Good day, and welcome to
the Almirall Financial Results and Business Update First Quarter twenty twenty Presentation. Today's conference is being recorded. At this time, I would like to turn the conference over to Pablo Divasan. Please go ahead, sir.
Thank you, Nadia. Good morning to everyone on the call. Thank you for joining us to review Almirall's first quarter results. I hope everyone is safe and remaining healthy during this unprecedented times. As usual, you can find the slides to this call on the Investors page on our website at terminal.com.
Moving to Slide two, I would like to remind you that the 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 three. Presenting today, we have Peter Winter, Chief Executive Officer and Mike McKellen, Executive Vice President and CFO. Peter will review the first quarter business performance and later come back to sum up, and Mike will provide you with detail on the financials. After that, we will open up for a Q and A session, where we will also have Busser Hagas, Executive Vice President, Research and Development, CSO, available to answer questions.
So with that, I will pass you over to our CEO, Peter Wouter.
Well, thanks a lot, Pablo, for the introduction, and good morning to everyone on the call. Let's take a moment to look how we're dealing with COVID nineteen as an organization first. It's definitely an understatement to say that we are going through a very difficult time. I would rather say that the situation we find ourselves in is unprecedented. I would first and foremost want to thank the physicians, the nurses, and other health care professionals who relentlessly work so hard and courageously in very difficult circumstances to mitigate the impact as much as possible.
I think they are truly a real example to all of us, and they deserve our deepest respect and admiration for what they do. I think we're also responding incredibly as an organization. I couldn't be more proud of the response of each and every one of Almirall's more than 1,800 employees. Everybody is putting the patient at the heart of everything we do despite the challenges, and we are doing a fantastic job of continuing to produce and supply our medicines. More than ever, we continue to be guided by our noble purpose.
At Almirall, we have a very important responsibility to ensure a continued supply of our medicines to all the patients around the globe who need them. Therefore, we've mobilized our industrial teams and kept 100% of our sites operational and running at full capacity, and also increased production capabilities for specific medicines such as paracetamol, which address symptoms of patients affected by COVID nineteen. We have clearly, like most companies, reinvented how we work during the first quarter. We're fully remote, but continue to function and delivering on our objectives. We've had a careful and meticulous business continuity planning, making sure we have no supply constraints to avoid any product shortage.
Additionally, we have enabled our sales force to start engaging digitally with physicians and with health care professionals in general. In fact, during this time, our employees have completed many hours of digital training, which has been a good use of their time during the crisis and will stand us in good stead as we continue to modernize and digitize the company. We thank all our employees for their dedication and for securing the supply of our essential medicines through difficult times. At the same time, at Almirall, we also have a social responsibility. To that end, we are making charitable contributions to help mitigating the effects of the sanitary emergency through a number of actions across our affiliates.
In Spain, we are donating protective clinical equipment and participating with a donation to an exciting project led by the Leica Foundation based in Catalonia, who are producing three d printed respirators. In Germany, we are producing sanitizing gel to distribute to hospitals and clinics. In several countries, we are providing blastoactiva and balmium topical creams to hospitals to help professionals reduce dry and damaged skin caused by masks, repeated hand washing, and the use of sanitizers. Our actions are focused on
our
employees and on all those people who have been directly and indirectly impacted by this unprecedented health crisis, and they remain in our thoughts. I would like now to show you in more detail the trends we are seeing that directly will affect Almirall so you have a better understanding of the different market dynamics. In Europe, it is evident that stockpile in preparation of the lockdown impacted positively q one net sales. The latest data shows that this has now normalized in April. If you look at the details, you will see Europe is not homogeneous.
There are variations in trends across Europe as each country has acted differently in the way the lockdown has been implemented, and they are easing restrictions at slightly different times and with different limitations. The outcome of this is that we are seeing a variety of different trends relating to this. And in addition, the it also includes the Eastern holiday period. Our two key markets, Germany and Spain, are showing positive prescription trends in the latest week. Similarly, in The US, stockpiling is evident.
And once new prescriptions are down, the latest data shows prescription trends are starting to stabilize. Compared to the pre COVID baseline, the number of weekly diagnosis visits in both institutions and offices has declined between minus sixty and minus seventy percent. Oral antibiotic prescriptions relevant to us have decreased sharply over the last month by about thirty percent. Now let's take a look at Almirall's performance. The first quarter has been a good start to the year for Almirall, and Mike will take you through the financials shortly.
But I would like to point out the 8% plus in net sales, which includes some stocking, as patients stocked up on chronic mets and for specific medicines such as paracetamol driven by demand in Europe. These temporary positives outweigh Axo genericization. We had also a strong business momentum driven by our European growth drivers, and we are seeing the stabilization of Seysara prescriptions after implementing the new patient access program. I will give you additional information later in this presentation on the growth drivers. We continue to work hard on late stage pipeline to progress development to unlock the midterm value.
Only just recently, we were pleased to announce in early March, the EMA and FDA acceptance of filing for tirbanibulin for actinic keratosis in both geographies. This is a significant step towards its approval. So far in the current COVID nineteen crisis, we do not expect regulatory agencies to have delays. Tirbanibulin is now undergoing the regulatory review phase. And as far as we know, the regulatory agencies have not signaled any delays in regulatory reviews, not only for our product, but for any product.
We will keep a close eye, but so far, we do not have any reason to expect a delay. With regard to lebrikizumab, consistent across the industry, our partner Eli Lilly announced a temporary pause of the enrollment of new patients for the phase three clinical trials. At this time, it is not possible to assess if this will delay the development and regulatory timelines. Obviously, we have made plans with Lilly to catch up the delays as soon as new patient recruitments will start again. We will continue to monitor the situation.
We remain firmly focused on additional external opportunities to generate sustainable value for shareholders. In summary, we are pleased with the momentum generated by the business during the first quarter. I will now highlight the performance of our growth drivers, and I know you all will want to hear about how COVID-nineteen crisis is impacting them. I'll try to address this for you on the next few slides. First for We have seen very strong performance of ILUMETRI growing net sales and have seen patient numbers accelerating in recent months, which you can see in the graph that we are actually tracking very nicely with the uptake.
These are February data, so definitely not yet infected by COVID-nineteen. The data is very positive in terms of share of new patients, and we are seeing this in The UK, Spain, Austria and Germany alike. ILUMETRI is in a great position in a growing market offering an absolutely decisive benefit to patients. Related to COVID-nineteen, we do see a decrease of new patient starts that has been seen with others in the class, but I think this will only be a pause before ILUMETRI will return to its growth trajectory. This is certainly a very competitive space, but we think ILUMETRI offers a great product to patients in the right class, whilst being highly favorable and differentiated from other anti IL-twenty three's.
Add to that the best cost effectiveness ratio, and ILUMETRI can be considered the therapy of choice for the vast majority of patients that cannot be controlled by conventional systemic therapies. Our thinking continues to be confirmed that anti IL-twenty three are going to be the winning class. And being in that growing class, we will continue to grow the product very nicely. On the next slide, let me now show you the market dynamics in the IL twenty three class. You can see from this slide that anti IL twenty threes are clearly conquering the market, gaining a 30% market share of new patients within the biologics.
There are compelling reasons for that. The anti IL-twenty three class has a strong efficacy profile with the key attributes being a proven lasting efficacy with convenient dosing and with no significant safety concerns. For patients suffering from psoriasis, it's important that any therapy provides long term control. Patients need a long term treatment strategy to reduce the disease burden and improve their quality of life. In this context, ILUMETRI has demonstrated clinically meaningful disease control by absolute and relative PASI, with eight patients out of ten staying on therapy for five years.
ILUMETRI's product profile of long term sustained efficacy data, very good tolerance, delivering maintained control for psoriasis patients and easiness of use are the key attributes that continue to drive its growth within the anti IL-twenty three class, capturing market share from competitors to achieve a 30% market share in new patients in the class. Now let's take a look at Skilarence. We did see an initial and temporary impact in the first quarter from a company that is compounding dimethyl fumarate in The Netherlands. However, adding back those volumes, Skilarence continues to perform in line with our expectations. For those of you unfamiliar with compounding, it is a creation of a drug by a licensed pharmacist to meet the unique needs of an individual patient when a commercially available drug does not meet those needs.
This is only allowed in cases where the patient does not respond enough to the registered drug, and in any event is limited to approximately 50 patients, so you can see it is quite restrictive. As we have previously outlined, the growth projection will likely be at a more gradual pace, as our room to grow additional share above the 80% to 90% share in Germany and The Netherlands is limited. We have achieved a strong foundation in Europe and now continue to work with DNF naive countries, which we expect will take more time and education to penetrate those markets. Also, bear in mind that we expect impacts from COVID-nineteen in Q2 because patients on Skilarence need blood monitoring, and on top, new patient starts will drop significantly until the situation normalizes. On Seysara, as you will remember in the January, we changed our co pay card program to improve the gross to net.
We have been pleased that at the end of the first quarter, the absolute number of prescriptions started to stabilize, and we started to see a revival of market share. Unfortunately, the impact from COVID nineteen will delay this rebuilding of prescriptions. As the acne market is not a chronic disease, the overall US acne market has seen a 45% decline, which is above average versus other therapeutics. Having said this, the Seysara brand has proved to be resilient. Despite being within the launch phase, Seysara maintains market share with TRX volume tracking the overall US oral antibiotic market.
What we are seeing is that the refill scripts are starting to stabilize. We expect a bit of a pause before getting Seysara back into a growth trajectory, as you will see across many companies in The US for non chronic treatments. Inevitably, COVID nineteen has resulted in slower new patient addition in recent weeks. Overall, we see a reduction for in person doctor visits resulting in a slower rate of new patient starts. The impact will depend on the length of the lockdown.
Q two will see a decline in the prescriptions as dermatology is more impacted than other therapies. But consistent to what we have seen so far, we do not believe this will affect our market share and that Seysara prescriptions will be in line with the overall oral antibiotic market. With that, I will pass the presentation over to Mike.
Thank you, Peter. Now I want to take you through the financial part of the presentation. We've delivered what we believe is a solid start to the year with limited COVID-nineteen impact on the Q1 performance. The key highlights are total revenue and net sales growing at 67% on a constant exchange rate, respectively, boosted by our growth drivers, some wholesaler stocking in Europe in the anticipation of the COVID-nineteen situation and a positive impact in deferred income, which more than offset the expected impact of the Axon generic in The U. S.
Gross margin has been impacted with our, generification of Axone, but this is in line with our expectations. SG and A, excluding depreciation, was flat at $71,000,000 as increased new product investments were offset by lower promotional activity in late March due to the COVID situation. With this, we delivered good operating leverage with EBITDA growth of 10% and an improvement in the year on year margin. And this has helped us achieve a strong operating cash flow of GBP 48,000,000, which I will expand on later when we address the cash flow statement. Taking a look at the P and L in detail, you can see this 8% net sales growth, which was 7% on constant exchange rate that I mentioned.
In addition to this, we have net sales, which were boosted by growth products in Europe, wholesaler destocking and the positive impact from deferred income in the first quarter, which more than offset the decline in the Axsome. As you can imagine, we've reviewed in detail our $241,000,000 Q1 net sales performance very carefully for any COVID-nineteen related stocking impacts, including longer scripts. Our assessment is that the impact is roughly 5,000,000 to £10,000,000 in net sales, primarily in Europe. In addition, the deferred income acceleration is related to a change in our participation in an ongoing clinical trial, which resulted in a positive impact that will have a full year range of about €20,000,000 in other net sales. Other income reduced as expected, we as we've previously communicated, due to the significant reduction in other income as milestone related income from AstraZeneca decreases sharply, and we switched to a predominantly royalty income model, which had a slight positive currency impact in q one.
Gross margin achieved 71%, which was impacted by the, generic vacation of Axon as we expected. This is flat quarter on quarter, while there was a stocking of products mainly coming in Europe and Spain, which are mainly lower margin products. R and D shows a marginal decrease in the first quarter, and this is related to minor delays in Phase IV studies. We managed SG and A spending flat versus last year while investing in our recent product launches. We currently anticipate low to mid single digit growth in SG and A, excluding depreciation, for the full year to support the launches and to continue the investment in our growth drivers while seeing some savings due to the lower promotional efforts in q one and q two due to the COVID restrictions.
This should help compensate partially any potential sales impacts we will see, but are unable to fully quantify at this point. All this led to a good EBITDA growth of 10% as compared to a strong Q1 of twenty nineteen, with an improvement in terms of EBITDA margin from 35.7 to 36.6 On the next slide, going down the P and L, the combination of growth, improved product mix and limited expense increase provided operating leverage with solid EBITDA and EBIT margin increases. Net financial income of 200,000.0 in Q1 is related mainly to foreign exchange gains due to the weakening of the euro and a change in the value of the convertible bond derivative due to the lower stock price. We expect these to normalize during the year and to end the full year in line with twenty nineteen's net financial expenses. Looking at the balance sheet, I simply want to highlight three elements.
Financial assets outlined the fair value of future milestones and royalties to be collected from AstraZeneca. This is consistent with the previous year. We have a decrease in our accounts receivable related to the collection of a sales milestone from AstraZeneca in Q1. A small increase in our gross debt reflects the repayment of The U. S.
Revolving credit facility. We finished Q1 with a leverage of 1.5 times EBITDA to net debt, similar to year end, which gives us flexibility in the current environment and also puts us in a good position to to look at M and A activity if attractive deals come around. Let's take a look at the cash flow statement. We delivered a strong operating cash flow generating £49,000,000 aided by collection of a sales milestone for AstraZeneca. We made significant investments during the quarter, including the Phase III milestone for 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 Bionase for the underlying CTCL assets. And finally, given the ongoing COVID nineteen situation, I'd like to highlight that Amaral continues to maintain good financial liquidity. As I've just explained, Amaral has nearly £100,000,000 in cash and an undrawn revolving credit facility of £250,000,000 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. We'd also like to reiterate our previous dividend payment recommendation for the coming annual general meeting, which
has been postponed due to the
COVID-nineteen situation, of a gross dividend of $0.02 €03 per share in a script dividend modality. I'll now hand back to Peter for his closing remarks.
Thanks a lot, Mike. So in conclusion, I have said it already, and I will repeat it again, securing the supply of our medicines to patients who need them is our core responsibility. In terms of business, I would just say that we have had a strong start to the year. We are pleased with the momentum from our European growth drivers and including brands such as Sartivax and Cyclopoly, which are really growing very dynamically. Today, I have tried to provide you with as much detail to help understand the current position of our key products.
Moreover, in our pipeline, we have created a number of very nice opportunities to create very significant mid to long term value. Our late stage pipeline will provide significant future leverage on our growth profile. Innovation is our main priority, and that is what we have been doing with our in licensing and our research portfolio, where we focus on first in class or best in class opportunities. The top priority for us is to build a world class pipeline in medical dermatology. We are maintaining our 2020 guidance.
We can aim at this time not reliably, we can at this time not reliably quantify the impacts of COVID-nineteen, but we are permanently monitoring the impact on the health care systems and the prescription trends. We will share an update in the half year earnings call. However, we are not looking at any type of in quarter guidance update for quarter two. Overall, we anticipate COVID nineteen to impact our business in q two, especially in The US. However, at this stage, it is not clear to what extent its impact in the coming months will be defined by duration and intensity.
As Mike has just commented, our priorities are clear and remain unchanged as we continue to focus on additional external opportunities to cement our position in our key markets and boost our growth prospects. With that, I'll turn it over to Pablo for the Q and A.
Thank you very much, Peter. Nadia, back to you for the Q and A, please.
Thank you. The first question comes from the line of Chung Hwan from Credit Suisse. Please ask your question.
Hi guys, it's Chung Hwan from Credit Suisse. Three questions if I can. Firstly, can I just understand the €20,000,000 deferred income on sales a bit more? Can you just give us some more color here? And what's the impact of this to margins?
I assume it drops down the P and L by 100%. Secondly, on other income, it came in at €6,000,000 At this level, if you continue on the rest of the year, it should come in at €20,000,000 But at full year, we had in our models a guidance of €10,000,000 So where do you think this will go for the year? And then finally, timing of R and D, when should we expect that to come for the year? Thanks very much.
Okay, Frank. Thanks for the question. I'll pass your questions to Mike. Mike, on the €20,000,000 deferred income and the other operating income of €6,000,000 in the first quarter.
Yes. The deferred income impact relates to something that was set up in the original disposal of the respiratory assets to AstraZeneca. We had continuing involvement in some clinical trials, which deferred some of the income of that original deal. We've changed the participation in one of the trials to refocus our resources on internal projects, and that led to a release of the deferred income, which full year impact will be about a 20,000,000 increase. And that was included in our guidance for the year as we did anticipate that there could be some changes in those clinical trials.
The second part, other income, the £6,000,000 for the quarter was aided by a positive currency impact. We revalue that future asset on a quarterly basis, and the strengthening dollar versus euro actually led to a boost of GBP 2,000,000 to 3,000,000 there. So we still think that the full year will come in line, 10,000,000 to 15,000,000. But, of course, it is subject to currency swings. And the third question was due to r and d timing of, and I'll pass that over to Bhushan.
But I'm not sure which product you were looking at.
Just, the level of spend when we expect that to increase. For one q, it was down. Two q, I imagine, down.
Oh, so we'll we'll see it, we'll see it phase in throughout the full year. We still expect the activity on the r and d side to to be pretty robust. We we know that, there there could be some slight delays to delivery, but that's more on a milestone deal and not in our internal R and D. So we would expect you to see a normalization throughout the year and the full year R and D.
Okay. And very quickly, if I've got you, can I just get the Seysara sales for 1Q? Thank you.
Yes. It's roughly €5,000,000, which was impacted, I'll say, by, destocking. As we've seen the prescriptions go down, the wholesalers have destocked the product. So we did see a destocking impact of roughly 1,000,000 to 2,000,000 there as well.
Thanks very much.
Thank you.
Thank you. The next question comes from the line of Francisco Ruiz from Exane. Please ask your question.
Hi, good morning. I have some follow-up questions and some new ones. So on the deferred tax sorry, on the deferred income impact of this EUR 20,000,000, could you quantify how much was in Q1? Also, I think Mike has commented that you expect a better SG and A right now than at the beginning of the year. And you mentioned a figure, but I didn't catch it.
Could you repeat it for me? The third question is, at the end of the year, you also commented that there will be some regulatory changes in Spain. Do you still see them in this environment? And finally, if you could give us a little bit more color on the renal growth of Skilarans after the component in that is solved. Yes.
So the impact on deferred income has hit in Q1. That's pretty clear. So that helped us in what you're seeing as the growth versus last year. SG and A, I had originally said in the guidance we expected it to be in the mid to high single digits. We've now put that more in the low to mid single digits as we do see some lower promotional activities in q one and q two due to COVID.
We do think that'll help offset partially any sales downside we might see during the year, though it's still a little bit too early to see what the full year effect's gonna be on the top line. In terms of, changes to pricing in Spain, we think that that's unlikely in the first half, because of the COVID situation. There there are other priorities. We don't know what's gonna happen later in the year, so we still see that as as a potential risk. But, you know, as Peter mentioned, we're we're maintaining our guidance at this point subject to the business coming back to a more normal state by the end of the second quarter.
And in terms of Skilarence, it's hard to exactly quantify, but we think the impact due to the compounding is anywhere between 1,000,000 and €2,000,000 in a quarter.
Yeah. I would just, perhaps, you know, we perhaps two comments from my side. First, on the impact on of of COVID nineteen on on the behavior of governments. I think you can see both ways. Right?
Either you look at it and and you see, for example, what happened in back in 02/2010, that I think there is also a silver lining in the whole story is that many governments and many politicians, think, start to understand that they need a strong pharmaceutical industry domestically because probably, if COVID nineteen has demonstrated anything, it is that the pharmaceutical companies are part of the solution and and not part of the problem. And and strategic I mean, I think they should look more strategically to to having a strong domestic pharmaceutical industry than anything else. So we'll we'll see how that bodes for the rest of the year and and in the coming years, obviously. And on on Skilarem, so impact, like Mike said, we don't have precise numbers, but you can take one to two million a quarter. And and we happen to have our general counsel here, Amita Kemp.
And and, Amita, could you provide a little bit of color to the to the procedure and the timings?
Sure. Happy to do so. Good morning, everybody. So, you may be aware that with respect to compounding, and particularly in The Netherlands, the Dutch Medicines Act is very clear that if there is a registered product with a marketing authorization, then they can be caught on it, but only on a very small scale. A small scale preparation and particularly in The Netherlands in April 2019, it was clear that such small scale preparation could be for approximately 50 unique patients per month.
We have had some litigation ongoing with the company, specifically with respect to their compounding and some stock not destroyed under a settlement agreement. We have now entered with respect to a subpoena against this particular company. The subpoena was filed in January 2020. However, due to COVID-nineteen and the measurements there with respect to the legal proceedings, currently, this matter, we will decide whether we wanna go for an oral hearing, which will be a longer procedure, or whether we will provide our explanations to the court in writing, which is a short procedure, and then weigh what the verdict may be. We're not sure when the court will hear this matter, so we are looking at that.
In addition to the legal proceeding, we have also lodged a complaint with respect to the inspectorate in The Netherlands asking them to take a look at this particular case, and we are expecting a a judgment from that inspectorate within the coming days.
Okay. Thanks. I'm done.
Thank you very much.
Next question?
Thank you. The next question comes from the line of Keita Alicatla from Goldman Sachs. Please ask your question.
Hello, everyone. Thank you for taking my questions. I have a few, please. Mike, I hate to go back to deferred income, but if my understanding is correct, that has always been part of your net sales historically. And if I'm not wrong, it has been around 13,000,000 ish every year.
So is this 20,000,000 on top of what normally would have been recognized in your net sales, or is that the absolute deferred income in the year? And how much of the deferred income is currently on your balance sheet, please? And what how we should expect that being reflected in your income statement going forward? And two, on core EBITDA, you haven't really mentioned about reiterating the core EBITDA guidance. How should we think about that?
Those would be my two questions. Thank you.
Okay. Thanks, Casey. So as for the deferred income, you're right. There has been an annual amount every year, and the $20,000,000 I mentioned is on top of that. So it's a onetime boost for for q one this year.
There are you know, there's another trial that's remaining, so there's another amount that'll continue throughout this year and into next year. I think the full year impact of that piece is roughly in line with the 13,000,000 that you're talking about. So in terms of the core EBITDA, we maintain the guidance and the same split core EBITDA to other income. There was a little bit of an extra other income in Q1 due to a currency impact I mentioned earlier, but we still see the full year coming out to 10% to 15%, leaving the core EBITDA as the difference.
Got it. If I could throw in another question, please. On your m and a opportunities, clearly, we're living in times which are very uncertain, especially from a cash flow perspective. Does this make your m and a opportunity set more conducive? Are you seeing more of them come on your table?
So I'd say in terms of m and a, and I'll let Peter give his comments as well, you know, given the uncertainties in the market, of course, we'll be very, very careful if we look at anything. We are seeing two impacts. One is that interest rates, you know, are variable, so, things, are moving in different directions. They've started to normalize from a peak that we saw post COVID, but we'd have to take that into consideration for anything of a sizable acquisition. And two, you are seeing prices of some assets come down a little bit because of the situation.
So but before we would do anything, we would be very, very careful, and it has to be assets that we felt were were important to the future of the business. But I'll let Peter give his his thoughts as well. No.
I think, Casey, thanks for the question. I think you can look at it from from two angles. If you would look at, let's say, late stage in licensing, high quality assets, they may become available at at more interesting prices. So we are definitely looking at a certain of those opportunities. And then the in parallel, you know, we we are still interested in increasing our critical mass in some countries by immediately accretive assets.
So it really we're really looking at the m and a transactions or in in licensing transactions from from both angles. And as Mike said, of course, we'll be we'll be prudent given the COVID nineteen situation. We have a very close eye on on interest rates, of course, and and they start to normalize somehow. And so, again, in function of the, I would say, the, you know, the the quality of the assets, the potential immediate accretion, the predictability and the stability of the cash flows that we we may be able to acquire, we would, of course, continue to look at interesting assets.
Thank you.
Thanks. Thank
you. The next question comes from the line of Peter Belfort from Jefferies. Please ask your question.
Hi. Thanks. Yes. I just got a couple left just with regards to specific products, if you don't mind, please. Just with regards to Skiloran, I wonder if you can go through there just with regards to the blood monitoring, how frequently that is needed and what has to happen for patients in terms of renewing prescriptions if they don't have that and whether or not there's any flexibility in that at all or whether or not prescriptions then need to be curtailed and can't be extended in the current period.
And then in a similar vein on ILUMETRI, I wonder if you could just talk about the trends you're seeing there with regards to repeat dosing of the drug. Obviously, a relatively frequent regimen, which could be a benefit in the current climate. But equally, if you just talk about, I guess, the potential dynamics that you're seeing from dermatologists in terms of patients getting their repeat doses of the drug understanding obviously the impact that there is currently on the new patient dynamics. And then just finally on Cesara, just curious there with regards to what you could essentially see happening with regards to longer term impact on payers in The U. S?
We obviously understand that given the current unemployment situations, potentially a shift in the payer mix we can see in The U. S. Market. Curious to know your thoughts on that. If you could perhaps update us, I guess, on the current coverage of Cesara in The U.
S? Thank you.
Yes. Thanks for your question. Let me take first Niromety and the Teixara question, and Bhushan will answer you on the Skelevance question. So on Niromety, you singled out very correctly, of course, that, the once a quarter dosing is definitely well, is is anyhow a very important feature and an advantage of the product. But especially in in COVID times where accessibility to physicians is hampered to some extent or or even to a large extent in some countries, a once quarter dosing is, of course, a very important benefit.
So what we have seen in dynamics is that, patients who were on the drug have continued to receive the drugs. Even we have anecdotal evidence that, some patients have been receiving, you know, a treatment for six months instead of for three months in in some countries. And but we also see in in April numbers that new patient initiations have dropped significantly because simply patients are no longer in front of their physician, and new patient initiations have been postponed until situation will normalize. And and that is, of course, a market phenomenon, Peter, that is not solely, limited to ILUMEDRI. But if anything, if you look at the product profile, we think that the product profile features are even even better in a COVID nineteen situation than in a pre COVID nineteen situation.
So so that's my my short summary on on ILUMEDRI. In terms of Seysara, well, look, we haven't seen any specific impact. You know, our coverage, is about is round about 40%, 37, 38% unrestricted coverage, 60% total coverage. So we'll look into that as as as the weeks go by, but we haven't seen any specific reactions from from payers in the positive or positive or or in the negative sense. And and the the the, you know, the name of the game process is again to drive volume up, at the at an acceptable gross to net equation.
Bhushan, for, Skilarence, can you comment a little bit on on the blood monitoring requirements and and and patient initiation?
Yeah. Thanks, Peter. Skilarence, which is dimethyl tumor, every dimethyl tumor on the market has one has a a instruction that the patient has to go through blood monitoring once a quarter. In our case, you definitely have to go through blood monitoring, specifically for lymphopenia. And if you have a low lymphopenia levels, are very clearly written in our label, then you have to discontinue the drug.
But then after three months, you can go back once the lymphopenia lymphocytes are high. So, yes, there is a instruction on the label that you have to monitor on a regular basis. But once you discontinue, it goes back to normal. I would have
to do that, Peter, if you allow me one one one more background on Skida, as you know. You know that the the initiation and the titration is a little bit cumbersome with the product. It's not like you get one shot for three months and you're done, which, of course, requires for new patients a bit of a, I would say, an intensive process between the doctor, the physician, and the patient. And therefore, we also expect in, in the months of April, May, June, impact on new patient initiations in. So you have to take into account both factors, actually.
Sorry. Could you just just go back to Cesaraman? Did you say 60% total? It 37 to 38 unrestricted, 60 total coverage.
Yeah. That's correct.
That's great. Thank you.
Thank you. The next question comes from the line of Jose Maria Canovas from JP Capital Markets. Please ask your question.
Hi, good morning. Thanks for taking my questions. Actually, most of them have already been answered. Just one last because I didn't get it right. You were commenting on the potential milestone payments throughout the year regarding levy or any other product in the pipeline or portfolio.
I don't know if you gave a guidance for the year of what we could expect as regards to further payments. Yes.
So I did mention that we had a significant amount of investments in Q1. The next large piece could be in Q4 with the BioMAZE. We haven't given exact numbers, so we do expect the overall investments for the year to be slightly lower than last year, but we haven't given a precise number as some of these things, of course, are dependent on actions happening and decisions being made.
Thanks.
Thank you. The next question comes from the line of Chung Hwan from Credit Suisse. Please ask your question.
Hi. Thanks my follow-up. Just a clarification here, please. Can you explain why the deferred income is in net sales given that it's not really related to product sales but a change in R and D funding? And then just is this all profit?
Or are there any associated costs here? And on Skilarence, can you give us a bit more color on the rollout, in the non DMF countries, so beyond Germany and The Netherlands? How have you how's the pricing compare here? Thanks very much.
Okay. So with the deferred income, you know, the accounting treatment, that's been in place for for several years is it's in the line other net sales in addition to royalties and and other things that are not directly, sale of product but are considered as as net sales in the accounting treatment. There's no cost associated with it, so it drops straight to to the EBITDA. And the second question
Hold on. So so I'll take that. So, Trump, obviously, you know, Italy and Spain have been severely hit, and and it's in in some hospitals, actually, dermatologists have been have been participating in the in the COVID mitigation, let's say, efforts. So, obviously, the skill and efforts vis a vis dermatologists in the non BMF countries, which are in essence, in our case, Spain and Italy, have also been passed. So the way you have to think about Skilarend in those countries is that we really try to to sharpen the pencil the pencil and the positioning because you are you are in front of a a a big product called methotrexate, which is there since decades.
And and the way we we are now positioning the product is really explaining them that quite a number of people with psoriasis have a certain number of contraindications against methotrexate and that actually Skilayen is a very good substitute to methotrexate in those patients that, you know, either cannot receive methotrexate, either incur a certain number of risks when they are initiated with methotrexate. So that is the the the line of our positioning in the DMF naive countries. And, of course, we'll renew those efforts once patients are back in front of the physicians and once our reps are back in front of their physicians too.
Thanks very much. And final question from me. Sorry to keep asking. But just to follow-up on Pete's question on Seysara. At full year 2019, it was you had over 40% unrestricted access, and now it's gone down to 30% to 35%.
So what's happened? I
think we all always said 37, 38%. Yes. It's around. Yes. Around a little bit shy of 40%.
Yes.
Okay. So it hasn't gone down?
No. No. No. No. No.
We get what we have.
Okay. Excellent. Thanks very much.
Thank you.
Thank you. There are no further questions at this time. I would like to turn the conference over back to Pablo Davidson for closing remarks. Please go ahead.
Thank you. Thank you, Nadia. We are not 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.