Hello, welcome to the 2003 half year results session at Bachem. My name is Daniel Grotzky. I'm the Head of Group Communications at Bachem, and I will be leading you through this call. Before we start, two quick notes with regards to housekeeping. For one, we will have a Q&A session at the end. We will ask you then to use the raise your hand function so that we can hear your question, and I will be repeating that at the end. The other point is that this call is being recorded for a replay on our website, that will be available to you in the next few days as well. With me today are Thomas Meier, the CEO of Bachem, and Alain Schaffter, our CFO. Thomas will take us through the results of the first half of this year. Alain will then provide the financial perspective, and Thomas will then spend a few words on the outlook going forward, and then we should have ample time for your questions after that. With that, I am very happy to hand over to Thomas. Thomas, please go ahead with your remarks. Thank you. We are gonna look now at the half year, and I like to do that and give you some perspective where we are and what we are gonna achieve in the future. Certainly know that you are aware that our main focus is on the full year. With that, we see that in the first half year of 2023, we had sales of CHF 239.9 million. That's a plus of 2.1% in Swiss francs, and in local currency, that's a plus of 5.3%. The growth was mainly driven by a successful commercial API business and resulted in a profitability of EBITDA of CHF 52.5 million, which is 21.9% of our sales. You see that there's some pressure on our margin. This pressure was exerted mainly by the hiring of new colleagues that we need for the future, for the growth of the company, and to serve our portfolio. Our portfolio is very strong. We have a strong CMC pipeline with very important assets in there, and that continues, even if we see some headwinds from financing of biotech companies and smaller companies, that is more challenging than in the past. As mentioned, the API, the commercial APIs, were going very well in the first half year. They made the first half year, and Research & Specialties, we have some reduced sales also because our capacity was limited in some instances. We build on for new capacities. We had a capital increase, approximately CHF 105.9 million. We used that money to expand our capacity with a new building in Bubendorf, Building K. Also our workforce, we are now 1,926 full-time equivalents worldwide, that's a net plus of 150 full-time equivalents. If you look at the pattern of the years, we see that the second half of... was almost always stronger than the first half or always stronger as the first half. We expect the same for 2023. On this slide, you can also see that 2023 was actually the strongest first half year we ever had at Bachem in terms of sales. If you look at the product categories, I touched on a few of already. We see the commercial APIs with a plus of 15.4%. In local currency, a really strong showing and the CMC development at level compared to the first half year in 2022, and a decline in Research & Specialties. The dynamics are also explained on the next slide, where we see that, for CMC development, we see very strong peptide and oligonucleotide projects in our pipeline, but at the same time, we also had some delays, because biotech funding was harsher and, some project got delayed. Mainly, I, I think they, they're gonna come back, but for the moment, they, they're just a little bit paused. Commercial API was broadly successful. We have seen an increase of sales in patented APIs. We had very good generic sales, and we were also able to pass along the increase of incoming materials and energy and labor cost to our customers. The headwinds here for the patent products are the oligonucleotides. We mentioned that previously, that a approved oligonucleotide had lower demand than originally expected. Research & Specialties, I mentioned capacity was a bit of an issue. That's why we're expanding, to have more capacity ready for our customers in the future. The geographies, both Europe and America, were successful, and also here you can see the influence of the currency. We are running against the stronger Euro, stronger yen, and the stronger dollar, so the local currencies are always stronger than the Swiss result. There's not much we can do. We accept that and come up with 2.1% increase in sales. With that, I pass it on to Alain, who's gonna give you the detailed numbers. Yes, I'm glad to talk through some details about the numbers from the first half year, starting with the key figures with the table. Thomas talked about sales and EBITDA, but also on EBIT, we had a drop due to the higher depreciation from the large investments we did in the past. On the net income, we have achieved that we are more or less stable, and the main impact there is that we have achieved this year a CHF 2.1 million net income from the financial results, versus last half year of negative CHF 11.2 million. There is the impact on the net income. The earnings per share slightly lower. That's because they are diluted from the capital increase that we did in March this year. Very positive on the cash flow from operating activities, we see a CHF 44 million higher cash flow than in the first half of 2022. Talking about EBITDA, what are the drivers in this number? We start here with the first half year 2022 EBITDA of 28.7%. We see a drop in COGS. There is a 510 basis points impact, which is mainly driven by the higher personal expenses from the new colleagues we hired, which are still on the onboarding and training phase. On the marketing phase, we have been able to keep those costs stable. On the R&D, that's our own R&D, that's the patents, that's process improvements. We committed to invest there. It's the future for Bachem. We will invest there also in the future. There is a 140 basis points lower impact from R&D part. On the G&A, we are a growing company. We have filled some positions that we need for the future with a slightly 40 basis points reduction in the EBITDA margin, which ends in the 21.9% margin for the first half year. We have in the U.S., maybe you have seen that, a CHF 1.5 million, one-off non-recurring payment from the reorganization. Without that impact, it would be a CHF 22.5 million EBITDA margin for the first half year. Talking about the cash position, I said we have a CHF 44 million higher cash flow from operating. On one hand, we have reduced our accounts receivable by about CHF 39 million. That's the main impact on the asset side as an income. To be able and have the right material to produce and to deliver our material on, on time to our customers, we have increased our inventory by CHF 38.7 million. We have been able, with our customers as a partnership, to increase our prepayments by CHF 44.5 million in the first half of the year. That's the commitment for our working capital, but also for our CapEx from our customers. This leads up in the CHF 94.7 million operating cash flow. We have used that, one hand, for CapEx. It's a CHF 126.7 million that we have spent cash out for CapEx. This is higher than the operating cash flow, so we also sold securities in the amount of CHF 58 million during the first half of 2023. On the other hand, we did the capital increase in March. We closed that with a net cash income of CHF 105.9 million, and we paid out, by the end of April, the dividend of CHF 56.2 million. This leads in a net change in cash for the first half year in 2023 of CHF 77.2 million. Balance sheet, two main numbers. We have the working capital on the left and on the right, equity. In the working capital, we have, by the end of June, CHF 289 million cash or cash equivalents on hand to support our growth strategy. On the other hand, mainly impacted by the high prepayment from our customers, we have been able to reduce our net working capital by about 36 million Swiss francs in the first half of the year. On the equity, as mentioned, the capital increase led to a equity of 1.3 billion Swiss francs, which is to raise a ratio of about 83% by the end of June this year. My last slide, talking about CapEx. We see we have 114.6 million Swiss francs in investments in the first half. 101 million Swiss francs out of that is for capacity increase, so it's a second plot of land in Eiken for the new site. But it's also the buildings, the Building K, and its equipment all over the world at all sites. On the depreciation, as mentioned, we see an increase there compared to last year's. That's because of depreciation of many equipment and capacity that went online also over the past few months. It's very important that we have this CapEx. It's increasing the capacity that is needed, and we're talking about capacity and growth of the company. I'd like to give back to Thomas to talk about the outlook. Thank you, Alain. I'm gonna lead now through the outlook, as you can imagine, it's a positive outlook. We're investing in our team, we are expanding our capacity, this is all driven by market dynamics that we think they are quite brilliant. They are looking good. On this slide, on the left side, you see a positive trends we see there, first and foremost, it's a trend to larger volume sites, larger volumes of oligonucleotides. We are entering a new era for those modalities. Both of them are ramping up in a really high therapeutic areas with high demand, so we are be producing tons of material for the future, that is a substantial change of what we have experienced over the last 50 years. This comes in combination with our CDMO offering, where we use our technical pros and technical skills and the very high demand over both modalities. It is rewarding to work with teams. For example, we had great success together with Lilly for a technological improvement for the oligonucleotide manufacturing. The therapeutic applications are also broadening up, so it's cardiovascular and, plus, of course, there are also other indication are moving forward and certainly gonna have great approvals in the coming years. On the right-hand side, the risks or challenges, and be clear, so success is coming, competitive dynamic are moving in superior, for example, in the oligonucleotide space. We are alone, but I think we are, we are very well to our journey. This because we need to be top priorities. It's for the first from somewhat a niche player into a main modality for the pharma industry, larger quantity, this transformation is certainly that is gonna important for the future of the future success of the company. We're gonna continue to have a smart portfolio selection, but to have the largest pipeline, but we wanna have better. I think we have been successful in the past, and I remain very optimistic that we're gonna continue that journey successfully. This all is based on our focus on tight expertise, tight expertise that is the best of the industry and continues to be fostered by our process, R&D, and our day-to-day work. Now, two examples of our capacity increases, the large Build K here in Bubendorf. We're working with full commitment, makes an ambitious timeline, we are successful in expanding the equipment that's built in there, also our workforce in Bubendorf that was very successful in the first half year of 2023, we will now reduce the pace somewhat in the second half of 2023. We have contracts already signed for this building, we are educating now the teams, we're gonna start manufacturing for those contracts in 2024. Following Building K, we'll expand in Sisslerfeld, in northwestern part of Switzerland, that project is running according to schedule. We started our planning project, we continue to believe that we need this operational at the end of this decade. If you look at our operating models, I think we have three within our company. The one on the right side is the trailblazing CDMO. That's where our process research is happening and where we introduce new techniques, new chemistry, new equipment for the first time. Then in the middle lane, the blue one is the CDMO, where we cooperate with pharma companies. Those two, I think they have been around for a very long time, but what we are now going in with full force is the contract manufacturing, where we produce larger quantities, higher volumes, and that part also according to processes that are brought to us, that are property of somebody else. We see benefit in there. We see high demand, and we're gonna transform our organization to be a professional in all three operating modes. That's what's happening right now. Like every transformation process, it comes with its own challenges, but it's of course, also very rewarding to see that we are getting better every day and are successful in all three operating modes. I think that's the slide that leads to the outlook in numbers. For the full year of 2023, we see high single-digit growth in local currency and a profitability around 30%. By 2026, we believe we are ahead of CHF 1 billion sales, and we're gonna improve the EBITDA margin again and believe that we are above 30%. With that, I think it's time for question and answers. Thank you very much, Thomas. Thank you very much, Alain. We are indeed going to the Q&A part. I see some hands already raised. Let's start with Daniel Jelovcan from ZKB. Daniel, please make sure you're unmuted, and proceed. Yes, thank you very much. Can you hear me, gentlemen? Yes, we can. Great. Perfect. Maybe starting bit on the short-term picture and looking at your EBITDA margin guidance of around 30%. If I do the math and even adjust for the, for this one and a half million, one-off, you would need, like, 35% EBITDA margin in the second half to get to 30% for the full year. Looking at my model, I have never seen Bachem having such a strong margin in one half year, basically. The Swiss franc becomes even more of a headwind. I mean, maybe to you, Alain, how can you get to 30% still on a full year basis? Maybe also bit related to that on the 2026 guidance, I mean, you're saying still more than CHF 1 billion revenue growth, and also 30% or above 30% EBITDA margin by 2026. How much headroom is left in this guidance for FX headwinds? I mean, this year, according to my model, you're gonna lose 5% revenues because of that. At some point, CHF 1 billion might get ambitious, and the same for margins, given how FX sensitive you are. That's my point. Yes, thank you, Daniel, for the question, and I understand your concerns about that, but we have done our forecast. We have done some measures. One was the, in the U.S., the reorganization, and we see that it's possible, based on our models, that we can achieve the 35%, where your math is totally correct, and are convinced that we can make around 30% EBITDA. It's also the economy of scale, it's about the efficiency we're gonna achieve and the savings for the reorganizations we mentioned before. On the future, in 2026, we plan now with U.S. dollars since June already, again, dropped, but we still see with that currency rate that we can achieve the 2026. Okay, thank you. Alain, let's take questions from James Quigley, Morgan Stanley. James, please unmute yourself. I have to take your question. We're not hearing you yet. James, we're not hearing you. We'll take you in... Can anyone else-- No one can hear James? Okay. Let's go to the next question. Oh, James, don't worry. We'll, we'll try you again in a moment. Vineet Agarwal from Citi, please go ahead with your questions. Do I have Vineet? I'm looking at our... Is there a Vineet? Hello? Yeah. Can you hear me? There we go. There we go. Yeah, here we go. Great. Look, first, coming back on revenues, I mean, you have flagged some headwinds, right, from early stage services and continued commercial volume pressures in your oligo business, and now you're flagging some, you know, increased competition as well. I mean, I'm just trying to understand, what are the puts and takes for that over CHF 1 billion sales target? I mean, if I take your CHF 220 million CapEx for Building K phase one and assume a one is to one sales to CapEx ratio and a full ramp by 2026, and maybe even some revenues from the ramp of phase two in 2026, you still need more than CHF 200 billion revenues to meet that target. I'm just trying to think if you can, you know, walk us through that bridge. Then on margins, I think most of the improvement is gonna come from the gross margin, right? Now, you said that you had about 16% increase in your staff in first half. Now, I'm assuming that increase is not sitting in your second half base of last year, right? I mean, we are just struggling because I think what the implied guidance for second half means is that you are probably looking at a COGS base, which is almost flat on a YOY basis compared to the second half of last year. Yeah, I mean, if you can share any more color on that, that would be very useful. Thank you. I think first question goes to Thomas with regards to drivers for sales in the medium term, based on the 2026 guidance, and then the second one is probably for Alain, with the margins. Vineet, thank you very much for your question. I understand that it looks a little low for us to CHF 1 billion. I can confirm that based on the forecasts and the contracts we have, we believe firmly that we can reach the CHF 1 billion by 2026. Of course, it's important that we now execute seamlessly on our capital expenditure projects, and that by itself is a challenge. Also we need to bring the teams in and grow the team, that they can successfully work on this equipment. Also keeping very much that we go to larger volumes, it will be larger projects that deliver this additional growth. For the margin, I think Alain already touched on that, and I would just echo that, what he mentioned. We're gonna have a positive impact of the reorganization we did in the U.S., and we see in our numbers that this ambitious goal of around 30% is possible. I don't know, Alain, you have all those numbers in your head. You want to reinforce that or leave it there? Maybe to mention, when you do the calculation with the, the guidance minus what we have in H1, there is a sales forecast for the second half, which will have a positive impact, what I mentioned from the economy of scale and of cost absorption that we have right now in our organization. We did really the forecast, based on a bottom-up detail level, and we see this is achievable. It's not a walk in the park, of course, but it's based on our measures we have taken. It is possible to achieve this around 30% EBITDA. Sorry, if I can follow up. I mean, what sort of, what sort of recovery are you assuming in your development segment? What sort of, what sort of recovery are you baking in for Research & Specialties? Because if, if I were to assume these both segments decline in line with our first half, that would probably imply sort of 25% constant exchange growth rate for your commercial API business in the second half. I think we don't want to break out the product categories forecast. We give you the overall forecast we have, and give you the segments for the full year when we talk to you again. Thank you. I'm sorry. Okay. Let's try to see if we can get James this time. James Quigley, shall we try one more time? Hello, can you hear me now? Yes. Here we go. Lovely. Thank you very much. Part of my questions were asked in the last question, but just to maybe drill a bit more into the margin movements for next year, could you quantify the cost savings that you've made in the U.S. and the restructuring? That'd be great if you could give us an idea of that. Secondly, on oligonucleotides, you mentioned that you're unlikely to hit the CHF 100 million target this year due to a commercial drug. Is that to do with purely just the demand of that drug? Or is it to do with phasing of inventory buildup, and this year you have lower requirements? Is it due to things like insourcing for, from customers? When should we now think you could maybe achieve that, that CHF 100 million target for oligos? Thank you. I will start with the oligos. James, thank you for your question, and it's correct. We don't see that we can reach the CHF 100 million in the short term right now. At the same time, we can confirm that our oligonucleotide initiative for antisense and small interfering RNAs is going very well. It's going according to plan or even slightly better. It's just not possible to compensate for the reduced commercial demand by those development projects we have pipelined. The development projects are above the entire spectrum of the pharmaceutical development. We are very positive that our collaboration with late-stage assets and large pharmaceutical company will bring us growth in the future. We are happy with the initiatives that in that way. I think I answered the question, too. Savings for the second, Perfect. Thank you very much. I'll take the next question from Laura Pfeifer from Octavian. Yes, hi- There we go. Good. Can you hear me? Maybe quickly on the midterm guidance, I think you have modified somehow the wording, and you were speaking specifically about 26, I think also on the margin. I'm just wondering if you could comment maybe a little bit about the evolution of the profitability in that time frame, until we get to this year 26. How should we directionally think about it, and what are the drivers and also the potential margins, margin headwinds that we have to consider? Then maybe the second question relates to this new large-scale contract you have for customer A. I'm wondering if you can talk here a little bit, maybe about the upscaling process, how smoothly things are progressing, and what will be, you know, also here, the impact into next year. Thank you. I'll start again with the second question. I think that was about the contract with Customer B, if I'm not mistaken. Customer A. Customer A ramp-up, right? Customer A, ramp-up for Customer A. Yeah, well, I'm confused. The development should be with customer B, if I'm not mistaken. No, I was referring, to customer A, sorry, the ramping up of the new large-scale contract. Okay. That is fully dependent on our capital expenditure project here in Bubendorf. As I mentioned, we are working against a challenging timeline, and we go as quickly as we ever can. There are uncertainties involved. Like everybody knows, if you execute such a project, and we remain optimistic that we will be operational as planned in 2024. Other question, or is that cool, Laura? It's okay? I think so. It's true that you still expect CHF 25 million revenues for related to customer A to be booked this year. Is this still the case? We don't break, single customer results. That's all I can say. Okay, I go back to question one about the margin, where we say 26 ahead. It does not mean that we are not ahead of 30% in 2024 or 2025, but it's challenging time. We, in general, do not change our guidance. We just split out the midterm 26, but our target is to achieve the 30% as soon as possible, and being higher and taking 30% as a floor with upside potential. Okay. That's clear. Thank you. Okay. Thank you. Thank you, Laura. Then, Daniel Jelovcan wrote me that he does not have an unmute button, but let's try to see if we can take your questions anyway. Hello? Yes, it works. Perfect. Sorry, the unmute button just popped up. Thanks. It's fake. It's okay. Good. Sorry, I had troubles to log in, so I missed the first 10 slides, so maybe you have already commented. On the U.S. restructuring, you mentioned in the press release that you changed the project portfolio. I have no clue what you mean. Can you be a bit more specific? First, we just aligned our team and our skill base to the projects we see coming there in the future. We have a very clear program for the U.S. sites. We have a development pipeline and a mid to large-scale manufacturing unit in Vista, and we want to make sure that we have the skill sets needed, because we see high demand for peptide manufacturing there. I think that's what we wanted to do and what we are doing. It's not related to to, let's say, an American customer who produces a peptide, in Bubendorf, right? Yeah, we are clearly having a network strategy for the group. Projects are shifting around, and quite frequently, we see projects building up in the U.S., and at one point in time, they get shifted to Switzerland. Right now it's really to focusing again on peptides in the U.S. I think that's, that was our initial momentum or impulse we wanted to take. The second and last question, if I may. What I don't understand is that you once said that for the first half, you were really, you know, running with a full capacity. That's why you didn't add more growth. Now with the guidance, you will have at least CHF 100 million more sales in the second half than in the first half. Just to understand that, how is that possible? Maybe it's related, that you have already produced some batches in the first half and will book it in the second half, or how can I better get these things? Yeah, that, that's right, Daniel. It might be a little bit counterintuitive, but we did, we built up our teams, and we're gonna run our equipment for longer hours with stronger teams. The second idea that we had some things produced already, that they are work in progress and are not yet sold, is also correct. I think it's the combination of those two effects, whereas the real jump in revenue will be with new capacity in the new building. The new capacity comes online. 2024. In spring, right? You said once. Yeah, that's, that's certainly an ambitious goal. Okay. Thanks. Okay. Thank you very much, Daniel. Next, question will come from Tanya Hansalik. Can we have Tanya on the line, please? Hi. Yes. Hello, can you hear me? Hello, yes, we can hear you, Tanya. Great. Yeah, most of my questions have been answered, but maybe just a few more. One is on the 2023 sales guidance for high single digit growth. I want to clarify, since there is a quite an FX headwind expected for the second half, is this in Swiss francs or local currencies? That's one. Two is: do you expect any more one-time costs for the efficiency programs at the U.S. sites in the second half? I think it's in local currency. That's what we can control more or less. We don't have any one-offs for programs as we speak right now. Okay. The next question would come from Sisa Aga. Haven't heard from Sisa Aga. Thank you very much, gentlemen. Many of the questions have been answered. Just to make sure, the question of Tanya was, your sales guidance for 2023 is now, I understand, in local currency, because before I expect it to be in Swiss franc, and then about a very strong negative currency effect? That's my first question. It's a local currency. Thanks. If you start production of the Building K, let's say in the second half, is it fair to assume that the sales generated with the Building K will be very late in the year, meaning it will not too much influence the 2024 sales and more to 2025? Will there be meaningful sales generated in this building already in 2024? That's a, a very smart observation. The sales from Building K will certainly be to the large extent, in the second half of 2024. It depends when this building will be operational. I mean, we're gonna start the part of the building. We don't start the entire building. That's also important to bear in mind. As I said, we against those times, and we hope that there's something happening, that's meaningful in 2024. The other thing is that you have to invest strongly in CapEx for your plans. I would like to understand how much CapEx you invest in 2023 and 2024, because you had an increase of capital, and you have to finance everything. In the same time, you're increasing stock. Is it fair to assume that in 2023, you will have about CHF 200 million at the same for 2024? That's my next question. Yep. Thank you. Yes, I think your assumptions are correct. We expect more than CHF 200 million this year, and we are also investing now, starting to invest in Sisslerfeld. Both years, more than CHF 200 million is not a wrong assumption. Yes. Thank you very much. Okay. Thank you, Sybil. let's hear from Konstantin Wicha. Konstantin? Yeah. Hi, thanks for taking my questions, maybe also a bit remaining on the midterm outlook. If we look on into Building K, I think then over the next basically two to three years, you also expand the second stage of the building. Maybe then also regarding your updated midterm guidance, now only in targeting above 30% by 2026, how much more employees would you need to also be able to serve the second expansion phase of Building K? Is this then maybe a driver for still somewhat more muted profitability that could occur in 2024 or 2025? Is this then a lower extent and therefore shouldn't have such a high impact as we have seen currently? Okay. I'm not quite sure I understood the question fully. We will hire more people as more capacity comes on stream, we guided for 2023 with a pretty precise EBITDA margin we expect. We told you in the long run, we are targeting to be above 30%. As the years progress, we will give you an update with the half year as we do and as we see the picture. I think we cannot give any more granularity as that. I must ask you to call it in again. I think that's all I can say. Yeah, sorry. Maybe, just let me rephrase it real quick. What I was hoping to get some more color on is how much of basically the employees that you're hiring now are only or only enough for the phase one now? Also, are you already training staff for the second expansion phase then as well, or would there be another need for larger hiring wave in the next years? I think the second expansion should get productive in the middle of the decade. Right now, we're hiring for the first expansion, and the hiring is always staggered so that we don't have too many hands in the team. That's a continuum that we're gonna see for the years. Okay. Thank you. Yeah. Good. Thank you. You're welcome. Alain Trétal? Alain, please unmute yourself. We're trying to hear you. I'm gonna try again in a moment. While we're, we'll take Andy Schneider then. Is that Capital? Andy Schneider. Yes. I have a question for Alain regarding depreciation and amortization. With all the investments, it's quite difficult to have good estimates here for the next few years. Maybe you can help us here a little bit. What should we expect for this year, next year, and probably the year after? That would be helpful. Yeah. We had about 17.7 million as a staff. You can expect that it's more than double this year, I have our office building here in Bubendorf be coming on, or we move in the third or the fourth quarter. I would say it will still be around 7%, 6.5%, 7% maybe this year on the upper end, 7% of the total sales, where we will end up right now, what we see. In the future, yes, of course, as soon as Building K goes online, there will be a huge portion that will jump in the depreciation. Of 2024, my model still is the same, it's about 6.5%-7% of total sales when we are growing in the future. Okay. The ratio will not materially- Will not change. Okay, perfect. If Excel is right, it doesn't change. The second one is, again, regarding the guidance. If I understood you correctly before, it's at least 30% for 2024, 2025, 2026. Not another around 30% year in the next year? Maybe I think I said it's the target, at least 26, is ahead of, and we want to be ahead of 30 already earlier than just in 26. There may be another around 30% year in 2024? I would not say no to that. Okay. Thank you. Okay. let's try to see if we can get Alain Trétal again. Alain, can you... okay. No? Unmute. Okay. otherwise, let's go into a second round of questions I have here from, from a couple of people. Vineet Agrawal, raise your hand again. Let's hear from Vineet. Yeah. Hi, can you hear me? Yeah. All right. First, how do you think about finance going forward, and do you plan to come back to equity markets? Maybe you could just let us know what% of your revenues come from early-stage services. Just maybe a last one, can you let us know what% of the cost associated with these expansion projects are capitalized versus expensed? I know you are hiring staff for phase of Building K, but how much of it is an expense versus capitalized? Yeah, if you can share any color on that, that would be useful. Maybe I can start with the financing and the capitalization of costs. On the financing, we have cash on hand, we have our operating cash flow, we still have credit lines with the banks. What we're not gonna do, there's also a strong commitment or an opinion that I will not go to the capital market again. It will be own or a debt financing in the future, if needed, for some reaches. On the capitalization, I mean, what is capitalized is the part of engineering and qualification of the CapEx. Internal, probably 10% of total cost is capitalized, which is, as I said, engineering and some other functions. The people who are trained are not capitalized. Yeah. Then there was also a question, Thomas, I think with regards to exposure to, to early stage, how much of the revenues are stage? Maybe our product segment for API development is what we consider to be the earlier stages. Once they get approved, they move to commercial. If the number there, on top of that, I'd have any additional numbers, and I'm gonna wait. Just to add on that, we publish the pipeline once a year at the full year mark. If you're with us, you can see a pipeline, how much products are in the phase. Obviously, you need to look at them, give you a guidance on the sales expert, but you can look at the pipeline from the beginning of the year. Thank you. Okay, raise hand from Daniel. Daniel, question. Yes. Can you hear me again? Yeah. Great, thank you. Maybe coming back a bit on the development in the CMC development, which, I mean, it's like a negative organic growth. Basically, is this to a large degree driven by the oligo business, or is also, the peptides business, the early stage products, do you also see there a slowdown? If so, and maybe for both businesses, is this rather just delays of projects or have also projects been canceled? We have seen, for example, from Lonza, relatively cautious comments on the, you always need potential in terms of is that also a pay currency or pay, I don't know, some others, maybe in Danish krone. I mean, how are the payment? All right. Well, first question, slowing down in our... It is still going very strong, and we're working against a very strong first quarter for a API development, where we had actual volumes for toxicology there. Overall, the pipeline developed as we had expected. We see, and that's also a fact, outside of the cardiovascular and weight loss area, there are some smaller companies that are having difficulties at time to fund themselves, and then they call in and delay some of the... as everybody took slot that they could get, and right now it's, it's a little bit softer if, if you want to sell something. We remain very, very happy with what we are achieving and optimistic that those assets we have there also are good selection of the pie, but out in the market is successful. When it comes to currencies, we all were Swiss franc, and we try to sign our contracts in Swiss francs, and sometimes we are successful in that and sometimes we are not. I think that's all I can say. Okay. Thank you very much. We're also second questions. Thank you very much. First, you doubled R&D in the first half. Is it fair to assume that this is the new run level for this year and the next years, that you are spending much more than in the past? I think what we want to do is, and I think Allen alluded to that, we wanna cement our leadership position by running our own process, R&D, and we see that it has a positive impact on our skill set, and so we're gonna continue to invest in R&D. I think this will slightly increase for the coming years, or the level we have seen this year, hoping to spend this year. Maybe I can add, it's about what we mentioned before. It's about 200 phase, what we want to invest. Thank you. The other thing is, again, Research & Specialties. Do I see this coming from this too? We give you a forecast as a for the whole business. We see it, and we don't break it down into segment. I'm afraid I cannot give you any more color here. Thank you. The last thing is then the oligo, the 100 million goal is a little delayed. Can we expect 100 million in 2024? I think I wanted to be clear there that in the short term, we will not reach that goal. I think we're gonna grow long term. Right now, this CHF 100 million seems to be a bit elusive, looking at the commercial demand, that's the problem. Thank you very much. Okay. Let's take Andy Schneider. Andy? Sorry, yeah. There we go. Sorry, I just didn't lower my hand. Forgot. Okay, fine. I think I saw an re-raised hand by Daniel Jelovcan. Yes, thanks. On this, commercial phase, I mean, there aren't that many products on the market, especially big ones. Is it fair to say that when you have a little bit less sales than you probably expected, that there is more in-house capacity or production by large pharma? Or is it probably more other CDMOs? I guess it's the first one, but can you share at least a little bit of my thoughts? I think it's relatively clear. It's just a product that is losing a momentum in the market, and that's why we are producing less. I mean, to speak it out, I mean, it's clear that [like Rio] is disappointing, so it can be related to. I don't want to comment you on a specific customer or not, but so examples like that, is that correct? I can just repeat, it's a product that's selling less than before. One product? Okay, thanks. Okay. Thank you, Daniel. Looking at the time, looking at the list, let's have one last question. Konstantin Wicha, you raised your hand again. Hi, thanks again. Maybe, again, one question on the currency. I would test that you basically try to sell in U.S. dollars from your U.S. site. Is this correct? Maybe, in as follow-up on that, due to the restructuring as well, you should have lower sales in from U.S. production base, and therefore, maybe in the second half, the Forex effect from U.S. dollar should also be then less pronounced than you would think, based on 2022 sales. Is that correct? Maybe these are best for Alain. Yes, I'm not sure if I could follow the math behind. When U.S. is selling, it's mainly in U.S. dollar. It's U.S. dollar only that currently, when you talk about the FX, that was lower second of last year. Yes, there will be still, but we don't expect lower sales in the second half because of the organization. Okay. No, good. Thanks. Okay. Looking at the time, I think we're going to close the call. Thank you very much for attending. If there are any additional follow-up questions, feel free to drop us an email. Now, we got through most of the questions, but I think the Alain, if you are hearing me, feel free to shoot us an email. Thank you very much for joining us today. Thank you, Alain. Thank you, Thomas, for the remarks and answers. Have a wonderful remainder of the day. How long that may be, depending on where in the world you are. Goodbye.