Good afternoon and welcome to the Bachem half year results presentation 2022. There we go. For those of you who are joining us for the first time or as a reminder, we're using a Zoom call, this is a Q&A section. You can use the Q&A section anytime, write questions into it or later on when we get to the questions and answers part, use the raise your hand function. At the end of the presentations, we will have adequate time for questions. Also, keep in mind that this call is being recorded and the playback will be available on bachem.com in due course after the conclusion of the call. I am very happy to be joined today by Thomas Meier, CEO of Bachem, and Alain Schaffter, CFO. My name is Daniel Grotzky. I'll be moderating this call. Thomas is joining us from the U.S. West Coast, where he is on business travel, and Alain and myself are in Bubendorf, Switzerland. Without any further ado, we get to the agenda. Thomas will speak to the half year results, and Alain will cover the financial perspective, and then Thomas will conclude with the outlook, and then we'll get to the Q&A. That gives us Thomas. Thomas, welcome and happy to hand over to you to give us a walk through the results. Thank you, Daniel, and thank you everyone for joining us on our call for the Bachem half year results 2022. Before we dive into the numbers, I think it's important to provide the context of these results. At Bachem we are focused on the long-term perspective and development of the company. I recommend that investors take this long-term perspective to heart too. Historically speaking, this is still the third best half year result ever for Bachem. We think in H2, we will be able to deliver another record half year for Bachem. This in front of the backdrop of an intensely tense macroeconomic environment. Altogether, this speaks for the solid and strong underlying stability and resilience of our business. With that, we move on to the first slide. As you could see from the press release this morning, we reported sales of CHF 234.9 million. This is a slight decline from the first half year, 2021. We are very confident that this will turn into a positive growth figure by the end of 2022, and I will go into more details on the outlook later. Sales were driven by an impressive growth of the CMC development product category. However, this growth was offset by a decline in commercial API. The main reason for this was that we saw lower order intake for somewhat slower product launches. This is by itself a typical risk of our industry, but it's important for us to mention that we do not see a structural indicator of slower demand for peptides or oligonucleotides. In addition, we could stabilize the commercial API category with strong generic business. Make no mistake, this profit portfolio structure, of course, also affected our earnings. As you can imagine, ramping up multiple new products, new projects in development requires greater effort in time and people, and this has an effect on margins. In effect, we landed with the EBITDA at 28.7% and with an EBIT margin of 22%. We believe we can improve this towards the full year. As all companies, we are also affected by the macroeconomics. For the team at Bachem, we have been weathering this pretty well so far. That being said, inflation, supply chain, and energy costs remain three of the top risks we see going into the future. As we see the ongoing long-term demand for peptides and oligonucleotides, we are continuing our expansion of our capacity. The construction of building K in Bubendorf is moving ahead as planned, and so is the search for an additional site in the northwestern part of Switzerland. These are now the figures in detail. As I mentioned, we had a revenue of CHF 234.9 million with EBIT of CHF 67.3 million at 28.7%. EBITDA, I'm sorry. EBITDA at CHF 67.3 million with a margin at 28.7%. EBIT at CHF 51.6 million and a margin of 22%. Net income took a little bit of a dive, and Alain will give details on that in the later part of this presentation. As I mentioned at the beginning, we need to see these results in the context of the long-term growth trajectory at Bachem. We added this historical chart to illustrate for two reasons. Firstly, it clearly shows that in the first half, we often see a somewhat less dynamic business for Bachem than we have it in the second half of the calendar year. Secondly, you can see that in 2021, we had an exceptionally strong first half year that brought in revenues ahead of the second half of 2020. Something unheard of over the recent years. This made, of course, for a very difficult benchmark to beat. If you look at the product categories, we see, as I have mentioned, this really strong showing of the CMC development with 50.2% increase in local currency and a decline in the commercial APIs of 13% in local currency. In our third category, the research and specialties, we were happy to see that they were also growing. Looking into the geographies, I wanted to give the context to that too, as you have seen when you follow us over the last couple of years, there has been very strong growth in North America. Given the portfolio structure now, the slower launches mostly affected the North America region. Hence, their results were, compared to Europe, less positive. It's okay. We can move on. What is important to highlight on this slide is that, again, despite some fluctuations, we have a very solid and stable structure of our business. Individual customers might pop in or step out of the tiers, but overall, it's a healthy, balanced picture with the top five and the top ten making up about 50% of our revenue. On to the next slide. I think especially in this year, it's important that we look at the results in three categories. First of all, what has happened in the first half of the year. Second, what we expect for the second half. Third, what is happening long-term in the market and with Bachem. We have already spoken about the first half-year. For the full year, we expect to see CMC development to keep driving sales. What adds to this is that the new oligonucleotide business is also heavily pointed towards the development. In the project space of commercial projects, we see a return of sales to the previous year's level by the end of 2022. All in all, CMC development dynamics should be enough to leverage group-wide sales growth in the mid- to high-single-digit% at the end of 2022. For the long term, I'm optimistic. The industry pipelines are full of both peptides and oligonucleotides. With the needs for CDMO partners, we see an interest from large pharmaceutical companies. We have many good discussions, and that's nothing new. I think this trend is rather accelerating. For Bachem, I believe that new NCEs will have an important part, but also the generic business will help grow the commercial API product category. All in all, those are the reasons why we are confident that we can hold on to our CAGR goal of, on average, 50% for the period of 2022 till 2026. You might ask, why are you so confident for the long term? This, of course, has to do with the dynamics of the peptide and oligonucleotide and their demand. In many aspects, I think we see the full potential of peptides right now, and also especially over the last half year. I just want to pick out two examples. I felt the weight loss data for tirzepatide was really remarkable, and I also are looking forward to seeing pegcetacoplan approved for geographic atrophy, a disease where right now, to my knowledge, there is not a real treatment out in the market. Looking at the oligonucleotide, we can certainly say that we are on track to make those CHF 100 million sales in 2023, and we see a positive business and market environment for Bachem, who's accepted and respected as a player in the field, and also for the whole field that is developing nicely and expecting very many positive news over the coming decade. We are ramping up the development business, and we are also working on having the capacity for the oligonucleotide business. In that respect, we think it's important and we are happy to have this collaboration with Eli Lilly that we announced in the first half year of this year. That provides us with two things. It certainly gives us a long-term planning perspective. It also shows that Bachem is getting an established player in the oligonucleotide field with success with smaller and larger companies. The second highlight of the first half year is our sustainability rating from EcoVadis. EcoVadis is a well-respected rating agency. Many large and smaller company work with EcoVadis, and it's accepted in the industry. When it comes to sustainability, for me, it's always important, two things. One is that we do our business of producing oligonucleotide and peptides in a sustainable manner. It's also important to remind all of us that Bachem is a supplier of API for medicines. Our business itself makes an important contribution to sustainable development of our society. What we are doing are sustainable products, APIs for medicine. With that, I think I pass it on to Alain. Alain, please. Thank you, Thomas, and also welcome from my side to this call. Again, key figures as a reminder, Thomas already talked about the sales down to EBIT. On the net income, he also mentioned, as you can see, major drop in the numbers. Let me give some words here. We have, from the capital increase, purchased some securities, as stated in our notes. Due to the financial market situation, the macroeconomics, on the securities, we have, a number of unrealized loss of CHF 13.5 million from the valuation in the first half year, 2022. On the other hand, we also have, realized profit or gains from these securities, which is coming from dividend and, interests. In fact, it's a CHF - 12 million that is hitting our P&L here on the net income line. Then on the next slide, what are the drivers of the change in our margin? When we look at where we started and compare first half year 2021 to the actual one, we started with 25.9% in the margin. You see here in the cost of goods sold, it's the major part of the drop. There are several reasons for that. One is, as Thomas already mentioned, the product mix, which is not that favorable like in the first half year in 2021. There's also that we have hired new people. To hire new people, the new colleagues are very important for the future growth for our plan. It's also ramp-up costs for the new buildings, for new products, and also the higher depreciation we have from our CapEx program play into that number in the first half of 2022. On marketing and sales and also on the G&A, it's very similar. We have, as expected, higher costs now from traveling again. We have exhibitions, we have fairs. There are more costs as expected. We also hired here new colleagues to support us also in general administrative and marketing and sales to support the growth of the company and our plans. Also in the G&A, we have an impact from higher capital tax due to the capital increase, which is also substantial number in the cost here. This leads us to a 22.0% EBIT margin in the first half of 2022. On the next slide, maybe you've already seen it. It's now talking about the EBITDA. Why is there a jump from EBIT to EBITDA? There are several reasons for that. EBITDA for us would be a future number to report. It's more relevant for us because we have a better operational control there. The depreciation will increase due to our CapEx program, and depreciation is just given by accounting principles, so it's not something we can influence. We see EBITDA as a number that is also used by our competitors in the market and which will also make it easier to compare with the market participants. Talking about that, it's the first half year, like the slide that Thomas already mentioned, past, short-term and long-term. To mention the downside on the margin is the product mix, the ramp-up costs that we have in FTEs but also in hours to be ready for the growth in the next half year, but also in the future. Then we compare with the strong first half year in 2021 as a base. What are our full year estimates? With the sales growth for full year with about a mid- to high-single-digit number, we expect a better distribution of our COGS, cost of goods sold, across the higher sales volume in the second half. Which means the economies of scale that we can benefit there, but also that our marketing and sales and G&A costs are stable or grow less than proportional to the top line. Of course, we still have the macroeconomic uncertainties that are already ongoing. On the long-term outlook, we see that we have a pricing power. There is limited industry capacity, and we are building up capacity at the moment. We see the potential of the scale-up from the oligos, but also the management of our own project portfolio. On the downside, potential, again, the macroeconomic, which is not just a phase, it's here to stay as it seems, but also the risk that some projects or products become a commodity and then we have more competitors, or we have the pricing pressure here that could impact our numbers. On the long term, we say we go ahead of 30% in the EBITDA margin. This doesn't mean that there is not a chance to improve that or to increase that number. It's a floor. It's our target that we achieve that. It's especially also for 2022 a target that we need to achieve. We need to work for that. We see this as a floor target for the next few years. On the next slide, we see what happened with the cash we have earned. With the cash flow analysis, starting with an operating cash flow before change in working capital with CHF 67.4 million. We had a positive impact in the receivables and current accruals. It's mainly we were able to reduce our trade receivables by almost CHF 12 million. On the other hand, we have invested heavily in our inventory, mainly raw material, but also work in progress, which can be invoiced in the second half of the year. The raw material is clearly also driven by the actual situation and the challenges in supply chain. We just want to make sure that we have the raw material in place to produce and to deliver the products as requested and in the quality we need to deliver to our customers. On the payable side, we also have a positive impact, and there is one factor I want to mention. We are, as already announced, what we try is to get prepayments from customer. There we increased by CHF 8 million our number to make sure that we already have cash and do not play like a bank and go in upfront with the cash situation. At the end, we have an operating cash flow of CHF 50.7 million, and we have spent it for mainly two topics. One is the CapEx of CHF 70.6 million. This is the cash out. This also includes the change in accounts payable for CapEx project between the balance sheet dates. That's why it's a higher number than the CapEx we see in the balance sheet. On the acquisition side, there is a separate slide later in the deck. We spent a net cash of CHF 21.9 million. To cover all of this cash out, we had a sale of securities, mainly money market with CHF 772 million in the first half of the year. On the financing side, we paid out a dividend in May with CHF 51.6 million, and we repaid the loan of CHF 20 million that was already in the books at the end of last year. In addition, with the acquisition, we have taken over a CHF 13.5 million loan from the seller, which also had been repaid at acquisition date. This leads us to a net change in cash in the first half year of CHF 54.7 million as a cash out, net cash out. On the next slide, the balance sheet analysis. Here on the left side, you see the working capital. You see that the cash or securities which are cash-like as always can be sold, so it's not a current, it's all current money. We reduced by CHF 120 million for the CapEx and for others like just seen on the other slides. On the bottom, the current financial liabilities to CHF 20 million went down to 0.3, which means that Bachem now at the moment is debt-free. There are no external loans anymore. It's a part of financial leasing liabilities that are in there. On the equity side, we have a stable equity with CHF 1.1 billion and with a ratio of 88% at the end of June 2022. This shows that we are financially independent, which is always a very important topic for Bachem to be able to act independently. Talking about the CapEx on the next slide, we have invested about 16.5% of our revenue into CapEx. CHF 29.7 million out of this CHF 38.7 million is invested directly in capacity, be it building or equipment. For the full year, we expect about 25%-30% CapEx in relation to our revenues. It also includes the new projects at the new site from the acquisition we have taken over in April. That will be our projects now and will be our CapEx. We see that the depreciation now increases, as mentioned from the past CapEx. This is an impact that now is coming through from going live with the new capacity. On the next slide, what's just mentioned before, it's the expansion at the Bubendorf site. One thing that we are talking now for a long time is the building K. On the left side, you see the progress there. The construction is on track for the launch of manufacturing in 2024. It will have capabilities for both peptides and oligos. It will have a strong focus on green chemistry and automation, as this is a very important topic at the moment also in the industry. The investment in the first construction phase is about CHF 220 million until 2024, and a part of that has already been spent over the past few months and in 2021 for bringing the building up as it is today. It has a modular expansion after 2024 for the overall doubling of the Bubendorf capacity in the future. Second, the consolidation at the Bubendorf site. So when you're in Bubendorf, there was a premises with office buildings just across the street. On April 25, Bachem AG has acquired 100% of the company, Breiten Immobilien AG, through Ingro Immobilien AG. Bachem is now the owner of the office buildings there, the parking lots. Until that time, all the buildings and the parking lot has been rented out from the Breiten Immobilien AG. Both acquired companies have already been merged with the Bachem AG as of June 21, and are part of Bachem now. The total consideration of the shares amounted to CHF 23.8 million, which included also CHF 1 million in cash. Based on the preliminary purchase price allocation, the net assets we have taken over had a total value of CHF 23.7 million at the time of the acquisition. With that, I'd like to hand over back to Thomas for the outlook 2022 and beyond. Thank you, Alain. I'm happily looking to the future. As always, we can do that with a more specified outlook now at the half year mark. Alain and myself, we have already mentioned that we think we can deliver mid- to high-single-digit growth with a strong order book, particularly the CMC development space. We also believe that we can get EBIT and EBITDA margins to a level comparable to 2021. This needs action, this needs a lot of hard work, and we are focusing among others on managing our capacity utilization and controlling our costs, as always. We will, however, continue with our investment into Bachem into the long term, and that means capacity expansions. There, the larger part of the investments will happen in the second half of 2022. We will also continue our investments in technology and knowledge and work on our R&D projects, because we know that this knowledge is actually what our customers look most for at Bachem, and that's where we are leading, and that gives us the strongest outlook for the future. If you look at the long-term perspective on the next slide, we also reviewed those for the half year. Given the macroeconomic environment that has rising material costs, inflationary risks, and also rising energy costs, we felt we better go cautiously and say that we are updating our long-term profitability guidance to an EBITDA margin of more than 30%. For the top line growth, there is no change. As already mentioned, we are confident that we can make this 50% compounded annual growth rate in average for the five-year period. If it goes faster, nobody's unhappy, and this is certainly not impossible. That brings us to the Capital Markets Day. We set up a Capital Markets Day for Tuesday, September twentieth, for many reasons. Because first of all, we would like to have the opportunity to meet you face-to-face again. Also the entire corporate executive committee has a lot to tell. I think we should give an update of what happened over the last years, and such a face-to-face event is certainly a great opportunity to not just listen and see Alain and myself talking together with Daniel here, but really get a sense of where we are as a team, as the leading team of Bachem. It's a face-to-face event, as I mentioned, 2:00 P.M., but there's also an option to dial in. Of course, we are happy to have as many as ever joining us and telling you the story of Bachem as we see it developing in 2022, but also going forward, what are the opportunities in the market? How can we make this company even stronger and what we see as opportunities out there. With that, I think we're at the half-hour mark and we're ready for questions and answers. Thank you very much, Thomas. Thank you very much, Alain, for your remarks. Just reiterating to everyone, you can pose questions in the Q&A feed. We already have a few. Or you can raise your hand and then we'll take your call. I have already five raised hands for questions, so we'll try to mix it a little bit. Let's start with a question here. One note, we do have 96 participants overall, so it's quite a lot, most of whom are external. We hope that we'll be able to cover as much as possible in the next half hour. I'll also ask Alain and Thomas to be as brief as you can, and people who ask questions, please try to be as brief as you can so that maximum number of attendees can get the input they want. First question here by Carlos Moreno goes to Thomas. Thomas, what do you think will be the long-term split between fermentation for peptides versus chemical synthesis? The chemical route appears cheaper and more batch consistent. Thomas, question to you. Quick answer from the peptide- Yeah, I'll try to be very quick. For Bachem, we are only active in the chemical synthesis, so our split is 100% chemical synthesis. For the industry, it's certainly nice to see for us as chemists and a chemical company that tirzepatide is a chemical process. So far, the large GLP-1s were mainly produced by recombinant expression systems. There's a certain shift in there. I think the long-term trend could be to the chemical synthesis because it offers a broader diversity of medical chemistry. You can actually play around and extend your half-life and other things, and I think that's the main driver for chemical synthesis. Okay. Let's take a question now from someone on the call who's raised their hand. Daniel Buchta from Zürcher Kantonalbank. Daniel, you should see something popping up where you can unmute yourself now, and please ask your question. Yeah. Thank you. I hope you can hear me. Yeah. Thank you very much. Maybe two questions. The first one on the updated margin guidance. I mean, you left your top-line guidance basically unchanged, expecting 15% sales growth per annum on average. Before you guided on EBIT, we are not exactly comparing the same things. Nonetheless, I mean, you indicated that margin should rise structurally, while if you are above 30%, that could also include, I don't know, for example, 30.5%. That would not mean an increase in terms of margins. I mean, is that to be understood in a way that you got more cautious? If so, why is that the case? I mean, consensus, at least if I look on Bloomberg this morning, was still expecting clearly rising margins in the coming years. If you could shed a little bit more light in that direction, would be great. Maybe the second question, maybe for you, Alain, on the cost base. I mean, obviously the COGS is quite a drag on profitability in the first half, with the input cost inflation that we see. I mean, and also what your competitor from Baar was saying in the last couple of days and weeks. I mean, how confident do you feel that you can pass on the rising input costs completely? And how long would it take until this is really fully pushed through or almost completely? Those would be my two questions. Thank you very much in advance. Maybe Alain, take the COGS question and maybe also already add a little bit on the margin, and then Thomas can add to the margin, essentially. Sure. On the COGS question with inflation, yes, I mean, It's not that we don't see the impact, but for us it's an external factor and we have to take measures to sort it out and to balance it out as good as we can. It's not that we are not affected, but it's something we need to sort out. It will have, or it has actually an impact, of course, like all the others. We try, we have contracts and we try to increase our prices to our customers. If there are clauses in the contract where we can pass on the cost, if we have new projects, it's already based and invoiced on a higher cost base. It's an ongoing process. Our sales team, BD team is doing what they can. It will not be that we can increase the prices on every contract we have, but of course, we do what we can to pass these costs to our customers. On the margin question. Margin question. I mentioned in my talk that we see the macroeconomic climate as one reason, but the main reason for this somewhat tough first half year is really the product mix and the certain timing issue. We feel we improve in the second half of 2022. We're gonna continue to work very diligently to have the margin to remain independent. At the same time, we want and we must invest into our business. That's knowledge and that's new teams and education. We really tread that line very narrowly and make all decisions based on our long-term perspective. We right now believe that we can remain above EBITDA of more than 30%. Thank you, Thomas, Alain. I'll read a question here from the chat from Laura Pfeifer-Rossi. Question, how should we directionally think about sales growth in 2023, considering that this year's growth will be below average? Is it fair to assume that growth could be clearly above the 15% in 2023, let's say high teen sales growth during year? And what areas would you expect growth to come from? And some color on 2023 margin dynamics would be appreciated as well. Thomas, I'm not sure we can say about 2023, but maybe sort of the long term. Yeah. I guess what I can say is that our long-term perspective to five years, I mentioned the 15%. I see a strong demand, especially in the later years of this five-year period. That is in line with additional capacity coming on stream in 2024. We are focused on finishing out the construction work, and we have demand for that. Until then, I think it will be maxing out the existing capacity in Bubendorf. We kind of bounce towards some capacity limitation, I would assume for the coming years. Let's take another question from the raised hands. Tanya Hansalik has raised her hand. Who produced this? Tanya, please go ahead. Yeah. Yes. Hello, can you hear me? Yes, perfect. Okay. Yes, some of my questions were answered, but maybe a few more. Then maybe back to the midterm margin guidance, the change from, you know, EBIT growth ahead of sales to EBITDA of more than 30%. Could you also put this into context? What does this mean on the EBIT line? Should we expect EBIT to begin to decline with these, you know, investments in capacity and higher depreciation costs? That's my first one. I think that one's for Alain. Yes. I mean, if we would stay at the floor of 30%, it's the math that and the fair assumption that an EBIT margin would decline. Okay. Then, another question, just maybe to make clear on COVID effects. You said neutral in the last two years, but just to make sure, were there any, you know, positive effects on the revenue base in H1? Do you include anything in your guidance for the future? Thomas? No, I think the positive COVID situation, the positive effect we have seen, they are already, so they almost completely have vanished. We, as I mentioned, still had some rather slower than expected introductions that were partly affected by COVID, but I think that hopefully is also behind us. If I could squeeze in one more, I think it's been asked a bit, but just if you could maybe give a bit more color on the guidance for the full year 2022, you know, implies if there's stable, you know, or comparable margins for the full year to last year, then you'd have quite a significant margin uplift in the second half, around a 28% EBIT margin, which seems quite demanding and you haven't had that in a very long time, such a high margin. Maybe if you could give us a bit more of the drivers of that high margin uplift. Yeah. What I mentioned or tried to say is that, I mean, we have a significant better sales forecast for the second half. It's very important that we do not grow overproportionally to that on our COGS and also on the other functions like G&A and M&S. With that, every additional Swiss franc should have a higher impact percentage-wise than the existing business. There, we expect that it's possible with the economies of scale, so with the volume that we can produce at more or less the same cost base, that we have an important contribution to the EBIT margin. Thank you, Alain, for that. Let's take another question from the chat from Antoine [Diserens]. There are three questions here. I'll try to cover them briefly. One, can you specify your growth guidance? Is this in local currency? So a quick one probably for Alain. Then can you explain why you implied path to EBIT margin ahead of 28%, way higher than your past H2 margins? I think, Alain, you just covered that one. And then are there some adjustments backed into your results? Maybe quickly cover this. Yeah. The first one, it's in Swiss francs, so it's a reporting currency with that we guide. The second one I just explained from the question from Tanya. On the third one, no, there is nothing baked in our results. Next question from the call raised hand, Daniel Jelovcan. Please make sure you press the unmute button. Yeah, now we should be able to hear. Hello? Daniel Jelovcan, you are unmuted from our end, but you have to unmute yourself. There should be a button popping up. Doesn't seem to work right now. Let's just take the next one. There's a Sibylle Bischofberger then, while we're seeing Daniel Jelovcan, please then. Otherwise, if it's not working, use the chat function. We'll take Sibylle Bischofberger in the meanwhile. Thank you very much for taking my questions. Most of the questions are answered. I have a few more. You said sales guidance is in Swiss franc. In the first half, you had 1.2% currency effect, a positive currency effect. Could you tell us how much you expect for the full year on the top line? Secondly, the sales decline in the U.S. was very strong with -27%. Could you give us more color why, especially in the U.S., the sales development was so weak? Thank you. Yeah, okay. Maybe I'll take the second question first. It's correct that the development of the U.S. sales numbers is not very pretty. There are many reasons behind. The main reason is that there are slower product launches, and they are affecting those U.S. customers. Those launches might be worldwide, but they were somewhat delayed. The second thing that's very important to us and everybody at Bachem, the U.S. market by itself remains very attractive. We see many good customer interaction there. We see many early-stage projects, so we really don't see a structural weakness of the U.S. market. It's just a few individual situations that came together and one in addition for this year, and this was very specific, is that one invoice address changed. We shipped the material not to the U.S. anymore, but to Europe, and that triggers a change in our accounting practice. I think it's really a coincidence rather than a structural situation for the U.S. I'll take the other question. Yeah. That would be great. On the FX. I mean, when you compare now the dollar at the moment, which is a substantial part of our sales, we expect that the currency rate is at the level for the full year where it is today, so about around 95, U.S dollar to Swiss francs. Compared to the last year, where the full year we had 91, so the increase, it will also be in our numbers by year-end. I still expect a positive impact there in the second half of the year, but it's not a substantial amount in relation to the net income or to the margins. Okay. Let's try Daniel Jelovcan one more time. Daniel, try to ask your question. Let's see if we can hear you. Not working for some reason. There we go, but I see your questions here. Question, Daniel Jelovcan. I'll read them out. Can you provide a bit more details on the product mix impact just because CMC Development grew stronger than commercial, which has a higher margin? Question mark. Then the question, last year were involved for FDA approvals, what about this year? And the question whether the security loss was on equities. First two to Thomas Meier and then the last one to Alain Schaffter. All right. The product mix, I'm not sure how I can read this question. We see very strong demand for development projects. That means we have many projects coming toward us and some of them in the later phase that generate a lot of revenue. This business by itself is somewhat more uncertain because it waits for clinical data and also in our manufacturing process, sometimes we have surprises. Those surprises are they are not always positive ones, and so they create costs, they create planning uncertainty. All this mix of replanning, additional costs, investigations that get passed on but maybe have a little bit of a less attractive margin really influences the margin picture. Whereas in commercial manufacturing, you can crank the handle, as we say, and that makes it for better plannable business, a more commodity-like business, if you like. I think it's those effects that we have seen in the first half year. The second question was on- Approvals, whether there's anything to say about approvals? The approvals. I mentioned the four approvals last year, and the four approvals I mentioned last year was for illustration that the FDA was still approving Bachem, even if they could not visit. We don't disclose approvals for the very reason that it's not helping to. For transparency, I'm convinced. I can say that approvals are going according to plan and we are waiting for the next ones and overall the peptide field especially is having a very good year. I think that's very clear. I think there was one last piece on- Security ...losses for Alain. Yeah, I can take that one. The loss was on bonds and also on equity shares. You can see the difference in note 11 of the half year report. Both categories were affected by the unrealized loss in the first half year. Okay. Let's take another question from a raised hand. Andy Schneider. You should be able to speak. Yes. Thank you. I have just two clarification questions. Basically, the same two questions Daniel asked before. Thomas, just to be clear, you said that the new margin guidance is due to macro inflation and supply chain risks out there. Would that mean that the underlying dynamics of the industry, the economics, your order book margins, your outlook on your pipeline, the competitive environment, all that, has not changed? You changed the guidance because you see more general risks. Is that correct? I think both are correct. We see more general risks and we see a very strong economic outlook for Bachem and for the whole industry. It also carries its costs, and I think we have felt that too in many aspects in the first half year. It's like bringing those new people on board, educating them, making them understand how we work. It's not a small feat. If you look where we are coming from, we were somewhere around CHF 300 million. We are now solidly above CHF 500 million, and we foresee to double that again. It will carry a certain cost and that might be somewhat starting costs or accelerating the business costs. I think it's that component that we also clearly see, and maybe we see that a bit more clear than one year ago. Okay. If I read you correctly, that means that the 30% floor and the general dynamics of becoming bigger and increasing margins by becoming bigger are still intact, but as the expansion is so appropriate and over the next few years, the margin can be a little bit volatile and tends to the 30% floor. I think you put it in very nice words. Okay, perfect. Then, an add-on question on the COGS. The headwind you saw there, 330 basis points. Am I right assuming that as you expect the margin to recover for the full year with the commercial API business rebounding, that the vast majority of this headwind we saw in H1 of this 330 basis points is really from mix and inflation is not really a big topic as you can pass it on? I think that can be correct, but we have to be mindful about inflation. I don't believe it's over and the pressure on salary, it's out there. Okay, perfect. Thank you very much. Okay. Question here from Dario Schubiger in the chat. I think it's two. Go to Alain. If you could quantify foreign exchange impact on margins in first half of the year and what you would expect for the full year. And then if you could elaborate a bit more on 2022 margin guidance. I think we covered most of this. Outlook implies, yeah, 33.3% EBITDA in H2. What would be driving much better margins? I think we covered that one already, but sorry, foreign exchange impact, if you have anything to add on 2022. I think we covered that. I mean, the impact on the margin you see in the table we have in the media release. We benefit this year from the change in the rate with the US dollar. I already mentioned what we expect for full year. Yeah. Let's take another question here from a raised hand, Konstantin Wiechert. There is his hand. Konstantin, please, we're unmuting you now. Please go ahead. Yeah. Hi. Thanks for taking my question. Basically most of them are answered, but when we look at the COGS, I'm also thinking a bit about energy costs. Maybe you can elaborate a bit how much that is affecting you right now and maybe also what you expect for the second half and also for 2023. And then on your Building K, just to remind me really quick, is that or do you expect the ramp up to begin in the first or in the second half of 2024? Regarding that also, what Andy just asked a bit in this direction, regarding new employees, do you think that this might then impact potentially margin in the end of 2023 or beginning of 2024 as you have to hire more employees before really being able to use them, which is kind of a bit the problem that we heard from PolyPeptide last week as well. That would be helpful. Thank you. All right. Yeah, the energy costs, we can see an impact there. They're rising and, we try to pass it on as good as ever possible. We are not heavily dependent on gas, but we see the electricity as probably our largest risk and we are in contact with the local authorities and try to work out diligent plans how we will react if there's an issue in winter. The second one was Building K. Building K should go into operation in the first half of 2024. There remains uncertainty about construction work that we see some delays of equipment components. I hope this will not hit us very hard, and I really thoroughly hope that we be over those difficulties pretty soon, that it will clean up what we have seen in terms of delayed materials, equipment and increasing prices there. The last one was hiring of the team. The plan is in place for starting in 2023 to hire those people. They also need to then take this new building into operation. That's not a small task. We like to have them on board as quickly as ever possible. I think we work on two things. We wanna make sure that we hire the best talent in the industry, and we also wanna make sure that people like to work at Bachem so that they don't leave us. That should help us grow the company sustainably for the future. I've got two questions here in the Q&A slot. I'll take them together because they're pretty much similar. One is from Carlos Morgano, how material could tirzepatide be for you? We have one here from Anas Wantul] about whether we're the exclusive producer of tirzepatide. Thomas, maybe you could say something just about your thoughts on tirzepatide, given that this is a recurring topic in the market. Thank you very much. It's a good question. Tirzepatide is certainly a very important drug for patients out there and also for our industry. As I mentioned, it's synthetically manufactured and I think everybody is needed to meet those volumes which are required. That's my take on it. It's substantial for the market, and I think everybody works on it. We probably have one, max two more questions that we can cover. Let's take a raised hand. One more raised hand. Alessandro Musati, you should be audible now. Alessandro? We can't hear anything. Let's just take another raised hand, Florian Töpfl, in that case. Can we get Florian Töpfl online instead? Yeah. Please go ahead. Hi. Yeah. It's Tobias Schulte, but I'm joining the- Oh. The line with Florian Töpfl. Sorry. Maybe one or two question. One is this product launches delay in the U.S. I was wondering, is there any particular common reason for it, or is it just by chance that it was happening more in the U.S.? The follow-up question is a bit of these macro uncertainties which you mentioned that somehow I thought you to interpret it that you see some impact already. Now, I was wondering a little bit, what is the mechanism which is working here on the business? Maybe a third and more strategic or a competitive question, being mainly positioned in Switzerland, do you see it as an advantage right now, or is it more challenging in regard of the Swiss franc and, but on one side, the Swiss franc, which is strengthening, but on the other side, you are probably less impacted by this inflationary pressure as many other competitors which are outside of Switzerland. A little bit here, maybe what are you hearing or what you are thinking on this point? Thanks. Thank you for your questions. The first one, why is it America first for this somewhat delayed launch is, I don't know. I think those are products where the physician talks to the customers or the patients and they are harder to introduce without a personal contact. I think that was hampering some of their initial plans or ideas. However, I feel, and that's what this is fading away. The second question, I have a hard time to remember, Daniel or- I recall the one on Switzerland, but that was probably the third. Maybe you can- The one about Switzerland. Yeah, I can take that one first. We like to work in Switzerland mainly for quality reasons and knowledge of workforce. You're right. Sometimes you pinch yourself and say, "Wow, where's the Swiss franc?" We are still profitable. The Swiss franc is certainly a drag on. We whenever possible try to close agreements in Swiss franc so that we don't carry the currency risk. [crosstalk] The salary increase pressure is a bit lower and right now this plays in our favor. The second question, yes, please, again. Yeah. The second question was a bit around the macro uncertainties, where I thought you have already some signs that you are seeing some impacts here, and I was wondering how the mechanism works on Bachem business in terms of these macro uncertainties. Yeah. I mean, somebody asked a question about what's with electricity in winter. So that is a certain uncertainty that we probably can't get rid of. Then what we have seen is partly really substantial increases in input materials, which I don't really know how they can be justified, but they are there and we try to pass them on and we also try to shield us from such movements in the future. As I said, I think this in theory at least should resolve within the next couple months or years. I don't understand why we have spikes in basic chemical solvents pricing. It just is beyond me. I think as something like this happens, it starts and everybody bakes it in and then it kind of continues by itself. We just need to break that and I'm sure it will happen. Okay. The question is when. Thank you, Thomas. Thank you, Alain. Thank you everyone here on the call for your questions. We're at the end of the hour that we slotted in the calendars. For those of you who haven't yet registered for our Capital Markets Day, would like to do so, just a quick reminder, the registration link is in the chat. Also alternatively, you can just send us an email to ir@bachem.com. If there are any follow-up questions that you felt weren't answered or tackled that are either urgent or like to approach in the next couple of days, please shoot us an email with those as well. We've tried to cover as much as we could with the large interest that we have on this call. Obviously, the standard disclaimer also holds valid this half year as in all others. Very much look forward to further engagement conversations over the next few days, either directly with us or then certainly in Zurich for Capital Markets Day on September twentieth, live in person and/or via Zoom. Thank you very much everyone, and have a lovely afternoon and remainder of the day.