Thank you, Sabrina, and good afternoon or good morning, everyone, and thank you for attending the Recordati conference call today. I’m pleased to be here with our CEO, Andrea Recordati; and Luigi La Corte, our CFO, that we will be presenting the first quarter 2021 results and the strategy and now to the update for the next three years.

There will be an usual the presentation. As usual, the second slide is available on our website under the Investors section.

After that, we will open up for Q&A. I will now leave the floor to Andrea.

Please go ahead.

Good afternoon, ladies and gentlemen, and thank you for having joined us for the Recordati First Quarter 2021 Results and the three-year plan update investor presentation. If you please move to the second slide, the agenda.

The agenda today will take us through our company overview and strategy, our 2021 first quarter results, the key assumptions around the drivers for organic growth, our focus on further growth opportunities internal and external, and finally, our financial projection for the next three years. So if you can please turn to the first slide of our presentation, Slide number 3.

So let me start with Recordati in a snapshot in one page. For those of you who don’t know our company, to give you a quick profile of Recordati and where Recordati is today.

An International Specialty Pharma Group with its roots and legacy in Italy that has successfully grown international markets, mostly through acquisitions and business development over many years to the point that Italy now accounts less than 20% of revenue. We manage the business for two business units: SPC, which stands for specialty and primary care that accounts for 78% of revenues and includes Rx, OTC and Fine Chemicals; and our rare disease business unit, which is mainly focused on the treatment for metabolic deficiencies and rare endocrine conditions.

That accounts for 22% of revenues but accounts for more than 25% of consolidated EBITDA. Our SPC legacy is in cardiovascular.

We’re also pressing a number of other therapeutic areas, such as urology, gastrointestinal, anti-infectives to mention Q1. We have a well-diversified footprint and strong vertical integration with eight manufacturing facilities, of which two are API production size and one is specialized packaging and distribution strategic dedicated to rare diseases.

This diversification has served us well in 2020 during the COVID-19 pandemic. Although we were not immune from the impact that COVID has on several categories and markets, our organization was quick to react ensuring continued availability of our products and the safety of our employees.

Despite the disruption, we were able to deliver revenues, which were broadly flat versus the prior year. And EBITDA and adjusted income that were very closely aligned with the target that we have set at the beginning of 2020.

Moving on to the next slide. Those of you who are – that are more familiar with the business would know that we have a relatively straightforward and successful and proven business model, which is summarized on this slide.

Thank you, Andrea, and good morning, good afternoon, everyone. I will take you through the Quarter 1 financials.

And we’ll try to do so clearly, but also with pace given that I’m sure everyone is keen to hear more about the three-year plan. And also given that, as you already know from our press release a few weeks ago, Q1 financials are somewhat distorted by stock movements both this year and last.

So starting from Slide 9. And in terms of key highlights.

Revenue, as we’ve already disclosed, that was down 10.3% for the quarter at just under EUR 385 million. This reflects adverse foreign exchange of 3.5%.

And obviously, the continuation of COVID pandemic pressure on some key categories as we saw in the second part of last year, but also reflects the year-on-year impact of lots of exclusivity that as we faced in 2020 on pitavastatin and silodosin.

Thank you, Luigi. So if you could turn to the agenda, please Slide 16.

So let me now take you in more details for the two – our two businesses and describe the key drivers of our plan from 2021 to 2023. I will start with SEC, which today still represents, like we mentioned before, 78% of total revenues and 74% of our EBITDA.

So Slide 17, next slide. So as you can see from the summary overview on the slide, our presence in SPC is focused on Europe, essentially in Europe, CIS, Turkey, with direct selling organizations in over 30 countries and with approximately 1,900 strong sales organizations.

But we’ve also an important business as I would like to remind, worth roughly EUR 100 million, which is selling profitably on other international markets by licensors. We have a very broad portfolio across a number of therapeutical areas, key ones being cardiovascular, urology, eye and anti-infectives.

Like I mentioned before, we’ve our product offering, including both Rx products, but also OTC products. OPCs being roughly 8% – 18% of total SBC.

You will see here some of the key brands, which is a combination of products that developed internally and once we have acquired only licensed from our partners. You can move to the next slide, please, Slide 18.

So specialty & primary care, is the fact of a backbone of recoating offering a robust and resilient portfolio with no loss of exclusivity exposure in the plan period and very little exposure beyond that. Growth of 6% CAG in the planned period or 3% CAGR when excluding Eligard, with growth across all markets and all key categories in the next three years.

Despite some assumed FX headwinds in the plan in Turkey and Russia. We will focus on commercial efforts on accelerating growth from the assets with potential, namely Eligard Regina and the forecoming launch of RSN as well as the selective promotion of key OTC brands like Procto-Glyvenol, Gino and Magnesio Supreme.

In parallel through the period, our largest divest portfolio of established brands in areas like cardio ear and gastro, are stable or marginally growing cost recent LOEs. We focused promotional efforts exemplifying the robustness and resilience of our SPC business.

With this diverse and well-balanced portfolio, SPC offers a very solid and diversified platform with single-digit growth but can be leveraged with accretive business development deals that complement our capabilities and footprint just by the recent one with Eligard. Hence, our continued focus on inorganic acquisitions or new licenses to accelerate growth and sustain margins of this part of the business.

If you please move to the next slide. So looking into our portfolio by key categories, let’s start with the areas that have suffered the most due like we mentioned before, due to the COVID pandemic, being the cost on cold and E&T infections for our pitiful portfolio.

With the lack of pathology due to the COVID prevention and restriction measures has resulted in a decline in our reference market of roughly 25% in 2020 and almost 50% in the January to February 2021 period. This is actually IQVIA data in volumes.

And this has been translating into a significant sales decline of almost 40% of our portfolio versus pre-COVID levels and versus 2019. This has been impacted mostly, those markets with a relevant cough and cold portfolio, an E&P portfolio, like Luigi mentioned before, in Russia, Italy and France.

We have taken what we believe a balanced view in our plan, in our expectations of a recovery of pathology over the next couple of years, following the easing of restrictions and distancing measures and the reduction of the use of protective masks. We are still progressively recovering over the next three years, starting from the second half of 2022, but still expected to be more than 20% below pre-COVID levels at the end of 2023.

Next slide, please. Moving on to the cardiovascular portfolio.

Unlike cough and cold ENT, our core portfolio of cardiovascular products has shown an extraordinary robustness and resilience throughout the COVID pandemic. With a limited impact on the LOE of pitavastatin until 2021 and then low single-digit growth of the portfolio across the Recordati geographical footprint.

But also through our international partners, and particularly in China, thanks to the expansion driven by our new distributor for that market. We are expecting pitavastatin and metoprolol to be relatively stable throughout the plan period, with some growth of our Canadian franchise post any price loss of exclusivity stabilization.

As you know, our cardio franchise is the largest cash flow generator, which supports the continued BD and M&A activities of Recordati and its robust resilience is a massive asset for our company. Moving on to urology.

Next slide, Page 21. For the planned period, we forecast a gradual similar stabilization of sales of Urorec.

Soon after the initial top line decline following the loss of exclusivity last year. As you can see in the above graph on the right, we have been able to preserve its market share in units over the past months and expect to sustain the sales over the coming years, thanks to targeted promotion to key customers.

As well as calls on urologists with Eligard and with an opportunity for some further growth coming from Turkey and Central Eastern Europe. Next slide, please.

Moving on to Eligard, our new addition to our FTC portfolio. This is what we consider this to be a growth opportunity.

It’s a great asset that will benefit from our established presence in heritage in urology. And that also the opportunity to demonstrate our ability to reverse the declining trends seen over recent years under the Astellas non-promoted tenure and therefore, revitalize its growth.

We kicked up promotion in March in certain key markets with very encouraging feedback from our customers. Transition from Astellas has been smooth with our year-to-date sales on track with expectations and now all key markets of promoting Eligard.

Our collaboration is progressing well with Tolmar around the development of a new easier to handle device. We expect the regulatory submission by the end of this year.

And following the expected approval, we believe we would be able to further accelerate its growth going forward, as you can see in this graph. Moving on to Slide 23 on Reagila.

So we believe that the end of the COVID-19 pandemic will offer an opportunity to relaunch in all the brands like Reagila. As and when, obviously, access to health care professionals, but both patients and sales representatives is normalized.

For the majority of products launched or still in launch phase around the COVID pandemic physicians have been obviously very cautious and generally more reluctant to switch their patients to new drugs. Especially in therapeutical areas with difficult-to-manage patients such as schizophrenia.

This therefore limit substantial to the potential and launch uptake for this product. During this last month, we’ve been preparing the ground for the relaunch of a product on, let’s say, the day after – the end of COVID, by repositioning the brand around both negative and positive symptoms and strengthening our network of local advocates and key opinion leaders as well as expanding the opportunity into new markets like Greece and Austria where Reagila is expected to be launched later in this year.

As a result, we do expect an acceleration of Reagila’s growth through the forecast period. This could be boosted if we manage to allot the access also in France and UK and which is actually not represented in this plan and should be considered as an upside to the current numbers.

Moving on to the next slide. So before we move to rare diseases, we tend to seldomly talk about key products in our OTC portfolio.

And we wanted to share a success story of Procto-Glyvenol, an asset that has seen continued growth in Central Eastern Europe and Turkey since Record at acquired, growing from a brand with EUR 9 million in sales in 2011 to just over EUR 30 million by 2019, 2020. For the development of line extensions and omnichannel approaches, leveraging DTC investments, we’re comparing to reach more than EUR 40 million by 2023.

This is a success story that we expect to replicate with other OTC brands across our portfolio, as I mentioned at the beginning of my presentation. In conclusion, our diverse portfolio in SPC has weathered COVID-19 pretty well with and acceptable for growth across all markets and all categories over the coming years.

Providing Recordati with a robust and resilient platform to build on cervical growth fueled by more accretive acquisitions and new in-licensing deals that fit with our proven commercial capabilities and geographical footprint. While we bring in sitting big opportunities, we will continue to focus accelerating growth through commercial focus on selected assets like Eligard, Reagila, RS1 and some selectable ran.

And target the promotional activities aimed at sustaining legacy brands across all countries, especially those particularly sensitive to promotion. So moving on to Slide 25, or actually, let’s just move to Slide 26 to take you through our rare diseases business unit outlook.

So first of all, as many of you know, rare diseases is an area of still significant unmet medical need with only 500 of the total 7,000 designated conditions having approved medical treatments. Thanks to advance in sciences, both the diagnosis, but also the treatment rates are increasing, supported also by supportive legislation by incentivized investment and innovation in this area through different initiatives, both in Europe and in the U.S.

It is vast scenario with very strong growth fundamentals. Our market expects to grow double digit over the next years from an estimated EUR 138 billion in 2020 to over EUR 230 billion by 2025.

And which, therefore, offers plenty opportunities for growth for an established player like Recordati. Next slide, please, 27.

Recordati has a long established presence in rare diseases. Starting with the acquisition, obviously, of Orphan Europe in 2006 and then the U.S.

rare disease business from Lundbeck in 2013. We have a growing global footprint, which currently encompasses North America, EMEA and key markets in South America, Australasia and Japan.

But with an ambition to expand further in other geographies in order to become a fully fledged global player in the field. Our legacy portfolio is mainly concentrated in metabolic diseases.

So for example, products that strict in that area are Carbaglu and Cystadrops. And in the more recent times, as you all know very well, we have entered the endocrinology therapeutical area for the acquisition in 2019 of Virirec to Signifor, Signifor LAR and Isis from Novartis.

The rare disease space, we also pursue innovation by investing through our own research into potential new treatments for some rare and ultra rare conditions. If you move to the next slide, 28, please.

So in more detail on our key priorities and a three-year outlook. We see potential for Recordati Rare Diseases to grow at a CAGR of around 15% through 2023, with a large portion of the growth coming from our endo portfolio.

Our list of priorities is expansive, but I want to focus on a few that are critical. We will continue to drive the uptick of Isturisa, while we’re still growing Signifor in the respective primary indications of Cushing’s and acromegaly.

But we will also continue to grow Ledaga in EMEA and Juxtapid in Japan, and we’ll continue maximizing new opportunities in North America, especially Cystadrops and Carbaglu, newly granted indication organic acidaemia. While we have been investing in our growth of our organic portfolio, we’re also committed to growing the Recordati Rare Diseases to improve BD and M&A activities in order to reinforce our global portfolio and presence in the market.

Regarding the revenue outlook, all regions are growing. North America is benefiting from the strong uptick of the Endo portfolio.

And the decline of Panhematin would also be offset by the new product launches uptake and new indications expansions in the metabolic portfolio that I mentioned before, being Carbaglu, organic acidaemia and Cystadrops. Rest of World is maximizing opportunities in newly opened markets including Juxtapid in Japan, as mentioned earlier.

With regards to EMEA, we expect to accelerate further from 2023 onwards possibly to read the reimbursement approval with growth of Endo, Ledaga and Cystadrops and some slowdown of Carbaglu. Finally, as you can see on the bottom of the chart, we forecast the end of portfolio doubling during the plan period – doubling in size during the plan period.

So if we move to Slide 29, a little more focus on the endo franchise. So if you take a deeper look at the end of portfolio, Signifor Isturisa represent a significant opportunity for patients suffering concussion and acromegaly.

In order to maximize the potential of these assets within the reproductive rare diseases, there are several critical success factors that we need to achieve. Let’s begin on the left of slide of Signifor in which we plan to grow in acromegaly by accelerating the step-up from first-generation somatostatin analogs but also continue to put nutrition patients on therapy, particularly one that can benefit from tumor shrinkage.

Regarding Isturisa on the right, we plan to differentiate the product to establish it as a new standard of care for Cushing’s disease. in the U.S.

and Centrum in the EU and Japan. We are also putting all initiatives in place to ensure that we have the appropriate level of access for patients to receive Isturisa, not just in the U.S.

but also in the EU and the rest of the world. Finally, all this comes down to the execution by our country teams with strong engagement with KOLs and thought leaders and of course, for the collaboration with patient efficacy groups, all of whom are true very supportive to the product.

If you move to Slide 30, we will give a bit more insight on our expectations for the enterprise to continue on this topic. So taking all tenant and consideration, we expect that our global endo franchise will deliver between EUR 80 million to EUR 100 million in incremental net revenue by 2023, exceeding EUR 200 million in net revenue by Pete or at the end of the plan period.

Most of the growth will come from Isturisa, but we also expect Signifor global net revenues to continue growing by around 10% per year with our ex-U. S.

EU region growing by more than 50%. Understandably, there has been a lot of interest in better understanding Isturisa early uptake by all of you.

And while we continue to want to be cautious in disclosing too much information since we deem it to be commercially sensitive. Before we will provide some insight on the traction to date where the launch is most advanced being the U.S.

On the right side of the slide, you can see the very positive Isturisa patient uptake we have in the U.S. from launch last year in May until the end of Quarter 1 2021, where we have close to 200 active patients on therapy.

And we expect the number of patients receiving treatment in the U.S. to exceed 500 by 2023.

Further momentum will come from the launch in Japan and expecting in the second half of this year and for reimbursement in Europe. We will start seeing in key markets in the second half of this year and the first half of 2022.

Our long-term view remains for Isturisa to achieve a peak sales estimate of between EUR 300 million to EUR 350 million. And with further potential upside beyond the plan years, from the expansion of the indication to Cushing’s syndrome in the U.S.

and the expansion in new territories globally. If you move to Slide 31, please.

So finally, on rare diseases. Here is some additional detail around the averse products in the Recordati Rare Disease portfolio.

And obviously, we have a very important franchise in metabolic diseases, like I mentioned before. And here, you can see on the right-hand side of the slide, some of the key assumptions underpinning the plan period product performance.

As I mentioned before, this portfolio represents a significant portion of the Recordati Rare Disease revenue. So I think it’s worth mentioning that we expect to continue growth of several of these products over the planned period, including Carbaglu in the U.S.

and Cystadrops both in the U.S. and in the U.S.

Juxtapid in Japan and the Dakin EMEA, like I mentioned before, more than offsetting the erosion of pandemic in the U.S. Overall, our rare disease business offers a solid and diversified portfolio with a global reach and demonstrated capabilities established over a number of years, making Recordati Rare Disease as a strong partner of trust for innovative company, the research institutions investing in the immunotherapies.

We are committed to continue growing the share of our business in rare diseases introducing new and innovative treatments for patients with academic very serious conditions. So moving on to Slide, I’d say, to Slide 33.

So having covered our two businesses, business units and specific at expectations and priorities for our existing portfolio. I will now briefly cover the BD and R&D areas to explain how we plan to keep using them to further enhance our business over the coming years and months.

So starting off with R&D, which, as I mentioned when the coin or data model is a narrow we have historically made and will continue to make selective investments. Our SPC historically reported in SPC, sorry, the focus on – of our R&D activities have been primarily on life cycle management for formulation and indication expansions with more clinical work than on rare diseases side with our own portfolio of projects focused primarily on the ultra rare conditions.

Following the recent deals, we do have a number of important projects in both areas of our business, either directly or through our partners. On SPC, the key ones are obviously around Eligard and with the development of a new easier-to-handle device, where we are on track for regulatory submission by Q4 of 2021, and we’ve an approval expected by the second half of 2022.

We clearly have also ours. We expect to engage the new authority – regulatory authorities on the form submitted by Q3 of 2021, with an approval and not expected by late 2022.

In addition to this, also in SPC, we have a pediatric investigation plan ongoing for an indication to debt indication expansion for Reagila. And also we are also looking to develop further our probiotics portfolio.

On the other side, on Recordati Rare Diseases, focus is clearly on continuation of study supporting Signifor and Isturisa that we inherited from Novartis and support the entry into new territories from a regulatory perspective, while finalizing a plan to engage with the FDA on the potential indication expansion in the U.S. We have two clinical stage programs always in the rare disease space.

One is NTA for neurotrophic eats which is in Phase I/II started with trade patients enrolled, and we expect a study readout by second quarter. And also we have urine disease product, which is expected to be filed in Q4 of 2021.

Moving on to BD. I think that it’s important that when we plan for the future, it’s also a good idea to look at our history.

And this chart, you can see clearly how BD track – the our productive BD track record is an integral and fundamental part of our development history. We selected 2007 as an entry in the rare disease business as an ideal starting point for this slide, even if the BD journey of Recordati started even earlier in late 1990s.

And the group started to reinvest cash flows generated by lercanidipine for the initial direct expansion in the key Western European countries. Since 2007 and the acquisition of Orphan Europe, we completed more than 30 transactions, both accretive and growth.

both in SPC and ride diseases with a total investment over EUR 1.8 billion. And throughout the period, we have never stretched our net debt-to-EBITDA ratio.

Having in mind our history in the next few slides, we describe what we plan to do for the future, which is very much consistent, as you can see, with our development pathway and consistent with our already disclosed strategy in 2019. So moving to Slide 35, starting with SPC.

We will continue to look actively for licensing and acquisition opportunities, and we will continue to pursue the right mix of the innovation immediately accretive mature assets with turnaround potential and OTC brands. Also, we will continue to invest preferably in our commercial or near-to-market opportunities.

We do not plan to further expand our geographical region for short term, but we would position ourselves as a regional partner for leveraging on our commercial platform and proven integration capabilities. Moving on to Slide 36, pertains to rare diseases.

In this stage, we will continue to look actively for in-licensing and acquisition opportunities, positioning ourselves as a worldwide partner of choice for development commercialization of rare disease products. While our preference remains for late-stage opportunities, we are also keen to look at early-stage assets for Recordati Rare Diseases partnering with other rare disease companies or research institutions.

We will focus on our main therapeutical areas, but at the same time, we will remain opportunistic to explore different therapeutical areas, leveraging of our solid experience in the rare disease space. So finally, I will leave the floor to Luigi to take you through the core assumptions and drivers and targets for our three-year plan.

Luigi?

Thank you, Andrea. And On Slide 38, you’ll see sort of a summary of key assumptions.

And obviously, I will not try and summarize everything that Andrea went through. Hopefully, we’ve given you some good color on both the key drivers of our current portfolio, but also the areas where we expect to focus – and we’ll continue to focus our efforts from a BD and M&A perspective.

But as you will have seen, we expect a good underlying growth in both businesses despite FX headwinds, which were assumed at around 1.5% per annum built into our forecast with, as we said, no material loss of exclusivities expected in the period. And of course, we will continue to complement our current portfolio with M&A and BD, following a proven successful model and strategy.

And the share of rare disease as a percent of the total business that we expect to continue to grow from March today, 22% of revenues to over 25% of revenue by 2023. Now the exact split clearly will be subject to the type of deals that we will do.

And we’ve consistently said and as Andrea articulated, we are committed to continue investing in both those of businesses. We expect margins to stay around the current levels of 38% in terms of EBITDA and 28% on adjusted net income, reflecting our intent to continue investing behind the growth opportunities, particularly those that will materialize post-COVID.

We, of course, also expect to maintain the strong cash generation profile of the group with free cash flow of around 100% of net income. over the period, of which we expect 60% per our dividend policy to be paid out and the balance being available for reinvestment in the business.

Thanks to the strong cash generation of the group, we expect to achieve the objective that we set out with a net debt-to-EBITDA leverage ratio to stay between 1.5 times and 1.8 times, including again, here providing a small range. Clearly, it will depend on the timing define and the structure of the deals that we will do over the coming years.

But as we said before, allowing for a little bit flexibility for that till temporarily increase up to a maximum of 3 times for really high-quality opportunities, which is consistent with the guidance we gave in 2019. So then turning over to Slide 39, which summarizes clearly the theme key figures, and we’re reconfirming obviously, the guidance for 2021, which is unchanged for this year.

And for 2023, including additional M&A and BD, which were built into the plan. We aim to achieve revenue of between EUR 1.92 billion, which at the midpoint of those ranges that we deliver a CAGR of over 10%.

EBITDA of between EUR 720 million and EUR 760 million, again, a CAGR of around 9% and adjusted net income of between EUR 530 million and EUR 560 million with a CAGR of around 10%. I will now hand it over to Andrea for some closing remarks.

So if you can please move to Slide 14 of the presentation, which sums up the financial projections and key takeaways. So in conclusion, hopefully, we’ve given you a good overview of the objectives set for the business for the next years and the key assumptions and drivers of understanding them.

In summary, we aim to achieve a broad-based growth across both of our business current portfolios, with growth of 6% CAGR in SPC, half of which thanks to the contribution of Eligard that we mentioned, and are returning to volume growth post COVID of the next – of the rest of the business and 15% CAGR for rare diseases with significant growth of our enter franchise pen model. We aim to sustain a high level of profitability with EBITDA margin of around 38% and adjusted net income of around 28% of revenues, reflecting also continued investment behind our growth opportunities.

We continue with our strong track record – we plan to continue with a strong track record of turning a substantial part of those margins and profit in cash with free cash flow to remain on average around 100% of the consolidated net income. We maintain a clear capital allocation policy with dividend payout of 60% of consolidated net income and the balance of the free cash flow reinvestment in the business on both growth and accretive deals in both parts of the business.

And we aim to preserve a strong balance sheet like Luigi mentioned just a moment ago, we have a net debt around current levels of 1.5x likely to fluctuate between 1.5x to 1.8x depending on the timing, the structure and the type of deals being again, growth for accretive, but ready to go up to a max of 3x for really an underlying really high-quality opportunities. So moving on to the last slide of the presentation.

So finally, before opening to Q&A. In recent times, we have also worked to strengthen the team in recent time and years.

Not only obviously across the organization but also a top management level to obviously ensure the efficacious management of our growing and more complex organization and in order to drive more effectively towards the achievement of the goals. So with me here today, in addition to Fritz Squindo, who all of you know, and is currently the Group General Manager.

And there is also Corrado Castellucci, which who is the head of our rare disease business and has been so for many years. Obviously, Luigi La Corte, our CFO, Group CFO since in 2019.

But also I have joining us today also Scott Pescatore, who joined the group in February 2020, as Head of Operations for recalculated diseases. Joined from AstraZeneca and before then have spent many years in Novartis in the rare disease division in Europe with a good and deep knowledge of our end portfolio.

And finally but more recent, Alberto Martinez, who joined the group in January of this year to head our SPC business. Joining from Mundipharma where he held in his latest role, the – that of President and CEO of EMEA.

So having concluded our presentation. I think we can move on to the Q&A session.

Thank you very much for listening.

The first is an obvious question on the like-for-like growth. In the previous plan, I know it’s not unusual for you to include acquisitions in the long-term target.

But in the previous plan, you presented a 50% organic growth for 50% coming from acquisitions. Is it still the case of 50-50?

Or based on the existing portfolio, you have more visibility on the portion related to the like-for-like growth. And the second question was on the guidance.

Just to have an idea where R&D costs are envisaged in your 2023 target? Or what’s the range over the 3-year period?

And the third question is on just a clarification on what do you mean for acceptable valuations? In your Slide 38, when you talk about M&A, you underline acceptable valuation for M&A.

So just to understand what you mean in the current market environment.

Thank you, Martino. In terms of like-for-like growth, I mean, it kind of depends on how you consider Eligard.

As Eligard, that was not in the 2020 base. So it’s started looking at it on a sort of consistent base with how you would have looked at in 2019.

I think that 50-50 would still apply. And hopefully, we’re giving you quite a bit of sort of color on the drivers of the growth of the portfolio, which we already have today to be able to get a sense of the growth of the current portfolio.

With regards to R&D, we’d expect R& D to be between 10% and 11%. Now don’t forget, close to 4 – over 40% of our R&D cost is actually amortization of licenses.

So it will depend also on the type of deals that we do with an acquisition, with goodwill, which is not amortized. Obviously, we’ll not ask to that.

If we do – if we acquire product rights, which are amortized, clearly, the R&D line will be on the higher end of that range. I think acceptable valuations means we’ll continue to be as disciplined as we’ve always being.

I don’t know Andrea.

It means, keep our good discipline in not overpaying for acquisitions whatever they may be, okay? So this has been part of our way of doing things until now, and we’re not planning to change this.

So clearly, every deal the growth deal has different multiples from an accretive deals. But clearly, every case, it’s a different case.

So the main kind of point is discipline and not overpaying. I hope that answers your question.

Just a follow-up for the first question, Luigi. 50-50 is considering Eligard as M&A or organic?

No, if we were – if you were comparing it to the guidance, which brought guidance, which we’ve given in 2019. And I – what I’m saying is if you’re doing it like that, then you have to take into account that the 2020 base that the CAGR is built on, obviously, didn’t have any Eligard in that.

Yes.

So if we include Eligard, which is in the pocket today, you had more visibility than the 50% on the... And if I may, last question on the strategic optionality.

I clearly understand it is not an issue today, but would it make sense in the medium term if you separate the rare disease business through a spin-off, a separate listing merger with another to become larger. I don’t know, strategic optionality on the rare disease is something that could be taken into account?

At this moment in time, we believe that keeping the two businesses combined is fundamental for the development of both. And I think that also for rare diseases, having the strong cash generation generated by SPC is a major asset for rare diseases because it allows solvency to be more ambitious and invest in a more ambitious way on the development of the part of the business.

So today, you can never say never, but today, we’re not planning or we’re not even remotely thinking about something like that.

Very clear. Is there any size – ideal size for the rear disease business to think about it?

No. We cannot generalize on the assumptions of our size.

I mean it depends on the opportunity. We look at a lot of opportunities.

We get new opportunities over time. Today, I wouldn’t kind of give you a ball park number to – for size around the opportunities that will look for right diseases.

Depends on it’s product addition, it depends on the portfolio, it depends on our. So every case it’s different and gets measured and waited at doc.

Firstly, can I say what an excellent presentation. I thought it was you’ve really set out the parameters of the company to make it a lot easy for new investors to understand your company so well done.

My second – now my one questions, please. I have two product ones and one more strategic ones.

So the product one, the first one is on Isturisa. How confident are you that you don’t need more studies in order to be able to extend the indication to Cushing’s Syndrome in the U.S.

I believe you felt in the past that you haven’t needed those, but you are still going to have a discussion with the FDA, although not until next year. So just a little bit on why it’s taking you so long and what the risks are, and what you could be asked additionally to do.

And perhaps if you are lucky enough to be able to file with what you have, what the peak additional sales might be? My second question is on Reagila.

You said that the UK and France is not in your plan. It’s an opportunity to you an upside opportunity, but you need to be able to get a good pricing there.

I wonder if you could just talk about some of the positives and negatives on the – so that we can try and handicap your likelihood that you would be able to get that within the planned time frame. And then my strategic questions.

One of them is, I think, a little bit mean, but I’ll try it anyway. So looking back in 2019, at what you were expecting to be able to do in 2021, clearly, it was about EUR 1.7 billion.

You’re coming in quite a bit short of that. And I appreciate there’s been a massive pandemic in the meantime.

But if we were to characterize currently the misled, would it be that you haven’t been able to find as many acquisitions as you have hoped to be able to do over that time frame. And looking a bit more forward, I wonder if you could talk a bit about the balance of your M&A objectives between getting new specialty-type products to go into your rare disease franchise and buying tail assets, which are immediately accretive.

And if you could just talk a little bit about the pricing, the level of opportunity that you have in that? That would be very helpful for us.

And my very final question, and I apologize for taking so long. Just looking at R&D, as you’ve said yourselves, your R&D at 10% of sales, I mean, that’s low by industry standards, particularly low or innovative pharma companies by industry standards and yet within that, you’ve got a high level of amortization.

So looking forward, could you tell us a little bit about what your objectives are in terms of building up a genuine development franchise or development capability. So that you are more able to buy in, let’s say, mid-stage assets and finish them off of the market rather than being somewhat more restricted perhaps to late- stage assets like Isturisa, which was just ready to roll or tail assets.

There’s a whole sort of section in the middle, which you don’t seem to be able to address at the moment.

Okay. Maybe I will let Scott Pescatore to take the first question, Joe, on Isturisa regarding the indication expansion in the U.S.

Yes. Good afternoon, everybody, and thanks for the opportunity.

So it’s always been our plan to have a possible label expansion to the U.S. for Cushing’s Syndrome.

Any sort of peak opportunity or upside in the plan. We won’t be sharing the details but it will follow up by the planning period.

As you mentioned, we don’t have any current time lines for the approval of the chlormethine dosing cohort, we have to meet with the FDA first. We have a robust data package that we can bring to the FDA.

But first, we need to understand exactly what the requirements would be in order for us to achieve that label extension. One thing I can tell you, though, is that we don’t expect to start any new clinical trials to generate that data.

But data generation to real avenues and another range would be our proposed strategy for any decent data that will be that.

Okay. Reagila, I will ask to Alberto Martinez take on this question.

Thank you very much. Good afternoon, everyone.

On your question around the opportunity for Reagila in UK and France, I’m afraid the situation in France is difficult and it’s unlikely to get reimbursement from a realistic perspective. So I don’t think we should consider that as an option.

However, we are actively working on it and continue to work on it with the French authorities and certainly will not give up for the patients with schizophrenia in the French market. In the UK, we are in the market, and we are actively promoting.

However, we face significant hurdles in terms of assets. And the team is rethinking and revisiting the opportunity there, looking at new ways of approaching the promotion of the products, on lifting the hurdles that we’re facing from a market access perspective.

I would say the options in the UK to improve the position of Reagila are somehow more positive than those in France as a potential upside. But we have been prudent and cautious in our projections for this product.

Yes, exactly right. I mean, so let – I’ll reiterate what I said before, just to reiterate what Alberto said, that we did not build this in our forecast, okay?

So the UK and France Reagila are out as you say it is important. France, obviously, we are – we all know that it’s an extremely tough market.

Market assets wise in the UK, we are on the market, like Alberto said, but it’s just a matter. Let’s say that the penetration of the different mental health trusts has been taken longer than expected.

But we’re obviously working on it and slowly we are getting access to them. And so the uptick is slower than what we expected, but it is we will get there eventually.

Regarding the 2019 objective of 1.7%, we can respond me and Luigi together, I guess. I can tell you that for sure COVID has an impact.

I think, obviously, I don’t remember, honestly, the effect, the impact that we had in our plan, but it’s probably more or less aligned. Clearly, we have also – we’ve had other headwinds within the business.

Regarding the M&A, I’ll let…

I think, you already – if you do the math, if you take the 2020 numbers, Eligard and the contribution we’ve had from the Endo franchise, I think you’ll see – and plus the other bits and pieces, the smaller bits ad pieces we’ve done. I wouldn’t say that it’s been sort of a shortage on M&A.

I mean, at the end of the day, as you said, I mean, we unfortunately no one else has predicted the market condition, which unfolded since the beginning of last year. That’s really the key driver of the variance.

And very shortly after the 2019 plan was announced, the deal with Novartis was announced. Right now with that slightly different position we’ve charted in the last couple of months, the last few months, announced the deal with.

So again, which is why I would say, it’s very difficult to compare that sort of split in 2019 versus what may be the sort of split now. I hope that makes sense.

On the R&D…

On the R&D no there was a balance of objectives on – organ – Jo, if I recall, cat, the other question was – you wanted more insight on how we build – if I understood correctly, our M&A component of business development component in our numbers, our 2019 numbers between revenue…

It’s the balance between older products, tail products, which are immediately accretive and buying more the specialty type products, which may take a little while longer. I think we’re trying to think about how much money you’re likely to need to spend to get to your objective.

And it’s relatively easy to work that out from the tail point of view, but I’m feeling that you’re also keen to do more deals that will get you products at the beginning of their life cycle rather than at the end of their life cycle?

Yes. And I think you said it right, Jo.

I think in terms of the way we thought about the target in the overlay, I mean if you look at the last 5 years, we’ve done an average between EUR 220 million and EUR 250 million on BD. That has not been sort of consistent, I mean 10 years, we did north of EUR 300 million.

Some years we did less. And we built our set of target around that.

And the leverage is – assumption is consistent with this. And of course, within that, We’re aiming to be both high low deals and accretive.

So we gave ourselves an objective of additional, obviously additional growth, but we don’t know at this moment exactly where that growth is going to come. We clearly have ideas of where we want to go.

We want to pursue growth in rare diseases with growth deals. But at the same time, we also want to keep fully sustaining and developing with accretive deals, our SPC business and all.

So it’s a mix. So I think you need to take a number, you need to take our range of projected EBITDA kind of, let’s say, range and obviously, also net of EBITDA to the net debt and calculate from there.

I mean, but we don’t – not going to give further cadence in this impossible to do.

And on the sort of – on your question around R&D, I mean you’re right. I mean, I don’t think that we’ve ever sort of have pretended it to be otherwise that relative, we’re not a sort of company, which has a private business model, a significant investment in R&D and pipeline on a cash basis.

As we set out on Slide 4, we actually look to make selective investments in R&D. And whilst as we said that we are open to opportunities, which are in late – potential in mid-stage development in rare diseases now rare diseases is also an area where there’s not a lot of difference between sort of mid-stage and late stage where we’re certainly open for that, and we do think we have the capabilities for that.

But if you just look historically, our track record over the last 10 years, the growth has been both sort of on market and BD-driven as opposed to product coming from our R&D pipeline. Hope that makes sense and answered your question.

I have a few please. First one, if I look at your specialty division, you have now built a sales force for CNS with Reagila and for urology through Urorec and Eligard.

As you think about in licensing strategy for this division, are you looking at assets where you already have on a presence and want to build on the operating leverage? Or are you focused on also expanding into other therapeutic areas within specialty?

That’s the first one. Second one, what is your view on incremental pricing pressure in Europe as the economies come out of COVID?

Is this something that you have incorporated in your business plan, please? Third one on China opportunity for Recordati.

Are you make it very clear that, that is an upside and not in your business plan. I’m just wondering the driver behind that deal?

Is this because you need to want to take additional trials to be approved in China? Or are there any other commercial hurdles for Recordati to launch in China?

And final one, if you could just provide an update on the clinical projects that you have undertaken historically, be it retinopathy prematurity or Maple syrup urine disease. When can we expect clinical updates here?

And if you could confirm if there’s any contribution from them in your business plan?

First question. I’ll answer the first question, KC.

So regarding the SPC, obviously, ideally, I mean, our objective is to reinforce and look for assets. Let us be in-licensed growth assets or crucial ones that are fit with our current presence on the field.

And we fly within our kind of areas of expertise goes without saying. So we are also – we’re looking at neurology, we’re looking at cardiovascular, we’re looking at cross intestinal.

And we’re also obviously looking to CNX to some extent because clearly, we set up our structure to promote Reagila. And we would like to build more critical mass and synergy, let’s say, on the promotion target with the addition of other products.

However, let us always keep in mind that we are – we always see some degree of opportunistic approach in – when we look at our different asset deals. So we also look at other stuff.

Now we tend to focus more on areas to require the asset. The answer to the question is we tend to focus more on therapeutic areas, where we already have a strong presence, both on the field and in our, let’s say, know-how.

Maybe on pricing, KC, we still, at this stage, do not see a significant sort of more – higher pricing pressure in Europe over the next few years. I mean, historically, over the last year on SBC, we’ve seen sort of price erosion of plus or minus 1% higher in years, slightly higher in years where we lost exclusivity, but we’re on average for total group and they’ve gone up.

And we don’t see a wall of new price measures being taken. Don’t forget pricing, reimbursement, generic policies in Europe are still decided to go to market by a country-by-country basis.

They’re not decided a pan-European level. So it doesn’t – we don’t see sort of governments starting to act on that deck.

So obviously, we’re just not seeing. I think I may have mentioned in some calls, I have noted in the past, we’ve seen one price reduction across the portfolio last year as a result of COVID, being an additional 10% discount in Spain from products which have – which were going generic, which has impacted pitavastatin.

On the other hand, we see the higher authorities increase the level of health care budget and where pharmaceutical span spend as a percentage of health care, that’s allowed a higher ceiling for total country pharmaceutical spend. Doesn’t impact us significantly the other way.

But just as – just to say, we’re not seeing significantly increasing pricing pressure over the next years.

This is Scott. I’ll take the question and have some additional details on our expansion in China.

And you’re absolutely right that it’s a key strategic priority for us moving into new territories. China offers a large opportunity for us outside of the planning period.

Just to give you some additional insight as to what we’ve been doing so far, we hired a general manager who started in Quarter 1 this year. And we also began – we reapproaching agencies to begin discussing with the filing requirements for our products that we’ll be launching there with the China FDA.

So things are progressing there, and we will continue to build out the organization as we also have opened headquarters in Beijing. So it’s more to do with regulatory time lines and interactions with authorities.

And the same applied to the FDA on the label expansion opportunity, which we’ve always said is an upside to the guidance that we’ve given where the FDA clearly had quite a backlog following the COVID, as we understand it. So again, it’s more to do with regulatory time lines than – and building a data packet based on what we have and the evidence, which we continue to accrue through the use of Isturisa in the market.

Okay. I think the last one was on some time lines around our pipeline development right, KC?

You mentioned MSUD, the Maple syrup – and MC2. So like I mentioned, for MC2, I mean we’re still in early phase.

I mean, we’re expecting a study readout of the Phase I, Phase II study is expected by Q2 2023. So it’s was obviously the end of the plan period.

And also, when it comes to MSUD, we are expecting to file at the end of this year, but we’re expecting an approval in the first half of 2023 approximately. Just to give you…

And then MC1, I mean it’s fair to say, I mean it’s true for all studies, but even more where patients are rare. I mean that the pandemic is generating – carry some delay in terms of…

An involvement we have to be honest. Absolutely.

Recruitment of new patients for studies, any clinical development study has obviously been impacted quite negatively by the COVID pandemic, which is totally understandable clearly. So – but this for a moment, our study readout is still planned for the second quarter of 2023, then we’ll update you as well.

Time is still feasible for it.

First one, you mentioned that you’d be comfortable going to kind of 3x leverage for really high-quality opportunities. So just be interested if you could define what you need to see as a really high-quality opportunity regards a profile of potential asset there?

And then secondly, could you just provide your thoughts on CVC in term – long term in the business given that they’ve been involved for every year now. Can you just help give us an update on how you see that progressing going forward?

And then thirdly, just on the BD teams again, the types of deals that you’ve talked to potentially doing, particularly in the rare disease space are in high demand. So how confident are you personally in closing these deals?

And what advantages do you seeing the group having versus competitors in this regard?

So maybe I’ll start with one to get on that off the table. So I mean, CVC has been severe investing the company for approximately two years now.

And honestly, they’re committed to remain invested in the company for some years to come. I mean we see a lot of potential in the growth potential of the company, they are happy very with their investment.

The collaboration is excellent with the management of the company. So I think on that, I can say – that’s what I can say on that.

So I wouldn’t add anything else. We don’t expect any substantial exits shortly or something like that from what I can say and see.

Now. Rajan, first of all, I look forward to connecting and thank you for starting there to cover there, the stock.

With regard to the leverage, first of all, just to be very clear for those of you that maybe you were to to Recordati. I mean, clearly, the guidance that we provided in terms of our EBITDA is not built on an expectation of 3 times.

It’s just to say that whilst instead our sort of target on the basis of an estimated leverage of 1.1 to 1.3. We just want to make sure it’s clear that we would not be constraining ourselves to those levels.

If we find an opportunity, which is compelling, a strong strategic fit and generate value for the business. So it’s more to speak to the flexibility that as an organization we have on the back of the results that we deliver in terms of both profit and cash flow.

So I think that’s how to think about it. And in terms of BD and what – being in high demand.

I think that’s in our experience never – there’s nothing new. I mean, good aspects have always been in competition.

We have a very strong and established infrastructure in Europe on the specialty family care side, which is appealing for many. We’re not a newcomer to rare diseases.

We been in rare diseases since 2007. We have established capabilities and we’ve picked up as recently as 2019 to great assets from Novartis.

So – and I’m sure we’ll continue to do so. So and again, good assets have always been in competition from a smart point of view.

And the track record of the company, we’d like to think is fairly robust in terms of executing on M&A and BD. I hope that answers your question.

So you talked about your leverage target of the level. Do you have any information to the market about what your intentions are for the expensive bonds that are sitting at the Rossini level?

No, I’m sorry. That – we have nothing to do with the Rossini level sort of financing.

You’d have to ask that question to Rossini. I believe in the Q1, when they sort of gave the update at the end of the year, they said we have no current plans, but we honestly don’t have any info regarding to that.

I have two. The first one is a follow-up on the building block on your expectations in terms of.

If you take the midpoint of your 2023 target, so a speaking, EUR 500 million related to negotiable. It is correct to assume that some 70% of the stimulus top-up is related to products, which are currently in your perimeter in just somewhere 10% to 30% coming from future M&A.

Second question is on your target in terms of profitability for the group going in easily, what the most profitable second order rare diseases. It is to how contemplating to see EBITDA margin target in line with one of the past business plan.

So can you provide more color on these assumption on your margin, which is embedded in your 39% EBITDA margin target. And last question, you don’t have milestones.

Can you open – trying to follow on the amount of milestones, which is included in your financial leverage target as of 2023?

So Isacco, thank you for the question. I’m sorry if I get a point on the first one in terms of a range is a range, and I’ll not try and pick the midpoint of the range in terms of what – now assuming we achieve that, one of that would be from current portfolio versus BD.

We’ve given a range, which is consistent with what sort of peers will do. And we’ve given also quite a bit of color on what we think the current portfolio should be able to deliver.

Of course, it’s never A plus B equals C. We are giving a range, which is a composition of what we believe that we will deliver through the organic portfolio and what we will deliver through BD, continuing to invest at a level that is consistent with what we’ve done in the past and going for both growth and accretive deals and without wanting or being able to exactly second guess over the next three years, which ones we will do or what kind and so on.

So I think you’ll have to accept that that’s where we will leave that one. With regards to profitability, I think we’ve said consistently that margins over the course of 2020 and also now over the course of 2021 are enhanced by the impact that COVID has by putting pressure on the top line, but at the same time, reducing our level of activity spend.

And again, we want to make sure that – and are reflecting through these targets, we intend to continue to invest behind the growth of the business particularly once market conditions will return to normal. In terms of milestones, I assume around EUR 100 million, EUR 110 million in each of 2021 and 2022.

Of 2021 number, as I said, we have already paid close to EUR 15 million of debt in the first quarter being the milestones for Eligard and Reagila. So hopefully, that addresses your question.

Again, apologies if I’m sticking with the guidance on the range.

Questions 2, if I may. The first one, I would like to come back a bit on profitability and the assumptions on your business plan.

I was wondering whether we can see during the planned period, some operating leverage coming from Isturisa, meaning if you plan to have higher profitability in 2023 versus the one you have today on that specific product. And how this fit into your guidance of the 38% margin?

And the second shorter one on your net financial position target, how much buyback are you assuming in your 1.5 times, 1.8 times target? Thank you.

So Niccolo, we’re not – we’ve never given sort of profitability by product. And so unfortunately, we can’t – we were not going to start doing that on Isturisa.

I mean, of course – and as you – we did say, there will be some growth of rare disease as presented total, thanks to the growth of the end of franchise over the period. But we are committed to invest and grow both the businesses.

But again, we don’t provide sort of profitability by product. In terms of net financial position, you should assume a level of buyback consistent with the average of what we’ve done over the last years, which was really to sort of cater to the management long-term incentive plan.

So we’ve not built into sort of those leverage targets that any sort of buyback over and above that, if that makes sense.

Just follow-up from a slide. In – I wasn’t at a license.

Is there any kind of turnover from this product included in your 2023 target?

No, only marginal, to be honest, Isacco, we’ve always said this would sort of launch – sort of mid in 2022. And so it has the hands up, don’t forget, I mean, in Europe, obviously, launching is one thing, then you go through the reimbursement process.

So no, we…

The marginal sales and there’s still investments launch investments, like it’s normal for a product under launch phase. So especially in a number usual negative impact because it’s – like it’s normal for a product under launch, which also applies clearly to Isturisa, which is still in the launch space.

Just couple of questions about your future investments. Are there any other countries where you’d like to move from, say, a distributor model to have your own footprint?

And are any of those sort of geographic expansions included over the next couple of years. What countries might they be?

And also, if you could tell us a little bit about your objectives in OTC rather than prescription. Do you see a difference in that?

Do you want to be more involved in products where the patients pay themselves or more involved in government pay. And finally, because it’s a market that’s relatively important to you, but we don’t hear much about some other people.

I wonder if you could tell us a little bit about your view of the outlook for the Turkish market.

So for countries where we’re planning to move from a distributor, that’s Turkey for sure for rare diseases, okay? Clearly, we aim – we trying to enter during the course of the plan in China, but also that is going to be a partial – it would be the start of the entry.

And on SPC, I don’t recall – no we don’t have any plans to kind of from our distributor. I mean, as we said before in the presentation, our plan is to remain present in the countries we really present as now and be a regional player for SPC.

Regarding the other question was….

I mean, it continues to be an integral part of the SPC portfolio. I mean…

We like the diversification, Jo. So we like to think that diversification would be between SPC between our rate to reimbursed drugs prices but also out of pocket, our drug, our OTX, OTC.

And we will keep on pursuing a mixture of BD activities around reinforcing all those areas.

I’ll let Alberto say a little bit more in terms of sort of current dynamics in the field in Turkey, but a fundamental view on the market longer term remains positive. Both in terms of volumes and in terms of our pricing.

And of course, the currency is really what being used these days. And we start from that.

And that Turkey is under some of the strict restrictions that it’s been on from a public perspective, Alberto, do you want to comment on some of current environment there?

Yes, with pleasure. Turkey being particularly this is affected with COVID restrictions, there is a current knockdown somehow hindering the ability of our sales force to access health care professionals.

That is clearly dispersing the activity. But the growth in the market, the demand remains – our business remains very strong on our commitment to continue to grow our business in Turkey is in fact – is actually one of the large operations within SPC in Recordati.

And regarding pricing around Turkey or better currency issues, obviously, that we mentioned on Slide 38 that we have built a general minus 1.5% of the FX headwinds, which is clearly does not only applies to Turkey. It applies to the whole group, but clearly whole point of that is attributable to go to Turkey, as we’re not going to give that full detail.

But like Alberto said, I mean for us, it remains a key market, we still see a lot of potential and growth in the market. And we are happy with our size.

We’re not planning to do any M&A deals. I think we already have a very critical mass, and it’s working well for us.

And could I finally ask you, I think you said your Maple syrup urine disease, you’d be able to file at the end of this year, but you wouldn’t get an approval to the first half of 2023. Is there any reason why it’s such a long approval period or maybe I missed some of it.

I’ll let Corrado Castellucci answer this.

Joe, what we are going to do for Maple syrup disease is built a package based on real- world evidence. We will file with this – with that package, but prior to that, we’re going to consult EMA and check whether this is going to be enough, and we are not going to need more.

So this is spending on the impact to the positive opinion of EMA. We are seeking to have a meeting with the agency before the end of the year and hopefully be clear through and have the chance to file at that point in time.

And then the usual time lag for the approval to win.

And partly depend on the package.

Thank you very much, everybody, for having joined our presentation today and for your very interesting questions. And have a good afternoon or evening, depending where you are.

Bye-bye.