Earnings Call: Q3 2022

Nov 8, 2022

Hello, everybody. Good afternoon or good morning wherever you are. This is a small video conference here discussing the 9 months results of Ekater and Ziegler, which you see up here, let me actually do this, then I have a little laser pointer. And there is a disclaimer because a public company and then there is a netiquette rules here. Please mute your microphones. This presentation, which I'm going to will be recorded. The Q and A answer question and answer session afterwards will not be recorded, Seoul, which already gives you a structure, an idea about the structure of the coming 15, 20, 30 minutes. I'm going to say a few words to our results which you published here this morning and afterwards, you will have a chance to pose your questions. Okay. We are here in the empire of radioisotopes, Ekater and Ziegler. In order to keep confusion low, we keep the presentation a little boring, always the same. It's a global specialist for radioactive applications with a whole range of main products. For the 9 months now, we booked EUR 164,000,000 in revenues Q1 to Q3 2022 and EUR 23,000,000 net income. Growth engines here are radiation sources. Ops. Somebody please mute himself. Thank you. Hello? Kwenzi. Could you please mute your microphone? Okay. Thank you. I love it. So anyway, I'm here in the radioisotopes and nothing will hinder me of going through this presentation. We are 945 employees here at the moment, 18 sites worldwide. We've eliminated here some sites because we sold our HDR business. And otherwise, we have no big changes compared to last year or last quarter. General story here there, we have a good run here in the last yes, we have increased our net income by a factor 2.4, our dividend shares by a factor 2.5. And in general, the Ekaterin Ziegler here is in the middle of a developing, exploding specialty mark despite all the problems which we have here in the world. Corona is not yet over. The 20th Congress of the Communist Party has still closed China. Ukraine war continues to happen. However, the threat to our 2022 EBIT at least has evaporated. And we had in the last quarters there delays with the rollout of important products here from Novartis. Inflation heating up. All of these items are all familiar to most of you, but I nevertheless want to pass them by. And we have now here for the Q3 recorded a net income of EUR 23,300,000, which is pretty much 86% of our guidance for the full year. We said we're going to do EUR 27,000,000. Now the first question is who, so why don't you raise your guidance and all that, that looks a little silly. Yes, yes, yes, but you know how things are. The end of the year for us is normally the time where we look at a few things here and see whether we have to bury some corpses. And so it's very likely that we will exceed the CHF 27,000,000 net income, but it's not that likely that we will be exceeded by more by 10%, 15%. And in general terms, anything which is in the range of 10% less or more is fudge. We're not going to change our guidance for such. Just for those who are new with us here, this is our last year's 9 years of earnings starting here with a €6,800,000,000 in 2014. You, of course, picked this so that this is the absolute nadir. And then we've going up last year, we had strong year with €34,000,000 of net income. This year, our guidance is €27,000,000 As I say, it's a little higher there. It will be still within the range of 10%. This is a net in growth growth all in €1,000,000 since 2014. Through the 1st 9 months 2022, the essential. We have a strong growth, and we have progressed materially with our pipeline. You saw it in the press release, revenue growth on a nominal base for the time period from January to September. Total group revenues up 25%. The revenues in the Isotope Products segment up 40%, radiopharmaceuticals, which is kind of the hottest thing we have at the moment in our basket, including Speck, up 29% year over year. Revenues in the Medical segment, up 6%. That sounds a little meager. I will say a few words to that. But for the record here, I just have it listed. The group profits are up 18%, if you adjust for the fact that last year why is there a comma? We had an STR, one off sale of business of €9,400,000 of course. And I hope I haven't picked up here now. And that's the main messages. It's in line with what we had in the half years and it's a general trust. The net cash adjusted for debt is constant here at EUR 60,000,000 we are, despite an ambitious investment program, see that we can conserve as much as possible given the clouds on the horizon. And we have material progress on development pipeline. The European Defence Fund, we had a in this quarter, we had a press release, has given us €70,000,000 in cash, non dilutive for one of our associates there. We have the 1st patient dose in PENTIXA-four Phase II trial in Denmark. We have acquired global rights for CXCR4 Technetium-ninety nine tracer. This would be the highlights of the Q3. How do you interpret now the nominal results in the Medical segment? We have things which mildly inflate our growth and that is a foreign exchange rate effect. In the previous years, we had a much more favorable or less favorable exchange rate because the dollar was weaker. Now we benefiting from the fact that we sell a lot into the United States and that the U. S. Currency has appreciated. So that makes us a little even more beautiful than they are. The countervailing tendencies are a number of factors which reduced the growth. And one of them is, as I said, the EUR 9,400,000 net income one off last year, if you take them off, then you have the 18% growth in the profits. We also have here EUR 1,400,000 still missing revenues associated with the HDR our business in this year. Previous year, we booked some of that. And we have start up costs in China and Boston, which accumulated up to EUR 2,500,000 for the whole year there, which we didn't have in previous year. It's not really big swing but worth mentioning. On a material basis, why is in the Medical segment why aren't we even better than we are because we kind of have less revenues in contract development services. It's a category we have in our radiopharmaceuticals where we develop for other companies their compounds. And last year, we had a very strong year in that. We had a lot of bookings up to that, euros 2,500,000 are missing. And that's the only product category really in the pharmaceutical a space where we have a decline compared to last year. In the ice drop segments where we have Industrial Products, of course, we have a big tailwind through foreign exchange rates effects and also base effect because last year, we did not have Technonuclear in the fold. These will be the comments of what is unusual and remarkable. Linda is all kinds of tidbits and small stuff, but these are the big things. Radiopharmaceuticals, just to give you an idea how it worked. Here, again, the radiopharmaceutical product categories, it's bulk radioisotopes, it's generators, contract development service, contract manufacturing services and equipment. And you see here you have our trajectory over the years. This year's the extrapolation. We've taken the 9 months here, divided by 3 and multiplied it by 4 to have a standard to these one full year things, and you see we're going to see here actually quite a jump in the radiopharmaceuticals. The group balance sheet is we still think it's solid. Net liquidity here, SEK 83,000,000 we have in cash and stocks, not much stock, so I think it's more cash. And here we have CHF 23 now in loan liabilities. So that makes a net liquidity of CHF 60,000,000. Is equity ratio is still a comfortable 52%. And a view on the cash flow situation, of course, here we have full year or we have end of year dates. Here, we have the Q3. So that is somewhat comparing apples and peers, but nevertheless, you see apples and pears, but nevertheless, you see we're going up here. The green is our cash from SEK 80,000,000 it sits down somewhat here 15%. And of course, the loans here increased also about, I would say, 15%, giving us a net liquidity of IR 30 less. Okay. This is growing business, which we go up there. Select a topic. Our clinical pipeline is worth a few words here. Here you have the Easyjet version of that, what are we doing here. The plan is really for us to get cash flow with radiopharmaceuticals with proprietary radiopharmaceuticals going with a quick Phase III diagnostics. This is product we're trying to register. It's called PENTIXA IV. Initially, we sold about 600 patients. We thought the study should cost us less than EUR 50,000,000 and should be feasible to actually, which we announced like half a year ago, maybe even 2024. We were a little overoptimistic. You see here we have to push it out into 2024. Study costs are still the same. The indication which we've learned now from some interaction will most likely be less of a basket and more focused on myelomas. The cost though, therefore, will be likely less, somewhat less, not really significantly less because we probably don't need 600 patients. An EMA decision, which will give the details to when can we start with the Phase 3, is expected still within this year. The compound itself, pantixapharm, are already making headlines. Some of you have maybe seen that already. There's a Journal of Nuclear Medicine. That's where all these nuclear medicine practitioners die for being published. They took the Pentixa here, the CXC Motive Chemokine Receptor in Pentixa for PET made it to the cover. That is enough to make people switch. We're quite happy. There's a lot of activities going on. We're very happy with the compound just passes here as a surrogate indicator. We have started in Denmark now a Phase II supportive trial, which will eventually cover more than 6 sites. And what's the story there? We have here that normal for myeloma patients. Patients are admitted, K SIB, relapsed and then because it's a very aggressive tumor, you just go week 1, CHAMO week 2, CHEMO week 3, CHEMO, you have to act quickly because it's an aggressive tumor. But that is also a problem because you don't have much time to see whether it actually works. What we are doing in this medical supportive Phase II trial in Denmark we're going to have an arm where after a week we're going to have a response checking with CXCR4. And that should really tell you whether this works. And if it doesn't work, then you can change regimen. And if it does work, then you would double. This is kind of not doesn't sound here like a real, real, real, real big progress, but is enormous progress for hematological oncologists because they would be able to direct their patients in a much more rational way and react quicker. If something doesn't work, find out. So let's see the therapeutic we are the diagnostic we're developing. Of course, there's also then at later stage a therapeutic to that, that is not as soon on the horizon as all these diagnostics are. The core of our clinical program here. It's focused around the therapeutic diagnostic area, Gallium 68 Phase I, Phase II. This is what we're going to afford. And we have an yttrium based therapeutics. There we will not be able to jump right away in a Phase III. We have to go through all of the kind of things. It will take a little longer. This is the core of our clinical pipeline. We are preparing an additional spec branch, and I'm happy to announce that for the CXCL4, we have gotten the global rights for Technetium-ninety nine. We're looking at other things as well. And the rationale to that is our recent acquisition Techno Nuclear, which happens to be, as the name says, a techno Technetium generator producer. It's very well worth to support that, not just with the product, but also with the expertise up there. And on the therapeutic side, we are reviewing here additional Alpha Therapeutics. Our hope is in the end to get a sustainable pipeline with an economic field which includes, for our small world, the most as many options and as many opportunities as possible, which together, we hope to add another EUR 100,000,000 in additional EBIT by 2027. A file there are many ways of how to look at this little scheme. One scheme would be by financial independence, all of the diagnostics Phase I, Phase II, Phase III. That is something which we can be doing with non dilutive funding. These are given that you have diagnostics and you very early in the phase where that works. You just need 2 or 3 patients. We're talking here €10,000,000 €10,000,000 €15,000,000 per shot. That is something which is doable for Ekaterin Ziegler and in the therapeutic side where the patient requirements are much larger. We are able to start Phase 1 dose finding and initial things, but there we most likely will look for partners. In the future. Now here on the Diagnostics side, we are in many instances here, for example, already aiming at the Phase III. We think that here for the Technisio, we should also be very quickly get in Phase III. Here, it will take longer. If you look don't look by financial independence, but by time to market, all of this should go quick. Now Quick and Pharmaceuticals, of course, I know is in Oximaran, but relatively quick there. We're hoping to have first product sales in 2025. And you can also look at it in a risk management thing. You see we're using 4 radioisotopes. Using Technetium, we're using Gallium, Yttrium and Actinium, all of which we manufacture or intend to manufacture. We're having the CXCL4 compound as a motive, which developing as a therapeutic and as a diagnostic in various things. And we're reviewing other ones, which was put nicely in here, which would still be within our budget so that we have, let's say, interesting, attractive, sustainable, risk management, self financing a pipeline, many eggs, many baskets, which sits there nicely together with our existing world market position as a supplier of radiopharmaceuticals. Just here, this is a chart from somebody very knowledgeable about the things saying that what counts really in radioisotopes is can be understood like that. You have research applications, you have commercial applications, and here you 10,000 clinical doses annually. That's where the wheat is separate from the chaff. That's here you do research and here you're a real guy. And then short half times and long half times and there's all kind of things. But if you look at it, the main radioisotopes is gallium. Now a pretty strong world market wise on that. F-eighteen, we're no longer there. We sold our cyclotron chain. So we have a good idea really on what is there. Technetium. We are there with Technonuclear. You see Luthisium, we're working on our drug master file, and I'm optimistic that Edu will come, come, come. Itrium. We are definitely number 1 or 2 in the world market. And Actinium here, that's an ongoing project we have with the Prague Academy of Science. We reported about it already in previous sessions, and maybe I will revisit that topic later when there's something to report. So coming soon here, EMA feedback on the start of Phase 3, PENTIXA-four, likely the end of 2022. We're expecting additional production capacity in Boston for our Yttrium 90 franchise regulatory approvals are pending. Nucetium-one hundred and seventy seven in branch, Mike, also there regulatory approvals. And anything which happens on our alpha front, we will report when progress happens. Thank you for your attention. Financial calendar and this would end the recording session of the our little presentation and would now