Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Transcript 2019-Q2

[Operator]

Ladies and gentlemen, welcome to the Sobi presentation of the Q2 results. I will now hand over to Guido Oelkers, CEO; Henrik Stenqvist, CFO; and Milan Zdravkovic, Head of R&D. Please go ahead.

[Guido Oelkers, CEO & President]

Yes. Thank you so much. Good morning, everybody. It's really my pleasure to kick off our Q2 result presentation. Let's go straight to Slide 3. The presenters, as mentioned -- forward-looking statements obviously as per usual. But the presenters today are myself, Henrik, CFO; and Milan, our Head of R&D. And I'm quite blessed to present what we believe are strong results. So if we go straight into -- go to Page 4. So basically, when you look at it, what are the main thesis and that's the reason why we call it strong performance, sharper focus. We think that we are presenting here today very strong quarter results, financials as well. And what we also, let's say, show is that we strengthened our organization, particularly in the United States, but also in other countries where we have invested into our business, hence, you don't see the operating leverage at the bottom line as much. And we are building our future in R&D, particularly on our late-stage pipeline, and we need to mention in this context our programs with emapalumab, in particular. And we focus also on what matters, that means that we sharpen our focus on our core areas in Haematology and Immunology, Haematology out of Sweden, Immunology out of Switzerland, and that resulted into an alignment of our structure. So when you think about it, bringing the results now into context, 38% revenue growth in the quarter is quite strong. And what is gratifying here is that our Haemophilia franchise with Elocta growing at 42% and Alprolix growing at 45%, I mean, shows, in a good way, we see strong patient uptake in hemophilia demonstrating that what we are doing now with our Liberating Life campaign and also the focus behind those products and the clinical work is paying dividends. And when you look at the financials, we have a 25% uplift on the EBITDA, so demonstrating strong financial growth or earnings growth, but we are also investing into our future and we believe that this is what you want us to do to strengthen Sobi also in the years to come. For us, very gratifying in the Immunology field was the uplift of Gamifant. Even though it is early days, but we felt that the SEK 205 million in Q2 demonstrates that we are entering an area with a very high unmet medical need in HLH and we got very positive feedback from the numerous physicians who are using the product now, and very pleased with the uplift of Gamifant in Q2. That increases our confidence around the product and supports our decision to have acquired this product. We have also concluded -- or we have signed a purchase agreement with regard to emapalumab and related assets and we reported on this earlier. You know that we got an organization as part of this transaction, I'm very proud of it, that is now the nucleus for our Immunology franchise out of Switzerland and we think that this is an organization that can be leveraged in the future significantly. And we also got an option for 2 immuno-oncology assets that we are also very pleased about. So that really gives you a little bit of flavor. So it's really about today strong financial performance, it's about building our organization, but it's also building tomorrow. And now we'll be going clearly more into the meat of the presentation and show you a little bit on the next page what we do by the different business areas. So in Haemophilia, as I mentioned, we think that we have a very strong momentum. We see strong penetration in existing markets. We accept that there is -- obviously, there's increased competition out there, but we are convinced and we are gratified by the products that we have, that these are really state-of-the-art products and that ReFacto treatment is here to stay and remains the standard of care in this area. And we benefit from further internationalization and we got some further, first, really nice uplifts also in Central and Eastern Europe. So this shows that we believe our growth story has a couple of more legs. We see also that the concept of individualizing and intensifying therapy, and with this, allowing patients to have a more normal life that this also resonates because it is not about making patients forget about their disease, but it is about improving outcome and allowing patients to live the life they elect to live. And we feel that factor replacement plays an important role in this context. And we believe that factor treatment will remain the standard of care and when you see it later, the results that were published at ISTH on BIVV001, we see that, and we look at the areas under the curve, that you can achieve with those newer treatments, we think that we have not, by far, reached the end of the life cycle for this treatment and that we will be part of the future in this regard as well. So now we go to the financials, and as you can see, Alprolix doing extremely well. On a year-to-date basis, we have 66% growth. Now in the quarter, we have 45%. Growth is driven by France, Italy and Germany, as depicted here, and we have now a nice franchise of countries. And basically, for now, the main theme is, yes, to make sure that in factor IX, it's not just about trust. It is about the distribution of the product and Alprolix has demonstrated that in the clinical benefit in the extra vascularization. And we were quite gratified to see in our recent publication that was published at ISTH where Alprolix even showed 0 bleeds unlike other EHLs and this confirmed our view that Alprolix is really a fantastic product in the factor IX treatment and more patients should benefit from it. Next slide, maybe we go to our performance with Elocta. So in Elocta, we had a very strong quarter as well with 42% growth. Also here, no surprise here, mainly driven by the main markets in Europe, but also very positively affected in the Middle East. We have now here very nice already distribution by countries with 27. And we think that, yes, there is a lot of noise in the hemophilia A market, but people also recognize in daily practice that ReFacto treatment has an important role to play. Let me go maybe to the next slide and I refer to Milan who will share with you some exciting data that were recently published at ISTH.

[Milan Zdravkovic]

Thanks, Guido. So this slide shows the data from the completed single-dose study with BIVV001 in patients with hemophilia A. Now BIVV001 has been designed to have a half-life that is decoupled from the von Willebrand factor-mediated half-life ceiling, thereby, not only prolonging the half-life but also giving greater exposure and thereby potentially also enabling better protection. So as shown here on the slide, at the clinically relevant dose of 65 units per kilogram, the half-life of BIVV001 was 43 hours versus 13 hours for traditional recombinant human factor VIII. And this was associated with factor VIII levels with BIVV001 of 38% and 17% after 5 and 7 days, respectively. In addition, as can be seen from the figure, normal factor VIII levels were obtained in the first days after dosing with BIVV001. So in summary, these data support the BIVV001 may have the opportunity to bring unprecedented protection and to liberate the lives of people with hemophilia A. If I can have the next slide. So immune tolerance induction is the standard of therapy for eradication of inhibitors, and there are experimental data and retrospective clinical data suggesting that there may be immunomodulatory effects and also favorable effects on ITI of Fc fused factor therapy. And this slide shows the interim results from the prospective clinical study with Elocta for first-time ITI in subjects with severe hemophilia A and high titer inhibitors. And what we saw was that in 6 out of 15 patients, we saw an ITI success after a median of 11.7 weeks suggesting that Elocta may offer rapid time to tolerization. Now while these data are early and not all patients have completed the study, the time to tolerization compares very favorably to the international ITI study. So we are very encouraged by these interim data and we look forward to sharing the full data set when it's available. And then back over to you, Guido.

[Guido Oelkers, CEO & President]

Thank you so much. And now it's time to talk about our other leg, main leg, which is Immunology. And as you have probably seen, very strong results with all 3 products, and I start with Kineret where we have now 24% growth in the quarter. And this demonstrated that we were able to overcome some of the turbulence that we had with the distributor change and now repositioned the product for growth. Gamifant, obviously, as I already alluded to at the beginning, very high unmet medical need and this is propelling our growth in this sector. And we are obviously continuously looking for opportunities to expand this franchise and report back to you when we have -- when it's the right time. So maybe we go into the meat of the presentation. Here, you can see the step change that we inflicted to our business with the acquisition of Synagis being -- primarily in Q1 and obviously now the launch of Gamifant. So we are really now resetting the base of the business on a completely new level. Please take note that our Synagis is a very seasonal product, as we reported back, so its main sales are happening in Q1, but also for us, this year, particularly will be Q4 and depending on the virology there will be an onset already in September. And please also take note that we didn't have -- that we only closed the transaction on the 24th of January, so we are missing an important part of the January sales in our books. But notwithstanding this, what we can say is that the business is really taking off very nicely. So we had a nice -- still nice sales of Synagis in Q2, but really what is the shining star now emerging is Gamifant and very positive trend now for Kineret in Q2 and this is driven by our U.S. performance but also by the rollout of Still's indication in Europe. Next slide. So here, basically you see the Kineret in more detail, also very strong growth in the quarter. I mentioned the U.S. now, which is pulling through where all the leadership change in the U.S. and the refocusing of the team, and overall very gratifying results. What we basically can see is that we improved the fill rate, but also new patients now enrolled and we have improved the stickiness of the product by basically working better with this new distributor, special distributor, and this is now paying dividends. Next slide. So Synagis was SEK 148 million, very strong sales for this off-season quarter, affected also by a one-off of SEK 81 million, which is related to a more informed understanding now on what basically is Medicaid and Medicare, and hence, we were -- we felt that it was indicated to have this one-off of SEK 81 million, this reversal. But still the viral season lasted longer this year and this helped us to achieve this result. But I think for you, more importantly, I think you should understand that the product's underlying demand is still increasing at 2.5% and we're obviously working very intensively to improve the product. That was our, let's say, main objective when we did the acquisition that we wanted to show by focusing on this product that we can do a better job and drive growth. And our main focus is obviously reducing the leakage and improve adherence to the protocol, and we think that we are, by far, not yet -- we have reached the end of this objective. So we hope that we can do better and proof is in the pudding, particularly then in Q4. So with Gamifant, let's say, very strong Q2 and let's say, as you know, it's really -- it's early days so we want also to have more of a measured approach. But we can see that there's a very significant uplift, physicians see a lot of utility for this product. And basically, it's too early for us now to revise our guidance, but obviously, as you can see, we are very positive when it looks to the future of the product and that we are on the right track. In Europe, we had a dialogue with CHMP and we think, based on the normalized approval timeline, that we should have an approval more like mid-2020, but this is not obviously in our hands. We will do everything we can to make sure that CHMP can make an informed decision. So this gives you a little bit of a flavor on the product and now I refer back to Milan who will show you the clinical trial program, which is very important to us.

[Milan Zdravkovic]

Thanks, Guido. So this slide gives an overview of the completed, ongoing and planned clinical activities with emapalumab. So we have the original pivotal trial in primary HLH including the extension study, the 04 and 05, as well as the 09 study in primary HLH to accrue more information also on long-term outcomes and quality of life. The study in malignancy and nonmalignancy associated HLH in adults is about to be initiated and finally, we have the secondary HLH study that I'll share more details with you on the next slide. So this slide shows the design and outcomes from the ongoing study in patients with systemic juvenile idiopathic arthritis developing secondary HLH or macrophage activation syndrome. sJIA is part of the juvenile idiopathic arthritis diseases and also has systemic features beyond arthritis such as fever and rash. Around 10% of patients with sJIA, a secondary HLH or MAS may develop and this is associated with significant morbidity and mortality. And there is today no treatment available for this secondary HLH MAS in patients specifically initially treated with high-dose steroids. As we have presented previously, patients with this form of secondary HLH, they have elevated interferon gamma levels, and this was the rationale for initiating the study. And as shown here, we enrolled patients with MAS secondary to sJIA having failed high-dose steroids. They were treated with an initial dose of emapalumab of 6 milligram per kilogram for 2 weeks, followed by a dose of 3 milligram per kilogram for the subsequent 2 weeks. The dose of steroid could be changed during the course of the study. And what we observed in this difficult-to-treat population with high morbidity and mortality was quite remarkable in our view. We saw a complete response to emapalumab in 6 out of 6 patients, all of whom had failed conventional steroid therapy. We saw a rapid decrease in CXCL9 demonstrating complete neutralization of interferon gamma. We saw the treatment response occurring early and also with a clinically meaningful tapering of the steroid dose already from week 1. Finally, emapalumab was well tolerated. There were a few infections. There was one case of CMV reactivation that was considered related and serious, but this was resolved with conventional antiviral therapy with no sequelae. So in summary, we are very encouraged by these interim clinical data and we plan to share this with the FDA to discuss the potential way forward for this indication. And now, I hand it over to Henrik, I believe, for the presentation of the financial results.

[Henrik Stenqvist, Chief Financial Officer]

Thank you, Milan. So let's start with the financial summary of the quarter. Revenues from Q2, as we saw, amounted to SEK 3.163 billion, corresponding to an increase of 38% and 32% at constant currencies. The year-on-year growth was driven in almost equal parts by Haemophilia and Immunology. And in terms of organic growth, that is adjusting for Synagis, it was 25% for the quarter. Gross margin jumped to 76%, positively impacted by the addition of the high-margin products, Gamifant and Synagis, and then the continued positive product mix effect driven by the Haemophilia franchise, and then at the same time, a lower relative sale from some of the Specialty Care products. EBITA adjusted for the restructuring charge in Q2 of SEK 157 million reached SEK 1.193 billion for the quarter, corresponding to a margin of 38% versus 42% in Q2 '18. The seasonality of Synagis here has an impact. The revenue will negatively impact the margin in Q2 and Q3 whereas we will see the positive impact on the product in Q1 and Q4. And finally, the adjusted EPS number was SEK 2.12, minus 17% for the quarter, but growing 16% in H1 compared to last year. And furthermore, the operating cash flow is very strong during the quarter of SEK 1.275 billion catching up from the weaker cash flow that we had in Q1. And as a result, net debt amounted to SEK 4.4 billion at the end of the quarter, which is a decrease of about SEK 1.1 billion compared to Q1. We go to next slide. On this slide, we have a crosswalk illustrating how we are building our business. We're comparing adjusted EBITA for Q2 '19 with the same period 2018, again adjusted EBITA, meaning excluding restructuring costs. Overall, the adjusted EBITA of SEK 1.193 billion corresponds to an increase of SEK 242 million year-on-year. First of all, the increase in revenues coming from highly profitable products in Haemophilia, as well as Gamifant and Synagis, has contributed to increase in gross profit of SEK 736 million. However, as we are building the business, that means also increasing efforts in SG&A. We've taken over the Synagis business and established a commercial infrastructure in the U.S. and we have launched Gamifant in the same U.S. market, and at the same time, we've increased our investment into Haemophilia as we continue to drive that growth. And as a consequence, SG&A increased by SEK 377 million. But we are obviously dealing with a much larger and growing business. The R&D line increased by SEK 115 million, excluding the restructuring costs, and this relates to the increased activities in our R&D programs with emapalumab obviously being the major driver. We expect to continue to see some increase in spend in both sales and marketing and R&D as we move into H2. And finally, I want to bring up the financial impact of 2 important events this quarter on the next slide. First, we have the intention to discontinue early research in R&D programs outside of core areas, and restructuring costs for the quarter amounted to SEK 175 million whereof SEK 157 million impacted EBITA and SEK 18 million related to the impairment of intangible assets. We expect that this restructuring will release SEK 200 million to SEK 300 million in 2020, giving us the possibility to reinvest in our core areas. And secondly, there is the impact of the agreement to acquire emapalumab and related assets. The consideration for the acquisition is CHF 515 million, of which CHF 400 million was previously committed in the emapalumab license agreement. Through the acquisition, we gain access to 3 main items: all assets relating to emapalumab, including the in-house expertise; options for the shared financial rights of 2 immuno-oncology products; and a priority review voucher with the FDA. This acquisition was debt-financed and will increase our net debt position to SEK 9.3 billion on a pro forma basis as of June 2. Leverage, however, will remain below 2, and as we can comfortably lever up to 3 to 4x EBITA and we continue to see very strong cash flow from operations, there is significant additional debt capacity for further M&A. And with that, I hand over to you, Guido.

[Guido Oelkers, CEO & President]

Thank you so much, Henrik.Let's go straight to the key messages. So basically, we are committed to the strategic direction that we actually laid out as early as September 2017 obviously with the refinement now that Immunology is our second leg, but clearly, we are committed to further drive penetration in Haemophilia. We are excited about the opportunities related to BIVV001. And we see a lot of excitement still around our existing franchise and recent data demonstrate that we have fantastic products. When you look at the opportunities in the U.S., we obviously have a very different setup in the U.S. This, you have seen also in the financials so we strengthened this organization, but now we have a significant platform in United States and we are very well positioned obviously in EMENAR and we have strengthen this position by -- particularly by the investment into our Haemophilia organization. We are also working on our late-stage pipeline, and we see a significant opportunity related to emapalumab beyond also HLH but even within.We're committed to M&A because we want to make sure that we remain, also forward-looking, a strong growing company in this rare disease space and assume -- are on this pathway to assume a leadership position in the rare disease context. With regard now to our financials, we come obviously with very strong financials into this first half, and as a consequence, we felt that it was appropriate to uplift guidance from SEK 13 billion to SEK 13.5 billion. And basically, here, the current trend makes us more confident that this is appropriate. And also on the EBITA, we think that the range -- that we can uplift the range, excluding obviously, the restructuring costs as explained by Henrik. So this updated outlook really reflects the feedback we get on the product sales in hemophilia, but also from the strong uptake of Gamifant in the U.S. And I think now it's time to open the floor for questions as they may arise. Thank you.

[Operator]

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

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

So I have 2 questions, one is on Haemophilia and the second one is on Gamifant. So on Haemophilia, you mentioned there most growth in the quarter came from major EU markets, but also it was positively impacted by the order patterns in the Middle East. Can you quantify the impact from the Middle East and comment on whether you expect that ordering pattern to continue in the second half of this year?

[Guido Oelkers, CEO & President]

Yes. I mean, the Middle East, this is more driven by the way these tenders go and we have obviously a very strong position in the Middle East, particularly in markets like Saudi Arabia and UAE. But when you look at the, let's say, the overall performance, let's say, in case of Elocta, now basically we have shown -- if I just look at the first half, we have, give and take, SEK 670 million gross in absolute terms in SEK and basically the effect from the Middle East overall on the half year is a 5%, give or take, effect. Yes, so it's not the main activity. So really, what drives the growth are the primary markets, obviously in Europe, where we still see strong patient uptake and then we have some growth now that we see in Central and Eastern Europe. And granted this is early days and also obviously they are the legacy, these are more traditional plasma markets and there we basically see a gradual shift now towards more modern therapy, yes.

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

Okay. But do you think that the Middle East ordering pattern that you saw in second quarter to continue in the second half of this year?

[Guido Oelkers, CEO & President]

Yes. I mean, basically, there's nothing unusual, let's say, to this because it's just the way these legal setups are in the Middle East. So yes, you will not see now every month but on a half year basis, yes, you should see the business repeating. Absolutely.

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

Okay. And then Gamifant with the previous strong growth since launch in the U.S., do you think that the growth is largely driven by only when used in primary HLH? Or do you think that it's also coming from off-label use in secondary form?

[Guido Oelkers, CEO & President]

I mean what we see is that there's a strong uplift obviously in primary HLH, but you can also see that there is utility of the product in very severe cases in the overall HLH indication and their physicians obviously make decisions, let's say, to basically rescue patients, and we respect this.

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

Okay. And then last, a question on Gamifant. You mentioned that you may work with EMA and now approval is expected the middle next year, that's about 6 months of push from year-end of this year. Is that because the approval process is more standardized than accelerated as you expected?

[Guido Oelkers, CEO & President]

Milan, you want to comment because you have been in close contact with the authorities?

[Milan Zdravkovic]

Yes. So I think this is just based on the way the clock stop works and our ability to provide questions and answers to this. So that's why we have postponed, you can say when we expect the approvals from mid-2020.

[Operator]

Our next question comes from the line of Richard Parkes from Deutsche Bank.

[Richard J. Parkes, Director]

And congratulations on a great quarter. Firstly, I've got a few questions, but firstly, on Haemophilia. Can you talk about any geographies within your Haemophilia territories where you're seeing the access to reimbursement for Hemlibra in the noninhibitor setting, it's been approved or you're expecting it to be approved imminently and it could start to impact your growth prospects. So that's just the first question.

[Guido Oelkers, CEO & President]

Yes. So Richard, I mean, I think you may want to understand that, yes, we have obviously some visibility on this but I think this will be a very good question for the earning call of Roche, I think -- which is happening, I think, one of those days. And I think then you get a much more profound answer to this.

[Richard J. Parkes, Director]

Okay. No problem. And then second question on the Gamifant EMA process, I just wanted to push you a little bit more. So it has been a clock stopper, I assume there are some questions or data requests from the EMA as part of that. So I just wondered if you could give us some kind of clarity on what issues the EMA has and how confident you are that, that can be addressed based on the current data set?

[Guido Oelkers, CEO & President]

I think before Milan answers, if we wouldn't be confident that we can resolve it, we would not give you a timeline obviously as the way we have done. But maybe, Milan, you can give -- provide some more color.

[Milan Zdravkovic]

Yes. No. I agree, Guido. I mean we -- based on the visibility we have, we expect an approval by around mid-2020 and this is as far as we can, you can say, discuss today, I think.

[Richard J. Parkes, Director]

Okay. No problem. And then, finally, I just wondered if you could talk around scenarios for the secondary HLH setting and potential for high -- I know you plan to discuss that data with the FDA later this year. But what's your kind of hopes around best case/worst case filing timelines? Is it possible that you could be able to file based on this clinical study or do you think further clinical trials will be required?

[Milan Zdravkovic]

Thanks for your question. So I would prefer to answer that question once we have discussed with the FDA and then I think we would be able to provide a bit more specificity around what it would really take. Needless to say, we're encouraged by these emerging 6 patients, but I prefer to get back with more specificity once we have discussed with the FDA.

[Guido Oelkers, CEO & President]

Thank you, Richard, yes. Appreciate it, yes. But you can see that for Gamifant, obviously, in particular, there will be some broader horizons that will open up in new indications, but also, over time, we would like to update you on our plans for new geographies because we think that there's a broader utility of the product.

[Operator]

Our next question comes from the line of Chris Ruhde (sic) [ Chris Uhde ] from SEB.

[Christopher Winston Uhde, Analyst]

Can you hear me?

[Guido Oelkers, CEO & President]

Yes. We can hear you now.

[Christopher Winston Uhde, Analyst]

Yes. So regarding Elocta, just to start with that and ITI, do you plan to apply for approval for ITI? I guess we can just take them one by one.

[Guido Oelkers, CEO & President]

Yes. I mean, obviously, these are interim results of verITI-8 and we have another study ongoing for ReITIrate. So it may be a little bit premature to talk about before the final readout of the study in what way this may suffice for application. But the way the studies were set up for us primarily to elucidate the overall knowledge in the ITI and the benefits of treatment, but obviously very gratified to see the relatively fast response to tolerize patients, but Milan, maybe you can talk more about this.

[Milan Zdravkovic]

I agree. I think once we have completed the studies, we will evaluate the outcomes, and then based on that, we will take a decision as to whether these data merits approaching the regulatory agencies. But as we said, we are quite encouraged by the early interim data and particularly on time to tolerization.

[Christopher Winston Uhde, Analyst]

Okay. Great. And then -- so I guess, just wondering in terms of obviously very strong results so there's no signal in the numbers, but have you had any pricing pressure in the Sobi territory for hemophilia, particularly, I guess, with respect to Hemlibra preparing to come on the market or something like that or...

[Guido Oelkers, CEO & President]

I think any data point that we have learned so far indicates to us that the launch may not affect negatively the price level. That basically is also a question you need to refer to Roche honestly on their pricing strategy. But anyway, these data points that we have collected don't suggest this. Let's say, the other thing is that yes, there has been obviously, in the normal course of business, there have been renegotiations. But the overall demand growth has been strong, so that the mix effect, I mean, it's basically -- it shows still a very positive variant. But we have not seen now a dramatic shift on the price level when you look at it -- on the business in its entirety here.

[Christopher Winston Uhde, Analyst]

Okay. Great. And then so just with Synagis sort of details. But I mean we have in the past seen negative sales at AstraZeneca. Is this something that we could see in future off-season quarters, do you think? I mean was there a specific reason that, that sort of thing happened?

[Guido Oelkers, CEO & President]

Yes. No. I mean basically, this is -- you know that basically the accrual mechanisms when you sell, you don't know sometimes how much goes into Medicaid and how much goes into the private centers and then you have to make a certain peck in the ground. I mean we don't profess that we can predict these things with 100% accuracy. So this is not a science. This is, to a certain degree, is a judgment and an art, but we think that we are very much on the ball because obviously, for us, obviously, the relative impact of Synagis is much larger than it was with AstraZeneca. So we want to get it right. So what you see now in the Q2 result is really emphasizing that we wanted to do it right and get it right and we basically used all the data points that we were able to get our hands on and basically do this. So that's the reason we have not seen the negative results. We had an advantage of the virology. There's always this -- we will never have 100% prediction on the results. There could be -- as you know the way this works, in many cases, they can come back to you up to 2 years later so there's always an opportunity for, let's say, for a surprise. But from our perspective, we just looked at the way we think the product is going. We studied it very careful, let's say, at a detailed level. The data points suggest right now a demand increase of 2.5% of the product. And if we can increase demand over a period of time, then obviously the actual sales will follow. And we are, let's say, for us, to be honest, yes, Synagis is the product in the United States and it still is the #1 product at this point of time for immunology. Maybe at one stage, Gamifant will surpass it, but for now, it is clearly the priority and we think that we should do a good job, let's say when you look at the later part of the year obviously to be proven here. And let's say nothing beats then, the proof. But you have to be patient a little bit with us to see the Q4 results and we are doing now in the off-season obviously, everything we can to build up the right patient flow.

[Christopher Winston Uhde, Analyst]

Okay. Great. And then the last thing is sort of related to sort of strategy on R&D. So notwithstanding the sort of refocusing on Haematology and Immunology, you've stated very clearly you want to expand the late-stage pipeline, okay, fine. But I guess the downside of focusing on the late stages that there tends to be lower return on investment, at least assuming in-house origination BDs -- business development for early-stage candidates. So I mean unless you're just trying to sell Sobi off, why sell off SOBI003 and the rest of the early-stage assets assuming you believe in them?

[Guido Oelkers, CEO & President]

Yes. I think when you think about our pathway, I think strategy is as much about what you do as what you don't do. And here, basically, we said -- and when you read it carefully, let's say what we tried to say anyway, is that we stopped research in our noncore areas, but we didn't say that we stopped research in our core areas, yes? And let's say, and basically -- and what we -- now obviously, the emphasis is clearly on late-stage. And when you look at -- you do a risk-adjusted with the probabilities on an early-stage versus a late-stage. I'm not sure that your ratios -- or your return ratios, when you risk-adjust them, will be really much better provided you make smart buys of late-stage assets. And so far, we feel that we have been actually reconfirmed by what we are doing and we see much bigger opportunities in the now development of emapalumab indication than we saw, to be honest, in the case of the assets that we now want to divest. So what you will see is, hopefully, that over time, we can articulate clearer that more projects will come our way. But we think that for the company size we are, you need to basically balance it off and clearly, there's no mandate now to sell the company or to do this short term. And when you look at our financials, how we have done investing in the business, then actually no matter what the gospel is you think we are spelling here, just look what we are doing, then you understand what our real strategy is. And our real strategy is that we are investing into the business and we don't deleverage because if you -- and let's say, because if you want to get a leveraged P&L, obviously we -- and be able to have short-term ambition, you could arrange this. But we believe in the long term a longitudinal nature of this business. Therefore, we are investing into good projects that we're seeing. We think that 003 could be a great project in somebody else's hand. But it leads us into an area that we think -- because then it's not -- where you need to build up an entire value chain and we think that we have more to gain for us in the value chain in our core areas, yes? So I mean I hope I didn't avoid your other question but let's say, but we think this is a pretty sound strategy. And when you look at some of the most prominent biotech companies in the world, one of them owned by a large big pharma company, you ask yourself how many projects did they bring from the bench to commercialization, maybe not to so many, yes, let's say. But there are a lot of projects coming because they were interfacing and connecting competently with certain areas and that's basically we want to get entrenched in our core areas so that we become the partner of choice and then can bring the scale, let's say, to those projects and then bring them to the market, yes? So that's really what is the reasoning behind.

[Operator]

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

[Johan Unnerus, Analyst]

Yes. I'm trying. Can you hear me?

[Guido Oelkers, CEO & President]

Yes, we can hear you now.

[Johan Unnerus, Analyst]

Congratulations. It's a great quarter. Just a few questions on Gamifant. It seems to be an extraordinary good launch. Q1 was strong. You were pointing -- alluding to some inventory effect as often is the case in the initial launch and Q2 is clearly very solid again. Can you provide us with some details what to expect -- you're not guiding on particular products, of course, but should we expect a very sort of rapid uptake in the initial label or is this just a very good start? How should we look at it?

[Guido Oelkers, CEO & President]

I think it's early days for the project, but obviously the Q2 data are very encouraging. And for me, what is more important is that we got very strong data points from the physicians who treat patients. Now the reason why we are refraining right now from providing more detailed guidance, I mean, obviously, we normally don't provide product guidance anyway, but you have seen that we are more bullish obviously for the second half and clearly Gamifant plays a role in this context. But it's also that you want to have a couple of more data points on percentages, on, so to say, repeat prescriptions. And you have obviously now the product is used in numerous centers, you have also, let's say, an uptick across centers. But where you see repeat, you see obviously satisfaction with the outcome. So that's the reason why we are, at this stage, I mean, we want to make sure that we get it right. We think, though, that it's a fantastic product showing -- making a significant difference to patients' lives in the broader HLH indication and that's the reason why we're actually quite confident.

[Johan Unnerus, Analyst]

And so I guess now when you have more experience from the U.S. market even though, of course, Q2 is not in season, but in retrospect, Q1 when we're thinking about what's a reasonable baseline for a more typical Q1, if you would have had the product for the full quarter, can you give us some more details? It was obvious that you didn't have the support from the full Q1, but what's the reasonable baseline? How much more should we base it on Q1 going forward?

[Guido Oelkers, CEO & President]

You see, there were 2 effects that we try to -- and we provided quite a bit of data points at the Capital Market Day on how to read the performance because there was an inventory effect and there was an effect that basically, let's say, was driven by the later clause on the 24th. And obviously, as we also explained, we got a compensation of a lower purchase price that unfortunately, didn't find its way into our P&L but basically meant less cash out for the transaction. So we got a compensatory effect of over $30 million so that basically I think you have to add back. But I think for U.S. data point, I think it's, let's say -- and maybe what we could do is try to provide you with the presentation from the Capital Market Day, which is public knowledge, and for you then maybe to do your own adjustment because when you then think these one-offs through and we give you the data point of 2.5% ongoing demand and I give you another data point that obviously we think with what we are doing, we can hopefully do better, yes, then you might be able to compute this. But because also here, in the case of Synagis, we don't give guidance on an individual product, but we think that if you take away these one-offs, we will be able to grow the product, and let's say, and basically create a solid foundation for the product and make sure that within the guidelines that have been established 3 years ago, we can basically grow the product by improving adherence and reducing leakage.

[Johan Unnerus, Analyst]

So no changes as from the Capital Market then. And finally, you alluded, too, that we should expect some more growth then from R&D and S&A in the second half of the year, but that could be a broad indication. What is some growth, is it 10% more or 5% or 15% more?

[Guido Oelkers, CEO & President]

Henrik, you want to answer?

[Henrik Stenqvist, Chief Financial Officer]

Yes. We increased our guidance on revenue. So we think it's only natural that also the OpEx will increase. But this is no major increase. It is slightly higher number for H2 that we expect for H1.

[Operator]

[Operator Instructions] We now have are our next question from Jon Berggren from DNB.

[Jon Berggren, Junior Analyst]

Quick one for Milan. So if I understood your comment on the 001 correctly, I think you said that it has potential to offer not only longer half-life but also greater exposure. So could you just elaborate a little bit on what you mean by greater exposure?

[Milan Zdravkovic]

Yes. So thanks for the question. So I think if you look at the curve, I think, historically, there's been a lot of discussion about trough levels in the hemophilia space. What we want to do is we want to move the conversation to talk about the total, let's say, area under the curve that we are providing of, you can say, hemophilia protection. And that's why when you look at the 65 units-per-kilogram dose, you can see not only a very good trough level assuming a once-weekly dosing of algorithm, which is a speculation by now, but what they can also see is we see very, very high exposures at the beginning of the week supporting, you can say, more protection, a better ability for patients to normalize their lives and this is, you can say, the conversation that we want to move or the direction of the conversation that we want to take. Because the area under the curve that, you can say, provides a better measure of what level of protection you can get on top of the fact that you also have, you can say, very good peaks that normalizes at least in the beginning of the week, you can say, in fact, aid exposure. And that essentially means that in that period of the week, these patients would be normalized essentially. So we want to move to a trough discussion and we want to move towards the full exposure and describing that. Because I think we think that's more meaningful clinically and we also think that, that is connected to our fundamental vision of being able to liberate the lives of people with hemophilia A and B. Thank you for your question.

[Operator]

We have no further questions at this time. I'd like to hand back to our speakers.

[Guido Oelkers, CEO & President]

Yes. Thank you so much for your interest. And I know that this was probably an inconvenient hour for those dialed in from the U.S, so we'll try to do this better next time. But what we expected your interest, and we very much appreciate it. Look forward to staying in contact with you and keep you tuned. Thank you so much. Appreciate it.

[Henrik Stenqvist, Chief Financial Officer]

Thanks.

[Operator]

Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect.