Good morning everyone, and welcome to the VEATRIS Q2 2026 Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touchtone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Bill Sablewski, Head of Capital Markets. Sir, please go ahead.

Good morning, everyone. Welcome to our Q2 2026 earnings call. With us today is CEO Scott Smith, Interim CFO Paul Campbell, Chief R&D Officer Philippe Martin, and Chief Commercial Officer Corinne Lgoff. During today's call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2026 and various strategic initiatives. These statements are subject to risk and uncertainties. We will also be referring to certain actual and projected non-GAAP financial measures. Please refer to today's slide presentation and our SEC filings for more information, including reconciliations of those non-GAAP measures to most directly comparable GAAP measures. When discussing 2026 actual or reported results, we will be making certain comparisons to 2025 actual or reported results on an operational basis, which excludes the impact of foreign currency rates. When comparing our 2026 actual or reported results to our expectations, we are making comparisons to our 2026 financial guidance. With that, I'll hand the call over to our CEO, Scott Smith.

Good morning, everyone. We're off to an exceptional start in 2026. We delivered another strong quarter that reinforces our confidence in the strategy we outlined earlier this year. In the second quarter, we delivered $3.8 billion in total revenues, representing 3.5% operational revenue growth year over year, adjusted EBITDA of $1.2 billion, and adjusted EPS of 69 cents per share. These results exceeded our expectations and reflect a strong momentum across our businesses in continued improvement and operating leverage. Just as importantly, these results give us confidence to raise our outlook. Let me briefly highlight some of the progress we made across our businesses. Commercial execution was excellent across our global portfolio during the quarter, led once again by greater China, where the commercial investments in our portfolio of established brands are generating meaningful growth. In North America, execution across our complex generics and transdermal products also drove solid growth. Our pipeline is progressing as expected. As we announced last week, we received U.S. regulatory approval for Gwendolyn and expect to launch the product later this year. At the same time, launch preparations continue for fast-acting Moloxcam as it progresses through FDA review. We're confident in the differentiated clinical profiles of both medicines and also in our commercial readiness. In Japan, we recently reported Phase 3 results for Nescon, while patolacin continues to progress through the final stages of regulatory review, underscoring the momentum we're building across our pipeline in the strategically important market. Beyond these opportunities, our Phase 3 programs for Shiladigrel and Saneramon remain on track with important readouts expected in 2027, which, if successful, we believe will represent meaningful long-term blockbuster growth opportunities. Taken together, these milestones provide a robust set of near-term catalysts with the potential to excel. As we prepare for our next phase of growth, we're prioritizing our capital, talent, and and resources toward the opportunities we believe offer the greatest long-term growth potential. As part of that effort, we agreed to sell the global race to Turbaya, reflecting a strategic shift away from eye care as a therapeutic area of focus. Turning to our enterprise-wide strategic review, we're delivering the savings we committed to earlier this year while reinvesting a portion of those savings to support. We're beginning to see those actions translate into the real operating leverage we expected. That's creating a stronger Beatrice with greater flexibility to invest in growth and create long-term value. Turning to capital allocation, we continue to take a balanced and opportunistic approach. Supported by strong cash generation and the additional financial flexibility created through the monetization of our Biocon equity stake, we're executing across all. We continue to return significant capital to shareholders through our dividend and more recently through our continued share repurchases together, totaling approximately $550 million to date. At the same time, we're maintaining flexibility to pursue disciplined business development opportunities that we believe can play a significant role in accelerating our long-term growth. As we think about our performance so far this year and the outlook for the rest of the year, we're raising the midpoint of our 2026 financial guidance ranges across all key. Our updated outlook incorporates all the business dynamics we expect in the second half, including certain intermittent manufacturing disruptions in our NASHRC facility following the Q1 fire and the FDA's May 2026 inspection. We are communicating with the FDA, working closely with external experts, and have initiated a comprehensive remediation plan to address the inspection observations. In summary, I'm very pleased with our execution through the first half of the year and the momentum we're carrying into the second half. We're entering a catalyst-rich period with multiple upcoming launches, important Phase 3 milestones, and the financial flexibility to pursue disciplined, accretive business development. Together, we believe these opportunities position Beatrice to accelerate long-term growth and create meaningful value for shareholders. With that, I'll turn it over to Philippe.

Thank you, Scott. We have delivered a strong first half of the year in R&D as we continue to execute with discipline against our strategy. Starting with our value-added medicines, we were pleased to receive FDA approval for GreenLaw last week ahead of its PDUFA date. GreenLaw is a new, discreet, once-weekly transthermal hormonal contraceptive batch that offers women a non-invasive, reversible option with a low dose of estrogen. Importantly, the approved label reflects the strength of our clinical program, including demonstrated efficacy in women with a BMI of 25 to less than 30 kilograms per square meter, with no BMI-based limitation of use for this population. We are also working on addressing the unmet need for women with a BMI at or above 30 through our next contraceptive transdermal system, the projecting-only patch, currently in development. This program has completed Phase 3 enrollment and we expect top-line results in the first half of 2027. As patients continue to seek convenient and non-invasive treatment options, we believe our deep expertise in developing and manufacturing transdermal drug delivery systems position us well to advance additional opportunities across this platform. Regarding fast-acting Meloxica, we continue to have positive engagement with FDA as the NDA review progresses and as we approach the mid-cycle point of the review. We continue to believe that the investigational profile of fast-acting Meloxicam, including its rapid absorption, clinically meaningful pain relief, and reductions in opioid use, positions the product as a meaningful addition to the evolving acute pain treatment landscape, pending final labeling negotiations ahead of an anticipated FDA approval. Regarding our pipeline in Japan, we recently announced positive top-line Phase 3 results evaluating the efficacy and safety of Nefecon in Japanese adults with primary IgA nephropathy, a designated intractable disease in Japan. If approved, Nefecon has the potential to provide a meaningful disease-modifying treatment option for these patients. We are targeting submission of a new drug application in Japan by the end of 2026. In addition, our applications for Pitolicin for the treatment of excessive daytime sleepiness associated with obstructive sleep apnea and narcolepsy remain on track and have reached the final stages of review. We anticipate regulatory decisions for both indications in the second half of this year. Turning to our innovative global Phase III programs, for Scenerimod, we continue to expect results from both Phase III SLE studies, Op. 1 and 2, in the first half of 2027. So far, most patients have elected to continue treatment in the Open Label Extension Study, with a study treatment duration extending up to five years. For Silatogrel, we remain on track to reach full enrollment in our SOSMI Phase III study around the area, and I'm maintaining an enrollment rate of approximately 1,200 patients per month. We continue to expect a data readout in the first half of 2027. And finally, turning to our generic pipeline, we continue to execute well across our pipeline and remain on track to achieve more than 100 new product approvals this year, with 70 approvals already secured in the first half. A key area of focus remains are complex generics, including complex injectables, where we have established a meaningful expertise. Over the past two years, we have secured approval in the U.S. for 11 complex injectables, including octreotide, and recently we're the first approved for all three strengths for both iron sucrose and ferric carboxymaltose injection. Overall, the substantial progress we've made in the first half of the year reflects both the discipline execution of our teams and the breadth of capabilities we've built. With multiple regulatory, clinical, and scientific milestones ahead, we remain confident in our ability to execute our MD strategy, advance meaningful medicines for patients, and continue strengthening our scientific leadership. With that, I'll turn it over to Paul.

Thank you, Philippe, and good morning, everyone. I'm pleased to report that we deliver another strong quarter, reflecting the durability of our global portfolio and disciplined execution of our strategy. This morning, I'll highlight the drivers of this strong second quarter performance, the progress we've made delivering on our capital allocation priorities, and details supporting our financial guidance raise for the year. Beginning with our second quarter results, total revenues were $3.8 billion, representing operational growth of approximately 3.5% year over year. This performance was driven primarily by continued growth in our cardiovascular portfolio in Greater China and strong performance across our generics product category in developed markets, led primarily by our complex generics and transdermal products in North America. The commercial highlights for the quarter across each of our segments is as follows. In developed markets, net sales increased by 2% versus the prior year, exceeding our expectations. For North America, net sales grew 1% driven by increased demand across our diverse generics portfolio, including estradiol patches, as well as continued strength from Braina. New product revenues also benefited from continued momentum across our more durable, higher-margin, complex injectable portfolio, including octreotide and iron sucrose. Within our branded product category, solid growth from Uppelri was more than offset by anticipated competitive pressure within our established brand's portfolio. In Europe, net sales increased 2% versus the prior year, primarily driven by strength in the generics portfolio across key countries, including France and Italy, as well as contributions from new product revenue. The brand's portfolio declined slightly year over year, as continued solid growth from Creon and Brufen was offset by anticipated competitive pressure on Dymista. Turning to emerging markets, net sales declined 2% versus the prior year, coming in below our expectations. The decline was primarily driven by continued supply constraints affecting our lower margin ARV generics portfolio. Net sales in our brand product category increased 6% year over year, supported by stable growth across the establishment. Within JANs, net sales were essentially flat versus the prior year, exceeding our expectations. This result reflects uptake from the launch of Effexor for generalized anxiety disorder and broad volume growth in generics, offset by the anticipated impact on government-driven price regulations in Japan and increased competition for certain brands in Australia. Lastly, we deliver another exceptional quarter in greater China, with net sales increasing 16% year-over-year, once again ahead of our expectations. We continue to benefit from favorable market fundamentals in China, including an aging population and demand for our cardiovascular products. In addition, our strategic investments in selling and marketing capabilities, including our e-commerce and retail platforms, have positioned us to capitalize on the strength of our well-recognized brands. As a result, we saw growth across all channels during the quarter, including e-commerce, where sales increased 36%, now turning to the remainder of the P&L. Adjusted gross margin was 57.5% for the quarter, representing nearly 1% improvement versus the prior year. The increase was driven primarily by the strong performance in Greater China and the favorable product mix in our North American generics portfolio, as mentioned earlier. Operating expenses declined as a percentage of total revenues compared with the prior year, partially reflecting continued SG&A discipline and realization of the expected savings from our enterprise-wide strategic review. R&D investment progressed in line with our expectations, driven primarily by the ongoing phase-through programs for Saladigirl and Scenarimod. For free cash flow, we generated $329 million of cash during the quarter, inclusive of transaction and restructuring-related costs and taxes. Excluding these items, free cash flow would have been $449 million. The year-over-year improvement was primarily driven by stronger operating performance and favorable working capital dynamics. Turning to capital allocation, through early August, we have deployed approximately $1.4 billion of capital, consistent with our balanced capital allocation strategy, including the return of approximately $550 million of capital to shareholders through dividends and approximately $270 million of shareholders. Additionally, we continued to strengthen our balance sheet by repaying approximately $900 million of debt that matured in June, while refinancing the remaining balance. As a result, we ended the quarter with a gross leverage ratio of approximately 2.9 times, below the midpoint of our long-term target range of 2.8 to 3.2 times. For the remainder of the year, we expect to have approximately $1.6 billion in deployable This includes approximately $380 million of pre-tax proceeds from the sale of our equity stake in Biocon. Now, a few comments on our updated financial guidance and phasing for the remainder of Based primarily on our strong first-half performance and our continued confidence in the momentum of our businesses, we are raising our 2026 financial guidance for all key metrics. The midpoint of each of our revised guidance ranges represents expected operational growth of approximately 2% for total revenues, 5% for adjusted EBITDA, and 7% for adjusted EPS versus the prior year. To provide further visibility into the segments, our updated full-year guidance for total revenues reflects the following expectations compared to the prior year. low double-digit growth in greater China, developed markets roughly flat with North America declining slightly, low single-digit growth in emerging markets, and low single-digit decline in JANs. In addition, this takes into account the following expected second-half dynamics. Moderation in greater China growth due to the implementation of a procurement policy change expected to negatively impact volumes in our hospital channel, additional competitive pressure in developed markets, including for Brena and Wixella in North America, and additional expected supply disruptions primarily resulting from our NASHIC facility and primarily impacting our low-margin oral solid-dose generics in emerging markets and certain generic products in Europe. We currently anticipate the impact of supply disruptions to be between $100 and $150 million to total revenues in the second half of 2026. Lastly, as Scott mentioned, we reached an agreement to divest our global product rights for TierVaya. The transaction is expected to close in the second half of 2026, subject to customary closing conditions. The anticipated impact of this transaction has been fully considered in our updated 2026 financial capital. Turning to phasing for the remainder of the year, total revenues are expected to be weighted to the second half at approximately 51% of our full-year output. Adjusted EBITDA and adjusted EPS are now expected to be slightly lower in the second half, and free cash flow is still expected to be more heavily weighted to the second half. In closing, we are pleased with our performance through the first half of the year, reflecting strong execution against our strategy. As we look ahead, we believe our diversified portfolio, strong commercial execution, and financial flexibility positions us well to deliver sustainable revenue and earnings growth. With that, I'll hand it back to the operator to begin the Q&A.

We will now begin the question and answer session. To ask a question, you may press star and then 1 on your touchtone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Ash Verma from UBS. Please go ahead with your question.

Okay. Yeah, thanks for taking your questions. Congrats on the progress. Maybe just on China, so great to see solid operational growth here that you've seen in the first two quarters. I know you've noted e-commerce has been a big source of growth. Just help us understand what percentage of your revenue right now is coming from e-commerce, retail, or the government channel. I know you mentioned some headwinds on the procurement and the hospital channel. So if you can just give us a little bit of a breakdown, that would be helpful. And then secondly, just help us understand the guidance. So at the midpoint of 2026 guide, you're raising revenue by $50 million, but EBITDA by $100 million. Is this because you're expecting some very high-margin products to launch, or is there a chance that your reiterated OPEX guides come towards the lower end?

Good. So thank you. Good morning, Ashton. Thank you for the questions. Let me make some comments. I'll kick it over to Paul for some more detail. You know, relative to China, a really strong quarter for China. Our commercial team, I believe, is doing an outstanding job. I think we've got great leadership there. We've made the right investments in China and are participating very, very well in health care in China. There's a real focus right now in China on health care, quality of life. There's a sizable aging middle class, et cetera, which, you know, really allows us to participate strongly in China. We're very, very pleased, you know, with the progress there. And, you know, we continue to see what I believe is real and strong demand for the iconic brands that we have in China, which is really nice to see. Relative to the guidance, very pleased, you know, based on the strength of the first half and the strength that we see throughout the rest of the year, being able to raise guidance on all our key financial metrics. And, you know, I think we're in really good shape as we sit here in August in 26 and are moving towards the second half, 26 and 27, and feel very, very good about the strength of the business. Now, I'll kick it over to Paul to comment specifically on China and also the guidance.

Yeah, thanks.

Thanks, Ash.

So as far as China goes, I think it's important to note that we have seen growth across all channels in the market, not just the retail platform or e-commerce. However, e-commerce is about 10, between 10 and 15 percent of the overall business, which is specifically why I know you didn't ask, but in the second half of the year, we expect some decline in the hospital channel growth as a result of the implementation of the policy. But we do expect, you know, I think in first quarter we said it was too early. We do expect the growth overall to continue similar to the trajectory we saw in the first half. It's just going to be muted because of the policy issue. As far as the guidance goes, so we ran ahead of expectations for the first half, both revenue and EBITDA. Adjusted EBITDA was approximately twice the growth or the increase in expectation over revenue, right? And a lot of that is because of the cost containment measures, you know, are on track and even ahead of schedule in certain instances. However, in the back half of the year, you know, we do see the challenges on the additional competition that we have in the North America products, which are high margin, and the China business, which is high margin, kind of muting that. But if you also think about the revenue challenges from NOSIC that we've talked about the back half of the year, you know, they're lower margin generic products that are impacted. So, you know, the revenue component of the guidance, you know, we had to mute a little bit because of that, whereas EBITDA ran pretty strong in the first half of the year. And even with the challenges in the second half of the year, we expect that that will, for the full year, you know, exceed the midpoint to where we put it compared to revenue.

Paul, hit on, I think, an issue that I think it's good for us to expand on a little bit, and that's the enterprise-wide strategic review, which we've engaged in, taking a look at the company, making sure we've got the resources in the right place. And, you know, we're executing that. We're delivering on that. And from that, we're seeing real even a leverage here for the second quarter in a row. So we're very pleased with the outcome of that particular enterprise-wide strategic review.

Our next question comes from Omer Ratif from Evercore. Please go ahead with your question.

Hi, guys. Thanks for taking my question. I just wanted to ask a three-part question on salatogrel, if I may. First, at what point in the patient's journey post an event are they initiating an oral antiplatelet? I understand in the trial, if you're on an active arm, you'll be on salatogrel perhaps right away, but at what point once you're in the hospital after the index event are you initiating an oral antiplatelet number one, which sort of leads me into my second part, which is what I know what the half-life is, but what's the off time where no more platelet inhibitions in place? And I ask because if I go by your EC50, which is I think 14 nanomolars, it looks like the 16 meg dose doesn't get to that EC50 until 8 to 10 hours post the dosing. And then finally, for patients that do end up needing a more intensive procedure like a CABG, I guess how is that being handled in the trial in terms of how they're taking out the blood thinner or the timing post initial Salatogrel administration?

Before we get to answer the technicalities of your question, first of all, good morning and thank you for the question. We're really excited about Salatogrel. You know, we expect the readout, you know, when we get into the first half of 27 on this. We've enrolled a lot of patients. Philippe can give you some context on that. And I think, you know, we've been very, very pleased with the execution and enrollment and progress of this particular trial. You know, we see, you know, if positive, we see real blockbuster opportunities for Saladogrel here and a major expansion. I say the same thing for Scenaromod. There's a lot of attention on Saladogrel, which is a great, very unique product. But we're also really excited about the progress execution and the potential of Synaramod as well. So we really appreciate the question. Love talking about new, interesting products that can help drive our revenue future. Let me kick it over to Philippe to give you some context.

Thanks, Scott, and thank you, Mark, for the question. So patients that are on the study, the vast majority are on dual anti-fledged lead therapy to begin with. So they're already on an oral clopidogrel for the most part is what we expect to see. So that, while celadogrel is added on top of that. Now, for those that are not necessarily on it, they could be post-treatment, you know, Within 24 hours or so, the effect of Siladabrel is no longer present, and therefore, treatment with a normal P2Y12 could be initiated at that point in time should it be required. With regards to the offset, as I said, I think we know that within six to seven hours, we get to peak platelet inhibition, 80% platelet inhibition after 15 minutes, or more than 80% after 15 minutes is what we've seen in phase two. The offset is, as I said, within 24 hours, silatogrel is no longer present. Now, in terms of the CABG, I think CABG can be initiated at any point should it be required should it be deemed required it's the current guidelines there's no need to wait if it is deemed urgent but that being said again within the post 8 hours cabbage post 8 hour postilateral injection cabbage can be initiated safely it safely. Again, it is not a requirement to waste.

Our next question comes from Matt Delator from Goldman Sachs. Please go ahead with your question.

Great. Good morning and congrats on the progress. Maybe a couple on the branded pipeline, starting with fast-acting meloxicam or FAM. Could you comment on any recent interactions with the FDA regarding the label being opioid sparing. And then just remind us how this asset is factored into your longer-term guidance targets and the degree to which success could represent upside to those, either the base or bull case. And then on salatogrel, could you just remind us what magnitude of benefit you believe we need to see? I think you've disclosed in the past the study's powered for a 20% benefit. So, I guess, what's the minimum benefit that could drive meaningful uptake? And then when we see the data, will there be any subtleties that we need to keep in mind, you know, given it is a composite endpoint, for instance, does it matter which of the components is driving the benefit? It seems like they're all fairly serious, but I just wanted to confirm. Thank you.

First of all, on Bloxcam fast acting, you know, we think it's going to be a significant contributor to our pipeline, to our revenue, to the U.S. business, you know, between now and 2030. And so I'm not getting into specific numbers at this point in time. We don't have a label yet, and And there's some other things that we really need to look at. We see it being a very significant contributor in the U.S. to, you know, high-margin branded portfolio in the United States. Philippe can talk a little bit about the label and the progression of discussions with the FDA in Saladogrel. And then maybe we can loop back to Karim to talk a little bit about the potential she sees in Saladogrel.

Yeah, thank you. So, with regard to Meloxicam first and the progress of the review currently ongoing with FDA, we are reaching mid-cycle. Things are progressing as planned. FDA is very engaged. We're answering all the queries that they have and expect to get approval toward the end of the year at the time of the doofa. In terms of the labeling negotiations, there's been, I mean, there's interaction on the clinical data with the agency. Labeling negotiations won't start until October, November timeframe. So, this is when really we will start talking about the exact language around opioid sparing. As I previously mentioned, this was heavily discussed with the agency during phase two and during the the putting the protocol together for phase three and we've followed every recommendation that the agency had for us in order to be able to get this language included in the label section where in the label sections in exactly what language I can't tell you as of today but we should get a better And we see a lot of excitement about this product, we are getting very positive feedback

from KOLs. Definitely the results of the phase three program and notably on the opioid sprain effect is seen as a real positive. So in terms of potential that we see for fast-acting meloxicam, as you call it, the potential is large. You know that acute pain is a broad market with about 80 million patients suffering from acute pain every year. And unfortunately, half of those patients already are dependent on opioids for pain relief. So we see that this product has the right profile. It is generating a lot of interest. And we can imagine that with a market activity that could potentially go beyond three years as we are finding more patents, you know, we could reach up to $500 million in big sales with these assets. And that will contribute meaningfully to our long-term guidance.

And then on your question on silato graph, so the actual benefit that the study is sized for is approximately a 20% risk reduction. We have discussed this obviously heavily with our KOLs and investigators. The minimal bar is much lower than that in the mind of the investigators and KOL. I think if we were to be able to show risk closer to 10% to 15%, that would be very much acceptable and the lowest bar commercially to get this drug to patients. So again, the study is overpowered for that 20% risk reduction and that's really the minimal bar we're seeking at this point in time. In terms of the endpoint itself, as you know, the endpoint is ranked according to the outcome and according to their clinical importance. What we expect to see is that celadogrel is blunting acute MI from happening if injected at the right time. And we also expect to see that filial well will reduce the severity of VMI that these patients are expecting, making them a lot more manageable for the patient with a lot less sequelae over time, which leads to patients being in the hospital a lot less for a much shorter amount of time as well. also adds a lot of benefits to the patient and to the payers overall.

And these post-MI patients are very, very expensive for the health care system. They're very difficult to manage over time. And so being able to improve any particular outcome for a patient has not only tremendous benefits to that patient, but also on the health care system overall. So that's why, you know, part of the excitement that we feel about salatogrel being a unique drug in this space.

Our next question comes from Glenn Santangelo from Barclays. Please go ahead with your question.

Good morning and thanks for taking my question. Hey Scott, I just had a couple of follow-up questions. I wanted to talk about this China dynamic. It seems like you're describing a situation that maybe has some durability in those commercial efforts beyond just 2026 because it seems like it's that market that gave you the ability to sort of raise guidance despite the fire-related disruptions you're sort of calling out in the back half of the year. And so I know it's a little bit too early to comment on 27, but I was kind of curious if you could comment on the durability of the strength there. And then, you know, should these fire-related disruptions be contained to just 2026? And then, you know, my follow-up was on Meloxicam. You know, it seems like, you know, Meloxicam and the Presbyopia solution are the two meaningful approvals you have left this year. At your analyst day, you sort of highlighted that value-added medicines pipeline would add about 1%, you know, to the growth algorithm, and in the previous question, you just sort of highlighted that you think it can be a meaningful contributor, and I'm just kind of curious, when I think about that value-added pipeline, are you still thinking about it as a 1% contributor to the growth algorithm, or do you have maybe greater expectations at this point? Thanks so much.

Glenn, thank you very much for the question. So, yeah, we're really pleased with the performance in China. There seems to be some good durability. We had good performance last year. We see good performance this year. I think we see some of the investments that we've made in China in terms of the channels that we're going to, reaching to the patients, trying to restructure our business there, trying to make sure that we're overinvesting in some of the demand for some of these iconic brands. There seems to be good durability there. The only thing, you know, you worry about in China is, you know, there's policy changes at times, and sometimes you see them coming and sometimes not. Sometimes they're inconsistently applied across provinces and things. We try and, you know, obviously work with the government in China to deliver the best health care we can. But China seems to me to be a good engine for us moving forward. And I think it's not only China that allowed us to sort of, you know, beat and raise, you know, and to have a good outlook for this particular year. You know, there was some good strength in a number of other businesses as well. We see good strength in the value-added medicines that we're bringing in the United States and other places. So we're very pleased with the business overall. You know, you raised NASHIC, and just to put that, you know, in perspective for you, you know, we currently operate 26 manufacturing facilities around the world. We have inspections and observations and things all the time. Specific to NASHIC, you know, as I said in my prepared remarks, we're communicating with the FDA. We're working closely with the external experts and initiated a comprehensive remediation plan to address, you know, all the issues or any issues that we see there. And we had a fire, as you said, in Q1 and some inspection observations in May. We expect the remediations, as Paul was pointing out, to have some impact on second-hand revenues. But it's fully baked into our guidance. And as a reminder, we raise guidance for the year for all key financial metrics, we see this being sort of intermittent as we remediate the fire and some of the things from the observations and the inspection, and we don't expect this to be long-term affecting the business now.

Yeah, maybe if I could just add one thing, too, from an expectation perspective, you know, we do see the impact being larger in Q3 and moderating a bit in Q4. So I think as Scott has made it, we expect this, you know, supply disruption to be shorter term in nature. And, you know, hopefully by exiting the end of the year into the beginning of next year, you know, we will have gotten ourselves past it. That's our expectation.

And Nash, just to characterize it as a lot of smaller products, it's mainly emerging markets, jams um you know there's no one product there that's more than 20 million dollars in revenue so it's a lot of little pieces and again as we as we remediate and get things online we expect to see you know relatively short-term intermittent uh effects of that but uh the strength of the business allows us to to get to uh to get through that uh and uh again be in a position to raise our guidance across all financial metrics i think you had a question around maloxicam as well Yeah, maybe I can address this again, Glenn.

Good morning. Just to say that, again, we remain very optimistic about Meloxicam. We're expecting this at the end of the year. So, of course, we'll wait for the label to be available to finalize our pricing strategy and value proposition. But everything we are seeing so far and the feedback that we get from the market is very positive. So we believe that there is room for another asset that is fast-acting, that would have a meaningful role in acute pain, and really expand the utilization of NSAIDs that are with fast-acting melopsic and having a very well-characterized tolerability and safety So we are looking forward to launching this product. It will be a branded asset, we will deploy a specialty salesforce, and I'm looking forward to, you know, talking about our launch at the next call.

And I think one of the reasons we're so excited is not only the strength of the data relative to a competitive set out there, but also the real market need. And I think Karine hit on that earlier. The need for non-opioid solutions for patients with acute pain is really, really, really large, particularly in the U.S. And so we're excited about the profile. We're excited about the product. But we're also excited that it's going to fill a really significant need in the U.S.

Our next question comes from Chris Schott from J.P. Morgan. Please go ahead with your question.

Hi, this is Ethan on for Chris. Thanks for taking our questions. Just starting off, what are your latest thoughts on the M&A environment? Are you still seeing a good amount of assets in the marketplace, or has that changed at all over the past couple of months? And then secondly, just thoughts on the latest headlines for potential U.S. generic tariffs and maybe how you're thinking about the potential impact to Vietra specifically. Thank you.

I think the environment is obviously pretty active right now. It's a good environment. There's a lot of things going on. Certainly, there's a lot of assets still out there. Certainly, I still get a lot of inbound. I talk about getting inbound virtually every day, sometimes multiple times a day. And so, you know, we're looking hard at business development, adding things in market, accretive things to the portfolio. We're going to be disciplined, though. We're going to try and find the right assets, the ones that we can be good owners of at the right price to bring them in. And so we're looking at a lot of things. We're excited about our ability to use our capital not only to pay back to shareholders, dividends, share buybacks, but also really build a portfolio of assets. And, again, we're sort of focused on in-market, accretive assets right now. And there's a lot of things out there that we're looking at for sure. The second part was tariffs. Yes, I mean, it's difficult for me to comment. We're still gathering information. The administration has not released any official policy details at all here. You know, just it's important to note that I think we're in a pretty good position regardless of how this goes, if it goes relative to tariffs. We currently have eight manufacturing R&D distribution sites in the United States. Over half our U.S. revenues are from products that are manifested in the U.S. You know, we're planning as we move forward to manufacture higher margin products like complex generics, transdermal products, value-added products and such in the United States. And, you know, we'll always work to partner with the administration as we understand the details of what they're trying to do here from a policy perspective and work with them to help better health care for Americans.

Our next question comes from Dennis Ding from Jeffries. Please go ahead with your question.

Hey, good morning. Thanks for taking my questions. I have two pipeline questions, so one on lupus and one on salatogrel. So, for scenario, I, you know, I appreciate that the phase three is enriching for high IFN1, and we've seen with other lupus programs like iberamide and sapinello that, you know, SRI-4 is consistently higher in this population versus low interferon-1, but when I look at your phase two, this relationship breaks apart. It seems like the 4-milligram dose was a clear outlier on both SRI-4 and also SLID-Eye. So, what is it about the prior data that really gives you confidence going into that readout outside of this high, you know, this high interferon-1 relationship? And then question number two on solatogrel, you know, I believe the CBO2 was initially 14,000 patients, but then you upsized the trial by almost 50% to 25,000. So I want to understand what went into that decision to add 11,000 patients and, you know, what are you seeing on blinded event rates? Is it tracking with what you initially planned or are they lower than expected? Thanks so much.

Thank you for the questions. So with regard to Scenarimod and the interferon 1 signature, in phase 2, we saw that the four milligram dose, which was the highest dose tested, was the dose that was clinically meaningful improvement and a nominally statistically significant p-value. That was in the total population. And then in that four milligram arm dose, we had approximately 50%, actually 45% of patients that were interferon-1 high. These interferon-1 high patients responded better than the interferon-1 low, with a delta versus placebo of about 24%, which is one of the highest delta reported for this population. And we also saw, which is what is so much expected, that the interferon-1-high patients were the patients that were the most active in terms of their disease. And this is the kind of patients we are actively enrolling in phase 3. We are ensuring that we are getting patients with higher disease activity and higher interferon-1-high expression. Our goal was to get to approximately 70% of patients that were interferon well high in Phase 3, and we have exceeded that goal in both studies. So that's the data from our Phase 2. And then we've also, just to finish on this, implemented a number of things in Phase 3 that were different than Phase 2, obviously, that we believe will lead to better outcomes. First of all, the primary endpoint is at one year and not at six months, which will lead to, I believe, continued and better strength of the data, as we've seen continued improvement in patients exposed to one year to scenario mode. And then another important part I would mention is the fact that because the endpoint is at one year, we're able to implement steroid sparing, mandatory steroid sparing for patients that will lead to further differentiation versus placebo. So that's our strategy. We feel good about the data that we've generated so far, and we're actively cleaning that data so that we can report our top-line results in 2027, not in 2027. And then there's another question on...

It's a lot of power. Patient enrollment. 14 was the...

Oh, yeah, yeah, yeah. So, yeah, the protocol always contemplated enrolling up to 21,000 patients. That's where we were. It was anywhere between 14,000 to 21,000. We are seeing an event rate that is what we expected. That being said, what we're trying to do is to enroll patients all the way to the end. By that, I mean all the way to the time point where we get all the needed events that we need. We're not going to stop and wait for the events to happen. We will continue to enroll through that. And we may need a little bit more than 21,000 patients. That remains to be determined. But we will continue to enroll through that. What's important is that we believe we'll get the events we need by the end of the year so that we can early next year so that we can get data in the first half of 2027.

Our next question comes from Jason Gerberry from Bank of America. please go ahead with your question hey guys thanks for taking my questions um just two for me just wanted to follow up on the china policy question because i didn't quite understand so it sounds like despite the policy change you're still bullish on the market overall perhaps there might be a little bit of fluidity with the situation with the comment about the variability at the province levels but i guess i'm just wondering you know i look at the back half of the year sort of an implied low single-digit growth. Is that sort of what we should think about, you know, first half, the carryover into next year? Does that create tough comps for 2027 is ultimately what I'm trying to get at. And then on Saladigrel, just curious, once you complete enrollment towards the end of the year, you know, for the primary endpoint, I think, you know, you only need to assess the patient for like two to seven days to determine the impact on mortality or the other measures. And so can you just remind me the different lag factors that go into once you complete enrollment to actually, you know, the time to which you can generate top-line data?

So just on China first, again, we're very, very pleased with the business. It's running very strong. We think it's going to, obviously, we're going to have strong results in 26, and we believe 27 and beyond as well. There's good momentum there. It's a very important part of our company going forward. Good growth. In terms of policy, you know, it's not finalized at this point in time. There's discussions with the government around different policy executions, you know, so we're being a little bit careful to try and understand that policy. We will be in a position, I think, in November to really talk about the policy, what it looks like, what any changes, if we think it's going to impact our business or not, what that's going to look like. And so it's just an active discussion right now with the government. We're not exactly sure how that policy is going to be executed. And, again, policy in China tends to get executed in a kind of spotty way and, you know, different execution in different provinces and things. So we're taking a look at it. We're in active discussions. We think it could have some effect in the second half of the year. And we'll have a much better view on the policy execution when we get to November.

And let me just add, you know, we've built all that into the forecast, right? So I would say, from my perspective, we are hopeful we'll continue to see momentum and grow beyond 26. But as of right now, you know, we don't see the 16%, 17% continued growth, right? And so we do expect growth, but it will moderate back down. That's our current expectation based on everything we know.

Right, and I have nothing to add to this, just to say that, you know, and you mentioned it, the implementation of this new policy, which is a new program that concerns only public hospitals, will be done at the provincial level. So there are 31 provinces in China, and some of our products that have high-volume industrialization may be impacted, but who will know more as those 31 provinces adopt this policy, and definitely by the end of the year, we'll have a much better picture of the impact. But again, we are confident, as Paul said, that we're going to go through this policy implementation.

And then regarding your question on silatobl, so yes, you are correct that the primary endpoint is at seven days for death and within two days of injections for the other types of That being said, the secondary endpoint is at 30 days. So we need to get that data at 30 days. And then remember, this is a very sizable study with 45 countries involved and close to 900 sites. So we need to make sure that we gather all that data and clean all that data, which is why we're talking about the first half data. We take some time to clean all that and bring that back, right?

So it's a very large study, right, a large global study, so it takes some time to clean and prepare the data properly.

Our next question comes from David Amselm from Piper Sandler. Please go ahead with your question.

Thanks. So two for me. First on Cenarimod, my understanding is that background Benlista is allowed in the trial. So wondering about the thought process there and is it stratified or the patient stratified for background Benlista? So that's number one. And then switching gears to complex generics, wanted to ask about the hormonal patch business with the acceleration following the removal of the box warnings. Wanted to get your thoughts on how long you think that could be a relatively limited competition market for you and how big of a growth driver for generics and developed markets, namely the U.S., that could be in 27.

So on your question about bilimumab, yes, bilimumab is considered standard of care and therefore is included in the medications that can be given in combination with Senamod as part of this trial. That being said, we don't expect a significant number of patients that will be on bilibumab as part of the study. We expect it to be closer to 5% of the patients. So this will have limited potential impact on the data. Second, the randomization ensures balance and mitigation bias. It is the effect that you could see with bilimumab, you see in both placebo and the treatment off. And then it's important to generate this data just from a pure safety and clinical value to show that the efficacy of synchimoid is seen on top of bilimumab or benista and that it is safe to co-administer these two drugs. So that's part of the reason why we also included it in the clinical trials. And then should we see an effect? I mean, we have sensitivity analysis that we would be looking at. Remember, we have two identical studies. This allows us to pull data across both studies to determine whether an effect that we would see is real or not. So that gives us more robustness behind that data. But overall, I would say that we do not expect this to affect the study in any way.

And so regarding your question on estradiol patch, we have seen over the last year, over the past year, a strong increase in demand for estradiol patch for hormone replacement therapy. And you're right. So the first reason for this is the market expansion, which is due to the FDA removing a black box warning at the end of last year. And we believe that this market expansion is here to stay. Now there is a secondary factor, a bit less important, but worth mentioning as well, which is the increased use of GLP-1s that has an impact on the agilization of patches because it's been demonstrated that there's a contraindication with the use of not only all contraceptive, but all HRT products as well. So we benefit from those two factors. Now, we have a leading position in the manufacturing of patches. We have our facility, which is based out of Vermont, that produces high-tech, next-generation transdermal systems, and we continue to increase capacity there. We continue to drive efficiencies, so we will continue to be a major leader in this market as we see the expansion forward.

Yeah, just to finalize the thought around Estrada, we do see it as an opportunity. Again, less about additional competition from my perspective. It is that demand has blown up. We're currently, as a data point, being able to fulfill about 70%. You know, we're trying to ramp up production to meet that demand.

And looking forward to meet what we see as sort of unprecedented increases in demand for the reasons that Karim was saying. So I think a real nice area of opportunity for us and one that we're going to invest in and likely to be a good driver of our revenues at least through now to 2030.

And our next question comes from, is a follow-up question from Umur Rafat from Evercore. Please go ahead with your question.

Hi, guys. Thanks for taking my follow-up. I wanted to touch up on something I meant to ask early on as well. I think it kind of came up on a question a few moments ago as well. So, Felipe, I think you mentioned the original sample size was 14,000 to 21,000, and I think ClinTrials has it having gone from 14,000 to 25,000, even though in practice what's happened is it's gone from 14,000 to 21,000 to 25,000 to 35,000. Could you just speak to that, if that was informed more by powering or more by sort of you're just letting it continue to enroll so you just keep getting the events faster?

That's exactly what the latter, right, which is that we are letting it enroll. This is a sizable study. We spend quite a bit of time and energy and money, quite frankly, in this study, so we want to leverage it as best we can. And getting that data will be important for positioning of the drug, and therefore, we believe it is important to let it run as close to the time point where we're going to lock the data, which will mean that we'll have more events that we need eventually, right? But for the timing of the primary endpoint, that allows us to get there faster than if we were to stop now and wait for the events to occur, right? So that's that strategy that you're seeing in play. These numbers that we put on clinicaltrials.gov are to give us flexibility in how many patients we want to enroll. I don't want to have to change it 15 times. So we change it once, give a window, and then we'll end up somewhere there.

And with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Scott Smith, CEO, for closing remarks.

Thank you very much. And let me close with just three thoughts here. First, our second quarter performance and, indeed, sort of the strong first half results reinforce that the strategy we outlined earlier in the year is working. Second, we're entering an important time period for our company. Over the coming quarters, we expect multiple regulatory milestones, important product launches, and continued progress across our pipeline. Finally, we're building a stronger company. We're improving the quality of our earnings, strengthening our operating model, sharpening our portfolio, and investing behind the opportunities we believe will drive sustainable, long-term growth. We're excited about the opportunities ahead, confident in our ability to execute, and believe Vietris is well-positioned to deliver sustainable, long-term value to shareholders. Thank you very much for your attention this morning.

And with that, we'll be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.