Laboratorios Farmaceuticos Rovi, S.A.

Good morning to everybody. Thank you for joining us today for our conference on the ROVI's First Half 2025 Financial Results, which will start in a moment.

I am Javier Lopez-Belmonte, ROVI's Deputy Chairman and Chief Financial Officer. Joining me on today's call are Juan Lopez-Belmonte, ROVI's Chairman and CEO; and Marta Campos, our Head of Finance.

The presentation will be followed by a Q&A session. Therefore, if you want to ask any questions during the presentation, please do not hesitate to send them through the question button on the platform.

Before we begin, let me remind you that the information presented in this call contains forward-looking statements based on our current beliefs and expectations. Actual results could materially differ due to the known and unknown risks, uncertainties and other factors, and we undertake no obligation to update or revise any of these statements.

With that, I thank you for your presence here today, and I will now hand the presentation over to Juan Lopez-Belmonte. Please Juan, go ahead.

Thank you, Javier, and good morning to everyone in the call. Since the pandemic, we've been steadily investing to build the foundations of our future.

2025 is a transition year for us. We believe it's essential to continue investing, and that conviction has made us more resilient, more focused and better positioned for sustainable growth.

We are at an inflection point. The progress we've made, combined with improving market conditions put us in a strong position for long-term success.

In this context, our operating revenue reached EUR 314.6 million, a decrease of 4% in the first half of 2025, mainly due to the performance of contract development and manufacturing business. However, sales of the Specialty Pharma business increased 13% to EUR 237.4 million in the first half of 2025.

Okedi monthly Risperidone ISM has continued to grow robustly with sales in the first half of 2025 increasing by 115% to EUR 26.9 million compared to the same period of 2024. Heparin division continues to perform positively.

Its sales increased 12% to EUR 135.2 million, mostly due to an increase in orders from partners. Enoxaparin was the main contributor to the growth of the division with sales rising 14% due to stronger international sales in the first 6 months of the year.

Our gross margin was 62.4% in the first half of 2025, an increase of 3 percentage points. EBITDA decreased 6% in the first half of 2025, mainly due to higher R&D expenses.

However, if we recognize the same amount of R&D expenses in the first half of 2025 as in the same period of 2024, EBITDA would have increased 0.5% with EBITDA margin improving by 1.1 percentage points to 22.3% in the first half of 2025. For 2025, with the visibility that the company has at this moment, we reiterate our guidance.

ROVI expects its operating revenue to decrease by a mid-single-digit percentage in comparison with 2024. Let's begin by reviewing the key milestones achieved in the first 6 months of the year.

First, it should be noted that on July 9, 2025, the Technological Development and Innovation Center published the final decision confirming the award of aid of EUR 36.3 million for ROVI's LAISOLID project. This aid covers the period running from January 2023 to August 2026.

In the third quarter of 2025, the company plans to book the revenue relating to the expenses incurred from January 2023 to September 2025 and collect the entire amount awarded, once the administrative procedures required by the awarding body have been completed. And secondly, the company continues to advance in the artificial intelligence field.

In January 2025, ROVI acquired a majority position in Cells IA Technologies, a pioneering company in the development of artificial intelligence-assisted diagnosis in the pathological anatomy area. Pathological anatomy, an essential medical specialty in the diagnosis and staging of many diseases, is destined to become one of the disciplines with the greatest potential for transformation as a result of the new digital technologies.

This agreement with Cells IA represents an opportunity for ROVI in its goal to contribute to improving healthcare through the development of artificial intelligence solutions. And now let me give a quick overview of the first half 2025 financials.

As I mentioned before, total operating revenue fell 4% to EUR 314.6 million versus the first 6 months of 2024, mainly due to the behavior of the contract development and manufacturing business. Notwithstanding sales of the Specialty Pharmaceutical business rose 13% to EUR 237.4 million in the first half of the year, positively impacted by our low-molecular-weight heparins, Okedi, Neparvis and the contrast agents and other hospital products division.

I will touch upon the performance later in the presentation. EBITDA stood at EUR 65.6 million, a decrease of 6% compared to the same period of last year, reflecting a 0.4 percent points decrease in EBITDA margin, which was 20.9% in the first half of 2025.

Likewise, net profit stood at EUR 39.7 million, a decrease of 10% in the first half of 2025 compared to the first half of 2024. Moving on to one of our main pillars of growth, our Specialty Pharma area.

Sales of prescription-based pharmaceutical products increased 14% to EUR 208.1 million in the first 6 months of the year. Heparin sales, low-molecular-weight heparin mainly and other heparins grew by 12% in the first half of 2025.

Enoxaparin was the main contributor to the growth of the division with sales rising 14% to EUR 79.8 million due to an increase in orders from internal partners. Bemiparin had a strong half in terms of revenue performance.

In the first half of 2025, Bemiparin international sales grew 38% with a strong contribution from China, Greece and Turkey. And we continue to see momentum for the product.

We aspire to become a global leader in this field with Bemiparin and enoxaparin biosimilar. In this context, we're investing to become self-sufficient in obtaining crude heparin and thus becoming a vertically integrated company in all the low-molecular-weight heparin manufacturing phases.

ROVI also continues with its internalization plan. Sales outside Spain represented 55% of operating revenue in the first half of 2025.

Regarding enoxaparin biosimilar, let me say, it's already present in 42 countries, and we continue to sign licensing agreements to distribute the product in more countries. As I mentioned before, in the first 6 months of the year, enoxaparin biosimilar sales performed positively, increasing by 14% to EUR 79.8 million due to an increase in orders from international partners in the first half of 2025 compared to the first half of last year.

The growth drivers of the Specialty Pharmaceutical business were Okedi, Neparvis and contrast agents and other hospital products. Now taking each one of the brands in turn step by step.

Sales of Okedi, the first ROVI product based on its leading-edge drug delivery technology ISM for the treatment of schizophrenia in adults reached EUR 26.9 million in the first 6 months of 2025, an increase of 115% compared to the same period in 2024 and 14% rise compared to the first quarter of 2025. Sales of Neparvis, a specialty product from Novartis indicated for the treatment of adult patients with symptomatic chronic heart failure and reduced ejection fraction increased 11% in the first half of 2025.

Finally, sales of contrast imaging agents and other hospital products increased by 9% in the first half of the year. Regarding CDMO sales fell 35% to EUR 77.2 million in the first half of 2025 compared to the same period in 2024.

Despite the decline in sales, we remain excited about the near and long-term potential of our globally leading CDMO business. We are in a phase characterized by a highly dynamic market in which ROVI is soundly positioned.

In order to capitalize our competitive edge, we are making significant investments aim to consolidate global leadership in sterile fill and finish capacity and service. This will allow the company to continue to capitalize on the significant imbalance between the growing demand for injectable products and the capacity currently on offer.

With the recent investments and expansions underway in the contract manufacturing business, ROVI will become one of the largest and most experienced pharmaceutical groups in Spain with 8 fully integrated plants, 3 of which are fully engaged in contract development manufacturing operations. Moving to research and development.

We are developing 2 innovative formulations based on our ISM technology platform. Letrozole SIE, a quarterly prolonged release Letrozole injection superior to Femara in estrogen supression to treat hormone-dependent breast cancer and Risperidone, a quarterly prolonged release Risperidone injection to treat schizophrenia in adults, which allows adequate plasma levels to be obtained as of the injection date.

Both products seeks to improve clinical efficacy, increase treatment awareness and provide an enhanced tolerability profile. In the first quarter of 2025, we obtained positive results in 2 previous Phase I trials, enabling us to progress towards Phase III clinical trials.

These developments reflect our commitment to innovation and enhancement of the patient's quality of life. And finally, I will provide an overview of the 2025 outlook.

As I mentioned, 2025 guidance remains unchanged, and we expect operating revenue to decrease by a mid-single-digit percentage in comparison with 2024. Notwithstanding, this guidance is calculated using certain factors that although they could be relevant to the estimates are difficult to specify at the present time, such as how the demand and production might evolve for the vaccination campaign that will take place in 2025.

2025 is a transition year in which the company continues to invest, laying the foundation for sustainable growth and value creation in the years ahead. We are at an inflection point with several growth opportunities on the horizon and a clear focus driven by our established European footprint, which will continue delivering growth within our low-molecular-weight heparin platform and the successful launch of Okedi.

And second, potential growth avenues with our recent investments in the CDMO business as well as in the clinical development of a 3-month formulation of Letrozole and a 3-month formulation of Risperidone. And with that, I would like to turn it back over to Javier, who will run you through financials in more detail.

Thank you very much for your attention and for taking the time to participate in this meeting.

Thanks, Juan. As Juan mentioned earlier, since the pandemic, we have been undergoing a period of transition, focused on building long-term value.

Within this framework, operating revenue for the first half of this year totaled EUR 314.6 million, a decrease of 4% in the first 6 months of 2025, mainly driven by the performance of the CDMO business. CDMO sales fell 35% to EUR 77.2 million in the first half of the year in comparison to the same period of 2024, mainly due to the booking of negligible revenue related to the activities carried out to prepare the plant for production of the vaccine under the agreement with Moderna in the first half of 2025, and lower revenues from the production for Moderna in the first half of 2025.

And finally, lower revenues from existing customer, excluding Moderna, as a result of the closure of the Madrid facility to upgrade some Annex 1 GMP aspects for sterile manufacturing. As a result of this closure, some production for existing clients was brought forward from the first half 2025 to the last half of 2025 to the last half of last year and other production has been postponed to the remainder of 2025.

However, Sales of the Specialty Pharmaceutical business increased 13% to EUR 237.4 million compared to EUR 210.5 million in the first half of the previous year. In addition to the increase in the low-molecular-weight heparin sales, enoxaparin and Bemiparin stand out with a 12% growth, reaching EUR 131.3 million in the first half of 2025.

Enoxaparin was the main contributor to the growth of the division, with sales rising 14% to EUR 79.8 million due to an increase in orders from international partners. ROVI expects full year sales of enoxaparin biosimilar to increase by a mid-single-digit percentage in this year compared to 2024.

In addition, Bemiparin sales also increased by 9% to EUR 51.5 million in the first half of 2025 compared to the first half of 2024. This rise was driven by Bemiparin international sales, which increased by 38% in the period linked to higher orders from partners in China, Greece and Turkey.

ROVI expects full year sales of Bemiparin to increase by a low single-digit percentage in 2025 compared to 2024. Gross profit increased 0.3% to EUR 196.2 million in the first half of this year compared to the same period of last year.

Gross margin was up 3.0 percentage points, sorry, to 62.4% in the first 6 of '25. This increase was mainly due to the increased contribution of Okedi sales, which added high margins, the decrease in low-molecular-weight heparin raw material prices, which had a positive impact on gross margin, too.

And finally, the residual contribution to the CDMO business of revenue related to the activities carried out to prepare the plant for production of the vaccine under the agreement with Moderna in the first half of '25 compared to the first half of '24, which added lower margins to group sales. In the first half of 2025, raw material prices for low-molecular-weight heparins fell 33% compared to the first half of 2024.

Likewise, a positive impact on gross margin is expected over the year as a result of the drop in heparin raw material prices. ROVI continues to be committed to innovation.

R&D expenses increased 38% to EUR 16.8 million in the first half of 2025 due to the completion of the Phase I clinical trials for Letrozole SIE and quarterly Risperidone ISM. And the preparation for the development of Letrozole SIE's Phase III clinical trial.

Selling, general and administrative expenses, SG&A remained stable at EUR 113.7 million in the first half of 2025 compared to the same period of the previous year. Within SG&A expenses, employee benefit expenses, excluding R&D, increased by 9% in the first half of 2025 compared to the same period of 2024, mainly due to a 3% wage increase due to the entry into force of the collective agreement, along with the hiring of additional CDMO personnel.

However, this increase was offset by a 10% decrease in other operating expenses, excluding R&D, driven by an efficient cost-containment policies. EBITDA totaled EUR 65.6 million in the first half of 2025, a decrease of 6% compared to the same period of '24, reflecting a 0.4 percentage point decrease in the EBITDA margin, which decreased to 20.9% in the first half of the year.

EBIT decreased 10% to EUR 50.9 million in the first 6 months of this year, reflecting a 1 percentage point decrease in the EBIT margin, which decreased to 16.2% in the first 6 months of 2025. Net profit decreased 10% to EUR 39.7 million in the first half of 2025.

EBITDA pre-R&D calculated excluding R&D expenses in the first 6 months of this year increased by 0.4%, reflecting a 1.3 percentage point increase in the EBITDA margin to 26.2% in the first 6 months of 2024. Again, EBIT pre-R&D in this case, decreased by 1%, reflecting a 0.7 percentage point increase in the EBIT margin to 21.5% in the first 6 months of the year.

Net profit pre-R&D decreased by 2% in the first 6 months of the year. We now move to CapEx and cash flow.

We have been saying we are on the track to becoming a key leading player within the CDMO industry in terms of injectable capabilities. In this context, ROVI invested EUR 20.8 million in the first half of the year.

And of this amount, EUR 15.7 million relates to investment CapEx regarding our facilities, including important projects such as the new filling lines and the operations expansions, the Glicopepton joint venture for the construction of a plant, dedicated to the production of compounds of high biological value from the intestinal mucosa of pigs. And finally, the ISM industrialization.

Lastly, we invested EUR 5.2 million in maintenance and other CapEx. Cash flow from operating activities decreased 6% to EUR 28 million, mainly due to the decrease of EUR 6.5 million in profit before income tax and the increase of EUR 8.6 million in the trade and other receivables item in this first half of 2025 compared to an increase of EUR 27 million in the same period of last year.

Regarding our debt now as of 30th of June this year, ROVI's total debt increased to EUR 129.3 million. EUR 105 million is debt with banks, representing 81% of total debt, while we have EUR 13.7 million correspond to financial liabilities for leases representing this 11% of total debt and EUR 10.5 million correspond to debt with public administration related to the development of R&D projects, which is 0% interest rate debt, representing 8% of our total debt.

At the end of the first half of this year, ROVI had a gross cash position of EUR 49.6 million, and therefore, our net debt is EUR 79.7 million. Regarding our dividend, ROVI's General Shareholders' Meeting held on 18th June this year approved the payment of a dividend equivalent to EUR 0.9351 per share entitled to receive it and charged to the 2024 profit.

This would entail distribution to an amount equivalent to approximately 35% of the consolidated net profit for last year attributed to the parent company. By the way, this dividend was already paid on 16th of July this year.

So regarding the news flows for 2025, we will continue to monitor on the manufacturing developments of Moderna's products. We also expect to announce the launch of Risperidone ISM in other countries.

Please remember that the product is currently being marketed in Germany, U.K., Spain, Portugal, Italy, Austria, Greece, Serbia and the Nordic countries, Australia, Taiwan and the Netherlands. We also look forward to hearing about new licensing of new products.

And regarding our R&D, we are making good progress with the next steps of the clinical trial of Letrozole SIE and Risperidone 4, the new formulation of Risperidone for a 3-monthly injection. And that's all regarding our financial results for the first 6 months of 2025.

We can now start the Q&A session. So remember if you want to ask any questions, please do not hesitate to send them through the question button on the platform.

The first question is from Pablo De Renteria from Kepler. Javier, this is for you.

The sales seem to be performing better than initially expected as reflected in your upgraded expectations from a low single-digit decline to a mid-single-digit increase. Should we understand that this stronger-than-expected performance is helping to offset somewhat weaker-than-expected evolution in CDMO?

And that is why you are maintaining your overall guidance? Or alternatively, does the improved outlook for the low-molecular-weight heparin franchise give you greater confidence in achieving your full year targets?

Well, thank you, Marta. Thank you, Pablo, for your question.

You're right. We have mentioned in the presentation that enoxaparin sales have increased 14% semester over semester.

This increase, as we said, came from higher orders from our international partners, especially say, Canada, South Africa and France. And we are very happy how the division, especially this division is progressing so far throughout the year.

And this is what why we have updated the guidance for product. Also on the CDMO side, as you know, we expect to have declining revenue since we expect to have also residual revenues from the tech transfer, what we call tech transfer activities, this preparation for the plant and the CapEx from Moderna.

And remember that we recognized between EUR 40 million and EUR 45 million last year from these services. And having said that, I think we -- right now, we remain very confident around the guidance.

As you know, the guidance was also ample. So we do not believe that at this moment of time is we need to change the guidance.

And I would say that this first semester reinforce how positive we are about achieving the guidance.

Thanks, Javier. The next question comes from Álvaro Lenze from Alantra Equities.

Javier is for you. You spent EUR 17 million in R&D in H1, which annualized is below the EUR 40 million, EUR 60 million R&D budget you provided.

I missed the question, sorry. So are you going to -- sorry, could you provide some guidance on whether you will be in the lower or upper end of the range in 2025 and in 2026?

Yes. Well, thank you, Alvaro, for your question.

I guess it's regarding the evolution of R&D. We try to explain and to be very, very transparent in our Capital Market Day about the evolution of our R&D expenditure.

As we explained today, we are preparing and about to start probably in the next coming months our Phase III clinical trial of Letrozole SIE. So that means that for sure, and this will be good news for the company that we expect in the second part of the year to spend more money on R&D compared to the first half.

So probably we will be in the range that we provided for R&D for the next years. And for this 2025 year, I guess that the R&D expenditure will be, I would say, somehow in the middle of the range towards the high part of the range, but probably in the average.

And I guess that '26 will be a more expensive year with regards to R&D.

Thanks Javier. Juan, the next question is from Guilherme Sampaio from CaixaBank.

Are you seeing any slowdown in conversations regarding new manufacturing contracts based on the volatility induced by the U.S. tariff announcements?

Any signal at all. As we mentioned in our presentation, the CDMO landscape is booming.

Really, the demand for injectable capacity is probably leading to the most impressive days with a complete alignment between supply and demand. We are really overwhelmed by the number of proposals, contracts and tech transfer that we are involved.

As Javier has mentioned before, we believe that the news flow CDMO is going to be reached in the next 12 months. And it's logical as well that if I may expand on the answer that the CMO is not affected by all these geopolitical environment because we're really working on timing that goes beyond a quarter or 2 quarters or a year.

At the end of the day, conversations for CDMO contracts takes at least 1.5 years, then you have to do the tech transfer, the regulatory submissions with the approvals. So we're always talking about a period of time between 2 to 4 years.

So again, it really goes beyond any short-term volatility. So we are extremely confident, as Javier has mentioned before, and I have stressed myself that the CMO is going to be one of our lighting stars in the next coming quarters and years.

Thanks, Juan. Javier, Guilherme has another question.

This is for you. On SG&A, it is reasonable to project a year-over-year development in the second part of 2025 in line with the first part of the year?

Thanks, Marta. Thanks, Guilherme, for your question.

I mean we are very happy with the evolution of SG&A during the first semester of the year. I think we are having very restricted cost containment policies.

And probably for the pending -- for the remaining part of the year, we don't expect a higher increase, maybe a moderate, a very small increase, very modest anyway. So that's why we are quite excited about the how we are managing the company now.

So we are trying to maintain cost under control, and we are very happy about it.

Thanks Javier, Juan, Álvaro Lenze from Alantra Equities asks the following question. Can you provide some color on whether you are signing new CDMO contracts even if these are not as large as the one announced in April 2024?

How long are the production lead times for new smaller clients?

Thank you, Alvaro, for your question. I mean as I mentioned before, we are probably -- I mean we are overwhelmed by the number of contracts and tech transfer discussions that we are holding in the last 2, 3 quarters.

Really, I mean, in terms of lead times between small, let's say, contracts and large contracts, there really not much differentiation. We might gain some regarding contract discussions or contract execution.

But when it comes to tech transfer, when it comes to filling stability data, when it comes to registration submissions and registration approvals, it takes usually 90% of the same time of any large contract. Again, as I mentioned before, we are trying to balance.

I mean not everything can be large, huge contracts extremely material. But on the other hand, I think something that we are working extremely hard right now in the similar activities is really to try to expand our customer base.

So I believe in that sense, as I mentioned before, we are going to have a very rich news flow in the next probably year ahead of us with many different announcements of small, large contracts. Always -- as we mentioned before, in many cases, always related to the confidentiality clauses and in many cases, it doesn't allow us to provide that much detail and information regarding the intrinsics of the different agreements.

Thanks, Juan. Javier, then Alvaro also wants to know how are the preparation works for the 2024 announced CDMO client doing?

And when do you expect to start producing test batches and when commercial batches?

Thank you, Alvaro. For sure, this agreement that we announced on 2024, I think this is a game changer for us and a milestone for the next -- for the coming future of the CDMO business.

So that's why we are so optimistic for the evolution of the business. We have been working -- we are working with the customer with the validation process and trying to make sure that we progress in the right direction.

As we always guided the market, we expect next year not to have the initial impact on sales from this agreement of the initial commercial sales, at least impact from this agreement on ROVI's revenue. We have explained several times that the starting or kicking off commercial activities normally depend or always depend on regulatory approvals and regulatory approvals are something that is difficult to plan very well ahead or at least to highlight that this is going to be for sure in a quarter or in another quarter.

What we are planning is that for sure, second part of next year, we'll have already commercial activities. So that's I think a good message on both companies, our customers ourselves, we are trying to advance and trying to materialize the approvals and tech transfer activities to advance the production as soon as possible.

But for sure, I think we are quite confident that the second part of next year, we'll see sales coming from this contract, which for sure, it will change the dynamic of the CDMO.

Javier, the next question is for you comes from Jaime Escribano. Okedi EUR 27 million in H1 2025.

2025 guidance is EUR 50 million. Could this be conservative?

How do we [indiscernible] the second part of the year?

Yes. Thanks for the questions around Okedi sales.

I think we are quite our way. We are very optimistic about the evolution of Okedi sales as we try to deliver today, we have already launched the product in many countries.

And that's why we always try to be cautious around guidance because we can control the sales of the product in the countries where we market the product in a direct way. However, in the countries that we have partners, as it happened also with enoxaparin and Bemiparin, the sales and the orders coming from partners sometimes are even or are not split evenly during the year and somehow we have different peaks and valleys during the year.

So that's why that taking into account that Okedi has been launched very recently in some of these countries, we prefer to maintain the guidance even though that the first year -- the first part of the year has been tremendous, I think very positive. And for sure, in the countries that we are marketing ourselves the product in a direct way, we will expect an increase of sales of direct sales in the second part of the year.

As I said before, we cannot control stocks of our partners. That's why we prefer to keep and maintain the guidance for the full year.

Thanks Javier. And the last question comes from Chris Richardson from Jefferies.

Juan is for you. What changed in the enoxaparin guidance?

What caused the initial negativity? Is there a possible pull forward of revenues from the rest of the year to avoid tariffs, for example?

I mean thank you, Chris, for your question. I hope I have got it right.

I mean, first, let me say that we, as a company, we don't export. I mean we don't commercialize products in the U.S.

So we shouldn't be impacted by tariffs and the CDMOs likewise, most of our customers are European-based customers and most of our product manufacturing CDMO are related to European countries as well. And so far to the best of our knowledge regarding tariffs, it seems that so far, and again, this is -- we have as much information as you may have, it seems that it's more related to starting materials and API and finished product seems to be at least so far avoided any sort of measures from the Trump administration.

On enoxaparin, as Javier has mentioned, really the evolution is pretty good. We see momentum from the international markets, especially France, Israel, South Africa, Canada.

We're investing heavily really on the supply chain, as we have mentioned many different times in different occasions, trying to be self-sufficient in having a vertical integration from the really raw material that means the [indiscernible] cost to the finished product. So that definitely should allow us to improve our cost of goods, improve our margins and definitely to give us further competitiveness on the market.

Thank you very much, Juan. Thank you very much for your participation.

Let me now turn the call over to our Vice President and CFO, Mr. Javier Lopez-Belmonte for the closure of the presentation.

Thanks, Marta, for your help. As Marta was pointing out, there is no more questions at this moment.

So we are finishing this call. Thank you very much again for attending this first half results call, and have a good day and a good summer break.

Thank you. Bye-bye.