Good afternoon, ladies and gentlemen, and welcome to the Formycon A/T Earnings Call regarding the half-year 2025 results. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation. Let me now turn the floor over to Dr. Stefan Glombitza, the CEO of Formycon.
Yeah, thank you for the introduction, Beatrice. Good afternoon, good morning, and warm welcome also from my side. We appreciate, of course, as always, your attendance and the interest into Formycon's H1 earnings call. Earlier today, as you might have read, we issued a press release with detailed insights on our mid-year performance. In a nutshell, I'm very pleased to reconfirm the full-year guidance for revenue and EBITDA, while working capital cash is boosted by our recent highly successful Eurobond placement. We're also looking back at a period with very strong operational achievements across many areas. Particularly, I want to mention our pembrolizumab Phase III waiver, which is putting us in a very strong competitive lead position and opens up many fold opportunities for this attractive asset and beyond. This breakthrough will allow Formycon to develop biosimilars faster and at lower cost.
The financial numbers of the first half year are still indicating that we are at the starting point of the commercial ramp-up. They are in line with our phasing assumptions for this transformational year. We are expecting significant revenue-generating events, particularly in Q4, which make us very confident to confirm the 2025 full-year guidance. We want to use the next 30 minutes as an opportunity to provide additional context on both the operational achievements and, of course, the financial performance, combined with an outlook into the period to come. Enno Spillner, our CFO, and me will guide you through the key facts in our joint presentation. Andreas Seidl, our CSO, will chime in to answer any questions in the Q&A section. As usual in those settings, I'm starting with a legal disclaimer on forward-looking statements.
Some of you might have seen this slide already quite often, but it's important to me to always refer to our strategic timeplan, which we continue to execute stringently, which is unchanged, and we continue executing with laser focus step by step on our growth trajectory. 2024 was tremendously important for the company as we got two more biosimilar products approved, which prepares the ground for the next ignition stage, turning us into sustainable profitability after having those products established in key markets. Our continued operational successes are driving the transformation of Formycon into a biopharmaceutical company. Increasing commercial revenues will fuel our pipeline and continuously drive more patient access to vital medicines through our products. The business is a key driver for many players in the off-patent industry. You hear that across multiple earnings calls.
Supported by the overall positive momentum in biosimilars, and thanks to the progress of our attractive pipeline, we are at an inflection point to profitable growth. Our target remains unchanged: to turn Formycon into sustainable EBITDA profitability, ideally as early as next year, 2026. Let me now focus on the operational achievements in more detail. The excellence and track record of our development platform remain the solid foundation for our growth path. This is getting even more important in the light of a long-awaited Phase III waiver opportunity. In essence, this is driving higher throughput and value generation from our development platform. Looking at the milestones and the programs in detail, we have been able to communicate a bundle of achievements not only in the year 2024, as well as in Q1 2025, but also in this strong operational quarter across all programs.
In this chart, you see depicted the major achievements of the first half and also an outlook for the months to come. Starting with Q1, we gained approval in Brazil. That sounds like another country we add, but it's a gate opener to Latam, underpinning our strategy of diversification and geographic extension into emerging markets. Another deal for emerging markets could be signed with a company called Bio Usawa, serving patients in sub-Saharan Africa. A clear testament that our biosimilars are the solution to address high unmet needs for affordable biological treatments, which are practically not existing in those regions by law. Q1 had another highlight: the EMR approval of our pre-filled syringe. That was another very important milestone, a high-end off-the-device with strong technological features that have been approved and will benefit doctors and patients.
Large quantities are being produced as we speak, and the preparations are on track for the introduction into new key markets. This will generate additional market traction in those countries. Key highlight of the first half, of course, have been our FYB22 Otulfi, launches in the United States and key European markets via our commercial partner, Fresenius Kabi, and the February start march that happened, followed by Canada in May. The second half of this year started already with an exciting addition: the launch of FIMskina, the second brand of our FYB202 in Germany. The product is distributed by our commercial partner, Teva-Ratiophar m, and this shall add complementary customers and patients while maximizing our overall market penetration. Coming to FYB203, several commercial partnerships have been installed in the last months.
U.S. with a new biosimilar specialist, Valorum, Europe with a very familiar partner, Teva , and we also struck the second product deal with Lotus for APAC. You will see more of those licensing deals for additional countries in the next months. All are lining up for a staggered launch as soon as the IP situation allows. The year 2025 also started with the breaking news from a positive agency feedback, allowing us to waive the Phase III clinical study for FYB206, Keytruda biosimilar. That puts the critical path on our Phase I study with a major time driver, recruitment speed. Already in July, we could share the great news on last patient in. Combined with the Phase III waiver, this means that the patient recruitment for the total FYB206 study program is completed now.
This unique time advantage puts us into an extremely competitive situation, a strong competitive situation, around this attractive asset. We sense that very tangibly when it comes to these multiple licensing pitches. Upfront payments are planned as an important contributor to our revenue target this year. We expect those to come in Q4. Of course, this is not the end. Our clinical team will dedicate full focus on accurate execution of the remaining treatment schedule until we have the final Phase I study results in hand, and this is expected for Q1 2026 already. FYB208 has a very attractive cell line feature and is further progressing towards the so-called TPOs milestone, which is the entry gate to manufacturing, scale-up, and clinical phase, and by the way, at a high probability of success.
In essence, you can expect that the strong operational momentum will generate continuous positive news flow in the second half of this year and beyond. These operational achievements are creating the foundation of future revenues as a lifeblood of our growth path. Allow me some thoughts on key strategic success drivers for the future because you always have to be agile and adapt to the needs, and there are clear success drivers that are important on the way forward. Particularly, the rather young segment of biosimilars is still evolving, and we are observing multiple dynamic changes. There are huge opportunities to embrace, and the underlying momentum in that segment is definitely growth. One key lever towards sustainable success in such a fast-moving business environment is geographic diversification.
This helps to grasp as many opportunities as possible and boosts the global leverage of our developments, including also a rapidly expanding network of international commercialization partners. We have intensified our efforts in this direction the first half of the year. You saw some deals we struck for emerging markets, and through expansion into these high-growth emerging markets and with a broad network of regional marketing specialists, we are today laying the foundation for tomorrow. Pipeline selection excellence is and will always be of essence. Identifying where to play and how to win is super important. Then, of course, advancing with focus and conviction. Tracking semi-exclusive deals, which we also have done partially already for certain territories, provides the opportunity to even maximize revenues from this existing portfolio by complementary market strategies.
Our strong backbone is the excellence in biosimilar development, and this excellence is the basis for innovation as a key differentiator. Top-notch novel technology in device development, like for instance, our off-the-prefilled syringe, is important to offer superior product features to patients and healthcare professionals. Innovation means for us also shaping the science, so challenging existing policies, shaping the regulatory landscape with novel creative approaches in constant dialogue with the regulators. This happened successfully, for instance, with our Phase III waiver in FYB206. This is, by the way, not only saving investments of high double-digit millions in our program, same science applied to our younger pipeline enables us to develop biosimilar projects faster and more cost-efficiently. Building on our extensive biosimilar experience, we are thus streamlining our development processes through targeted AI deployment and a constant refinement of our approaches.
Streamlined development timelines and advanced cost efficiencies will enable us to fully leverage our development platform and take even more advantage of the unprecedented number of LOE opportunities in the upcoming years. Speaking about cost efficiency, it's a perfect timing to switch over to the financial part. Happy to hand over to Enno, our CFO.
Thank you, Stefan, and also a very warm welcome from my side. Happy to introduce our H1 2025 numbers to you, plus, of course, providing an outlook/guidance for the remainder of the year. Let's take a look first at our P&L, which is mainly on track. Starting with the revenues, revenues are in range of what we expected for H1 based on our guidance, which we provided at the end of March to you of this year. Due to the transformation of our revenue structure, revenues are clearly reduced compared against H1 2024, and I will introduce some more details on the next slide. Cost of goods also reduced against H1 2024. However, at first sight, reduction takes place in a smaller scale.
This is mainly due to the fact that we are now recording the regular amortization of FYB202, which makes about €6.2 million per quarter, something we didn't have during the first half of 2024. If we adjust for this accounting measure, we would be looking at operational cost of sales of approximately €10 million for H1 2025 versus €25 million in H1 2024. R&D expenses remain in a similar ballpark with the main spending for FYB208 and FYB210. EBITDA is about the same range. This is in the same range, sorry. This is A due to savings and phasings along the previous positions I just mentioned to you, and B due to the fact that the aforementioned amortization is neither EBITDA nor cash flow relevant. The adjusted EBITDA declined due to the reduced equity reside coming from our joint venture BioAid, which is running our FYB201 performance.
With Sandoz pausing its U.S. activities for similarly and the Q1 sales being under some price pressure, there's little contribution from this joint venture in H1 2025. The capitalized development costs in 2025 are fully contributed to the clinical development activities of FYB206, and the clear increase of this investment is due to the fact that FYB206 clinical trials started in June 2024, extending the investment at that point in time. Let's take a closer look at the breakdown of our sales, which are consisting of three pillars: A, service/development recharges; B, upfront and milestone payments; and C, royalties. In the future, we will recognize a kind of a fourth category, namely sales as a manufacturer of FYB202 for retained countries and FI203 supply chain management. However, both haven't recognized revenues in H1 2025 yet. Current development is clearly reflecting our change in our revenue structure.
While recharges for development work on FYB201 and FYB203 continue to reduce as products mature successfully, deferred milestones from FYB202 have now completely faded out due to the successful approval of the product in fall 2024. FYB201 royalties reduce mainly due to pausing marketing of the product in the U.S. by our partner, Sandoz, as mentioned before. However, the last position we assume to resume in H1 2026. In return, FYB202 royalties generated €1.7 million of revenues, a relatively moderate start year- to- date, assuming to pick up in the second half, especially Q4 of this year. These incoming royalties are not yet in a range to compensate for the other effects which I mentioned to you. Upfront payments and/or milestone payments from, for example, FYB206 partnering are yet to come and are anticipated to contribute to our overall performance in the future.
Therefore, in total, revenues in H1 2025 decline compared against H1 2024, which was expected due to the backloaded 2025 revenue structure. Also, with regard to our cost of sales, we are recognizing similar structural changes as just described in the context of our revenues. Operational cost of sales reduced significantly for FYB202, going down by almost €10 million, plus cutting more than 50% of cost of sales for FYB201 and FYB203, respectively, due to reduced and fading out development work. On the other side, we do record a new position of FYB202's regular amortization, and this €12.5 million amount is neither EBITDA nor cash relevant, but significantly influences our cost of sales. In total, our cost of sales reduced by approximately 10%. Let's review some group asset KPIs. Our balance sheet totals at a strong €743 million.
The light reduction mainly results from reduced trade receivables as well as a reduced cash position at the end of the reporting period. Equity is reduced by €54 million due to the net result. At the same time, our liabilities increased by €24 million or 8%, which mainly is a technical effect from our non-current liabilities residing from a change of WACC, or weighted average cost of capital, from 10%- 8.7% being used to discount the earnout obligations. In consequence, our equity ratio slightly drops but remains with a strong 55%. Cash and cash equivalents adjusted to €27.3 million at the end of H1 2025. Also, while we continue to invest a lot into our FYB206 Phase I study, we saw significant cash savings due to the fact that we didn't have to continue to invest into prior Phase III activities.
The recently concluded bond is not yet considered in these numbers, as it was only settled in July, or on July 9th to be more precise. Cash flow and working capital were determined by multiple factors. Net cash from operating activities was quite balanced between our negative EBITDA on the one hand and the strong positive impact from more than $20 million trade receivables, mainly from a Fresenius Kabi payment. Net cash from investing activities reflects our strong engagement into FYB206, showing a $25 million investment, while at the same time receiving almost $8 million from BioAid, our joint venture, repaying further parts of their shareholder loan to Formy. On the working capital side, current receivables as well as current liabilities and accruals were the most influential factors leading to an H1 2025 working capital of $17 million. What do you need to know about our debut bond offering?
In June, we announced the offering for our first-time Nordic bond as a debut offer to institutional and to retail investors, opening the network to a new group of investors joining FONK. The offer was well taken by investors from Deutsch, from Scandic, but also from the U.S. While initially targeting $50 million, we finally had more than $100 million on the table and decided to lock in for $70 million. The transaction was concluded on July 9th, 2025. This is why, as I mentioned, the reason why the successful chapter was not yet accounted for in the H1 reporting. The bond is publicly traded. The proceeds will be utilized for further developing our existing product pipeline, pushing our assets further down the value chain towards market. The loan is unsecured and contains very moderate covenants and maintenance only.
Interest is floating at three months Euribor plus 700 basis points, turning out at the lower end of the spread, payable quarterly with first payments due on October 9th, 2025. The term is four years. Our so far existing shareholder loan was, by the way, waived in this context, while also seeing a commitment into this new loan from some of our major shareholders, which, of course, is highly appreciated. Let's get back to our financial performance and our respective guidance for the second half of 2025. It is obvious that with revenues of €9 million recognized for H1 2025, aiming for a range of €55 million- €65 million of revenues for the full year looks a bit like a stretch. That said, we remain positive to achieve this revenue guidance for the full year 2025 based on two main revenue drivers.
Formycon expects a strong and very dynamic second half of the year due to the targeted conclusion of first licensing partnerships for FYB206 and further establishment of FYB202. This is especially true for the fourth quarter of 2025 and therefore a backloaded expectation. Regarding FYB206, we are progressing in positive discussions with various industry players, which may become our future licensing and commoditization partners for FYB206. Not yet a done deal, but we consider it realistic to conclude accordingly still in this year. Regarding FYB202, we are receiving encouraging signs from our commercialization partners for further accelerating increase in revenues and thus royalties for Formycon. Recently announced deals, for example, in the U.S. between Fresenius Kabi and CivicaScript , confirm this trend. However, it takes a while until these agreements materialize into revenues with benefits for Formycon. Overall, we confirm our guidance for 2025.
Revenues in H1 2025 came in below €24 million. As just described, 2025 will be backloaded due to the market grip of FYB202 and expected licensing deals for FYB206. Full-year EBITDA will benefit from the expected positive revenue performance during the second half of the year. Adjusted EBITDA should even reverse slightly. Working capital is the position we change, namely uplift, mainly due to the successful bond financing and contributing to the working capital. Liquidity with the additional €70 million gross on our LV pounds will get us through the developing of the current pipeline and achieving EBITDA profitability. Just three very brief points on this particular slide. Engagement of existing anchor investors remains stable or unchanged. Comparing our trading volume for H1 2024 versus H1 2025 shows a more than 4x increase of our average share liquidity.
Now, with a publicly listed bond in place, we do have a second publicly listed vehicle in the capital markets fund. With that, I'm at the end of my part of the presentation and would like to hand back to Stefan for a final summary. Looking very much forward to your questions, and thank you very much.
Yeah, thank you, Enno, for providing us with all the necessary details to understand the numbers. Let me just conclude in a summary regarding our company and the way forward. With three pipeline assets approved, two being marketed, and the third one in the wings, it was a very strong and steadily progressing pipeline. We were able to create a trust-building track record. At the same time, also a robust platform for commercial partners that are seeking to license in our attractive assets for their portfolio. We believe we have all the ingredients in place: the right strategy, the right science and excellence, combined with passion and agility to adapt and grasp the multiple opportunities. This is enabling us to increase access for patients with severe diseases to our biologics through our partners and play an increasingly leading role in this attractive growth space.
Biosimilars have come to stay, and we are acting in the fastest growing segment of pharma with more than 100 biologics losing exclusivity in the next decade. The ground is prepared for the next chapter of Formycon's growth story. With that, I want to conclude the presentation. Thank you for your attention and hand over to the moderator for the Q&A section.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press nine and Star on your telephone keypad. In case you wish to withdraw your question, please press three and Star. Please press nine and Star to register for a question. One moment for the first question, please. First up is Nicolas Pauillac from Kepler Cheuvreux. Over to you.
Hi, guys. Hopefully, you can hear me and thanks for the presentation. Maybe a few annoying questions from my side, but just to come back on this good slide that you showcased for the ramp-up of the revenues of H2, I was wondering first if you could maybe give us some color on how much of the, let's say, total sales would be exposed to the licensing deal. How much would be tied to FIB? I think broad idea on that would be clear. Maybe a second question tied to that. We saw this increase in trade receivable, and you are saying that this is tied to Fresenius . Are we to expect that maybe there is potentially a private liability or something like that that can happen around the end of the year for 2024?
On 2023, if you have any updates on the timeline, that would be really helpful too. Thanks.
Yeah, thanks, Nicola, for your questions. I'll start with the 2023 first in a different order. Although I cannot tell a lot more than last time, I think you're probably aware that FYB203 or uplabel semi-biosimilars are currently in multiple litigation and court proceedings in several countries, and each country is handled differently in different courts and on different grounds. We will learn more about the timing depending on the outcome of those proceedings in the next couple of months. There's still a lot going on there. We feel well positioned, but the outcome is never 100% to predict. For those reasons, we are currently unable to make a valid statement here. I mean, we have also announced that we have approvals and commercial partners, so we are in the wings for the launches to come.
Besides that, we have to wait for the outcomes country by country and then be ready for launch, which we are. In 2022, the statement of the Civica deal. We are happy to confirm that Fresenius Kabi has signed an agreement with Civica Script, and Civica Script will act as an exclusive distributor of unbranded products as Fresenius customers. That's a very positive announcement and deal. This is in the series of deals we expect. The market penetration, of course, goes step by step. It doesn't move fast in the PBM segment. Stelara is still dominating the formularies. Fresenius Kabi is well- positioned and based on the established customer relationship and also on an integrated commercial infrastructure. This team, the U.S. team, is not only launching this molecule, but also other molecules with the same pay and structure.
The U.S. team is relentlessly driving coverage gains step by step with a growing number of deals and with totally different types of settings, direct, indirect, exclusive, non-exclusive. The Civica Script deal is a nice and a good example for that. The first question, was that around 2026? We have to...
It was basically about the revenue ramp-up and breakdown. At this stage, we cannot guide on detailed numbers with regard to each single asset. Clearly, we can confirm that FYB202 from royalty performance and FYB206, hopefully, from upfront payments/milestones will be the two major revenue contributors. Of course, we will also see some revenues from FYB203, from preparation work and services. The same is true for FYB201. Clearly, FYB206 and FYB202 are meant to be the major revenue drivers, but no details. Both of them, however, will probably show their most significant impact in Q4 of this.
Okay, it's exactly that. Thanks.
Thank you.
Thank you. Next up is Simon Scholes First Berlin Equity Research .
Yes, good afternoon. Thanks for taking my questions. I've got two. I think it's likely you'll be disclosing the originator product for FYB208 in the course of the remaining months of this year. I was just wondering if you could remind us or tell us for the first time roughly how large or how the market for the FYB208 originator product compares to the size of the originator of the market for some of your other assets. Just on the working capital position, I was just looking at your balance sheet, your H1 balance sheet. It looks as if you generated about €13 million from receivables in the first half and €8 million from payables. That makes it roughly comes to the €20 million you mentioned in the slides. I was just wondering what might happen to those positions in the second half of this year. Thanks.
Yes, thanks, Simon. Happy to hear you. Thanks for your questions. First, on the first one, I have to ask for your patience. We will disclose, I can confirm, we will disclose in the round the TPOs, which is expected in the next few months. In that moment, we will disclose, and that will come then, of course, with the size and the description and the molecule. We have to ask for a bit more patience and for the work patience. For the working capital, handing over to my neighbor.
Yes, and welcome, Simon, from my end as well. With regard to the receivables that you were mentioning, this is basically the repayment of the shareholder loan that we received from BioAid, which is a larger position still remaining. We had an extended slide on that, I think, two quarters ago of the structure work. Whenever BioAid is in a liquidity position to repay positions of this loan, they will transfer. It's hard to guide on regular numbers here. The $13 million payables that you were referring to is based on receivables from Fresenius Kabi royalties, right?
Okay, thanks very much.
The next question comes from Yi Chen from H.C. Wainwright. Over to you.
Hi there. This is Eduardo on for Yi. I guess a question around FYB202 and kind of the progress in the U.S. market. If you have any just an update on early uptake and the distributor dynamics there, and what the timeline is for kind of seeing the revenue reflect and revenue ramp in the U.S. market.
Yeah, thanks. Hi, and thanks for the question. I mean, partially answered already to the first question. What we see is that you can compare a bit with adalimumab where it took 9-1 2 months until there was an inflection point until the market opens up more significantly. It does, and it did. We expect the same for FYB202. What we see here is still that in the first year, what we also announced, that Stelara is still very dominant on the formularies. Overall, I don't know the very recent percentages because IQVIA is not always correct on that one, but it's above the 90% still. It's slowly eroding to the favor of biosimilars and to the favor of the deals that are being struck. I mentioned just one example, the Civica deal.
This is for sure a major one, but there are others as well ongoing. The U.S. team in Fresenius is doing a very good job and striking one deal after the other. The major impact for this year is very backloaded in Q4. The deals are, of course, something that will then generate revenues in the future years to come. 2025 will be just a starting point, but in Q4, significant numbers compared to the first half.
Got it. That's really helpful. You're switching over to FYB206 and clinical data there. Do you have any visibility into interim safety and PK comparison for the FYB206 trial? Any early signs or reports that we should watch for in the coming months?
I mean, of course, this is something where Dr. Andreas Seidl jumps in. Please, Andreas.
Yeah, this is Andreas, CSO Formycon. The clinical study for FYB206, so the PK study, is progressing very well. We have finalized the recruitment of this study in July. The first patients have passed the 12-month treatment period also successfully. We expect the top-line results of this study, which means the results of the primary endpoint, in the first quarter of 2026. The study is progressing extremely well. We have no issues there, and therefore, we expect also a good outcome in the next year.
That's great. Thanks for taking the question.
The next question comes from Alexander Galica from Hauck Aufhäuser Investment Banking.
Good afternoon. Thank you for the question. I just have two, one sort of a clarification. I think you kind of touched upon that in your presentation. I'm not sure if I caught it correctly. The increase in the contingent purchase price payment from €173 million- €192 million in the second quarter, why was that? How does this liability, which is essentially earnout, split between 2021 and 2022?
Yes, thanks, Alex. Goes right away to Enno.
Yes, the factor is the way that indeed we have to, on a regular basis, review and calculate the earnout model. Obviously, underlying this is the WACC, the weighted average cost of capital, which is a key calculating parameter. This changes once in a while as an external factor, which we do not totally have under our own control. In this case, it went down from 10%- 8.7%. That means we have less deduction here or depreciation here, so to say. That means that for technical reasons, the amount increases, which is obviously something that can go up and down by a while. With regard to your earnout question, it's roughly a split 75% on FYB201 and 25% on FYB203, FYB202, right? Sorry. Yeah.
Understood. Thank you. My second question is related to FYB202 revenue. I guess I wonder what kind of step-up would you require to see in the third quarter for you to still be confident in the guide? There will be, of course, an increase in the third quarter we expect, but it's incrementally increasing. We see with the additional launch in Germany, we see markets evolving step by step in Europe. The big drivers will be U.S. This is kind of one point assignment of a deal and one point assignment of delivery and supply to that deal. That's why we don't expect a huge increase in Q3. We will see a heavy loaded increase in Q4, and all the signals we see there confirm that. That will be a kind of hockey stick event or evolvement, which will then be more stabilized in the way to go.
It is just establishing that market and its early launch phase still. The Q code and interchangeability was assigned in May, so it takes some time to evolve that. Again, Q4 will be much stronger than Q3. That's our expectation.
Perfect. Thanks for the color.
Thank you. Welcome.
At the moment, there are no further questions. If you have any additional questions, please press nine and star key now. Thank you. Nine and Star for any additional questions, please. There are no further questions.
Okay. With that, thank you very much. Finally, everybody has deserved to enjoy the sun outside, obviously. We, of course, close earlier. I would like to thank the operator, Beatrice, and also our investor relations team, my board colleagues, and especially everyone who is joining today's earnings call. Thank you for your lively interest and trust in Formycon. We remain highly committed to building solid growth of Formycon and thus creating value for our shareholders. Thank you very much for joining and looking forward to the next interaction.