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Earnings Transcript for SOBI.ST - Q1 Fiscal Year 2024

Operator: Ladies and gentlemen, welcome to the Q1 Results 2024 Conference Call and Live Webcast. I am Alice, the Chorus Call operator. I would like to remind you that all participants will be in a listen-only mode. And the conference is being recorded. The presentation will be followed by a Q&A session. The conference must not be recorded for publication or broadcast. At this time, it’s my pleasure to hand over to Guido Oelkers, CEO. Please go ahead, sir.
Guido Oelkers: Yeah. Thank you so much and welcome everybody. And with this having said, let’s go straight to the first slide. It’s really a pleasure to welcome you today to our Q1 report. And today and forward-looking statement as the usual. Today I’m joined by Henrik Stenqvist, our Chief Financial Officer and Lydia Abad-Franch, our Head of R&D and CMO. And during the Q&A session we will have also Armin Reininger, our Senior Scientific Advisor. Please go to the next slide. I mean, you have seen the results this morning. I mean, results was excellent from our perspective as plus 20% versus previous year. I think this weighs even more when you consider that we had to make up for SEK 880 million roughly of sales that we lost with the Synagis. So we’re quite happy with the results in the US list. But due to this erosion of Synagis and it was not made up, obviously fully by the Beyfortus revenues, we had also a lower EBITA margin. We will talk about this, but 37% still represents a 12% growth versus previous year. So when you think about our strategic portfolio, the strategic portfolio grew at 177%. This is our launch medicines and our new royalties that we received from Beyfortus and for Altuviiio. This is quite significant and this is making up for 140% of our growth despite the fact that we had a pretty good year – pretty good quarter with our hemophilia franchise as well. So and when you see the slide and all these growth rates here, I mean it’s very substantial for Doptelet, Gamifant and it’s nice to see materiality with Aspaveli and Empaveli this quarter. We will talk about Vonjo a little bit, because I’m sure this is on everybody’s mind as well, where we had more of a stable comparison versus previous quarter and there’s more to say to this. And with regard to key milestones that we achieved, I think it’s very nice to see that we’ve got fast-track designation for SEL-212 and we say increases our confidence around the product that we have positive Phase 3 data for Doptelet and we had a positive CHMP opinion for first-line treatment of Aspaveli and Empaveli which is also helpful to be more competitive in near future competitive entries. Outlook remains unchanged, simply because it’s early in the year and we have to make up also for instance for one or the other topic and for most here that we will have more growth in sales in Q2. Let’s move to the next slide. So when you basically look at the areas of business growth, as you can see now, the Hematology being the growth leader with 46%, Hemophilia sales very positive – positively influenced by some of the international business where we want some tenders, but also still strong growth in the more established markets. And this even makes us quite confident that we retain competitiveness in Hemophilia, but overall Hematology, the growth leader, Immunology impacted by the Synagis development and Specialty Care in line with what we expected, because this business is something that we manage for cash and earnings to support the growth in our core areas. When you look at the regions, Europe growing very strongly with 15% based on the strategic growth portfolio, but also supported by the growth in Hemophilia and the North American business impacted by the erosion of Synagis. We are not adding here, but the royalties in the North American number that showing it below. So if you [technical difficulty] Ying and the Yang, then this businesses would have done still very well. International being our growth leader and becoming material. So our strategy to diversify in countries beyond North America and Europe is starting to pay dividend. Next slide. So this is, we spend a bit of time here to break out the strategic portfolio which is really however is complement products plus the products that we have recently launched or find this early-stage of commercialization. And as you can see, these are pretty significant growth rates and I think we talked about it, and if you exclude the [full-time] [ph] business of Doptelet, 59% at this point of time makes us very confident that we have also more growth for this product. Let’s go to the next slide. And here it’s broken up. So what you can see is really that the product portfolio that is relatively early is growing in significance and is now was for this quarter, 35%. And if anything, that part will grow while the foundation portfolio is also healthily growing. And this foundational portfolio does not include obviously Synagis which is in the legacy portfolio and but the health status of the company is strengthened over time, we’re paying quite a bit of attention to this, that we have a healthy portfolio of tomorrow’s drug demand and today’s cash contributors. Next slide. This shows you that we are far not yet done, but there’s still a lot of growth. I think once we have submitted the SEL-212, we will talk a little bit more about the opportunity in chronic refractory gout. If you see the material, Aspaveli, we are obviously waiting for the pathology indications approval. Sorry, for the Phase 3 data first. And, we believe that this is a material opportunity and then obviously Efanesoctocog alfa and [inaudible] but we are also with Doptelet outside of the four regions, a lot of growth still to come. And we just launched in Japan, that is making our great strides. There’s still a lot of opportunity ahead of us in Aspaveli. And Beyfortus is also an important growth driver. And just when you think about the RSV franchise as such, I mean, when you look at this, because you have to look at it really not as a calendar year, but as the season than the last – for the season which basically started in October last year through March, it’s a SEK 3 billion roughly region. I understand that you have difficulties to hear me. Is this correct? Can you hear me better now? Yeah. And when you think about the season, so it’s a SEK 3 billion season started a bit late. So not a season as we are used to, but by no means, let’s say, reason for us to be less confident about RSV. Yeah so that maybe we move to the next slide. And, here you can see the Hematology franchise, how it’s growing as an example of Doptelet I think we talked about it. Next slide. Aspaveli/Empaveli, I’m quite happy with the acceleration of growth that we have seen in Q1. And we are now launching in more countries, Japan and stream into becoming sizable and more countries to come. We announced our joint venture in Korea and you would expect quite a bit from there. We have Latin America emerging. So there’s still a lot of new markets for us. And then obviously the Nephrology indication. So we stay quite positive about this franchise despite the fact that it will get more crowded. Next slide. And Vonjo launch. Yeah so here I think one needs to add a couple of points. When you look at it, it has been not nearly perfectly flat from Q3 to Q1 this year. And I think it’s fair to say it took us some time to restructure the team and bring these two organizations together, understand what needed to be done in terms of messaging and strategy. And basically – and we were impacted as we outlined in our report by the part D, meaning also unpaid patients at the crossover from last year to this year. And so it took us some time, what we have seen, and this is, I think the best yardstick and this is that we have A, we have got very positive feedback from market research where physicians believe in the utility of the product. We have obviously very strong data, Lydia will show you some of them later. And so there’s a strong preference share for Vonjo, but it needs some time until we make sure that this messaging is getting understood. We have seen some positive signals during the second half of the quarter. And what we see is, this is what we announced because we wanted to give you a fair appraisal where we are and where we are not. And this is a 29% growth of March versus the average of January and February. And so we are confident about this product, it is not growing at the pace we want at this point of time, I mean, needless to say, but the feedback that we get now and the indicators make us believe that we have – that we are on the right path. And that’s what we said also in our report. Next slide. Yeah, strong demand in Hemophilia. I think it is a reason for to change our perspective on the franchise. We think this is a stable growing business and obviously we get a positive – we got a product uplift for the reasons that I mentioned. This is an important franchise and we can’t wait to add Efanesoctocog alfa to this franchise. Next slide. This is the RSV season. And as you can see it’s this – when you look at this on a seasonal basis, which is not so obvious when you just look at the Q1 data. Yeah, the season was not the best season as we reported last year, started a bit late. And Beyfortus obviously being a formidable product. And there is an asymmetry between the value of Beyfortus patients obviously and Synagis. Therefore it’s a little bit difficult to predict this at times. But we stay very positive about this franchise overall and think that when you look at it even on a calendar year basis, that there’s a positive outlook and clearly there’s a positive outlook once the new market dynamics have been established. And we believe in the future of Beyfortus. And don’t forget that over time, our royalty percentage is also increasing. So, we should get a dual benefit from the increase of adoption, but also from the increase of our participation in the earnings stream. Next slide. Gamifant strategy is working out. We’re very happy with the Q1, which is in line with previous quarters and we – but overall it’s obviously a massive change versus the Q1 that we had last year and we believe in the future of this product. Secondary HLH for the submission coming, new data coming for Gamifant. And hence we are quite bullish about this product even though it’s sometimes quite difficult to predict given the small number of patients and so relatively high value per patient. And Kineret, very gratifying to see this now. You can see evolution for the product and making good strides. And after we had the washout of the COVID business, the product is now following a more normal pathway. Next slide. I think now it’s time to hand over to Henrik, who will update you on the financials.
Henrik Stenqvist: Thank you, Guido and hello, everyone. So if we go to next slide, please. And the key financials for the first quarter in 2024. So as we heard, Q1 was a very strong growth quarter with a solid business performance. Revenue growth saw 20% at CER and an adjusted EBITA of 37%. If we look at the bars to the left, we see the consistent trend in Hematology, reflecting the 46% growth in Q1 through strong double-digit growth for both nocturnal products, Doptelet, Aspaveli and the addition of Vonjo. And the last revenue from the discontinued manufacturing of ReFacto. In Immunology, which was down 11% versus Q1 ‘23, we saw Gamifant deliver 100% growth over Q1 last year, representing the fourth consecutive quarter with sales in excess of SEK 400 million. So the decline in Immunology is explained by the new situation in RSV with the launch of Beyfortus and an earlier peak of the RSV season. Synagis declined by 63% and this was only partly compensated by royalty revenues from Beyfortus in the quarter. But as the new dynamics settle in this market, we have very positive view on the franchise. Even if seasonal patterns of Beyfortus royalties could differ from those we have had for Synagis. And as you saw in the Q1 report, in order to adapt to a lower demand of Synagis in the quarter, we took the unfortunate, but necessary decision to reduce the Synagis commercial organization by approximately 70%. So over to the table on the right, revenues reached almost SEK 6.3 billion. And this was the 20% at constant currency. The lower adjusted gross margin in the quarter of 76% versus 80% in Q1 ‘23 was from the impact of lower RSV sales in the same period last year, including some inventory adjustments as well as other country and product mix effects. The adjusted EBITA margin reached 37% below last year or 40% of course impacted by the lower gross margin that I just mentioned. Focusing now on the operating expenses in the quarter, we saw a growth of 17% at CER versus the same period in ‘23. SG&A, excluding non-recurring costs increased by 13%, mainly related to Vonjo, which was not there in Q1 ‘23, but also accelerated activities for launch products. R&D expenses, excluding non-recurring costs, increased by 24% at CER, mainly also due to the addition of Vonjo, but also the filing activities for SEL-212. The non-recurring costs or items affecting comparability amounted to SEK 155 million in the quarter. This resulted from cost related to the integration of CTI of SEK 42 million, as well as the restructuring of the Synagis commercial organization, which I just mentioned, amounting to SEK 85 million. Moving forward, we don’t expect any material additional non-recurring costs from the acquisition of CTI, except for the adjustment to cogs related to the fair value of the acquired inventory. And for details on these non-recurring items in the quarter, please see Page 3 in the Q1 report. The operating cash flow in the quarter was SEK 2.3 billion, 14% higher than the same quarter last year, reflecting an improved working capital. And as a result, the net debt at the end of the quarter was SEK 18 billion, a reduction from SEK 19 billion at the end of Q4, corresponding to a net debt to EBITA ratio of about 2.3 and reflecting our consistent cash flow generation. If you go to next slide, please. At a look at the financial outlook for the full year. As usual for revenue growth at constant exchange rates and adjusted EBITA margin. So we confirm the guidance for the full year, meaning that, revenue is anticipated to grow by a high single-digit percentage at CER and the adjusted EBITA margin is anticipated at the mid-30s percentage of revenue. We expect the main drivers of growth in ‘24 to be the same as we discussed in connection with giving this guidance the first time at the time of the Q4 report, and those were the uptake of Vonjo, including of course the full year impact, the launch products, Doptelet, Aspaveli and Gamifant and the royalties for Beyfortus. In reflecting over the high single-digit full year revenue forecast versus the 20% growth that we’ve seen in Q1. We should remember that we are early in the year and that there are a few factors that can be expected to be different for the rest of the of 2024 compared to Q1. First, Hemophilia product sales in the quarter we had sales of close to SEK 2 billion, growth of about 15% at CER. This was driven in part by phasing of international orders and due to the phasing of these orders although we expect to maintain very strong position, we do not expect the same growth rates for the rest of the year. Second, as we heard there was a SEK 0.6 billion sales of Doptelet to China in Q2 ‘23 and as you probably know, we don’t expect any further sales of Doptelet to China at this stage. We still expect material growth in our ex-China Doptelet sales for the rest of the year, but the growth rates will be impacted by the China sales from Q2 ‘23. And third, Gamifant saw a significant step up in sales in Q2 ‘23 to more than SEK 400 million which we have now maintained the last four quarters. And with the comps starting in Q2, it will be more difficult to show significant growth in percentage terms compared to the situation in Q1. And finally, we had the final ReFacto manufacturing revenue of SEK 375 million in Q1 and there will be no more sales of ReFacto moving forward. So with the outlook covered, I will now hand over to Lydia.
Lydia Abad-Franch: Thank you, Henrik and hello, everyone. So let’s start with the pipeline milestone from the next slide, please. We continued our steady pipeline progress in the first quarter. In Hematology, Doptelet is advancing in the Pediatric ITP indication and I will come to this in a minute. Aspaveli received positive CHMP opinion for the first-line treatment in PNH, and last week, the Committee of Orphan Medicinal Products confirmed the orphan drug designation. We terminated the Cold Agglutinin Disease program for Aspaveli as communicated in February. Our Immunology portfolio continues to advance this quarter in US and China. SEL-212 received fast-track designation from FDA and we are on track to submit the BLA filing for chronic refractory gout. Kineret received approval for the Still’s disease by the Chinese National Medical Product Administration and this indication is the largest of the three that we have applied in China. Next slide, please. Looking closer at the Doptelet Pediatric ITP Phase 3 study, this trial enrolled a total of 75 children between 1 and 17 years of age. It made its primary endpoint of durable treatment response in 28% of patients in the treatment arm compared to 0% for placebo, and all the secondary endpoints were met as shown on the slide. Overall, very compelling data and full results will be presented at an upcoming medical international conference. We plan to submit the pediatric ITP indication in the second half of this year to both FDA and EMA. Next slide, please. Let’s look now into the excitement developments around paratenic, which rapidly emerges as a backbone of myelofibrosis treatment with potential benefit also in other indications. Our strong belief in pacritinib is guided by a clear scientific rationale and existing unmet medical needs in MS. Cytopenias are a common feature of progressing myelofibrosis, with anemia being a common and challenging complication, often as an anticipating downside of current therapies. The prognosis is poor, with low survival rates for both severe thrombocytopenic and severe anemia populations. The medical community has shown a strong interest in the potential of pacritinib. The National Comprehensive Cancer Network, NCCN has set forth guidelines that endorse pacritinib as a first-line treatment option not only for MS patients with severe thrombocytopenia, but also as a potential option for high-risk patients regardless of platelet count. In addition, they now include pacritinib as a potential treatment option in patients with myelofibrosis associated anemia. Pacritinib is increasingly thin as a differentiated agent in MS due to its unique mechanism of action as a JAK2/IRAK1 and ACVR1 inhibitor targeting multiple disease pathways. Additionally, it offers benefit – anemia benefits likely related to AVCR1 inhibition. We’re also getting an important stream of requests for exploring further uses of pacritinib in other indications beyond MS. Next slide, please. So we have convincing evidence to support the clinical value of pacritinib in chronic myelofibrosis. Pacritinib was more effective in cytopenic patients than best available therapy in reducing splenomegaly and symptoms. It is generally well tolerated even in patients with severe cytopenia. It can be administered at full dose regardless of platelet counts, and we see an anemia benefit. Next slide, please. So our strategy for MS is designed to differentiate pacritinib based on its mechanism of action and to strengthen the therapeutic rationale. We are broadening the evidence based on a number of approaches. We are compiling preclinical data that will further enhance knowledge on pacritinib’s mode of action and we continue to strengthen the clinical evidence for pacritinib in MS. Of particular interest for investigators is, pacritinib efficacy for combination therapies. An example is pacritinib as a potential add-on to selinexor monotherapy in JAK inhibitor naive participants which Sobi supports. Besides pacritinib, this study also includes ruxo and momelotinib as potential add-on JAK inhibitors. Further studies explore its impact on disease progression, particularly in accelerated phase myelofibrosis and its role in improving cytopenias and bone marrow fibrosis. As I say, there is a high interest in the community and the studies you see on the right-hand side of the slide only reflects those that are already happening. Next slide, please. Our vision for pacritinib extends beyond myelofibrosis. We’re actively supporting a range of studies both as investigators sponsored trials and in partnerships to explore its use in a range of other hematological conditions. In Malignant Hematology, there are studies underway in myelodysplastic syndrome, CMML, Waldenstorm’s Macroglobulinemia and T-Cell Lymphoma. Other hematoinflammatory diseases with potential use include recently published preclinical data in Castleman’s Disease and new clinical trials in Castleman’s as well as Chronic Graft versus Host Disease. As with myelofibrosis, we are in a number of discussions with investigators to support further studies in other hematoinflammatory conditions. Next slide, please. Our news outlook remains strong. The CHMP is meeting these days to adopt an opinion on Efanesoctocog alfa. So we anticipate sharing news very soon. As mentioned earlier, we plan to submit SEL-212 in chronic refractory gout in the US. Now with the backing of the fast-track designation. And we plan to submit Gamifant in secondary HLH for Macrophage Activation Syndrome in Still’s disease in the second half of the year. Doptelet new pediatric ITP data will be used for filing in the pediatric indication in the US and Europe. And lastly we continue our geographic expansion with anticipated Chinese decision for Doptelet in ITP and a submission in Japan. And with that, I would like to hand back to Guido.
Guido Oelkers: Yeah. Thank you, Lydia. And maybe before we go into Q&A, a quick summary of what was presented. I think what we want you to remember from this presentation for sure is, 20% top line, 177% growth for the strategic portfolio, 12% earnings growth and clearly what we want you to remember is that we are very confident or increased confidence around SEL-212 based on fast-track designation. And then there are obviously quite a few other, let’s say, factors but when you think about it, it’s always difficult to anticipate what the future holds. At this stage, we have a conservative approach. We have a couple of headwinds. We may also have some upsides, but this is a good business and we want to keep growing it as fast as we can. But at this early stage, there was no reason to change the outlook. Maybe with this, we open the floor for question-and-answers.
Operator: We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Viktor Sundberg with Nordea. Please go ahead.
Viktor Sundberg: Yes, hi, Viktor Sundberg from Nordea. I have a couple of questions, if I may. See I have a question on guidance. So guidance kept here despite a strong start. Any headwinds we should think about when we look at the full year that keeps you from increasing guidance, even if it’s early in the year? And maybe related that also I guess people who are not that impressed with the report today points to that Hemophilia was a strong driver, but ReFacto manufacturing facing was a big part of that strength and conditions as sustainable growth. So any guide on what the kind of underlying growth is in Hemophilia in order to help us model this better? Thanks.
Guido Oelkers: Yeah, basically with regard to the guidance in headwinds, I mean, we will not have a full-time business for Doptelet in Q2. And that’s to the tune of SEK 600 million. And then other than this, there are other factors as Henrik pointed out on comparability will be more difficult to continue growing at the current growth rate. Gamifant simply because the base is getting larger than, there will be other factors, but at this stage, it’s pretty early and we obviously hope that wonder it will become a driver. I think there will be a couple of factors plus and minus. I don’t think that we see now any major change to our portfolio as such, but we want to make sure that we don’t get ahead of ourselves at this point of time. So there are – as Henrik pointed it out, there are small things that that makes it a little bit more difficult. But we hope obviously also that this early-stage portfolio is obviously making greater strides. I mean, it will not surprise you despite the fact that we will not have any full-time business for Doptelet, we still want to grow this at a material scale on a total basis as we have done last year, where we consolidated the first half. So with regard to Hemophilia, I mean that’s really where we left it. You have seen that Elocta and Alprolix has grown roughly around 15% versus previous year. And this was positively impacted by some of the international business in the phasing of some of these tenders. But there is a strong, still strong underlying growth which is driven by patient expansion. And I think that will stay with us and then there will be some erosion due to price as we move forward. But we don’t expect anything that we need to report here. So there are no significant shifts as we had in the past. So we just think that this is, at this stage, is more of stable a to single-digit growth business for us. And so in line with previous discussions here. So that’s really how where we pack it. So maybe we move then to the next question. Thank you, Viktor. Thanks for your interest.
Operator: The next question comes from the line of Henrietta Boeg, Deutsche Bank. Please go ahead.
Henrietta Boeg: Thank you. Yeah, two questions for me, please. The first on Hemophilia. So what proportion of Q1 growth was phasing? And what is the pricing outlook and how are you concerned about the potential competitive pressure from Novo’s [inaudible]? And secondly, given comments for acceleration through Q1, is it still realistic that Vonjo will hit about SEK 2 billion this year? Or should we expect slower recovery in growth over the coming quarters? Thank you.
Guido Oelkers: Yeah let’s start with Hemophilia. I mean, we unfortunately will not provide guidance not on the percentage of the different components because it’s a bit difficult. But, I think if you take my earlier guidance into consideration, then I think you probably get a grasp direction of travel in this area. We obviously take every competitor very seriously. But you may also understand that we are super excited about the Efanesoctocog alfa launch, if nothing else, we are quite reconfirmed our conviction by the recent announcement, of course, from Sanofi demonstrating that this compound is in high demand. But, we just had two of our members here of the senior executive team members at WFH and, there’s a lot of anticipation for Efanesoctocog alfa so whilst we respect, obviously, Novo is a company that is a little bit larger than us. I think we just need to acknowledge this. But in Hemophilia, we don’t think that we can be outscaled or mustered by anybody. So we have come up with a very strong product and we think that Efanesoctocog alfa will make its pathway and we think that the Novo compound will primarily compete with the other non-factor product. And then we will see and obviously they will have to show their Phase 3 results first and then we’ll see – we’ll think about this newly. With regard to Vonjo, we don’t give product guidance now for the year, but what you can expect is that, we obviously are confident about this product. That means that we will substantially want to grow this in the coming quarters and that our confidence has grown about the product. And, yeah, I mean, we have to acknowledge that sometimes this growth doesn’t come in line with our extrapolation on a spreadsheet, took a while until Aspaveli was material. And now with Vonjo, it will – but we are confident that we made the right acquisition and shareholders will find – will get a good return on this product. So we will, but we were not giving you a guidance or steer yet on the sales of Vonjo. Maybe we go to the next – sorry so obviously that would be interesting, but we don’t guide on our product, so maybe we can go to the next question.
Operator: The next question comes from the line of Alistair Campbell, RBC. Please go ahead.
Alistair Campbell: Thanks very much. I’ve got a couple of questions, please. Just on Vonjo, you referenced some market research you’ve recently done. Maybe if I just ask a bit more on that. Did you also ask in that piece of research physicians use on anemia and how the product stacks up on that basis? And maybe did you also ask how they’d look at the product versus Ojjaara and any feedback and sort of competitive dynamic you’re sensing between the two products there? And then if I could just turn to business development intentions, just a sense of what you’re thinking right now. Are you more focused on fully integrating CTI and making Vonjo a success? Or do you have room to think about sort of adding more to the business and doing more BD going forward from here? Thank you.
Guido Oelkers: Yeah, excuse me, the first part of your question was difficult to understand. I think it could have been a connection or maybe on our end, but could you repeat that first question? I mean, it was Ajara and then BD potential. But what was the first question with regard to the market research potential?
Alistair Campbell: Yeah, just really trying to understand obviously you’ve been doing some market research looking at Vonjo. Just to get a sense, if you got sort of, if there’s more from that research you can discuss in terms of how physicians view the product, referencing patients with anemia or perhaps how they view Vonjo versus Ojjaara, if you got that level of information?
Guido Oelkers: We actually did. I mean, as you would do. I mean, we did research not go only against Ojjaara and obviously for Vonjo, but also understanding currently perceptions on Jakafi, which is still serving the majority of patients. And I mean, basically what we pointed this one out. I mean, we had some topics, I think in the clarity of our messaging. And this took us a while and we have now sorted this, where we clearly wanted to position in line with physicians’ recommendations Vonjo for a little bit more than roughly two-thirds of the patients. That means, for patients who are cytopenic below 100,000, irregardless of whether they are anemic or not, in line with the guidelines from NCCN. And this is – this messaging has been clarified in the past. The product is so good and it has so many elements, effects on different receptors. That message was probably not clear enough articulated. And also we obviously have to clarify that the cytopenia is a severe issue and it’s not going to get any easier over time. And we basically see a clear opportunity for the product, particular for patients that are currently underdosed who can really benefit from the product profile. And Ojjaara probably had an advantage in this way, that they had a simpler message and clear. And I had also a few years of probably solid premarketing that we have to catch up. So, we did some introspection and we understand now what it takes, but sometimes these things take some time. We believe in the product profile of Vonjo and that we can get the preference share in this segment that I described here based on this research, but we need to live up to it. We work very consistently and to be honest, it takes just some time until we can cover the universe at scale. And in the meantime, obviously our competitors will not wait for us. I mean, that’s the nature of the thing, and we just have to acknowledge this. But we have a team that is extremely vigilant. And therefore, we are confident that we can solve this. With regard to BD, I mean, we want to demonstrate, obviously that it was the right decision to acquire CTI. In the meantime, because it’s part and parcel of our business model, we are, as we speak exploring different opportunities, Henrik has pointed out, leverage has come down that gives us opportunities. We also see opportunities for funding via different means. And we think that the company, during the second half of this year, may be ready for some activities on this external growth activities, whether it’s a license or M&A. But that’s part and parcel of our model. And once we are confident, and it’s really gratifying to see, I think, not only Vonjo the growth products, but also the endpoints that we will have this year, that the portfolio is rejuvenating further and increasing with regard to this profile. But we believe that we will constantly improve this profile and rejuvenate it. Thank you. Maybe we –
Alistair Campbell: Thanks. Thank you –
Guido Oelkers: Go to the next question.
Operator: The next question comes from the line of Christopher Uhde, SEB. Please go ahead.
Christopher Uhde: Yeah, thanks. And you mentioned that it takes time for Vonjo, but I guess how much time is the most salient question? So maybe I think it would be really helpful if you could give more detail around and clarity around new patient starts or other launch metrics for Vonjo beyond just what happened in a single month, given there can be volatility? And maybe what have you seen so far in Q2, for example? And then for my second question, so a 70% cut in the Synagis commercial organization cost. Is it correct that that relative difference includes cuts for all of selling, medical and marketing costs or just the selling? And roughly how much were the total costs for the force in 2023? Thank you.
Guido Oelkers: Yeah, thank you so much, Christopher. You make it – it was a pretty loaded question. You will understand that I can’t give you any guidance on Q2 as much as I wanted, let’s say. But let’s put it this way. When we looked at the different indicators, and obviously they got bit skewed because of this changeover from the Part D part in Q4 to this year. So we didn’t have the strongest start in January as a consequence of this. But when we looked at the indicators, we looked at the feedback – direct feedback we get from physicians. And we obviously quite receptive to any sort of feedback. We have quite a number of increased our activity level. Also materially, as of Feb, we think that there is a correlation. Now, when is it going to happen? I mean, you have seen the report where we just said that we are more confident about Q2. I think that I leave this up to you. I mean, more we can probably cannot say, let’s say the first, we have to earn it and we are not making our forward-looking statement by quarter. But that we are – that we didn’t buy this product to be a flatliner. I think it’s also fair to say. So we want to grow it and we should experience growth. We know what consensus is and we see this as a yardstick to live up to this. But whether we achieve this, we’ll see. But we want to grow this product and indicators tell us that it is on the cards. With regard to the Synagis restructuring, this was referring to the headcount and maybe, Hendrik, you want to add some additional flavor?
Henrik Stenqvist: Yeah. So it’s sales and marketing headcount and it means that we are now, have commercial force of about 40 people working with Synagis going forward.
Guido Oelkers: Yeah. And we have given you guidance on how many people we used to have. So that gives you a little bit of a fence and 70% gives you another direction, I hope. Yeah. Thank you, Christopher. Maybe we move to the next question. Thank you.
Operator: The next question comes from the line of Harry Gillis with Berenberg. Please go ahead.
Harry Gillis: Thank you for taking the questions. So just one quickly on SG&A, obviously you mentioned that Q4 last year came in sort of if perhaps higher than typical, and that’s come down in Q1. I just wanted to think about how you expect SG&A spend to phase throughout the year and whether we should expect a similar pattern to last year, particularly as we consider the annualization of the CTI acquisition? And then on top of that, just thinking about the Altuviiio launch, I just wanted to ask how we should think about the initial conversion of patients or the initial sales in Altuviiio? And whether those early sales are more likely to come from a Elocta patients and then a greater proportion from other factor products or do you expect a high proportion of competitive products right from the beginning? Thank you.
Guido Oelkers: Yeah, I mean, maybe I’ll take the Altuviiio part and then Henrik can talk about how to think about SG&A. So with regard to Altuviiio, I mean, obviously, we have now the product available in some Middle Eastern countries and we get very positive feedback. We have feedback obviously from these trials that were ongoing and the patient experience and physicians who have worked with this. We have seen obviously the data point from Sanofi and obviously, which gives us another data point of robustness. Now, we will launch, let’s say, mid of year, which and we told you that in summer, European summer, it’s not normally the easiest way to make sure that physicians and patients are meeting and that switches can, but we will launch anyway. And there’s a lot of anticipation of this. And the launch in Europe will be in Germany and then the other countries, another country, UK, following in the later part of the year. I think for us, beyond now sales, because basically some of these physicians see their patients once a year, and then it’s a question, when do they see them during the course of this year to have this opportunity for changing therapy and obviously there will be some patients who will ask for it. So it’s a little bit difficult to predict this. But what we want to see is that, by the end of the year, we want to have at least a significant number of patients that are on the product. We are not yet guiding on what this number should look like, but this is probably more a marker for our success than being impressed now by significant sales numbers when we are aware of the Sanofi number. I mean, it will take a while until we have all Europe reimbursed, given just a sequence of reimbursement process. So the real first to launch here for us is probably more next year, even though some of the countries will also come during the year on stream. So it’s also not a complete full year, but you should see them also materiality in terms of sales. But we know that there’s some significant interest. And when you think about the sources of growth, historically, Sanofi gave some indication on what they were able to get from the [inaudible] and let’s say what they were switching from Elocta and from other sources. So we believe that clearly the vast majority will come from other factors. There will be a part which is unavoidable coming from Elocta whether we induce it or not is besides the point simply, because it’s a more – it’s a better product with a better product profile. And then there will be also, we believe that non-factor patients switching to Efanesoctocog alfa who will want to benefit from this. And I think historically Sanofi guided around 10% of their patients. I’m not sure whether it’s ten or more. We think that this is a very competitive product. Let’s say that is with our team, that we should be able to take material share again. Yeah, from non-factor as well. I think this is really what we can say, maybe. Henrik, you want to give some guidance on SG&A?
Henrik Stenqvist: Yeah, on the phasing of SG&A, of course, ‘24 will be different to ‘23 when we had the ramp up of SG&A, because of the acquisition of CTI and the efforts on Vonjo. Now, this year, it’s expected to be more of an even play with probably slightly lower spending Q3, which is, relatively speaking, a low activity quarter or lower activity quarter.
Guido Oelkers: So maybe being focused enough time, we have ten minutes, two more questions, and then what I would propose is, because I recognize that we may not be able to answer all questions that you otherwise contact [inaudible] or anybody else from our IR team, and we make sure that we can answer them with your questions within the next couple of days anyway. Next question, please.
Operator: The next question comes from Mattias Haggblom, Handelsbanken. Please go ahead.
Mattias Haggblom: Good afternoon. Hi. Thanks so much for taking my questions. I have two, please. So first, I’m sorry, I’m going to go for another try on Vonjo. So your guidance that we will see quarter-on-quarter growth in Q2 is not very aggressive after being down in Q4, now flat in Q1. But also taking into account what you said about March performance versus the average of January, February. So I’m going to try to push you again. Using the March number you provided albeit I guess roughly $12 million in revenues for March, using that as a run rate for Q2, I get the $36 million with no added monthly growth. And Bloomberg consensus seems to carry $41 million for the quarter. So help us set the right expectations for Vonjo. Anything more you can add? And then I have a follow-up.
Guido Oelkers: Yeah, no, I mean, this is, I know it would be interesting, but yes, I would love to help you out here, but first of all, we have to deliver it in the first place, and let’s say, but we – yeah, we would be disappointed if we don’t – we cannot grow the product. Very disappointed. But that is. But we have to earn it. I mean, I would – I was also hoping that we could have shown some growth earlier, but I just have to acknowledge that it takes some time and that we have to come – overcome a little bit of an inertia in a fragmented target audience, but that is receptive. And once you spend enough time with key physicians to the differentiated profile of our product, and we have strong data, let’s say, but it just takes some time. So, apologies that I cannot give you the percentage let’s say for the next quarter.
Mattias Haggblom: That’s clear. And then I had a follow-up. When do you think it’s time to help investors understand the potential of your factor VIII franchise in your region, perhaps with a peak sales target in dollar terms, like you did back in 2020 for select of your products at the Capital Markets Day? When Sanofi provided an implied peak sales potential, Altuviiio consensus expectations moved accordingly, not least when they have now executed quarter-by-quarter. So I know you prefer to talk about patient share in the profit segment and what share gains the product may provide, but that doesn’t seem to translate into high consensus projections, at least not yet. So any thoughts on this would be helpful.
Guido Oelkers: Yeah, I mean, what we – I mean, we obviously need to launch in the first place, but we always said, this is a leader, leaders in the segment, and we think a leader is between 30% and we historically said up to 40%. So it’s not going to take at all. We gave guidance that Elocta in the space is around low-20s right now. And so that gives you a dimensional shift. And that basically means that over time obviously the share of Elocta will reduce. And basically and then you look at this as a consolidated share. So the share in this category will be significantly larger. Then the question is, obviously, what is the size of the opportunity in this prophylactic market right now if you basically look at the market, you can deduct this by what we are proposing. And let’s say that basically now the question is, how is the price evolution of this market? That’s very difficult, to be honest, to predict, but that in our books, Efanesoctocog alfa is a much larger product than what we have today with Elocta. I think it has to be assumed. And that’s basically – that will not be a surprise. But how much larger that we have not projected yet, and we have not done this for the Group, but, and we’re not doing this now for IFA. So I’m a little – we probably, this is as much guidance as we can give at this stage. But we are keen to launch. Yeah, but and that means, we believe that this is a growth franchise. Thank you, Mattias. Next question.
Operator: The next question comes from line of Yifeng Liu, HSBC. Please go ahead.
Yifeng Liu: Hi. Hi. Thanks for taking my question. I’ve got two very quick ones. The first one, could you briefly talk about SEL-212 timeline for regulatory submission and also whether you have intention to file elsewhere? And second question is on these Vonjo’s additional studies you presented in the call. I just wonder any R&D costs in the guidance of 2024, are they implies guidance or sorry, in another word, are they baked in your guidance already? Sorry. Thanks.
Guido Oelkers: Yeah. I do the easy part of your questions, and Lydia will do the tough part. And let’s say, the easy part is, yes, the studies are in our guidance. We are not projecting anything that we have not budgeted for, and as a consequence, it’s included. And basically SEL-212 is a global product, and we see opportunities for this product outside of North America or outside of the US and launch it to – how large the opportunity then will be, for instance, in Europe, will depend on our discussions with the different pricing authorities. But we believe that there’s a high unmet medical need also outside of the US. Lydia, maybe you want to talk about the filing?
Lydia Abad-Franch: Yes, and I think that we have communicated in previous reports that our plan is to submit in the first half of this year. And now with the fast-track designation, I think that that’s going to support our submission timeline. So, still everything is on target for that. And yeah.
Guido Oelkers: Very good.
Yifeng Liu: Thanks so much. Yeah.
Guido Oelkers: Thank you. Yeah, I mean, maybe we have – yeah, I think we probably covered it for now. So apologies that not everybody was able to maybe ask a question, so please refer to our IR and then we will address them swiftly. Thank you for your interest. So we don’t – as you can see, 20% doesn’t feel so bad as a start into the year, so makes us look forward to the following quarters. Thank you so much for your interest. Wish you a great day.
Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.