ALK-Abello A/S

CSE:ALK B

Earnings Call Transcript 2021-Q1

[Per Plotnikof]

Hello, everyone, and welcome to today's presentation of ALK's Q1 results, together with the updated outlook for the full year. Could you please turn to Slide #2, where I will introduce you today's presenters and our agenda. My name is Per Plotnikof, and I'm Head of Investor Relations at ALK. And with me today are ALK's CEO, Carsten Hellmann; and our CFO, Søren Jelert. And today, we will look at our Q1 performance, sales trends across our region and portfolio and the Q1 financial. And then we will give you an update on our 4 strategic priorities before talking you through our improved full year outlook. And finally, we will end today's call with the usual Q&A session. So if you could please turn to Slide #3. And then I'll hand over to Carsten and we'll get started.

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

Thanks, Per, and thank you, everyone, for joining this call. First, let me give you some highlights. During Q1, we continued to execute on our long-term strategy and despite the ongoing effects of COVID and the very strong Q1 last year. Q1 in 2021, saw a 9% growth -- sales growth and represented the best-ever quarter for ALK, with revenues exceeding DKK 1 billion for the first time. The growth was primarily fueled by tablet sales with better-than-expected growth of 32% on strong performance in Europe and Japan. The 9% growth is especially impressive when you consider that we estimate planned product discontinuations in Europe impact this figure by approximately 3 percentage points. There was revenue growth in all regions as revenue in Europe grew by 5%, in North America by 16% and International markets by 29%. COVID continues to somewhat distort the market, especially in Europe, but patients' ability and willingness to visit clinics remained constrained in many places. On the other hand, in the U.S., we are now seeing a positive effect on sales as the [ country ] begins to reopen. Meanwhile, manufacturing and supplier remains resilient and product inventories are still robust. We are also keeping a close eye on the effects of COVID in our clinical development program, which I'll come back to a little later. Overall, operating profit EBITDA increased by 14% despite planned increase expenses in R&D. Finally, because of the stronger tablet outlook, we have also adjusted our financial outlook for the full year upwards. With that quick look at the highlights, I'll hand over to Søren Jelert, who will take a look at the Q1 financials in more detail. So please now turn to Slide 4.

[Søren Jelert]

Thanks, Carsten. As said, Q1 was a very good quarter for ALK, and we saw overall growth in all regions. As you can see, Europe performed well in first quarter. Revenue increased by 5%, with discontinuations reducing growth by 4 percentage points as we continue to see the effects of our phasing out of [ all the ] SCIT and SLIT-drops products in favor of documented registered products. This is likely going to be the last quarter where we see the effect being so pronounced. Sales were particularly strong in the Nordics and Central Europe, driven by tablets, which were up by 34% in Europe overall. Once again, we saw ITULAZAX perform well, but we also see a clear uplift of GRAZAX sales in markets where ITULAZAX has been launched. As in previous quarters, Germany delivered double-digit growth, and we saw the shift towards registered evidence-based AIT treatment accelerate. National reimbursement guidelines recommending that AIT patients should be initiated onto registered products only, have now been implemented in the majority of the local regions and we see this translating into more new patients being initiated onto registered products. Needless to say, these changes to the market structure represent a significant commercial opportunity for us. Please remember that last year, ALK became the first company in Germany to exclusively market registered AIT products for the main allergens. And we are currently seeing a very strong double-digit tablet growth rates in Germany. In Southern Europe, COVID continued to constrain the market, as growth in tablet sales was offset by lower legacy sales. In North America, revenue grew -- was up 16% as we saw the impact of COVID ease towards the end of the quarter, especially in the U.S. where sales of legacy products increased sharply as doctors focused on bringing patients back into their clinics and hospitals. In contrast, tablet sales continue to be challenged by the higher financial incentives for prescribing legacy products. Tablet sales were only up by 12%, driven by an increasing acceptance in Canada, especially on the back of the late 2020 ITULAZAX launch, which is progressing well. Sales in International markets were up 29%. This reflected strong tablet sales growth in Japan, especially for MITICURE, the house dust mite tablet, and we ended up bringing forward some tablet shipments to Torii into first quarter, which has originally been planned for second quarter. Sales in Jext in this region also grew due to some markets requiring adrenaline auto-injectors to be on hand when administering COVID vaccines. Now let's take a closer look at the product categories on Slide 5. As I mentioned earlier, the tablet portfolio performed very strong, with 32% growth in first quarter, underlying the fact that tablets continue to be the undisputed growth engine of ALK. As mentioned in previous quarters, sales benefited from various factors, including resilience to the impact of COVID versus alternative treatment options, the ongoing market shift in favor of evidence-based medicines and the continued strong performance of ITULAZAX in Europe, which also created a halo effect for GRAZAX. Combined, SCIT/SLIT drop sales were down 10%. Roughly half of this was due to product discontinuations in Europe in 2020. However, SCIT treatments were also disproportionately affected by COVID since we still see that some patients are either unable or unwilling to visit the clinic. Sales of other products increased by 15% in first quarter, as COVID eased its grip on our sales of life science products and PRE-PEN in the U.S. In first quarter and in contrast to previous quarters, Jext sales were down in Europe. In the U.K., in particular, we saw an impact from lower pen replacement rates by patients, which is slightly linked to the COVID lockdowns, resulting in reduced exposure to live threatening allergens. However, we expect this to be a temporary effect and we have not seen any significant changes in the market shares. This brings us to the Slide 6 and to the P&L. I'll go through this slide briefly because we've already touched on the themes. But Q1 revenue was up 9% in local currencies. The lower U.S. dollar, in particular, had a negative currency impact, so that reported growth was 7%. The gross margin improved by 1 percentage points to 62%, reflecting increased sales of tablets in Europe, somewhat reduced by increased shipments to Torii in Japan that holds lower margins. EBITDA increased 14% to DKK 226 million, corresponding to an EBITDA margin of 22%. Capacity costs increased 7% in local currency. And as planned, R&D expenses was up 20% in support of increasing activities relating to clinical trials. Sales and marketing increased 2% on more normalized activity levels. However, we also continue to see operational leverage of ALK commercial activities. Finally, free cash flow improved to DKK 86 million, mainly driven by increased earnings. All in all, a solid start of the year. Now let's move on to a brief strategy status on Slide 7 and over to Carsten again.

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

Thank you very much, Søren, for the update. I will give you some update on the strategy now. And as you may recall, in February, we updated our strategy to support and pursued a sustained high-growth and to continuously improve our profitability towards 2025 but also sustain the growth beyond '25 with some [ actualization ] opportunities. Tablets will continue to be the primary drivers of growth, and we will support their success by becoming relevant to ever more allergy sufferers. The 4 priorities are still: to succeed in North America; to complete and commercialize the tablet portfolio; to really improve our digital consumer engagement and new horizons; and to optimize for excellence. By executing on these, we seek to extend our leadership in respiratory allergy and accelerate our long-term growth by entering food allergy and expanding our presence in anaphylaxis. The goal is an ALK capable of delivering sustainable, high revenue growth of 10% or more annually and earnings growth towards an EBIT margin of 25% in '25, or as we call it 25% in '25.So let's take a look at our progress towards all of this with the first 2 priority areas on Slide 8. Let's look first at North America. As Søren mentioned earlier, we're now seeing an easing of COVID restrictions in the U.S. but the higher financial incentives for allergists to prescribe legacy products continue to be a challenge. We saw this in Q1 sales figures of legacy products versus tablets, in particular, because allergists are now catching up for their lost income following the COVID lockdowns of their clinics during the last year. Nevertheless, we do also see an increasing prescription depth among prescribers which we're supporting with initiatives to overcome barriers to prescription fulfillment and a new telehealth partnership where patients get direct access to an allergy health professional. In the U.S., we were already using our klarify platform to direct potential AIT patients toward doctors who we know are willing to offer them the full range of treatment options, including our tablets.But this latest initiative, in partnership with U.S. telehealth provider [ Clear, ] leverages our virtual platform further by actually connecting potential patients directly with an allergy healthcare professional, and again, who we know will consider tablets as treatment option. The partnership focuses on the New York area initially, but has the potential to be scaled up if the results are impressive. You can see more on getcleared.com. The addition of pediatric and adolescent indications around the world is an important lever for commercialization of the tablets. And just after Q1 ended, we received approval from the FDA for pediatric use of RAGWITEK following similar approvals in Europe and Canada. Looking at our next priority, to complete and commercialize the tablets. For the first time in Q1, we saw that the tablet portfolio is now responsible for more than 50% of ALK's allergy immunotherapy sales. The rollout out of ITULAZAX has been an important factor here, not only because of its own growing sales, but also because it's having a halo effect on the rest of the tablet portfolio in the market where it has been launched. And Germany is a great example of this. As I mentioned earlier, previous COVID related delays make this a big year for our clinical development on the tablets and I'm pleased to report that patient recruitment for the key European and North American pediatric trial for [ GRAZAX ] for allergic rhinitis remains on track. It remains on track. Also on track are the safety trial targeting approval of ODACTRA for adolescents in the U.S. and the Phase III pediatric allergic rhinitis trial for the tree tablet in Europe and Canada. Meanwhile, recruitment for [ GRAZAX ] registration trial in China is expected to resume later this year when we also access any impact of COVID on the European and North American pediatric asthma trial on ACARIZAX and ODACTRA. Finally, also in Q1, we secured agreement in France for the reimbursement of ACARIZAX for adolescent patients. Let's now move on to our 2 other priority areas on Slide 9. Focus area #3 is consumer engagement and new horizons. Here, our patient engagement activities nearly doubled the number of consumers mobilized via digital channels versus Q1 last year to around 50,000, with 3,000 of these in the U.S. During Q2, we will also expand these activities further to include Canada. Under new horizons, we continue to target a U.S. registration submission of a next-generation adrenaline solution no later than '24. While early development of the peanut allergy product continued according to plan with a formulation feasibility study in partnership with Catalent and we expect to see the results of this later this year. Our fourth and final priority is optimized for excellence. Among other things, this heading includes all the work we are doing to both rationalize our portfolio, simplify our manufacturing processes and to upgrade the regulatory documentation for core legacy products. As a part of this work during Q1, we submitted 482 regulatory changes, covering 86 products to 30 different regulatory authorities. So a lot of work was done in Q1.I'd like to conclude my comments by -- comments on optimization by adding that the work we have done in this area over recent years has been a major factor in our ability to maintain uninterrupted supply and keep our inventory strong during the challenges of COVID, of course, along with these incredible flexibility and dedication of our fantastic employees. With that, I'll hand back to Søren, who will talk you through our updated 2021 outlook on Slide 10.

[Søren Jelert]

Thanks, Carsten. Our full year outlook has improved based on the solid earnings in the first quarter and the strong tablet sales. Improved full year outlook is as follows: we now expect revenue growth of 9% to 12%. This is driven by an increase in tablets outlook from 20% to now 25% increase, which continue also to be key for our overall long-term growth. We now expect muted sales growth across our legacy portfolio as a consequence of the continuing uncertainty around COVID. EBITDA is now projected between DKK 375 million and DKK 425 million from previously DKK 325 million to DKK 425 million, reflecting a strong first quarter and an improved tablet outlook. We still expect a significant increase in R&D and a gradual normalization of sales and marketing costs. Free cash flow also improved and is now expected to be around minus DKK 200 million, reflecting higher earnings, while CapEx is still around DKK 300 million adjusting for the one-off working capital payments of up to DKK 225 million that were postponed from 2020 into 2021. This means that we are actually now at an underlying cash flow breakeven.With this, I'll hand you back to Per and the Q&A session on Slide 11.

[Per Plotnikof]

Thank you, Søren. And thank you, Carsten. And this concludes the main part of our presentation. So we will now move on to the usual Q&A session, where we will be happy to take any of your questions. Operator, please go ahead.

[Operator]

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

[Michael Novod]

It's Michael from Nordea. Three questions. First of all, on ITULAZAX in Canada. Maybe you could just give us a bit on how the sales are performing in terms of absolute numbers, just for sort of our modeling purposes, it would be nice to see how sort of the traction is in Canada for this key product. And then secondly, in terms of your trial with ODACTRA in the U.S., do you have any visibility on how long a potential delay can be if you have to sort of change the trial? And then thirdly, on the peanut program, will it be possible for you to start the first clinical trial in 2021 after the feasibility study, or do we need to get in to 2022 for the first clinical trial to start?

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

Carsten. I will start. We do not foresee any issues. We are on track and have recruited for the ODACTRA trial U.S. thinking about the pediatric trials. We don't expect any delays, what we're saying is that for the asthma children trial, we don't know how many [indiscernible] there will be, so we are looking at some statistics over this year to see if we get enough, and that's it. But for the children studies, in general, that isn't an issue for the U.S. The children studies for Europe and U.S. ODACTRA/ACARIZAX is going according to plan, and we don't expect any delays there. But the peanut, I don't know. If you ask me what the ambition is and what I'm asking every morning, if it's possible, then is, of course, Phase I this year. But the Phase I will most likely be starting in '22, it depends. We hope to have the first tablet to show to the Board already here in June, when we had the strategy meeting with peanut [indiscernible]. So it's a lot of work in progress, but I don't know, Michael, exactly when that will be happening. What I don't know either is whether we're looking into that, depending on then the dosage trial and the safety trials we're making here in early days. We might look at if we can do a Phase II and a Phase III trial in parallel to even gain more time. So we have full focused full investment in that. And I want to remind you that when we say we [ go to grow ] 10% plus next 10 years, we have not included any peanut sales into that [ one it's purely an upside. ] So with the ITULAZAX numbers, I'll just hand it to Søren, our CFO, so he can just answer the absolute numbers there.

[Søren Jelert]

Yes. I mean, normally, of course, for a specific market, we don't give a specific number out, Michael. But I think it's fair to say that it's off to the same good start as we've seen in Europe. And then is proportionately also a good size for us in North America with expectations that ITULAZAX will also be a core driver in Canada. So -- although it's still small numbers, that's also why I'm a little bit hesitant to give out more numbers, but I think it's -- more important message for me here is that it is progressing according to plan, and we are seeing a same good uptake as we are seeing in Europe. So I think -- and I hope I can satisfy you with that comment.

[Operator]

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

[Per Plotnikof]

Excellent. Well, that was a surprise. So maybe the, the report and the webcast was very clear. So I trust -- I think there's one more question coming in now from the line of Jesper Ilsoe from Carnegie. Is that correct?

[Operator]

Exactly.

[Jesper Ilsoe, Research Analyst]

Sorry for taking the late question here. Maybe you can just talk a bit about what you see in Germany. And also the recent update to national reimbursement guidelines that you write about in the report, how you see that really, say, transforming the market and opening up this DKK 100 million opportunity that you have talked about? And also, is this mainly on new prescriptions, new patients, or will they [ phase ] it out entirely here in 2021? How should we look at these changes?

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

Thank you, Jesper. I'll start and then hand over to Søren. It is now -- about 80% of all the different regions that now have implemented these guidelines. And I have 2 comments to it. One is that what it means de facto in absolute value [indiscernible] about EUR 100 million of sales, which are with today unregistered, undocumented products will be up for grabs in the next years. And to answer your next question, it works this way that now when you are within those guidelines, you are required to initiate new patients with the registered products. So no, we do not go out and cannibalize all our competitors [ on ] ourselves, but all new initiations over the next year. So that means that we are pretty comfortable with very strong growth in Germany in the years to come. And of course, we have very ambitious targets there, but we'll try not to get ahead of ourselves. I don't know if you want to add anything, Søren?

[Søren Jelert]

Well, I think really -- it's been impressive to see the uptake in Germany, and it is actually the biggest country for us and holds a huge prospect, amongst others, due to this new legislation. I think what's also a clear signal for us and what is also helping us here is the good launch of ITULAZAX with a product that clearly helps the patients and that help has spilled over on ACARIZAX, so that where we sort of -- this old lady ACARIZAX has actually really fueled the growth so that we -- ACARIZAX was growing 10% in '19, 20% in 2020. And we are -- sort of 30% growth in ACARIZAX here in the first quarter in Germany. So -- and that -- part of that is probably also the push towards evidence-based medicines, combined with ITULAZAX. So I think we are into a perfect cocktail in Germany these days, and we are seeing that in the numbers, we're, of course, extremely pleased that our German organization is executing so well.

[Operator]

We have a question from the line of Peter Sehested from Handelsbanken.

[Peter Sehested, Research Analyst]

It's Peter from Handelsbanken. I have a couple. First one with respect to your anaphylaxis strategy. In the U.S., you confirm that [ pivotal ] registration no later than '24, but also that you take some decisions on the Windgap product later in 2021. I believe you sort of mentioned this before, but this potential strategy or decision on the Windgap products, does that entail a potential scenario that says, well, we'll drop the Windgap product and will continue with a new one? And then secondly, with respect to your 10% growth over the next 10 years, could you just repeat and reactuate what actually is embedded in that one? You just stated that peanuts are not included here, but what is sort of included as to what we know and what we don't know, in terms of pipelines, et cetera? And on R&D costs, I guess, since we have seen some delays on clinical trial activity due to COVID-19, some costs are likely to be postponed into '22 and '23. And can you say a little bit more about how we should think about that from a modeling perspective?

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

Yes. Thank you, Peter. Good questions. If you look at the anaphylaxis strategy we have, we are still pushing hard on Windgap, but we're also pushing very hard on [indiscernible], which is our own project of a new pen to the U.S. market. And both can be completed at the same point in time. So we don't know actually because we're doing all the stability and safety testing right now on the Windgap, whether it really holds water in a manner that we would like to continue with that one, except of our own one. The reason why we're doing a parallel stream is that Windgap is a new technology with a blend of a powder and a liquid and we need to be very, very sure that this works well, and this is still work in progress. It's not because we're just keeping it alive to keep a story alive because we do have a parallel track with our own product. So it's not that '24 U.S. launch with a very good competitive pen is not going to happen, it is going to happen no matter what. But we don't know yet whether that's going to be Windgap or own concept. It depends if -- because if Windgap works, it's going to be a transformation technology due to -- it's just a new and novel concept. But it's also why we can't conclude anything immediately right now. And I can just give the first line on the 10 year strategy, then I'm going to hand it over to Søren for some of the more details. What has been very important to us is not to dream up a fantasy land. So in general, when we say we're going to grow the next 10 years, 8% to 12%, 10% average, it's based on what we know and what we know we can execute on. And we know -- also we have some development projects that might turn out. We have some markets that might turn out. But we have the U.S. opportunity as well. But none of those is certainly kicking in as a big splash or coming ketchup out of the bottle, get to coming out of the bottle with a big benefit to us. It's within an organic control. I don't know if you want to add some flavor to that, Søren?

[Søren Jelert]

No, I think that's perfectly fine. I think the growth above the 10% definitely rests on also the peanut and the anaphylaxis to what extent that can penetrate well in the U.S. market. And then also, you could say, we also have China where, yes, some of it is baked in, but it's a fantastic opportunity in China and beyond, potentially yes. And I think that's still what we believe are some of the key strategic levers, revenue growth-wise out there. So I think we have good visibility in the first 10%, and I think that's important. When it comes to the R&D costs, basically, as Carsten said, we, for sure, are running the trials as we had planned to. And as such, we can also see that we do burn the cost, and we do expect a step-up in costs here during the next 3 quarters. And so that's important to still remember that we are still aiming to burn these DKK 650 million. Well -- some of the trials that we are restarting or starting up again, if that gets pushed out, will that take that number down a little bit? Potentially, yes. And that will then roll into the 2022 where we think it's around DKK 600 million will be burning. So of course, you're right in that we could potentially see a delay. But bear in mind that all the -- majority of the high cost burners of the trials are running as planned, and they are expensed as planned as the patients are coming in. So I don't expect the same delay as we saw last year due to the fact that the trials are actually running according to plan. So that pattern or picture still holds water. And then just sort of -- so you completely understand what's the base case. I mean, remember that peanuts is not in the base case. It's in addition to the base case, if there were [ misinterpreters ] anyway.

[Peter Sehested, Research Analyst]

Yes. So just one final question. I believe that for the first half ever I actually managed to hit your income tax forecast for Q1 here with a tax rate of 26%. My best guess, is this a total coincidence? Or are we actually seeing some more, let's say, stable tax rate levels at ALK?

[Søren Jelert]

I would like to say that it was a good calculated. But I think it's more coincidence than anything else. I think we don't expect a huge changes to that tax line. So I think you are -- it is a coincidence more than anything else. And of course, it will depend on exactly where do the sales and where the profit generated throughout the year. So I think good that you believe in that, you hit it right, but I think it can fluctuate quarter-by-quarter.

[Operator]

Our next question comes from the line of Thomas Bowers from Danske Bank.

[Thomas Schultz Bowers, Analyst]

Yes, just a couple of questions. Just for -- maybe for clarification in regards to the MT11 asthma trial. So the lower incident observed in the study right now, COVID-19 related, will this potentially lead to a protocol amendment increasing the sample size? Or did I sort of misunderstand your first answer? And then second question, just on the product pruning, so 4 percentage points this quarter, and you also, in your prepared remarks, also mentioned that that's basically or it will be a very low number, but you guided for 1 percentage point for the full year. So is this basically going to 0 for the remainder of the year here? And then just lastly, just on the -- if you can comment here. So on the prescription numbers for the U.S. market, so we are seeing some dramatic fluctuations to the downside for -- when you look at the weekly [indiscernible] numbers? And to my impression, the [indiscernible] data is not fluctuating as much. So can you maybe just confirm whether you have any insight to whether it's data error? Or is there any changes to how you sort of collect or how the providers collect prescriptions for the tablets?

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

Thank you so much, Thomas. I'll just say, remember, we're talking only about the asthma trial, not the pediatric trial. Pediatric trials are going according to plan. We don't know yet. And we're just flagging that we have to analyze the stats and see what's coming out throughout this year to fully understand if we have enough power to complete the trial satisfactorily. And we are only saying this now because we know de facto that because the children has not been in school or been socializing as much as they normally do, we should expect that they have not had as many attacks as normally. And we want to make sure that we have enough in our trial to really show the significance we know. But we are just looking at those data. What is worst-case, worst case is most likely that you then have to take another cohort in when you can see you have enough [indiscernible] in general in a country. But we don't do that yet because we don't even know that, that was necessary. But that's what we're looking at. And it's only the asthma trial, not the pediatric trial for ODACTRA, ACARIZAX in Europe and U.S., just to be very clear about that. For the pruning part, remember that it was 3% globally and 4% in Europe. And to answer your question, yes, it's not going to be much the rest of the year. I think we're getting there. And to the last question, there was a data error. And I don't remember which bank who called Bloomberg and got it confirmed, if it was Michael Novod, but that was actually all to check that we had some data error problems in the U.S. that sort of affected our [ script ] data. So there isn't any [ fluctuations ] like it looks like. So it was a data error.

[Thomas Schultz Bowers, Analyst]

Okay. Great. And then just a follow-up on the asthma trial. So just to get a feeling here, I know it's sort of could be icing on the cake maybe compared to the pediatric rhinitis trials, of course. But do you have any sort of flavor on what we should expect. Let's assume that this trial reads out positive. I guess it will not be sufficient for asthma specialists to start prescribing tablets immediately. So what's your feeling here? Do you need -- I guess you need some longer-term trials and then maybe also add another phase for your -- or maybe even 2 more trials. Is that sort of correct, understood?

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

Almost. I think there are 2 things. And remember that for Grass, there's already some indications there. It's not like we are expecting that the product will not work in sort of an asthma indication. Remember that we're already on the GINA guideline for asthma treatment in Europe. So we are -- so [indiscernible] and the society in general, that's not really the risk. This is just -- this specific trial on the dust mite tablets that are going to be evaluated more thoroughly because we have had this COVID situation. And again, as I've said before, on the other projects, we have now built a plan that does not include, for example, that we succeed with dust mite asthma tablet in the U.S. children. That's not a part of our base case. When we say we're going to grow 8% to 12%, that's what we have in our hands. So yes, peanut, so yes, [ asthma ] for children, and other projects we have been looking at or are looking at, are working with, those projects are financed in the plans, but we have not added the sales to that yet. So it will be clearly an upside to our base case of the 8% to 12%, so we succeed there. How big that will be? I think, personally, it will be an upside that will grow over time, depending on how well received it is by the clinical community. Because if you look at the data we already do know, for some of the [ longevity ] trials we have done on -- in general, we do see actually that the prevalence of asthma in children significantly improved. But -- so you're right in your comment that it's something I guess will grow over time the importance of that, but we haven't factored in our 10-year plan sales. But of course, that we hope it comes way much before. And then we will be very happy to talk about what we think it will bring when we launch it.

[Operator]

And we have a question from the line of Alex Cogut from Kempen.

[Alexandru Cogut, Co]

Congrats on the excellent quarter. I just have question on your peanut allergy program. So it's great to see that you're -- you will be getting an answer on feasibility this year for tablet. And I was just wondering if that works out well, could we see you exploring similar formulations for out of food allergies? Or are you looking more to -- more of a sequential product development in food allergies?

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

Thank you for that question. I actually forgot to mention. When we say peanut, it's, of course, a portfolio thinking we have, like we also have of the respiratory allergies. So we -- if you should [ raise them, ] you would probably say peanut, then you would say tree nut, and then you will say, egg/milk. So that's sort of where we [indiscernible] start in our thinking. That's where the platform holds water, we believe. And so it's just a matter of getting the first feasibility studies and understanding the dosage and tolerance and so forth and how we should [ up ] dose it. We are very sure already now that this is going to be a very competitive product we're going to make, not with 20 hospital visits and not with lot of complications, but of course, we need to prove that in larger scale right now. But as soon as that concept is proven, and we have good notions of how the different allergens in the different food spectrum works in the tablet regime with our -- when they take it already, then I think we can actually scale up rather quickly, which will be done with a good view on the market potential, our launch capabilities and the investment it would take to get there. So it's a portfolio thinking. But of course, we start with peanut as we believe that Aimmune after 5 quarters have complicated but well working concept, hopefully, not proving so much yet, and we -- DBV has some good notions coming out now, but it's a [ device less ] pharma concept, integrated concept, while this one will be a very clean concept. But of course, coming later to the market if both these succeeds but also for a very sustainable methodology we're going to use. So it's a portfolio thinking, where that can take us in the future let's see. Now I would very much like to see the Phase I done well and a good plan for Phase II and Phase III, and then I promise to come in every morning ask them to do it faster.

[Alexandru Cogut, Co]

Understood. And maybe a bit looking ahead. But how do you look at the receptiveness from the market for food allergy, oral treatment in the U.S., Europe and Japan?

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

We think that there's a real need here. I mean, it's probably one of the most complicated allergies to have as a parent. When your child has a peanut allergy, you are literally talking about a child that might have an anaphylactic shock in the classroom, if somebody opened the peanut bag in the backseat of the classroom. And so it's a very stressful situation. And remember, the big difference from years back was that everybody was trying to solve for an immune therapy to sort of cure peanut allergies. That's not what people are looking for any longer. What Aimmune and DBV are getting approved is that by giving the treatment, you reduce the number of attacks or anaphylactic shocks that your child might get over time and thereby take some of the burden and stress out of families. So we have done a lot of market research. We have worked a lot on this one. And I think we know both on a customer, on a market and a pricing level, what we need to do. And I'm personally very sure that this is going to be a very good and strong and big product for us, should we succeed to get it to the market as we expect. But as I said before and say again, we put in the numbers when I'm very sure that when we're going to launch at what price. And then we are all very happy that we do another upgrade.

[Alexandru Cogut, Co]

Yes. No, I appreciate that. And then just the last one on M&A and licensing. Are there any areas that you're particularly focused on?

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

In licensing?

[Alexandru Cogut, Co]

[indiscernible]

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

Yes. I think if you ask me, if we are going to work more heavily on the digital platforms, and we are, as you know, working with the [indiscernible] and a full digital system. You know also in the U.S. where the [indiscernible] are addressing a lot of health problems. We're opening these 200 -- 200-plus health hubs and so forth. If we can in-license diagnostic technologies that can support digital strategies and ease of some of the pain points or bottlenecks in a fully digital flow before they get to the doctor, that will be something we're very interested in. So we are really screening the market heavily to see if we can find some technologies that can help that. And in order to balance it out with the big players, which also have an interest in keeping the labs alive, so yes, in diagnostics, if we can get some diagnostics -- if we can get a diagnostic kit where -- which is [indiscernible] on and then you show to your phone, and then you have the results, I'm buying it. I just haven't found it yet.

[Alexandru Cogut, Co]

Okay. And then I know where to call, if I have it.

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

Yes, you call me and we'll have a beer.

[Operator]

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

[Per Plotnikof]

Excellent. Well, I think we will finish off this call then. Thank you all for joining the call. And I'm really glad that we got the questions going after a little bit of an artificial break. Anyway, we hope to begin -- being able to see you in person again during the coming quarters. In addition, as you can see from Slide #12, we are also scheduling a series of virtual roadshow sessions, and we hope that you will join us in one of these. As always, you are most welcome to call me, Søren or Carsten, if you have additional questions. And with that, I wish you all a good day, and I will end today's session. Thank you.