Rovi A Specialty Pharma Growth Story Disclaimer
This document has been prepared by Laboratorios Farmacéuticos Rovi, S.A. (“ROVI” or the “Company”), solely for its use during the attached presentation. The information and each of the opinions and statements contained in this document have not been verified by independent experts and, therefore, no guarantee is provided of the impartiality, accuracy, completeness or precision of the information or opinions and statements contained in this presentation. The Company and its advisors do not assume responsibility for any damage or losses that may arise from the use of this document or the information it contains. This document does not constitute an offer or invitation to acquire or subscribe shares, in accordance with the Spanish Securities Market Law of 1988 and its implementing regulations. Moreover, this document does not constitute an offer to purchase, sell or exchange securities, a solicitation of any offer to purchase, sell or exchange securities, a solicitation of any kind of voting rights, or approval in the United States of America or any other jurisdiction. Neither this document nor any part of it are of a contractual nature, and they cannot be used to form part or construe any agreement or any kind of undertaking. This presentation may contain information and statements or declarations with future projections regarding ROVI. The future projections do not constitute historical facts and are generally identifiable by the use of terms such as “expects”, “anticipates”, “believes”, “intends”, “estimates” and similar expressions. In this regard, although ROVI believes that the expectations contained in such statements are reasonable, the investors and holders of ROVI shares are advised that the information and future projections are subject to risks and uncertainties, a large part of which are difficult to foresee, and which are, in general, out of ROVI’s control. These risks could cause the results and real development to differ substantially from those expressed, implicit or projected, in the information and future projections. Among these risks and uncertainties include those identified in the documents submitted by ROVI to the Spanish Securities Exchange Commission (Comisión Nacional del Mercado de Valores), which are available to the public. It is recommended that investment decisions not be taken based on the future projections, which refer exclusively to the date on which they were publicised. All the future projections contained below and made by ROVI or any of its directors, managers, employees or representatives are expressly subject to the above warnings. The future projections included in this presentation are based on the information available on the date hereof. Except when legally required, ROVI does not assume any obligation to update its affirmations or review the future projections, even if new data is published or new facts arise.
1 Overview Multiple Pillars of Growth
Fully integrated, profitable Spanish specialty pharmaceutical company
Leading Spanish Differentiated specialty product portfolio Specialty Pharma Company Strong flagship product Bemiparin and unique expertise in LMWH 2013 Revenue: €157 Mn ’04-’13 CAGR: 18% Partner of choice in Spain
Accelerating internationalization of Bemiparin 2013 Operating revenues: €218Mn ‘04-’13 CAGR: 15% World class pre-filled syringe and oral
compounds toll manufacturing services Exceptional GrowthDrivers Exceptional Novel extended release injectable delivery World Class technology with transformational potential Pre-filled Syringe Robust and Oral Forms Research and Highly attractive risk / reward profile Toll Manufacturing Development and Broad Pipeline Fully invested infrastructure delivering strong 2013 Revenue: €60 Mn operational leverage ’04-’13 CAGR: 18%
3 Focused on Most Attractive Areas of the Spanish Pharmaceutical Market
Diversified Specialty Pharmaceutical Business
• 30 principal marketed products across 7 core franchises
– not impacted by Spanish reference pricing regime
– long patent protection portfolio
• 20 new products since October 2005
• Highly skilled and efficiently targeted > 250 person sales force
Franchise Focused Business
Cardiovascular Anaesthesia / Pain Relief
Osteoarticular Central Nervous System
Respiratory Primary Care
Contrast Imaging
4 Growing Hibor: Differentiated 2 Differentiated Hibor: • • • • • • Source Mean molecular weight(in Daltons) Potential growth Potential opportunity following Lovenox protected Patent until 2019 Sales in Spain of only The 2 ~26% withshare market position market No. 2 in ~ the Internally developed product flagship – – : Expert applicable in widera therapeutic window clinically differentiated US $3.4 Bn Opin nd . Pharmacotherapy generation generation LMWH Hibor Highlights Hibor € 43.8 43.8 Mn in 2013 Global LMWH market ( 2003 ) ; € 4 : 186Mn Spanish 1551 - 61 nd Differentiated Product Differentiated Anti Generation LMWH Generation - Xa: Xa: Anti - IIa IIa Ratio 50,0 10,0 20,0 30,0 40,0 0,0 ( € Mn) 2005
Range 19,8 2006 23,5 2007
25,6 CAGR 2008
29,3 Sales Hibor 2009 +10% 31,2 2010 Half 31,1 - 2011 life life (in hours) 35,4 2012 36,6 2013 43,8 2013 9M Range 31,4 +9% 2014 9M 34,4 5 12,0 16,0 20,0 24,0 alliances strategic through launched products 52 countries with 0,0 4,0 8,0 approved registration approved 59 countries with Rovi Group registration on registration 15 countries with registration pending registration 14 countries with Highly efficient international strategy of partnering with leading local local playersleading with partnering of strategy Highly efficientinternational Bemiparin International presence International Bemiparin 2006 ( 5,7 € Mn) 2007 4,7 2008 - hold
8,7 +22% 2009 9,8 2010 12,8 2011 15,1 2012 19,1 2013 22,9 2013 9M 9M
17,6 +6% 2014 9M 9M 18,6 Established Network International Established 6 Partner of Choice in Spain: Leading Specialty Sales Force >250 member leading sales force: 11 products in-licensed in last 9 years and active pipeline of attractive new opportunities. 4 new in-license products to be launch until March 2020 under the MSD agreement.
Iomeprol Ivabradine
Gadobenate Sulfur hexafluoride dimeglumine
Iopamidol
Before 2002 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Gadoteridol
Lidocaine + Prilocaine Strontium Ranelate
Key In-licensing Partners
MEDICE
7 Product portfolio enhanced during 2013
In 2013, ROVI reinforced its product portfolio both through buying new products and signing new license agreements.
In June 2013, ROVI exercised the Purchase Option held over Rhodogil in Spain, which was owned by Sanofi. Under the new agreement, Rhodogil (an antibacterial drug used against infections of the oral cavity) is directly marketed by ROVI in Spain.
In November 2013, ROVI signed two important in-license agreements: . Agreement with Novartis for co-marketing Hirobriz Breezehaler (indacaterol maleate) and Ulunar Breezhaler (indacaterol + glycopyrronium), being both products inhaled bronchodilators for patients with COPD. The combination of indacaterol and glycopyrronium delivered through the Breezhaler® device is the first once-daily dual bronchodilator (LABA-LAMA) for the maintenance treatment of COPD to be approved both in Europe and in Japan, and will marketed by ROVI in the last quarter of 2014. . Agreement with MEDICE to market in Spain, on exclusivity basis, both Medicebran and Medikinet, pychostimulant drugs aimed for the treatment of ADHD in children and teenagers. These products are already marketed in Spain with annual sales c. €9Mn and a 20% market share.
These operations will significantly contribute to revenue growth.
8 Pre-filled Syringe Toll Manufacturing: High Value Added Business Model
A Global Leader in Pre-filled “Customer-for-life” Strong Revenue Visibility Syringes Business Model
• Differentiated capabilities • Numerous late stage conversations with – Highly flexible and multinationals responsive to our customers’ needs • Revenues: +15% CAGR 2010-2013. – Annual capacity of 180 Mn pre-filled syringe units – Can deliver pre-filled syringes in 4 weeks • GMP, FDA approved for filling syringes that are prefilled with Water for Injection. • Highly profitable contracts • Limited competition and significant barriers to entry
9 Oral Compounds Toll Manufacturing: High Value Added Business Model
Frosst Ibérica Customers Strong Revenue Visibility
• Long tradition of formulation • Formulation and packaging excellence in pharmaceutical activities for Maxalt and products Maxalt-MLT until March 2020
• GMP, FDA approved for • Packaging activities until formulation and packaging of March 2017 for products sold solid compounds in Spain and March 2015 for products sold abroad • Exports to more than 40 • In conversations with countries potential new customers • State of the art technology – Roller compaction
• Manufacturing capabilities of 3 billion of tablets and 100 million of boxes
10 A Productive R&D Engine with a Higher Probability of Success Full spectrum of in-house R&D capabilities with a market-driven approach focusing on chronic diseases with large, unmet medical needs Efficient R&D Model • ~5% of sales dedicated to R&D
Innovative ISM • Broad pipeline technology “in-situ • Focused on approved compounds microparticles” with proven safety and efficacy • Pursuing new indications and product enhancements • Smaller clinical trials expected • R&D effort enhanced through extensive partnerships • Strong IP protection of product Glycomics area portfolio
11 Spanish pharmaceutical market Historical market crisis
Pharmaceutical expenditure growth rate Pharmaceutical expenditure vs ROVI sales growth (%)
15% 15,0% 12,2% 14,6% 14,3% 10,0% 10% 9,9% 6,4% 6,9% 10,2% 5,6% 5,8% 7,9% 5,0% 5% 7,5% 4,5% 5,3% 0,9% 3,9% 0,0% 0% 2010 2011 2012 2013 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14E 15E -5,0% -2,4% -1,9% -5% -2,4% -6,0% -10,0% -6,0% -8,7% -10% -8,7% -15,0% -12,2% -12,2% -15% Pharmaceutical expenditure ROVI's prescription product sales
• In the last four years (2010-2013), pharmaceutical 2010 Var. 2011 Var. 2012 Var. 2013 Var. expenditure decreased by 27%. Pharmaceutical expenditure €12.2Bn -2.4% €11.1Bn -8.7% €9.8Bn -12.2% €9.2Bn -6.0% • 19% of reduction in the monthly pharmaceutical Registered expenditure since the introduction of the prescriptions 957.1Mn 2.5% 973.3Mn 1.7% 913.7Mn -6.1% 859.6Mn -5.9% Average copayment (July 2012) to December 2013. expenditure per €12.7 -4.8% €11.4 -10.3% €10.7 -6.5% €10.7 -0.1% • ROVI’s prescription products sales increased by prescription 50% in 2010-2013, beating the market by 77pp. • Slight rise of 1% and 2% reduction in pharma expenditure expected1 for ‘14 and ‘15 respectively.
(*) Source: Farmaindustria (Spanish Pharmaceutical Association) 1 http://www.farmaindustria.es/web/indicadores/mercado-farmaceutico/ 13 Reduction of pharmaceutical spending in Spain
March 2010 May 2010 March 2011 August 2011 Dec . 2011 April 2012 March 2014
Reform of Mandatory Reference Prescription Reference Co-payment on Incorporation the Reference discount of 7.5% on prices per active prices medicines based to the RPS of Price System the sales of update. principle, except update. on income levels. medicines (RPS). The medicines excluded for drugs A max of €8 or authorized for reference price from the reference belonging to a €18/month is set for >10 years, calculated prices system. group of a drug pensioners. Active without generic, taking the and its licenses at workers will rise to as long as there lowest price in the same price. 50-60%. is another the market. medicine with the same AP. Reduction Adaptation of the Discount of Packaging Reference of the number of units of 15% on the adapted to prices update. generics the medicines medicines treatment prices on an packages to the without generic, duration. Reduction of average standardized except if a patent Encouragement the reference amount of 25% duration of the proof approved in of generics use. price to the with a treatments. all the EU Exclusion of lowest in any EU maximum limit countries is some drugs from country. of 30%. presented. reimbursement. Specific Elimination of Single health regulation on the gradualness card and health discounts to reduce prices service portfolio. applied by for drugs Restriction of distributors to affected by the health tourism. pharmacies Reference Price Joint purchasing (10% generics System. centre. & 5% patented products)
Savings €1,500m €1,300m €1,033m €2,400m €650m €7,000m €580m
When? July 2010 June 2010 Mar 2011 Nov 2011 Apr 2012 July 2012 Sept 2014
Impact €3.5m on ‘10 sales Growth to be Minimal Minimal < €1.0m Minimal Minimal 14 for ROVI and €8m on ‘11 sales slowed down Business growth strategy Our main strategic pillars to lead growth
Specialty pharma Toll manufacturing • Bemiparin • Spare capacity both in the • Recent launches such as injectable plant and in the oral Vytorin, Absorcol and compounds plant Medikinet • New customers to be acquired in • Existing portfolio (Corlentor, both plants contrast imaging agents…) • New in-licensed products to be launched (Hirobriz, Ulunar) • 4 additional MSD products
R&D • ISM Platform Risperidone Paliperidone Letrozole • Glycomics
16 Focus on Drug Release Platform & Glycomics
Platform Product Potential indication Current situation Expected milestones
Pre- I II III Clínical
Risperidone, • Phase I results disclosed Schizophrenia monthly • Phase II ongoing • Phase III starts 2H 2015 Paliperidone, ISM Schizophrenia Phase I starts 1H 2015 monthly
Letrozole, Breast Cancer Phase I starts 2H 2015 quarterly
Phase II results Glycomics Bemiparin (LMWH) Small Cell Lung Cancer (*) published
ISM: in situ microparticles; LMWH: low molecular weight heparin; * Currently looking for a strategic partner to go on further clinical development
17 ISM®: innovative technology for the prolonged release of substances
Administration technology
• Separated syringes containing: – The drug and polymer (solid state) – The solvent (liquid state)
Combination of syringes
Reconstitution
Epidermis Carrier strengthening Dermis Subcutaneous cell tissue
Drug released in body fluids Muscular
The ISM technology aims to combine the advantages of micro-particles and pre-formed implants
18 Risperidone ISM®. First Phase I study (“proof of concept”)
• Phase I, open label, single dose escalation, single centre, on 17 healthy volunteers • “Proof of concept”: kinetics, safety, and tolerability • Results disclosed in July 2011
6 vol. 37.5 mg
2 vol. 37.5 mg • Pharmacokinetic • Safety • Tolerability
7 vol. 25 mg
2 vol. 25 mg
ClinicalTrials.gov # NCT 01320410
19 9M 2014 Results 9M 2014 financial results - Highlights
Operating revenue increased by 8% to €173.3Mn, mainly driven by the strength of the prescription-based pharmaceutical business, where sales rose 9%, clearly outperforming the market, and by the toll manufacturing business which grew by 6%. Total revenue increased by 8% to 175.5 million euros in the nine-month period ended 30 September 2014.
For 2015, ROVI expects a mid-to-high single digit growth rate for the operating revenue.
Outstanding performance of Bemiparin: +8% growth to €53.0Mn, representing 31% of total operating revenue.
Excellent performance of Absorcol & Vytorin: sales increase of 19%.
Excellent performance of Corlentor: sales increase of 19%.
Sales of Medicebran and Medikinet, both products launched in December 2013 and marketed on exclusivity basis by ROVI in Spain, reached €5.1Mn.
EBITDA increased by 14% to €28.9Mn, reflecting a 0.9pp EBITDA margin rise vs 9M 2013.
Net profit (€19.9Mn) growth of 6%.
In July, ROVI paid a gross dividend of €0.1612/share on 2013 earnings, +18% vs last dividend.
21 Growth driven by the specialty pharmaceutical business strength…
Total operating revenue (€Mn) Operating revenue growth by category (€Mn)
180 173,3 180 160,9 +8% 0,2 +8% 160 0,3 48,2 160 140 45,6 +6% 120
100 140 173,3 80 160,9 +9% 60 115,0 124,9 120 40
20
100 0 9M 2013 9M 2014 9M 2013 9M 2014
Specialty pharma Toll manufacturing Royalties
Operating revenue increased by 8% in 9M 2014, up to €173.3Mn, driven by the strength of: the specialty pharmaceutical business, where sales rose 9%; and the toll manufacturing business, where sales increased by 6%. ROVI forecasts to continue growing despite the difficult situation that the Spanish pharmaceutical industry is going through: 1% rise expected by Farmaindustria1 for 2014; 2% reduction expected by Farmaindustria1 for 2015; and continued decreases in the pharmacy retail market at least until 2017 according to IMS Health2.
1 http://www.farmaindustria.es/web/indicadores/mercado-farmaceutico/ 22 2 http://www.farmaindustria.es/web/documentos/boletines (boletín nº 108, April 2014) Gross margin impacted by the increase of customers being invoiced for materials in the injectables plant
Gross profit (€Mn) & Gross margin (%)
70% 62,3% 61,0% 110 Gross margin decreased by 1.4 pp in 9M 2014 vs 9M 2013 mainly due to: 60% 100 the increase in volumes manufactured for 50% clients being invoiced for materials in the 90 injectables plant, contributing with lower 40% margins. 80 +5% 105,7 30% 100,3 The decrease of the Bemiparin raw material 70 cost impacted positively in 9M 2014 gross 20% margin.
10% 60 Gross profit increased by 5% to €105.7Mn in 9M 0% 50 2014. 9M 2013 9M 2014
Gross profit Gross margin
23 EBITDA & EBIT
EBITDA (€Mn) and EBITDA margin (%) EBIT (€Mn) and EBIT margin (%)
16,7% 16% 24 18% 15,8% 30 12,9% 22 15% 25 12,7% 12% 20 12% 20 18 +14% 9% 28,9 15 8% +10% 25,4 22,4 16 20,5 6% 10 14 4%
3% 5 12
0% 0 0% 10 9M 2013 9M 2014 9M 2013 9M 2014
EBITDA EBITDA margin EBIT EBIT margin
EBITDA increased by 14% to €28.9Mn in 9M 2014, reflecting a 0.9 pp rise in the EBITDA margin to 16.7% in 9M 2014 up from 15.8% in 9M 2013. This increase has been achieved on higher sales and operating leverage of the business. Depreciation and amortization expenses increased by 31% in 9M 2014, up to €6.5Mn, as a result of the new PP&E and intangible assets purchases made during the last twelve months. EBIT increased by 10% to €22.4Mn in 9M 2014, reflecting a 0.2 pp rise in the EBIT margin to 12.9% up from 12.7% in 9M 2013.
24 Net profit
Net profit increased by 6% to €19.9Mn in 9M 2014. Net profit (€Mn) Effective tax rate of 5.2% in 9M 2014 vs 4.1% in 9M 2013. This favourable effective tax rate is due to: 20 deduction of existing R&D expenses; and capitalisation of existing negative tax bases from Frosst 18 +6% Ibérica.
16 As of December 2013, Frosst Ibérica had €57.5Mn of negative tax bases, of which €7.4Mn were used in the 2013 income tax and 19,9 18,7 €6.2Mn to be used in 9M 2014. 14 On 20 June 2014, the Spanish Government announced a deep tax reform, to be introduced from January 2015. 12 These suggested tax measures would positively affect ROVI income statement and income tax payable rate. ROVI expects to 10 9M 2013 9M 2014 maintain an effective tax rate from mid to high single digit for the following years. The tax reform content is still pending to be approved. Among the suggested tax measures that would affect corporate income tax, it should be noted that: the tax rate is reduced from 30% to 28% in 2015 and to 25% from 2016; tax losses may offset positive taxable income faster and without time limit from 2016; and R&D tax credit schedule is maintained.
25 Financial debt
Debt breakdown by source (%) Debt maturities by year (€Mn) 15
12
9 15,9
6 €37.3 million 9,5 7,2 3 3,6 1,1 0 2014 2015 2016 2017 2018 & beyond Debt with public administration represented 44% of total debt, with 0% interest rate. New banking debt of €20Mn, of which €12Mn came from European Investment bank funds (through banking institutions) with very good conditions. despite the new banking debt (€20Mn) obtained in 9M 2014, total debt increased only by €6.3Mn as of 30 September 2014 compared to total debt as of 31 December 2013. Gross cash position of €36.1Mn as of 30 September 2014 vs €36.7Mn as of 31 December 2013. Net cash position of -€1.2Mn as of 30 September 2014 vs €5.8Mn as of 31 December 2013 mainly as a result of a 6.3 million euros total debt increase. On July 3, ROVI paid a dividend of €0.1612 per share on 2013 earnings. This dividend meant an increase of 18% compared to the dividend on 2012 earnings.
26 Guidance 2014 and 2015
Operating revenue Operating revenue Operating revenue 2013 2014 2015 mid single digit – mid single digit – €217.6Mn high single digit high single digit
Our main strategic pillars to lead growth
Specialty pharma Toll manufacturing
• Bemiparin • Spare capacity both in the • Recent launches such as injectable plant and in the oral Vytorin, Absorcol, Medikinet… compounds plant • Existing portfolio (Corlentor, • New customers to be acquired contrast imaging agents…) in both plants • New in-licensed products to be launched (Hirobriz and Ulunar)
27 News-flow 2014/2015
Specialty pharma Additional new in-licensing products to be launched
Toll manufacturing New contracts to be announced
Results of ISM-Risperidone® Phase I to be released in Q4 2014 R&D Results of ISM-Risperidone® Phase II to be released in Q3 2015 Start of ISM-Risperidone ® Phase III
28 Multiple Pillars of Growth
Research & Development Toll Manufacturing Specialty Pharma • Novel extended • Fast growing market release injectable • Specialty focus • Unique capabilities technology (ISM) High • Bemiparin, Ulunar, • Trusted partner • Risperidone Vytorin, Absorcol, • Targeting diluents • Paliperidone Growth • Corlentor, Hirobriz, • FDA approval • Letrozole Medikinet ... • MSD manufacturing • Glycomics • Partner of choice and packaging • Bemiparin in • Internationalisation agreement Small Cell Lung • MSD marketing Cancer agreement • New secured products
• Long patent life • Customer for life • Proven compounds • Not affected by • Strong revenue visibility Low • Efficient approach reference pricing • High barriers to entry • Market-driven strategy Risk
29