Go`od morning, everyone. Welcome to the 42nd edition of the JPM Healthcare Conference in San Francisco. I'm happy to introduce you to Carlos Gallardo, Chairman and CEO of Almirall. Thank you.
Thank you, Niccolò, and good morning, everyone. It's a pleasure to be here with all of you, and thanks to J.P. Morgan for the kind invitation one more year. So, 10, almost 10 years ago, we took the strategic decision to focus exclusively on medical dermatology. So we started our journey to build a portfolio and to build a pipeline in this indication. Today, I'm very happy to share with you that we are a recognized leader in Europe, already medical dermatology, with a strong portfolio of 48 products across different modalities: topicals, systemics, and biologics. We have a strong commercial organization that covers 60% of office-based dermatologists in Europe and 90% of hospital-based dermatologists, and a growing and exciting pipeline, also across different modalities of dermatology assets.
Additionally, we have direct presence in the U.S. and also indirect presence in other geographies through, through partners and, and distributors. But why did we choose to focus on dermatology, you know, 10 years ago? At that time, we already had a portfolio, thanks to the acquisition of Hermal. Also, there was tremendous unmet needs, so a great opportunity for us to develop exciting medicines to help, to help patients. And it was specialty, and we were looking to, to stay away of, of primary care. So fast-forward into this market, and we've seen that the growth in the market has occurred today. Dermatology is a market of around $47 billion, mainly driven by the biologics in psoriasis. It's around 50% of the sales come from... And that's U.S. and EU5 , come from this disease area.
But looking at latest data from Evaluate Pharma, this market is expected to continue to grow double- digit, 10% year-over-year in the next five years. There are other very attractive things, characteristics of this market, and that's why we are very excited to be focused on dermatology. First, there are many pipeline in a product opportunities, particularly in the immune-mediated diseases. If you look at our pipeline, we have two of such assets in our pipeline, the anti-IL-1RAP and the anti-IL-2 fusion mutein, in which we do believe that we have a pipeline in our product already. We are positioned to treat chronic diseases, so we don't understand the biology well enough to aim for cures in these diseases, so they are chronic treatments.
As I will show you with an example in psoriasis later on, these novel mechanism of actions drive higher biologics penetration. A characteristic of these diseases is that only a small percentage of eligible patients are treated with advanced therapeutics, and therefore, every time there's a new mechanism of action, what it does is increases the penetration. So it does not cannibalize the previous sales, but increases the penetration. So that's positive, and we will see the example later on in psoriasis. And therefore, you know, multiple products can coexist in the same indication. And that's important. That's important because, you know, we can aim for, we can expect products growing in this disease until patent expiration. So in this market, how have we performed recently?
So in the past few years, we've been able to deliver a steady stream of launches, and therefore, we believe that we have a proven track record of executing these successful launches, both of internally developed assets, such as Skilarence, but also external and partnered assets, such as the others, the ones that you, that you see in the slide. And let me, let me pause for a second on the latest, on the last product that we have, that we have launched, EBGLYSS, lebrikizumab. This is a product that was approved by the European Commission in November last year, and that we have already launched in Germany just a couple of weeks ago.
It's a product that is partnered with Eli Lilly, and we are delighted to have such a strong company as our licensor and as our partner, and we have a great collaboration in place. So what are we expecting from EBGLYSS, no? We truly believe that EBGLYSS has the potential to become a best-in-class treatment for atopic dermatitis, thanks to its unique mechanism of action. So the way it binds to IL-13 with high affinity and selectivity results in great efficacy. We are seeing it in the clinical trials as early as week 16, but also we have data until two years, where patients that respond well in week 16, they continue to respond. We continue to see efficacy of the product two years later.
Of course, a unique dosing schedule with one injection every four weeks. Super excited to have EBGLYSS in our arsenal, in our repertoire of products to help patients in atopic dermatitis. It's launched already in Germany, and we are going to launch it this year in a number of countries as soon as we get pricing and we secure market access. Again, very excited to position EBGLYSS as the best-in-class treatment for atopic dermatitis. What can we expect of EBGLYSS and the other innovative products? We look in this slide and we look from left to right. What we can see is that already from the innovative portfolio that we have launched in recent years, already 30% of our net sales, and that's data from last year, already account for...
Are driven by this portfolio. And we move into the biologics, where we have the biggest opportunity. We look at Ilumetri, tildrakizumab, that we launched four years ago, already has become in 2022 was our best-selling product with EUR 122 million, sorry, EUR 124 million. And this year, you look at the data, has grown more than 35%. So it's a product that, as I mentioned before, you know, continues despite new mechanism of action entering psoriasis, is a product that continues to show how great high growth rates. Moving forward, if you add EBGLYSS to the equation, we see that we have a tremendous opportunity in terms of sales growth, with high double-digit growth expected until the end of the decade.
So together, if we look at two biologics, we have announced peak sales of around EUR 700 million, which means that, you know, it's going to multiply by more than five our existing franchise today in atopic dermatitis and psoriasis. In addition, what are the areas that we are focusing in dermatology? So basically, we focus on areas of high unmet need. Okay? And so if you look at it, two of the areas we're focusing also have high prevalence, such as the immune-mediated inflammatory diseases, such as atopic dermatitis, HS, alopecia areata, vitiligo, psoriasis, and non-melanoma skin cancer, where we already have a strong presence in AK with Solaraze and Actikerall. But also, we are looking at rare dermatology diseases, and as we'll see later, there are more than 1,000.
When I learned about this data, it blew my mind away, but more than 1,000 rare diseases in dermatology, and the vast majority of them, they have no FDA- or EMA-approved treatment, so a great opportunity. And also, it's a great opportunity for products that are developed in the first bucket, the IMiDs, because some of them, you know, can present opportunities also to have efficacy in rare dermatology diseases. And even with the lebrikizumab, we are looking into this bucket as we manage, as we maximize the impact of this product. If we focus now on the immune-mediated inflammatory diseases, we see what I mentioned before.
On one hand, there's very high prevalence, and this is data from U.S. and in EU5, and we see the millions of patients with atopic dermatitis, psoriasis, vitiligo, HS, CSU, alopecia areata, et cetera. But it's more relevant is that if you look at the, the blue bar, we see that even in mature markets or more mature market like psoriasis, only 23% of patients are treated with, with, advanced therapies. Okay, and that's, you know, 15 years or more than 50 years since it was the first TNF was launched. So still, tremendous unmet need.
A vast majority of patients are not treated with the right medicines, and so, you know, we are very excited to be in these areas, to be able to, to contribute, you know, to, to treat patients effectively and, and to transform the patients of, to transform the lives of these patients. I mentioned before that, you know, as new mechanisms of action come into these diseases, they do not cannibalize the previous products, but they help to drive penetration, no? Let's look at the example of psoriasis that currently has a 23% market penetration. If you look at this slide, what we can see is that, just 16, 17 years ago, the first advanced biologic was launched, the TNF Enbrel, TNF-alpha.
What we can see is that in the last 17 years, there's been many new classes added. You know, a few years later, year five, the Stelara was added into the equation, then the anti-IL-17s came in, then the anti-IL-23s, in which, you know, we have Ilumetri, is, is one of our products there, and more recently, the TYK2 s, no? And if you look at the sales, what you can see is that still today, all the mechanism of action, all the classes, they still have their place in therapy, and they have continued to grow. And that's very relevant because, as I mentioned before, what it helps, the new products helps to drive the penetration. That is really where the opportunity is.
And that's mainly driven also by the heterogeneity of these diseases, of psoriasis, atopic dermatitis, in which, you know, one size does not fit all, and we need different types of medicines, you know, for, for different types of patients. So if you look at this, what does it mean also for atopic dermatitis, right? So atopic dermatitis, we can compare it a little bit to psoriasis, but it now with much less developed market, no? Atopic dermatitis, it's been only six years ago, when Dupixent was launched. There's only three mechanism of action, five products in the market. EBGLYSS, lebrikizumab, is going to be the, the, the sixth one, and it's only one blockbuster to date, when in, in psoriasis, there's at least five, five of these products.
So tremendous opportunity, tremendous opportunity for market expansion and very good opportunity to penetrate this, this market. But we are not only focused on immune-mediated inflammatory diseases. I mentioned before, we are also focused on developing drugs for non-melanoma skin cancer. Why? Because there's a growing incidence because of increasing sun exposure and aging population, not only in both Europe and the U.S. And there's a lot of unmet need still in this area. So, melanoma has evolved much better in terms of treatment options, but SCC, BCC, et cetera, these areas still, there's a lot of unmet need, there's still a lot of opportunity to develop innovative medicines to help patients in these indications. And the same thing applies to rare disease.
As I mentioned before, 1,000 rare dermatology diseases, and more than 90% of those have no treatment, have no treatment today. So there's a tremendous opportunity there as well to develop innovative medicines. So if you look at our pipeline, of course, where we're focusing more, more of our efforts is in the first bucket, in the, in IMiDs, and where we have nine programs in discovery and three programs in early to mid-development stage. And again, these are programs, and as I mentioned before, some of these programs we believe are pipelining a product, such as our anti-IL-1RAP and our anti-IL-2 fusion mutein, where that are already in the clinic, both products in phase I. In terms of non-melanoma skin cancer, we have two programs in discovery and one program in the clinic for onychomycosis.
And how are we making sure, how are we, trying to maximize our chances to be successful in, in R&D? Well, by building a very clever, a very smart, network of partnerships that, that give us access to the latest therapeutic modalities for long-term success, right? So in, for example, for antibody discovery, we have announced in the past few months a number of collaborations with Absci, with [AbCellera], with EpimAb, that give us, access to the discovery engines. And we believe that we're building this, this, this strong partnership with these companies that will help us maximize the chances of success with, with antibody discovery. But if we look at new chemical entity, the same thing applies.
You know, we have a very successful collaboration in place now for more than a year now with Evotec, and for one of our programs also with the University of Dundee. And I left the mRNA collaboration for the last, as it was just announced a few weeks ago. Very exciting. We were meeting for the kickoff officially with the company yesterday. They have a great platform for mRNA, and we have signed an agreement to develop products or programs for non-melanoma skin cancer and other indications. So overall, very excited about how we are tying ourself up for success in discovery, and looking forward to see these programs evolving in the future.
As a summary, at Almirall, we are already today a market leader in Europe with 48 products in dermatology across modalities and across dermatology diseases. We have a tremendous opportunity with our two biologics, Ilumetri and EBGLYSS, that has been just recently launched in Germany, as I mentioned before. That combined, they can bring EUR 700+ million in terms of sales, in terms of peak sales, between now until the end of the decade. Very attractive, we believe. We have a very attractive pipeline in development in areas of greater unmet need, but also if you've seen in the slides, also in markets that have not been penetrated. Even mature market like psoriasis is only 23% market penetration.
Lastly, we are financially strong, and we believe we have all the resources, the people, and the financial resources in place to execute on our ambition. Today, already, at Almirall, a leader in dermatology in Europe, and we're going to be working very hard to build on this leadership in Europe, but also in other geographies going forward. Thank you very much for your attention, and very happy to take any questions that you might have.
Thank you very much, Carlos, and I'm happy to start the Q&A session, then take some questions from the audience. I know we quickly touch base on lebri. Wanted me to discuss a little bit more if you have your feedback after the launch in Europe in December, and if thoughts on peak sales have changed now that you have more visibility on the competitive landscape, we see Dupixent from Sanofi.
Sure. Well, we provided our peak sales estimate already a while back ago, and have you seen, one of the key assumptions is how quickly the market will expand, right? So, you know, we are, we're looking the proxy of psoriasis, so you can-- we're using similar multiple expansion in terms of patient evolution in the coming years. And also, of course, the market share that we will achieve in terms of new patients, right? So, you know, we are revising continuously, as you can imagine, these metrics. I think that, you know, we might. I think that, probably all the assumptions that we put in place a number of years ago, all of them has come out as expected or even more favorably.
For example, also, the penetration of the JAKs, as we see, you know, probably we over expected the role of the JAKs in the treatment of atopic dermatitis, and at least in Europe, the penetration has been less than we expected, right? So, we might update our forecast going forward. Let's see. But I would say that either our assumptions have been confirmed or even they are becoming even more attractive to us as we get closer to launch.
Okay. Yeah, I think we have a question from the audience.
How do you see, Congratulations for the great progress, by the way. Clear vision some year ago and fantastic execution. How do you see the landscape of pricing and reimbursement for the kind of drugs you are in?
Well, again, most of our, for the two biologics, by the way, we have our rights in Europe, so we are only launching in the European market. And some of, w e have other products that are global, and we have products that are only U.S., no? But I think we have pricing challenges. The industry has pricing challenges, you know, everywhere in the globe, wherever you look at Europe, the U.S. or Japan, right? In where we are more comfortable operating, where we have where a strong commercial presence is in Europe. And, you know, that we have, you know, almost every government has their own price or their cost-containing measures, whether it is by price cuts, whether it is by rebates, whether it's by clawback contributions, et cetera, no?
Again, this is the area where we have our expertise, where we operate. Well, we look at our opportunity to help patients, right? I think that as long as we can help patients in a profitable way, we will continue to do so. Despite the ever-increasing pressure from governments to contain, to slow down the penetration, no? As long as governments continue to see us as a cost and as a cost center, right, it's going to be difficult to enter into a different type of conversation, no? We're working hard. We're working hard as a company. We're working hard as industry associations, in particular, to try to enter into a different type of dialogue, so they see that the overall contribution of medicines and the impact on patients and the overall society.
Right, so as a summary, I would say that conditions keep deteriorating, so to speak, in across the globe, but we still believe that if we bring innovative medicines in areas of higher med need, there's a great opportunity to, again, one, help patients and also, you know, make a good business out of it.
Okay. Yeah, so I have to stay on the portfolio, on Wynzora. How is the rollout progressing in Europe? Can you comment on that?
Sure, and maybe Mike can add more color later on, but we are very, very happy with Wynzora. I think it's, it's a clear example where, I mentioned before at the start of my presentation that we not only focus on areas of with high severity, right? We focus where the unmet need is. And in some cases, you know, when speaking with dermatologists, it was clear that there was an unmet need in atopic dermatitis and psoriasis, et cetera, to look for more convenient products for mild patients, for example. So there was an opportunity, there was a need. Dermatologists were asking for products that were more convenient for the patients. So we, through our partnership with MC2, we were able to identify Wynzora with a superior formulation.
You know, definitely, the patients do like this presentation, and the penetration that we're seeing in terms of on the molecule, on the combination of molecules is fantastic. I think that in particular in Spain, where we're seeing a penetration that is fantastic. We're seeing also very good results in Germany. We launched recently in Italy as well, and also we have high expectations there. But, Mike, can you provide maybe more color on Wynzora, or?
Yeah, no, I think the launch has been going well. We've continued to roll out in different countries. I mean, this isn't going to be a huge blockbuster-type product, but it's competing in a space where there's a known market, there's known molecules, and we feel like we've got a very competitive one. So we've started breaking the sales out. It's still in the high single digits, going to double digits, but we expect this to continue to grow over the course of the next couple of years.
So a really good opportunity, very competitive, and like Carlos said, it kinda completes our psoriasis portfolio. 'Cause we've got a biologic, we've got a topical, and we also have an oral in Skilarence that's doing well in the markets where those kind of products are used. So overall, I think it's a very good, positive momentum for the psoriasis franchise.
Thank you. And, I mean, going back to Ilumetri, if we think about 2024, you know, can you comment on growth, and if you're adding any new countries where you're planning to launch?
Ilumetri, as I mentioned in my presentation, last year, 2023, we saw north of 35% growth. We expect this year to contribute—I mean, it's gonna be probably below this level of growth, but we are, we're aiming for high double-digit growth for this brand. As I mentioned before, psoriasis, you know, the number of treated patients is very low compared to the potential number of or the number of eligible patients for advanced formulations. And all classes that we have, and it's a competitive market. There's more than 15 biologics in the marketplace fighting for new patients. But this fight, this push for new patients, what it's doing is that increasing this penetration. So we believe that the anti-IL-23s are becoming the winning class in psoriasis.
It's the class where dermatologists now, you know, they're using a majority of anti-IL-23 in the majority of their patients, sorry. And we are one of those alternative in the anti-IL-23. So we do believe that not only for this year, in 2024, but in years to come, until the end of patent expiration, we believe that this product will continue to grow and will continue to have an important role in the treatment of moderate to severe patients in psoriasis.
Okay, makes sense. And if we think about, you know, still 2024 on, on the broader portfolio and the broader P&L, you expect—I mean, obviously, you expect growth at the top line. Do you, y ou know, what about EBITDA growth, margin expansion? Can you maybe briefly mention growth pillars at top line, and then if we can also maybe discuss-
Sure
... profitability a little bit?
Sure. I think that last year, let's say that we hit the bottom in terms of EBITDA in absolute numbers. So from this year onwards, we plan to grow in terms of EBITDA from an absolute perspective, and we will announce, of course, the expectations for 2024 in February. But Mike, do you want to provide a bit more color?
No, I think when we did our Q3 call, we kinda gave a little bit of a, I wouldn't say guidance, but some themes of 2024. Like Carlos said, we want to grow the EBITDA, so we feel like 2023 should be the bottom on an absolute basis. Whether or not we see margin expansion in 2024 is really gonna depend on the launch of EBGLYSS. We're not going to sacrifice the launch in order just to have a slightly better 2024, because it's so important to 2025 and beyond. So we're gonna roll the product out. You know, it's still early days. We'll give an update in February, but we do see sales continuing to grow. We are gonna see SG&A grow in order to support that launch.
And we are continuing to invest in R&D. You saw, as Carlos presented, we're doing a lot of partnerships. We're trying to build a long-term pipeline there as well. So there will continue to be a little bit of margin pressure into 2024. The expansion, we expect, to really start to work in 2025 and beyond, as we will be able to grow sales much faster than we're growing expenses. So that's really the key. 2024 is gonna be the key year for launching EBGLYSS.
We've already got it on the market in Germany. We will be launching as soon as we can in the rest of the countries, based on the reimbursement cycle. So you will see more and more countries come online in the mid to later part of 2024 or early 2025. But once we start to get the uplift of that product, that's what's gonna help us to get into margin expansion 2025 and beyond.
Makes sense. So in terms of COGS, SG&A, you expect obviously the ramp-up caused by the launch of EBGLYSS to stabilize and normalize from 2025?
Yeah. So I think it'll be. You'll see a bolus in 2024 and 2025 for those launch costs, because we will need to add sales reps, we will need to add, you know, variable marketing spend. We've got such a good franchise with Ilumetri. We don't want to lose the focus on that, so we will be adding, where it makes sense, additional sales forces, across Europe. We've already done that in Germany in Q4. You'll see that we will have those expenses as we roll through 2024 and 2025. We expect once we get past 2025, that that increases, we'll, we'll start to, to really, to, to decrease the increasing amount of SG&A, because we'll already have the infrastructure then in place across all of Europe for, for both of the biologic products.
Okay. Makes sense. And, in terms of... You know, we're all in the U.S. today. In terms of U.S. strategy, U.S. plans, are there any comments you can provide?
Sure. For the U.S., again, the priority for us going forward will be to do a great job with biologics in Europe and executing on our R&D roadmap. These are the two priorities. And also, in terms of the U.S., what we plan now is to optimize the business there. We think there's an opportunity to reignite growth in the U.S. with the existing portfolio, and more importantly, with the launch of the large field for Klisyri. That should happen in the second half of this year, right?
After, you know, we optimize the performance of this portfolio, driven by the large field of Klisyri, then we will look for, maybe for opportunities of bolt-on through business development, and eventually prepare a strong platform to receive the products that will come from our pipeline in the future, for which we have global rights. So for the products that we have in phase one and less advanced, we have global rights. So let's say that we need to prepare the organization in the U.S., that is still the biggest and more attractive market in dermatology-
Sure
... for hopefully a successful of our roadmap in R&D.
Yeah, and you just touched actually, the large field. And how do you expect this to contribute to the U.S. sales?
So we do believe that the large, the large field will be a, a very nice tool in the repertoire of dermatologists to treat AK, right? But now we have the small field that only allows for 25 sq cm , and we hear from dermatologists the need of treating a larger surface, treating the whole scalp or treating area- bigger areas in the face, right? So I think that there is- there's a number of patients that we cannot help today with Klisyri, that will be helped with the large field.
You actually also touched base on M&A and licensing opportunities in the U.S. But, I mean, is there any more comments you can provide, of course, on U.S. strategy, but also maybe on Europe?
Sure. If you look where we can create value in the short term, it's by organic growth.
Yeah.
That's gonna be our priority. We have a tremendous opportunity with our new recently launched products, and in particular with the biologics. Our priority will be to focus on commercial execution with the biologics in Europe, priority number one, and as I said, priority number two, the execution of our R&D roadmap to deliver the next generation of innovative products in dermatology. If we have small opportunities that are not going to distract us from these two key priorities, we will try to execute on them, but we are not aiming for any type of transformational M&A, big M&A, that will distract us for where the opportunity to create value in the short term is. Later on, as we establish EBGLYSS in the right trajectory, we can start to look at more ambitious type of transformational M&A operations or deals or product acquisitions.
Makes sense. To stay in the topic, any divestments, any planned divestments?
Nothing major, but as you've seen in the last couple of years, we always look at first for opportunities, bolt-on opportunities, to bring into our portfolio. If we have a, let's say that part of the field force in a certain country that is not fully utilized, then we try to look for nice bolt-on opportunities that we can plug in nicely into this field force. And by the same token, if we have old or mature products in our portfolio, typically in Spain, but sometimes in other countries, that we are not promoting because we don't have the capacity or we are not seeing the right customers, and someone and this product has more value on someone else's hands, we will look. So we call it kind of a refreshing the portfolio, right?
If we can bring more value than someone else in a product, we will try to get it. If someone else can exploit or extract more value from one of our products through promotion, where we cannot promote it, we will divest the product. But again, it's going to be very tactical-
Yeah
... for we are not looking for any big movements or anything major.
Makes sense. Any question from the audience? Okay, I think, you know, thank you very, I think at this point, we can probably close the presentation. Thank you very much, Carlos, and all the Almirall team, for attending again this JPM Conference, and congratulations for your strong results.
Thank you.