Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Transcript 2019-Q1

[Operator]

Ladies and gentlemen, welcome to the SOBI presentation of the Q1 results. I will now hand over to Guido Oelkers, CEO. Please go ahead with your meeting.

[Guido Oelkers, CEO & President]

Yes, thank you so much, and welcome, everybody. It's my pleasure to start our presentation and lead you through our Q1 results. If we go to the next slide, our forward-looking statement as per usual. During the call, I will be joined by our CFO Henrik Stenqvist; and our Chief Scientific Officer Milan Zdravkovic.And maybe without spending too much time on other formalities, let's go straight into the highlights of Q1. We feel that we have actually a fantastic result in Q1. We had 66% revenue growth, 54% at constant currency. So we have achieved close to SEK 3.3 billion of revenues. Organic growth profile, let's say, is pretty much intact with 24%.We have very strong hemophilia growth. And I would like to point this one out with Elocta growing at 53% at actual currency and 46% at constant and Alprolix at 120%. And that obviously has, let's say, fueled our organic growth. But I think notably, our EBITDA has increased by 96%, almost doubled. And I think this is very gratifying. And EPS has increased to SEK 3.14.And let's see. So when we think about it, we have launched as well Gamifant and have scored the first SEK 89 million. Very, very pleased with this result in the first quarter. And we brought in Synagis with 134 -- 135 employees. Let's say, unfortunately, only closed on the 24th of January. Hence, we were missing a couple of days. And we will explain to you a little bit later what this meant for sales. And we recorded the first Synagis sales, let's say, of a shorter season of SEK 665 million.So what we have done, just a reflection on the quarter, we have not only grown organically our core business very substantially. We have launched, let's say, a very important [indiscernible] and made a significant impact. And we have built a foundation for our future in United States by integrating this business. And granted, let's say, when you integrate such a business, there are always some adjustments, whether it's inventory adjustments and whether it's now the phasing of the data, and we'll take note of this in the later part of the presentation.So when we go at the revenue split, I think you get a first taste of the transformation that is happening at SOBI, just comparing the Q1 results. Basically, what we are now -- we have called out our now 2 significant pillars, meaning hemophilia and immunology. Now those 2 businesses are 87% of our total revenue base. And the other specialty business is obviously affected by the patent erosion of Orfadin and some minor businesses that we lost in the partnering -- on the partnering side. But what we -- what you see is that the company is now much more focused in terms of core areas and has substantially shaped in this now -- we have now really a 2-legged organization.So with this, I want to go into -- straight into the business review and basically just familiarize. What we have done in hemophilia, and I mention this also to clarify a little bit our pathway because there are obviously some new entrants and clarify why we are optimistic about our hemophilia also moving into the future.We have done quite a bit of comparative research, ethnographic research. And this ethnographic research led us on Slide 8 to a new concept that we are now launching across the region. And it's called Liberating Life because -- and the preamble is that many patients are actually not yet well served and let's say -- and have a lot of what they call worry days. And basically, we felt that those patients are best served taking advantage of the profile of Elocta and Alprolix.And the concept is our foundation is what we believe is a best-in-class EHL platform. We have obviously demonstrated phenomenal efficacy and safety profile in real-world evidence with thousands of patients. And we have impressive results. And Milan will share with you later some latest data in the individualized therapy that we believe are extremely outstanding and compare very favorably, even versus data that new therapies can bring to par.And so basically, what this concept is all about is that we will bring possibility back to patients. And we try to make the patient -- bring the patient in charge of their life. So we are not, like others, trying to make the patient believe that he is no longer a patient and he can forget about the disease. We want to bring the patient in charge of his life, live an active life. And an active life means that trough levels of 10% to 15% on a consistent basis will not allow this. So you need a peak. It's more than -- life in hemophilia goes beyond the trough. And I think this is at the heart of it. And we want to enable patients to take advantage of the products that we have to offer.So when you summarize our hemophilia story on the next slide, we believe that we have -- we continue having exceptional momentum. We have still significant opportunities to drive growth via penetration and internationalization. We have, let's say, significant room to further individualize therapy and take advantage of the profile of the 2 EHLs that we can offer. And in totality, we think that, let's say, given those foundations, there's significant promise for the future, particular now on the strength of our new campaign.So when we go into the where are we at in -- let's say, with the sales growth, maybe go to the next slide number 10. Elocta, as you can see, very strong quarter-on-quarter growth and also very strong growth with 46% at constant currency and 53% at actual versus previous year and really driven by the large markets in the EU and reimbursed now in 26 countries.Alprolix, let's say, has done extremely well with 120% of revenue growth. And also here, let's say, the main markets in France, U.K. and Italy are driving this growth, now reimbursed in 22 markets.So the -- so what we believe is that this trend, given the activities that we are now doing, will remain our friend. And that's the best for us in hemophilia still to come. And I would like now to ask Milan to share with you some of the latest scientific findings.

[Milan Zdravkovic]

Thank you very much, Guido. So this slide illustrates the excellent protection and low annual bleeding rates in adults and adolescents with hemophilia A using Elocta as individualized prophylaxis.These data are important in 2 ways. Firstly, it represents a long-term clinical trial exposure experience over a period of 5 years, with a median of exposure days just above 250. Secondly, we saw a low overall annualized bleeding rate as well as joint bleeding rate. And these low bleeding rates are likely important when we evaluate the long-term joint health status, which is illustrated on this slide.So the gradual destruction of joints is one of the most important complications of hemophilia. And the pathogenesis involves bleeds into the joints with associated inflammation and cartilage destruction. Therefore, good prophylaxis, as shown on the previous slide, with Elocta is critical.Now this slide shows data over a 5-year period on joint health, demonstrating not only a stabilization of the disease but also a continuous improvement in joint health, in particular on swelling, range of motion and strength. And we are very, very encouraged by these data.Now the mechanism behind this -- the improvement in joint health you can say beyond the successful long-term bleeding control that we see with Elocta prophylaxis needs further study. There are preclinical data suggesting that Factor 8 may directly play a role in bone remodeling. And in addition, it could be speculated that the IgG Fc part of the Elocta molecule may have anti-inflammatory properties.Now this slide illustrates the excellent protection and low annualized bleed rate with Alprolix prophylaxis. Again, the longitudinal data collection over a 5-year period including a median number of exposure day of just below 150 is important to recognize.In addition, there was a low rate of joint and spontaneous bleeds over the same period, using an 8- to 16-day individualized profile regimen. So taken together, we are very excited about the treatment outcomes that we see with both Elocta and Alprolix. The next slide?

[Guido Oelkers, CEO & President]

Okay. Yes, thank you so much, Milan. And now basically, we would like to share with you our thoughts on -- let's say, on immunology. Obviously, when you think about this second leg, now that we have established over the last basically 12 months, is it's built on Kineret. And as you will see, we have regained momentum again, let's say, with Kineret.It is basically -- what we have done is we delayed this acquisition. We have expanded our product platform, but also now clearly created a significant platform in United States, moving from a, let's say, initial -- from a first attempt to really solidify our position.We launched a new promising monoclonal antibody called Gamifant. You have seen the result, very satisfied, let's say, with the SEK 89 million in the first quarter. That makes us, obviously, even more, optimistic for the product moving into the future. And we have bolstered our pipeline by basically the new indications for emapalumab and having access now to 8897 and really look forward to the readout of the Phase IIb data. And obviously, we will look forward for new external growth.So when you look at the numbers on Slide 16, what you see is, obviously, this very significant effect in immunology of Kineret -- sorry, of Synagis acquisition, granted we have not consolidated a full first quarter, granted that there is obviously a strong bias as a seasonal product. So you know this is not the product sales that you can expect now every quarter.Let's say, and it's also fair to say that we are happy that we have integrated this really fantastic talent base from AstraZeneca of 135 individuals. But we have probably not changed a lot yet. But we are going to change quite a few things, as we will explain to you later. And then obviously, quite encouraging result with Gamifant.So basically, let's start with our foundation business Kineret, now 17% up, quite pleased with this, granted that, at constant, it's less at 7%. So we still have some room to grow, particularly in the U.S. We are in a repositioning phase. But we are confident that this product will retain -- remain for us a very strong growth driver. And we are also excited about new indications that we would like to debate with you during the Capital Market Day.So when you think about Synagis, now it basically has become the second largest product for the group. It's obviously a key priority. And the good news is that the demand data suggests first quarter 2% growth of demand.Now I know that there has been a debate how to read those data. And one has to clarify there is a lot of noise out of such a transaction that basically happens at the end of the first month at the peak basically of the season. So we have an effect that we're missing not only 23 days, but there has been also some consolidation of inventory at the wholesaler level. There has been a small price effect.So there is a lot of noise. But -- and I obviously wish -- we wish that this wasn't -- was not the noise. But I'm much more happy, to be honest, that the demand engine is growing. So we're buying a growing product. And those effects that you see now, let's say, in the first quarter we believe is -- are going to even out during the later course of the year, in particular obviously during the fourth quarter, which is the main part of the season. And Henrik will explain to you a little bit the seasonality of the product and how you have to think about this product.But our optimism that this is a growing product in our hands remains unchanged, yes? And when we did a very thorough work -- now piece of work with some external help and with the team, we are even more excited about this product.What we see is that there are significant opportunities with more scripts within the guidelines -- that are clearly miss -- that we are missing out because this team went through quite a bit of changes where they were clearly in the noncore area. Now they become a core area.There -- the -- there was a contraction of reps, let's say, last year that still has some ripple effects because productivity of the representatives are -- will take some time until they're at the right level. So there's opportunities for us getting more scripts.We see that there are quite a few leakages in the chain, where even though you might get a script, the script is not fulfilled. And we basically feel that the dosage regimen can benefit -- we see in many cases that patients don't get the indicated 5 dosing and end up with just a little bit more than 3. So there is a significant opportunity to fix those things as well.So we are excited about the product, which is not going to be, let's say, into the future a huge growth in terms of percentage, but it will be a steady growth product for us. And obviously, don't forget we bought this not for the first quarter. We bought this product to build a strong foundation for our U.S. business and having access to an exciting product and basically -- but we are as excited about the platform that it brings, particularly in the pediatric field.So whilst I appreciate that the expectations may have been higher, but when you basically rationalize this, there's nothing that point us that we have an operational topic, yes? We have transitional, let's say, adjustments that we have to recognize. But we are excited about the opportunity with Synagis.So coming to Gamifant, we have -- I think we have a fantastic launch in Q1. We are getting patients now in quite a number of centers. We focus obviously a lot on education, disease awareness. So it's early days for us, but it seems to resonate already quite well.And this is also something where I think we want to spend a little bit of time in the -- at the Capital Market Day is to clarify we see significant opportunities in Gamifant with an expansion in HLH as an overall disease, but also beyond. And our investments into our clinical trials actually reflect this, yes?So we are also -- we are now having trials on the way in terms of preemptive treatment for -- of graft failure for -- in children undergoing stem cell transplantation. But for us, obviously, it's very important now to move from primary HLH into secondary HLH. There's a study ongoing in children with autoimmune systemic juvenile idiopathic arthritis. And there is an adult in the study in the planning.So we are excited about Gamifant. We're excited about the collaboration with Novimmune and -- let's say, and hope that this will lead us even to a closer cooperation in the short-term future. But let's say, very happy with the progress that we have made so far.And just to share the degree of excitement that we have regarding Gamifant, and I think the scale probably of this opportunity is not -- we have not yet done the best job to make it understood. And that's something we want to correct also at the Capital Market Day. But to share maybe some of the excitement, Milan shares maybe some of the clinical data that have been recently published. And, Milan, maybe I -- you will take over.

[Milan Zdravkovic]

Thank you very much, Guido. Yes, so this slide shows the very strong survival data from the emapalumab pivotal trial program in patients with primary HLH undergoing hematopoietic stem cell transplantation.So following emapalumab treatment, both in patients failing conventional HLH therapy, but also in the full study population, then there was a very high one-year survival post transplant of around 19% -- 90%, sorry.Beyond the importance of these data for patients with primary HLH, then this also suggests a permissive effect of interferon gamma blockade on transplant acceptance. And this combines with data showing an increase in interferon gamma in patients experiencing immune-mediated graft failure led through the planning of the graft failure study that Guido just discussed.So we're very excited about emapalumab and the potential it brings, both to patients within but also outside HLH. And emapalumab is a key focus area for us. And with that, I hand over to Henrik.

[Henrik Stenqvist, Chief Financial Officer]

Thank you, Milan, and good morning, everyone. Let's start with a year-on-year crosswalk of revenues from Q1 '18 to this quarter. Revenues have increased from just below SEK 2 billion a year ago to SEK 3.265 billion in Q1 '19. The main drivers for this development are Synagis, adding SEK 665 million to Q1 revenues, hemophilia SEK 464 million at constant currencies, contributing to a growth of 33% for the franchise, and Gamifant SEK 89 million. Then we have all other products contributing together with minus SEK 75 million. And here, we see, for example, the impact from the decline in Orfadin compared to last year. And finally, we have a positive FX impact of SEK 158 million for the quarter.And then we move to next slide for some other financial highlights for the quarter. Revenue from Q1, as we saw, amounted to SEK 3.265 billion, corresponding to an increase of 66% and 54% at constant currencies. You saw the growth drivers on the previous slide. And if we speak in terms of organic growth, that is adjusting for Synagis, the organic growth was 24% for the quarter.Gross margin jumped to 76%, positively impacted by the addition of the high-margin product Synagis and continued positive product mix effects driven by the hemophilia franchise and also lower relative sales from some of the specialty care products.EBITDA, adjusted for the divestment of SOBI 005, reached SEK 1.471 billion for the quarter, corresponding to a margin of 45% versus 39% in Q1 '18. And finally, the adjusted EPS number was SEK 3.03, with a growth of 59% compared to last year. Furthermore, operating cash flow was a bit soft for the quarter, SEK 388 million, reflecting the working capital impact in Q1 of Synagis, with large receivables being settled only in Q2. And as a result, net debt amounted to SEK 5.5 billion at the end of the quarter.If we go to next slide, please. So before Guido goes into the outlook for the full year, I just want to highlight the seasonal pattern of Synagis, which will have an impact on how performance will be divided between the remaining quarters of the year. And I want to point out that this slide is an illustration only, and it's not about factual numbers.Synagis has a strong seasonal sales pattern with very little sales occurring during the off-season period in Q2 and Q3. However, the cost structure of this business is not seasonal, but relatively stable between the quarters, as the business is getting prepared for the next RSV season starting in the October timeframe. And as a consequence of this business, the natural pattern is a negative contribution to EBITDA from Synagis in Q2 and Q3.And with that, I hand back to Guido again. Thank you.

[Guido Oelkers, CEO & President]

Yes. Thank you so much, let's say, Henrik. And what we -- what I want to make sure is, as you can see, we remain firm with our guidance. There's no reason to change the guidance, even though, let's say, you have seen that we have not been able to consolidated the first 23 days. And there has been this transitional effect on Synagis. But I should also highlight even though that this is not hitting the P&L, the effect of the late close has been recognized by a purchase price adjustment, let's say, of $34 million. Didn't hit the P&L, but it's recognizing at least that this is -- that we didn't have the full advantage of -- take full advantage of the -- of January.So when we basically think about it, we believe that Elocta and Alprolix will remain strong growth drivers for us this year. We think that Synagis will perform well under our ownership. We're happy to see that there's a demand growth. And yes, there have been some transitional adjustments, but this is not affecting our perspective on the product. And let's say, Henrik has explained to you that there's a seasonal effect. And we think that, over the year, there will be a washout of some of the effects that we have seen in Q1.And we are excited, obviously -- even more excited about Gamifant now in the U.S. and given the results that we have shown now in Q1. So when the EBIT -- with regard to EBITDA, we stick to our guidance, also here no reason to change. And let's say, what we will do is we're investing, obviously, in our franchise in hemophilia because we are convinced that we have a fantastic opportunity in hemophilia, and we need to make sure that more patients take advantage of the product.We focus obviously on Gamifant and the development of the clinical opportunities in emapalumab within HLH, but also beyond. And we feel that we are extremely well positioned for the future, given the fact that we have made operational significant improvements, but also made significant strategic leeway now for the future.And I think on this note, we open the floor for Q&A.

[Operator]

[Operator Instructions] We now have our first question from Kyung Yang from Jefferies.

[Eun Kyung Yang, MD & Senior Equity Research Analyst]

I have a few questions. So hemophilia products in your territory looks pretty good. But now with the Hemlibra coming onto the market, I want to ask you a couple of things. One, Roche has commented that Hemlibra uptake in the non-integral market in the U.S. has been quite strong. Are you hearing that Hemlibra uptake in the U.S. is largely from the short-acting product conversion or long acting? That's number one question. And second question, now it's entering the market in Europe. What are you hearing from the medical community? And second question is on the new tender markets. I know that the first quarter sales have been quite strong. But are you seeing some pricing pressure in Europe? Because some of your competitors have commented that, particularly ex-U.S., net pricing has been lower, and there has been some increase in pricing pressure. So I want to get some sense of, how do you see pricing going forward with the hemophilia products in Europe?

[Guido Oelkers, CEO & President]

Yes, thank you, Kyung, and thanks for the interest. So with regard to the U.S. situation, obviously, we are not as close, let's say, really to the development. And I think this is really for Sanofi to comment on the U.S. situation when they have their earning call shortly. Let's say, we obviously have seen the results of Roche, let's say, in the U.S. And they had a very good quarter, but frankly, so had we. And obviously, let's say, we are still bullish about it and, let's say, about the opportunity. And that's the reason why I think what we see is that we want to make clear there is no panacea. This is a large market. There's room for a lot of therapies, let's say. But it's for patients who want to have an active life. They need a peak. And let's say, and we -- and this is something that we will obviously promote very strongly. And particularly also the favorable safety profile of Elocta based on real-world evidence I think is something that we want to make sure comes strongly across. There is -- with regard to the medical community, I think there -- at least in Europe, what we understand, there's -- it's not like there's a consensus that this is now, let's say, a therapy that should be made available to all patients, let's say, with regard to new therapies. But I think there's a clear understanding that EHLs will remain playing an important role. And there is -- given also the evidence now that we have generated around our products, there's an -- actually, there's a growing interest, as you can see reflected in our numbers, in adopting, let's say, best-in-class EHL therapy across the board. So we are -- so we -- whilst we recognize the strong uptake of Roche, we also recognize the strong uptake of our products in our territory and the growing interest, yes? With regard to the tender situation, yes, there has been -- there is price pressure, obviously. We are less affected than short-acting or less differentiated EHLs. And therefore, we are not as much affected, but we see some price pressure obviously in the tender markets as well.

[Eun Kyung Yang, MD & Senior Equity Research Analyst]

Do you think that the Hemlibra entry would impact the pricing on long-acting products?

[Guido Oelkers, CEO & President]

We have -- we don't expect this, yes? Can I anticipate, let's say, how Roche is going to price it? I've seen the one or the other documentation where, in fact, costs of therapy are expected to increase, let's say, now. But I think I cannot speak for Roche. You would have to ask them whether they want to become a discounter in this hemophilia area. But my understanding at this stage is that it's -- that costs of therapy are not declining. But you never know. But I think this is a question you need to ask them.

[Eun Kyung Yang, MD & Senior Equity Research Analyst]

Okay. And then one last question. On Synagis, you mentioned that there were transitional adjustments that impacted sales in the first quarter. I get it. But if you are accounting for that like 23 days -- loss of 23 days as you were -- as some inventory that you mentioned, if you account all that, did you see growth in terms of volume in the first quarter this year compared to the same period the last year?

[Guido Oelkers, CEO & President]

Yes, on an in-market level, we saw a 2% increase, yes.

[Eun Kyung Yang, MD & Senior Equity Research Analyst]

Okay. Okay.

[Guido Oelkers, CEO & President]

So that's -- yes, so that's the reason why we are actually quite happy with the Synagis performance, even though maybe others see it differently.

[Operator]

Our next question comes from Richard Parkes from Deutsche Bank.

[Richard J. Parkes, Director]

A couple of sort of Hemlibra impacts. First of all, your estimate for hemophilia royalties from Sanofi expects seems to imply sales to be down year-on-year at CER. I know that's your estimate. But I'm just wondering how much confidence you have in that because it seems to imply a greater than 10% quarter-on-quarter decline in sales of Alprolix and Elocta in Sanofi territory. So that's the first question. And then the second one, we're hearing anecdotally that the Hemlibra launch has got off to a very rapid uptake, particularly in the pediatric setting. So I was wondering what your current split of sales were between pediatric, adolescent and adult sales and maybe it's the pediatric setting where parents seem to be demanding access to Hemlibra in the U.S. And then finally, I wondered if you could give us an insight into the profile of MEDI8897. We know it's in the Phase II study. Just wondering what profile we should expect and when we might see that clinical data. Thank you.

[Guido Oelkers, CEO & President]

Yes, thank you so much, Richard, yes? With regard to U.S. sales, I cannot comment on obviously Sanofi's performance because what we got is just an information on an estimation of royalties. So what this means in terms of in-market performance, I think you probably have to wait for the earning call of Sanofi and ask them these questions. So I don't want to speculate. Now with regard to the, let's say, different, let's say, settings of Elocta versus Hemlibra now with a particular focus on pediatric, I -- to be honest, I -- we don't give guidance at that granular level, to be honest, either. Let's say, I only know in our territory that there is still quite a bit of concern with regard to, let's say, the safety of new therapies, in particular with regard to newly released safety data, let's say, that just came out. And this is -- and we believe that it is I think -- this is our main theme, yes? We believe, for patients who want to have an active life and take charge of their therapy, they should not try to forget about the disease. They should manage the disease. And this is basically the fundamental concept of Liberating Life that you take the product when you need it, individualized therapy. You have seen the data that Milan presented to you with fantastic ABRs. And we believe that this concept may not be of value to everybody, but there will be a large group of patients who will try to benefit from this therapy. And with regard to 8897, I think the main theme what you can expect is and what has been published is that, with Synagis, you need to take it 5 times in a season. And with this product, it seems that once a season is good enough. So it's a very potent product and has shown very strong efficacy. But I think would also like to hold horses here. And I think you need to wait for the publishing of the Phase IIb data and which will come out shortly. And I hope we will like what we're going to see.

[Operator]

Our next question comes from the line of Jon Berggen from DNB Market.

[Jon Berggren, Junior Analyst]

So the first one, could you elaborate a bit on the small price effect you mentioned for Synagis? So could you just confirm that -- has this -- has the pricing of the product changed, or is -- was this strictly a temporary effect that we saw in Q1 here for Synagis?

[Guido Oelkers, CEO & President]

Yes, there has been some adjustments, to be honest. And it's very hard for us in this first couple of weeks there's been -- that we got this product to say, is this now a more systemic effect, or is this a temporary effect? We -- there has been some gross-to-net adjustments with some provisions regarding Medicaid. We think that the overall -- but it's a minor effect. The overall impact of that will be overcompensated throughout the year by the value creation initiatives that I've outlined, where we see more opportunities to drive volume. And we're obviously gratified via the impact of -- that we have seen already in obviously demand growth. So I can't, unfortunately, give you more granularity on the pricing effect.

[Jon Berggren, Junior Analyst]

Okay. And the last one, could you please just give us an update on the patient recruitment in the anaSTILLS trial, please?

[Guido Oelkers, CEO & President]

The anaSTILLS trials we have terminated, let's say, and because there it was, let's say, basically for us -- we have got a label in Europe, as you know. And basically, it seems difficult for something that is already so established to recruit patients and also didn't really yield more benefit. So honestly, our focus now with Kineret is pointing us more toward oncological indication as a further expansion and potentially [ IRP ].

[Operator]

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

[Peter Sehested, Research Analyst]

Yes. It's Peter from Handelsbanken. A couple, first one [indiscernible] sorry, hemophilia pricing, but not in the tender markets, but more mature, more advanced market in the Nordics, are you seeing any [indiscernible] as well? And my second question relates to your liberate study [indiscernible] here with a recently published survey that has been published in one of the [indiscernible] journals. This is from Canada. We have citations here of parents citing, "Mommy, you're hurting me." That's intravenous infusion. So my question sort of is a -- relates to the previous one about the Hemlibra uptake in the pediatric setting, so suggesting that parents are very much concerned about the convenience factor here. You've previously stated that the convenience higher in the U.S. than it is in Europe and [indiscernible] acknowledge that [indiscernible] tradition in Europe. But nevertheless, parents tend to be the same all over the world. So are you confident that convenience factor is not as important in your [indiscernible] in the U.S.? And my third question relates to costs. Elaborate on whether the average cost for your newly added [indiscernible] is higher than the average as reported in [indiscernible]. Secondly, give us an [indiscernible] the number of full-time employees by the end of [ 2018 ].

[Guido Oelkers, CEO & President]

Yes, let's start with the easy bit with the Nordics, let's say. So there has been last year an adjustment as part of a tendering process in Sweden that we have taken, like everybody else. And -- but basically, that adjustment has take -- has not effectively helped us also to grow further volume. So quite actually -- so let's say, I think the outcome, whilst we didn't appreciate it, let's say, is still okay. With regard now to the survey, it's a bit like, what is the end, yes? And obviously, there is -- there will be patients, and we all know them, that already basically freak out when they see a needle. And in particular, in children, there will be patients. But I have also equally -- to be honest, I can give you many cases where people will say it's not a problem. And then basically, as always in life, it's a tradeoff. And during the tradeoff, I can also quote you patients who wanted -- who went to the -- for a simple tooth extraction to a doctor and were on new therapies and were bleeding as if there's no tomorrow after a simple tooth extraction and needed factor to compensate the lack of efficacy of this new therapy. And I can quote you a lot of -- also actually quite a number of those patients. Yes, so I think you need to make sure that you don't use anecdotal evidence for broader extrapolation I think. And let's say, now I think the tradeoff decision also in the pediatric field will be done by parents and by physicians based on best knowledge. And our job is to make sure that people understand the tradeoff, let's say, that they are making because, with 10% to 15% activity level, it's not enough to have an active life, yes? And I would know, if I'm a parent with a hemophilia patient what I -- what my decision would be, yes, so let's say, knowing a little bit now about the subject matter. So yes, I'm acknowledging that this tradeoff decision for various patients and families will be weighing more towards, let's say, convenience. For others, they will make -- this tradeoff will be -- will have a different balance, yes? And I know we are very close to a large group of key opinion leaders and real specialists. And no matter what we think, this is what we still hear in the community that they are worried. And they will try to help patients to overcome maybe the fear of a needle and of infusion. So it's not -- we're not saying it's going to be a one size fits all. We're saying there is going to be a large group of patients who will want to make a tradeoff decision in favor of the profile that we are offering. And then the -- let's say, there was a third element with regard to the cost. Yes, the cost component, and this, when you have a highly trained field force fully loaded cost of representative, indeed that they are costing what a fully loaded come in the U.S. costs and that costs are higher than an average employee who would work in a factory or in an office environment, actually quite substantially higher, and that's correct. So these 135 people are more expensive than what you -- what our average cost per headcount would be, as it is in every company who is active in the pharmaceutical industry. And with regard now to the headcount, end of year, we have a headcount number that we have published, which is north of 900. But we have -- I don't think we have published an FTE, let's say, that basically gives you full account of all the full-time equivalent. I think we have made a reference to heads. What one --

[Henrik Stenqvist, Chief Financial Officer]

We actually report 1,077 at the end of March full-time equivalents.

[Guido Oelkers, CEO & President]

Full-time equivalents. So sorry, I overlooked this here.

[Operator]

Our next question comes from the line of Erik Hultgard from Carnegie.

[Erik Hultgård, Research Analyst]

Most of my questions have been asked already, but I have a few. First, on Gamifant, could you comment on the number of patients on treatment or have been treated so far and also if you could help us to understand how much of the sales in the first quarter was inventory if you could give a ballpark number on the inventory effect there? And then finally, on Synagis, you mentioned the $34 million in purchase price adjustment. Is that basically the sales that was generated the first 23 days of January, or is it more complicated than that? And what was the inventory effect of Synagis? Is it possible for you to give some type of number on that impact in Q1?

[Guido Oelkers, CEO & President]

Yes, so let's -- so, Erik, just help me out. Where shall we start, with the…

[Erik Hultgård, Research Analyst]

With Gamifant. You can start with Gamifant.

[Guido Oelkers, CEO & President]

Yes? So Gamifant, basically, we are not reporting on number of patients on Gamifant. I would say if you want to know -- there is an inventory effect, but it doesn't seem to be the -- a very significant effect. It's a minority effect of most of it, given the fact that it's an expensive treatment for a very compromised number of patients. It's not like you're building up inventory. It's an acute product as opposed to a chronic product. So the inventory effect is not significant. I'm sure there is one, but we cannot -- to be honest, we cannot account for every vial now. The -- so it's -- from what we can see, it's really going to the patients. And if you basically would use the average cost of a product in that rare disease category, that will give you an indication magnitudinally of the number of patients. But we would not comment on this, yes? Now with regard, let's say, to this purchase price adjustment, the purchase price adjustment was actually more of a simple formula related to the number of days that we missed out. And as a reflection on the -- was an estimated -- was built on the estimation of earnings that we are missing out as a consequence of the late close, not of the sales, yes? So that gives you also a good indication. And basically -- and the inventory effect, Henrik, you want to comment on this?

[Henrik Stenqvist, Chief Financial Officer]

We cannot be specific at this early stage. We are getting our arms around the product during this takeover. So we are not in a position to quantify it. We know it's significant and that inventory levels at the wholesaler level are lower.

[Guido Oelkers, CEO & President]

Yes. Yes, so but I think, magnitudinally, when you think this through, it gives you an indication. In particular when you look at the Q2 results of the product last year, yes, when they were negative sales, yes, basically, so there was a wash out. It gives you a sense whilst we have seen sales anyway. So it gives you a dimensional effect. But okay, and then in conjunction with the 2%, let's say, demand growth that we have seen, I think gives you sufficient dimensional effect how to view the Synagis performance.

[Operator]

Our next question comes from the line of Christopher Uhde at ABG Sundal Collier.

[Christopher Winston Uhde, Former Research Analyst]

Yes, so I have a few questions. So start with Elocta. Versus some analysts' expectations, it was a bit soft. Were -- do you see signs of patients holding off from switching in advance of Hemlibra, or what can you say about the rate of patients switching in your territory? That's the first question. Then when it comes to Synagis, you've talked about demand increasing. And I think those -- the things you pointed out make sense. But when it comes to -- so sales when you announced the deal for the last 12 months were SEK 269 million. Then full year results came in SEK 251 million. And you talked about then underlying growth having increased. But that -- I struggle to make sense of that. And now they're lower than expectations despite the currency tailwinds. How can we reconcile all that? And then third, Gamifant, so how volatile were underlying sales during the quarter? What should we expect going forward? It's an ultra-rare disease. Yes, and then when it comes to the liberate campaign, is it really -- is it pure marketing, or are you pushing for a higher peak level to go with it, or is it just that you're talking about how yours gives a higher peak level already? That's all for me now.

[Guido Oelkers, CEO & President]

Yes, so honestly, when you look at the switches, 46% Elocta growth, yes? And that's obviously on a much higher base than historically. We don't see a slowdown of that, yes? So we see strong demand increase despite the fact that people know that Hemlibra is knocking at the door. Now you could say, could it have been even more if Hemlibra doesn't come? I don't know. That -- but at this stage, we get very encouraging signals from the guys who are driving the therapy in Europe. There is a lot of confidence to build this further. And maybe I take your last point. Liberating Life, yes, this is more than just a marketing idea. There are multiple initiatives connected to this that will provide significant help to patients. And we are working with key centers on these initiatives, whether it's in a clinical trial setting or beyond, and where we will further work this out. And at the right time, we will update you, yes? So this is not just -- we believe in real stuff. And let's say, and clearly, we want to make sure that people understand the tradeoff of what it means and not to benefit from a peak, yes? That's the -- at the forefront of this. And then the -- and you need to have, for instance, at least when I believe some of the [KOLs], the -- in the discussions, they tell me that, if you want to play soccer, for instance, you need to have factor activity levels of above 50, not 15, yes, so just to bring things into perspective. Then with regard to Gamifant, yes, it's a rare disease. We have commented on the number of HLH patients as part of the announcement. It's a significant patient pool, yes? It's not as big as hemophilia or diabetes. We understand this. This is rare disease. Whether you call it ultra-rare depends probably on your definition. We are very comfortable in this area. And we see significant opportunity in indications beyond HLH. But 5,000 patients, let's say, multiplied with an average cost of therapy in this area still creates a very significant commercial opportunity, yes? So I would not belittle this, yes? And we are very encouraged by these results. And it's an acute therapy. So yes, the patients either, let's say, are born with it, and/or they acquire it as a result -- as a secondary condition. So yes, we think that also here we are just scratching the surface. And we have to acknowledge that this concept -- just to give you a little anecdote, we were with parents of patients and who basically for 2 years didn't have the right diagnosis for their child, 2 years going to many different institutions, and then basically got the diagnosis. And they said, "Well, basically, thank God it's not leukemia." And after they understood the disease, basically, they told us they wished it would have been leukemia. So that gives you a bit of a flavor. And there is a lot of educational work necessary. But we don't see that this is -- let's say, after first quarter, we are missing out.

[Christopher Winston Uhde, Former Research Analyst]

No, what I really meant was -- so there are very few patients. If there were a high number of patients this quarter just by stochasticity, could we see a reduction in sales in the -- is that something that -- rather than -- normally, you'd see an uptake that is fairly consistently increasing early on. But is there a risk with so few patients that it could go down? If we see that, should we be alarmed? That's my question.

[Guido Oelkers, CEO & President]

Let's put it this way. I'm not alarmed. I'm looking forward to consistently building up this product. And there's always a risk that, in a month, it's -- there's -- given the fact it is an acute product that you have less patients, but that's normal. But when you look at it throughout the year, we are extremely encouraged by the results in Q1.

[Operator]

Our next question comes from the line of Johan Unnerus from Pareto Securities.

[Johan Unnerus]

My question has broadly been answered already, but some brief follow-ups. Could you please remind us about the visibility on royalties from hemophilia then on your -- well, the royalties basically? To what extent can we actually see for a fact the level of sales, and to what proportion is it an estimate? That can be the first question.

[Guido Oelkers, CEO & President]

Okay. Royalties is indeed an estimate that we have obtained from Sanofi. And I would recommend you to ask the question at their earning call that will happen shortly I think this week.

[Johan Unnerus]

So it's -- in its entirety, it is an estimate. Put it that way.

[Guido Oelkers, CEO & President]

It is an estimate that we have obtained from Sanofi, yes.

[Johan Unnerus]

Yes. Okay. And on the Synagis, on the price that was -- recently, there's been a change in net-to-gross price. Is that mainly or only related to Medicare, so what you can see?

[Guido Oelkers, CEO & President]

Yes, I think we haven't seen any significant entries of discounts. And obviously, when you take over a product, there's always a little bit of noise level. So I -- we don't see this as a systemic impairment, let's say. But there has been some -- and we don't see that there's been some crazy discounts over the -- the majority of the effect is really the inventory level. And it's basically the fact that we have -- we are not benefiting from 23 days. And there has been a different -- to be honest, also, a different probably accrual mechanism taking place. But this would take us -- now lead us too far. But we don't see there like a significant impairment now to net price.

[Johan Unnerus]

And also, any comment on the influenza season this year? It's been maybe a bit longer than normal perhaps. Is that correct?

[Guido Oelkers, CEO & President]

I -- we will update you obviously on the Q2 sales in due course. Just bear with us.

[Johan Unnerus]

Yes. And is it possible to say anything about the Gamifant outlook? You mentioned 5,000 patients. What sort of penetration rates can you go for?

[Guido Oelkers, CEO & President]

I think the -- I think, at this stage, it's early days, and we are not yet updating, I would say, at this juncture our forecast, but I think we obviously -- once we see -- because, typically, we don't give guidance on singular product sales. And -- but we -- I think you will get a good taste. Let's say, already Q2 will tell us quite a bit. And then -- but the team is very focused on it. And what -- as I told you, got very encouraging signals.Thank you. I think, in the interest of time, let's say, because we said we make an hour, I think maybe one more question, and then we should probably close the call.

[Operator]

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

[Peter Sehested, Research Analyst]

Okay. I'll try to be short and more housekeeping [indiscernible] modeling [indiscernible] the other stuff at the Capital Market Day. Two here very short. In terms of the reported amortization costs for Q1, [indiscernible] the fact that Synagis will be fully consolidated [indiscernible]. Second question [indiscernible] related to this one, and it regards your overall [indiscernible] which was higher than [indiscernible] substantially [indiscernible] absolute number for OpEx we should also [indiscernible] higher [indiscernible] due to the Synagis consolidation and secondly [indiscernible] give us a little bit more [indiscernible] marketing [indiscernible].

[Guido Oelkers, CEO & President]

Yes, maybe Henrik.

[Henrik Stenqvist, Chief Financial Officer]

So concerning the amortization charge of -- from Synagis, it will, of course, be consolidated for full quarters going forward. So it would be slightly higher than in Q1. Then when it comes to costs by quarter, we don't guide by quarter. I'm sure you have -- I'm sure you're able to estimate properly based on our full year guidance that we've given. We also don't want to provide guidance for specific products. So we refrain from that, unfortunately.

[Guido Oelkers, CEO & President]

Yes? Maybe I round it up. Obviously, you have seen that this is -- we are building the company to a new scale, as you see it. There are really exciting opportunities ahead of us with -- particularly with regard to Gamifant. And we also feel, with Synagis, the best is still to come. We are -- as you see -- as you can hear from us, we are excited about the opportunities in hemophilia and are here to build. And I think this gives you a little bit of a flavor. And we have now very two strong pillars. So we feel that the company is in a good shape and really happy to take more questions. Please refer to our IR Department, so if you haven't been able to address all your questions right now. And other than this, we're happy to see those of you who can make it at the Capital Market Day and then go into much more granular depth. Thanks a lot for your interest, and wish everybody a great day, yes? Thank you.