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 am 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 is 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.

With these words, it is 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 an 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 EUR 522 million, and operating profit increased by 69%, resulting in a 34% operating profit margin and EUR 177 million.

Earnings per share was EUR 1. Of course, in our net sales development, Innovative Medicines was the main driver by EUR 95 million.

Also when we look at Branded Products and the size of the Branded Products division, EUR 10.3 million is a significant growth rate. All the other businesses were more or less on par.

On operating profit, the volume growth increased our profit by EUR 17.3 million. Again, royalties playing a key role here by close to EUR 77 million.

We have also finalized the liquidation of our Russian operations and the final cost of that liquidation, EUR 3.3 million, is included now here in other expenses. Fixed costs, EUR 50 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 EUR 939 million during the first six months of net sales, and almost 60% growth of operating profit, up to EUR 291 million. With operating profit margin of 31% and earnings per share EUR 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 is really more than 60% growth both on the Q2 and during the first six months. Royalty is 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 is very back end loaded during one financial year.

If you look at here the Q1 2026 and compare it to this previous quarter, Q2, a significant increase in royalties, but also in tablet deliveries to Bayer. I think we have also previously stated that the tablet deliveries may vary between the quarters.

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 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 year's Q2, and also the 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 cannot resist to say here that if we would exclude Simdax and Dexdor from this portfolio and look purely at our generic portfolio and not include the legacy product, the generic business growth was 2%, a very healthy growth percentage for a generic business in Europe. We also made a license agreement for new biosimilar for European rights of nivolumab with Shilpa, a partner that we are already developing products with, but now we have a new biosimilar, and we are expecting to launch that in 2030s.

Animal Health had a bit tougher quarter in Q2. Let us remember that the previous year's Q2 was, if not all-time high, but exceptionally high.

The comparison period was tough. It is 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 is -2.4%, and we are expecting the growth to accelerate towards the latter part of the year. We have also received very good news, an approval by FDA for a new product called Tessie.

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

We expect our partner to start commercial sales in mid 2027. 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 on that front. We had, and I'm sharing this since there has been also news by the Finnish Broadcasting Company and here in the Finland in News, that there was a water damage at one of the Fermion plants on Hanko site last week during the summer maintenance period.

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 by product. I'm not going to go through that in detail.

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 had started the combination study with our TEAD inhibitor, ODM-212. Now most of the readouts for these studies are actually in 2027 or 2028, like for Nubeqa studies and opevesostat studies.

We are expecting LEVEL study by Tenax to be read out during the latter part of this year. I already mentioned ODM-212.

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. One has to do with the Hippo pathway, and some cancers, 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 these 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 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. Also we have 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 announced 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 2027.

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 drug of choice to be combined with those medications.

We've also received orphan drug designation in U.S. and Europe for mesothelioma, and that, of course, validates our belief that this is a very important study and important drug for patients.

The combination study results, and the study is a phase I-B/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 2029.

Now to a 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.

I think this graph speaks for itself, as you can see how our emissions have decreased year by year. We started the program early on, many years ago, and in 2019, we changed and switched fully to clean electricity, carbon-free electricity.

Then we've also done many different activities to reach our goal. We have 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. 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. 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 strong quarter, we thought that this is the place to do it.

We actually hiked up the lower range in our outlook by EUR 50 million. Now the range for net sales is from EUR 2 billion to EUR 2.1 billion, and the range for our EBIT operating profit is from EUR 650 million to EUR 750 million.

I thank you for your attention.

Thank you, Liisa, for the presentation. 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 from 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? Secondly, are you able to disclose at which point during the quarter you've reached the highest royalty tier?

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 continue then on the royalty rate.

Your question was on the tablet deliveries. 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 bunch of tablets sent out during one quarter.

If it's a one-day miss, 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 the 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 Nubeqa at the marketplace.

Maybe, René, if you want to say something about the royalty rate.

Yeah. To continue on the tablet sales.

Yeah.

Of course, we always have the maintenance break in our factories during the summertime.

Yes.

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.

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?

Was it driven mainly by your Q2 performance, or have you also upgraded your estimates for H2?

Yeah. Thanks, Iiris, for the question.

Of course, when we look at the first half of the year, we are having a good momentum, and especially with Nubeqa. 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 lower boundary, of course, the probability to landing there started to be very low in our scenarios.

Exactly.

Okay. Secondly, sales of Divina increased a lot.

Were there any difficulties with peer 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 stock out in the Nordic countries.

What we've seen actually during this year and even last year is, on average, 40% growth of Divigel or Divina product portfolio, maybe even above 40%. You could speculate that the additional maybe slightly under 10% could be a result of stock outs 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 needs to go via doctor. Clearly, it is a treatment that needs to be continued.

I could imagine that we see some of that stock out 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 said, we've seen a constant growth of around 40% for Divigel, even without this competitor stock out. I would estimate that the growth will continue even in the second half of this year, at that rate at least.

Good. 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, 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?

Well, 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, or starting from beginning of October.

We have also in our forecast some impact for that, not a big one for this year, but of course next year with four full quarters, if that impact comes, then of course, then it's a larger one. In the end, we have to see then how that is impacting us.

Of course, we have to see how it's calculated in the end. I think that's also something which haven't been tested, but so far, this year impact is small, next year a bit bigger, and hopefully it will not be a significant one, but we'll have to see how it develops.

Okay. Thank you.

Hi. I have still a couple of questions.

Will 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, so there is at least one month.

The maintenance break is usually even four to six weeks, so there is less manufacturing during the Q3, so that's usually less deliveries as well. Again, in Q4, we are usually fully geared on.

You might see this fluctuation again between the quarters.

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

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 big, so we have a pretty good understanding and estimates on a monthly basis.

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

Well, I said nothing to comment on that side.

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

You are 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 we think about the rest of the year?

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

Well, 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 kind of goes as a part of that maintenance work now to get it fixed.

Okay. I guess you're talking about weeks and not months.

Yes, rather weeks than months.

Okay. One final question regarding Fermion.

We have seen quite good growth this year. In the past, you may have not been able to grow 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? What is the outlook for the second half of the year on this front?

Well, let me start from a bit further. Of course, Fermion, first of all, has two sites, both Oulu and Hanko.

In both sites, in Hanko we have four plants, and in Oulu we have nine modules. We actually manufacture APIs in many different plants, so to speak, if we calculate modules also as plants.

Thus, darolutamide doesn't have effect to all of them. The fact that we've been able to deliver external products is there might be, 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 maintain this level also during the second half of the year?

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

Okay, thanks. I don't have any further questions.

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

The royalty growth was super strong in the quarter. As you 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 end market sales growth for Nubeqa?

Then looking ahead, do you expect to see continued fast progression or 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. On top of that, of course, the market sales increased.

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 meaningful 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 a lot in 3Q and 4Q?

It's a good question. 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 was at the 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 a single quarter, you could have a lot of fluctuations.

This year's Q1 maybe started out a bit slow. 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. I think it's careful not to assume that you would have similar type of growths each quarter.

Thanks. I don't have any further 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 increase in Nubeqa sales and the share of Branded Products is driving the whole group wide gross margin up, still it's a very strong growth. Are there any kind of changes in your underlying business if we think about Generics and Consumer Health or Branded Products or any other that is boosting the profitability?

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

Okay. Maybe one more question regarding the Nubeqa, maybe a bit of a more longer term view.

Next year, you just mentioned that you might have a bit headwind from the tariffs. What are you expecting if we go to market shares and that there is one competing product losing its exclusivity.

Are you expecting that taking over some market shares or giving some price pressure?

Well, yes, indeed, we are aware of this, as Bayer makes the market forecast, and it is better to ask from Bayer this question. To our knowledge, based on discussions with Bayer, this has been absorbed in all the forecasts, the effect of the Xgeva study becoming generic.

We are expecting a strong growth going forward to next year and the years after that.

Okay. No further questions.

Yes, hi all, it is Anssi from SEB. Thank you for the presentation, I have only one question left regarding Nubeqa and ARASENS study.

Could you maybe remind us about the timing of this study? Is it early 2027 when this should be completed?

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 2027.

It's 2027, 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, I cannot remember the month or quarter there exactly.

There was a question about the cost.

Of course, there we are participating most likely as well in this phase III course. There will be incremental costs in R&D as well.

Overall, as part of our R&D budget at that point of time.

Exactly.

Nothing major from that perspective.

No.

It is again an incremental part of the budget.

Okay, 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. Can you provide an update on your U.S.

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 U.S. expansion and cost development this and next year?

Yes. Thank you for that question.

Indeed, we are expanding our team in U.S., 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 U.S.

We are hiring and extending the commercial group with medical affairs and market access. These are single individuals, so we are not talking about any kind of significant change of the level of cost 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 is 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 U.S.

is very different than it used to be even last year, not to mention in 2022 when we didn't have the U.S. operation, but it is still nothing material or that way significant.

It is 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.