PHM.MCPHM.MCBME
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Operator: Hello, everyone, and thank you for joining the PharmaMar Full Year Results 2025. My name is Gabriel, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, José Luis Moreno, Head of Capital Markets and Investor Relations. Please go ahead.
José Martinez-Losa: Thank you, Gabriel, and good morning to everyone, and thank you for joining us for today's PharmaMar Earnings Conference Call to discuss our 2025 Financial Results. On the call with me today are María Luisa de Francia, Chief Financial Officer; Luis Mora, Managing Director of PharmaMar; and Pascal Besman, the Senior Vice President of Strategic Development. After our comments, we'll open the floor for your questions. And before we begin, please note that certain statements made during this call may constitute forward-looking statements, and these statements are based on current expectations, and actual results might differ materially from those projected. A full safe harbor statement is available in the corporate presentation on our website and together with the press release and the results report issued this morning. We undertake no obligation to update these statements, except as required by the applicable law. All right. Well, I'm pleased to say that 2025 was a very strong year for the company with clear progress, both strategically and financially. Strategically, a key milestone in 2025 was the U.S. approval of Zepzelca as first-line maintenance therapy in October. And this, of course, represents an important step for patients and a meaningful catalyst for the business. Financially, we delivered very strong -- very solid performance. Revenues grew 27% year-on-year, reflecting strong execution and the increased scale of our business. Our top line growth translated into a significant step in profitability with EBITDA up by roughly 5x versus '24 and net income up 187% year-on-year. Importantly, we achieved these results ahead of the expected European approval for Zepzelca, which is granted, it should provide an additional tailwind to revenues and further reinforce our growth trajectory. And with that, I will hand over to María Luisa to walk you through the financials in more detail. And then Luis Mora will update you on our development plans for the years ahead. María Luisa?
María de Francia Caballero: Thank you, José Luis. Good morning, and thank you all for joining us in the 2025 results conference call. Regarding the financial statements for the year just ended, we would like to highlight the following points. First, a substantial increase in revenue from all of the company's sources of income, sales plus 20%, royalties plus 4% and licensing revenues 66%. We expect this trend to continue in 2026 with growth in sales due to the potential approval of Zepzelca for Europe and also growth in royalties due to the approval of Zepzelca as a first-line maintenance treatment last October, which will increase sales for our partners in the U.S. in 2026. Another point is the maintenance of R&D expenditure at the same level as last year and in line with our expectations for next year with the projects we are involved in, which Luis Mora will detail below. We had also a slight increase in operating expenses, for example, in commercial expenses, where activities have been carried out to prepare for the eventual launch of Zepzelca in Europe in 2026. This increase has been -- this increase in expenses -- in operating expenses has been partially netted out by the European grants obtained its first the Sylentis project. All the above has led to EBITDA of EUR 68 million, approximately 5x that of the previous year, as José said before, and to a net profit of EUR 75 million. Finally, and also noteworthy is the generation of operating cash flow amounting to EUR 53 million. This has enabled us to close the year with cash and financial investment of EUR 168 million, while debt remains at similar levels to 2024. This financial situation enabled us to continue with our ongoing projects without any pressure as Luis Mora is going to explain right now, and I pass the floor to Luis Mora.
Luis Capitán: Okay. Thank you, María Luisa. 2025 has been a great year for PharmaMar with significant milestones achieved for both patients and the company. We obtained the approval in the United States and Switzerland for Zepzelca in first-line maintenance non-small cell lung cancer. The compound was licensed to Merck for Japan and both the pivotal trials, LAGOON and SaLuDo trials continued successful according to schedule. We also submitted the registration dossier for Zepzelca in Europe for first-line maintenance non-small cell lung cancer and the compounds P54 and PM534 are continuing day-to-day development. The total revenue as María Luisa described it has grown by 27%. I would like to highlight the growth of Zepzelca in Switzerland and especially in France under the early use model with a 31% increase. This clearly demonstrates that Zepzelca is changing the treatment paradigm for the patients. I also want to highlight to increase Yondelis raw material sales to our partners with a 20% growth compared with '24 as well as the growth in Yondelis royalties in the U.S.A., which have more than doubled compared with 2024. This means that Yondelis continues to grow, being considered a standard treatment for soft tissue sarcoma. In Europe, where there are already 6 approved generic version of Yondelis, the unit sales have grown by approximately 4% compared with '24. This help us to introduce in the future lurbinectedin in leiomyosarcoma in first-line treatment. Regarding Zepzelca in the United States, the royalties have decreased by 12% compared with '24 for 2 reasons. One is the exchange rate Euro-U.S. dollar, which has had a negative impact 7.5% and another to enter a new competitor into the market. However, in this last quarter, we have seen a significant change that we expect that will continue to grow in 2026 with the approval of [indiscernible] in first-line small cell lung cancer maintenance therapy. Finally, looking ahead to the next 12 months, important milestones are on the horizon that will be transformative for the company. The European registration dossier for Zepzelca for first-line maintenance non-small cell lung cancer is currently under evaluation by EMA, and we expect the opinion likely in the first quarter of this year. If this is the case and given the European Commission time lines, we could begin marketing the product in some European countries in the second half of this year. In fact, our entire marketing, sales, market access, medical affairs, logistics team is working intensively on this. We expect it to grow in commercial expenditure in 30% over the next [ 2 ] years. The LAGOON trial for second-line treatment non-small cell lung cancer is expected the top line results in the second half of this year. If the results are positive in either arm where Zepzelca is administrated either as a single agent or in combination with irinotecan. It will lead to another registration dossier likely in the second half of this year for the second line, and this is the objective of the company to any patient with small cell lung cancer will have the opportunity to take lurbinectedin in first on the second line. The SaLuDo trial, which compares Zepzelca plus high-dose doxorubicin, Zepzelca plus low-dose doxorubicin against doxorubicin alone is expected to complete enrollment in the first half of this year ahead of the schedule. We expect the results in the first half of '27, and if positive, they will lead another registration dossier in 2027 with potential approval in '28. The other 2 products we have in the clinical development pipeline, PM54 has already reached the recommended dose in both infusion regimens included in the separated Phase I trials, and we expect it to show the data in the next ESMO Congress in Madrid in October as we have observed very manageable safety and promising efficacy. This encourages us to begin a very ambitious plan in 2026 with expansion as a single agent for different tumor types as well as initiating combination trial with another chemotherapy agent and immunotherapy. In fact, the FDA already approved the new IND for this combination trial with immunotherapy at the end of 2025. Similarly, PM534 is in dose escalation in 2 different Phase I trials with 2 different institution regimens, and we expect to begin expanding 1 of 2 regimens in different tumor types in the second half of this year. In summary, '25, we executed as planned and '26 will be a transformative year for the company with significant milestones, both commercially and in the development for our compounds. Now I pass across to [indiscernible] Thank you.
José Martinez-Losa: Thank you, Luis. And well, with this, we conclude our speech today, and we open the floor to questions. Gabriel?
Operator: [Operator Instructions] Our first question is from Joseph Hedden from Rx Securities.
Joseph Hedden: It's been the first quarter since Zepzelca's label was expanded for first-line use. So 90 million sales in the U.S. Can you just tell us how that compares to your internal expectations? And perhaps any feedback that you've received from U.S. docs or any kind of usage metrics other than the sales that you may have?
Pascal Besman: All right Joe, Pascal here. We're not going to tell you what our projections are and Jazz doesn't give you what their projections are. So unfortunately, not much that I can help you with. And in terms of inventory levels that you're asking, that's not something that we make public other than if there was a situation where there was a problem with inventory, then we would feel that would be material. But obviously, we were expecting to see an uptake after the October FDA approval in the first-line maintenance setting. That happened with a 13% quarter-over-quarter bump, which we're pleased to see. And we expect, personally, we as PharmaMar expect that to continue, as Jazz indicated on their call earlier in the week.
Joseph Hedden: Okay. Fair enough. And then perhaps if I could have one on Yondelis. It was interesting to see that U.S. sales climbing again there after the NCCN inclusion. Do you expect that trend to continue through this year of having a much better year with royalties coming from J&J sales there?
Luis Capitán: Yes. We expect that continues to grow if you compare '26 with '25. In fact, from the inclusion in NCCN guidelines, the combination of Yondelis plus doxorubicin in first-line leiomyosarcoma, the use of Yondelis is increasing dramatically, and we expect that to continue to grow in 2026.
Joseph Hedden: Okay. And then perhaps if you could just reconfirm your expectations for generic entry for Yondelis in the U.S.?
Luis Capitán: I don't know. This is not -- remember, it's J&J territory, it's not PharmaMar territory, then we don't know where they will potentially enter the generics. So we don't know. I can advise you not -- in principle, not in 2026.
Operator: Our next question is from [ Rowan Ropali ] from Santander.
Unknown Analyst: Can you hear me?
Luis Capitán: Yes.
Unknown Analyst: Okay. Perfect. So I have a few questions. The first one is on the potential approval of Zepzelca in the first-line maintenance setting in Europe. Are there any updates on the pricing negotiation process that we should be aware of? And have you already initiated discussions with the relevant national authorities in key European markets? The second one was concerning the M&A and in-licensing. How is the process progressing at this stage? So should we expect any concrete developments or announcements this year? And that would be everything.
Luis Capitán: Okay. Thank you very much. As I said in my speech minutes ago, we expected accordingly the calendar from the EMA opinion at the end of this quarter for first-line small cell lung cancer maintenance therapy. That is we expected. And then accordingly, the European Commission time lines, they have 2 months after the EMA opinion to send us the authorization for commercialization in this territory. This is the time line. Regarding the pricing, the procedure in all the European countries, you can start the submission dossier for pricing and not before the EMA opinion because at the end of the day, you negotiate the pricing and reimbursement from one particular label. And the label is included in the EMA opinion, then you can negotiate before you have this label, okay? But in fact, this is all the PharmaMar team regarding this matter as working more than 1 year ago. Then in order to be ready, the dossier for submission immediately after the EMA opinion. And regarding the licensing here, okay, we can't disclose the [indiscernible] and the process. We have some options in the table. And when we will arrive some type of agreement, we will disclose.
Operator: We will now move on to text questions. So I will hand over to the management team. Please go ahead.
José Martinez-Losa: Thank you. Now we have some written questions that we received. And we can start with these ones about Zepzelca. The first one says, now that the FDA has approved lurbinectedin as a first-line maintenance therapy for small cell lung cancer, could we expect significant increase in U.S. royalties by 2026?
Luis Capitán: Yes, that is what we expected in the second line, you compare with the first-line maintenance therapy. First of all, the number of cycles in the IMforte trial, if we compare with the basket trial, is quite a double and it's about 30% of the patients potentially in this disease. Then we expect the royalties will be growing across 2026.
José Martinez-Losa: We have another question about some regulatory issues also regarding with Zepzelca. Could you please confirm whether IMforte has been officially approved in Uruguay and Ecuador as mentioned by [ Adrian ].
Luis Capitán: Yes, Uruguay was approved in the last quarter 2025 and Ecuador in this year, January.
José Martinez-Losa: We have another question also in regulatory issues. As the dossier for IMforte being submitted in the Japanese authorities for approval?
Luis Capitán: Well, I want to remember it's not about territory. We license the drug to Merck, and this is the Merck task. And when Merck decide to disclosed or not, this process is a Merck decision. It's not PharmaMar decision.
José Martinez-Losa: Okay. More about pricing. When do you anticipate receiving reimbursement for IMforte in Switzerland?
Luis Capitán: Well, we are in the negotiation process actively. This is a normal process. We expected in the middle of the year, finalize this process in order to have the price and reimbursement for first-line maintenance therapy. But I want to remind you that from the commercial point of view, we are already selling in first line, but we're waiting for final pricing and reimbursement.
José Martinez-Losa: So in that regard, there's another question of the same person that he asked about if you could say anything about the pricing that we have in Switzerland for [indiscernible].
Luis Capitán: No, it's in the negotiation process. You can't disclose that.
José Martinez-Losa: Okay. All right. We have other questions about other molecules in the pipeline, PM54. So the FDA has approved IND for the new Phase I/II of PM54 with immunotherapy since the trial targets multiple tumor indications, could we expect to include several immunotherapies as well?
Luis Capitán: Well, we are in the decision process when we will start the trial, we will announce. We have several options like in the synergistic effect is already demonstrated with this type of compounds. We have several options, and we will start the trial, we will disclose, okay? Could be atezolizumab, pembrolizumab, durvalumab, et cetera, et cetera.
José Martinez-Losa: In this regard, there are also questions about what's the time frame when we could start. You've mentioned that we'll start this year. What can we expect about starting point and endpoint?
Luis Capitán: Yes, we are already prepared every seeing the protocol. We already contacted with the centers to start the trial, and we expected to start the trial in the first half of this year.
José Martinez-Losa: All right. We have a question about Sylentis. And if you could provide any update on SYL1801 and specifically, is the Phase Ib trial expected to start surely.
Luis Capitán: Well, when the SYL1801 was disclosed the data, the team are still analyzing the data. They have worked so hard in the preclinical setting in order to be focused in the next trials in some subtype of DCC. And when we will start the trial, we will announce. We are working on that.
José Martinez-Losa: Thank you. We're receiving more questions. Here's another one. R&D investment decreased from EUR 103 million to EUR 95 million this year. Does this reflect a natural tailing of late-stage trial costs? Or is a strategic decision to be more selective in early-stage compounds like PM534, PM54?
Luis Capitán: No, this is a normal one. When you have several Phase III ongoing or you finalize the Phase III, the investment in R&D are down, in fact, given the Phase III ongoing. But according to María Luisa's speech, we expect the similar numbers in 2023 than 2025, but this is the major reason.
José Martinez-Losa: Okay. We have another one about Zepzelca. With the FDA approval of Zepzelca in combination with atezolizumab, how does management expect this change in treatment paradigm to impact the long-term peak sales estimates compared to the previous second-line monotherapy use?
Pascal Besman: Well, to echo what Luis said recently, maybe I'll add a little bit more. Out of 100 patients who are diagnosed with extensive stage small cell lung cancer, about 95% are treated in first-line induction. About 75% have been seen to be treated in first-line maintenance, about 50% to 60% in second line. So right away, you can see by having the first-line maintenance label, there are more patients in the pool. In addition, as Luis also mentioned, the number of cycles that are seen on a mean or median basis is about double from 4 to 8, moving from second line to first line. And a third key point is to consider market share between atezolizumab and durvalumab, which are both approved insofar that these 2 drugs are widely seen as Coke and Pepsi, especially in small cell interchangeable duopoly. And therefore, if atezo plus lurbinectedin is better than atezo, it's seen that atezo lurbinectedin is better than durva. In addition to that, in terms of market share potential, atezolizumab has a version that's been approved in the U.S., U.K. and Europe and Switzerland of a subcutaneous, whereas durvalumab does not and will not have one. So with all that said and with the caveat that we're not making predictions that Jazz hasn't themselves made, we expect sales to be improved starting this year as they were in the last quarter after the first -- the approval in October.
José Martinez-Losa: Thank you, Pascal. We have received -- talking about Jazz, we have received some other questions about the patent situation in the U.S. and we cannot answer these questions. I guess these are more questions for our partner, Jazz, who's doing a great job in the U.S. The final question here says the company spent EUR 34 million on share buybacks in '25. Given the cash position, how is management balancing further buybacks against potential M&A or licensing opportunities to diversify the oncology portfolio? I'll take this one. We do not -- I mean, from the company, we do not see either doing one or another. I mean the fact that we're doing share buybacks program does not mean that we cannot consider, as Luis has mentioned now, in-license deals or any other deals. So we could do both, and we're happy to look at everything. Talking about share buybacks, if we're going to do further buybacks, as you know, we decide that on a yearly basis, same as the dividend policy. I mean, from our perspective, from the company perspective, our first priority is investment in R&D. And once we've covered all that and we have room for more stuff like dividend increase or the share buyback, then we decide on the year. But again, the fact that we do additional share buybacks, if we do it or whatever, does not mean that we're not going to consider in-license agreements or M&A or any other deal. And I think these are all questions that we received in written. So in summary, just to wrap up, our 2025 results demonstrate robust growth driven by rising Zepzelca revenues and a meaningful advance across our clinical development portfolio. And in addition, we expect a strong flow of important news in the near term. And with this, we conclude our call today, and we would like to thank you all for joining us and Gabriel.
Operator: Thank you. This concludes today's PharmaMar Full Year Results 2025. Thank you for joining. You may now disconnect your lines.