Pharma Mar, S.A. (PHM) Earnings Call Transcript

Thank you, Emily, and good morning to everyone. Thank you for joining today's PharmaMar earnings conference call for the financial results for the first half of '25. On the call with me today are María Luisa de Francia, Chief Financial Officer; Luis Mora, Managing Director of PharmaMar; and Pascal Besman, Senior Vice President of Strategic Development. Following our prepared remarks today, we will open the line for questions. I'd like to remind you that today's conference call may include forward-looking statements regarding future events or the future financial and operating performance of the company. Such forward-looking statements are only predictions based on our current expectations, and actual results might vary from those projected. We disclaim any obligation to update any information provided herein, and we refer you to our safe harbor statement on our corporate presentation, which is available on our website together with the press release and the report of the results we released yesterday. Well, PharmaMar's financial results for the first half of '25 clearly reflect the positive momentum we are experiencing and our solid financial position. Total revenues grew by 18% compared to the same period last year, and this growth has been consistent across all revenue streams, including recurring income and nonrecurring income. And María Luisa will provide more detailed information on these revenues in a few minutes. The oncology segment significantly contributed to both sales and royalty income and importantly, demonstrated the ability to generate cash from its own activities. This is particularly significant as nearly 50% of its revenues has been reinvested in R&D. In fact, R&D investment totaled over EUR 47 million in this period, supporting our ongoing clinical development programs in both late stage and early stage. Profitability also saw a clear improvement with EBITDA reaching to EUR 25 million and net profit rising to 14 point -- sorry, EUR 19.4 million, which is more than 5x the result of the first half in '24. Finally, last May, we filed a Marketing Authorization Application with EMA for Zepzelca in combination with atezolizumab for first-line maintenance treatment in small cell lung cancer. So in summary, these results confirm that the group is in a strong and sustainable position to continue delivering innovation and value. And now we'll go into more detail on all these figures. So I will turn the floor over to Maria Luisa.

Thank you, Jose Luis. Good morning, and thank you all for joining us in the PharmaMar '25 Half Year Results call. The financial results we are presenting today, as Jose Luis said, so the group's strong performance, solid operations and stable financial position. Total revenue grew by 18%, sales increased 9%. License income, nonrecurring revenues increased 87% and royalty income remained flat. Regarding royalties, payment from our Zepzelca partner, Jazz, were impacted this half year for 2 main reasons: increased competition in the U.S., which reflected Jazz sales -- which affected Jazz sales and less favorable dollar-euro exchange rate compared to the same period last year. Jazz royalties in the second quarter are an estimation. The overestimation in first quarter has been adjusted. Sales growth was driven by -- mainly by the strong performance of Zepzelca in Europe, both in sales and in compassionate use distribution. Nonrecurring revenues, basically license increased by 80%, thanks to the Zepzelca license agreement for Japan with Merck. This agreement included an upfront payment of EUR 22 million, of which EUR 21.7 million has been recorded as revenue by June 30. R&D expenses were 7% lower than in the same period last year. With regard to operating expenses, it should be note that a part of the grant awarded to Sylentis by European Commission under the IPCEI program, important programs of common European interest. As I was saying, a part of that grant was recorded as income under the heading other operating income expenses. This grant covers the January 2023, August 2026 period and EUR 14.7 million have been already recognized as income in our P&L as of June 30. The total grant amounts to EUR 21.1 million, which we have already received in July. All of the above leads to an EBITDA of EUR 25.1 million compared to negative EBITDA of EUR 0.8 million in the same period last year. Operating activities generated a positive cash flow of EUR 2.9 million, reflecting an improvement compared to EUR 0.1 million outflow recorded in the same period of the previous year. Capital expenditure was significantly reduced to EUR 1.9 million compared to EUR 9.4 million in the prior year period, mainly related to investments in the oligonucleotide manufacturing facilities. Furthermore, dividends amounting to EUR 14 million were distributed from the share premium account and treasury shares were repurchased for a total consideration of EUR 12 million. As a result of the above, the group ended at the half year with cash and cash equivalents, this current and noncurrent financial investments amounting to EUR 182.9 million. I will conclude my presentation by emphasizing, as I did at the beginning, the strong performance, the operational robustness of the business and its solid financial position. And now I pass the microphone to Luis Mora.

Hello. Good morning. Thank you, Maria Luisa. It has truly been a very good half year, both in terms of financial results and the progress of our ongoing projects. Yondelis sales in Europe are performing better than expected despite having 5 generic products in the market. Despite the impact from price and the 15% difference in values compared to 2024, that has been a 12% increase in unit sales. This is remarkable and the positioning trabectedin in Europe is a standard of care, and they still maintain about 30% of the market share in soft tissue sarcoma. Yondelis sales in U.S.A. through our partner, Janssen have also increased significantly, resulting in royalties 2.5x higher than those for the same period in '24, reaching EUR 5.4 million in royalties. In summary, Yondelis total net revenue remains stable compared to 2024, around EUR 23 million in this period. Regarding lurbinectedin, on 23 of July 25, we decided to withdraw the dossier for the treatment of multiple myeloma as part of the examination process for the marketing authorization of that compound. As indicated in the version for withdrawal, the version is commercial. 8 years have passed since the EMA refusal and after the court ruling in favor of PharmaMar, our examination process was initiated. However, during this time, there have been a substantial modification to both the treatment algorithms and the available alternatives in validating the clinical trial that served as the basis for the marketing authorization application in the potential clinical practice. This is currently a clinical trial underway with plitidepsin PharmaMar is not a sponsor for the treatment of long COVID. This semester has been very important for Zepzelca. The marketing authorization application for first line of maintenance treatment based on the important trial was submitted to the EMA. The review process has begun, and we await the EMA opinion by the end of the first quarter of 2026. We have already initiated all the prelaunch activity, market access, sales network sizing and medical affairs activity, leading up the product launch in the first half of '26 in Europe. On the other hand, our partner, Jazz Pharmaceutical also announced the submission of the dossier to the FDA and announced that the PDUFA date will be in October 7 this year. At this point, it should be noted that through the Orbis Project, other countries are also evaluating the registration of dossier like Israel, Switzerland, Australia and Singapore. So we expect news from these licenses a few months after the FDA opinion. Following the presentation at ASCO and the publication of the IMforte trial results, the combination of lurbinectedin plus atezolizumab for treatment of small cell lung cancer in first-line maintenance treatment is expected to be included in the NCCN guidelines. The royalties come from Zepzelca and U.S.A. territory included in our accounts include a very adjusted figure for the first quarter and our estimate for the second quarter which we maintained the same figure in the first quarter as we don't have the actual data at the end of this period. Regarding compassionate use, this quarter has been excellent with the use of lurbinectedin increasing in all the countries where it's used in this system of compassionate use, including France, Austria, Portugal and Spain, reaching a 26% increase compared with the same period from '24. Sales of Zepzelca through our subsidiary in Switzerland have also reached 8.4 million. This represents a 75% increase compared to 2024. In summary, we can say that Zepzelca in Europe is already positioning itself a true treatment alternative for small cell lung cancer, and we hope that after its approval for first line, it can offer more patients a very valid therapeutic alternative for this disease. We can also announce that our partner, Luye Pharma launched Zepzelca in China for the treatment of second-line small cell lung cancer in mid-May. We consider the launch to be going very well, and we have already received approximately EUR 1.2 million in royalties. This semester has been very important for the progress of our SaLuDo trial, which combines lurbinectedin plus doxorubicin for first line of treatment of leiomyosarcoma. This trial is now in Phase III. The patient cohort has been expanded to 450 patients, and we hope to complete recruitment as initially planned in the first half of next year. It is important to note that recruitment is going much better than expected with more than 250 patients already included in the trial. This is the most important remarks. And now thank you for your attention, and now it's [indiscernible].

Thank you, Luis. Well, with this, we conclude our speech today and open the floor for questions. Emily, I believe there's someone raising their hand already.

[Operator Instructions] Our first question today comes from Joseph Hedden with Rx Securities.

So just on the royalty line that you've reported, you reported Jose and Luis together. Could you give us any indication of what you attribute to each of the geography, please?

Well, the Zepzelca report, I say we maintain the same level of royalties than the real in the first quarter. This included $1.2 million from China, I explained before regarding Zepzelca. Regarding Yondelis, I included this EUR 5.4 million come from Johnson & Johnson plus a little amount from Japan.

Okay. And then just on Zepzelca in China. Is it possible to get an idea of your overall market expectations and perhaps peak royalty expectations for the drug over there?

Well, we never send the -- first of all, because it's Luye [indiscernible] is our partner, okay? But the launch was fantastic. The more than 80 key Chinese key opinion leaders in 1.5 months, you see the royalties we received were fantastic. And we expect that growing in the following months use Zepzelca in second line. [Operator Instructions]

Emily, if there are no more questions, I have some written questions that we've received.