Welcome to the Bayer Presentation at the 43rd JP Morgan Healthcare Conference. I'm Richard Vosser, European Pharma Analyst with JP Morgan. It's my great pleasure to introduce the head of the Pharma business, Stefan Oelrich, who will give us the presentation. Just a housekeeping ahead of that is, when we get to the Q&A period, please either raise your hand or put questions in through the portal, and we'll take your questions. Stefan, welcome to the conference.
Thank you, Richard. Good morning, ladies and gentlemen. Over the next few minutes, I look forward to giving you an update on where we stand on the strategic implementation of our roadmap for Bayer Pharma. It's been quite the ride. I think I started presenting last year to you at this conference about our three strategic pillars, mainly consisting of replacing our top line, largely due to the fact that we're now in full swing with loss of exclusivity of Xarelto. I'll give you a little bit of more color on this in a second. Plus, also our clear renovation of our pipeline, which is making tremendous advances at the same time. While we have a lot of moving pieces at Bayer, you read a lot about our operating model and the changes that we're putting in place.
So all of this is happening in real time at the same time. But rest assured that for us, we have perfect clarity around our must-win battles and our strategic focus, and we're diligently working on this. And I'm very proud to show that it's starting to also show in the numbers for this year. What was seen to be at the beginning of the year to be a very challenging year with Xarelto loss of exclusivity on April 1 in most geographies in the world has turned into, first, an upgrade of our guidance in the summer, and then at the end of the third quarter, a commitment to come in at the top end of that upgraded guidance, which I continue to confirm even before we have read out or presented our fourth quarter results. In essence, that gives us growth for 2024.
And I'll give you the detail where that growth is coming from. But it shows the impact that we're showing, especially from our launches with Nubeqa, growing tremendously, having achieved blockbuster status with Kerendia showing strong growth. But also noteworthy to see that our base business is remaining very consistently stable with a radiology that continues to be a very pleasant surprise to all of us, radiology business, where we're market leading. But I'll go to those in a second. On the margin side, we continue to see margin compression, largely linked to Xarelto erosion, because there we have a high gross margin with low SG&A cost attached to this. So this is something that we're fighting with very diligent cost measures across the board. We had guided in the midterm to margins going into around the mid-20s as we go through this transition.
But all of this, as you're going to see, is going into really setting us up for growth once we come out of the Xarelto situation. When we look at the short to midterm of our portfolio, I think this picture that I had started showing at the Capital Markets Day is really gaining a lot of credibility with the proof points that we're setting throughout all of 2024. And that being, maybe to begin with, which is the less spectacular one, is that our base business is extremely resilient with EUR 10+ billion that we foresee to remain that resilient given the strong performance that we're seeing on our radiology business. But we're also seeing renewed performance on our women's healthcare business, where we're really coming out of what I would call the COVID ditch, where we had really seen a decreased use of long-acting contraceptives. So that's coming back.
But really noteworthy is what's happening on our launches. Our launches are overcompensating for the time being what we're losing with Xarelto, even though Xarelto has shown now in the third quarter of 2024, -23%. And so that's sort of like a harbinger for what you can expect in sequential quarters and that we will have to fight with our launch performance. We clearly see that once that effect is washed out, that we're going to see strong growth coming out of Bayer Pharma as of 2027 and in the following years. And I'll give you significantly more color to that in a second. One of the things that I had mentioned was a positive surprise to us was the results and now the subsequent label action that we've seen across the world for high dose of Eylea.
And I've been asked by many people, "So how are you doing?" And I've been a little cautious in showing too many numbers. But I can tell you these are two examples from typical markets that are fast adopters for innovative products because they get good market access here in the examples of Japan and Switzerland. Not only do we continue to command a leading market share with above 60%, and you can see that this is very consistent, even slightly improving in the case of Switzerland, but you also see the strong penetration of our 8 mg. And it, of course, gives me a special pleasure to show Switzerland, given that we have some of our competitors coming from there.
So you can see that not only are we strong, continuing to show high single-digit growth in the third quarter. We think that this is a franchise that's going to continue giving in the next years to come with compensating through the 8 mg launch some of the adverse effects that we're going to be experiencing through the entry of biosimilar competition as of most probably next year. We're not doing this just with data readouts of a higher dose, but we're also going into difficult clinical settings. The QUASAR study that showed that this is a product that is best in its class has the best label. We're now having across most geographies availability of prefilled syringe, which competition doesn't have. We have the highest dosing interval, which competition doesn't have. So we're really poised for continued leadership in this space.
And I think this graph shows it very nicely, which leads me to probably our most successful launch to this date in the history of our company. We've now treated more than 100,000 patients with Nubeqa in our indicated use. We're leading in the marketplace. We've submitted for additional approval the ARASENS data in all geographies, which is going to give us additional thrust with Nubeqa, which has been growing about 80% last year, which broke the EUR 1 billion level in September, and that we expect to come in at the end of the year roughly around EUR 1.5 million without wanting to disclose anything prior to disclosing our fourth quarter. So we're showing some tremendous growth.
With all the data readouts that we still expect over the next three to four years, we think that we have the potential to be the most widely used product in prostate cancer globally. So this is a product that continues to show extreme promise, and we feel extremely strong about this. I think this is something that very few expected us to deliver. And I think we're really bringing in the proof points for one of the best cancer launches in recent history. So talking about launches, Kerendia is another one where I had guided markets for the last three years that this would be a slow uptake. It has been a slow uptake, but we're reaching now EUR 500 million. And that based on our diabetic kidney disease indication, you will have seen that at ESC, we came in with really exciting data for heart failure patients.
We studied a population that is not easy to treat in HFpEF. So there are very few therapeutic options here. And we studied an Alzheimer population, including SGLT2s as an underlying therapy. And I'm happy to, for those that haven't seen the data, to say that not only do we have some really remarkable data that I think has the potential to be 1A guideline material, but if you also look at the subset of data on top of SGLT2s, there is even an additive effect between our unique selective MRA antagonist and SGLT2s. So I think we have the possibility to really alter the standard of care in heart failure. And that gives a completely different look and feel to this franchise. This is the promise that this substance class always held. We've proven that it works. And not only that it works, but it's safe to use.
And that the potassium-sparing effect that you would expect from mineralocorticoid receptor antagonism is not a clinical hindrance to treating patients that are affected neither with kidney disease, but most importantly with heart failure. So really tremendous perspective here beyond the already very encouraging news that we're seeing on the kidney, which brings me to something that we feel strongly about, what's happening this year in 2025. Last year at this conference, I announced hot off the press a deal that we had done with BridgeBio on another form of heart failure with ATTR, cardiomyopathy. You have seen that we have a +ve CHMP opinion that we received in Europe. We've seen the launch now in the U.S. I think BridgeBio reported back first launch results yesterday at this conference, very encouraging, which makes us believe that we have a potential class-leading product that certainly convinces with its efficacy.
When I think back at how people came out of ESC, also comparing this modality compared to others, I think we have reason to believe that we have a potential winner here that's going to be launch ready at the end of the first quarter. Germany is most likely in Switzerland are the first markets that we're going to serve in Europe. It's certainly a fast-growing billion-plus type of market opportunity that we will address right where the sweet spot for us is. We use an existing infrastructure. We're ready to go from the get-go. We feel extremely strong about this also as we see that BridgeBio is getting off a really good start in the U.S.. Then we have additionally also coming up for launch this year, elinzanetant. This is the first of its kind oral dual neurokinin- 1,3 receptor antagonist.
I have to say that loud because we often get thrown into the same bag with others that have entered the category. We believe that this is a different mechanism of action and helps us to be differentiated. We've seen now four consecutive strong phase three readouts. The last one just happening a few days ago with our OASIS- 4 program that studies breast cancer patients that display menopausal symptoms, very difficult-to-study population, which essentially confirms the strong efficacy and also good safety that we've seen across the OASIS- 1, 2, and 3 program. This is an area obviously that not only addresses a tremendous unmet need. Two out of three women that suffer from menopausal symptoms do not get treated with hormones. We believe that this is a tremendous opportunity and alternative to women that display symptoms.
We've seen in our studies significant efficacy in treating hot flashes, but also in terms of sleep quality and some other points there as well. So we're looking into this eyes wide open. It's not an easy market. I have personally been part of a launch of HRT because we have been a leader in the segment for over 100 years and have been also a leader for many, many years in the women's healthcare space in the United States. So we're looking at this eyes wide open. It's not an easy market, but it's still a tremendous opportunity. Who if not we as market leaders in that space can unlock this opportunity? So feeling confident about that as well. So you can see if we just sum it all up, those are our must-win battles.
Those are the things that all Bayer employees are laser-focused on to get this right. And I hope you can see with me that over the past years and quarters, we have built up the credibility in our pharmaceutical business that we can and that we will deliver. So we are ready to win on all of these battles. So that takes me to another point, which has been sort of like the sore point since I got back into this role here at Bayer, was a very lackluster pipeline. You've seen that we've done quite a lot with relatively little on the late stage, mostly with really smart, I think, lifecycle management and some good acquisitions like Elinzanetant, which has led to, for us, a really tremendous success in phase three readouts. Out of the last nine phase three readouts, we've had eight positives.
I think that's a really good track record. There has been unfortunately also one negative, which was not small. But I think we have credibly shown that from 2027 onwards, once the Xarelto effect is washed out, that we have a credible case for growth. But it's not just the late-stage readouts. We've also completely revamped over the last years. And I'm happy to welcome in a few minutes on stage with me also our head of R&D, Christian Rommel. We've been able to really raise the bar to levels that at least in our company, we had not seen before. And when we say raising the bar, this came in multiple fashions.
It was a focus on fewer therapeutic areas, but it was also an increase in the sort of like hurdles that we set ourselves and the bars that we set ourselves in terms of clinical efficacy, in terms of being first in class, best in class, and I'm really happy to report that we're not just displaying numbers, and it's no longer a tick mark exercise where we pay our R&D people for advancing things through the different stage gates of clinical development, but it's really a question of how much we're going to make a difference in people's lives. And so when you go through them, and I could pick any of the examples that we have currently in our pipeline, you will see that these are highly sought targets.
Like for example, in most of our oncology pipeline, I'm just thinking of our chemoproteomics platform, Vividion, that we acquired. I'm thinking of our cell and gene platforms that we acquired. That all three of them gave us a very impressive footprint in the U.S. and helped us to balance better between a very Germany-centric footprint that we had traditionally into a much more now global footprint between what we do in China, in Europe, and in the United States. So all of this is starting to show good momentum. And so I was thinking like, which one could I showcase here? Should I go for the oncology stuff? Should I go for maybe our acute stroke program where we have a really very exciting antibody that's moving now into late-stage development?
But then we had the good fortune to have a very good dialogue with FDA over the past year or so, which ultimately landed us RMAT designation for our iPSC cell program. For those that don't know what RMAT means, this is when you get sort of like recognized in these new modalities for incredibly advancing the science and potentially giving benefits to patients. And we're in Parkinson's. This is an underserved community of patients, more than 11 million in the world. I think by now every one of us knows someone who is affected by Parkinson's disease. And the standard of care is incredibly low. We had started with a high-risk program with BlueRock in relatively few patients. And we saw not only incredibly good safety in our phase one, but we also saw good signals for efficacy, especially in the high-dose group.
Together with the FDA, we came to the conclusion that it would be best for patients to directly jump into phase three setting. So we're getting ready to start a late-stage registrational trial in cell therapies. What convinced the FDA was not just our ability to show some level of efficacy in our phase one, but what they also convinced them to move forward is our ability to produce and manufacture at scale this type of product, which is one of the biggest challenges in this type of modality. We have made investments at risk. And I'm glad to see that this seems to be going in the right direction. This is going to be a placebo or sham control trial that we do with round about 100 patients. And that we hope will be sufficient for registrational approval before the end of the decade.
It's going to be an 18-month exposure at least to these patients, and we feel confident because we now have over two years of exposure from our phase one. And these cells continue to be active and produce dopamine in patients' brains. Now, as I was preparing for the conference, we got the good news also this morning that we've enrolled first patients in our gene therapy program, which also goes after moderate to severe Parkinson's patients. This is a completely different approach with growth factor in the brain that's surgically inserted through a viral vector, and will, I think, give an equal amount of good hope to patients of there being something new, and we're also trying to accelerate to the highest degree possible that program, so you see, we're taking risks, but we're taking them in areas of unmet need and of high value also to our shareholders.
It's starting to pay off while at the same time taking care of the here and today in our business. When I say we're taking care of the here and today, it's largely also managing our bottom line and making sure that we diligently manage cost. Our efficiency programs are paying off. We've been shifting our footprint like we had announced five years ago, but now this is in full swing with a strong presence in the U.S. We have built a strong commercial presence in the U.S., which is giving the results. Our biggest, fastest growing region today is the United States of America, where we were under-indexed in the past. We're seeing with what we call Dynamic Shared Ownership that we're moving decision-making much more at the product level.
We've created microenterprises, we call them, that function very much like our biotech companies that we had managed in our so-called arm's length principle function. That means they have a financial frame over three years. And then the decision-making very much happens at the enterprise level and not in our functional hierarchies. And this is something that we're rolling out across the board. I can report that this not only gives us higher focus, but also gives us probably better performing employees, more satisfied people instead of running up the flagpole for decision-making. They're making it where it's most needed and gives us higher productivity while spending less. These are truly transformative changes in the way how we drive our business and translate into superior top-line growth and also strong probability. So in closing, I think we're making tremendous progress on our agenda.
Our three strategic priorities are delivering both in renewing top line, but most importantly also really evolving a pipeline that was seen to be interesting on the early side, but that is now getting late early, if I may say so. So it's good progress on all of those fronts because our launches are succeeding with Nubeqa, Kerendia, and Eylea 8 mg. It's because we have new launches in store with Acoramidis and Elinzanetant. By the way, I failed to mention we have the readout for Asundexian and stroke prevention in the second half of this year, which potentially gives us a sixth opportunity here. And just think about this. A company that has been very much relying on two franchises, which were Xarelto and Eylea, is now gearing up to have six potential blockbuster growth drivers. On top of that, given our size, I think is a tremendous opportunity.
This is why we feel so strong about renewing growth as of 2027. All of this based on also continuing to advance our pipeline and to get all of these new assets in under the new operating model. With that, I would like to conclude my remarks here, invite up Christian Rommel, our Head of R&D, and Olivier Mouroy, who is our CFO. Look forward to your questions, Richard, and to those in the audience. Thank you very much.
Any questions in the room? We do have one there in the middle. If you just wait for the microphone, hopefully we can get to.
Hi. Thanks very much for the presentation. Historically, you've talked about elinzanetant as being a billion-dollar-plus opportunity. Today, that was noticeably absent from your slide, and you described it as being a, I can't remember the exact words, a challenging market and going in eyes wide open. Are you less confident in the potential of Eylea? Or how would you characterize the top-line potential for elinzanetant?
First of all, thank you for asking the question because that allows me to make it very clear. We see this as a blockbuster candidate. So that has not changed. And quite frankly, otherwise we shouldn't be launching it. So that has not changed. But I think I mentioned it last year already. This is not a walk in the park because there is a clear understanding by physicians that HRT is an effective treatment. So we need to find the right place where this is acceptable both to women, which I think are more open to non-hormonals, but also to physicians. So two out of three women don't get HRT, but more than that, that suffer from symptoms. And so I think so far that unlock hasn't happened. And this is where we feel strongly about our knowledge in the market.
We will be benefiting from others that have sort of like also set the scene a little bit. But we continue to be confident. But we also know that this is not like in cardiovascular where you have the data and sort of like the guideline will sort of like force the physician to prescribe this. There's a lot of education that will need to happen before that happens.
Stefan, just a bit, we got another question. But just to build on that, you mentioned the depth of the data in terms of four trials. Does that help build the market from your perspective relative to the competition?
First of all, I think that we don't have direct comparison to the competition. So it's all indirect. But I think if you care to make the indirect comparisons, then this is a very strong set of data. And we believe that from what we see, the dual mechanism of action also potentially gives us an additional leg up over something that's only focused on hot flashes. So I think we have a differentiated profile. And now it's about really finding the right segmentation between where hormones go and where non-hormonals go. And I think this is when this class, when the first product came to market, there was sort of like this belief, oh, this is going to replace all hormones. I think we're past that.
Take the question at the front.
Could you please add more color regarding Xarelto patent situation in different geographies?
Yeah, sure. So this is a very mixed picture. So it's going to take us a little longer. I don't know, Olivier, you want to take that one?
Yeah, I can start. Thank you for the question. So Xarelto has been our biggest blockbuster so far. So indeed, for the past few months and even a few years, we've been losing some of the patent protection in different geographies, Canada, Japan recently, the U.K. as well. And it's starting to be a bit more impactful in Europe in particular now. So we still have our once daily patent to protect us until 2026. But there are very different dynamics in the countries, especially in Europe, where we have sometimes entries at risk. Sometimes we win some first appeals or first injunctions. Sometimes we lose as well. So it's very dynamic. It has been dynamic in 2024. We are still, sorry? And it will be very volatile and dynamic in 2025 and even in 2026.
I think that we have been doing a pretty good job at defending Xarelto in 2024. We will be continuously and vigorously defending our patent in 2025 and 2026. But you can expect a bit of volatility in this year as well in 2025.
Just to add to that, all of these launches that we're seeing, they're all at risk. So we feel that we have valid patents in place. But these generic companies are launching at risk. We were surprised in some geographies that that would happen. It has happened. We had, I think, in our guidance, cautiously included that. And when you look at the overall performance in 2024, we're seeing that I think we anticipated the Xarelto situation quite well. Our exceeding the guidance is also strongly built on our launch successes. So the Xarelto effect is going to go away. So this is a question that's going to sort itself out over the next 24 months. And then I hope we can speak about other things.
Hassan?
Yeah. I was actually wondering what your plans with TKI is, specifically Regorafenib. Future plans with that would be?
Do you want to take TKI, Regorafenib?
So this is a product that is losing exclusivity around the world. It's not really one of our focus areas right now. Actually, when I look at our oncology portfolio, I can think of other priorities that we're following.
Maybe you want to add some color?
We have one for the HER2 exon 20 mutation, which is now in phase III, and it looks very promising. You may have seen some of the responses between 70%-90% response rate, so there's one TKI currently that is in development and entered phase III.
We'll take a question from the website here, which is related to oncology, and they're asking about the supply of actinium and whether that is a barrier to conducting clinical trials, but we could maybe broaden that as well beyond that question and think about the radioligand therapy and your thoughts.
The supply is, of course, a challenge because it has become a more attractive area. There's a lot of new entries. We see more competition. We anticipated that. Bayer is one of two that has experience in commercializing radiopharmaceuticals. So we have an infrastructure. We have secured supply to the best of my knowledge so far. And we're generating data with three clinical programs now with actinium conjugates. And I think it's when you want to expand a bit, it's about the right target, of course, in a disease relation. Then the right modality is an antibody, small molecule peptide, the conjugation technology, and then the choice of radioisotope. And for now, we focus on actinium. We're exploring further the space. And supply is something that you have to monitor and make sure it's not holding you back.
If it's working, you don't want patients not getting the medicine, the therapy. That's our commitment. I think the beauty of our business is that we have a strong footprint to build on with our Xofigo business. We know how to supply this into the world. The supply chain is not trivial, but we know how to manage this. And I think we have some really very attractive early-stage assets that we now need to see if the data confirms our expectations. And then you see even more reason to believe why we think we can play an even bigger role in oncology beyond Nubeqa.
Any further questions?
Maybe I did want to build on the Xarelto question and just ask about Eylea. It was very pleasing to see great uptake in Japan and Switzerland of high-dose Eylea. But maybe you could build on the color of how you see the market developing. You touched on it briefly.
Yeah. So first of all, I think we need to highlight a little bit that in Europe, also in Japan, we're building the 8 mg launch on more than a decade of really market-leading success in the space. And when you look at our label, it's highly differentiated, not only over 2 mg, but also over competition. No one has the dosing intervals that we have. Right now, we're the only ones also of the novel entities with a prefilled syringe, which is not trivial to actually getting treated for patients. So what we see is we're going to see a lot of the new starts going directly on 8 mg. And this is now happening. And we're getting tremendously positive responses also from our treating physicians in terms of efficacy, of ability to dry, and to have the larger dosing intervals. So we feel bullish about this.
There's a reason why the label is so differentiated. This is the class-leading product. I see no reason why that would go away. Now, the bigger question is what happens once biosimilars hit. So there is no exact science around this. Because when you look at analogs in Europe, what you see, for example, with Lucentis is that biosimilars have not had a lot of impact in that class. Instead, patients have rather gone to alternative treatments, by the way, also to Eylea and to competition. We believe that with the 8 milligrams, we have the perfect alternative if a switch is needed. If no switch is needed medically or because of whatever regulations, then people will probably stay on treatment. We're going to see more of the uptake through new patients. That's gradually going to take over from the 2 mg.
If there was really someone forcing our hand, then I would foresee that we're going to have more switches towards the 8 mg . What we're likely to see is pricing action in Europe, and it's going to change country by country, so the 2mg is going to come under fire from a pricing perspective, and most HTA systems are going to mandate some level of price discount for the 8 mg. That's, again, changes from country to country, for the 2 mg, sorry, but should not necessarily, for the most part, be affecting the 8 mg .
You showed us the very strong uptake of Nubeqa. And that's really even before that's the ARASENS trial, I suppose. You had positive data from the ARANOTE trial, I think it was last year. So what does that, there's a bit more competition maybe in that particular segment. But what does that data bring? What's the reaction been to that?
For ARANOTE? I think ARANOTE overall confirms the profile of Nubeqa. Maybe Christian, you want to comment?
Yeah, it's a chemo-free option. I think the data are very consistent. We continue generating now additional data for bringing this therapy to more patients in the adjuvant, neoadjuvant setting. We also have a trial going on, ARASTEP. That is, we call it biochemical response on PSA that has never been done to the best of our knowledge to create a new endpoint. So we believe that Nubeqa is positioned to be the leading class in that space. Hopefully, every patient across the disease range can have the opportunity to benefit from the therapy.
But Richard, to your question on ARANOTE, I don't think that the competition is more or less on ARASENS versus ARAMIS or ARASENS. I think this product has just proven now in doctors, in physicians' hands to be the best one, the one they like the most. It shows because we don't cross the blood-brain barrier. Let's remind ourselves of that. We have a superior safety profile. And many of these patients, or most of these patients, remain asymptomatic. And you don't want to have side effects when you are. And when you have a product which is perfectly efficacious, we've seen that this just has become the number one choice in those settings. And you're right. With ARANOTE, I think this opens just another lid or takes another lid off in terms of its potential. So we continue to be bullish around Nubeqa.
And then we have the final trials, which are going to read out in 2027, 2028-ish, which should really give us more than, I think, 75% of total prostate cancer. So this is not the end. We're just sort of in the middle of the race.
Maybe finally, we touched, or you touched on Kerendia. And obviously, the very good data in heart failure, particularly on SGLT2s. I mean, could we see cardiologists adopt drugs relatively slowly? We've seen it in heart failure. We've seen it across the space. But can we see an inflection here from that indication?
So interestingly enough, we're seeing it a little bit already with the release of the data. But this is obviously then off-label. But I think it also gives more credibility to the kidney indication. And there's really like an injection of good energy, maybe also to our salespeople, quite frankly, when you get this type of a data set. I think the FINEARTS data, and by the way, you wrote the best comment after the FINEARTS trial. But I think I already told you that, most qualified one at least. I think it really totally changes the way how we should look at Kerendia. When you think about spironolactone analogs, which have proven that they're efficacious in heart failure settings, but show, because of hypokalemia risk, show some risk that have led to non-approval for these types of treatments.
Now we have a clear pathway to not only approving this class in this setting, but I think the evidence is so strong, and we have multiple trials showing evidence of class evidence. But it required a non-steroidal to show improved safety. That this is, to me, a 1A type of case in terms of efficacy, and then this becomes a must prescribe. And I think it would be good medicine if we went down that path. We'll have to see. I don't want to preempt medical societies here, but I think we have a strong case. The data is, I think you wrote it. If it's that strong, it should be that. And ultimately, we came out at the top of what everyone was expecting, so Kerendia is something that I feel very strongly about, and we're not ending it here. We still have a number of trials ongoing.
Actually, we have a dedicated trial to study Kerendia plus SGLT2s, which has already been proven quite nicely in the FINEARTS-HF trial. We're now looking at this in a HFrEF setting, where I would knock on wood, also would expect that this is a really good trial setting for us, given the readouts in HFpEF. So we're really covering all of our bases from an evidence generation perspective. I think this is a well-developed product if we get to the end of it, and we should live up to its potential, and yes, cardiology is slow, but let's also not forget that cardiologists have wanted to use more broadly MRAs in heart failure. And there was off-label use, but limited to some degree, so I would hope that that can change with Kerendia.
Excellent. I think we're out of time. So thank you very much, Stefan. Thank you.