Earnings Call: Q4 2019

Feb 13, 2020

Ladies and gentlemen, welcome to the Sobeys Presentation of the Q4 and Full Year 2019 Results. Throughout the call, all participants will be in listen only mode and afterwards there will be a question and answer session. I will now hand over to Guido Olkers, CEO. Please go ahead. Yes. Good morning, everybody. It's really my pleasure to welcome you to our webcast on the Q4 results. And I think with this, we go straight into the beef forward looking statement as per usual. Today, I'm accompanied by our CFO, Henrik Stenqvist and our Head of R and D, Milan Strachovich. And this has been twenty 19 has been a significant journey for the company. And before I get into the numbers, I think it's time just quickly reflect what actually happened. We really grew now our hemophilia business with the acquisition of DOPTELET or broadened it into a hematology franchise. We got our first launch experience with Gamifant during the year, and the $56,000,000 I think made our first mark. We had Synagis under as of 1st year in the 1st year under our ownership. And as you have seen, the product has performed extremely well. We strengthened substantially our North American franchise. And not very long ago, our North American franchise was contributing around 12% to the top line. Last year, it contributed 37%. And we have invested substantially in our portfolio with BIVV001 and emapalumab and avatrombopak. So basically, we have diversified company into really an hematology immunology company with the help of the investments. So coming to the next page, 2019 is indeed a year of transformation, as I pointed out, but it is a year of very strong growth. So 56% growth on the top line, 72% at the bottom. Organic growth has been very strong even though we have some parts in our range like the manufacturing business or the royalty streams that are not growing as fast. But overall, the product business has performed extremely well. Elocta, 34%, Alpulix, 46%, I'll come back later, on how we see this business moving. But the good news is that we see we still see very strong patient growth, and that gives us a lot of confidence moving into the future. In the immunology sector, we have, let's say, very strong track record now with Synagis, and we'll explain a little bit later on how to view this business. And the Gamifant launch, I think, at least measured up to my expectation, even though there was a couple of bumps on the way. But $56,000,000 with restricted indication, I think, is a very respectable result. And in addition, with these 2 acquisitions now, we really brought this build our pipeline, but also we executed, I mean, obviously, 2 important deals and established us as a credible player in the M and A space. We have recently set up a company in China, and this will be another growth platform for us moving into the future, in particular for Gamifant, but also for other products in our range. And we are restructuring, obviously, our specialty care and partnering product portfolio. This business used to be, in 2015, 60% of our business. And now over time, it's becoming increasingly irrelevant given its less profitable bias. And we really focus on the core. So basically, when you look at the next slide, how we have performed at constant currency, 48% year to date or last year versus 2018. But here, you can see how this business has transformed over time and how we have now really established 2 very strong franchises that will be the engine for the company moving forward. But we have not only moved the existing business or the on market business, but also our pipeline, as you can see on the next slide. And what is important to note is that with our thrombopark, we have 3 indications. And in the U. S, we have today only launched DoD and ITP, just going forward to become the 1st TPO RA registered in CIT, and we expect the Phase III results in Q3. So this gives us a significant platform when you think about internationalizing this franchise. We have BIVV001 in our stable, and Milan will talk more about this. BIVV002 in the preclinical phase for hemophilia B. And with hemiparatumab, we have a bundle of indication expansions, and we still have some ambitions also for Anakinra. And as you know, we are participating what we termed in the past as MEDI8897 and Nilsa Vemap as well. And we have an option on 2 oncology assets, 1 in Phase I and 1 in preclinical as part of the Novimmune transaction. So it's a nice portfolio that should basically bring us into a position of dynamic growth over the next couple of years. Next slide. And basically, when you synthesize this, we have a very clear strategic ambition. We want to maintain the hemophilia leadership. We think that we have the best EHLs now stable. And we can sense that Vector business is here to stay. And we have the future with BIVV001. And we have opted in, as you know, last year. And this was now helping us, obviously, to position ourselves as an important player in hemophilia. We are diversifying and building DOCTORLET to scale with this establishing the hematology franchise. And we are extending Gamifant into secondary HLH, but also into acute graft failure, and Milan will talk about this later, expanding Kineret and growing Synagis, and we alluded to this how we think about it. So when we now turn to hematology, here you can see the growth. And as already alluded to, we have very strong underlying growth, and we don't see that this trend is discontinuing anytime soon. Turning to Elocta. I mean, it's very nice to see that we gained speed again in Q4. And this is not only reflected by sales, but also by patient growth. And it's really the growth is really driven by EU5 markets and the Middle East. And product is now well established, but we are still having opportunities to penetrate. And one should not forget that there's a very substantial share still out there to get for us and to convert in the short acting sector. And very nice for us was that we got just recently in January the approval in Russia, which is an important milestone for the franchise. These are some sound bits that we have picked up at Eheart, a conference that took place last week. And I think it's important these are for us, these are some important learnings. And these are original quotes from leading KOLs in the sector. And this is not just one KOL who told us this, but many KOLs share this view now that factor replacement remains standard of care. And even in the inhibitor sector, eradication of the inhibitors is a key objective. And they see ITI treatment still as a treatment of choice. And risk benefit ratio depends on the significance on the unmet medical needs. So I think there's a growing understanding in the community that with new therapies, you have trade off decisions. And I think there is a bit of a at least in Europe, and this is also documented by the uptake data, you can sense there's a bit of more skepticism now in the community whether this ratio, riskbenefit ratio is actually that favorable or in other words, whether convenience will actually top safety concerns. So we are convinced that we have the best in class hemophilia treatments in our portfolio, and therefore, we are confident with regard to our future. Quick snap shot into Doctollet. Here, we wanted to just give you a little bit of a frame on how we think about it because we think that Doctor. Let is a little bit underrated as a product right now. The main indications are obviously ITP, and this is a $2,000,000,000 global market. And as you know, we have global rights. The CIT market, based on our estimation, will clearly exceed $1,000,000,000 I mean, there are estimates out that suggest it could be even close to 2. And CLD is around $300,000,000 alone in the U. S. We think that Doctolut is a differentiated product. And we believe that the window of food intake that you have to consider with a leading competitor is not trivial. And we believe that once a day dosing is very positive for this product oral administration and also that you don't have to worry about And We come in with a differentiated product. Hence, we are very bullish about this product. Now turning to immunology. The and obviously, when you come to this chart, this chart is pretty much skewed by the seasonal effect now of Synagis. And but it's nice to come out on the high. I think I've commented already. I mean, for me, important to note is that Kineret, at constant currency, is growing at 12%. And we don't see that this trend is diminishing anytime soon. And now coming to Synagis, I think we are performing very well. We have performed very well in Q4. The overall increased demand and referrals really drove this. We have a mid single digit underlying growth. And we have obviously benefited to a certain degree from the RSV season. But let's say there is also an effect on the from the wholesaler side. And I think we guided on this that this year or last year end of last year, we bought we sold in probably around $6,000,000 more than AstraZeneca has done at the same point of time the year before. But I think this is to evaluate this product, which is a seasonal product, you really need to look at season by season. And we guided you that when we took the product, it was a product of around $269,000,000 for the season. We think that when we completed this season in the 'nineteen, 'twenty season, we will have sold between 290 to 230, which means mid single digit growth versus the 'eighteen-twenty 19 season. So we are very happy and basically see a validation of our thesis that this product will perform well under our ownership. This product is 20 years on the market. So we're quite gratified that we can drive continuous growth. And Gamifant, we have talked about, this product is still at an early stage. The consumption obviously is driven by the weightage, duration of treatment and let's say, the average dose of the patients. It's early days. We are excited about the fact that the natural definition, essentially the North American hemophagocytic hemophagocytosis Society is broadening the approach and has broadened the understanding of primary HLH. This will help us in the years to come, and we see strong underlying demand for the product. Yes, it's not yet a linear extrapolation of the product that is possible. But overall, the magnitude, I think, of how we established the product last year was a positive event for us. And now I would like to ask Mila to talk about the pipeline. Thank you. Thank you very much, Guido. As mentioned in the past couple of years, we have made a very deliberate effort to strengthen our innovation pipeline within our areas of strength, being within hematology and immunology, and this is illustrated on this slide. We now have 2 ongoing Phase III studies, one for BIVV001 in collaboration with Sanofi and one for avatrombopak in chemotherapy induced thrombocytopenia. And we have our Phase IIIII study with emapalumab in a dose, non primary SLH, which is now open for enrollment. In addition, we have the ongoing Phase 2 study with imapalumab in MAS. In the registration phase in Europe, we have the primary SODH indication with imapalumab, the familial Mediterranean fever indication with Anakinra, and we have just very recently submitted a chronic immune thrombocytopenia thrombocytopenia application with avatrombopak. As mentioned, we have an option to an immune oncology asset in Phase 1 and financial rights to a potential follow on molecule within RSV. On the next slide, I will share more details on pipeline events in the coming period. So, we expect to initiate the pediatric Phase 3 study with BIVV001 by year end, obtain Phase 3 readout on chemotherapy induced thrombocytopenia with avotrombopag in second half of twenty twenty, submission of dura or deficiency of the interleukin-one receptor antagonist in the U. S. In mid-twenty 20 with Anakinra, expected approval of imapalumab in EU mid-twenty 20, complete enrollment of 10 patients in MAS with imapalumab and subsequent meeting with the FDA by year end and to initiate the Phase II study with imipalumab in pre emptive graft failure by year end. If I can have the next slide, please. On this slide, I'm showing the design of the ongoing Phase 3 trial with VAVOR-one in previously treated patients with hemophilia A above 12 years of age. The study will enroll 150 patients and include the annualized beating rate annualized beating rate as primary endpoint, but also include additional measures such as ultrasound and activity monitoring to better document the unique profile and ability to normalize the life of patients with hemophilia A with vibroorone. And with that, I hand over to Henrik to discuss the financials. Thank you, Milan. Good morning, everyone. So let's start with the financial summary of the quarter. Revenues for Q4, as we saw, amounted to €4,890,000,000 corresponding to an increase of 90% and 82% if we look at constant currencies. Elocta and Alprolix both saw strong double digit growth, showing continued momentum. In both products, we are seeing this growth across Europe and the Middle East. Synergies sales of €1,656,000,000 were above our expectations. We see positive signals as a result of improved commercial effectiveness, but sales were also impacted by wholesaler stocking, positive gross to net impact as well as the severe RSV season. It's important, as Guido said, that we evaluate synergies in season, and that is really measuring July to June as there can be monthly variations. So for this season, 2019 2020, we expect sales of between 2 $1,000,000 $300,000,000 Gamifant sales of $180,000,000 showed a rebound from the $67,000,000 that we saw in Q3. But as discussed, we expect some continued volatility in the quarter in the quarters to come due to the nature of the disease and the small patient population, although the underlying trend is very positive. In terms of organic growth, that is adjusting for the acquired growth from Synergis and also Doptelet, we saw year on year growth of 20% in the quarter at constant currencies. In Q3, we discussed our slightly lower gross margin due to the seasonal product mix effect, primarily driven by synergies and then lower Gamifant sales. But as expected, the quarter on quarter increase in gross margin for this we saw a quarter over quarter increase leading to 78% gross margin for the quarter, with a full year gross margin of 77%, which is then up from 74% a year ago. Adjusted EBITDA reached SEK 2,380,000,000 for the quarter, an increase of 100 and 60%, and this corresponded to a margin of 49%. Again, the margin of the quarter was obviously impacted by the seasonality of synergies. Adjusted EPS, that is adjusted for nonrecurring items for the quarter was up as much as 122%, but also the full year adjusted EPS showed very strong growth of 33%. The operating cash flow of SEK 976,000,000 for the quarter and SEK 3,600,000,000 year to date signals continued very strong operating cash flow. The net debt as a result of the Dover acquisition increased from $7,600,000,000 in Q3 to SEK15.4 billion at the end of Q4. This increase is obviously driven by the roughly SEK8 billion acquisition of Dova, but it was also impacted by the $50,000,000 payment to Sanofi related to the early opt in for BIB-one, but also the positive impact from our underlying business performance. So if we go to next slide. I also want to discuss our revenue and OpEx development over the last two years. The fact that we've diversified now into new areas has and will have a significant impact throughout our financials. The top blue chart illustrates revenue, where we have 90% growth for the quarter and 50 6% for the year. And as we can see, approximately 38% of our Q4 revenue related the new products, particularly Synergies, but also Gamifant and to a smaller extent, DOPTELET. Let's next discuss OpEx. We have a trended view in the bottom gray chart. There are a few key points to be made here. I mean, first, the OpEx in our base business is relatively stable, where we have increased investments primarily in hemophilia. Secondly, as we can see, we have invested and we will continue to invest in Synergis, Gamifant and DOPTELET in order to drive the long term growth and profitability. I mean, both in the commercial and the R and D areas and also in the internationalization of Gamifantin and Optelec outside of the U. S. And you can see this trend in Q4 2019, where 36 percent of our SEK1.4 billion OpEx relates to these new products. Just as a reminder, even though the Synagis revenue is seasonal, I mean, the expenses are more evenly spread throughout the year. And finally, a major driver of the Q3 to Q4 OpEx increase was due to the impact of Dova corresponding to about €150,000,000 in Q4. So if we go to next slide. So let's turn to the development of operating cash flow per quarter and our cash conversion over EBITA on a latest 12 month basis. We see a continued very strong cash conversion between 60% 70% of EBITDA over the last three quarters. The net debt of SEK 15,400,000,000 at the end of the quarter was a bit lower than planned due to the strong operational performance, and this level corresponds to a pro form a leverage of well below 3x. And this level is expected to decline to 2x to 2.5x EBITDA during this year. Thank you. And back to you, Guido. Yes. Thank you, Henrik. And what I would like to share with you now is really to how to think about us now moving forward. And Henrik has alluded to the fact that there's a lot of investment or spend going into the Doctolid and the Gummy Fund of future growth drivers. And it feels a little bit like the soccer player who has to kick the penalty, he should not waver and think about twice whether he should choose the penalty. And we don't need to waiver or shouldn't waiver now to invest into these significant growth opportunities moving into the future Because we have now products in our hands, and that's the reason why we upgraded also the guidance. Just to clarify what we see now, that there are more than $500,000,000 sales related to these 2 entities, but they need to be developed. They need to be developed commercially, but they need to be also developed from an R and D standpoint and from a medical standpoint. And these costs of developing the products are reflected obviously also in our guidance. And we just wanted to make sure that this is absolutely clarified. But we feel when you think about the opportunities now moving forward and you have in mind that we think that we can grow our 2 main franchises with the help of these 2 growth drivers at double digit growth mid term, and mid term we mean 3 years, then I think this is worth all the effort. And we also wanted to clarify that our noncore Specialty Care business, as we have alluded to earlier, we will have an expected negative impact on revenues of around $300,000,000 to $400,000,000 And this is just related to the fact that we have discontinued some relationships with some of the partners and essentially focusing now on our core business, which is much more profitable and where we also see the long term growth. So coming back to the financial outlook. So when you look at our financial outlook of $15,000,000,000 to $16,000,000,000 on the top line, primarily driven by hematology and immunology growing double digit and also in the years to come. I think this is how you have to look at us. This is excluding or this is including obviously the reduction on the Specialty Care business. And our EBITDA reflects the fact that we believe in the future, particularly of Doctor. Led and of Gamifant. And we called out the negative effect of Doctor. Led, meaning gross margin minusing of the expenses for R and D and commercial expansion. And this delta is around SEK 500,000,000. So we are confident looking into the future, and I'm very bullish what we can do as a company. I'm very excited that we have now a much more that we have broadened the franchise into 2 areas and that we have the future in our hand. And then with this note, I think we are now up for question and answers. Thank you. The first question comes from the line of Lin Yang from Jefferies. Please go ahead. Thank you. So if I missed it, I apologize, but when you mentioned double digit growth in hematology as already immunology in the midterm next 3 years, particularly in the hematology franchise. Does that imply you expect a double digit growth in hemophilia? Or do you think that double digit growth is largely coming from DAPLIT? Yes, I mean, we actually know you and we don't typically guide by product. And what we wanted to make sure is that we are convinced that we have great products in our company. I mean, 34% growth with Elocta last year feels good. And we feel good about the continuous expansion of patients. Now there is obviously uncertainty with regard to the new entrants. We have seen the uptake data in Europe, also now particularly from IMOIbRA, which are not so convincing and compelling as they are in the United States. It's early days. So what we wanted to say is we stand by our products. We think that we will continuously drive them. But what we want to now steer the discussion towards to is that we say, let's think about this broader. Let's think about Sobeys broader and as a company that can drive its core business double digit. Because this is and then you can have different views on how strong we grow our hemophilia franchise. Again, we are convinced that we have the best products in our stable and that this remains mainstream. But basically, we overlay this with Doctolad and those franchises together where we are convinced that we can make a significant impact with this product, with a differentiated product in a very well structured market. And we have demonstrated that we can compete in those environments also with big pharma as demonstrated as shown in overseas hemophilia franchise that we can have an impact. So we don't provide guidance by product, but we wanted to make sure that you are left with a view actually core business of SOVI grows double digit. Thank you. And then question on Gamifide. Can you give us previously you said the EU approval is expected to be this year. So can you give us an update on Gamifant EU approval timeline? And then lastly on DAPTILIT, so ITP is an established market, so you need to capture market share. But CIT is a market that you would need to cultivate. So when you think about uptake of Dactylate in these two indications, how do you see uptake would look like? Which one would be easier to penetrate versus more challenging? Thank you. Thank you, Eun. So let's start with Gamifan in Europe. We are currently in the discussions with EMA, and we have, at this stage, no new guidance. We have outlined we have guided earlier, and we are just now waiting for some responses from their side. We have no new update at this stage either way. With regard to DOPTELET, it's true, yes. We're entering we have the product registered today in COD in Europe. And we have and we're expecting in Q3 the approval for ITP in Europe. And basically, Q3 end of Q3, beginning of Q4, yes? So just to give us a little bit of flex, but there's a bit of luck in Q3. And then basically, we think this is obviously a significant opportunity because also in Europe, this is a very structured market. We will have to compete. Now, maybe to your question, how do we think about the competition? Now I just use, for argument's sake, the U. S. Market. So it's a give and take, it's a $1,000,000,000 market, which is dominated by Promacta and with a significant position by EnPlate. So you have Novartis and Amgen as our competitors. And we come in with a product that is oral, once a day, no hepatotoxicity, and you don't have to worry about the food intake. And sometimes, we believe this is a little bit misunderstood or not properly taken given justice because if you have to take a product, we cannot eat 2 hours prior to intake and 2 hours after. All you have to align your life. And when you think about an average duration of treatment of 9 months, that means you need to juggle this. And this came out of some inside analysis loud and clear that there is a demand for new product. And but this will take some time. So every we think that this is a compounding business where we then gradually take share. And towards the end of the year, we'll take a significant share of the total market. And obviously, the but in terms of absolute sales, I think it will take probably 2 or 3 years that this market share is very substantial. And then in addition, you have the readout of the Phase III in CIT in the Q3. And here we will be the 1st to market. And we think when you look at the structure of this environment, minimum, I think it's a $1,000,000,000 opportunity market, possibly more, let's say. And we now come into this market. And the question for us is going to be how we will approach this market. We know that actually similar to ITP, the hematologist plays an important role for ITP anyway, but even for CLD, the existing indication, as a decision maker as well for CIT. So there is some leverage in the organization with the team that we have in place. But we may have to complement the team, And this is something that we are currently thinking of. So we think that we will have a very good shot. It's not going to be a walk in the park, competition will invite us to take their share. But we have a strong proposition. I hope that this gives you a little bit of a flavor. Thank you. You're welcome. The next question comes from the line of Emmanuel Papadakis from Barclays. Please go ahead. Emmanuel Papadakis from Barclays. Thank you for taking the question. Maybe just a couple. Hemophilia, I wonder if you could give us any color on the geographic European split of sales for both Elocta and Alprolix. Some data we've seen, it seems relatively concentrated, for example, in France. But perhaps you can tell us if that's wrong. And if so, sustainability of that concentration would be also interesting to hear perspectives. Maybe a follow-up on DOPTELET. You obviously had the ITP approval in the U. S. A while ago, still seems to be relatively slow progress there. So any comments on when you would expect that? Is that a gradual change? Or should we be looking for a step change at some point? And where you're going to be spending that additional SEK 500,000,000 over the coming year? Is that just sales reps? Would it be helpful to know? And then final one on Synergis. You talked about mid single digit growth rate for this year. Do you think that is sustainable over the next couple of seasons? And are you anticipating any major changes in the AIP COD guidelines? Thank you very much. Thank you. Yes, no, I mean, maybe we start with hemophilia. It's true that we have a high market share in France, but we are having also very high market shares in Switzerland, in Ireland. And we are getting significance also now in markets like Germany, Italy, Northern Europe. So you see Spain, you see really a significant ramp up of our presence. So I don't whilst maybe historically it was more skewed towards various markets, I don't think that this is now holding forward looking. And we have very nice growth opportunities now in Central Eastern Europe. And obviously, as I mentioned earlier, we just got the approval. We still have to get the price, but we got the registration of Elocta in Russia. And yes, so I don't think that basically we have concentration risk as such. Let's say, yes, I mean, we have some markets that are larger, but we have growth opportunities in others. And obviously, we are I think we are prepared to defend our position and articulate to the community why Elocta is a very strong choice. Now with regard to Synagis, is this sustainable? When we did an insight, we basically realized that there is still a lot of leakage in the system of people adhering to therapy and even babies therapy. We had a significant stronger demand increase last year than what, in the end, we were able to dispense that got dispensed because we were not yet totally synchronized in the Visa Hub system. So we think that these opportunities are there also midterms. So we don't think that the Synagis mid term growth story will come to an end anytime soon because we still have significant opportunities ahead of us. And the AAP guidelines is hard to judge. We will try to make a point. Will our point be strong enough or not? Honestly, is out of our hands. So I don't want to speculate. Yes, I hope and with regard to DocterLit, slow progress is correct. I think you need to also recognize that Dova, before our ownership, got the registration in July last year, was probably, I wouldn't say surprised, but probably not as well prepared as you would think. Then they were in discussions with us on the exit. That didn't really enhance their preparation for the launch either. We have not last year, we have the product and now ownership for essentially 1.5 months. I mean, it's not just good enough to put the hands on your business and then automatically it's going to increase. But we see signals. We brought in new leadership. We have a very rigorous methodology on commercial effectiveness. We have our metrics overlaid there. We have I was with the team last week. We're trying to create the right excitement. We believe in the product. We believe in the team that we have now in place. And we will, I think, during the course of this year, maybe more skewed towards the second half, but we should already see something in Q2. You will see a very steady increase as this is like overlaying different layers of patients essentially on a monthly basis. So we should see some response, but let's say, more significant, let's say, in the second half. And it's probably more every month, it's a steady process. And then hopefully, we get into a bit of a snowball effect towards the end of the year. Thanks very much. You're welcome. The next question comes from the line of Richard Parks from Deutsche Bank. Please go ahead. Hi, thanks very much for taking my questions. I've just got 3, I think. So firstly, on the guidance, it's a wider range than you've given previously. So could you just discuss the swing factors to that in your thinking over giving a wider range than in the past? I think historically, you've given a conservative beginning of the year and then upgraded through the year. Just I'm just wondering if this marks a change in that policy. Secondly, and related to that guidance, just wondered if you could help us by talking about the visibility that you've got on Alokta for 20 Sanofi seemed to get taken a little bit by surprise by the competitive impact of HEMLIBRA in the U. S. And I'm wondering what visibility you've got going forward and whether that's helped by certain tenders, etcetera. Maybe you could also help us understand in what territories you're now experiencing full impact from Hemlibra competition where it's fully reimbursed and how you expect that to evolve over the year? Final question is just clarification on Doctolut in terms of the sales that you've reported. That 6 week number implies they're annualizing about $30,000,000 versus IQVIA volumes and sales, which looked to be materially lower than that. Just wondered if you could help us understand whether IQVIA volume data is not very good in this category or whether the 4Q number was impacted by inventory changes? Thanks very much. You're welcome, Ian. Yes, no, maybe we start with the hemophilia part. So I think why do we have a wider range? We have a range because we have a couple of areas. First of all, you establish product essentially new you're in a launch phase, which is automatically you have a little bit more variability. We have obviously we face competition on in hemophilia, but we have also offered in a generic environment. So there are a couple of variabilities where we felt we are as you know, Richard, we are not the guys who are talking a lot and promising a lot and then seem to under deliver. We rather like to deliver what we are doing, And that's the reason why we provided a range that covers us. And but we are confident that we can make a significant impact. With regard to Elocta, yes, it seems that I think there was a disproportionate impact on Elocta in the U. S. When HEMLIBRA launched. And I'm sure that Sanofi would love to give you there some explanation of how this came along. But what our understanding is that basically, there was a there's a bias for HEMLIBRA given that convenience features on the demand pyramid much higher than in the European setting. And obviously, in the European setting, you have the connection with the centers, with the physicians, which are much stronger. And you don't hear physicians who are probably need to be convinced and who are very interested in safety data as well. And then basically comes also with growing time. And I'm sure you're aware of the Mike McGrath's quotes on even mortality and other issues. So there's now I think the community is more realizing now, it's also sometimes timing, that new therapies are not a panacea. You look then and then there's also the growing awareness that it's not like when you are on new therapies, you can forget about Factor. You still need Factor to complement its therapy. And so it is it's a trade off. And I think we are not saying that new therapies are not going to have a market, but we are saying that EHLs will have a market, and we are convinced with our offering we have the best EHL. So we have a couple of things now in preparation. So we understand, to be honest, our understanding on what real world shows has grown significantly. We are also understanding how we can enable patients and we are working there on digital solutions and allowing them to liberate their life is under the rule. We have many other initiatives just to make sure that physicians and patients have an option to have an active life and manage their disease as opposed to believe that they are cured, yes? And that's normalized for argument's sake. So I think that works quite well. Now with regards to the what was the other question? Yes, on the sales reported with doctor led, I mean, the doctor led sales, and this is the unfortunate story is, is not we're not talking about a product that now makes $1,000,000,000 And with this, you have certain sales. And as you know, IQVIA is a panel that then extrapolates for the universe. And I think that panel right now is not yet indicative for our adopted revenues. But hopefully, let's say, with growing business, we become more this panel becomes more representative. And sorry, just one follow-up. So the if we take that 6 weeks number that you've reported and annualize that, is that a better guide for the underlying sales at present? Or was there anything lumpy in there? Yes. I think December was a good month. Could there be we are talking really small numbers, yes? Could there be the one or the other 100,000 that basically moved into was advanced from last year? Maybe. But we don't see it. And I kind of also, to be honest, I cannot validate this now. But I think it will appear in our chart, drop the lid, and you don't and you won't need a magnifying glass to find it. So it's a it will become a significant product. And let's say that will propel our sales. Great. Thanks very much. And the 6 weeks, I mean, for whatever it's worth, it's one data point. I think look at our Q1 will be the next, yes. Thank you. The next question comes from the line of Erik Huetgard from Carnegie. Please go ahead. Yes, hi. A couple of more questions, if I may. First on Elocta, could you talk a little bit about the performance that you've seen for Elocta in Europe so far in Q1? And in particular, whether you're seeing any impact from HEMLIBRA in markets where they have secured market access and reimbursement? Europe 2022 similar to the U. S? Or should we assume that the EMA would require sequential pediatric data as was the case with the Locta? And then finally, could you talk a little bit about the DOPTELET Phase III study in CIT with data due Q3? How should we see the risk, the development risk in this study? Could you talk about the design? What sort of historical data has shown and the power of the study, just to understand sort of the risk of failure in that important trial? Thank you. Yes. Thank you, Erik. Pleasure. So Elocta Q1, we cannot comment. I can only tell you that we come from the last year with very with a lot of confidence into this year, yes? And unfortunately, I can't tell you more. We have obviously a couple of markets where HEMLIBRA had market access last year, full access, one of them being Germany. And it hasn't affected our patient acquisition. And BIVV001, let's say, they are basically we think that this is I mean, there is a pediatric study need, but our time frame is 2023. Milan, you want to comment? No, I agree. Approval in 2023 is what we have been saying. Yes, there is a requirement in Europe for pediatric data, and we will have to fulfill that. Yes. And on the development risk, we are obviously confident to get it with CIT, but maybe Milan also hears you. Yes. So, I think there's a number of data points that supports a role of TPO receptor agonist in the space also of chemotherapy induced thrombocytopenia. The study has been designed taking all these data points into consideration. There has been FDA discussions around the Phase III design, including the endpoints. The study is well underway. We have approximately 75% of the patients enrolled. The study is well powered. This we are confident around, you can say the CIT. This was also one of the reasons around the attractiveness around the All right. Thank you so much. Thank you, Erik. The next question comes from the line of Peter Sjostad from Handelsbanken. Please go ahead. Hi, it's Steven. I just have a few housekeeping for Henrik. Could you please help us with some numbers on what you should expect for Also in terms of the absolute level of It was a little difficult to hear you, Peter. But I understood your question to be about the amortizations for new rights? Yes. I hope you can hear me better now. Now I Now I can hear you. Yes. Okay. Sorry. No, I'll just repeat them very quickly. So just some brief guidance on amortization and depreciation costs for 2020 as well as the incremental spend above the $6,300,000 that you had in 2019 that we should expect for 2020? Yes. When it comes to amortization of these new rights, you can expect that we amortize intangibles over 15 to 20 years. So if you go into the note in the report, you see the amounts. When it comes to an absolute OpEx number for 2020, We don't give any further guidance than the one we have given with a range, obviously, and the impact from top to let for the development and launch costs. So, at this stage, we don't give an absolute number on OpEx. Okay. Thank you very much. I just have each have one question on HEMLIBRA then. Just sort of understand the dynamics in the U. S. For product in such a disease supply climb, as I see it, that can only happen if you have patients switching out of Eloctate and into HEMLIBRA. Is that also how you understand it? And Roche at their call said that the underlying patient dynamics are unchanged in Europe, but this until now has been a question of lack of access in market. Is that also how you see it? I mean, there is I mean, we are based on the data points that we have obtained, there is they suggest that there were switches from Eloctate to AMLIMA. And you need really to ask Sanofi about further explanations. Now, yes, I mean, Europe, there is always a question of market access, absolutely. And I'm sure that this may or may not have influenced Roche so far. That's basically in every European launch the case. But I think our point was more, yes, there will be and to be proven, obviously, there will be more market access as they go along. And the but the next 6 months will already be quite indicative, yes, because what basically is going to be the game. And so you don't have to wait maybe for 18 quarters to figure out whether there's an impact or not. You may see this faster. And I'm not and again, we're not professing here that they won't have an impact. We're just saying that we feel we have a good therapy. Thank you. Just one additional for Henrik and I'll jump out. Tax rate for 2020, is there anything we should think are some of the amortizations that are not tax deductible, etcetera? Yes. So what we expect for 2020 is slightly lower tax rate than we've seen in 2019. Thank you. The next question comes from the line of Johan Unnerus from Pareto. Please go ahead. Thank you for taking my questions. Some follow ups mainly. Gross margin, 78% in 2019. Is that a fair level also for 2020? If you look at the full year, it was actually 77%. Yes. So yes, I mean that's a fair view also going forward here for 2020. Yes. On Elekta royalties, obviously, your quarterly number is sort of a best guesstimate or proxy for the underlying? Is there any true ups or adjustment that you want to highlight? Perhaps you've done that in the beginning of the call. But anyway, is there anything to point out there? No, not really. Not really on for this quarter. Good. And on Synagis, I remember from the acquisition, I think you were talking about slight growth, sort of 2% or thereabouts out from memory. And now you're pretty clear about mid single digits. That's a more positive take. And given the strong ending in 2019, is that also something we should have in mind for next year? Of course, there will be seasonal variations excluding that, I mean. But clearly, a couple of years out, 3 years out, if that's what we should look at for the midterm, mid single digits is clearly higher than 2% anyway? Yes, yes. No, it's higher than 2 here. And let's say, so we I mean, at this stage, we haven't given out the guidance for Synagis midterm, but on the immunology franchise. But as we alluded to earlier during the call, we have a lot of opportunities still to grow the product. And therefore, we are going after these opportunities, and we think that this is not just another year. But we're not giving guidance for the product. Thank you. And the message you get from Sobean, the impression is clearly that you're more focused on your core business or on your 2 main divisions. And you're talking about both mid term double digit growth, and that seems to be the case also for this year. I think that's very good to have that sort of clarification. Should we continue should we expect you to continue to guide for the annual outlook on these 2 core businesses going forward? Yes. I think the nature of these things is when you once you start, it's very difficult to stop, yes? Yes? So, we will continue, yes. Okay. Yes, it's like taking a penalty, I guess. And the and also just sort of Elocta, clearly, Germany is reimbursed for HEMLIBRA. Did you say that you see no indication of substantial switching at this stage in June? Yes. I mean, we have look, we haven't found it, yes. But with but normally, we don't comment even on a country basis. But the impact has been, let's say, what we can see has been very limited. And what we see for sure is how many patients we have net gains. And there's a positive trend. Good. Yes, that was all. Thank you. You're welcome. The next question comes from the line of Victor Sundberg from ABG Sundal Coulier. Please go ahead. Hello, Victor, your line is open. Yes, can you hear me? Yes, we can. Yes. So thank you for taking my question. So on Gamifant, maybe you could add some reasoning around the raised sales peak sales projections. I guess as of now the product is quite lumpy since it has a limited patient population and you're in Phase II, I guess, for secondary HLH. So when would we expect a more stable or linear sales trajectory for that product? And on synergies, since the RSV season, I guess, is behind us right now if I look at the CDC data, what do you expect from the Q1 since the peak of the season has sort of peaked? And could you comment if wholesale is already stacked up in anticipation of that peak since before? Yes, just a comment on Q1 would be helpful. And also, like just a final question also, Just in terms of what gives you most confidence that you could reach your sales target for 2020. I mean, Gamifant is still quite lumpy. On the after that, we haven't really seen the sales trajectory yet. And Synagis will, in some ways, depend on the RSV season, I guess, for next year. Is it mostly hemophilia where you have the greatest visibility for your guidance for next year? Thank you. Thank you. Yes. Let's start with Synagis. When you look at these the product by season, then basically we bought we gave guidance to the market of $269,000,000 for the when we bought it and this was the 'seventeen, 'eighteen season. Last season, 'eighteen, 'nineteen, which basically ended in April, the business was then around 276, already starting to benefit from the change of ownership. When you look at the 2019 2020 season, we think that we can grow this franchise and also in the last remaining two quarters of that, let's say, it's mid single digit. And then when you compute this, that basically gives you a view. So, there's always these inventory movements. But the good news is that over the entire season, this becomes irrelevant because it's always flushed out towards the end. And so I think what we see what we believe in the single digit. With scummy fund, let's say, I think you need to realize, I mean, dollars 56,000,000 for a limited indication from a start, yes, it was lumpy, but it became a reality, yes? So I'm not I'm actually confident that this and satisfied that this was actually a good launch. Yes, I mean, would I have wished that this is more that this launch would fit into more of a spreadsheet of a linear model, I agree. It would make my life much easier. It would make your life much easier. But it doesn't. So it is dependent on the patient who's coming in. Now there will be various trends. Obviously, the big trend is the enabling of secondary HLH in adults and in children. And with the first readout of the MAS data that will come sooner. So basically, that's the regulatory pathway. And then there is another pathway, which is the new definition of primary HLH, which basically says, in a nutshell, you do this by exclusion, because there are data out that suggests that even patients with infection related HLH have a genetic predisposition, yes, so as such being classified as primary. And so there is a debate ongoing. This is not as structured as other areas. So the more the debate and the leaders, thought leaders in this area who are strongly advocating to think this way, the more the debate is swaying this way, the more the broader, let's say, the target audience for our for this business is going to become. And so I would say, towards the second half of this year, hopefully, we see a little bit less lumpiness If that would lead to a significant growth versus previous year, I could even live with a bit of lumpiness, yes? But I think bottom line is Gamifant will be a significant contributor. And then we you look at Doctolent entering into a significant category and you come with a better product and with a sharpened organization into this year, you would assume that the Challenger will take some share, I'm not saying that we will be already a leader, but that you take some significant share that should be that should resemble then also in our P and L. So there is a growth. Yes, it's not a guarantee, but that's the reason why we're also now investing into the product, investing into the development, into CIT. And the more we invest into clinical experience, medical marketing activity, the stronger the halo will be, the stronger it will be clear what that this product has is clearly differentiated. So that's really how we think about it. And we think that hemophilia will be good for us. And I look forward to present to you the Q1 number and whatever they will be. But I think we are coming into this year with a broad chest. Yes. And just to adopt on that, do you have a full sales force in place for that product? Or are you building that as we go here in 2020 or? We have that's part of the investment. So, it's a part of the investment is commercial and the other part is really R and D related, indication related and medical related. Yes, we have a full field force in place that is absolutely competitive in size and definitely and also in qualification with best in class. Yes. And that sales force was not in place after June when the product got approved last year? Yes. It was, to a certain degree, in place. But the what I would say, the field force orientation and also and we invested obviously in further expansions, and so there are more team members now on board. But it is primarily also now the way we will bring in to be proved, yes, I mean, that we are really better than the previous day. But you would think that an organization that focuses on exit and not on sales, and I was a little bit I wouldn't say surprised, but came to this launch in a little bit in an accelerated fashion, was not so prepared that this now should pay dividends. So we there's for the team, there's no excuse. We now will be on par, and we are convinced by the team. I mean, I met them all. We had a pretty large event recently in the U. S, and they are fired up. Okay, thanks. You're welcome. The last question comes from the line of Christopher Oder from SEB. Please go ahead. Hi, there. Lots of analysts these days. So I just have some questions. Well, first, so Russia, what would be a typical time to reimbursement to launch, let's say, for rare disease products after approval? And then can you share the switch rates for Elocta and Alprolix right now? And I think then I have some questions from Milan on gamma, but we start with those 2. Yes. I mean, basically, Russia will be a 2021 event. It takes around a year to get surprised and then launch and we use all the time to prepare obviously. And the switch rate, we don't comment really on this, but we have you have seen because you have seen recently patient conversions that we have mentioned in the one or the other context, and they provide you with a good orientation on how many patients we are gaining. Maybe then I give the floor free to me, Larder. Maybe you'll fire off your second question, Christoph. Yes. Okay. So for the, I guess, secondary HLH in kids, have you seen well, how does the initial dosing and dose escalation compare to what was done in the registration trial? And then can you also comment what proportion of those patients are getting stem cell transplants? And then also what was the reason for the delay for the secondary HLH study in please? Yes. So the secondary HLH study in MAS has a starting dose of 6 mgs per kilogram. We have very good response rates from that study. So I can't really comment on transplantation. First first patients to enter hopefully. Great. Thanks very much. So, any I hope our answers complete, hopefully. Yes, that's great. No, I think I would ask one last question actually about Synagis. Last, I guess, when you got the rights, you commented that there was not the usual price increase in 20 19. Have you secured that for 2020, something more in line with historically? Yes, we have secured this. Okay, great. Thanks. You're welcome. Thank you. Thanks a lot. I appreciate it. Yes, thanks everybody for your interest. It was an exciting year, and I hope 20 20 will be not less exciting. Appreciate it, yes. Thank you. Thank you. This now concludes our presentation. We do apologize for any sound issues you may have experienced. The full presentation will be available on demand in a short while. Thank you all for attending. You may now disconnect.