Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Transcript 2019-Q3

[Operator]

Ladies and gentlemen, welcome to the Sobi presentation of the Q3 results. [Operator Instructions] I will now hand the call over to Guido Oelkers, CEO; and Henrik Stenqvist, CFO. Please go ahead.

[Guido Oelkers, CEO & President]

Yes. Thank you so much, and welcome, everybody. Really pleasure to familiarize you with our Q3 results. You have seen this. And I think without further discussion, let's go straight in the meat. Forward-looking statement, please take note of this. And with this, I go straight to Slide #4.And when you look at the results, I think we are quite gratified by the fact, 27% top line growth, 18% EBITA growth, very pleased with the performance of Elocta and Alprolix. And for those who have seen some news, we sell Elocta and not ELOCTATE. And very, very gratified by the performance in over 30% for the quarter and over 40% for both products year-to-date and very strong patient growth.And when you look at Gamifant, we are -- let's say, with SEK 67 million, you just have to see this in view of this is an ultra-rare disease. We had a couple of patients that weaned off. We -- and there were some inventory movements, as explained. But overall, we're actually very happy with our year-to-date performance for Gamifant and where we are considering the label that we have. And obviously, our main focus is on broadening the label. Very strong performance with Synagis and also with Kineret, particularly after the very strong Q2. And at the same time, we were able to prepare our future. Dova is a very important acquisition for us because it takes us into the broader area of hematology. And we have been able to opt in early for BIVV001, which demonstrates our commitment to the area in hemophilia. But also, it's a signal that we are very excited about the results, and we think that we have -- this is a product of the future in our hand.And we have completed, obviously, the acquisition of emapalumab and related assets. I'm very happy to have over 100 people now in Switzerland that basically allow us to take this to the next level. So when you basically go straight into the next slide, what you can see here is -- and I think that may not -- we have -- maybe not yet done the best possible job to explain this. But the -- we have now a very nice portfolio of actually pre- and on-market assets.And when you think it through what we now have created with Doptelet in the different indications, CIT, ITP, CLD, and with Gamifant in the different indications, indication expansion with Kineret with 8897 and with BIVV001 primarily, we will have a very nice cadence of launches of key indications in the key geographies over the next 5 years. So you would expect, on an average year, to have around 3 main indications to be launched in either Europe, U.S. or rest of world. And that gives you, let's say, a sense that the company is obviously extremely well positioned for future growth. And so maybe we go into the details now of this presentation, it's reasonably straightforward, go through Elocta performance. As you can see here, strong quarter-on-quarter growth, and the good news is that we have very strong patient growth on an incremental basis quarter-on-quarter. And that is not fully reflected as, obviously, you have seen the Q2 summer period is always a bit of a tough one, but it's nice to start on a high. And growth is coming from the key EU5 markets. Actually, we have also nice growth in the U.K., and we have now reimbursement in 27 countries. And this shows that we -- our world is still very positive, and we keep growing this product at the right rate. When we go then to Alprolix, there, let's say, the sales quarter-on-quarter is a little bit more mixed. And basically, what you can see here is -- but we have 34% growth versus previous year. And also, for Alprolix, very strong patient growth even though not as many patients are initiated on a quarter-to-quarter basis. So frankly, I mean, let's say, the Q2 could have been a little bit too good, but overall, trending is actually very positive and strong underlying growth. And when you then come to the fundamentals of our hemophilia business, we think that we have -- we continue having a very strong momentum. We can further gain patient share by launches in new markets, Central, Eastern Europe, Middle East, but also still significant growth opportunities for us in many European markets.We think that the individualized therapy, given the very low ABRs that you can achieve with this and that it also enables patients to live the life, have an active life as opposed to adjust their life to the profile of the product, that this is resonating.Our Liberate Life campaign has gained significant traction in many markets. And we don't get the sense that we are losing, I would say, this aspirational spot versus new therapies. There's obviously a new -- there's obviously demand, but we think that we have a credible alternative, and we don't think that it's going to be one-size-fits-all because there will be people with different needs. And we think that we're addressing the needs of a large group.And then we -- and then I think when you look also realistically at the data, and I think this is many times forgotten, factor replacement therapy is here to stay because when you look at the data of some of the later -- latest introduction in the nonfactor space that actually cannot show the results without additional factor consumption. So it is also, let's say -- and by definition, if you -- the kind of activity level that you need, you cannot achieve with new therapies. So if you want to have an active life, there is actually no alternative. And we think that with the Fc fusion, we have the best factor replacement therapy in our stable. So coming now to the broader realm of Hematology. So when you think it through, we're very happy with our existing products and the way they're doing. We think that with a very strong focus on individualization and protection with the data we have and we are now in the process to further generate, we have a very strong alternative for patients in our stable.We have now acquired Doptelet. Doptelet comes into a market environment, while not yet acquired, we have an intent to consume the deal within the next few weeks, and it looks very positive in this regard. But we are entering into a market with $2 billion with an underlying growth rate of 5%. And let's say -- and we can -- we believe that we're coming with a better product, highly efficacious, no food interaction and not associated with liver toxicity and oral. So we think that there's going to be a significant opportunity for us in this regard.And on top, we're going to be the first, as it looks like now, TPO that will be indicated in the CIT indication, which is very material given the number of patients, 70,000 patients concerned overall in the U.S. So if you get a couple of those, that will make a material difference to our revenue forecast readout second half -- sorry, second quarter next year. And then we have BIVV001. And when you look at these data in a once-a-week environment and you have in the 65-microgram dose -- milligram dose, you have an activity level of 18% after a week. We think that we have the future in our hands, and this cannot be matched by current available new treatments. And so we have an unprecedented level of protection with, let's say, this promise of very low side effects. And so the trade-off decision that you have to take here is very favorable. So overall, a very nice franchise, and we made great strides to complement this portfolio in Q3.So coming to the acquisition detail, I think we have reported on this. Here, you can see this is more for usual. We have 3 indications, as I talked about it. We have the tender offer out there, and we expect to finalize it on the 8th of November end of business. So mid of November, this deal is going to be -- going to come into play.And as I outlined, very excited about this transaction because it also comes with a team of over 120 people and business team. We get also an R&D setup in United States, which we think is very important for us because you need to be close to the key opinion leaders and thinkers in the largest rare disease market of the world. And that will clearly bring us closer, and we were excited about the quality of work that has been performed at Dova.Now coming to Immunology, I think we are gratified. I mean the backbone business, Kineret, is still plowing along. With Gamifant, we're entering obviously a space with high unmet medical need. And overall, when I look at it on a year-to-date basis, I think this is a very positive performance, and we'll talk a little bit more about it. And obviously, we are now preparing synergies for the RSV season and have positive indicators there. So coming to the next slide. Here, you can see the overall uptake. And I just want to remind everybody, let's say, that the key season for Synagis, as you know, is in Q1 and Q4. So the -- in Q2 and Q3, you are essentially preparing, let's say, for the next season. And therefore, the shape of the curve looks a bit counterintuitive even though we have made substantial progress.Kineret, obviously, as I mentioned, doing extremely strong. And let's say, at Synagis, we are obviously now really laser-sharp focused on the new season. And we have very strong signals. The RSV season is making its way now from the South. We have a very strong update -- uptake data from Puerto Rico, and we can see that the number of referrals is actually at a very encouraging level. So very positive about Synagis. And maybe we can then talk a little bit about Gamifant. And when you think about Gamifant, Q3, with SEK 67 million, the sales pattern for this ultra-rare disease is obviously volatile. I mean we looked at many different launches that have happened over the last 10 years in this overall rare disease space, and very few are able to achieve a straight line, and so are we.And basically, I think what you just have to recognize is our current label includes, give and take, 100 patients. And as we explained, there are around 1,700 to 1,800 patients in the United States. So if you have a couple of patients that are weaned off, then you have -- and plus inventory, let's say, movement, you have, by definition, a little bit more of a lumpy, let's say, sales uptake at the earlier stage.And for me, key is not now to get excited around this. But to be clear about the [ NorthStar ], the [ NorthStar ] in United States, the enabling of -- enabling 1,800 patients to have access to this medicine. And that's really what is at -- really at our foremost idea, there is this debate. Is it actually a primary and a secondary? Or is it one HLH? And how many of those patients really have a genetic signature? And we are very keen to drive this debate.And in the meantime, we have very encouraging signals, interim results on the secondary HLH in children, MAS, and this looks very promising. We have shared interim data with the FDA, and we intend to do this shortly again. And we have initiated now the -- well, we had the program -- process now to initiate the secondary study in adults during the course of this quarter. So actually, the main focus is really enabling the larger patient population, and that's really the mark of, in my books, of success. And we just have to accept that there's a bit of lumpiness in the sales. But all the indicators that we have tell us that we are able to penetrate more hospitals. We are able to make the product. We gained momentum in the primary HLH community further. So it looks -- for me, it looks very positive, but the materiality of the sales will kick in once we have unlocked the secondary indication. And this will make a significant difference also to our economic results. So coming to the financial results, I would like to refer to Henrik and -- before we then round it off.

[Henrik Stenqvist, Chief Financial Officer]

Thank you, Guido, and good morning, everyone. So let's look at the financial summary of the quarter. Revenues, as we saw, amounted to SEK 2.930 billion, and that corresponded to an increase of 27% and 22% at constant currencies. The year-on-year growth was driven both by our product sales of Elocta and Alprolix and, of course, the new products in Immunology.Elocta sales for the quarter was impacted by positive revenue adjustment of SEK 35 million related to France pharmaceutical taxes. We had the same kind of adjustment in France in Q3 '18, but then it was SEK 52 million positive for Elocta. And in terms of organic growth, that is adjusting for Synagis, this was 17% for the quarter. Gross margin for the quarter was 74%; and year-to-date, it's 76%. The slightly lower gross margin for this quarter compared to previous quarter was due to the seasonal product mix effect coming from lower sales of Synagis but also lower sales of Gamifant and lower royalty revenues. And as a natural consequence of the RSV season and corresponding expected higher sales of Synagis, we expect gross margin in Q4 to increase compared to Q3. EBITA increased by 18% and reached SEK 1.099 billion for the quarter, corresponding to a margin of 38%. In a similar way as in Q2, the seasonality of Synagis revenue impacted the EBITA margin negatively in Q3. On the other hand, operating expenses for the quarter were a bit lower due to lower activity level during the summer period. As for clarity, we have not yet booked any expenses to the restructuring provision from Q2 as it's expected to start gradually in Q4. In Q3, EPS number was SEK 1.84, a decline of 20% for the quarter, mainly impacted by the increase in amortizations following the investments in intangibles and the high number of shares. Furthermore, the operating cash flow of SEK 995 million for the quarter and the SEK 2.658 billion year-to-date is signaling continuous strong operating cash flows.And as a result of that, net debt amounted to SEK 7.6 billion at the end of the quarter as we completed the acquisition of emapalumab and related assets amounting to SEK 4.9 billion and divested a priority review voucher for the consideration of just about SEK 900 million. The next slide shows the development of operating cash flow per quarter and our cash conversion over EBITDA calculated on latest 12-months basis. We see a continued very strong cash conversion, close to 70% of EBITDA. The net debt of SEK 7.6 billion at the end of the quarter corresponds to a pro forma leverage of less than 1.5x.The contemplated acquisition of Dova Pharmaceuticals, which will be debt-financed, is expected to increase this leverage in Q4. But with the continued strong operating cash flow, we will be able to deleverage quickly. And as a reminder, operating cash flow and the cash conversion will have a seasonal pattern because of the strong seasonality of Synagis, meaning a slightly lower cash conversion in Q4.And with that, I hand back to Guido. Thank you.

[Guido Oelkers, CEO & President]

Yes. Thank you, Henrik. As you know, we're going to round it off with our financial outlook. Basically, we see the results in Q3 as very encouraging. We are very upbeat about it. When you think about the -- on a quarter-to-quarter effect, if you take away some of the considerations for Elocta, then it grows -- organic growth would be even higher. This, coupled with the strong momentum we have on patient acquisition, so we have -- yes, we feel good. We prepare the future.Gamifant looks very promising. Yes, there's a bit of lumpiness, but the opportunity is so large. We've done a good way to enable the broad pool of patients. And now Doptelet gives us a fantastic opportunity to broaden hemophilia into the realm of hematology, which we think is very exciting. And we feel very much confirmed by what we have started and expect strong revenues for the year. Don't see, at this juncture, any reason to deviate from our forecast for this year in top line but also not in bottom line. But as you can see from the third quarter results, we are in a good way. And I think this is a -- I think it's reasonably straightforward. Maybe this is a good time now to open the discussion and be ready for questions as they may arise.

[Operator]

[Operator Instructions] The first question comes from the line of Rajan Sharma from Deutsche Bank.

[Rajan Sharma, Analyst]

Firstly, just on Doptelet in chemotherapy-induced indication. So that looks like it will probably be the major differentiator for the product if the trial is successful. But I'm just wondering if you could kind of walk us through the Phase III trial design and what the challenges are in that setting given that physicians currently manage thrombocytopenia by reducing doses of chemotherapy. Is that something you can control in the clinical trials? And then second, just a question on Elocta. So we've seen Hemlibra kind of made broad reimbursement wins in the U.K. and Ireland. And I was wondering if you could discuss what you're seeing in those regions and what your expectations are going forward. And then just on Elocta again. Were there any true-ups in the hemophilia royalty there because it doesn't seem that that's consistent with the sales trend?

[Guido Oelkers, CEO & President]

Yes. With regard to Doptelet, you know now in CIT, I think if you could bear with us because we currently -- we have not consummated the transaction. And I think it would be appropriate for us to come back to your questions. We can provide, to the extent possible, a more bilateral discussion, some further color. Definitely in the Q4 earnings, we would go in great lengths into this. But at this stage, we have not consummated the deal, so it would feel a little bit inappropriate now to go into this.But the -- I mean, obviously, we think -- we share your excitement around CIT. And we think we are optimistic that the CIT indication can be enabled during Q2 next year. So I mean by -- we have the readout, whether we have a positive readout of the study. But I think it would go too far now at this stage, and I'm just mindful of the current state of the transaction. The other thing is with regard to U.K. and Ireland. I think the headline is impressive, obviously. In reality, it may vary, yes? So I think the -- our understanding of the tender situation varies a little bit from the impression that has been generated. We think that there is going to be an opportunity for a new tender in the U.K. mid of next year. And there, basically, everybody will then be invited to participate. So I don't think you can -- I would think that this already constitutes progress as such. And we -- and frankly, we have not lost any patients on a net basis in the U.K. or Ireland. Yes? And in Ireland, let's say, we have made an announcement -- or we'll make an announcement on the current status of the tender. And yes, I mean the -- I think you have to recognize that currently, we have -- we are in the market there. So yes, there will be patients who will want to benefit from alternative treatment. Our ambition is going to be to make sure that the patients understand the trade-off, and then we will what's the impact of those 2 initiatives will be in reality. So I would have there, Rajan, a more nuanced view. But I agree that the headlines, when you basically just focus on this unreflected, looks impressive. But the reality, we think, may vary. The -- and we will make an effort, to be honest, to make sure that the reality is different.With regard to the royalties, the -- I think you have 2 effects, and I think we need to hold our horses, obviously, for the presentation of Sanofi later during the day where you will get a good view from them on what the business is. But you have there also different effects. You have -- we commented on this that we are very optimistic at least about Sanofi's ability to drive the business globally given their phenomenal footprint.

[Operator]

And the next question is from Christopher Uhde from SEB.

[Christopher Winston Uhde, Analyst]

Can I just start by asking you, you got cut off on the last comment you said about -- optimistic about their ability to drive sales in rest of the world. But then -- yes.

[Guido Oelkers, CEO & President]

Yes. You got cut off. Yes, I just realized, it felt a bit lonely. Yes, no, the -- yes, so basically, just coming back. Basically, you look at Sanofi, I mean this is probably one of the most -- the strongest engines in the emerging markets and has a very broad international footprint overall, yes? So you will see, I guess, and this is our hope, you will see compensatory effects in the royalty development. And -- but I don't want to comment on this much more because I think it's really Sanofi's privilege to comment on their performance later this afternoon.

[Christopher Winston Uhde, Analyst]

Okay. Should we go back to the previous question? Or should I stay on?

[Guido Oelkers, CEO & President]

Yes, please. So did...

[Henrik Stenqvist, Chief Financial Officer]

Can you repeat that question?

[Guido Oelkers, CEO & President]

Can you repeat the other question? Maybe we were cut off from the other question, let's say, there.

[Christopher Winston Uhde, Analyst]

Yes. So I guess in terms of Gamifant, can you comment on the proportion of adults there? And I mean, is pricing a factor in the results at all, pricing changes?

[Guido Oelkers, CEO & President]

Not in Q3. And we had -- there are some -- there are primary adult patients, let's say, obviously. And we had less of those in Q3, and some of them were weaned off or moved on. And that basically affected, because they are heavier patients, that affected our results in Q3. And it is -- and then plus, it's never perfect with -- they come -- patients come in and that we had a couple of more patients coming in, in September, but then you don't have them for the full course, and therefore, you have a bit of lumpiness. I hope you know that this is basically overall washing out in the next couple of months, this effect.

[Christopher Winston Uhde, Analyst]

And then when it comes to hemophilia, so Alprolix is down a bit, as you pointed out, and it's a little bit like what we saw before last year. And then similarly, if you exclude the one-off for Elocta, it's slightly down sequentially. Is this -- are we talking -- is this the same kind of thing as we saw with Alprolix last year in Q3? And is there anything else going on? And can you comment on sales impact of Hemlibra in Germany at this point? So during the quarter and -- I'm sorry, yes, during the quarter and then since.

[Guido Oelkers, CEO & President]

Maybe I'll give you a reference point. So the effect when you compare at least Q3 2019 versus Q3 2018, actually, our growth in '19, without those special effects, would have been even larger, yes, let's say, than what we have shown in our results because the effect -- and basically, the clawback of the -- let's say, that basically has happened here is just -- this would have been part of our sales during the course of the year anyway, yes? So we are not having here an extraordinary benefit. It is just that we realized this during the quarter.And -- but I think the marker of progress, because you have a lower activity level, first of all, probably there have been some adjustments of inventory between Q2 and Q3. Very difficult, to be honest, to get a good grip on this because these are decisions. We have definitely not used it of the hospitals. But what we see is a very strong progress in the patient acquisition on the netting off. And we haven't seen, on a net basis, a material effect of Hemlibra. And in fact, we have gained in Germany very substantially. This is one of our strongest growth markets.

[Christopher Winston Uhde, Analyst]

Okay. Great. And so that's the same then for Alprolix?

[Guido Oelkers, CEO & President]

The same for Alprolix. And then with Alprolix, we obviously -- we have a head-to-head competition with CSL. And the -- let's say, in there, it is just overall growth is very material still. You look at the year-to-date growth, very strong. Yes, there has been an adjustment on the -- there's no adjustment, sorry. There is a -- the relative growth rate in Q3 is lower than year-to-date, but this is partially seasonally driven. And you would also, over time, obviously see that the relative growth rates cannot be at that historical level because we have significant market shares now in the meantime obtained in a number of markets. And it will take us some time also to unlock again new opportunities. We are not on the schedule, for instance, in Spain. And we are rolling out the product also now in Central and Eastern Europe, where it's not material, and in the Middle East. So in Asia, there will be still significant growth, let's say, and we see very strong patient acquisition there. Also, there's nothing wrong, to be honest, with the -- the quarter-on-quarter comparison is not reflective of the progress we are making with the product, of the demand growth of the product.

[Christopher Winston Uhde, Analyst]

Right. Great. And then for Synagis, so should we see this early stock buildup as potentially weakening the sales performance in Q4? I mean if they already have it now, they don't need to buy as much later.

[Guido Oelkers, CEO & President]

I would say you'd see it more as an offsetting effect for the reduction of inventory after the last season. And then basically, you would have the buildup. I'm very optimistic for the Q4 performance of Synagis because all the indicators tell us, like referral rate, very strong, even double-digit increase. We have -- let's say, we know from the last season, we had a 2.5% organic growth rate, we see that -- which we reported. All the indicators that we have now tell us it's better, yes? We'll need to still convert. Nothing beats money in the bank.But what we can see in terms of indicators from the -- because we said there were certain leakage points that we wanted to address and, let's say, like improving number of cycles, giving -- improving the number of overall referrals and scripts just to take advantage of the current label. We also think there's a case to be made to expand the label. So Synagis' world still looks good.

[Christopher Winston Uhde, Analyst]

Great. And then -- so last 2 questions are, I guess, on -- so on R&D -- or as last question really. So should we be expecting any more restructuring costs during the year? And is there any other -- I mean what other explanations are there for the low -- I mean relatively low after making the adjustment...

[Guido Oelkers, CEO & President]

No. I think the R&D expenses will increase during Q4 because there are quite a number of studies that we are, let's say, that we are now commencing like secondary, for instance, HLH in adults. Well, so you should see the Q2 expense line more like the summer period. But now a lot of things are ramping up, so we are not going to slow down in R&D.But Henrik, do you want to comment on the restructuring?

[Henrik Stenqvist, Chief Financial Officer]

Yes. We don't expect any further restructuring expenses. And we have not yet charged any expenses to the reserve that we made in Q2. But that will come gradually from Q4 and onwards.

[Operator]

And next question is from Victoria English from Evernow.

[Victoria English;Evernow Publishing Ltd.]

I'm calling to ask -- I'm curious about your comments on replacement -- factor replacement therapy and whether you see any scope within your development strategy for investigating gene therapy. I'm mentioning that because there are a number of other companies that are looking into gene therapy, and I'm just wondering what your thoughts are.

[Guido Oelkers, CEO & President]

Yes. No, absolutely. I mean, basically, when we look at the means we have at Sobi, the size of the company and the overall risk/reward decisions that we have to take within those, let's say, businesses we have, we think that we are extremely well positioned with BIVV001 because very high probability of success, very favorable profile versus existing therapy, even versus new therapies; essentially, the promise of normalizing the patients for 4 days out of 7, yes? And then you'll say, yes, well, would you now need more -- so do you need to diversify to the gene therapy? Then you have the question mark around hematotoxicity with gene therapy. You have the question mark whether the effect size can be sustained.And then you have, yes, you have the question for us if these other vectors of today already the vectors of tomorrow. And there is a debate, and I'm not professing that we have now the ultimate wisdom on this. I think what we are currently doing is more looking at it from a perspective that we feel quite good with what we have. With Alprolix, every other week, we have very encouraging data points from Ireland where very significant trough levels can be obtained after 1 or 2 weeks of dosing. We have BIVV001 knocking at the door, creating a lot of excitement in the -- with key opinion leaders in the medical community. And also, I think it's maybe a little bit underappreciated, but hence, we believe in this product that we have opted in early. So I don't think it's coming immediately, but we will obviously -- we are not ignorant to the fact -- we think that this is something we want to look at on a continuous basis. But I think the gene therapy piece is also -- the question is going to be how impactful is it going to be, particularly in our territory. In Europe, what is going to be the pricing and, let's say, the funding of this? So we are not totally -- to be honest, we are, at this stage, a little bit more reluctant to jump on the bandwagon. I know it's very fashionable. And it is very much -- and the promise of cure is obviously phenomenal. But when you look at the profile of BIVV001, you are pretty close to normalization, yes? So the -- so we think that at this stage, maybe not, but we will continuously review the area. And when we feel that the risk/reward decision is looking differently, we probably will think about something. But for now, we are covered, but it doesn't mean that we are against gene therapy. I mean that's -- we see that -- I mean we are not oblivious to this, yes.

[Operator]

And next question is from Viktor Sundberg from ABG Collier. We'll just go to the next question, it is from Eun Yang from Jefferies.

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

I have a couple of questions on Gamifant. Number one, first, what do you think you would need in order to get the secondary HLH indication on the label? Have you spoken with the regulators in terms of requirements approval?And second question is, as you're moving into secondary HLH population, which is much larger than the primary form, with the complete data, some [ after 11 years ], so how are you addressing the pricing point which could be more accessible for secondary HLH population?

[Guido Oelkers, CEO & President]

Thank you, Eun. Let's say -- so first of all, we have had already, as I mentioned, interaction. And I will refer to -- actually, we have Milan here as well, and he will talk you through in a few seconds, yes? So we had already interactions with the regulator. And let's say -- and they indicated to us that they -- what they would like to see, and we'll work on this.And obviously, with regard to the price, we have made a step in this regard, let's say, in the higher dose to enable, let's say, patients. But the thing is that the -- we don't -- because of the label, we cannot obviously encourage usage there. What we do is we will focus totally on broadening the indication by the clinical trials. That's really our main focus.Maybe, Milan, you want to talk about those indications.

[Milan Zdravkovic]

Yes. So Eun, this is Milan. So as we discussed earlier, we reported some early data in patients with sJIA that developed secondary MAS. And we continue to feel that these data are very, very encouraging. We had a dialogue -- a constructive dialogue with the FDA around this data set, and we plan to meet with the FDA again once we have data from at least 10 evaluable patients. So once we have an agreement with the agency around what the requirements are, then we would update you on how that looks. And as Guido already mentioned, we plan to initiate the adult study of the patients -- secondary HLH in adults later this year. And once we start accruing data, then we will also meet with regulators to better understand the requirements.

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

Can I ask you a follow-up question? So in the third quarter, organic sales, I mean there's just some negative impact from inventory shift effect. Do you see some negative impact from pricing perspective on secondary form?

[Guido Oelkers, CEO & President]

No. I think the -- actually, the heavier patients that we had are actually primary HLH patients. And let's say, they were a group of patients that got off the drug, and no, we haven't seen this. I think, Eun, also for us, that's the reason why we said sales are obviously important. We are a profit organization, that's clear, but our primary focus is now enabling the secondary indication. And we have encouraging signals, as Milan just pointed out, for children now. And we will promote a debate because there is obviously a suspicion that there is a genetic signature with secondary HLH patients as well. And we will engage into this debate, and we'll set up various centers of excellence now in United States and work there hand in hand with the key opinion leaders because we understand that there's a significant demand and how we can do the best for patients here.

[Operator]

And the next question is from Viktor Sundberg again from ABG Sundal Collier.

[Viktor Sundberg, Research Analyst]

First one refers, if you could comment in which market you compete right now with Hemlibra in Europe. Of course, the reimbursement in the U.K., Ireland and Germany, but I wondered any other markets -- if you compete in any other markets in Europe. And then secondly, on the Dova acquisition, will that be consolidated into your numbers for the first quarter in 2020 if that is materialized? And my final question was, if you could give any more details on the strong development of Kineret, maybe some details what drove the strong beat in the quarter and what is your expectations for the future.

[Guido Oelkers, CEO & President]

Okay. You're welcome. We -- I mean Hemlibra, as such, is available now in Europe, basically, nearly everywhere because it is -- they got approved in the noninhibitor indication some time ago. And they got -- sorry, the inhibitor indication some time ago; in the noninhibitor indication, obviously, earlier during the year. And they are basically now going through the pricing approval processes, and they are visible obviously now in a number of markets. And we -- but we haven't seen the effect yet on our business, let's say, in terms of patient acquisition. So it will take some time. We'll see when -- I think the good news is in 9 months from now, we will have a good perspective, yes, on what the impact is, and then we don't probably need to speculate too much.And let's say, with regard now to Kineret, I think there, it is -- we have changed the focus -- commercial focus in the U.S. and changed leadership there. This is very beneficial because it brings it down now to -- down to earth. Obviously, as we reported, there's a huge increase of scientific interest in the product, yes? And it's represented by the significant number of publications that are coming out on IL-1 inhibition every year that could stimulate, clearly, the product. And then it's Europe, the sales indication, and we have a number of ideas how to expand the product further. The product is very current. And then -- sorry, there was a third element to your question. Can you repeat this?

[Henrik Stenqvist, Chief Financial Officer]

It was about the timing for consolidation of...

[Guido Oelkers, CEO & President]

Yes. The consolidation, yes, of Dova, yes.

[Henrik Stenqvist, Chief Financial Officer]

Yes. Well, we are now in the process between signing and closing. And what we've communicated is that we are expecting this transaction to close by mid-November, and that would mean that we would consolidate it by mid-November. But that is just our expectation, yes.

[Guido Oelkers, CEO & President]

Yes. Already given Q4, but definitely Q1, if it closes. Good.

[Operator]

[Operator Instructions] And there are currently no further questions registered, so I'll hand the call back to the speakers. Please go ahead.

[Guido Oelkers, CEO & President]

Yes. Thank you so much for your interest, and very much appreciated the questions and hope that we could, let's say, make this reasonably interesting for you.And -- but just to sum it up, very confident about the performance of the company to date and very happy that we were able to prepare the future for the group. And there's something to do, but this is what the team is up for. Appreciate it, and I wish everybody a great day.

[Operator]

And this now concludes the conference call. Thank you all for attending, and you may now disconnect your lines.