In their Nine Months 2024 Financial Results Conference Call, Almirall, a pharmaceutical company specializing in medical dermatology, reported a net sales increase of nearly 8% to EUR 728 million and a 3% rise in EBITDA, which is in line with their full-year guidance. The company's biologics portfolio, particularly Ilumetri, has been a significant growth driver, with sales surging by 25% to approximately EUR 153 million.
The recent launch of Ebglyss, a new product in the market since December 2023, has already achieved over EUR 20 million in sales, primarily in Germany. Almirall is also making strides in R&D, with notable achievements including the decentralized regulatory approval for efinaconazole in Europe and the U.S. launch of Klisyri.
Key Takeaways
- Almirall's net sales grew by 7.9% to EUR 728 million, with EBITDA reaching EUR 142.2 million.
- Ilumetri's strong sales performance contributed to a 22% growth in the European dermatology portfolio.
- Ebglyss, launched in December 2023, has garnered over EUR 20 million in sales, with a positive market reception in Germany.
- R&D investments increased by 14.9%, reflecting the company's commitment to innovation.
- The company maintains a favorable net debt-to-EBITDA ratio of 0.3x, allowing for potential M&A opportunities.
- Almirall anticipates a net sales growth of 8% and an EBITDA growth of 3% for the full year of 2024.
Company Outlook
- The company expects to maintain net sales growth at 8% and EBITDA growth at 3% for the full year of 2024.
- Almirall aims to strengthen its U.S. presence and capitalize on its R&D pipeline, with a focus on medical dermatology leadership.
Bearish Highlights
- Gross margin faced pressure at 64.8%, due to a higher sales mix and increasing royalty fees from Ilumetri's sales.
- SG&A expenses rose by 9% due to the Ebglyss launch and salary pressures.
- The effective tax rate is projected to be in the mid-60s for 2024, dropping to mid-40s in 2025, before returning to low to mid-20s by 2026.
Bullish Highlights
- Long-term data from lebrikizumab showed 84% of patients maintained clear or almost clear skin after three years, supporting its use as a first-line therapy.
- Positive feedback on Ebglyss and anticipated growth from Klisyri and Wynzora were noted.
- Management is optimistic about mid-term EBITDA margins as sales accelerate.
Misses
- There were no specific misses reported during the earnings call.
Q&A Highlights
- Management confirmed Ilumetri's peak sales estimate at EUR 250 million and discussed positive market share trends for Klisyri and Ebglyss.
- Efinaconazole is expected to contribute positively but not significantly impact the P&L due to its out-of-pocket market nature.
- SG&A growth is expected to moderate post-Ebglyss launch, with a return to low single-digit growth by 2026.
- Ebglyss's revenue expectations for the next year are EUR 35 million, with a peak sales estimate of EUR 450 million.
- The company is actively pursuing licensing and bolt-on M&A opportunities to enhance the R&D pipeline.
Almirall (ticker: ALM) has reported a steady increase in net sales and EBITDA for the first nine months of 2024, demonstrating the company's ability to grow its revenue and manage investments effectively. The company's focus on expanding its biologics portfolio, particularly with products like Ilumetri and Ebglyss, has paid off with substantial sales increases. Almirall's commitment to R&D and successful product launches, such as Klisyri in the U.S. and efinaconazole in Europe, signal strong potential for future growth. The company's favorable financial position, with a low net debt-to-EBITDA ratio, provides flexibility for potential M&A activities to further enhance its pipeline. Despite increased SG&A and R&D expenses, management remains confident in the company's growth trajectory and long-term profitability.
Full transcript - None (LBTSF) Q3 2024:
Operator: Good day, and thank you for standing by. Welcome to the Almirall Nine Months 2024 Financial Results Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call is being recorded. I'd like to hand the conference over to your first speaker today, Pablo Divasson. Please go ahead.
Pablo Divasson: Thank you very much, Sonia. Good morning, everyone. Thank you for joining us for today's quarterly earnings update and review of Almirall's 2024 nine months financial results. As always, we are showing the slides we are using today in the Investors section of our website at almirall.com. Please move to Slide number two. Let me remind you that the information presented in this call contains forward-looking statements, which involve known and unknown risks, uncertainties and other factors that make us actual results to materially differ from what we are serving today. Please move to Slide number three. Presenting today are Carlos Gallardo, Chairman and Chief Executive Officer; Mike McClellan, Chief Financial Officer; and Karl Ziegelbauer, Chief Scientific Officer. Carlos will start with the business highlights covering the first nine months of 2024 and will also give us an update specifically on our biologics portfolio as key growth drivers in our medical dermatology portfolio. Karl will provide you with an R&D status update, highlighting the progress of pipeline. And Mike will then talk you through the financials before Carlos close, and we open up for Q&A questions. I invite Carlos Gallardo, our Chairman and CEO, to summarize our nine months business overview. Please move to Slide number five.
Michael McClellan: Thank you, Pablo, and hello, everyone. It's going to be here with you today and talk you through what has now continued the strong performance of Almirall in the first nine months of the year 2024. We have achieved solid results up until the end of September, delivering a net sales growth of almost 8% to a total of EUR 728 million, with an EBITDA growth of only 3%. This strong performance is fully in line with our expectations for the year and we, therefore, reiterate our guidance for the full year. Our biologics portfolio remains a key driver of our continued business momentum, thanks to the executional excellence of our teams in the markets, which also enabled us to achieve continued growth of our broader product portfolio beyond biologics. The balanced performance of our dermatology portfolio with a focus on biologics continues to support and grow our leadership in medical dermatology. In 2024, we continue to focus on the launches and the growth of Ebglyss across the European markets. Our launch schedule of Ebglyss is on track, and we are seeing strong momentum of the product, particularly -- where Ebglyss is already established and is helping patients every day. We are also pleased with the progress of our medical dermatology R&D pipeline, which consists of a broad portfolio of assets that are designed to address significant unmet needs and are based on our leading scientific and technology expertise. Over the first three quarters of the year, our business performance has continued to be driven by our European dermatology business. In Europe, we have seen our growth accelerate throughout the year, led by the strong performance of biologics portfolio and the continued growth of our broad medical dermatology brands. The majority of our growth comes from our most introduced products, which is a testament of the commercial excellence and executional strength that we have in our country teams. Let me explain this in more detail. Ilumetri, our biologics product for psoriasis, continues to deliver strong performance and has become an important in medical dermatology. This is a testament of our team's commercial excellence and our company's ability to achieve market success within the segments. Since launching Wynzora and Klisyri in Europe, our presence and market share in medical dermatology have expanded significantly, particularly in key countries such as Spain, Germany and Italy. We're very encouraged by the positive development of the Ebglyss sales performance at this early stage of market rollouts. We have now launched in Germany, Norway, U.K., Spain, Denmark and the Czech Republic, and we are on track with our preparation of upcoming launches. I'll go into more details of it later. Progressing our R&D pipeline is at the heart of our company strategy, and we are pleased with our recent steps ahead of advancing our pipeline throughout the first nine months of the year. We have achieved two milestones in our late-stage pipeline -- After the FDA approval, we have already launched Klisyri in the US., which gives dermatologists a powerful alternative to treat patients with -- affected by actinic keratosis. In Europe, we have recently completed -- to license regulatory procedure for efinaconazole, which is a -- asset to treat on onychomycosis, an especially persistent condition that still has significant unmet need. In the early-stage pipeline, we have also made significant progress in the year-to-date. This is the basis for us to drive future growth of our medical dermatology business. Karl will give more details on our -- progress in a little while. In addition to our current pipeline assets, we continue to evaluate external opportunities across the early and mid-stages of clinical development. Our strategy continues to focus on assessing collaborations and agreements based on the scientific, strategic and financial parameters. Our close collaborations with the medical community are a cornerstone of our strategy and embedded in the -- touch of our company. In addition to our many direct interactions through our teams across different functions, our confidence presence is central to that approach. This year, we had a strong presence at the 33rd Congress of the European Academy of Dermatology and Venerology, EADV, in Amsterdam, which was focused on our biologics portfolio and was a key activity to support the launch of Ebglyss. We presented 34 abstracts detailing the latest research on lebrikizumab for moderate to severe atopic dermatitis in adolescence and adults. In atacitumab, Almirite acitretametasone cream for moderate to severe plaque psoriasis in adults as well as tirbanibulin for actinic keratosis. In October, the results of two additional studies related to Ebglyss were presented in the full clinical conference. Karl will explain this important data in more detail later in the call. Please move on to Slide seven for an update on our biologics portfolio. Let's dive a little deeper into the continued strong performance of Ilumetri, our anti-IL-23 biologic for psoriasis in Europe. Ilumetri has grown in line with our expectations and now holds a strong position and continues to gain market share in key countries across Europe. In the first nine months of 2024, Ilumetri was 25% year-on-year, reaching sales of around EUR 153 million. As usual, we experienced a recurrent summer seasonality, but sales still reached a robust EUR 52 million a quarter. The anti-IL-23 class not only continues to lead in advanced therapies within the dynamic psoriasis market, but it is also the fastest-growing class within the psoriasis market. This strong performance is an excellent basis for Ilumetri continued growth, along with a -- performance across the different countries in Europe. Germany continues to be the strongest market for Ilumetri and in addition, we are seeing strong growth in other European countries, reaching important market milestones. For example, Ilumetri is now delivered in the dynamic market of branded biologics for psoriasis treatment in Italy for the first time. Also, in the recent launch of the 200-milligram option for Ilumetri gives dermatologists a unique opportunity to treat a broader segment of patients and also to contribute to increased Ilumetri's market share. Additionally, new real-world evidence on the performance helps drives awareness of the strength of Ilumetri, presented new 52-week interim data on the positive study at the September EADV Congress, demonstrating improvement in overall well-being of patients with moderate to severe psoriasis in addition to the improvement of the physical symptoms. Having achieved a run rate figure of EUR 200 million based on September sales, we remain confident in achieving the EUR 250 million pixels start. Please move on to Slide 8 for an update on the Ebglyss, our new biologic treatment for moderate to severe atopic dermatitis. We are very pleased with the progress of Ebglyss in the first nine months of 2024. The strong performance of Ebglyss shows the potential of the treatment to impact patients and the opportunities this case for us as a company. This performance is testament to the product and to our focus on launch excellence across our key markets. Ebglyss continues its positive performance trajectory. In quarter three, we grew 34% quarter-on-quarter, reaching a sales total of EUR 10 million and delivering nine months sales of just over EUR 20 million. Please note that this EUR 20 million are mainly German sales. Although we have already launched Ebglyss -- we're still going through the market access phase to get a product in the hospitals. So it's a limited amount of sales coming from these remaining countries as of today, as expected. The awareness of Ebglyss amongst health care professionals has increased significantly since launch and is further growing on a quarterly basis. Prescriptions to treat other severe atopic dermatitis in Germany are steadily increasing with Ebglyss, continuing to gain significant share in the dynamic market segment. Overall, we are very proud of the feedback we continue to get from patients and physicians about the product. Ebglyss continues to go with a strong position in the market and demonstrates its role as new first-line treatment based on the strong efficacy and favorable safety profile. Let's move on to the next slide, please. Our Ebglyss launch plan in Europe is on track, and we are pleased with the significant progress we have made this year already since the launch in Germany in December 2023. After our launches in Norway and U.K., we have recently made Ebglyss accessible in Spain, Denmark and Czech Republic, where the product is available for commercial reimbursement. Most recently, we have also received a regulatory approval of Ebglyss in Switzerland and expect a reimbursement decision in 2025, in line with the standard process timing in Switzerland. We are now anticipating that Ebglyss will be available in Austria at the beginning of the next year instead of late 2024. Also, in 2025, we will focus on rolling out Ebglyss in the remaining countries. We will, of course, keep you updated in on our progress with these launches. After receiving the FDA approval in the U.S. -- Lilly has recently launched in the U.S., Canada, Japan, United Arab Emirates, which demonstrates the potential of the brand to become a global powerhouse in the -- The growth of Ebglyss is further supported by ongoing -- trials, additional launches by the opportunity to generate the overall evidence of the impact of the product. Next (LON:NXT), please move on to Slide 11. I invite Karl to give us an update on the positive progress in R&D and our pipeline.
Karl Ziegelbauer: Thank you, Carlos, and good morning to everyone on the call. This slide now shows you the progress of -- In October, we have successfully completed the decentralized regulatory approval procedure for efinaconazole in Europe. We expect to give an update on the -- materialization plan later this year. The successful completion of the -- procedure is the final step before national marketing authorization can be granted by European countries. Work with the national regulatory authorities is now underway and marketing authorization are expected within the first half of 2025. Sarecycline's regulatory review in China is still ongoing. Post-COVID time lines are more volatile for regulatory procedures in China and we expect now approval in the second half of 2025. After receiving FDA approval addressing -- expansion large fill in June, we have successfully launched in the U.S. We are currently running a clinical study to enable the label expansion to large field in Europe, aiming to launch in 2026. Together with our partners, we continue to work on expanding the labels for our key products, telemetry and Epclis. We expect our partner, San pharma, complete the INSPIRE 2 studies by the end of this year. INSPIRE 2 is a Phase III study, assessing the efficacy and safety of tildrakizumab compared to placebo in anti-TNF alpha subject with active psoriasis arthritis. Our partner, Eli Lilly (NYSE:LLY) is running a Phase III study, exploring the safe and efficacy of lebrikizumab in patients six months to younger than 18 years with moderate to severe atopic dermatitis. Clinical supply manufacturing for anti-IL-21 monoclonal antibody is ongoing to prepare for Phase II. IL-21 is a cytokine involved both T and B cell biology and hypothesize to be involved in several immediated skin diseases. For our anti-IL-1 REP anti-monoclonal antibody, we have completed Phase I single and multiple ascending doses in healthy volunteers. Now pharmacokinetics and safety are exploring patients. This anti-IL-1 REP monoclonal antibody plus signaling of sick members of the IL-1 cytokine family and has potential utility in several -- skin diseases. For our IL-2 mutant fusion protein Phase I single and multiple ascending doses are on ongoing. This IL-2 mutant fusion protein is aimed to activate regulatory T cells with the potential to treat various autoimmune diseases. ZKN-013 is an oral retinuser, designed to overcome nonsense mutations that cause premature stop codon. ZKN-013 has potential utility in several rare indications, such as dystrophic epidermolysis, junctional bullosa and familial adematose polyposis. Phase I is ongoing. In summary, we are making very good progress with both our early and late-stage pipeline. Let's move to Slide 12. At the EADV Congress in September this year, we presented new long-term data from the lebrikizumab at showing long-term extension study. For the first time, data from three years of treatment were presented. High levels of maintenance of response were seen in patients that responded to lebrikizumab in the monotherapy trials ADVOCATE 1 and 2 and entering the long-term extension study at church Patients taking lebrikizumab, who completed 52 weeks in ADVOCATE 1 or 2 would enroll in a joint for an additional 100 weeks of continued treatment. Patients either receive treatment with 250 milligram lebrikizumab every two weeks or every four weeks. The approved maintenance dose of lebrikizumab is 250-milligram every four weeks. 84% of patients taking lebrikizumab once a month and 83% taking lebrikizumab every two weeks maintained clear or most skin at three years. 83% of these patients taking lebrikizumab once a month and 91 taking lebrikizumab every two weeks, did not require high potent CCS or systemic treatment as rescue therapy. The safety profile of lebrikizumab in a joint was consistent with previous lebrikizumab study in patients with moderate to severe atopic dermatitis. These data show that lebrikizumab can provide long-term disease control throughout three years of continuous treatment and support our positioning of lebrikizumab as first-line treatment for patients suffering from moderate to severe atopic dermatitis. Please move to the next slide. As the fall clinical dermatology conference last month, our partner, Eli Lilly, presented clinical data exploring lebrikizumab in atopic dermatitis skin of color patients and patients who are exposed to dupilumab. This shows data from skin of color atopic dermatitis patient. Lebrikizumab showed significant improvement in atopic dermatitis signs and symptoms after 16 weeks of treatment. Most patients achieved a 75% or greater improvement in skin clearance along with reduced itching and an enhanced quality of life. The safety profile of lebrikizumab is consistent with what we observed in the ADVOCATE 1 and 2 Phase III trials. In summary, lebrikizumab demonstrated meaningful improvement in skin clearance and itch relief for most patients with skin of color suffering from moderate to severe atopic dermatitis. Next slide, please. This slide shows the results from the Phase IIIb ADAPT study. The ADAPT study evaluated the efficacy and safety of lebrikizumab in 86 patients with moderate to severe atopic dermatitis who were obviously treated with dupilumab. To qualify for ADAPT, patients must have discontinued dupilumab treatment due to inadequate response intolerance or an adverse effect, or other reasons, including cost or loss of access to the medicine. Similar to the results of the Phase III monotherapy trial ADVOCATE 1 and 2 in patients without clear exposure to medication from moderate to severe atopic dermatitis, 57% of patients at week 16 and 60% of patients at week 24 who were previously treated with dupilumab achieved EC75. In addition, patients in this study showed improvement in difficult-to-treat area. For example, more than half of patients treated with lebrikizumab saw clear or almost clear [indiscernible] at week 24. In summary, together with the results of ADVOCATE 1 and 2, the data supports the potential of lebrikizumab as a first-line treatment in different [indiscernible] population suffering from atopic dermatitis. With that, I will hand over to Mike for the financial review.
Michael McClellan: Thank you, Karl, for the overview of the exciting new data and progress of our R&D pipeline. As Carlos mentioned, we delivered a solid performance through the first nine months of 2024 with a net sales growth of 7.9%. We're very pleased to continue our strong growth trajectory in the European dermatology portfolio, which helped us drive the overall net sales. These results are a key -- on our journey to become a leader in medical dermatology. We achieved a total EBITDA of EUR 142.2 million in the first nine months of 2024, up 3% versus the first nine months of 2023. This was driven by our sales growth and partially offset by higher launch investments in SG&A and pipeline investments in R&D. Our gross margin came in at 64.8% of sales despite the effect of increased royalties from Ilumetri and is in line with our guidance for 2024. SG&A through the first nine months of 2024 is up 9% to EUR 345 million. This is mainly due to recent and upcoming launch Ebglyss investments to further support the growth trajectory of the brand. R&D investment is up 14.9% year-on-year, representing 12.4% of sales, in line with our annual target that is based on our pipeline and future growth strategy. We ended the first nine months of 2024 with a net debt-to-EBITDA ratio of 0.3 times. This gives us a strong basis for potential licensing or bolt-on M&A opportunities. Let's move to the detailed sales on Slide 17. The net sales in the European dermatology business showed a very strong performance with 22% increase year-on-year that I'll review in the next slide. Our general medicine and OTC businesses in Europe showed a slightly softer performance compared to 2023. That includes the impact of minor divestments in 2023 and a downward trend for FSC -- which were partially counterbalanced by good Almax performance and the inclusion of Prometax in Spain. Our U.S. business saw a slight decline in 2024 with some products recovering through the year. I'll share more details on that in the next slide. Rest of the World general medicine is down as the good performance of Evastel was offset by the discontinuation of some minor products and a normalization of immunorex versus a very strong 2023. Let's take a closer look at the dermatology business on the next slide. Our European dermatology segment continues to show a strong performance with Ilumetri as the primary driver. Other growth drivers such as Klisyri and Wynzora are making progress with their launches in key European markets. Ebglyss has achieved EUR 20.4 million in sales after nine months on the market, which is consistent with our expectations and continues to strengthen our confidence in its strong growth trajectory. Ciclopoli and Skilarence showed slightly lower sales due to high competition in their spaces. The U.S. business is stabilizing with Seysara sales recovering in Q2 and Q3. The positive impact of the recent large field launch for Klisyri in August is not yet visible in the data, but the overall volume is growing since the launch. The U.S. legacy business remains under pressure from ongoing generic impacts for Cordarone and Tazorac. However, Axone sales have recovered slightly. Rest of the world dermatology sales were down due to the nonrecurrence of the 2023 licensing upfront payment for Axone in Korea and [indiscernible] partner supply in Japan. Now let's move to the complete financial statements. Let's focus on the rest of the P&L, starting with a detailed review of some of the highlights previously mentioned by Carlos. The gross margin came in at 64.8% in the third quarter. We will continue to face margin pressure due to higher sales mix and higher royalty peers as we continue to achieve higher sales levels for Ilumetri. We have further increased our R&D investments versus the first nine months of 2023, landing at 12.4% of net sales. We expect the full year figure to land in a similar range of sales, supporting our innovation and plan strategy. We have increased SG&A investments by high single digits compared to the first nine months of 2023, and we expect this trend to continue next quarter as we focus on successfully executing the Ebglyss launch in more markets. Net financial expenses were lower year-on-year, influenced by interest from short-term deposits and a positive equity swap valuation. Just a reminder, our effective tax rate is affected by the U.S. losses, which are not deductible against our profitable European business. We expect 2024 to land in the mid-60s in terms of effective tax rate, decreased somewhat in 2025 to the mid-40s and then revert back to a normal low to mid-20s rate in 2026 and beyond. Please move to the next slide to look at the balance sheet. The primary highlight of the balance sheet is the effect of the recent investments in intangible assets, including the EUR 10 million upfront payment for the IL-21 asset from Novo Nordisk (NYSE:NVO) and a smaller upfront for the read-through in DSER asset from Eloxx Pharmaceuticals (OTC:ELOX) in-licensing deal. In the third quarter, we had an additional minor investment related to acquiring the remaining Plyseri. The total impact of intangibles have been offset by the recurring amortization. Importantly, our net debt ratio continues to be very favorable at 0.3x despite significant cash outflows through the first nine months, which we will look at more detail on the next slide. We delivered operating cash flow of EUR 106 million in the first nine months to '24. This presents a substantial improvement versus the first nine months of 2023 as we've effectively stabilized our working capital this year. Other adjustments here are mostly related to net financial income, including interest from the short-term deposits and a higher equity swap valuation. Our investing activities notably include cat outflows in the first nine months, mostly related to 2023 milestones paid in the first quarter of '24. In January, we incurred a EUR 45 million payment for achieving the first commercial sales of Ebglyss in the EU from the late 2023 launch. Additionally, we have paid a EUR 20 million milestone related to Ilumetri sales as we've achieved higher targets. The remaining payments include some additional in-licensing payments related to agreements I mentioned earlier. The divestment line refers to milestones and royalty collections from AstraZeneca (NASDAQ:AZN) and Cobus. These have been classified under investing activities due to the reduced focus on our operations and our lower in 2023 based on the agreed schedule. With that, let me please pass back to Carlos to conclude the presentation.
Carlos Gallardo: Thanks, Karl and Mike. As you have seen, we have continued our strong performance over the first nine months of the year, and we are happy to reiterate our guidance for the full year today. Achieving a net sales growth of 8% to a total of EUR 728 million and an EBITDA growth of 3% means we are on track to achieve our business ambition and further cement our leadership in medical dermatology. We see continued strong performance of our differentiated dermatology products, which enables us to reach more patients and make a real impact on their lives. Our capabilities allow us to be successful commercially, grow our market share and progress exciting opportunities in our R&D pipeline, which creates the potential for continued growth in medical dermatology. We continue to make significant investments in our key products. Ilumetri's growth path remains solid and shows continued momentum to achieve future growth milestones. Its strong performance is a good indication for us achieving Ilumetri's peak cell Stagnet. We anticipate the positive trends of Klisyri and Wynzora to continue as we make them available to more patients in Europe. We are very confident in the progress of our Ebglyss launch as our strong achievements in 2024 have demonstrated. In Germany, we saw key growth in the year. And in next year, we expect sales to take off in the remaining countries once we complete market access. Our strong partnership with the dermatological community is centered to achieving leadership in medical dermatology by reaching more patients and enabling them to benefit from our products. The highly positive feedback from the medical community and our strong business performance continue to set us up for success on our journey of leadership in medical dermatology. Our leadership is also going to be secured by the strong progress we are making with our R&D pipeline, pushing the boundaries of science and technology, especially with the work on our exciting early-stage assets. This is another clear sign of our dedication to the medical dermatology sector. In the year of the 80 anniversary of our company, we are proud of the impact we have from people. What makes unique is the combination of our long-term business vision and our full dermatology, science and innovation. The strong performance of our teams across the organization enables us to create and execute powerful opportunities through in-house development, collaborations and partnerships and strong commercial execution. With this, we conclude the presentation. And I hand you back to Pablo for the Q&A session.
Pablo Divasson: Thank you very much, Carlos. Sonia, back to you for the Q&A, please.
Operator: [Operator Instructions] And the first question comes from the line of Lucy Codrington from Jefferies. Please go ahead. Your line is now open.
Lucy Codrington: Hi there. Thanks for taking my questions. Just a couple. I was just wondering if you could give us some more detail on how we should think about the Klisyri large field launch just in terms of the dynamic of that uptick we might see? Is that something we could see earlier 4Q? Or will that take longer? How much education is required? And are you expecting the erosion of the kind of small field use? And then secondly, just in terms of the feedback so far from the Ebglyss launch. Just any commentary on how many patients are managing to get to the four weekly maintenance dosing? I gather that your competitor has been saying that it's a minority but don't know how accurate that is. And then just related to that just in terms of the ADmirable result, any chance you could put those into context of what has been seen with other treatments and how these differentiating for lebri?
Carlos Gallardo: Thank you, Lucy, for your questions. In terms of the Klisyri large field launch, we are seeing a very good trend. And I can confirm that it's additive to small field, we are seeing no or very little cannibalization. It's early days to confirm further data on how we can expect, but it's very encouraging what we're seeing. And we are very excited about giving HCPs a new field alternative for patients that might not be eligible or before cardiotherapy. In terms of Ebglyss, everything that we are seeing around Ebglyss is very positive. On markets where we already have launched, we see great penetration in terms of dynamic market share, well ahead of all our players with the exception of two Pixent. And in countries where we are still in market access, we are getting the price that we wanted, in some cases, earlier than we expected. And overall, the feedback we're getting from HCPs and from dermatologists is very, very positive. So very encouraged about the is trajectory so far. In terms of your question about the ADmirable results, let me pass this question to Karl, and I'm sure he'll better answer than myself.
Karl Ziegelbauer: Happy to answer this question. The ADMIRABLE study explores the effectiveness and safety of lebrikizumab and skin of color patients. And we're seeing similar activities as in other clinical studies in different patient population. So this just confirms the excellent profile of lebrikizumab being activity, letting in different patient population, either in monotherapy or in combination and support our positioning as a first-line treatment for moderate to severe atopic dermatitis.
Operator: [Operator Instructions] And the next question comes from the line of Alistair Campbell from Royal Bank of Canada. Please go ahead. Your line is now open.
Alistair Campbell: Great. Thanks so much for taking the questions. Two, if I can. First of all, just on Ilumetri, EUR 250 million as a peak estimate. Does seem a bit conservative given current run rate. So just any reason why you stick to EUR 250 million? And are you sort of concerned about changes in the marketplace, for instance, biosimilars emerging? And then just on the US. business, it looks like it's beginning to stabilize and your guidance on tax rate suggests moves towards breakeven within a couple of years. But what has given you confidence that, that is a business that has long-term positive value? And how are you going to go about releasing that value?
Carlos Gallardo: Thank you, Alistair, for your questions. Ilumetri, we're very pleased with the trajectory of Ilumetri. And as I mentioned before, we are not only having the bandwidth of being in the class that has going to be the modificatios class in the treatment of moderate to severe patients, and it's the preferred go-to products or go-to category for the team of these patients, but also we think that Ilumetri is gaining market share in a number of countries. So very encouraged. So very comfortable with the peak sales that we mentioned, and we hope to do more. The U.S., where we have a tremendous opportunity to generate value in Almirall in the short term in Europe with the introduction of the biologics. Of course, the U.S. remains a very important market for us in our quest to -- for leadership in medical dermatology. Very encouraged now with the launch of the large field trays, stabilizing the operations there. We continue to see this trend to continue in the U.S. and we will be looking for other opportunities to strengthen the business there. We see it as a market going forward, very large market, the largest market in medical dermatology. And we have an exciting R&D pipeline, which has global rights.
Operator: [Operator Instructions] And the next question comes from the line of Alvaro Lenze from Alantra Equities. Please go ahead. Your line is now open.
Alvaro Lenze: Thanks for taking my questions. I just wondered if you could share the dynamic market share that you're seeing in some of the countries where you have plans like Germany? My second question would be on efinaconazole and if you could maybe give us some indication of the ballpark number of what contribution could we expect from this? And then my third question would be, if you could provide some on costs going forward, just to understand how much of the increase that we have seen over the last few years is just a step-up that it's here to stay to sustain the revenues or the sales effort for Ebglyss? Or whether there is some to this cost that is temporary related to purely launch costs?
Carlos Gallardo: Thanks for the question, Alvaro In terms of Ebglyss' performance in the countries where we have full access, such as Germany, we are very happy with the trajectory. We're well into the double digits market share. We are ahead of any other product with the exception of Dupixent. And the trajectory and the trend remains very favorable and according to our expectations. So very pleased with that. In terms of efinaconazole, efinaconazole is probably the best-in-class treatment for onychomycosis. This is a disease where there's still a lot of unmet need remaining. So very pleased to have this product in our portfolio. Very consistent with our ambition to have a broad portfolio serving all the needs -- the existing needs of patients and dermatologists. But please note that this is a market that is largely out of pocket, so over the country, in the majority of countries in Europe. We are still analyzing what it means for us, how -- what's going to be our go-to market model. So -- but it's not going to be a significant contributor to our P&L. It's going to be great for patients. It's not going to be a significant contributor for us. And we are still deciding which countries and how do we launch it. In terms of the cost question, Mike, can you take it, please?
Michael McClellan: Yes. Thanks, Carlos. So Alvaro, I mean, the way that we've kind of looked at the SG&A investment, most of the incremental you're seeing this year is coming from the Ebglyss launch and from the pressure on salaries for all the employees. And those are things that will continue. As we move forward, we'll see another significant increase next year, less than the sales growth, but still because we need to invest in several of the other countries coming online. In the midterm, we should start to see that moderate. And I would say SG&A growth will come back down to the low single digits from '26 and beyond, whereas the sales growth should accelerate because of all the impact of the Ebglyss launch plus the continued growth of the rest of the portfolio.
Alvaro Lenze: Maybe I'll follow up on that. So you're confident on returning maybe to the [ middle of this ] EBITDA margins in the next couple of years or maybe it's more long-term target?
Michael McClellan: Yes, I think that's a reasonable midterm target. I mean the trajectory this year was kind of going to be the bottom of the EBITDA margin. We are expecting EBITDA growth as you see in our guidance that we've reconfirmed. Next year, we hope to get a little bit of expansion and then to accelerate that in '26 and beyond. So I'd say in three, four years, a mid-20s EBITDA margin is a nice target.
Operator: [Operator Instructions] And the next question comes from the line of Jaime Escribano from Banco Santander (BME:SAN). Please go ahead. Your line is now open.
Jaime Escribano: Hi, good morning. So my first question is regarding the Dupixent experience patients trial. So what will we expect in terms of commercial impact of this trial going forward? The second question would be regarding the CapEx for 2024, if you can remind us ordinary CapEx plus milestones and others, how much should we have for this year? And the third one on Ilumetri, so it keeps growing at around 30%. Maybe you can elaborate a little bit more on the drivers of this growth. Is it that you keep growing or gaining market share in existing countries? Is it that you are launching in new countries? Is it that the whole category of psoriasis biological produce for psoriasis is growing and as a result everybody's growing? So just to have a little bit more color. And finally on competition, if maybe you want to be conservative on your EUR 250 million pixels target because you see more competition coming in following years?
Carlos Gallardo: Jaime, thank you very much for your questions. So on the first question about the new data that we have for Ebglyss, very encouraging. We believe that this is a first time product. This is how we are positioning it. It's arguably the best product for the treatment of moderate to severe patients. In the markets where we have market access, such as Germany, the majority of patients are coming for first line, so very consistent with the strategy and this positioning, very good news. And this is study that Karl was referring, both the one with Dupixent experienced patients and the one with skin color, contributes to the body of evidence of the great efficacy of Ebglyss, of the product that we have in our hands. So again, it just builds into the evidence that this is arguably the best product to treat patients first-line for moderate to severe atopic dermatitis market. I will take the Ilumetri question, and then I will pass it to Mike for the CapEx question, okay? So Ilumetri's growth -- drivers of growth, first. The entire category is growing. As a reminder, although there's been advancements for these patients for many years and some -- even more than a decade now still is a population that is severely undertreated. Only around 22% of eligible patients to be treated with advanced therapies are treated with advanced therapies. So there's still more than 75% of patients that are out there. There's a pool of patients out there that could be treated. So that's also one dynamic that is already pushing the growth in this category. Within this category, we have the Anti-IL23s that are becoming the go-to category to treat these patients in Europe. And then if you look into Almirall, first, we did launch recently in some markets such as the Nordics. So that's contributing to the growth, of course, compared to previous years. But more importantly, two things that I would like to highlight. First, we have launched a 200-milligram. We are the only product in the category with this flexibility that allows patients -- sorry, that allows practician, dermatologists, to achieve their treatment goals without deviating from Ilumetri, thanks to the extra dose. In addition, we are getting an extremely robust real-world evidence. So the more they use the product, the more they like it, and this is contributing to the -- to them using it more and more. And in terms of the future, we expect the class to continue to grow in the coming years, and we expect Ilumetri to continue to grow with the class.
Michael McClellan: Yes. So in terms of CapEx, if you look at nine months year-to-date, we've had ordinary CapEx of about EUR 46 million. I would expect that to annualize on that kind of a run rate somewhere in the EUR 60 million range. In terms of investments, we've had a EUR 96 million through nine months. I don't expect a lot more in Q4, so maybe another EUR 10 million. Overall cash outflow from investing activities, when you net everything together, were EUR 124 million at the nine months, and I would expect it to land in the EUR 140-ish million range, plus or minus a little bit.
Jaime Escribano: Okay. And maybe a follow-up question. Well, maybe a more spicy one, but -- and I know you are doing the budget for 2024, but consensus is more or less for 2025 in 230 -- EUR 225 million, EUR 230 million EBITDA with an implied margin of more or less 21%, maybe a little bit more. How comfortable you are with this number? Do you think this is something that could go in line with your budget? Or is maybe a little bit high building on what you mentioned about the OpEx for next year?
Carlos Gallardo: Thanks, Jaime. I'll leave it to Mike as well to answer this one.
Michael McClellan: Yes. And of course, we'll give you our guidance in 2025 in February. But let me just confirm some of the trends that we're seeing. So it will help you a little bit in your mindset when you're looking out there. We've seen good sales growth. I would expect sales growth to accelerate next year. We are expecting high single digits this year. So that probably puts us over the double-digit power. Gross margin, we might see a little bit of pressure there because of the royalties I mentioned earlier in the mix. So maybe 50 basis points there. R&D, probably a similar percentage of net sales. That's kind of our commitment at this point. SG&A, we will see some growth probably not as much as the sales percentage, but we will see additional investment for the Ebglyss launch continuation. And then at the EBITDA margin, we'd like to see a little bit of accretion. How much? We'll give you a better idea when we come back in February, but we want to see a little bit of margin accretion in 2025. Hopefully, that helps you.
Operator: [Operator Instructions] And the next question comes from the line of Guilherme Sampaio from CaixaBank.
Guilherme Sampaio: So the first one on Ebglyss, just putting into context what you just mentioned regarding the guidance for 2025 and the cost expectations for Ebglyss. So for this, expecting about EUR 35 million revenues for next year, almost EUR 100 million. This is a run rate that you expect for these two years? Or is something else contributing to your growth expectation? And secondly, regarding M&A, if there's something pipeline over the short term that we might be seeing now?
Carlos Gallardo: Thank you, Guilherme, for the question. So Ebglyss, as I mentioned before, we are very pleased with what we're seeing. We are seeing that the product is being established in first -- the majority of patients coming from naive patients, first line, everything is going according to our plans. Our long-term guidance is the EUR 450 million peak sales. We are -- we remain very comfortable with this estimate for the time being. So, in terms of future years, a continued growth rate towards this peak sales ambition. In terms of M&A, we have a strong track record of partnering and M&A. We continue to look for, of course, exciting opportunities. The main focus now is licensing, as we mentioned many times, looking for early-stage opportunities to add to our already exciting R&D pipeline also late-stage opportunities, so beyond proof of concept, Phase II, Phase III. And for bolt-ons, so nothing transformational in terms of M&A, bolt-on opportunities that we can -- opportunity can fit nicely in existing infrastructure either in European countries or in the US.
Operator: Thank you. There are no further questions. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
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