UCB SA (UCB) Earnings Call Transcript

A warm welcome to UCB's Half Year 2026 Presentation Conference Call and webcast for investors and analysts. I'm Yvonne Naughton, Head of Investor Relations. Before I hand over to Jean-Christophe and members of our executive team, I would like to cover some housekeeping items. Today's presentation is available for download on the Investor Relations section of our website. The presentation and Q&A session are subject to the disclaimer and safe harbor statement contained on Slide 2 of the presentation. Moving to Slide 3. Our speakers today are Jean-Christophe Tellier, Chief Executive Officer; Emmanuel Caeymaex, Executive Vice President and Head of Patient Evidence; Fiona du Monceau, Executive Vice President and Chief Commercial Officer; and Sandrine Dufour, Executive Vice President and Chief Financial Officer. Following our prepared remarks, we will open the line for questions. As usual, we will try to address as many questions as we can. So please limit your questions to allow others a fair chance to participate in the Q&A. And with that, I'll hand over to you Jean-Christophe.

Thank you, Yvonne. Good morning, good afternoon, and good evening, everyone. It's a pleasure to welcome you to our Half Year Results presentation, and thank you for joining. Next slide, please. As you have seen in our press release this morning, we are very pleased with the results that we have been able to deliver during the first half of the year, continuing to build on the strength of our growth that we had delivered in 2025. And if I want you to keep just 1 or 2 numbers illustrating this growth, I will look at the top left-hand side of this slide and show that, basically, our big growth drivers, our 5 products that currently are driving our growth are already delivering more than 50% of our revenue, which is quite exceptional. And that has been able to show more than 28% of growth at constant rate for our net sales. So definitely a strong growth at the beginning of the year, built upon the portfolio of the growth driver that we have, which allow us to move on the right-hand side of the slide when you can see, and Sandrine will comment on that, that we have upgraded our guidance for 2026 versus what we had shared with you earlier. On top of that, we have also published this morning a new pixels of BIMZELX, about EUR 7 billion of revenue. And that put us in a quite unique position. And the reason why we are in this quite unique position is exactly summarized here, a group of products which are growing very significantly today already, and we will have enjoy a period of growth without a loss of exclusivity. And this is what you see on the bottom of the slide. The first product that will lose exclusivity in the near future is FINTEPLA in 2033. And the last one will be BIMZELX in 2037. So we still have, ahead of us, 10 years of growth with BIMZELX. Moving to the next slide. You can see that the growth that we see today is based, of course, of what we have been able to deliver. But the first half, we had also very good news to expand the growth beyond what we see today. And I would like to start with BE BOLD and with BIMZELX. For the first time ever, a product has been able to demonstrate superiority versus standard of care in our case versus an IL-23, SKYRIZI in psoriatic arthritis based on a very severe criteria, which is -- or a difficult criteria to reach, if I may say, ACR50. And we have been able to confirm with this study what we have been able to deliver already in psoriatic. And so this is the fourth superiority clinical trial achieved with BIMZELX. And each of these results confirm the unique profile of BIMZELX; fast onset of action, the case of BE BOLD, we see the difference already in the fourth week. The depth of the efficacy, ACR50 in the case of BE BOLD. The duration of activity, we see the curve continue to differentiate up to 24 weeks and we -- will be beyond. And then the safety profile, which is comparable for the 2 products. So there is no difference in terms of drop of treatment or treatment discontinuation between SKYRIZI and BIMZELX. This is quite unique, and this is also what gives us a very strong confidence moving forward with the potential growth of BIMZELX. Now BE BOLD has been published in June 2026, but we have also a way to continue to maximize the value of our growth with the life cycle extension. In the case of BIMZELX, for example, it's the extension to child and adolescents in HS and other rheumatoid disease. But in FINTEPLA, we have already filed CDD, CDKL5 disease disorder, deficit disorder, and we are starting also a study in the Rett syndrome. But if we think about beyond this phase of the current growth that we have with our current portfolio, the first half has been also very rich for UCB in terms of preparing the future beyond 2035, 2037. In the case of our own pipeline, we have decided to move with bepranemab into a confirmatory Phase II study. Despite the fact that our primary endpoint was not positive on the POC, we thought that we have a very strong signal in a subpopulation of low TAU activity, and we have decided to do a confirmatory study, Phase II, on this population that will start soon. On galvokimig, our bispecific IL-13, IL-17A and F, after having done and started a clinical trial in atopic dermatitis, where the recruitment is doing very well and faster than expected. we have decided to move on into respiratory and evaluating the product in 2 disease in Phase II, COPD and NC, and non-cystic fibrosis bronchiectasis. But on top of our internal pipeline, you have seen also that during the first half, we have moved into inorganic growth with 4 acquisitions. And each of these acquisitions will strengthen UCB for the long-term sustainable growth and success. IMIDomics is a Barcelona-based biotech company where we -- would gave us access to more than 17,000 of material, DNA material, that we can evaluate, target potentially in sub patient population. Neurona is a biotech where, first of all, for us, first, we will get in cell therapy in a very severe epileptic disease, mesial temporal epilepsy. With cell therapy, we are an ability to reduce the level of -- the numbers of seizure and to significantly increase patients, so in our core of neurological focus. And in immunology, the in-licensing of an asset for antigen and the acquisitions of Candid Therapeutics give us a very solid, now, addition to our own pipeline in T-cell engagers, and Emmanuel will comment on that. So as a summary, a very strong first half of the year based on solid execution that give us huge leverage moving forward. Visibility in a unique position because a lot of exclusivity will come late, strengthening the data set that we have with BIMZELX in particular, continuing developing our assets and pipeline and acquiring new companies, and preparing the long-term future. This is in a nutshell, the summary of a very rich first half of the year. And with that, I hand over to Emmanuel. Thank you.

Thank you very much, Jean-Christophe, and greetings, everyone. Indeed, it's going to be my pleasure to give you some more details on our 2 acquisitions, namely Candid Therapeutics and Neurona. Clearly, very good strategic fits, but also potentially paradigm-shifting therapies. Now before I do that, let me just set the scene. And on the next slide, you'll see that we're really focused on shaping the next phase of growth with these acquisitions, and it started from, first of all, our purpose and our strategy to expanding the horizons of what's possible for patients and be ambitious in terms of the clinical endpoints that we're going after, moving from deeper clinical response, where we are today, to an ambition of long-lasting drug-free remission and ultimately, potentially, even cure. And so if you take BIMZELX, for example, as a first modality, it's a dual cytokine inhibitor. In psoriasis, for example, BIMZELX has been able, as the first drug ever, to bring 7 out of 10 psoriasis patients to a state of totally clear skin for a full year. And that wasn't possible before BIMZELX. Likewise, BIMZELX, in other indications, may not be able to achieve such deep level of disease control and, potentially, remission. And so we've been continuing to look for solutions for diseases that are more heterogeneous than psoriasis. And galvokimig is a good example where, from the Phase II study, we had about 90% -- sorry, EASI90 achieved in about half of the patients. And that's probably only possible because we inhibit multiple pathways. And so really leveraging the power of combinatorial biology in a well-informed manner represents another strategy to achieve deeper clinical response. Now, really, for a step change, one needs to look at different technologies, and we've been observing the field of CAR-Ts for quite a few years and have decided to invest in T-cell engagers, first with the licensing of ATG-201 and second, with the acquisition of Candid Therapeutics because those medicines really promise a transformative potential, meaning drug-free remission for, potentially, quite a long period of time in a manner that is scalable. And scalable, not just from an accessibility and a cost point of view, but also scalable from a safety and tolerability point of view. With cizutamig, we have a BCMA T-cell engager, really going after auto-antibodies, about the auto-antibody production, very complementary to the earlier license of ATG-201, which is targeted at CD19, which is a broader B-cell strategy. And so we are aiming to redefine the outcomes. And, really, this can be our next step in immunology. It's a large market opportunity. I think we're still defining what B-cell diseases truly are, and that seems to be a pool that is expanding as we discover empirically what the impact is of those molecules and others. And this focus on B-cell-driven diseases is one that we're now pursuing. With cizutamig, we are focused on depleting pathogenic plasma cells, and it's really focused on deep depletion with potentially a best-in-class profile, and I'm referring here to the fact that the incidence of cytokine release syndromes and of neurotoxicity, ICANS, has been low and has been favorable. And that's really being factored in our choice for Candid Therapeutics. And so this has been presented recently at the EULAR rheumatology congress, where one has an overview of about 50 patients treated both in Europe and in Asia in Phase I type studies, signal-seeking studies. And you see there's a variety of conditions here that are depicted. The efficacy has been remarkable. Not much of this is published, but more to come next year. What's really been of interest here is the favorable safety. So there's been no CRS higher than Grade 2 and in fact, only 1 Grade 2 CRS. No death reported in those autoimmune studies despite, of course, dealing with very sick patients, and no incidence of ICANS at all. And that I think is the early clinical signal, let's say, that this balance between potentially revolutionary efficacy and the favorable safety and tolerability profile is achievable. So with that, in 2026, we are planning to get cizutamig into Phase II exploratory studies, one in myasthenia gravis and another one in interstitial lung disease that's associated with chronic rheumatology conditions. So very exciting times ahead for our autoimmune franchise. Likewise, on the next slide, you will see that we're equally excited with our acquisition of Neurona Therapeutics. Obviously, it's going to build on 30 years of UCB presence and leadership in epilepsy and take a resolute step forward to disease modification. So we've decided to focus on a technology and a potential therapy that can really address seizures and, potentially, the underlying disease in patients that have failed on many, many of those oral anti-seizure medications. So Rezanecel, as it is called, is an allogeneic off-the-shelf GABA interneuron therapy. It is delivered in a one-time minimally invasive intracranial procedure. And we've seen in the data published or available so far that there's been no serious adverse events related to the cells or the procedure. It's remarkable in terms of its results. And of course, as we were looking into the data, we were very impressed a few years ago reading about and hearing about this first patient who had about 30 seizures a month -- and after that single administration of these interneuron cells, the seizure count for disabling seizures went down to less than a handful, really life changing. And in fact, for this particular patient, the difference between staying at home, feeling hostage to occur -- to unpredictable seizures occurring to actually being at work. And if one looks at the broader data set that's available now, and you see that on the bottom of the right-hand panel, we see, for example, that in unilateral mesial temporal lobe epilepsy, that we have close to 90% of patients, that 90% of seizure reduction as a median in 6, 7 to 12 months into the therapy and bilateral patients who are not even candidates for epilepsy resective surgery, so destructive surgery, the first patient there achieved 100% seizure freedom for a year. And so this really tells us that this could be life-changing for many, many patients and it's definitely something that, from a patient point of view, will be potentially very attractive as an alternative to epilepsy surgery, which, of course, comes with the threat of cognitive and behavioral adverse events, let alone the waiting lists and the costs. So the regulators have recognized the promise of this investigational therapy with the RMAT and PRIME designations. And I'm pleased to announce that we will start a Phase III in the first half of next year. We regard this as a great opportunity for patients and also a way for UCB to continue to build on its leadership in epilepsy. And with that, it's my pleasure to hand over to Fiona now, who will take us through our growth drivers. Fiona?

Thank you, Emmanuel, and thank you for the update on the pipeline. I'll now focus on our 5 growth drivers with the title, Winning Through Execution. If we go to the next slide, I'm really happy to share with you our revised peak sales potential of at least EUR 7 billion, like JC mentioned earlier today for BIMZELX. And this is very much based on the strong execution that we see again this half year. The teams out in the field, the very vigilant mix channel between field and other DTC, as well as using AI where appropriate, and expanding strategically our access. Second, our evidence base. We now have 4 head-to-head superiority studies with most recently, as JC mentioned, the BE BOLD, where we shared our data at EULAR back in June. It's a head-to-head study against SKYRIZI. We are the only company who has shown superiority against a biologic in psoriatic arthritis. And on top of that, we measured it on ACR50, really raising the bar for our patients. We are increasing our real-world evidence. We now have 5-year data for PSO, 4-year data for psoriatic arthritis, and 3-year data for HS. And the third lever is around expanding our indications. Our PPP trial is recruiting well and our pediatric studies as well. And as JC mentioned, you will have the top line results for adolescent HS trial in H1 2027. So now let's focus on the execution with the next slide. So BIMZELX is continuing its great momentum. We have now approved in more than 50 countries. We have helped more than 135,000 patients, and our sales -- net sales for this half year are EUR 1.5 billion, twice from last year. On the IL-17 dynamic shares, we continue to progress with now 35% in PSO, 30% in our rheumatology indications, and more than 30% -- 45% in HS. And our net sales split across the indications of 45% for PSO, 33% for HS, and 22% for rheumatology. And I'd like you to pause and look at the top right corner with BIMZELX performance versus other analogs. And as you can see, we continue to have great momentum versus the others, and we're still very early on in our journey, in our growth journey. On the access side, back in February, we shared with you that we now have 80% of commercial lives that have access to BIMZELX across all indications as well as the vast majority of Medicare and Medicaid patients. We've also progressed the mix on 1st of June across all indications. We have now first line with one of the PBMs. And we really think about this as sort of what stage, what coverage to have with the access based on 3 dimensions: sort of one, the experience we want to have with our physicians and our patients, moving at the right time and at the right speed so that the access matches the prescribing line of our physicians. Now if we move to HS on the next slide. In the U.S., we continue to see great momentum after a temporary spike of biosimilars early January, we see the nice trend going back up with a 34% dynamic market share. And in the rest of the world, where we launched earlier than in the U.S., we now have dynamic shares in Italy of above 60%, in Spain of about 55%, and in Japan, above 70%. Our ambition is really to lead in HS. We are the best product for our patients. It's still a market that has huge potential to grow. It needs to grow, one, because a lot of our patients are lost in the system, are finding it difficult to find the right -- the right physicians to treat them. They are often sort of pushed away. And so it's really important that, one, these patients get diagnosed earlier, get access to the right physicians as quickly as possible, and then are treated with biologics where there's huge room to progress. This all leads us to believe that the global market potential for HS by 2030 should be around the EUR 5 billion. Now let's focus on the other 4 growth drivers. First, EVENITY. EVENITY is our bone builder, which we have in partnership with Amgen. It's now -- it might now has leadership in quite a few markets. It's treated more than 1.5 million patients since launch. The net contribution with our partner is EUR 379 million. The net sales for UCB are above EUR 88 million and shows a growth of 34% versus last year. In the middle, you see our MG portfolio. As a reminder, UCB is the first and only company with a dual therapy portfolio. This enables us to tailor treatments to the right patients. It is now -- the portfolio has now treated more than 4,100 patients with net sales of EUR 330 million and a growth of 38% year-on-year. And to finish, FINTEPLA with our long history in epilepsy, Again, here is treating more and more patients with strong differentiated data. 16,000 patients have been treated, net sales of EUR 239 million, and a growth of 18%. Really excited about the performance of our growth drivers and about the revised peak sales potential of at least EUR 7 billion for BIMZELX. And now I'd like to hand over to Sandrine, who will cover the finance. Thank you very much.

Thank you, Fiona, and good morning, good afternoon, everyone. Let me first comment on the first half performance, and then we'll see how it translates for the year with an upgraded guidance. So if we move to the next slide, we continued our long-term sustainability journey for the first half of '26. We delivered strong top line growth. We've expanded margins meaningfully as we actively invest behind our next phase of growth. The total net sales grew by 23% to EUR 4.1 billion, driven by the strong underlying demand of our growth portfolio, supported by a solid performance of CIMZIA. The combined net sales of our 5 growth drivers make up more than 50% of our total net sales, and Fiona just commented on the underlying drivers of growth. So beyond the 5 growth drivers, CIMZIA delivered a solid performance of EUR 954 million, down 1%, but still growing by 4% at constant rate. And performance was driven by volume growth as CIMZIA continues to be the fastest-growing branded anti-TNF across Europe, Japan, and international markets. And this reflected the differentiated profile of CIMZIA as the only Fc-free TNF inhibitor and our ability to maintain competitiveness through the life cycle of our drugs. BRIVIACT contributed net sales of EUR 327 million, down 13%, and reflecting entry of generics in the U.S. in February. We expect to see in the U.S. an 80% decline in sales over the 12 months from the loss of exclusivity and 50% decline in Europe when losses of exclusivity is expected in August this year. And regarding sustainability, we continue to maintain our leadership position across ESG ratings with TIME and Statista recently recognizing UCB as one of the world's most sustainable companies, and this is reinforcing our commitment to long-term value creation. Now moving to the next slide and the financial performance and the profit drivers. So on the top of the page, I'll start with the revenue. And we've highlighted the very good top line momentum in the first half with total revenue increasing by 22%, 27% at constant rate, to EUR 4.3 billion, and this was driven by the net sales of EUR 4.1 billion, up 23%. And revenue in the first half also benefited from a number of phasing dynamics, which should be accounted for when considering the second half trajectory. And that includes the BRIVIACT loss of exclusivity, which is second half weighted given the fact U.S. went off patent late February, and we expect the loss of exclusivity in Europe in August. Then the first half of '26 full portfolio, and predominantly BIMZELX and CIMZIA, benefited from around EUR 100 million prior year gross to net adjustment. And as every year, there's significant lags for some channels, and this is reflected in this amount. And finally, we secured meaningful new access for BIMZELX, as Fiona mentioned, including one significant agreement effective as of 1st of June in first-line in all indications. And this is expected to create additional net price pressure in the second half, while the related volume benefits will take more time to build and contribute positively to growth. Now if I turn to profitability, adjusted gross profit reached EUR 3.5 billion, up 27%, 33% at constant exchange rate, with the gross margin improving to 82%, and this was driven primarily by a more favorable product mix and also benefiting from the pricing effect, the prior year gross to net adjustment. And even if less pronounced than the first half, we still expect to see a net improvement versus '25 for the full year, thanks to favorable product mix more than compensating the pricing effects. Operating expenses were EUR 1.9 billion, up a limited 2%, clearly demonstrating strong operating leverage. Marketing and selling expenses increased by 6% to EUR 1.2 billion reflecting our continued investments behind the growth drivers and including deeper market expansion. R&D expenses increased by 6% to EUR 903 million, reflecting continued disciplined investments and pipeline prioritization. And we expect the full year R&D ratio to be closer to 25%, first, as a result of some phasing as every year; and second, considering R&D expenses following the acquisitions of Neurona and Candid. And finally, G&A expenses increased 20%, reflecting digital transformation programs across the value chain as well as some phasing effects, and we do not expect this level of increase to be representative of the full year trajectory. The other operating income was a positive, EUR 394 million, driven by EUR 379 million net contribution from our EVENITY partners, and it's a growth of 34%. And altogether, this resulted in adjusted EBITDA of EUR 1.7 billion, up 68% or 79% at constant rate, driven by strong top line growth, the improved gross margin, and significant operating leverage. And the EBITDA margin reached 40.7% in the first half, also reflecting the phasing dynamics in net sales and the R&D investment timing that I have just outlined and should therefore be considered in the context of our full year guidance. Now moving to profit. Group profit reached EUR 1.1 billion, up from EUR 475 million last year. Net financial expenses declined to EUR 69 million. of which EUR 25 million of net interest expenses that is expected to increase following the recent debt financed acquisition, while the hedging costs linked to the acquisitions included in other financial expenses will not reoccur. And we ended the period with a total net financial debt of EUR 2.8 billion, lower than one-time EBITDA. Effective tax rate is 15% and as expected for the full year, reflecting strong business performance and partially offset by the continued use of R&D incentives and additional recognition of deferred tax assets on losses. Core EPS reached EUR 6.84, almost doubling year-on-year. So in summary, this first half was very strong, and it gives us the confidence to upgrade our guidance for the year. And so moving to the next slide. We remain focused on sustaining our growth momentum at both top and bottom line, and we're increasing our full year guidance. So for revenues, we expect low teens to mid-teens growth at constant exchange rate and the underlying drivers remain the same 5 growth assets with BIMZELX as the largest contributor. And year-on-year H2 evolution versus H1 growth will reflect the various phasing dynamics that I have explained. And moving to EBITDA, we expect mid-teens to low 20s growth at constant exchange rate, and this is the direct result of revenue growth and is also driven by continued investment behind our 5 growth drivers, focused R&D execution, and integration of our recent acquisitions, Neurona and Candid. EVENITY's contribution is expected to grow faster than the whole top line, supporting further margin expansion. And we expect the core tax rate to be around 15%, and we have provided you, at the bottom of this page, with the sensitivity of the guidance to foreign exchange impact on both revenues and EBITDA lines. And as a reminder, our guidance reflects the current rules and regulation. It does not include any impact from potential NFN or tariffs. So to conclude, a very strong first half with continued top line momentum, significant operating leverage, and a solid financial position, giving us the confidence to upgrade our full year guidance while continuing to invest behind our next phase of growth. So with that, I thank you, and I hand back to Jean-Christophe.

Thank you, Sandrine. Thank you, Fiona, and thank you, Emmanuel. And I think we have been able to cover the different part of this first half, moving from strong executions to strengthening the portfolio and the confidence in the future, as well as the ability to deliver on the various line on the P&L, a very strong performance. So next slide, please. What we would like -- what I would like to leave you with is a very simple message. The strategy of UCB always have been to concentrate on innovations and making sure that through innovation, we are able to deliver very unique patient value. And this is what we are delivering year after year and semester after semester like we are doing this time. Two, with the space and the strategic flexibility that we are gaining through this execution, we are delivering not only strong data, but we are also investing in order to make sure that the pipeline continues to develop and that we are also able, through inorganic growth, to strengthen our offering so that in the end, we are not able to be in the position to deliver growth today, but to continue to deliver growth tomorrow and to be in the best possible solution for the long-term success of the company. And so with that, we hope and -- that you have been able to be convinced by what we are sharing with you today because our job is to, of course, deliver sustainable value for our shareholders, for the patient, and for society. And with that, I would like to thank you for your attention and moving to the Q&A session. Thank you.

[Operator Instructions] Our first question comes from Peter Verdult from BNP.

Just a few, some are very quick, yes and no answers. But firstly, on the galvo AD data, you're calling out faster recruitment rates. If they continue, could we actually see that data next year, question number one. Secondly, the only investor debate until February full year results is going to be BIMZELX volume price trends and compared to -- just data sets. I know, JC, that you don't guide to individual drugs. But in light of today's share price reaction, perhaps you take -- you're making exception and describe your level of comfort with consensus expectations of EUR 3.5 billion in '26. Any potential for upside there? When do you think BE BOLD will have an impact on trends and your thoughts on what looks like flattening NRx trends? And then if I could, forgive me, you can always say no, squeeze in one, just on EVENITY, almost 25% of your profits. In the past, I think, Emmanuel, you cited that could be a [ 4 billion ] drug. Just wanted to explore, is there any life cycle management opportunities to consider here that could extend life beyond 2033?

Thank you, Peter. Perhaps I can start with the galvokimig question. So as we've discussed in the past, our aim with galvokimig's current Phase II study is to have a Phase III enabling study that really will inform potential comparator strategies, potential subpopulation strategies. Indeed, recruitments have been accelerating very nicely. And as of now, we are looking at early '28. Obviously, I'm not going to exclude that it could be earlier, and we'll give you an update at the next opportunity.

I can take the question on the BIMZELX consensus, if that's okay.

Yes. BIMZELX and EVENITY. Thanks, Sandrine.

Yes. So as you know, Peter, we do not guide for product net sales, but we can confirm that we're comfortable with where the Visible Alpha consensus is for '26 as published on our website.

Fiona, do you want to take BE BOLD?

Yes. So on the BE BOLD, it's still early days. The data came out at EULAR, which was in June. And response from the market and from physicians is very positive. It reinforces the strong efficacy, the long-term impact that it has in psoriatic arthritis, which, as you know, is a really devastating disease and where -- yes, the -- if you don't treat it early with something strong, it has irreversible damage. It's really early days. But based on the initial reactions from physicians, some markets, we can use it proactively. Other markets, we still have to wait for the publications. We're very confident that you will continue to see the great performance of BIMZELX. And I think it's important to realize it's not only on the rheumatology, but 1/3 of our PSO patients will progress to PsA, and so it has an impact there as well. Thank you for the question, Peter.

There's one last question on EVENITY. Do you want to take that, Fiona or Sandrine?

I'm happy. Well, we -- with the partner we have, we cannot guide on the long-term sales of EVENITY. So we have not changed on that. But true, it's a very strong growth contributing a meaningful part of our overall profitability and has been so, and we are confident on the future growth trajectory as well of EVENITY.

And maybe, Peter, one thing to keep in mind that osteoporosis is slightly different than quite a lot of therapeutic areas where it's a really underserved market. So -- and your -- the market potential is really significant as you've got 1 out of 3 women and 1 out of 5 men who will have a fragility fracture. But the -- but people don't take care enough of their bones yet. So it's really a market that can continue to grow over time.

Our next question is from Sarita Kapila from Morgan Stanley.

Sorry if I missed it, but just to come back to the emerging competition in HS, how are you thinking about particularly Novartis' remibrutinib or potentially coming in earlier than BIMZELX and AbbVie's lutikizumab and the potential headwind that more entrenched players may create on pricing?

Go ahead, Emmanuel.

Yes. Thanks for that question. So I think it's fair to say that BIMZELX, with the dual IL-17 ANF blockade, is very central in terms of mechanism in HS. And from the data that we've seen so far from oral or antibody products in mid-stage development, there is nothing there that suggests stronger efficacy. Then the question is whether an oral mode of action might represent an advantage and also a broad mode of action. I think HS is, as we all know, a very heterogeneous disease. So I would foresee that patients will benefit from different approaches to the HS biology. Let's see how the Phase III studies read-out. We've been there before with other products. In terms of the anti-IL-1, I mean, clearly, the mode of action is promising. We know that IL-1, in particular, is expressed in HS lesions. However, mid-stage study results do not suggest a deeper broad-based efficacy. However, there are probably segments of patients that will benefit from IL-1 blockade. And there's been reports anecdotally from trialists that patients not doing well on BIMZELX were responding well on such a product. So to me, it's good news for patients and hopefully, an oral mechanism will also enable to accelerate the market growth. Thank you.

Our next question is from Sofia Graeff Buhl-Nielsen from JPMorgan.

One, just on BIMZELX channel mix. So how much of a channel mix are you seeing year-on-year? Have you seen a meaningful step-up in the proportion of volume through government channels? And how much did your assumptions on this change from the beginning of last year versus the beginning of this year? And then maybe just to this point on the heterogeneity within HS. Are you gaining further insights into the patients which respond best to IL-17? And are you yourselves exploring other pathways such as JAK-STAT that could address some of the continued unmet need in the indication or be used in combination with BIMZELX?

So thank you for your question. We don't share details on exactly how our channel mix is split. But what I can say is that we're seeing progression across the board, both on our commercial and government programs. And again, I would say the feedback from patients and physicians is really astonishing on the impact that BIMZELX is having on the HS patients. From a heterogeneity, I think it's too early to say for the moment on where there may be a difference. We have as much, I would say, bio-naive switch patients from different classes. And again, there, we continue to see sort of nice progression. Emmanuel, I don't know if you want to add anything from the pipeline perspective.

Yes. I mean from an R&D point of view, we are continuing to interrogate tissues, actually, that we collect and to perform mechanistic studies to uncover segments of patients and figure out how to best bring an approach that either serves more patients or helps patients that are difficult to treat to achieve the same high score and tunnel results that we've seen with BIMZELX in responders.

Our next question is from Xian Deng from UBS.

Two, please, if I may. So the first one is on BIMZELX, this improved mix towards the frontline access. So just wondering if you could maybe give us a bit more color on this particular PBM. So as you mentioned, this is one particular player that actually have frontline for everything. So just wondering, is this the same PBM that used to have frontline psoriasis, now it's just frontline for everything or it's from a different payor? So just wondering, just trying to understand how should we think about the net price erosion in the second half? And then the second question is, if I may ask maybe a bit on the BIMZELX peak sales, the EUR 7 billion peak sales. So if we look at the consensus, which is already almost towards EUR 8 billion, which is let's say, EUR 3 billion each for HS and psoriasis and EUR 1 billion each for PsA and axSpA. So just wondering from your internal projection, just wondering, is there any of the indications that you are actually very different in either way from consensus?

Thank you very much for your question. So first on the access. Just to remind everyone, we had an increase of 36 million lives back in January. And then this move, 1st of June across all 3 indications in one of the large PBMs. You will see the impact on net price in the second half, but we are assuming the growth of the volume will come with that. And I think it's really important as we sort of think about sort of both the short term and the long term, we're here for the long term. This is a marathon. And so we want to make sure that we're constantly improving the experience that our physicians and our patients are having, and making it easier to use BIMZELX, particularly as they start to prescribe it earlier and earlier in their prescription patterns. On your question around peak sales, our intention is at least EUR 7 billion. We will see where the market takes us. We're seeing strong progression across all 3 indications. Of course, the 3 indications are at different stages from a competition perspective and from a penetration. And we don't share for the moment how that split will be across our peak sales. But thank you very much for the question.

Our next question is from Charles Pitman King from Barclays.

Maybe a first one, just to try and push you a little bit more on the BIMZLEX pricing. I mean, this has been a key component of the debate today in the market. I understand you're here for long-term volumes. But just are you able to give us any indicative change in the net price you are expecting across on a kind of global or U.S. level into the 2H, just noting the change seen M1H. Just anything else you're able to give us in terms of trying to quantify that net price change? And then secondly, just on R&D, noting the strong acquisitions that have been made by over the first half, you obviously have to fund the various trials. The indicated 25% for the full year implies a high 20s R&D rate by the end of this year. Just wondering, is this a sensible exit rate that we should be assuming for R&D going into 2027? Or should we still assume some phasing in 1H, 2H? Just how should we think about the R&D that's necessary to support your expanding pipeline given the primary readout of the Phase II/III trials aren't expected until 2028?

Yes, I can take this question. So on the net price dynamic, we are not giving trends on the net price, but I think the way to look at it is really the net price is clearly reflecting the access coverage mix and it's ranging from double step edit to single step edit and now to first-line. And maybe to add on what Fiona said earlier, the improved one large contract for first-line for all indication is coming from a position where there was no first-line previously. So that gives you -- you know the difference there is in terms of net price between double step edit and first-line. And so you can certainly form a judgment of what it can mean on how the improved access first weigh on the price and then, of course, drive volume growth. Then on your question on R&D. So we have a mid-term view of -- our focus is really strongly on differentiation and innovation. So our mid-term view of our R&D as a percentage of net sales is around 25%. Of course, depending on organic, inorganic, it can move slightly. Historically, we've seen indeed that there was a phasing between H1 and H2. Typically, that's how we operate decision internal. We tend to design the phase and then start them in the second half. And when I look at '26, there's a lot of life cycle and new phases starting plus the acquisition. But I will not give elements regarding '27. It's too early. But directionally, I think the 25% as a percentage of net sales for R&D is a good indicator.

Our next question is from Charlie Haywood from Bank of America.

First one is just trying to understand the implied second half EBITDA margin step down in your guidance. So I guess, firstly, it assumes no gross to net in second half. And then on -- 2 questions, so gross margin and OpEx. So gross margin commented to expansion year-on-year. Any magnitude we should consider after what we've seen in 1H? And how do you expect sort of gross margin to evolve over the years to come as your growth drivers increase as a percent of mix? And then secondly, on the total OpEx growth, we've seen 2% reported growth or mid-single-digit CER growth for 1H. Is that a good proxy for how we should think of second half ex your acquisitions? And then any sort of magnitude of dilution in terms of total R&D cost we should expect from the acquisitions to hit in second half?

Okay. So on the dynamic of H1 and H2, I think you really need to take into account what I've said earlier on the elements which are going to be impacting the difference between H1 and H2 trend. And on the net sales, of course, BRIVIACT loss of exclusivity is really second half weighted. If you think about the fact that Europe will be off patent in August and U.S. went off patent at the end of February. So that's 1 -- I think that's 1 key element when you measure the 2 semester. Then what I've mentioned on the gross to net prior year adjustments, that's also an element. But the other, I would say, potential element to reflect is this improved market access because the 1st of June contract, as I said, translates first in higher pricing erosion, while the volume benefit takes a bit more time to build. So once you look at these different elements, you can better understand the underlying trends between H1 and H2. And then the translation on the margin is -- and in the gross margin is reflected as well because some of the big increase in the first half is linked to this pricing effect, which we'll not see in the second half. However, as I said, overall, we expect to see an improved gross margin for the full year compared to last year, which means that the mix effect -- the mix product effect more than compensate the pricing dynamics. And then if I go to OpEx, I will not comment line by line on the trends. I think what you should keep in mind is that there was certainly phasing elements linked to R&D. So even excluding the integration of the new acquisition, we expect more R&D spend in the second half. And then we will continue to support the growth of our assets, and we will continue to invest in terms of marketing and DTC in the second half. And so that's why there is also a difference and an asymmetry between the first and the second half expected margin.

Our next question is from Kerry Holford from Berenberg.