Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bayer AG (BAYRY, Financial) is advancing towards its target of EUR 2 to 3 billion in free cash flow for the year.
- The company has seen positive developments in litigation, including a favorable decision from the Federal Court of Australia in the Roundup litigation.
- Bayer AG (BAYRY) has launched new products and expanded existing ones, such as Veracast in the U.S. and One A Day in the cellular health field.
- The company has made significant progress in its pharma pipeline, with successful results in recent Phase 3 clinical trials for heart failure and advancements in treatments for Parkinson's disease and non-small cell lung cancer.
- The Consumer Health division has returned to growth, with a 5% increase in sales driven by innovation and improved supply situations.
Negative Points
- Bayer AG (BAYRY) faced a EUR 240 million foreign exchange headwind, impacting reported sales growth.
- EBITDA before special items declined by 16% compared to the prior year quarter, largely due to an unfavorable mix effect in Crop Science and higher provisions for short-term incentives.
- The company is experiencing significant generic pricing pressure in its Crop Protection business, which is expected to continue.
- Sales of Xarelto declined by 11% due to patent expirations and resulting generic competition in Europe and Canada.
- Despite lower earnings, the company still faces high net financial debt, which stood at EUR 36.8 billion by the end of Q2.
Q & A Highlights
Q: Rodrigo, could you help me with two things: what do you think you have planted acreage wound up being this year? And within that, do you think you gained or lost share? And then secondly, as you look to the back half, just talk about how you expect corn acres to play out, both in Argentina with the corn side and issues as seen from some challenge our corn prices? Thank you.
A: Well, let me start with the U.S. So our US we again, we saw another good performance of our corn this year. We are coming from a very strong performance last year globally in order strong performance of or NBC's, again, we saw was the reduction of the origin. You asking the three 4 million acres. We're going to see how this will finish the season. We it's important to say that we started our sales in North America, as you know, into Q4 of last year than previous both Q1 and Q2 or confidence on our share. We did a lot of research with farmers and we're going to continued market share up 4% in our trade share or 40 U.S. approvals, 80%. So our great performance and or that we're seeing here when you go to the South America right now, you're seeing the effect of the ortho business, 13 a bit more challenging Argentina, Brazil, the commodity price has an impact, but also the currency is helping the farmers a little bit right now. It will we see a higher aerial are not a significant one, but we see a higher aerial are either in the composition of severance of three or four basic. So overall, I would say that our own performance distributed strong. We see the same in North America. I want to highlight that one because of the opportunity to meet, we're going to be up over 50% generic share in US above 80% and trade share. And Bill mentioned, we launched the oral, you're going to have almost 1.8 million during the 1st year alone. So very happy with the seat performance and speak on the order you asked me here. Thank you.
Q: Great to see the primary endpoint. I realize you can't talk specifics, but could you at least help us provide some context, given the market's seen other posted a place that datasets recently from the likes of numerous GLP-1 agonists, SGLT2, just anything you you could help us gauge your confidence, put the final data in context of what we're seeing elsewhere in heart failure would be useful, be patient and wait till ESC.
A: We are very confident in our data and believe it will stand strong in comparison to other recent datasets. Our Phase 3 trial results for Corindi have shown positive top-line outcomes, and we are looking forward to presenting detailed data at the upcoming European Society of Cardiology congress. The results are promising, especially in a high-stakes, innovation-driven business like ours, and we are optimistic about the potential expansion of the patient population we can reach with Corindi.
Q: Rodrigo, it feels like you're increasingly reliant on a strong Q4 performance from LatAm to hit the guidance. Is the guidance being lowered primarily because of what you're seeing in corn and fungicide dynamics? If not, what else is the factor?
A: Yes, we are indeed relying on a strong Q4 performance from Latin America to meet our guidance. The dynamics in corn and fungicides are significant factors, but we are also seeing some positive trends in other areas. For instance, our soybean business has benefited from higher volumes due to acreage expansion in North America. Additionally, our insecticide portfolio has shown strong volume growth, driven by our move into new products in EMEA. We are cautiously optimistic about the second half of the year and are taking measures to mitigate any potential headwinds.
Q: Could you provide more details on the litigation developments, particularly regarding the Roundup and PCB cases?
A: We have seen positive developments in our litigation efforts. In the Roundup litigation, we achieved a favorable decision from the Federal Court of Australia, which dismissed the class action. In the U.S., we have also seen positive outcomes, including a recent decision in the Philadelphia court that led the plaintiff to dismiss the case. We continue to explore measures to contain litigation risk, including partnering with American farmers and focusing on legislation at both the state and federal levels. Our goal is to bring closure to these situations and ensure that revenues are directed towards funding the company's mission rather than litigation.
Q: Can you elaborate on the progress and future plans for your pharma pipeline, particularly in relation to heart failure and Parkinson's disease?
A: Our pharma pipeline has made significant strides. We recently released positive top-line results from our Phase 3 trial for Corindi in heart failure, which is a major milestone. We are also advancing our efforts against Parkinson's disease, with the FDA granting Fast Track designation to our gene therapy AB-1005 and the innovation passport from the UKMHRA. Additionally, we are working on an investigational tyrosine kinase inhibitor for non-small cell lung cancer, which has received the FDA's breakthrough therapy designation. Our pipeline advancements are promising, and we are optimistic about the potential impact on patient care and value creation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
