Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Transcript 2022-Q2

[Operator]

Ladies and gentlemen, welcome to the Sobi Q2 2022 report. Throughout the call, all participants will be in listen-only mode and afterwards there will be a question-and-answer session.

I will now hand over to the company.

[Guido Oelkers, CEO]

Yes. Hello, everybody. This is Guido Oelkers, CEO of Sobi. Welcome to the second quarter 2022 report and conference call for investors and analysts. The presentation was posted to sobi.com earlier.

Please refer to slide number two. As the usual Safe Harbor statement, we will be making comments on our performance using constant exchange rates, and numbers used are in million Swedish krona for the second quarter of 2022, unless stated otherwise. Comments will be made will be mostly related to the second quarter performance.

Please turn to slide number three. This is the agenda where we plan to cover all key aspects of results today. We plan to review the presentation first and then to go to the Q&A until around 2 P.M. Swedish Time. We want to be respectful of your time as there are a couple of other companies reporting. If you keep questions short, we will try to keep our answers short too. [Operator Instructions]

Many thanks. In speaking order, I'm joined by Henrik, our CFO; Anders, our Head of R&D and Chief Medical Officer. For questions later, we have also Armin, our Senior Scientific and Medical Advisor as part of this conference call.

Please turn to slide number four. Starting off, I'm pleased 2022 has continued well for Sobi despite uncertainties in the world around us. Revenue increased by 10% and by 21% at actual rate, including an element of continued phasing of Doptelet sales to our partner in China.

Launch medicines, Doptelet, Aspaveli, and Gamifant combined advanced by 96%, is very gratifying. This performance was underpinned by a strong executional dimension in our commercial organizations.

We continue to invest to our growth in selling and R&D and medical and we concluded efficiency programs with limited impact in the quarter. As a reminder, the efficiency programs focus on resources into core areas, simplify the organization and adjust the cost base to enable Sobi to continue to sustainably grow and margin improvement over time. Anders will cover changes in R&D and medical scientific affairs later in his presentation.

The EBITA margin adjusted landed at 25%. All items affecting comparability are detailed on page three of the former Q2 2022 report and also in the appendix of the presentation.

The pipeline continued to deliver with the first efanesoctocog alfa Phase 3 presentation. We expect continued pipeline news flow during the year and in 2023. Recently, we announced an agreement to license the orphan medicine of loncastuximab tesirine from ADC Therapeutics to augment our strategic presence in haematology. With the performance today we added further commentary to the 2022 outlook, Henrik will cover that later.

Finally, I would like to thank our colleagues at Sobi for the hard work and the focus on providing innovative medicines that transform lives of people with rare and debilitating diseases.

Please turn to slide number five. Moving to disease areas and geographies, we saw haemophilia showing the promised stability. The growth in haemophilia was boosted by Doptelet in geographies while Immunology was held back by the lack of COVID-19 sales for Kineret offset by Gamifant.

From a regional point of view, we saw higher growth in our new markets, further adding to the ongoing global expansion and increased geographical diversification of Sobi's business.

We have also seen that in most markets, our sales and marketing efforts are back up and close to the level seen before the pandemic. Overall, we are happy with the performance and you know quite gratified by the overall growth.

Please turn to slide number six. Turning to haemophilia, we saw growth of 5% in sales, 1% in revenues including royalty and manufacturing. This performance is underpinning our commitment to continue stability in 2022.

Elocta advances by 6% driven by the growth in patient and higher factor consumption, but slightly offset by price. An element of price -- patient retention also supported performance.

Alprolix advanced by 2%, driven by growth in patients and slightly offset by price and some stocking effects with consumption being relatively stable. We are pretty happy with the performance and stay focused on continuing and stable development.

Please turn to slide number seven. Doptelet had another strong quarter as continued phasing of sales to China. Excluding China, sales grew by 66% based on a sustained uptake in the U.S. and also in Europe.

In the U.S., we have seen new-to-brand prescriptions increase to teens percentages, with another significant part of business coming from switches from competitive medicine.

In Europe, Germany is leading the way and we saw sales from across the continent and obtained more reimbursement including Italy and Spain, which will benefit us later on.

In China, we know provide heated [ph] sales number and see continued benefit of phasing. As we discussed also at the last quarter this will provide a tougher comparison later in 2022.

Please turn to slide number eight. The launch of Aspaveli progressed well with sales of SEK38 million in the quarter. This is a large increase from SEK4 million in the first quarter and we are pleased with the progress we have now launched in the U.K., Germany and France. And with good patient and physician feedback, we estimate to have around 35 patient on commercial supply by the end of June. As we move forward, we will continue to track and share all relevant launch metrics.

Please turn to slide number nine. Based on our commitment to provide innovative medicine that transformed the lives of people with rare debilitating diseases as well as stated capital allocation priorities, we were pleased to announce the licensing agreement with ADC Therapeutics for loncastuximab tesirine in Europe and most international markets.

We believe Sobi's heritage and strong presence in haematology coupled with a new medicines like Doptelet will provide a competitive platform for bringing this product to more patients with orphan diseases. As you know the medicine is under regulatory review in Europe by the EU and with an anticipated decision in the first quarter of 2023.

Please turn to slide number 10. Turning to Immunology, Kineret sales were impacted by the lack of sales for COVID in emerging markets and therefore, rebased with only a slight offset by us in other indications.

Gamifant sales increased by 34% following a softer first quarter and underpinned by growth in new patients. During the quarter, Sobi launched the INTO-HLH Registry, a new Disease Registry for Patients with HLH. It is designed to define the natural history of the disease, including the full diagnostic and treatment journey of patients' experience. The Registry also aims to provide critical insights into burden of HLH and its impact on quality of life and health care resource use. A Steering Committee will oversee the Registry for Sobi.

Please turn to slide number 11. Last in immunology as synergies, we saw little revenues in the quarter from positive gross to net rebate adjustments. There were also no sales from earlier increase in the U.S. RSV detection, and Sobi continues to expect the 2022-20233 season to follow a normal pattern.

I will now hand over to Henrik for the financials. Please go ahead, Henrik.

[Henrik Stenqvist, CFO]

Thank you, Guido and hello, everybody. So, please turn to slide 13. I would now take you through our financial performance in the second quarter of 2022. Starting with quarterly revenue, we are showing quarterly amounts here over the past five quarters and apart from the steady growth in haematology over the quarters, which we're adopting as the main driver, we see that revenue in the second quarter was higher than both the second and the third quarter of 2021. Sequentially versus the first quarter immunology in Q2 is as expected lower due to the seasonality of synergies.

Turning to the profit and loss on the right. This table has growth rates at actual rates, the statutory view. And as mentioned earlier, revenue for the second quarter was high, with 10% growth at constant rates and elevated by increased sales of Doptelet to the partner in China.

Given their importance, we are now giving more details of Doptelet sales to China. We do expect sales to China in both Q3 and Q4, but at lower levels than we've seen in the first half of this year. As I also mentioned at the last quarter, we expect growth rates in H2 for Doptelet and also overall and to moderate due to the higher comparisons in H2 2021.

Gross margin in the quarter was 74%, down from 76%, reflecting the mix of business with sales of Doptelet to China having a lower gross margin than the sort of the average.

Selling and administrative expenses increased 22% at CER when adjusted for affected -- items affecting comparability and amortization and supported launches of Aspaveli, Doptelet, and also supported the ongoing geographic expansion.

R&D expenses increased by 7% at CER when adjusted for items affecting comparability. Adjusted EBITA margin realized was 24%, but 25% on an adjusted basis. But we do not anticipate any further restructuring charges this year.

EPS for the quarter ended at SEK0.87 and SEK0.91 when adjusted. For more details on items affecting comparability as we heard, please look at page three in the Q2 report or the appendix to this presentation.

Please turn to slide 14. Finally, I'll turn to the financial outlook for 2022, which is on revenue growth at constant exchange rates and EBITA margin adjusted. As discussed in February, when the outlook was issued, Sobi will continue to expand the presence in rare diseases and expand into new geographies. As a result of this growth strategy, Sobi expects revenue to grow by mid to high single-digit percentage at CER, now potentially towards the higher end of the range. And growth is anticipated to moderate as we move into the second half of 2022 due to the higher comparisons from previous -- from the previous year.

Sobi will continue to invest in the pipeline and launches on new medicine to unlock the long-term value of the business. And with this investments in the future, Sobi maintains a favorable margin. The EBITA margin adjusted is anticipated to be at the low 30s percentage of revenue, but now including the cost effects of the agreement to license, the new orphan medicine, loncastuximab tesirine in haematology.

And with the outlook covered, I will now hand over to Anders for the pipeline. Thank you.

[Anders Ullman, Head, R&D and CMO]

Thank you very much, Henrik. Hello everyone. I am pleased for the opportunity to take you through the pipeline highlights this quarter, including data from an important recent medical meeting, an overview of our new R&D and medical affairs team, and a list of upcoming news.

Please turn to slide 16. So, the pipeline saw continued progress since April with several key license being achieved. License included the first Phase 3 study data presentation for efanesoctocog alfa at the International Society of Thrombosis and Haemostasis 2022 Congress in London. Earlier the medicine had been rewarded breakthrough therapy designation in the United States.

Aspaveli/Empaveli also issued multiple [indiscernible] with regulatory submission acceptance in Japan for the potential treatment of PNH, and the start of a new Phase 3 study into rare hematologic kidney disorders.

Kineret saw its first regulatory submission in China and SEL-212 had the last patient in being this in the Phase 3 program.

Please turn to slide 17. Now, the big news for us was clearly the presentation last week at the first Phase 3 data on the Phase 3 data for efanesoctocog alfa, the XTEND-1 Phase 3 study. The study met the primary efficacy endpoints with once weekly efanesoctocog alfa prophylaxis, providing clinically meaningful bleed protection for people with severe haemophilia A. The median and mean annualized bleeding rates were zero and 0.71, respectively.

The study also met the key secondary endpoint, demonstrating superior bleed protection over prior FVIII prophylaxis with an estimated annualized bleeding reduction of 77% and a mean annualized bleeding rate of 0.69 compared to 2.96 on prior prophylaxis based on intra patient comparison.

Finally, in a subset of participants studied at baseline and at week 26, mean FVIII levels remained in the normal to normal -- to near normal range, about 40 international units per deciliter for the majority of the week and at 15 international units per deciliter at day seven, reducing providing increased factor activity level protection for patients with once weekly prophylaxis.

Other secondary efficacy endpoints were also met, including clinically meaningful improvements in physical health, pain, and joint health. Treatment emergent adverse events were generally consistent with a population with severe haemophilia A. Inhibited development to FVIII was not detected. These data support our confidence in the potential of efanesoctocog alfa to elevate protection in people with haemophilia A towards normal haemostasis.

In other words, we will seek to move from treating bleeds to normalizing lives, an exciting journey ahead of us and ahead of many patients who will benefit from this treatment once approved and launched.

Please now turn to slide 18. In the last quarter, we announced the transformation of Research & Development and Medical Affairs, which includes a new operating model, a revised governance, a new structure for the organization, and more efficient processes.

We did this to accelerate the development of our medicine, to ensure that we are well-equipped for global expansion, and that we are more efficient to accommodate future growth.

The new model is based around cross-functional teams that are responsible for our core assets. They are supported by a combined R&D and Medical Affairs organization with simplified processes and strategic external partners.

I would like to thank all colleagues in the new R&D M&A team for their support of the change and their continued commitment to patients and science of these recent [indiscernible] of change.

Please now turn to my last slide 19. As we look ahead to the pipeline news flow in the remainder of this year and overall 2023, we expect more news of importance. In the second half of 2022, we anticipate collaborators to apply for and get acceptance of U.S. regulatory submission for efanesoctocog alfa and nirsevimab.

We also expect to hear from U.S. FDA on Kineret in COVID-19. Looking ahead to next year, we have now split the news into the first half and second half of 2023. In the first half, we anticipate the second Phase 3 study of efanesoctocog alfa to read out and we expect a couple of regulatory decisions in Japan for Doptelet and Empaveli.

We anticipate a regulatory decision for our new orphan medicine haematology, loncastuximab tesirine. We are getting the Gamifant data in macrophage activation syndrome for rheumatological disease, specifically the Still's disease cohort and with our partner, Selecta, we anticipate the Phase 3 program read out or SEL-212. In the second half, we generally expect the data received in the first half to convert into regulatory submissions.

With that, I want to thank you for your attention and for this opportunity to talk about science and our pipeline in Sobi. And I hand it back to Guido who will now conclude.

[Guido Oelkers, CEO]

Yes, thank you so much Anders. It's really a pleasure to round it off and please turn to slide 21 to repeat at the end of the Q&A session. So, in summary, I think we can be very pleased that 2022 has continued well for Sobi despite uncertainties in the world around us. Our revenues increased by 10% as I mentioned earlier and by 21%, that actual rate, including of -- an element of continued phasing of Doptelet sales to a partner to China. But the fundamental business of Doptelet in the U.S. and in Europe, obviously, remains very strong.

Launch medicines, Doptelet, Aspaveli and Gamifant combined advanced by 96% very strong indicator that Sobi has developed to become a launch machine. This performance was underpinned by very strong commercial execution.

And finally, we added a further commentary to the 2022 outlook today. So, basically, when we -- we will now go to the Q&A session. [Operator Instructions]

Thanks in advance. Perhaps now, we can take the first question from the conference call.

[Operator]

Thank you. The first question comes from the line of Adam Karlsson from ABG. Please go ahead.

[Adam Karlsson, ABG]

Hi all. Thanks for taking my questions. I have two. One on efan alfa and another on RSV. Starting on efan alfa, it's on reimbursement, the data at ISTH was clearly very strong. And we heard from some U.S. KOLs at that Congress that if efan alfa would be the obvious first choice of any patients choosing factor replacement going forward, but in Europe peers typically have a greater say on the therapy choices through the tendering processes.

So, my question is how you and I guess, Sanofi, are thinking about firstly, pricing of efan alfa relative to say, Elocta? And how readily you expect European payers to recognize the convenience and efficacy benefits of efan alfa relative to other extended half-life factors? And how willing they are to pay for that? Your expectations around that would be interesting. Thank you.

[Guido Oelkers, CEO]

Our view on efanesoctocog alfa has actually not changed. I mean, we will -- our thought process is that we position the product at comparable cost of therapy to Elocta and other prevailing medicine and basically allow the product to expand our franchise by its beneficial -- by its benefits and as now clearly emphasized in the Phase 3 trial. Now, so that's really our assumptions. Cost of therapy, comparable FP and based on our research, that's not an unreasonable expectation to get approved with payers in Europe.

[Adam Karlsson, ABG]

Okay. Thank you. And then secondly on RSV, you're highlighting that you're expecting a normal season. But just given the RSV detection trends we're seeing for the U.S., is that indication of a normal season? Is that based on what you're hearing from your commercial organization on the grounds, something that contradicts what the RSV detection trends are showing? Or is that just you being sort of sensibly cautious given the unpredictable nature of the RSV at this early stage?

[Guido Oelkers, CEO]

I think we are sensibly cautious that we -- obviously we're recognizing the fact that they are pockets of RSV already happening as we speak, emerging and this could lead to an advancement of sales, but at this stage it always depends on the adoption of the respective bodies and then recommendation and that's very difficult to predict. Hence, our perspective is let's assume a normal season and we have no indications that this season is not going to be -- it's going to be negatively affected by any stretch for this part of the year.

[Adam Karlsson, ABG]

Okay. Thank you very much.

[Guido Oelkers, CEO]

You're welcome. Next question. Maybe back to the operator.

[Operator]

The next question comes from the line of Eun Yang from Jefferies. Please go ahead.

[Eun Yang, Jefferies]

Thank you. I have a question on BIVV001. So, it's great data from ISTH. So, I want to ask you about how you think about the potential of BIVV001? Aside from Elocta conversion, I assume the greatest market share gain would be from other FVIII replacement therapy. So, two questions, is it reasonable to assume that you could potentially double Elocta sales with BIVV001? And second question is, how do you think about conversion from -- potential conversion from Hemlibra? Thank you.

[Guido Oelkers, CEO]

Yes. Thank you, Eun. I mean -- I take this first and then, maybe let's also Armin -- we were both ISTH, maybe comment, his impression. I mean, when you think about it, I mean, the product, obviously normalizes patients for the majority of the week, providing clearly an additional benefit that was also reflected by earlier feedback that we got from patients and physicians as we reported to -- if anything, our conviction about the product has increased.

And we think that this is clearly a very important option in the treatment algorithm that we'll take share from not only from Elocta, but from all factor treatments. But we also think as activity levels are increasing, we think that -- and we see this in our consumption data from Elocta as they improve as well.

So, as activity levels are increasing, patients will increasingly also recognize the limitations, also of non-factor treatment. And as a consequence, there will be a quest from a significant patient who will also to look at efanesoctocog alfa as an alternative.

So, we think that this is actually pretty -- that this basically was a one-off efanesoctocog alfa, we will have a very significant opportunity to expand our market share. At this juncture, we would not comment on whether we think that we can double the Elocta share, but clearly, we will not hold back and we see this as a very, very important opportunity for our company and we will -- and we're extremely gratified by the response at ISTH and got a lot of encouragement and people see the utility as earlier pointed out from your colleague from AVG. Maybe Armin, you want to comment?

[Armin Reininger, Head of Medical and Scientific Affairs]

Yes. Hello, Eun. Just a few highlights from ISTH. Clearly, all the physicians key opinion leaders we spoke to saw the huge importance of the protection level that efanesoctocog alfa can deliver to patients. I mean for four days, they are normalized with their clotting, deliver something that is unheard of.

And they also believe that -- also as Guido mentioned, non-factor therapies clearly now have something that is provided by -- that will be measured against, but the benefit is if you do this, you can measure, you can predict what levels will be achieved and you are not in the dark, like with other products and other therapies where you do not like gene therapy, for example, not know is the patient benefiting and to which level and also its -- efa is for patients, it's not just for a selected group of patients. So, I think we have a very broad approach here that will benefit and this is what we literally heard from everyone we spoke to.

[Eun Yang, Jefferies]

Thank you.

[Guido Oelkers, CEO]

I hope this gives you a bit of a flavor. Thank you.

[Eun Yang, Jefferies]

Thank you.

[Guido Oelkers, CEO]

Thank you. Back to the operator then maybe for another question.

[Operator]

Thank you. The next question comes from the line of Viktor Sundberg from Nordea. Please go ahead.

[Viktor Sundberg, Nordea]

Yes, hi. Thanks for taking my questions. I have a few, but I will start also by the good data you present of efanesoctocog. Thinking here of moderate haemophilia patients with 1% to 5% normal factor level, it was a lot of talk about these patients at ISTH that they could also benefit from a treatment that patients have such high factor concentration throughout the week.

What is your thinking around this patient category, especially given that Hemlibra does not have that on the label here in Europe? Or do you think that these patients are already well-controlled on say, Desmopressin?

And also have you seen any PK data at day 10? I'm thinking if these levels are maybe above the 3% of normal factor level that's recommended by the World Hemophilia Federation, or in their guidelines that could enable less frequent administration? Thank you.

[Guido Oelkers, CEO]

Yes, thank you for your good question. I would straight refer to Armin. Armin can you?

[Armin Reininger, Head of Medical and Scientific Affairs]

Hello, Victor. Clearly, what -- if you look at the clinical picture of moderate patients, there are some that bleed heavily. And if you refer to those that will probably not be treated enough with what you just mentioned, but they definitely need factor replacement because they have fairly high bleed rates, at least in some and for those, I absolutely agree with you that efanesoctocog alfa can be a treatment choice that will really get them to a completely different level of protection. And this is what we pursue.

The dosing regimen needs to be what will be on the label, so we cannot recommend anything else. But as you know, it's always the physicians' choice then what to do with it.

[Viktor Sundberg, Nordea]

Okay. Thanks. And just a final one here on haemophilia. So, congrats on the strong growth here also for Elocta. But is there any major tenders coming up in major markets here in the second half of the year and they could have a negative price effect if you could give any guidance on that that would be great. Thanks.

[Guido Oelkers, CEO]

Yes, no, we don't anticipate any major impact. I mean, there will be -- no, that will basically negative early impact what we have, we see a big opportunity for us in certain geographies. I mean we're making good progress in international markets, but we don't see -- let's see our core being affected by major tenders that would erode our prices.

[Viktor Sundberg, Nordea]

Okay, great. And just a final one here also on Gamifant and the Emerald study. I know that there was a delay there, I just wondered to get some flavor on that. I guess some patients with Still's disease get that from a secondary virus infection, has the low circulation of virus infections in general during COVID-19 impacted recruitment? Now, do you see that the outlook of finding more patients here in 2022. I just want to get some flavor on if you're close to recruiting that cohort in the beginning and also given her the eight week follow-up, we should expect a readout early in H1 or maybe later for next year. Thanks.

[Guido Oelkers, CEO]

Thanks. Anders you want to comment?

[Anders Ullman, Head, R&D and CMO]

Yes. Right. This is a tricky, complex study to perform and with severely ill patients, but spread over a large number of rheumatology sites. And we still -- we expect we need to have very many more sites than we will need patients in the end of the day. And so the whole process of activating the study, activating the sensors during the worst year mount of the COVID pandemic, I think, was the initial main challenge that caused a little bit of delay in startup.

When we have then got into a more stable situation, improved our collaboration with a very dedicated team, also from icon [ph] who is our CRO here, I think we are now rapidly initiating sites and we still have relatively few patients enrolled. And this is -- as we see, largely dependent to exactly what you're talking about that this is a bit of a seasonal disease related to infections, rates, et cetera, which are currently live.

But we are optimistic that we will catch up and deliver to be it now somewhat, according to revised timelines. But I think we have a good momentum in the team internally with our external suppliers. So, we -- the investigators are clearly excited and committed to make this happen.

[Viktor Sundberg, Nordea]

Yes. Thanks. That’s all for me. Thank you.

[Guido Oelkers, CEO]

Thank you. Maybe back to the operator.

[Operator]

The next question comes from the line of Christopher Uhde from SEB. Please go ahead.

[Christopher Uhde, SEB]

Yes, hi. Thank you for taking my questions. So, I'll start with two and get back in the queue. So, I guess my question is on loncastuximab tesirine, so you're moving into oncology, which is, of course, quite different from benign haematology, so how are you preparing the commercial organization for this? I mean, what do you see as notable differences to your commercial approach in the existing markets? And can you tell us about any key competences in oncology on the team already? And perhaps, sort of, what are key competitive differentiating attributes of loncastuximab versus other CD-19 targeted products in development? Thanks.

[Guido Oelkers, CEO]

Yes, thanks, Christopher. I mean, the way we see this license is as a logical extension of our approach in haematology. So, we don't position ourselves to be honest as an oncology company, but we see this broadening of our scope into a niche area of haematology oncology as an opportunity to create -- to make our calls and our interactions with physicians more meaningful.

And that basically should benefit the new product, but it also should benefit Doptelet. And we have quite -- actually quite significant capabilities in our team already, because we got quite a few people in from the oncology sector when we recruit in Europe, because the approach to promotion by medical marketing is similar. And we have quite a bit of capabilities in our medical departments already with deep onco background.

But basically see it as a first extension of our haematology franchise that gives us optionability that basically allows us to improve our contribution with that in the haematology area. We will not get confused, we know who we are at this juncture. But it will give us, let's say, an opportunity to extend our franchise.

And just to round it off and then I leave it to Armin, who can talk about our perspective on competitive approaches there. I mean, this isn't -- particular in Europe, we have breadths and depth of a pretty complete rare disease company that basically is able to apply itself to very different diseases as demonstrated in that example, most recently with [indiscernible].

So, our organization, as long as we are operating in a very refined niche environment, in this case, actually connected to an area that we know already and where we have a significant overlap of physicians. It should actually -- based on the kind of work we have done with the team, it should lend itself. So, maybe, Armin you want to comment on the product and how it compares with other products coming into CD-19 space?

[Armin Reininger, Head of Medical and Scientific Affairs]

Thank you, Guido. Hello, Christopher. I think just looking at lonca to the, I would say almost direct competitors, you need to think about the monotherapy approach, which is in those very difficult patients with -- who have many different aspects to watch out for probably elderly people, you will really want to have something that is not overloaded with many additional other therapies and drugs. So, the monotherapy is clearly one of the advantages.

And the other one that I want to point out here is the safety aspect. So, the safety profile that we have seen so far, I believe, really makes this standing out among those competitors extending our drug and product. I mean, the efficacy is more or less in the same range as what you would expect from others, but in the combination, I think this clearly has an advantage. And it has already shown in third line treatment not to be forgotten. Those are patients who were refractory or not responding at all -- anymore or literally relapsing. So, very difficult patient group to treat and to have such an overall response rate and complete response, I think that proves that this product is targeting the right aspect.

[Guido Oelkers, CEO]

So, Christopher, you're clear?

[Christopher Uhde, SEB]

Yes, thanks. I'll get back in the queue.

[Guido Oelkers, CEO]

Excellent. Thanks. Operator, maybe take the next question.

[Operator]

The next question comes from the line of Peter Östling from Pareto Securities. Please go ahead.

[Peter Östling, Pareto Securities]

Yes, thank you for taking my question. Most of them has already been asked, but I have a brief one. You just mentioned that you even in Q2 had some price adjustments -- negative price adjustments for Elocta. Could you just talk about in what countries you saw those price adjustments? Thank you.

[Guido Oelkers, CEO]

Yes, thank you, Peter. I mean, these price adjustments are mostly actually, in the non-ordinary costs, the low single-digit, as you would see in negotiations with hospitals. So, there's not -- no unfortunate -- I mean, no country to pick out. I think what you see as a price adjustment is more in our average mix is that we're making significant progress, particular in Central Eastern European countries and the Russia and basically -- and as a consequence, the prices -- the average price goes a little bit down. But there's nothing to report of that is affecting the core of the business.

[Peter Östling, Pareto Securities]

Okay, great. Thank you.

[Guido Oelkers, CEO]

Thank you. Operator, maybe next question.

[Operator]

The next question comes from the line of Mattias Häggblom from Handelsbanken. Please go ahead.

[Mattias Häggblom, Handelsbanken]

Yes. Thanks so much. Two questions please. I'll take them one at a time. So, firstly, on Doptelet, SEK281 million in China in the quarter, down from SEK358 million, but I think materially higher than consensus had anticipated. I may be wrong, but I recall some comments about SEK500 million to China for the full year, but that's already exceeded some by now.

So, Henrik mentioned we should expect additional shipments for the coming quarters, so maybe help us understand what we should expect for Doptelet China going forward, is the average per quarter first half expectation per quarter? Or should they continue -- should we expect to continue to see it as we saw in Q2 that would be helpful?

[Guido Oelkers, CEO]

Yes, I mean, the business -- there's a very significant business build up by our partner, Fozone [ph] in China. And we got some reasons data point, it's probably in the mid-hundreds of millions of dollars. And at this juncture in markets progressing on an annualized -- on a rolling forecast and progressing relatively rapidly. So, what you see is that, obviously, inventory movements are always hard to predict, let's say, what is their perspective. And that's the reason why it's tough to comment what will be our quarterly sales, because they -- we have a rolling forecast, obviously, with them and have an agreement. So, we will have continuous sales into China. But it's too early for us to comment of the magnitude. But as we are selling to them and as a business as continuous making significant progress, we expecting that this is not just a one-off. So, we will have continued sales into China during the second part of the year. But it's -- but I wouldn't -- would not like to comment already. On the magnitude, because that's with China can be quite flux, given the inventory build-up and then sell off.

[Mattias Häggblom, Handelsbanken]

Okay, that's fair. And then secondly, assuming you obtain for nirsevimab rights later this year, when Sanofi submits and assuming the product gets approved for the second half 2023, I guess the market needs to start to think about the size of the portion of the initial loss that later will convert into profit for the portion you have rights to down in the U.S.

So, I guess, two things, really at this stage, do you have any insight to the magnitude of Sanofi's investment plans or is this sort of a guessing game for you as well? And then secondly, consensus seems to have started to more than a loss with operating income and trends, the maintenance close to zero, but we have some with a profit and others with a loss of up to SEK0.5 billion, so anything to help us put this into context, please?

[Guido Oelkers, CEO]

Yes, I mean, basically, the dilemma is that we cannot give you any insight on the Sanofi's numbers, because due to the competitive situation with Synagis, they cannot share those numbers with us. I mean, we would -- we can tell you what we think outside in, but that -- this is always as a caveat. But this is not going to be, I mean, a humongously expensive launch, like -- and it's going to be intense, they will have leverage with existing teams. And that will obviously be subject to the guidance of AAP, the broader the guidance, the less the promotional efforts will be necessary probably.

And -- but we think that, yes, there will be a loss, we on the other hand, will still -- we believe that we will still have in 2023, material sales of Synagis. To what degree the substitution will take place? I mean there have been multiple surveys going on and obviously, some of the surveys would suggest a very efficient rate of substitution.

We think that we will be able to retain a fair share. The size of the share will determine how we can compensate for the promotion for the introduction cost -- market introduction cost. But we see a 50% of that, yes.

I think the question is how would it affect your valuation? I mean, we see this -- as a -- and you know this is unchanged. We see that the earning stream for this -- for nirsevimab is probably to the tune of the state's level in the mid run, that we are currently yielding with Synagis. So, hence, from a -- if you can afford to do a discounted, you should be fine. So, I'm -- but I cannot comment on you -- coming to you for these reasons, is this now a good assumption or a bad assumption, because I cannot speak for Sanofi.

[Mattias Häggblom, Handelsbanken]

That's all. Thanks so much.

[Guido Oelkers, CEO]

Thank you. Back to the operator. Next question, please.

[Operator]

The next question comes from the line of Erik Hultgård from Carnegie. Please go ahead.

[Erik Hultgård, Carnegie]

Yes hi, thank you for taking my questions. I have two. My first BIVV and a follow-up on Doptelet. First, on BIVV, related to an earlier question on access in Europe, can you talk a little bit about what to expect in terms of timing when we should have access for BIVV in the major geographies, some of Doptelet took almost four months before you had accessing all top five markets, will there be a much faster access for BIVV given the precedent of Elocta and the similar cost of therapy? Or will there be similar timelines? I think -- yes -- and then I'll go shoot another one for Doptelet. Thank you.

[Guido Oelkers, CEO]

Thank you Erik. I mean with regard to BIVV, no, I think it's -- the concept is obviously much more intuitive. We have the experience from the Elocta rollout. I mean we were trying to create an environment that makes it easier -- easy for payers to accept this new therapy, even though they basically get the same cost of therapy, a much better product.

And obviously, physicians want it now, and patients want it. So, there's going to be quite a bit of pressure to access -- to have access to the therapy on a broad base. And -- but we cannot speak for -- and so we will do everything, cutting a long story short, to provide quick access to the product. Let's say that maybe faster than the experience we had with Elocta, but to what degree we will be successful is obviously depends on the negotiation with the payer, once the product is approved. So, I think -- so I would not necessarily like to speculate.

[Erik Hultgård, Carnegie]

All right. Great. Thank you so much. I think I'll take another one on BIVV. Any plans to develop the subcu version? I know that you did some -- you showed some early clinical data a couple of years back at the scientific meeting, I was quite mixed up, given the convenience benefit with Hemlibra on some technological advances lately, do consider it viable to develop the subcu version?

[Guido Oelkers, CEO]

Subcu version normally for factor VIII is very, very difficult space and we don't intend it and that from what I remember this was related to the Factor IX therapy. And also, this program is currently going through some challenges.

[Erik Hultgård, Carnegie]

All right. Thank you so much.

[Guido Oelkers, CEO]

Thank you. Back to the operator.

[Operator]

We have a follow-up question from Adam Karlsson from ABG. Please go ahead.

[Adam Karlsson, ABG]

Hi. Thanks for taking my follow-ups. Two brief ones then, in the interest of time. The first one, are you able to clarify the costs from the licensing of loncastuximab in 2022 as it relates to the adjusted EBITDA, given that the guidance now incorporates these costs? And then secondly, on that licensing deal, which is obviously of relatively modest deal size, I'm wondering what that might imply in terms of your appetite for the bid activity here in the second half or let's say, the coming quarters? Any commentary there would be appreciated. Thank you.

[Guido Oelkers, CEO]

Yeah. Thank you. I mean, I'll start with the easy bit. Our appetite is large to do more, because we think that we are in a position that we can take advantage of this environment of uncertainty. And we are focusing on further acquisitions, even though we believe that this product actually can be quite meaningful -- a meaningful contributor as we generate synergies here. Henrik, you want to comment on the exact -- on the appropriation of payments in the -- for this licensing deal?

[Henrik Stenqvist, CFO]

Sure. We estimate that the additional costs that weren't in the previous forecast as a result of this licensing would be between SEK100 million and SEK150 million in 2022.

[Adam Karlsson, ABG]

Great. No, that's very helpful. Thanks.

[Guido Oelkers, CEO]

Thank you. Back to the operator.

[Operator]

The next follow-up comes from Christopher Uhde from SEB. Please go ahead.

[Christopher Uhde, SEB]

Thanks for taking my follow-up questions. So, I guess the first question is as the pricing of Elocta declines, the gross margin should of course be pressured to some degree. To what extent are there offsets to that? And then while we're talking about margins, can you quantify the potential margin impact pre and post reorganization say a couple of years out? I mean, is it more than a few tens of basis points? Thanks.

[Guido Oelkers, CEO]

Yeah. I mean, the -- I start with the hemophilia one, there will be -- pricing in Europe will have an effect. You basically have to offset this by efficiencies in manufacturing and scale economies. And we are here working together with our partner, Sanofi and that will internalize the production. And then to what degree can this really offset pricing pressure is speculative.

But let's say, you need to believe that, this will be an important method. You will get operating leverage if you expense this franchise because there are so many physicians that you can see. So by expanding your patient numbers and that's with a new therapy and more efficacious cost structure you should be able to manage this. That's what my view is.

With regard to the efficiency programs on a corporate level, I think we basically think that we -- this is an important part for us. But to expand, to make sure that we can compensate some of the increases in our cost structure on the expansion of footprint launches and R&D expenses. But at this stage, we are not guiding more that we -- on the exact size.

[Christopher Uhde, SEB]

Okay. Thanks. And then in terms of the R&D reorganization that Anders kind of summarized here this time, what could it mean in terms of say the average time to market saved or the number of indications that a product in-house could be expanded toward either for existing or pipeline medicines and also for pricing power?

[Guido Oelkers, CEO]

Anders, you want to comment on it?

[Anders Ullman, Head, R&D and CMO]

Yeah, yeah, I can start and you can fill in, Guido. I don't think we can put up any distinct comparable numbers from the initial plans and the new plans. I think what we have really tried to do here, because we have been growing too very fast. We have incorporated organizations that we have acquired, et cetera. So we have now ensured that we get a single set of governance principles, a single set of principal team set up, that we have key talent on top of each core assets.

And what I think it will lead to is that, it really enable us with the latest possible investments, keeping our time lines moving to competitive labeling submissions and labeling for a rapidly increasing portfolio and increasing geographic footprint. So I hope that, you will see that we will be acting as a very professional organization with -- in our spaces and our rapidly increasing portfolio.

[Guido Oelkers, CEO]

Yeah. I think it's tough to quantify, but as Anders said, what we want is improve our delivery in R&D to get more credit for this, and I think the teams are in a good way in order to do so. With this having said, maybe come to the last question. Back to the operator.

[Operator]

Our last question comes from the line of Mattias Häggblom from Handelsbanken. Please go ahead.

[Mattias Häggblom, Handelsbanken]

Oh, great. Thanks so much for taking the follow-up. So firstly, on sales growth in constant exchange rates for the quarter, if I adjust for the very impressive book sales, I end up with plus 1% for the rest of the revenue. Of course, we need to think of this in line with the tough comp last year when sales grew 14% in local currency second quarter. But anything to add beyond the tough comparison, what's going on for the rest of the business and other focus here? In Doptelet, and in particular, Elocta, I guess, during the core months, anything to add there? And then I have a follow-up.

[Guido Oelkers, CEO]

Yeah. No. I mean, Mattias, I mean, yes, you can see. I mean, purely mathematically, there is some room, but we don't want to spur at this juncture. We don't want to speculate. We have a mountain to climb given that the synergy season last year started earlier, but we have extremely good momentum with Doptelet as you spotted. We hope that we can carry also the strong quarter for Gamifant into the next, and that we can keep the strong performance in hemophilia. So -- but at this juncture, we don't want to get ahead of ourselves, and would rather prefer to update you on -- in the Q3 environment, let's say, where we are heading. I hope that, this makes sense.

[Mattias Häggblom, Handelsbanken]

Sure. And then just lastly, a financial question for Henrik. So tax rates surprising low first half at 19% that's 500 basis points lower than last year at this stage. Is this something fundamentally different about how we should think about tax rate for Sobi? Or is it seems to facing?

[Henrik Stenqvist, CFO]

So I -- just below 20% is a good mark for the full year so there is nothing extraordinary happening in the quarter.

[Mattias Häggblom, Handelsbanken]

For the full year and then that's the rate we should think for the -- going forward as well?

[Henrik Stenqvist, CFO]

It's likely to be slightly higher beyond 2022.

[Mattias Häggblom, Handelsbanken]

Fantastic. Thanks so much.

[Guido Oelkers, CEO]

Thank you. Yeah. So guys, thank you so much for your engagement. I know, this is the summer season is coming soon. The more we appreciate it, we stay tuned and variants for so engaged. And really, thanks for your time today. As you can see, we didn't need a heat wave in Europe that is currently affecting everybody to get our metabolic rate up. Business is in a good shape, and we look forward to deliver also during the second part of the year. And -- but we, as you understand, we don't get ahead of ourselves.

So thanks for your interest into Sobi, and wish you a great summer and look forward to reengage. If there are further questions, please do not hesitate to connect with Thomas. He would be very happy to either facilitate a meeting or answer directly. Thank you, and wish everybody a great summer. Thank you.

[Operator]

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