管理層發言
Good morning, everyone, and welcome to the Viatris Q2 2026 Earnings Call. Operator instructions were provided. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Bill Szablewski, 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 Le Goff. 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 risks 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 the 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 $0.69 per share. These results exceeded our expectations and reflect the strong momentum across our businesses and continued improvement in operating leverage. Just as importantly, these results give us confidence to raise our outlook for the remainder of the year. Let me briefly highlight some of the progress we've 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 Gwyn Lo and expect to launch the product later this year. At the same time, launch preparations continue for fast-acting meloxicam 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 III results for Nefecon, while pitolisant 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 III programs for selatogrel and cenerimod 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 accelerate our long-term growth profile. As we prepare for our next phase of growth, we're prioritizing our capital, talent 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 rights to Tyrvaya, 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 future growth. We're beginning to see those actions translate into the real operating leverage we expected. That's creating a stronger Viatris 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 our capital allocation priorities. 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 financial metrics. Our updated outlook incorporates all the business dynamics we expect in the second half, including certain intermittent manufacturing disruptions at our Nashik 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 III milestones and the financial flexibility to pursue disciplined, accretive business development. Together, we believe these opportunities position Viatris 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 Gwyn Lo last week ahead of its PDUFA date. Gwyn Lo is a new discreet once-weekly transdermal hormonal contraceptive patch that offers women a noninvasive 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 kilogram 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, a progestin-only patch currently in development. This program has completed Phase III enrollment, and we expect topline results in the first half of 2027.
As patients continue to seek convenient and noninvasive 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 meloxicam, 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 topline Phase III 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 pitolisant 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 cenerimod, we continue to expect results from both Phase III SLE studies, OPUS-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 5 years. Selatogrel, we remain on track to reach full enrollment in our SOS-AMI Phase III study around year-end and are 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. The key area of focus remains our complex generics, including complex injectables, where we have established a meaningful expertise. Over the past 2 years, we have secured approval in the U.S. for 11 complex injectables, including octreotide and recently, we were the first approved for all 3 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 disciplined 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 R&D 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 delivered another strong quarter, reflecting the durability of our global portfolio and disciplined execution of our strategy. This morning, I'll highlight the drivers of the strong second quarter performance, the progress we've made delivering on our capital allocation priorities and details supporting our financial guidance ranges 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 Breyna. 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 Yupelri was more than offset by anticipated competitive pressure within our established brands portfolio. In Europe, net sales increased 2% versus prior year, primarily driven by strength in the generics portfolio across key countries, including France and Italy as well as contributions from new product revenues. The brands 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 established brands. Within JANZ, 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 from government-driven price regulations in Japan and increased competition for certain brands in Australia. Lastly, we delivered 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% versus the prior year. 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 III programs for selatogrel and cenerimod.
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 share repurchases. Additionally, we continue 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 2.9x, below the midpoint of our long-term target range of 2.8 to 3.2x.
For the remainder of the year, we expect to have approximately $1.6 billion in deployable capital. This includes approximately $380 million of pretax 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 the year. 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 JANZ.
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 Breyna and Wixela in North America; and additional expected supply disruptions, primarily resulting from our Nashik 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 million 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 Tyrvaya. 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 guidance. 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 outlook. 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.
分析師問答
Our first question today comes from Ash Verma from UBS.
Congrats on the progress. Maybe just on China. So great to see solid operational growth here that you've seen in the first 2 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, where I know you mentioned some headwinds on the procurement in the hospital channel. So if you can just give us a little bit of a breakdown, that will be helpful. And then secondly, just to 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 morning, Ash, and thank you for the questions. Let me make some comments. I'll kick it over to Paul for some more detail. 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, which really allows us to participate strongly in China. We're very, very pleased with the progress there. And 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 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 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.
Yes. 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% to 15% 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 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, and a lot of that is because of the cost containment measures. We are on track and even ahead of schedule in certain instances.
However, in the back half of the year, 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 Nashik that we've talked about, the back half of the year, they're lower-margin generic products that are impacted. So the revenue component of the guidance, 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, for the full year, EBITDA will exceed the midpoint relative 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 got the resources in the right place. And we're executing that. We're delivering on that. And from that, we're seeing real EBITDA 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 Umer Raffat from Evercore.
I just wanted to ask a 3-part question on selatogrel, 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 selatogrel 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 to my second part, which is what is the off time where no more platelet inhibition is in place? And I ask because if I go by your EC50, which I think is 14 nanomolar, it looks like the 16 mg 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 on the blood thinner or the timing post initial selatogrel administration?
Before we get to that to answer the technicalities of your question, first of all, thank you for the question. We're really excited about selatogrel. We expect the readout 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 we've been very, very pleased with the execution and enrollment and progress of this particular trial. We see — if positive, we see real blockbuster opportunities for selatogrel here and a major expansion. I say the same thing for cenerimod. There's a lot of attention on selatogrel, which is great, very unique product, but we're also really excited about the progress, execution and the potential of cenerimod as well. So I really appreciate the question. Love talking about new interesting products that can help drive our revenue future. And let me kick it over to Philippe to give you some context.
Thanks, Scott, and thank you, Umer, for the question. So patients that are on the study, the vast majority are on dual antiplatelet therapy to begin with. So they're already on an oral clopidogrel for the most part is what we expect to see, so selatogrel is added on top of that. Now for those that are not necessarily on it, they could be post treatment within 24 hours or so, the effect of selatogrel is no longer present. Therefore, treatment with an oral P2Y12 could be initiated at that point in time should it be required. With regard to the offset, within 6 to 7 hours we get to peak platelet inhibition, and more than 80% platelet inhibition after 15 minutes is what we've seen in Phase II. The offset is, as I said, within 24 hours, selatogrel is no longer present. Now in terms of CABG, CABG can be initiated at any point should it be required, if deemed urgent. That being said, post 8 hours after selatogrel injection, CABG can be initiated safely; it is not a requirement to wait.
Our next question comes from Matt Dellatorre from Goldman Sachs.
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 selatogrel, could you just remind us what magnitude of benefit you believe we need to see? I think you've disclosed in the past that the study is 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 given it is a composite endpoint, for instance, it doesn't matter which of the components is driving the benefit? It seems like they're all fairly serious, but I just wanted to confirm.
Thanks, Matt. First of all, on meloxicam fast-acting, we think it's going to be a significant contributor to our pipeline and to our revenue in the U.S. between now and 2030. I'm not getting into specific numbers at this point in time. We don't have a label yet, and there are some other things that we really need to look at. We see it being a very significant contributor to our 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 selatogrel. And then maybe we can loop back to Corinne to talk a little bit about the potential she sees in selatogrel.
Yes. Thank you. So with regards 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 are answering all the queries that they have and expect to get approval towards the end of the year at the time of PDUFA. In terms of the labeling negotiations, those won't start until October or November timeframe. This is when we will start talking about the exact language around opioid sparing. As I previously mentioned, this was heavily discussed with the agency during Phase II and during putting the protocol together for Phase III. We've followed every recommendation that the agency had for us in order to be able to get this language included in the label. Where in the label and exactly what language, I can't tell you as of today, but we should get a better idea around the October-November timeframe.
We see a lot of excitement about this product. We are getting very positive feedback from KOLs. Definitely, the results of the Phase III program and notably the opioid-sparing effect is seen as a real positive. In terms of potential that we see for fast-acting meloxicam, FAM, the potential is large. Acute pain is a broad market with about 80 million patients suffering from acute pain every year. Unfortunately, many of those patients are treated with opioids for pain relief. We see that this product has the right profile. It is generating a lot of interest, and we can imagine that with market exclusivity that could potentially go beyond 3 years as we are finding more patents, we could reach up to $500 million in peak sales with this asset, and that will contribute meaningfully to our long-term guidance.
And then on your question on selatogrel. The actual benefit that the study is sized for is approximately a 20% risk reduction. We have discussed this extensively with our KOLs and investigators. The minimal bar is much lower than that in the mind of the investigators and KOLs. I think if we were to show a risk reduction closer to 10% to 15%, that would be acceptable and the lowest bar commercially to get this drug to patients. So again, the study is powered for a 20% risk reduction, which is the minimum bar we're seeking at this point in time. In terms of the endpoint itself, as you know, it is ranked according to the outcome and according to clinical importance. What we expect to see is that selatogrel is blunting acute MI from happening if injected at the right time. We also expect to see that selatogrel will reduce the severity of the MI that these patients experience, making them much more manageable for the patient with fewer sequelae over time, which leads to patients being in the hospital for a shorter duration as well. So it adds benefits to the patient and to payers overall.
These post-MI patients are very expensive for the health care system. They're difficult to manage over time. Being able to improve any particular outcome for a patient has tremendous benefits for that patient and for the health care system overall. That's why there's excitement about selatogrel being a unique drug in the space.
Our next question comes from Glen Santangelo from Barclays.
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 calling out in the back half of the year. I know it's a little bit too early to comment on '27, but I was curious if you could comment on the durability of the strength there. And then should these fire-related disruptions be contained to just 2026? My follow-up was on meloxicam. It seems like meloxicam and the presbyopia solution are the two meaningful approvals you have left this year. At your Analyst Day, you highlighted that the value-added medicines pipeline would add about 1% to the growth algorithm. In the previous question, you highlighted that you think it can be a meaningful contributor. 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 greater expectations at this point?
Thank you for the question. We're really pleased with the performance in China. There seems to be durability. We had good performance last year and this year. I think we see some of the investments we've made in China in terms of channels and restructuring our business there, overinvesting in demand for some of these iconic brands. There seems to be good durability. The only thing to be cautious about in China is policy changes at times and sometimes they're inconsistently applied across provinces. We try to work with the government in China to deliver the best health care we can. China seems to me to be a good engine for us moving forward. I think it's not only China that allowed us to beat, raise guidance and have a good outlook for this year. There was some good strength in a number of other businesses as well. We see good strength in the value-added medicines we're bringing in the United States and other places.
Regarding Nashik, to put that in perspective, we currently operate 26 manufacturing facilities around the world. We have inspections and observations and things all the time. Specific to Nashik, as I said in my prepared remarks, we're communicating with the FDA. We're working closely with external experts and initiated a comprehensive remediation plan to address the inspection observations. We had a fire in Q1 and some inspection observations in May. We expect the remediations, as Paul pointed out, to have some impact on second half revenues, but it's fully baked into our guidance. As a reminder, we raised guidance for the year for all key financial metrics. We see this being 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 a long-term impact to the business.
Maybe if I could add one thing from an expectation perspective. We do see the impact being larger in Q3 and moderating a bit in Q4. So I think, as Scott intimated, we expect this supply disruption to be shorter term in nature. Hopefully, by exiting the end of the year into the beginning of next year, we will have gotten past it. That's our expectation.
Nashik is a lot of smaller products. It's mainly emerging markets and JANZ. There's no one product there that's more than $20 million in revenue. So it's a lot of little pieces. As we remediate and get things online, we expect relatively short-term intermittent effects. The strength of the business allows us to get through that and be in a position to raise our guidance across all financial metrics. You had a question around meloxicam as well.
We remain very optimistic about meloxicam. We're expecting a PDUFA date at the end of the year, so we'll wait for the label to finalize our pricing strategy and value proposition. Everything we are seeing so far and the feedback from the market is very positive. We believe there is room for another fast-acting asset that will have a meaningful role in acute pain and expand the utilization of NSAIDs. Fast-acting meloxicam has a well-characterized tolerability and safety profile. It will be a branded asset. We will deploy a specialty sales force, and I'm looking forward to discussing the launch at the next call.
One of the reasons we're excited is not only the strength of the data relative to the competitive set, but also the real market need. The need for non-opioid solutions for acute pain is large, particularly in the U.S. Corinne hit on that earlier. We're excited about the profile and that it's going to fill a significant need in the U.S.
Our next question comes from Chris Schott from JPMorgan.
This is Ethan on for Chris. 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 Viatris specifically?
I think the M&A environment is pretty active right now. There's a lot of assets out there. I get a lot of inbound interest, multiple times a day. We're looking hard at business development, adding in-market accretive assets to the portfolio. We'll be disciplined to find the right assets at the right price. We're focused on in-market accretive assets. Regarding tariffs, it's difficult to comment as the administration has not released official policy details. We're gathering information. We have eight manufacturing, R&D and distribution sites in the U.S. Over half our U.S. revenues are from products that are manifested in the U.S. We're planning to manufacture higher-margin products like complex generics, transdermal products and value-added products in the U.S. We'll work with the administration as we understand policy details and partner to help improve health care for Americans.
Our next question comes from Dennis Ding from Jefferies.
I have two pipeline questions. One on lupus and one on selatogrel. For cenerimod, I appreciate that the Phase III is enriching for high IFN-1 and we've seen with other lupus programs like iberdomide and Saphnelo that SRI-4 is consistently higher in this population versus low interferon-1. But when I look at your Phase II, this relationship breaks apart. It seems like the 4-milligram dose was a clear outlier on both SRI-4 and also SLEDAI. What is it about the prior data that really gives you confidence going into that readout outside of the high interferon-1 relationship? And then question number two, on selatogrel. I believe the CVOT was initially 14,000 patients, but then you upsized the trial by almost 50% to 25,000. I want to understand what went into that decision to add 11,000 patients, and what are you seeing on blinded event rates? Is it tracking with what you initially planned or are they lower than expected?
Thank you for the question. Regarding cenerimod and the interferon-1 signature, in Phase II we saw that the 4-milligram dose, which was the highest dose tested, was the dose that showed a clinically meaningful improvement and a nominally statistically significant p-value in the total population. In that 4-milligram dose arm, about 45% of patients were interferon-1 high. The interferon-1 high patients responded better than interferon-1 low with a delta versus placebo of about 24%, which is one of the highest deltas reported for this population. We also saw that interferon-1 high patients were the most active in terms of disease, which is the kind of patients we're actively enrolling in Phase III. We targeted approximately 70% interferon-1 high in Phase III and have exceeded that goal in both studies. In Phase III we implemented a number of changes versus Phase II that we believe will lead to better outcomes: the primary endpoint is at one year rather than six months, allowing for continued and stronger treatment effects over a longer period; and mandatory steroid sparing because the endpoint is at one year, which we expect will further differentiate cenerimod versus placebo.
We feel good about the data generated so far and are actively cleaning the data to report topline results in early 2027. Regarding selatogrel, the protocol always contemplated enrolling up to 21,000 patients. We are seeing an event rate that is what we expected. We are letting the study continue to enroll to obtain all the needed events. We may need a little bit more than 21,000 patients; that remains to be determined. We believe we'll get the events we need by year-end so we can get data in the first half of 2027.
Our next question comes from Jason Gerberry from Bank of America.
Just two for me. I 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, as I look at the back half of the year, sort of an implied low single-digit growth, is that what we should think about for carryover into next year? Does that create tough comps for 2027 is ultimately what I'm trying to get at? And then on selatogrel, once you complete enrollment towards the end of the year, for the primary endpoint, I think you only need to assess the patient for like 2 to 7 days to determine the impact on mortality or the other measures. Could you remind me the different lag factors that go into once you complete enrollment to actually the time to which you can generate topline data?
On China, we're pleased with the business. It's running strong and we expect strong results in 2026 and believe for 2027 and beyond there will be momentum. Regarding policy, it's not finalized. There are discussions with the government and we will be in a position in November to talk about the policy, how it will be executed and the potential impact. Policy in China can be applied inconsistently across provinces. We're in active discussions. We think it could have some effect in the second half, and we'll have a much better view in November. We've built all of that into the forecast. From my perspective, we hope to continue momentum beyond 2026, but we don't expect 16%–17% continued growth; growth will moderate. As for Nashik, we've baked that supply disruption into guidance and expect it to be shorter term.
From a phasing perspective, we see the impact being larger in Q3 and moderating in Q4. We expect this supply disruption to be shorter term in nature and hope to be past it by the end of the year into early next year.
The implementation of the new policy concerns only public hospitals and will be done at the provincial level; there are 31 provinces in China. Some of our products that have high volume utilization might be impacted, but we will know more as those provinces adopt the policy. By the end of the year we'll have a much better picture of the impact. We are confident, as Paul said, that we'll continue to grow through the policy implementation.
Regarding your question on selatogrel, the primary endpoint does involve assessments at 7 days for death and within 2 days of injection for other types of MI. Secondary endpoints are at 30 days, so we need that data as well. This is a sizable study with 45 countries and close to 900 sites, so we need to gather and clean all that data, which is why we're targeting topline data in the first half of 2027.
Our next question comes from David Amsellem from Piper Sandler.
Two for me. First on cenerimod. My understanding is that background Benlysta is allowed in the trial. I was wondering about the thought process there, and are patients stratified for background Benlysta? Second, switching gears to complex generics, I wanted to ask about the hormonal patch business with the acceleration following the removal of the boxed warnings. How long do you think that could be a relatively limited competition market for you and how big of a growth driver for generics in developed markets, namely the U.S., could that be in '27?
Yes, belimumab (Benlysta) is considered part of standard of care and therefore is allowed in combination with cenerimod in the trial. We don't expect a significant number of patients on belimumab; we expect closer to 5% of patients, so limited potential impact. Randomization ensures balance so any effect of belimumab is felt in both placebo and treatment arms. Including it allows us to generate data on safety and clinical value when co-administered with benlysta. We have sensitivity analyses planned and two identical studies so we can pull data across both to determine robustness.
Regarding estradiol patch, over the past year we've seen a strong increase in demand for hormone replacement therapy patches, driven primarily by the FDA removing a black box warning at the end of last year, which led to market expansion. A secondary factor is increased use of GLP-1s, which has impacted utilization of certain contraceptives and HRT products. We have a leading position in manufacturing patches, with our Vermont facility producing next-generation transdermal systems. We continue to increase capacity and drive efficiencies and expect to remain a major leader in this market.
To finalize the thought around estradiol, we see this as an opportunity driven by demand. We're currently able to fulfill about 70% of orders, so demand has outstripped current capacity and we're ramping production. We're looking at our own plant and externally to meet that demand in the future.
We're willing to invest to meet what we see as unprecedented increases in demand for patches for the reasons Corinne cited. It's a strong area of opportunity that we expect will be a good driver of revenue through 2030.
We have a follow-up question from Umer Raffat from Evercore.
I wanted to touch on something I meant to ask earlier. Philippe, I think you mentioned the original sample size was 14,000 to 21,000. ClinicalTrials.gov shows it went from 14,000 to 25,000, and in practice it's gone from 14,000 to 21,000 to 25,000 to 35,000. Could you speak to that, whether that was informed more by powering or more by just letting it continue to enroll so you keep getting events faster?
That's the latter. We are letting it enroll. This is a sizable study and we've invested significantly in it. We want to leverage it as best we can. Letting it run toward the time point where we lock the data will mean we have more events when we lock, which helps timing. We won't stop and wait for events; we'll continue to enroll through the window. The numbers on ClinicalTrials.gov give flexibility for enrollment without changing it repeatedly.
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. Let me close with just three thoughts. First, our second quarter performance and 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 Viatris 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.