Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Transcript 2020-Q2

[Operator]

Ladies and gentlemen, welcome to the Sobi presentation of the Q2 results. [Operator Instructions]I will now hand over to Guido Oelkers, CEO. Please go ahead.

[Guido Oelkers, CEO & President]

Yes. Good afternoon, everybody. It's really a pleasure to have you here at our Q2 webcast. And I think with this having said, I will be joined today by Henrik Stenqvist, our CFO; and Milan Zdravkovic, our Head of R&D. And I think forward-looking statement as per usual. And why don't we go right into the beef of the presentation.Yes. So basically, this is a difficult environment, and I understand that we are one of the -- we are the first group of pharma companies presenting. And I think, therefore -- I think it may be worthwhile to understand what happened actually in this environment. And I just want to refer to U.S. data that I just -- we just got recently hold of. So basically, in the U.S., total prescription between end of May and beginning of June are down 6% to 12%, and these are weekly data, so they are oscillating. But I think more important is that NRxs are down 30% to 40%. And I think it's clear that Telemedicine is also not as effective as the usual pharma model. So I think when you look at our milestones that we have achieved in this environment, I think they have to be seen in this -- in view of this -- so half year data are actually quite strong for us. We have 20% top line growth, 20% EBITDA -- adjusted EBITDA growth. We have healthy cash flows. And we have been able to get -- make a significant contribution to fight against COVID and got 2 studies, that we'll talk later on, published. We completed the enrollments of 2 key studies, the 06 trial in MAS/sJIA and the CIT trial, which is also not understood in this environment. And we gained market share with Elocta and Alprolix. And I think this is something that we want to spend a little bit more time on because it needs to be understood, particularly when you look at our Q2 number. And we have made substantial progress with our new launches despite the lack of face-to-face interaction, meaning Doptelet and Gamifant. And we are building the future and we're able to transact the license agreement for the global license of SEL-212 from Selecta. So overall, actually, we felt that it was an ambitious agenda, and I think we need to understand a little bit more what are behind the headline numbers that you have all seen.Next slide, Peter, please. So these are the data as they stand. To the -- I think, important to note is -- and the narrative has been partially given already. We have a 4% patient growth give or take for our Haemophilia product portfolio quarter-on-quarter, and this in this environment where there's not a lot of switches have happened. Doptelet, we talked about 52% quarter-on-quarter growth. Gamifant, 27% quarter-on-quarter. Kineret, we maintained a very solid performance with 24%. And with Synagis, because I saw a couple of comments, I think you just have to recognize that the season last year was unusually low. Hence, we had more significant sales in April, which we didn't have because the season for this year ended earlier, but we had a very successful season, as we outlined in the Q1 report. So there's nothing down with Synagis. In fact, we are very proud of what we have achieved.Next slide, please. And here, you can see the quarter-on-quarter, let's say, development versus the half-year development. And I think there are quite a bit of adjustments that have to be recognized when you look at it quarter-on-quarter. And partially, they are driven by stocking effects. But as you will see later, the consumption per patient in some countries in Europe in hemophilia have come down, for instance. And that basically has affected our results. And it's worth mentioning that Q2 in 2019 was also strong. But these effects are more smoothened when you look at it on a half year basis, and this is 17% growth at constant currency. At actual currency, it's actually 20% growth. And important to note is that the core business in the same period, the product business in Immunology and Haematology has improved considerably faster.Next slide. And this is, I think, something that we try to explain now what actually happened between -- in Q2 to make the performance a little bit better understood. We had an adjustment of our inventory, let's say, that reflect - we've had give and take. In the example of Elocta this was 1/3 of our growth last year -- last quarter was driven by the stocking effect, and that's around between SEK 140 million to SEK 150 million. That was a stocking effect. Then we had a negative effect from the patient consumption. And this is something we didn't really have on the radar, but I just saw market data, for instance, from France that it's consistent for the entire Haemophilia business, where basically patients because they didn't want to go to the physician office, they wanted to stretch essentially their ReFacto and elective surgeries did not happen in Q2. As a consequence, we had a negative effect that outweighed our patient growth. Now we think that this negative effect is of a temporary nature, and we believe that this will correct itself during the second half of the year. But -- and then you need to understand that at the same time we have a 21% H1 versus previous year patient growth with Elocta, and a 29% patient growth with Alprolix. And basically, I just want to give you some sense that we have become the #1 prophylaxis company in Germany in Q2, and we have not lost any market share in Haemophilia in France either. So this gives you a little bit of a perspective that we do not have a competitive topic. In fact, we made significant progress. But when you look at the quarterly results, this is not as visible. On a half year basis, I think there is a certain smoothening effect. But still, the consumption per patient is in effect, obviously, also on a half year basis that we still think will smoothen itself out during the second half.Next slide, please. For us, the partnering with Selecta is -- was a fantastic move, let's say, because we get access to a very important product in chronic refractory gout and we think that with this pegylated uricase that is powered by the ImmTOR platform, essentially, it's a rapamycin platform that can be also used in gene therapy to mitigate the effects of immunogenicity. We think that they have a very unique product and there are around 160,000 patients and we think that this product, for sure, could be useful in around 10% of those patients. So it's a very significant -- alone in the U.S., it's a very significant opportunity. We got the global rights, and we got a share in the company. So on a whole, we think it's a very strategic transaction in the immunology sector that is on target with our strategy.Next slide, please. So summarizing this first part, we continue to make significant progress in hemophilia, even in this difficult environment. Strong progress with Doptelet despite lack of face-to-face interaction. The Gamifant, quarter-on-quarter, strong patient growth, we'll show you some data later. Yes, there's been a price effect and yes, there has been an effect from the lower rate of patients, but also over time these effects will be washed out. Continued growth with Kineret, progress in R&D, as I pointed out, and portfolio expansion.So next slide. So now we go into the business review of Haematology. And here you see basically for both products on a half year basis to show the progress that we have made, but I think important just to note is the patient growth. And I think -- and that we basically are able to continue expanding our share even though it's much more difficult in a Q2 environment to switch patients, but we were able to do so, and that basically gives us the confidence also for the rest of the year.Next slide, please. And here, you can see the progress that we have made with Doptelet, actually quite substantial. And using here, let's say, units as a proxy and that gives you a feeling that we are actually making great strides with this product. We're very optimistic with the product. And very gratified that despite this difficult environment, we were able to complete the enrollment of the CIT trial. And the team at Dova is doing a fantastic job, very proud of them.Next slide, please. And then we basically want to talk about Immunology. Here, you have to just notice the seasonal effect of Synagis and also the effect that we had such a fantastic season -- the end of the season in Q1, but it ended earlier. Hence, the Q2 comparison for Synagis is really not relevant. And let's say, and with Gamifant, we are now making some progress. And maybe next slide, and here you can see basically the progress on the patient base and basically, when you would index this, the absolute patient growth in Q2 2020 versus Q1 2020 in comparison to the progress we have made 1 year ago is around 50% higher. So it's a significant uplift of patient population. We wish it could be faster, but you have to acknowledge that this is a significant progress and the economics actually are more influenced by the price reduction that we [ found ] established and via the lower consumption per patient because of the lower weight. But as we're expanding the indication, we also think that this will -- we will continuously broaden the product and the product is on a good track.Next slide, please. Kineret continues making -- is continuing to make good progress, as you can see here. And we think that this is a product that has significantly more potential, but it's a crowded environment and it has shown some positive effects even in a COVID-related environment. I just want to show you 1 slide and then -- before I hand over to Milan.Next slide, please. And here, you can see one of the studies that was just recently launched -- published in May this year in severe forms of COVID and you see a beautiful separation of the Kaplan-Meier curve and an improvement of survival. And basically, whilst you can always argue that there are limitations to some of those studies, but we were very happy and this confirmed our hypothesis that anakinra can have a significant role in this area of hyperinflammation. And basically, many authorities have now a positive to a neutral view, whilst other compounds have been dismissed in this treatment regime. And we have currently 2,500 patients in different trials ongoing. Some of them have the grade of Phase III. So we are looking at this quite optimistically moving in the future. And I think this is a good time now to hand over to Milan. And maybe Milan, you can share your view on Kineret and maybe some of the data that we are generating.

[Milan Zdravkovic]

Yes. Thank you very much, Guido. Please turn to Slide 18. So on this slide, we're showing some additional data through the data that Guido just showed. Another retrospective cohort story. This one was performed in Italy. And this was from a group of patients that had COVID-19 infection. They had acute respiratory distress syndrome and they also had hyperinflammation. And what was seen here in [indiscernible] [ day 21 ] is that we see higher dose in anakinra in comparison to the historical control of 16 patients. Then -- first of all, anakinra reduced inflammation. It also showed improvement in respiratory function. And then also, as Guido mentioned from the previous study, also a survival benefit. So when we add up the data that has been accrued until now with anakinra, we think that these continue to support a potential benefit of anakinra in this patient population. And of course, let's say, on the strength of that, we will continue to support research into this area. And we will also evaluate when there may be sufficient data also from randomized controlled trials whether we can engage into a dialogue with regulatory authorities around the potential benefits of anakinra here.And if we can move to Slide 19, please. So as Guido already mentioned, we have announced a partnership with Selecta around treatment of patients with refractory gout. So gout is an inflammatory disease that is essentially caused by elevated levels of uric acid, that subsequently leads to deposition of urate crystals. This can occur anywhere in the body, but most frequently it's seen in the joints. If sufficient crystals accumulate, then these can cause tophi that may cause pain and restricted mobility. And as shown on the right-hand side of the slide, complications of chronic gout includes joint deformities with potential disability, but these crystals may also form in the kidneys and here they may cause obstruction and/or infection. Now refractory gout, which is, let's say, the potential we're discussing here with 212, are patients that are not controlled on conventional therapies, and I'll share a little bit more of the data on the next slide, which would then be Slide 20.So it turns out that humans do not have an enzyme that can break down uric acid. So whenever you give the recombinant enzyme, this will elicit a very strong immune response in humans. And this not only causes safety concern with infusion-related reactions but also blunts the efficacy of the enzyme that is being infused. So the beauty of 212, as Guido mentioned, is that this is a combination of the uricase enzyme and also rapamycin nanoparticles, and these rapamycin nanoparticles when given together with uricase enzyme causes tolerance induction. And this is what we're illustrating on this slide, where we see 66% of evaluable patients from a Phase II study responding with serum uric acid levels less than 6, but not only that but also a very significant reduction in serious infusion reactions if the ImmTOR or the rapamycin nanoparticles are added to the combination.So if I can have the next slide, please, which would then be Slide 21. So there is a Phase II study ongoing comparing 212 to pegloticase. The study is now fully enrolled. And there's some early data that suggests a lower withdrawal rate in the 212 arm versus pegloticase, which further supports the potential differentiation of the 212 molecule. The Phase III program that I'm showing on the right-hand side here has been agreed with the FDA and consists of 2 pivotal trials that are planned to start later this year.And if we can move to the next slide, which would then be the Slide 22. Then this slide illustrates how we continue to build the R&D pipeline around our 2 core areas being Haematology and Immunology. And just to give you some updates since the last time we showed this slide, we have added 212 in Phase II. We expect to start Phase III later this year. As Guido mentioned, we completed the enrollment in the chemotherapy-induced thrombocytopenia trial with avatrombopag, and we expect results in Q4 this year. We've got approval of FMF in Europe with anakinra. We very recently submitted the file in the U.S. for anakinra, and there the file is under validation. We plan to add additional sites in the U.S. for the COVID-19 study in August to increase enrollment. And we also expect to initiate the Phase II study with emapalumab in graft failure somewhere around year-end.And with that, I would like to hand over to Henrik for the financial results.

[Henrik Stenqvist, Chief Financial Officer]

Thank you, Milan, and good afternoon, everyone. So let's move to next slide and look at the financial summary for the quarter and the first half of the year. The revenues for Q2 amounted to SEK 3.070 billion. That corresponded to a decline of 3% and 4% at CER. In Q2, as we heard, we had to pay back for some of the favorable impact that we reported in Q1, now in the form of destocking and other negative factors, such as reduced consumption impacting from COVID-19. So it's actually also relevant to reflect over the half year situation where we see a growth of 20% or 17% at CER.As we move on from revenue, we increased our gross margin to 78% in Q2 compared to 76% in 2019. So we continue to trend positively due to various favorable product mix but also including the diminishing share of the noncore Specialty Care business. We expect to see an accelerated decline in Specialty Care in H2 as a result of discontinued products. The COVID-19 situation with lockdowns across most markets led to a lower activity level and a lower spend in Q2.Operating expenses in Q2 of SEK 1.344 billion were, in fact, SEK 75 million lower than in Q1. And as a result, adjusted EBITDA reached SEK 1.018 billion for the quarter, corresponding to a margin of 33%. So we hold the margin well because this margin reflects the seasonal weakness of Q2 relative to Q1. And as we can see the margin year-to-date of 41% is in line with the same period 2019.Looking now a bit into cash flow and debt. Despite the relative seasonal weakness in Q2 that I just mentioned, we have an extraordinary operating cash flow in the quarter. And this is mainly the result of a reduction in working capital following the collection of receivables from the high sales levels that we reported in Q1. And as a consequence, net debt was reduced to SEK 11.8 billion from SEK 14.2 billion in Q1.And if we switch to next slide, this illustrates the net debt development over recent quarters and it's evident that we continue to rapidly delever the company, having levered up in 2019 to finance the acquisitions of Synagis, Gamifant and Dova [ and from the point ] in Q4 '19 of SEK 15.4 billion, we have delevered now to SEK 11.8 billion in just 6 months. And this is, of course, very satisfactory, but we should also consider that Q3 and Q4 are expected to be a little less prominent in terms of cash generation due to the seasonality and the need to expand working capital, mainly because of the synergies that we built.The net debt of SEK 11.8 billion corresponds to the leverage, which is now down well below 2x EBITDA on a pro forma basis, which is, of course, very comfortable. And we maintain available liquidity of more than SEK 7 billion despite maturities occurring during this quarter. And this position of financial strength, of course, provides us with opportunities going forward.And with that, thank you, and back to you, Guido.

[Guido Oelkers, CEO & President]

Thank you, Henrik. And maybe we go then to the summary. Next slide, please. Yes. So basically, when you look at it, we are making progress in a number of areas. With Florio, our digital platform, we are working on -- we have made significant progress, more than doubled our patients on the -- in Q2 versus what we had. The project is on a good way, and it's starting to become meaningful to a larger group of patients. We have avatrombopag with the CIT trial we talked about, ITP currently under review in Europe, and we are ready for launch in CLD and waiting now for the right environment to launch the product in Europe.With regard to the -- let's say, with regard to anakinra and Immunology, broadening the foundation, you have seen the data on anakinra, emapalumab making at least on a quarter-on-quarter basis on a patient basis, nice progress. And with SEL-212, we think that we have a very meaningful addition to our Immunology franchise and Synagis we have talked about. And I think it's also important to note that now with portfolio, we further expand the company also geographically. We talked about an expansion into China last time, last -- it's in Q1 and now we have set up a company in Japan as well. And we think that particularly our Immunology franchise would be very relevant for those countries.Next slide. So when you basically look at the results, yes, there are some adjustments in Q2, but we are convinced that we see very strong signals from the market from patients for all our products and we are not -- for our core products, we are really not losing anything. We are gaining share, which has been very useful. That makes us, and even in this very uncertain environment, confident to confirm our current guidance. And let's say, and think that we can continue growing double digit our 2 core business areas. Core business grows well above 20%, 22% in constant currency. So we think that we are in a good way. And the same applies for earnings. Our EBITDA guidance also remains unchanged. And we think that we want to continue building the business. [ See ] that the example of Doptelet, we have seen that there have been some question marks around the Doptelet performance. But the percentage of 52% quarter-on-quarter, this is the milestone. This is pure operating business, around SEK 100 million in Q2 and around SEK 65 million in Q1. And then in addition, we had SEK 87 million of a milestone payment for China. So that's really where we stand, so quite -- feeling quite good about performance. Maybe it's a good time now to invite questions as they may arise.

[Operator]

[Operator Instructions] And our first question is from Eun Yang, Jefferies.

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

So I have a couple of quick questions on the clinical data time line and then one financial question. So on CIT, I think previously, you mentioned data for avatrombopag in third quarter. So it kind of slipped into 4Q. So would that be kind of only part of 4Q? And for Kineret and Gamifant phase III trial for COVID-19. Given the patient enrollment now, and you mentioned increasing the clinical sites, do you think we should expect the data at least before year-end? And the last question is on EBITDA margin. Second quarter EBITDA margin of 33% is similar to that of last year. So should we expect the full year 2020 EBITDA margin to be similar to 2019, which was close to like 42%?

[Guido Oelkers, CEO & President]

Thank you, Eun. Maybe I start just priming it and then I can invite Milan and Henrik also to comment. Let's start maybe with regard to these COVID-related questions. We think that we will have continuous flow now out of these very different trials of information and data during the course of this year. And it's obviously a question. Some of them, let's say, will be Phase III grade. Will this be enough to get an indication? I mean it's not -- I mean we can -- we just make the data available. But we think with all these information and data that we're collectively providing at least as meaningful evidence generated, and I think this is reflected in some of the positive views that we see about the product regarding the product, in particular view of this very favorable safety profile. So we'll -- and we will see quite a lot of data now coming in during the course of the year. Obviously, you have seen a reduction of ICU patients in Europe. But we have seen, at the same time, significant number of ICU patients in Europe and other parts of the world. So with this, there is sufficient patient potential.The other thing is now with the CIT trial. We will -- actually, we are on track, exactly where we wanted to be. We will now in this quarter, will basically conclude the trial, will then prepare submission. So we are still on track for 2021 launch in the U.S. So I think that's -- I mean, this is -- I think we're quite happy now that, that basically this works out. And with regard to the EBITDA margin, I think we -- you have seen this, that there was a rise, obviously, during the later part last year, I think we would rather stay consistent with our guidance of 5.5% to 6.3% and then basically -- it basically is the EBITDA margin that it will be, let's say, and then also in terms of top line, we don't want to speculate too much, but it will be, let's say, somehow in a range. And I would rather refrain from providing more precise guidance. Maybe we start with Milan, do you want to comment on some of the questions?

[Milan Zdravkovic]

Yes. So thanks, Guido and Eun. So with respect to the CIT trial, I agree there's not a delay. You can say it's more like whether you get data at the end of Q3 or early Q4. So I think that one is okay. Then we have the COVID-19 study. We initially were under the impression that we would be able to enroll the study in Italy. So we have now 4 in 6 sites with the reigning pandemic. We're moving to the U.S. I think maybe unfortunately for the community as such, the pandemic continues. So we plan to add probably around another 10 sites in the U.S. in order to complete enrollment of the trial. And I think it's difficult to speculate. It depends very much on how the pandemic evolves, how long time it would take to enroll the patients. And I think, I don't know, Henrik, there was a question for you also, I think.

[Henrik Stenqvist, Chief Financial Officer]

I think actually [ obviously we ] don't guide on specific margin. It's the range [indiscernible] where we end up in that range. Is it clear?

[Guido Oelkers, CEO & President]

Maybe we then open the floor to other questions. So I hope you answered the question.

[Operator]

The next question is from Christopher Uhde, SEB.

[Christopher Winston Uhde, Analyst]

Congrats on a solid quarter despite difficult circumstances. So the first question, the EU ITP time line is still 2021, but why the delayed launch in CLD in the EU? Because I think at the deal announcement, it was originally 2019. That's the first question. Then can you provide some detail on your expansion into Asia? I mean, particularly what products are sold directly by you there now? And what are your plans for the future with your current stable of products? Or what's the orders in the pipeline?

[Guido Oelkers, CEO & President]

Yes, perfect. Maybe we start with CLD. I mean, CLD is approved in Europe. And basically, what held us back a little bit was COVID and supply chain. And because we got a certain formulation approved, now we have everything in place, but it is very tough in these -- at this moment of time to create the right level of excitement. So we think that this is -- that the CLD launch will be late Q3, beginning of Q1, yes? -- Q4, sorry, Q4. And there's nothing more to it. The product is registered. So we're eager to get into the weeds of it. And then basically, beginning of 2021, we should be in good close for ITP should everything work in Europe. And with regard to Asia, I think it's really the -- when you look at the number, for instance, of HLH patients in markets like China and Japan, then this is very significant. And this prompted us to rethink geographic diversification. And for these 2 markets, we take ownership ourselves. We know what it takes. I have worked 18 years in this part of the world to build representations there. And we have made quick strides. We have been able to win that share from a big pharma company, which is one -- I mean, one of the largest companies in China. We have a very experienced team in -- sorry, in Japan. We have a very experienced team in China now. And basically products like Gamifant, like Kineret, like Doptelet, then obviously, Selecta and also Kineret will make -- it will make perfect sense for us to launch those products there and have a very significant, let's say, expansion of our overall global franchise. So we think that these were our strategic moves and very excited about Asia. We have already got one or the other accolade, for instance, now in China going. So we are very optimistic. Current sales is 0. These are pre operational activities, but we may actually be able to record our first sales next year in China, Japan in 2022.

[Christopher Winston Uhde, Analyst]

Okay. And then a couple questions on Haemophilia and SEL-212. So Haemophilia in the wake of the U.K. tender agreement, will there be any temporary negative impact from lower pricing? And if so, when should we expect it? And then as far as Haemophilia factor consumption is concerned, how much of the effect Q-on -- year-on-year was the result of lower activity on the part of patients and how much is from fewer surgical procedures, if you know? And then for SEL-212, are there any obvious antitrust -- potential antitrust issues that I'm missing? Or do you expect this to be straightforward from an antitrust perspective, at least? And then lastly, there -- is there a scenario in which SEL-212 could get accelerated approval on the basis of COMPARE?

[Guido Oelkers, CEO & President]

Yes. I think why don't we take it one step at a time. I mean we have got -- we were listed in the U.K. tender. Very happy about this. The price concessions, let's say, that we have made in the U.K. are within a reasonable frame and actually we enacted this already ahead of the tender. So we are very happy with the outcome of the U.K. tender. With regard to the consumption versus reduction as a consequence of activity and surgical procedure, that granularity, unfortunately, we do not have, yes? So we -- but consumption is more than -- this consumption effect in Q2 is more than SEK 200 million. So that gives you a little bit of a flavor where we are currently at the SEK, yes? And then with regard to the SEL-212, there we don't foresee, I mean, any antitrust because the launch sequences around 2023 -- end of 2023, 2024. We don't think that -- we're not aware that we have violation of anything. We should be able to launch this, and we are very excited once also we can publish the Phase II data, let's say, of what this product is.

[Christopher Winston Uhde, Analyst]

Yes. Great. And then the last one was about whether you could get accelerated approval for it on the basis of the COMPARE trial?

[Guido Oelkers, CEO & President]

No. Maybe Milan, do you have a view on this? I don't think so, but maybe -- Milan, what is your view?

[Milan Zdravkovic]

Yes. So I mean, I think we're encouraged, you can say, by the differentiation potential of 212 also with the rapamycin tolerance induction. I mean, I think it's -- to your point, Guido, I think it's too early to speculate whether that's, you can say, a clinical differentiation would translate into an accelerated approach, but we are encouraged by 212.

[Operator]

Our next question is from Peter Sehested, Handelsbanken.

[Peter Sehested, Research Analyst]

It's Peter from Handelsbanken. I have a bunch of questions, but I'll just fire 2 away and get back in the queue. The first one on SEL-212. Just wondered how we should look at the data when it comes out here in Q3, Q4, in particularly in view of the fact that the response rate seen with KRYSTEXXA in combination with methotrexate, they are topping at 80% to 100%. I'm fully aware of the issues with methotrexate. But on the other hand, every rheumatologist on the planet has probably experience with that product, whereas very few, probably no on rapamycin. So on some of data, some perspectives on how you see the differentiation versus KRYSTEXXA plus methotrexate? And then secondly, on the Haemophilia franchise. Should we anticipate that Elocta and Alprolix will be back in growth mode during Q3 and Q4?

[Guido Oelkers, CEO & President]

Yes. Yes. Maybe we go back to -- we start with SEL-212. I think the -- we know that basically KRYSTEXXA has a certain group of patients, I think they have made announcements how many patients they currently have on the product. And you can read the report, so it's a fraction of the [ 16,000 ] that I just mentioned. And it is because of the immunogenicity that we think we can address very well. So it's not just side effects because the product has done some -- let's say, doesn't seem to work also in certain areas. So we think that our combination is going to be a meaningful addition, at least for a larger group of patients. So I think the -- and with regard to hemophilia, I mean, we -- if you take -- if you believe that the, let's say, the patient -- the consumption reduction is of temporary nature, which we believe, then you would assume that the product will grow again in the rest of the year with the Haemophilia franchise. And yes, so I mean -- maybe, Milan, you want to add some additional flavor to ImmTOR and the differentiation of Selecta, SEL-212?

[Milan Zdravkovic]

Absolutely, and thanks for the question. So I think, yes, you can say, the rheumatologists are used to it, but rheumatologists will not be the ones that have to take the combination. And I think in this particular space with gout patients, I think methotrexate has a significant number of black box warnings across a number of different organ systems from the bone marrow to the kidney. To deliver, the dose has to be adjusted in patients that have chronic kidney disease. We know that there are also convenience issues with KRYSTEXXA every other -- every 2 weeks plus methotrexate plus folic acid versus, you can say, a once-monthly therapeutic option that covers everything. Then there is the alcohol issue and the liver toxicity with methotrexate. So while it may have achieved some acceptability in a rheumatoid arthritis space, I am less confident that you would see the same acceptability, you can say, in a gout -- than a refractory gout space. And I think having a combination with the tolerance induction, I think we feel quite comfortable about where we are and the potential for 212 to differentiate itself.

[Peter Sehested, Research Analyst]

Just a follow-up question here. Correct me if I'm wrong, but doesn't rapamycin have a boxed warning as well?

[Milan Zdravkovic]

Rapamycin also has, you can say, safety and also a boxed warning, but it doesn't have the systemic boxed warnings that you see with methotrexate, that more or less every organ system is affected. And there's even a prescription restriction on physicians having to understand methotrexate. So I think out of the 2, I think rapamycin is far more benign.

[Peter Sehested, Research Analyst]

But do you think you can evade the boxed warning on the on the SEL-212...

[Milan Zdravkovic]

No, I don't think the idea is to negate boxed warnings. I think -- definitely not, but I think the idea is more -- what is the relevance of the toxicities observed in the target population that you want to treat and what is the likelihood that any of those -- safety liabilities would have a translational impact into the patient population. And here, I see more of an impact of methotrexate than I see of rapamycin.

[Operator]

Our next question is from Emmanuel Papadakis, Barclays.

[Emmanuel Douglas Papadakis, MD & Head of European Pharmaceuticals Research]

Emmanuel of Barclays. Maybe I'll take a couple ones follow-up on a lot to really just if you could give us a little bit more color on the regional dynamics, particularly how France is looking. Maybe just quantify for us the potential in the U.K. I mean where I'm really going with the question is, you talked about the SEK 140 million to SEK 150 million destock in Q2 and lower consumption. But for us to get anywhere close to consensus expectations, this year, for the full year for the second half would need a pretty significant recovery. So your confidence in that and how regional dynamics might help that would be of interest? And then the second question, Guido, really is a bigger picture question around guidance. You've reaffirmed guidance this morning. We discussed in the past after a very strong start to the year that it seemed like you might have room to increase guidance. Consensus expectation currently sits at the top end of your existing guidance range for both revenue and EBITDA. So your confidence in meeting that upper end and how H2 may facilitate or not scope to increase that would be of interest?

[Guido Oelkers, CEO & President]

Yes. Thank you. I mean just maybe let's start with Haemophilia. I just saw the DRS data from the first half in France, which is obviously an important market from us. And there, we basically, our consumption data mimic the market data. We have not given any market share. In fact, we have gained patients on a net basis. So that actually gives us confidence that we still have a very competitive package. We have -- as I mentioned earlier, we have become the #1 prophylaxis product in hemophilia in Germany in Q2. So there, let's say, it's also resonating. We have, overall, in Europe, gained significant number of patients despite the impact on face-to-face -- lack of face-to-face interaction. And I think you have -- most of you have seen these studies where face-to-face interaction versus the current environment has a 30% to 40% productivity difference. So just recognizing this, I think, and people have other worries than switching patients typically in COVID times. So that gives us also confidence in Europe that basically we should be back. Obviously, there is a proliferation of competition, but we have still -- we hold firm on our offering. We have the Florio platform, let's say, expanding. And the product advantages we have talked about, I mean, in many sessions. So we think we have a strong offering. And with regard to the U.K., I commented on. I think that -- I think we are quite actually satisfied with the outcome because we are no longer held back now in this new environment by the share of the market that we can -- we are allowed to compete in. So that gives us a good opportunity also.But I think we -- I mean, obviously, the -- when you look at Haemophilia, mid- to long term, there will be limitations to growth. But then we have also if there is one knocking at the door, which actually looks pretty good as we speak, so we think we have a significant role to play, yes? I mean, we don't give guidance now on a product basis. But the -- as I alluded to earlier, it would -- it seems that we should be able to show growth in the following quarters. And therefore, we see no reason to change our guidance. I mean the -- whether we are now at the higher end of the guidance or not in this environment, I do not want to precise our guidance. Guidance is a guidance, but we are confident that we will be in line with the guidance and we would -- and you can be rest assured that we will do everything to be at the upper end. So that's what I can tell you. But I'm not now, let's say, basically narrowing the window of the guidance. So I think this would not be sound.

[Operator]

Our next question is from Viktor Sundberg, ABG.

[Viktor Sundberg, Research Analyst]

So first of all, I just wondered if you could give any indication of when you're going to pay the upfront payment to Selecta for the licensing agreement? And on the same topic, Selecta said that there is a cost savings of at least USD 150 million with the Sobi deal. How much that -- how much of that will be increased cost for you going forward? If you can take those questions first, and then I have some follow-up.

[Guido Oelkers, CEO & President]

Yes. I mean, we see with regard to the upfront payment, the upfront payment where we do upon closing, which we expect within the next 1 or 2 months, we don't expect any issues with the competition authorities and then this will become due. Henrik, you want to mention more about the accounting of this and how you see it?

[Henrik Stenqvist, Chief Financial Officer]

No. I mean, it's absolutely right that we expect closing to occur relatively soon and then we pay, and we capitalize the upfront.

[Guido Oelkers, CEO & President]

And the SEK 150 million that Selecta can save, I think this is back to a certain degree in our upfront as well.

[Henrik Stenqvist, Chief Financial Officer]

Yes. So when it comes to...

[Guido Oelkers, CEO & President]

Henrik, you want to comment?

[Henrik Stenqvist, Chief Financial Officer]

Yes. So what we say regarding the guidance is that the guidance excludes any impact from Selecta. When we close, we indicate -- it's in the note there in the report that it could mean increased R&D spend of up to SEK 150 million for the rest of this year. So that...

[Guido Oelkers, CEO & President]

In SEK?

[Henrik Stenqvist, Chief Financial Officer]

In SEK, yes. We will have to come back to the longer term impact of this development.

[Viktor Sundberg, Research Analyst]

Okay. And staying on Selecta, for SEL-212, you talked about the 66% response rate. But if you do a modified intent-to-treat analysis on the higher dose cohorts, 10 to 12, putting back patients that discontinued, it seems like your response is closer to 46%. Can you speak a bit how you have optimized the COMPARE trial to limit this continuations, so where you expect the response to end up? Maybe how much better do you need to be in order to be outside of the confidence interval to its superiority for that trial?

[Guido Oelkers, CEO & President]

Milan, you want to comment?

[Milan Zdravkovic]

Yes. So I think it's difficult to compare studies across, as you correctly point out. The 66% refers from Phase II evaluable patient analysis. And I think even in a comparative study, the patients that you can say was true for nonsafety related adverse events are none. The withdrawal criteria would also be the same in the KRYSTEXXA study. So the differentiation potential of 212 and KRYSTEXXA, I think, as I said, and this was also announced by Selecta in December 2019, they have seen a numerical imbalance in the withdrawal rate and the withdrawal -- due to the 6 -- less than 6 milligram per deciliter withdrawal criteria for uric acid. And they have seen that in favor of 212 both for the, you can say, stopping criteria, but also to a certain extent for adverse events. And this is why we continue to believe that 212 would be differentiated against KRYSTEXXA. The study -- the 212 study is sufficiently powered to detect what I would say, a meaningful difference between 212 and KRYSTEXXA on sustainability of being able to lower uric acid.

[Viktor Sundberg, Research Analyst]

Okay. And just a final question on Doptelet. Can you give any more flavor on how the launch is going for ITP? And of patient numbers, prescription data that you could share? And also maybe a quick comment on Novartis that is planning to file a food effect free formulation in 2021. How do you view that competitive threat to Doptelet?

[Guido Oelkers, CEO & President]

Yes. I mean the product makes a very significant progress. You have seen 52% growth quarter-on-quarter. So that's very positive. And that's basically also reflected in the number, obviously, of patients now that we have been able to increase. And I think the ITP, obviously -- I mean we were a little bit impacted by like many other companies by the lack of ability to see physicians. And when you look at the data from the U.S. from IQVIA, 30% to 40% less NRxs in this time period from end of March to beginning of June. Obviously, this was most of the quarter. So then in the second part of June, when things were coming back, clearly had an impact on our launch. So the hope is by the opening of the economy we will be able to accelerate the pace here again. And that's really what we have in mind. And let's say -- but the -- so we are very positive also. By the product, we also think that the CIT indication remain convinced where we have significant move for the products where the evaluation of the product in our books has not changed. And basically the advantages, maybe, Milan, you want to summarize how you view the new formulation from Novartis for Promacta, but we think that we will continue going strong in regard to this.

[Milan Zdravkovic]

Yes. So I think we have also seen this. We have not seen any data, but the safety liability continues to be the same when it comes to liver toxicity. So even if there is, you can say, a blunted or less aggressive food effect of the new formulation, which remains to be seen, the fundamental issue around the toxicity profile is unchanged. So we continue to stand by the differentiated profile, avatrombopag. I think when you look at the totality of the package that avatrombopag can provide, I think it's very meaningfully differentiated against any other TPO in this space.

[Operator]

Our next question is from Sten Gustafsson, Nordea.

[Sten Gustafsson, Senior Analyst]

A few. First of all, on Elocta. Just to make sure I understand it. Should we use the Q2 sales figure, adding back the stocking effect and then look at some patient growth going into the second half when you talk about that you see growth opportunities for that product? That would be the first one. My second question is regards to your OpEx spending. And if you could perhaps help us with the phasing of how that will develop in the second half. And my final question is, if the CIT indication is included in the $500 million sales potential you talked about in -- I think it was in the Q4 presentation half a year ago, that would be helpful.

[Guido Oelkers, CEO & President]

Yes. No. Maybe we'll -- we start with the CIT. I mean we looked at the product when we gave the first guidance as holistically. But if CIT really works well, then yes, you can model yourself, obviously, I mean, 70,000 patients. That basically should give you some comfort for the guidance that we have given on the CIT strength alone. I mean 70,000 patients alone in the U.S. But this is not the time for us now to change the guidance. And yes, I think that gives you a little bit of a flavor. The -- sorry, the first question, I just -- the first -- can you repeat the first question one more time, sorry?

[Sten Gustafsson, Senior Analyst]

Yes. That was -- when you talk about Elocta growth for the second half, should we add back the stocking effect? You said SEK 140 million, SEK 150 million to the Q2 number and look at growth from that level? Is that representing...

[Guido Oelkers, CEO & President]

Yes. I think you -- basically, the stocking effect is really something that we had in Q1, now is in Q2. So that basically increased your base for Q2. And then you have obviously -- and then basically, you will have patient growth that will drive ultimately sales growth. And then the question is only -- do you still have an overhang, a little bit of consumption saving because the people are still affected by COVID and in terms of -- I think elective surgery will be a little bit down also in the second half of the year. I mean, we heard that in Q4 that should normalize. But the main driver is probably that patients now get back into the right regime. And there, we are working with physicians as well as the patient associations to make sure that patients don't underdose and are joining in full protection. So there should be an offsetting effect in the second half of this year.And let's say with regard to OpEx, we have -- I mean, the main -- one of the main drivers of OpEx is going to be the some of the studies that we are undertaking that we are now ramping up like [ Gamifant ] like the acute graft failure study, and this is impacting OpEx. And obviously, we want to remain competitive launches in Europe for CLD and the prelaunch and then launch and hopefully, depending on how it falls for ITP and that basically has to be seen as main factors. Maybe, Henrik, you want to comment to give it more of a flavor.

[Henrik Stenqvist, Chief Financial Officer]

Yes. I mean, we do expect a generally higher activity level in H2 than we've seen in H1. It's not like we think COVID is over, but we do expect an easier environment to operate in. And in addition to what you said, Guido, we also continue the international work, including not only China and Japan, but also Russia, preparing for the future launch of Elocta. Does that answer your question?

[Sten Gustafsson, Senior Analyst]

Yes. But is it fair to assume that it will be more Q4 than Q3? Or do you -- I mean, now in Q2, we saw OpEx coming down and -- yes, on -- so do you expect -- when do you expect it to increase, basically?

[Henrik Stenqvist, Chief Financial Officer]

Over the full half year, but obviously, Q4 is a much higher activity level quarter than Q3 in general. So more in Q4 than in Q3, obviously.

[Operator]

Our next question is from Christopher Uhde, SEB.

[Christopher Winston Uhde, Analyst]

I just wanted -- had a couple of quick follow-ups. So I guess, the manufacturing revenue, 2 consecutive quarters of quite high performance. Should we be expecting that to drop back down or is this the new normal? And the last question I have was this type 2 variation submission. Is this -- I mean, I'm a bit confused as I think that was basically like a reformulation. Is this an [ SFDA ] or -- type of thing equivalent for Europe or I mean, why bring it up if there are no new safety findings?

[Guido Oelkers, CEO & President]

Okay. Maybe we start with the safety filings. Milan, you want to comment on this? This is a new formulation.

[Milan Zdravkovic]

Which variation application are you thinking of, Christopher?

[Christopher Winston Uhde, Analyst]

Sorry?

[Milan Zdravkovic]

Which variation application are you thinking of?

[Christopher Winston Uhde, Analyst]

It was the Kineret for -- or is it -- it was one referred to in the report, yes, for the Sobi.Anakin-302 [ instills ].

[Milan Zdravkovic]

That's a very -- I mean, I need to come back to you on that, sorry.

[Guido Oelkers, CEO & President]

Yes, that's not really the main stream as regards in [indiscernible] [ manufacturing ] income. I mean this is a relatively stable business. So the growth that you see now, I mean -- and we are here following, obviously, Pfizer's lead. So I think if you want to know over the longer run how our manufacturing revenues are performing, you just look at the forecast for ReFacto.

[Operator]

And our last question is from Peter Sehested, Handelsbanken.

[Peter Sehested, Research Analyst]

Yes, it's Peter again. Follow-up, and they were actually related to -- cost related to SEL-212. If you look at Selecta in 2019, they reported SEL-212 related costs, R&D costs of roughly USD 26 million. That is roughly, let's say, SEK 260 million, and that is just for the smaller studies. Assuming a larger Phase III starting to be initiated this year and rolling into 2021, perhaps '22, I mean, it would be -- I mean, just a doubling of these costs sounds sort of in the lower end of what we should expect in terms of additional cost for 2020 -- sorry, '21, '22. Is that sort of the right calculation/weight to look at it? And I just want to get back to Elocta and the competitive landscape in France. I think one thing that sort of spooks the market a bit is that you talk about additional patient growth across the board, but in France, you specifically just mentioned that you are maintaining your market leadership, which basically could assume that you are maintaining the leadership in the replacement factor segment, but the overall market share of that segment is going down. So my question very specifically, have you seen patients switches out of Elocta and into other products during Q2 in France?

[Guido Oelkers, CEO & President]

Maybe, Henrik, you want to talk about it?

[Henrik Stenqvist, Chief Financial Officer]

Yes, I think we -- Peter, we -- I don't contradict you when you say what you say about the cost for the Phase III trial. But I think it's fair that we come back with a firmer opinion once we've actually closed the transaction.

[Peter Sehested, Research Analyst]

Okay. And then on Elocta and switches out of Elocta in France, if you have seen any of that during Q2?

[Guido Oelkers, CEO & President]

The -- actually, to be honest, we had a net patient gain. There were mainly -- in fact, there were 2 or 3 switches from Elocta, but most of -- but this was overcompensated by the gains, yes. So it's still -- we are still going strong here. It's the overall number of switches to Hemlibra is minimal for us.

[Operator]

And we have no further questions. I give the floor back to you for the final remarks.

[Guido Oelkers, CEO & President]

Yes. Yes. Thank you so much for your interest and apologies if some of the questions were not sufficiently answered or we were not broad enough. But at least, you can see there's quite a bit of robustness in this business. And in Q2, it deserves a bit of a second look, some additional comments. But as hopefully we have communicated, we think actually, these are solid results in further building the future. Thank you so much for your interest, and wish you a great day. Talk to you soon. Bye.

[Operator]

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