Bora Pharmaceuticals Co., LTD. (6472) Earnings Call Transcript

Ladies and gentlemen, good morning. Originating from Taiwan and now a premier international CDMO, Bora Pharmaceuticals has spent the past decade executing a master class in global expansion through a disciplined combination of organic growth and a high-impact strategic acquisitions. Bora has significantly enhanced its technical capabilities and diversified its international clientele. The company continues to set new industry benchmarks constantly reaching record high in revenue, year-to-year growth and operating and EBITDA margins. Just last week, Bora achieved another historical milestone by becoming the first ever Taiwanese company to join the OTCQX market in the U.S. To share the strategy behind this remarkable journey, please join me in welcoming the visionary leader of Bora Group, Chairman, Mr. Bobby Sheng.

Thank you, everybody. Good morning. And really would thank -- first, like to thank JPMorgan for organizing such a wonderful event. And it's an honor to be speaking with everybody here today and introducing the latest updates for Bora Pharmaceuticals. Some disclaimers. I'll leave it here for a couple of seconds. So we're at JPMorgan. And so we want to know companies by the numbers. So the best way to know Bora in the beginning is to know us by our numbers. We are a publicly traded company on the Taiwan Stock Exchange. Our market cap is roughly around USD 2 billion. We have over 2,100 employees. Most of our employees are now in North America. We export from our sites, we export to about 100 countries. We have 10 manufacturing sites, 5 in North America, 5 in Taiwan. Our 2025 fiscal year revenues that we just reported are USD 634 million. 95% of our revenue is outside of Taiwan, primarily within North America, and we are the #1 pharma manufacturing company in Taiwan. In our journey to become a global contender, we've done a lot of acquisition, and here are some of the highlights of our acquisitions. Since our IPO in 2017, we've grown the company 700% in market cap, highlighted by some of our recent activities here in 2024 with the start of our acquisition of Upsher-Smith, which creates us -- give us the largest oral solid dose capacity within the United States at this new capacity that was built within the last 5 to 10 years. And our acquisition of our sterile fill and finish facility from Emergent, which gave us sterile fill and finish capabilities within the United States, acquisition of Pyros, which is rounded out our vigabatrin franchise with their leading product, the vigabatrin oral -- ready-to-use oral solid or oral solution. And then the -- completing of the strategic investment into Tanvex in San Diego, which gave the Bora Group full commercial biologics mAb capability manufacturing within the United States. We had a lot of milestones in 2025. Here are some of them. We re-signed numerous multiyear commercial products and contracts with our anchor clients. Many we can't say, and we really want to maintain confidentiality with our clients. But one allowed us to mention today, we re-signed a multiyear $350 million re-signing of commercial contracts within one of our anchor clients in our anchor sites. And so because of a lot of these numerous re-signings, we've also had our largest CapEx investment in 2025 and also our largest investment in sales and marketing activities. All of this is to really show the market the additional capacity we've created and also be ready for the additional demand that's coming up. We've also increased our free cash flow for the business as well to be ready for the expand our trajectory in the future. We've completed the strategic investment, a very important investment for Bora is the investment in the Tanvex BioPharma and successfully rebranded it into Bora Biologics. This rounds out our full service capabilities, end-to-end solution capabilities and Bora has become a full-service CDMO with the addition of commercial capabilities of a single-use bioreactor mAb facility within the United States located in San Diego. Now once again, that's-- we've become a full-service CDMO with small and large molecule offerings to our clients. As many of you know, we have a dual engine strategy. One is in the CDMO space. The other is in the commercial sales of pharma products and under the Upsher-Smith brand name. Upsher-Smith demonstrating strong ability to deliver M&A synergies especially with our acquisition of VIGAFYDE to grow our vigabatrin franchise. And now we are the market leaders for infantile spasm. And we continue to make progress in our pipeline formulation and investment into rare neurology and pediatric diseases. And of course, one of our most exciting things happening in the capital markets for us. We started in 2025, but just got confirmation early 2026 is Bora Pharmaceuticals is trading on the OTC Stock Exchange on the OTCQX under the ticker symbol BORAY. This is really a milestone for Taiwan public companies. It's the first Level 1 ADR listing in the United States for a Taiwanese public company. It allows our shareholders to have additional liquidity. It allows more investors access to our stock and allows global visibility and transparency for many investors to understand us and get to know us and be a part of our growth. It's really our continued effort to become a global company and allowing investors and employees around the world access to partake in the growth of Bora. Here's some of our financials. We haven't reported our quarter 4 financials yet, and they'll be consolidating in probably around March. But up to fiscal year '25, we report our revenues. Our total revenues were $634 million. That's up 2.7% from last year. Our profits -- gross profits up to quarter 3 are $195 million, up 4.6% from last year. Our quarter 3 profits -- net income for 2025 is $86 million. Now compared to last year, it's down 25%. I will highlight that it's because we have discontinued multiple nonprofiting products and operations. I want to thank the shareholders and our Board and our employees for helping and really understanding that we are continuing to invest in long-term growth. In some of our acquisitions, we've acquired some nonprofitable or cash flow heavy operations that we want to discontinue. If we eliminate those discontinued operations and we focus on our continuing operations, which is really what we want to focus on as a company, our quarter 3 2025 net income goes up to $129 million. That's from continued operations, and that's up 6.8% compared to last year. Because of our activities, discontinuing these operations that occupy a lot of our cash flow, but really don't benefit our net income, we've increased our net working capital or actually, we've reduced our net working capital utilization from Q4 of 53% down to 23.69%. So we've really decreased our net working capital almost by 50% within a year. That gives us a lot of fresh powder to invest in the company, CapEx and other acquisitions. On the bottom right here, I want to show that we remain very strong in our cash and cash equivalent positions. We've -- and also been able to increase in CapEx and also pay dividends, but remain having a strong or consistent debt to -- net debt-to-EBITDA ratio here for us as well. So keeping financially strong and financially disciplined is a very, very strong attribute for the Bora and the finance team. In this slide, we just want to show our increased growth year-over-year. As we said before, we increased 700% in market cap valuation since our IPO. It's been done through steady growth and steady increase in our EBITDA and our return on invested capital. As you can see here, our EBITDA is highlighted by 2024, and we don't have the 2025 numbers, unfortunately, as of date. But as of 2024, our EBITDA margins are up to 40%, as you can see, increasing from 17% in 2017. And our return on invested capital continues to increase. There was a little bit of decrease in 2024 because we've made a lot of investments in our M&A activities within 2024. So we continue to focus on value creation for our investors. And here are some highlights in our CDMO business. Once again, we're focusing on really having a large footprint within North America. It's something we've been putting on our pipeline or actually our information for the last 3 years to the investor base. So we continue to execute on that. Our goal has always been to be a one-stop shop for all CDMO needs. This is what the customers are continuing to demand from us. They're very happy with our service. They are very happy with the quality, our on-time, in-full, and they just continue to want us to have more capabilities for them. So on top of our oral solids, ophthalmics, semi solids, liquids and nasal spray, in 2024 and '25, we've added sterile fill and finish in our Camden facility and biologic capabilities, not only in process development, but all the way now into commercialization, commercial production in our San Diego U.S. facility, which really gives us an end-to-end drug -- substance to drug product, having biologics and now sterile fill and finish, all within the United States. Here's a footprint of our sites within the -- around the world. On the right side is our sites within the U.S. But as you can see, we are well positioned for U.S. manufacturing surge. We have 4 sites here on the left, all within North America. The 3 newest ones are our Maple Grove facility on the very top and our 2 facilities on the bottom, the Baltimore, Maryland injectable facility and our San Diego biologics facility. This really prepares us for the increasing demand we are seeing from our customers and our RFPs for -- to adhere to the current administration for onshoring manufacturing of key pharma products within the United States. And also because of that, over 70% of our revenue now is coming from these North America sites. We see that increasing over time as well. Some of the highlights of the CDMO business. Our CDMO business, including internal orders, grew 53% year-over-year compared to 2024, reaching USD 340 million. The CDMO backlog is very strong. We digested a lot of it in Q4. So we had a little bit of decrease to $264 million, but we've had more than 20 new molecules signed in 2025. Our on-time, in-full, which is a very, very key figure for us and right first time as well for our customers is with 96% and 93%. These are market-leading figures, and we continue to maintain those. As we continue to find operational efficiencies and increase our revenue, our revenues per headcount continue to decrease -- improve by 30% year-over-year. And net capacity-wise, our aseptic fill and finish capacity increased by 10% and our solid, liquid capacity increased by 3%. And I'll highlight some of those investments we've made in the CapEx for our equipment. And some of the other key figures. We produced 2.5 billion doses in 2025. To date, we have 117 commercialized molecules. And just in 2025 alone, we signed 24 new molecules in that year. As I said before, we are committed to investing in the United States. We are committed to investing into U.S. CapEx. We've invested $400 million in the last 2 years. In 2024, these were mostly strategic investments into acquisitions. But as you can see, after these acquisitions, it's all about organic growth for us and integrating these sites. And in 2025, we've installed the -- or started the installation of the AST fill and finish line on top of our FlexPro line. We had a new -- in July 2025, the new Norden fill and line capacity in Mississauga. We had an investment in the Gerteis roller compactor in Maple Grove. And we also like to add new technologies. One new technologies we're very excited about is high potent liquid capsule technology that we've invested in our Taiwan Zhunan facility as well. A little bit of detail into our aseptic technology for Maryland. We're obviously seeing huge demand in our sterile fill and finish site. We have a FlexPro isolator line already online, and that capacity has already been spoken for. So we have another line coming in, the AST isolator line, and that is in December '25, which is last month, we received city-level lab permits, filler clean room construction to start in Q2 of 2026. We have 20 near-term projects already for that line, and the validation batches we estimate to be started in Q4 2026. We continue to expand our isolator aseptic filling capacity to fill the demand. And we see the aseptic process technology market increasing to reach about $10.4 billion within 10 years and have a CAGR of about 8.5%. And here's a little bit of information on our fill line, our liquids fill line. Now our anchor client there just re-signed us. And so we see all our fill lines there at almost full capacity with this new commercial demand. So we added a third line. Now third line can produce 7 million to 15 million units per year, increasing the site's total capability to about 50 million units. Now that's increasing our capacity about 40%. We're already seeing a need for that line already. Some of our current customers are already actually asking to be use that line. And that's really -- we see the dermatology market really increasing, projected to nearly double by value to $70 billion by 2030. Finally, we want to invest in technology. We think technology is going to really differentiate us as a future CDMO. And we had an addition of a liquid-filled hard capsule capacity in Zhunan. It's a new operating area that's been designed in Zhunan, Taiwan to address the growing demand for stable delivery of sensitive compounds and complex pharmaceutical ingredients such as oncology and high potent drugs. And that will be up in production by this year, quarter 1. So a little bit of detail on our pharma sales and our business in the U.S. We continue to focus on our core strength. As you know, we've acquired a lot of ANDAs and a lot of drug licenses within the last 3 years, and we continue to consolidate and rationalize those products in the previous years. Here's -- on the right, it shows in 2023, we are highly focused on generics. And in 2023, we've made a very concerted effort to only focus on high-value, high-margin generics, hard to produce, hard to manufacture and hard to develop generics as well as refocusing a lot of our R&D investment into specialty branded and rare disease. Because so we've been able to really focus on our rare disease vigabatrin franchise, we've got excellent payer coverage, reimbursement up to 80% in our top 50 accounts. We continue to show strong uptake for both new starts and switches and inpatient stocking at 15 hospitals. Now this is a rare disease, so 15 hospitals is sort of the base where we are at. And it's 50% quarter-over-quarter for the inpatient stocking. Now VIGAFYDE, which is the leading new formulation we have in the vigabatrin franchise, which was acquired last year, it's -- specialty is to maintain consistent and correct concentration compared to other treatments in the market. A little bit of Upsher-Smith. We continue to focus on the value of Upsher-Smith. We think the brand has extreme value within the generic space and the rare disease space, especially in children's epilepsy and pediatric neurology, we are doubling down on our market penetration. And some of the pipelines we're investing also continue to invest in brand awareness and patient advocacy, which is very, very important for the branded and specialty space. Some more detail into our vigabatrin franchise and some of the activities we are doing to solidify our market presence within that community. We've had some strong achievements. We've increased our investment in sales and marketing and the distribution network in the space. Our 3-dose combined now, which is the ready-to-use, the powder and the oral solid dose is our vigabatrin franchise. We have the most complete franchise in the industry for this market. Our market share grew by 15% in Q4 of 2026. And overall, since the VIGAFYDE launch, which is the ready-to-use oral solution, we've increased 85% since its launch. A little bit more about the VIGAFYDE brand that we're pushing into the vigabatrin franchise. Our [ CAMs ] are deployed across all academic centers in the top 50 hospitals, pursuing enhanced customer segments and also really focusing on payer engagement. That's really important, especially in the rare disease space. A little bit about our generics. The generic focus is to get more stable and transition into high margin, more difficult to produce generics, really highlighted by our dexlansoprazole and potassium chloride. We are some of the -- in some of the formulations, we are market leaders in potassium chloride. And we really refilled our pipeline in both internal and external resources. So I'll share with you on the other slides. We're more aggressive in investment into the differentiated branded portfolios within the generic space. Here are some of the highlights for our generic launches planned for 2026. We have 5 confirmed launches in 2026. Total market size for those are about USD 800 million. They're mature, some are competitive, but that's a market size that we're excited to be about to be in. We have 2 approved [ P4 ] pending launches as well in this space. We have 9 pending approvals this year, one of them a blockbuster drug. And we have multiple in-license discussion, but one that we're pretty close to and we're excited about for this year. So as you can see, it's a continued transformation into high-value and branded generics within the generic space. A little about Bora and what Bora is doing in the community. We value ESG. We continue to benchmark ourselves against global competition and global industry players to be within at the same level as them as well. So here's our commitment to governance, people and society. I'll go quick through these real quick. MSCI rating of A, Ecovadis commitment level of -- committed level, sorry. We have 52 points. On the average, it's 45 points. We're excited about that. For the Taiwan Stock Exchange, the stock exchange has made a rigorous commitment for all of our companies to be -- have a high score in ESG. And amongst the Taiwan Stock Exchange, we're the top 6 to 20%. And so we're proud of that. And the FTSE Russell ESG, we are 3.5 out of 5. Some other achievements on the Sustainalytics. I pronounced that right. That was going to be a hard one. We're about medium risk. We continue to go up that ladder. Our PR value is about 81 on the global pharmaceutical sector. We -- and for Business Weekly, we were awarded Top 100 for 2025 carbon competitiveness. And we -- and for the Taiwan Corporate Sustainability Awards, we were awarded a silver level award there. So our vision for 2026. We're very excited about what we can do in 2026. 2025 was really a year of really creating a stronger foundation for our growth in the next 5 years. Some of the exciting things that we see happening in 2026, we're going to continue -- we're going to see continued growth in our CDMO scale and increased global awareness. We are going to obviously maximize the opportunity to capture all the U.S. demands coming in. Like I said, the current administration has made a really strong push to have manufacturing come back into the U.S. We have an amazing footprint that we've prepared for a lot of our customers to utilize our facilities. Because of that as well, we're continuing to increase CapEx and increase our CapEx utilization with our investments that we've made and also realize a lot of operational efficiencies due to the increase into the CapEx. We're also going to continue to double down on our brand awareness and the quality of our pipeline, obviously, with organic growth. But also, as you've seen, we've grown through acquisition and we continue to be active in the M&A market. On the other side of the dual engine is our USL operations with our commercial sales. Rapid growth through our rare disease portfolio and high-value generics. We continue to focus on the vigabatrin franchise and specialty portfolio to drive stable and margin accretive growth. We have advanced high-value generics and favorable P4 prospects, but really about growing that pipeline again into the branded and generic space, smartly though, through partnerships, in-licensing. And obviously, as you can see, once again, our strength is in our M&A activities and our ability to integrate these companies post acquisition. We continue to expand our advantages. We really are seeing a lot of operational efficiencies. We're really gaining a lot of efficiencies, a lot of margins through scale. And are -- we're really excited about our recommitment into AI, and we see that as something that's going to be crucial for our growth in the next coming years. We're going to continue to take advantage of our global scale and create operational efficiencies to improve and drive increased capacity utilization, also centralize a lot of the procurement, which is part of the integration process that we're doing to continue to value our synergies and also create -- also take advantage of the cost advantages of our Taiwan operations, which we feel is a key point in our manufacturing capabilities. Also, we're excited about our AI initiative. We've established an AI committee with SMEs, but we're heavily focused on pharma manufacturing and how AI can add value to pharma manufacturing, in our efficiencies, quality deviation analysis. We're going to do a deep dive into really creating some unique AI -- proprietary AI technologies that will help us be even more competitive, increase our speed, increase our capacity and also allow for our customers to have a higher-quality product with increased value as well. And thank you, everybody. We're very excited about 2026. Really appreciate the opportunity to present all the things that are happening within Bora, and we look forward to talking to you in the next coming year. Thank you very much.