Almirall (Madrid:ALM) Q2 2026 Earnings Call

0:00 Good day, and thank you for standing by. Welcome to the twenty twenty six First Half Earnings Call of Almirall. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer

0:25 Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pablo de Vason, Head of Investor Relations. Please go ahead. Thank you very much, Sharon, and good morning, everyone. Thank you for joining us for today's quarterly earnings update and review of Almirall first half year financial results of 2026. As always, the slides we are using today are shared in the Investors section of our website at almirall.com. Please move to Slide number two. Let me remind you that the information presented in this call contains forward looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to materially differ from what we are sharing today.

1:18 Please move to Slide number three. Presenting today are Carlos Gallardo, Chairman and Chief Executive Officer John Karai, Chief Financial Officer and Carl Sigabara, Chief Scientific Officer. Karl will start with the business highlights of the first half of twenty twenty six, followed by an update on biologics and the key growth drivers of our medical dermatology portfolio. Karl will provide you with an update on the pipeline and R and D programs. And then John will go through the financial before Carlos concludes the presentation and we open for questions. I will hand over to Carlos Gallardo, our Chairman and CEO. Please move to Slide number five.

2:07 Thank you, Pablo, and good morning to everyone in the world. Almirall delivered a steady first half of twenty twenty six, broadly in line with our expectations and the trajectory set out at the beginning of the year, with performance expected to build progressively through the remainder of the year. Net sales reached $03,000,000 with European dermatology once again acting as a primary growth engine. These results remain broadly consistent with recent trends and our full year guidance. This is why we are reiterating our full year 2026 guidance with growth expected to pick up towards the second half of the year. Turning to Products. ILUMETRI delivered steady double digit growth around one hundred and twenty five million euros in the first half and remains firmly on track towards peak sales of over $300,000,000 Eglis generated $84,500,000 in the first half, close to doubling year on year. I will provide a bit more context on Eglis on the following slides.

3:08 Among other products, Winthora continues to lead market share across key regions, while Glyciri delivered stable growth overall. We remain closely connected to the dermatology community, strengthening our partnership with physicians through ongoing engagement at key platforms such as the twenty twenty six American Academy, Skin Academy, and European Academy of Dermatology and Brain Neurology Symposium. On the innovation side, we continue to make progress. We have several proof of concept and Phase II programs advancing, most of which are first or potentially best in class. The initiation of Phase II of our anti twenty one monoclonal and IO21, sorry, monoclonal antibody marks, a key step in our either an 80 supportive strategy. Combined with the IL-one wrap, now we have two differentiated assets targeting a disease with significant unmet need.

4:01 We also signed a strategic research collaboration and licensing agreement with Third Test Biotech, adding further depth to our innovation efforts. Karl will revisit our pilot updates in greater detail. Please move on to the next slide for an update on our biologics portfolio. ILUMETRI net sales reached $125,000,000 in the first half of the year, marking a steady 10.5 year on year increase. ILUMETRI continues to demonstrate a solid position in the psoriasis market, maintaining its share within the leading anti IL-twenty three class, supported by real world evidence such as the positive study data presented at the latest AAD and EIDP congresses, which continue to highlight meaningful long term benefits in patients' well-being and disease control.

4:49 Moreover, we see additional opportunity to further strengthen their profile of ILUMETRI. For that reason, we plan to initiate the EVOLVE study in psoriasis to study the effect of the two hundred milligrams dose in biologic naive patients diagnosed for less than two years, further reinforcing ILUMETRI's strong and growing long term clinical evidence base. Karl will provide additional details on the APOF study. Performance remains consistent, and we therefore continue to be firmly on track to deliver over €300,000,000 in peak net sales, even as both the product and the class enter a more mature phase of the growth cycle. Please move to the next slide for highlights. Since its approval in Germany in December 2023, Eglis has rapidly displayed to become our second largest product, underscoring one of the most successful atopic dermatitis launches in recent years.

5:45 Second quarter sales reached €43,000,000 up from around €26,000,000 a year earlier, bringing first half sales to approximately €85,000,000 close to double the level in the first half of twenty twenty five. Despite the positive trajectory of the launch, the performance in the second quarter reflects two factors. First, we must recall that we had a strong performance in the first quarter, which sets a higher base for comparison. Secondly, we experienced some softness in the countries like Germany, where a relatively modest pricing adjustment created a short term uncertainty and we may have resulted in some sales shifting from June to July. In addition, we also experienced temporary minor volatility in certain other countries. Overall, we have not changed our mid- long term view on Eplis, and we expect the strong clinical profile and continued healthy growth in the AD market to support Eplis sales.

6:38 While we do not typically like to comment on individual product sales for the year, we are aware that we're the consent to sit for Eplis and we remain comfortable around that figure. On the clinical side, our collaboration with Lilly continues to support Eplis positioning with extensive lebrikizumab data, including the at long four year results and the ADDERBAL-one pediatric data presented at recent scientific meetings. This week, the EMA admitted the submission of the pediatric indication of EPLIIS. In June, the FDA approved the every eight week maintenance dosing regimen for Eplis in The U. S. This approval further strengthens Eplis profile in atopic dermatitis and supports its long term competitiveness in the market. We are also conducting the ADHOPE-two trial in Europe, which has the potential to support an extension of the dosing interval to every twelve weeks.

7:31 I will now hand over to Karl to walk you through our pilot developments in more detail.

7:37 Thank you, Carlos, and good morning to everyone on the call. On this slide, I would like to focus on the early and mid stage pipeline as a source of future value iteration and upcoming clinical inflection points. Today, we have four proof of concept of Phase II studies ongoing with two additional studies planned to start towards the end of this year. During 2025, we advanced two important programs into Phase II. Our anti IL1RAP antibody in heterogeneity suppurativa and the IL2 mutant Fc in alopecia areata. In addition, our partner Sinsere initiated a Phase II study of IL-two mutant Fc in atopic dermatitis.

8:30 We also recently started a proof of concept study for our anti IL-twenty one antibody in heteroadenitis suppurativa. Looking ahead, we plan to initiate two further proof of concept studies. IL-two, MUTIN SC in SLE with cutaneous manifestation, anti anti AL1REP antibody in an inflammatory skin disease. Taken together, this gives us six proof of concept of Phase II studies with data readouts expected over the next couple of years beginning at the end of twenty twenty six. These programs remain early, but they are anchored in well defined biology and give us a diversified set of potential first or best in class opportunities in area of high unmet need.

9:27 Next slide. While we advance the clinical pipeline, we're also building the next wave of innovation in dermatology. Our approach is to focus Almirall's internal capabilities on deep disease understanding and to partner selectively where external technology can provide the most appropriate modality for another therapeutic hypothesis. A recent example is our strategic research collaboration with Certus Biotech, a Spanish biotechnology company with mRNA and lipid nanoparticle discovery and development expertise. Together we aim to discover novel treatments for rare dermatological diseases and recurrent cutaneous conditions.

10:19 The important point is that this is a partner enabled model. We access differentiated technology while Almirall retains global rights and leads future development and commercialization. This allows us to broaden our innovation reach while maintaining strategic control over asset that fits our dermatology focus. Next slide. This slide summarizes our lifecycle management activity for products already on the market. The objective is to support the long term relevance of our key brands through label expansion, additional clinical evidence and disciplined prioritization of investment. For tirbanibulin, the regulatory process for the larger 100 square centimeter treatment area is ongoing and we now expect a European approval towards the end of this year.

11:16 Together with our partners, Sun Pharma and Eli Lilly, we continue to advance label expansion opportunities and generate additional clinical data for ILUMETRI and Eplis respectively.

11:32 For lebrikizumab, we have filed with EMA for pediatric label extension to include children from six months to 70 years of age and awaiting below forty kilo with moderate to severe atopic dermatitis with approval expected around mid-twenty twenty seven. We are also running a Phase III of lebrikizumab in numeral eczema with readout expected in 2029. Additional ongoing clinical studies are summarized in the appendix. Turning to tildrakizumab. The INSPIRE one and two studies showed benefit in psoriatic arthritis. Both trials met the primary endpoint at week twenty four and continued to show benefit through week fifty two.

12:24 After evaluating the excess dynamics and investment required, we have decided not to pursue commercialization of tildagizumab in psoriatic arthritis in Europe. We believe that further investment in generating additional data in psoriasis can generate more value for tildrakizumab and we therefore plan to study tildrakizumab in psoriasis patients with short disease duration and high disease burden. Details are shown on the next slide. Evolve PSO is designed to explore the potential benefit of tildrakizumab two hundred mg in biologic naive adults with moderate to severe blood psoriasis and short disease duration defined as less than two years.

13:14 In addition, the study will evaluate the potential to maintain high levels of disease control using a dose facing approach. We plan to initiate the study around year end with first readouts are expected in 2029. Strategically, Evolve PSO is intended to support a more flexible and patient centric treatment paradigm. If successful, it could help reinforce the value proposition of tildrakizumab in psoriasis by maintaining outcomes while potentially reducing treatment burden. With that, I will hand over to John for the financial review. Thank you, Carl, for the pipeline updates and good morning, everyone.

14:01 Net sales for the first half reached $6.00 €3,000,000 a 7.5% growth year on year and a 10% growth in the last twelve months, which is in line with providing net sales guidance range. Please note that the second quarter of twenty twenty six included the recently announced divestment of Actitul comprising of a €13,000,000 upfront and an additional €1,000,000 revenue recognition out of the remaining payments. As noted, the year is progressing positively with increasing performance expected during the remaining part of the year as indicated in February earnings call. European dermatology keeps delivering solid double digit growth, reinforcing Almirall's path towards leadership in medical dermatology.

14:49 We will review the details in the coming slides. EBITDA for the first half came in at EUR 151,000,000 resulting in a ratio of 25% of our net sales versus 21.7% prior year, representing an improvement by three thirty basis points. Gross margin benefited from Actitio divestment and is expected to normalize in upcoming quarters amid ongoing pressure from higher royalty tiers associated with ILUMETRI's net sales growth. Regarding SG and A, investment reflects the timing of our promotional activities during the year, and there will be some pickup in the coming quarters. On R and D expenses, our half year phasing reflects the progress of our trials into Phase two with four already ongoing and another two set to start shortly.

15:39 We closed the first half with a net cash to EBITDA ratio of around 0.1 with a strong cash generation in the first half of the year, leaving us with significant financial flexibility. Overall, these results lead us to reiterate our twenty twenty six guidance. Let's move to the details of our sales breakdown on the next slide. European dermatology continued to perform positively in the first six months with double digit year on year net sales growth. We will go into more details on the next slide. In general medicine and OTC, European sales reflect the divestment of Factor Cure completed in the second quarter. Excluding these portfolio moves, the segment remained broadly stable with lower sales in some legacy products, largely offset by contributions from products such as Evastel and Eital.

16:29 In The United States, performance declined year on year reflecting continued pressure on the legacy portfolio, which we will discuss on the next slide.

16:38 In the rest of the world, overall sales grew strongly driven by solid dermatology demand. Let me take you through the dermatology performance in more detail on the next slide. Our European dermatology business continued to perform well in the first half. ILUMETRI delivered robust double digit growth versus prior year reaching €125,000,000 EGRIZ further increased its contribution to approximately €85,000,000 in the first six months of the year. We remain focused on unlocking the full value of the franchise from both the commercial and the R and D side. WinZORA continued to build market share across core European countries and Glacier demonstrated a stable growth in Europe year on year. In The United States overall performance declined reflecting continued pressure on the legacy portfolio.

17:28 Dollar Euro FX evolution represented a negative impact of minus 6% in our performance year to date. Seysara and Glissiti improved their price volume dynamics in their second quarter while it's still declining and Axon remain impacted by generic competition.

17:45 In the rest of the world, dermatology sales were driven primarily by FINJUVET demand in China. Overall, our dermatology franchise continues to show solid underlying performance. Let's briefly review the remaining elements of the P and L in the next slide. Gross margin reached 64.6% in the first half with a second quarter divestment of Septin royalty impact associated with ILUMETRI's growth. SG and A in the second quarter following an incremental quarter on quarter trend as previously announced. We expect that trend to continue in the remaining quarters of 2026 while supporting margin expansion on an annual basis. R and D percentage of net sales was somewhat lower than our target of 12.5%.

18:31 Our half year phasing reflects the progress of our trials into Phase II with four already ongoing and another two set to start shortly. A full year ratio of approximately 12.5% remains a good proxy subject to the normal quarterly variability. EBITDA margin reached 25% of net sales, a level aligned with our 2028 ambition, but approximately two point five years ahead of schedule. While this performance benefited from the divestment of a minor non derma product, portfolio optimization is an integral part of our ongoing business strategy and value creation.

19:06 This milestone demonstrate the strong position we are building. Financial expenses continue to reflect the valuation impact of the equity swap in line with the share price evolution during the period. Our effective tax rate continues to normalize and we continue delivering on this positive trend driven by the strong increase in the group's overall profitability, which materially reduces the related impact of our U. S. Business at consolidated level. Please move to the next slide to take a look at the balance sheet. Our balance sheet remained stable throughout the first half of the year. Intangible assets reflect Airplane's related R and D capitalization, the development milestone to Sincer for advancing IH2 multi infusion protein into Phase II and the access fee linked to the HuAta collaboration broadly offset by higher amortization.

19:58 Our net cash to EBITDA ratio stood at around 0.1, providing us with a strong financial flexibility for licensing opportunities and selective bolt on acquisitions. During the quarter, Moody's upgraded our credit rating to be A1 validated the strength of our balance sheet and financial performance. Let's now turn to the cash flow statement. Company generated EUR 17,000,000 cash in the first six months of the year compared to a dilution of minus EUR 54,000,000 in the same period last year, representing an improvement by €71,000,000 Free cash flow raised to €33,000,000 compared to minus €20,000,000 in the first half of twenty twenty five. Let's now go through the different components of our cash flow.

20:46 Cash flow from operating activities raised to €132,000,000 representing more than two times improvement versus prior year, driven by working capital management alongside higher profitability levels. Cash flow from investing activities reflects the 2025 ILUMETRI sales milestone paid in the first quarter, the highest milestone expected this year with the remaining investment related payments for the GRB marginal and the total outflow within the usual limits in absence of new acquisitions.

21:17 As for from financing activities reflect the change in the bond interest payment schedule following the recent bond issuance and cancellation of the previous one, as well as the dividend paid in the period. With that, thank you very much for your attention and I hand it over to Carlos for his closing remarks. Thank you, John. To summarize, the first half of twenty twenty six confirms that the business remains solid and on track. We know where the consensus sits today, and we are comfortable with these figures. Turning to the key drivers. First, our biologics portfolio continues to give us real momentum in our dermatology market that keeps expanding, with Eplis scaling across Europe and ILUMETRI still growing steadily as it moves through a more mature phase of growth.

22:03 In parallel, we continue to generate robust life cycle management data that further support the strong profile of our biologics. Second, our growing and exciting pipeline now expands immune mediated skin diseases, rare dermatology and non melanoma skin cancer, with six proof of concept Phase II programs moving forward and most assets being with potential for best or first in class, providing a solid base for sustainable growth without concentration on any single asset. Third, we remain disciplined and active on capital deployment, with a strong balance sheet supporting both on M and A and early stage licensing. We'll continue to work toward delivering on our mid- and long term ambitions, supported by our well positioned portfolio, a strong and targeted pipeline, and a strategic positioning in the right dermatology indications.

22:57 This combination of pipeline depth, financial discipline and execution gives us confidence as we continue to advance Almirall towards leadership in medical dermatology. With that, we conclude the presentation and turn to Pablo for the Q and A. Thank you very much, Carlos. Sharon, back to you for the Q and A, please. Thank

23:35 Thank Thank you. You. We will now go to our first question. One moment please. And your first question comes from the line of Henberg from DB. Please go ahead. Morning team. Yes, thanks for taking my questions. I've just got a couple. The first one, you mentioned there's a Germany pricing adjustment from July. It'd be good to know a bit of clarity about what effect that's having into H2 and also how this fits into maybe the German drug pricing reform that's taking effect in 2027

24:08 and how you think that will impact Evglis and ILUMITRI and maybe whether that's included in your 28% EBITDA margin target of 25%?

24:18 And then my second question please is you didn't reiterate your peak guidance for Evolus. Is there a reason for this? Yes, just a bit more clarity. Thank you. Thank you, Hen. Not sure about the second question. You're asking us to confirm the pictures estimate for Replis? Yes, yeah. Okay, sure. Thanks for the question, Hen. So the German pricing reform is certainly not good news for the industry in Europe. However, there's still a number of clarifications as there are deductions and bonifications that now need to be clarified by the German government between now and the end of the year. Once we have clarity on these reports, we will be able to provide further clarity on how we see this impacting the business.

25:07 In terms of the peak sales guidance for Eplis, yes, we remain very confident on the outlook that we have provided. And so we are very happy to reiterate peak sales above €450,000,000 Great. Thank you. Thank you. Your next question today comes from the line of Shan Hammer from Jefferies. Please go ahead.

25:34 Hi there. Thank you for taking my questions. Just two from me, please. Are you able to quantify the extent of the planned price decrease for in Germany in July or from July?

25:47 And then secondly, can you tell us about some early ordering patterns you're seeing in 3Q for Epglis and whether you're expecting a return to acceleration from 3Q despite the typical slowdown during the summer season? Thank you. Thank you, Shan, for the questions. If I understood well, like you're asking about the price decrease in Germany and at least this year, it will be from 01/01/2027. Is that a question or not? No, your question, Sean, if I understood well, you are asking the price reduction for Eblis in July, right? Yes, exactly. Yes. So it has been a low single digit one that it was agreed with the German government at the point of launch of the product.

26:37 It has is minor, but it has had an impact on the phasing of orders between quarters. So we expect an acceleration in the Q3.

26:46 So this is the answer of your first question. You want to take? Thank you for, sorry, I misunderstood the question. Thank you for your help. Worries. You want to take the number two as well? Yes. Your second question, Sean, was about order pattern in the second half of the year and return to accelerate. Yes, I mean, we remain confident in the long term profile of the product.

27:08 We continue receiving very positive feedback from our key opinion leaders in the market, And we continue having long term life cycle management. The market consensus for the product shown at this point in time is in the range of EUR190 million to EUR193 million. And we remain comfortable in this ballpark for this year. Just to reiterate that our focus remains firmly on the long term opportunity. And as usual, we would encourage all the analysts to have a view on short months more than on quarter on quarter facing. Hope this addresses the answer to your question, Sean. Thank you.

27:45 Thank you. Your next question today comes from the line of Juan Ras Padilla from ODDO BHF. Please go ahead. Good morning. Thank you for taking my questions. Two, if I may. First one regarding the PCS guidance. So after the H1 EBITDA, how should we interpret the guidance of EUR $270,000,000 to EUR $290,000,000 for the year? Are you now maybe more comfortable with the upper half of the range? And secondly, regarding ILUMETRI, we've seen some moderation of the growth in ILUMETRI in Q2. Are you still expecting double digit growth for this year?

28:31 And what contribution are you seeing from the Juan, thank you very much for your questions. So at this stage, we are confirming our full year guidance.

28:51 Yes, we had a very nice EBITDA in the first half. Not only that, we have already reached the 25% EBITDA ambition that we had set for ourselves in the long mid term guidance that we set up, and we have set this target for 2028. So, we are very happy to see that we have been able to accelerate our operational leverage agenda. So, that's great news. But at this time, we were happy to confirm the full year guidance that we have provided. ILUMETRI,

29:25 perhaps for the details, will pass it to John, but let me reiterate that we remain very, very confident with the performance of ILUMETRI, both in terms of how the market is growing. IL-twenty three is firmly established as the winning class. And within this class, we are able to either to keep or to grow market share. So the underlying dynamics remain extremely positive for ILLUMETRI. John, do you want to add some more color on ILLUMETRI? Yes, just to complement Juan, that if I remember well, the market consensus is in the ballpark of $260,000,162 million euros similar level as of February earnings call. And the company feels comfortable with that ballpark, although we do not provide guidance per product. On long term, the guidance for the product is to reach peak sales beyond EUR300 million.

30:17 And we also reiterate we are comfortable with that peak sales. But more importantly, Carl has been sharing with us exciting aspects of lumetri lifecycle management and product. So if it is okay, Juan, I would like to pass the word to Carl to complement our answer. Thank you. I mean, just to remind everyone, Lumetri is the only anti IL-twenty three with dose flexibility and we're seeing especially on two hundred milligram where we receive very positive feedback, especially in patients that are overweight or with a high disease burden. And that's why we now start the EVOLVE PSO study to further explore this two hundred milligram option in patients with a short disease duration and a high disease burden.

31:11 And we are confident that this adds to the already very solid clinical evidence on ILUMETRI and will further drive the product. Thank you. We will now go to the next question. And your next question comes from the line of Guilherme Sampeo from CaixaBank. Please go ahead. Hello. Good morning. Thank you for taking my questions. So two, if I may. I'm sorry to insist on the Germany reform, but taking into consideration the accelerated operating leverage that you have been achieving, is there a scenario in your preliminary analysis in which you would not reiterate the 25% margins in 2028 that you've been targeting?

32:03 And the second question, you've been guiding for an underlying EBITDA growth acceleration across 2026 and you've been delivering upon it. But you mentioned that you're comfortable with current consensus, which implies a major slowdown in the second half of the year. So I wanted just to confirm both statements. So if you still think that you should have some acceleration or if there's going be a slowdown and maybe if you could provide some more details regarding this project? Thank you. Thanks for your question, Gleyerme. Yes, as I mentioned, we're very happy to see our acceleration on the operational leverage agenda that we have established for ourselves.

32:54 In addition, we've seen very good progress and I would I would say that's excellent progress in our pipeline with the six POCs by end of twenty twenty six. And that means that we'll have all the data, the data readouts in the next eighteen months. And you were about the scenarios, right? So this opens many scenarios depending on the data, depending on the readouts. And we will be, of course, first solving with value maximization for shareholders in mind. And secondly, monitoring very closely what this means. And your question on EBITDA for the second half of this year, maybe John, you want to take it? Yes, thank you very much Carlos. Thanks a lot, Guillermo, for your question.

33:40 When you are doing the comparison, first of all, any potential scenario we have had in the first half of the year, including the divestment of a minor derma product activity was already included in the scenarios we provided for our full year guidance in both net sales and EBITDA, nine to 12 and EBITDA amount $270 to $290 Having said that, in the second half of the year, we expect certain acceleration in our R and D investment as our trials progresses, and we expect certain pickup in our SG and A investment following the phasing of our promotional activities. If you remember, what we have always said is that SG and A will be a key component to the operational leverage that you already see in the P and L as of today, but the growth will be materially lower than the growth we are showing in headsets.

34:31 In this scenario, in the second half of the year, of course, in order to continue accelerating in the same ratio, we should have a similar divestment to the one we have executed for Active Yacht. But from an operational point of view, excluding the divestiture, we continue expecting EBITDA acceleration. This would be our ambition and still we think we are in the ranges we have provided for the full year guidance range for 2026. Okay. Thank you. Thank you. Your next question today comes from the line of Damian Esquivano Maes from Banco Santander. Please go ahead. Thank you. Good morning. So a couple of questions from my side.

35:18 The first one more on the competitive landscape in AD. So today, heard Sanofi is discontinuing amlitelimab. I would like to to know your opinion and and maybe to to summarize which ones do you think are gonna be the main competitors, going forward. And the second one for Carl would be how excited you are with the new anti IL-twenty one candidate that is passing to Phase II for hidradenitis suppurativa. Maybe if you can elaborate on this candidate versus, for example, the anti-one IL wrap? Thank you. Thank you, Jaime, for the questions.

36:05 So there's competitive landscape in AD. We've always said that the AD market is largely under penetrated. So only around, for probably less than twenty percent of patients that are eligible for this type of advanced treatments are treated with modern medicines. So for us, the new entrants, new mechanosfractions coming into this market continue to expand the market, right? Having said so, we remain the community and remains firmly convinced that the anti IL-thirteen remains the mainstay treatment for first line in patients, right? So, overall, we believe know, ioxetine will continue for the future to become the mainstay.

36:57 And market progression and feedback of physicians and these patients, you know, make us very, very, continue to deliver very positive signals for us in this market. Karl, do you want to comment maybe on Amlodilumab and the L21? Yes. I think, yes, we saw the news on amlodilumab this morning, you know, when these decisions are always based on benefit risk. We need now to analyze what this could mean on our bi bispecific antibody where this is only one component. The other component is an anti IL-thirteen mechanism that as Carlos said is the key pathogenic driver in AD.

37:47 Now coming to your second question, we are very excited about the anti IL-twenty one antibody. You know HS is an indication with very high unmet medical need, but it's also a very complex disease. And that's why we have been searching for mechanism that can address multiple pathways. The anti IL-one rep addresses multiple pathways more towards to the innate immune system. So the IL-one alpha beta, the IL-thirty three and the IL-thirty six alpha beta and gamma. And both the anti IL-one beta independently as well as an antibody against the IL-thirty six receptor have shown benefits addressing different aspects of the pathophysiology.

38:38 So we believe this combination of those activities when inhibiting the anti AL1 rep has a chance for an increased efficacy. IL-twenty one is a cytokine that is involved both in B and T cell biology, so addressing more the adaptive immune system. And again, there is evidence that addressing T cells and addressing B cells has impact on the pathophysiology of HS and our hypothesis is again that by combining those activities this may lead to an increased efficacy. We have just started a Phase II kind of proof of concept study and expect first results during next year.

39:29 Thank you very much. Thank you. We have one further question in the queue. One moment please. And the question comes from the line of Hakim Gassia Quiros from JB Capital. Please go ahead. Yes. Thank you for taking my questions. Regarding the investments, if I remember correctly, you said that you should expect around €70,000,000 for the year. Is that still a good target? And then what can we expect for next year? And then if you could remind us what could be the potential target markets for Ilhaveniti Superativa and Alopecia Reata and talk a bit on the competition right now that you could have on those fields? Thank you.

40:27 Again, thank you very much for the questions. John, do you want to take the first one on investments and then Carlos, the ones on HS and Yes. Thanks a lot, Carlos. And thanks for your question, Joaquin. I understand you referred to investment CapEx. Should this not be the case, please feel free to speak up and we also cover ordinary CapEx. In terms of investment CapEx, yes, our guidance for the full year was EUR70 million to EUR80 million in absence of new acquisitions. What year today basically reflects the payment of our 2025 filamentary sales milestone that is the highest we are going to experience this year. And right now Joaquin, we confirm that the range probably ending today to the high to €75,000,000 to €80,000,000 It is what we will be finalizing in our investment CapEx.

41:15 I've been happy to say that the results we are presenting today, while we are discussing CapEx, they also show the strong cash generation the company has achieved in the first six months of the year. So I am confident we have enough muscle and power to fund those CapEx and potential new licensing opportunities that may come up in near future. Hopefully I have addressed your question. Otherwise, me know. Back to Carlos for the And now, and then to Carlos. Yes. Thanks for the question. As I mentioned, HS is an indication with a still very high unmet need and experts we have talked to mention that the currently available treatments are still optimally in addressing all the different aspects specifically the efficacy.

42:04 The high unmet need is also reflected in the interest and in the pipeline. We believe we have two very differentiated assets that have, as I just mentioned, a chance for an increased efficacy by addressing not a single but multiple other mechanisms. When it comes to the potential commercial opportunities, Evaluide estimates the HS market to be in the range of 5,300,000,000 in 2030. And the second, the AA market alopecia areata is estimated to be in the range of about $1,400,000,000 again from Evaluate Pharma 2030 estimates.

42:51 It shows that both are significant commercial opportunities. Thank you. I will now hand the call back to Pablo as there are no further questions. Thank you very much, Sharon. If there are no further questions, ladies and gentlemen, this concludes our today's conference call. Thank you for your participation. You may now disconnect.