Formycon's 2024 Earnings: Revenue Surge, EPS Miss

Formycon AG, a leading independent biosimilar developer, has reported a strong financial year 2024, with revenues exceeding expectations. However, the company's earnings per share (EPS) fell short of projections. Let's dive into the details and analyze what this means for investors.

Revenue Surge

Formycon's group revenue for 2024 was €69.7 million, significantly higher than the forecasted range of €55.0 million to €65.0 million. This impressive performance can be attributed to several key factors:

1. Successful Launch of FYB201: Formycon's FYB201 (ranibizumab biosimilar) was successfully launched in additional markets, including Canada, Saudi Arabia, and several countries in the MENA region. This expansion allowed FYB201 to be available in 20 countries worldwide, contributing to its strong market position and revenue growth.

2. Approval of New Biosimilars: The company achieved significant regulatory milestones with the FDA and EMA approvals of FYB202 (Stelara® biosimilar) and FYB203 (Eylea® biosimilar). These approvals paved the way for the commercialization of two additional products, further solidifying Formycon's position in the biosimilar market and contributing to the revenue increase.

3. Strategic Partnerships and Capital Increase: Formycon secured a cash inflow of €82.8 million from a capital increase with a strategic partner, Gedeon Richter. This financial injection supported the company's operational activities and pipeline development, contributing to its overall financial stability and revenue growth.

4. Market Position and Commercial Success: Formycon's FYB201 captured a significant share of the overall U.S. Lucentis® market, with a market share of over 40% in August 2024. In the United Kingdom, FYB201/ONGAVIA® had a market share of over 80% based on indication-based market volume, further highlighting the product's commercial success and revenue contribution.

EPS Miss

Despite the strong revenue performance, Formycon's EPS for 2024 was €-13.7 million, which was better than expected but still in the red. The company's adjusted EBITDA totaled €-1.6 million, aligning with the expected range of €-5.0 million to €5.0 million. The EPS miss can be attributed to several factors:

1. Commercial Challenges in the U.S.: Recent market developments in the U.S. required Formycon and its partner to adjust the marketing approach for FYB201. This adjustment led to a non-recurring impairment requirement of €27.3 million, which was recognized as an impairment loss.

2. Price Erosion: Ongoing price erosion in the U.S. market led to a significant decline in the equity result from Bioeq AG in the fourth quarter. This price development prompted Formycon's commercialization partner Sandoz to temporarily suspend marketing activities and reposition FYB201 in the U.S. after one year.

Key Operational Milestones

Formycon achieved several key operational milestones in 2024 that position the company for future growth:

1. FDA and EMA Approvals for FYB202 and FYB203: Formycon received FDA and EMA approvals for FYB202 (Stelara® biosimilar) and FYB203 (Eylea® biosimilar). These approvals allow Formycon to commercialize these products in key markets, including the U.S. and Europe.

2. Start of Clinical Development for FYB206: Formycon initiated the clinical development program for FYB206, a Keytruda® biosimilar candidate. This milestone marks Formycon's entry into the oncological biosimilar market.

3. Successful Launch of FYB201 in Additional Markets: FYB201 (Lucentis® biosimilar) was successfully launched in additional markets in 2024, including Canada, Saudi Arabia, and several countries in the MENA region. This expansion has increased the availability of FYB201 to 20 countries worldwide, further solidifying its position in the competitive market.

4. Cash Inflow and Financial Stability: Formycon secured a cash inflow of €82.8 million from a capital increase with a strategic partner, resulting in a cash position of €41.8 million as of year-end 2024. This financial stability is crucial for advancing the company's pipeline and further strengthening its market position.

Outlook for 2025

Formycon expects revenue and EBITDA in 2025 to be at the 2024 level, despite the current challenging market environment in the U.S. The company's long-term financial strategy continues to focus on enabling sustainable growth and leading Formycon to profitability in the medium term—ideally as early as 2026.

Conclusion

Formycon's 2024 earnings report shows a company that is making significant strides in the biosimilar market. While the EPS miss is a concern, the strong revenue performance and key operational milestones position Formycon for future growth. Investors should keep an eye on the company's progress in the U.S. market and its ability to navigate commercial challenges. With a strong pipeline and strategic partnerships, Formycon is well-positioned to harness the potential of the rapidly growing biosimilar market across multiple indications and to help ensure that patients with serious diseases gain access to highly effective and affordable biologics.