Annual profit of 2019 Ypsomed Holdings CallBurgdorf May 27, 2019 (
Thomson StreetEvents)--
On Thursday, May 23, 2019, at 2:30:00, the transcript of the Ypsomed Holding AG Earnings Call or presentation was Edited
CEO Thomas kutmder Holdings
IR Presentation demo head--------------------------------------------------------------------------------Operator [1]--------------------------------------------------------------------------------
Hello, ladies and gentlemen, welcome to fiscal 2018.
The income was recorded on the conference call. (
Operator instructions)
I would like to introduce you to Mr. moderator of today\'s meeting.
Thomas Kutt, head of investor relations
The floor is yours, sir. --------------------------------------------------------------------------------
Thomas Kutt, holding a joint stock limitedHead of IR [2]--------------------------------------------------------------------------------So thank you.
Hello, ladies and gentlemen, thank you for joining our annual number 2018-
19 revenue calls.
CEO Simon Michelle is with me today;
And Chief Financial Officer Niklaus Ramseier.
We discuss press releases, reports and presentations for 2018-
Performance and fiscal year 2019
The Media and Investors section of our website provides 20 guidelines.
In this way, I will transfer the phone to Simon. --------------------------------------------------------------------------------
Simon Michel, a private holding companyCEO [3]--------------------------------------------------------------------------------
Thank you, Thomas.
Thank you all for coming here today.
This shows that our title, our company, is gaining traction at this transition stage.
I can say that we are very satisfied with our business year.
We have achieved all our financial goals.
In particular, now that we have handed over the Omnipod business to Insulet, it gives us two opportunities to focus not only on the sales side, but also on the entire value chain in development and production manufacturing, all of this makes it possible for us to pay more attention to the factors of sustainable development and become more and more important.
If you look at our strategy, it is clear that we are focused on sustainable profitability.
We are growing and I will show you how fast we are growing.
But our main focus is on earnings growth.
Everything we are doing, all of our plans, basically, they focus on expansion, innovation or cost leadership.
I will detail this in a minute.
Our growth strategy clearly guides us to achieve profitability and the EBIT target of over 100 million Swiss francs in the medium term.
It will not be reached in 3 years, but it will certainly be reached in 4 years.
Let me talk about the main elements of our strategic achievements over the past 12 months.
Our current 10,000 patients are the main topic.
We have a good start in the product, the product is very strong, the market feedback is good, the cost is very low.
Now that we have 20 mar markets, we have a good baseline for further sales.
We are also pleased that we have now established our subsidiaries in the United States. S.
We will talk more about America. S.
Later, our general manager in the United StatesS.
Also on board.
In terms of innovation, we are pleased to present more and more products with JDRF.
We are very confident that the open way we will try to achieve through YpsoPump in the future is the right model for better treatment.
We also launched 2 automatic transmissions and I will expand in a minute as well
Some license agreements have been signed with Terumo and Teva, which is very good for our bottom line.
Then, through the SmartService plan, we have some new data business models in front of us, which is a good opportunity for Ypsomed to enter the data business together with our device portfolio.
In terms of operations, we are pleased that we have finally moved into a new lab now.
Our tool store is alive.
Our technology center is alive so we can really make all our plastic molds and tools here
House, have them verify at our tech center and ship them to Schwerin, Solothurn and Burgdorf so all our manufacturing sites give us a lot
So we can make production on site and we do all the verification work herehouse.
Schwerin is coming online.
We\'re qualified in two weeks.
On the lean management project, we are working to achieve cost-effectiveness every year.
Now, of course, growth requires investment.
We have invested a lot in the past 12 months.
We have added another 8 million Swiss francs and 10% Swiss francs to our sales infrastructure.
We have increased our R & D budget by 46%, mainly in software, application testing, and also on new devices, especially in this market area.
The substantial increase in fixed assets was as high as 100 million Swiss francs, mainly due to Schwerin.
I\'ll show it to you later.
This is a very important point if you look at our key data.
We are very focused on continuous product operation.
So, if you look at us from now on, we really want to talk about Ypsomed without the Omnipod effect.
So if you do-
In the absence of the Omnipod, our continued operations increased by 24%, and EBIT without the Omnipod effect was 11 Swiss francs. 4 million.
This is the baseline we are working on now and we will be talking about Ypsomed in the future.
20 mar kets live with an equity ratio of 46--64.
5%. very healthy and well funded.
I mentioned in the beginning that my own manufacturing industry is the key, and it will be the key.
Of course, it is now on the pump side of the new market, with 10,000 patients so far, but also on the side of the new automatic delivery system
Important license income, but also increased income on the project side.
In the past 24 months, we have seen that we have gained more and more profits online through projects, which always have some benefits, equipment projects of these large pharmaceutical companies, biotechnology is also very good for our bottom line.
This is very positive if you look at our income.
We almost reached the same number as the previous year, but only slightly lower than the previous year.
Of course, we will analyze it a little. In 18\'-
We have--
We are still making a profit from the last quarter of Omnipod sales in Europe.
Of course, there are still 49 million Swiss francs due here, but continued operations have increased by 24%.
If divided between the diabetes care and delivery system, the growth rate of diabetes care and 17 is 34%.
Delivery system growth of 5%.
A little more detail.
We added about 20 million Swiss francs in sales on YpsoPump.
Of course, Omnipod sales were made in Germany through the payment contract, which will maintain--which we kept. On the right-
On the other hand, we have to distinguish between contract manufacturing and injection systems.
More importantly, of course, the injection system.
This is where we have to improve our profit margins.
We are 18 years old.
5%. that\'s what we need to focus on.
This is a profitable and interesting business at this moment, and we are still investing in the growth of ypsop.
If you look at the bottom line, it\'s already 11 Swiss francs.
4 million Swiss francs, up 12 million from the previous quarter.
The rest is the dues we booked last year.
If you turn to cash flow, the investment of 0. 107 billion Swiss francs is mainly invested on the Schwerin website and also on our new facilities in Switzerland, as well as the additional infrastructure capacity mainly used for cars.
Syringes, infusion sets and insulin pens.
We did this with very attractive bank loans.
So we\'re safe.
As I mentioned, financing and still maintaining a share ratio of about 65%.
In terms of the dividend policy, we remain unchanged at 35%. And --
But we only pay 0 Swiss francs. 55 to 1 Swiss franc.
Because we pay dividends only in our bank.
Since Insulet has not paid all fees yet, we will pay dividends as an additional dividend once the money is deposited into the bank account.
It depends a bit on the discussion with Insulet in front of the tribunal over the next two years.
When the money is here, we will pay a partial dividend to the shareholders here.
With this introduction, I want to transfer to the business department.
I started with diabetes care today.
Of course, diabetes care is an area you know well, but I would still like to mention ---
Give you a few numbers. So of the 50 --
There are about 50 million patients with type 1 diabetes around the world, and we only have one.
4 million life with water pump.
It has a strong growth of 8% to 10% per year, but we see great potential here.
Of course, while North America is gradually leveling, Europe is becoming stronger and stronger.
We have more potential.
This is our main market.
This is the focus of our attention.
As you can see on the map, we currently have 20 mar markets.
So let me say a few words on ypsop.
This is really an important milestone.
We have hit the first 10,000 patients.
Our sales stories about simplicity, easy training, product size, product quality have all been completed.
Our customer service is very good.
Our ratio is very good.
We received very few calls.
We have few complaints.
So we are happy that we have a powerful Swiss product here that is available to pump people now.
So we are happy with the good start.
If you compare the beginning to the same period we experienced in 2012 --
In 13 years, when we launched the first patch pump in Europe, we even achieved greater success.
Of course, we start from different angles.
We have 20 horses ready now.
We were at seven.
We\'re doing well now. known brands.
We now have a very well-established SAP system all over the world.
We are ready for customer service in all languages.
We learned a lot through the Omnipod time.
Now we\'re ready. -
This is the main reason why we are so successful at this launch phase.
If you move to two important markets, North America, Canada and the United StatesS.
, Give you an update here.
Now we can finally launch this product in Canada.
This month, we have been approved by Health Canada. We are ready.
Team of 10 people on site, very experienced team, we can start right now.
This is important.
Canada is a very single market.
We know the logic of the market very well, and some of us know ---
Who decided, so launch now in Canada.
If you move to AmericaS.
This may be the only qualitative goal we have not fully achieved.
The FDA has asked us to submit an additional study on some of the small topics of biocompatibility, and we are too late.
So it\'s very sad that external companies are not ready to provide us with this report.
Therefore, the file was rejected for this single reason.
We must resubmit.
We will submit it in the summer, after the early autumn, which gives us a realistic start ---
FDA approval, end of business year, 2021.
This has no negative impact on the results of our operations;
On the contrary, of course, even positive.
You know, we don\'t put too much. -
The number of our medium-term plans is too high.
Also, it doesn\'t matter if you look at our medium term plan.
It gives us more time to watch the market.
As I mentioned, we set up this company.
We hired Todd durnick.
He has been in Insulet for a while, so he knows the market very well.
He is also an insider of medtech and all payment systems in the United States. S. market.
So now with him and the team, we will focus on the visit--
What is the smartest way we enter?
I mean, the US market is not really waiting for the arrival of another pump. It\'s clear.
We believe that not only from the product side, but also from the price point of view, we have a strong proposition.
For example, there are some channels, Medicaid, Medicare, waiting for better options, waiting for more prices-
Affordable products.
Here we have prepared a very strong suggestion.
We will test this in the next 9 months.
Then when the FDA gave us the green light, we started.
Let me stay on YpsoPump for a while and tell you one more element here.
This is mainly about the open approach.
As you know Medtronic, going out here, market leaders really focus on a complete closed system, as well as sensors, pumps and algorithms.
We believe this is a dangerous way.
We believe we must be more open because we have a choice.
There is more flexibility.
It is important that, just six months ago, the FDA decided to actually open this approach.
So the FDA will no longer focus on these systems.
The FDA will study system elements.
So it gives you a complete-
Here is an example.
So in the past, the FDA treated pumps, sensors, and algorithms as a system.
Now, they look at the pumps, sensors, and algorithms.
This is smart because if you think of some examples in the market, you get a pump from one company, sensors from another company, and algorithms from another company, then they also work together and it\'s dangerous that the tactile owners basically don\'t have access to the whole system.
So they really want to hand over the full responsibility to the people who make or design the product components, which is the modular approach we follow.
Although, as you know, JDRF has a high incentive to develop open protocol pumps from modular, standardized access, which is why we are going to carry out several studies in Australia, Germany, Switzerland, finally in France.
We will test our open pumps with algorithms from different aspects to demonstrate the benefits of personalized treatment in a controlled, closed world.
I think with this, I can move to ypsom, our second business unit.
We are pleased to announce here that we are now finally rolling out 2 open syringes, one for Teva and Copaxone.
This is a drug for the treatment of multiple hardening.
But there are also biosimilars from Terumo, adalimumab, and Humira biosimilars are basically sold in Europe through Mylan.
Two very strong products, two very strong brands, we are very happy that we can finally launch now.
We have five more launches in 2019. \'20 in automatic
Syringe space and 4 to 5 in pen field.
So the business is really attractive now.
1 year ago, we have explained to you that in 3 years, we hope to double this business unit and this department.
I can tell you today that we are really on track.
Now, if you look at our platform portfolio, as you know, we have our insulin pens, reusable pens on the left, disposable pens, then it is mainly aimed at fixing, for example, some drugs sold by biological generic drugs.
But we have the whole car.
The syringe series with 1 ml and 2. 25 ml auto-
Now is the core element in our portfolio.
Tomorrow, we will invest more and more in smart products and hope to give you--
Explain our SmartPilot and our patch sodose, our patch syringe in more detail.
So let me start with the patch syringe.
I think this is an important factor that needs to be deepened because it is a whole new area.
If you talk to the top 20 pharmaceutical companies, 80% of them, they all have molecules in their pipeline that are no longer appropriate in 1 ml or 2 companies. 25 ml auto-injectors.
So it\'s just too much liquid, up to 10 ml and you can\'t inject your body at once.
So they put the medicine in a bigger skin.
The glass heart skin is pre-filled and you have to bring it into the human body in some way.
You don\'t want to take patients to the clinic every two weeks or every month.
So you give them a pre-filled set of this patch injector.
The patient at home put it on the body and press the blue button.
It will be injected automatically.
The needle is on your skin, inject the medicine, reject the needle, give you a slight beep, you take it off.
This is indeed a new category.
There\'s definitely 100-
Plus the great potential here.
This is a product that you will see in 3, and if you are not going to do the first study with a new drug, it will prove to be a beneficial way, drugs can be brought to home care more and more in order to reduce the cost of space--
In the area of health care.
Talking about the costs in the health care sector, a core factor is, of course, non-compliance.
It\'s a tragedy to actually take only part of the drug or people stop taking it.
If you look like arthritis or multiple hardening, half of the patients actually stop the treatment, or somehow stop obeying and forget to take pictures.
This is mainly due to the following problem, which is a huge problem.
We have 125,000 deaths, which is clearly related to non-compliance in the United States. S. alone.
We have huge costs with this lack of persistence.
We have too many extra hospital stays.
How can we solve this problem?
In fact, the only solution as a health care system is that we bring intelligence into the product.
Now our pen and auto
They are easy to use, but they are not smart yet.
So what we have to do now is bring intelligence into our devices.
What should we do?
So SmartPilot is actually an add-on.
You put the car on it.
Similar to the syringe of the dongle.
You click on it and then it connects to the smartphone immediately.
If you move to page 33, you can see how it works.
Basically, the data is automatically sent to the cloud by your app.
Yes, we did. -
Reach a global agreement with Philips to organize our data in a safe and data-protected mannerby-
Country, this is a rather complex topic and then provides data to large pharmaceutical companies, payers, doctors and parents.
For example, parents with diabetes who suddenly control what their children do during school breaks.
The doctor suddenly prepared all the information. -
Actually doing a good treatment, if necessary, can actually provide a good input in the treatment.
Payees have now view--
Now, if the drug has been taken or is not taken, it can be seen clearly.
If not, they can contact the patient and motivate him to take the medicine.
So this is a huge potential.
Of course, you see, you see, it\'s no longer just the equipment we\'re going to sell.
We will provide the data itself for large pharmaceutical companies and the data will be--
It becomes very valuable here.
Because if you can really sell the drug and prove it to the payer, the pharmaceutical company and the pharmaceutical company, then you may be in a better position than if you can\'t prove it. So it\'s a (inaudible).
This is the next new business area that Ypsomed is entering, just like the patch syringe YpsoDose I mentioned earlier.
Very motivated here.
If you look at our pipeline, this is our last slide on the subject of the delivery system, and we see 2 automaticinjectors.
This is a small blue bar.
We have already launched a few pens--
We announced the news around the world earlier this year.
Now you can see, especially on the left, and then we have some-
Again, this is a great year at the acquisition level.
We have acquired nearly 20 projects in total and they are now moving slowly but steadily to the right.
They entered the customization phase.
Some of them need to go to the clinical study, and some do not, because the clinical study is already done at the syringe level.
Then they were put into the automatic
Syringe with bridge Research, put into registration, put on the market.
So finally before 2020, 2019-
20. we expect 10 launches and 5 automatic launches.
Syringe, 5 launches.
So, our equipment business is really driving us.
It\'s actually important here, maybe it needs to be noted, just to emphasize that Ypsomed has now closed about 8 out of 10 deals in the world of pens, and closed out of 10 deals in the automotive industryinjector world.
So we have a good location.
There is little competition.
There are SHL from Taiwan and Sweden on the car.
There are Picton Dickinson in the syringe field and in the pen field, but they are really--
No attention was paid to this topic.
So our location is very good.
If you want a device, you can talk to ypsom.
You can talk to BD if you want a glass syringe, which is very similar.
If you want a pen or an automatic
Injector, you and Ypsomed.
This is a great location for us here as we already have the infrastructure.
We already have automation.
We have done dozens of regulatory work.
So people understand.
They know how to do it. there are a lot of paperwork here.
We will therefore take advantage of this position in the future.
Turn to some good topics.
Our new website is also very motivated.
We operate about 150 molding machines today on this new website in Schwerin, which of course gives us another space for about 100 additional molding machines, as well as additional assembly lines.
We have our team, the first launch team.
We will conduct qualification verification and lead audit within 3 weeks. We are ready.
Then we held the opening ceremony at the end of August, which roughly increased production.
We started with the Bydureon pen from AstraZeneca.
We will then go into the track infusion set for YpsoPump, our large 10 million infusion set line.
It will be delivered next year, so it will be a very exciting moment where we can produce important infusion sets for our ypsop patients.
Again, we have hired over 150 people, 100 of whom are in Switzerland and about 50 in the sales team.
We now have more than 1,600 people in total, and we are growing steadily.
We have about 150 people on our 19-year recruitment list.
Therefore, we must let more people join in to increase the speed of the market, but also to increase the speed of research and development.
We are going to strengthen our site in Solothurn, so this is the second site next to our main site, Burgdorf, for one of the main reasons.
We want to install a software, hardware and application development center.
Solothurn is perfect for making these people work for us.
We have plenty of office space in Solothurn.
That\'s why I now use this very large industrial site to add our engineers.
Sustainability is, of course, a problem.
Not just some words.
Our real focus is on reducing carbon dioxide emissions in Switzerland.
Some of you may know that there is also some political pressure to do so, so we are able to reduce fossil energy sources, for example, in Solothurn.
We reduced our fossil energy to zero.
We are really using the heat generated by the factory forming machine to heat our building right now.
We have also made a lot of efforts in society, not only our support for those who join the official institutions, but also our support for affordability.
We are very, very confident that health care can only survive and succeed in the long term if we also provide affordable products.
So we put a lot of new efforts on the cost side to optimize this and move forward and also benefit large cooperatives in countries that may not have that much money or people can\'t afford it
Payments like those in the United States.
You want products on the market, for example, to allow all Americans to join this therapy in the future.
Let\'s start looking at the entire 19 years. \'20.
We expect sales to be slightly lower than CHF 0. 415 billion.
Of course, we have no outbound payment now.
Only once.
We don\'t have any sales of Omnipod anymore.
But it is also 0. 415 billion Swiss francs, not 0. 425 billion Swiss francs, because we are not very sure about the exchange rate, the euro, the Swiss franc.
Then, a lot of new equipment was launched by large pharmaceutical and biotechnology companies.
We never knew there was some uncertainty here.
But we are confident that we will reach 0. 415 billion Swiss francs.
That\'s what we need to protect.
0. 415 billion Swiss francs means 18% growth.
This is very motivated, so we continue to have strong growth and very clear signs, which I mentioned in the first place.
On EBIT, we directed 25 million Swiss francs to 30 million Swiss francs, so it was a little lower than what we said six months ago.
We said 30 million Swiss francs.
Now we are at the upper limit of 25 million Swiss francs to 30 million Swiss francs, 28 million Swiss francs and 29 million Swiss francs.
But we want to give you this openness, because we have to first look at how we started with these launches.
As I mentioned earlier, we are also putting more money into the research of our pump and algorithm collaboration.
But we believe that this is the guidance that we can achieve.
That means, at the very least, I would like to remind you that it starts now at CHF 11 million.
This is at least double, almost three times.
That\'s why I think we believe in the positive numbers we are giving here.
Just on the 42-page chart, we show that our income returned to the same level in 2021.
Then you will see this depth of growth.
Now, in the history of the product, it is important to touch the Ypsomed based on the blue line, not the gray.
YpsoPump is the future where you can see the blue line.
If you look at the EBIT table here, how it is exported, that is, 25 million Swiss francs to 30 million Swiss francs.
Of course, it started at 11 million Swiss francs.
And then we brought the increase of 25 million Swiss francs to 30 million Swiss francs. -
This comes from YDS, so the delivery system and diabetes care, about 50-50.
But we still have some undisclosed sales infrastructure.
As you can remember, after handing over the Omnipod business to Insulet, we didn\'t cut our sales team, just gave the team the opportunity to reach out to doctors.
This is definitely an important reason for our successful growth in our existing markets in Europe.
In addition, we have an investment of 5 million Swiss francs in the expansion, and of course, mainly Canada, which is growing, as is Australia and the new Eastern European market.
That is why we are now using CHF 6 million to CHF 5 million, which is why we have finally directed CHF 25 million to CHF 30 million.
My last slide is about Martin moonbach.
We will propose to the General Assembly at the end of June Martin muenchbach as our new member-
New members of the board.
Martin has brought a lot of experience from mergers and acquisitions and biotechnology.
He knows a lot of important pipeline, so he will provide very strong support to our YDS team leader Ulrike.
He also has a lot of experience in M & A, which is very important for us to better understand how to carry out future business.
He is now joining the team next to Paul Fontaine, who joined us a year ago from Bollinger Ingleheim to take over Professor Norbert Tom.
Paul is more active in traditional American diabetes care.
He himself is an American and has extensive experience in negotiating with insurance companies, so we are also happy to have him join.
So, ladies and gentlemen, I thank you for your interest in us and for listening to our time today.
If there is any problem now, I will give the word to Thomas. --------------------------------------------------------------------------------
Thomas Kutt, holding a joint stock limitedHead of IR [4]--------------------------------------------------------------------------------Yes. Thanks.
So operator, please open the line if you have any questions. --------------------------------------------------------------------------------Operator [5]--------------------------------------------------------------------------------(
Operator instructions)
There seems to be no problem now. --------------------------------------------------------------------------------
Simon Michel, a private holding companyCEO [6]--------------------------------------------------------------------------------Okay.
So, thank you for joining us today. Hello? --------------------------------------------------------------------------------Operator [7]--------------------------------------------------------------------------------Sorry? --------------------------------------------------------------------------------
Simon Michel, a private holding companyCEO [8]--------------------------------------------------------------------------------
So, thank you for joining us today.
I think we can finish without more questions. --------------------------------------------------------------------------------Operator [9]--------------------------------------------------------------------------------Okay.
That\'s what we do.
No problem. Thank you. --------------------------------------------------------------------------------
Thomas Kutt, holding a joint stock limitedHead of IR [10]--------------------------------------------------------------------------------
Thank you very much. --------------------------------------------------------------------------------
Simon Michel, a private holding companyCEO [11]--------------------------------------------------------------------------------Thank you.