Roche Holding AG (OTC:RHHBY) Q4 2025 Earnings Call Transcript

Roche Holding AG (OTC:RHHBY) Q4 2025 Earnings Call Transcript January 29, 2026

Roche Holding AG beats earnings expectations. Reported EPS is $1.36, expectations were $1.35.

Operator: Ladies and gentlemen, welcome to Roche’s Full Year Results Webinar 2025. My name is [ Henrik, ] and I’m the technical operator for today’s call. Kindly note that the webinar is being recorded. [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 good morning, good afternoon and good evening. I’m really, really excited to share with you the update for the full year because we had an amazing fourth quarter, not only in terms of financial results, but also in terms of pipeline news. So let me get started on the normal overview slide. So group sales in 2025 grew with 7%, Pharma at 9%, Diagnostics at 2%. Again, this was due to the China healthcare pricing reforms. Without that, Diagnostics actually grew with 7% last year with a very strong operating performance with a core operating profit of plus 13% and a core operating margin plus 1.9 percentage points and core EPS plus 11%. So you may ask what’s the difference between EPS and OP?

Why is there a deceleration there? This is basically mostly driven through higher taxes. On the full year LOE impacts, we had impact of about CHF 700 million. Now I come really to the exciting part. We had truly an outstanding Q4 when it comes to pipeline news. From a pharma regulatory perspective, the EU approval for Gazyva in lupus nephritis, U.S. and EU approval for Lunsumio as subcut solution in third-line plus follicular lymphoma. And U.S. filing for giredestrant in post-CDKi ER-positive HER2-negative metastatic breast cancer. Now come the many positive readouts that we had. Phase III, FENtrepid and FENhance, so 2 positive studies in fenebrutinib, 1 in PPMS, the other one in RMS, a positive Phase III study just already this year in Enspryng in MOG-AD, positive Phase III lidERA giredestrant study in adjuvant ER-positive HER2-negative breast cancer, a positive Phase III PiaSky in aHUS and a positive Phase III in Gazyva in INS and another positive Phase III Gazyva in SLE and positive Phase II in CT-388 in obesity.

And I know Teresa will go through a lot of these details with you, but you can see with very, very busy newsflow, and I think there are more exciting things to come also this year. On the diagnostic side, regulatory approval of the Elecsys dengue test, Matt will talk about that, the cobas BV/CV test and also the mass spectrometry extension of our menu. So exciting launches there as well. There is significant newsflow ahead in 2026. We are awaiting the second fenebrutinib study in RMS. We are awaiting persevERA, so the giredestrant in first-line ER-positive, HER2-negative metastatic breast cancer. We have other studies reading out in — for Itovebi, but also for our divarasib KRAS medicine and further in Lunsumio and Gazyva. So again, I think very exciting.

And we have a number of Phase II readouts coming. So it could again be a very busy year in terms of transition from Phase II into Phase III. And of course, everyone is talking about it, our next-generation sequencing solution. And we promised it for many years. Now here it is. So I’m super excited also personally that we are now coming with this very exciting solution to the market. And yes, I think it will cause a couple of [ waves ] in the market. Now let me go through the growth rates. And I don’t think I have to cover too much on the left-hand side. But what you can see on the slide is that we have consistently strong growth in the last 2 years. And even before that, when we had the washout of COVID-19 tests and the medicine, we had a good underlying growth.

Q&A Session

So we always said we will deliver and we delivered. Now on the 2025, Pharma kept growing at 9%. Diagnostics, we did have the healthcare pricing reforms impact in China. Without that, Diagnostics would also have been growing consistently at 7% over this time period. Again, here, we just look at the full year, 9% growth, again by Pharmaceuticals division, 2% by Diagnostics. Again, without the China effect, it’s 7% and the Roche Group has 7% growth. And this is really driven across our entire portfolio. I think Diagnostics, I already explained, and I know Matt will go into that further. Vabysmo, we have continued strong global growth. We do expect that we will see even more uptake in the next year when it comes to the U.S. market now that we are also supporting more on the co-pay assistance foundations, and Teresa will go into that.

Also Xolair keeps growing significantly. Gazyva, we have now launching in lupus nephritis, but you will see also the other indications really contributing to the growth in this business. Oncology growing well at 6%. For Phesgo, we are now at the global conversion rates above 50%. Tecentriq, returning to low single-digit growth, Alecensa growth driven by U.S. and Japan. On the Hematology side, Polivy strong now. We are reaching a U.S. patient share of 36%. Columvi/Lunsumio, growth driven by second-line plus launch and third line plus DLBCL, strong third-line growth in follicular lymphoma. So you can see also in the Ocrevus franchise, we see now a strong uptake of the subcut solution, as we also discussed, and Evrysdi is the leading SMA solution and medicine now with more than 21,000 patients on treatment.

So overall, we’ve achieved the upgraded guidance. On mid-single-digit sales growth, we had 7%. And you may remember in the QR — in the IR call in Q3, you asked why are we not upgrading the guidance on sales? And my answer was because 7% is still mid-single digit, and we delivered 7%. So we delivered on what we also communicated. On core EPS, we upgraded the guidance from high single digit to high single digit to low double digit. And why did we do that? Because we already knew that we would land in double-digit range. So we wanted to include it in that range, and that’s why we upgraded it at the time. And we further increased the dividends in Swiss franc. So I can say we, for the second year, upgraded the guidance during the year, and we ended up on the upper end of these 2 guidances every time in ’24 and in ’25.

Now what’s super exciting is the growth outlook. And the growth outlook has fundamentally changed based on some of the Phase III readouts that we have seen in Q4. Giredestrant, our SERD has had 2 positive readouts, one with evERA and the second one with lidERA, lidERA reading out early. We expected the readout only next year. But based on the very significant results, it read out early already this year. We’re now waiting for the persevERA data, but we clearly see that we have a very active and very good molecule in hand. Not only is it going to replace the standard of care and it’s going to become the new backbone in this field but it’s so safe and tolerable that we do believe that this will become the standard of care. Fenebrutinib in MS, we had 2 positive studies here in RMS and in PPMS, and now Teresa will go into that.

We’re still waiting for the second, the FENhance 1 study in RMS in order to be able to file this. You will see the data in not-too-distant future. But again, we are very excited with the data that we have seen. Gazyva, the same. We’ve had already positive data in lupus nephritis. Now we have 2 more additional Phase III data, again, something that will give us momentum in the midterm. On vamikibart and in Enspryng, we had 2 trials each. And each of the 2 trials, we always had 2 arms and 2 different doses. In one trial, in both of those, it was fully positive trial. In the second trial, one dose was positive, the other one was negative. Now this was always a very close call. And based on the conversations we had with the FDA, we do believe that the FDA will support filing here.

So this is the midterm. And in the long term, what’s also exciting is that we had 10 NMEs moving into Phase III. That’s a record for us. We’ve never had 10 NMEs moving into Phase III. And these are all NMEs with substantial revenue and patient impact attached to them. Now we know the other part or a topic that’s on your mind is our agreement with the U.S. government. Now the agreement we reached with the U.S. government is not an LOI, it’s a contract with the U.S. government. And based on this contract with the U.S. government, which is terminated for the next 3 years, we get an exemption from tariffs, and we get an exemption of the demo projects. In return, we agreed to the Medicaid rebates in some of our portfolio. We agreed to the encouragement of other wealthy nations to reward biopharmaceutical innovation and to pay their share to contribute to innovation.

And we also support the direct-to-patient medication access with our influenza portfolio, Xofluza and Tamiflu and also future medicines with which we can go direct to patients. Also, we agreed to invest in the United States $50 billion over the next 5 years. This includes R&D and PP&E investments. And for example, on the red dots on the right-hand side, you can see where these investments are happening. In North Carolina, Holly Springs, we are investing $2 billion in manufacturing for our CVRM portfolio. In Indianapolis, we’re investing in CGM manufacturing. And in Boston, we’re investing in our research hub as well as we’re going to invest more in Genentech in San Francisco. But we already have a very strong manufacturing and R&D network present in the United States.

Now it’s all about delivering on the next innovation cycle. So I think we have good growth momentum. We do believe we can sustain the good growth momentum and how do we keep that beyond 2030. Well, one is we’ve made substantial progress on our initiatives in order to prepare the company for future success. For the last 3 years, we’ve been talking about high-performing organization, about delivery and about execution. And I do believe we’ve delivered on that. We’ve introduced the bar so that we focus on those medicines with the highest impact. We have an intentional focus in terms of TAs and also — and disease areas. And we look at the portfolio as an overall investment portfolio with certain risk and reward profiles that we want to balance to have the right portfolio.

We’re expanding into new technologies, not only in Dia, but also in Pharma, and we’re implementing AI across the value chain. And we’ve made good progress in R&D. Now more than 60% of the NMEs are post bar, 66% of the late-stage projects have best-in-disease potential. We want to get to 80% and 60% more average peak sales per pipeline project. If you actually take not end of ’23, if you take end of ’22, it’s even higher. And the same for the total portfolio value. Since end of ’23, it’s about 45%. If you look at end of ’22 as a comparator, we are more than 60% higher, and this is a risk-adjusted value. So we do believe we’ve made a significant move when it comes to our pipeline in terms of higher rewards and also manageable risk. We have a strong on-market portfolio.

In the midterm, we have great readouts that are going to help us sustain our growth, but we have many, many NMEs that will read out before the end of this decade. And many of them can be significant contributors to the sales of our company. And here, you can see the prioritization that we have done over the years in our portfolio, really taking out high-risk, low-value projects and adding higher-value projects with very strong data as a foundation that gives us more confidence into Phase III. And this has resulted in a significant shift in our portfolio value. As mentioned, this is year-end ’23 as a baseline. If you take year-end ’22, it’s even significantly higher. And on the Diagnostics side, as I mentioned, we have been experiencing the headwinds in China from the healthcare pricing reforms.

These headwinds will become a lot less in 2026 and will be gone in 2027. We will continue to grow significantly. This year, we expect mid-single-digit growth, but then back to mid- to high single-digit growth. And these products that you see here can each contribute additional CHF 1 billion when it comes to sales per year. And again, very excited about the sequence of that’s coming. Now let me go through the outlook. For 2026, we again have an exciting year when it comes in terms of pipeline readouts. But then after that ’27, ’28, ’29, we will have many different NMEs that will have Phase III readouts. In ’26, I just want to highlight a couple, persevERA for giredestrant and fenebrutinib, Itovebi, divarasib, a number that can also continue to drive our growth in the next years.

And of course, we have a number of Phase II readouts in obesity, 2 of them already have been positive this year. So we had a very good start. So the year ended well in terms of readouts and the year started well in terms of readouts. So we are very positive in terms of the momentum that we have and that we can continue this momentum. And these are the 19 medicines that we can launch by the end of the decade. Now it’s clear that not all 19 ultimately will make it. But these are really substantial contributions that they can deliver to the future business of our company and to patients out there. So I’m very excited about what’s ahead for us. Now let me talk about the 2026 guidance. In group sales, again, we expect mid-single-digit sales growth; in core EPS, high single-digit core EPS growth, and we do believe that we can continue to further increase the dividend in Swiss francs.

With that, I hand it over to Teresa or to Alan, yes.

Alan Hippe: Yes, welcome from my side as well. As Thomas said, great pipeline progress. And that really then combined with great financial results. I think that’s really — that’s a great setup, and thanks to the whole Roche team for delivering that. So let’s go into the results right away. And here’s the overview. And I will focus on the right-hand side, so really the changes in constant rates. Sales plus 7%. Matt and Teresa will go into this, 9% on the Pharma side, 2% on the Dia side. As said, I think on the Dia side with the impact from China. Matt will highlight this. The core operating profit, plus 13%. So you see really good cost containment, but at the same time, we have invested where it really matters. And I will lead you through this.

And then Thomas mentioned it, slower momentum on the core net income and the core EPS, yes, driven by a higher tax load, roughly CHF 600 million, CHF 579 million more taxes that we had to pay, which brought the momentum a little bit down. IFRS net income up 58%. And you know where it comes from. It comes from a base effect from last year. We had 2 goodwill impairments accounted for CHF 3.2 billion negatively. If you adjust for that, I think it would be a plus 20%, which, in my opinion, mirrors very well the operational performance. Well, now I come to the cash flow. And we can now debate quite a bit about the cash flow. I think you see it, CHF 16.2 billion, down from CHF 20.2 billion. Let me say here, we had really a very strong December when it comes to sales and quite an increase in accounts receivables.

They will convert into cash. So automatically, what I’m saying, I’m expecting quite a strong cash year 2026. The other piece here is in the net trade working capital inventories. We had the situation that we had to deal with the tariffs. So we brought inventories up a little bit. That contributed to this. And last but not least, we have invested more into intangible assets, roughly CHF 600 million. I come to this, but I think that explains the number very well. As I said, I think we will recover quite well on the cash flow side in 2026. Let me say, I will also highlight this net debt came down at the same time. I will lead you through this. Good. I think when you look really at the bridge here for the sales, in constant rates, 7% up, as you can see.

When you go from the left-hand side to the right-hand side, it’s a plus 2% because we have the currency impact in, which is quite significant with minus 5 percentage points. Let me focus on the middle. You see Pharma and the loss of exclusivity of minus CHF 745 million, in total, a plus 9%, as mentioned. And then you see the situation in Dia, where we have a 7% growth, excluding China. And we have then an impact of minus CHF 579 million coming really from the healthcare pricing reform in China, which means a minus 24% of sales in China itself. Good. With that, let’s go through the P&L. I talked about the sales growth. Other revenue, I think on one hand, we had a lower milestone income compared to last year, minus CHF 87 million, but we also had higher royalty income.

That’s why this is very, very stable and really looks good. Cost of sales, both divisions increased their cost of sales by 7%, but with very different dynamics. I think we in — from a volume point of view in Pharma, plus 13%. So very, very clearly, I think here a driver for the plus 7% growth on the cost side. I think that growth was also a little bit supported by royalty expenses. And the Dia division, plus 4% on the volume side compared now to a plus 7% growth on the cost side. So what is that triggered by? Well, very clearly, the healthcare reform plays a role here, so China once again, but also higher costs related to placing of machines, which certainly fuels our future growth of diagnostics, so well invested here. We had certainly investments into the new technologies like CGM, Lumira, et cetera.

And last but not least, we had a tariff impact on the Diagnostics side of CHF 64 million half year impact. So it’s also something we potentially have to deal with in 2026. Core operating profit up 13%, a nice margin increase. When you look at the margins itself, I think really in constant rates, overall, plus 1.9 percentage points for the group. You see a nice progression on the Pharma division. You see a decrease of minus 1.1 percentage points in CER on the Diagnostics division side, which is explainable given that here, a significant portion of the sales in China went away. When you look at the core financial results, and really here, interestingly, I think really in CER, we have an increase. When you look at Swiss francs, we have a decrease.

And I think really what that speaks for is, well, the U.S. dollar is weak, hurts us a little bit in the P&L, but helps us with the financial result. That’s one conclusion here. You see the equity securities with minus CHF 88 million. I think the market has recovered, but we have some investments in the Roche Venture Fund where we wait for data. So hopefully, a better year ahead. Net interest income, we had less cash available, led to less income here. Interest expenses was plus CHF 69 million; in concentrate, it would be rather flattish. But let me say here, certainly, the weak U.S. dollar helped. And then we have really here other, and these are predominantly less hyperinflation impacts compared to last year. So with that, let’s go to the tax rate.

And Thomas mentioned it, I mentioned it already. Let’s focus on the middle of the slide. First, you see really the effective tax rate full year 2024, excluding the resolution of tax disputes, 18.1%. And then you see really the effective tax rate full year 2025, excluding the resolution of tax disputes, 19.5%. So you really see the increased momentum here. Both years were really mitigated by the resolution of tax disputes. In 2024, that was a positive of CHF 263 million, representing a minus 1.4 percentage points. And in 2025, it was a lower effect, plus CHF 185 million in constant rates, resulting in minus 0.9 percentage points, leading to the effective tax rate full year 2025 with 18.6%. Well, for 2026, I think we will hover more to a 20% tax rate.

Core EPS. On the core EPS side, this is the bridge here. I think for me, the most important point to say is it’s driven by operations. The increase in core EPS is driven by operations. And I think there’s nothing better to say here. Look, I think the product disposals, you’ve seen in the P&L, I think less income coming from that. Financial income and expenses are negative in constant rates, the slides in constant rates, that’s a negative. It’s roughly CHF 60 million. And then effective tax rate changes, as said, this is the once again mentioned increase on the tax side that we have seen here. So operations was the major driver. All other effects on that slide worked against us. When you look at non-core, and the IFRS income, I’ve mentioned the IFRS income, see it on the right-hand side, plus 58%.

Core operating profit, I’ve mentioned as well with plus 13%. Perhaps 2 points to mention on that slide. One is the global restructuring plans. You see really the restructuring charges have increased by roughly CHF 300 million. I would argue that’s a positive because that gives us savings in the future. And then I think you see the impairments of intangible assets, as mentioned, not a lot of impact in 2025. In 2024, with CHF 4.6 billion negatively, an enormous impact, very much driven by the 2 goodwill impairments for Spark and Flatiron accounting both together, minus CHF 3.2 billion. With that, let’s go to the cash. And here’s the story. And look at the left-hand side, CHF 20.2 billion, I’ve mentioned that already in 2024. And then you see in constant rates, full year 2025 with CHF 17.7 billion.

Well, you see really when you go back to the left-hand side, the operating profit, net of cash adjustments. I think that’s the positive momentum coming from operations, really positive. And then you see the net working capital movement. And out of that net working capital movement’s, minus CHF 2.2 billion comes from net trade working capital. And as I said, predominantly driven by accounts receivables. Let me mention here that has nothing to do with extended payment terms for certain products and nothing to do with Vabysmo. This is really we have for — especially for Vabysmo payment terms for a longer period for the last couple of years, and we have not changed them. So this is really because we had a strong December and that brought the accounts receivables up.

We have the higher inventories on the Pharma side. That explains the minus CHF 2.2 billion. We have the investments in PP&E, placements in Diagnostics for the positive site investments that we have done. And then we have the investments in intangible assets, the increase of CHF 645 million, very much driven by Zealand and the deal we have done there. Then foreign exchange kicks in with minus 8 percentage points quite significantly leads us to an operating free cash flow of CHF 16.2 billion. Well, I think when you look at the margins, I think that tells the same story here. When you look for it, I can just really point back to the fact that we will recover in 2026. Now when I talk about cash, I have to talk about the net debt development and debt in total as well.

And as said, I think interestingly, when you look really at net debt at the end of 2024 with minus CHF 17.3 billion. If you compare that on the right-hand side with the net debt position at the end of 2025, we have reduced by CHF 1.1 billion. So you might ask yourself, okay, the cash flow was not so strong. How is that possible? Did they invest less, especially on the M&A side? No, we didn’t. I think that the numbers are really on the lower part of the slide. As you can see on the right-hand side, you see what we’ve invested in intangible assets and in M&A is pretty equal, CHF 4.6 billion in 2024 and even more in 2025 with CHF 5.1 billion. One driver here is the weaker U.S. dollar. And you see it really when you look really on this bar, minus CHF 10.7 billion, dividends, M&A and alliance transactions and other, there is the currency translation point with plus CHF 1.8 billion.

That is a major driver here and helps us on the debt side. By the way, we have decreased gross debt by CHF 3.1 billion. And certainly, as 70% of our gross debt is in U.S. dollar, the U.S. dollar helps in that sense to bring the debt down, at least when we report in Swiss francs. Good. With that, a quick comment on the balance sheet. Not too much to say. When you look really on the left-hand side, where we have the assets, I think cash and marketable securities went a little bit down. Nothing to mention here, paid the dividend, all of that. When you look at other current assets, well, higher trade receivables, as mentioned already, mostly coming from the Pharma side. And when you look really at the noncurrent assets, that was driven by higher intangible assets of CHF 4.1 billion, mostly acquisitions accounting for plus CHF 2.5 billion.

On the right-hand side, you see the liabilities and the equity. The current liabilities increased mainly due to the higher accounts of payables and bank creditors, some loans here. And the noncurrent liabilities decreased slightly due to the decrease in long-term debt. I’ve mentioned the CHF 3.1 billion already. Leads us to an equity increase quite nicely and now an equity ratio of 38%. Good. Leads me to the currencies. Well, yes, I think really, the volatility is certainly disturbing. And the weak U.S. dollar is something we’re fighting against. You see really the result for the full year, minus 5 percentage points on sales and minus 8 percentage points on core operating profit, a minus 7 percentage points on core EPS. To be honest, if you apply today’s rates, that would be basically the same picture for 2026 if we keep all that rates from today until the end of the year 2026.

So I think it would be basically the same impact. When you compare at year-end 2025 and you keep these currency rates stable until the end of 2026, you see it really on the box down low. The impact would be minus 4 percentage points on sales and minus 6 percentage points on core operating profit and core EPS. This topic remains in 2026. Good core EPS. I think really we want to set the base right for you for the core EPS and what is the starting point because we have currency effects in the core EPS. So let me lead you through this. You see on the left-hand side, the CHF 19.46 per share as reported. And then I think really, we adjust for CHF 0.37 to get to the CHF 19.83 per share, which would be the starting base for your calculations in — or if you like, for the core EPS in 2026.

So let me explain now the CHF 0.37. What you see here, these are the exchange rate effects. This is a result of dividing the 2025 currency losses of minus CHF 273 million as well as the 2025 losses on net monetary position in hyperinflationary economies of minus CHF 48 million. This is shown in Note 4 of the consolidated financial statements on Page 64. So on Page 64, you find these 2 numbers. Net of taxes and noncontrolling interest by the number of diluted shares of 803 million, and this number is outlined in Note 29 of the finance report on Page 126, just to confirm that, which is, I think, quite a positive because it sets the higher bar for us, so to say. So hopefully, a little bit of a positive for the projections for 2025. Here’s the guidance again.

Thomas has alluded to it. Let me mention to it, the loss of exclusivity impact that we have estimated or actually that we expect of roughly CHF 1 billion for 2026. So relatively narrow to what we had for 2025 and well in line between the CHF 1 billion and CHF 1.5 billion that we’ve indicated to you that we will have on an ongoing basis. And with that, I have the pleasure to hand over to Teresa.

Teresa Graham: Fantastic. Thanks, Alan. So I’m going to hand it back to Alan.

Alan Hippe: You hand it back to me. Teresa — it’s hard to bring it to you. But let me make a last comment here. We have a change in our income statement presentation for 2026. Let me say very clearly, has nothing to do with the group in itself. So really, when you look at sales, group core operating profit and the core EPS, the metrics are unaffected. This topic is between corporate and the divisions. And basically, what we’re doing is we are centralizing the legal department. That’s what we’re doing. And that has quite an impact. When you look at Pharma, we reduced SG&A costs in Pharma by CHF 250 million, roughly, I think, certainly in constant rates, which represents roughly 0.5 percentage point in core operating profit margin.

So you should adjust for that in your calculations. On the Diagnostics side, that’s roughly CHF 50 million less for the SG&A costs, which represents 0.4 percentage points in the core operating profit margin in CR. Corporate equally then would increase by CHF 300 million. Just to point that out, as I said, for the group accounts, nothing changed. This is between the divisions and corporate. Just to remind you when you project your margins forward for 2026, especially for the divisions. And now, yes, I have the pleasure to hand over to Teresa.

Teresa Graham: I’m going to move forward really quickly in case they try and take it away from me again. So let’s jump right in. So as Thomas shared the group perspective with you a little earlier, I wanted to provide some additional color on the key priorities for the Pharma division, starting with our focus on delivering the on-market portfolio. Q4 2025 marks our eighth consecutive quarter of growth. So today’s on-market portfolio continues to deliver strong performance with 16 blockbusters across our 5 therapeutic areas. We expect this momentum to continue until 2028. And thereafter, we expect that sales become stable to fully compensate for generic erosion. Importantly, we do not expect a patent cliff. As Thomas mentioned, though, in the near term, we are expecting to deliver multiple key launches, which come on top of today’s on-market portfolio.

This includes Gazyva in immunology, giredestrant in breast cancer, fenebrutinib in MS, vamikibart in UME and Enspryng with additional indications in both neurology and ophthalmology. We expect that these products are going to continue to extend our growth momentum until well beyond 2028. We are currently in the process of updating our mid- to long-term outlook, and we’ll be sharing that with you a little bit later this year. And so while we’re very excited for these upcoming launches, we are just as excited about the progress that we’ve made on our pipeline. As Thomas mentioned, through R&D excellence and rigorous application of the bar, we have successfully rejuvenated our pipeline. With our post-bar NMEs, we have the potential to enter new disease areas like Alzheimer’s and obesity, and we aim to bring multiple new transformational medicines to patients.

As I mentioned at Pharma Day, all of our activities are really driven by 2 key tenets: discipline in the business and rigor in the science. Discipline in the business, we remain committed to keeping our COP at least stable. And rigor in the science, optimizing how we spend our R&D budget and applying our bar criteria to each and every asset progressing in the pipeline or entering it, including from partnerships or acquisitions. I am truly excited and confident for the future of Pharma, delivering transformative medicines and sustaining our growth momentum. So now let’s take a closer look at how this momentum played out in 2025, and we’ll start with the full year sales. So as you heard from both Thomas and Alan, Pharma sales grew at 9% at constant exchange rates, reaching CHF 47.7 billion.

All regions are delivering strong performance, led by our international region with 14% growth. And overall, our volumes were up by 13%. As Alan mentioned, COP increased by 13% versus that 9% sales increase with a COP margin of 49.2%, so a slight increase over last year. Clearly, COP grew ahead of sales, which we mainly attribute to effective cost management, particularly in R&D, but I am going to drill down on the individual line items in a little more detail. Other revenue slightly decreased by 1% with higher profit share income from the higher sales of Venclexta in the U.S., which was offset by lower income from our out-licensing agreements. As Alan mentioned, cost of sales increased 7% against a 13% volume growth. R&D costs declined by 3%.

This was mainly driven by savings in Flatiron as well as some other operational efficiencies. But let me say that this reduction was very thoughtful and deliberate as it gives us the oxygen that we need for the upcoming CVRM Phase III trials. SG&A costs increased by 8%, and this is primarily for 2 reasons. It was driven by some investments in our growth drivers, particularly Ocrevus and Xolair, but also increased donations to multiple independent co-pay assistance foundations. As part of our broader corporate philanthropy strategy, Genentech doubled its donations to those independent co-pay assistance foundations in 2025 versus 2024. Our corporate giving strategy is focused on supporting the patients most in need across multiple therapeutic areas, including oncology, neurology, immunology and ophthalmology.

And we continually evaluate the strategy to ensure that it remains aligned to patient needs. And finally, other operating income and expenses decreased by 43%, and this is primarily due to lower gains on the disposal of products. And so now let’s look at our individual growth drivers. So as always, first, I have to comment on the graph. These are all absolute values and year-over-year growth rates are presented at constant exchange rates. At full year, our top brands, Phesgo, Xolair, Ocrevus, Hemlibra, Vabysmo and Polivy generated roughly CHF 3.6 billion in new sales at constant exchange rates. For the fourth quarter in a row, Phesgo is our #1 growth driver with 48% growth, closely followed by Xolair, driven by the continued outstanding uptake in food allergy.

You’ll also notice the strong performance of Xofluza. And I just want to talk for a minute about that here, which is driven by the strong flu season that we saw in Q1 of 2025 in China. This may create a bit of a base effect for Xofluza in 2026, especially considering that we haven’t seen a similarly strong flu season in China this year. So now let’s dive into our TAs, starting with oncology. Oncology sales increased by 2% to CHF 15.3 billion, primarily driven by our HER2 franchise. As I mentioned, Phesgo posted an impressive 48% growth and the global conversion rate keeps climbing. We’re now at 54%, well on our way to our new goal of 60%. This, of course, also means that Perjeta conversion to Phesgo continues to impact Perjeta sales, which is to be expected.

Kadcyla growth continues to be driven by uptake in adjuvant breast cancer. Looking forward to the HER2 franchise overall, and as I’ve said previously, we expect the HER2 franchise to peak this year at about CHF 9 billion at 2024 exchange rates, followed by a steady decline through the end of the decade with a solid tail of around CHF 4 billion. And that CHF 4 billion is primarily Phesgo, about CHF 1 billion for Kadcyla and a bit of HMP. We do not foresee a biosimilar in the U.S. for Perjeta until the end of 2027. And let me also confirm again that we do not expect a cliff situation for the HER2 franchise. For Itovebi, we see good launch momentum in our first-line PI3 kinase HR-positive breast cancer population, and we expect 2 Phase III readouts this year with INAVO121 and 122, which could enable further indication expansion.

But of course, the highlight of Q4 was the positive Phase III lidERA result for giredestrant. I am going to cover this in more depth on the next slide, but let me give you a few quick updates on giredestrant in general. We presented the lidERA data at San Antonio Breast, and we have already filed the evERA results with the FDA that happened at the end of last year, and EU filing is expected for 2026. Therefore, we expect evERA U.S. approval later this year, lidERA results will be filed with the U.S. and EU regulators this year. In the first half of this year, we expect the readout of persevERA in first-line ER-positive, HER2-negative metastatic breast cancer. Moving on to Tecentriq. Tecentriq exited 2025 with 3% growth and actually quite a nice Q4.

For 2026, we expect low single-digit growth for Tecentriq, driven by the positive studies that we shared last year, such as IMforte in small cell, IMvigor in MIBC and ATOMIC in dMMR colon cancer. And finally, before I move to the next slide, let me just briefly mention that we expect the first Phase III readout for our KRASG12C inhibitor, divarasib, later this year. So now let’s take a closer look at the lidERA results for giredestrant. So here are the giredestrant-lidERA results in adjuvant ER-positive HER2-negative breast cancer, which we presented last December. As you can see, giredestrant demonstrated a statistically significant and clinically meaningful improvement in invasive disease-free survival versus standard of care endocrine therapy, achieving a hazard ratio of 0.7. Let me emphasize here that this is the first oral SERD to show superior IDFS versus endocrine therapy in the adjuvant setting.

And in terms of overall survival, the data was still immature, but clearly, a positive trend for giredestrant was observed with a hazard ratio of 0.79. Giredestrant safety profile remains favorable as we’ve seen in previously — previous studies. And importantly, we saw a lower discontinuation rate with giredestrant versus the comparator arm. This is a significant improvement in this setting, and it indicates the improved patient experience on giredestrant compared to standard of care. So taken together, these results further underline giredestrant’s potential as a next-generation best-in-class endocrine therapy in ER-positive breast cancer. To expand on this, let me dive a little bit deeper into the giredestrant development program. So now given the positive evERA and lidERA results we just discussed and the upcoming readouts, we’re very excited for the future of giredestrant.

Giredestrant has the potential to replace standard of care endocrine therapy in ER-positive breast cancer and become the new backbone of choice in this setting. As you can see in the treatment paradigm on the left, our clinical development program for giredestrant covers different lines of treatment and risk groups with the readout of persevERA in first-line expected mid-first half of this year. Please note that the giredestrant plus CDK4/6 combination in lidERA relates to a single-arm substudy that’s still being evaluated. That’s in combination with [ abema ]. We have also started a sub-study in combination with [ ribo ] as well. As you would expect, we are working at speed to complete filings and collaborate with regulators to ensure that this transformational medicine gets to patients as fast as possible.

And just to reiterate, we have already filed evERA in the U.S. and expect lidERA filing in Q1. Beyond giredestrant, we also have a strong pipeline of potentially best-in-class molecules in breast cancer that give us the opportunity for numerous future combinations. For instance, our highly potent CDK4/2 inhibitor, which may overcome some of the limitations of currently available CDK4/6 inhibitors. And as I mentioned, we believe giredestrant has the possibility to become the new backbone of choice in ER-positive breast cancer. And therefore, we’re exploring many combinations with some of the internal assets, as I just mentioned. Additionally, our phone keeps ringing as we are getting calls from potential partners interested in combination studies with giredestrant.

We look forward to sharing future updates on our breast cancer pipeline with you in the near future. But for now, let’s move on to hematology. The hematology franchise delivered strong growth of 15% in 2025, achieving CHF 8.6 billion in sales. Hemlibra closed the year with strong growth, 12% (sic) [ 11% ] driven by increasing adoption in the non-inhibitor patient population. For 2026, we expect low single-digit growth, and that’s partly driven by competitor launches, which are anticipated later in the year. Polivy’s growth momentum continued in 2025, reaching U.S. patient sales of 36% in first-line DLBCL. But in fact, we reached 2 significant milestones with Polivy last year. First, it is now the most prescribed regimen for IPI 2-5 patients in the U.S. And second, we have officially hit more than CHF 1 billion in sale in the first-line DLB setting alone.

Shifting to Columvi and Lunsumio, our CD20, CD3 bispecifics. Launch performance remains on track for Columvi in third-line plus DLBCL with second-line DLBCL launches gearing up. For Lunsumio, we’re happy to report that the subcutaneous formulation has been approved in both the U.S. and the EU. And just a reminder that, that new formulation reduces administration time from hours down to actually under a minute. Additionally, we expect 2 key events for Lunsumio later this year. We expect U.S. approval for Lunsumio plus Polivy in second-line DLBCL based on the positive SUNMO results, and we expect the readout for the Phase III CELESTIMO in second-line plus follicular lymphoma. So now let’s move on to neurology. Our neurology franchise achieved CHF 9.8 billion in sales in 2025 with a strong growth of 11%.

Ocrevus continues to have good momentum, delivering 9% growth globally and crossing the CHF 7 billion milestone in annual sales. We’re excited to see the increasing growth momentum of our subcutaneous formulation known as Zunovo in the U.S. In Q4, more than half of global Ocrevus growth was driven by the subcut formulation. And importantly, in the U.S. and many other early launch countries, roughly 50% of Zunovo patients are naive to an Ocrevus. This represents that acceleration that we’ve been talking about. U.S. uptake continues to be driven primarily by community practices, which emphasizes how Zunovo is actually expanding the addressable market and can help overcome healthcare system restraints like IV capacity limitations. Overall, we now have more than 17,500 patients on Ocrevus now globally, and that’s roughly 5,000 more than we had at Q3.

For 2026, we expect to hit high single-digit to low double-digit growth for Ocrevus. And as a reminder, we upgraded our peak sales expectations for Ocrevus for the Ocrevus franchise to CHF 9 billion by 2029. This includes CHF 2 billion of incremental sales from Ocrevus subcut. But of course, there’s also going to be some switching from IV to subcut. Staying with the MS franchise, you’ve seen the exciting news regarding the positive 3 results for fenebrutinib. We’re going to cover that more on the next slide. But for now, let’s take a minute on Evrysdi. The global rollout of the tablet formation continues, and we see great pickup from that as well as very positive feedback from the patient community. As Thomas mentioned, this remains the leader in SMA.

Quick note that Q4 performance for Evrysdi in international was boosted by a tender-related buying pattern, but we are still expecting double-digit growth for Evrysdi next year. Earlier this week, you saw positive data from Elevidys in DMD. We continue to believe in the positive risk-benefit profile in the ambulatory DMD population and more than 1,050 patients have already been treated globally in this setting. Furthermore, the latest 3-year data from EMBARK shows the durable efficacy and slowing of disease progression for ambulatory DMD patients treated with Elevidys. We are working with EMA continually to find a viable path forward for EU patient access here. Quickly stopping over prasi, a quick update here where we have achieved both FPI for the Phase III study as well as we have been able to materially accelerate site activation.

So we’re a number of months ahead of schedule with the prasi trial, which is great news for patients. And let me close quickly by speaking a little bit about Enspryng in MOG-AD. So MOG-AD, if you are not aware, is a rare antibody-mediated autoimmune condition of the central nervous system, which causes inflammation of the brain, optic nerve and spinal cord. The Phase III study METEOROID read out positively. And we’re looking forward to presenting that data at an upcoming medical conference later this year. We expect to file these results with the U.S. and EU regulators in 2026, and this additional indication could unlock an upside of approximately CHF 500 million for Enspryng. So now as promised, let’s take a little bit of a deeper look at fenebrutinib.

We are very excited about the positive Phase III readouts for fene. This includes FENtrepid in PPMS and FENhance 2 in RMS with the FENhance 1 readout expected mid half of this year. These results make fenebrutinib the only BTK inhibitor with positive Phase III results in both RMS and PPMS, and it has the potential to be both first and best-in-class in RMS and PPMS, which would also make it the first and only high-efficacy oral treatment for both relapsing and progressive multiple sclerosis. We see fenebrutinib as an opportunity to increase high efficacy treatment rates amongst MS patients and expand the footprint of our franchise. Ocrevus and now Ocrevus subcut have brought transformational impact to people living with MS, and we believe fenebrutinib has the potential to be that next transformational medicine for these patients.

Let me also briefly remind you that fenebrutinib is differentiated by design from other BTK inhibitors. It is the only noncovalent binding BTK in Phase III development for MS and has a highly optimized PK profile that allows it to reach its target, including in the brain. So stay tuned for the FENhance 1 readout in half 1. And until then, we look forward to presenting the FENtrepid results in PPMS at ACTRIMS, where we are also inviting you to attend our IR event on the 9th of February. And so with that, let’s move on to immunology. Our immunology franchise grew at 12% at constant exchange rates and reached CHF 6.7 billion in sales. Xolair’s strong growth momentum continues, driven by uptake in food allergy. In 2025, we achieved 32% growth in sales of CHF 3 billion.

We are also happy to celebrate a key Xolair milestone in 2025, which is more than 100,000 patients have now been treated for food allergy since launch. Regarding the 2026 outlook for Xolair, we expect around 20% growth, and this includes the impact of an expected first biosimilar entering the market in the second half of the year. You will have seen that Xolair was selected for the latest rounds of IRA negotiations. So let me provide a little bit of extra information on this. Xolair’s inclusion on this list, as you know, does not change patient access or pricing at this time. Any potential pricing impact, if applicable, would not take effect until 2028 at the earliest. But CMS’ final guidance provides that a selected drug will no longer be subject to negotiation and will cease to be a selected drug if CMS determines that a generic or biosimilar has been marketed by November 1, 2026, and we do expect that a biosimilar for Xolair will be launched before that date.

Actemra sales declined by 2% in 2025. As predicted, we are now seeing increased biosimilar impact in the U.S., which resulted in a 10% decline in growth in Q4. This is aligned with all of our previous communications of an accelerating biosimilar impact in the second half of 2025, which will obviously continue into 2026. Just like in Q3, Gazyva is one of our key highlights for the quarter. Following the FDA approval in Q3, we achieved EU approval in lupus nephritis, and we announced positive Phase III readouts in both SLE and INS. In both indications, Gazyva has first-in-class potential. SLE results have been submitted for presentation at SLE Euro in early March, and the INS results have been submitted to WCN in late March. Both indications, as I mentioned, I think, previously, will be filed in the U.S. and EU later this year.

And I’m also very happy to share that the FDA has granted breakthrough therapy designation for Gazyva in childhood onset idiopathic nephrotic syndrome, which is INS based on the positive ENSURE results. And we are not quite done with Gazyva just yet. There’s one more Phase III trial, which is expected to read out in 2026, and that’s MAJESTY in membranous nephropathy. And as a reminder, we see up to a CHF 2 billion opportunity for Gazyva in kidney disease. And just finally, I’d like to mention the upcoming Phase III readout for sefaxersen in IgAN, which is expected later in the year. Now let’s move on to ophthalmology. Ophthalmology grew by 10%, achieving CHF 4.2 billion in sales. Vabysmo performance, as you know, was impacted by the contraction of the U.S. branded market.

It landed at 12% growth for the year, which is still quite strong. We had mentioned this contraction previously. And through 2025, we saw a decline in the branded IBT market in the U.S. of about 15%. Nevertheless, Vabysmo continues to gain market share in the branded IBT market in the U.S. and across early launch countries globally. In the U.S., we now see that more than 60% of Vabysmo patient starts are from treatment-naive patients, and this further solidifies Vabysmo’s position as the standard of care. Looking forward, we would expect the U.S. branded market to gradually recover in 2026. And taking this into account, we expect a growth acceleration in 2026, driven by the ex U.S. continued growth and U.S. recovery. In fact, as Thomas mentioned, there is a lot to look forward to in ophthalmology this year.

We have 2 potential new medicines entering our ophthalmology portfolio. That’s the vamikibart in UME, which is expected to be filed in both the U.S. and EU. Enspryng in thyroid eye disease will be filed in the U.S., and we are currently considering ex U.S. filings with the appropriate regulators. Now let’s jump into our CVRM pipeline. This is one slide with a whole bunch on it, but I am very happy to share with you the key developments in our pipeline as well as provide a perspective on a very newsflow-rich 2026. So earlier this week, we shared positive final Phase II top line results at week 48 for the once weekly CT-388 in people with obesity. This is study 103. For the efficacy estimand, we achieved a placebo-adjusted weight loss of 22.5%.

As a reminder, the efficacy estimand includes patients who dropped out from further analysis, so the effect size measured represents the true efficacy of the medicine tested. For the treatment regimen estimand, we achieved a placebo-adjusted weight loss of 18.3%. The treatment regimen estimand reflects a more real-world outcome, acknowledging the fact that not all patients will be able to adhere to treatment. In this case, data after treatment discontinuation, either in the treatment [ or ] placebo arm are included in the analysis. So for example, it includes data from patients who discontinued treatment early and have regained weight. Now this is a question we received a number of times over the last week. So I’m just going to take another minute here to reiterate.

Generally speaking, the difference between the efficacy and treatment regimen estimands is usually driven by treatment discontinuation, either due to patients on the active treatment arm who regained weight after discontinuing treatment or patients on placebo who go on a weight loss therapy after discontinuation. There are many ways to potentially address this phenomenon in our future Phase IIIs from a more flexible dosing regimen, which allows patients to stay on lower maintenance doses in case of tolerability issues to the incentive of a long-term extension to retain more placebo patients. But these kinds of measures should serve to improve the discontinuation rate and eventually reduce the gap between the 2 estimands. In that context, I should also point out that in most of the recent Phase III trials in obesity, marked differences between the estimands greater than 5% have been observed.

Let me also highlight 2 other key points in terms of the efficacy achieved in the study. First, we saw a clear dose-dependent relationship on weight loss. And secondly, and most importantly, we are pleased by the absence of a visible efficacy plateau at 48 weeks for the highest dose tested, which was 24 milligrams. Taken together, this clearly indicates that further weight loss can be achieved after 48 weeks, and it gives us confidence in CT-388’s potential to deliver best-in-class efficacy for obesity. In terms of safety and tolerability, CT-388 was well tolerated and the tolerability profile was generally consistent with incretin class. The majority of gastrointestinal-related events were mild to moderate and total treatment discontinuations due to AEs in all arms were low at 5.9% for CT-388 versus 1.3% for the placebo arm.

Let me also highlight here as we received this question a number of times as well, the discontinuation rate due to AEs at the highest 24-milligram dose was similar to the total discontinuation rate observed. We look forward to sharing more detail on the Phase II results with you at an upcoming medical conference later this year. Similarly to 388, we saw positive results for CT-868 in the Phase II 004 study in type 1 diabetes. And just like for CT-388, we will share the final results at an upcoming medical conference in 2026. So speaking of the outlook for the rest of the year, let’s start with our Phase II and Phase III study initiations. As a reminder, we announced for both CT-388 and CT-868 that we will move them into Phase III development in 2026.

For CT-388, we can now provide a first update. The Phase III trials for CT-388 named Enith1 and Enith2 are now scheduled to start in Q1. In addition, you can see that we plan to initiate the first Phase II studies for petrelintide in CT-996 as well as a Phase II combination study for CT-388 with petrelintide. In addition, we have a number of other CVRM readouts scheduled for 2026. There are multiple Phase II readouts to look forward to. For CT-388, we have data for patients with obesity and with type 2 diabetes, which will come later this year. We also expect the first Phase II readout for CT-996, our oral GLP-1 and for petrelintide, ZUPREME 1 and 2 trials in obese overweight patients with and without type 2. And finally, emugrobart and tirzepatide combination data in obesity are expected towards the end of the year.

So as you can see, we continue to progress our CVRM pipeline at pace, and we are excited to share updates with you throughout the year. So last but not least, let’s go to the next slide to bring us home. Here, we have the 2026 pharma key newsflow. We start the year with 4 green check marks, certainly a good omen for the year ahead. And we have discussed everything else on previous slides, so I won’t go into more detail here. For any of you who are feeling the lack of the 2025 newsflow table, we have moved that to the appendix. And with that, I would say, I’ll give it back to Alan but I’ll be crazy and I’ll give it over to Matt.

Matthew Sause: That’s wild.

Teresa Graham: Wild. Wild times.

Matthew Sause: All right. Thank you, Teresa. Good morning, good afternoon, everyone. It’s my pleasure to present the full year 2025 Diagnostics division financial results. So with sales, as you heard from Alan and from Thomas, sales in diagnostics were CHF 13.8 billion. We grew 2% or CHF 292 million compared with 2024 at constant exchange rates. But as you heard from both Thomas and Alan earlier, excluding the sales in China, which I would reiterate is our second largest market, was impacted by health care pricing reforms. The growth of the diagnostics business was 7%. So now let me walk you through these results by each of our customer areas. So sales in our largest customer at Core Lab were flat, again, driven by this previously mentioned health care pricing reform.

Excluding this effect, sales were plus 10%. Sales in the Molecular Lab increased 4% due to growth in our blood screening business. Now this was partially offset by reduced sales growth in the infectious disease segment, which grew at 1%. This was impacted by the USA funding stop in Q1 that caused a corresponding decrease in HIV testing, which I covered last year. Sales in our Near Patient Care customer decreased at minus 3%, mainly driven by the decline of our blood glucose monitoring business at minus 2% due to the market shift to continuous glucose monitoring as well as a decline in respiratory molecular point-of-care testing due to the late start of the 2025 respiratory season. And again, back to what you heard earlier from Thomas, we expect the CGM product to really be a driver for this customer area in the future and we continue to invest in expanding and preparing for this.

Finally, sales in the Pathology Lab grew strongly at plus 14%, mainly driven by sales of advanced staining at plus 10% and our companion diagnostics business, which grew at plus 25%. So now I’d like to show the geographic performance that’s behind these results. Taking through the regional view, North America, the business grew at plus 9%, well ahead of market. You saw good growth in EMEA at plus 6%, again, ahead of market. Latin America, strong growth at plus 11%. Now Asia Pacific, again, as we discussed, minus 12%, driven by the minus 24% decline in China. Excluding the effect of China, APAC grew at plus 4%. Now as you heard earlier, our consistent ambition in the Diagnostics division is to grow our sales at mid- to high single digits. However, given that we anticipate diminished but continuing headwinds in China for 2026, we would set our ambition this year at mid-single digits for 2026.

Again, our consistent ambition is to grow this business at mid- to high single digits. Now I’d like to walk you through the P&L line by line. As previously mentioned, sales grew at plus 2%. Cost of sales, as you heard from Alan, grew at plus 7% but this was mainly driven by that unfavorable impact of the China health care price reforms, half a year impact of tariffs and the production ramp-up of our new technologies such as CGM and sequencing and the placement of a significant number of instruments in 2025. And I would highlight that we saw growth of some of our key platforms like our immunoassay at strong double-digit increase. And for example, our molecular workstation, the 5800 grew at over 40%. So very strong placement of instruments. R&D costs decreased at minus 2%.

Now this is a result of significant and focused cost containment measures across the organization in response to China impact. As mentioned previously, we are ensuring delivery on all our key priorities, especially our investment in the key new product areas such as CGM and our AXELIOS Sequencing Solution and LumiraDx. SG&A decreased by 2%, again, reflecting focused cost containment measures across the organization. This resulted in a core operating profit of approximately CHF 2 billion, declining at 4% at constant exchange rates, which reflects the cost control initiatives. So now I would like to transition to some of the innovation that we launched in last year and really specifically focus on our cobas Mass Spec 601, which as you heard from Thomas, these are CHF 1 billion opportunities that we’re very excited about and their potential to really deliver growth to the Diagnostics division.

So as I mentioned before, current mass spec primarily relies on lab-developed tests and lack automation, are highly manual and require highly skilled labor. With the launch of our mass spec solution in 2024, we’ve introduced the first fully automated IVD platform for clinical mass spec. So throughout 2025, we received CE mark for all of our wave 1 menu composed of 39 analytes spanning the key parameters used in mass spec testing, including therapeutic drug monitoring, steroid and hormone analysis as well as vitamin D testing. These comprise the majority of parameters used in a routine clinical mass spec lab and we are going to follow that with a second wave of additional parameters. I would add that this system, which integrates with our existing serum work area platforms, strengthens our leading position in the Core Lab.

And now I’d like to talk about some of the high medical value content that we launched last year for our serum work area, specifically our dengue antigen test, which received CE mark in October. Dengue is the most common mosquito-borne viral disease globally and represents a major global health burden. It accounts for an estimated 390 million infections per year. It has shifted from being a seasonal illness to a year-round risk with locally transmitted cases shifting from historical geographies such as South America to now in Europe and North America. Diagnosing dengue can be challenging as patients are often misdiagnosed due to overlapping conditions with other febrile illness. With our Elecsys antigen test, we will enable health care systems to diagnose dengue more reliably and efficiently by providing all 4 dengue virus serotypes differentially diagnosed with a rapid test that takes only 18 minutes.

This will add one more test to our leading immunohistochemistry platform — or excuse me, immunochemistry platform, which comprises of approximately 120 different parameters. So now I would like to move on to a customer who’re very near and dear to my heart, the Molecular Lab and switch to discussing our cobas BV/CV assay, which we received CE mark in December. Sexual health diagnostics market is valued at CHF 1.1 billion with a yearly growth rate of 11%. Vaginitis is the primary growth driver within this segment showing a yearly growth rate of 26%. With our cobas BV/CV assay, we will provide a multiplex assay designed for the direct detection of bacterial vaginosis and candida vaginitis and expand our molecular STI offering. With the addition to our STI portfolio, we will continue to enable testing the most commonly sexually transmitted infections using a single tube and a vaginal swab.

In the future, we plan to continue expanding our offering in this area with home collection solutions as well as novel molecular point-of-care assays. Transitioning to our point-of-care portfolio, I would like to discuss our recent CE mark and FDA clearance with a CLIA waiver for our liat Bordetella panel. Pertussis is a highly contagious disease that causes more than 24 million estimated yearly cases, resulting in 160,000 deaths with the majority of those in children. Diagnosing pertussis can be particularly challenging as its symptoms often overlap with those of common colds, leading to underdiagnosis. Our liat Bordetella panel offers a reliable point-of-care solution, delivering results in just 15 minutes between 3 Bordetella pathogens and again, delivers lab-like performance.

This will enable health care providers to act quickly and prevent severe complications, especially in vulnerable populations such as children. As you can see from this slide, this launch, we further expand our cobas liat menu of lab equivalent point-of-care testing and we will continue to expand this in the future. And with that, I would like to transition to our key launches in 2026 and call out a few highlights. Again, I would really want to emphasize that 2026 is the year that we will launch our AXELIOS Sequencing Solution. This is a groundbreaking high-throughput solution that will deliver high accuracy, high throughput and flexible sequencing based on our proprietary Sequencing by Expansion technology. And would also again highlight that this represents a potential blockbuster opportunity for us with sales potential and above the CHF 1 billion range.

I would also like to call out the expansion of our neurology menu, including the Elecsys pTau 217, which is a blood-based diagnostic for Alzheimer’s disease and Elecsys Neurofilament light chain for detection of disease activity in Multiple Sclerosis, greatly expanding our offering in neuroscience. Additionally, I would like to — I would really like to particularly mention our TB IGRA test, our assay to detect latent tuberculosis infection, which remains a global health care challenge and a significant commercial opportunity and I’m very convinced that we will offer a very differentiated, highly competitive solution here. And overall, this 2026 is going to be a very exciting year of launches and I look forward to keeping you updated over the course of the year.

Thank you and now I hand it to Bruno.

Bruno Eschli: Thanks, Matt. And with that, we open our Q&A session. The first question goes to Sachin Jain from Bank of America.

Sachin Jain: Two, please. So firstly, on Vabysmo, I don’t think you’ve guided to growth for this year beyond acceleration. So any color on what you’re assuming within the guide? And perhaps, Teresa, you could just provide a bit more color on your funding comments. What does that doubling in ’25 versus ’24 mean relative to historic levels? Like where is that funding relative to sort of a 3-, 4-year average? And any color on how that flows back to patients? When we should see an impact on sales? The second question is on persevERA, if I may. It’s a topic that I think has come up on prior calls but just to reiterate as we approach data. If the study hits, is any hit clinically meaningful for you, would you need to see a certain hazard ratio or absolute PFS benefit — you used that wording in the press release. The reason for the question is, there’s been speculation since your San Antonio call around passing an interim. Those are my 2 questions.

Teresa Graham: Yes. Great. So in terms of Vabysmo, I’m not going to give you specifics on the amount of money that we contributed because as you have heard me say many, many times before, our charitable giving is not in any way related to our commercial expectations for the product. So those 2 things are and have to be completely separate. I can tell you that we doubled our donations last year and that was a significant increase for us over the last couple of years as you sort of alluded to. We do believe that 2025 represented sort of a rebaselining of the branded market in the U.S. And so what we are hopeful is that 2026 will now allow the underlying growth of Vabysmo to actually be more visible. And so we would expect an acceleration in 2026.

I don’t believe we’ve been more specific than that. In terms of persevERA, so clearly, the fact that we’ve now seen positive data from giredestrant in a number of important settings, both neoadjuvant, adjuvant and in a complex late-stage population, sort of underscores our belief in this molecule and that clinically, it is potent, it’s active and it’s combinable, it’s tolerable. It’s given us great confidence that we do have the opportunity to be really impactful for many different patients and to really become a new standard of care in hormone receptor-positive breast cancer. Reading through though, to different settings is complex. And so thinking about how we would read through to persevERA, happily, we don’t have too long to wait to actually get the answer to that question.

In terms of what would be clinically meaningful, we have designed the study to yield a clinically meaningful result. And so generally speaking, a 20% reduction would be considered clinically meaningful. Did I answer your question?

Sachin Jain: Perfect.

Bruno Eschli: Okay. Very good. Then we move on. Next one in the row would be Peter Verdult from BNP Paribas.

Peter Verdult: Pete Verdult from BNP. Two questions. Teresa, just on obesity. We understand from Zealand that the amylin data is in-house and the market seems to have set the bar at sort of being low to mid-teens weight loss. Forget the market for a second. Can we just focus on Roche? What is the minimum target profile you are looking to demonstrate for amylin in obesity? And then secondly, on BTK, you sound very confident about the approvability despite recent CRLs elsewhere in the BTK class. You know the efficacy in the first relapsing-remitting study in PPMS, which we don’t. Just wanted a sense or kick the tires with you. Is your confidence based on a highly skewed benefit risk profile? Or is it more because you think the 2 cases of Hy’s Law that you’ve seen in the data set can be attributed to other or nondrug causes?

Teresa Graham: Yes. So I’m going to start with your second question first because I think we’ve gotten a lot of questions over the last couple of weeks about tolebrutinib and read-throughs to fenebrutinib. And I think we have to be very, very cautious here. If you actually read that CRL, it is incredibly specific to the risk benefit that was seen with tolebrutinib. And unfortunately, they had a number of failed trials. They had a number of Hy’s Law cases. So I think it is very difficult and inappropriate to actually take the language that was applied to tolebrutinib and actually put that forward on to fenebrutinib. Let me be really clear because I think there have been some — there’s been some confusion about what we’ve actually seen in terms of Hy’s Law cases for fenebrutinib.

We had 2 cases of elevated liver enzymes with bilirubin, which was what put us on clinical hold with the FDA. Both of those cases were in FENhance 1, which currently is a study that still remains blinded. When we looked at those 2 cases, only one case was deemed by the FDA to be a Hy’s Law case. The other one was confounded due to alcohol use by the patient. And so right now, in fenebrutinib, we have only one case and it is in FENhance 1. So we are sort of blinded to any more detail. It’s also really important to note that since we put liver monitoring in place in the clinical trials, we have not seen any more cases. And so I think we feel very good about the overall benefit risk profile that we have with fenebrutinib, particularly when you consider the other half of that coin, which is the benefit.

When you look at the Phase II trials for fenebrutinib, you saw a significant amount of clinical benefit to patients. And the data that we’ve seen are sort of very consistent. And so I think when you look at that very high efficacy with a very — what looks to be a very manageable safety profile, I think we’re just in a totally different situation than what you saw with tolebrutinib. So hopefully, that kind of provides a little bit more perspective there. So in terms of petrelintide, so as a monotherapy, we believe that petrelintide holds the potential to be a foundational therapy for weight management. We are looking forward to being able to deliver a weight loss that the vast majority of people are actually looking for, which is something more in that sort of 10% to 20-ish percent with the potential to be a much more improved tolerability profile compared to the GLP classes as well as just a better patient experience in terms of titration, quality of weight loss, et cetera.

So obviously, we don’t, again, happily have long to wait. We’ll see that data soon. You mentioned the data being in-house. We remain blinded to that data. So we have not seen it but we do — we expect to see it very soon.

Bruno Eschli: Peter, did this answer your questions?

Peter Verdult: Yes.

Bruno Eschli: And we move on then. Next one would be Simon Baker from Redburn.

Simon Baker: Two, if I may, please. Firstly, just continuing on Pete’s question about fenebrutinib. I just wonder if you could give us some idea about how we should be thinking about the relative tolerability profile of fenebrutinib versus Ocrevus ahead of the ACTRIMS data? And how do you see in light of that fenebrutinib being positioned relative to Ocrevus? And then secondly, a question for Matt. It’s a little while since you unveiled to us the new sequencing offering. I just wonder if you could update us on the market feedback you’ve had in terms of levels of demand and where that demand is coming from, whether it’s smaller scale or larger scale applications or indeed both?

Teresa Graham: You want to go first?

Matthew Sause: I would be delighted to go first.

Teresa Graham: And I would be happy to yield the floor.

Matthew Sause: Super. Wow. So yes, and I would maybe give a plug for our Dia Day in May, which will talk quite a bit more about this and Bruno will mention that at the close. Maybe I’ll just say that first. But yes, we’ve seen a high level of demand for the sequencer, I would say in, more than we had originally anticipated ahead of launch. We’re already starting commercial activities with select customers. And the feedback from our early evaluators has been extremely positive. So when you talk about applications, we’re really seeing interest in a broad variety of applications from translational, such as single cell but then on to more focused clinical applications such as whole genome sequencing and germline. So what we’re really seeing is the potential of an instrument with that kind of flexibility, throughput and accuracy and a dual assay format with the longest reads of Simplex as well as the very high accuracy Duplex format to have a broad applicability really across the spectrum of sequencing applications.

And I think we’re very confident in the potential for this technology as well as the launch. Does that answer your question?

Bruno Eschli: Simon?

Simon Baker: Perfect.

Teresa Graham: Yes. Great. So when we think about where fenebrutinib sits, I mean, we believe that it has best-in-class potential. And together with OCREVUS, OCREVUS subcut and potentially further on — down the line, OCREVUS high concentration, we believe, ultimately, we are going to have a range of highly efficacious and very tolerable therapies that meet every patient with MS exactly where they’re at. Right now, 30% of patients are on a less efficacious oral therapy. And so that’s sort of an easy place to imagine fenebrutinib starting. But I think ultimately, we believe that this is — the combination of these 2 therapies gives us the opportunity to really sort of revolutionize the entire patient journey for MS patients. And I think we’re feeling very confident about our ability to do that.

Simon Baker: [indiscernible] Very clear.

Bruno Eschli: Next questions go to Matthew Weston from UBS.

Matthew Weston: Hopefully, you can now hear me. The first one on giredestrant. Teresa, there’s a lot of debate about how the commercial potential in the adjuvant setting could be impacted by the data from persevERA. Can you give us your thoughts as to whether or not you see adjuvant as independent of that frontline metastatic result? And also, there’s a lot of debate about the peak sales potential of giredestrant.. So when do we — when should we expect to hear what Roche thinks the potential of this medicine is? And then secondly, if I can just pick up on biosimilar erosion. So Q2, Q3 of last year, you made a number of comments about delays to the entry of Xolair and now similar comments about potential delays to the entry of biosimilar Perjeta.

Clearly, there are multiple patents, so you can do deals with biosimilar companies. But do you think investors should get used to a more gradual erosion of some of these biosimilars at the beginning of generic entry? Or should we still continue to expect to see like a minus 40% that has been kind of the underlying trend so far when we actually see biosimilars enter the market?

Teresa Graham: Yes. So I’ll take — thanks, Matthew, for your questions. I’ll take your second one first and I have a very definitive answer for you, which is that it absolutely depends. So it depends on the therapy. It depends on the part of the world. I mean, I think it — this is one of those things where biosimilar impact is not a one size fits all. So in some parts of the world, with some therapies, you are going to see an immediate decline. With some others like Xolair, we just do expect that to be a smidge more sticky because you’re dealing ultimately with a very allergic patient. And so physicians might be a little bit more tentative about switching so quickly. And so I think this is one of those areas where we are constantly monitoring the environment.

We’re constantly talking to treating physicians to get a sense of how they may think about the utilization of biosimilars and we give to you our best knowledge of how we believe those erosion curves will happen. But it’s very difficult to give you one answer because I think it is actually quite variable, again, by therapeutic area and by geographic area. When it comes to giredestrant, so this market is somewhere between a $20 billion and $30 billion opportunity. Adjuvant is about 2/3 of that between initiation and maintenance therapy. We do think that adjuvant and first-line is pretty separate. And we think that giredestrant has the opportunity, as we said, to really be establishing itself as a new standard of care. When are you going to get a better read-through from that?

Q1 is a very data-rich — here, so the first half is a very data-rich time for us. We’re in the process of updating our own assumptions. And as soon as we have a clear read-through, we will share that with you.

Thomas Schinecker: Maybe just to answer your question on Perjeta as well because you had this question. So we don’t expect the biosimilar for Perjeta until ’28 in the U.S. and ’27 in the EU.

Teresa Graham: Correct.

Thomas Schinecker: Just to clarify that.

Bruno Eschli: Matthew, did we answer your questions?

Matthew Weston: That’s perfect.

Bruno Eschli: Then we move on. Next one would be James Gordon from Barclays.

James Gordon: James Gordon from Barclays. Two questions, please. One would be on giredestrant, actually 2 subparts. One would be, the slight delay in persevERA readout timing and I think it’s now more likely to be Q2. Is that because the event rate is a little bit slower? Or could you be getting a few more events in and could that actually help the [ powering ], which has been a concern some people have had? And also on giredestrant, the lidERA Study, the [ side ] study of about 100 patients, I think they’re getting on top of the CDK. How will you communicate that? And it sounds like you’re filing ahead of that because you’re filing the data in Q1. So is that something that then gets added to the filing package and you hope to have on the initial label?

Or how does that work? And then the other one was on fenebrutinib. So you sound very confident talking about the Vabysmo upcoming launch, which is great. And there’s been some talk about liver already. But in terms of other tolerability issues, I saw the comment in the original release about additional safety data that is further being evaluated. So could there be some other off-target BTK side effects you need to think about? And just on the side effect point, though, if you’re comparing it to something like Ocrevus, so you’ve got the advantage of oral but could you have to have liver monitoring or something like that? Could that be a barrier to becoming a very big drug? How would you think about that?

Teresa Graham: Great. Okay. So we’ll start with the second question first. So we intend to assess the safety of fenebrutinib when we have the — all of the studies read out and we look at — when we look at the pooled safety. So obviously, we only have 2 of the 3 studies. So we need to wait a little bit in order to be able to step back and look at that. The data that we’ve seen so far, we haven’t seen anything that is different than what you would see in the background rate of the overall MS population. In terms of liver monitoring, as is typical, when you get your label, usually for things like monitoring, you get what you studied in your label. So we would anticipate that we would have the same liver monitoring in our label that we had in our clinical trial.

And again, I think when you look at the efficacy and the risk-benefit profile that fenebrutinib has, I think this still — this is going to be a meaningful medicine in MS. So more to come as we get FENhance 1 data. For persevERA, just to be really clear, the timing on that has not changed. We have consistently been messaging, the first half, mid-first half of this year and that has not changed. So that is remaining consistent. And again, we do plan to file the lidERA data first. We get the [ abema ] data, I believe, the substudy data comes, is that also in Q1? Guys, someone is going to have to remind me of that. And then the [ ribo ] study, which is a 200-patient substudy is just kicking off, so that will come later. So those are data pieces that clearly, as soon as they are available, we will be making public.

But the adjuvant filing is going in — into Q1 as planned and it looks like end of 2026 for the substudies.

Bruno Eschli: James, all questions answered?

James Gordon: That’s great.

Bruno Eschli: Yes. Then next one is Sarita Kapila from Morgan Stanley.

Sarita Kapila: So you addressed the study approval risk and I guess others have touched on it. But what is underscoring the confidence in the commercial potential? What’s the initial feedback from the physician community being? So we’ve seen orals with LiverTox launch post CD20 approval, which have struggled to reach 1 billion. So I guess why is fenebrutinib different? And how are you viewing risk from Novartis’ remibrutinib in RMS data in Q2 and they’ve had no signs of LiverTox so far? And then the second one is just on persevERA. It’s also been touched on but how confident are you that you have enough patients in the trial to hit stat sig? And how should we think about the [indiscernible] study and the potential read across to persevERA?

Teresa Graham: Great. So let’s start with fenebrutinib. So obviously, the data have not yet been presented. So the PPMS data goes to ACTRIMS shortly, and then the RMS data will be packaged together when we have FENhance 1 as well. That having been said, we’ve obviously shared it with those physicians who are part of the trial. And I think people have been really impressed with the data that we’ve seen. And in particular, people were really impressed with the Phase II data that we’ve seen. So what we’re talking about is the ability to get OCREVUS like efficacy in an oral treatment. And for many patients for many, many different reasons, that’s a very attractive option. So again, I think in this market, a lot of it comes down to the overall efficacy that we’re able to deliver.

And based on the Phase II data, we believe we have a highly efficacious molecule on our hands. In terms of the Novartis data, I mean, it’s important to remember, we haven’t really seen anything in MS from Novartis yet. This is a dose that I think is about 4x higher than the existing dose. They had sort of second mover advantage and they started their trial with liver monitoring. So I think it’s very difficult to compare because we just really haven’t seen anything. We have first-mover advantage here. We’ve had robust Phase II data. And yes, I mean, I think we’re — it’s very difficult to say anything until we actually see data. It’s also, I think, important to remember that fenebrutinib is a non-covalent molecule. And in a chronic indication, that noncovalency really matters because it means that even though you’re taking it chronically, if you need to stop for whatever reason, it does leave your system more quickly.

And I think that really in a chronic care environment is a benefit. So in terms of read-through for persevERA, it’s clear when breast cancer is dependent on the endocrine receptor for viability, giredestrant can perform very well. And we’ve seen that in a number of settings. So all of these patients are, by definition, dependent on ER signaling and it’s worked really well here. So clearly, in the front line, the likelihood that it’s successful hasn’t gone down. And we should always be really cautious with cross-trial comparisons. And so I think we are — again, as I mentioned, the benefit is, we don’t really have long to wait. So we’ll know really soon. And yes, persevERA is designed to show improvement over palbo plus letrozole.

Bruno Eschli: Sarita, all questions answered?

Sarita Kapila: Yes.

Bruno Eschli: Yes. And the next one in the queue is Richard Vosser from JPMorgan.

Richard Vosser: Two questions, please. First question, just to go to diagnostics for a little bit. Margins obviously hit by ramp-up of mass spec sequencing and the machine placements. Could you give us a bit of color on how to think about the margins from here? Those placements seem likely to continue as you ramp those 2 businesses up. So how should we think about ’26 and then the improvement in the margins from there? And then second question back to pharma. Just going back to Vabysmo — thanks for the comments on the foundations. Could we go a little bit further out and think about the future competition potentially from less frequently dosed injectable products? I think ocular has one half yearly. How you think about that sort of competition? And also closer to today, the biosimilars are really starting to come. They’re having some impact in Europe as far as we can see. So just what’s the thoughts globally, U.S., Europe on biosimilars from Eylea on Vabysmo?

Matthew Sause: So in this case, maybe…

Teresa Graham: No. Go ahead. I can use a break.

Matthew Sause: Thank you. So maybe starting with diagnostics. So we talked about a couple of effects. There’s the new technologies. There’s the tariffs of which Alan said we had half the year and we’ll have a full year this year. But the biggest effect on what hit us last year on the margin was really the China effect. And as you heard from Thomas, we expect to see this meaningfully diminish this year. 2027, again, we expect to decline but it will be small enough that it won’t really be meaningful. And then we expect to see a recovery. In terms of specific ambition on margin this year, I think I would refer you back to the group position that Alan mentioned earlier. But I would say our consistent ambition is to grow profit faster than sales.

And that is once we really get ourselves to the headwinds this year, that is our ambition going forward. And it’s also our continuous ambition to improve the margin in diagnostics. That’s something that is a goal for the entire organization. What I would call out, though, in 2025 is you had our second largest market with a 25% reduction. So obviously, there was an impact but that’s something that you can see with our discipline on the cost line that you can also expect to see continue again in 2026 but we expect the gradual washout of that. Anything you would add to that, Alan?

Alan Hippe: Well, I think for ’26, I think, well, we expect kind of a stabilization. I think that’s a little bit here. But we will give that additional information.

Matthew Sause: Absolutely. Yes. So I would maybe just refer to what Alan said. Our goal really this year is going to be that we stabilize the margin.

Thomas Schinecker: And I think on a group level, you have seen that our intention is to expand margin in 2026. And what I’ve said in the past still holds, which is that also going forward, we will at least keep margins stable also for the coming years.

Matthew Sause: Perfect. Does that answer your question?

Bruno Eschli: I think so.

Matthew Sause: You go ahead.

Teresa Graham: Yes. Great. So I’d like first just to start by talking about Vabysmo. So I mean, Vabysmo is highly efficacious therapy with a very well-defined safety profile where patients and physicians do have a lot of good experience in extending doses. And so — and it is designed to do just that. When you look at — you asked specifically about ocular, I mean, this drug is going into Phase III with a very small safety database and really no known data on long-term safety. And when you talk about something that’s going to be used intraocularly over a long period of time, I think long-term safety is incredibly important. So I think it’s very difficult to think about how these — how something like that is a threat to something that has such good efficacy, such good safety and where you do actually have the ability to extend doses.

So I think from a future competition perspective, just like in other disease areas, sort of the bar is high here to unseat Vabysmo. And you had one other question. Oh, biosimilars. So far, what we see is that the Eylea biosimilars are taking from Eylea. And so for those patients who are really benefiting from a new and novel treatment, Vabysmo, they were just less impacted. So yes, I mean I think we saw Lucentis take from Lucentis. We’re seeing Eylea biosimilars take from Eylea and we’re seeing high-dose Eylea take from low-dose Eylea. So there’s a lot of trading within that space. But I think for new patients who are going on therapy, physicians are picking the best available therapy out there available to them and that is Vabysmo.

Thomas Schinecker: And on ophthalmology, I would like to add that we have an amazing pipeline in ophthalmology. So when you look at all the different validated targets, I think we’re the only company that actually has all the different validated targets in-house. And so if you look at our pipeline, we have trispecifics, tetrapecifics, [indiscernible] et cetera. So if I look at our ophthalmology pipeline, I think the one that’s going to succeed surpassing Vabysmo, is then hopefully us.

Bruno Eschli: Very good. Richard?

Richard Vosser: Yes. Perfect, everyone.

Bruno Eschli: And next one in the queue is James Quigley from Goldman Sachs.

James Quigley: Hopefully, you can hear me. Just a couple of quick questions from my side left over. So firstly, again, on giredestrant and revisiting lidERA. What’s the KOL reaction been from your side? So some of the KOLs we spoke to have been a little bit more cautious than the presenter at your SABCS event, given the more limited follow-up versus the CDK4/6 class. So how do you think this could impact the giredestrant trajectory, of course, assuming approval? Would it be more of a step up — stepwise ramp or more a stepwise ramp as more data comes? Or do you — or do your feedback suggest the potential for a faster, more optimistic ramp on giredestrant? So that’s the first one. Second one, more a financial question. So underlying pharma growth has been pretty strong in recent years, driving operating leverage.

So how is Roche balancing R&D investment with profitability? So how long can R&D expenses stay flat? This half seem to show that Roche has a strong ability to reallocate costs in R&D. But how long can this go on to support operating leverage?

Teresa Graham: I mean I think what we’re hearing from the KOL community regarding where they would use lidERA is pretty bullish. I mean I think what we hear from — the lidERA population is 55% of the adjuvant breast cancer population. That’s 10% more than what we saw on the NATALEE trials. So I think you are really seeing physicians believe that this could have very broad applicability in their practice. And so I think that would — that’s what leads us to be fairly bullish about the opportunity. There’s a 74% overlap with the population in NATALEE and monarchE. And so I think we’re very — yes, I think we’re very confident that we have something on our hands here that is quite a game changer based on the data that we’ve seen.

Thomas Schinecker: Yes. Let me answer the second question. But first, something to add on giredestrant. I mean you look at the hazard ratio of 0.7. You can see that, that’s, I would say, highly competitive to also some of the CDK4/6 trials that you’ve seen. But what you have on top of that is the tolerability. If you look at CDK4/6, you have quite a high amount of patients that actually stop using it simply because they cannot take the tolerability. So I think these are all the right arguments for SERDs to be used. So I do believe that the pickup will be strong. Unfortunately, I wasn’t at the Congress in San Antonio but I heard there was standing innovation from the clinicians there. Then the second question on R&D. So we’re working very hard to be a high-performing, very cost-efficient organization.

There are still opportunities, in my view, to continue to work on that. AI, by the way, plays a big role in that. We’re using AI throughout the entire development process where we want to, on the one hand, speed up using AI but also reduce costs doing that. Regarding R&D expenses, also for 2026, I would say it will be broadly flat. Again, really focusing very hard on making sure that we put the money to work in the best possible way for the sake of patients in our company and for our investors.

Alan Hippe: And it all goes back to the margin point that you’ve made before.

Thomas Schinecker: That I made before, which is, it’s clear for ’26, expand margin. And as previously always said, at least stable for the long term.

Bruno Eschli: James?

James Quigley: Thank you very much.

Bruno Eschli: Okay. Then we move on to Graham Parry from Citi.

Graham Glyn Parry: So one on lidERA. Thanks for clarifying the filing time line as being Q1. Just wondering if you could comment on whether you expect priority review or to use a priority review voucher or not. And when exactly do you think you would expect to see the [ ribo ] combo substudy data, 200 patients, how long does that take to recruit? And could we see something by the end of this year? Is that a next year event? And then on fenebrutinib, could you just confirm how important you think confirmed disability progression is versus annualized relapse rate reduction in showing a risk-benefit profile and differentiation versus Ocrevus to the regulator, just given the — it’s a very brain-penetrant molecule and has potentially, therefore, the ability to work on disability progression where CD20 doesn’t?

And then the final question is, you’re technically still on clinical hold with FDA. So does that have to be lifted before you can actually file or receive approval? And what are the steps to doing that?

Teresa Graham: Okay. So we expect the [ abema ] substudy by the end of the year. We would expect [ ribo ] in 2027, that is really only starting now. So we’ve got a little time. That’s 100 patients in the [ abema ] arm. And in [ ribo ] it’s 200 patients. The FDA hold will be addressed as part of the planned [indiscernible] filings, but we’ve obviously been in consistent conversation with the agency over time. So there — we’ve been in very close contact. I won’t comment on our filing strategy only to say that we plan to bring lidERA to patients as quickly as possible. In terms of confirmed disability progression, I think we are — the annualized relapse rate is also a very good endpoint here. And we are confident that, that is giving us what we need in order to proceed.

Bruno Eschli: Graham, any additional questions or — all good? Then we move on. And I hand over to Rajesh Kumar from HSBC.

Rajesh Kumar: Two questions, if I may. First, on CT-388, thanks for clarifying discontinuation rate in the highest dose was similar to the overall group. You also mentioned that you could consider a flexible dosing in Phase III trials as an option. So could you give us some color on how you’re thinking about Phase III progression? Would flexible dosing or an active comparator be something you might consider? Or is it at the moment, too early to comment on that? Second, just on giredestrant, quick follow-up. You highlighted the overall TAM this class is targeting to be quite a large number. You are filing with a few — some persevERA data is about to read. So just in terms of the market segmentation, how much of the market you think it have been risked — derisked to some extent and how much we still depend on the data in your assessment of the market would be very much appreciated.

And because I’m an analyst and I cannot count, the third question would be just on the clarification on Vabysmo. Appreciate the working capital impact has gone up and that sort of reflects a very strong December. So should we consider the exit rate of December close, the indication of how you’re thinking about growth in 2026? Or should we take an overall slower growth rate going forward on Vabysmo?

Teresa Graham: So I would just go back to my earlier comments. For Vabysmo, we expect to see an acceleration of growth in 2026. So more to come on that. In terms of the dosing for CT-388, so what we have disclosed is that CT-388, it will be administered once a week and we’re aiming to develop it at 3 maintenance doses. We are not disclosing at this time the details of that dosing strategy. But just to avoid any misunderstanding, we have not indicated that we will be doing flexible dosing within the trial. So — but right now, the details of that Phase III design, that specifically have not been disclosed. And then in terms of giredestrant and the market segmentation, so — and how much do we feel like has been derisked? Well, 2/3 of the market is adjuvant and we have a positive adjuvant trial. So I mean, I think a significant portion of the — we have a significant portion of the market that has been derisked.

Bruno Eschli: Okay. And then next questions are from Michael Leuchten from Jefferies.

Michael Leuchten: A question for Matt, please. Abbott said last week that the Chinese may be pursuing VBP for Core Lab oncology. Just wondering whether you’ve heard that and how that may or may not have been reflected in your outlook and the margin commentary you made earlier? And then sorry, Teresa, just going back to Vabysmo, just your comment about 2025 in the U.S. being reset. Q4 was still soft. It didn’t really improve upon Q3 sequentially. So when you say you think that’s now stabilized and it can grow from here, just wondering how you look at that Q4 versus Q3 dynamic in the U.S.

Matthew Sause: Okay. 3. Wow. I know what 3 is [indiscernible]. So what I would first start off by saying is, as you may know, there was VBP for Core Lab oncology reagents last year. And so that was what you see, our China effect last year significantly represented a decrease in our Core Lab oncology reagents, which were down about 50%. So some of that effect is still pulling through this year. But I can’t speak for what was said on that call but we are seeing the effect of the VBP last year and the national reimbursement reduction. So we don’t anticipate additional Core Lab oncology VBP this year.

Teresa Graham: So in thinking about Vabysmo, Q4 — so 2025, we saw a big reset in the branded market in the U.S., right? With the closure of the co-pay foundations, fewer patients were put on branded drugs, more patients were put on Avastin and biosimilars. And you saw a big just sort of reset in how many new patients and continuing patients were actually going on a branded therapy and that constricted the market by about 15%. That constriction went all the way through Q4 because normally, when donations are given or grants are given, they’re given 4 years’ worth of therapy. What’s happening right now in the oncology world is something called the blizzard. It’s where every retinal specialist in the U.S. goes and reverifies the benefits for every single one of their patients.

And it’s at that point in time that patients actually determine what — will they be continuing on their current medication, will they be switching, et cetera. And so over the course of the next couple of months, I think we’re going to get a real sense of what is the trajectory of the branded market going to look like in 2026. But because that underlying base effect of 2024 is now washed out, you should be able to see the actual branded growth of people going on to new therapies actually come through. So I think there’s a reason why we didn’t see Q4 look any different than what the rest of the year looked like. I think we had sort of hoped that we might see some early signs of recovery but I think those signs of recovery really are going to come — become a little bit more evident as we get towards the end of Q1.

So Michael, I hope that addresses your question.

Thomas Schinecker: Yes. And I mean, we — the co- assistance foundations, they are separate, right, so nothing that — in terms of influence. But what we can say is in general, that our donation was towards the end of Q4.

Teresa Graham: Yes. And then again, we don’t link those 2 things. It is interesting to know though that in Q4, we did see a 4% growth. So we saw…

Thomas Schinecker: Quarter-over-quarter.

Teresa Graham: Yes, quarter-over-quarter growth. We did see a 4% growth. So we did see a little bit of an uptick.

Bruno Eschli: Michael, any follow-on? If not, then I would hand over to Paul Kuhn from Cowen. Paul?

Paul Kuhn: Thanks, Bruno. This is Paul on for Steve Scala. Two questions, please. What feedback have you heard from U.S. oncologists and how they plan to initially use giredestrant in the adjuvant setting? And secondly, how did the change in Xolair biosimilar entry from end of 2026 to before November 2026 come about? Was this a change in the settlement with generic manufacturers?

Teresa Graham: So with regards to Xolair, I think we have long said sort of second half of 2026 is when we expected the first biosimilars to come in for the U.S. So I don’t actually think that that’s a change.

Bruno Eschli: I think mentioning November was just related to IRA. So that is really, we need to have a biosimilar place — a payer in the market before the 1st of November. So then we cannot get negotiated.

Teresa Graham: That is correct. So my reference to the 1st of November was purely around CMS guidance that says if you have a marketed biosimilar by November 1, 2026, then you will be removed from the negotiated basket. So that’s where that date comes from. But we’ve always said second half of 2026, we would expect to have a biosimilar in the market. And then feedback from oncologists on where they intend to use for adjuvant. I mean, again, just to continue to reiterate, 55% of the adjuvant population was covered by the lidERA trial. And so I think you see a high degree of confidence in an oncologist to use in a very significant portion of their patients. And again, what we saw here was a very efficacious, seemingly combinable and well-tolerated therapy that I think has the opportunity to really become a new standard of care in this setting.

So what we’re hearing from oncologists in general is that they’re pretty excited to have this in their hands and we’re excited to get it to them.

Bruno Eschli: Paul, if we answer all your questions?

Paul Kuhn: Thank you.

Bruno Eschli: Then next one would be Justin Smith from Bernstein.

Justin Steven Smith: Two, please. Pharma, #1, NXT007, just wondered if you could share some thoughts on when the Phase III design head-to-head versus Hemlibra will hit ct.gov. Second one, diagnostics, Matt, just wondered if you could talk a little bit about CGM and when the finger prick recalibration will be removed and the impact that might have?

Matthew Sause: Wow, 4 is new territory. So I want to first thank Teresa for generosity. But — so starting with your question on auto calibration, which is the comparison of the CGM device with a blood glucose lancet, what we are planning to do is have that launch happen this year. I won’t say exactly which quarter but that is an improvement that we expect to deliver this year.

Teresa Graham: And with regards to NXT007, we would expect those trials to start in Q1, Q2 with clinicaltrials.gov entries at around that time frame. And again, these are 2 studies, one, head-to-head and one, versus [indiscernible] and one Hemlibra.

Bruno Eschli: Justin, all questions are answered?

Justin Steven Smith: Yes. Great.

Bruno Eschli: Then I would maybe read here loud 3 questions, which I got from Luisa Hector. She had to drop off and I promised her I will go through them. There is one question on Ocrevus [indiscernible]. So the split of naive versus switch patients that we are capturing and what is the target switch rate for 2026 and at peak? What I think we have been communicating that we have 2 billion in incremental sales for Ocrevus but this is true incremental sales. And on top, basically, we would have revenues coming from switching. So we have not yet provided a detailed outlook on what the ratio, IV to subcutaneous would be at around 29%. We might do that at a later point in time. There’s then a second question I found interesting on the pipeline.

66 NMEs now on the pipeline. Is this rightsized? And what we have seen now with the turnover in the fourth quarter with 4 molecules added, 5 going out — so 5 added, 4 going out, is this now — is there still cleansing ongoing of the pipeline? Is this now the regular run rate and the turnover? Or would we target more NMEs overall?

Thomas Schinecker: Yes. I mean I can answer that question. So overall, you apply the bar not only once, you apply the bar constantly based on data that you generate but also data that you get from the outside. So clearly, I think we are at a point where we’ll continue to bring in additional NMEs. We have actually — when you look at the very early stage of our research organization, we’ve actually doubled the amount of molecules moving ahead there. So we do believe that we’ll continue to expand on the amount of NMEs that we have in our portfolio beyond the 66. But this kind of, I would say, prioritization is just something that you have to do constantly based on just availability of data.

Bruno Eschli: And then the final question here would be on capital allocation. Given your positive pipeline progress, pharma deals with the U.S. administration and with competitor developments in obesity, are there any changes to your M&A objectives and R&D investment plans?

Thomas Schinecker: No, I can say there is no fundamental change. I think what we have really shown over the last couple of years that we’ve been very disciplined, very disciplined in terms of financials but also in terms of really screening the market for interesting molecules with good data. If you look at the amount of money that we spent compared to other companies and the kind of pipeline we’ve built doing that, I think we’ve been pretty efficient. And our intention is to continue to do the same and just continue to be quite disciplined on that. The good thing is, we are not in a situation where we have a huge patent lift, right? So we are not in a situation where we have to do late-stage deals, which are very costly. I think we are in a very good position when it comes to our late-stage pipeline.

But obviously, I mean, if you look at the amount of innovation that’s ongoing outside, you look at what’s happening in China, we need to continue to screen the market and look at everything that’s out there. I mean I looked at a statistic, for about 1,000 companies that we look at we do 1 deal. And I think that’s also what I expect of our organization that we know exactly what’s going on outside so that we can make data-driven good decisions.

Bruno Eschli: Very good. I think with that, actually, we are at the end of our Q&A session. Let me just remind you of the 2 upcoming IR events we already have flagged. I assume there might even be more. There’s on February 9, our neurology call, we will cover up the PPMS data for fenebrutinib presented at ACTRIMS. And then on May 12, we again will have our Diagnostic Day as a live event in London, where we will take you through the entire portfolio and highlight this year, I think, will be SBX sequencing. As we are now in the global launch phase, I think there is the next steps to come with pricing and so on. So I think it will be an exciting event. And with that, I hand over to Thomas for the final remarks.

Thomas Schinecker: Thank you very much, Bruno and huge thanks also to the team. I would say, quite exciting times. I mean, if I see all the discussions that we’ve had as a team over the last 3 years and the progress we made, I think it’s significant. And it’s not only that, it’s also a lot of fun because we get to talk about what we like to talk about, which is science, which is about progress for patients. And with people like Alan and myself who like math, also we can talk a lot about financials. So I think there’s a lot of good things that are going on. And we have a good momentum both on financials and pipeline. So very proud of the team. And I do believe we’ve always done what we said that we are going to do and you will continue to see that going forward. We continue to move with focus. We continue to move with speed. And as always, you can count on us because we will deliver.