I will now turn the call over to José Luis Moreno, Director of Capital Markets and Investor Relations, to begin. Please go ahead.
Thank you, Drew, and good morning to everyone. I'd like to welcome to all of you to our first half 2024 results conference call. On the call with me today are María Luisa de Francia, our Chief Financial Officer, Luis Mora, Managing Director of PharmaMar, and Pascal Besman, Senior Vice President of Strategic Development. Following our prepared remarks today, we'll open the line for questions. And I'd like you to remind you that today's conference call might include-- Sorry about that. I was saying today's conference call might include forward-looking statements regarding future events or the future financial and operating performance of our company. Such forward-looking statements are only predictions based on our current expectations, and actual results might vary from those projected.
We disclaim any obligation to update any information provided herein, and we refer you to a safe harbor statement on our corporate presentation, which is available on our webpage, together with the press release and the report of the results we released yesterday. Well, during the first half of 2024, revenues were significantly driven by Zepzelca, and we're pleased to report that revenues from Zepzelca continued to grow at a robust pace. Revenues from royalties also increased, with a notable contribution from Zepzelca royalties from the US, which grew by 15%. API sales saw a remarkable growth during the first six months, reflecting strong commercial activity preparation by our partners. It is important to note that API revenue does not typically follow a linear growth pattern and fluctuates based on our partners' stock management.
Our R&D investment remained strong during the first half of the year, largely due to the acceleration of the LAGOON trial recruitment, as Luis will explain in a minute. We maintain a solid balance sheet, with debt reduced to its lowest level in many years, and a strong cash position, even after distributing dividends and allocating portion of the funds to the acquisition of our shares, to share buyback, which we expect to complete in September. After these highlights, I'll now pass the floor to María Luisa, who will provide you with a more comprehensive overview of our financials. María Luisa?
Thank you, José Luis. Good morning, and thank you all for joining us in the PharmaMar first half 2024 results call. We are going to check now briefly some group financial statements and results as of June 2024. It is important to note that this second quarter of the year has been consistent with the previous one and in line with expectations. Revenues reached EUR 80.8 million, 1% higher than in the same period of 2023, mainly due to growth in royalties received from our partners, up 16%, especially Jazz Pharmaceuticals, as well as the sale of active pharmaceutical ingredients, also to our partners. This growth depends on the stock management practices of our partners, as José Luis mentioned earlier.
Together, these two items account for 52% of total revenues and compensate for the decline in Yondelis sales. Zepzelca revenues in Europe, under the compassionate use or early access program, have also performed well. If we eliminate the effect of the adjustment made in 2023 for the excess of provisions from previous years, they would show an increase of 16%. Yondelis sales are performing as expected in the third year of generic coming to market. On the expenses front, the evolution in the first half of the year was also as expected. R&D increased 10%, up to EUR 51.3 million, due to the progress in the various clinical trial underway. This represent 63% of total revenue.
The rest of operating expenses saw, in total, a slight increase of 2%, including expenses related to the oligonucleotide production plant of approximately EUR 2 million. Financial results, EUR 2.5 million, together with the positive income tax of EUR 5 million, due to the monetization of R&D deductions, led to a net result of EUR 3.5 million for the first half of the year. The change in cash as of June compared to December 2023 shows, firstly, that the operating activities have financed themselves. The difference in cash between these two dates, December 2023 and June 2024, has been applied as follows: approximately EUR 9 million have been applied to the investment in the new oligonucleotide manufacturing plant, and EUR 20 million have been applied to the distribution of dividends, share buyback program, and loan repayment.
After this cash consumption, the group has current and non-current cash and equivalents of approximately EUR 140 million, and a total financial debt of EUR 36 million. As José Luis mentioned before, we have a solid balance sheet to continue with our business plan. Now I pass the floor to Luis Mora.
Thank you, Maria. As my colleague has already commented, we are very interested—we are in a very interesting moment. In a few months, there will be a lot of news, and we hope that it will be transformational for PharmaMar. Zepzelca already represents an important part of our income. It already represents a standard of second-line treatment in USA, and it is reflected in the significant growth of royalties, 15% compared with the same period to 2023. The LAGOON pivotal phase III trial as a second-line treatment for small cell lung cancer, has accelerated patient recruitment. This is a three-arm trial compared with Vinorelbine as monotherapy, or in combination with Irinotecan against the investigator's choice of Irinotecan or Topotecan. We expected recruitment to end by the end of 2024.
If the outcome is positive, this could serve for a submission dossier in the European Union and a confirmatory trial in the United States. Also, our phase II/III SaLute trial for first-line leiomyosarcoma is recruiting better than expected. If this, if this continues, the recruitment will be completed by the end of 2025. The recruitment concluded for the phase III trial that our partner, Jazz Pharmaceuticals, is conducting with Hoffmann-La Roche, using Zepzelca in combination with Atezolizumab for first-line maintenance treatment of small cell lung cancer. This trial, which is sponsored by Hoffmann-La Roche and co-financed by Jazz, will measure the progression-free survival and overall survival in combination with Atezolizumab compared with Atezolizumab, a single agent.
Regarding the timing of, this trial IMforte, we are adhering that what our partners, Jazz and Roche, have communicated so far, which is that PFS data is expected to read out by the end 2024 or early 2025. Jazz and Roche will be the ones to update in this regard. If the data are clinically relevant, we plan to submit the registration dossier to the European Union in the spring 2025. Regarding the regulatory aspects, perhaps the most important thing is in the second half of the year will be the approval of Zepzelca in China. According to our partner in that territory, Luye Pharma Group, the authorities' opinions could be issued in any time from the beginning of September. As you know, we launched Zepzelca in Switzerland in September 2023, and we can say that it is already positioning itself as a standard of second-line treatment.
Early use is also growing significantly, especially in France, will grow, as María Luisa mentioned before, around 16% compared to 2023. With this, we hope to treat around 900 patients this year in France alone under this modality of access to the drug. Regarding Yondelis, despite the entry of generics in the European market, we have increased unit sales, maintaining our market share. Outside the European Union, our partners have increased sales of Yondelis, which is reflected in the significant increase in our sales of raw materials. Also, in USA, Yondelis has experienced significant growth, increasing the royalties we receive from our partner. This increase is due to the inclusion in the treatment guidelines of Yondelis plus doxorubicin as first line of leiomyosarcoma.
The other three products that we currently have in clinical development, PM14, is in phase 2 and is continuing its development in solid tumors. PM54 and PM534, which are also in phase 1 in solid tumors, continue to escalate dose, and we are already seeing significant activity and very good safety, which make us very excited about the future of these new drugs. We expected to complete the first phase 1 trials at the end of the year or early next year. As I have said, in the coming months, there will be important news, both for patients and for PharmaMar. Now, thank you very much. Now Pascal will comment on the latest relevant developments we have presented in medical conferences.
Thank you, Luis. Hello, everyone. Wanted to focus on data that was presented this year at ASCO, which was really very compelling within its limitations, with lots of KOL interest. In fact, there's a newly released video this week discussing this data on OncologyTube with Dr. Sands from Harvard. This data is to do with the combination of lurbinectedin and irinotecan in relapsed small cell lung cancer. A few years ago, we saw preclinical data of the synergy between topoisomerase I inhibitors and lurbinectedin, and presented the first 21 of a 100-patient cohort at World Lung 2020, which was in 2021, with encouraging results. This cohort has now matured. The context of this data within the LAGOON framework should not be lost.
R&D of LAGOON has the potential to serve in a confirmatory capacity for FDA and a registrational one for EMA. As such, within an OS endpoint, we need to see what the odds are for success. We've stated in the past that the control arm is modeled for 8 months, and we are seeking a hazard ratio of 0.8 with 90% power, so a delta of 25% or 2 months should do it. Let's look at the data here that we presented, and specifically focus on the like-to-like comparison of it, eliminating the refractory patients who are also eliminated from LAGOON. And then what I'll do is I'll compare that cohort to our basket trial, which got us approved, the basis of our approval, and the Dinutuximab DISTINCT study that was published in 2022.
And I'll focus on looking at the ORR, the PFS, and OS. Firstly, in ORR, this cohort of 74 patients with a chemotherapy-free interval greater than 30 days, so an ORR of the combination of 53%, compared to our basket study monotherapy of 35, and of irinotecan in the Dinutuximab study of 19%. Moving on to PFS, the combination, 5 months, the basket trial monotherapy, 3.5 months, and irinotecan monotherapy, 3 months. And finally, with overall survival, 12.7 months versus monotherapy, 9.3, and the DISTINCT study, 6.9 months. So quite startling improvements in data reading across trials with all of the caveats here in looking at these various parameters of efficacy.
In conclusion, if we can generate data anywhere near this overall survival benefit of 12.7 months in LAGOON arm B, it is likely to generate a compelling hazard ratio and a clinically meaningful benefit risk profile for small cell lung cancer patients in the future. We wanted to focus on that and make sure people are understanding the context of it, and I'll let José Luis take it from here.
Thank you, Pascal. And with this, we conclude our speech today, and we'll open the floor for questions. Drew?
Thank you. We will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you wish to withdraw your question, please press star followed by two. Our first question today comes from Ami Fadia from Needham. Your line is now open. Please go ahead.
Thanks. Good morning. Thank you for taking my question. Maybe my first question is just a follow-up to what Pascal just discussed. You know, with sort of the strong overall survival data that you talked about from the 74 patients, can you highlight if there's any reason why the LAGOON data would not turn out this way? Just trying to play the devil's advocate and trying to sort of really understand the data here. And also, if you could comment on the timing of when we might be able to expect the data to mature once the enrollment is completed. And then I have one or two other questions.
Sure. Thanks, Ami. So to your first question, what would be different between the data we presented now and LAGOON? Well, they're different trials, so obviously there's always gonna be differences. In terms of the eligibility criteria, they're really rather similar, with a chemotherapy-free interval of 30 days and no active brain mets, so those are very similar. But in terms of what could be really different when we think about it, is that in the LAGOON study, 70% of the patients will have had prior IO, which is a positive prognostic factor for patients in relapsed small cell lung cancer, so that could improve the numbers even further still. And of course, we, we are modeling the control arm that some of those patients would have had IO as well.
It's just that there's no known synergy between the topoisomerase inhibitors and IO, whereas there is with lurbinectedin. So net, net, you know, this is certainly not gonna be identical to the results we get. It never is. However, it's a compelling and encouraging efficacy in the identical population. I'll let you continue, Ami, with your follow-up questions. In terms of when will we follow up on this data? I have no idea. I think that this is a term-final, finalized study at this point, and so the next thing would probably be a publication, but I don't think that we have yet discussed that internally.
Okay, great. You guys highlighted the sort of increase in the API sales this quarter, and also mentioned that it's not, you know, a linear curve with regards to how API revenues come in. But it sounds like this might be driven by some purchases by our partners ahead of the first-line data in IMforte that's expected to come in. So my question is, should we anticipate that the API revenues could be really bit higher over the next couple of quarters? Could you give us some visibility around that?
Thank you for your question. The increase of sales and raw material is driven by the increase of sales of Yondelis for our partners around the world. They stock in this part of the year because the forecast they sent is the Yondelis continues to grow. In the second half of the year, we don't expect the same figure for this, but we expect to finalize the year with significantly more sales than 2023. Regarding USA, it is the royalties we collected from our partner from Yondelis in USA. Yes, the increase of our royalties is because Yondelis was included in the NCCN guidelines third line treatment in combination with doxorubicin for leiomyosarcoma. Our partner is Johnson in USA, and the sales goes very well, then the royalties grow.
Got it. I'll just ask one quick last question. If you could, help us understand the opportunity with Zepzelca in China, and maybe just remind us of your economics around that. Thank you.
We don't disclose this because first of all, we don't have the approval yet. But what is good news is that our partner announced us several days ago the process, long process in China, when the drug is not Chinese, it's an import drug, then even if we achieve the accelerated approval in China, when the drug is an import drug, is a different timings than you can see in Europe or USA. But the good news is they are very close to finalize all the appraisal for this dossier, and from early September we can expect that the opinion, we hope will be positive, and we prepare our stock to sell them the other day start the commercialization drug in China. In China there's a big population. The incidence of small cell lung cancer is higher than Europe.
Then, is about 3-4 times the incidence small cell lung cancer. But, you know, the pricing of drugs in China is completely different than Europe. Okay?
Thank you.
Our next question comes from Guilherme Sampaio, from CaixaBank. Your line is now open. Please go ahead.
Hello, thank you for taking my question. So the first one is regarding the platinum shortage that has boosted your revenues over the past quarters in the US. If you've seen any signs of a slowdown here? The second question is regarding the odds of a licensing deal in Japan over the next quarter, where you are certain that. And the third, what are your expectations regarding the LAGOON trial data? The small trial, not IMforte, that could be out, I don't know, by September, if you can confirm me that as well, it would be great. Thank you.
Thank you for the question, Guilherme . The first question regarding the shortage of platinum in USA, please send the question to [Jazz]. Today, I think, is the conference call, just, or tomorrow. But in any case, the public information, the shortage was over several months ago. Then, now it's not shortage of platinum, according to my information. The second question was... Sorry?
BDL, Japan.
Ah, regarding the Japan deal, well, they announced in several conferences that we are in active conversations with several companies, not only one, several companies, for license. This is a deal. Then, when we will achieve the agreement, we will announce opportunity. Then... But we are active work in this setting. And regarding the two small trial, we would remember is an IIS trial, is not trial. They will compare in two arms the Zepzelca plus IO. When the patient is in second line, are received previously IO, and the other group without IO. We expected in ESMO this year, if the sponsor of this trial is moving in the setting in ESMO, to show some presentation about this trial.
I can just add to this. The abstract titles for ESMO are out already. So obviously with what Luis said, that implies that if it's going to be accepted, it would be a late breaker. We don't have anything to add, and we'll find out with you middle of August.
Thank you.
As a reminder, if you would like to ask a question today, please press star followed by one on your telephone keypad. Our next question comes from Joseph Hedden from Rx Securities. Your line is now open. Please proceed.
Hi, good afternoon. Thanks for taking my questions. Just going back to the Zepzelca ASCO data, you know, promising, very promising stuff in that subgroup, and it's a big subgroup. I was just wondering if you did have any conversations with the regulators or any accelerated approval about that and, you know, what the kind of—if you did, what the kind of temperature was there? Secondly, on Imdelltra, approved in May, I was wondering if that drug had been launched yet, and obviously we can't really see any kind of commercial progress, but anecdotally through your KOLs, are the kind of concerns that were there regarding toxicity, et cetera, being borne out in the early stages?
And then finally, just, you know, you've highlighted in your report the Ecubectedin expansion phases of the phase two trials are ongoing. Just, when can we expect to see the data, the first data from those trials? Thanks.
I'll go first. Sure. Did we discuss this data with EMA? Well, we've discussed with EMA previously this combination, and it's been our strategic decision that we really would like to see IMforte read out, see what we've got there, look at all our, our options are. There's other many variables to consider. So, and a conditional approval is not something that we're currently contemplating for this, combination of, a 100-patient or 74-patient subset, Joe. Regarding Imdelltra, yes, it was approved in May. Amgen, I believe, in the middle of May, had a conference call where they espoused that the air tracks were gassed up and ready to go. You asked what our anecdotal discussions are.
Our anecdotal discussions are that the launch is measured, partly, because there's a lot of logistics involved in bringing this different medication with different adverse event profile, with the black box warnings, into the fold, and making sure people are comfortable with how to handle these adverse events. We would expect, at this point, a measured launch, but we have no more metrics to go on than you do. You may have more. And as for the toxicity profile, we haven't heard anything. Amgen will report later this week, maybe it'll give us some clues. And Luis, on Ecubectedin.
Ecubectedin, I mentioned before, is in phase two. The trial is ongoing in solid tumors. We expect it to finalize in the middle of the next year. After that and the data analysis, we will be sure we present in the medical congresses. The plan with ecubectedin now is to amplify the in other solid tumors, then probably in 2025, we will start the other interesting trial in the new indication in solid tumor, and we will announce. Okay?
Okay, great. Thank you both.
Thank you, Joe.
We have now some written questions, which I'll... Some of them are in regard to same topics, so I'll put them together. But basically, we have some questions about China, but I believe Luis is just thoroughly answer about that, about the, you know, expected approval in China. We have, Luis, another question about the R&D investment. Same, what can we expect from now?
Well, in the first half of the year, the R&D expenses were increased. The most important item is the LAGOON trial, the acceleration of recruitment, and the acceleration too much better than expected than the SaLute trial. In the second half of this year, we expect a lower R&D expenditure than in the first half. Non-significant lower, but lower than the first half of this year.
Okay. Thanks, Luis. We have another question in regard to cash and particularly to dividend. That I'll answer myself. Basically, as we've said in other calls and, you know, in other meetings, our dividend policy is decided on a yearly basis. And basically what we do here is we decide, or the board decides, to propose to the annual general meeting a dividend, depending on the R&D investment. Always is gonna depend on, you know, our investment in R&D, who has priority, and then we'll decide on a yearly basis. I have another question. This is for María Luisa. If we expect any adjustment in the sales or in the revenues coming from France, like it, you know, it happened last year?
No, no more adjustments are expected regarding sales 2023.
No, in order-
At all.
Yes. Thank you, María Luisa. In order to be for the future conference call, we can clarify. Last year was the first year the new legislation in France applied for this new modality. Until 2022, the name of this early access, the name was ATU. From 2023, it changed to ATU modalities or ATU or early access. Based on that, changed the conditions for the companies provide the drugs for these patients. Initially, the global discounts was in the law for full year 2023, but in the middle of the year, the authorities decide to start these discounts in the middle of 2023. For this reason, the accrual of discounts we're booking was adjusted in June 2023, but it's only one shot. Then, from this moment, there's a regular law application, no more adjustments will occur.
Right. Thank you, Luis. Just one final question. There were some questions about the share buyback. Just as a reminder, the current share buyback now, we had until thirtieth of September to conclude. As a reminder, it is about 5 million or up to 1%, whatever we reach first. And there were some questions about the previous one, part of that share buyback. We said it was for corporate purposes, and they're asking about what corporate purposes; that hasn't been disclosed. And whenever we're gonna use it, we still haven't. So when are we gonna use it, we'll announce it. And with this, I think we finish with all questions for today.
Just to wrap up, and as you've seen from our financials, we have a very robust balance sheet with our growing revenues from Zepzelca being the main driver of our company's revenue growth. Looking ahead, as has been mentioned today, we eagerly anticipated the coming period due to an excited and relevant news flow expected in the next few months, as mentioned today by Luis and the rest of the team. With this, we conclude our call today, and would like to thank you all for joining us, and wish you a peaceful rest of the summer. Thank you.