Q2 2025 Viatris Inc Earnings Call
Good day, everyone and welcome to the vitrus, second quarter 2025 earnings conference call.
All participants will be in a listen-only mode. Should you need assistance? Please send to a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions.
to ask a question, you may press star and then 1 on your touchtone phones to withdraw your questions, you may press star and 2
please also note, today's event is being recorded
At this time, I would like to turn the floor over to Bill solooki head of investor relations sir. Please go ahead.
Good morning everyone. Welcome to our Q2 2025 earnings call with us. Today is our CEO Scott Smith CFO data mistress, Chief R&D officer Fleet, Martin and chief commercial officer. Karen woof.
During today's call, we will be making forward-looking statements on a number of matters. Including our financial guidance for 2025 in various strategic initiatives, these statements are subject to risk and uncertainty.
We will also be referring to certain actual and projected non-gaap Financial measures.
Please refer to the 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 2025 actual or reported results, we will be making certain comparisons to 2024 actual or reported results on a Devastator adjusted operational basis, which excludes the impact of foreign currency rates and also excludes the proportionate results.
From the Devastators that closed in 2024 from the 2024 period.
We may refer to those as changes on an operational basis. When comparing our 2025 actual reported results to our expectations. We are making comparisons to our 2025 Financial guidance.
With that, I'll hand the call over to our CEO, Scott Smith.
Good morning, everyone.
We delivered strong second quarter performance. As a stage sharply focused on our Chi 2025 strategic priorities which are driving strong commercial execution, across our Global business of generics and established Brands advancing our late stage pipeline to drive future. Innovation,
Continuing to look at strategic, accretive in-market business development opportunities to drive near- and mid-term growth.
Progressing. Our enterprise-wide strategic review to position virtuous for sustainable growth in 26 and Beyond
And returning Capital to shareholders through dividends and share BuyBacks.
Let me begin with a few highlights from our second quarter performance.
We achieved 3% destitute adjusted operational Revenue growth, excluding the impact from indoor driven, primarily by strengthening Europe and the greater China region. These results. Reflect the strength of our execution, and the resilience of our Diversified Global business.
We have also made significant pipeline progress.
Five of our sixty-three readouts have shown positive results.
Most recently, this includes positive data from 2 opal, programs targeting dim, light, disturbances and presbyopia.
Both of which address High unmet medical needs.
With these readouts and our commercial assets are Eye Care Division remains well, positioned to become a more meaningful contributor to VHS over the next few years.
Earlier this year, we shared positive results, for effects are for generalized. Anxiety disorder in Japan. The zoo Lane low dose for contraception and our fast acting formulation of mocks Cam and acute pain. These achievements reinforce the strength of our Pipeline and lay the foundation for our future.
Frustrated, meaningful Improvement and pain. And reduced opioid, use relative to Placebo. A well characterized and well tolerated, safety profile, and Superior pain. Control versus an opioid arm and post hoc analyses.
We expect to file by year end and intense commercialized. This, as a brand of product, tapping into a 80 billion dollar US acute pain Market,
For Salata grow and scenario mod enrollment for the phase 3. Global programs for both assets is progressing. Well, with First Data readouts, expected in 2026, we continue to view both of these as potentially transformational Blockbuster treatments for patients and their respective therapeutic areas.
For soda, good flows. And we received our first approval in the UAE earlier, this year, and filings are progressing well, and other key countries around the world.
As our pipeline advances, we remain committed to returning, meaningful Capital to shareholders.
So far this year, we have returned more than 630 million dollars. Including 350 million in share repurchases,
We continue to balance our focus on shareholder returns with strategic accretive in-market Business Development Investments That Could fuel future growth.
We are also making strong progress on our enterprise-wide strategic review, evaluating all aspects of our business to ensure we're building a company that is both competitive today and prepared for the future. We plan to share an update on our progress during our Q3 earnings call in November.
Turning to operational priorities. We remain focused on remediation efforts at our indoor facility, which are now nearly complete.
Before the end of this month, We'll be asking the FDA for a meeting to discuss the progress of a remediation efforts and the potential timing for reinspection of the facility.
At our national facility while FDA classification is still pending all committed actions have been completed for some time encouragingly. We recently received FDA approval for the Run of your tablets and anti-retroviral Medicine made at our national facility.
Finally, I'd like to touch on recent policy developments, including proposed us tariffs, which could impact the broader pharmaceutical landscape. Vitrac serves approximately 1 billion patients worldwide each year. Our Global Supply Chain is built to support patients where they live of the 37, manufacturing distribution, R&D and packaging sites. Within our Global Network 8 are located in the United States, which should position us, well to navigate the impact of any future changes to trade policy.
Well, we're monitoring tariff developments closely in order to assess potential impact on our business, based on the available information we do not anticipate any material effect on our 2025 Financial pitcher. We will continue to assess the impact of any potential tariffs on patient access and Company financials and will provide updates accordingly.
We also continue to Advocate strongly for thoughtful policy-making, that protects access to medications.
specialty generics which account for 90% prescriptions filled in the United States and just 1% of the Total Health Care spend
Currently more than half of our us revenue is sourced domestically and we are currently exploring ways to further leverage and expand our Network.
With that said, based on the current pricing Dynamics in the generic industry, we believe that moving additional manufacturing of non-complex, generic to the United States would be very difficult in the short term and not likely sustainable in the long term.
However our move towards more complex, Innovative higher margin products does bring potential opportunity to further expand. Our domestic footprint. We are committed to evaluating all possible options. Ultimately our goal is to ensure the right infrastructure is in place to serve patients in the United States and around the globe and maintain a sustainable business model.
In closing, we have great momentum going into the second half of the year.
Given the strength of the results we are reiterating our 2025 Financial guidance, ranges, across all key metrics and currently expect to be in the top half of the range on revenue and adjusted eps.
we remain confident in the long-term trajectory of the interest, the strength of our business, our maturing late stage pipeline discipline, Capital, allocation, and strategic flexibility position as well for sustainable growth in 2016 and Beyond
Now, I'd like to turn it over to Philipe for more details on the pipeline.
Thank you, Scott. We are proud of the significant progress. Our R&D team has made in advancing pipeline of generics, and Lead stage novel and Innovative assets.
Starting with our phase 3 programs. Where 5
Of our 6. NC submitted phase 3, readouts have shown positive results.
People studies at the upcoming pain week medical Congress in September.
5 abstracts were accepted covering efficacy safety.
And reduction in opioid use in 2 different surgery models, as well as pharmaco kinetics data.
Overall, we remain highly enthusiastic about the potential of this asset as an acute pain. Nonopioid treatment option with the benefit risk profile that offers potential advantages over available treatment options and mainly to a significant reduction in opioid use
we are waiting fda's response on the potential for an early submission and accelerated approval path, given the strength of the data and the unmet public health need
We continue to Target the submission of the new drug application by the end of this year.
Turning to Zoola and lodoss.
We remain on track to submit the NDA in the coming weeks and anticipate approval mean next year.
Our second contrastive patch in development and knowledge is terminology weekly patch.
Is more than halfway through phase 3 enrollment with data expected by early 2027.
Now shifting to our internal G programs. We are pleased with the positive results. We recently shared from the second period of phase 3 trial of Mr. 141 in presbyopia.
The results, reinforce our confidence in Mr. 141 and its benefit risk profile as a potential.
Non-invasive option to support the million of patients impacted by this condition.
We expect that this data will be presented at the American Society of cataract and refractive, surgery annual meeting in April 2026.
We are targeting our application to the FDA and the second half of 2025.
In June we also announced positive Topline results from our pivotal phase 3. Trial, evaluating Mr. 142 in treating visual disturbances in low light conditions following character refractive surgery.
The study demonstrated significant functional Improvement in these patients in their ability to drive and function under low light conditions.
Importantly, they are currently no FDA approved options and the FDA has granted Fast Track. Designation
Further, emphasizing the unmet need.
This data will be presented at the American Academy of Optometry in October 2025. We recently started our second pillar of study and expect to have results in a first half of 2026.
The last of the of theology results.
That we recently announced was our phase 3, study of mr139 for bleer.
The study did not meet its primary endpoint of completion, complete resolution of debris at week 6.
The nominally significant change from Baseline in debris, at week, 6 was observed.
Suggesting that this mechanism of action remains relevant for the treatment of blepharitis.
Mr. 139 was generally safe and well tolerated.
Additional work is ongoing to determine the appropriate next step for this program.
Moving TOs and sin.
We are pleased with our recruitment efforts for these 2 programs for CAD. We have reached an enrollment rate of approximately 600 patients per month
and then TCP, we will reach approximately 1,000 patients per month by the end of the year and reach full enrollment in 2026.
Turning to scenario in SLE and Roman is nearing completion and we have studied notifying sites and investigators accordingly.
We anticipate the first Phase 3 readout near the end of 2026, followed shortly thereafter by the second readout.
Then if effort to explore additional value, this asset can bring to patients. We have received positive feedback from FDA and EMA on our proposed phase 3 registration study in lupus nephritis,
And anticipate having our first patient enrolled by the end of the year.
We are also making great progress with a reminder of our late stage pipeline.
Regarding sin. We recently, we recently received our first approval in the UAE within a very short turnaround time.
We have filed in Saudi Arabia and are expecting to file in Canada, Australia, New Zealand, Mexico, and Southeast Asian countries before the end of the year.
As we mentioned in our last call, the jda for effects or guard is under review by the Japanese health authority and is progressing. Well, we anticipate approval in the first half of 2026.
Demonstrating our capabilities in that market.
Finally, within our generic pipeline all products, scheduled for approval in Q2 were approved.
Except for iron sucrose.
We believe our application is substantially through its scientific review and expect approval in the near future.
The majority of our anticipated generics approvals are weighted toward the back half of the year. They remain largely on track, including for trial type.
Overall we are pleased with the strong momentum. We have across our Pipeline and remain focused on delivering meaningful Innovation for patients that address areas of significant unmet medical need
And now, turn the call to Doretta.
Thank you, Felipe, and good morning everyone. We had another strong quarter, and the underlying fundamentals of our base business of generics and established brands remain strong.
Today, I'll walk you through the key highlights. The progress we've made against our Capital, allocation plan, and our confidence in the outlook for the remainder of the year.
Our second quarter results. Came in ahead of our expectations reflecting our well Diversified Global business.
Total revenues for the quarter were 3.58 billion, which were down approximately 2% versus the prior year.
Excluding the indoor impact of approximately 160 million are operational Revenue growth versus the prior year would have been approximately 3%.
Now, let me walk you through the commercial highlights for the quarter across our segments, which includes the indoor impact.
in developed markets, we saw continued strength in Brands which helped to partially offset the indoor impact
From a regional perspective, we continue to see consistent and durable growth from our European business, which grew approximately 2% this quarter in line with our expectations.
In Europe, the brands portfolio, grew, approximately 3%, led by EpiPen Creon and Bruin. In addition to positive contributions from Key markets, including Italy,
Generics performance in Europe was flat year-over-year, despite the indoor impact and continues to benefit from the new product revenues in key markets such as France.
As anticipated, our North American Business decreased, 11% versus the prior year primarily as a result of the indoor impact and competition on wixela and other products.
This was partially offset by continued growth in upel and brayna as well as contributions from new product revenues.
An Emerging Market net sales, exceeded expectations, and increased approximately 1% versus the prior year.
This was primarily driven by continued strength in turkey and our emerging Asia region, as well as stabilization in the Korean market.
This performance helped to more than absorb the indoor, impact affecting our arv generic business.
in Jan's net sales decreased approximately 11%
Results were primarily driven by expected government price, regulations and a change in reimbursement policy impacting off patent brands, in Japan.
And competition in Australia.
This was partially offset by slight volume increases in our generic portfolio in Japan.
Lastly, we continue to see positive momentum in Greater China.
Net sales, exceeded expectations, and grew 9% driven by continued growth across our portfolio, due to proactive. Patient choice.
Net sales also benefited from the timing of customer purchasing patterns in the quarter which we expect to moderate in the second half.
moving to the remainder of the p&l, adjusted gross margin of 56.6% in the quarter was in line with our expectations
As anticipated margins, were impacted versus the prior year due to the indoor impact, as well as price regulations in Japan.
Operating expenses were down versus the prior year. As a result of the planned cost-saving initiatives, which primarily benefited sgna.
Turning to free cash flow. We generated 167 million of cash in the quarter.
Excluding the impact of transaction related costs. We would have generated 241 million during the quarter.
Capital requirements in the quarter.
Moving to Capital, allocation, we have repurchased shares, totaling 350 million year to date.
Including dividends paid, we have returned more than 630 million of capital this year, to our shareholders.
With this continued progress, we remain on track to deliver on our commitment of capital return this year.
Now a few comments on our outlook and phasing for the rest of the year based on the strong operational performance year-to-date and continued visibility of the anticipated indoor impact. We are reaffirming all guidance ranges.
Within total revenues. We expect to be in the top half of the guidance range as a result of positive operational momentum and the year-to-date benefit from foreign exchange.
We also expect adjusted EPS to be in the top half of the guidance range, primarily driven by share of purchases.
some of the pushes and pulls in this Outlook include
our continued expectation of Devastator adjusted growth, excluding the indoor impact of approximately 2%,
Continued growth in Europe, greater China, and Emerging Markets regions.
And delays in the anticipated timing of approvals and launches of certain generic products could negatively impact our new product revenues this year.
Lastly, we continue to monitor foreign exchange if current rates were to hold for the remainder of the year, it could result in an additional 1 to 2% Tailwind on total revenues. This could also result in a adjusted ebitda being in the top half of our guidance range as a reminder, any potential foreign exchange Tailwind benefiting total revenues would incorporate certain hedging program costs which could reduce the benefit to adjusted EBA
It is important to note that our guidance does not account for any potential impact related to Industry tariffs.
However, at Scott mentioned, we continue to assess the potential for future impact. But based on available information, we do not anticipate any material impact on our 2025 Financial results.
The following are a few points about anticipated, phasing for the rest of the year.
This reflects phasing of indoor normal product, seasonality and low to mid single-digit growth in Greater China.
Adjusted ebitda and adjusted. EPS are still expected to be higher in the second half.
This incorporates, the timing of spend and Investments, we are making to support our Pipeline and upcoming launches.
Last free cash flow is also expected to be higher in the second half and is expected to benefit from the timing of networking capital and disciplined Inventory management.
As you heard our results for the quarter, reflect strong performance,
We remain encouraged by the underlying fundamentals of our Global business growth and the success of our recent pipeline readouts.
With these positive Trends, we are building strong momentum for the rest of the year.
And with that, I'll hand it back to the operator, to begin the Q&A.
Ladies and gentlemen, at this time, we'll begin the question and answer session.
to ask a question, you may press star and then 1 using a touchtone telephone
to withdraw your questions. You may press star and 2
If you are using a speaker-phone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality.
Once again, that is star and then 1 to join the question queue.
We'll pause momentarily to assemble the roster.
In our first question today, comes from, Matt delatore from Goldman Sachs, please. Go ahead with your question.
Hey guys. Good morning and thanks for the question and congrats on the progress. Maybe just on on Capital allocation in the context of the current split between BuyBacks and BD. You know, how much of a priority is growth at this point. And what level of growth are are you now aiming for as we think about full year, 26 and Beyond? And then in particular what would make you more aggressive on the BD front. Thank you.
Thank you very much.
You know, over a period of time, over the next 3, to 5 years, we expect to both, uh, give back through, uh, dividends, uh, and share BuyBacks and also, and I think very importantly, we also need to build a portfolio, growth assets, use our Capital to to do business development. And what we're really looking for here in terms of Business Development is strategic assets, uh, that are creative and in Market growing assets to build a growth portfolio. So um, you know, we're very focused on doing both delivering Capital right back to shareholders and also finding ways to build um, a growth Pipeline and I will say business development, is just part of that growth pipeline going forward. Uh, again, we're we're focused on strategic accredited in Market assets to, to bring into the portfolio. But we also have, you know, as we look at 26 and Beyond a lot of excitement around the launches that we have, positive data readouts, uh, that we had in 25 to launches, for example, effects or G in Japan windlowe, which is our, uh,
Which is, uh, uh, contraceptive product in the United States fast, acting moxam. You know, a couple of aiare readouts in in, and launches and Presby op and dim light, and also launching. So do the flows and and some key xus markets. So we've got a lot of, uh, launches in 26. But we've got some nice inflection points in terms of data readouts in 26 as well. Uh, that's kind of Japan, Japan for Justin only patch and, you know, really importantly scenarios and so, a lot of girls. So, you know, we feel good about the growth prospects, the base of the business is very solid.
Uh, we've got a number of launches going into 26, and we've got Capital to deploy to build a portfolio growth assets and what, uh, Matt. Uh, what
we'd also add is
we've talked about the base business growth. We continue to see disability generally to generate low, single digits, from a revenue perspective for the face business this year. For example, we're on track to deliver on that 2% operational, growth X indoor. And so the incremental, Investments and opportunities that Scott has mentioning would be additive to that Baseline rate. Absolutely. And we're, we're looking for, uh, you know, not just growth in 1 year, we're looking to put a program together to have sustainable long-term revenue and able to growth over.
And our next question comes from Umar rafit from evercore. Please, go ahead with your questions.
Good morning guys. This is JP in lieu of Omar. Um, congrats on the strong quarter and thanks for taking our questions. Um, so go ahead and go back to tariffs. Um, you mentioned you have a
um, you have a flexibility, uh, for next year. How are you thinking on the proportion of the risk? Uh, India versus EU? It looks like, uh, we're going to have 2 different kind of uh uh, stars for each region.
So uh yeah, thank you for the question uh, Asus. Um so, you know, it's not clear to us uh, at this point in time, whether tariffs will be placed on Pharmaceuticals if they are willing to be placed on generic products at this point, uh there are no tariffs and so we're monitoring the situation. Very very very uh carefully about half our products in the United States.
Nothing more Revenue perspective or manufactured in the United States. We do have some exposure in EU in India. I would say India is about 10% of our Revenue. Uh, significant volume in terms of product that tends to be low margin. OSD type products coming out of India but it's 10%. So um, you know, as the situation evolves as we get more clarity on how tariffs may affect the overall industry, the generic industry Etc. Uh you know we model all kinds of things but until we have Clarity on that it's very difficult to to think of an impact. And again I think both doretta and I are prepared remarks. Uh, mentioned that, you know, know, regardless of tariffs, uh, how it evolves during the course of, uh, of this year. Um, we've put mitigations in place, we do not see any material Financial impact in 25 and we'll know more about 26 and Beyond once we get some specifics
Our next question comes from David amsalem from Piper Sandler, please. Go ahead with your questions.
And David, is it possible that your phone is on mute?
All right. We'll move on to Ash Verma from UBS. Please go ahead with your questions.
Activity in the region, uh, increasingly, uh, how much of that is a focus for you for your BD efforts? And then the the second thing, um, on the Enterprise wide strategic review, um, still waiting to hear a little bit Clarity. In terms of what is the scope of activities that you want to, um, showcase. Uh, and what's the timeline for that? Is there any, uh, potential cost optimization that can be a part of that, uh, exercise or, uh, should be should be not expect that.
Thanks. So let me let me, uh, maybe address that part first and then we'll go into China. The Enterprise strategic review. We're we're well engaged in it. We're active, uh, looking at every part of the business and I think, you know, the reason we're doing this now is I think there's a, it's a good time. We've done you know 4 divisors. The companies, the product of, you know, a merger of 2 different companies and we're, you know, we're evolving our business models and we sort of move up the value chain, get involved in more complex, and Innovative products. And so now is a good time to really take a look at things. Uh, do we have the right people in the right places to be effective? This is sort of about making sure the company is as effective and efficient as possible, delivering the business today, and delivering the business in the future. Um, I believe there will be significant cost savings that come out of it as well, which will benefit the company and, uh, you know, we don't I don't want to get ahead of myself. We're not through that full process yet, uh, but you know, in Q3 we have an expectation. My goal to be able to provide significant granularity relative to that program. Uh, by the time we get to the Q
You free call.
So Ashley, let me address your your China question so in Q2 China uh, with 9% of personal growth and that's really the result of our Diversified, uh, commercial model which is across e-commerce, retail and private hospitals.
And we also benefited in the quarter from the timing of, uh, customer buying patterns, and that's what dora mentioned in her, uh, prepared remarks. Now, uh, for the rest of the year, uh, we expect the growth to moderate more to the low, to our middle digit growth. Um, but what we're seeing is the consistent demand, uh, for our, uh, iconic brands that have very strong, uh, brand equity and notably, uh, the brands that, uh, uh, offer patients. Really the trust that they need. So the brands that are sensitive, uh, to proactive, patient demands. So the Overlook is is positive that for China, uh, for for the rest of the year. Um, and as a reminder, um, you know, about 95% of All Our Brands, went through the vbp process already. So that gives us some certainty on the Outlook, uh, in the region. And just
Couple comments on the China business, for me, I think, you know, overall, the market is progressed, very well, both in the Bayside and the Innovative side in China, I was very, very proud of the team we have there and how? Well, they're executing. I think we see some really good momentum in our China business. Which we're we're very pleased about and relative to your BD comment. Yeah. There's a lot of uh, there's a lot of companies out there. Uh from a sort of Biotech, small farmer perspective. There's lots of discussions going on trying to be very active in that so far. Uh, not only, you know, sort of, uh, products in China for China, but China for the rest of the world. So um, you know, lots of discussions. Lots of interesting things happen in the in the China bio world, for sure.
And our next question comes from David Anselm from Piper Sandler David, please. Go ahead with your questions.
Uh, thanks, and sorry about that. And thanks for accommodating me. Um, so a couple for me. Um, number 1, um, and sorry if I missed this, um, can you just talk about um, contribution from new products and developed markets this year? Um, if you can quantify that, and is that tracking to your stated, um, expectation? Um, then secondly, uh, looking beyond indoor, um, can you just talk about um, inspections uh, at the other facilities? Um, that uh, you've called out um, in the past. I think those are Nashik as well, um, but just wanted, um, any color.
There. Um, to the extent. There's anything new um, to add and then lastly, on meloxicam. Um, can you just talk about the commercial infrastructure? You're going to be putting in place here, is this going to be an office based product a hospital product? Both, I mean there's some promotion intensity here. So, how are you thinking about overall level of investment? Given that you've got a filing coming up for that product. Thank you.
Please, I'm gonna start on the new product.
Uh I don't want to get into makeshift between developed markets, Emerging Markets, we really view it as a a portfolio. Um in terms of the total revenue uh this year and you heard in our commentary, we did assume that new product Revenue would be back half weighted just based on our estimated approval and launch timing of certain um generics. Um and ultimately that will be an impact of any potential delays of timing of approvals. Um such as uh for example, kind of iron sucrose and others could never could negatively impact our new product revenues. But overall, I would just say we've taken all of these switches and pulls into account, with respect to our guidance commentary, um, and our kind of total revenue range and we're going to continue to monitor things as we move through the back.
And I'll, I'll send it over to Karen to talk about the mocks cam, uh commercial strategy. Hi David. So as you know, we are uh, very bullish about um, fast stacking miloxy cam. This is uh, the uh, moderate to severe acute. Pain Market is large. It's a 80 billion dollar opportunity in in the US. Uh, we are in the midst of uh, launch planning and it's progressing. Very nice. Well, currently focusing on doing market research for positioning. We're doing all pricing and for your research. So it's a bit too early for us at the moment, to give you more details on how we going to go about launching these products. Although we have some ideas
But what I can tell you is that, uh, it's going to be a large opportunity for, for theatrics, going forward. And, uh, we are very much looking forward to uh, finding this asset uh before the end of of the year and launching this product potentially next year. Thank you. And yeah, we we see that as a very significant opportunity for us going forward, um, you know, there will be the right time and place to go through full commercial strategy structures. Do we do Partnerships? Do we not exactly how do we approach the market and those sorts of things but, um, you know, we've got some work to do to get ready for that. We just got the data again in May and we've been doing very, very a lot of work, very hard, work head down, figuring out what our strategies are, and they'll be the right time when we can sort of unveil all that to you and in a good way. But uh, again we think this is going to be a very significant part of our portfolio going forward. In terms of the operations,
We are.
Uh, remediated in in our indoor facility, we've got a good line of sight on completing all the remaining items in the next couple of days. We're going to ask the FDA to a meeting for a meeting to discuss. Not only how their remediation has been going, but also talk about timing for reinspection of that facility. Um, we'll have more clarity on the timeline of reinspection and things. Once we you have that meeting which will happen this month. Uh, the request will go in this month for that meeting in terms of nashik um you know
I think it was an encouraging sign that the FDA approved the product, uh, that is manufactured in, in nashik, um, you know, having said that, uh, the FDA classification is still pending, we've completed all the actions, uh, for some some time ago, uh, and again, getting that approval of the product manufactured in Ash, I think is a positive sign there. So we're making a lot of progress on the operations front.
And our next question comes from Jason Gerber from Bank of America. Please go ahead with your question.
Thank you.
It's up for the Eye. Care question, I'm going to ask Philip and Karine to uh, to address that first.
Thank you. Yeah, so let me start and then uh according to to add. So uh, as you know, Mr. 141 offers a different mechanism of action than the approved meiotic products.
uh, including the recently approved 1
Uh and we believe that this will lead to important differences in in safety profile between these assets.
41 based on the mechanism of action and the data, uh, that we generated, uh, in Phase 3.
Now, importantly, you will remember that this asset was designed to reduce the pupil size to know less.
Than uh 2 mm. Um, if you go below 2 millimeters, which is the case with the meiotic assets, you will um that will lead to reduced vision in dim light settings.
So, uh, also, uh, significant difference, uh, between these 2 assets. So, we'll present our data, uh, in the medical meeting very soon in April of 2026, um, and then tcpip, that will be able, uh, to file. Um, by the second half of 2025. I can turn it to Corina. So, to your question about how, uh, this Market is going to evolve, you know, it's a very large addressable Market in the US, we have about 128 million patients, who suffer from presbyopia. And we, uh, really believe that this Market is opening up uh, to to Therapeutics. Uh, we now have 2 approved agents, uh, in in this market, as Philip mentioned, we believe that our asset phentolamine can play a very important role in addressing, the unmet needs in this market, and is very unique, patient population. It's a different mechanism of action. We expect a very different efficacy and
60 profile than the asset that are currently approved. Uh, and you know, we think it's a, it's a great opportunity as we build, uh, and continue to build. I our eye care business. Uh, as you know, um, you know, we we have already an I care division with capabilities in the us and we're looking forward to having, uh, Phantom in contribute, uh, to the revenues of the aare business going forward. And I just make a comment on on aiare business in general. And we've, we've had some significant management changes. We've changed to the footprint and the approach a little bit. I think we have now in place, a world-class team of people who have, uh, developed uh, and, and marketed and sold, uh, uh, Blockbuster products Innovative products that really, uh, understand the marketplace very, very well. And again, some, some real world, world world, world world class town, uh, in that group. Um, we, uh, you know, I think as, as I take a look at it with the world class group, the people that we have in place.
The changes that we've made to positive readouts recently, uh, for again, press bio being dim light. You know, I look for the IBI Care Division to become a significant contributor, a much more significant contributor than it is today to our overall business. So, um, you know, we're putting the efforts in there, and hopefully we'll see a good return soon. And again, I expect more positive contributions from the Eye Care Division as we move forward. And I turn it over to Doretta to answer the gross margin question. Great. Uh, so with respect to gross margins, gross margins came in for...
The porter in line with our expectations, the primary driver of the Step Up versus q1, um, was a couple sold 1. We did see uh, kind of slightly less um,
Mix shift impact from in North specifically as it relates to, some of the uh penalties. And then we also saw some improved product and and uh, segments, uh, that that impacted the the quarter. But generally, it was, it was in line, uh, with our expectations as we look in the second half. However, I I would also say that from a second half perspective. I would say gross margins. We expect to be consistent, uh, from phasing perspective. Uh, as what we saw in the first half.
And ladies and gentlemen, with that, we'll be concluding, today's question and answer session. I'd like to turn the call back over to Scott Smith for closing remarks.
Thank you very much and thank you to everybody on the call 2025 is shaping up to be an important year for beatrich. We are executing with purpose and Precision. Driving our business advancing, a high pro high potential Pipeline and returning meaningful value to shareholders. At the same time, we're planning for long-term success.
I'd like to add my sincere. Thank you to the more than 30,000 beatrich employees around the world for delivering, delivering an exceptional quarter and a challenging global environment. Thank you everybody.
Ladies and gentlemen, that does conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.