Good afternoon and greetings from sunny Helsinki. Welcome to Orion's half-year financial report January-June 2026 conference call and webcast.

My name is Tuukka Hirvonen, and I'm the Head of IR here at Orion. In a few moments, our CEO, Liisa Hurme, will go through the results and key events of the reported period, after which you will have then the possibility to ask questions in the Q&A session from Liisa and also from CFO René Lindell.

There's a possibility to ask questions through the conference call lines, but also by typing them in through the chat function in the webcast. We will start with the conference call lines and then turn on to the webcast chat.

For our Finnish viewers, information that there will be a Finnish-speaking interview of CEO Liisa Hurme available on Orion's internet page later this afternoon. Just before letting Liisa to take over, a brief reminder about the forward-looking statements in the presentation, and with these words, it's my pleasure to hand over to Liisa.

Thank you, Tuukka, and good afternoon on my behalf as well. We have once again delivered a strong quarter.

Our net sales growth accelerated and also profitability improved during Q2. This was driven by Nubeqa royalties and product sales, and also our Branded Products division had a excellent quarter.

In research and development, we reached several key milestones, especially with ODM-212, and I will discuss that molecule later on in more detail. In Q2, our net sales increased by 25%, totaling €522 million, and operating profit increased by 69%, being 90- 34%- resulting in 34% operating profit margin and €177 million.

Earnings per share was €1. Of course, in our net sales development, Innovative Medicines was the main driver by €95 million, but also when we look at Branded Products and the size of the Branded Products division, €10.3 million is a significant growth rate.

All the other businesses were more or less on par. On operating profit, the volume increased our profit by 17- the volume growth increased our profit by €17.3 million.

Again, royalties playing a key role here by close to €77 million. We have also finalized the liquidation of our Russian operations, and the cost of that, the final cost of that liquidation, €3.3 million, is included now here in other expenses.

Fixed cost, €15 million, is according to our plan as we widen and progress our research and development pipeline, accelerate our sales, and part of it also in the sales and marketing cost include the increase of the royalties to Endo as the Nubeqa sales perform well. Now I move to the first half of this year from January to June.

A very much similar type of figures here: growth or the increase by 22%, totaling of €939 million during the first 6 months of net sales, and almost 60% growth of operating profit up to €291 million, and with operating profit margin of 39- 31%, and earnings per share €1.64. Innovative Medicines, which clearly is the driver for the growth, here we can see Q2 numbers on the left, and then the first half in the middle.

It's really more than 60% growth both on the quarter two and during the first 6 months, royalties playing the biggest role and then smaller share of other services to our partners. I think the most important message here is on the right side figure with the columns on different quarters where we can once again underline the dynamics of the Nubeqa royalty growth for Orion or income growth to Orion.

It's very, very back-end loaded during one financial year. If you look at here the Q1 '26 and compare it to this previous quarter Q2, a significant increase in royalties, but also in tablet deliveries to Bayer.

I think we've also previously stated that the tablet deliveries may vary between the quarters, and this time, there were a lot of deliveries from Orion to Bayer. Branded Products, Q2 was strong, as I mentioned, almost 13% growth compared to the previous year's Q2.

The biggest increase came in percentage was in Women's Health with our Divina product range, mainly Divigel, which is an estradiol gel for hormone replacement therapy. Easyhaler franchise grew 7%, and there the combination product budesonide-formoterol contributed mainly to that growth.

In CNS, it was actually decreasing. The net sales was decreasing slightly due to the price changes or price decrease in some of our global markets.

Generics and Consumer Health was on par compared to the previous quarter two, previous year's quarter two, and also to previous first half first half of the previous year. The decline, a very slight decline here, comes from the generic prescription drugs, as the Consumer Health products actually are growing with a healthy percentage.

I can't resist to say here that if we would exclude Simdax and Dexdor from this portfolio and look purely our generic portfolio and not include the legacy products, the generic business growth was 2%, a very healthy growth percentage for generic business in Europe. We've also made a license agreement for new biosimilar for European rights of nivolumab with Shilpa, a partner that we are already developing products, but now we have a new biosimilar, and we are expecting to launch that in 2030s.

Animal Health had a bit more tough quarter in Q2, but let's remember that the previous year's Q2 was if not all-time high, but exceptionally high, the comparison period was tough. It's always a question of deliveries to our partners in this business.

When you look at then the first half of this year compared to the previous one, it's -2.4%, and we are expecting the growth to accelerate towards the latter part of the year. We've also received very, very good news, an approval by FDA for a new product called Tessie.

The molecule is tasipimidine. It's an oral solution for the anxiety and fear in dogs, especially if they go to the strange places or they need to experience new conditions.

We expect our partner to start commercial sales in mid-'27. Fermion external sales here, almost 20% growth in Q2 and 17% during the first half of the year.

Here, the delivery timing is all. These are big quantities that we sell to our business-to-business customers, we can clearly see that the first half of this year has been very busy in that front.

We had, and I'm sharing this since there has been also news in Finnish by the Finnish Broadcasting Company and here in the Finland news that there was a water damage at one of the Fermion plants on Hanko site last week during the summer maintenance period, and we are fully recovering from that water damage, and all the activities are implemented as we speak. Based on our current understanding, this will not have a material effect or impact to Orion or any disruption to continuity of our key products.

Our top 10 product list tells the same story as the therapy areas or the divisions, but product per product. I'm not going to go that through in detail, but I think the key message on this slide is clearly that now already in Q2, Innovative Medicines is the biggest division in Orion, Generics being the second-biggest, and Branded Products the third-biggest division.

Our clinical development pipeline has stayed the same from the previous Q1 report, no new projects included or no new stages entered. We already reported last time that we have started the combination study with our TEAD inhibitor, ODM-212.

Now most of the readouts for this studies are actually in '27 or '28, like for Nubeqa studies and opevesostat studies, but we are expecting level study by Tenacia to be read out during the latter part of this year. I already mentioned ODM-212, and let's look at that molecule in a bit more detail.

ODM-212 is a TEAD inhibitor, and we develop it for certain cancers. It has two different mechanisms that we can use for the benefit of cancer patients.

The one has to do with the Hippo pathway, and the tumor growth is driven by this Hippo pathway. With this TEAD inhibitor which binds to the TEAD transcription factors, we can actually limit the growth of the tumor in this certain cancers.

Currently, we are studying mesothelioma and EHE. These are very rare cancers where there is no specific treatment exactly for these cancers.

If we can find a solution for patients, it would be really great, and based on our Phase I results, we strongly believe so. The other part of the story for a TEAD inhibitor is that it can also prevent the resistance for some currently used cancer medication because it also limits some of the mechanisms that cells can develop to circumvent, for example, immune checkpoint inhibitors, chemotherapy, or KRAS inhibitors.

Here we talk about a different cancer types like pancreatic cancer, non-small cell lung cancer, and also on mesothelioma. There are two ways to use a TEAD inhibitor: specifically for a certain cancer that is driven by this Hippo pathway or trying to prevent the resistance for currently used cancer medication.

This far, we have carried out Phase I study as a monotherapy using only ODM-212, and we've seen very promising results on the efficacy. Of course, those are very early signals in mesothelioma and EHE, and also we've seen a very good side effect profile.

We know that in oncology, sometimes even a bit rougher side effect profile is approved, but here we really can see that it's very well tolerated. Based on these results, which we actually announce in ASCO this year, we started a Phase II study for mesothelioma and EHE, and this study is currently ongoing and expected to read out in late '27.

Based on this monotherapy study with ODM-212, we also initiated a combination study with some of the usually used drugs as the ones that I already mentioned for pancreatic cancer, non-small cell lung cancer, and mesothelioma. As we think that we have a potentially best-in-class TEAD inhibitor in our hands, we also believe that if this study is successful, we can solve many problems that are related to the resistance of current medication, and this could become a top drug of choice to be combined with those medications.

We've also received orphan drug designation in US and Europe for mesothelioma, and that of course validates our belief that this is a very, very important study and important drug for patients. The study is a Phase Ib/II study as we are also trying to find a suitable dosing for these combination studies before we go seamlessly to the Phase II.

This study's readout is in '29. Now to a very, very different topic: sustainability.

Orion was listed, I think, for fifth or sixth time now as one of Europe's Climate Leaders by Financial Times this year, and I think this graph speaks for itself as you can see how our emissions have decreased year by year. We started the program earlier on many, many years ago, and in 2019, we changed and switched fully to clean electricity, carbon-free electricity, and then we've also done many, many different activities to reach our goal.

We've changed from crude oil in our steam production first to gas, then electricity. We have local heat stations in our campuses where we use the energy or heat coming from our manufacturing facilities for the whole campus, and we are also carrying out many different type of renovations to be as carbon-neutral as possible.

We also understand that there is a way to go, and finally, I think the last piece of the emissions will then be compensated in the end. Today, we specified our outlook for this year.

This is another quarter, another strong quarter, we thought that this is the place to do it. We actually hiked up the lower range in our outlook by €50 million.

Now the range for net sales is from €2.0 billion to €2.1 billion, and the range for our EBIT operating profit is from €650 million to €750 million. Here you can see our upcoming events next time where we will be reporting in late October, and then the full-year report of '26 will be in the middle of the February.

I thank you for your attention.

Thank you, Liisa, for the presentation, and now it's time to open up the floor for questions. As I mentioned in the beginning, we will start with the conference call lines, but please do remember that you can also type in your questions by using the webcast chat function.

With this, I would like to hand over to the operator for the first questions, please.

Hi there. Thank you for taking my questions.

Just two for me, please. Firstly, could you provide some color as to the big increase in tablet sales for Nubeqa?

Is it a good proxy for the remainder of the year? Then secondly, are you able to disclose at which point during the quarter you reached the highest royalty tier and what the rate or at least the range of the rate is?

Thank you so much.

Thank you very much. I'll start and I'll let René to continue then on the royalty rate.

Your question was on the tablet deliveries, and there is no secrecy or nothing strange there. It's really as we've stated, we deliver tablets as based, of course, to Bayer's forecasts.

Sometimes the deliveries and manufacturing campaigns just are timed in our manufacturing so that there is a bigger punch of tablets sent out during one quarter. Then if it's a 1-day miss, then the deliveries and big numbers are seen on the next quarter.

Of course, the trend overall will be growing. The tablet deliveries will be growing, but there will still be maybe variation between the quarters.

I think that's not a very good, how would I say, key indicator for the future growth to look at it from one quarter to another quarter if you want to estimate the growth of the Nubeqa at the marketplace. Maybe, René, if you want to say something about the royalty rate?

Yeah. To continue on the tablet sales, of course we always have the maintenance break in our factories during the summertime,

and

of course before that, we try to also build in a little bit more of shipments, and those went out now nicely at the end of quarter, you saw this big jump in tablet sales. As Liisa said, it's not necessarily always going as a very continuous step, but there can be step changes in either direction depending on how the big shipments go out.

Then on the royalties, unfortunately, we can't disclose anything more further on that when it comes to the timing. We said that it was reached during Q2, the maximum tier.

We haven't also disclosed what the maximum percentage are, but I'm sure you can be able to get to a reasonable range when you compare the numbers.

Thanks so much.

Hello. This is Iiris Theman from DNB Carnegie.

I have several questions, and I'll take them one by one. Basically, the first one: what was the reason behind your guidance upgrade, and was it driven mainly by your Q2 performance, or have you also upgraded your estimates for H2?

Thanks, Iiris, for the question. Of course, when we look at the first half of the year, we are having a good momentum, especially with Nubeqa, and we think that that momentum will continue in the H2, and for that reason, we of course look at the whole full-year situation, and that led us to upgrade the lower boundary of the range higher.

As we saw that that lower boundary, of course, the probability to landing there started to be very low in our scenarios.

Exactly.

Okay. Then secondly, sales of Divina increased a lot.

Were there any difficulties with peers' supplies that increased demand?

Thank you, Iiris, for the question. If I heard right, you are asking about the other company's supply.

Did I get it right? Yes.

Yeah.

Exactly. Thanks.

Yes, we've seen and heard that there are actually some products, some patches, that there is a stockout in the Nordic countries. What we've seen actually during this year and even last year is on average 40% growth of Divigel, of Divina product portfolio, maybe even above 40%.

You could speculate that the additional maybe slightly under 10% could be a result of stockouts of some other hormone replacement therapies because patients really have to go to see a doctor to get a new prescription for another product, you can't really do the change at the pharmacy. It really really needs to go via a doctor, but clearly it is a treatment that needs to be continued.

I could imagine that some of that stockout can be seen in our growth.

Okay. Is that going to be still an issue in Q3?

That's a very difficult question. I don't really know about the other company's production capabilities.

As I say, we've seen a constant growth of around 40% for Divigel even without this competitor stockout, I would estimate that the growth will continue even in the second half of this year at that rate at least.

Okay. Thirdly, what is your current plan for ODM-212?

Do you plan to develop it yourself, or are you looking for a partner before Phase III study?

A very good question. Currently, we are not looking for a partner.

We are running our studies, the Phase II, by ourselves, and our plan is to run the Phase III also by ourselves, especially for the monotherapy, but also hopefully for the combination therapy. There are no plans currently to look for a partner.

My final question is regarding tariffs. What are your current expectations for this year regarding the impact from tariffs, and what should we assume for next year?

I think René could-

Yes, the latest is that we assume that there will be tariffs for innovative pharma from Europe in the last quarter of this year starting from beginning of October, and we have also in our forecast some impact for that, not a big one for this year. Of course next year with four full quarters, if that impact comes, then of course it's a larger one.

In the end, we have to see then how that is impacting us, but of course we have to see how it's calculated in the end. I think that's also something which haven't been tested.

Far, this year impact is small, next year a bit bigger, and hopefully it will not be a significant one. We'll have to see how it develops.

Okay. Thank you.

Hi. I have still a couple of questions.

We'll also be taking this one by one, starting from Nubeqa. Firstly, you said that deliveries were on the high side in the second quarter.

Are you suggesting that we will see lower deliveries in the third and fourth quarters relative to the second quarter level?

I think that's a fair assumption. In every year that in Q3, we do have the maintenance break, there is at least one month.

The maintenance break is usually even 4 to 6 weeks, there is less manufacturing during the Q3, so that's usually less deliveries as well. Then again, in Q4, we are usually fully geared on, then you might see this fluctuation again between the quarters.

Okay. Then, I'm wondering, did you make any accounting catch-ups related to Nubeqa sales that you estimated in the first quarter of the year?

It's

always there is some corrections that we do on a monthly basis, but we're not disclosing how much we correct on a monthly basis.

Exactly.

Typically, these are not very very big, we have a pretty good understanding and estimates on a monthly basis.

Probably nothing material in the second quarter, but maybe on the positive side?

As said, nothing to comment on that side.

Okay. Then I was wondering about the Fermion incident in Hanko.

You're not estimating any material financial impacts, but just curious, could we see changes to, let's say, normal seasonality, for example, that you would not be able to deliver full volumes in the third quarter yet? Could this have timing impacts if you think about the rest of the year?

Do you see risks for additional costs? When do you expect to restore the production volumes in full?

As we stated, we don't currently see any material effect of this damage to Orion or the supply of the product for the patients. Of course, it will take some time to get it prepared again to the full force, but as it is the maintenance break, it's kind of goes as a part of that maintenance work now to get it fixed.

I guess you're talking about weeks and not months?

Yes, rather weeks than months.

Okay. Then, one final question regarding Fermion.

We have seen quite good growth this year. In the past, you may have not been able to grow sort of the business because you've been using most of the capacity yourself.

What in a way explains that you're able to service also other customers now when Nubeqa is growing heavily, and what is the outlook for the second half of the year on this front?

Let me start from a bit further. Of course, Fermion first of all has two sites, both Oulu and Hanko, and in both sites, in Hanko we have four plants, and in Oulu we have nine modules.

We actually manufacture APIs in many different plants, to speak, if we calculate modules also as plants, and thus darolutamide doesn't have effect to all of them. The fact that we've been able to deliver external products is I don't know exactly the product mix, but there might be big deliveries from our Oulu factory as well to our CMO customers or from our other plants from Hanko than the plants that are also manufacturing darolutamide.

Okay. Are you expecting to sort of maintain this good level also during the second half of the year?

No, I think it will be leveling out during the rest part of the year,

rest of the year. Thanks.

I don't have any further questions.

Hiya. I thought I could just ask a follow-up on the Nubeqa royalties question.

The royalty growth certainly seemed strong in the quarter, and as you've stated, you reached the highest royalty level in 2Q. How should we therefore think about sequential quarter-on-quarter growth in royalties for Q3 and Q4?

Should we expect this to moderate a bit closer to underlying in-market sales growth for Nubeqa? Then looking ahead, do you expect to see a continued faster progression through royalty tiers in 2027 compared to 2026?

Maybe I can take that one. Naturally, if you reach the maximum royalty tier already, it means that then the rest of the quarters of the year will be more driven by the market sales and not by reaching any new tiers.

That is of course something which happens. For next year, of course we will have to see when we guide that, but of course we see overall in the big picture of Nubeqa that there's still a lot of growth left there, of course we assume that there will be year-on-year growth for many years to come.

Maybe if I can add on to that. Last year, we reached the ceiling in terms of the royalty rate during Q3, still in Q3 we will be enjoying partly the fact that now we are enjoying the highest royalty rate for the full quarter compared to last year, and on top of that, of course, the market sales increase.

Okay. Could I ask a follow-up on R&D?

Sure, please go ahead.

Yes, please.

Cool. Just on R&D cadence, you previously indicated that you expect R&D costs to increase for the full year compared to last year, and we saw quite a big full 29% increase in 2Q this year versus 1Q.

Should we view the level of quarter-on-quarter growth in R&D spend as a reasonable run rate for the second half, or do you expect sequential R&D growth to flatten somewhat in 3Q and 4Q?

It's a good question, and of course the quarter-on-quarter or the year-on-year growth in Q2 was quite big, as you mentioned, and I would be careful of using that as a full-year measure. I think what we said also beginning of the year that this year's R&D costs are going to increase because we have more projects.

It will be more like, I think, a continuous change, not a big quantum leap this year. I think you have to look at the more full-year kind of comparisons.

On single quarter, you could have a lot of fluctuations. This year's Q1 maybe started out a bit slow, and then this year Q2, we stepped up in terms of the project in ODM-212.

Now we maybe reached a different run rate than we didn't have yet in Q1, but I think it's careful not to assume that you would have similar type of growths each quarter.

Thanks. I don't have any other questions.

Hi, good afternoon on my behalf as well. I'd like to address the very strong gross margin that you had during this quarter.

Of course, I think there is the sales mix of the increasing Nubeqa sales and the share of Branded Products is driving the whole group-wide gross margin up, but still it's a very strong growth. Are there any kind of changes in your underlying business if we think about generics or Branded Products or any other that is boosting the profitability?

I think the main driver, you already mentioned, it's really when you have Nubeqa royalties taking a bigger share and growing so fast, then that of course impacts the gross margin absolutely the most. The other businesses' gross margins are more stable from that perspective.

Okay. Then maybe one more question regarding the Nubeqa, but maybe with a bit of a more longer-term view.

Next year, we just mentioned that you might have a bit headwind from the tariffs, but what are you expecting with regard to market sales and that there is one competing product losing its exclusivity? Are you expecting that kind of taking over some market shares or giving some pricing pressure?

Yes, indeed, we are aware of this, and as Bayer makes the market forecast and it's better to ask from Bayer this question, but to our knowledge, based on discussions with Bayer, this has been absorbed in all the forecasts, the effect of the Xtandi becoming generic. We are expecting a strong growth going forward to next year and the years after that.

No further questions.

Yes, hi all. It's Anssi from SEB.

Thank you for the presentation, and I have only one question left regarding Nubeqa and ARASTEP study. Could you maybe remind us about the timing of this study?

Is it early 2027 when this should be completed? Then, how should we think about your R&D expenses?

I guess this study is requiring some expenses from that side.

Thanks, Anssi. Now we cannot recall exactly what was the time within '27.

It's '27, but we can come back to that later on if needed. That's public info on the clinicaltrials.gov, we are basing our assumptions on that info.

Unfortunately, now cannot remember the month or quarter there exactly. Then

there was a question about the cost. Yes,

of course. There we are participating most likely as well in this Phase III cost, there will be incremental costs in R&D as well, but overall as part of our R&D budget at that point of time.

So-

Exactly.

Nothing major from that perspective.

It's

again an incremental part of the budget.

Thanks.

Thank you, operator. Now we are turning on to the webcast questions.

We have actually one follow-up here from Iiris from DNB Carnegie: "So can you provide an update on your US expansion? What have you done so far, and are you planning to accelerate your presence, for example, by hiring more people?

I just wanted to understand that how should we think about your US expansion and cost development this and next year?"

Yes. Thank you for that question.

Indeed, we are expanding our team in US, in Boston. We have a strong team in clinical regulatory, biostatistics, and in R&D.

That's how we started out. Now we also have a commercial head in US.

We are hiring and extending the commercial group with medical affairs and market access. These are single individuals, we are not talking about any kind of a significant change of the level of costs at this time.

This is all preparing for ODM-212, planning the Phase III studies, and preparing the ground with the hospitals and key opinion leaders. It's still single individuals.

The cost hike, if that comes, then it comes very close to the launch when you start to recruit the sales reps for the launch. Of course, our cost base in US is a very different than it used to be even last year, not to mention in '22 when we didn't have the US operation, but it's still nothing material or that way significant.

It's tens of people, not hundreds of people.

All right. Thank you, Liisa.

We seem to have no further questions on the webcast, at this point, thank you all for attending this webcast. Next time, as Liisa said, we will be reporting in late October.

Meanwhile, we want to wish you all great summer.

Thank you.

Thank you.