Ladies and gentlemen, thank you for standing by, and welcome to the H1 twenty twenty Financial Results and Business Update Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker today, Mr.
Pablo Gibson. Please go ahead, sir.
Thank you, Alexia. Good morning to everyone on the call. Thank you for joining us to review Almirall's first half results. I hope everyone is safe and remaining healthy. As usual, you can find the slides to this call on the Investors page of our website at admiral.com.
Moving to Slide two, I would like to remind you that information presented in this call contain forward looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. With that, please advance to Slide number three. Presenting today, we have Peter Gunther, Chief Executive Officer Mike McKiller, Executive Vice President and CFO Volker Kunzhelsme, our CMO and Bussen Hardas, CSO. Peter will review the first half business performance and later come back to sum up. Volker will provide you with some detail around a new label for Seysera that we are very pleased about.
Wilson will provide you with an update on the pipeline, and Mike will give you detail on the financials. After that, we will open up for a q and a session. So with that, I will pass you over to our CEO, Peter Gunther.
Thank you, Pablo. Good morning, good afternoon to everybody. So to begin with, as at q one, I wish to thank the health professionals who relentlessly worked so hard and courageously in very difficult circumstances to mitigate the impact of the COVID pandemic. I would also like to thank all of my dedicated colleagues at Almirall who have continued to put our patients first. Now turning to the business, you won't be surprised to hear that in Q2, we faced the tough realities of business impact during a global lockdown.
We were naturally adversely impacted, albeit the impact varied across geographies. So whereas The US was severely impacted, and I will come onto that shortly, domestic demand for example, remained relatively resilient. It is sometimes easy to lose sight of the bigger picture during such challenging times, But when this crisis does finish, it is the underlying growth that we will show true. But these are indeed challenging times for all, and given the current situation in The US in particular, it looks at this point in time unlikely that we will be able to reach the guidance that we provided to you back in February before the COVID pandemic took full effect. So we are providing an updated guidance for you today as the impact has been deeper and for longer than initially expected, especially in The US.
And now we have a slightly better sense of how this is all playing out. Mike will provide more details on the financials shortly. Across our franchises, which together with our pipeline is what will drive growth as we begin to exit this period, ILUMETRI continued to perform strongly and the reimbursement approval in France is a key building block for that product going forward. For Skilarence, no surprises here, but very much as we had guided for you at q one results. Seysara saw a stabilization in TRx and some recovery in new tube brand prescriptions in June.
And I'm pleased to have our CMO, Volker Kosheny, here today to provide you with some more detail on that product and some exciting news of a critical label update. But as with all areas of medical dermatology, where there is a short treatment time, acne prescribing has been disproportionately impacted by COVID, as has our actinic keratosis business in The EU. Our pipeline leverage potential remains extremely significant as you all know. The decision on the Bionase option in CTCL is due later this year, and Bhushan will talk you through the recent positive interim data. Meanwhile, the EMA and FDA acceptance of filings, of filing for tirbanibulin in actinic keratoses takes us closer to launches in The EU and US early next year.
And the more data we see on lebrikizumab and its competitors, the more confident we become in the outlook for that product. Boucham will share some new data with you shortly that again increases our confidence around the profile of lebrikizumab for which we continue to plan for a 2023 launch. Finally, and irrespective of the very significant significant challenges we are currently facing, we remain firmly focused on additional external opportunities to generate sustainable value for shareholders. The next slide, you can see that across Europe, as expected, we have seen a decline in retail prescriptions and consumer health sales. The stocking effect we saw broadly across Europe in March reversed through April and May.
And this of course had a major impact on our quarterly performance when we compare the first and second quarters. There are some green shoots, however, although last latest week growth versus June is still down significantly, it has improved versus prior weeks, and we have begun to see a pickup in face to face interactions with our customers. The US is a different story to Europe. As the chart shows, there had been signs of a recovery in TRX growth from early June after a big fall off in April and May. However, with the majority of US states now experiencing a worrying rise in positive COVID nineteen tests, that recovery appears to have begun to stall, and all indications suggest that unless the infection rate is halted, we may experience a further decline in physician access, patient visits, and prescriptions.
We will, of course, be monitoring the situation very closely in the coming weeks and months, as we resume our growth strategies. Focusing now on dermatology, this chart clearly shows that it above all other therapeutic areas has been the most adversely impacted by COVID, with a seventy one percent drop in patient appointments in The US and sixty five percent in Europe. The impact has varied widely within dermatology, depending on whether disease is acute versus chronic, severe versus less serious, and so on. In general, severe chronic conditions have been less affected, whereas acute dermatology conditions have been significantly hampered by the absence of new patients. The use of tele dermatology in place of in person physician visits has also had a major impact with physicians typically more comfortable prescribing standard generics when they cannot see patients face to face, even if these older, more established therapies have a lower efficacy.
Therefore, will not be surprised to hear that the newer products which characterize our dermatology portfolio, were adversely impacted in the quadrant. Other diseases have been severely impacted such as AK with decreases up to seventy percent on a country to country basis. However, I'm pleased to say that the performance of our brand Solaraze is actually ahead of the AK market. So let's now move to the performance of our growth drivers, starting with ILUMETRI. This slide shows you the market dynamics in the IL-twenty three class.
You can see very clearly that anti IL-twenty three are conquering the market, gaining in excess of a 34 market share of new patients within the biologics, though with growth naturally moderating a little during this pandemic. There are compelling reasons for the share gain. The MD IL-twenty three class has a strong efficacy profile, with the key attribute being a proven lasting efficacy with convenient dosing, and with no significant safety concerns. For patients suffering from psoriasis, it is indeed important that any therapy provides long term control. Patients need a long term treatment strategy to reduce disease burden and improve their quality of life.
In this context, ILUMETRI has demonstrated clinically meaningful disease control by absolute and relative passing, with eight patients out of ten staying on therapy for five years. Idometry's product profile of long term sustained efficacy, very good tolerance, delivering maintained control for psoriasis patients, and ease of use are the key attributes that continue to drive its growth within the IL-twenty three class, capturing market share from competitors to achieve a thirty four percent share of new patients in Germany. We think that coming through this pandemic, the profile of ILUMETRI is really what is going to continue to make it a product for physicians to turn to. So the competitive dynamic is going strong for ILUMETRI. We of course had to content with a sharp reduction of total biologics prescriptions in the early phase of the pandemic, but this has now reversed and we are confident after the initial decrease in patients that we will come back even stronger as our profile of one injection every quarter and low infection risk goes extremely well in the post COVID world.
Let me show you why we have this confidence. Here we provide you with some incremental details across specific markets as to how ILUMETRI was impacted due to COVID. I think we all understand that when we are not speaking about a life saving drug, that some patients will not have ventured out of their homes, even if allowed to, or being unable to access their prescriptions and so not being treated. And of course, new patient starts are going to be extremely rare in such scenarios. Therefore, ILUMETRI did see some adverse impacts with the drop off in sales in April, but then picked up in May and was back to growth in June.
We remain fully confident in this growth potential going forward. And I can tell you that the early data for July are more than encouraging. In summary, despite the COVID impact in the second quarter, we delivered a strong performance for ILUMETRI with sales more than doubling in the first half. And you've seen the return to growth in Germany, in Austria, we've seen the same across Switzerland, The UK, and Spain. And we have begun the targeted rollout of ILUMETRI in both Italy and Belgium.
I also want to particularly highlight France where the auto delivery desante has handed down a favorable reimbursement opinion. ILUMETRI is now included on the list of reimbursable medicines by the social insurance, and we expect to launch the product in September 2020. This launch is an important milestone for Almirall in that it represents the introduction of the medical dermatology portfolio of Almirall in France and provides a platform for adding on products like girtanibulin and lebrikizumab in the future. Now let's take a look at Spilanes. As we've explained previously, Spilanes is a two stage growth product.
Firstly, the big market shares to gain quickly were Germany and The Netherlands, where the DMF products were used in the past, where we now hold market shares of 80 to 90%. And we have also previously outlined to you the issue of compounding we have faced in The Netherlands, which has stalled our growth there and will now be reviewed in court. Having said this, we have recently received favorable decisions from the Dutch pharmaceutical inspectorate against the MF compounding, which will be highly supportive in the pending court case. But no surprises overall in q two. We mentioned to you at q one results that we expected an impact from COVID because patients on Skilarems need blood monitoring, and on top new patient starts will drop significantly until the situation normalized.
This indeed proved to be the case in q two, but as patients get back in front of their doctors, that should now begin to pick up again. Let's turn next to Selsara. Despite the contraction in the oral antibiotics markets that I described earlier, Seysara TRX had stabilized post COVID with what represents a solid base to build from. Most encouragingly, we started to see an increase in new to brand prescriptions as lockdowns eased across The States. This gives us confidence that we can rebuild our position with Zysara as conditions normalize.
And an important factor that we can leverage with physicians is the new label update, which really differentiates the product from the older generics that continue to dominate the market, and Volta will describe the new label to you shortly. Also, we recently announced that we have acquired the rights to Seysara in China, and we will start phase three later this year. There is a large acne population leading to a potential of thirteen million moderate to severe treated acne patients in the urban population by 2028. This is a highly attractive opportunity where we can launch an innovative product into a growing market with clinical development that is largely derisked. I think it is well documented that Chinese parents will make significant efforts to enable their children to succeed academically, allowing for social mobility.
Willingness to pay for education, in general, the best for the children, whether you look at premium diapers, formula milk, and there are lots of case studies, is extremely high. And, of course, the middle class in China is growing rapidly. Given the significant impact of acne on psychoso psychological well-being, self confidence, and academic performance, we expect a very high interest from physicians and parents in the safe harbor value proposition and a high willingness to pay out of pocket. This can only be strengthened by the heightened awareness in China around antimicrobial resistance or AMR as a result of COVID nineteen. Now I'm delighted to hand over to Holger to discuss The US label update I just referenced.
Thank you, Peter. So I am I am pleased to tell you about an important FDA update to the microbiology section of the Sizara. Proprianobacterium acnes or p acnes for short is commonly associated with acne. This bacterium shows a very low potential to develop resistance to psilocycline. The chance to develop spontaneous mutations is as low as one in ten billion, even at higher concentrations.
So this is now included in our label. Why is this important? First, doxycycline has been used since the nineteen seventies, and depending on geography, significant bacterial resistance has been reported. For example, in The US, more than fifty percent of strains of p agonists are considered resistant. As you know, and not least due to the topicality of COVID nineteen, so for example, AMR may contribute to COVID fatalities.
AMR today is considered a global health emergency. One highly publicized initiative is the AMR Action Fund. The collaboration between industry and WHO to which Amaral we are proud to say is contributing. Beyond the societal health impact, on an individual patient level, resistance has been associated with poor clinical outcomes and response. Importantly, there's also an increasing interest in off target activity of broad spectrum antibiotics such as doxycycline on other bacteria or bacilli, particularly those inhibiting the healthy gut microbiome.
This is important as there's mounting evidence that a disturbed gut microbiome may be associated with autoimmune or autoinflammatory diseases such as inflammatory bowel disease, IBD. So for example, it has been suggested that doxycycline increases the risk for Crohn's disease by to develop Crohn's disease by twofold. It is for this reason that there is clear guidance today from the American Academy of Dermatology or the CDC to avoid treatment strategies leading to AMR. Finally, it is clear that there is increasingly high awareness amongst patients and healthcare professionals around the topic of AMR. And again, this is only emphasized in the current COVID-nineteen context.
And we believe that this will result in changed prescribing behavior moving forward, particularly amongst dermatologists who account to a high percentage of the prescribing of oral antibiotics. I want to emphasize again that Cesara has been specifically developed for acne. We are seeing early and are seeing early and deep effects. And particularly, the early onset of action is very important to motivate these mainly young patients to complete a treatment course with CEZARA as we know that with older antibiotics adherence is a major challenge in these patients. I would also like to point out that CEZARA has been prescribed for close to one hundred thousand patients and that we have not seen any emerging safety signals in the real world setting.
In particular, we haven't seen any signals around the occurrence of inflammatory bowel disease. The resistance message I just highlighted will form a cornerstone of our sales and marketing campaign going forward. We have also invested in increased resources in our medical affairs team, in particular more medical science relations in the field. The campaign will be supported by an extensive continuing medical education program. So in the quote here, you see us nicely summarized by Doctor.
Greber, we consider CEZARA to be a treatment option of choice. And with our new label update, it is clear that CEZARA offers a superior product proposition compared to historic older antibiotics such as doxycycline. Finally, we have conducted extensive consultancies with the majority of leading experts in this field in The US and there is an anonymous verdict that this product has changed practice. It is now our job to communicate this value to the dermatology community. And with this, now let me please pass on to Boshan to provide you with an update on the pipeline.
Thank you, Volker. As we are all familiar with the mechanism of action lebrikizumab that we have discussed in the past, and how we further emphasize that it has the potential to be the best in disease for otropic dermatitis. Since we met last time, there has been significant data release from our competitors. Novartis has decided to discontinue development of Ziarko, its h four receptor antagonist for atopic dermatitis at phase two level. The study results for IL thirty one in conjunction with topic corticosteroid was also published this year in the New England Journal of Medicine.
I will not be discussing the data for this, but I will encourage you to have a look at it. On the other hand, trilaciclib presented phase three data at American Academy of Dermatology in the virtual meeting, similarly, our partners Lilly presented some new phase two b data on lebrikizumab. Though the data is derived from two different studies and no way we are making any direct comparison. Nevertheless, we thought you would be interested in getting a sense as to where BELIEVE stands today. The first thing we will do is go over the mechanism of action, which you have already seen before.
Olebrikizumab is a monoclonal antibody designed to bind IL 13 cytokine that does not prevent it from finding IL 13 receptor alpha one, but prevents its dimerization with IL four, thereby blocking downstream signaling. It also does not block its binding to IL 13 receptor alpha two, which is a D CAR receptor, has believed that it plays an important role in endogenous IL 13 cytokine regulation, which may have an effect on anti inflammatory properties. On the other hand, traloprazoleimab is also a monoclonal antibody against IL 13 cytokine, but it targets very different epitope. Trallo prevents IL-thirteen cytokine from binding to IL-thirteen one receptor, thereby preventing its dimerization to IL-four receptor, and inhibits the downstream signaling pathway. Tralipizumab also wants prevents binding the alpha two, which is the decry receptor, thus blocking its endogenous regulation of IL-thirteen, which may have an anti inflammatory property.
And the most important thing is, lebrikizumab has a fairly high affinity as compared to trilaciclib. Slow disassociation of IL-thirteen lebrikizumab complex gives lebrikizumab an advantage in specifically blocking the downstream Th2 pathway for a long period of time, and this is dose dependent. This is, we feel, is a fundamental difference between the two mechanisms of action and two IL-thirteen monoclonal antibodies, which actually translate into some of the clinical advantages that we have, that we are gonna look at shortly. So before we go into the data, I remind you that the phase two b data from Libby is a standalone slide, I'll just states here. Placebo adjusted effect in EG75 at sixteen week, thirty one percent when it is dosed every four weeks, and thirty six percent when it is dosed every two weeks.
Just to remind you, the main phase of our phase three is every two weeks. And in our maintenance phase, we are looking at both regimens, which would be good. When we look at the IGA, which has a direct correlation with EZ90, you see sixteen and twenty seven respectively, which is a very high number. In the next slide, as a reference, let us look at the published data from trilaciclib. EZ seventy five at week sixteen, the patients are going to be slightly different and the studies are different.
So for your ease, we have made placebo corrected adjustments so we can look at the numbers. The two phase three studies show placebo corrected EZ seventy five to twelve percent and twenty two percent with dosing every two weeks. As I mentioned early on, lebrikizumab phase 2b data results show more than thirty percent in both regimens. IgA response, which is placebo corrected, shows that there is a improvement nine percent and eleven percent respectively. But when we saw in lebrikizumab phase two d results, it is sixteen and twenty seven percent.
The next slide. This is the most important parameter in atopic dermatitis. Most of the patients come to the doctors complaining about the itch and not because of the rash. But all of the comorbidities and psychosocial and developmental affections in atopic dermatitis are directly related to intense intensity and longevity of the itch. As per the recent data presented at the AAD, with lebrikizumab, there is already improvement in itch by day two on treatment with further improvement at day at week sixteen.
There's a improvement in sleep by first on treatment assessment at week one, and there's a further improvement at week sixteen. This is extremely important for our child's growth. Important in disease severity as assisted by the POEM, which is patient oriented eczema measure by the first onset of treatment at sixteen weeks, and the dermatology health related question, quality of life questionnaire shows improvement. So all these things actually are saying that patients are benefited by libipizimab much, much earlier and much more effectively. But when we look at the data, the way FDA monitors look at it, with a clinical relevance of more than equal to or more than four point improvement in the scale, the placebo adjusted data shows improvement of twenty percent with dosing every four weeks and over forty percent with dosing every two weeks.
In the next slide, if we now look at the trial of phase three data, the placebo adjusted improvements in Puritus score were nine and eleven percent respectively in two clinical trials at week sixteen. As just mentioned, lebrikizumab showed improvement over the same time period of 20 and over 40, which we think is a significant advantage and offer benefit to both patients and the treating physicians. But we will only be able to make claims once we have the phase three data on lebrikizumab. The next slide. Before I close on lebrikizumab, I would like to remind you of the economic opportunity.
As you know, we exercise our option when we looked at the phase 2b data and made an assessment, which we just saw earlier on. The patient number with moderate to severe disease are large and growing. Despite the launch of dupilumab, the penetration of biologic extremely low. We believe there is clear need for new and differentiated treatment in atopic dermatitis. With lebrikizumab in our pipeline, it gives Almirall a unique opportunity to help these patients live a better life.
As a consequence, we remain confident that we will deliver peak sales of libetuzumab of approximately €450,000,000. Next slide. This is, again, extremely exciting to us today. We have a strategic deal with Barney's regarding VNZ one. For those unfamiliar, VNZ one is a first in class extracellular peptide that inhibits three cytokines, mainly IL two, IL nine, and IL 15.
It has been shown to selectively modulate Tregs, NK cells, and central memory CD eight positive T cells. This could have an important goal in treatment of cutaneous T cell lymphoma, a rare form of non Hodgkin's lymphoma that affects skin. LENSY-one is part of a platform technologies, which could be potentially used for various immune mediated pathologies. The good news is that the recent interim data for the cohort expansion of benzene one in CTCL patient at two milligrams per kilogram confirm the initial observation of clinical efficient efficacy in this patient population. The data showed that benzene one was well tolerated and no dose limiting toxicity was observed.
In addition, over eighty percent of the subjects showed improvement in tumor burden as assisted by the modified severity rate assessment tool, which is also called mSWAT, in absence of any concomitant medication. This is extremely important. Most of the patients in CPCL will have more than one treatment in real life. About half achieved a partial response at least fifty percent reduction in from the baseline in mSWAP score. For patient achieving a partial response, the mean duration of response was two seventy seven days, which is about nine point two months.
At the time of cutoff, this will extend as the study completes. Again, an average time for a patient to switch treatment today is five minutes. Bionage expects the study to conclude during this quarter and will submit a request for an end of phase two meeting with the FDA that will occur in the fourth quarter. Ulnarol has a choice to execute an option by 2020 based on the evaluation of phase two results. If we choose to exercise, we would initiate a phase three program for CTCL in 2021.
And at the same time, we would also expect to initiate phase two study for alopecia areata for which we have a really strong scientific rationale. And this slide talks to the commercial opportunity we foresee in CTCL. Around forty thousand patients are living with this disease in United States and in Europe, and about one thousand five hundred new patients are diagnosed every year in United States. Patients routinely switch between therapies due to toxicity, as well as suboptimal efficacy. And as I said before, average time is about five months.
Consequently, if BENCY-one continues to deliver the efficacy profile that we have seen in our phase two interim data analysis, it could be launched in 2023 and become a treatment option for these patients. We estimate the market will be worth $1,600,000,000 by 2025. Now I hand it over to Mai to walk us through the results, financial results.
Thank you, Vishal. Now I wanna take you through the financial part of the presentation. As Peter mentioned in his introduction, and you will have seen from the reports of other companies, Q2 was a difficult quarter as the impact of wholesaler destocking in April and May was compounded by reduced prescribing due to the lockdowns. While we did see improved trading conditions in June, our net and total revenues declined by double digits amounts in Q2 versus 2019 after the solid growth we reported in Q1. Overall, particularly given the stocking timing impacts, we believe the first half results are more representative of our ongoing performance.
Here, our net sales declined by 1%. If we dig a little deeper into this, we consider this an encouraging result as our net sales grew by 6% if we exclude the Axone generic impact. Of course, Axone is still part of our product franchise, but for those looking to get a sense of the sustainable growth outlook for Almirall, the generic impact will annualize at the end of Q3, after which our reported growth will revert to a more representative figure. If I turn next to total revenues, as we guided earlier this year, other income is down significantly, so we experienced a decline of 8% for the half year. On gross margin, again, we see the adverse impact of the generic competition to Axsome, resulting in a gross margin around 70%, which is very much in line with our expectations.
In term of operating expenses, SG and A declined in line with total revenues as increased new product investments were offset by lower promotion activity in Q1 due to the COVID situation. Combined, this delivered an EBITDA decline of 73% in line in the first half. If I turn to Slide 30, here you will see we've decided to increase our product sales disclosure to better help you understand the dynamics of our business. The discrepancy between the resilience of our performance in Europe and the sharp contraction in our US dermatology business is clear. Although, as I mentioned, much of the latter is due to the generic impact on Axon even before we factor in COVID impacts.
Our Rest of World business benefited from strong orders from partners in the first half. And I'll remind you that the other net sales include the impact of the acceleration of deferred income that we mentioned in the first quarter results, and I will discuss later in more detail. Turning to Slide 31. This slide gives you much more granularity than we have previously provided in our dermatology business, again in the interest of improving transparency and assisting your understanding of our business dynamics. In The EU, we are pleased by the performance of ILUMETRI, which has continued to deliver strong growth even with, the COVID backdrop, as Peter discussed.
You can also see the significant impact of slowdown of the AK market due to COVID-nineteen has had on solar arrays despite the fact that we actually gained market share in the first half. The US was heavily impacted by the generic competition to Axone as well as the COVID-nineteen impact on the uptake of Seysara and the legacy U. S. Business. I'm now moving to Slide 32, the sales evolution in the first half.
And here, there are a couple of things I'd like to highlight for you. The existing portfolio net sales increased around CHF 31,000,000. £26,500,000 of this was due to the deferred income release recognized in the first quarter. The deferred income included in other net sales will normalize for the full year to a difference of approximately 22,000,000 resulting in roughly GBP 52,000,000 in this year versus GBP 30,000,000 in 2019, with a final amount of around GBP 18,000,000 to be recognized in 2021. I'd also like to clarify the quarterly split to clear up any confusion that we may have created in the first quarter call.
In last year, we saw a quarterly deferred income of around 7,500,000.0 per quarter throughout the year. This year, we saw roughly $36,000,000 in the first quarter, and we will see around 5,000,000, 5,500,000.0 in the remaining quarters of the year. That gives you on the half year the 26,500,000.0 described on this chart. On the opposite side of this, we took a hit of close to 35,000,000 in The US, of which £27,000,000 was due to the generic Axon. To repeat my earlier comments, this impact will annualize in the end of Q3.
And without this impact, our first half net sales would have grown by 6%. Moving to Slide 33. Having reviewed our sales performance, let's take a brief look at the P and L. I addressed most of the key factors here on my opening slide, but just to call out that other income reduced from 2019 as expected and as we have previously communicated as milestone related income from AstraZeneca has fallen away, and we have now switched to a predominantly royalty income model. The net result is that despite lower expenses, decline in our revenues and the other income led to a 17% reduction in the first half EBITDA landing at CHF137 million.
On Slide 34, going down the P and L, nothing particular to pull out from here aside from an impairment charge on the legacy portfolio in The U. S, which impacts our pretax profit. This generated a normalized net income of nearly £60,000,000 and a normalized earnings per share of $0.34 per share. Looking at the balance sheet, in addition to the comments provided on the slide, I simply want to highlight what we view to be the most important factors. First, we finished the first half with a leverage of 1.6 times net debt to EBITDA, similar to year end, which gives us flexibility in the current environment and also for additional M and A activity.
Based on the updated guidance for the year, we expect the ratio to land between one point six and one point eight by the end of the year, absent any significant M and A activity. Second, we refinanced our revolving credit facility by signing a syndicated finance contract for the amount of €275,000,000 for an initial period of three years with a possible extension of an additional year, which will be used for general corporate purposes. This financing agreement replaces the previous one, which had a maturity date of February 2021. On Slide 36, let's take a look at the cash flow statement. We delivered a strong operating cash flow in the first half, generating 68,000,000 aided by a collection of a sales milestone from AstraZeneca.
We made significant investments during the first half, including the Phase III milestone of Lebri and a sales related Crestor milestone. We do not expect a significant amount of investing activities again until Q4, where we could have a payment related to the option agreement with Bionage for the underlying CTCL asset that Bouchon described earlier. And finally, given the ongoing COVID-nineteen situation, I'd like to highlight that Amarol continues to maintain good financial liquidity. As you just saw, we have nearly $100,000,000 in cash on the balance sheet and an undrawn revolving credit facility of $275,000,000 as well as other avenues of credit with no debt repayment scheduled until the end of twenty twenty one. Therefore, our capital allocation strategy priorities are clear and remain unchanged.
Our dividend payment was delayed this year due to the postponement of the Annual General Meeting to July as a result of the COVID-nineteen situation. A gross dividend of €0.203 per share has been approved with a scrip dividend option similar to last year. Now on Slide 37, we're presenting our 2020 guidance, updating for the impact of COVID-nineteen. For net sales, we now expect a low to mid single digit decline. For EBITDA, we expect an outcome in the range of GBP230 million to GBP250 million, which is GBP10 million to GBP30 million below the low end of our previous guidance.
Essentially, the COVID impact has been deeper than we had anticipated on certain products, and the recovery to normalization will take longer than we previously communicated. Currently, we anticipate a progressing normalization in The EU during the second half. But as The U. S. Has more uncertainty, we are not anticipating normalization there until the end of the year.
We will expect OpEx for the full year to be a slight decline versus 2019, but we will see increased investment on our launch products in the second half. This is what we have contemplated as the basis for our new guidance. Additionally, to update you on our thinking around government measures in Spain, while we think there is less risk for government actions in 2020, we would like to point out there is about $100,000,000 of sales in our Spanish business that is most likely to be at risk for price reductions in the future as this represents products already facing generic competition and reimbursed at generic price levels. Our OTC business of around £55,000,000 in Spain is not expected to be under price pressure nor do we anticipate an impact on our innovative growing business. On Slide 38, I'd like to provide a different perspective on the company's transformation in the recent years.
We are looking at EBITDA including excluding other income and deferred income. What you will see is the core EBITDA has been growing the last few years, while the significance of other income has been declining. As we mentioned, other income will comprise mostly of royalties on a go forward basis beginning in 2020. And given the current performance of the underlying products, we expect this to be significantly lower as we've already seen in 2020. As you can see, we expect core EBITDA to decline by approximately 19% at the midpoint in 2020 to land between 170,000,000 and $190,000,000 You may be interested to note that if we exclude the impact of Axon generic competition, our guidance implies roughly flat core EBITDA despite the COVID impact.
Going forward, we will focus on driving the significant growth potential of our core EBITDA once the Axon generic erosion annualizes and the core COVID nineteen impact subsides. I'll now hand back over to Peter for his closing remarks.
Thanks a lot, Mike. So, today, we have tried to provide you with as much as detail as is useful to help understand the current position of our key products, how they might continue to be impacted over the next few weeks and months due to COVID, and why we are optimistic about our outlook as market conditions begin to normalize. There are many things we can be optimistic about, including the resilience of our business in Europe, the performance of ILUMETRI, the improving outlook for Seixaara, our strong financial management and balance sheet, and, of course, our very exciting innovative pipeline. Hopefully, sooner rather than later, there will be a return to normality, and those businesses with a strong growth potential as demonstrated by our core EBITDA evolution will be able to reap the rewards of their strategy. So though we doubtless, like many others, have had to reduce our expectations for this year, we remain extremely confident in the future.
With that, I'll hand it over to Pablo for the Q and A.
Thank you very much, Peter. Alexia, back to you for the Q and A, please.
Our first question comes from the line of from Credit Suisse. Please ask your question. Your line is now open.
Hi, guys. It's Trung Trung Huong from Credit Suisse. Thanks for taking my questions. Firstly, thanks for the extra color on the normalization of COVID to your new guidance. Beyond this, can you talk about the pushes and pulls to get you to the top end of your guidance versus the bottom end of your guidance?
And if there is no return to normality in The U. S, should we think about forecast below this EBITDA guidance? Secondly, on Slide 48, you show your leading product sales. Your rest of product sales are approximately half of those sales and grew 6.4%. Can you talk about the dynamics here?
And what of those products have significantly outperformed? And do you think this will continue for the rest of the year? And finally, how much will it set how much will it cost to set up marketing organization costs to tackle the Chinese market? And when do you expect to start incurring these expenses? Thanks very much.
Thanks, Kurnal. I'll take the question on China first, then I'll defer the questions on the high end or the low end of the guidance to and the rest of the products to Mike. So look, on China, we still have a bit of time to make up our mind what kind of go to market model we will contemplate. So, as I mentioned to you, we will start a phase three later this year. By the way, we think this is a highly derisked development given the experience we have with the product in in in The US.
And although we're very excited about the potential of the drug, and you have understood that we will launch this without reimbursement requests, we still have to make up our mind whether in which type of construction we would launch the product. But as I mentioned to you today, a little bit early days to give you more granularity on that. Mike, the question on the two questions on the top end versus the low end of the guidance, what may move the needle here?
Yeah. So I think, clearly, the top and the low end of the guidance could be impacted by the normalization of COVID. We do have some ability to further squeeze expenses if we see that the normalization is taking longer. In our current guidance, we do anticipate, as I said earlier, a little bit of a reinvestment in the launch products. But we'll see if there's no access to physicians, it could impact sales, but it also could impact the money we spend.
So that's probably the larger end of that. You also mentioned The US, same thing in The U. S. If things do not normalize, we'll have to manage that within this guidance. So we feel like we've put forward a good range and we have some possibilities to manage within that.
And your question on the overall, the Slide 48, the rest of products, just reminds you that the deferred income is impacting that line. If you take that out, it's a slight decline year on year, partially a COVID impact and partially just older products that continue to decline. We would expect post this year and post the deferred income, that line to maintain just a gradual decline in in the coming years.
I would like to add one comment, Mike, on the, you know, the the the guidance and the the play between sales and and OpEx.
At the end of the day,
there is a natural hedge against the market not reopening or less reopening because quite automatically, of course, our our SG and A, will will continue to be at the low end, because just the activities are not there. So it's kind of a natural hedge, if you will, on the EBITDA line against an even worse situation than we may imagine at this point in time.
Thanks very much, guys.
Thank you. Our next question comes from the line of Casey Aristotle from Goldman Sachs. Please ask your question. Your line is now open.
Hello everyone. Thank you for taking my questions. I have two. The first one, Mike, are you able to provide more detail on the Spanish price reform? What is the level of price cut that you are anticipating and how broad ranging will this be?
And also within this one, you mentioned that you don't expect any impact on the OTC side of the business. Maybe if you could give us an analog what happened back during the global financial crisis. How did the OTC business do in Spain back then, please? And the second question on lebrikizumab, we've seen several clinical trials being delayed because recruitment has been paused given COVID. When do you expect lebrikizumab Phase III study to finish recruitment?
And when can we expect the Phase III readout to be out, please? Thank you.
Okay. So I'll take the first question, and maybe I'll pass the second one on to Vashon. So in terms of Spanish price cuts, we're not anticipating a significant impact this year. I mean, there are some discussions still going on, but we think that if there's anything, it'll probably be more of an effect in 2021. What that could be and what form is still not, not certain.
We just highlight the risk because we do have a significant business in Spain. And as I mentioned, there's about 100,000,000 of those products which are facing generic competition, reimbursed at generic prices. And that is a bucket that in past crises has been a little bit more under pressure. The OTC business, I don't think it saw any significant price decreases in the last round of financial impacts, and we don't expect that in this round. Of course, we are subject to demand variations from COVID.
We expect COVID to normalize in Europe and Spain over the course of the second half, but we'll keep a very close eye on how that business develops. Vishan? On lebucamap.
Yes. There was some delay in recruitment because of my COVID in The US as well as starting of the recruitment in the EU. But hopefully, that should come to an end. We should have a first patient in Europe very soon, next month. There wouldn't be a significant delay because we have all the mitigation plans to make sure that we stick with our original communication on completing as well as, you know, launch date of 2023.
Sixteen weeks data will be announced in the middle, and I don't know exact timing, but that should be sometime next year.
Yeah. We're working really hard with our partner, Lily, to to mitigate the impact of on on the clinical trial, let's say, timelines, to mitigate the COVID nineteen impact. So we're really looking at everything we can we can compensate. We can accelerate on on different, let's say, parts of the whole equation so so that that we can stick with our initial timings.
Thank you.
Thank you. Your next question comes from the line of Peter Walpole from Jefferies. Please ask your question. Your line is now open.
Hi, yes. Thanks for taking my questions. I've got three, please. Firstly, on CEZARA. I appreciate, obviously, the commentary around the label update and the dynamics in The U.
S. Market there. Given acne is typically less of a summer market, think, to some extent, perhaps you just outline when we should start thinking about your reps getting back into the field, you think, and starting to see an impact on the new patient dynamics there and how we should sort of think about looking at the TRx curve going forward? Secondly, then on ILLUMETRI. Obviously, Germany, it looks as though you've gained a significant market share there.
But obviously, think that's an acne market where you've had a long term presence. What sort of targets, I guess, have you set internally for market share within some of the other key markets in Europe, perhaps like France, for example, where you said you don't have an established dermatology platform? And how should we think about potentially the market shares evolving in those markets? And then finally, just on the cost base. Obviously, COVID-nineteen has brought up some interesting challenges for everyone.
Perhaps you could just comment on whether or not you think there's any aspects of your costs potentially are going to be sticky, I guess, COVID-nineteen, thinking of new ways of working and the like, and give us some sort of feeling of how we should think about that going forward. Thank you.
Yeah. Thanks, Peter, for the questions. I'll I'll start, and and Mike, don't hesitate to chime in. So based first of all, your question on safe Sahas. So what we have seen in the last couple of weeks with the gradual reopening of states is indeed a encouraging increase of new to brand subscriptions.
We have seen a face to face activity of our reps picking up again. We are latest data is about 30 to 50% of face to face interactions compared to where we were before. But as we we also mentioned to you and we also baked into our guidance, we think that the situation in The US is is highly volatile, and we wanted to be careful with the with, you know, what's going to be happening because at the end of the day, I think today, nobody really knows. But, again, it it it's very clear that, with the progressively opening of the states, with the progressive reps coming back to see the the the the the physicians and the patients coming back in front of physicians and our new label, which really we see as a very, very significant step, we remain very optimistic on reigniting the growth of Seysara once the opportunity is again there. On ergometry, as you rightfully say, we're very encouraged by the initial market share updates in a country like Germany.
We provide you in in, you know, in general more details on Germany because it is by far the high the the the most important market in Europe. It's about 40% of the biologic market in in Europe for psoriasis, so it's very significant. And you are right to say that we have a good legacy in that country, in dermatology. But we see a very consistent picture, in in other countries. We have provided you some granularity today in the call.
When you look at countries like, like Austria, like Switzerland, you really see the the the the the product doing the job. And I think, even beyond the the customer centricity we have with our dermatologists, it is really the the value proposition of the drug across the board, which is very, very, you know, compelling. It is really the sweet spot between efficacy, easiness of use, cost effectiveness, and and especially in a post COVID nineteen world, the value proposition that with just one injection by quarter, you basically treat in a very significant in a very effective and and and well tolerated way. The vast majority of your patients is a very compelling value proposition, I think. So in terms of market share, I think we said in the past that we targeted to to go to six to 8% market share in the total biologic market.
And we are now, in Germany, for example, one year and a half to the launch, and we are about already at four to 5% of that total market. So it's clear that we are doing extremely well with the drug, and, and we're going to do everything we can to really push it even further. Mike, on on the cost base post COVID nineteen.
Yes. So clearly, will be some things, that'll be a little bit more sticky. We don't expect travel to to pick up as quickly as as some of the rest of the parts of business. Clearly, some of the, the lessons we've learned on digitalization of of our contacts with physicians, for conferences, virtual meetings. There will be some efficiencies clearly in that.
However, we will need to invest in our new launches. We need to continue to drive Seysara, ILUMETRI. We will be launching Turbo next year. Clearly, will have to invest more, and we will be comparing to a year which has some really, really low expenses in this year. So clearly, goal next year will be to have a leveraged growth of our core EBITDA versus our sales excluding the deferred income and and the the other income.
So so we're still going to look for efficiencies. We're still going to try to drive leverage core business. But we will have, you know, of course, a very low comparison next year on expenses because this year, the activity just isn't there, assuming that we can get back to to normal level of of activities next year.
Thank you. Once again, star one if you wish to ask a question. Our next question comes from the line of Francisco Ruiz from Exane. Please ask your question. Your line is now open.
Hi, good morning. Yes. My question is regarding the working capital. So after this movement on stocking and destocking during the first quarter and second quarter, how do you see the working capital will evolve in the second half? And what we could expect for the end of the year?
Thank you.
Yes. So you will have seen the working capital in the half year, particularly in the Q2, has taken a little bit of drag on the cash flow. This is really because of the COVID impact as well as an increase in inventories as we've stocked up for some of our launch products. The reason the COVID has an impact on the working capital is that we've seen a pay down of accounts payable and a much lower buildup of new expenses, while accounts receivable have been much less impacted by that. So accounts receivable are fairly normal.
But on the accounts payable side, we haven't really built up as much in Q2 because we just have lower activity, and we've paid down the balance sheet that was there. We'll expect that to normalize throughout the year, but we will see a net drag in the full year due to inventory build as we've been launching new products and we've been stocking up on more expensive, inventory like, ILUMETRI, which is produced outside the company, and as a biologic tends to be a little bit more expensive with the, type of safety stock that we need.
Thank you.
Thank you. Your next question comes from the line of Geniz Grivano from Banco Santander. Please ask your question. Your line is now open.
Hello. Good morning. So, I wanted to ask, I know you have explained, but I I couldn't catch it well. Could you please explain again, how much were the deferred income last year? How much will be this year, and, how much should we expect this line to be in following years and what is the nature behind this line of revenues?
Thank you very much. Yes.
Thanks for the question. So all of these revenues relate to the clinical programs which were in place in 2014 at the time the company sold the respiratory business to AstraZeneca. The amount was received upon the closing and has been recognized as deferred income over the years as we participated in these clinical trials. So as of last year, the total was about $30,000,000 roughly $7,500,000 a quarter. This year in Q1, we actually reduced our participation in one of these programs, and we accelerated some of the deferred income.
So this year's pattern is roughly 36,500,000.0 in Q1, and roughly $5,000,000 a quarter in Q2, Q3 and Q4. Next year, we will see roughly $18,000,000 mostly in the first three quarters with a little bit in the fourth quarter. At that point, all of this deferred income will have been amortized and there
will be nothing left on the balance sheet.
Okay. Thank you very much.
Thank you. Your last question comes from the line of Trung Huynh from Credit Suisse. Please ask your question. Your line is now open.
Hi, guys. Thanks for taking my follow ups. Just two on pricing, if I can. Firstly, in light of the possible U. S.
Reference pricing, are you limited to the price you can charge for lebri in the EU, given there's a possibility of that bleeding back into The U. S? And also, do you have any concerns about The U. S./EU pricing of turbinibulin? And then secondly, can you just tell us the price of illumimetry in France?
And how does that compare with Germany? Thanks very much.
Thanks, Frank, for your question. So on on Libri, well, you know, contractually, we we have, of course, the you know, all the leaders for Europe. So we will try to get the optimal price for for for Europe. And I remind you that already in the atopic dermatitis market, if you would compare the the the prices for dupilumab between Europe and and and The US, you will see less of a difference than, for example, biologics in psoriasis. I think the factor is about the factor times two in for the biologics in atopic dermatitis where the factor is more times four in psoriasis, so we're not worried about that.
Gerbanibulin, of course, is a question we have to ask ourselves, given the fact that we anticipate roughly a fifty-fifty use between the commercial segment and the Medicare segment for tirbanibulin, and potential, of course, being significantly higher in The US for obvious reasons. So let's see how that plays out and then and then also decide on on on, you know, the sweet spot of the company to decide on on pricing. And then your third question, I I am afraid I didn't. Oh, France and the Metis. The price is is about to be published, and we will we will give you the the final numbers in a follow-up discussion.
Yeah. And I would like to to just add on to Peter's answer. And and I'm sure you're referring to to the executive orders that were signed by president Trump in in the recent time. We have not had time to to to fully, you know, review the impact of that or the strategy within our business or in our partnership with Lilly. So it's a little bit too early to give you any flavor on that.
We don't know if these are going to have teeth, if they're going to be at list price only. You know, The US pricing is quite complicated because you have list price and then you have PBM discounts and you have varying, you know, net prices between the government channels and everything. So that's very complicated. So it's too early to give you, any indication if that will have an impact on any of our strategies going forward.
Excellent. Thanks very much, guys.
Thank you. We have no further questions at this time. Pablo Dyson, back to you.
Alexa, think there is another question from Jaime Scribano. Yeah. We may want to take, yeah, we may want to take that one as well, please.
No problem. James Cravano, please ask your question. Your line is now open.
Sorry. It was last minute. No. Just a a very brief one. Just to complete the product review, I wanted to ask about, the, which the performance was actually quite good.
If we bear in mind COVID, what is behind that performance? And regarding Skilaranz, when do you think, when do you see Schillerance recovering the pre COVID level? Thank you very much.
Yeah. So on on Cyclopoly, we're very happy with the performance. As you rightfully state, we have revamped the product, the the design, the strategy, the positioning. We are pushing more the the ecommerce also for this product in Germany. We have also a new leadership there, a very experienced OTC person, and it all pays off.
I think if there would not have been COVID nineteen, the performance may have even better may have even been better. There's still a seven percent growth. I think it is in the first half for Cyclopoly is a is a very appreciative performance. On Skilarence, what you what you have to know, finally, is really the product is also quite dependent of new patient initiations. And the patient is the the the treatment is actually very good treatment, but you have to go through a titration scheme, which is a little bit cumbersome.
And, of course, in in COVID nineteen times, this is quite cumbersome for the for the physician, to spend time with the patient specifically on that. So we think that as as COVID nineteen, you know, resolves and normalizes that new patients will indeed be consulting with their physicians, and that's why you will see, skill events, again growing.
Okay. Thank you very much.
Thank you. We have another question from the line of Isabella Capalo from BBVA. Please ask your question. Your line is now open. Hello.
Good morning. One question from my side, please. Regarding your guidance in terms of EBITDA for the full year, can you provide please a little bit more light on the marketing expenses you are factoring in for the launch of tirbanibulin? Yes.
So as I mentioned in the full year guidance, we now expect our overall SG and A to be a slight decline from last year. As we will not be launching tirbanibulin until early twenty twenty one, I wouldn't expect that to have a significant impact already in this year, but we'll keep a very close eye on how to best do that. But overall, SG and A will be a slight decline from last year based on the amounts we've already saved through the first half.
Thank you. Thank you. We have no further question at this time. Pablo, please go ahead.
Thank you, Alexia. We are now going to close our Q and A session. And with this, we will complete our conference today. We want to thank you for your participation. You may now disconnect.