Good afternoon, ladies and gentlemen, and welcome to Orion's Earnings Conference Call and Webcast for the financial period of January, March 2023. My name is Tuukka Hirvonen, I'm the head of IR here at Orion. Like normally, today we start with the presentation from our CEO, Liisa Hurme, after which you will have the opportunity to ask questions either from Liisa or from our CFO, Jari Karlson. We will be first taking questions through the teleconference call lines And after that, we will then turn to the webcast questions which you may type in using the box below the screen in the webcast view. When you are presenting questions through the conference call lines, kindly please state your name and the organization you are representing before asking your question. Just before I let Liisa to take over, I'd like to draw your attention to the disclaimer regarding any future looking statements in this presentation. With these four words, it's my pleasure to invite on the podium, Liisa. Liisa, please, the stage is yours. Thank you, Tuukka. Good afternoon on my behalf as well, and welcome to Orion Q1 2023 Webcast. For the first time, Nubeqa darolutamide is now Orion's top selling product. There are news regarding Nubeqa lately. We started with Bayer a new phase III study called ARASTEP, and I will talk more about that later. We have received approvals for additional indication for the metastatic hormone-sensitive prostate cancer in Japan, European Union, and China. Year 2023 has largely started in line with our expectations. Net sales was EUR 277.9 million, and that grew 2.7% from the previous year. The main positives were, of course, Nubeqa, and also Animal Health after the acquisition of Inovet. The base portfolio in general performed well. There were some negatives like entacapone, effect of Russia, and dexmedetomidine, and Simdax. Operating profit was EUR 55.5 million. Decline was 22.4%. The decline in the operating profit was in line with our expectations and forecasts, the full year outlook is same as previously. The factors behind the decline in operating profit was the increase of fixed costs by EUR 9 million. The effect of the contraction of the Russian business alone was EUR 7 million. The lower gross margin was a result of price declines, product mix, and increased cost of goods. A cash flow from operating activities declined 87.9%. This is due to the decline of course in operating profit. Also our working capital increased and was much higher than in the comparative period, mainly resulting in regarding the Nubeqa and darolutamide. When we look at the net sales in more detail, we can see Nubeqa sales, which actually was EUR 18 million higher Higher Higher than in the previous year. Also Easyhaler and other base portfolio developed very well. Of course Animal Health, as we can see on the last column here, together with Fermion performed excellently. However, there were the declines of EUR 12 million of the Russian operations. It's the environment is very challenging at the moment. Some decline on entacapone. This is a timing issue related to the shipments to our partners, so this should sort out during the year. Exchange rates, very little effect from that part. Stable quarter compared to the previous last year. Operating profit decline here on EUR 27 million is partly due to the product mix and cost increase. However, when we look at the price decreases, the very significant part of that is explained by the fact that Orion has supplied Nubeqa with the lower price than in the comparative period in Q1 2022. This will be a temporary effect as the prices to Bayer changed actually in the middle of the year 2022, so it's been in effect already for a while, some quarters, but it wasn't in effect last year's quarter one. To the comparative period, you can clearly see the difference. However, even though the transfer price of the tablets is lower to Bayer, as those tablets, payments on those tablets will be reduced on the quarter's royalties, the final income is actually, it doesn't really have the effect on that income. Actually, it has a positive effect on royalties. We also see here the effect of exchanges, nothing significant there, no significant milestones. We also see fixed cost increase, that's mainly due to the increased costs in our sales and marketing. We almost don't remember that last year this time, pandemic was still heavily impacting our lives, last year we were not able to meet our customers as this year. Though we are kind of getting back to normal on the sales front. Inovet is of course included here. That wasn't in our fixed cost base last year at this time. When we look at all the business divisions, now for the first time we are reporting the new business division, according to the new business division structure, we can see here on the columns that Animal Health and Innovative Medicines performed very well compared to the previous year. We can see the division, or the sales split between the divisions. Generics and Consumer Health, still almost half of the revenues, Branded Products 21%, and Innovative Medicines 15%. Just to remind that the previous year, I think Innovative Medicines was less than 10, somewhere around 7%, so it's really hiking up here. Of course, Animal Health is already 10% of the revenues. On top ten list, Nubeqa, as the first one with 93% of growth, Easyhaler, a solid performance during the Q1, then the usual suspects to the generic competition, Simdax and Dexdor, and a rather steep decline in Entacapone, with the 37.1%. This is really a timing issue that just hit us on a first quarter and should be sorted out as we go along. Divina here, and Solomed have declined mainly due to the contraction of the Russian business. They were rather big products in that market. Nubeqa. When we look at the Nubeqa, and here we of course look at the Orion sales, the trend is extremely positive, but we can still be prepared that there might be fluctuations between the quarters due to the product supply to Bayer. We are in a launch phase, especially with the new indication and some quarters we might deliver extremely big quantities to Bayer, and as said, those are then deducted from the previous quarters' royalties. Branded Products, due to decline in Entacapone, almost 20% down. Sales is balanced nicely between Easyhaler portfolio and Entacapone products, which actually should be more than 40, if the deliveries would have been made, and then a small portion of HRT products, Divigel, being the biggest of those. Generics and Consumer Health business performed well, even though it shows minus here. Looking at the environment where division operates, I think this is an extremely good achievement. Simdax, Dexdor, we know what's happening there. Russia actually has been a significant, somewhat significant part of this business, and majority of that decline is actually seen in Generics and Consumer Health. In Finland, we performed again very well. Finnish market grew 3.4%, the whole Finnish pharmaceutical market, and Orion was able to grow 5.4%. The growth was even more visible with the reference priced prescription products where Orion grew 8.3%, and the whole market went down with the two digit numbers. Again, I can't resist to underline that we've been really able to create a competitive edge with our service level, which is the best in Finland and very good also in Scandinavian countries. Animal Health doubled its revenues due to the acquisition of Inovet VMD. Also, the companion animal, the sedative portfolio performed very well. Of course, this sometimes has to do with the, again, with the timings of shipments. For the Fermion we see a small decline. However, we currently manufacture big quantities, tons of darolutamide that kind of limits to some extent capacity for the external sales. We are working all the time as we speak to build more capacity on that front. The strike in Finland had a small effect on Fermion in early part of this year. Fermion which is a process chemical industry, for Fermion a few days strike means actually almost two weeks out of operations as you need to run down operations utilities and then again start it all over again and both ends takes several days to be prepared for. Our clinical pipeline proceeds as we have planned according to our strategy. Happy to tell about ARASTEP trial, a new one, in phase III with Bayer. Here we study patients with the high risk, prostate cancer, hormone sensitive prostate cancer, and high risk meaning that they have very, they double their PSA value in a very short time within a year after first round of treatment. This way, we will be able to offer the Nubeqa and this treatment to the earlier segment of the disease to which it fits very well as the side effect profile is very good and mild compared to some other products. ARASENS is now received the marketing authorizations in all the key markets. Of course, there are smaller markets where we still await for the registration. We have ODM-208 for the prostate cancer with MSD. We are happy to tell that a phase III study will be starting in the end of this year. This is good news. This is good news of course for the both companies, but also for the patients. Our ODM-105 tasipimidine for psychiatric disorders, we are preparing for the global phase II, and then our ODM-111 for the treatment of pain is advancing well in the phase I. We have published our sustainability report recently. I hope you've all been able to look at it. Sustainability is an important matter for Orion. Here I would like to raise two new things that we've taken to our agenda. On the environment track, we have extended our climate targets to cover the Scope 3 emissions. Scope 3 meaning the emissions of our suppliers and partners. To this date, we've been focusing on targeting to Scope 1 and 2, which are our own manufacturing and logistics, and all the projects that we are now and we've been running for several years in our own operations have been very successful, and we've been able to reduce both the energy or increase the energy efficiency and decrease the emissions. Also, we are now aligned with the 1.5 Celsius warming target. The other topic that I want to raise here regarding our employees and all the professionals working in Orion is the diversity, equity, and inclusion. We have raised this topic so that on our safety sessions, all our teams from Executive Management Board to the factory floor level have safety sessions on a regular basis with different topics. Now we also discuss, this DEI topics. It's an important thing for me that all the Orion employees feel safe and accepted and included in Orion. Our outlook for the current year is, as we've told before, it unchanged as it is. We estimate that our net sales will be slightly higher during this year compared to 2022, and where the comparative number is EUR 1,130 million without the signing fee from the MSD. For the operating profit, we've given the outlook that We will be on a slightly higher or higher level compared to 2022, and there the comparative number is EUR 232 million. Separately from this outlook, we are currently exploring a possibility to transfer our pension fund to an insurance company. Until today, Orion has managed its pension funds by itself, but now we are exploring if we could really sell this business, if you could call it so, but we don't include it into this outlook. It is a one-off event. It is a very administrative action, and it is difficult to estimate since this will happen the final day of closing will be in the end of the year, so we don't really know what will be the final effect for the income. It will be dependent on the discount rate and then, of course, on the value of the assets when it relates to the cash flow. That is a separate matter from our outlook, but of course, something that we want to share with our, with the outside world. Basis for the outlook are the same as previously. Nubeqa, Animal Health, the milestones. We are looking forward to a milestone regarding Nubeqa and certain sales thresholds exceeded. Easyhaler, a very robust business. Of course, then the generic competition. Russia will still have an effect to us, you know, especially on the early part of the year. I mean, the difference to the comparative year, and the pricing pressure will have some negative impacts on our net sales. The operational operating costs and will have an effect still, increasing effect on our cost of goods, especially on the first half of the year. Regarding upcoming events, the next one will be on 25th of May, our Capital Markets Day. You are all very welcome to participate. In July, the half year financial report. Thank you. Thank you, Liisa. Now it's time for the questions, and we will start taking questions first from the conference call line. Operator, please, the first questions. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Dominic Lunn from Credit Suisse. Please go ahead. Hi there. Thank you. You stated that you plan to move ODM-208 into phase III by the end of the year, but we haven't seen the phase II data yet. I'm just wondering what gives you confidence to go to phase III. For the phase II study, I didn't get the full year results. You said the trial would complete in the second half of 2024. Do we have to wait until then to see the data, or is there anything you plan to share ahead of that to help us assess the phase III opportunity? Lastly, when might we see that data for the phase III? Secondly, just wondering what assumptions are built into your Nubeqa forecasts in the longer term in terms of the Inflation Reduction Act. Wondering if you could just give a bit of context in terms of, firstly, the proportion of U.S. sales in Medicare. And then also on our analysis it looks like XTANDI could be selected in 2026 even if Nubeqa isn't, so could there be some indirect impact there? And then just curious on what your assumptions are in terms of impact from any Part D redesign. Thank you. I'll start from the beginning. Regarding the ODM-208, I leave commenting on that phase III program to MSD. That much I can say that, yes, phase II will run until next year, but based on the results there in the middle, it will be possible to draft the study outlines and start to carry out phase III studies. Otherwise, I think it's MSD who will be able to give you those details. Regarding Bayer, your question was on the long-term plans and forecasts for Nubeqa, taking into account the IRA and other things on the marketplace. That's a question for Bayer. I'm not going to comment on that one. I'm sure they can tell you how they have estimated these market effects and changes to their forecasts. The last question was. If you could repeat? That was just related to. It was still on the IRA, so I think, that's probably a question for Bayer. Yes. Thank you. The next question comes from unknown caller from number ending in 1868. Please go ahead. Hi, it's Graham Parry from Bank of America. Thanks for taking my question. Just first one's on COGS phasing through the year. Do you think you've seen now fully the impact of inflation in your cost of goods? Or do we still expect to see, you know, inventories being sold off, where we could still see elevated COGS? And also if you could just comment on the impact on cost of goods of the different pricing to Bayer in terms of the Nubeqa sales and how that might positively or negatively impact your COGS. Secondly on Russia, should we expect that to continue to shrink through remaining quarters or is that now essentially, annualizing in the base or we should expect to see continued declines on future quarters through the year? Two questions on phasing of costs and margins through the year. Thank you. Maybe I. Yes, Jari. I can take those. I'd say that compared to last year, we probably still will see some impact in COGS on the inflation. On the other hand, quarter to quarter, I think the numbers are not changing because of the inflation that much anymore. One needs to remember that especially in the case of Fermion, because of the long production lead times, the impact on our COGS for the inflation that started around this time last year was shown only towards the end of the year. That's why we will still see the impact of the inflation in our numbers compared to 2022. On quarter to quarter, I think we probably will not see that much inflation impact anymore. Salaries are increasing in some markets and so forth, but not that much impact in maybe the COGS. You asked also the impact of the Nubeqa and the transfer prices on COGS. That of course doesn't have any impact on COGS. How the Nubeqa profitability ultimately for Orion will be that it will be the royalty minus the COGS. What is having impact on our profitability is that if we produce a lot of, and deliver a lot of Nubeqa and to Bayer, that of course means that in that period there is a lot of COGS. Now as the product is still growing, it means that all the time we are producing and shipping more products to Bayer than they are selling out because they of course need to prepare for the growth. That's the impact on margins, not that much. The pricing as such, of course, is not really impacting the cost of goods, but margins it has impact because of this time-timing. I guess on the Russia, the business is very small there now. We still had business there last year. Currently the business is very small as one can see in the negative impact on the first quarter. For the full- year of this year, Russian business will be very small. But last year we still had quite, actually quite a lot of sales. Because of the increased value of the Russian ruble also the currencies were very beneficially in 2022. Thank you. The next question comes from Sami Sarkamies from Danske Bank. Please go ahead. Hi. I have three questions, starting from Nubeqa. If we look at Q1, you had 90% or EUR 80 million growth year-on-year in Nubeqa sales. What is roughly the EBIT contribution from higher Nubeqa sales in Q1 if we take into account changes in transfer pricing that you're highlighting? Oh. Well, I mean, like with any of the other products, we are not disclosing the details of the profitability on individual products. Unfortunately we cannot really give you too much of an impact or numbers on that. Like you referred to, royalty of course is 100% income, but then the cost of goods is something we are not disclosing. Okay. Regarding ODM-105, you mentioned that you're preparing for a phase II study. When do you think you'll be ready to start this trial? Well, we'll see. I hope we'll be able to inform about that, timing, more accurate timing during this year. Okay. On ODM-208, according to the contract between you and Merck, you have an option to convert this into a normal licensing model. Can you discuss why it would make sense from a Orion perspective, to do this, instead of current partnership model? Well, I think the option gives always a freedom for a company to look at the company situation at that time. You know, market environment might change, the company strategy might change, so it really gives a flexibility to look at that matter again. In general, comparing those models, I think licensing model, if you would license the global rights, is a lighter one for Orion type of a company where you wouldn't have to bear all the costs for the development. I think that would be the main difference between those models. Yes, exactly. It's a timing question that carrying out and participating in expensive and large phase III trials of course means that we would be heavily burdened during the early years. Of course, if everything is successful, of course that would mean higher income years later. For our perspective is really question that how do we allocate our R&D funding. Would we like to use it in ODM-208 or something else? Of course, one is to remember also that the other party also has the same rights. Even if we would like to keep it but our partner would like to use the option, then it would be used. It's. For the time being that is a question. That is true. we need to consider for later years. That's true, and as both parties have the option, it gives the flexibility for the both companies to look at the situation at the given time point. Okay. Thanks. I don't have any further questions. The next question comes from Jo Walton from Credit Suisse. Please go ahead. Thank you. This is just a more general question, Liisa. Now that you've got the new structure in place, you said that you thought it might be a bit more responsive, aligning the costs of the businesses together. Can you give us some update as to how you found that now it's bedded in for a quarter? Are there any examples you can give us as to, you know, perhaps a more speedy response to things that the new structure has been able to give? Could you also tell us from your perspective of looking at the Northern European markets in particular, if you're seeing any signs of austerity measures from any governments anywhere making it more difficult to launch products or just some, you know, update in terms of the market environment that you're seeing at the moment? Thank you. Thank you. Well, the first question was about the new structure. Yes, one of the purposes was really make the divisions more accountable for their businesses and also for their operations and actions, and also be able to compete in their respective markets, which are very different. I think we are seeing the first signs of that, especially with the innovative drugs, and how they respond to the market, how they build the market access and other type of capabilities and competencies. I clearly see that each of them is now approaching their markets and capabilities in a more precise way and being able to compete with their respective similar peers. That's very clear. Now for the generic business, their research and development is now separated from previous Orion research and development, which is now fully focused on the human innovative drugs. They are looking for more pace and new partners and CROs to do it in a speedier and more efficient, efficacious way. Clearly they, there is, I can see the signs that this was a very beneficial solution. For the Northern European market, well, first of all Finland, our biggest single market, we can see the continuation of the price decrease. However, in some of the markets we already hear rumors, like in Sweden that government and the pricing systems might change so that they would allow probably more flexibility on pricing, not just putting prices down. I think what is really important and interesting at the moment is the EU pharmaceutical legislation that was published yesterday, and there were several leakages of that beforehand, which will have an effect on the European innovation and competitive environment. There are several kind of changes that are suggested for the exclusivity period, for the launch timing, and other things. It will be very interesting to see what will be the final outcomes of that one. What type of an effect that will have on the pharma industry in Europe. Thank you. There are no more questions at this time, so I hand the conference back to the speakers. Thank you. We will turn to the webcast questions. We have a few from Carnegie's Iiris Theman. I will start with the first one related to cost of goods sold. Your cost of goods sold increased by about 15% year-on-year in Q1. Why are your cost increases higher than the inflation? I.e., what are the main cost items that have increased? Well, of course, one always needs to remember that this is cost of goods sold, which of course means that if you get the same sales at lower price, it means that you have more costs, and part of that increase is due to that. For example, the impact of the lower Nubeqa price, pricing, it means that we are selling certain amount of Nubeqa to buyer, but the cost of goods is higher than in the comparative period because the volume of was higher. If we think of the actual cost elements, the normal ones, energy of course is now. Luckily, the costs are down, but still, of course, energy during the first quarter was more expensive than it was last year. Many of the key materials we are buying there, one can see clearly that in various type of chemicals the costs are high-higher. Those elements have been increasing but as big impact in the higher cost of goods is really that the volumes have increased, and as a consequence of that, the cost of goods is higher. Ires has a follow-up. Are the COGS increases likely to be faster than sales in Q2 and then in turn in H2, so the second half of the year, due to easing inflation, so will the sales increase be higher than the cost increase? Like I said in the previous one, of course it again is a mix of pricing and actual costs. Still during the second quarter compared to last year we probably will see a little bit, like I said in one of the earlier answers, that the inflation still is impacting our numbers. When we go to the second half of the year, probably if impact of that will be less because the costs, higher costs were already there. Again, as long as we see prices declining like in Simdax and some of the other areas, that probably will show in the numbers as if the cost of goods were increasing. For the full year, we probably will see a decline in the product sales margins, but probably the impact is bigger now during the early part of the year than in the second part of the year. Thank you, Jari. The third one from Ires is regarding ODM-208. I have understood that you have planned to start your phase III study for ODM-208 as fast as possible. Could this happen already in the first half of this year? I don't think so. I think the message is very clear that the study will be started in the end of this year. by the end of this year. By the end of this year. MSD will confirm this one. Yes. Thank you, Liisa. Now we have exhausted the webcast questions, and I had the information that there should be at least one follow-up on the conference call line, so I will hand it back to the operator please. The next question comes from Dominic Lunn from Credit Suisse. Please go ahead. Hi. Thanks for taking my follow-up. It's just a longer term question. You still appear to be paying out the vast majority of the free cash flow to pay out the dividend. I'm just wondering what gives you confidence to be able to continue to invest in the growth of the business overall, and can you just remind us of how you think about the dividend policy longer term? I think it was just kind of noteworthy that you said, you know, that deciding on whether to license ODM-208 might or, you know, do it yourself might depend on how much money you've got at the time. I'm just wondering how that kind of weighs up when you think about the dividend as well. Thank you. Well Yeah I could start. Yeah And then Jari can continue. Well, for in our financial guidance, we have clearly stated that we pay at least EUR 1.30 per share dividend. We've also said that, of course, as we generate more income from the Nubeqa royalties, we will invest more to research and development, also to our sales and marketing organization. It's always a decision by decision, and eventually board makes a decision on the dividends. I mean, it's a decision every year, a separate decision, and it depends on your strategy and confident on how good projects we have. Eventually it's a board decision. Jari, you want to add something? Yes. I mean, I think the dividend payout ratio as such doesn't really have impact on the R&D spending because it's more that what kind of a profitability we want to show. Then, after we have certain profits in our hands, then of course it's a separate decision that how much of that will be distributed as a dividend. That's clear. That's. Then of course it's another question that if we want to do M&A and investments like that, then of course it's a question that how much that and what is then the right ratio between dividends and the investments. Ultimately the board looks at the overall total allocation of capital and it's a balancing act between all of these elements. Great. Thank you. The next question comes from caller from Bank of America. Please go ahead. Hi, it's Graham Parry the follow-up. Sorry, just actually just a question on the pension fund sale or transfer. Just would that potentially generate a material gain and would that be excluded from your outlook? Are there any sort of administrative costs that could sort of benefit the the operating profit margin as you're no longer administering it? Just thinking at sort of what kind of changes we could see through the P&L from that transfer if it goes ahead. Thank you. Thank you. Yeah. I can probably take that. We published that assuming that the discount rates will not fundamentally change from the current level, we are talking about plus EUR 20 million one-time gain from the dissolution of the pension fund. On the other hand, we probably will actually see a small, tiny, small annual decline in our profitability in the coming years because the pension fund has been performing quite well, and the administrative costs are really very small. That is the key thing which we are now evaluating, that is the one-time gain enough to cover long enough period lower profit or higher pension costs so that it makes sense to do it now. Of course the cash flow is the other impact. The outcome is that we probably will have a little bit higher costs than today if we don't have the pension fund. Thank you. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Thank you, operator. We don't have any further questions on the webcast tool either. I'll hand it to Liisa and Jari for your concluding words. Well, I thank you for your attention and very good questions and discussion. Maybe to conclude in the end that really the year has started in line with our expectations, even despite of the decline in the first quarter. We are keeping our outlook as it was at the beginning of the year. Thank you.