Ladies and gentlemen, the conference call for unaudited release of Cosmo Pharmaceuticals full-year results will start right now. I'm Sandra, the call operator. I would like to remind you that all participants have been listened to on the mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference will not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Hazel Winchester. Please go ahead.
Good afternoon, everyone, and welcome to Cosmo's Full-Year 2024 Unaudited Results Webcast Call. My name is Hazel Winchester, Head of Investor Relations at Cosmo Pharmaceuticals. Thank you all for joining us today. We are excited to share the results of a strong year and provide insights into the performance of our business, along with key strategic initiatives and outlook for the future. Please note this presentation includes forward-looking statements. While based on current insights, actual results may vary due to risk and uncertainties. Before we dive into the presentation, I'd also like to remind everyone that the presentation slides for today's webcast are available for download, and a replay of this call will be available shortly after the conclusion of the session.
During today's call, Gio will provide an overview of our strategic initiatives and how we've positioned the company for future growth, and Svetlana will walk us through the financial performance, including a breakdown of our revenue and financial framework and outlook for the coming year. With that, I will now hand over to Gio. Thank you very much.
Good morning, everyone, and welcome to Cosmo Pharmaceuticals' FY24 Earnings Call. It's a pleasure to be here today to share our full-year 2024 results, key milestones, and our outlook for 2025. At Cosmo, our story is one of consistency and growth, a story built on innovation, execution, and a relentless commitment to advancing patient care. 2024 was a transformational year, marking record revenues, strategic expansion, and continued leadership in AI-powered endoscopy, GI, and dermatology. Our strong performance reflected the resilience of our business model, the strength of our partnership, and our ability to execute with discipline. We entered 2025 very well positioned for the next phase of growth, with a solid cash position, an exciting and well-balanced pipeline, and new opportunities in AI and digital health. Let's get started. Before we begin, I want to highlight three key themes that define Cosmo's story of consistency and growth.
Our track record speaks for itself. We have a proven business model, built for sustainable success. We have a strong financial position and strong execution, delivering results that allow us to be very well positioned for the future and ready to accelerate growth and seize new opportunities. These pillars are what drive us forward. Cosmo has a proven business model. Cosmo has financial strength and strong execution, and Cosmo is positioned to grow faster than ever before. Here is the agenda for today's call. I want to dive deep into our business model first. Then I'll show you why we are excited about the future with our portfolio and pipeline highlights before discussing our key focus area for 2025. I'll then hand over to our CFO, Svetlana Sigalova, for our financial review. I will then provide closing remarks and talk about our upcoming Investor Day.
Before we dive into our business model, let's take a moment to highlight the phenomenal year we have had, not just financially, but also strategically and in attracting top-tier talent into Cosmo. Here you can see that we had a record year in terms of revenue, a record year in terms of operating profit, and a very solid cash position. This reflects our commitment to increase the shareholder value. 2024 was a defining year for Cosmo Pharmaceuticals, a year of transformation, execution, and setting new benchmarks. Financially, we strengthened our cash position, maintained zero debt, and continued our track record of disciplined execution. Beyond the numbers, what truly set 2024 apart was our ability to accelerate innovation and bring it to market. Our pipeline is strategically focused on large, high-value markets while being very well balanced across all stages of development.
We also secured two FDA approvals, reinforcing our core competence in navigating regulatory pathways and efficiently bringing new products to market. This ability to execute our regulatory approvals is a competitive advantage that sets Cosmo apart. We also deepened our position as a trusted partner, continuing to collaborate within the life science industry and also outside of it. While we celebrate these achievements, we also took bold steps towards the future, launching our road to zero carbon by 2035, a commitment that reflects our responsibility to sustainable growth. Simply put, 2024 was a year to remember. It set the foundation for where we are headed in 2025 and beyond. It was also a year of building a stronger Cosmo, not just in performance, but in people. We successfully attracted the top talent to the company, strengthening our leadership team with proven expertise and fresh perspective.
These leaders are already making a significant impact, driving execution and innovation across the business. I also want to announce today that we appointed a new Chief Legal Counsel, Federico Somariva, who is joining us from Gilead Sciences, and will be starting April 1, 2025. Now, let's take a look at how we are building on this momentum. Let's talk about why Cosmo Pharmaceuticals is in such a strong financial and growth position going into 2025. The answer is simple. Our business model works. It's proven, repeatable, and highly efficient. I want you to focus on this slide. Cosmo Pharmaceuticals follows a disciplined cycle that drives both innovation and profitability. Let me show you how it works. We invest in clinical unmet needs in large markets. We don't chase trends. We focus on real, high-impact opportunities where innovation is needed and where the market is substantial. We develop everything in-house.
This is the key. Every single product we have on the market today was built from scratch by Cosmo. From research to development to regulatory approvals, we control the entire process, ensuring speed, quality, and cost efficiency. Then we partner with the right commercial players. Once we have a product ready for market, we license it to commercial partners with the strongest market reach. These allow us to scale quickly, minimize commercial risk, and maximize profitability. Last but not least, we repeat that cycle. This is not a one-time success. It's our core strategy. We do it over and over again, driving consistent revenue and growth. This is what makes Cosmo unique. We don't rely on acquisitions or external assets. We build, develop, and execute everything internally, and then we scale through world-class commercial partners.
Now, let me show you a real example of how this model has created exceptional value. Okay, let's use the same slide, but now with the GI Genius example, which was in step one in 2019. We identified a large clinical need and made a decision to invest in its development. Because we have deep expertise in R&D, clinical trials, and regulatory approvals, we developed this technology entirely in-house, controlling the entire process, ensuring efficiency, and maximizing the value we created. Once it was ready for commercialization, we licensed it to the largest medtech company in the world, Medtronic, with a global reach and infrastructure to scale it successfully. The result: a EUR 51 million investment turned into EUR 223 million in cash in just five years, of which EUR 37 million in recurring revenue so far from royalties and manufacturing, and EUR 186 million in project-based revenue from milestones and upfront.
What I have shared so far is how our business model works, but this slide is about why it works and why we are so confident in Cosmo Pharmaceuticals' future. Since 2007, we have invested about EUR 345 million in developing new drugs and breakthrough technologies. We secured six NDAs out of seven, a track record that speaks for itself. We partnered with market and industry leaders, and the result was that we were able to generate more than EUR 1.2 billion in revenue, both recurring and project-based. This is a 3.5x multiple on every EURO invested. We did this without ever raising money beyond our IPO. We delivered consistent value creation for our shareholders, paying over EUR 120 million in dividends so far since our IPO. This is not a one-time success. It is the result of a well-executed strategy that keeps repeating itself.
We invest, we develop, we partner, and we create long-term value. Before we move into the 2025 and the pipeline, let me recap. Our business model consists of two revenue sources: project-based revenue. Think of this like developing a new cutting-edge medical technology. We do all the work from concept to R&D to clinical trials and regulatory approval, and once it's fully developed, we license it to a major partner with the commercial strength to bring it to market. Because we have taken on the development risk and created a high-value product, we receive a large upfront payment, a multiple of what we invested. This project-based revenue provides strong cash flow and high returns on investment, allowing us to continue to reinvest in the next breakthrough. Then we have recurring revenue.
Beyond the upfront payment, we continue to generate revenue in two ways: royalties on sales, ensuring a long-term predictable revenue stream, and manufacturing revenue. Unlike many companies that fully outsource production, we retain control over manufacturing in our state-of-the-art facility. This means that even after licensing, we continue to produce the product, capturing additional margins from manufacturing. Clearly, this dual stream of royalties and manufacturing revenue makes our recurring revenue highly profitable and sustainable. This business model is highly effective because it allows us to reinvest continuously. Every dollar we put into development creates a multiple in returns, fueling the next wave of innovation. Our goal is to have a return of above 4x on our projects and double-digit growth for royalties and manufacturing. This is how Cosmo Pharmaceuticals delivers consistent, profitable growth.
Now, let's take a look at how we are applying this same model to our future pipeline. Now, let's talk about the future. Our pipeline is the strongest it has ever been, with new products addressing large clinical unmet needs. We are positioned for significant future growth, backed by a model that has already proven its ability to deliver. This is why we are so bullish about Cosmo's future. We have done it before, and we are about to do it again at an even bigger scale. Let's take a look at the pipeline. Our marketed products are already driving strong revenue through partnership with industry leaders. Our future pipeline is very well balanced, ensuring continuous momentum. We are completing our phase one study with large potential.
We have two ongoing phase two studies, advancing toward key milestones in large underserved markets, and one phase three study, a near-commercial asset that represents a major upcoming catalyst for Cosmo. This is the perfect setup for future value creation. This pipeline positions us for multi-year growth, with both near and long-term revenue generators in play. Now, I have a major announcement to share, one that represents a huge milestone for Cosmo and a significant step forward in one of the most exciting lifestyle markets today. We have officially closed enrollment for the phase three trial for male hair loss indication, marking the largest global randomized control trial Cosmo has ever run. This is a huge achievement, and I want to take a moment to recognize our team for the incredible work in executing a trial of this scale. What's next?
Top prior results expected by the second half of this year. This is going to be a key inflection point that will drive the next stage of value creation. Market research is ongoing in the US. We are actively shaping our go-to-market strategy in what we believe is one of the most attractive lifestyle drugs alongside GLP-1. This is a massive commercial opportunity. This will be the first novel therapy for hair loss in over three decades, with a total addressable market of EUR 28 billion for the U.S., Europe, South Korea, and Japan alone. This is Cosmo Pharmaceuticals' business model at work, a perfect example of how we identify measured unmet needs, execute clinical development at the highest level, and position ourselves to maximize value. Let's take a closer look at our two growth drivers, starting with WINLEVI.
WINLEVI is a key growth driver for Cosmo, now the number one branded topical acne prescription in the U.S., with strong global expansion underway. Since launching in November 2021, WINLEVI has surpassed 1.3 million U.S. prescriptions, reflecting strong adoption. Revenue growth remains robust, with a 34% increase versus prior year. Scientific validation continues, with over 30 key dermatology publications supporting its unique mechanism of action. We are also on track for EU approval this first half of 2025, targeting commercial launch in 38 countries by 2027. With increasing prescriptions, market expansions, and a strong growth trajectory, WINLEVI remains a significant driver for Cosmo. We look forward to sharing further progress. Let's now talk about our second growth driver. Adoption of GI Genius is expanding rapidly, with market authorization in 43 countries.
The fourth-generation Cologne Pro is now available in the U.S., offering post-procedure AI-generated insights, further enhancing its value to physicians and patients. The commercial model is proving highly successful, with double-digit royalties received from Medtronic, highlighting both strong market demand and financial sustainability. The AI-driven endoscopy market represents a significant growth opportunity, with a total addressable market of up to $4.4 billion worldwide. GI Genius is very well positioned to capture a significant share of this expanding sector. Beyond Cologne applications, we are advancing GI Genius into new areas. Let me show you what I'm talking about on the next slides. Today, I'm excited to share some major news on our platform, key developments and upgrades that will transform endoscopy workflow in a way no one has ever seen before.
When we introduced GI Genius, we brought something entirely new to the endoscopy room, an AI-powered module designed to seamlessly assist doctors during procedures. It was the first medical device to integrate NVIDIA's AI technology for real-time endoscopy. In just a short time, it became the most widely used AI platform in its field. Its role is simple. It connects to the endoscopy system, analyzes the live video in real time, and highlights areas of concern, helping doctors detect potential lesions with greater confidence. It fits into existing workflow effortlessly. No extra steps, no complex setup, just AI-powered support when it matters the most. Next, we took a major step forward by enabling our system to characterize and measure lesions on the fly, providing deeper, immediate insights during every procedure.
For the first time, we also introduced a real-time procedural summary, automatically capturing key moments so doctors can review a clear, detailed overview as soon as the procedure ends. Today, we are taking this module's capability far beyond real-time AI detection. I'm excited to introduce today to all of you a brand new interactive touchscreen that pairs with our platform, giving the endoscopy team the power to interact with AI insights in ways that just are impossible on the main display alone. This interactive interface allows us to access and action several things. For instance, as you can see here, it is possible to open the AI apps you would like to use. In addition to our Cologne Pro application, you can have other AI apps.
Our partner, Endovision, developed Cerebro, a groundbreaking AI app supporting during upper GI procedure to ensure proper inspection of all of the landmarks and that helps with the procedure documentation. Now, Cerebro has received a certification for the EU market, and therefore, it will be available to run on GI Genius from this screen. If you tap on it, then the application will activate and will be shown on the main endoscopy display, enabling physicians to use GI Genius in upper GI endoscopy. This interactive interface is offering much more. Imagine performing a procedure while simultaneously confirming AI-assisted findings on a touchscreen without adding extra minutes to the workflow. The endoscopy team can now document, stage, and finalize details in real time, all while the procedure is in progress.
Everything, images, annotations, and key data flow straight into the EMR, electronic medical record, ensuring that critical information is captured and shared securely. By the time the procedure ends, all relevant annotations and interactions have already happened. The final report is already there. This expansion of our platform goes well beyond colonoscopy, making it universally applicable across a wide range of endoscopy procedures by streamlining workflow and making AI-driven documentation effortless. We are opening the door to a new era of endoscopy efficiency. Now to our 2025 priorities. 2024 was about transformation. 2025 is about execution and acceleration. These priorities will drive our next phase of growth, ensuring that Cosmo continues to lead, innovate, and deliver value. The one I want to spend a few words on is number four, AI and digital transformation across Cosmo.
Cosmo is at a turning point where AI and digital transformation are becoming core to how we innovate, develop, and commercialize our products. With Andrea Cherubini now leading as the Chief AI Officer, we are taking a structured, execution-focused approach to leveraging AI across our business, with a clear path to growth and value creation. We have already seen the impact of AI in GI Genius, where real-time AI assistance has changed the way physicians detect lesions. Now, we're expanding this vision into lifestyle medicine, dermatology, and GI drugs, areas where AI can significantly accelerate commercialization and patient engagement. This is not just a technology shift. It's a new way of doing business where AI helps us move faster, unlock new revenue streams, and maximize the value of our assets.
With Andrea leading the charge, Cosmo is positioning itself as a true AI-driven pharma and life science company, building a competitive edge in both medical AI and high-value lifestyle treatments. We talked a lot about talents and how Cosmo was able to attract those over the last year. I am very proud and happy to leave the stage to our new CFO, Svetlana Sigalova, who is going to walk you through our key financials for 2024 and 2025. Svetlana, the floor is yours.
Thank you, Gio, and hello, everyone. Very excited to be here today. Today, I'll walk you through our selected and audited financial results for full year 2024, highlighting key drivers, and will also provide our financial outlook for 2025 as we continue to execute our business model. As Gio previously mentioned, 2024 was a phenomenal year for Cosmo.
We have recorded the highest revenues and operating profit in Cosmo history. Our 2024 revenue, un-audited, was at the upper end of our guidance. This includes $190 million in project-based revenues from GI Genius and WINLEVI. Turning to operating profit, in 2024, we adopted a change in accounting policy regarding internal development costs. This change means approximately $19 million in development costs previously capitalized are now included in operating expenses. Adjusted for this change, our operating profit has exceeded our guidance. Turning to year-over-year performance for 2024, comparing our 2024 un-audited results to 2023, we delivered exceptional performance and execution. Our revenue increased by 188% year-over-year. Our EBITDA grew by 1,517%. Our operating profit reached $149 million versus an operating loss in 2023. Our cash equivalents and investments increased 239% versus prior year.
Please note that our 2023 financials have been restated to reflect the change in accounting policy related to the development costs. Now, let's discuss our 2025 revenue guidance. As Gio explained earlier, our business model consists of two revenue streams. For 2025, we are guiding $102 million-$107 million in revenue, including $17 million from project-based collaborations linked to Winlevi and other partnerships. This guidance is different from what was previously provided, not lower, but more strategic. We are not providing guidance on our key pipeline assets because we see tremendous strategic value in keeping our options open. We are extremely confident in our ability to maximize potential deals and partnerships when the right time comes. Our recurring revenues are expected to be in the range of $85-$90 million, a strong double-digit growth from 2024.
The double-digit year-over-year growth is driven by significant increase in GI Genius royalties and manufacturing streams, WINLEVI U.K. and EU commercial launches, and our continued strong business performance from CDMO and pharma business. Now, let's discuss our 2025 financial framework. Our core business is profitable with strong margins. Core business EBITDA is projected at $40 million-$42 million, including cost of sales and SG&A expenses. We expect to generate $42 million-$44 million in cash from operations from our core business. This year, we plan to invest approximately $40 million in research and development, focusing on both late and early-stage pipeline assets and AI-driven innovations, a critical component of our long-term growth strategy. Due to the significant research and development investments, EBITDA for 2025 is projected between $1 million and $3 million. We anticipate maintaining a strong balance sheet with over $110 million in cash and investments by year-end.
Turning to capital allocations, our priorities remain unchanged. Our core business is profitable, generating strong cash flow from operations. We continue to reinvest heavily in research and development, supporting future high-value opportunities. Our business model continues to deliver, generating sufficient cash to self-finance without diluting our shareholders. We expect to maintain a strong dividend policy with a proposed increased dividend in 2025. In addition, $23 million in cash expenses this year relate primarily to prior year taxes, reflecting record project-based revenues in 2024. Capital expenditures will remain consistent with prior year levels, aligned with organic business needs. As mentioned earlier, we expect to close 2025 in a strong financial position with no debt. Now, I'll hand it over back to Gio for closing remarks. Thank you.
Thank you, Svetlana. Let me close with a few remarks. Our track record proves it.
We invest smartly, we execute with precision, and we deliver results. Our future is not just promising; it is already in motion. With game-changing products in development, a robust revenue engine, and a clear path to expansion, we are set to achieve even greater success. Cosmo is built for scale, built for profitability, and built to win. We have done it before. We are about to do it again, bigger, stronger, and faster. Please block your agenda. We are excited to invite you to an interactive investor day in Zurich on July 1, where you will have the unique opportunity to experience our technology firsthand and see its impact in action. More information about the detailed agenda will follow. Thank you so much. We are now moving to the Q&A session, and we are happy to take your questions.
We will now begin the question and answer session.
Anyone who wishes to ask a question may press star and one on the touchstone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question and eventually turn off the volume of the webcast. Webcast viewers may submit a question or comment in writing by the relative field. Anyone with a question may press star and one at this time. Our first question comes from Harris Gillis from Bernburg. Please go ahead.
Hi, thank you very much for taking the questions. Two from me, please. Gio, you talked a lot about the strengths at Cosmo, but I just wanted to know now it's approaching your one-year anniversary.
What are some of the areas that you've identified that you perhaps think have significant room for improvement and how you're progressing on these? A little bit more specifically, you talked about the phase three readout for Clascoterone in male pattern baldness being due in the beginning of the second half of this year. I just was wondering if you could provide any updates on the specifics on your partnership discussions, the timelines you might hope to secure a partnership, and whether you expect to look at a similar structure of partnership to the one you have for WINLEVI. Thank you.
Thank you for the questions, and I will start with your first one. I think, you know, in one of my slides, I highlighted the business model of Cosmo that has been very successful over the last 15-plus years.
I think that business model is the core of what we do here. You also have seen that we added new fresh perspectives with new leaders in my LT. I think those are going to also add, I would say, a boost on execution and opportunities in front of us. Per se, I think the company is in a very solid position strategically and also with our pipeline and our investment. Now, with these new leaders on board, I also expect to have even a faster execution opportunity to generate more revenue and business down the road, starting from this fiscal year. For the second question, you know, I think this is really an important message. The male androgenetic alopecia is a very huge market opportunity. Just for the sake of clarity, there is no other drug in phase one, phase two.
I think we have a huge advantage here. Assuming the study goes well, we want to wait the right timing to negotiate and to find a partner. I want to remind everyone that Cosmo Pharmaceuticals has cash, not debt. I think we want to keep all the options open here to maximize the value of this asset for our shareholders. That is why it is important for us to wait until the right time to identify the right strategy to go to market, especially in the U.S., where we have seen huge successes over the last few years for lifestyle drugs.
Next question comes from Ram Selvaraju from H.C. Wainwright. Please go ahead.
Thank you so much for taking my questions and congratulations on all the progress.
Gio, I wanted to drill down on something that you said earlier, specifically with regard to the opportunity in androgenetic alopecia and how this dovetails with what Cosmo is seeing as a leader in the field of application of AI. Could you maybe talk about what specific AI applications might be relevant to the future commercialization of a product like Breezula and how this might be informing your strategy with regard to optimizing the value of this asset?
Excuse me, this is the operator speaking. We are not receiving, and the connection with the speaker has been lost. Please hold the line. The connection with the speakers has been reestablished. You may proceed with the conference.
Hey, Ram, can you hear me?
Yes, I can.
Sorry, I lost you. You were asking a question about Clascoterone, and then I lost you. Sorry for that.
Yeah, no, so just to repeat, what I was asking about was in reference to your previous prepared remarks, where you alluded to the possibility of applying AI to the future commercialization of Breezula. And I was just wondering if you could talk a little bit more about that, you know, what specific AI applications you might envision that could conceivably facilitate the commercialization of Breezula and how this might inform the way in which Cosmo is thinking internally about how to optimize the value of the asset.
Yeah, I mean, it's not only Breezula, though, here. We're thinking about AI across the company, as I said in my presentation. The appointment of Andrea Cherubini, with strong expertise that we have gained over the last seven years with GI Genius, applies to those drugs, including Breezula, that have, by definition, a very important impact on patients.
I would also call them, in some ways, consumers, because, as you know, Breezula is more on the lifestyle, but also WINLEVI treating acne. You know, we believe also AI can add a ton of value for compliance, for engagement, and for patient feedback. I think you will see over the next few months that we have been working behind the scenes on those types of approaches. We believe the asset of Breezula not only is strong because of the molecule we are bringing to market, but also because of the companion that AI can bring to our potential partner or to ourselves. It depends the way we want to go to market. In my opinion, in our opinion, this can be a strong addition to our assets. Thank you, Ram.
Next question comes from Nicolas Pauillac from Kepler Cheuvreux . Please go ahead.
Hi, thanks for taking my question. Maybe two questions for me. The first one will be on GI Genius. Could you give us a sense of what will be, let's say, the new market that you will be expanding with GI application, and how does the financial work as it's a collaboration? That would be the first. On WINLEVI, I know that you said over H1 result that you were trying to change the strategy to have a better mix in terms of rebates. Can you have an update on where do you stand on that right now? Thanks.
Yeah, thank you, Nicolas. Thank you for the question. The first is about GI Genius. I think I'm sure you have appreciated the flexibility and the unique approach our technology has in real-time life procedures. I'm not talking about endoscopy.
I'm talking about live real-time procedures. Our agreement with Medtronic goes well beyond endoscopy. The answer is the market is gigantic. We're talking about billions of dollars. We're talking about a big unmet need from our customers across the globe, especially in the U.S.. There's a huge burden on employees, lack of resources. You know, this step we're taking into reporting using AI is going to save lots of time during the day. This can be applied not only in endoscopy. We'll start there, but also can be applied in other procedures, including also laparoscopy, robotic, orthopedics, cardiac, right? This is the huge opportunity we have here. I want to say very proudly that nobody's doing what we are doing, and nobody owns a technology like the one that we have. We're very bullish about this.
We're very close to Medtronic, and we are keen to move this fast forward, as we have been doing over the last four years with five upgrades, now a new hardware, and also a new integration system that nobody else has. Now, back to WINLEVI. I think you have seen also from my presentation that we are increasing revenue by 34% year- over- year, which also is a testament of the investment of Sun Pharmaceuticals in terms of marketing approach and also patient selection. We're getting more bucks in each of the tubes that are ordered. I think that's also reflecting investment that I was talking about last July in this program called Fill Rx. We have been waiting, and we are waiting this semester to get also EMA approval. We're going to open other 38 countries by the end of 2027.
The opportunity for WINLEVI is still gigantic. With that said, we have been collecting a lot of successes already in the US, which will serve us also to go further with the other markets we want to open. I also want to refer to the question I answered to Ram. Think about also WINLEVI as another asset part of Cosmo where AI can also play a role to also generate additional revenue stream and opportunities in the future.
Maybe if I can squeeze the last one, which is the favorite of this time, do you have any thoughts on what will be the potential impact of tariffs that will come from the U.S. administration?
No, I do not. I think we are bullish about the need. We are bullish about what we have been doing already in the US.
I think our technologies are very unique in many different ways. There is a lot of added value that we are bringing to market. I think we're not going to be impacted by any of this.
Okay, thanks.
Thanks to you, Nicolas.
The next question comes from Bob Pooler from Valuation Lab. Please go ahead.
Good afternoon and congratulations on the record results. Just coming back to WINLEVI, what are your expectations for the European Union and other markets?
The expectations are very important to us. I think we have been working with our partners. I mean, I mentioned Glenmark, Inspecto Pharma in Germany. We have been collaborating already on market assumption, and I think we are waiting to get this approval any week now. They are ready. They are prepping the market.
We have been collaborating also on a few activities in some of these markets, which I hope we'll be able to disclose during the Investor Day. There is a lot of confidence, and there is a lot of investment from those companies because WINLEVI has proved its ability to treat acne vulgaris very well in the U.S.. The expectation is very high, Bob.
Okay, again, I think the U.S. is the largest market here in terms also of pricing that you can get there despite the rebates.
Yeah, I mean, if you talk about absolute price, yes. If you talk about geography here, I mean, the opportunity also in Europe is big as we have multiple markets with a very important population as well.
I mean, I wouldn't compare this one to one, but I feel like this is going to be an opportunity for us to expand globally as we want to get this product in the hands of millions of patients also in Europe.
Okay, and just on WINLEVI in the U.S., has Sun been able to lower the rebates that they've been offering previously?
Yes, very much. Part of the growth that we have seen also is because we have seen a very important increase in gross unit, which also is what I was telling to Nicolas about the improvement of patient selection covered by insurance in the U.S.. Sun is doing a very nice job on that side. We're very happy with their investment and execution.
Okay, on GI Genius, you showed also this tablet or so. How is that hooked up to the device?
It's more something technical, but it seems like the interface is very easy to use. Therefore, I think it's very important to sort of see how this works for a physician because they have so many things that they have to understand. Having a very simple interface seems to be also something important, maybe not just on data driven, but just on ease of use.
Yeah, I think one of the goals for us at the investor there is to show you how simple it is to interact with our platform. I will call it also ecosystem now because we're adding more tools to simplify the workload of GI nurses. I think about AI to provide inputs to this tablet, and those inputs need just to be checked by the nurse or the GI, and they go straight to the EMR system.
You're saving seconds in each step, which will result in minutes at the end of the procedure. We believe this is a major switch from the current pen and piece of paper way that they're working. It's a huge leapfrog for endoscopies in the U.S., in Europe, across the globe. It's very intuitive. I couldn't be prouder of the team who have been working very hard to get this product approved in the market. We're now working together with Medtronic to launch these over the next few months.
Okay, and this one final on Breezula then. As you said, the six-month top-line results are due in the second half. When do you expect filing and approval in the U.S. and Europe? What kind of peak sales do you envision for both regions?
We are going to get six months result sometime in the second half. Then we have to wait 12 months result, and then we can file. Expect to file early next year. It is going to take another potential maybe 10-12 months to get where we want to be at the approval. In the meantime, we have lots of things to do and accomplish. That is why also I talked about 2025 to be a year of execution. I think we have been gaining a lot of interest, attention from potential partners already. I think we have to wait a little bit more. As you know, the phase three completion increased the value of your asset quite importantly. The more we go forward, the more value we can increase. The market is gigantic, as I said. It is a huge opportunity for Cosmo.
We're going to make this right and find the right opportunity to increase value for our shareholders for sure.
Just on that, on the partnering there, of course, you need the positive results there. That would be the first target. As you said, you have sufficient cash. Approval would also increase the value. That might be somewhere when you would look or sign a partnership. Is that correct?
Yes, correct.
Okay, thank you.
Thanks to you, Bob.
No further questions on the phone, I hand back over to Hazel for the questions from the webcast. You may proceed.
Good afternoon, everyone. The first question comes from Marshall from Auto BHS. There are three questions. I will read out the first question, and then we will answer them. The first question is specifically on GI Genius.
Could you help us on the timing of the new applications and milestones that you could receive?
Yeah, I think, Marshall, I did answer partially to this one over the last few questions I got. I think the new applications, I also introduced this partnership with Endovision AI for Cerebro, which is an upper GI AI that can be used in every upper GI endoscopy, which is a very common procedure, even more than colonoscopy. We are going to launch this over the next few months in Europe as they got the CE mark approval. Their application, as we always said, is compatible with GI Genius being an open platform. Expect to see also royalties coming from this application as soon as we launch it. We also are about to launch in the U.S. the new module, Genius 300.
As you know, also we have margins on manufacturing. That's part of our recording revenue. As we move into the market release of the new module, also Cosmo, we receive payments because the new module is going to be deployed in the market. On the WINLEVI, yeah.
The second question from Marshall is on WINLEVI. How do you see the market opportunity in Europe and the ramp-up of the drug? Do you see any issues on the pricing and reimbursement with payers?
Yeah, we do not see any significant pricing issue with WINLEVI in Europe. I think our pricing aligns with the market dynamics reimbursement frameworks and also ensure broad patient access. I think we also have seen WINLEVI to be a very strong and effective and robust drug. The clinical data support also the value we are asking for.
We're very confident about the market position that we want to have in Europe as well. I told you already that our partner is keen and getting ready already to launch the product in the market. We are ready as soon as we get approval.
Thank you, Gio. The third question from Marshall is, is it possible to come back on your, are you confident in your phase III evaluating Breezula? If we have a success, how do you see the next commercial step? Is the main difference between the last 2025 guidance and this new comes from this potential partnership?
I think I did answer to this already. I think we are in a very strong position. We have a strong cash and balance sheet.
I think what we have to do over the next few months is to wait for the results of six months, but also get ready for a potential partnership and also potential alternatives we have for Breezula. I think time is on our side. That is a very good thing for Cosmo. That is why we really are believing this is actually a huge asset in our pipeline. We have plenty of options that we will maximize over the next few months.
The next question from Marshall is, after 2025 and the Breezula results, what could we expect in terms of R&D cost? Then could you come back on your objectives for your capital allocation? Thank you.
You want to get this?
Thank you for the question. I'll take that. Once we complete Breezula phase III trials, we expect the costs in 2026 to decline.
However, that decline will be short-lived as we will continue the development of bile acid diarrhea and distal ulcerative colitis for phase III. Thank you. The second question, Hazel.
The second question is, is it possible to come back on your confidence in your phase III evaluating Breezula? And if we have a success, how do you see the next commercial step? Is the main difference between the last 2025 guidance and this new one comes from this potential partnership? I think we already answered that.
We did.
We already answered that. Let's move on to the next question on the webcast. It's from Mr. Aaron Acker. Thank you very much for giving this presentation. A general question from him. Can we hear your thoughts on the current sentiment towards partnering in the sector as we move through 2025?
Yeah, I'll let our CFO answer to this one.
We believe that Breezula value is very strong, especially now that we have completed the phase three enrollment. We are looking to maximize our value and value for our shareholders. We believe that this lifestyle drug has a blockbuster potential, and we're very confident in our ability to partner and maximize its value. Thank you.
The next question comes from Mr. Moseimani. Despite strong financial results and positive pipeline updates, the share price declined by 11% following the announcement. How do you view the stock's valuation at current levels? What would you say to investors concerned about this drop?
I can only say a few words here. We are very confident in our business. We are very confident in our business model. We're very confident about our strengths and innovation pipeline. As we move into 2025 and 2026, we have key milestones, a couple of big catalysts.
We see a huge opportunity in terms of growth for Cosmo Pharmaceuticals. Those short-term stock movements do not change the long-term value we are building. We remain fully committed to executing. As I said a few times during the presentation, we want to deliver like we have done over the last years and create even more value than we have done so far for our shareholders.
The next question comes from Mr. George Schlagmuller. Please provide more flavor on how the new 2025 guidance looks like compared with the old guidance of EUR 240 million-EUR 270 million. What are the revenue numbers in 2024 for WINLEVI and GI Genius? Thank you.
Thank you. Our 2025 guidance is EUR 102 million-EUR 107 million, as mentioned earlier today. Of this EUR 102 million-EUR 107 million , EUR 85 million - EUR 90 million are recurring revenues, which represent our royalties and manufacturing revenue stream.
The GI Genius is going to grow high double digit to low triple digit year- over- year. WINLEVI, we expect to grow low double digits driven by U.K. and EU commercial launches. Thank you.
That's all the questions, operator. I hand it back to you.
Further and no further questions over the phone. Not sure if you would like to conclude with some closing remarks.
I want to thank you all if there are no any further questions. I remind everyone that we're looking forward to meet you in person in Zurich on July 1, 2025 for a very interactive investor day where we believe you can take a look and also see firsthand on our technologies. Thank you very much, everyone.