Thoughts Ahead of 1H26

Research evidence excerpt

Thoughts Ahead of 1H26

table: Vacaville continues to operate in line with

expectations; the planned shutdowns relate to previously announced upgrade and capacity

expansion projects. While customer decision-making remains prolonged, management

remains confident in contract signings this year, which is consistent with broader industry

commentary. As evidence, LONN has expanded a strategic partnership with a leading US

biopharma company, adding two commercial biologics programs (plus options for two more)

totalling multi-billion CHF revenue potential. As the agreement covers all US commercial-

scale biologics sites, it likely includes Vacaville. This, coupled with the decision to host the

CMD (14/10) at the facility, provides a further signal of management's confidence in the site's

ongoing transition and operational trajectory.

Specialized Modalities returning to growth: Following a softer prior year, SM has returned to

a structural growth profile, supported in particular by microbial manufacturing. The division

also benefited from the resolution of prior challenges in cell and gene therapy, as well as a

favourable batch phasing shifting from 2H24 into 1H25. Despite some 1H-weighting, mgmt.

indicated an overall improvement versus last year. Recent green shoots in biotech funding may

be supporting this recovery.

MT Shift to EPS as we Strip out CHI, PT to CHF798: With this note, we remove the CHI

James Vane-Tempest * | Equity Analystbusiness from our model, recognising the income from associates, estimate the incoming

44 (0) 20 7029 8275 | jvane-tempest@jefferies.com

cash flow and hence value contribution from the new holding. We also adjust for the CHF500m

share buyback. Christopher Richardson, ACA * | Equity

Analyst

+44 (0)20 7029 8675 | chris.richardson@jefferies.com