Hello everyone and welcome to this presentation of ALK's Q2 and first half year results. Thank you all for joining us. Let's turn to slide number two with an introduction to the speakers and the agenda. My name is Per Plotnikov, I'm Head of Investor Relations. With me today are CEO Peter Halling and CFO Klaus Steensen-Söljö. Peter and Klaus will walk you through the quarterly highlights, markets, product trends and financials. After a brief strategy update, we will turn to the full year outlook and as usual we'll end the call with a Q&A session. First I'll hand you over to Peter to the highlights on slide 3. Please go ahead Peter.
Thank you Per and thank you all for taking the time to listen to this call. ALK sustained strong sales momentum in Q2 with double digit sales growth across all regions driven mainly by tablets and anaphylaxis products. Revenue grew by 18% in local currencies to close to 1.8 billion DKK and EBIT increased by 19%. The EBIT margin was unchanged at 25% as gross margin improvements were offset by continued investments in product launches, commercial infrastructure, R&D, AI and other areas. Tablet sales again exceeded 1 billion DKK and were up 22%. The tablets with the new pediatric indications for Karasax and Etulisax continue to perform well and we're increasingly contributing to the inflow of new patients across key markets. We continue to see pediatric indications as a key growth driver for ALK for many years to come. There are still many opportunities in this space. In China, the local phase 3 trial of AcaraSax is rapidly approaching the finishing line, with results expected in Q4 this year. If these are positive, we expect to see an important opportunity opening in China, which is the world's largest house-to-smite market, and if approved, a Karasax could be launched in 2028. On Nefi, we made further progress with market access and launches. We have seen good progress with our total anaphylaxis business in Germany, and we are off to a promising start with NEFI in Canada. I'll be back to this shortly, but I'll mention revenue contribution from NEFI in the quarter was still relatively modest and came primarily from Germany and the US. This reflects the early stages of the launches and particularly the situation in the UK where prolonged formulary approvals and administrative processes continue to impact the full rollout of NEFI. The ongoing reform of the UK healthcare system is impacting the pace of market access progress but nevertheless we remain very confident in the opportunity in the UK. In June we presented detailed data from our successful phase 2 peanut tablet trial at the IAQI congress in Istanbul. The congress was attended by more than 7 000 healthcare professionals and we saw strong interest from the scientific community in our progress. Feedback on our peanut trial results was very encouraging and we still expect to initiate phase three development before the end of 26 and planning is progressing well including conversations both with ema in europe and fda in the us based on the momentum for tablets we are updating the revenue outlook the update also reflects greater transparency on pricing and rebates after germany passed new legislation increasing the mandatory rebate on prescription drugs from 7 to 15.5 percent. This change will take effect from 1st of January 27. It is not expected to have any impact in 26 and we remain confident in the strong growth outlook in Germany and globally for the years to come. Germany is ALK's largest market and it accounted for approximately 25 percent of global revenue in 2025. Hence we're working hard to mitigate the financial effects of the rebate increase next year. The new scheme came as no surprise, although the size of the increase was slightly higher than what we had indicated earlier. Germany has had changing rebate policies over the past many years and we had expected the rebate increase earlier. Consequently, ELK has been preparing for a situation like this and will be implementing initiatives to counter the impact. While not all details are yet in place, including potential exemptions from the rebate increase it is however obvious that healthcare providers cannot and should not benefit twice from the rebates and will therefore seek to carefully rebalance our existing rebates sorry agreements and contracts with the healthcare providers the rebate increase does not change lk's long-term financial ambitions and will still target more than 10 growth in the years ahead our business platform and market positions are robust and Germany remains an important growth market for ALK. We will continue to execute on our strategy and push forward for strong results in the coming years. Earlier today, we announced the appointment of Jakob Glinting as the new head of R&D. Jakob joined ALK in 2007 and has worked extensively in the interface between commercial and science. He has been a key architect in several of ALK's strategic developments, including the partnerships with Toree, Abbott, GenSci, and Ares Pharma. He has been deeply involved in the pediatric expansion and strategy development. Few people know our patients better than Jacob. His background in R&D and with a PhD in vaccines and immunology makes him an ideal leader to drive our innovation efforts. Jacob and the team will do so under the Allergy Plus strategy and secure a strong bridge to LK's commercial operations, including our long-term targets. His job will be to balance core business growth with expanding in existing and new adjacent allergy areas through our own pipeline, partnerships and business development and licensing. Now I'll hand it over to you Klaus for the regional trends on slide four.
Thank you so much Peter. So let's look at the sales. All sales regions deliver a double-dated growth in Q2, and Europe continued to lead the development. European revenue was up 19% in local currencies, driven particularly by tablets and anaphylaxis products. The performance was sustained. Q2 sales growth was identical to growth in Q1. Tablet sales was up 27%, mainly on higher volumes, linked to the strong inflow of new patients during the 25-26 initiation season. The new pediatric and adolescence indications for a Kaisax and a Tullasax remained strong, contributors to growth, whereas the contribution from Kaisax was more modest. Tablet sales grew strongly in most markets in Central and Western Europe, including Germany and France. High sales growth, although from a lower base, was also achieved in Eastern European markets such as Poland, Slovakia and the Czech Republic, as well as the UK, where Akaisax and Etulesax obtained general reimbursement for adults' use last year. I can add that just a few days ago, Akaisax and Etulesax for pediatric use received a positive endorsement from NICE in the UK. Of other positive news, I can tell that in Sweden, the government recently introduced a new national allergy strategy calling for more preventive, effective, and equal allergy care throughout the country. We expect these new guidelines, once implemented regionally, will support more patients in treatment with AIT. Combined skid and slit drops in sales in Europe increased by 4%, with skid growth coming from both venom and non-villum sub-segments in Central Europe. Sales of slit drops, primarily marketed in France, regained some momentum in Q2 after a weak start to the year. Sales of anaphylaxis and other products in Europe increased by 28%. Growth for our anaphylaxis products alone was 30%, which also became a key driver behind the 20% market growth in Europe. Our Jext auto-injector continued to benefit from tender wins, strong commercial execution, as well as intermediate competition, supply issues in certain markets. And the overperformance by Dext more than made up for the slow uptake of Euronefi in the UK, as mentioned earlier by Peter. Revenue in North America increased by 13% in local currencies, based on continued double-digit growth in both the US and Canada. Canadian tablet sales remained an important growth contributor, reflecting an increasing number of customer touchpoints and solid demand, particularly for the tree tablet Etulatec, which again was boosted by the pediatric indication. Tablet sales in North America were up 17%, with double-digit growth in both Canada and the U.S. Skid sales was flat, right revenue for anaphylaxis and other products increased by 22%. The increase was linked in part to the cost compensation from AIS Pharma related to the co-promotion of Nefi, as well as sales of pre-pen, diagnostics, and other products. In international markets, revenue grew by 18%, mirroring increasing product shipments to China and Japan. Skid shipments to China increased compared to last year, when shipments were impacted by the renewal of ALK's import license. In-market sales growth temporarily slowed down during the transition to our new partner Jensai, but a new sales setup is now in place, and in-market sales are expected to pick up in the second half year. Tablet revenue returned to growth and was up 9% in international market. Japan delivered double-digit growth from product shipments and royalties. Supply from our Japanese partners' new API manufacturing facility for the SedaCure tablet has reached the market, and in-market sales at both SedaCure and MyTecure accelerated in Q2. We remain confident that ALK's revenue from Japan will pick up further in the second half year as planned. Now let's continue to slide 5 with the product lines. Global tablet sales grew by 22% to just over 1 billion DKK. Sales exceeded the billion DKK mark for the second consecutive quarter, well supported by the pediatric rollout. Europe led the way with 27% tablet growth, followed by North America with 17% growth and international markets with 9%. Combined skid and slit drops, sales were up 7% to 515 million DKK, mainly driven by the ramp-up of skid shipments to China. Sales of anaphylaxis and other products increased by 26% to $267 million DKK. Sales were boosted by Jext, with a growing but still modest contribution from Nefi. Now let's turn to slide 6 and the half-year financials. Half-year revenue increased by 18% in local currencies to $3.6 billion Danish kroner on double-digit growth across all sales regions and product lines. The gross profit of 2.4 billion DKK yielded a gross margin of 68%, up from 66% last year due to higher sales volumes, production efficiencies, and changes to the sales mix with a higher proportion of ALK-branded products with higher margins. Capacity cost increased by 22% in local currencies to 1.4 billion Danish kroner, driven by significant investment in current and future growth drivers, including product launches, commercial infrastructure, NR&D, not least the peanut and LKO 14 programs. Sales and marketing cost increased 25%. 6 percentage points of this increase was due to the US NEFI co-promotion cost and the marketing fee to our Chinese partners. These items had very limited impact on our numbers last year. The operating profit improved by 20% in local currencies to more than 1 billion Danish kroner. The EBIT margin was unchanged at 28% as progress on the gross margin were offset by a slightly higher capacity cost-to-revenue ratio, which we had guided for. The net profit was 776 million Danish kroner, up from 617 million DKK a year ago. Free cash flow improved to 889 million Danish kroner, driven by higher earnings and changes to working capital, including timing of payables and lower capex investments. Free cash flow was higher than expected, which is also why we have notched the full-year assumption for free cash flow up. The net debt to EBITDA ratio remained negative at 0.6. All in all, another strong quarter in solid financial possession, with high growth and margin resilience, despite extra allocation of funds and resources to growth initiatives. Now let's continue to slide 7 for the execution of the Allergy Plus strategy. Over to you, Peter.
Thanks, Klaus. Let me now take you through some of the Allergy Plus initiatives that we have lined up for the near future. Starting with respiratory allergy, the pediatric tablet rollout continues to perform real well and increasingly contributes to the tablet growth. By end of Q2, the Hausdorz My tablet was launched in 22 markets including North America and the tree pollen tablet in 13. Key performance indicators remain strong. We had around 4,500 prescribers in our direct-served markets that have now prescribed at least one of the two tablets to children. Around 20% of these doctors have not prescribed any ALK tablets before. This indicates that we are expanding our prescriber base in existing markets. Our current focus is first and foremost on increasing depth and sustaining prescriber adoption, although we also continue to work on prescriber expansion. As mentioned earlier, the local Phase 3 trial of a Karasax in China will complete in Q4, followed by an anticipated filing in 27 and potential approval in 28. In Japan, the GRASAX Phase III trial continues towards completion in 27 with a potential filing the same year. Additional life cycle management activities I expect to follow in the years ahead, aimed at further building the value proposition of our core business. The commercialization of NEFI or your NEFI in Europe for anaphylaxis continues. A few days ago, the 2mg version was launched in the key Canadian market, bringing the number of markets where the product is available up to 10. The one milligram version for younger children was approved across Europe, including the UK, while approvals of the one milligram version are pending in Canada and other markets. Market access processes are ongoing in several places and we are planning many additional launches over the next half year, allowing us to start building a more sizable Neffy business in the years ahead. As mentioned in my opening remarks, we made good progress with market access in Canada, both with the public healthcare providers and the commercial plans. And the initial launch feedback looks promising, even though still early days. We've also seen good progress with our total ad inflexus business in Germany. Since the beginning of 2025, we have doubled our market share, which is now close to 50%, driven by both Jext and Euronefi. This happened in context of the market growing approximately 20% in 26. We have been able to grow Euronefi sales during the period and maintain a sound market share, even during the recent peak season. Jext has also benefited from tender winds, which is a major part of the German market. Finally, on food allergy and new disease areas, In just a few months, we plan to initiate the Pivotal Phase 3 trial with the peanut tablet. Preparations are well advanced. We have initiated a positive and constructive dialogue with the relevant authorities on the Phase 3 plans. And subject to their final feedback, we expect to go live by the end of the year and include patients from both sides of the Atlantic. Moreover, as part of our broader food allergy portfolio strategy, We are also seeing positive progress with ALK-014, a biologic drug candidate targeting the key mediator of allergic reactions. We expect to enter clinical development in 27. This program may be applied to food allergy as well as many other IgE-mediated allergic diseases. In the beginning of next year, we also expect to see interim data from ARS Phase 2B trial with NEFI. That is a setting, rapid relief of acute flares associated with conic spontaneous urticaria. A potentially very interesting add-on to ALK's product portfolio. So all in all, work continues to strengthen existing revenue streams and build new ones. We look forward to sharing progress on these and other initiatives. Now, I'll hand it back to you, Klaus, and the full year outlook on slide 8.
Thanks, Peter. We decided to raise the lower end of the revenue outlook range. We now expect revenue to grow by 14-16% in local currencies, up from the previous outlook of 13-16% growth. The EBIT margin is still expected at around 26%. This clarification reflects the continued strong momentum for tablet sales, particularly in Europe, combined with lower risk related to price and rebate adjustments, after it became clear that the German rebate increase will not take effect until next year. We expect volume-driven revenue growth across sales regions and product groups. Tablet sales are expected to grow by double digits across regions, with children and adolescents projected to account for a growing share of the sales. Combined skid and slit drop sales are anticipated to grow by single digits, while its sales of anaphylaxis and other products are expected to grow by low double digits. As usual, the timing of shipments to China and Japan may cause quarterly fluctuations. The gross margin is now expected to be slightly higher than last year due to positive volume and mix effects, although these will be partly offset by growth in lower margin partner-related revenue. Capacity costs are still projected to increase as we continue to reinvest scale benefits into strategic initiatives. Disciplined capital allocations and careful prioritizations remain key to us. We now expect free cash flow to further improve and exceed more than a billion Danish kroner, partly driven by optimized capex investments. So to sum up, the business momentum remains strong. We expect to continue our trajectory of double-digit organic revenue growth for the eighth consecutive year, with an EBIT margin slightly above our long-term financial ambitions. So with this, I hand it back to you, Pierre, and slide nine.
Thank you, Klaus, and thank you, Peter. And this concludes our presentation, and we will now open up the Q&A session. Operator, please go ahead.
Operator
I will begin today's question-and-answer session. If you would like to ask a question, please press star and then one using a touchtone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Again, that is star and then one to join the question queue. First question today comes from Ben Jackson from Jefferies.
Please go ahead with your question. you know early thought messaging you're giving around the potential for 2027 mitigation of those german rebates i guess maybe even this mitigation and then perhaps more build into next year and then secondly if i could just add on the dynamics around neti please particularly in germany now
versus when we last caught see uk becoming a bit more meaningful here uh given the headwinds that go down the initial launch thanks ben uh appreciate it so let me uh start out and then Klaus and Pierre can jump in and supplement. So first on 27, as you know, we are not guiding specifically on a given year, but I'll give you some high-level thoughts around where we're heading and specifically around how we see the German market. I think overall, we continue to see Germany as a key growth driver for ALK going forward. It has been a strong contributor to our our double-digit growth in the past years, and we expect that to continue going forward. As you also know, we've been talking about the German rebate and the expectation that it would go up in the past years, and we have all along been planning for how to tackle it. Obviously, there is a commission now coming in place in Germany, and they have been tasked with the fact that the 15.5% rebate, what would potentially be allowed for exemptions to that rebate? So we are attacking it from a couple of fronts. One is, if we look at the rebate as it is constructed and potentially with the exemptions, it may be that we can actually use the number of clinical trials with German patients to lower the rebate. Currently, we don't know whether that That is going to be included, but this is part of the discussions in the committee. Moreover, there has been less clear discussions around manufacturing in Germany, R&D in Germany, But what it tells us is that there will be levers going forward that may allow a company like ALK to lower the amount we pay in the rebate. The other part of the rebate is that basically the way it works in the German system is that we pay a rebate directly to the German health authorities. As part of that, they send it directly to the insurers. We also have direct contracts with the insurers coming from the other angle where we are also negotiating a certain amount of rebates. Now what we are expecting is that this type of double paying a rebate from two angles is obviously something that we will look into and something we feel can be negotiated with the German insurers and that can also help us mitigate the rebate. Thirdly on an internal front we've known this for for a while that the rebate would come one day and now it's in in 27. First and foremost to give us more clarity. We know where we stand, and we also know how to approach it. That means that we have been looking at what are the initiatives that we may or may not continue with in which form. And that allows us to make clear choices quickly and implement them. And then finally, I'll say, do remember that ELK has been growing above our long-term targets. That has allowed us to also invest ahead of the curve. And that means that we have been able to make commercial investments quicker than what we've done or been able to do based on our earlier projections. And that allows us also to invest in markets like Germany, and we've been doing that for a period of time. And that also gives us a strong basis going forward. For instance, the TAO, so basically the move from unregistered products to registered products is ending towards the end of this year, meaning that prescribers and patients will need to transition from unregistered to registered products. That gives ALK a strong opportunity with our portfolio to capture some of that business going forward. So that also gives us opportunities we haven't had in the past when we look into 27. So it's just to give you an idea of how are we actually intending to mitigate some of this and how do we look at the market going forward in Germany. Last comment on Germany. We see this as a core market in Europe. We look at this market as a market with a lot of growth potential going forward. The rebate will only come once. It might be changed going forward one way or the other. But Germany remains, as it has been, a key country in the LK's portfolio. So hopefully that gave you a little bit of flavor on that one, Ben. And then on Nefi, you asked about whether we could comment a little more on Canada, Germany, and the UK. I can start out, and then I think you guys just jump in. I think it's early days in Canada. But what we are encouraged about is that some of the market access challenges that you could potentially see in a market like Canada, which is to some extent similar to the US, we've not been facing. We found a way to mitigate some of this with patient programs. And that also means that it's easier flow. And from the patient standpoint, when you acquire or when you get a nephew, you don't experience some of the same market access issues you've seen in the U.S. with rejections. So we have a clear flow through. That has been positive. And that's something we've seen also with the pull through from the wholesalers into the pharmacies. So overall, a good start. But do remember that we are basically more or less three, four weeks into the launch, but a good start. Germany, I think it's a very good example of a market where you have less market access restrictions. It's a market where we've seen when NEFI can flow freely in, it has a pretty solid adoption rate. Now, why are we then soiling a bit? It's twofold. One is part of the German market is a tender market, and there we've been very pleased to see that our focus on NEFI and our focus on the anaphylaxis portfolio, including JEXT, have enabled us to also win tenders in Germany. And that has given us a stronger portfolio and a stronger overall business. The other part of it is that normally in Germany, you also see peak seasons, typically in advance of the summer. And that's where we were interested in seeing whether NEFI would maintain its market share. And it has been maintaining its market share. This is typically where you see a lot of the auto renewals. So that's also been a positive driver in Germany. Now we're also realistic around the German market. A fair portion of the German market is still general practitioners that prescribe auto injectors. And there we need the guidelines to come in place. That means update of guidelines. So basically, NEFI or a nasal device is on par with the autoinjectors, also from a guideline standpoint, and it takes time. This brings us obviously to the UK. And on the UK market, we must admit that we had not anticipated the complexity of a healthcare system which is under reform. As Klaus also said at the call and we also said earlier today, we remain very optimistic around the market. There is no doubt that it is a very well received product in the UK. Patients, patients organizations, doctors and even authorities are positive around it. Now our challenge is not only getting on the formularies but also having the budgets in place and then getting updated on the lists on the local hospitals. That has taken longer than what we had expected, and it's been complicated by the fact that we're moving from 42 regions to 26 regions in the UK, and we have had downsizing and also cost budget reforms on top of it. That has slowed the progress. But it doesn't take away from the fact that the U.K. remains one of the biggest markets for anaphylaxis products. And we believe Neffy has a very strong place in that market going forward. It's a matter of time. Klaus, Peer, anything to add? I hope, Ben, that gave you some insights.
Operator
Our next question comes from Thomas Bowers from SEB. Please go ahead with your question.
So maybe just kick off with the keynote project. So you mentioned the process dialogue with the regulator. So should I understand this to be a dialogue both with the FDA and EMA? And maybe is there any early conclusions on the TD versus ED endpoints that you have at this point already? And what are the remaining gating factors before you can start the study in the fourth quarter? And then second question, just on the full year guidance. So right now, with a super strong QQ number here, you are implied in the middle of your updated growth, the upper end of guidance, the season, or maybe just lastly, just on pediatrics. Give us a little bit more follow on where you actually are with this.
Thanks, Thomas. Let me kick it off quickly. I'll hand it over to Per and for the full year guidance clause. Maybe you can also comment on the pizza and we can jump in as needed. So on the peanut phase 3, yes, we have had meetings both with the FDA and EMA. And I think we've had a very constructive dialogue with both. What we're really happy about is that they have confirmed that they also think that we have had solid phase 2 data. So we are confident moving into phase 3. We still need to submit and have final approval for the trial designs before we can move into it, but we remain optimistic around going into phase three towards the end of the year. So all in all, good dialogue, but we need to finalize it. Per, you want to comment a bit further on the peanut?
Sure. As to the exact trial design, it is still too early to conclude As we are still negotiating the details here, once we have the trial protocol approved by the authorities, we will communicate to the market. And that is expected to happen later this year. And then we initiate the study also later this year. But it's a little bit too premature to have detailed discussions about the trial assigned before the authorities have approved it. So that's where we are on that one.
Klaus, full year guidance.
Thank you, Skies. Full year guidance. Thanks, Thomas, for the question. And you're right that we had a strong first half with the 18% growth. And we are, of course, looking into now a half year where we are then mathematically expecting somewhere between 11% to 15% growth in the second half in local currencies. I think it's important to state that we still expect a very strong underlying business momentum to continue. So that's basically not the case, and we are not looking into anything related to the underlying business here. I think there are three things that are worth noticing. First of all, please bear in mind that we are up against some tough comparisons versus the second half of last year, where our revenue grew by 18%, especially tablets and jecks in Europe. So this is the comparison we are up against. And then you're right that you mentioned it yourself. We have key swing factors for second half is always the timing of shipments to international markets, Japan and China. And those could be a swing factor. And we would like to get a little bit further into the second year before we start to conclude on that. And then thirdly, then our initiation season. We are actually coming out of, as you know, two good initiation seasons back in both 24 and 25. that are also fueling our growth this year. And this is, of course, good, and it will continue to do so. We are expecting a nice initiation season. We still can only look at the early signals from the spring, and that's looking good. But we also have to be a bit cautious here, and we find it prudent to wait until we understand how this initiation season starts, you know, one, one, two months from now. So when we know more about that, then we will, of course, as soon as we can see something reported out. But for now, we believe it's the right thing just to wait a few more months to see where the second half is going. I hope that puts some flavor on that.
Klaus, you also want to comment on the peats?
Yeah, I can do that on the peats. We are very satisfied with what we are seeing. We have said that a few quarters, actually. We We are right now in 22 markets for the acai sachs and 13 markets for the etula sachs. We are seeing that the children are taking a larger and larger share of our share growth. And if you look at it from a new patient point of view, then we can see that we are approaching 30 percent of new patients being children. We have said at some point in time that we would like to get up to 50 percent. So we are approaching that very well and as expected. So very nice development. And we can only say that we continue to see positive trends in that and as expected and very positive. So that's good.
Operator
The question comes from Jesper Ingolson from DNB Carnegie. Please go ahead with your question.
I think you're getting Q2 to dynamic. Then on the international markets, new manufacturing governments you normally have, but demand, Shinogi would put the confirmation for the takeover of Torrey and then maybe just...
Thanks Jesper. So I'll let Klaus kick it off with the gross margin. I can talk about the international tablets. We can talk jointly around the capital allocation. Klaus will talk mainly on the capex. I'll talk about the BDE. So Klaus?
Yeah, thanks Jesper for the question here. You are right that our gross margin is actually higher than what we had expected at this point in time. Remember when we guided last year, we had actually expected higher shipments to both China and Japan, but also higher partner sales as such over the year. Thereby, we actually said that you should expect to see these ones two percentage point down on the gross margin this year. Now we have changed the guidance for that. Now we are looking at slightly higher compared to last year, and that is very much we're in both by that our manufacturing colleagues are doing a very good job. We are looking into good scrap. We are following the efficiencies in the manufacturing sites, but also that we are now seeing delayed shipments into China, Japan, and that will impact that. The in-market, I think, is important to mention. It's actually continuing in both China and Japan very well. Peter will cover the in-market sales also in Japan. But from a gross margin perspective, then it's the shipments that are postponing it, bid to the second half of the year. And that's why we also say where we are now, then we expect more to have visibility in the second half on the gross margin, and we will end this around a little bit better than what we did last year. And then when we look into the second half of the year, we are seeing higher tablet sales in Europe also, and this will also bring up the gross margin there. So we should expect full year a little bit better than what we did last year. And this is, of course, a quite significant upgrade compared to when we were six months ago guiding for the full year.
And I think, Jesper, on the tablets for international markets, particularly Japan, we continue to see a really strong underlying demand in Japan. the in-market sales continue well, both with MightyCure but also CedarCure. And especially as more API becomes available, it's a matter of meeting that demand. So I think we expect this to continue. And there it's really important that we have the full supply chain in order where we can make the shipments on a timely and also to a large extent that we've done in the past in order to meet that demand. So we look positively at Japan and the in-market growth. Secondly, on the partnership with Turi and soon Shinogi, I think it's important to say Shinogi has still not fully vested the MA, so the marketing authorization that they currently have. And that also means that there is a split between the Torii business and Shiunoki. We are talking to Shiunoki, but we are talking to Shiunoki outside of the business we have with Torii. So this is obviously always a little more of a difficult position to be in, but it's a natural position when you see some of these takeovers. So we are waiting until we have full flow in order to have a communication and discussion around the Japanese market in particular. But that doesn't prevent us from discussing what we can do with this partnership and how we can work together going forward. And I will say, we are really excited about both the partnership we have with Turi, but certainly also with the opportunity we have ahead with Shinogi. It's an interesting partner. So I think I'll leave it there. And maybe Klaus, if you talk about the general capital allocation, I could talk about the beauty part.
I will do that. So Jesper, you are right that we are, of course, seeing some opportunities because we are increasing the free cash flow that you have been seeing. We have already expected it stated that we will be disciplined about our capital allocation. So we are sure that we ensure both sufficient flexibility to deliver on our growth ambition while we also generate, you know, attractive shareholder return. You can also see in today's report that we are generating increasing free cash flow. We are even guiding a bit higher than what we did at the last quarter. So this is also moving in the right direction. We will continue to allocate capital in the order we have said earlier. First, investments in organic growth, including the R&D area. Second, business development and licensing activities. Peter can comment on that. And then thirdly, cash distribution to shareholders via dividends and or share buyback programs. And that's, of course, also why we resumed here our dividend payouts earlier this year. And there's no doubt that we will continue also to focus on that. So this is the discipline capital allocation we are following. And number two of those was BD activities, Peter, that we're looking at.
Yeah, I mean, we don't have anything specific to comment on. I've said it before, but I also think you need to look at it in the context of we believe we can do more on the BD side, but we want to do it for the right opportunities. And we're going to do it with, as Klaus said, disciplined approach, but also with regard to our long term financial targets, including EBIT and including what we said in terms of how we're going to allocate to the R&D function. So we continue to monitor the market. We continue to look for opportunities globally, but especially we like to find something that could also be relevant for the U.S. market. So we continue to work on that angle. And I promise you, if and when we find something, then we will make sure to communicate it based on what we can do there. So I think it's as close as we get to that one. I hope that gave you some answers, Jesper. We are not looking at, it depends on how you define transformational, but we are not looking at changing this company fundamentally in any way.
Operator
Our next question comes from Peter Ruggerf from Nordia. Please go ahead with your question.
Yeah, hi, Peter Ruggerf. Thank you so much for taking my question. So, Klaus, I'm sorry. I would like to go back on the implicit second half because you very kindly answered so much questions around the top line. But I guess an implicit 3% to 8% growth on EBIT maybe warrants some explanation. What will take you to 3%? Because right now, at least I feel to see that's a pretty helpersome building blocks around that. And then just a small follow-up on just the capital allocation. So can I just understand, when is enough enough in terms of piling cash? Now it's 1.7. I'm just curious to understand when you can see it, and I respect your dividends payment. And then just finally, the higher of Jakob Flinstein, congratulations. With that, can you just say what you mentioned on the strategy? I mean, are you going back to a bit more kind of ALK classic, or what is it that we should do?
Thanks, Peter. I'll let Klaus answer on the second half, and the margin growth, again, on the capital allocation, we can split it. When is enough? Enough. I like that phrasing. And then, obviously, I'll talk to Jakob as well. So, Klaus, you want to kick it off?
Yeah, I can do the full year. And thanks, Peter, for the questions. And you, of course, right before I only touched upon the top line. And if you look at the bottom line and the EBIT there, then we continue to have that very nice growth at 20% for the half year. As we stated, we are still guiding these around 26%. How can that then be? What is it for building blocks that we are then kind of invested into, you know, sales doing good and gross margin also improving? There are a few things that are important to notice. First of all, we continue to invest into both the children launches and especially the Neffy These two are great opportunities for the company in the long run, and we will make sure that we keep investing into that. That also means that if we find, you can say, pockets of money where we can actually see that we can invest even further in to secure the organic growth over the many years to come, then we would like to do that. And if we get those opportunities, for example, with some extra investment opportunities and money, then we would like to do it. And then also on the R&D part, here we have, of course, the peanut, as we just talked about before. Here we are doing everything we can to speed it up as much as possible. The dialogue with FDA and EMEA is positive, and that also means that we feel confident that it's the right thing to do, to invest as much as we can into the peanut trial as fast as possible. Well, of course, we should not do it with a head under our arms, but when we can see it makes sense, then we do it. And besides that, then we're also starting up to invest into ALKO 14, our own NCIG. So we have some big bets, two commercial, two R&D, where we have an opportunity in the second half of this year to increase the investments. And this is the building blocks to keep the 26% EBIT margin. Should I just add also on the just high level on the when is enough, enough? It's a good one. I think we will steal that one. Of course, there is no right or wrong answer on that one. But we are, of course, also debating internally when is enough, enough. As Peter alluded before, and he can add a little bit more again, maybe on the BBE. But of course, we would like to make sure that we have opportunities also financially, that if that is anything we find, then we can actually quite fast react on it. And that means that where we are right now, we would like to keep that flexibility. But it also means that if we do not find anything, then as we have said before, we do not want to be a bank. And then we will continue, one, with the dividends. That's the plan. And then share buyback could be an opportunity. Right now, there are no plans. Then, of course, we would inform you about it. But that could be an option if we can see that there are no BD opportunities out there that we would like to spend our cash on. But we will come back to that as soon as we know something concrete.
Yeah, thanks, Klaus. And I think on the BD side and also on Jakob as new head of R&D, I think on the BD side, we will continue to explore the opportunity space. It's important for us to say that when you look at when we outline Allergy Plus, we know that in the respiratory area, we have a really strong base. We also have a high market share, which limits some of the moves one could envision there. But when we look at some of the other areas, the first one being anaphylaxis, it was clear we could do something on the BD side. We did it. And I think we had a really good deal with NEFI coming in at a very low price, paid off more or less immediately. And now it's about if we can get this executed, which we believe we can. Then we have food, and we also have potentially new areas, the example being the CSU with NEFI. But in the food space and also to supplement some of the other spaces, there might be options out there that could help us as examples. So we like to strengthen this because the thinking and the strategy is global play, opportunity to become a strong number one or number two, with ambition of always being number one, and then with a portfolio, meaning more than one product. So for instance, in food, currently we have peanut, and there is an example whether we should do something ourselves internally or if we want to add externally as examples. It all boils down to price opportunities, et cetera, and timing. So that's also why we need to work through some of these things. And it will, by the way, be an ongoing discussion internally. So ideally, we can meet the investors' needs on all ends. Then on Jakob, first and foremost, I'm also very pleased, and thank you for noting it, that we found Jakob. Jakob has gone through an extensive process against external candidates, and he came out And as I also stated, it's because Jakob brings the right type of expertise, both from 25 years in the field, PhD and R&D background, in a strong combination with an understanding of ALK and what we do and what we need going forward. You asked whether this was kind of back to basics. I don't think ALK had never left the basics, but I think we look at it as an opportunity with Jakob to strengthen the partnership side, but also to really build a stronger bridge between R&D and commercial, and continue to strengthen our position both in the respiratory space, but also in some of these new spaces. And Jakob brings that expertise. And then do remember, Jakob has an organization of close to 400 people that are all experts and the subject matter experts and who have been vital in our success so far. And luckily, I believe all of them are continuing with ALK on top of it. So I really feel we have a strong foundation, but Jakob brings something else to the table. And I think he brings that combination that will allow ALK to scale and further build and become and stay the number one leader in this space. So, super pleased, and hopefully you will see it soon as well, Peter. So, I hope that kind of wraps up the questions.
Operator
Our next question comes from Susheela Hernandez from Van Lanshaw at Kempen. Please go ahead with your question.
Yes, thank you for taking my question. On that fee, what could the CSU opportunity mean for ALK? And if you opted in after the phase 2B data, what kind of investments are we looking at?
Thanks, Susheela. So NEFI, CSU, as I heard it, NEFI and the phase 2B, so ARS are currently conducting the trials we expect to have the readout in Q1 now. The reason for the slight delay is basically when you run the trial, you want, unfortunately, to see at least three incidents from a patient. And luckily, we cannot decide when that happens for each of the patients. So we need to have the patience to wait for that. So that is currently being conducted. By the way, part of it is being conducted in Germany. So we are obviously excited around the trial and the trial results. Now, in terms of the investments coming from it, it's too early to say. But we will obviously, together with ARS, depending on the outcome and also the research we've done, figure out how to scale this. Basically as it stands, this is an ARS investment with us having the commercial rights outside of the US, but we are closely involved. If it turns out and if the business case looks as promising as we've seen so far, then we'll obviously work out to ensure we have the funds in order to commercialize the product as fast as possible. But that will depend also on what are the asks from the European authorities, authorities in Canada, UK, and other markets. So that remains to be seen. So first and foremost, we're waiting on the trial outcome. But we are sharing ARS's optimism about the potential. I will say, though, that do remember there's a difference between what you pay in the U.S. and what you pay outside of the U.S. So I think the potential outside of the U.S. cannot exactly be one-to-one with what you see in the U.S. Nevertheless, a very exciting product and potential for the future. Did that answer, Susila?
That's clear. Thank you. Yes, great. Thank you.
Operator
And I'd like to turn the floor back over to management for closing remarks.
Thank you very much. And thank you all for the good questions. Before we end the call, let me just draw your attention to a few upcoming investor events and roadshows across our three continents. We certainly hope to see you at one of these events. Please also note that we will release our Q3 report on the 17th of November. It was previously planned for the 18th of November. With this, we will end today's session and wish you all a pleasant day.
