UCB SA (UCB) Earnings Call Transcript & Summary

Welcome to day 3 at the JPMorgan Healthcare Conference. I'm Richard Vosser, European pharma analyst at JPMorgan, and it's my great pleasure to introduce the UCB CEO, Jean-Christophe Tellier to you. Just before I hand over to Jean-Christophe for his presentation, I'd just remind you that if you have a question, please take up your hand and wait for a microphone or you can put your questions on the portal, and I'll ask them for you. With that, Jean-Christophe, welcome to the conference.

Thank you, Richard. Good morning, everyone, and thank you for joining me this morning for the UCB presentation. It's always a pleasure to be in front of you and share with you some updates about the company. And give you the confidence that you need to get with the progress that we are making and the future and the perspective of the company. So thank you for being here. If there is only one message that I would like you -- it's not the disclaimer, by the way. If I have only one message that I want to get -- to leave you with today is the fact that we are in a position of strength and the level of performance that have been able to deliver for the last couple of years is the best possible introduction to the decade of growth that we have ahead of us. And so the strength that we have today is built on a lot of different pillars that I would like to highlight with you in the next few slides. So of course, the first element that you should be confident with is the fact that this decade of growth has been built on a very solid and strong foundation. We have a company of almost 1 century of history. We will celebrate our century in 2028. So it's getting closer. And the foundation of the company has been a family which have always, have believed in the future and in innovation. And these strong foundations on innovations and sustainability and success have been executed towards today. Two pillars. One is immunology and the second is neurology. And is today translating in these five growth drivers that you have on the right-hand side of the slide. And of course, the first one that you think of when you think about UCB today, is BIMZELX with the five indications of the product that we have been able to launch a few years ago. But it's not just BIMZELX. You see here the other products, general myasthenia gravis in Dravet, Lennox-Gastaut, fragility fracture that you have here. Five growth driver is the first pillar of the growth and the first reason of this decade of growth ahead of us. The second element -- sorry, I should mention another thing on this slide. The second pillar of growth that you get -- you have to think of when you think about UCB is the fact that we have a huge visibility ahead of us. The green dots that you see on the right part of the slide, almost outside of the slide, actually, it's the delay versus between now and the loss of exclusivity. So BIMZELX, for example, the loss of exclusivity will be in 2037. So with this five growth driver, we have ahead of us a huge period between 2033 and 2037 before we will have to face the next round of loss of exclusivity. So strength with the growth driver, strength with the visibility that we have ahead of us. The strength that we have today is also the results of a strategy that has been executed with agility and resilience. And it's also something that illustrates UCB and has been illustrating UCB for a while. So if you think about the first element, which is the innovation piece, we always have invested more than our peer in R&D. And this level of investment for the last years, at least the last decade, have created the strength that we have today. The second element is we are continuously investing in areas and in geographies that support innovation. And in the current environment, and particularly here in the U.S., we have decided last June to expand our manufacturing capacity and building a state-of-the-art mammalian factory in the U.S., which remain -- which will be an investment of $5 billion for a company our size. It's quite a significant investment. But it's also an illustration of the growth that we have ahead of us and the ability that we will have to produce more regionally and to be closer to where the innovation is. And then last but not least, invest in our own research is, of course, very important. But it's not everything. I don't think there is any company today, which is able to grow long term without a combination of organic and inorganic growth. And the other pillar of strength that we have today, it's our strong balance sheet. And the strategic flexibility that we have already today to invest in potential inorganic growth in order to strengthen, accelerate and give us even more solidity in the future. So if you think about that for us, we will, of course, start with early stage with research, strengthening our discovery engine because with five growth engines right now, we have enough on our plate and we don't want to add additional element now. I cannot resist to the pleasure of spending a little bit of time on this slide, right? Because when you look at the strength of UCB, it's the ability to deliver results, which, of course, is the most important one to give confidence in the future. And this is not the result of the growth over the last 10 years, actually. It's just '25 versus '24. And so you can see 24% of growth, and you can see 700 basis points of improvement of EBITDA. And being here for the last 12 years, I have heard a lot of time skepticism when we put the guidance to say we will reach more than 30% by '25 of EBITDA, there have been some questions about how you will get there. And now it looks like 31% is quite conservative. But frankly, I like to be in this position on making sure that we can deliver what we have promised and show confidence in the future. So when we look at the strategy in action, I would like now to zoom a bit on a few elements. The first one, it looks maybe general, but it's the reality of the company, and it's the reality of who we are today. The focus on innovations, the ability to invest in research and science is the heart of the company because we always believed that if we are able and as long we are able to translate science into differentiated candidates, we can deliver additional value for people suffering from chronic disease. And the way to do that is on the paper quite simple, not that easy to execute. But the first thing is first is better understanding of biology. If you understand better the human biology, if you really put connections between the patient and the science, then you can extract from this knowledge an ability to formulate differentiated hypothesis, scientific hypothesis that then you can translate into different candidates. And if you are able to execute on these science, develop faster with a higher probability of success, which we have been able to demonstrate with BIMZELX, for example, and execute commercially, which we are demonstrating today then you completed the circle from innovations to results that should give you confidence in our future. The last product of the portfolio is Kygevvi. So Kygevvi, it's a product which is the first and only treatment today, just got approved in the U.S. It's a rare disease. It's even an ultra-rare disease for kids suffering from TK2d deficiency. And this is really a very severe disease for the kids, the only treatment available. So it's not a big patient population, but it's here also a good illustration of what patients value means and what unique differentiations can create. The second element of the pipeline that I would like to illustrate is galvokimig. So galvokimig is an illustration of a multispecific antibody targeting different pathways. So it's a natural evolution, if you think about science. It's a natural evolution of how we can evolve and how we can progress in the treatment of auto-immune disease. By nature, autoimmune disease is not just the result of a dysfunctioning of one pathway. It's a multiple complex consequences of man functioning of the immune system. And so after targeting one interleukin in certain disease, it looks natural to try to combine different target together and having one monoclonal antibody and ability to target different interleukin. So with galvokimig, we have the combination of IL-13 and an IL-17A and IL-17F. And by doing so, we hope that we will be able to provide additional clinical value for patients suffering from atopic dermatitis in the first disease that we have evaluated the drug here. If I move now just to give one example in neurology after covering -- after having covered immunology. Alzheimer's disease, it's a very complex disease, of course, and it's not an easy one. I think -- we think that with bepranemab, we have something quite unique there. The first time that we have been able to demonstrate clinically, some improvements in patients suffering for Alzheimer's disease with an anti-tau treatment. And we think we have a good option there because we have been able to demonstrate with human cells that we were targeting the right epitope that can translate an anti-tau into clinical positive outcome. So as you can see from a pipeline standpoint, I just highlighted three components. I could have added dapirolizumab for lupus that we have with our partner, Amgen, which is in the second Phase III now, and it's also a huge unmet patients need, right? So you can see multispecific dapi in lupus, beep in Alzheimer, Kygevvi in rare disease, you can see that we have already in the phase of preparations of the future of the company. So pipeline is one. Execution is the final -- is also another one, right? And you can see here what has been very specific for us, and we have not been used to that before. On the launch of BIMZELX is the speed by which we have been able to complement the first launch of one indications in one country by a launch globally in multiple indications. So in less than 2 years, we have been able to reach 50 countries, 5 indications. And we have still some to come with pediatric studies and with PPP that we have started to develop. And that's how it translates into results, right. More than 100,000 patients have been treated already today with BIMZELX in just 2 years of treatment in most of the countries where we have been able to launch. We have no additional elements there, no signal, things are doing very well and the feedback of the patients, the physicians on the product have been amazing, which is translated in the graph below, where you see the dark green in terms of patient acquisition, which is above competition. And once again, I think with the level of competition that we are facing, I think it's pretty remarkable there. . And for '26, we are happy, and we have published that yesterday in the press release, we are happy to add 36 millions of life covered. And so we will be able -- which is an increase of 25% versus '25, which means that now we are able to cover already 80% less than 3 years after the launch of a product in such a competitive market, we are already covered 80% of the commercial lives. But as I said, the growth drivers are not just about BIMZELX. We have also other products that drive the growth of the product -- of the company for the next 10 years. And all of them illustrate very unique specificity and outcome for patients. EVENITY is still today the only anti-sclerosin with able to build back bone at a moment where you need it, which is able to translate into 50% reduction of fragility fracture. And what means life expectancy going up if you are not able to get the bone and the quality of the bone that goes with it. RYSTIGGO and ZILBRYSQ are two portfolio brands that we have in general myasthenia gravis. RYSTIGGO is the only one that have the indications broader between [ Muzkalanti ACH ] and ZILBRYSQ is an anti-C5 on a daily indication and daily prescriptions and dosing, which is a very important one for younger patients who want to stay active and to control the disease all over the year. And last but not least, FINTEPLA in Dravet and Lennox-Gastaut. So you see a full portfolio who will drive the growth and behind the pipeline. So the last thing that I wanted to share with you is really to leave you with this message, UCB is a company today which is very uniquely positioned in the industry today in terms of ability to enter into a negative growth, visibility with a very limited number of products with a loss of exclusivity in the next 10 years. Plus the evolutions and the investments in innovation that translate into a solid pipeline and an ability to execute both from research to development and to commercial executions that fully provide the results that we want to see from research to the patients. Thank you very much for your attention. Thank you for your confidence. And with that, Richard, I hand over for the question. Thank you.

[Operator Instructions] Maybe I'll kick off. Jean-Christophe, you highlighted that the incremental patients and lives covered on BIMZELX that you've been able to achieve, that presumably comes with elements of increased rebates to the payers. How should we think about that -- the balance of that as we go forward for the growth of the brand in the U.S.?

Yes. No, Richard, it's a great question, of course. And it's a fine line. Finding the right balance of how much you want to cover patients and get access to the patient versus the gross to net that you leave on the table. So two elements that I would like to illustrate on that. The first one is we have never considered price as a way to capture new patients. We wanted to be at the level of the market. We wanted to make sure that we follow the rules of the market and we provide the best access that we can. But we didn't want to push the rebates to a level that can stimulate even further competition on price. Why? Because we have the differentiation, and we have the outlook. Don't forget, we have already published three comparative study versus standard of care where we have demonstrated superiority. And these have been really instrumental to make sure that all of the three major PBMs include us since the beginning in their formulary. And so we are very happy that just at the first year already, we had already a very solid coverage. And these positive coverage gives us an additional opportunities to switch patients from our bridge program, which was ability for the patients to get access to the drug, but didn't create any revenue for us and shift the patients faster to commercial coverage, which have helped us in '25 to increase and to get a good level of revenue. So yes, EUR 36 million of additional life covered in '26 translate, of course, into a less medical exception and less patients who pay full price and an additional more pressure on the net price. But once again, we had already the contract, we had already the coverage. We have no exception in the PBMs and for the major indications. And then we will be able to expand that now, which means that after 3 years, we can be very confident that if a patient need our drugs and if the physicians want to prescribe the drug, it will be able for the patients to get the drug. And you know how important it is, and particularly in this market, where sometimes the time between getting the prescriptions to being able to actually benefit for the treatment, it's sometimes weeks and even months. So it was important to get this volume in order to make sure that the environment was not creating additional hurdle if the willingness to prescribe is here, but doing that with a minimum impact on the net price, is something that we wanted to achieve. And I think we have a very good balance now.

One of the indications that boosted the growth in '25 was HS. And that was a relatively new market. So how has been the ability? And what's the ability to go going forward for you to sort of expand that market with -- there is another IL-17 as well?

Yes, absolutely. I mean HS is a new market. It's a new indication. And it's a market where it's not so easy to treat patients. And you just need to keep in mind two things on HS. First is patients suffering from HS, very often, we are very disappointed by the treatment they have been able to get so far. And because of the disappointments, the patients have left the classical secret of treatment or connection with the health care system. And many of them actually are out of the system, treated from time to time with antibiotic or with a surgery, but are not connected completely with the dermatologic environment. So we have to bring them back and we have to educate them also and to let them know that there are new solutions available for them that will help them to treat their patients. So HS growth is there. It will be there for the long term. Epidemiology said that basically 1% of the populations may suffer from HS. We are far from having these patients connected to the system being diagnosed, average time between early symptoms at diagnosis is more than 7 years. We need to reduce that, and we need to treat patients earlier and earlier in order for them to benefit. But the benefit of the treatment and particularly BIMZELX is real. I just want to give you one illustration of that. In our Phase III clinical trial in HS, the patient was all severe at the beginning of the study. None of them describe their state as mild or moderate. At the end of the study, more than 50% of the patients consider that they had a mild disease expression. So you can see the impact from the drug on the disease. So I'm very confident that we can leverage the differentiations and the power of dual inhibition of the IL-17A and IL-17F for these patient populations. And the growth in this indication is just at the starting point, because we will bring more patients to consultation. We will shorten the time of the diagnostic. And because of that, patients will be better treated and so there will be much more motivation to follow the treatments and to continue to be adherent to the treatment. Today, we have already 3 years of exposure to the product in our open-label extension more than 80% -- 86% of the patients who have been controlled at the beginning, continue to be controlled after 3 years. So we are very confident that despite the severity of the disease, despite the complexity of the treatment, BIMZELX is a huge potential tool in the toolbox of the physicians to provide to the patient the relief that they need.

I think in the excitement on HS last year, we sometimes forget that psoriasis is a very, very large market and still growing today with biologic penetration and PSA too. So maybe you could give us some color on how BIMZELX is performing there and what the opportunity set you see.

Yes. I mentioned in the slide that you have noticed that what was very different from UCB for UCB with BIMZELX was the ability to launch in many markets at the same time, almost and in many indications. So we have five indications now. And as you mentioned, HS is just one of them, which creates a lot of excitement because there is not a lot of solution. And so you can feel and see the growth for the future. But the other indications are also very much present. Psoriasis, basic arthritis, ankylosing spondylitis and non-radiographic-axSpA. We are present in all of these indications, and we are doing well, and we are growing in all of these indications. There is one element that I would like to highlight here maybe. It's the psoriatic arthritis. I mentioned already the growth opportunity with the additional coverage and access in the U.S. I have not mentioned the other elements in '26, which is our head-to-head study versus IL-23 in psoriatic arthritis. We will expect results in this study in the second half of this year. And our expectation is that we will be able to demonstrate superiority versus IL-23 in psoriatic arthritis. It will be the first time that we can demonstrate superiority versus this product and this class. The reason why we have chosen psoriatic arthritis, is because we feel that the pathways of 17A and 17-F, is very important in psoriatic arthritis. Actually, it was the reason why initially we had the hypothesis that targeting both interleukin will create more patient value because of the high level of Interline in the joint of patients suffering from psoriatic arthritis. So of course, if we are able to demonstrate that we have superior 2023, you can imagine that we can have an additional growth there. But we feel also that the growth will not be just for psoriatic arthritis, but also for psoriasis. Because one patient out of three today is suffering from psoriasis will have psoriatic arthritis one day. The problem is you don't know who, which patients will have and which will not have. And so if it was you and if you suffer from psoriasis and you don't know if you may be, subject to have psoriatic arthritis in the near future, it's probably better to choose immediately in psoriasis to be treated with the product, which offer the best coverage for your skin and you're joined at the same time. So as you said, Richard, HS is the most recent indication but we have others and in particular, the ability to provide other and further element of differentiation in this case, psoriatic arthritis versus IL-23 will help us also to grow in other indications such as psoriasis.

And I think you snuck on the slide, PPP as well. What's the opportunity there? And what could we see?

Well, from a clinical standpoint, the PPP opportunity is a very important one. If you think of a disease where basically you cannot walk and you cannot hold anything in your hands because you have trouble on both palmoplantar. It's another illustration that sometimes quantitative percentage of skin touch with the disease doesn't mean a lot. Because if you look at palmoplantar -- palmoplantar pustulosis, it's basically probably 5% of your skin. But this 5% are so critical that you cannot leave a normal life, right? So it's a rare disease. It's not a strong patient -- a big patient population, but it's a very damaging disease and it's a disease that create when you suffer from it, which creates a huge impact on your quality of life, on your inability to have a normal life to go to work and to -- and just to walk and just hold and do the normal things of the daily life. So it's a quite damaging disease. We've started the study right now. And so far, there is no treatment available. So even if it's a small patient population, it's a nice and it's a very important addition to what we currently have.