Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Analysis

Sobi's Q2 sees 11% growth, optimistic outlook for H2 2024

Sobi reported a robust Q2 with an 11% revenue increase, driven by haematology and immunology sales. Excluding China sales, this growth was 26%. Major contributors included Doptelet, Aspaveli, Elocta, and Vonjo, with a strong 28% EBITDA margin. Key pipeline achievements were the European approval of Altuvoct for haemophilia A and filing SEL-212 with the FDA for chronic refractory gout. Sobi upgraded its full-year guidance to low double-digit revenue growth, maintaining a mid-30s EBITDA margin. The company foresees continued momentum in H2 2024 from its strategic portfolio and new product launches .

Introduction and Performance Overview

In the second quarter of 2024, Sobi reported significant growth, driven mainly by their strategic portfolio of products in both haematology and immunology. The company experienced a total revenue growth of 11% at constant exchange rates with an adjusted EBITDA margin of 28%. Excluding the effects of consolidated sales to Fosun, the top line growth actually reached 26%.

Haematology and Immunology Segments

The haematology segment showed strong performance with continued growth in key products such as Doptelet and Aspaveli. The introduction of Vonjo contributed SEK 347 million in sales. Elocta and Alprolix benefitted from geographic expansion and market phasing. The immunology segment also showed robust growth, particularly with Gamifant reaching sales of SEK 522 million.

Pipeline Developments and Approvals

Sobi made significant strides in its pipeline during the first half of the year. The approval of Altuvoct in Europe for haemophilia A and the SEL-212 for chronic refractory gout under fast-track designation by the FDA underscores their progress. They also received fast-track designation for Gamifant for treating secondary HLH, with plans to file in the second half of the year.

Financial Highlights

Financially, Sobi recorded an operating cash flow of SEK 2.3 billion in Q2 2024, significantly higher than the SEK 0.4 billion in the same period last year. This improvement is attributed to higher operating profits and reduced net working capital buildup. The net debt was reduced by SEK 3.2 billion in the first six months of 2024.

Strategic Updates and Future Outlook

Sobi upgraded its full-year revenue guidance to low double-digit growth at constant currencies, maintaining an adjusted EBITDA margin in the mid-30s. The growth is expected to be driven by Doptelet, Aspaveli, Vonjo, and royalties from Beyfortus. The pipeline remains active with upcoming milestones, including the filing of SEL-212 and additional indications for Aspaveli.

Vonjo and Market Penetration

Despite a slower than expected market uptake for Vonjo, Sobi remains optimistic about its potential. Currently penetrating around 8% of the US myelofibrosis market, they aim to increase this through targeted strategic initiatives and broader acceptance of the NCCN guidelines. They are also looking forward to new indications and international expansions.

Innovative Treatments and Market Expansion

Sobi launched several strategic initiatives to sustain growth. They expanded their market reach and launched important products like Aspaveli in new markets. The company's dual focus on pipeline development and geographic expansion is expected to drive future growth, supported by products like Altuvoct and the anticipated FDA approval of SEL-212.

Closing Remarks and Future Plans

The company is confident in its strategic direction, driven by a robust R&D pipeline and strong financial health. They aim to leverage their innovative treatments to maintain growth and market relevance. While there are challenges, particularly with the slower uptake of Vonjo, Sobi's strategic initiatives and market expansions are expected to drive significant growth in the upcoming quarters.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, welcome to the Q2 2024 Report Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Guido Oelkers, CEO. Please go ahead, sir.

[Guido Oelkers, executive]

Thank you. Hello, everyone. This is Guido Oelkers, CEO of Sobi. We are delighted to welcome you to the Second Quarter 2024 Conference Call for investors and analysts. We posted this presentation to sobi.com earlier today.

We would like to remind you, please go to Slide #2 of the usual provisions on statements about expectations and projections of future events. And unless stated otherwise, we will be making comments that mostly relate to the second quarter at constant exchange rate in million Swedish krona.

Please turn to Slide #3. Today, we plan to cover the key aspects of our Q2 report. I'm joined by Henrik Stenqvist, our CFO; Lydia Abad-Franch, our Head of R&D and Chief Medical Officer. During the Q&A session, we will be joined by Armin Reininger, our Senior Scientific Adviser as well. We plan to review the presentation first and then have a Q&A under around 3:00 p.m. Swedish time. [Operator Instructions]

With this said, let's go right to the beef of the presentation. Please turn to Slide #4. We are very pleased with the performance in the second quarter and overall strong first half, which has been driven by successfully executing on our strategy and growth of our strategic portfolio. We saw a significant top line growth of 11% in Q2 and an EBITDA margin adjusted for was 28%. Please bear in mind that we consolidated the business to Fosun. Taking away this effect, our top line growth would have been 26%.

Haematology growth was driven by continued growth of Doptelet and Aspaveli sales and the addition of Vonjo. We saw growth of Elocta and Alprolix mainly driven by geographic expansion, but also by some phasing in tender markets. We continue to build the launch of Vonjo, which has taken time, and while we see progress, we believe that the product offers a broader potential than we currently yield.

Given our strong scientific profile -- sorry, given the strong scientific profile of the product and the feedback of physicians, we remain confident to change the trajectory by our new strategic initiatives and the broader and higher reach of our target audience during H2. Immunology reflects strong Gamifant sales of SEK 522 million sales where no synergy sales in the quarter as we are now out of the RSV season.

In terms of the pipeline, we have seen tremendous progress in the first half thanks to our strong development teams with the approval of Altuvoct in Europe for haemophilia A and the filing of SEL-212 to FDA under fast track designation for the potential treatment of chronic refractory gout.

Additionally, we received fast track designation for Gamifant for the potential treatment of secondary HLH, which we intend to file in H2. We have a very strong momentum in the Sobi business, both commercially and in the development and are pleased to update our guidance for 2024. We expect double-digit growth, previously high single digit at mid-30s for the adjusted EBITDA margin.

Please turn to Slide #5. Let's look at the overall performance in more detail. Our growth of 11% was driven by both haematology and immunology sales. We saw a strong performance of haematology with 13%. And the more gratifying is when we look at the underlying growth, as I highlighted earlier, of 26%, excluding the effect of sales to Fosun. Growth came from all regions, with the U.S. growing at 38% and international, excluding Doptelet China, grew impressively 73%. We look forward to continuing the delivery of our global strategy in 2024.

Please go to Slide #6. Our growth strategy has led to strong results which primarily driven by our strategic growth portfolio, which includes our medicines listed here and paid forward to us in the 2-year royalties in the U.S. contributing to 41% of our total business in Q2. Here you see the 5 medicines from our portfolio, which impressively grew year-on-year growth, delivering significant growth to our business now and most importantly, will be the future growth drivers of our business. We are excited to include Altuvoct sales as of now based on the recent approval in the U.S. -- sorry, in Europe and will further enrich our strategic growth portfolio in the second half of the year.

Please turn to Slide #7. Another look at the strategic portfolio. This is a graphical visualization and it shows the other representation of growth in the quarter, again, demonstrating the growth of our strategic portfolio of 74%, while the vast majority of the strategic portfolio is driven by our own medicines.

We have built this one on top of a strong foundation portfolio, which grew 9%, driven by Elocta, Alprolix and Kineret, all showing double-digit on a year-to-date basis. Our legacy portfolio is expected is it -- isn't expected shrinking particular this quarter with no RSV revenues and our manufacturing of ReFacto now closed as of the first quarter. Based on high growth rates at the early stage in life cycle medicines, in the strategic portfolio, we expect it to demonstrate continuous growth fueled by geographic expansion and the new indications as illustrated on the next slide.

Please turn to Slide #8. Sobi has been pushing growth across two dimensions as part of our overall strategy: pipeline development, meaning bringing new products to market and extending indication; geographic expansion, meaning expanding the market coverage of our medicines. For the pipeline, it has been a very productive first half of the year. Altuvoct will now be launched in Europe, first in Germany in H2. This medicine has a tremendous first launch in the U.S. with our partner, Sanofi and we look forward to bringing these important medicines to patients in Europe in our territories.

For SEL-212, we are very gratified that the FDA has granted fast track designation and we now initiated the submission to the U.S. FDA. Fast track designation will allow us to more access and support to the FDA during the filing and the recognition of the unmet medical need in chronic refractory gout. We are also very happy that we have received the second fast track designation this year in Q2, this time for Gamifant in secondary HLH, which reflects the importance of the -- of our innovative potential medicine and what they can bring to patients. We are on track for filing this indication in the second half.

At the same time, we continue building our geographic footprint with launches of Aspaveli, Doptelet, Zynlonta, and Gamifant in new markets and for Vonjo as of 2055 at scale. This puts forward Sobi into a new phase of sustained growth, driven by new products, execution on our development commitments, and we look forward to the data of Aspaveli in nephrology and the filing of Gamifant in secondary HLH during the second half of the year.

Please turn to Slide 9. Doptelet has had another strong quarter with 61% growth excluding sales to China in Q2. Sales growth was driven by increased uptake in the U.S., ongoing launches in regions, Europe and international. In the U.S., there's a continued positive evolution of patients, new prescribers, higher market share and duration of treatment. There's also accelerated growth in Europe and international driven by our ongoing launches and continued increased market share in the earlier launched markets.

Please turn to Slide #10. The launch of Aspaveli continued well with quarterly sales of SEK 251 million and 77% growth, continuing a solid launch trajectory. We have strong growth momentum across Europe, International and Canada as more patients switch from C5 inhibitors to Aspaveli/Empaveli seeking optimal control of their PNH.

In the quarter, the EU approved the broad label to include first-line treatment of PNH, enabling our teams to talk broadly about the benefits of this important medicine. We will see the next inflection point for Aspaveli later this year with the data for the potential new indication in nephrology. We look forward to seeing the VALIANT Phase III study results in second half of this year.

Please turn to Slide #11. Vonjo sales were SEK 347 million in the quarter. We have seen continued momentum from March, and Vonjo is establishing its place, especially in the below 50,000 microliter platelet patient population. However, we still have not seen the inflection point, we want to see in terms of market penetration. Of note, in the first half, we have seen from several sources that the overall volumes in the market -- myelofibrosis market have been flat and is expected to grow during the later part of 2024.

Currently, we have approximately 8% market share in the myelofibrosis market. Further progress hinges on broader acceptance of the unmet medical need in these patients with less than 100,000 platelets and wider knowledge and acceptance of the NCCN guidelines. We are working hard with our enlarged teams on focused messaging and increasing our coverage and reach in the market. We firmly believe we have the best-in-class medicine as outlined on the next slide.

Please turn to Slide 12. As mentioned, we still have ample opportunity for Vonjo not only in the U.S. myelofibrosis market, but -- where we have a lot of potential, but also in terms of internationalization and new indications. We are progressing well with Pacifica with the Phase III trial, which is important in two fronts. It is a confirmatory study to get full approval in the U.S., and it will allow us to file ex-U.S. in more territories.

Currently, we will have early access programs in countries utilizing the FDA label, such as in the Middle East. However, Pacifica will be needed for Europe and Japan. We are also continuing our work on new indications and have advanced two indications and we'll give some update later in the year.

Please turn to Slide #13. There is a tremendous unmet medical need in myelofibrosis and Vonjo represents an important advancement. You can see from the numbers shown here that the medium survival with low platelet counts, for instance, below 50,000 platelets per microliter is only 1.25 years whilst with severe anemia, the median survival is almost 70% longer.

When considering Vonjo's effect on platelets, we are convinced that Vonjo could play a much broader role in clinical practice along with the strong KOL support we have seen and the updated NCCN guidelines with additional data emerging on various aspects of Vonjo benefits such as fast and durable clinical response, symptom reductions and real-world evidence, which Lydia will cover in more detail later on. We continue to generate new data and build upon the strong clinical rationale for Vonjo in the treatment of myelofibrosis.

We have made significant changes to the U.S. setup with new leadership in the sales management and expanded the overall structure, both commercially and medically. We are increasing our targeting and digital approaches to reach more HCPs and patients and building on the education work around the benefits of Vonjo and the unmet medical needs in myelofibrosis treatment.

Please turn to Slide #14. Our foundation business continues to be driven by our haemophilia medicines in the second quarter, especially for Elocta. We are expanding the leading presence of Elocta and Alprolix to more patients and in the new territories. This confirms the community's confidence in these treatments and has been able to overcompensate for price developments that we experienced, especially in Europe.

We saw some additional order facing order phasing driving growth in Q2. We are very excited and look forward to introducing Altuvoct in Europe in the coming months. And in this important therapy area for Sobi and building on the great legacy we have built with the haemophilia community in Europe.

Please turn to Slide #15. We see continued growth for Gamifant in Q2 with sales of SEK 522 million, growth becoming more difficult in view of the strong Q2 in 2023. Overall, this positive development is a result of an enhanced go-to-market model, more experience with Gamifant and the belief of interferon gamma in this setting.

We see increased interest from both existing positions and new prescribing centers who are increasingly prescribing it for their patients as well as a better balanced patient mix, including adolescents and adult patients. As far as Kineret is concerned, patients showed strong growth of 11% in Q2, further reinforced by the elevated interest in the IL-1 mechanism. Demand is coming from all regions.

Please turn to Slide #16. I now hand over to Henrik for the financials. Thank you.

[Henrik Stenqvist, executive]

Thank you, Guido, and hello, everyone. Please turn to Slide 17, and we will now review some key financial metrics for Q2. As said by Guido, Q2 was a strong growth quarter with a very solid business performance reflected in 11% revenue growth at constant currencies and adjusted EBITDA margin of 28%.

Two quick notes. First, and as we heard, there were significant sales of Doptelet to our partner in China last year. Excluding this, our revenue growth in the quarter at CER would have increased to 26%. Second, our EBITDA margin in Q2 and Q3 for that matter is typically impacted by the lack of RSV sales, leading to a lower margin in this quarter than the average for a full year of business.

Looking at the bar chart on the left, all our therapeutic areas exhibited a strong performance, specifically, haematology reported a 13% increase; immunology grew by 7%; and specialty care saw 12% rise. Within haematology, haemophilia grew in the double digits in Q2. We see continued momentum in Doptelet with a growth of 61%, excluding China, and we see Doptelet growth in all regions.

Then we had the addition of Vonjo contributing SEK 347 million in the quarter, and this is a slight quarter-on-quarter growth. In immunology, we continue to see a strong momentum with Gamifant, and this is the fifth quarter starting in Q2 2023 that we have delivered more than SEK 400 million in revenue in the first quarter with sales in excess of SEK 500 million, an all-time high for the product. Also, Kineret continued to grow at double digits, surpassing SEK 700 million in the quarter.

Referring to the table on the right, the revenue of over SEK 5.4 billion corresponds to 11% at constant currencies. Doptelet outside of China, Vonjo, Elocta and Aspaveli are the key growth drivers in this quarter. The improved adjusted gross margin of 77% in the quarter compared to 71% in Q2 '23 is mainly due to the absence of low-margin Doptelet sales to China in the quarter, but also to other positive product and country mix effects in the business. The adjusted EBITDA margin reached 28%, up from 26% last year, influenced by the high gross margin just mentioned.

Looking at the operating expenses for the quarter. We observed a 22% growth at constant currencies compared to the same period in 2023. SG&A, excluding nonrecurring items and amortization increased by 7% at CER in the quarter, primarily due to Vonjo, which was not materially included until Q3 '23 and accelerated activities for the launch products.

We've managed to partly offset the impact of Vonjo on the SG&A line through savings in the synergies organization as we reported in Q1. But R&D expenses are the main driver in overall OpEx increase in the quarter. And this is about SEK 350 million of increased spend reflecting the efforts to file SEL-212 for FDA approval, the addition of Vonjo and clinical and medical affairs and activities related to Altuvoct.

Nonrecurring costs or items affecting comparability amounted to SEK 30 million in the quarter, resulting from the adjustment to COGS related to the fair value of acquired inventory in the CTI acquisition. And other than this item, we do not expect any significant additional nonrecurring costs from the acquisition of CTI moving forward. For detailed informational items affecting comparability in the quarter, please refer to Page 3 of the Q2 report.

The operating cash flow for the quarter was SEK 2.3 billion compared to SEK 0.4 billion in Q2 last year. The very strong cash flow is due to higher operating profits, but also a lower net working capital buildup. This net working capital reduction is primarily due to lower gross to debt settlements in the U.S. for synergies. Net debt at the end of the quarter was SEK 16 billion, corresponding to a net debt-to-EBITDA ratio of approximately 2x. And in the first 6 months of '24, we have reduced net debt by SEK 3.2 billion, reflecting our solid cash flow generation.

If we now turn to Slide 18, and we discuss the financial outlook for the full year 2024. And this is as usual, based on revenue growth at constant exchange rates and adjusted EBITDA margin. We're upgrading our revenue guidance for the full year, anticipating a low double-digit revenue growth at constant currencies, and we are reiterating adjusted EBITDA margin in the mid-30s percentage of revenue.

The upgrade of the revenue guidance comes from the strong momentum that we've seen in H1 of this year, where we expect the main drivers of growth in H2 to continue to be Doptelet, Aspaveli, Vonjo, and the royalties from Beyfortus. And naturally, overall growth rates in H2 are expected to decline versus H1 due to the more difficult comps from H2 2023.

The margin guidance remains unchanged at the mid-30s percentage of revenue, considering the continued efforts in R&D mainly related to the FDA filing of SEL-212, which is a rolling submission and Gamifant. In addition, we had the nephrology indications of Aspaveli, C3G and IC-MPGN as well as accelerated clinical and medical activities for the recently approved Altuvoct.

And with the outlook covered, I will now hand over to Lydia. Thank you.

[Lydia Abad-Franch, executive]

Thank you, Henrik, and hello, everyone. So let's start with the pipeline milestones on the next slide, please. We have continued our solid pipeline progress in the second quarter of this year. In haematology, we received European approval for Altuvoct in haemophilia A as well as for Aspaveli/Empaveli in first-line for paroxysmal nocturnal hemoglobinuria.

Both medicines have also retained their orphan drug status. No other factor VIII product has managed to maintain their orphan designation at the time of marketing authorization which underlines Altuvoct's significant patient benefit. We are very happy to be able to offer these new options for patients with PNH and haemophilia A.

In immunology, we initiated the rolling submission BLA for the SEL-212 in chronic refractory gout at the end of June. And FDA granted fast track designation for Gamifant in secondary HLH MAS in Still's disease. Additionally, very promising data for SEL-212, Altuvoct and Vonjo was also prominently presented at the recent EULAR, ISTH and ASCO Congresses. And I would like to give you a glimpse of it.

Let's start with the SEL-212 on the next slide, please. The SEL-212 submission is based on the results of the DISSOLVE I and II pivotal studies. We have been developing SEL-212 for chronic refractory gout. The DISSOLVE program consisted of two double-blind, placebo-controlled studies of SEL-212 with 265 dose patients. And here is the data from the recent EULAR congress, for the first time showing the pool data from both DISSOLVE I and II studies. As you see on the left graph, there was a statistically significant higher response rate for SEL-212 versus placebo with the majority of chronic refractory gout patients treated with the dose chosen for the BLA submission being responders.

On the right-hand graph, we see that the reduction of serum uric from baseline in treated patients was profound, with a reduction of 5.3 milligrams per deciliter or which represented 60.8%. These are clinically meaningful reductions with unexpected effect on [indiscernible]. It is notable that treated patients have no difference in the number of gout flares within the first 3 months of therapy.

As you might know, during the initial treatment period of these patients, other serum uric lowering therapies, increased gout flares in this patient population. And finally, no new safety signals were observed and the overall safety profile of SEL-212 was consistent with previously conducted studies. This is the data FDA used to grant fast track designation and which we are basing the BLA on.

Next slide, please. Moving to efanesoctocog alfa. The results from the XTEND-ed studies were presented at ISTH with 4 oral presentations. XTEND-ed is the open-label extension study to the pivotal XTEND-1 and XTEND-Kids, evaluating the long-term safety and efficacy of efa and will continue until 2027. The primary endpoint is occurrence of inhibitor development.

Secondary endpoints shown here include annualized bleeding rates, treatment of bleeding episodes and safety. The results confirm efa's ability to change the treatment paradigm for haemophilia A. 217 participants roll over to the XTEND-ed study, 146 adults and 71 kids. Importantly, factor VIII inhibitors did not develop.

On the left side of the graph, you see the benefits of efa prophylaxis. The median annual bleed rate remained at 0 as in the pivotal studies. Over 94% experienced 0 is spontaneously bleed over 2 years in adults and adolescents and over 35 weeks in the children population. And once-weekly prophylaxis resulted in very high compliance, as you see in the lower left side.

If we look at the right-hand side graph, we see the high efficacy of efa when bleeds occur. A single injection was sufficient to resolve the bleed in 94% of cases. And a large majority of patients, 88%, evaluated their response to treatment of bleed as excellent or good. The mean total dose of efa required to treat a bleed was 48.2 units per kilogram.

Next slide, please. Joint health outcomes in adults and adolescents were also presented at ISTH, showing that all 132 evaluable target joints were resolved during the study as shown on the left graph. The investigators who completed the surgical procedures, on the right-hand side, you see the outcomes of the 49 major surgeries. And the investigators completing the procedures assess the participants' response during the surgery and during the postoperative period. All except one procedure were rated excellent or good and did not require blood transfusion.

Importantly, the cumulative median consumption for major surgeries was 162 international units per kilogram over a period of 16 days starting the day before of the surgery. This consumption is unprecedentedly low for major surgeries in haemophilia and is similar to the 150 international units per kilogram dose of efa for the routine prophylaxis during the same time period. You can see why we believe that efa will make such a significant difference to how haemophilia A is treated.

Next slide, please. Moving into myelofibrosis. Emerging data on Vonjo highlights a strong rationale for its use in the treatment of this disease. A recently published manuscript analyzed patients treated with pacritinib across the Phase III PERSIST studies. Strikingly, the benefit of pacritinib on both spleen volume and symptoms was consistent regardless of baseline platelets or hemoglobin subgroups as shown on the left side of the slide. In other words, its effect is maintained regardless of baseline blood counts.

Symptoms improvement was actually greatest in the patients with severe anemia who had baseline hemoglobin less than 8 grams per deciliter. This subgroup also experienced improvement in hemoglobin after starting pacritinib as shown on the right upper graph, and there was a correlation between symptoms improvement and anemia improvement.

In other words, pacritinib has demonstrated efficacy across MF patients, in particular, in patients with severe anemia. Furthermore, our clinical trial data has now been confirmed by the first real-world evidence analysis of Vonjo recently presented at ASCO and based on its use for treatment of MF in the U.S. This real-world data shows that cytopenic patients who receive Vonjo experienced stable or increasing platelet counts and hemoglobin levels, with the greatest anemia benefit experienced by patients with the most severe baseline anemia as shown on the right lower graph.

Next slide, please. Summing up the first half year, we have delivered on all our major milestones, as you can see on the left-hand side of the slide. Our outlook for the second half of 2024 remains strong. We plan to submit for Gamifant in secondary HLH for macrophage activation syndrome in Still's disease in the second half of the year to the FDA.

Doptelet continues its geographic expansion with a planned ITP filing in Japan. And we also will file for the pediatric indication based on the data from earlier this year. And we will have the Aspaveli VALIANT Phase III data on C3G and IC-MPGN, which we expect to open the path to new nephrology indications for pegcetacoplan, and our momentum will continue in 2025.

Next slide, please. We continue to generate data for Altuvoct. And next year, we expect the first year interim data from the FREEDOM Phase IIIb study. This will give us insights into physical activity changes for people using once-weekly prophylaxis with efa. And this is a highly relevant indicator for quality of life of patients.

For Aspaveli, we aim to submit our nephrology application in Europe and Japan. Gamifant will see both FDA decision and the Japan submission in secondary HLH MAS, and we will prepare our European filing strategy. We also expect a U.S. regulatory decision for SEL-212 in chronic refractory gout. And finally, we also expect Kineret to be ready for submission in Still's disease in Japan.

And with that, I would like to hand back to Guido. Thank you.

[Guido Oelkers, executive]

Thank you, Lydia, and let's maybe provide you with a summary on the next slide, Slide 28.

So in summary, we are very pleased with Sobi's development in the first half of the year and the performance in Q2. We saw a significant top line growth of 11% in the quarter, 26% excluding Doptelet China. This reflects the strong performance in our strategic portfolio and our foundational portfolio in haematology and immunology and continued growth in our key products around the world. This has led us to upgrade our revenue guidance from high single digit to low double-digit revenues for the full year as we maintain the guidance of mid-30s adjusted EBITDA margin.

Our R&D pipeline showed tremendous progress with the approval of Altuvoct in Europe for haemophilia A and Aspaveli in first-line PNH in Europe. We initiated the filing of SEL-212 as you just heard for chronic refractory gout based on fast-track designation in the U.S., and received fast-track designation for Gamifant in secondary HLH. In summary, we have a strong momentum at Sobi and in the business and as well as in pipeline development, and we look very much forward to the second half of the year.

And with this, I think we would like now to open the floor for questions for those on the phone. [Operator Instructions] Apologies in advance that we are a little bit -- we had to stretch it a little bit today, but we had so many areas to cover. Shows how busy we are. With this, let's go straight into the question-and-answer session to give you a maximum time.

[Operator]

[Operator Instructions] The first question comes from Brian Balchin from Jefferies.

[Brian Balchin, analyst]

Just one on Vonjo. So Guido, you said you're currently penetrating around 8% of the U.S. MS market. So how confident are you in kind of trading up to 30% just in light of the strategic initiatives you've implemented? I guess, have you seen a shift in physicians prescribing behavior more towards NCCN guidelines? Or is it still kind of in line with the label?

[Guido Oelkers, executive]

Yes. Thank you. We are currently seeing that there are probably more -- we get the vast majority in line with the labor. There's a lot of work that is set out for us. But we also see that once we are having the right interactions with physicians, that there's an opportunity to change. That makes us hopeful and -- when we look at the data. And also, we looked at some data from patients, what patients expect. It's clear that they're expecting more than just [indiscernible]. And that makes us hopeful if we can get this connection right, that we can also penetrate in other segments below 100,000...

[Operator]

The next question comes from Viktor Sundberg from Nordea.

[Viktor Sundberg, analyst]

I have two, if I may. So also on Vonjo here, I just wondered a bit about the difference here between the outcome of these couple of quarters versus what you envisioned for the product when you acquired it. I guess you must have known that you would lay off part of the CTI team to reap the synergies here.

But just wondered what kind of -- what the reasons behind the kind of sluggish uptake we see right now versus what you expected when you acquired the products and the reason behind that. And also appreciate if you can relate that to the SEK 36 million provided here at the final week of the quarter, if that's a reasonable uptake for Q3.

And a quick second one also on Altuvoct and the dynamics here with Elocta. How do you think we should view the erosion of Elocta sales in Europe going forward? I know that in the U.S., Elocta lost quite a lot of sales, I believe, around 35% in the quarters after Altuviiio was approved, but consensus figures in Sobi remain quite flat in '25 versus '24 for Elocta. So should the market perhaps factor in higher erosion of sales for Elocta when Altuvoct gains market share? Or should we have anything in the back of our mind when we model sales for Sobi -- in the Sobi territory versus the U.S.?

[Guido Oelkers, executive]

Thank you. Let's start with Vonjo. I mean it's fair to say that we would have hoped for better sales in the -- and whilst we clearly expected to see efficiencies out of the merger with -- or the integration of CTI, it's fair to say that we also lost a few sales management leaders and camps we would not necessarily like to have lost. And that's the competition, and we need to just accept it.

And -- but we have now, let's say, rebuilt the team. We have -- we really understand what is at stake. There are some learnings for sure in targeting and segmentation as well. But I think we had the messaging earlier this year as we reported that, that needed to improve. And obviously, we have a formidable competitor, we have more time to prepare the market. But the rationale for the product remains the same.

So we think we are delayed, but when you elevate yourself, you still have, obviously, to deliver Pacifica, to roll it out broader internationally, but we will have significant launches next year. And then we will obviously bring it all in terms of new indications. So we remain very confident that we can do this year, we are delayed, but we are not derailed, yes. And I think this is important and we will keep pushing this product very hard.

As far as the guidance is concerned for the year, we don't do this on a product basis. But let's put it this way, we stay confident that we will see some growth in H2, which is more material than whatever we have shown so far.

As far as Altuvoct is concerned, we look really at Altuvoct and Elocta as one area. I mean, we will obviously try to penetrate and reclaim territories from areas that also Hemlibra have taken and also obviously consolidate more of the factor VIII market. As you've seen from the data from Lydia, this product is fantastic. I mean, very rarely have we seen so much anticipation of the product. And as part of Q3 then, we can update you on the progress. I mean, it's -- but so far, this is a lot of anticipation and very positive momentum. We just had the product a few days in the market in Germany and it's fantastic.

So this is -- but we see this, Altuvoct and Elocta really as one haemophilia A franchise. For me, the more patients we switch over time to Altuvoct, the better for Sobi because -- and the better for patients because they have access to the best possible product.

So we will see some reversion. I don't think it's going to be a land slide, it's more gradual. But don't forget that Elocta's patient growth will also come from international territories where Altuvoct is not going to be launched in the first place. So I'm not commenting on Elocta forecast, I'm just saying that we believe that we can expand our haemophilia A franchise.

[Operator]

The next question comes from Mattias Häggblom from Handelsbanken.

[Mattias Häggblom, analyst]

Two questions, please. Firstly, there were a number of products that exceeded consensus expectations in the quarter, including Doptelet, Elocta, and Kineret. Could you talk about to what extent there were any one-off tenders or orders that drove the beat by those products or if their performance reflected underlying dynamics in the quarter?

And then secondly, on Gamifant based on consensus expectations, the product will approach SEK 2 billion in revenues this year. Back in 2020, at the CMD, you called out the peak sales potential of SEK 4 billion to SEK 5 billion. So can you remind me the importance of the potential approval in secondary HLH for Gamifant in order to accomplish these peak sales?

[Guido Oelkers, executive]

Yes. Thank you, Mattias, for your question. So with regard to Doptelet and Kineret, there are no one-offs. It's just -- it's really a reflection of the underlying performance of the business because we have -- we are experiencing exponential growth as we go along, in particular, with Doptelet and the growth phase and -- sorry, with Kineret, not exponential, but double-digit growth for a product that obviously has a bit of tenure, and this is really growing interest of the product and -- but it's not affected by tenders.

As far as Elocta is concerned, this growth is really -- there has been some favorability in H1 due to tenders, but it is not as material. So that's really a strong underlying healthy growth of Elocta, primarily driven by emerging markets, in international markets where we have access to the license, Eastern Europe, North Africa. In Turkey, we have an unbelievable momentum.

So that's really what's driving a lot, but there has been some favorability. So we are not projecting -- I would not project double-digit growth for Elocta for the full year, particularly as Altuvoct is going to be launched now. But it's not like this is flat. I mean there's a -- the product in itself grows very substantially. So that's really -- but this is really an effect of internationalization.

With regard to Gamifant, yes, you do the math, the Gamifant is up for very significant growth. We have unlocked now this new potential of Gamifant, as you can see in Q2, and we will build upon this. The secondary HLH indication as we have highlighted, is going to be very material for us, and that's the reason why we are showing here so much tenacity even though this was not the most straight pathway.

As you know, it took us a while. Now in the second half, we will submit, and we will be able to build this business next -- as of next year. And we learned by the virtue of the data and all the publications that are coming out also from the real world evidence, we think that we -- that the product has much more to go for. So we are very excited about Gamifant as a very significant revenue driver for the company in the future.

[Operator]

The next question comes from Alistair Campbell from RBC.

[Alistair Campbell, analyst]

Two questions, please. First of all, just to go back to Vonjo. I mean, it is sort of striking that your key competitor GSK with Ojjaara has been launching very well and gaining traction pretty nicely there. So just to get a sense of why you think that's happening for Ojjaara versus Vonjo in terms of the competitive dynamic. Does that come down to a broader label for them or perceived efficacy advantage? Or is it maybe something to do with tolerability as a sense of how those two drugs stack up?

And then maybe just one for Henrik in terms of R&D. Obviously, R&D stepping up this year as you integrate CTI. But as we look forward into 2025 not sort of specific guidance, but just broadly, how should we think about the moving parts in terms of perhaps some trials completing versus others coming on like additional Vonjo studies? Is it still going to be upward tension for R&D in 2025?

[Guido Oelkers, executive]

Yes. Maybe I'll start with Ojjaara versus Vonjo. I think what you need to bear in mind is that GSK had probably around 2 years of market shaping, is a medical organization ahead of us before they launched the product. And they got a label which is very broad versus Vonjo's label. We got them end of the year, end of last year, the NCCN guidelines, so they had a head start.

And I think the -- when you think about the medical education, what we probably have is more pronounced anemia as an issue, that's an issue than maybe myelofibrosis. By the same token, as you have seen from the mortality data, we feel very strong that basically the -- that the thrombocytopenia is a much bigger issue. And maybe, let's say, after Henrik has completed his -- or maybe -- no, I think it's good, maybe Armin, because I think it's the essence to come back myelofibrosis versus anemia, what is here the issue, and then Henrik talks about R&D. Armin?

[Armin Reininger, executive]

Yes, thank you very much. Hello, everyone. I think one needs to recognize that in myelofibrosis, the end is always fatal. And for the physicians, they really want to treat the patients so that they feel good along the way. And if the patients come and the biggest concern taking out all the other aspects, which are less so, is fatigue, and textbook knowledge says well, fatigue is linked to low red cell count to anemia. But a lot of people forget that also local platelet counts could cause fatigue.

And if you look at the survival rates, it means that if you have a drug that works in the least favorable population with platelet counts below 50,000, and they have a survival rate as short as 1.25 years median versus anemia, severe anemia has 2.1 years. That, I think, tells me as a physician, and this is something that we need to communicate even more to the physicians out there, if they really want to treat their patients, it should not just be the anemia aspect, number one.

And number two, the anemia aspect in the Ojjaara data are not really in the lowest platelet count patients because along myelofibrosis development, both go down. It's cytopenia, meaning the platelets go down, the red cells go down. And if you really want to look at which product serves both areas, we have strong data and more emerging for pacritinib and Vonjo and I think this is why we really need to push much, much more and get more communication going with the physician, even than what we have had before.

[Guido Oelkers, executive]

Yes. So I think that gave you maybe a bit of a spell. Henrik, why don't you comment on the R&D expenses?

[Henrik Stenqvist, executive]

Yes. So on the R&D, while you're right that activity level has been high and will continue to be high during this year, but when it comes to 2025, we don't add specifically on 2025 right now. But it's fair to believe that we will continue with high R&D activities also in 2025. Even if some studies come to an end, there is also a lot -- a whole set of important medical activities for all these products that will come and launch.

[Operator]

The next question comes from Harry Gillis from Berenberg.

[Harry Gillis, analyst]

So I also just have a couple of questions on Vonjo, please. So I was wondering of the 8% share that you have today, whether it would be possible for you to provide some information on how much of that, as it stands today, is coming from the less than 50,000 platelet group and those with between 50,000 to 100,000.

And then any sort of feedback you're hearing from physicians today about how they decide between Vonjo and Ojjaara and how confident you are that you can ultimately highlight the benefits of Vonjo and start accelerating that sales ramp. And just looking to the longer term, clearly, the sales have been a bit slower than you had hoped, but has this impacted the longer-term potential in myelofibrosis specifically?

[Guido Oelkers, executive]

Yes. Thank you. With regard to the 8% share, we don't break it down. I mentioned that the vast majority of this share is coming from below 50,000. And we are underrepresented in the other 2 segments, meaning below 100 and above 100.

Now we know that from the work that we have done, once we have a consistent approach, and we are coming through with the new messaging that we can change opinions, and that makes us hope for particularly when you think about the connection that Armin laid out earlier and the data that were presented by Lydia earlier that we can do with this. So in terms of long-term potential, nothing has changed.

And I think when you think about the other vectors of growth, we will update you that we stand by what we have communicated to the market. There's absolutely no reason for us -- yes, we are not happy. Yes, we had a fair share of learnings. But we are not by any stretch of imagination feeling that we have now to revise our vision for the product. We go back in there and we will try to convince, let's say, physicians about the merits of our product.

That's what we're doing. And there's a ton of data that we are accruing in various different aspects. I mean, you have seen the anemia data from -- Lydia earlier presented our evidence. So it's very strong. I mean as people will get more accustomed to this, we just have to understand that we have to -- we had some headwinds that were larger than we were hoping for. But that doesn't mean that we don't believe in the place of the product. And I think once you -- once we get into a different rhythm, I think there will be -- we will take our fair share.

[Operator]

[Operator Instructions] The next question comes from Christopher Uhde from SEB.

[Christopher Uhde, analyst]

So I might have misunderstood this from before, but I believe that you have said in the past that you're really targeting the community or local office setting with Vonjo rather than the institutional setting and where, let's say, GSK maybe is more focused, which strikes me as a little unconventional. Is that the correct strategy? Why do you think that's the better route than the usual sort of institutional KOL-led launch?

And if I could squeeze in a second one. You've previously talked about on Vonjo, having life cycle management trials. None has been announced yet, and I just wondered why the delay? Is it the organization? Or is it something else?

[Guido Oelkers, executive]

Thank you, Christopher. Very much appreciated. No, I think we probably were not clear enough. I mean, of course, we are focusing on KOLs and making sure that we get it down right. And -- but we also cover community accounts, and that's correct, where we have seen some positive feedback.

And it's fair to say that the -- when you think about the launch dynamics, the -- in the first wave, before we got the NCCN guidelines, it's clear that Ojjaara probably had taken some share in second line, also in other segments. And we now are in the process to correct this. So we are not -- we are clearly focusing also on the top-down strategy on key accounts.

With regard to the life cycle management or new indications, the thing is that we have made decisions, and we have progressed those, let's say, quite nicely. Traditionally, we have only announced those studies once you have -- we have first patient in. And sometimes, this takes some time. And that's the reason why you haven't heard from us. But H2, we come out and we will share this with you. And I hope you will be happy with the choices that we have made. And there's a much broader, let's say, story that we want to tell you, let's say, in the next couple of months.

And we will not shy away. So it is not that we are not daring, we are wavering or we are slow. It's just sometimes, it takes a while. And it's true that -- let's say, that it took us a while maybe last year, but we are absolutely determined to get this one going and we have made arrangements already and signed contracts, agreements to get this one off the ground, but we wanted to make sure that we come out of the blocks, also to make sure that we don't give too much lead time to our competitors. And that's the reason why you haven't heard from us.

[Operator]

The next question comes from Erik Hultgård from Carnegie.

[Erik Hultgård, analyst]

Regarding Vonjo, I guess it's quite obvious that you haven't seen the successful enough to get your message out to physicians to change sort of prescriber behavior. So how much of that is just a question of time, that it takes time to get the messaging out? And how much is actually related to sort of investments behind the product? So are you considering increasing the number of sales reps or investing more behind other type of channels to get the message out?

[Guido Oelkers, executive]

Thank you. I mean it is both. It's time, because when we lost quite a few people in the field, then obviously, we lost also context. So that needs to be rebuilt. That takes time. And it's also a question of quantity, and we have addressed this as well. So we have significantly upgraded the team. And we have changed the sales management.

[Operator]

The next question comes from Alexander, Niall from DB.

[Niall Alexander, analyst]

It's Niall Alexander from Deutsche Bank. Is -- one on margin outlook. So you've historically provided some guidance for FY '25. So thinking of haemophilia's momentum on the slow start to Vonjo, if your profit margins can get to north of 40% in the midterm. And then if I can squeeze in a very quick one. If you have -- if we have any appetite for further acquisitions going forward?

[Guido Oelkers, executive]

Thank you. I think the north of 40%. If we keep growing at the pace we are currently growing, it's probably -- with the programs that we are currently supporting, it's probably not quite realistic. I mean, we will get a significant boost obviously from -- we're expecting a significant boost from the royalty income. And that will clearly give us an uplift, and we'll have to see if Sanofi will give you guidance next week, as I understand.

But the -- I think right now, I think we need to double down on this -- on our portfolio and on our pipeline, as you've seen. I mean, we have fantastic pipeline in our stable. I mean, I know that there is still some reservations with SEL-212. And this is also a bit of a struggle, yes. But now to get fast track designation and to finally submit, I mean, I was very excited. We were yesterday, together with the team that it has been newly formed for this product. I mean there's so much excitement around this product.

And the way they're thinking about it, we're thinking that this is a very material product for the company. I mean, we had a launch conference just a few days ago as well. So you want us to really exploit the opportunity that are related to our portfolio. And therefore, I'm probably more cautious on the earnings, but I'm bullish on the prospect of company in terms of driving double-digit growth. And that's what we are trying to do and obviously, building this business in a very sound way.

With regard to new deals. I think we are currently obviously looking at this. We have our hands full. As you can see, it's a very rich program. I mean, if the nephrology data looks as good in a few weeks as the Phase II data looks like, I mean, we will have another very happy problem to tackle this very important indication, and we think the opportunity is there. This is a spectacular place also for Sobi.

In sum, I mean, we believe in this business and building it up. I mean, the -- obviously, we understand that we want to improve margins. But whether this is the time now to think already above 40%, I think it's probably premature.

Henrik, do you want to comment on margins? This is your area.

[Henrik Stenqvist, executive]

No, I think you covered it. It's premature with all the activities that we have on ongoing, driving the pipeline but also all the launches that are ongoing and outstanding. It is not a short-term realistic scenario.

[Guido Oelkers, executive]

Thank you. Maybe another question.

[Operator]

The last question for today's call is from Yifeng Liu from HSBC.

[Yifeng Liu, analyst]

I just got one in there. You commented on the overall sort of myelofibrosis market in first half remains flat. And was -- how should we think about moving part of it in terms of going to H2 and maybe 2025? Do you see any sort of upside and trends. Any color you can provide on that, please?

[Guido Oelkers, executive]

Yes. Thank you. I mean, when you look at the evaluate data, and they're expecting the recovery of this and around 5% for the year. I think I would want to have a better data point myself. So I think whilst you see this momentary weakness in Q1 -- sorry, in Q2, I don't see this as a permanent situation. Yes. So I think this will even out and -- over the next quarters and also driven by the fact of the new launches and taking share and building the market and awareness. So I don't see this as a permanent.

I'm mindful now of time and apologies that we had so much to cover, but which is also good. This is a company that has a lot of things currently ongoing. I would propose, if you agree with this, that we stop now the earning call, respecting everybody's time. And if you have questions, please refer to our IR team, and we will try to schedule also meetings with other experts of the company as you feel like. We want to make sure that you get the best possible information on our business and we don't shortchange anybody.

So very much appreciate your time. Thank you for staying tuned during the summer period, and I wish you a great, great week, and talk to you soon. Thank you.

[Operator]

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