Good afternoon. This is the conference call operator. Welcome and thank you for joining the Recordati First Half 2025 Presentation Conference Call. As a reminder, all participants are on listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star one at any time. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on the table. At this time, I would like to turn the conference over to Eugenia Litz, Investor Relator. Please go ahead, madam.
Thank you, and good afternoon, everyone. I'm pleased to be here today with Rob Cormans, our CEO, and Luigi La Corte, our CFO. Together, they will present results for the first half of 2025. Also joining for the Q&A session will be Alberto Martinez, Executive Vice President of Specialty and Primary Care; Scott Pescatore, Executive Vice President of Rare Diseases; and Milan Droszkovic, Executive Vice President of R&D. As always, the presentation is available in the Investor section of our website. It is now my pleasure to pass the call over to Rob. Please go ahead.
Thank you, Eugenia, and good afternoon, and thank you for joining us today. We are very pleased to share our good results for the first half of 2025. Beginning with net revenue of EUR 1.32 billion, an increase of 11.7% compared to the previous year, or 7.8% like-for-like at a constant exchange rate. This reflects an adverse FX impact of -2% in the first half, mostly from the Turkish lira and increasingly from the US dollar. This performance demonstrates continued momentum across specialty and primary care, which increased by 5.1% like-for-like at a constant exchange rate, and rare diseases, which grew by 12.8% like-for-like at a constant exchange rate. Robust top-line performance and operating leverage, partly offset by higher investments to support the expanded approval of Vistariza for Cushing syndrome in the U.S., integrating of Enjaymo, and for continued geographic expansion, resulted in an EBITDA margin of 37.5%.
Adjusted net income was EUR 327.8 million, up 8.9% from the previous year, reflects higher operating income partially offset by a higher tax rate. With a strong free cash flow of EUR 256.8 million, with higher EBITDA partly offset by working capital absorption and income tax paid, leverage at the end of the quarter was just below 2.3 times EBITDA pro forma. During quarter two, we announced the signing of the licensing and supply agreement with Amarin to commercialize Vascepa in Europe, further strengthening our cardiovascular franchise, and I will provide more details on the next slide. As for R&D, I am very pleased to highlight that the clinical trial for Denutuximab beta for Ewing sarcoma has been initiated in the second quarter. Finally, I am glad to confirm our full year 2025 financial targets, despite increased FX headwinds, as the positive momentum of the business is expected to continue.
Now to provide some additional details on the Vascepa transaction. Vascepa is an approved product indicated to reduce the risk of cardiovascular events in statin-treated adult patients with high cardiovascular risk. It has patent protection in Europe up to 2039. It has been approved in 2021 in the EU and in the United Kingdom in 2022 in Switzerland. Based on the REDUCE-IT, or REDUCE-IT phase 3 cardiovascular outcomes trial, this trial included over 8,000 patients and demonstrated statistically significant and clinically meaningful results. We believe Vascepa is a great strategic fit and complements our existing SPC business and cardiovascular portfolio in our core markets, while also enhancing our presence in the U.K. In terms of financial contribution, Vascepa is expected to be EBITDA positive from 2026 onwards and to generate over EUR 40 million in revenues in 2027.
As for the expected financial impact in this year and the remainder of 2025, the top-line impact is expected to be below EUR 10 million, and there will be a slightly negative EBITDA contribution level due to the integration and launch cost. Finally, the terms of the agreement was an upfront payment to Amarin of $25 million, and Amarin is also eligible to receive commercial milestones up to a total of $150 million if annual revenues exceed certain sales thresholds starting from EUR 100 million—sorry, euros. I will now turn the call to Luigi to give a bit more details to our results.
Thank you, Rob, and good morning, good afternoon, everyone. Once again, happy to comment on the results, which wrap up the first six months of 2025. Once again, actually very happy with how the business is performing really across both sectors. As usual, I'll start with revenue and with SPC specifically on slide five, which you will see actually that contrary to one note at least that went out with incorrect data, is not just growing solidly, but in fact picked up slightly in Q2, the pace relative to Q1. You see growth at constant exchange rate of just above 5% and continue to be underpinned by solid performance of our key promoter products and also supported by growth of both our OTC and Rx drugs. Really broad-based growth there.
The standard in terms of performance within the therapeutic areas, clearly cardiovascular, with very broad-based growth of our legacy portfolio there across markets and also solid growth of the GI franchise, both on the Rx and OTC portfolio. Nice to see equally, as we anticipated, starting to see some recovery of the cough and cold business in Q2, particularly in Russia. Still negative to what was a strong first half of 2024, but not quite at the same level as was the case in Q1. Finally, within neurology, positive, very positive growth of Celodicin in a number of our local products. Very happy also to see the in-market performance of Eligard, which however compares to the first half of last year where obviously we had the selling of the new device and therefore strong ex-factory sales in the first part of last year.
Also positive, although still down, Avodart Combodart, very happy to start seeing signs of stabilization in Spain, and that stabilization is very much consolidated in Italy, these two being the key markets. Once again, very resilient growth of SPC. Of course, we'll now start adding to that as of Q3 revenue from Vascepa. It'll be a gradual ramp as we transfer sales and distribution activities over from Ama rin, but look forward to that contributing to growth, particularly in 2026 and beyond. On there to Rare Disease on slide six. Here equally, we, nice to flag, also in the case of Rare Disease, a small tick up in the growth rate in Q2 relative to Q1. You see at the constant exchange rate just under 13% overall, with a nice step up in both the rate of sales of Vistariza and Corsaiba, as we'd expected.
Also with Enjaymo, really posting very strong sales in the quarter, nicely stepping up as we expected, and Enjaymo contributing over EUR 69 million of revenue in the first half. Up 26% versus the same period of last year, if you like on a pro forma basis. In terms of the key franchises, clearly very happy and growingly so with the prospects for this franchise to drive continued growth both this year and in the future. Particularly in respect of Vistariza, where we have now achieved over 1,000 patients in the U.S., which is an exciting milestone for us. Vistariza recently also gaining approval in Canada and Russia, but equally happy that that's complemented by continued double-digit growth of Signifor across most geographies. Very excited about the prospects there.
Very happy to see both Silvant and Corsaiba contribute to the strong growth of the hem-oncology franchise, and obviously pleased by the resilient growth that Metabolic is continuing to show this year, driven in particular by Panimidin. With this performance, rare disease now represents close to 40% of our revenue. Given the really strong momentum across all franchises and the progress that we're making in our life cycle management programs, clearly this percentage is destined to continue growing. Looking at it by geography, the picture does not change on slide seven in terms of really all key regions contributing to the growth. As I've done in previous calls, I'll only focus on some of the main trends. Clearly, the standout performance is the U.S., with over 32% growth in local currency.
Of course, that includes contribution of Enjaymo of just over EUR 35 million, but that also reflects strong growth of all of the franchises really in the U.S. Spain growth a bit subdued due to the strong comparable of Eligard last year and the stabilizing now pressure from generics on Avodart. Enjaymo clearly contributing to the growth in Germany and also to internationals, where we've also caught up with phasing of shipments to international distributors on the SPC side. You'll note Russia returning to solid double-digit growth on the back of the recovery of the cough and cold, which I've mentioned. Strong performance in Portugal, where we've now launched our Magnesio Supremo. You've heard me reference it in previous calls. Our food supplement OTC, which has been very successful in Italy and we've now introduced in Portugal as well.
Of course, sorry, I skipped over Turkey, where we continue to see solid growth, of course, in local currency, but also in terms of specifically volumes. Very strong performance there. Unfortunately, fully offset by the strong devaluation, which was really sort of focused in Q2. In terms of revenue, as I said already, very happy with the performance of the business across all of the portfolio. Also pleased on slide eight to see that we are still tracking very much in line with our expectations for the year.
You will recall we said at the beginning of the year that we were expecting the phasing of margin to be slightly different from previous years as a result of the combination of early investments behind the broader label, which we were granted in the U.S. for Vistariza, and also obviously the integration of Enjaymo in the first part of the year with the expectation that both of those products would really step up and contribute to even stronger momentum in the second part of the year. That clearly is reflected in the numbers. Despite that and the FX, very happy to see in the first half of the year both double-digit growth in revenue and EBITDA with adjusted net income just slightly behind. Still very strong 9% growth, reflecting the strong operating performance, but a slightly higher tax rate.
I mean, the integration of Enjaymo and the step-up in investment in Vistariza clearly explaining the step-up in SG&A and particularly selling expenses in R&D in the first part of the year, with obviously the progression of our life cycle management programs contributing to that as well. Decline in net income really being driven by, despite the strong operating performance, the non-cash charges which arise from the acquisition of Enjaymo and the somewhat higher non-recurring cost that we incurred in Q2 as part of our continued optimization of our sales organization, particularly in Italy and to a lesser extent in Spain. Very happy with the P&L performance. Once again, very much in track with expectations. Turning to cash flow and leverage on slide nine and ten. Continue to deliver, the company group continues to deliver very solid cash flow.
We did elect in the first part of this year, for reasons I'm sure you all understand, to increase our stock levels a bit, particularly in the US, which is really the key driver of. The higher working capital absorption in the first six months of this year, alongside obviously the growth of the business. The higher results that we achieve obviously result in somewhat higher income tax payments, all of which are leading to free cash flow in line with the first six months of last year, but really being driven by strong operating performance. Following the payment of the dividend, the final dividend for 2024 in May. The higher share buyback and obviously the upfront for Vascepa. Leverage is pretty much unchanged relative to Q2 at 2.3 times, just below 2.3 times EBITDA. Clearly set to deleverage further in Q3.
With that, I will pass it over to Rob to comment on the outlook for the remainder of the year.
Thank you, Luigi. Yeah, concluding with our financial targets for the full year of 2025, we're very pleased to confirm our targets of double-digit growth across all metrics. On the top- line, we expect revenue between EUR 2.6 billion–EUR 2.67 billion, including increasing FX headwinds now expected to be approximately -3% for the full year. Top line is driven by the strong underlying performance of the business and reflecting a small contribution of less than EUR 10 million for Vascepa this year, a further step up of Enjaymo in the second half. We're particularly encouraged by the strong positive market dynamics and performance of Vistariza, especially in the U. S. following the label extension. On the back of this, we continue to increase our investments to maximize the opportunity of Vistariza. We expect EBITDA margin around 37.5%.
Driven by operating leverage, a positive mix and efficiency initiatives, but partly offset by the FX impact from the U.S. dollar. And the already mentioned Vascepa transition and integration cost and the continued investments into the Vistariza maximization. Adjusted net income margin is expected to be around 25% with strong operating results and with a tax rate of approximately 24%. We're extremely pleased with the start of the year and the continued momentum going forward. Now, together with the team, I'm very happy to take your questions.
Thank you. This is the Chorus Call conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Shan Hama, from Jefferies. Please go ahead.
Hi, thank you. Take my questions. Two from me, please. Given the high level of investments just based on Vistariza and Enjaymo and the expectation that they will ramp up in 2H in terms of their performance, how are you thinking about level of investments in 2H? Is this something we can expect to stay at steady levels, or will there be a slight step up to also complement that increased ramp? Secondly, in the presentation, you flagged the go/no-go decision for Enjaymo and ITP 1Q 2026. Can you provide additional color on the potential opportunity here at the moment? Is this more of a bolt-on or a step change in the total addressable market? Thank you.
Hi, Shan. Just make sure that acoustically I got you right, but you're asking whether we continue to increase our investments in the second half behind Enjaymo and Vistariza, right?
Yes, exactly.
Okay. Yeah, sorry, the line was a bit bad to follow. Yes, I think especially for Vistariza, we see incredibly good market dynamics and with mild Cushings becoming more and more of a reality where we're also tapping into. The performance of Vistariza, where we've now exceeded 1,000 patients in the U.S. only a couple of months after just getting the extended label, we see this opportunity and we're really very keen to continue to invest to maximize the opportunity for Vistariza. This was also something that very much is part of our plan and we're executing on that plan. I do not know whether Scott, you want to comment on it a bit further?
No, thanks, Rob. As you guys all remember, I mean, we made a significant investment at the end of last year into this year for the approved label in April. Obviously, as you see from the results, those investments are certainly paying off and we expect that trend to continue and even ramp up in the second part of the year. Just to reiterate what Rob said, I mean, we're looking now more closely at the mild segment of patients with Cushing's and looking to make additional investments to capitalize on that opportunity as it becomes more and more concrete.
Maybe Milan, you care to comment on ITP?
Yeah, so Milan, yes, thanks, Rob. Milan Zdravkovic here. Regarding the ITP program, as we wrote in our update, we plan to meet with the FDA during this year and take a stop-go decision in Q1 around how we want to progress this as a potential interface redevelopment. This is on the basis of the very strong, I think, phase one data in particular and very treatment-resistant patients with ITP. We want to make sure that we have, you can say, the regulatory path cleared before we, I think, comment further on how this may progress. Thanks.
The next question is from Sofia Gras from GPM. Please go ahead.
Hi, thanks for taking my question. Another one on Vistariza. I just wanted to ask, could you expand a bit more on the progress on Vistariza uptake since the label expansion into Cushing syndrome? I think we've seen a relatively limited step-up in quarterly revenue, just EUR 3 million quarter on quarter. Could you explain some of the dynamics there in terms of why we haven't seen more of an inflection or a bigger acceleration here? What should we be expecting in terms of an H2 acceleration and what gives you confidence in this acceleration in light of what we've seen in this quarter's performance? Thank you.
Thanks, Sofia. Hi, this is Scott Pescatore. No, it's a great question. What we're seeing now, as Luigi alluded to, is we've sort of broached now the 1,000 patients mark, which is a significant milestone for us. Also for the treatment of the disease. It's really showing that the expanded investment that we put behind the business in the U.S. is starting to now pay off. We've seen now in the early parts of the year, with the embedding of the new reps, that the uptake was, let's say, a little bit slower than we had anticipated, but now that uptake is continuing much more rapidly. In the second part of the year, we're seeing the ramp-up of even more patients that are being put on Vistariza in Cushing syndrome.
This is something that we see very strong momentum coming out of the second quarter, continuing into the third and the fourth quarter, and into next year as well. As Rob had also mentioned, we do see some of these mild patients that were inside some of the numbers earlier in the year. Those patients will also continue to be put on therapy as needed. We're really excited about the second part of the year because this is where we see the true ramp-up and the momentum behind the performance that we've had in the first half of the year will certainly continue in the second part of the year.
Maybe if I can add just from my side, do not forget that approval was taken sort of during Q2, not quite from the very start. Also, of course, in Q2, we did have quite a bit of, we did start seeing FX headwinds in the U.S., which impacted, in fact, the dollar was positive in the first quarter and then turned negative in the second. I think you would have to factor in, but to echo what Scott has said, very happy with how we are seeing the product take off now. We do expect continued uptake. I think maybe just to round out also on the first question from Shana, yes, we do expect those investments to continue and are looking at potentially adding to that. We do expect also the pace of revenue to step up.
In terms of margins, their sort of expectation for the year is unchanged. Yes, FX is a factor. Yes, Vascepa will be slightly diluted, but the momentum of the business is strong and is picking up, particularly on those two franchises.
Thank you.
The next question is from Alistair Campbell from Royal Bank Canada. Please go ahead.
Great. Thanks so much for taking the question. It's actually on Vascepa, if that's okay. You've obviously kindly given us expectations for sales around 2027, but I wonder if I could press you in what you think the longer-term sales ambition could be here, maybe sort of in context, your next set of, if you like, thresholds kick in if sales cross EUR 100 million. Do you think that's a stretch target? Do you think that's something we could see sort of within the foreseeable forecast horizon? Thank you.
Thank you for the question. This is Alberto Martinez from SPC. Just confirming the expectation would be in the range of EUR 100 million around the expiry date of the patent that we expect around 2039. Obviously, this is based upon the current markets where Vascepa is being commercialized, although we are also looking at opportunities in other markets that could increase that expectation beyond that figure. We are obviously now focused on the transition, which is going very well, smoothly, and we will be able to revisit and continuously explore opportunities for further growth.
Thank you.
The next question is from Martino De Ambroggi from EQUITA. Please go ahead.
Thank you. Good afternoon, everybody. Again on Vistariza, because you mentioned 1,000 patients in the U.S., could you provide a figure for the worldwide in terms of patient and. What is the updated potential market that you see for Vistariza in terms of patients? The second, I clearly understand there is a step-up in the second half for both Vistariza and Enjaymo. Could you provide any rough indication in terms of expected sales for the full year? Just a very quick double-check. Are we comfortable saying that rare diseases are excluded for any U.S. price cut or duties going ahead? Maybe you have a better picture than mine.
Maybe to start with your last question. Everything, I mean, you know that this section 232 analysis is still going on, expected to be finalized in August. From what we hear on tariffs, the max cap seems to be 15% on pharmaceuticals. Yes, there are very strong comments coming from regulators and people in the FDA and Republican Party that rare diseases get a special better treatment and are excluded for many. I mean, we also only have the same crystal ball as you have, right? Yes, we are on top of this. We take it extremely serious. I do not want to pretend that anyone knows at the moment, really. I think we have to take it as it comes. From what we hear initially, it seems to be manageable in that sense.
No, this is Scott Pescatore. I'll take the first couple of questions that you had. With regards to the global Vistariza uptake, I mean, certainly in the U.S. is where the biggest opportunity lies. We're happy to sort of share more specifics around the patient uptake there. Globally, we don't have the specific number to share for the global uptake. However, I can tell you that since launch, we've had significant success, as you can imagine, in markets across Europe and now in the Middle East and in Latin America. We're really pleased with the opportunity that we have with this product globally. Certainly, we're even more excited about the opportunities that we're going to have now with Cushing syndrome in the U.S. and onto bigger and broader things that are going to happen there in the future.
With regards to our anticipated landing for Vistariza and Enjaymo, Luigi can probably share a bit more of the specifics there, but I can tell you that we're on track to achieve our expectations. As you rightly said, we do have a step-up in the second part of the year, but we have very strong momentum both on Vistariza and Enjaymo. We haven't spoken about that yet, but Enjaymo had a really strong first half of the year, as you saw from the numbers Luigi shared. We had 26.4% growth. I can tell you that all the markets in particular, we're very pleased with the performance in Europe, particularly in Germany. Also, the uptake in Japan has been very successful year to date.
One piece of information that was important is that we've seen ourselves through the warmer periods in Japan at the moment where we anticipated some patients coming off of the product due to the nature of the disease, and that hasn't played out. We're really pleased about that. Patients are staying on product through the warmer months. That's an important piece as we learn the sales cycle of this product and we experience patients through 12 months of the year. Just to tie up the last piece around Enjaymo and expectations for the year, we anticipate landing at EUR 150 million. Endo, we're well within the range of EUR 400–EUR 440 million. That also includes, of course, Signifor as well.
Yeah. And those, Martino, were the targets, you recall, Enjaymo, we said at the beginning of the year. On Endo, I think this is what we sort of provided when we did the three-year plan. We're still very much on track. Of course, again, we'll have to deal with the effects, but the business is doing well and performing in line with those.
Thank you.
The next question is from Isacco Brambilla from Mediobanca. Please go ahead.
Hi. Good afternoon, everybody. A couple of questions from my side. The first one is on the cash side. Absorption from trade working capital was to the tune of EUR 100 million in the first half. You elaborated a bit on the drivers behind that. Could you help us figure out a sort of trajectory to embed in a full-year forecast for this line of the cash flow statement? Second question is a follow-up on operating margins. Full-year guidance implies an adjusted EBITDA margin in the second half in line with the one of the first half. Actually, in the past years, we were used to see second-half margins slightly below the first semester. Just if you can recap the moving parts that should lead to different seasonality margins this year. Thanks.
Sure, Isacco, and thanks for the question because actually that is exactly what we were trying to sort of anticipate to everyone at the start of the year when we said that there would be different phasing, right? As you rightly pointed out, historically, Q1 was our strongest margin quarter, Q4 much weaker than the previous ones. We did say at the start of the year that because of that sort of phasing of investments relative to the ramp-up of the revenue that we were expecting in those products, we would expect to see a more balanced sort of evolution of margin over the course of the year. That is still very much the case. That is why we still expect to be in line with guidance. Again, Vascepa will have a slightly dilutive effect, and obviously that was not built into the original numbers.
FX is a bit of a headwind. Again, we are still confident on our ability to deliver. Where exactly within that range will depend on sort of the trade-offs between how FX plays out over the next months and the speed of the further ramp-up that we are expecting on both the Vistariza and Enjaymo in particular. Of course, the performance of the broader portfolio, but those two really are where we are expecting to see continued growth. In terms of working capital, I do not think I would expect a lot more than this for the full year.
Okay. Thank you, Luigi.
The next question is from Niccolo Storer from Kepler Cheuvreux. Please go ahead.
Good afternoon and thanks for taking my two questions. The first one is another one on Vascepa and the growth trajectory. I mean, you said you are expecting around EUR 100 million by 2039, but 2039 is quite far in the future. So how should we expect the trajectory from the EUR 40 million to the EUR 100 million in 2039? Is it a linear one or something different? Second one is on the sale restructuring cost. I saw you booked around EUR 17 million in H1. Should we expect anything more here in the remainder of the year? Thank you.
Thanks, Niccolo. Let me maybe answer the second part of the question. No, I think we've done our right sizing, and as a company, we continuously look at where can we improve. I think in terms of the mass of that, that should really be behind us after this restructuring. We will always try and adapt to the market and to opportunities and constantly try to have the right structure in place. With this, I think the one-off in that sense is, in terms of substantial figures, significantly behind us.
On the first question, I mean, obviously we gave guidance around 2027. And 2027 revenues expected of around EUR 40 million. And we have given you the directional figure of EUR 100 million for the current countries where the product is commercialized by 2039. We expect the product to continue to grow. Last year, it was above EUR 11 million. This year is going to be well above EUR 20 million. It is in a good launch trajectory. Obviously, it is expected to continue to have a strong double digit for a number of years, then flattening in the outer years. Luigi, you may want to add.
Yeah, no, it's just to make sure that it's clear. The EUR 20 million for this year, that's obviously on a sort of total year basis and sort of full revenue. We will get a fraction of that for the time period that we own it. We are being transferred a net margin until we pick up sales and distribution. Obviously, with the costs of the promotion behind the product, that's fairly limited, which is why you will have seen in the sort of outlook we said it's going to be less than EUR 10 million in terms of revenue and actually slightly negative in terms of EBITDA. That's really up just sort of only for this year. We did say it's going to be contributing positively as of next year.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Eugenia Litz, there are no more questions registered at this time.
Thank you. Thank you for having joined us today. We were very happy to share our first half year with continued really good momentum of our business and a nice stepping up of specifically Enjaymo and Vistariza. Very confident that we see this momentum going on based on the in-market performance that we see. We are happy to answer your questions. Look forward to giving you further updates further down the year. Thank you and have a wonderful day.
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