Swedish Orphan Biovitrum AB (publ)

STO:SOBI

Earnings Call Analysis

Revenue and Profit Growth on Track; R&D Advancing

The company saw robust topline growth of 23%, driven by increased contributions from key hematology and immunology products, particularly from new launches in the US and internationally. The solid foundation provided by stable growth from products like Elocta and Alprolix allowed for a strong revenue performance, evidenced by 29% reported growth. R&D advancements include five milestones and continued strong sales from launch medicines. The company maintains its raised July guidance, expecting high single-digit revenue growth and an adjusted EBITDA margin in the low 30s.

Strategic Delivery and Growth Momentum

Sobi has demonstrated a robust strategic execution in the past quarter, seeing a top-line growth of 23%, which was 29% reported, and an 11% increase for the first nine months, which was 19% reported. This performance is attributed to significant strides in hematology and immunology segments with notable contributions from the launch medicines, principally in the US and international markets. The company has also maintained momentum, following the upward revision of their guidance in July, expecting high single-digit growth and low 30s for the adjusted EBITDA margin.

Acquisition Fosters Expansion

Sobi has expressed continual excitement about the strategic CTI acquisition, which resulted in a fully subscribed rights issue, raising 6 billion Swedish Krona to partly fund this purchase. Vonjo, the flagship product from the acquisition, recorded a noteworthy 30% quarter-on-quarter increase in sales, totaling 347 million Swedish Krona and is expected to significantly contribute to revenue and margins.

Geographic and Launch Medicine-Driven Revenue Growth

The company's revenue growth is driven by expanded geographical reach and the strong performance of their launch medicines, with North America and international segments showing remarkable growth. Launch products account for 89% of absolute growth, showing strong momentum and potential for further expansion through geographic reach, line extensions, and lifecycle management.

Stable Hemophilia Franchise Foundation

Underpinning Sobi's business is a stable 4% growth in hemophilia in the first nine months of the year. With products like Elocta and Alprolix expanding to new territories and patient bases, Sobi has managed to counterbalance price pressures, particularly from Europe, ensuring continued growth in this sector.

Highlight Performances in Product Portfolio

Doptelet showcased a 50% increase in the quarter and a 21% year-to-date growth, buoyed by uptake in the US and ongoing regional launches. Aspaveli also performed exceptionally well, with 169 million Swedish Krona in quarterly sales, which follows a strong launch trajectory bolstered by ongoing expansions into new markets.

Immunology Segment Shows Remarkable Growth

The immunology category, mainly driven by Gamifant's success, grew by 27% in the quarter and 9% in the first nine months. A more established go-to-market model and increased physician confidence contributed to a significant 112% growth for Gamifant.

Recovery from Pandemic Impact

Kineret is returning to normal growth trajectory as it recovers from the COVID-19 effects with heightened interest in the IL-1 mechanism. The US market predominantly drives the growth, with the first nine months seeing a 5% increase when excluding the pandemic impact.

Financial Highs and Outlook

Q3 marked a record revenue for Sobi, reaching nearly 5.2 billion and constituting the highest Q3 as reported by the company. Although non-recurring integration costs were present following the CTI acquisition at 102 million, future quarters are anticipated to witness lower amounts of such costs. Sobi confirms its full-year guidance, projecting high single-digit revenue growth at constant rates and an adjusted EBITDA margin at the low 30% of revenue.

Pipeline Advancements and Geopolitical Factors

The company's guidance remains influenced by its performance to date, ongoing investments in launches, and pipeline acceleration. Nonetheless, uncertainty exists due to factors like the respiratory syncytial virus disease course (RSDC), which could affect both the Synagis sales and royalties from Beyfortus, introducing potential risks and opportunities.

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, welcome to the Q3 2023 Report Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] At this time, it's my pleasure to hand over to Guido Oelkers, CEO. Please go ahead, sir.

[Guido Oelkers, executive]

Thank you so much, and hello, everyone. This is Guido Oelkers, CEO of Sobi. We are delighted to welcome you to the third quarter 2023 conference call for investors and analysts. And as you can tell from our previous announcement, we are pleased with our performance in 2023 so far. We posted this presentation to Sobi.com earlier today.Please turn to Slide 2, where we're looking the statement as per usual. We would like to remind you of those provisions in line with normal procedures. Unless stated otherwise, we will be making comments that mostly relate to the third quarter performance in 2023 at constant currency rate and in million Swedish krona.Please turn to Slide 3. Today, we will cover the key aspects of our quarterly report. I'm joined by Henrik Stenqvist, our CFO, and Lydia Abad-Franch, Head of R&D and Chief Medical Officer. And during the Q&A session by Armin Reininger, our Senior Scientific Advisor. We plan to review the presentation first and then do a Q&A around 2:00 p.m. Swedish time. Please turn to Slide 4. We successfully delivered on our strategy in the last quarter. We saw significant topline growth of 23%, 29% reported, and 11% for the first nine months, 19% reported. This reflects a strong performance in both hematology and immunology, with a growing contribution from our launch medicines in all regions, primarily in the US and in international. In addition, we received a strong contribution from Vonjo, as well as Beyfortus. The stable growth of Elocta and Alprolix provides us with a solid basis from which we are expanding our position with our launch medicines. Hematology revenues were driven by the first full quarter of Vonjo, strong sales for Elocta, and continued growth of Doptelet, and the launch of Aspaveli. Immunology growth reflects strong Gamifant sales and first royalties of Beyfortus. We continue to build the leading ready hematology franchise. This quarter, we focus on the integration of [Indiscernible], which offers considerable strategic opportunities.Our R&D pipeline progressed with five milestones. We launched the Phase 3b FREEDOM trial for Efanesoctocog alfa, our Doptelet ITP studies for Japan, and for the pediatric indication, and these are fully enrolled. We announced positive Phase 2 data for the pegcetacoplan for [Indiscernible] in C3 and IC-MPGN. And Nirsevimab received approval in the US. We have strong momentum in the Sobi business. We thus maintain our guidance that was raised in July. We continue to expect high single-digit growth and low 30s for the adjusted EBITDA margin. All four elements of the Sobi strategy contribute to this performance, building a leading position in rare hematology. Our pipeline is progressing. Our immunology franchise continues to grow, and our regional expansion contributes to the overall growth and launch success.Please turn to Slide 5. We continue to be excited about the CTI acquisition, which has been the key focus of our company activities in Q3. The rights issue was fully subscribed, and we used the proceeds of 6 billion Swedish Krona to partially finance the acquisition. Vonjo will be highly accretive. The product was in terms of revenues and margins, we now recorded the first full-time quarter of sales with 347 million Swedish Krona, which is an increase of 30% quarter-on-quarter. The integration has been going on very smoothly. This one was one of our focus areas. We successfully retained key talents. We continue with our thoughtful strategy to maximize Vonjo's potential and Synagis beyond cost savings. We have ambitious near-term goals for our hematology franchise, and see exciting LCM development opportunities.Please turn to Slide number 6. Let's look at our quarterly performance. Our growth of 23% was driven by both hematology and immunology, especially our launch brands. For the first nine months, revenues grew 11%. If we exclude the impact from COVID-19 on Kineret and sales to our Chinese partner, Doptelet, we grew by 15% in a year-to-date setting on a constant currency basis. Both North America and international grew significantly in the quarter, while Europe remained at the same level of last year. In the first nine months, international and North America grew the fastest, as you can see from this picture.Please turn to Slide number 7. So, we have been pushing growth in two dimensions or along two vectors, geographic expansion, extending the market coverage of our medicine, pipeline development, bringing new products to the market, extending indications. For the geographic expansion, we have streamlined our organization so that we are able to process multiple applications in international markets in [Indiscernible], prepare international supply, and can rapidly deploy our commercial capabilities. Aspaveli, Doptelet, Zynlonta, Gamifant, and Vonjo, are examples of our current and anticipated growth in new markets. For the pipeline growth, our recent reorganization in R&D and medical affairs gives us improved reliability and scalability to master new products. Efanesoctocog alfa, SEL-212, will be launched soon, and Beyfortus just have a rolling start in North America. We are working on expanding the indication for Aspaveli, Zynlonta, Gamifant, and Vonjo. This puts Sobi into a new phase of sustained growth driven by a lot of new products all on the stable basis of our established franchise.Please turn to Slide number 8. This growth strategy has led to strong results, which is now primarily driven by our launch products, launch and growth products, or as we call them in the report, launch medicines. 89% of the absolute growth is derived from this part of our portfolio, which you can see in orange here. This reflects the strong momentum. It also shows that despite our growth rate, we still have further headroom because there's still a lot of potential connected to these products from being early in the launch phase or benefiting from further geographic expansions or line extensions or lifecycle management.Please turn to Slide 9. Our business continues to be underpinned by stable hemophilia growth at 4% in the first nine months of 2023. We expand the leading presence of Elocta and Alprolix to more patients in new territories. This confirms the community's confidence in these treatments and has been able to overcompensate for price developments that we experienced, particularly in Europe. For Elocta, we continue seeing growth in patients, benefits from geographic expansion, and favorable phasing of deliveries. Government interventions compressed prices in various European markets, while we see the positive evolution on consumption and patient expansion in Europe. As a result, Elocta grew by 4% during the first nine months. Alprolix was supported this quarter by phasing in the Middle East, slightly offset by unfavorable price development. It grew 8% in the first nine months.Please turn to Slide number 10. Doptelet is up 50% in the quarter and 21% in the year-to-date. Sales growth was strong, driven by increased uptake in the US, ongoing launches in the regions, Europe and international. In the US, there's a continued positive evolution of new patients, new prescribers [Indiscernible] share and duration of treatment. There's also an accelerated growth in Europe and international. Key growth drivers were Spain, UK, Italy, and Germany. As expected, there were no sales of Doptelet to our partner in China in the quarter. Excluding sales to China in the third quarter 2022, sales grew 57% at CER in Q3 2023. We expect this positive trend to continue even with our China sales. During the quarter, Doptelet has also become available in Japan.Please turn to Slide 11. The launch of Aspaveli continues doing very well, with quarterly sales of 169 million Swedish Krona, continuing a solid launch trajectory. We have launched in Germany, the UK, France, and parts of the Middle East, Australia, as well as Canada, and more European countries. We also have early sales in a number of other countries where reimbursement is starting to come in one at a time. Aspaveli is one of our candidates for new indication. Here we have just released positive topline data of the Phase 2 NOVEL study. This is a very encouraging sign for our Phase 3 program, and we expected to read this one out next year.Please turn to Slide number 12. Immunology is also doing very well, with a growth of 27% in the quarter and 9% in the first nine months. Gamifant, we saw in the second quarter of significant improved Gamifant sales. This is the result of an enhanced go-to market model, more experience with Gamifant, and the recent publication of new data. Physicians have gotten more comfortable with the benefit-risk ratio of Gamifant, and are increasingly prescribing it for their patients. We're doing this also for a longer period of time. All of this has contributed to a very encouraging quarter for Gamifant with growth of 112%. As in Q2, more than half of this is from new patients. There's some volatility between the quarters because of a large number of high-dosing patients, which depends on the patient's body weight. Kineret is now let's say flushing out the COVID effects and returns to normal growth, as there is a more elevated interest in the IL-1 mechanism. Growth is driven by the US, and international sales for the first nine months are down 3%, but are up 5% when excluding the COVID-19 effect.Please turn to Slide number 13, and now's the time to hand over to Henrik, our CFO.

[Henrik Stenqvist, executive]

Thank you, Guido, and hello, everyone. So, please turn to Slide 14 and we go to the key financials for the quarter. So, Q3 was another very strong quarter, with solid business performance. Looking at the bars to the left, we see a consistent trend in hematology where contribution to growth, not only from the addition of Vonjo, but also from hemophilia and Doptelet outside of China. In immunology, we're glad to deliver another very good quarter for Gamifant, while Beyfortus royalties more than compensate for lower synergy sales, for which we see a decline in Q3 impacted by the late start of the RSV season. So, back to the table, revenue reached almost 5.2 billion, and that was the highest Q3 ever as reported in SEC. And this was driven by the underlying performance, but also benefiting from currency tailwinds. Reported growth was 29%, and that corresponded to 23% of cost in currencies.The adjusted gross margin in the quarter of 78%, this is a slight improvement compared to the same period last year. And this is mainly due to the absence of the low margin sales of Doptelet to China in the quarter and also FX effect. The adjusted EBITDA margin reached 30%, likely below last year of 31%. And this is explained by the increase in operating expenses in the quarter, driven by, first and foremost, the addition of the CTI business, which was not there before, but also in marketing and sales, higher spend related to the launches of Doptelet, Aspaveli, and Zynlonta, and the pre-launch activities for Efanesoctocog alfa.In R&D, the increase relates also to Vonjo activities, but also to the indication expansion of Aspaveli, and the Phase 3b trials of the Efanesoctocog alfa. The non-recurring cost or items affecting comparability of 102 million in Q3 related to the ongoing integration following the CTI acquisition. And we expect some further non-recurring cost in coming quarters, but at lower amounts. And for details on items affecting comparability in the quarter, please see page three in the Q3 report. Operating cash flow in the quarter was just above 1 billion. [Indiscernible] are higher than the same quarter last year, reflecting an improved working capital. And the net debt at the end of the quarter was 20 billion, a reductions from 27 billion at the end of Q2, reflecting the completion of the 6 billion rights issue in Q3.And if we go to slide 15, we have an illustration of our recent debt and leverage development resulting from the financing of the $1.7 billion acquisition of CPI. This acquisition was initially all debt financed, and brought net debt up to 27 billion at the end of Q2, and this was equivalent to a net debt to EBITDA ratio of about 3.7 times. In Q3, the 6 billion rights issue and the underlying cash flow brought net debt down to 20 million and leverage to about 2.7 times. And this is a comfortable takeoff point for further de-leveraging and further expansion.Please go to Slide 16. We now go to the financial outlook for the full year, as usual for revenue growth at constant exchange rates and adjusted EBITDA margin. So, we confirm the guidance for the full year from Q2, and that is that revenues anticipate to grow by a high single digit percentage at CR, and that the adjusted EBITDA margin is anticipated at the low 30 percentage of revenue. And this outlook is of course a reflection of the year-to-date performance and our continued investment in launches and pipeline acceleration. And needless to say, the main uncertainty to our forecast is what would happen to the RSDC in the short term and how that will play out for Synagis and our royalties from Beyfortus. And we believe this could be both an upside and a downside risk to this forecast.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 Slide 18, please. Thank you. So, we hit five key R&D milestones for our latest stage pipeline this quarter. In July, the first patient was dosed in the Efanesoctocog alfa FREEDOM trial. This is the first Phase 3b study we conduct after the ones that are required for filing, and it evaluates both changes in physical activity patterns and long-term joint health, which are pressing concerns for people with hemophilia and for healthcare providers. Also, in July, the Doptelet Japan study in immune thrombocytopenia was fully enrolled. This study is required to file Doptelet for ITP in Japan, which is planned for 2024. Later in August, we completed enrollment for the Doptelet pediatric study in ITP, which is a global Phase 3b study. Together with our partner, Apellis, this month we announced positive Phase 2 data for pegcetacoplan in C3G, an immune complex membranoproliferative glomerulonephritis. The data will be presented in early November at the annual Congress of the American Society of Nephrology Kidney Week. The results showed that pegcetacoplan is clearing the deposits that are causing kidney damage and may block kidney damage from occurring. The study also show improvements across key clinical measures of kidney function. This data give us confidence for the ongoing Phase 3 VALIANT study, which we'll read out next year. And finally, the FDA approved Sanofi and AstraZeneca's Beyfortus for the prevention of RSV in early July.Please turn to slide 19. As Guido said earlier, we do have a rich pipeline, with a lot of expected news upcoming. More significantly, we are preparing for the submission of Gamifant in secondary HLH macrophage activation syndrome in a Still's disease in the US. It is a rare life-threatening complication of a rheumatic disease, with poor prognosis. Gamifant operates at the cutting edge of science and thinking evolves with growing experience. During our ongoing conversations with FDA, we were recently requested that longer term safety and efficacy data on secondary HLH must - to be included in a supplementary BLA filing. We expect to cover this with the available data from our ongoing study. I would like to highlight that in October, we also completed enrollment of the full cohort one in a Still's disease in the EMERALD study. We intend to use the data from these two cohorts in the filings, so including the total of data from 25 patients. This allows for a more robust and complete dataset to be included in the supplementary BLA filing in 2024. We also were able to accelerate the Kineret regulatory process for SMS in China, which we now expect by the end of this year.Please turn to Slide 20. And with that, I hand back over to Guido.

[Guido Oelkers, executive]

Thank you so much, Lydia. As you can sense, we are really pleased with Sobi's development during this quarter and the first nine months. And just to reiterate, we saw a significant topline growth of 23% at constant and 29% reported in the quarter, 11% at constant and 19% reported for the first nine months. This is due to our steady base in hemophilia as well as our expansion position in launch medicines that contributed over 89% to our total growth first nine months. Our R&D pipeline progressed with our key milestones for Efanesoctocog alfa, Doptelet, Aspaveli, and Nirsevimab. We have a strong momentum in the Sobi business, and we thus maintain our guidance that we raised in July.Please turn to slide 22. We'll now go to the Q&A session. [Operator instructions]. Perhaps it's now time to take the first question. Operator, maybe you can have …

[Operator]

The first question comes from Gonzalo Artiach from ABG Sundal Collier. Please go ahead.

[Gonzalo Artiach Castañón, analyst]

Hi. Can you hear me?

[Guido Oelkers, executive]

Yes.

[Gonzalo Artiach Castañón, analyst]

Great. The first one is on Beyfortus. I was wondering if you could give us some color on how to look at the potential royalties from this drug in Q4. I mean, for Synagis, we have seen historically that from Q3 to Q4, there has been a high jump on sales due to the RSV season. Should we see Beyfortus in the same way or the number reported in Q3 somewhat showing hospital stocking for Q4? And if so, why would be different from the trends we have seen historically with Synagis?

[Guido Oelkers, executive]

Yes, thank you so much for your question. I mean, you have seen probably some announcement of CDC that is a little bit worried about the availability of stocks for Beyfortus in a broader setting. And so, there's a high demand for the product. Due to competitive reasons, we cannot exchange information with them on Beyfortus. So, I think this is mostly really a question that you should ask Sanofi. We can give you a take that we think that for Synagis, given the constraints that were outlined by CDC, we think that we would probably have a more normal season. But please remember that the season started this year rather late. So, there's still some uncertainty related to Synagis performance, as Henrik pointed out. But Beyfortus, it's obviously doing extremely well, and the RSV seasons, that while it has started very slowly, is now becoming more epidemic in many more States in the US. So, you would - but we cannot comment on the stock situation in Sanofi.

[Gonzalo Artiach Castañón, analyst]

Great. Thank you. And a second question is on the guidance. You did not upgrade it. You're maintaining the expected topline growth at high single-digit percentage. So, my question here is, having in mind the positive numbers seen in the Q3 report today, could you give us some words on the trends that you are currently seeing in Q4, which make you believe that, yes, that the topline growth guidance should stay as it is now? Thank you.

[Guido Oelkers, executive]

Yes, thank you. I mean, as usual, Sobi is not known for being too forthcoming or too external, again, with regard to forecasting. We like to deliver what we forecast. We have increased the guidance in Q2. We have a little bit of uncertainty in in Q4. And just remember that we had a really very significant quarter last year for Synagis and in Q4 and to - so it is a - you have to make this one up in the first place. We see, though, if you take away the RSV part, we see a very strong momentum across all businesses, and we think that this is going to continue, but we have a little bit of question mark this juncture. But it's not like we are lacking confidence. It's more that we don't want to be caught out because we cannot oversee all the elements. That's the reason why we left it, but we are confident that we can make [Indiscernible], with a bit of luck maybe do better. Yes.

[Operator]

The next question comes from Charlie Mabbutt from Morgan Stanley. Please go ahead.

[Charles Mabbutt, analyst]

Hi, it's Charlie Mabbutt from Morgan Stanley. Two questions, please. So, firstly, on Vonjo, following the integration of the sales forces in the first full quarter of sales, please could you talk to your expectations for the ramp of the product over the coming 18 months, and how much improvement do you think you can drive by simply reaching a broader set of prescribers than CTI and is potential contracting with Doptelet an advantage? And then secondly, Q4 is always a higher cost quarter, but bearing that in mind, do you believe Q3 is a good guide for the OpEx we should expect into 2024 given CTI has now been fully integrated? Thanks very much.

[Guido Oelkers, executive]

Thank you. Yes, let's go right into Vonjo and Doptelet. We think it's a strength to have Vonjo and Doptelet. Yes, we have also integrated the field force. I think this was an important step to have a - to get more breadth and depth for both products, which are very complimentary and benefit from a very big overlap in terms of target audience. We make sure that we don't forget the specificities of the product by a very strong medical team. And we think that the combination now makes us very competitive also with regard to new competitors, new entrants. We think that we will see an improvement of [Indiscernible] pretty soon, let's say and because the team has worked during this period of discontinuities quite well. I mean, there's still a bit of work cut out for us to bring - to get really fully productive, but we should have some low hanging fruits, and we believe that Vonjo will be a very material product for us next year with very strong year-on-year growth versus what we expect for this year. So, we are not yet giving guidance for Vonjo in detail, but you can expect a further acceleration in the next - by year-end next year. There's significant acceleration. Yes, so we think it's - we are on a good way. I mean, the team is super motivated, makes us very attractive also as an employer to have two products in the bag in this very competitive space of hematology. With regard to the OpEx line, maybe Henrik, you want to comment on this, whether this is indicative for the next year?

[Henrik Stenqvist, executive]

Yes, well, when it comes to Vonjo costs, and you are right that of course, it is now fully absorbed in Q3. And that's an indication that we don't expect the sales and marketing cost to be any larger really in 2024. But that goes for Vonjo and the rest of 2024, we will guide for at the later stage.

[Guido Oelkers, executive]

Yes, so we are ambitious. We see significant growth opportunities. We have now seven products in the stable that are still experience really exuberant growth. We need to make sure that they can further flourish and become a much more bigger part - much bigger part of our entire corporation and driving further growth. But we'll provide guidance on OpEx soon. Thank you for your question.

[Operator]

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

[Nalin Tejavibulya, analyst]

Hi, this is Nalin on for Eun. So, the first question is for Beyfortus. You mentioned that there's [Indiscernible] this year before the 2024 to 2025 RSV season. Do you expect Synagis usage to be minimal? And if not, how do you expect it would take for in terms of to - how you would you expect to [Indiscernible] for Synagis? Thank you.

[Guido Oelkers, executive]

Thank you. Yes, I think the - we told you that already in Q2 that what we are expecting with increasing usage of Beyfortus, we expect that more confidence is build up for the product. And provided that their safety profile sticks up to what they've demonstrated in the clinical trials, then that should also have an impact on us. Yes. Now, we are let's say busy latest guidelines or with the latest recommendation from CDC, let's see how - I think we are still confident for this season that we have respectable sales. But for next year, you would see at one stage we believe Beyfortus could play a larger role, which will benefit us in a different way. And then the big question is obviously, will their progress outside of the Synagis indication will be so large that it will balance the negative effects it will have on - we expecting for Synagis, and there's a good case to do - for this, but at this stage, we are not providing guidance. So, there is a - this is a question mark, but we obviously - the team around Synagis is still very confident, is working the physicians right now. And that will - but over time, whether it's now 2025 or 2026, 2024, 2025, to see 2024, 2025, or 2025, 2026, you will see obviously an erosion of Synagis at a more significant scale. Yes, that's clear.

[Nalin Tejavibulya, analyst]

[Indiscernible] for Beyfortus, what's the anticipated patent expiration, and when does Sobi's entitlement to royalties from Sanofi expire? Thank you very much.

[Guido Oelkers, executive]

Yes, excuse me. I mean, it might be my computer, but I have difficulties to hear you, to be honest.

[Nalin Tejavibulya, analyst]

So, for Beyfortus, what's the anticipated patent expiration, and when does Sobi's entitlement to royalty from Sanofi expire? Thank you so much.

[Guido Oelkers, executive]

Yes. It is - we have a perpetual license, perpetual agreement that basically makes us participants that we have announced, and this royalty agreement goes from 25% in the earlier years, in the early - in the first two years to up to 35% on sales. And this is not expiring. As far as the patent of Beyfortus is concerned, I mean, it's - I can't tell you actually off top of my head to be honest let's say when the patent is expiring, and will provide this by the - during either later part of this call or tomorrow when we have the call in a broader audience.

[Operator]

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

[Christopher Uhde, analyst]

Hi there. Christopher Uhde from SEB. So, on the pipeline, Gamifant, you - I guess, can you tell us about the response rate in EMERALD? Was it consistent with prior clinical data presented previously? And then Efanesoctocog alfa, you previously talked about the possibility of a relatively rapid review. You've got the 180-day questions in two weeks by my calculations. So, have you any sense whether your optimism there was well founded? And then - so for my second question, Elocta, can you quantify the order phasing impact? Thank you.

[Guido Oelkers, executive]

Yes, thanks, Christopher. We cannot probably provide you with too many details on the response rate now because we are still in discussions with FDA and there's not yet a publication. But maybe what we could do is, Lydia, you can give maybe Christopher a sense on where we stand with Gamifant, and give him just - because the overall response was quite good of Gamifant. So, we were quite pleased with this. But maybe we can give you a sense and also with regard to efa,

[Lydia Abad-Franch, executive]

So, with regards to Gamifant, what we had was the interim analysis of 16 patients. But what we have achieved, as I mentioned before, was the full recruitment of cohort one. And that's what we want to analyze now, because it will make much more sense to present a full cohort instead of only the interim analysis. But of course, I cannot comment on the data, and we will be communicating as soon as possible the data from the full cohort. When it comes to Efanesoctocog alfa, you are right. We received 120 questions, and we are ready to answer all of those questions. We are collaborating closely with our co-development partner Sanofi, and we are confident that we have all the data to answer the questions that were raised by CHMP.

[Guido Oelkers, executive]

Yes. And the UND, I mean, I think the pipelining for the - I think this was more related for - not to a Elocta, but more to Alprolix. But this is not at the material scale really. I mean, it's more to be - to give justice. And Henrik, you want to comment on this on the - on the adjustment potential there?

[Henrik Stenqvist, executive]

Christopher, I think the question related to the phasing. Is that right?

[Christopher Uhde, analyst]

Yes, correct.

[Henrik Stenqvist, executive]

Yes. Well, there is some fluctuations obviously from international markets due to tenders that we have in some quarters, but not in all quarters. In this quarter, about 50% of the growth relates to these new markets.

[Christopher Uhde, analyst]

Okay, great. Thank you very much.

[Operator]

The next question comes from Suzanna Queckbörner from Handelsbanken. Please go ahead.

[Suzanna Queckbörner, analyst]

Hello. Suzanna Queckbörner, Handelsbanken. I'd like to follow up on Beyfortus. Has Sobi started to adjust the cost associated with the field force supporting Synagis? And then also, since Q3 net financials were burdened by the bridge loans cost prior to finalizing the right issue, how should we think about Q4 net financials?

[Guido Oelkers, executive]

So, with regard to Synagis, we have, I mean in a prudent way, managed headcount over the last 12 months, and have now a small smaller head team, obviously than we had maybe two years ago or three years ago, but that's okay. It still allows us to be competitive. For us, it's important that the team feels that we have trust and faith in them managing this period. And they do. So, they're very fired up and we don't anticipate now any short-term changes to this. We'll obviously review this again in Q1 on the strengths of any further feedbacks that we may obtain from the market. With regard to the loans, maybe Henrik, you want to talk about this.

[Henrik Stenqvist, executive]

The net financials in Q4, it's natural that it will be slightly lower. But remember that you don't get an immediate effect. There is a bit of delay in the impact, but it's going to be slightly lower than what we saw in Q3.

[Operator]

The next question comes Niall Alexander from Deutsche Bank. Please go ahead.

[Niall Alexander, analyst]

Hi, everyone. Niall Alexander from Deutsche Bank. It'd be good to get your views on the pricing outlook for hemophilia and your hemophilia products. And then second question on ALTUVIIIO, expectations of pricing once it's launched, will it be similar to Elocta? Thanks.

[Guido Oelkers, executive]

Yes. And so, what we expecting in the hemophilia field is that we have a more - a price reduction more to the low to mid-single digit. As we had traditionally, there may be the one or the other outlier that we cannot anticipate at this stage right now that will force us to respond. But overall, as a franchise, I think this is where I would pack it. And with regard to ALTUVIIIO, I think we will be able to take a premium in some markets, but in most markets, it'll be at the same cost of therapy.Thank you. Good case really in this strong expansion of market share. Thank you. Next question.

[Operator]

The next question comes from Viktor Sundberg from Nordea. Please go ahead.

[Viktor Sundberg, analyst]

Yes. Hi, Viktor Sundberg, Nordea. Yes, a question here on Nirsevimab also. So, we've seen, as you said, the CDC priorities in Nirsevimab to high risk groups here for mainly the 100 milligram dose. But I guess the 50 mg dose is still quite available, if I read the guide correctly, which I guess could be used for premature infants or anyone weighing less than five kilograms. So, could you elaborate a bit more why Synagis could be protected here, giving that overlap? I mean, the fear here, I guess from my feedback is that you don't get the upside from the 100 mg dose in kids weighing over five kilograms, but you could get cannibalized by the 50 milligram dose, maybe the 100 milligram dose in high risk patients or patients with lung or heart conditions. So, I just want to get your flavor on that a bit. Thanks.

[Guido Oelkers, executive]

Yes, thank you. There is still a - we'll do still a bit of consultation with the decision makers because there's a bit of an ambiguity because obviously what we hear in the market is also that the people are adding two doses of 50 to compensate for 100. So, it is - but it is not - this is what we hear from the market. This is not official Sanofi. And let's say the - but to what extent - so there is this ambiguity, and unfortunately we cannot completely remove this ambiguity right now because, A, I think there needs to be further clarification from the agencies. And B, there is then the question, obviously how physicians are responding. I mean, we have done a survey as we reported. I think previously as that indicates that in the up to 29 weeks, there's a large group of physicians that sees utility of Synagis.

[Viktor Sundberg, analyst]

Okay, thanks. And also, I had a question on Still's disease or the EMERALD study. Since the FDA required more safety data, is that positive somehow, because before you were a bit uncertain if the data package you had would be enough for the FDA filing and subsequent label extension. So, just wanted to understand more here with your interactions with the FDA, if you are more certain now that maybe the data you have is enough, if you get the safety analysis to the agency. Thanks.

[Guido Oelkers, executive]

Yes, I think it's the - we see this more as - the interaction as a valuable interaction given the high unmet medical need. And if anything, the data sets that we are now collecting should give us much more confidence. Lydia, you want to comment on specifics?

[Lydia Abad-Franch, executive]

Yes, sure. I agree, Guido. So, we are talking about rare diseases, very small patient population. So, the more data that we can present to FDA, the higher chances we will have to really support the benefit risk profile of Gamifant. So, for us, it's good to present more larger data for longer period of time. So, we see this as something very positive for us.

[Viktor Sundberg, analyst]

And if I can sneak one question in. I think you hinted that you needed more time to communicate something around Synagis with CTI Biopharma. Is that something you plan or something you have some more visibility around here? Thanks.

[Guido Oelkers, executive]

Yes. With regard to the Synagis, yes, I mean there's - we have not yet announces because we are - we obviously reaped quite substantial synergies, but let's say we want to get now the overall trials going for indication expansion and also for further lifecycle management. But we'll provide you with an account, but today was unfortunately not yet the day.

[Operator]

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

[Erik Hultgård, analyst]

Yes. Hi there. I have two, if I may. First, a bit on Vonjo, if you could provide some type of early feedback from what you're seeing with GSK launch of Ojjaara. I know it's early, six weeks post the US approval, but what they're seeing, I know there appears to be some type of overlap with patients that you address, but although Ojjaara is more focused on anemia. Then secondly, if you could provide some sort of feedback on how resilient Synagis is. And I think given the sort of strong demand message conveyed by Sanofi, it seems to be a lot of use already. So, have you seen, or what are you hearing in terms of switches to Beyfortus in on-label population? That would be really helpful. And I guess that's sort of before the CDC recommendation on the supply constraints that was communicated. Thank you.

[Guido Oelkers, executive]

Yes, thank you Erik. For your question. So, let's so with regard to Vonjo and Ojjaara from GSK, I mean, let's say basically the battle field is, we have a clear place in those patients below 50,000 platelets, regardless whether they're anemic or not. They have now for anemic patients, let's say some support and also the guidelines. And basically, the battlefield is now - really what is more important is, is it the thrombocytopenia or is it the anemia? When you look at mortality, you would think that thrombocytopenia plays a more important role. And let's say we think that based on the feedback, we don't need to be in this phase of our launch. We don't think that we need to be too clever. We have figured out that a lot of physicians were not covered, that I think it's fair to say that CTI was more focused on academic centers. And we basically - obviously you're having now a much larger team, have an opportunity to go deeper and broader. We figure out that there's still an opportunity for - many physicians have not even heard about Vonjo. So, that we see this as an opportunity for us to make our claim. And we think that the thrombocytopenia topic is of more serious concern. Arm, do you want to maybe comment on the on the thrombocytopenia element?

[Armin Reininger, executive]

Yes, thank you. And Erik, thanks for the question. I think it's a very important one because if you consider that Vonjo is really helping those patients at 50,000 and below platelet count, and that literally cuts the survival time in half when you compare to higher platelet counts, or particularly if you compare to red cell counts, like the anemia, and if you also look into the papers, particularly the pivotal report on momelotinib, you see that their patients were in the range of 100,000 to 150,000 platelets per microliter, which is much less worse severe states as the ones that we looked at for Vonjo. And then the question is, what do the physicians want to see? Because there's also now publication, blood advances that Vonjo also works well on transfusion avoidance and really on the anemia part. Now, the question is, if it also works in a much more severe patient group, isn't there a drug that you want to use, particularly if the other one has not that data that they work also on the look-like accounts. So, I think it's up to the physician to decide if they believe that one drug has advantages, but when it comes to the data and the facts, I think we are very confident that Vonjo has a very strong data set.

[Guido Oelkers, executive]

Yes. But Erik, but we wanted - we have not yet heard of a big shift in - we were last week in the US, and in the US, obviously there is a group of physicians that will embrace it, but we always said that the market is large enough. I think our focus right now is really on the more established [Indiscernible] as opposed to be too worried now about those who don't have patients yet. So, but that obviously going to change, but we feel well equipped, cutting a long story short with the profile that we have. And with regard to Synagis here, we - I mean, obviously as you protect the patients and apart from those patients that you're carrying forward, we have not heard so much of switching obviously the product let's say of those patients. Otherwise, you vaccinate newly in the season, let's say with regard to Synagis. So, we think the - in the most data points make us believe that we have yes, a shorter season in 2023, but more of a more normal like season, but this is - and obviously, we see the indication of shortage of supply at this juncture for Synagis because we obviously also like to be beneficiaries of the Nirsevimab stream. But for Synagis, it's probably more of a positive than rather believe that the 1.4%, 1.5% of patient population is where all the stocks of Nirsevimab are going in. I mean, so that is - so we think at this stage the - it is probably making more of the point that there is - also based on FDA comments, that we think that there's more clear pathway at least for this [Indiscernible] and for Synagis than it may have been beforehand.

[Operator]

The next question comes from Alistair Campbell from RBC. Please go ahead.

[Alistair Campbell, analyst]

Just a couple of quick questions. Gamifant, obviously you've had two very strong quarters, the last couple of quarters. As we roll into Q4 and more importantly, I guess into 2024, I mean, should I thinking that the current quarterly run rate is good base to be thinking of, or would you urge a bit more caution than that? Obviously, you've rightly called out volatility. So, just a question on that. We're now obviously seeing Sanofi rolling out ALTUVIIIO in the US, and so far it looks pretty strong, and overall, their hemophilia franchises growing. Obviously, you have differential royalties on those programs. So, the franchise is growing. Is there anything specific we should think about, about the royalties you receive? I mean, obviously you've delivered a good quarter actually in terms of royalties, but is there anything you'd call out there? Thanks.

[Guido Oelkers, executive]

Thank you. Yes, no, with regard to Gamifant, I don't think we're yet at a point to say that the last two quarters are the new normal. But it is clear that what we are doing that this is not just serendipity, yes, that the - let's say, because I think what we understand is data, and now the medical education programs that we are running and a newly composed team with much more insights, is paying dividends. And so, I think is it already this, but clearly it's an elevated level. So, we see - we don't see now - we clearly have moved away from a Q1 situation, yes, which was devastating. And let's say - so we think that we are on a much higher plateau, let's say, and basically are very confident that we can develop the business from here, particular once we can publish also the EMERALD data in its full. Yes, I think this will be a big pull also because the piece basically - physicians see more utility and we have a couple of lifecycle management programs right now for coming fund in pipeline, and one of them reading out the middle of next year. Yes. So, that could also quite - could stimulate the debate quite a bit. So, we think that we are quite positive in this regard. With regard to the royalties, we think that efa is a much bigger product, obviously also for Sanofi, hence even though it's a differential royalty, it'll be - when you look at the overall royalty stream, should be good for us. Yes.

[Operator]

The next question comes from Yifeng Liu from HSBC. please go ahead.

[Yifeng Liu, analyst]

Hello. Two questions, please. One is, so could you possibly give some timeline and some color on timeline of the alfa and the market access in European countries in the next year on? And the second question is on your leverage, and obviously you're coming down from 3.7 times to 2.7 times. Just in terms, how should we think about that going forward in the next few quarters? Thank you.

[Guido Oelkers, executive]

Thank you. Yes, so we're expecting to launch the - in Europe efa mid of next year, the first country, and it's no surprise that it's going to be Germany, okay? There's holiday season, so we have to see, but we are committed to bring this on the market as soon as possible because we have such a great demand for the product from the associations, from patients that - individual as well as the healthcare professionals. And then basically we will follow the flow. We had - UK would've been also very fast. There's a bit of a queue right now with the agency, but we should be able to resolve this also by end of year. And then you have some - and then you have various early access programs and - in various markets, in addition and further [Indiscernible]. So, full launch is really 2025, but you will see some significant already through the course of 2024. And with regard to leverage, I can refer to Henrik. How do you see this?

[Henrik Stenqvist, executive]

Yes, so the current situation after the rights issue is about 2.7 times. Obviously, what we foresee going forward is a further reduction due to our strong cash flows. How fast the reduction is, we don't guide on, but we are creating obviously a headroom for further expansion.

[Guido Oelkers, executive]

Thank you. Maybe we open up for the last question.

[Operator]

The last question comes from Christopher Uhde from SEB. Please go ahead.

[Christopher Uhde, analyst]

So, yes, just could you comment on Gamifant? You did say about the average duration of therapy being longer, but what are you seeing in familial and rheumatologic HLH, respectively? And Orfadin has also been quite flattish lately despite generic competition obviously. Is this the kind of run rate we should expect for the - going forward for a while at least? Thank you.

[Guido Oelkers, executive]

Yes, I mean, maybe I talk to Gamifant first. With regard to Gamifant, let's say we think that we have a good growth path ahead of us. Sorry, Christopher, I didn't get probably this question completely right here. Can you just repeat it for Gamifant?

[Christopher Uhde, analyst]

Yes, sure. Just the average duration of therapy that you're seeing in familial HLH and also rheumatologic HLH.

[Guido Oelkers, executive]

Yes. So, the duration is sometimes driven - obviously, we have sometimes longer duration particular when - these are heavier patients and they are in rheumatologic or conditions or in not necessary primary settings where the physician is making decisions. But what we see is also that the physician is dosing higher at the beginning, because there's more confidence, and that basically also is impacting this. But we have not - I would say we don't have yet a good take on the data, on duration, but yes, there's a longer duration and there's also more units that are deployed. Yes.

[Christopher Uhde, analyst]

Okay. Great. Thank you.

[Guido Oelkers, executive]

And that's basically -- yes, and with regard to Orfadin, yes, I mean, it's not as core anymore to our business, but we have now reached a point where we can effectively compete, and therefore it's a little bit more of a steady state. Yes.Thank you. Armin, you have a point?

[Armin Reininger, executive]

Yes. Maybe, Christopher, just to give you a little bit the perspective, because those patients are so different and so difficult, literally ranges that we have seen are from four to 245 days, averaging at roughly 60 days. But that is probably a difficult thing to say then how does that translate to the large group unless we have more data and more to come with more experience. But that is just to give you a feel of what it can be.

[Guido Oelkers, executive]

Thanks, Armin. Thank you. Yes, thank you so much for your interest. As you can see, we feel reasonably upbeat as it feels quite nice to be at Sobi at quarter two. The quarter growth of 23% doesn't feel so bad. And thank you for your interest in Sobi. I look forward to - for those who want to join us tomorrow, to answer more questions in more detail. Thanks a lot. Wish you well. 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.