Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Transcript 2023-Q1

[Guido Oelkers, executive]

Thank you so much, and hello, everybody this is Guido Oelkers, CEO of Sobi. Welcome to our first quarter 2023 conference call for investors and analysts. As usual, the presentation was posted to sobi.com earlier today. And basically, as per usual as well on Slide 2, please take note of the safe harbor statement. And unless stated otherwise, we will be making comments that relate mostly to first quarter performance in 2023 at constant exchange rate, and in million Swedish Krona.

Let's turn to Slide #3. This is, let's say, and this is the agenda where we plan to cover all the key aspects of the report today. We are going to share with you presentations on Q1, followed by Q&A until around 3:00 p.m. Swedish time. And please keep your questions short and we will try to keep our answers also pretty much to the point. [Operator Instructions] In speaking order, I'm joined by Henrik, our CFO; and Tony Hoos, our new Head of R&D, MA; and Armin, our Senior Scientific American offices also participating in the Q&A session. And we have Anders Ullman on the phone, the previous head of RDMA and you know that he is going -- he's going to be up for election to the Board. And hopefully, he'll be elected at the General Meeting of shareholders, and it just shows that we do this development in RDMA in a very systematic and organic way.

So please turn to Slide #4. Starting off, I'm pleased to say that Q1 2023 has been a good quarter for Sobi with continued solid growth. So revenues increased at 6% at actual rate contracted at by 2% at constant exchange rate, and the main reason is related to phasing of sales to our partner in China and the high comparison for Kineret due to previous COVID-related sales. If we exclude these 2 factors, the underlying revenues increased by 8% at constant currency, and that's quite good a terrain.

The launch medicines increased by 66%, driven by COVID. Very proud of our haemophilia's business. It grew by 10% and Aspaveli is surfacing to become material and had sales just below SEK 100 million, SEK 95 million. And while immunology was overall held back with a COVID comparison for Kineret. Gamifant, continued good -- continue the trend with increased numbers of patients to the tune of 32%, and we are glad that more patients are now benefiting from Gamifant because -- as you will hear from Tony later, we have -- there's a lot of need in the society also beyond outside of the U.S.

EBITA reached SEK 2.2 billion in the quarter with a margin of 40%. And -- and as much as we like our economic progress, we are very happy with the progress that we have made with the pipeline. And we have much higher certainty for efanesoctocog alfa now based on the U.S. approval and the positive Phase III results for the children study. And this means that we are ready very soon to fire.

SEL-212 met the primary endpoint in the 2 Phase 3 studies and DISSOLVE 1 and 2, this is the -- we are still expecting more details and Tony will update you on this. But we feel that the product base on the primary endpoint data looks pretty competitive versus existing therapy, and is confirmed by market research. Simplifying our economic rights to nirsevimab by the royalty agreement was also an important move for the company, gives us strategic option ability to use the funds for growing the company in different forms and shape and also simplifies our interaction with Sanofi moving forward by preserving our economic interest.

Approvals for Empaveli and Doptelet in Japan speak to the quality of the RDMA team. And we have completed the enrollment for the EMERALD study or Study 14 that is relevant for the U.S. filing. So more use, obviously, to come. But with all that considered, we confirm our outlook and for the full year 2023 with revenues anticipated to grow by low to mid-single digit and at constant currency and for adjusted EBITA in the low 30s. The outlook excludes Sobi's right to royalty on net sales of nirsevimab in the U.S. And as usual, I mean, as we were asked earlier in some quarters, it's basically our main basic principle that we look at life in a more conservative and prudent way. I would like to take the opportunity to thank all my colleagues at Sobi for the contribution in the first quarter than in every day striving to bring life-saving medicines or relevant medicines to patients faster.

Please turn to Slide #5, moving to disease areas and geographies, the phasing of sales to our partner in China and COVID-related business has significantly distorted this picture and the comparability of numbers. Just as a reference, Doptelet did not decline but in outside of China, it grew 78% and our international business, excluding the assorting factors grew by 54%. But we wanted to be transparent. Hence, we have shown this, but we have a very strong underlying business growth.

Let's turn to Slide #6. Turning to hemophilia. This was a very good quarter with continued stability. Elocta grew at 9%, driven by patient growth, consumption and geographic expansion. Alprolix increased by 16%, driven by patient growth and geographic expansion as well.

Next slide, #7. As earlier mentioned, Doptelet 78% in markets out of China, driven by increased uptake of new patients in the U.S. and the ongoing launches in Europe and international markets, and that's a very gratifying development. In Europe, we saw strong growth in Germany supported by recent reimbursement in Italy and Spain. So we feel that there's a much bigger news to come. In the U.S., the trend continued with more new patients, new prescribers and higher share and also longer duration of treatment. So the market share gain at this juncture is mainly from the injectable competitors giving rise to believe that we could do more. The first quarter was also adversely impacted, as already previously mentioned. While sales to our partner in China, we are expecting combinatory effect in Q2, but future Doptelet beyond Q2 will be determined really by the U.S., Europe and other international markets due to the generic entry in China in 2023.

Please turn to Slide #8. The launch of Aspaveli continued well with quarterly payout just below SEK 100 million, as previously said. We launched now in Germany, U.K., France, part of the Middle East, Australia, with some early sales in some other countries where reimbursement is starting to come in. So these sales are really not reflective of our entire territory. We adjusted a bit the beginning have around 120 patients at this juncture.

Next slide, #9. So turning to immunology. Kineret really declined only because of COVID-related sales and the rebasing we flushed out in the next quarter. And then you should see a growing business again. And Gamifant increased by 5%. The growth was mainly due to an increased number of patients, which I quoted already and -- but shorter in the -- shorter treatment cycles, we are working on this. And we feel that we are on a good way. The study 6 or the Phase II study in secondary HLH was published, and we'll talk more about this later in the R&D section. And the study demonstrated really favorable efficacy and safety and about EMERALD study I talked about. So also strategically, the window for Gamifant is opening up.

Please turn to Slide #10. We are now moving to Synagis, and Synagis was really in line with our expectations. There's a small variation versus say last year, the first quarter. But please bear in mind that we had a very strong season in the end -- at the end of last year. So I think there is nothing to read into it. Product has done very well, and we are very gratified with the evolution. In April, as mentioned, we announced a new royalty agreement with Sanofi for nirsevimab, the termination of the participation agreement with AstraZeneca. This, as I highlighted, this new structure provides simplification and gives increased strategic flexibility. Nirsevimab is under regulatory review in the U.S. and was recently approved in Europe.

I will now hand over to Henrik for the financials. Please go ahead. Please turn to Slide 11, I think.

[Henrik Stenqvist, executive]

Thank you, Guido, and hello, everyone, and I think it is Slide 12 Yes. So I'm pleased to take you through the key financials for the first quarter of 2023. Starting with the top line. Q1 was a good quarter with a solid business performance. Revenue of more than SEK 5.2 billion was the highest Q1 ever as reported in SEK and the second highest quarter ever. So benefiting from both underlying performance but also currency tailwinds. And as we saw, the reported growth was 6% and corresponding to minus 2% at CER. Explained really by the lack of sales of Doptelet to China in the quarter and last year's COVID-related sales of Kineret.

Looking at the bars to the left. In immunology, we see the impact in the quarter of the seasonal pattern of the synergies with high sales in Q1, however, lower sales in the previous quarter. Furthermore, a strong trend in hematology, driven by the strong performance of Doptelet in the United States and Europe and the hemophilia products. If we go back to the table, the gross margin in the quarter of 80% is strong because of the seasonality with synergies, but it's also increased from a year ago due to product mix, not at least the lower sales of Doptelet to China, which is a low-margin business and a favorable FX impact.

The EBITA margin was 40%, equal to the adjusted EBITA margin for the same period in 2022, and there were no items affecting comparability in the quarter this year. The operating expenses, excluding amortization, came in slightly below the previous quarter, but increased versus Q1 '22 by 4% at CER, driven by increased R&D expenses mainly related to SEL-212, where we had the readout in the quarter, and a good cost control remains in focus for Sobi. And earnings per share for the quarter ended at SEK 3.60, just below the adjusted EPS from last year.

The operating cash flow was strong in the quarter at close to SEK 2 billion, reflecting increased operating profit. And as anticipated, in Q1, we had some important milestone payments and cash flow from investing activities was minus SEK 3.2 billion and included milestones related to nirsevimab of $175 million, a sales milestone for Doptelet of $65 million and the EU approval milestone for ZYNLONTA of $50 million. And as a consequence, net debt in the quarter ended at SEK 8.7 billion, and this corresponds to a net debt-to-EBITA ratio of about 1.25. And for details on the items affecting comparability that we had in Q1 '22, please see Page 4 in the Q1 report.

So please go to Slide 13. And we turn to the financial outlook for the full year '23, which is as before on revenue growth at constant exchange rates and the adjusted EBITDA margin. We will continue to expand our presence in hematology, immunology and specialty care through our ongoing launches and new medicine and geographic markets, and we anticipate sustained sales growth, and we confirm the previous outlook for 2023, which reads as follows.

So revenue is anticipated to grow by low to mid-single-digit percentage at CER. And we continue to invest in launches and advance our pipeline of new medicines and emphasize the long-term value of the business. And therefore, we anticipate an adjusted EBITDA margin at the low 30s percentage of revenue. And as before, this outlook excludes any element from nirsevimab and with the new agreement in place, this means that it excludes Sobi's right to royalty on net sales of nirsevimab in the U.S. And with this covered, I would now hand over to Tony for the pipeline. Thank you.

[Anton Hoos, executive]

Henrik, thank you very much. So I'm Tony Hoos, if you allow me a personal word. This is Day 17 of my journey with Sobi. And I personally really look forward to making a contribution to Sobi's success. And another word of introduction, Anders Ullman, who is on the call today, my predecessor, and I have made a real effort to ensure that this transition occurs seamless that we have no gaps and nothing is lost, which I think is really in the best interest of everyone. Last but not least, our patients. And in addition to Armin, we also have Anders here to take any questions you may have that may be better addressed by him.

So that being said, allow me to walk you through the continued progress of the pipeline that we can share and the news flow in the first quarter. And thank you. You already turned to Slide #15. So let me walk you through. If we start with hemophilia, Guido highlighted 2 events already. I think this has been really, really nice for us with the 2 events, as you see here, highlighted once more, the regulatory approval in the U.S. and the positive kids trial, the XTEND-Kids Phase III pediatric study.

If we think about the FDA approval, the label is routine prophylaxis, on-demand treatment and control of bleeding episodes and therapeutic management of bleeding. So really good and meaningful label for the product. And again, primarily based on the data of the XTEND-1 Phase III study where the once-weekly dosing met the primary endpoint, which I personally believe is a significant improvement for patients to protect bleedings for people who suffer from simply hemophilia A.

And then the second line in hemophilia, as you can see here, the XTEND-Kids Phase III pediatric study did meet its primary end point. I think this is very exciting. Just to recap, we had safety efficacy and pharmacokinetics of efanesoctocog alfa as a once-weekly prophylaxis in these previously treated kids and they were all under 12 years. And personally, I was quite interested in seeing that we had no Factor VIII inhibitors observed in the 74 children who enrolled in the study. And thereof, we had 65 who experienced at least 50 exposure days. So again, I would say this is a very, very good result.

And Guido hinted at that already, these 2 trials combined, of course, will form a basis for a future European submission. And since I just mentioned Europe, you may recall that we were granted the Orphan Drug Designation by the European Commission already in June 2019. So maybe I continue now to Kineret, Kineret, our IL-1 receptor antagonist. During the quarter, the third regulatory submission was made for Kineret in China and this time for the potential use in the treatment of cryopyrin-associated periodic syndromes or CAPS. We would expect the regulatory decision in 2024. And just as a recap, we had 2 other China submissions, FMF and Still's disease.

Probably -- or going back to what Guido mentioned already, you will recall, SEL-212 that's the pegylated-uricase ImmTOR for chronic refractory gout. In March, Sobi and Selecta announced positive top line results of the Phase III DISSOLVE programs. Those were 2 placebo-controlled randomized clinical studies, of course, to determine safety and efficacy of 2 different dose levels in adult patients with CRG. The primary end point of the program was met. The primary end point was serum urate control during month 6.

And of course, now having the top line data, it's extremely important that we very diligently analyze everything that we have, including secondary endpoints, get the full data set and a full study report as soon as possible. And of course, we'll also now check very carefully what additional evidence, including CMC, we'll need to include in a future license application with the regulators. So perhaps the next point to tackle is Doptelet, our thrombopoietin receptor agonist for chronic liver disease. It did receive regulatory approval by the PMDA in Japan on March 27, 2023.

And that combined with the approval of Empaveli, Aspaveli on the very same date in Japan, I think, is a very powerful story for patients in Japan, and you can look at all the details, obviously, in the respective pieces of information. But I would say just looking at geography, look at what happened in the U.S., regulatory submission China, 2 approvals in Japan, I'm very, very happy with that, I should say.

And there is another piece of information I'd want to share with you on pegcetacoplan. Some of you may remember that pegcetacoplan had -- or has a study in ALS. We have an update regarding this open label long-term extension portion of the Phase II MERIDIAN study, that has been led by Apellis. All of these studies or usually, these studies have independent data monitoring committees. They did an unblinded review of the available data. They didn't find any safety concerns, but the IDMC concluded that the available data did not support continuation of the treatment. And so in consequence, as you will have seen in the press release, the decision has been made to discontinue treatment with systemic pegcetacoplan related to this open-label long-term extension study. Just as an FYI, all patients had completed the randomized treatment portion of that study. And of course, all data will be reviewed as planned.

So maybe this allows us now to go into the outlook. So if we go to the next slide, we talked already about hemophilia, efanesoctocog alfa. We, of course, now the regulatory submission in the European Union. We'll do everything we can to be as quick as possible. The scheduled date is second half of 2023, as we've shown on this slide. Again, if we go to China, you will see 2 events for China. You will see Doptelet and you will see Kineret, and we expect a regulatory decision for Doptelet in ITP and Kineret in FMF, i.e., Familial Mediterranean Fever.

So moving on to Gamifant.For Gamifant, we expect to receive data from the EMERALD Phase III study. This is what we call the Still's disease cohort and we aim regulatory submission for the Still's disease cohort in the second half of 2023. And perhaps I offer 2 additional bits of information for Gamifant. One, you will have seen Guido referred to that already the results of Study 6. This is a Phase II study in patients with macrophage activation syndrome secondary to Still's disease, and that was published in the annals of rheumatic diseases. Again, I personally think this has been very meaningful data.

In addition to that, I always have a pretty good signal about how high the medical need is when we receive urgent calls from physicians and requests for compassionate use, and we get quite a lot for this drug. So we see there's a real, real unmet medical need. And again, we're super happy to help in this regard wherever we can. So perhaps this allows us to move on. Just one word about nirsevimab. In the U.S., it's progressing with a regulatory review with the decision anticipated at the end of the third quarter, AstraZeneca and Sanofi here player role. And so he has the right to royalties on Sanofi's future net sales of nirsevimab in the United States.

So that concludes my outlook for the second half of 2023. You will see some anticipated milestones for 2024 on the right-hand side of this slide. My suggestion would be, we will keep this without commenting further at this stage. These are certainly our targets, and we will update you with refined goals, targets, time lines as we progress through 2024. And maybe before I close this session and hand it back to Guido, if you allow me again to say a personal word. I really want to say heartfelt thank you. First of all, to all my colleagues at Sobi for the hard work they do. I also want to express an appreciation for our external experts and in particular, to all our patients and their families who participate in our trials because without what they are doing, we would never be able to help advance the science and really care for those who we strive to help. So thank you very much, and let me turn it back to Guido.

[Guido Oelkers, executive]

Sorry, I was on mute. Sorry. Thanks, Tony. Let's go straight to Slide #18. And just to quickly summarize, this was a good, very solid quarter. And as you have seen, there are a lot of reasons to believe that we have a pretty exciting future ahead of us with all the progress we made on pipeline, on restructuring agreements and also on approvals and study readouts. So the business is in a good shape. As you have seen, we are bullish about the prospects of this business. And as Tony said, well, thanks everybody at Sobi who made this possible, and we hope to continue to provide good news for patients all this year. And as we move forward, let's say, with our business.

So we now go to Q&A. Slide #19. [Operator Instructions] So let's go right into the first question.

[Operator]

[Operator Instructions] Our first question comes from the line of Eun Yang from Jefferies.

[Eun Yang, analyst]

I have a couple of questions. The first one is on nirsevimab. So Guido, you mentioned that the recently simplified arrangement, royalty arrangement with the Sanofi that could increase your strategic flexibility. So can you comment on what kind of strategic options that you are considering? And the second question is on Doptelet. So there was -- there were no sales to China this quarter. Are you expecting sales to China in second quarter beyond?

[Guido Oelkers, executive]

Yes. Thanks, Eun. Basically, let's start with the easy question. So on Doptelet, we're expecting a material order in the near term. And that should bring us back on track. But looking forward, I think beyond this, it's -- we have to see that the landscape with generic entries in China is changing. So our revenue expectations are going to be rather moderate. But when you look at our existing business, just for that was north of SEK 140 million last year, growing at 78%. Right now, you can understand why we believe that this business has a very good future, even if basically, in the second half, maybe there is not so much business or nothing in the most extreme case. We don't know at this stage.

But -- so this will be a growing business. And regardless, we always said that this business has to grow even if you're notwithstanding what your aspiration for China is and we're on a good way because now we are launching in Europe, we got the approval in Japan. I mean so there is going to be -- with longer patent protection, so it is going to be a certain dynamic.

Regarding nirsevimab, it's pretty straightforward. I mean, we like nirsevimab because it props up our earnings, royalties that you record earnings of 100%. So that's useful for your ratios and basically helps us to fund the projects that are a priority to us where we take ownership. So that's option number one. Now option number two is if we really would have no other way of funding. Obviously, you could monetize it now because it's pretty transparent. We need to just find somebody who likes the prospect of nirsevimab.

And there are obviously many forecasts out. So both options are relevant at this stage. Nothing has been decided in the meantime, we love the earnings and look forward to a successful launch of Sanofi and will book some nice proceeds and we avoided uncertainty around investing into what we would be for us noncore. So it avoids -- this agreement avoids investments, also moving into the future in areas that are not core to our business. Maybe -- hope that this answer your question and maybe go to the next question.

[Operator]

The next question comes from the line of Charlie [indiscernible] with Morgan Stanley.

[Unknown Analyst]

[indiscernible] from Morgan Stanley. So firstly, I'd say the growth of 2 hemophilia products was a decent step up year-on-year. So at the start of the year, you suggested stability for the franchise in 2023, but is this rather conservative? And secondly, on ZYNLONTA, given this was the first sales quarter, could you please talk a little bit about the physician feedback and the cadence of uptake you expect over the year?

[Guido Oelkers, executive]

The -- yes, let's say in this regard to hemophilia, we always like to hold our horses. Obviously, the growth was driven by strong patient growth, internationalization and also, let's say, the -- internationalization. So that -- there, we still have a little bit of more room. We don't underestimate competitors. That's the reason why we always take a conservative stand and there will be some price effects also kicking in. But you need the franchises in a good way yes. There's no question, yes.

I mean with 9%, respectively, 16% can't complain too much. And -- but it's too early now to change our view. I mean we are excited about, obviously, efanesoctocog alfa. And with a bit of luck, we may already have some one of the other Middle Eastern country launching during the course of this year and then definitely Europe in the following. So I think that will be the engine that will give us reason to have a lot of optimism.

With regard to ZYNLONTA, it's a bit early. I mean we have 3 patients now and they are very recent. So I would refrain from now -- in Saudi Arabia, not giving you feedback. From what I hear, the therapy has worked well. But to be honest, now to draw, extrapolate from there, I think it would be premature. I think we -- when we have the next market, the next market will be a German launch, and then they roll out across Europe. I think that we -- I think I would like to come back and give you a more profound perspective.

But it's nice to launch it. And nice to make it available because there was a high demand, and we are convinced that this product can play a role. And we don't need a lot of effort towards it because we are already in the target audience.

[Operator]

The next question comes from the line of Christopher Uhde with SEB.

[Christopher Uhde, analyst]

I hope you can hear me. My question first is on Elocta and Alprolix again. So you mentioned phasing. So do you expect the phasing to unwind in Q2 or later this year? And would you please quantify the impact it had on Q1? And then also, if you could give us any more detail on the price cuts where and roughly how much?

And then the second question I'd like to ask is, so the 2-year period of investment has sort of -- that you guided to 2 years ago has, of course, come to an end. And -- perhaps you could give us some more color on the expenses for R&D going forward for -- over the next few years for the existing product and pipeline portfolio?

[Guido Oelkers, executive]

Yes, sure. Sure. So with regard to Elocta and Alprolix, I mean we have never really come out, but we would have expected a couple of hundred million of impact, yes, out of these price adjustments and cost containment measure, including clawbacks in Europe. But because we had a little bit of -- we still have -- we still have room to improve consumption per capita. And we have a strong momentum from international. We figure that we should be able to have a stable at least hemophilia business, whatever that means. It could be also a slight growth. We start well. We like it. But that's already -- anything else is a bonus. And we are relentless, we will not give in here, yes. So but in order of magnitude, we have a couple of hundred million headwind.

But you have seen they are applicable already now. So having the momentum we have from a consumption and eventually [ phasing ] out away that impact, which is nice. But it will come in, and we will have to keep going. But the hope is that we are still a little bit more undertaken, and we can keep this moderately growing. But our guideline was always stable, we're stable or also stability. Don't change this. It's our strength because we want to understand -- you see that the issue is also that the more you have losers in this game, who have nothing to offer, but price potentially that could also have effects in the one or the other market.

I mean on a materiality basis, it has not yet provided additional pressure. But we know that we are -- that this is coming. The more we are looking forward to the efanesoctocog alfa launch where we are able to step out of this with a better product. at least to a large degree. And with regard to the investment, I mean, what we -- I hope that we can defend a strong R&D spend where we have it by further significantly growing our business. So that basically from a -- you see some leverage coming in over the years. But when you look at it, I mean, this is -- we have now nice end points in RDMA, which clearly gives visibility now to a future beyond also '25 and gives reasons to believe that we strongly grow the business.

So we are not yet at this juncture in a phase where we will optimize because we still have a couple of things to do. But we hope that the spiraling effect that we have seen that, that basically over the next years will come down, but it will also depend on which opportunities we will be able to source in. But I think as a mix, it is a good business. And I like where we are today, it's a much more -- much better strategic position than we have been a year ago or 2 years ago, now it's a nicely balanced portfolio with access to the earnings at least of 3 main assets, I mean that's in the pipeline of testing. So I don't have -- I don't give you now because typically, we don't give guidance beyond 1 year. But -- and probably we would not.

But I would see -- I see the point. I understand the -- we have obviously given you guidance on '25. By '25, I have forgotten this, it haunts me at really every call, and we have given guidance on the delivery. I mean we have also -- when you look at it, we have invested, obviously, substantially broadening the company. And you heard China, many times, Japan and Australia. All of those companies were not around some time ago. So I think it's -- we are actively at the best interest of shareholders. Next question, maybe?

[Operator]

The next question comes from the line of Alistair Campbell with RBC.

[Alistair Campbell, analyst]

I've got 2, please. First of all, just I wanted to talk a bit more, if you can, about Beyfortus, about nirsevimab. Just in terms of that new agreement with Sanofi, I'm sort of keen to understand how that negotiation originated. Is that something that you sought to do. And ultimately, is the outcome of that value neutral? Or have you had to give up some value to sort of gain more flexibility in that deal?

Then the other point of that is just basically Sanofi this morning is still saying that they remain optimistic they'll be able to get to the U.S. market with Beyfortus to participate in the RSV season before the end of the year. I mean, technically, if they did get sales before the end of the year in terms of the timing of when you receive royalties, could that fall into this year? Or is that more likely to fall into next year?

[Guido Oelkers, executive]

Yes. I mean -- so first, with nirsevimab, I mean, when you dance with obviously, 2 very large companies, so we -- you need to wait for the right moment. So we basically -- we knew that we could be a piece of the puzzle that these other 2 companies were trying to address. But we did not really champion this because otherwise, this would have impaired our -- the economic outcome of the negotiation. And that basically was the reason -- was our strategy all along. And as you can see, very positive because clearly, when you're neutral to your other question and because we also saved milestones. And simplified agreement and obviously are now not forced to invest into a product that we don't control or manage also forward looking, there are obviously opportunities for this product.

And we basically participate in a very meaningful way in the economics of this product without taking any risk and without having lengthy discussions and negotiations, and report on how much what -- on how to define profit or revenues or other things. So we like that. It's simple. And clearly keeps us harmless, but it gives us also, as I mentioned earlier -- and as said, that has a currency.

And with regard to RSV, I cannot speak, obviously, on behalf of Sanofi, they know this better. We have -- in the previous call, we did an outside in where we -- I think the last one, where we also asked people close to the subject matter in the committees and everything as a concerning firm. And as that -- so I can report on both assumptions. Yes, I think there's a high probability that they will have sales and in that case, depending on how they will record them, I think there's a good chance that we have already material mix this year because the part of this because the way this works is normally when a proficient company in this space or when you look at analogs launches, you can, even in 2 months can achieve a significant market penetration and you just need one shop, and you have accomplished the sales for that patient. So we are cautiously optimistic to see something. But you have to really ask Sanofi how they view this because we can only draw -- extrapolate from what they have said. We are not in charge.

[Operator]

The next question comes from the line of Peter Östling with Pareto Securities.

[Peter Östling, analyst]

Yes. Just a question on Doptelet in China. How should we look at this? Is it prudent to take away all sales beyond Q2 this year even in '24 and beyond that?

[Guido Oelkers, executive]

Yes. I mean there is -- I mean, it's prudent for sure. It cannot be less than [ that ], then you're very true. We hope that in the further discussions that the brand that we own, carry some weight. And we are now rethinking also how to look at this, is how to restructure this partnership with [indiscernible]. So that maybe we can preserve something. But in terms of materiality, it's not going to be to what we have seen obviously last year by any respect.

And that's the reason why we -- we need to grow what we have and we have some really explosive growth right now in Europe. Even though we don't have all market share, and we have -- we continuously going strong and look forward to the launches also in Japan and Australia and then taking the product into Latin America in a big market. I think you know that we were -- we are absolutely optimistic that it's a growing product for us despite the fact that it is conceivable that we flush out the China business as of '24.

[Peter Östling, analyst]

Okay. And just to confirm, did you say that you expect a material order in Q2? And then more or less nothing.

[Guido Oelkers, executive]

Yes. I mean I'm always cautious because we are dependent here on the ordering of our partner. But that is -- we're expecting at least one big order here absolutely.

[Operator]

The next question comes from the line of Viktor Sundberg with Nordea.

[Viktor Sundberg, analyst]

So I had a question on nirsevimab that was partly answered. But I can go ahead with another question on nirsevimab. So the payments here to AstraZeneca and Sanofi will they be booked in the P&L or in any other way? That was my first question.

[Guido Oelkers, executive]

No, they're milestone payments, they are not P&L related.

[Viktor Sundberg, analyst]

Okay. Perfect. And on Doptelet, I mean, if you strip out the China sales historically and look at the growth here, it looks like quarter-on-quarter that it's quite flat, 4.6% quarter-on-quarter growth since Q4. Are there any like gross to net dynamics that we should be aware of? Or do you have any comment on that? And maybe also if you can comment on the growth in Europe versus the U.S. here as well.

[Guido Oelkers, executive]

Yes. No, I think the -- what we see is really -- I mean, exponential growth in Europe because you broaden the base, the product responds extremely well to promotional effort, and we are coming in at the right time. In the U.S., we -- I mean, this is always -- you basically -- you go through this really exponential growth. You always hit at certain points of time, certain milestones and you think, okay, am I still collecting enough new patients, but that is absolutely -- when you look at the trend, it's very powerful and also at the latest indicators of new patients, new prescribers.

This is by far not done, is there is -- I would not worry too much about the comparisons the way you've done in the -- and the 78% is quite indicative of what we are -- where the product is right now in terms of acceleration also on all of these other parameters and the leading indicators, they're pointing on to the right direction. And sometimes, there's also some inventory that we have done right, which we don't obviously encourage in whatever form or shape. And when it impacts a little bit when you do the quarterly comparison but when you look at the leading indicators, they are all very solid.

[Operator]

[Operator Instructions] The next question is a follow-up from Mr. Uhde with SEB.

[Christopher Uhde, analyst]

So I guess in terms of SG&A and -- well, so the number of employees basically at the end of last year was basically unchanged from the year before, but SG&A, excluding amortization, was up 25% and salaries were as well. So what factors are behind that? How much was related to the restructuring and how much to other reasons why -- for exceeding core inflation? And what should we expect in terms of inflationary impact on overhead in 2023? And also, what were the 56 new hires reported for?

[Guido Oelkers, executive]

Yes. Henrik, do you want to take it?

[Henrik Stenqvist, executive]

Yes. To start, to be clear, if we look at SG&A in Q1 compared to Q1 last year, excluding amortization at constant currencies, it is virtually flat. So there is no...

[Christopher Uhde, analyst]

I was looking at the full year from last year from the annual report.

[Henrik Stenqvist, executive]

Yes. Okay. So your question relates to '22 compared to '21.

[Christopher Uhde, analyst]

And trying to use that to get a sense of the trajectory going forward, what factors are...

[Henrik Stenqvist, executive]

Yes. Well, when it comes to the increase in '22 over '21, it's really, really about the launches of Aspaveli and Doptelet worldwide and also our internationalization. When it comes to where we go from here during the rest of the year, we expect some increase in SG&A compared to Q1 because of the same reasons. We continue to try to accelerate both Doptelet worldwide and Aspaveli in our territories. So that will lead to a slight increase from the Q1 level in the coming quarters.

In terms of number of FTEs, similarly, the gentlemen here next to me, Tony, he is planning to have some increase in staff and similarly in SG&A, but that's really balanced increase across the board. Okay.

[Christopher Uhde, analyst]

And for the rest of this year, inflationary impact?

[Henrik Stenqvist, executive]

Well, we think we can handle inflation fairly well. Like everybody else, we've tried to curb salary increases. We also focus quite a lot on procurement. -- where we try to, through an improved procurement actually mitigate or offset some of the inflationary pressures.

[Operator]

Today's last question comes from the line of Peter Östling with Pareto Securities.

[Peter Östling, analyst]

Yes. It's not a question, just another confirmation. When it comes to price reductions for -- within your hemophilia business. Did you say that you had already seen some or that you expect some for the rest of the year?

[Guido Oelkers, executive]

Yes, we have seen some I mean, the effect because they have been executed, and we are expecting also, let's say, the more to come because they are less because of government but more because of further competitive pressure. But we think that we can -- the way we look at it, that we can compensate this in a way that we have seen also in the first quarter, maybe not to the full extent. I mean this was a very nice, obviously, evolution here. But that's how we look at it.

Yes, I think we can have probably more questions and answers, I guess we have tomorrow a call as well. And if you have questions, please refer to us. I mean this was just the first meeting and provide -- as you can see, we are quite happy with where we are today. Would I like to present to you an order for Doptelet after Q1, absolutely working the case. But what I like is that we have put our underlying business grows very strongly and that we're doing the right things on our product pipeline.

On this note, I wish you a great week and look forward to hearing from you. And if you -- if there are any questions, please refer to our as per usual [ IR team ]. And from a summary, I mean, just a short detail. We think that our perspective on 2023 is unchanged, but this is more probably also driven by the fact that this Q1, it -- why would we go ahead of our services juncture, which is a good business and strong earnings, strong growth with the product, yes, some headwinds. But as you can see, we manage. All right on that note I wish everybody a good day. Thank you.

[Operator]

Ladies and gentlemen the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.