Pharming Group - Earnings Call - Q1 2025

Transcript

Moderator (participant)

Hello, and welcome to the Pharming First Quarter 2025 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a telephone question, please press star one one on your keypad to join the queue. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand over to Fabrice Chouraqui, who's CEO. Please go ahead.

Fabrice Chouraqui (CEO)

Thank you. Hello, everyone, and welcome to this Q1 2025 call. I'm Fabrice Chouraqui, I'm the CEO of Pharming, and I will be joined on this call today by Stephen Toor, our Chief Commercial Officer; Anurag Relan, our Chief Medical Officer; and Jeroen Wakkerman, our Chief Financial Officer. Next slide. In this call, we'll be making forward-looking statements that are based upon our current insights and plans. As you very well know, this may differ from future results. Next slide. First of all, let me say that I had a great first three months at Pharming.

I mean, the passion and the commitment of all employees to serving rare disease patients is really palpable throughout the company, whether you are at the production facilities, at the headquarter, or with the sales.

This mindset of going this extra mile is clearly part of the DNA of the company, and not just a few words on a culture slide, as I have seen it actually too often. Next slide. Everyone is clearly determined to realize the vision that we have set for the company, which is to make Pharming a leading global rare disease company with a diverse portfolio and presence in large markets that leverages a proven and efficient clinical development, supply chain, and commercial infrastructure. Next slide.

Our results in the first quarter of 2025 are a good illustration of the solid growth foundation that we have built to realize this vision. We have had a strong start of the year, with our total revenues increasing by 42% in the first quarter and a significant improvement of our bottom line, which supported an upgrade of our full-year guidance.

Going into a little more detail, grew 49% to $68.6 million, driven by a continued increase of new patient enrollment and the sustained expansion of our prescriber base, as well as a lower inventory restocking versus the previous quarter. RUCONEST has a unique profile on the on-demand HAE market, which makes it an extremely valuable treatment for moderate to severe patients who experience more frequent and stronger attacks.

This differentiation really explains the strong momentum and the growth prospects that we have for RUCONEST in the long term. When it comes to Joenja, revenue increased by 9%, driven by robust new patient enrollment, offset by the impact of stocking in the last quarter of 2024, and higher but expected gross-to-net adjustment versus a year ago.

The efforts to identify new patients after the initial bolus of launch are really starting to pay off, with six new patients in the U.S. this quarter, the largest quarterly increase since Q2 2024. We expect to see a sustainable acceleration of the number of new patients on Joenja starting in the second half of the year, with three clear growth catalysts to come. First, the reclassification of VUS patients in the U.S. Second, the pediatric label expansion.

Third, the launch in key markets outside the U.S., which started actually with the U.K. just a month ago. In the first quarter of 2025, our operating loss narrowed very significantly year- over-year, and we even generated a profit for the third quarter in a row if we exclude the non-recurring Abliva acquisition-related expenses.

Given our strong growth outlook, I believe that our ability to be disciplined financially will be as important as generating strong top-line growth to unlock significant value creation in the near and long term. As a first step, we've made the decision to cut G&A expenses by 15% or $10 million on an annual basis to optimize capital allocation to grow our business. Next slide. Our pipeline continues to progress well during this quarter. Both the genetic PID and CBIT phase two studies are now initiated and enrolling patients.

These two indications in patients with immune dysregulation who may benefit from a modulation of their PI3K delta signaling pathway have the potential to propel Joenja to a whole new level given the much higher patient prevalence.

The clinical development team also worked very hard to resume the enrollment of the phase two registrational trial for KL1333 in MTD just a few weeks after the completion of the Abliva acquisition. Before I let Anurag tell you more about these $2 billion-plus pipeline opportunities, let me first hand over to Stephen Toor, our Chief Commercial Officer, who will give you a more granular perspective on the strong dynamics of RUCONEST and Joenja. Steve?

Stephen Toor (Chief Commercial Officer)

Thank you, Fabrice. Good morning, everybody. If you could go to the next two slides, the RUCONEST performance. As Fabrice said, we have delivered a very strong performance in Q1. RUCONEST is up 49% versus prior year. This reflects the strong trend that started in early 2023 as we emerged from the disruption caused by the pandemic. Since then, our sales teams have added new prescribers and new patients on a quarterly basis, which has translated to consistent quarter-on-quarter growth of RUCONEST sales.

In addition to the underlying strength of the business, we also saw significantly less inventory build-up, as Fabrice mentioned, especially pharmacies in Q4, so less inventory to wash out in Q1. Sales, therefore, largely reflect the demand created within the quarter.

I'm also pleased to share that our market access team improved the number and speed of patient prior authorizations in Q1, enabling our patients to reorder RUCONEST earlier than in previous years. These two factors combined also strengthen the RUCONEST performance in Q1. The key, though, to the past and future performance is, of course, RUCONEST. It always starts with a product. Next slide, please. In RUCONEST, we have an excellent product serving all patient types, those being type one, type one, and the normal C1 patient population.

All three groups, as it relates to RUCONEST, have one thing in common. They all suffer from moderate to severe debilitating HAE attacks, and they have them frequently. They've also typically failed other targeted acute therapies, such as Icatibant, or are having to redose to resolve their HAE attack.

RUCONEST delivers attack resolution for 97% of patients in a single dose. It is therefore a major factor in patients continuing to choose it to treat their acute attacks. Now, some of you know I've been with the company for almost 9 years, so I've witnessed firsthand the continued growth and also the enduring strength of the RUCONEST business.

I can testify that as well as being a very good product, it's also the result of very deliberate positioning and disciplined messaging to the needs of the more severely affected patients, primarily by our sales team, also supported, though, by the services we provide to ensure patients get covered, they get trained, and are able to benefit from RUCONEST, confident to infuse themselves over the long term. Now, on this slide, you can see an actual patient.

In the photographs, you can see the patient at the start of an attack and then a recovery as it resolves at the four-hour mark and the 24-hour mark. For patients like this, as I said, suffering with a severe course of disease, attacking frequently and having to redose on other therapies, knowing that 97% of patients will get their attack stopped in a single dose and almost all of them will be attack-free for at least three days is critical to their decision to use RUCONEST.

RUCONEST's efficacy, its reliability, allows our patients to better plan and control their lives. The severe course of disease our patients have and our team's execution of excellence is why RUCONEST will continue to have a strong position in the U.S. acute market and remain an important product for us for many years to come.

Next slide, please. Transitioning now to Joenja. As Fabrice said, we increased sales by 9% to $10.5 million in Q1. Importantly, we saw an acceleration in Q1, adding six more patients, ending the quarter with 102 patients on paid therapy in the U.S., where we've now identified over 240. Additionally, we have 187 patients on treatment globally, and we've now identified close to 900 patients worldwide.

As you'll see in subsequent slides, Joenja is still in the very early stages of its life cycle, with many well-identified opportunities to accelerate growth in the near term, including the VUS program rollout, a pediatric label extension, and the launch of Joenja in key markets outside of the U.S., which actually started just this last quarter in the U.K. at a launch meeting in London which I had the privilege to attend.

I can share that physicians and patients there are just as excited as those in the U.S. by the prospect of now accessing Joenja for APDS and the potential it has to transform patients' lives with APDS, just as it has in the US. As with RUCONEST, though, it always starts with a good product. In Joenja, we have the only product indicated to treat APDS, a serious, debilitating, and often fatal disease.

Next slide, please. I think that, as you all know, APDS is a primary immune deficiency caused by pathogenic variants in either of the two genes that encode the PI3K delta enzyme. The result is the immune system does not develop properly, having more immature cells and less functional cells.

This leads to the symptoms APDS patients suffer with, which are often serious, have a negative effect on health, quality of life, and the patient's ability to live what we might consider a normal life. Unfortunately, APDS can and often does also lead to early mortality. Until the development and launch of Joenja, APDS patients had no targeted or indicated medications to treat the underlying cause of their disease.

Importantly, Joenja was specifically designed to correct the underlying immune defects, selectively inhibiting PI3K delta and normalizing that hyperactive pathway, thereby restoring balance to the immune system. In doing so, Joenja has that potential to transform patients lives. Next slide, please. Let's look briefly at a typical patient with APDS on Joenja. In this case, it is a 24-year-old male that we followed up over six years.

On the left-hand side, you can clearly see the severity of the symptoms that this patient endured and the burden and impact it had over a prolonged period of this 24-year-old man's life. After starting Joenja, our patient was able to stop infusions of immune globulin, had no hospitalizations, his blood platelets increased, and critically, the organ damage, in this instance, the lungs, has not worsened.

The clinical impact means this young man has been able to walk and drive without difficulty, graduate high school and university, and has now secured a full-time job. Results like this is what I meant when I stated on the previous slide Joenja's potential to transform the lives of APDS patients.

It's also why myself personally, my team, and in fact, all of Pharming's employees are excited for our global launches for APDS and what the molecule will deliver for patients and Pharming over the long term. Next slide, please. Finally, I want to review those near-term opportunities I mentioned for Joenja in both APDS and the longer term beyond.

Right now, our teams have in their hands the patients we've already found and those remaining patients that bridge the gap from what we have today to the full prevalent populations in major markets around the world. We can also look forward to some milestones that provide important additional opportunity to expand that addressable patient population. If you look at the second block on this slide, the first is our targeted geographic expansion program to key markets. As I mentioned, this has already begun with the U.K. launch.

The teams are preparing for further launches on approval in Germany, France, Italy, Spain, Japan, Canada, and Australia, which means Joenja will soon be available in most of the top 10 pharma markets around the world. The second is the outputs from the VUS resolution program, which Anurag will discuss later. That will deliver another bolus of APDS patients available for treatment this year and beyond.

The third will be the pediatric indication launch in the U.S., which is expected in 2026. We currently have over 60 pediatric patients in our U.S. patient pipeline, and that is growing. They will be transitioning into Joenja as soon as that indication is approved. Those are all significant near-term opportunities. In addition to that, though, as you see in the final two blocks of this slide, leniolisib for APDS is only part of our story.

Trials have also been initiated using leniolisib to treat PIDs with immune dysregulation, including CVID, which, while still a rare disease with a prevalence of 40 patients per million, transitions leniolisib from a small ultra-rare disease molecule to one with blockbuster sales potential, thereby creating a leniolisib franchise delivering significantly greater value for all stakeholders in the coming years. We and our teams have a lot to be excited about.

With all that said, I'll hand over now to our Chief Medical Officer, Anurag Relan, whose teams are critical to driving these programs forward to provide us with an R&D update.

Anurag Relan (CMO)

Thanks, Steve. Let's turn now to those growth drivers you were talking about, beginning with those near-term opportunities that we can see on the next slide. As you heard from Steve, Joenja can have a real impact on patients' lives. One of the problems in diagnosing APDS happens when the result of the genetic test shows what's called a variant of uncertain significance, or a VUS. In fact, we found more than 1,300 patients in the U.S. alone who have received such a result.

This happens because the variant is new, and there isn't enough information about that variant to know if that variant is actually a large variance and screen those variants for PI3K hyperactivity.

The results, which will be published soon, will show that many of these variants actually do lead to hyperactivity of the pathway and can eventually cause these variants to be reclassified as causing APDS. The next step in this process will be for genetic testing labs to review the data from this academic lab and the publication, reclassify these patients, and then inform the doctors of any changes to the previous reports that showed these patients had a VUS.

We expect that together, all of this will lead to the identification of many new APDS patients later this year, as you heard from Stephen. On the next slide, we can see some of the other opportunities that we have in terms of bringing Joenja to more APDS patients in several key markets across the world and to expand the addressable population.

To support geographic expansion, we have a number of regulatory applications underway in several key markets across the world on the left. With the EMA, European Medicines Agency, we have a single outstanding CMC request, and we remain on track to respond to this in January 2026, which could then allow for approval soon afterwards. You heard from Steve. We already have MHRA approval, and we launched the drug there. We also have approval in Australia and an application under review in Canada.

In Japan, we expect to file mid this year. I think one of the other important things you heard from Steve is the pediatric need in APDS. This is a genetic disease where symptoms begin early in childhood, and given the progressive nature, treatment is critical.

To address this, we have a program with two studies that have actually completed enrollment now, and we intend, based on the results of the first study, to be able to file with FDA in the third quarter of this year with an expected six-month review of this efficacy supplement. Once we have the data from the second study, we'll follow a similar path to be able to bring Joenja to even younger patients.

In the next couple of slides, I'll be talking about the two phase two studies we have underway to expand the use potentially of leniolisib even further to additional primary immune deficiencies. You see that here now on this slide where we're looking at using leniolisib for primary immune deficiencies with immune dysregulation. Can you advance to the next slide? There we go.

This group of patients of primary immune deficiencies with immune dysregulation is a group that's similar to APDS with their clinical features, the unmet need, and early mortality. It's also a group that's significantly larger than APDS. The rationale for setting leniolisib here is very clear. The PI3K pathway in lymphocytes plays a clear role in the dysregulation seen in these patients, which drives the lymphoproliferation and the autoimmunity.

It's actually the same approach that we have that we've seen be successful in treating APDS patients where modulating that enzyme can address the immune dysregulation. We also have a positive experience in a handful of patients who've been treated with leniolisib now for more than six months as part of a compassionate use request that we've received from physicians across the world.

Now we have two phase two dose range finding studies underway, one in a genetically defined group of primary immune deficiencies and the other in what's called CVID, or common variable immune deficiency, both with these hallmarks of immune dysregulation. We expect the first results from these studies to be available in mid 2026. On the next slide, you can see the third molecule that we have in our portfolio, which is KL1333 for primary mitochondrial disease.

This is the disease of impaired energy production due to mitochondrial DNA mutations, which cause fatigue and muscle weakness in these patients, which you can see described in the quote from the patient on the right. This is being developed now for primary mitochondrial diseases, which is a group of rare disorders where these patients have these mitochondrial DNA mutations.

There's a large number of these patients already diagnosed in the U.S. and larger countries, and they're usually treated at centers of excellence and part of a large advocacy group. KL1333 addresses the underlying problem by normalizing the NAD+ to NADH ratio, which is abnormal in these patients. We have a registration-enabling study underway with endpoints that have been supported by regulators, including FDA. We've already completed a blinded interim analysis in which both endpoints passed utility.

We've also, as you heard from Fabrice's, restarted recruitment in the second wave of this study and expect readout in 2027, with potential approval later in 2028. Now on the last slide here, you can see our expanded pipeline, which will provide significant growth prospects beyond RUCONEST in HAE and Joenja in APDS.

Across this portfolio, we can use our rare disease expertise and development infrastructure to bring products to patients where there's significant unmet need. I'll turn it over to Jeroen now to review the financial performance.

Jeroen Wakkerman (CFO)

Thank you very much, Anurag, and good afternoon and good morning, everybody. As you've seen in the previous part of the presentation, in the next slide, please, Q1 was a very strong quarter for Pharming. The revenues grew by 42%, driven by RUCONEST growth of 49% and Joenja by 9% versus Q1 last year. The key growth drivers were additional demands for both RUCONEST and Joenja from increased numbers of patients and the sustained expansion of our prescriber base.

The gross profit is up 50%, which is the result of the additional revenues, and a gross margin improvement of 4% to 89%. Operating expenses increased because of the non-recurring Abliva acquisition-related expenses of $7.8 million. Excluding those one-off costs, OpEx would be $70.4 million, which is well below the Q4 2024 OpEx level and in line with our guidance.

Again, adjusting for the Abliva non-recurring cost, the operating profit was $0.8 million. Now, the net loss was $14.9 million, and that increased loss was primarily due to the non-recurring Abliva acquisition-related expenses, most of which were non-tax deductible. The results were also impacted by foreign exchange exposure and increased tax cost. The cash and marketable securities decreased since the end of 2024 by $60.5 million to $108.9 million.

That was primarily driven by the purchase of the Abliva shares, totaling $66.1 million. We had a positive operating cash flow in the quarter for the third quarter in a row, even with the non-recurring Abliva cost included. On the next slide, we see the financial impact of the Abliva acquisition. We completed the acquisition of Abliva via a public cash offer to the shareholders to acquire all outstanding shares for approximately $66.1 million in March 2025.

You see the immediate financial consequences on this slide. As mentioned before, the non-recurring acquisition-related expenses were $7.8 million, and that is the bridge between the GAAP operating loss and the adjusted non-GAAP operating profit on this overview. The acquisition was accounted for as a business combination with substantially all of the value of the acquisition concentrated in one single asset, KL1333.

The acquisition price is allocated on our balance sheet to the fair value of the acquired identifiable assets and liabilities, and the excess is recorded as goodwill, and you see the numbers on the slide. Moving on to the next slide, on the financial guidance, on the back of the strong Q1 results and the outlook on the remainder of the year, we raised the 2025 total revenue guidance to between $325 million and $340 million, up from the prior guidance between $315 million and $335 million.

This new guidance implies a growth between 9% and 14%. We expect operating expenses to be flat versus last year prior to the impact of Abliva, and we expect $30 million in Abliva related operating expenses, and that includes research and development costs and non-recurring transaction and integration expenses. Available cash and future cash flows are expected to cover the current pipeline investments and pre-launch costs, and that has not changed since the last guidance. With that, I would like to hand back to Fabrice to close the presentation.

Fabrice Chouraqui (CEO)

Thank you, Jeroen. As you've heard, I mean, we are off to a strong start of the year, which is fueled by the continued strong growth of RUCONEST and an acceleration of new patients on Joenja, the largest increase since Q2 2024. As a consequence, we are raising our full-year guidance, and we are also setting the foundation for strong financial discipline, with, as a first step, the decision to decrease annual G&A spend by $10 million to optimize capital allocation and drive sustainable growth.

We also continue to invest in our pipeline with the objectives to generate two blockbuster assets. The potential new indication for PIDs with immune dysregulation is an opportunity to significantly expand Joenja's addressable patient population beyond APDS. KL1333 in mitochondrial diseases is another asset with a billion-dollar-plus revenue potential.

As you can see, we are building a solid platform for sustainable growth and value creation with a series of clear catalysts in the short and near term. I personally believe that today, more than ever, our goal to develop a leading rare disease company is really enriched. Let me finish this call by thanking sincerely Jeroen Wakkerman, our Chief Financial Officer, for his contribution to the growth of Pharming over the past four years. With this, I'll open the line for questions.

Operator (participant)

Thank you. As a reminder to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Jones from Oppenheimer. Your line is open. Please go ahead.

Jeff Jones (Senior Analyst)

Good afternoon, gentlemen. Thank you for taking the question, and congrats on a great quarter. Jeroen, one quick clarification for you on the financials. Can you clarify on the flat OpEx for 2025 pre-Abliva while reducing G&A by $10 million? Should we be then thinking about the $10 million adjusting into, say, R&D, or how should we think about that?

Jeroen Wakkerman (CFO)

Yeah. So as I said, actually, this is really an adjustment that we're making on G&A, so general administrative expenses, to really optimize the capital allocation to drive the growth of our business further. Clearly, the goal is not to touch R&D, not to touch our commercial expenses, which clearly are the engine of the short and long-term growth.

Jeff Jones (Senior Analyst)

Got it. Appreciate that. One thing that is obviously a topic of a lot of discussion right now is the potential for tariffs with the U.S. Given your European manufacturing and most of your sales in the U.S., can you comment on how you're thinking about this at this point and opportunities for mitigation?

Fabrice Chouraqui (CEO)

Obviously, I mean, we do not have the details on the size and on the scope of those potential import tariffs, so it is very difficult to comment without the specifics. What I can say is that we have been working to evaluate a range of scenarios to see really how we can mitigate the risk and the impact of potential tariffs. This could include, I mean, adjustment in our supply chain, in our manufacturing, adjustment in our custom price. I think it is too soon, actually, to go into more details, but our goal is to be proactive, so we have a set of options if this actually becomes a reality.

Jeff Jones (Senior Analyst)

Appreciate that. I'll jump back into the queue.

Operator (participant)

Thank you. Our next question comes from the line of Joe Pantginis from H.C. Wainwright. Please go ahead. Your line is open.

Joe Pantginis (Managing Director and Senior Healthcare Analyst)

Hey, guys. Good morning and good afternoon. Very nice to see the continued growth in the assets and looking forward to the expansion of the pipeline. Two-part question, if you do not mind. First, I wanted to get a sense, and this is one of the obvious questions, with regard to product growth, potential impact on tariffs right now and on your supply chain. As part of that, you saw a nice RUCONEST growth in the first quarter. Just curious how first-quarter insurance and Medicare resets might have impacted that. The second question is maybe for Stephen. As you are looking to continue to drive new doctor signing-ons for RUCONEST, what are some of the key education or do they need to wait to see more factors before they actually sign on for RUCONEST? Thanks, guys.

Fabrice Chouraqui (CEO)

Steve, would you like to comment, actually, on the Medicare reset and the growth?

Stephen Toor (Chief Commercial Officer)

Absolutely. Thank you, Fabrice. Morning, Joe, thank you for the two questions. Just on Medicare, clearly, as you're aware, the IRA and out-of-pocket expense impact bottomed out this year, which is good for patients. I would say that it certainly did not hurt us, but it was not a major factor in our growth, Joe. The growth, as I said, just came from the underlying strength of the brand and the trend, but also the focus that we have on those severely affected patients. Yeah, it had some impact, but it was not major for us and certainly not for RUCONEST.

In terms of what new doctors like to see, I would say in those centers of excellence or those locations where physicians have a bigger patient base, then we're already very well positioned for patients that are attacking frequently and for whom other medications just aren't working or they're having to re-dose a lot. In some of the other practices where we see growth in prescribers, it's often where they only have one or two patients. It is really the point at which they get reviewed. It is not the positioning or the profile of the product.

It's more the opportunity for that physician to actually use, which I think is one of the factors where, aside from the execution stuff I mentioned, you see that consistent growth pre-pandemic, and then you see it return again when the office is reopened and we're able to get back out there and remind physicians of exactly where RUCONEST sits within the market. I think does that answer the question for you, Joe?

Joe Pantginis (Managing Director and Senior Healthcare Analyst)

Yeah, it certainly does, Steve.

Okay.

Operator (participant)

Thank you. We will take our next question. Our next question comes from the line of Alistair Campbell from RBC. Please go ahead. Your line is open.

Alistair Campbell (Equity Analyst)

Thanks very much, everyone. Thanks for taking my questions today. Just a couple, please. First of all, on Joenja, so a few things happening in Q1, but maybe if you could just help me understand, as we think about price evolution from 2024 into 2025, what do you think the true underlying net price evolution will be in the U.S.? Secondly, on the VUS opportunity, maybe you could sort of talk through a bit more detail about the process of getting those patients transferred onto paid therapy and how quick you think that can come through, or is that going to be a bit of a slow build?

Maybe just touch on that. And then finally, for Jeroen, good luck in the future, Jeroen. Maybe one last question before we head off.

Given the dynamics on tax, obviously loss-making Q1, but a tax expense in Q1, can you help us understand what we should be expecting for the full year? Thank you.

Fabrice Chouraqui (CEO)

Thank you, Alistair, for these questions. I'll let first Jeroen answer the tax question, and then Steve can provide actually a color on your two questions on Joenja.

Jeroen Wakkerman (CFO)

Yeah, thanks, Alistair, for the question. In terms of the tax line in Q1, it was really affected by three key things. One was the Abliva-related costs. They were non-tax deductible. Then we had some share-based payment costs that are also non-deductible, so that increases, obviously, the effective tax rate. We had a release of a deferred tax asset from the past. Now, those topics are all one-offs, apart from share-based compensation that will increase a little bit, but most of it is one-off. The high tax cost that we had in Q1 is a one-off, and we don't expect that to continue in the remainder of the year.

Alistair Campbell (Equity Analyst)

Thank you.

Stephen Toor (Chief Commercial Officer)

Thank you, Jeroen. Yeah, Alistair, so just in terms of you asked about net pricing or evolution, we expect roughly 75%-76% of our pricing action to flow through to the net line this year. In terms of approval evolution, I think, as you've seen, both within the U.S. but also globally in key markets, we've continued to build the funnel. Now, we've seen an acceleration, as both Fabrice and I mentioned earlier in the call, in patients coming onto paid therapy in Q1, which was really nice to see.

That reflects everything that we've put in place in the support services and the reimbursement services, etc., etc., to convert patients as quickly as possible. The good news is that the vast majority of patients are being converted relatively quickly once they're enrolled and with very little market access barriers being put in place.

One would imagine the severity of the disease, the lack of treatment options, and the fact this is the only indicated product are big factors there. As I said in previous calls, it's not linear. You have patients; these are very complicated patients with all kinds of comorbidities. We also, as I mentioned, have a lot of pediatric patients who simply don't qualify right now. It is not linear. There has been consistency, though, and Q1 was great to see, and we expect to see more and more patients converting through the year. I'm very confident in that. Does that help, Alistair?

Alistair Campbell (Equity Analyst)

Yeah, certainly it does. Maybe, Steve, can I quickly come back? You're talking about 75%-76% flow-through to net this year. I mean, how would that broadly compare to what you saw in 2024?

Stephen Toor (Chief Commercial Officer)

Obviously, growths and this are quite complicated, and they are affected by different things. I think it's probably slightly better in the book of business lens itself this year in terms of utilization of government versus commercial patients. I think without having the direct comparison for it, it's probably slightly better than last year.

Okay, great. Thank you.

Operator (participant)

Thank you. As a reminder, if you'd like to ask a question, please press star one and one on your telephone and wait for your name to be announced. Our next question comes from the line of Simon Scholes from First Berlin. Please go ahead.

Simon Scholes (Equity Research Analyst)

Yes, good afternoon. Thanks for taking my question. I've just got one. Just on the growth, or sorry, on the G&A cost reduction, I'm given that revenues are going to be presumably going to be continuing to grow quite strongly. Reducing G&A costs by $10 million is not going to be that easy. I was just wondering what elements of G&A you expect to be able to reduce, which elements you're targeting in particular.

Fabrice Chouraqui (CEO)

Thank you, Simon, for your question. I mean, at this stage, I cannot comment actually on the detail of the plan, and as soon as I can, I'll share more. It is indeed actually an ambitious plan. I believe it is something that we hope to do. I mean, our ability, as I said, to ensure that we get the best return on every euro, every dollar we invest is absolutely essential to unlock sync and value creation. We have a great growth outlook, and it's both about top line and bottom line if we want to optimize the value creation. We're doing that exercise. We're finalizing that exercise, and when I can share more, I'll share more. This is a target that we've set, $10 million on an annual basis.

Simon Scholes (Equity Research Analyst)

Okay. Thanks very much.

Operator (participant)

Alistair, if you have any further questions, I'd like to hand back to the speakers now. Thank you.

Fabrice Chouraqui (CEO)

Listen, with this, I think we're going to close our call. Thank you so much for your interest in the company. Thank you for your questions. We look forward to updating you on our plans, and probably I'll see many of you in person through one-on-one meeting or at investor conference in the coming months. Thank you very much.

Operator (participant)

Thank you. That does conclude today's conference. Thank you for participating. You may now disconnect. Speakers, please stand by.