Roche Holding AG (PNK:RHHBY) Q4 2024 Earnings Call Transcript

Roche Holding AG (PNK:RHHBY) Q4 2024 Earnings Call Transcript January 30, 2025

Roche Holding AG misses on earnings expectations. Reported EPS is $1.18 EPS, expectations were $1.19.

Operator: [Starts Abruptly] If you note that the webinar is being recorded. I’d like to inform you that all participants are in listen-only mode, during the call. After the presentation, there will be a question-and-answer session. [Operator Instructions] One last remark, if you would like to follow the presented slides on your end as well, please feel free to go to roche.com/investors to download the presentation. At this time, it’s my pleasure to introduce you to Thomas Schinecker, CEO of Roche Group. Mr. Schinecker, the stage is yours.

Thomas Schinecker: Thank you very much, and hello to everyone, wherever in the world you are. I’m really excited to share with you the results of 2024 for the Roche Group, because I believe they have been — this year has really been an excellent year for us. So let’s look at the performance. So overall, Group sales was at 7%. The base business, meaning excluding COVID-19, grew even with impressive 9%, pharma 9%, and diagnostics 8%. We saw the last and final impact of COVID-19 sales in — reduction in 2024, so there is no more impact going forward. The final impact was CHF1.1 billion, so exactly in line with the guidance that we gave at the beginning of the year. The LOE impact was CHF1 billion. So slightly better than the guidance we had given.

To round out the very strong performance of the organization, let’s look at the third line here. Core operating profit growth plus 14%. Group core operating margin up 2.1 percentage points. Core EPS growth plus 12%, if you exclude the tax effect, which we guided for or plus 7% if you include it. Operating free cash flow up 34% at CHF21.2 billion, certainly the number that Alan loves the most. Key milestones achieved in Q4, you see them on this list here. EU approval for Vabysmo pre-filled syringe. We had positive readout for trontinemab and also in the prasi trial, we see a potential benefit in certain sub-populations with this disease. On the diagnostic side, it was a very busy quarter with the Mass Spectrometry launch, the 6800/8800 launch, and so on.

And also on our deal side, we made good progress include introducing Poseida to our organization, allogeneic CAR-Ts, not only for oncology but also in the autoimmune diseases and the DLL3 ADC deal in small cell lung cancer. 2025 will really be a significant year for us in terms of Phase III readouts, but also in Phase III enabling readouts. So movement from Phase II and Phase III where we have up to [Technical Difficulty] Can you hear me? Yeah. Now you can hear me. Okay. Perfect. Sorry about that. Good. So now let’s look at how we did versus the guidance. At the beginning of the year, we talked about mid-single digit sales growth for the year 2024. We definitely ended up at the upper end of this guidance at 7%. Also at the beginning of the year, we talked about mid-single digit core EPS growth, excluding impact on resolution of tax disputes in 2023.

We raised that guidance in midyear and we’ve clearly exceeded this guidance with 12%. Again, if you include the impact, we are at 7%, which is in line with the sales growth, and we further increased the dividend. This means that we have increased the dividend for the 38th consecutive year. And as you will see at the end, we plan to do that also for the ninth consecutive year. Here you can see the slide that we always show. You can see that the Roche Group grew 7%. If you exclude COVID, we had a very strong growth of 9%. So again, very strong performance in the group. Now this is one of the slides that I like very much. On the left hand side, you see the Group sales growth over the last couple of quarters and years. And then the right hand side, you can see the growth if you exclude COVID-19.

Q&A Session

Clearly, we are one of the companies that had significant sales of COVID-19 between 2020 and 2022, in fact, around CHF19 billion. And we are also very proud of the contribution we did at the time. But also it means that as COVID-19 went away, and we always communicated that, that it would go away, we had in 2023 the situation that we had to compensate this loss. And we did so with significant base business growth, so excluding COVID-19. And this growth has been very strong over the last two years. You see 2023, 8%. If you take the average of ’24, you’re at 9% growth. And in fact, in the last three quarters, we reported 9% growth each quarter. I think this is a very strong performance from the organization. Now let me quickly take you through this slide.

A couple of highlights that I would like to make. First of all, we have now 17 medicines that have blockbuster status. Furthermore, in oncology, Perjeta/Phesgo conversion rate is now increasing to 46%. Polivy U.S. patient share first-line DLBCL now climbing to 29%, establishing itself to the new standard of care and it’s also an opportunity to further build upon it with combinations with the CD20/CD3 bispecifics that we have. Hemlibra patient share in the U.S./EU now reaching 42%, and we are now also looking forward to the Phase III enabling readout of NXT007, which is the next-generation Hemlibra. In neurology, Ocrevus subcutaneous now with roughly 50% patient share being naive to Ocrevus. And the J-code is only to come in April 1. Elevidys with good launch momentum and clearly, Teresa will touch on that and on the promising two year follow-up data from the Phase III EMBARK study.

Xolair food allergy with continued strong uptake now at more than 40,000 patients on treatment, mid-teens to be expected in terms of growth in 2025. Vabysmo pre-filled syringe now also approved in EU and is set to become the number one ophthalmology brand in 2025. In diagnostics, strong base business growth of 8%, as mentioned before. Now let’s take a brief look into the future. First, I can say that we have completed our strategic review and we are really now in implementation throughout the organization. So we’re set for the future. I would like to touch on the formation of our Near Patient Care Organization in diagnostics. So in diagnostics, we have four custom areas; Core Lab, Molecular Lab, Pathology Lab, and Near Patient Care. In the first three, we’re the number one globally.

The area where we want to become number one is Near Patient Care. And here, we’ve done the acquisition of LumiraDx and this has been covered quite a bit by Matt and myself in recent presentations. What’s really special about this platform, it’s a hand-held platform and on this technology, you can do multiple different technologies in terms of measurement, clinical chemistry, immunochemistry, coagulation, potentially molecular diagnostics, and it’s room temperature and it’s really disruptive from a cost of goods position. Accu-Chek CGM was launched last year. This will enter us into a very fast growing very large market. Cobas Liat, we just recently announced the menu expansion into STI and we’ll continue to build out the menu. But we have two more platforms in our pipeline.

One is around blood gas, the other one around lab like immunoassay performance where we are going to continuously invest into the Near Patient Care segment and we’ll continue to build out that segment as we go into the next years. Now let’s go to Pharma. You’ve seen the very strong momentum that we have in our organization and this is really due to the young portfolio that we have in terms of medicines. And you can see on the right hand side that in the meantime 56% of our Pharma sales are coming from these new medicines. In fact, in 2024 we launched two new medicines. One is PiaSky and the other one is Itovebi. And I would definitely say Itovebi is best-in-class and we have very high hopes on Itovebi. In 2025, we have a total of four potential NMEs that with a positive Phase III readout could lead to launches in ’26.

We have a sixth one — a fifth one which is tiragolumab that we didn’t mention on here because as we know the hopes for tiragolumab are lower, but there are still certain trials ongoing, let’s see how that runs out. But those are the four that we would like to highlight for 2025. What’s also important is that we are one of the companies that has very little biosimilar exposure until the end of the decade. So we have less headwinds than many other companies have in our industry in this time period. Now let’s look specifically at the pharma pipeline in 2025 and what we can expect. Here, you see a list of — a number of our key assets in our pipeline. In fact, we have more than seven NMEs with a peak sales potential of more than CHF3 billion and four with peak sales of CHF2 billion to CHF3 billion.

We have six marketed products that each have trials ongoing with potential line extensions that could add another CHF1 billion to CHF2 billion each per asset. Now 2025 will be a special year because we have 12 key pivotal readouts, so approximately one per month. And we have four readouts that are linked to new NMEs that could be launched in — then 2026. And even more important, I would say is that we are refilling our late stage pipeline. We have seven NMEs that could enter into Phase III. So — and that would be really for us a record, if I compare that to last 10 years or so, to bring seven additional NMEs into late stage would be really significant for us. Now let me finalize with the 2025 guidance, and you can see that we expect LOE impact of about CHF1.2 billion, so slightly higher than what we saw in 2024.

And we aim for Group sales growth in mid-single digit sales range and core EPS growth in the high-single digit range. And dividends, we aim to further increase in Swiss francs. Thank you very much. And with that, I hand over to Alan.

Alan Hippe: Yeah. Thanks, Thomas. Hello from my side. Great to see everybody. I hope everybody’s fine. Certainly, what I also hope is that Teresa is getting better soon. Very pleased with the performance this year and would like to thank the whole team and everybody who has contributed to that performance on one hand and certainly everybody who has contributed to the well-being for patients. Good. Let’s get into it, and this is the overview. Sales you see plus 7%, 3% in reported in Swiss francs. I’m sure Teresa and Matt will do quite a thing to explain the sales and dig deeper here. Underlying as you’ve heard from Thomas already, so without the COVID sales, plus 9%, quite impressive performance. And when you look at the core operating profit with a higher momentum, plus 14% I think very clearly good cost containment.

And really when you see the increases that we have in the cost lines well below the sales growth. Yeah. Then, we get to core net income and core EPS, and I would hit the two right away. Very clearly what brought the dynamic down, the growth dynamic of these numbers are two elements. One is taxes. We have paid CHF1.1 billion more taxes than last year. Part of that is the tax impact or the resolution of tax disputes we had last year as a positive to CHF774 million, that certainly contributes to that increase. The other part is high interest charges, roughly CHF320 million or CHF400 million when you just look at interest that we had more and that explains the core EPS growth of 7%. If you exclude the resolution of tax disputes from 2023, you go to a core EPS growth of plus 12%.

IFRS net income down 19% in constant rates, minus 26% in Swiss francs. Two major impairments happened here where we certainly have to acknowledge that the expectations of these investments and assets didn’t fulfill compared to what we had in mind when we bought these assets. So we had to impair end of 2024. Yeah. And then the number I love most, Thomas is completely right is the cash flow, 34% up, 28% in Swiss francs, CHF20.1 billion in constant rates in — as reported and CHF21.2 billion in constant rates, that’s really — it’s not a record number. I think once we had a higher one, yeah, it’s long ago, it’s a fantastic number and certainly helps us to mitigate the debt increase and the interest charges. The free cash flow also on a high level as you can see.

So really money available to do further M&A, but also to pay the dividend. When you look at this Group sales growth and here you see the bridge, full year 2023 on the left hand side and full year 2024 with CHF60.5 billion on the right hand side. First really let’s go through the divisions just to give you the broad overview. I think you see the DIA base business has grown over CHF1 billion. COVID impact minus CHF552 million. Pharma grows above CHF5 billion. Ronapreve sales impact from last year to CHF522 million. And then you see really the loss of exclusivity which is roughly CHF1 billion with minus CHF952 million. And then you see the currency impact which brings the 7% sales growth in constant rates to 3% in Swiss francs. When you look at the P&L, as said, I think the cost discipline is obvious, I mentioned the sales.

You see the other revenues was plus CHF215 million. This is as you know the line where we have the royalties in, where we have the profit shares in, and all of this. Here, I would argue Venclexta profit share contributed to that number. And then Xolair it’s outside of the U.S. that caused an increase of a plus CHF215 million. When you look at cost of sales with a 5% increase, a minus CHF720 million impact. I think the 5% is a major achievement because we had volume growth of 11%. When you look at pharma 14%, diagnostics at 3% volume growth. I think that’s a very respective outcome. I think for pharma, I can say CHF640 million increase. Here, half of that — basically half of that is triggered by a provisional release we had in 2023. This is really the Ronapreve provision as you know that we released.

I think that’s a big explanation here. So they would have looked much better without that. Diagnostics CHF80 million with quite some volume as well. Then you go for R&D, R&D modest growth rate with plus 1%. Very clearly the reprioritization in the portfolio on the pharma side is going on and moving on. On the other hand, we have invested more on the cardiovascular side. And then you see really SG&A was plus 5%. Let me explain that M&D plays a major role here. In pharma, an increase of CHF319 million very justified because when you look at the growth rates of Vabysmo, Ocrevus, Phesgo, I think that’s where we have to invest, and we did. When you look at diagnostics, higher logistics costs of CFH90 million on the M&D side. And then there’s an element of corporate, and you might ask yourself, okay, why is that coming?

Well, one element is we centralized more in the company, so there were more costs coming from other units into SG&A. Diabetes Care is one element that we integrated, just to mention example here, that’s roughly CHF100 million. And then the rest is informatics. In informatics, we have invested in artificial intelligence, ERP, and other technologies which I think is very justified. When you look at other operating income and expenses, the minus CHF166 million, the decline solely is driven by less gains on disposals compared to last year, leads us to a core operating profit of CHF20.8 billion with an increase of 14% compared to a sales growth in constant currencies of 7%. When you look at the margins, I think with such a performance, certainly the margins go up.

And you see for the group in constant rates 2.1 percentage points. Same applies to the pharma division with plus 2.1 percentage points. And diagnostics has grown with 1.3 percentage points. So really a great performance across the board and you see both divisions improved their margins. When we go to the core net financial result, you see really an increase of CHF310 million reported. Major driver here is the interest expenses. As you know, the debt has risen. On top of that, we have changed a couple of mature bonds with other bonds that have higher interest charges, which is clear here in the current environment. So I think that was the driver here. Equity security with something small, that’s our venture fund, small number. And then the net interest income is driven by the cash that we had on the balance sheet and that we just reinvested in a very cautious form.

Good. The core tax rate, that’s quite an interesting story. Let me start on the left hand side, with the 11.9% in 2023 which was certainly a great outcome. Very much driven by the CHF774 million positive tax impact. So you have to readjust for that, that’ minus 4.3 percentage points, brings us to 16.2% adjusted effective tax rate for 2023. When you compare that to the adjusted effective tax rate full year 2024 with 17.1%, I would argue, I think really very comparable to last year. Major change here is the profit mix that comes in with different jurisdictions and different tax rates. What came into it, on one hand is certainly the two pillar — the Pillar Two top-up tax, the Swiss minimum tax so to say, with plus 1 percentage point. And then we had a couple of resolution of tax disputes, we cannot really budget for.

It’s very hard to foresee, that brought the tax rate down by minus 1.4 percentage points to 16.7%. I know everybody’s eager to know what’s going to happen in 2025. Guidance here is very clearly 19.5%, 18% for the — if you like, effective tax rate and then 1.5 percentage points for the minimum tax, so we stick to that. Core EPS development and that tells the story a little bit about the year. I think really you see on the left hand side, where we started with, if you deduct the effect of the resolution of the tax disputes, you get to 18.02% and then you see operations is really that’s the driver of the result in 2024. What worked against us less product disposals, the minus CHF181 million that I’ve mentioned already. You see the financial income and expense which has risen that’s a minus CHF320 million and then you see the tax rate changed, I’ve elaborated about already.

And that brings us to the 12% increase in core EPS and you see the driver is clear operations. When you look at the non-core and the IFRS income, I start with the core operating profit. I’ve talked about with plus 14%, the outstanding performance that we have seen. You go to the IFRS net income line, you see the minus 19% in constant rates that I’ve mentioned already. And when you go through the lines, I think the global restructuring plan is very comparable what we had last year, you might say, hey, Alan, that’s the difference. Well, we have a positive effect in that line in 2024 coming from the Vacaville divestment of CHF240 million. Amortization of intangible assets, I would argue pretty stable. And then you see the impairments of intangible assets, a decline of minus CHF3.4 billion, very clearly here as said driven by two major impairments that we have taken where the assets really didn’t meet our expectations, we had when we acquired them and that really is the major driver.

So goodwill impairment was CHF3.1 billion and CHF800 million additional impairments on the assets. M&A and alliance transactions not much of a move here. And legal and environmental, I think in 2023 we had a positive impact because we released a provision for a court case and I would argue in 2024 normal business. Leads us to an IFRS operating profit of CHF13.4 billion and then you see the total financial result and taxes when you put it together, so that’s CHF1.4 billion more compared to 2023 in total, as I’ve said and outlined at the beginning already, leads us to an IFRS net income of CHF9.2 billion. Good. Yeah. I think this is not just the number, this is the slide I love the most, when I look at 2024 and that’s the cash generation. The cash generation has been outstanding.

When you look at constant rates from CHF15.8 billion to CHF21.2 billion reported on the right hand side, CHF20.1 billion, I think really an outstanding number. And what excites me the most is I think very — as expected, operations drove that number. And you see that in the first green bar with CHF3.7 billion. But then we also worked on the net working capital. And you see net trade working capital CHF1.3 billion. And I can say both divisions really brought that number home, so to say. This is really a fantastic outcome. And when you then look really at other net working capital movements, I think that helped as well. Investments in intangible assets, what we want to do so invest — we invested CHF600 million more here. So overall I think a fantastic achievement.

When we look really at the cash flow margins, they jumped as well. And as I’ve said, I think both divisions contributed. Group net debt development, so what does this cash flow generation mean for the net debt development? Let me first outline where we landed. End of December 2023 a minus CHF18.7 billion net debt, end of ’24 a minus CHF17.3 billion. So really an improvement of CHF1.4 billion. So really we overcompensated everything. So I think that’s a great message. How did that work? I think the operating free cash flow, I’ve talked about it in here is an investment in intangible assets of CHF1.5 billion. I think just to mention that. When you look at the non-operating free cash flow, taxes with CHF3.7 billion, treasury is CHF1.1 billion.

And then you see certainly dividends and M&A, dividends paid CHF8 billion, M&A and transactions CHF3.1 billion. So you can argue including the CHF1.5 billion for intangible assets, we have invested into M&A and intangible assets which certainly drive the pipeline, CHF4.6 billion. Then you see a currency translation effect, as much as we love a strong U.S. dollar in the P&L, it hits us on the balance sheet on the debt side because 70% of our debt and we have CHF34.7 billion gross debt on the balance sheet, 70% of that is in U.S. dollars. And when the dollar strengthens, I think that number gets higher. And then you see a couple of other effects here. So that leads us to the CHF17.3 billion certainly very pleased with that as well based on the strong cash flow that I’ve explained already.

Good. With that, let’s go quickly through the balance sheet. First time, we have more than CHF100 billion in assets in the balance sheet. And what you see is cash and marketable securities, yes, we brought that up. We had a couple of bond emissions that helped us and certainly CHF7.3 billion give you a lot of assurance that we can pay the dividend. Other current assets, I think very clearly slight decline. Why? Vacaville, went away. I think that’s CHF600 million. And inventories went down by CHF300 million, which I think is a great message. And the non-current assets, slightly up CHF4.8 billion here, very clearly deferred tax assets played a role here with the restructuring plans, I think the intangible assets impairments, all of that contribute to this as well as the acquisitions that we have done.

On the current liabilities, so we move to the right hand side, accruals are the reason for the increase on the current liabilities and the non-current liability is very clear, that’s the gross debt. Gross debt increased from CHF29.2 billion to CHF34.7 billion, so by CHF5.5 billion and that’s reflected in that number. And you see overall the equity has increased by CHF2.9 billion. Good. With that, currency. Yeah. A little bit of a pain in the last two years. And when you look at 2024, you still see that on the left hand side, this orange line is below the black line and the black line is the average for 2023 and the orange line is the average for 2024. And whenever these lines are below that’s not a good impact for us, if you like. So you see on the right hand side the result for the full year.

A minus 4 percentage points impact on sales, a minus 6 percentage points impacts on core operating profit and a minus 6 percentage points impact on core EPS. I think when you really look and we do that exercise, we assume really at the year-end that every currency rate stays the same during the year and we project them for the full year which is very, very hypothetical, but then we expect any impact for 2025, which is certainly encouraging. If we were looking at today, we even have a positive impact. But well, we all know currencies are very, very volatile, but it looks like a better year compared to the last two. Now a very formal slide, I know and a little bit boring but important to get to the right starting point for 2025. So let me start really with the core EPS as reported in 2024 of CHF18.8. And what we have to, or what you have to adjust for is the foreign exchange losses which are so far not really reflected in that number or not reflected number.

So in the green bucket what you see is an adjustment of CHF0.53, CHF0.53 rappen exchange rate effect. This is a result of dividing the 2024 currency losses of CHF291 million as well as the 2024 losses on net monetary position in hyper inflationary economies of CHF163 million. This is shown in Note 4 of our consolidated financial statements on Page 62 of the Finance Report 2024. This number, net of taxes and non-controlling interest by the number of diluted shares of 802 million, the 802 million shares you get in Note 29 of the Finance Report Page 121. So when you do that exercise, you get to the 0.53 (ph). If you do that exercise you might ask yourself, this implies a pretty low tax rate for that impact, yeah, when you do that. So you can do the math here.

It would imply a tax rate of 6.4%. Let me take that topic right away because the one impact, the CHF163 million has no tax impact. So that’s one element here. And the other piece is the CHF291 million has a tax impact but in the holding. In the holding, we have certainly another tax rate compared to what we have in the Group. So that leads you to the 0.53 rappen (ph) and the adjustment here. So the starting figure for the outlook for 2025 is CHF19.33 per share. Good. With that, yeah, that’s a bit formal, I know. With that, I think really nothing to say about the guidance, Thomas gave that. And with that, it’s my pleasure to hand over to Teresa.

Teresa Graham: Great. Thank you, Alan. So apologies for the mask, it is not a fashion statement. I am feeling a little bit under the weather, and so I want to make sure that I’m protecting my colleagues. But I am very pleased to share with you the 2024 results for Pharma. So let’s kick things off with a look at the sales performance. In 2024, pharma sales grew 8% at constant exchange rates to CHF46.2 billion, excluding Ronapreve sales grew 9%. All regions excluding Japan delivered strong growth. 9% in the U.S., 8% in Europe, and that extremely impressive 17% in International, all at constant exchange rates. Excluding Ronapreve, Japan declined just 2% and that is primarily due to mandatory price cuts. And as Alan already mentioned, overall pharma volumes were up by 14%.

Going into a little bit more detail, the core operating profit for Pharma increased by 13% versus an 8% sales increase with a COP margin of 47.7%. Going through the lines in a little bit more detail, you can see the COP grew ahead of sales and this was really driven by cost discipline in both R&D and SG&A. Other revenue, as Alan mentioned, increased 16%. This was primarily driven by the increases in profit share income for the higher sales of Xolair outside the U.S., and as you mentioned, Venclexta in the U.S. Cost of sales increased by 8% in line with sales growth and remains stable at around 18% as a percentage of sales. And again, this is including the base effect of that Ronapreve provision release from last year as well as that 14% volume increase.

So I think overall really good performance on cost of sales. R&D, costs increased only by 1%, this was about 24% of sales. And SG&A cost increased by 5% in Pharma as a percentage of sales, though it decreased to around 15%. As Alan mentioned, this was due to increased investments, including marketing and distribution costs to support our ongoing launches, particularly Vabysmo, Phesgo, and Xolair in food allergies. So I think as Alan mentioned, money well spent. And then other operating income and expenses decreased by 25%. And that is solely due to lower gains on disposals of products. So Thomas and Alan shared with you their favorite slides. This one is mine. Our young portfolio continues to deliver strong growth led by our key brands Vabysmo, Phesgo, Ocrevus, Hemlibra, Xolair, Polivy, and Evrysdi.

Combined, these added CHF3.9 billion of new sales last year, which is really impressive. For the first time, Polivy has achieved blockbuster status, making it our 17th blockbuster of 2024 when you include Venclexta. So now let’s take a deeper dive into our therapeutic areas, and let’s start with Oncology. Oncology sales increased by 3% to CHF15.8 billion in 2024. Let’s start by highlighting some of the latest news flow for our most recently launched NME, Itovebi. On Tuesday, we shared with you in the final analysis of INAVO120 that Itovebi met the key secondary endpoint of OS benefit. We are very much looking forward to sharing this data at future medical congresses and with regulators around the world. While the U.S. launch is ongoing, we expect EU approval in the first half of this year.

With the HER2 franchise, we finished strong. Kadcyla delivering 7% growth and Phesgo with 62% growth. Global conversion rate for Phesgo has climbed to 46% from 43% in Q3 and we would fully expect to exceed 50% in 2025. Moving on to Tecentriq. In 2024 sales overall were stable, that’s primarily driven by small cell and HCC. We do believe, as we have mentioned previously, that Tecentriq is getting close to peak and we expect sales growth to be in the zero to low-single digit range going forward. Looking ahead at what’s to come in 2025. I want to specifically call out the two highly anticipated Phase III readouts for giredestrant, persevERA in Q4 and evERA in Q2, and we are very much looking forward to sharing the outcomes of these potentially standard of care changing studies.

So let’s turn our attention to Hematology. Hematology continues to deliver strong growth. We ended the year at CHF7.9 billion in sales with 15% growth. And let’s start by looking at Hemlibra. In Q4, growth was strong across all regions and patient segments with good underlying market demand. We saw a very strong Q4 performance in the U.S., 20% at constant exchange rates and that was driven by a large specialty pharmacy order, which is very similar to the pattern that we’ve seen in previous years. Going forward into 2025, we would expect a mid-single digit growth globally for Hemlibra. Staying within our Hemophilia portfolio for the moment, as Thomas mentioned, we have the Phase II readout of our next-generation bispecific in hemophilia NXT007 that is anticipated around midyear.

If positive, this would lead to the initiation of a Phase III development program later in 2025. And as a reminder, we believe that NXT007, which is 30 times more potent than Hemlibra has the potential to receive zero treated bleeds without the need for additional Factor VIII treatment. So this would really allow us once again to change the treatment paradigm for patients suffering from Hemophilia A. Moving on to Polivy. In the U.S., first line DLBCL patient shares keep on climbing. We’re now at 29%. Polivy has been used in more than 42,000 patients globally. We also recently shared the five-year POLARIX data indicating a positive trend in OS with the hazard ratio improving from 0.85 to — improving to 0.85 from 0.94 in the three year data, which we believe will further support uptake.

Columvi and Lunsumio launches are progressing on track. For Lunsumio, we completed U.S. and EU filing of the subcutaneous formulation which has all the benefits of the available IV formulation with the added ease of subcu. Looking ahead into 2025, there is quite a bit happening in Hematology. We expect to move both Columvi and Lunsumio into second-line DLBCL, much bigger opportunities. For Columvi, this means U.S./EU approval based on the positive STARGLO data with the PDUFA set for July 20. And for Lunsumio, we’re expecting that Phase III SUNMO data in second-line DLBCL. For Lunsumio, there are two additional events. The U.S. approval of the subcutaneous formulation and third line follicular, which I just mentioned, and the Phase III readout in second line follicular.

We’re also expecting Phase III readouts for Venclexta in first-line MDS and PiaSky in aHUS. So lots to look forward to in hematology this year. Next up, let’s talk a little bit more about our recent acquisition of Poseida and its allogeneic CAR-T portfolio. We’ve long believed that the Poseida allo CAR-T technology could potentially be best-in-class in malignant hematology. The early data in multiple myeloma suggests very strong clinical activity comparable to the auto BCMA CAR-Ts. Now with this acquisition, we are going to be moving quickly to bring this approach into MS and SLE as well, with INDs already granted. And we’re excited about the possibilities for patients represented by these programs. And with the deal now closed, we’ll be able to bring you more regular updates in the coming months.

So with that, let’s move on to our Neurology franchise. The Neurology franchise continues to deliver strong growth of 13% at constant exchange rates, achieving CHF9.3 billion in sales. Starting with Ocrevus, the market leader in MS, and more specifically Ocrevus Zunovo, a recently launched subcutaneous formulation. The launch is progressing as planned and we continue to see very positive signals. In the U.S., more than 50% of Zunovo patients are naive to Ocrevus and we see accounts that have not used Ocrevus IV in the past prescribe Zunovo. As we’ve said earlier, Ocrevus Zunovo expands the addressable market for Ocrevus, and it’s not simply just about converting IP patients to subcutaneous. So far, we have more than 25,000 patients globally on Ocrevus Zunovo, and while we are waiting for a permanent J-code to be issued in April of this year, in the U.S. we would expect that that permanent J-code will lead to an acceleration of uptake in the U.S. and we remain quite confident in our CHF2 billion incremental sales projections for Zunovo.

Looking at Ocrevus as a whole, we closed the year with 9% growth. Q4 U.S. sales were negatively impacted by Hurricane Helene which as many of disrupted IV supplies and therefore reduced IV administration capacity, as well as some modest year-end buying patterns. That having been said, the first few weeks of sales in 2025 have been quite strong and we expect global sales growth to be in line with what you saw in 2024, so overall high-single digit growth. Evrysdi maintains its strong global position in SMA achieving 18% growth in 2024 and we expect similar global growth rate in 2025. We are anticipating approval of the tablet formulation for Evrysdi later this year. The tablet simplifies storage, eliminates the need for cold chain, and increases the ease of administration, three great benefits for patients.

If needed, that tablet can be dissolved in water. We are looking forward to bringing this innovation to patients and to further expand on the Evrysdi best in disease profile. Elevidy is the first gene therapy for DMD has now been used to treat over 80 patients in the ex-U.S., ex-EU region. Additionally, earlier this week we shared positive top line results from the two year follow-up of the EMBARK study, which will be shared with the EU regulators and I will talk a little bit more on that in a minute. Last December we also shared the top line results for the Phase IIb PADOVA study in Parkinson’s. This is what I’ll cover in more detail in an upcoming slide. So another big outlook year in 2025 for neurology in particular, this is going to be quite the year for MS.

Ocrevus high dose data is expected and has the potential to be best-in-class, best in disease setting a new standard care at MS. We also have the long anticipated Phase III readouts for fenebrutinib in RMS and PPMS, which we continue to believe has best-in-class potential based on the strong Phase II data that we’ve seen. There are two Phase II readouts for a GYM 329 expected in 2025 in combination with a Evrysdi in SMA and as monotherapy in FSHD. And last but certainly not least, we expect to share additional Phase I/II data cuts for trontinemab in Alzheimer’s disease at ADP and CTAD. Gated upon these results, we are planning to move tronti into Phase III by the end of the year and with FPI to be achieved in the second half. So let’s take a little bit of a closer look at the two year EMBARK data for Elevidys, which we shared on Monday.

The Phase III EMBARK two year data clearly reinforce the significant and sustained functional benefit for DMD patients. This benefit is seen across the primary and two key secondary functional endpoints of NSAA, Time to Rise, and the 10 meter walk/run when compared to propensity matched external cohort control. As you can see in the graph on the left, Elevidys is favored in all three of these functional endpoints, and functional differences between patients treated with Elevidys and the external control are getting larger between one year and two years after dosing. Additionally, pooled three year data from the studies 101, 102, and cohort 1 of study 103 demonstrated consistent and durable clinically meaningful benefits compared to external control.

Combined, we believe that this underscores the positive impact that Elevidys can have for DMD patients, their families and caregivers. We plan to present both data updates at MDA and share the EMBARK two year data with regulators to support ongoing approval processes. Moving on to Prasi in Parkinson’s. In December of last year we shared that PADOVA missed the primary endpoint. However, a suggested possible benefit in patients with early-stage Parkinson’s on L-Dopa treatment was observed. This was a pre-specified analysis and these patients were accounted for 75% of the trial population. Further data evaluation is ongoing and we’re awaiting additional insights from the open-label extension. Together with regulators, next step for Prasi will be determined later this year.

To remind us all, we continue to see this as a high risk, high reward opportunity, but given the unmet need, we did feel like it was important to let this trial play out a little bit longer. So with that, let’s move on to Immunology. In 2024 our immunology franchise achieved CHF6.3 billion in sales and grew at 5% at constant exchange rates. The key growth driver here is certainly Xolair and its launch in food allergy. We are very pleased with the launch uptake having reached the milestone of 40,000 patients on treatment. As I mentioned in Q3, we expect a year-over-year growth momentum in the mid-teens for 2025. Our second key growth driver here was Actemra. As we mentioned in Q3, the U.S. and EU biosimilar launches continue to be slower than expected.

We currently expect biosimilar erosion to pick up speed in the coming quarters, especially in second half of this year. We had previously shared with you the exciting news of positive Phase III data for Gazyva in lupus nephritis, a program you all know that I’m very fond of. We look forward to presenting the full data set at the World Nephrology Congress in February. Our IR team is also preparing a call in parallel and that data has now been submitted to the U.S. and EU regulators and we would expect approval decisions later this year. Going to our Immunology outlook and staying with Gazyva for the moment. We expect Phase III data from our ALLEGORY trial in SLE later this year. Astegolimab in COPD is also expected to readout later this year, and there are multiple upcoming developments in our anti-TL1A portfolio which I will talk about now.

So I am very excited to share the progress that we’ve seen with our TL1A program recently. As you know, TL1A is a highly validated pathway that’s important in a number of disease areas. We previously shared that our Phase III and UC is ongoing and enrolling rapidly. And that our Phase III in Crohn’s is expecting FPI this quarter. It’s safe to say that we’re moving at pace with our IBD trials, but as you know, we are not stopping there. We did share at JPM that we are initiating a Phase IIb trial in atopic dermatitis and a Phase Ib trial in MASH in Q1, with additional indications under consideration. We’ve also added an anti-p40/TL1A bispecific to our pipeline and that Phase II and IBD will initiate later this year. Now moving on to Ophthalmology.

So ophthalmology sales reached CHF4 billion last year, with an impressive growth rate of 44% at constant exchange rates. This franchise is led by Vabysmo which continues to expand its U.S. market share across all three indications. Before we get started, I did just want to call out that after our last IR call, we were informed by the third-party vendor that provides our market share numbers of a restatement of the Q3 U.S. market shares. We believe that this was related to stock-outs of other products included in the market definition, primarily [indiscernible]. To account for this, the Q3 values were restated to improve accuracy. Because of this change, you can’t directly compare the Q values here — the Q4 values here to the ones that we shared at Q3.

If you do compare the restated Q3 values to the Q4 of Vabysmo market shares, we expanded in each of its three indications by roughly 3 percentage points. We expect that you’ll once again be able to see the expanding market shares when comparing Q1 2025 to the Q4 ‘24 values you see here. We remain confident that the Vabysmo is well on its way to becoming a new standard of care. Our share of naive patients within the new-to-brand patient segment remains greater than 50%, indicating a very strong preference of ophthalmologists use Vabysmo in the frontline setting. Performance in the U.S. in Q4 was impacted by the significant channel filling we saw immediately after the launch of pre-filled syringe. So we saw a little bit of a spend down in Q4, but we are seeing a strong trajectory for Vabysmo in our January sales today.

Staying on the topic of our next generation pre-filled syringe, we achieved EU approval in Q4. U.S. conversion rates continue to climb to above 85%, clearly indicating that HCPs are very eager to use the simplified administration option. Regarding the 2025 outlook, we expect to see continued strong growth and further market share expansion. And as I said, we remain confident that the Vabysmo is well on its way to be the new standard of care. Moving on to Susvimo. Our AMD commercial relaunch in the U.S. is on track with roughly 100 implants completed in 2024. As a reminder, in this stage of the launch, it’s all about getting new ophthalmologists exposure to Susvimo and trained on how to perform the implant and refill exchange procedures. This is very much a story of going slow to ultimately go fast.

For 2025, we aim for a few thousand implanted eyes. Also, in 2025, we expect to complete the EU filing in AMD. And lastly, our new NME vamikibart which could become the first IL6 in ophthalmology, is expected to have pivotal results in UME later this year. And finally, before I get to our 2024 and 2025 news flow, I wanted to take a quick look at how our pipeline reshaping is progressing. Complimenting on what you saw from Thomas earlier, I’d like to highlight our continued efforts to strengthen the pharma pipeline. You can see the different additions and removals over time, and there are two recent additions in Q4 that I just want to call out. the allogeneic CAR-T that we added as part of the Poseida acquisition and the ADC DLL3 in small cell which was added to our pipeline via a deal with Innovent.

All-in-all, we brought in 10 assets via high value partnerships since Q2 2023 and at the same time, our internal R&D engines pRED, gRED, and Chugai delivered 14 new NMEs. Next, I want to quickly show you the final 2024 news flow. This slide well from all of our quarterly results last year. There were three final updates in Q4, which you are aware of, the tiragolumab in first line PDL1 positive non-small cell was negative. As previously mentioned, the readout for Prasi and then trontinemab in AD had positive interim data cut which we did present at CTAD. And so with, that let’s take a look at what we can expect in 2025. As mentioned by Thomas, we expect 12 key Phase III readouts this year and this includes four NMEs but also importantly seven Phase III enabling readouts.

So let me just quickly highlight some of the key Phase III readouts. We have the divarasib program in first-line and second-line HR positive metastatic breast cancer. We have Lunsumio plus Polivy in second line DLBCL. We have Ocrevus high dose in RMS and PPMS, Fenebrutinib in RMS and PPMS, Astegolimab in COPD and Vamikibart in UME. In addition, we also have multiple Phase III enabling readouts including NXT007 in Hemophilia A, Tronti in AD, GYM 329 in SMA and FSHD, zilebesiran in uncontrolled hypertension, CT-868 in Type 1 diabetes with obesity and CT-996 in obesity with type 2 diabetes. As you can see, it is going to be quite a busy year and I’m looking forward to sharing the news flow with you as updates come in. I am also pleased to say that as we get to the end of January, we already have our first green tick and that is for the Lunsumio subcu filing in Europe.

And now, I will hand it over to Matt to guide you through our diagnostic results. Matt?

Matt Sause: So good morning, good afternoon, everyone. It is my pleasure to present the full year 2024 Diagnostics division financial results. So as you heard from Alan and from Thomas, our Diagnostic sales grew 4% at constant exchange rate and our base business grew at plus 8%. Now the increase was mainly driven by our strong base business growth of 8%. But as you previously heard, this is the last time we will discuss COVID-19 sales separately from base, as this disease has transitioned into an endemic state. And so now I’ll walk you through the results by our different customer areas. So first, sales in our core lab increased at plus 8% with strong momentum driven by immunodiagnostics which grew at plus 9%, and clinical chemistry which grew at plus 8%.

Molecular diagnostics had an increase of plus 4% due to strong growth in our virology base business which grew 10% as well as our donor screening blood screening business which grew at plus 17%. Now this was again offset by lower COVID-19 PCR lab based testing sales, and excluding those, molecular lab grew at plus 8%. Our new customer area which you heard about earlier, Near Patient Care had a decline of minus 17% and this is mainly due to lower COVID-19 rapid antigen testing, as well as the steady decline of our blood glucose monitoring business at minus 4% due to the market shift to continuous glucose monitoring. Our point of care business grew at plus — our base point of care business grew at plus 6% and this is really driven by our point of care molecular diagnostics business.

Excluding COVID-19 sales, Near Patient Care declined minus 1%. Not to be outdone, our pathology lab grew at plus 17%. This was mainly driven by our advanced staining business which grew at plus 12%, as well as companion diagnostics which grew at plus 41%. So now I’d like to shift gears and walk through the sales results across the different regions. So first, excluding COVID-19 business, we see strong base business growth across North America, EMEA, and LATAM, and in North America, the base business excluding COVID grew at plus 8%. In EMEA, the base business excluding COVID-19 grew at plus 6%. In LATAM, the base business excluding COVID-19 grew at plus 23%. Now in APAC, the base business growth excluding COVID-19 grew at plus 3%, and sales growth in Q4 was impacted by volume based procurement and reimbursement reduction for immunoassay in China.

Now while our consistent ambition for the diagnostics business is to grow at mid to high-single digits, as a result of the headwinds from VVP and the reimbursement reductions in China, our ambition for 2025 is to grow the business by low to mid-single digits which would be a one year dip with a return to our consistent ambition in the years beyond. I would also call out that China is still a critical market for us and we continue to be the market leader. So now let me walk you through the diagnostics divisional P&L line by line. So core operating profit on sales of CHF14.3 billion increased by 12% at constant exchange rate versus 2023. Cost of sales increased by 1% though this is driven by favorable product mix really due to lower sales of COVID-19 rapid antigen tests.

R&D costs increased at plus 2% mainly driven by the integration of LumiraDx as well as investments in some of our upcoming late stage launches such as sequencing, Mass Spec, and Continuous Glucose Monitoring. SG&A increased at plus 3% driven by those high distribution costs you heard from Alan, as well as increased sales volume and the commercial costs associated with the preparation of these upcoming launches. This resulted in core operating profit of CHF2.4 billion, with a margin of 16.8% at reported currency. So now I’d really like to talk about some of the exciting innovations that we launched in 2024, specifically starting with our Core Lab and our Mass Spec system. So I’m very pleased to announce that we successfully received the CE Mark for our cobas Mass Spec system along with the wave 1 steroid assays.

The current Mass Spec market which is valued at CHF3 billion is predominantly composed of lab developed tests that require specially trained technicians, special laboratory arrangements, and with this launch, we intend to establish and shape the IVD market for automated, simplified, end-to-end Mass Spectrometry testing and driving market expansion. Our ambition is to reach CHF1 billion in sales by the end of the decade. And this year, we will launch over 40 new assays in our first wave which will cover the vast majority of routine Mass Spec testing and a second wave of tests will follow in the coming years. With our easy-to-use solution, which addresses the shortage of skilled labor as I mentioned earlier, as well as the lack of standardization and automation plus it has high level of synergy with our existing Serum Work Area, the launch of Mass Spec presents a real opportunity for us to expand our existing leadership in the Core Lab.

So on the theme of expanding our leadership, I’d like to talk about our cobas 6800 and 8800 version 2. Now I’d highlight that the CE launch of our version 2 update of our high throughput PCR systems, the cobas 68/8800 will further extend our competitive lead in the molecular lab and is field upgradable to our installed base of thousands of 6800s and 8008s around the world. These were the workhorse systems where we responded to the COVID-19 pandemic and they’re going to be an engine for our growth into the future. This update is fully compatible with our new TAGS multiplex assay, such as our Respiratory Syndromic Panel Flex test which we launched last year which tests for 15 different viruses from a single vial sample and will strengthen our position in the mid to high throughput segment of the molecular diagnostics market.

We will have the only high throughput platform capable of syndromic panel testing. With this update, we introduce increased testing flexibility such as the addition of a stat lane for urgent samples, greater automation of molecular workflows through being able to batch up to six assays in a single run and we will offer customizable quality controls that will enable improved run costs. So in addition to those upgrades, we also improve the throughput, the cobas 6800 will increase from 384 to 576 tasks per 8 hour shift. This further solidifies and provides an opportunity to expand our leading position in molecular diagnostics. So not only are we leading on the platform side, I’d like to talk about some of the innovations that we’re introducing as well in terms of the next generation of diagnostic assays.

Specifically, present the recent clinical study results for a Elecsys Amyloid Plasma Panel which consists of two blood based biomarkers, p-Tau 181 and Apolipoprotein E. Alzheimer’s disease continues to be a global burden affecting more than 50 million individuals annually and is projected to reach over 80 million people by 2030. However, two-thirds of people experiencing cognitive symptoms remain undiagnosed and diagnosis usually takes more than a year and up to two years, requiring subjective cognitive tests as well as imaging analysis. In this study, we enrolled 492 patients with suspected cognitive impairment across 30 different study sites. Our results demonstrated excellent clinical performance and a negative predictive value of over 90% independent of comorbidities and demographics for both the EAPP panel, as well as p-Tau 181 as an individual biomarker.

Pending regulatory clearance, we hope this test will provide a minimally invasive blood based test to rule out Alzheimer’s disease and decrease the time to definitive diagnosis. This will have a significant impact on patients, their families, and healthcare systems around the world. So we talked about favorite slides I guess and I’d like to say this is certainly my favorite slide. Last year, we said 2024 was going to be the biggest year for diagnostic launches, and what I’m proud to say is that we achieved all of those. We received all 12 key launches shown here, including our first CGM, the Accu-Chek SmartGuide, our serology blood screening solution for the United States. We’re already taking significant market share and winning business. The first clinical Mass Spec solution as I mentioned earlier, as well as our next-generation clinical chemistry and ISE solutions.

Now in 2025, we have additional important launches. I like to call it a few by customary. The first is what we just spoke about, our Elecsys p-Tau 181 which as I mentioned before could provide a convenient test to rule out Alzheimer’s disease. Furthermore, we’ll expand our Mass Spec menu with more than 40 assays in the first wave. For the Molecular Lab, we will launch cobas BV/CV. It’s a molecular test to aid in the diagnosis of bacterial vaginosis and Candida vaginitis, which will help complete our menu in the rapidly growing STI market segment. Now we’re also approaching this from the point of care side. For Near Patient Care, I’d like to call out our cobas liat CT/NG which is our first green tick of the year, a rapid multiplexing test that can detect and differentiate Chlamydia and Gonorrhoeae at the point of care in a CLIA-waived setting which we just received FDA approval.

In pathology, we will have a major update to the Roche Digital Pathology platform with enhanced image management, a fully redesigned user experience, and enhanced interoperability with third-party scanners. Combined with the primary diagnosis claims for our DP200 and DP600 scanners last year, this positions us well for the rapidly growing digital pathology market segment. And last but certainly not least, I’m pleased to invite you to our upcoming Diagnostics IR events. We at AGBT will be unveiling our core sequencing technology and I’d like to invite you to an IR event taking place virtually on February 20. During this event, we will provide an update on our sequencing technology as well as hold a Q&A session. And second is, our Annual Diagnostics Investor Day on May 27.

This is going to be a hybrid event held in London and online. We have an exciting agenda covering all of our customer areas where we will further discuss our Roche — forthcoming Roche Sequencing Solution as well as our entire pipeline across all customer areas. So I look forward to seeing you there. And with that, I will hand it over to Bruno.

Bruno Eschli: Thanks, Matt. And I will just quickly use the opportunity to have here a final slide to sum up on the upcoming IR events, a couple of them we touched upon already. The next one is to come already next week, Friday, February 7. This will be Immunology, the data, the Gazyva in Lupus Nephritis which are presented at the World Congress of Nephrology which we will have some time to discuss. Then the update on NGS mentioned by Matt and then on April 4, we’ll have a Neurology update. Here we have a couple of topics to cover. First of all, it’s the Elevidys EMBARK two-year data in DMD where we just had the top line release which we expect to be presented at MDA. And then two additional data sets from ADPD, Trastuzumab, the PADOVA data from end of last year and then the latest data cut for the Brainshuttle.

You see then as mentioned already by Matt again, the Diagnostics day is scheduled for May 27. That’s a live event again in London with the NGS solution being the highlight this time. And then we already set also a date for Pharma Day in the second half which is now scheduled for September 22, so that you can put it in your calendars. Just looking at the intense news flow ahead of us in ’25, I think there will be many more IR calls, especially, in the second half. I can imagine we will have something on Hematology midyear, but then also I would say ASD, CTAD just to call out a view of the upcoming medical conference in second half where we are likely to have additional calls. And with that, I think we can open the Q&A session.

A – Bruno Eschli: The first question would go to Richard Vosser from JPMorgan. Richard, please.

Richard Vosser: Thanks very much, Bruno. Two questions from me, please. Firstly one on the Vabysmo. I think we understand the temporary weakness in the quarter. But I wanted to ask about the launch of a pre-filled syringe for high dose CLIA and how you would see that affecting Vabysmo? Obviously, very key and you’re doing really well with yours. But in Europe, they have a pre-filled syringe for high dose CLIA, so thinking about how that might affect you in ’25? And then second question, just on Giredestrant, maybe a little bit of a push out on the persevERA data into Q4 and October on clinical trials. Just what do you see as the implications for that on your thoughts around the expectations for the results of the trial? Thanks very much.

Teresa Graham: I’ll start with the last one. So I don’t think that has really any implications on the results. Just sometimes these things take a little bit longer and that’s what we saw with Giredestrant. The pre-filled syringe, so I would just like to say right now, we’re really not seeing any impact in any part of the world from high-dose EYLEA. And the pre-filled syringe that we have in the market is materially different than the pre-filled syringe that EYLEA has. It has one-hand administration which when you think about it, if you’re doing 1,000 shots or 100 shots a day, having that really ease of administration is super important. So I would say we definitely have device preference going on our side. And quite frankly, I think just what is inside the syringe matters a lot.

And — but Vabysmo is clearly continuing to distinguish itself from an efficacy and safety standpoint with the added convenience of the pre-filled syringe, I would just continue to see it growing and continue to establish itself.

Bruno Eschli: Maybe Richard, and let me quickly add to your first question on giredestrant. I think there was no real change in the underlying timelines. That’s more an issue with when certain things get updated at clinicaltrials.gov. For the both studies, evERA and persevERA, we expect the data to come in somewhere around mid-year, second half. We cannot be more specific as you know these studies are event (ph) driven but nothing really fundamental that changed here. Any additional questions from your side?

Richard Vosser: No, Bruno. And Teresa, thank you very much. That’s great. Thanks a lot.

Teresa Graham: Thanks, Richard.

Bruno Eschli: Thanks. Then the next questions go to Emily Field from Barclays. Emily, please.

Emily Field: Hey, thanks for taking my question. Just on that last point, I think Teresa said during the prepared remarks that persevERA would come in Q4. So I just wanted to clarify that and make sure that’s correct. Yeah. So then my — I will ask two questions. So firstly on the high dose Ocrevus. So you’ve helpfully quantified the incremental revenue opportunity that you see from subcutaneous Ocrevus. But I was just wondering if you could help us frame how to think about the commercial potential for high dose Ocrevus. Obviously, this trial is versus the standard dose. So do you see this as additive to the franchise or just transferring patients over, and does high dose provide any opportunity to extend IP? And then secondly, I know that we’re expecting first pivotal readouts from Orforglipron later this and you’ll be getting if successful a royalty from that.

But I wanted to ask more just on, whether you see the success or failure of that compound as having a read across to CT-996? And if you could just remind us on how the two molecules are differentiated? Thank you.

Bruno Eschli: Emily, maybe just to quickly add I think as said on the timelines of Giredestrant mid — mid-year to second half its, of course, we cannot be more specific right now. As said, event driven. You will get the information as soon as we have it. And then the other question.

Teresa Graham: Yeah. So as far as high dose goes, I don’t think we have actually shared what our commercial expectations are for high dose. Once we get the data, we will be able to share some additional information with you assuming that the data are positive. From an IP perspective, I think should high dose be positive and we begin to look at putting it into devices, I think there is definitely some opportunity for expanded IP and we’ll be able to comment more on that once we get the results.

Thomas Schinecker: Should I take the last one?

Teresa Graham: Yeah.

Thomas Schinecker: Yeah. So on that one, I would say the difference clearly is that CT-996 is actually a small molecule. So from a production standpoint it has advantages versus a peptide. So it’s very different in terms of the two molecules. Regarding royalty income, that would not be obviously this year. But in case it’s positive then in future years there would be additional royalty income.

Bruno Eschli: Emily, did we answer your questions or do you have a follow-on question?

Emily Field: No, that was great. Thank you.

Bruno Eschli: Okay. Then we move on. Next one in the row is Sachin Jain from Bank of America.

Sachin Jain: Hi, there. Thanks for taking my questions. Two, please. Teresa, just on the surgs — the two surgeries, maybe just give a bit of big picture on evERA and persevERA. How you think about the probabilities of those two studies differing? And perhaps you could just touch on the commercial opportunities of both. I think evERA is generally perceived as quite small. If that’s incorrect, if you could just clarify? And then Thomas, just a big-picture question. Your second favorite slide after cash I think was the group sales slide showing sequential growth at 9.9% (ph) to 11% the last few quarters. So I just wanted to touch on what you think the ’25 headwinds are that slowed us to mid-single digit for this year other than Actemra which I think is less than 1%, is there anything we’re missing there? Thank you.

Teresa Graham: Do you want to start with that and I’ll…

Thomas Schinecker: Sure. I can go first. I think one of the headwinds was mentioned by Matt. So the volume-based procurement that’s happening in China. And other than that, I would say, look, we’re at the beginning of the year. We have almost one month behind us. And let’s see how the year goes.

Teresa Graham: And in terms of Giredestrant, I think we do believe that this has the opportunity to be a multi-billion dollar franchise when you look at all of the different indications. And I think persevERA has that patient population is first-line endocrine-sensitive, that’s 60% of first-line patients. The pionERA patient population is the first-line endocrine-resistant, that’s another 40% of patients. So between the two of them, we really get the full first line covered and evERA again gives us another set of that patient population that we would need to cover the entire spectrum of endocrine-sensitive patients. So I think we believe that we actually have the trials that would allow us to cover every single patient population and ultimately get to that multibillion-dollar opportunity.

Sachin Jain: Just anything on the relative probabilities of the two studies, to the extent you’re willing to comment?

Teresa Graham: Yeah. I think…

Bruno Eschli: I think Sachin what we have been communicating is of course the success likelihood for the later lines is a bit lower than for example the adjuvant setting next year. This is just logical if you look at it. You have the treatment on top of other treatments and you have a more diverse patient population which has some level of resistance which was building up over time. It’s not only ESR1 mutants, it’s also other resistant mechanisms which come to play. And I think this just leads to an overall lower success likelihood. Next year then ‘26, I think this is the big one. The adjuvant study to watch out and I think this is also the most [Technical Difficulty] opportunity which will allow us if successful then really to reshape the landscape and the treatment paradigm.

Sachin Jain: Thank you.

Bruno Eschli: Any other — Sachin, any other questions or this was all from your side?

Sachin Jain: No, that’s perfect. Thank you.

Bruno Eschli: Yeah. Okay. Then we move on. Next questions would go to Matthew Weston from UBS. Matthew?

Matthew Weston: Thanks, Bruno. Good afternoon, everybody. Two for me, please. The first on a Ocrevus Zunovo. It’s clearly launching well. One thing Thomas called out in terms of the sustainability of growth at Roche was the limited biosimilar exposure. Obviously, one of those in the future will be normal dose Ocrevus. Can you help us understand of any additional IP that that Zunovo brings? What should we be thinking of in terms of the long-term potential there? And then secondly, sorry to stick on patent expiries. But one of the statements that captured a lot of attention at the Pharma Day was that you had high confidence that we would not see us Xolair biosimilars entry in 2025. Can you now give us any understanding of how far you think that protection will go, especially given you called out investing in Xolair as one of the reasons for investing in significant SG&A in Alan’s comments.

Teresa Graham: Great. Two good questions. So when you look at the Ocrevus franchise between the — Zunovo, between other device formulations that we might be looking at high dose, I think you can assume that we are considering ways to extend the patent life of Ocrevus. So I can’t say more now but I think you should consider you should take comfort in the fact that we’re looking at this quite actively. In terms of patent expiry for Xolair, we can confirm that there will not be biosimilar entry in 2025.

Bruno Eschli: And maybe to add here, Matthew, on the IP situation for Ocrevus, I think in case Ocrevus high dose would work out, I think this would have given additional patterns. If a combination of Ocrevus high dose and subcutaneous would then be another development opportunity would come with a newly developed injector for example would give another layers of IP. So I think there are several layers which should help us to prolong the franchise.

Matthew Weston: Bruno, if I’m allowed — apologies to others. If I can just ask one additional follow-up.

Bruno Eschli: Yes, please.

Matthew Weston: Because you raised high dose of Ocrevus, Emily asked about it as well. It’s obviously one of the next readouts for Roche. You’ve got two arms, the people who are I guess let’s call it overweight and I understand why you hope it will work there. In the normal weight cohort, what evidence gave you confidence that more Ocrevus might give you more efficacy? Because I recall in the past Roche always being very strident about the fact that Ocrevus gave full CD20 inhibition in the setting. So what can more bring?

Teresa Graham: Yeah. So I think as we designed the high-dose studies, we looked very carefully at the Phase II studies where we actually saw the increased efficacy when you reached higher saturation points. So I think we are — that certainly would make sense in overweight patients. But I think we are — our assumption is that that might actually also extend into normal weight patients. And that’s just based on the data that we’ve seen today.

Matthew Weston: Thank you. Thanks, Bruno.

Bruno Eschli: It was a retrospective analysis which we did Matthew I think and we have looked into all confounding factors and imbalances in the different subsets. But it’s not that we believe that the effect we have seen would primarily driven by weight.

Teresa Graham: Exactly. Again, in those exploratory analyses post the Phase III, what we did see was just slowing of disease progression with higher exposure to Ocrevus, so hence the high dose study.

Matthew Weston: Thank you, all.

Bruno Eschli: Okay. Then the next questions would go to Simon Baker from Redburn. Simon?

Simon Baker: Thank you, Bruno, and thank you everyone else. Good afternoon. Two questions, if I may please. Firstly, one for Alan. I know you don’t guide on cost lines. But I just wonder if descriptively give us some indication of the movement we should expect in the various cost lines to get to the implied margin expansion within the ‘25 guidance? And then secondly on the anti-TL1A, the move into MASH, it’s obviously a very interesting and potentially very large category. I think you’re the first person or first company to move into the clinic in that indication. I just wonder if you could give us some color on the basis for moving into MASH with the TL1A. Thanks so much.

Thomas Schinecker: You want to take the cost question?

Alan Hippe: I can.

Thomas Schinecker: Yeah.

Alan Hippe: Yeah. I think first of all, I have to say, Simon, guidance is the guidance I think for 2025 and that’s what we orient ourselves on. Everything in between, certainly needs flexibility and will allow us to have. I think we have said that we want to be how should I say, flattish about R&D. I think that’s pretty clear. That’s why I can mention it. I can also mention that in other operating income, we expect a little bit less gains from product disposals. I think that’s another one. I would argue all the other lines we will apply the best cost discipline which makes sense to do that. But overall the guidance is the guidance.

Teresa Graham: And I think as we mentioned, TL1A is a very clinically validated target in immune disease. But it also has an anti-fibrotic component. And so I think as we were considering where were there opportunities to expand looking at diseases that have fibrotic pathogenesis, it just made sense to kind of look at something like MASH with TL1A.

Simon Baker: Okay. Thanks so much.

Bruno Eschli: I am struggling here. I have a technical issue, I cannot open my screen window right now. It is hidden somehow. So I don’t know what to do. I think we probably have to stop the call for some technical reasons. I basically cannot help this anymore.

James Quigley: Bruno has asked me to unmute. Shall I ask a question?

Bruno Eschli: Yes, please.

James Quigley: Thanks. Hi everyone, it’s James Quigley here from Goldman Sachs. So two questions, please. So first one on the margin. So I mean you had some nice increase in the margin across both divisions this year. Given this increase and with the move over time away from specialty pharma areas that have been higher margin maybe to some more primary care areas. And how does it impact your ambition to defend the margins? You’re keeping R&D flat, as you just mentioned, in ’25, but how should we think about the margin levers over the medium term? And secondly on prasi, as you mentioned, we’re going to see some next steps this year. But what are the potential options here? Given the data you’ve seen so far, what is the probability it you could potentially move straight to registration or would you need to run a — is it more likely that you need to run a Phase III and then again, how long could that last? Thank you.

Thomas Schinecker: I can take the first question. As I’ve stated before, the goal is to at least keep the margins as percent of sales stable, that means, of course, in absolute terms, we’ll continue to increase the margins. And that was say, at least, ambition it can always be higher than that, but the point is to at least keep it stable. And as you can see for 2025, we actually intend to expand our margins. So we’ll give you more updates then as we get to ’26 – FY ‘26 and so on. But long term, that would be my clear guidance.

Teresa Graham: And as far as prasi goes. So the open-label extension study is continuing and we will evaluate that data over time, talk with regulatory authorities, and see if the signal that we saw in the first part of the trial sort of continues to reveal itself. A decision on what we will actually do with that trial, I think will come after we see more information. It would be highly unlikely that would move — we would move straight to registration. This remains, I think, as we’ve always said, a very high-risk, high-reward program.

Bruno Eschli: Henrik, maybe you can please take over the moderation and just ask the next one in the row to — yeah, open the line and ask them to ask the questions.

Operator: Sure. So next one in line is Richard Parkes then. So, Richard, I open now your line.

Richard Parkes: Hi. Thank you very much for taking my questions. First one, I’d just like to push you a little bit more on Giredestrant because generally investors are quite skeptical about the class’s potential outside of the ESR1 mutant population. So can you just help us understand what gives you optimism in the persevERA study around broader potential outside ESR1 mutant patients? And can you confirm that the evERA study is powered to show a benefit in that population, therefore, obviously would be lower risk? And then secondly on TL1A, obviously, with another competitor showing proof of concept data, the potential of that class has become a lot more visible to investors. And speaking to KOLs, it sounds like development of a biomarker is an important aspect to driving uptake of the class, which seems to position you quite positively given your experience in inflammatory bowel disease and with biomarker developments.

So can you talk about where you’re differentiated in development of a biomarker and how yours differs to other companies? Thank you.

Teresa Graham: Yeah. So let’s start with TL1A. So, I mean, I think that we haven’t said much about the biomarker other than it’s there and we will consider it through the development program. I think we are very excited about this molecule and this pathway. And to your point, our prior experience in IBD and our experience with biomarker development, our experience in many different therapeutic areas and diseases where TL1A could potentially be relevant, makes us very excited about the full opportunity of this molecule over time. As you know, we’re in a head-to-head race with Merck. We’ve got another molecule that’s sort of further behind. But I think all of the data that we continue to see across the different molecules are out there, reinforces that this is a valid pathway, that these molecules have benefit.

And I think we’re — yeah, we’re really eager to actually see what it can do in patients. So definitely more to come on TL1A. To answer your last question first, so evERA is powered for both ITT and ISR1 mutants. So we are confident that we have powered the trial appropriately. Just to remind everyone why I think we are so — why we were so excited about giredestrant, when the program kicked off, I mean, it is the highest preclinical potency of any oral [indiscernible] that’s out there. It seems to be combinable with all CDKs and it’s well tolerated at all doses, which I think again, it makes it quite different. It has true endocrine backbone potential, which is very different than what we’ve seen with some of the other drugs that are out there.

Giredestrant has shown robust data in early trials and in metastatic settings and as a monotherapy and in combination. So I think the trials that we have out there right now, they start to answer some questions. The big kahuna (ph) is kind of coming in 2026. But I think this is a molecule which we’ve seen evidence of efficacy and so now we just need the trials to read out.

Richard Parkes: Thank you. Can I just ask one follow-up? Can you just confirm that with your TL1A you do have a biomarker integrated into the Phase III trials that are underway and planned?

Teresa Graham: Yes.

Richard Vosser: Thank you.

Operator: So, Richard, I hope that answered all your questions. In that case, the next person in line would be Rajesh Kumar. So I’ll give you now the possibility to ask your question.

Rajesh Kumar: Great. Thank you very much for taking my question. On the GYM asset, can you talk through what your ambitions are in the — in combination with obesity development, please? That would be very helpful. And then, swiftly revisiting trontinemab. Can you give some color on the timelines of when are we going to hear from you again and what should we be looking out for when you update us on your go/no-go decision?

Teresa Graham: Yeah. Great. So As I mentioned, GYM 329 is active in a number of places. So we’ve got the combination trial with Evrysdi as well as the monotherapy trial in FSHD. But we are also looking at it in combination with our obesity assets. We have some preliminary data in-house. We have made the decision to move forward into combination trials. And it’s still very early days. But I think we can easily say that this is definitely something that we’ll be taking forward. So more to come, probably not too much more I can say right now. With regards to tronti, we’ll share additional data cuts of the ongoing dose-finding study at ADPD in half one and CTAD in half two. We’re currently awaiting the completion of the part two expansion cohort to inform the final dose.

Once we have the final dose, we’ll be able to move into Phase III. I think you heard at Pharma Day last year and I reiterated at JPMorgan at the beginning of the month, that trontinemab is one of the fast-track assets that we’ve been really focused on through R&D excellence. And so we’ve been working very closely to actually do as much of the front loading for that Phase III trial as we can so that once we get the final dose we’ll be able to move very, very rapid to Phase IIIs. So expect to hear more from us on that this year.

Rajesh Kumar: Thank you.

Operator: Do you have any follow-up question, Rajesh?

Rajesh Kumar: No. Thank you.

Operator: All right. So thank you so much. And the next one in line will be then Justin Smith from Bernstein. We can’t hear you.

Justin Smith: Can you hear me?

Operator: Yes.

Justin Smith: Thanks. Two from me. Justin Smith, Bernstein. Number one just on 007 and sorry if I missed this, but it seems as though since the CMD it’s been moved up to a non-risk adjusted peak sales target of over CHF3 billion. Just wanted some color on that. And then just one on astegolimab. Might be a little bit too early to ask. But one of your competitors sort of suggested that severe COPD there’s more sufferers, but efficacy of the biologics is probably likely to be lower than in severe asthma. So just wondered if you had any thoughts on that. Many thanks.

Teresa Graham: Yeah. So I’ll answer the ASD (ph) question first. I mean, that’s why you run the clinical trial, right? So we’ll see. We think there’s a good scientific rationale for why this could work in COPD. We’re covering a very broad patient population, it’s an area of very high unmet need. So yeah, I would — we’ll know this year if it works. So stay tuned on that. But again, to your point, it’s a little bit early to speculate. In terms of NXT007, if this molecule lives up to what we believe it can do, it will for sure become a new standard of care in Hemophilia A and therefore easily a multi-billion dollar indication. But it is — the data that we’ve seen so far is exciting. It’s early days. More to come.

Justin Smith: Thank you.

Bruno Eschli: Okay. I’m back. So finally I made it. Had to restart my computer. I think we have one final analyst in the row. I think it’s Ben Jackson from Jefferies. Ben, please.

Thomas Schinecker: I think he is — may be on mute. We can’t hear you.

Bruno Eschli: Ben. Can I…

Benjamin Jackson: Is that better?

Bruno Eschli: Yes, we hear you.

Benjamin Jackson: Perfect. Thank you. Sorry about that. So just two quick ones for me if okay. So the first would be if you’re able to provide any color about the shifting back of the vamikibart in DME into ’26. Is there any particular reasons behind that and perhaps is there any competitive thoughts behind that decision? And then second, just to finish off. Any additional changes in thinking about BD, especially with areas of interest following the Poseida acquisition? Does that perhaps associate the need for adding more oncology to the pipeline or is that all still within scope? Thank you.

Thomas Schinecker: Let me just answer the second question first and then I can hand over to you. I mean, you have seen the five therapeutic areas that we are really focusing on. Cardiovascular metabolism, oncology, neurology. Those three contributing about 50% of global disease burden. Immunology really plays across many disease areas. And then you have, of course, a very strong franchise in ophthalmology. So you can imagine that these are the areas that we are looking into in terms of further strengthening our pipeline. Now, as we’ve done over the last couple of years, we always look very much at the science. How much data is available, that gives us the confidence like we’ve had the data available for TL1A. And then we also look at the financial terms and we try to just think about whether or not it makes more sense.

I think we have been very diligent on that, and I think we’ve made a number of very interesting acquisitions. Now, let me just highlight on Poseida, because we already had the partnership with Poseida in oncology, and we actually saw some of the data in the lupus nephritis, and there were some publications on that. And so, in order to go and move into autoimmune disease, where we see that there is a big role for CAR-Ts in the future, we also said we’ll go into this acquisition. So deals like that, I think, are really in the sweet spots. And you can see that we will continue to be very disciplined, and we’ll continue to make sure that the deals fit into our strategic agenda.

Teresa Graham: And in terms of vamikibart, we expect to have data in-house later this year, and we’ll then obviously be making decisions about how we move that program forward. I think it’s worth noting that we have several different opportunities to advance IL6 in ophthalmology, including bispecifics and trispecifics. So vamikibart is certainly only one molecule in a whole collection of molecules that could potentially bring IL6 promise into ophthalmology.

Bruno Eschli: Ben, did we answer all your questions? Okay. If there are any additional questions, if there are no additional questions, then I would hand back to Thomas for a final remark. Thomas, please.

Thomas Schinecker: Yeah. Thank you very much, Bruno, and thanks to everyone for your great questions. I believe we managed to deliver great results in 2024. And I hope it shows that we do what we say and we also deliver. You can count on that. And we have a great momentum as we go into this year. And we also have a rich pipeline news coming this year. And as mentioned, we’re very focused. We’re very disciplined, so that we continue to deliver for our investors. Thank you very much.