ALK-Abello A/S

CSE:ALK B

Earnings Call Transcript 2018-Q3

[Per Plotnikof]

Welcome to this presentation of ALK's third quarter results and the revised full year outlook. Please turn to Slide #2 for the agenda and today's presenters. My name is Per Plotnikof, I'm Head of Investor Relations. And with me today are Carsten Hellmann, our President and CEO; and Søren Jelert; Executive Vice President and Group CFO. During today's presentation, we will take you through the highlights from the third quarter, before we go into details about sales, market trends as well as financials. Then we will provide an update on the 4 business priorities, followed by the slightly revised full year outlook. And we will end the presentation with a customary Q&A session. With these opening remarks, I would like to hand you over to Carsten Hellmann for a summary of ALK's performance in Quarter 3. Slide 3, please.

[Carsten Hellmann, CEO, President & Member of Management Board]

Thanks, Per. This is Carsten Hellmann speaking. And thank you all for joining this call. I'll kick off with a couple of highlights. Financially, we beat targets in Q3, and the implementation of our strategy is well on track. We are very pleased to see the good progress with the global conversation of our tablets and our efforts to engage more patients are gaining traction. Furthermore, we continued to become a more effective organization. So we can say that the 3-year strategy transformation of ALK is well underway, but we need to stay 100% focused with no room for complacency and discipline and execution is key. Q2 revenue was slightly ahead of expectations due to strong sales growth for the tablets and Jext adrenaline, our 2 injectors. With strong momentum particularly in Europe, tablet sales grew by 46% in Q3, up from 29% growth in the first half year. Jext grew by 45%, as the global leader for adrenaline auto-injectors is currently experiencing supply issues, creating a supply shortfall and higher demand for Jext. And in response, we have increased capacity as much as possible. This has confirmed our ambition to expand our adrenaline business into North America too. The global adrenaline market is very attractive and it is significantly bigger than our AIT core market. And we are making progress well in this area, and we hope to tell you more about this soon. Coming back to Q3, combined SCIT and SLIT-drops sales were down 11%, as sales continued to be affected by the knock-on effect on last year's capacity constraints and the portfolio pruning that is essential to future-proof our legacy business. EBITDA was ahead of plan by DKK 24 million, but we still see 2018 as the toughest year financially in our 3-year transformation due to strategic investments. All in all, Q3 was good and warrant a minor update to the full year outlook, which we'll return to later. First, over to Søren for summary of European sales on Slide 4.

[Søren Jelert]

Thank you, Carsten. Revenue in Europe was down by 3% to DKK 498 million. Performance was slightly ahead of plan due to better than expected sales of tablets and Jext. Tablets grew by 45%. Every market reported solid growth, but progress was most pronounced in the region's largest markets, France, the Nordic countries and the Netherlands. Combined, SCIT and SLIT-drops sales were down 16%. The French market continues to normalize with the re-entrance of our biggest competitor, but we remain ahead of plan and retain our market share leadership there. Also, the strong uptake of ACARIZAX had a small cannibalizing impact of SLIT-drops sales in France. In Germany, despite higher tablet sales, overall sales were dragged down by the product rationalizations, a slow recovery on SCIT sales following the last year's supply constraints and the decline in AIT patient initiations following last year's mild pollen season. We are currently exploring initiatives with health insurers to accelerate the shift towards registered products. Separately, a new clinical strategy of our main SCIT product, Alutard SQ, indicates that it may be possible to accelerate this product's up-dosing period. Subject to regulatory approval, these results will improve the product's competitiveness. Finally, we saw strong 47% growth in sales of Jext. In response to a request from U.K. authorities, ALK supplied additional stability data for Jext, enabling extended use of specific batches by up to 4 months beyond expiry. We estimate there are more than 100,000 Jext pens in U.K. circulation. Extending the use of some of these is expected to ease the pressure on AAI demand. Now let's turn to Slide #5. Turning to our 2 other sales regions. Revenue in North America grew by 6% in local currencies to DKK 143 million. SCIT tablets were DKK 15 million. I wouldn't attach too much importance to this figure as it is still small numbers. Sales of SCIT bulk allergen extracts were up by 20%, while sales of diagnostics and other products fell by 21%. This decrease were caused by fluctuations in supply and demand patterns. Moving to international markets. Quarter 3 revenue grew by 4% to DKK 20 million. Growth was largely due to shipments to China, which, together with Japan, who is significantly accelerating the sales of tablets, are the region's 2 largest markets. With these market trends, let's move to Slide 6 and the 9-month results. 9-months revenue was DKK 2.1 billion, a 1% decrease in Danish kroner, but an increase of 1% in local currencies. And growth was slightly ahead of expectations. If you look at the graph to the right, you will see that tablets were the main growth driver and that their growth offset the expected drop in sales in SCIT and SLIT-drops.Gross profit was DKK 1.2 billion and yielded a gross margin of 56%. This reflects increased cost of compliance, efforts to build robustness in product supply as well as a change in the product mix. Medium term, the gross margin will be subdued due to the upgrades and investments in our legacy business. Long term, higher tablet volumes will increase economies of scale, helping us to restore margins together with new efficiency programs. Capacity costs were more or less flat in at DKK 1.2 billion, but costs increased 2% in local currencies. Sales and marketing expenses were up by 7% in local currencies in support of the buildup in the U.S. product launches and other markets as well as development and launch of new -- of the new digital platform and the consumer care division. Conversely, R&D costs were down, while admin expenses were unchanged.EBITDA was better than expected at DKK 126 million, reflecting savings as well as higher sales. And net profit was a loss of DKK 24 million. Compared to last year, we have significantly reduced the cash burn. And free cash flow was an outflow of DKK 354 million versus DKK 686 million last year. This was better than expected, and the improvement was caused by reduced cash outflow from investments as well as lower tax payments. Those were the financials, and I will now hand you over to Carsten for a strategy update on Slide 7.

[Carsten Hellmann, CEO, President & Member of Management Board]

Thank you. We continued to make good progress for the 4 focus areas in the transformational growth strategy and we launched -- that we launched in December 2017. I will take you through some of the headlines now, starting with Slide 8 and North America. In North America, our focus remains on building the prescriber base for ODACTRA and ACARIZAX, getting more scripts per doctor and further extending managed care coverage. We do see increasing traction and remain confident that we'll be able to establish a viable scalable business model for both our tablets and the allergists in North America, but we are now also looking at new types of partnerships to expand the prescriber base. We saw progress on our KPIs in Q3. In the key U.S. market, the number of active prescribers was around 1,100 at the end of Q3. That is 55% of the doctors we initially targeted, well above our original predictions. The number of ODACTRA patients is between 3,500 and 4,000, and we still expect to start more than 5,000 patients on ODACTRA treatment this year. U.S. commercial coverage increased slightly. Around 73% of patients with commercial insurance have access to reimbursement for ODACTRA. In Canada, we now cover 155 of the initially targeted 180 clinics, and these clinics have initiated around 2,000 patients. Sales in Canada are still soft, which is not caused by doctors not prescribing a patient's issues, but changes in the distribution setup needed to secure better long-term performance. And we expect the new product distribution setup to start showing results soon.These numbers, although modest, still show we are moving in the right direction. Establishing the tablets in North America remains a long-term endeavor, but there is an underlying trend towards acceptance among prescribers. For example, the top 100 U.S. prescribers have an average of more than 15 new prescriptions. This is pretty similar to their European counterparts and show the potential once prescribers understand that tablets can help build their business. In just one example, one of the largest allergy clinics in the U.S. has started to promote patients an exciting new option for the treatment of house dust mite allergy, namely ODACTRA. We continue to focus on early adopters to drive additional prescriptions for their patients. And we have recently moved the U.S. launch onto a new phase with the launch of our first-ever direct-to-consumer campaign to mobilize more patients to consult an allergy specialist. In conclusion, the U.S. rollout is progressing, and we continue to work in the coming quarters with confidence that the tablets will gain momentum over time, but we'll need to continue to work on different models to accelerate growth over time, too. For now, we need to do the work and accept the timing of results is, to some extent, uncertain.Now let's move on to Slide #9. Q3 saw clinical and commercial progress for efforts to globalize the SLIT tablets for all relevant ages. It's the second of the 4 strategic pillars. 2018 ACARIZAX sales have more than doubled in the 18 markets the product is available. In France, Europe's largest dust mite allergy market, the product has grown strongly since its introduction in February and leads the way with 13,000 new treatment initiations. These places ACARIZAX in a strong position to become the preferred treatment for prescribers and patients in France. In China, ALK is in dialogue with authorities on fast tracking the local development of ACARIZAX. Patient recruitment for MT-11 is on track. That is the key story into allergic asthma, which is planned to involve around 600 children from Europe and the U.S.A. In recent quarters, we have made substantial progress with the tablets in Europe. For instance, by the end of Q3, either ACARIZAX or GRAZAX was the most frequently initiated AIT treatment for Grass or house dust mite allergy in 11 European markets. Acceptance of tablets is growing across Europe, and we continue to work to grow these innovative medicines that fit so well with patients' daily lives.Moving to Japan. MITICURE and the newly launched CEDARCURE continued to unlock the market also with the pediatric indication driving new patient treatments. Finally, we have submitted a regulatory filing for the tree potent tablet in Europe. Subject to approval, first launches could take place in the second half of 2019. An additional filing will follow in Canada, too. With these highlights, let's move on to Slide 10.The third strategic pillar is to launch products, services and digital innovations to support people with allergy better. Our intent is to create multiple touch points to engage with patients, inform them and mobilize them. This approach is establishing a proprietary permission marketing platform for ALK, supporting our goal of becoming more relevant for many more people with allergy. Furthermore, there's a very big market in selling relevant products and services while doing it. A new -- a few snapshots from Q3. We have launched our consumer web platform, klarify.me in the U.K. The U.K. is an interesting market because it is -- it has one of the highest rates of allergy and asthma, yet AIT products are largely absent. Meanwhile, our German klarify.me consumer platform attracted 100,000 hits in September and sales are growing month by month, albeit from a low starting point. We continue to develop this value proposition for both patients and third-party vendors. And we will launch the platform in additional markets. Another engagement tool is the mobile app, KLARA, which is -- which combines local pollution data and pollen counts, allowing users to know about and plan their allergy management every day. The app has so far had 20,000 downloads in Germany and the U.K., and KLARA recently received the German best app -- best new app award. So, so far, this year, the number of unique users for our German patient information website, allergiecheck.de, is up 30%, with self-service tools attracting many users. For example, the number of online searches for allergy doctors has grown by 200% and the number of searchable doctors in the database has doubled.Finally, our expansion into adjacent product and services continues. We have started selling an easy-to-use breath management system from Bosch for selected markets, which helps doctors to diagnose patients with inflamed airways and closely monitor their conditions. We expect further products soon. Now on to Slide 11, please. The fourth strategic priority is to optimize and reallocate resources, and our efficiency programs continue to deliver results in Q3. In product supply, the result from recent authority inspections of our facilities underlined improvement that had been made on robustness and quality. And the output and inventories from both SCIT and SLIT-drops production have returned to normal. Also, we continue to implement our new site strategy to increase specializations and synergies and the rationalization of the product portfolio progresses as planned. Organizational effectiveness is growing. We are on track, but you won't find us resting on our laurels. We remain committed to further professionalization, efficiencies and improvements. I hope that this update has demonstrated that the execution of the 4 strategic pillars is still off to a good start. I'll now hand you back to Søren and the full year outlook on Slide 12.

[Søren Jelert]

Thank you, Carsten. As we already mentioned, we have adjusted the full year outlook slightly upwards. All in all, we now expect total revenue from existing business to be between DKK 2.85 billion and DKK 2.9 billion versus previous outlook of more than DKK 2.8 billion. Hence, our revenue is now expected to be on par or slightly above last year, if you factor in this year's adverse currency effects of approximately DKK 50 million. Earnings EBITDA are now projected between DKK 50 million and DKK 100 million, up from previous outlook of around DKK 50 million. This improvement is due to higher top line and improved efficiency. Free cash flow is now expected at minus DKK 500 million or better versus the previous outlook of minus DKK 550 million or better. Factors influencing the negative cash flows are obviously still the subdued earnings, following business investments, cost for capacity expansion and production upgrades as well as working capital requirements. Financially, we continue to see 2018 as the toughest year in the 3-year transformation of ALK, but the pressure on the top line and the financial resources this year is less pronounced than anticipated. We remain committed to investing to support the strategic transformation of ALK, and we expect these investments to increasingly affect the financial performance in quarter 4. With these comments, I'll hand you back to Per and Slide 13.

[Per Plotnikof]

Thank you, Søren, and thank you, Carsten. And this concludes our presentation, and we are now ready to open up the Q&A session. Operator, please go ahead.

[Operator]

[Operator Instructions] Our first question comes from the line of Michael Novod of Nordea Markets.

[Michael Novod]

Yes. It's Michael Novod from Nordea in Copenhagen. So I have 3 questions. First question is maybe to Carsten. So I've seen comments in media after the release that despite seeing that it's slightly going to take longer time to establish success in the U.S, you now see that the potential may even be larger. I just have difficulties in seeing with at least the experience with normal -- the product traction that you see a larger long-term potential despite a slower launch. That's one thing. Maybe you can clarify that a bit. And then the second question is to Germany and SCIT. So do you expect going into '19 that you are fully, let's say, up and running on the historical rates for sales of SCIT in Germany? Or is it going to take longer time? And thirdly, on the adrenaline strategy in the U.S. So is this going to be something where you will try to get Jext into that market? We have talked about that for a long time. Or are you more leaning towards a sort of an in-licensing strategy where you get another product you can launch in the U.S. market?

[Carsten Hellmann, CEO, President & Member of Management Board]

This is Carsten. Thank you, Michael. As usual, very spot on questions. About the potential, the potential remains intact and not bigger. And then we still had said that we had billions in kroner potential in the U.S. and we remain confident on that one. What I've been saying in the media is that, not only based on the sales force we have, but also more than 200 KOLs in 20 different sessions we have had where we now can see 50% to 60% of those now start initiating tablets, that the fear we had that we might not at all be able to pay 20 U.S. market, that we do not have any longer. So what I'm saying is that now we can see that we will get there, but it still takes 3 years. We have said it will to actually get there. It's true that the traction is low, but we can also see the -- if you look at it as a normal distribution, it almost looked like a hockey stick. So we have for about 100 doctors, exactly how we want it. Good penetration, deep penetration and a strong sales. And then we have a long tail of things where we need to do better and find ways to do that. But what we can see right now, that the long-term potential we have always talked about in the U.S., that we are pretty sure we would make, one day or another. But I think that within the time frame we have been discussing, it will happen. The other question, about Germany and SCIT, I think the answer is no. We will not in 2019 get up to the previous run rates we had when we're up and running in Germany. I mean, we did not win any popularity contests when we were taking -- pulling off products from the market and then not being able to replace them with the ones we promised, so we got a serious beating with the German doctors there. We are -- we think we have hit the button, and we are actually getting traction and getting back. But we were not already in 2019 be back on historical levels, but we will come back. Remember that tablets are doing very well in Germany as well, so this is a SCIT issue. We have a few ideas and new contents and products we are going to launch in Germany that will help. So it's not only just a linear progression of the old data, but it's not going to be historical levels in 2019. For adrenaline, yes, it's a little bit of a trick question. I can just say to you that we will announce soon what our strategy will be in the U.S. and I think it's going to be very interesting and maybe not as you expect and it is going to involve products.

[Operator]

Our next question comes from the line of Philippa Gardner of Jefferies.

[Philippa Gardner, Equity Analyst]

I've got a couple of questions if I could, please. So firstly, just on some of your wording around the modest growth in the prescriptions per doctor. I was just wondering, I know this is -- this was something you outlined on the last call as being a big focus for you to try and grow. So is this tracking below where you would hope it would be at this moment in time? And then my second question is just on your guidance for the full year. This seems to suggest that there's going to be quite a big uptick in operating expenses in the fourth quarter. And I was just wondering if you could give us some color on where the biggest increase is going to come.

[Carsten Hellmann, CEO, President & Member of Management Board]

Thank you, Philippa. About -- I'll take the first question about the modest growth or the uptake in prescription U.S. and then I will hand over to Søren, our CFO, for the guidance. But if you look at the U.S., no, we are pretty much on plan on the uptake. Now we're starting the sort of seasonality, and we are now launching a D2C campaign, a detour campaign in the U.S., spending an increment 4 million, maybe that relates to your last question, too. In a D2C campaign in the U.S. where we target 25 cities, tried to hit 30,000 allergic people and getting about 3,000 of those to the allergists, to demonstrate to the allergists that we actually help them to grow their businesses. So no, we are -- we are sort of on plan, but it is a modest growth. We've been off season, pretty stable scripts. But as I said before, when you look at the distribution of what goes well and what does not go well, I'm actually putting a lot of emphasis on the fact that it's not a equal distribution of the scripts per doctor. So we're not having like 2 scripts in average per doctor, like 3 or 4, but we actually have exactly what we want in maybe 25% of the doctors and then we have a lot of things to do and find out what we need to do better in the other 75% to get to the same level. So know what works well, we get there. And we see, as I said before, 100 doctors already now who are exactly similar to what we see in the European markets. And you just saw the sales numbers for the European markets. So no, it's actually on plan, but of course, it's modest numbers right now but we have said that all along, we are on a 3-year journey to get there and we will reach the potentials as I see it today without -- the elastic bands is going to be shortened for 6 month or prolonged for 6 month. We don't know that yet, but I can see that we are really dropping down where it works. And on top of that, we can also see that now we start getting the bigger chains like the [ AAA ], like Kaiser Permanente to get some traction. And what that will mean, we don't know yet, but it's something that -- I will not use the word confident, but I will say that it's not something that is different from what we hope for. And for the guidance question and the cost spending, I'll give it to Søren.

[Søren Jelert]

Yes. Thank you. I think it's, of course, well spotted that you will see a gearshift in the fourth quarter compared to the first 3 quarters when it comes to what we will consider an investment in the future more than just spending your money in this case. I think we have all along said that this is a 3-year journey. And we and the management, of course, need to take the needed actions to serve for the growth that we are also promising. And here, 2 things will mainly happen in quarter 4, that we will actually continue to invest in sales and marketing. As you will know and we have communicated before, we have what we consider being a large D2C campaign running in the U.S., which will start to burn costs in quarter 4 with the anticipation of going to 30,000 patients, basically bringing them to the doctors. And that will be running over probably the next 5 months, and that will start burning cost in quarter 4. And then in addition, as we also said, our clinical trials are actually on track, but that also means that when they start to pick up in terms of execution, you will see the cost burn starting. That's also what we will be seeing in R&D in quarter 4, and you should expect that also to be the case for next year as was also previously communicated. So you should look at this as for sure an investment in the future in growth and in even better products when it comes to clinical proof, so that's what we'll have in quarter 4 as dominating cost burn.

[Operator]

Our next question comes from the line of Peter Sehested of Handelsbanken.

[Peter Sehested, Research Analyst]

It's Peter. I have 2. One relates to the costs or the pricing impact embedded in the original 2018 guidance. I presume that we should roll that over into 2019, that was the first. The second, could you just remind us why the AIT has such a low penetration in the U.K. market?

[Carsten Hellmann, CEO, President & Member of Management Board]

This is Carsten. We had a little bit difficulty hearing you on the first question. I understood it was something about whether the cost level for Q4 will roll over to 2019, is that correct?

[Peter Sehested, Research Analyst]

No. It was the pricing impact originally guided for 2018, whether we should anticipate that to be rolled over into 2019.

[Carsten Hellmann, CEO, President & Member of Management Board]

Okay. Predominantly, in the South European countries, right?

[Peter Sehested, Research Analyst]

Exactly.

[Carsten Hellmann, CEO, President & Member of Management Board]

As we see it right now, it hasn't happened. But we are not budgeting for it. I think that's the best way to say it. We need to make sure that just for the beginning of the year, where we can see the transparency into the first couple of quarters, we plan, and then we can -- we don't expect for the last remaining of the year, half year, that we will not have to include those price reductions. The other one, about U.K. Historically, as I remember, there was actually a member of the Parliament way back which had a son or a relative who died from AIT and managed to get it out of the market for a long time. So today, AIT is a not a common treatment in the U.K. and you only have it in some hospitalized settings right now. You don't have it even in the clinics. So for historical reasons, it never gained any traction in the U.K. market, so that's why.

[Operator]

Our next question comes from the line of Christian Reinholdt of Small Cap Danmark.

[Christian Reinholdt, MD, CEO & Director]

I have 2 questions. First of all, the SCIT/SLIT product rationalization, when can we expect the negative impact from this in the figures? Is that from Q1 next year? Or what do we -- what can we expect here?

[Carsten Hellmann, CEO, President & Member of Management Board]

I mean, you have seen it already this year and you will see the same level next year.

[Christian Reinholdt, MD, CEO & Director]

Of reduction?

[Carsten Hellmann, CEO, President & Member of Management Board]

Yes. We -- in total, we want to reduce about 15% of our portfolio, and we have reduced a lot already this year and we will continue this work. But it still means that -- we can confirm that we will still grow 10% next year. So then I guess, you'll do your math.

[Christian Reinholdt, MD, CEO & Director]

And what about the products you are sure that you will be keeping in your portfolio? Are they growing or how are they doing?

[Carsten Hellmann, CEO, President & Member of Management Board]

It's -- it differs, actually, because some of them we'll keep it because you need to have the portfolio ready for the doctors in order to serve the patients. Some of them is a -- because of the margin, and some of them we have to take out because of complexity or regulatory issues and all. So a little bit of a mix. But of course, we have a very strong project management where we do a back-to-back or end-to-end, whatever you call it, from sales all the way up to R&D and production to make sure we make the prudent choices. But regardless to say that we already today see the effects of the efforts we've done this year, as we have had 3 FDA inspections, we have DMA, we have had an inspection from S&M in France. And we have actually been doing very well on all those inspections. So things are really moving in the right direction.

[Christian Reinholdt, MD, CEO & Director]

My last question is about ACARIZAX. Could you give us a figure for how many patients worldwide that are using ACARIZAX today? You have the 13,000 in France already and now Germany has been -- I am not given the figure lately, but it's probably some higher -- something higher than that. How many worldwide...

[Carsten Hellmann, CEO, President & Member of Management Board]

Yes. I consider the number -- Christian, I don't know exactly what it is, but it's -- we are getting close to 100,000.

[Christian Reinholdt, MD, CEO & Director]

Okay. And there's no sign that the growth is leveling off in any of the markets?

[Carsten Hellmann, CEO, President & Member of Management Board]

No. As I said to you, it's now become the leading one. We grew 46% last quarter, and that was not from market expansion that was [ existing markets ].

[Operator]

Our next question comes from the line of Peter Sehested of Handelsbanken.

[Peter Sehested, Research Analyst]

It's Peter. Just had one. I just noted that some time ago, that in France, we're seeing some -- compared to historical benchmark at least, some increased advertising for ACARIZAX, full-page adverts, et cetera. I don't believe we have seen that before. I just wanted to -- when you exactly started that and whether you have seen positive impact from that type of activities in the French market.

[Carsten Hellmann, CEO, President & Member of Management Board]

We just launched ACARIZAX in France, and we build it up. We could just say that the combination between the sales planning, the sales effort and marketing campaign had showed very good results in France. And I think we will end up in 16,000, 17,000 patients by the end of the year in France, which is a very good result for such a launch. We can now also see that if you look at the new initiations in France, ACARIZAX is taking a very, very strong proportion of new initiations within dust mite in totality even those in new products. So whether, Peter, it's because we made the advertisement, and so forth, but needless to say is that we are trying to also become a more patient-oriented company that are really trying to make sure we help the patient to understand what's available out there, brings that to the doctors and so forth. And it looks at least like it helped a lot in France.

[Peter Sehested, Research Analyst]

Okay. And just perhaps just one follow-up question. Should we expect you to comment on the, let's say, potential in [ your other consumer ] activities during 2019, i.e., some kind of guidance with respect to sales potential, margins, et cetera?

[Carsten Hellmann, CEO, President & Member of Management Board]

Yes, but not yet, not yet. It's still early days, and we are trying to make sure we stand on both feet. I think as soon as we can see it becomes material to our guidance and our results, of course, we will be guiding that. This is a little bit like elastic band in -- and you can stretch as much as you want, because we are entering a space which is 20x bigger than the AIT space. But what exactly does that mean? I mean -- it doesn't mean that we'll get all of that. And there will be a lot of different moving parts. However, what we do see is that the combination between selling products and patient engagement is actually relevant. So if you buy a product for dust mite management, whether that's a bed linen or it's relief products, we know your interest in dust mite. With all these new technologies around, we can actually track what you do on the different platforms. And by doing that, we know that you are interested in dust mite. And then we can see if you'd still do that after a month or 2, we know that the things you did were probably not enough. And then we start poking you with different questions like, is your sleep -- how do you sleep at night? Did you know that? And so forth. And then we start inviting them to see a doctor and so forth. So when we do that, you can see it, as I just said, that just to find the doctor function is up 200%. You got 100,000 hits on that platform with the products. We can see the traffic has increased by 30%. You can see we got 15,000, 17,000 new users on the KLARA app just in the launch, which is very good results. So we know we get the traction. Today, the focus is, of course, to make sure we pick the right relevant products and we find out how to sell them where -- so we get to a point where the marketing costs are smaller than the actual gross margin, and we're not there yet.

[Operator]

[Operator Instructions] And there are no further questions at this time. Please go ahead, speakers.

[Per Plotnikof]

Thank you all for your questions. And if you take a look at Slide #14, you will see that we have a couple of presentations lined up for the weeks ahead. Please refer to the slide and our website for additional information. We hope to see you at one of these events. In the meantime, do not hesitate to contact me, Søren or Carsten, if you have additional questions. Thank you. And have a nice weekend. Goodbye.