Good afternoon and welcome to Orion's earnings conference call and webcast for the financial period of January-September 2025. My name is Tuukka Hirvonen. I am the Head of Investor Relations here at Orion. In a few moments, we will start with the presentation by our CEO and President, Mrs. Liisa Hurme, after which we will have a Q&A session where you can post questions both to Liisa and also to our CFO, René Lindell. We will be first taking questions from the conference call lines, and after that, we will turn to the webcast questions so you can type in your questions using the chat box in the webcast view in the bottom. Just before I let Liisa take the stage, I'd like to draw your attention to this disclaimer regarding forward-looking statements. With that, it's my pleasure to hand over to Liisa. Liisa.
Thank you, Tuukka. And welcome to Orion Q3 webcast on my behalf as well. Here are some highlights from Q3 2025. Nubeqa received approval from the European Commission for the use of darolutamide and ADT, androgen deprivation therapy, in patients with metastatic hormone-sensitive prostate cancer. Nubeqa also reached all-time high royalties and product deliveries to Bayer during Q3. Generics and consumer health business had a strong quarter, supported by good availability of products in our major markets and very successful new launches. Unfortunately, ODM-105, tasipimidine phase II trial for insomnia, didn't reach its efficacy target, and we decided to discontinue the development of that program. Q3 financials are here. Before I go deeper into the financials, it is good to remember that the comparative period Q3 2024 was an exceptional quarter. We received EUR 130 million worth of milestones last year's Q3.
There was a EUR 70 million sales milestone from Bayer related to Nubeqa and a EUR 60 million milestone related to the MSD agreement on Opevesostat. These are quite difficult to compare to each other. As I go along, I will talk about the base business, so the business without the milestones. The base business growth was 24% from Q3 2024 to this year's Q3, totaling EUR 423 million. The operating profit growth was even stronger, 68%, up to EUR 121 million. Our cash flow grew 15% and was very solid. Of course, during last year's Q3, the milestones were booked, but yet not paid, so they were not yet cash in our bank.
When we look closer, the net sales bridge, we can see the kind of a net effect of the difference between the quarters here regarding the milestones in the innovative medicines column, which is EUR 59 million, but underlying net sales increased by EUR 71 million. I think the growth, as I earlier said, of Nubeqa product sales and royalties was very strong, but it didn't fully compensate the previous year's milestones. We can also see here that all other divisions developed positively, strongest being generics and consumer health, but also branded products and animal health showed positive development. Fermion was more or less on par. Here on the operating profit bridge, we can see the full effect of the last year's milestones, EUR 130 million, but also the positives on the change in sales volume and change in prices and cost of goods and product mix of almost EUR 20 million.
The royalties of EUR 50 million. We can also see that our fixed cost increased as well, but this is all planned. It's mainly R&D and sales and marketing costs here. Now let's take a view for the first nine months from January to September. Again, a very nice 22% growth during the first nine months and 7.8% growth, even though we would compare to the previous year's Q3, including the milestones. The first three months ended up with EUR 1.2 billion of net sales. Regarding operating profit, 57% growth and slight decrease if we compare to the numbers including milestones in the previous year. Again, a very positive development on cash flow during the first nine months. Now to innovative medicines. This is a bit different picture than you're used to see.
There is the shaded area which tries to tell you the comparison between the quarters, including everything else but the milestones from the previous year. 71% of growth is very healthy for innovative medicines and also almost 75% growth during the first nine months. On the right side here, you can see this all-time high royalties plus product deliveries ending up to EUR 166 million. I always remind looking at this picture, the very, how would I say, year is very late-ended, loaded, back-end loaded for Nubeqa, as you can see here when you look at the 2024 from the first quarter to the last quarter, but here as well. I would like to remind that in comparison to 2024, we already reached the higher royalty rate in the previous quarter with Nubeqa.
We are not going to see a similar shift and change in the royalty rate as we saw last year between the Q3 and Q4. Branded products growth during Q3 was somewhat slow. It was 3%. This slowness in the growth is mainly due to timing of deliveries to our Stalevo partners. That will be fixed during the rest of the year. It's kind of a temporary change here. The growth for the first nine months is a healthy 9%. In the Easyhaler portfolio, budesonide formoterol combination product was the clear driver for the growth. On the CNS portfolio, Stalevo Japan contributed to growth in branded products. As I said, generics and consumer health, Q3 was very, very strong.
5.4% growth is extremely good for any generic business, especially here when we remember that Simdax and Dextor are included in this business and they are constantly sliding down facing the generic competition. We are able to compensate that decrease, but at the same time, increase and grow our sales. The reason for a good quarter is really the good availability of the products in our Nordic countries. The service level is the thing in the generic business. You need to have the products at the time of the tender where they should be, and you need to be able to deliver also for all the different countries in the specific timings of tenders or pricing processes. We had a good launch, for example, for apixaban in Finland. Animal health continued the good growth trend, although here we see a bit of a similar slowdown as with branded products.
That partly has to do with deliveries as well. When we look at the first nine months, it's a very strong two-digit number growth. Our top 10 product list is as it has been. Nubeqa is a flagship with 83% or 84% growth. Easyhaler product portfolio growth was close to 8%, and entacapone products grew close to 5%, mainly due to the Japan sales. Our HRT product, Divina, performed very well here on the row five, growing almost 23%, continuing the strong growth from earlier this year. Some oldies like Trexan, even close to 10% growth, and quetiapine products, 10% growth. Currently, our business divisions are very healthy. The balance between business divisions is very healthy, approximately 30% for innovative medicines and generics, and close to 20% for branded products.
Orion's key clinical development pipeline has clearly become oncology-focused, as we decided to discontinue the ODM-105 project for treatment of insomnia. We have also removed Aranote from this list, as it's approved both in the U.S. and EU. We now have the Dussel Hiccup study on this list, and then the two Omaha studies with Opevesostat that MSD is responsible for. It is good to mention here for these two Opevesostat studies that their design or primary endpoints have changed since we last presented this, so that for the Omaha 3, which is for the later line patients, the primary endpoint is now overall survival. The progression-free survival has been demoted, and overall survival is the primary endpoint. There are also changes for the frontline patients study 004, so that the progression-free survival is now a primary endpoint for this study.
These are changes that our partner MSD has done, and it looks in all possible ways very logical. We have the Tenaxis Levosumendan study for pulmonary hypertension proceeding in phase III. They are planning to start another phase III study by the end of this year, another global study for this indication. We have another study for Opevesostat for metastatic castrate-resistant prostate cancer, and three phase II studies ongoing for three different hormonal cancers: women's hormonal cancers, breast, endometrial, and ovarian cancer. We continue the SUPIDAS, which was the phase II study that formed the basis for those two Opevesostat 3 and 4 studies for prostate cancer. Our TIH inhibitor, ODM-212 for solid tumors, is proceeding well in phase I, and we are preparing to start the phase II program in the first half of next year. A few words on sustainability, this time about decarbonization targets.
We have set an ambitious target to reduce absolute scope one and two greenhouse gas emissions by 70% by the year 2030, and also have 78% of our suppliers, meaning scope three emissions, covered by our targets. For scope one and two, we have very concrete actions ongoing. The steam production is one of the most energy-consuming phases in the chemical industry, especially in the API industry, and we are changing the energy source for steam production in all of our manufacturing facilities. In Turku, we are electrifying the steam production. In Oulu, we are changing to biofuels from fossil fuels, and we will start an electrifying project in Espoo. These are very concrete examples, and we have already done a lot of concrete actions and projects before this, for example, in our Hanko plant.
In supplier management, we are targeting our highest emitting suppliers who are not yet aligned with SBTI, and here we try to offer support, practices, and technical expertise with our suppliers. We have specified our outlook today. Our outlook for operating profit has been narrowed from EUR 410 million to EUR 490 million. Nothing drastic. We've been able to narrow it as the year has 10 months already passed. There are two months left, and we have a much clearer view on how the year will pan out. For net sales, our outlook is from EUR 1,640 million to EUR 1,720 million. Here you can see the upcoming events for next year. I thank you on my behalf, and welcome René here with me to answer your questions.
Thank you, Liisa, for the presentation. As we said in the beginning, we will first take questions from the conference call lines, and then we will turn to the questions you can type in through the chat function in the webcast. At this point, I would like to hand over to the operator with the conference call.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Sami Sarkamies from Danske Bank Markets. Please go ahead.
Hi, I have four questions. We'll take this one by one. Firstly, starting from the guidance, can you elaborate on what is driving the small revisions to the lower and upper ends of the guidance ranges? Is this about third quarter actuals, or have you also updated your forecasts for the fourth quarter?
Of course, the first thing is, as I mentioned, that we know now how the first, say, 10 months have passed, and there are only two months left. There are, of course, uncertainties for the latter part of the year. Nubeqa is a big moving factor in this, also R&D costs, and their tariffs are not that big of a matter here. We do think that they wouldn't have any effect to this year 2025. There are still uncertainties for the rest of the year. We have this range, but there are less uncertainties, and that's why we were able to narrow the range.
Okay, then moving on to growth momentum at branded products and animal health. Third quarter growth rates are clearly weaker than we saw in the second quarter. How would you explain that, and what is your expectation regarding Q4?
Yes, you are very correct that the branded products and animal health showed a slower growth than previously this year. It's mainly due to some delays in our deliveries to partners. We have both animal health, animal health is actually working closely with, we have some very big partners that we are working with. There might be a one-day or two-day delay for the deliveries, and it has an effect clearly, even on the quarter if there are big deliveries going on. The same goes with branded products. We deliver still to our Stalivo partners across the world, and it's the same thing. I think we experienced this in earlier years as well, that sometimes it just happens that we are not able to ship, you know, during the quarter that we had planned.
This should be, we should be able to sort this out by the end of the year during Q4.
Okay, thanks. Moving on, the third question is on ODM-208. You mentioned that Merck has been changing primary endpoints for the Omaha studies. When was this change made?
This change became public, I think, a month ago, three weeks ago, maybe.
It was a few weeks ago. In early October, they changed the protocols. It was visible in the clinicaltrials.gov. Nothing material because we didn't come out with at that point, but of course, you know, something that is very interesting for all of you, so we wanted to highlight it here.
Okay. Finally, regarding the R&D pipeline, thinking of next year, can you give a bit more color on when you're expecting phase I readout for ODM-212, and when would you expect to initiate the first phase II study for that molecule? Secondly, at CMD, you talked about three biological preclinical programs moving into phase I during next year. I just wanted to check if these projects are still alive as you are currently guiding for at least one new program during next year.
Yes, I'll start with ODM-212. The phase I is almost completed. We are looking at the results, and we are basing our phase II planning on those results. We will report the results in some forthcoming scientific meeting. Those are usually on embargo until we release them for the scientific audience. Regarding the phase II program, it's currently under plans. We have filed IND for that and hope to be starting by hopefully mid-2026. What was then, there was one more question.
About the biologics.
Biologics, indeed, yes. We told that we have three biologics close to advancing to clinical pipeline, and we think that we will be able to proceed with at least one of them to the phase I next year.
Okay, thanks. I don't have any further questions.
Thanks.
As a reminder, if you wish to ask a question, please dial the pound key five on your telephone keypad. The next question comes from Sean Hammer from Jefferies. Please go ahead.
Thank you for taking my questions. Three from me, also happy to take them one by one. Firstly, could you perhaps give us some, I guess, guide us to the impact on your OpEx from the ODM-105 failure? I mean, I know you weren't planning to take it to late-stage development yourselves, so I assume it's not significant, but perhaps any guidance on the provision set aside there would be helpful.
Maybe I can take that one. Of course, ODM-105, it was, you know, we got the results, and in such a way you could say the project was completed. For this year's perspective, not a big impact in terms of how we expected this year's R&D expenses to be going as it was in our plans and it was completed. Of course, for next year, you can obviously think that there is a, you know, a change in how the budget is allocated. 105, of course, is not moving forward. There are some tail costs for next year that we'll be taking in this year, but overall, we see it as being quite neutral for this year compared to whatever we save and whatever provisions we take for costs that would have occurred next year.
Got it. Thank you. Secondly, you're able to specify your guidance on this increasing visibility on the performance of the businesses. I assume the visibility on the milestones should also be better. Could you perhaps speak a bit on your expectations for this and whether that visibility has shifted slightly from last quarter?
As we have stated, we think that we will receive the milestone next year, 2026, but it is possible that we receive that milestone already in 2025. It's still not possible to state that as a fact, you know, that we get it this year. We remain where we have been to this date, that it's possible this year, but in our plans, it's next year.
Understood. Thank you. Finally, given the delay that you mentioned in the deliveries in branded products and animal health, is it fair to expect a slight boost to full Q4, assuming those deliveries are made as well as the normal business expected in full Q4, or is it more of a pull-through dynamic?
I didn't quite get the question. Is it?
It's about the timing of shipments in branded products and animal health. Since we now saw some headwinds, will there be a boost in Q4 now?
No, I think it's just according to plan that we get them out here, so it's not boosting the Q4.
Understood. Thank you so much for taking my questions.
Thank you.
The next question comes from Matti Kuarola from OP Corporate Bank. Please go ahead.
Hi, this is Matti Kuarola . I'd like to ask two Nubeqa-related questions. First, regarding the U.S. situation and the pricing, I know you are not willing to say a lot about it, but maybe could you a little bit say about the political atmosphere? Do you or your partner get the pressure to lower the price, or what's your kind of look right now if you look on another side of the Atlantic?
I think that's a good question regarding the U.S. business environment. However, I think a question whether our partner gets pressured or needs to change price, I think it's fair to say that that needs to be asked from Bayer. It's not my place to comment on that matter. In general, there are a lot of things happening in the U.S. regarding the pricing, the Most Favored Nation initiative, and also, of course, the tariffs. We follow the situation carefully.
All right, thank you. The second one, you received the latest permits in the U.S. during the summer and also in Europe regarding the latest indication. Have you seen a significant volume change or any change in the sales during Q3 if we speak about the adoption rates or any other sales indication? Is it visible after you got the final sales permits?
We see that the volumes are increasing. That's a very positive thing. We don't have a kind of a step change if you're referring to that with the new indication. It's more of a linear growth. It's very positive. I'm sure Aranote has a positive effect as it can be used also without docetaxel. To have a kind of a step change or big growth there, such we don't see exactly.
All right, thank you for taking my questions.
Thank you.
As a reminder, if you wish to ask a question, please dial the pound key five on your telephone keypad. The next question comes from Anssi Raussi from SEB. Please go ahead.
Yes, hi all, and thank you for the presentation. One question from me, and it's just to double-check something you said during the presentation about Nubeqa royalties in Q4 compared to Q3. I understood that we shouldn't expect similar growth as we saw last year, but anything else to add or comment on Q4 royalty rate? Maybe I didn't catch everything you said in that comment.
Very good that you asked. I was trying to explain that last year the royalty rate changed between Q3 and Q4.
During Q4?
During, not exactly between, but during Q4. It had an impact so that Q4 was clearly higher in Nubeqa sales or royalties to us. This year we already reached that royalty rate during Q3. Even though the royalties will be, or the sales will be growing, there would be a kind of a double effect of sales growing and royalties percentage increasing during quarter two. That's the difference. I don't know if I explained it well or if my colleague wants to explain it even better.
Got it. If your royalty rate hit the cap during Q3, was it at the end of the quarter, or was the average rate already capped and will be similar in Q4, or is it like the run rate at the end of Q3?
We reached the cap during Q3. Not going to specifics at which point of time, but like Liisa said, the message is that one should not expect a similar step-up as you saw last year between Q3 and Q4. In Q4 last year, we got the step-up coming from the royalty rate increase, but now that won't be happening between Q3 and Q4. That was the message that we expect the growth to continue, but a similar kind of step-up as you saw last year, one should not expect.
Okay, got it. Thanks.
There are no more questions at this time.
All right, thank you, operator. We turn on to the chat questions. We have a couple here. You still have time to type in more if you have anything on your mind. Let's start with one. This is actually already covered, but just to let you know that Aro is asking, is it still realistic to think that the EUR 180 million Nubeqa milestone would come already this year? Actually, you, Liisa, already addressed that question. That's covered. We are having one coming from Iris Theman from DNB Carnegie. Regarding Nubeqa, have you received any feedback from Bayer how Aranote sales have developed? What are Bayer's comments?
I think not specific comments on Aranote. I think we are more or less following the all sales development, and as I said, it's linearly growing. There we haven't really seen any, you know, step-up due to Aranote. Let's remember that there might have been already off-label use with Nubeqa for this patient segment. It might be that dramatic. It might not be that dramatic. That's what we've been trying to tell all along while we've been waiting for the Aranote approval.
All right, thank you, Liisa. We have no further questions in the chat, but I got a message. Actually, now Iris has a follow-up here. My administration costs were lower year on year, and what should we expect for Q4?
There are typically quite many line items there, and some of those can be just shifting from quarter to quarter. There can be also some definition changes, what is considered admin and what is considered in the other line items. There are quite minor changes in terms of the overall admin expenses. There's nothing big changing. The normal inflation, which is, you know, across the board. I wouldn't expect any drastic differences.
All right, thanks, René. We have a follow-up from Sami Sarkamies from Danske. Following changed endpoints for ODM-208, so Opevesostat, the Omaha trials, do you still foresee an interim readout in 2026? Before you answer, of course, we need to point out that we have never estimated or foreseen that there will be a readout.
Oh, interim readout.
Interim readout.
I think that's public when the readout for the full study.
Yeah, the full readout, yes, but interim readout.
We are not going to comment that, or we have never commented that. The readout from both studies should be in 2028.
Yes, that's correct. We have a follow-up from Aro Heikkilä. He says that Orion's R&D costs have been increasing clearly. At which point do you expect these increases to show as a growth in terms of net sales? To which development programs are you focusing the most after Nubeqa?
We are clearly focusing on the development programs that are in our hands, and that's ODM-212 now, and of course the biologics that are following that. When can we expect that program to turn into sales? I would say that would be early 2030s.
All right, thank you, Liisa. Now we have exhausted all the questions from the chat, and also I got a message that there are no follow-ups in the conference call lines. It is time for us to wrap up. Thank you for joining us today, and have a great rest of the day and week.
Thank you.