Earnings Call: Q1 2019

Apr 25, 2019

Ladies and gentlemen, welcome to the Sobeys presentation of the Q1 results. I will now hand over to Guido Eelkers, CEO. Please go ahead with your meeting. Yes. Thank you so much, and welcome everybody. It's my pleasure to start our presentation and lead you through our Q1 results. If you go to the next slide, our forward looking statement as per usual. During the call, I will be joined by our CFO, Henrik Stenqvist and our Chief Scientific Officer, Milan Stalkovich. And maybe without spending too much time on other formalities, let's go straight into the highlights of Q1. We feel that we have actually a fantastic result in Q1. We had 66% revenue growth, €54,000,000 at constant currency. So we have achieved close to €3,300,000,000 of revenues. Organic growth profile, let's say, is pretty much intact with 24%. We have very strong hemophilia growth, and I would like to point this one out with Elocta growing at 53% at actual currency and 46% at constant and Alprolix at 120%. And that obviously has, let's say, fueled our organic growth. But I think notably, our EBITDA has increased by 96%, almost doubled. And I think this is very gratifying, and EPS has increased to 3.14 percent. And let's say, so when we think about it, we have launched as well Gamifund and have scored the first €89,000,000 Very pleased with this result in the Q1. And we brought in Synagis with 1 and 35 employees. Let's say, unfortunately, only closed on the 24th January. Hence, we were missing a couple of days and we will explain to you a little bit later what this meant for sales. And we recorded the first Synagis sales, let's say, of a shorter season of SEK665,000,000. So what we have done, just a reflection on the quarter, we have not only grown organically our core business very substantially, We have launched, let's say, in a very important tomorrow, Spreadtriner and made a significant impact. And we have built the foundation for our future in the United States by integrating this business. And granted, let's say, when you integrate such a business, there are always some adjustments, whether it's inventory adjustments and whether it's now the phasing of the data, and we'll take note of this in the later part of the presentation. So when we go at the revenue split, I think you get a first taste of the transformation that is happening at Sobeys, just comparing the Q1 results and basically what we have called out, our now 2 significant pillars, meaning hemophilia and immunology. Now those two businesses are 87% of our total revenue base. And the other specialty business is obviously affected by the patent erosion of AlfaDIN and some minor businesses that we lost in the partnering on the partnering side. But what you see is that the company is now much more focused in terms of core areas and has substantially shaped in this now we have now really a 2 legged organization. So with this, I want to go straight into the business review. And basically just to familiarize what we have done in hemophilia, and I mentioned this also to clarify a little bit our pathway because there are obviously some new entrants and clarify why we are optimistic about our hemophilia also moving into the future. We have done quite a bit of comprehensive research, ethnographic research. And this ethnographic research led us on Slide 8 to a new concept that we are now launching across the region, and it's called Liberating Life. Because the preamble is that many patients are actually not yet well served. And let's say and have a lot of what they call worry days. And basically, we felt that those patients are best served taking advantage of the profile of Elocta and Alprolix. And the concept is, our foundation is what we believe is a best in class EHL platform. We have obviously demonstrated phenomenal efficacy and safety profile in real world evidence with thousands of patients. And we have impressive results, and Milan will share with you later some latest data in the individualized therapy that we believe are extremely outstanding and compare very favorably even versus data that new therapies can bring to par. And so basically what this concept is all about is that we will bring possibility back to patients and we try to make the patient bring the patient in charge of their life. So we are not like others trying to make the patient believe that he is no longer a patient and he can forget about the disease. We were born to bring the patient in charge of his life, live an active life. And an active life means that trough levels of 10% to 15% on a consistent basis will not allow this. So you need a peak. It's more than life in hemophilia goes beyond the trough. And I think this is at the heart of it, and we want to enable patients to take advantage of the products that we have to offer. So when you summarize our hemophilia story on the next slide, we believe that we have we continue having exceptional momentum. We have still significant opportunities to drive growth by our penetration and internationalization. We have, let's say, significant room to further individualize therapy and take advantage of the profile of the 2 AHLs that we can offer. And in totality, we think that, let's say, given those foundations, there's significant promise for the future, particularly now on the strength of our new campaign. So when we go into the where are we at, let's say, with the sales growth, maybe go to the next slide number 10. Elocta, as you can see, very strong quarter on quarter growth and also very strong growth with 46% at constant currency and 53% at actual versus previous year and really driven by the large markets in the EU and reimbursed now in 26 countries. Alprolix, let's say, has done extremely well with 120% of revenue growth. And also here, let's say, the main markets in France, U. K. And Italy are driving this growth, now reimbursed in 22 markets. So what we believe is that this trend, given the activities that we are now doing, will remain our friend. And that's the best for us in hemophilia still to come. And I would like now to ask Milan to share with you some of the latest scientific findings. Thank you very much, Guido. So this slide illustrates the excellent protection and low annual bleeding rates in adults and adolescents with hemophilia A using Elocta as individualized prophylaxis. These data are important in 2 ways. Firstly, it represents a long term clinical trial exposure experience over a period of 5 years with a median number of exposure days just above 2 50. Secondly, we saw a low overall annualized bleeding rate as well as joint bleeding rate. And these low bleeding rates are likely important when we evaluate the long term joint health status, which is illustrated on this slide. So the gradual destruction of joints is one of the most important complications of hemophilia. And the pathogenesis involves bleeds into the joints with associated inflammation and cartilage destruction. Therefore, a good prophylaxis as shown on the previous slide with the LOCKTA is critical. Now this slide shows data over a 5 year period on joint health, demonstrating not only a stabilization of the disease, but also a continuous improvement in joint health, in particular on swelling, range of motion and strength. And we are very, very encouraged by these data. Now the mechanism behind the improvement in joint health, you can say beyond the successful long term bleeding control that we see with Elocta prophylaxis needs further study. There are preclinical data suggesting that Factor VIII may directly play a role in bone remodeling. And in addition, it could be speculated that the IgG Fc part of the elocta molecule may have anti inflammatory properties. Now this slide illustrates the excellent protection and low annualized beat rate with Alprolix prophylaxis. Again, the longitudinal data collection over a 5 year period, including a median number of exposure days of just below 150 is important to recognize. In addition, there was a low rate of joint and spontaneous bleeds over the same period using an 8 to 16 day individualized profile regimen. So taken together, we are very excited about the treatment outcomes that we see with both eloxa and Alprolix. The next slide. Okay. Yes. Thank you so much, Milan. And now basically, we would like to share with you our thoughts on, let's say, on immunology. Obviously, when you think about the second leg now that we have established over the last basically 12 months, it's built on Kineret. And as you will see, we have regained momentum again, let's say, with Kineret. It is basically what we have done is, with the latest acquisition, we have expanded our product platform, but also now clearly created a significant platform in United States, moving from a let's say, from a first attempt to really solidify our position. We launched a new promising monoclonal antibody called Gamifant. You have seen the result, very satisfied, let's say, with the €89,000,000 in the Q1 and makes us obviously even more optimistic for the product moving into the future. And we have bolstered our pipeline by basically the new indications for emapalumab and having access now to 8,897 And we look forward to the readout of the Phase IIb data. And obviously, we will look forward for new external growth. So when you look at the numbers on Slide 16, what you see is obviously this very significant effect in immunology of Kineret sorry, of Synagis acquisition. Granted we have not consolidated a full Q1, granted that there is obviously a strong bias. As a seasonal product. So this is not a product sales that you can expect now every quarter. Let's say and it's also fair to say that we are happy that we have integrated this really fantastic talent base from AstraZeneca of 135 individuals. But we have probably not changed a lot yet. But we are going to change quite a few things as we will explain to you later. And then obviously quite encouraging result is coming from. So basically, let's start with our foundation business, Kineret, now 17% up, quite pleased with this, granted that constant, it's less with 7%. So we still have some room to go, particularly in the U. S. We are in the repositioning phase, but we are confident that this product will retain remain for us a very strong growth driver. And we are also excited about new indications that we would like to debate with you during the Capital Market Day. So when you think about Synagis, now it's basically it has become the 2nd largest product for the group. It says it's obviously a key priority. And the good news is that the demand data suggests 1st quarter 2% growth of demand. Now I know that there has been a debate how to read those data. And one has to clarify, there is a lot of noise out of such a transaction that basically happens at the end of the 1st month, at the peak basically of the season. So we have an effect that we are missing not only 23 days, but there has been also some consolidation of inventory at the wholesaler level. There has been a small price effect. So there is a lot of new noise, but and I obviously wish we wish that this was not the noise, But I'm much more happy, to be honest, that the demand engine is growing. So we're buying a growing product. And those effects that you see now, let's say, in the Q1, we believe are going to even out during the later course of the year, in particular, obviously, during the Q4, which is the main part of the season. And Henrik will explain to you a little bit the seasonality of the product and how you have to think about this product. But our optimism that this is a growing product in our hands remains unchanged, yes? And when we did a very thorough work, now piece of work with some external help and with the team, we are even more excited about this product. What we see is that there are significant opportunities with more scripts within the guidelines that are clearly that we are missing out because this team went through quite a bit of changes where they were clearly in the non core area. Now they have become a core area. There. There was a contraction of reps, let's say, last year that still has some ripple effect because productivity of the representatives are will take some time until they are at the right level. So there's opportunities for us getting more scripts. We see that there are quite a few leakages in the chain where even though you might get a script, the script is not fulfilled. And we basically feel that the dosage regimen can benefit. We see in many cases that patients don't get the indicated 5 dosing and end up with just a little bit more than 3. So there is a significant opportunity to fix those things as well. So we are excited about the product. This is not going to be, let's say, into the future, a huge growth in terms of percentage, but it will be a steady growth product for us. And obviously, don't forget, we bought this not for the Q1. We bought this product to build a strong foundation for our U. S. Business and having access to an exciting product and basically, but we are as excited about the platform that it brings, particularly in the pediatric field. So whilst I appreciate that the expectations may have been higher, but when you basically rationalize this, there's nothing that point us that we have an operational topic. We have a transitional, let's say, adjustments that we have to recognize, but we are excited about the opportunity with Synagis. So coming to Gamifant, we have I think we have a fantastic launch in Q1. We are getting patients now in quite a number of centers. We focus obviously a lot on education, disease awareness. So it's early days for us, but it seems to resonate already quite well. And this is also something where I think we want to spend a little bit of time in the at the Capital Market Day is to clarify, we see significant opportunities in Gamifant with an expansion in HLH as an overall disease, but also beyond. And our investments into our clinical trials actually reflects this, yes? So we also we are now having trials on the way in terms of preemptive treatment for of graft failure for in children undergoing stem cell transplantation. But for us, obviously, it's very important now to move from primary HLH into secondary HLH. There's a study ongoing in children with autoimmune systemic juvenile idiopathic arthritis. And there is an adult in the study in the planning. So we are excited about Gamifant. We are excited about the collaboration with Novoimmune. And let's say and hope that this will lead us even to a closer cooperation in the short term future. But let's say, very happy with the progress that we have made so far. And just to share the degree of excitement that we have regarding Gamifant, and I think the scale probably of this opportunity is not we have not yet done the best job to make it understood. And that's something we want to correct also at the Capital Market Day. But to share maybe some of the excitement, Milan shares maybe some of the clinical data that have been recently published. And Milan, maybe you would take over. Thank you very much, Guido. Yes. So this slide shows the very strong survival data from the emapalumab pivotal trial program in patients with primary HLH undergoing hematopoietic stem cell transplantation. So following imapalumab treatment, both in patients failing conventional HLH therapy, but also in the full study population, then there was a very high 1 year survival post transplant of around 19% 90%, sorry. Beyond the importance of these data for patients with primary HLH, then this also suggests a permissive effect of interferon gamma blockade on transplant acceptance. And this combined with data an increase in interferon gamma in patients experiencing immune mediated graft failure led to the planning of the graft failure study that Guido just discussed. So, we're very excited about emapalumab and the potential it brings both to patients within, but also outside HLH and emapalumab is a key focus area for us. And with that, I hand over to Henrik. Thank you, Milan, and good morning, everyone. Let's start with the year on year crosswalk of revenues from Q1 'eighteen to this quarter. Revenues have increased from just below SEK 2,000,000,000 a year ago to SEK 3,265,000,000 in Q1 2019. The main drivers for this development are synergies, adding SEK665,000,000 to Q1 revenues hemophilia, €464,000,000 at constant currencies, contributing to a growth of 33% for the franchise and Gamifant to SEK89 1,000,000. Then we have all other products contributing together with minus SEK75 1,000,000. And here we see, for example, the impact from the decline in Orfadin compared to last year. And finally, we have a positive FX impact of SEK158 1,000,000 for the quarter. And then we move to next slide for some other financial highlights for the quarter. Revenue for Q1, as we saw, amounted to SEK 3.265 billion corresponding to an increase of 66% 54% at constant currencies. You saw the growth drivers on the previous slide. And if we speak in terms of organic growth, that is adjusting for synergies, the organic was 24% for the quarter. Gross margin jumped to 76%, positively impacted by the addition of the high margin product synergies and continued positive product mix effects driven by the Emphilia franchise and also lower relative sales from some of the Specialty Care products. EBITDA adjusted for the divestment of SOBI-five reached SEK1.471 billion for the quarter corresponding to a margin of 45% versus 39 59% compared to last year. Furthermore, operating cash flow was a bit soft for the quarter, SEK 388,000,000, reflecting the working capital impact in Q1 of Synagis with large receivables being settled only in Q2. And as a result, net debt amounted to SEK 5,500,000,000 at the end of the quarter. If we go to next slide, please. So before Guido goes into the outlook for the full year, I just want to highlight the seasonal pattern of Synagis, which will have an impact on how performance will be divided between the remaining quarters of the year. And I want to point out that this slide is an illustration only and it's not about factual numbers. Synagis has a strong seasonal sales pattern with very little sales occurring during the off season period in Q2 and Q3. However, the cost structure of this business is not seasonal, but relatively stable between the quarters as the business is getting prepared for the next RSV season starting in the October timeframe. And as a consequence of this business, the natural pattern is a negative contribution to EBITDA from synergies in Q2 and Q3. And with that, I hand back to Guido again. Thank you. Yes. Thank you so much, let's say, Henrik. And what I want to make sure is, as you can see, we remain firm with our guidance. There's no reason to change the guidance, even though, let's say, you you have seen that we have not been able to consolidate the 1st 23 days. And there has been this transitional effect on Synagis. But I should also highlight, even though that this is not hitting the P and L, the effect of the late close has been recognized by a purchase price adjustment, let's say, of $34,000,000 didn't hit the P and L, but it's recognizing at least that this is that we didn't have the full advantage of take the full advantage of January. So when we basically think about it, we believe that Elocta and Alprolix will remain strong growth drivers for us this year. We think that Synagis will perform well under our ownership. We are happy to see that there is a demand growth. And yes, there have been some transitional adjustment, but this is not affecting our perspective on the product. And let's say, Henrik has explained to you that there's a seasonal effect. And we think that over the year, there will be a washout of some of the effects that we have seen in Q1. And we are excited, obviously, even more excited about Gamifant now in the U. S. And given the results that we have shown now in Q1. So when the EBIT with regard to EBITDA, we stick to our guidance also here, no reason to change. And let's say, what we will do is, we are investing obviously in our franchise in hemophilia because we are convinced that we have a fantastic opportunity in hemophilia, and we need to make sure that more patients take advantage of the product. We focus obviously on Gamifant and the development of the clinical opportunities in emapalumab within HLH, but also beyond. And we feel that we are extremely well positioned for the future, given the fact that we have made operational significant improvements, but also made significant strategic leeway now for the future. And I think on this note, we open the floor for Q and A. Thank you. We now have our first question from Ewen Yang from Jefferies. Thank you. I have a few questions. So hemophilia products in your territory looks pretty good. But now with the Hemlibra coming onto the market, I want to ask you a couple of things. One, Roche has commented that Hemlibra uptake in the non inhibitor market in the U. S. Has been quite strong. Are you hearing that Hemlibra uptake in the U. S. Is largely from the short acting product conversion or long acting? That's another one question. And second question, now it's entering the market in Europe, what are you hearing from America community? And second question is on the yield tender market. I know that the Q1 sales have been quite strong, but are you seeing some pricing pressure in Europe? Because some of your competitors have commented that particularly ex U. S, net pricing has been lower and there has been some increase in pricing pressure. So I want to get some sense of how do you see pricing going forward with hemophilia products in Europe? Yes. Thank you, Eun, and thanks for the interest. So with regard to the U. S. Situation, obviously, we are not as close, let's say, really to the development. And I think this is really for Sanofi to comment on the U. S. Situation when they have their earning call shortly. Let's say, we obviously have seen the results of Roche, let's say, in the U. S. And they had a very good quarter, but frankly, so had we. And obviously, let's say, we are still bullish about it and let's say about the opportunity. And that's the reason why I think what we see is that we want to make clear, there is no panacea. This is a large market. There's room for a lot of therapies, let's say. But it's for patients who want to have an active life, they need a peak. And let's say and this is something that we will obviously promote very strongly And particularly, also the favorable safety profile of Elocta based on real world evidence, I think, is something that we want to make sure comes strongly across. There is with regard to the medical community, I think there, at least in Europe, what we understand, there's it's not like there's a consensus that this is now, let's say, a therapy that should be made available to all patients, let's say, with regard to new therapies. I think there's a clear understanding that EHLs will remain playing an important role. And there's given also the evidence now that we have generated around our products, actually there's a growing interest, as you can see reflected in our numbers, in adopting, let's say, best in class EHL therapy across the board. So we are so we whilst we recognize the strong uptake of Roche, we also recognize the strong uptake of our products in our territory and the growing interest. With regard to the tender situation, yes, there has been there is price pressure, obviously. We are less affected than short acting or less differentiated EHLs. And therefore, we are not as much affected, but we see some price pressure, obviously, in the tender markets as well. Do you think that the Hemlibra entry would impact the impact of pricing on long acting products? We don't expect this, yes. I mean, can I anticipate, let's say, how Roche is going to price it? I mean, I've seen the one or the other documentation where, in fact, cost of therapy are expected to increase, let's say, now. But I think I cannot speak for Roche. You would have to ask them whether they want to become a discounter in this hemophilia area. But my understanding at this stage is that it's that cost of therapy therapy are not declining. But you never know. But I think this is a question you need to ask them. Okay. And then one last question. On synergies, you mentioned that there were transitional adjustments that impacted sales in the Q1. I get it. But if you're accounting for that, like a 23 days lost to 23 days as well as some inventory that you mentioned. If you account all that, did you see growth in terms of volume in the Q1 this year compared to the same period last year? Yes. On an in market level, we saw a 2% increase, yes. Okay. Thank you very much. Yes. So that's the reason why we are actually quite happy with the Synagis performance even though maybe others see it differently. Okay. Thank you very much. Thank you. Our next question comes from Richard Parkes from Deutsche Bank. Please go ahead. Your line is now open. Hi. Thank you very much for taking my questions. A couple of sort of Hemlibra impact. First of all, I mean, your estimate for CER. I know that's your estimate, but I'm just wondering, CER. I know that's your estimate, but I'm just wondering how much confidence you have in that because it seems to imply a greater than 10% quarter on quarter decline in sales of Alprolix and Eloctate in Sanofi territory. So that's the first question. And then the second one, we're hearing anecdotally that the HEMLIBRA launch has got off to a very rapid uptake, particularly in the pediatric setting. So I was wondering what your current split of sales were between pediatric, adolescent and adult sales and maybe it's the pediatric setting where parents seem to be demanding access to HEMLIBRA in the U. S? And then finally, I wondered if you could give us some insight into the profile of MEDI8897. We know it hit in the Phase 2 study. Just wondering Richard. I mean, with regard to U. S. Sales, I mean, I cannot comment on Sanofi's performance because what we got is just an information on an estimation of royalties. So what this means in terms of performance, I think you probably have to wait for the earning call of Sanofi and ask them these questions. So I don't want to speculate. Now with regards to the, let's say, different, let's say, settings of Elocta versus Hemlibra and always a particular focus on pediatric. To be honest, we don't give guidance at that granular level, to be honest, either. Let's say, I only know in our territory that there is still quite a bit of concern with regard to, let's say, the safety of new therapies, in particular with regard to newly released safety data, let's say, that just came out. And this is and we believe that it is, I think, this is our main theme, yes? We believe for patients who want to have an active life and take charge of their therapy, they should not try to forget about the disease. They should manage the disease. And this is basically the fundamental concept of liberating life that you take the product when you need it. Individualized therapy, you have seen the data that Milan presented to you with fantastic ABRs. And we believe that this concept may not be of value to everybody, but there will be a large group of patients who will try to benefit from this therapy. And with regard to 8,897, I think the main theme what you can expect is and what has been published is that with Synagis, you need to take it 5 times in a season. And with this product, it seems that once a season is good enough, so it's a very potent product and has shown very strong efficacy. But I think you would also like to hold horses here. And I think you need to wait for the publishing of the Phase IIb data and which will come out shortly. And I hope we will like what we're going to see. Okay. Thank you very much. You're welcome. Our next question comes from the line of Johan Bergin from DNB Markets. Please go ahead. Your line is now open. Yes. Hi. Thank you for taking my questions. So the first one, could you elaborate a little bit on the small price effect you mentioned for synergies? So could you just confirm that has the pricing of the product changed? Or was this strictly a temporary effect that we saw in Q1 here for SNAGIS? Yes. There has been some adjustments, to be honest. And it's very hard for us in this first couple of weeks that as we got this product to say is this now a more systemic effect or is this a temporary effect. I mean, there has been some gross to net adjustments with some provisions regarding Medicaid. We think that the overall, but it's a minor effect, the overall impact of that will be overcompensated throughout the year by the value creation initiatives that I've outlined, where we see more opportunities to drive volume and we're obviously gratified via the impact of that we have seen already in obviously demand growth. So I can't unfortunately give you more granularity on the pricing effect. Okay. Thank you. And last one, could you please just give us an update on the patient recruitment in the ANASTILLS trial, please? The ANASTILs trials we have terminated, let's say. And because there it was, let's say, basically for us, we have got the label in Europe, as you know. And basically, it seemed difficult for something that is already so established to recruit patients and also didn't really yield more benefit. So honestly, our focus now with Kineret is pointing us more towards oncological indication as a further expansion potentially IRP. Okay. Thank you. You're welcome. Our next question comes from the line of Peter Sehested from Handelsbanken. Please go ahead. Your line is now open. Yeah. Hi, it's Peter from Handelsbanken. Thank you for taking my questions. A couple, first one, hemophilia pricing, but not in the tender markets, but more in the mature more advanced market in the North America, etcetera. Are you seeing any pressure there as well? My second question relates to your LIBERATE study. Hitting here with a recently published survey that has been published in one of the last media journals. This is from Canada. We have citations here of parents citing, Mommy, you're hurting me. That's intravenous infusion. So my question sort of relates to the previous one about the Hemlibra uptake in the pediatric setting. As a service suggesting that parents are very much concerned about the convenience factor here. You've previously stated that the convenience is higher in the U. S. Than it is in Europe. And we all acknowledge that big profit tradition in Europe, but nevertheless, tariffs tend to be the same all over the world. So are you confident that convenience factor is not as important in your business in the U. S? And my third question relates to costs. Can you elaborate on whether the average costs for your newly added employees business is higher than the average as reported in the Q4? Secondly, give us an estimate of the number of employees by the end of 2018? Yes. Let's start with the easy bit with the Nordics, let's say. So there has been last year an adjustment as part of a tendering process in Sweden that we have taken, like everybody else. But basically, that adjustment has not effectively helped us also to grow further volume. So quite actually, let's say, I think the outcome, while we didn't appreciate it, let's say, is still okay. With regard now to the survey, it's a bit like what is the end, Yes? I mean, and obviously, there is there will be patients, and we all know them, that already basically freak out when they see a needle. And in particular, children, there will be patients. But I have also equally, to be honest, I can give you many cases where people will say it's not a problem. And then basically, as always in life, it's a trade off. And during the trade off, I can also quote you patients who wanted who went to the for a simple tooth extraction to a doctor and were on new therapies and were bleeding as if there's no tomorrow after a simple tooth extraction and needed Factor to compensate the lack of efficacy of this new therapy. And I can quote you a lot of also actually quite a number of those patients. Yes. So I think you need to make sure that you don't use anecdotal evidence for broader extrapolation, I think. And let's say, and I think the trade off decision also in the pediatric field will be done by parents and by physicians based on the best knowledge. And our job is to make sure that people understand the trade off, let's say, that they are making because with 10% to 15% activity level, it's not enough to have an active life. And I would know if I'm a parent with hemophilia patient, what I would what my decision would be, yes? So let's say, knowing a little bit now about the subject matter. So yes, I'm acknowledging that this trade off decision for various patients and families will be weighing more towards, let's say, convenience. For others, they will make this trade off decision will be will have a different balance, yes? And I know we are very close to a large group of key opinion leaders and real specialists. And no matter what we think, I mean, this is what we still hear in the community that they are worried. And they will try to help patients to overcome maybe the fear of a needle and of infusion. So it's not we're not saying it's going to be a one size fits all. We're saying there's going to be a large group of patients who will want to make a trade off decision in favor of the profile that we are offering. And then, there was a third element with regard to the cost. Yes, the cost. Yes, the cost. Yes, the cost component and then this when you have a highly trained field force fully loaded cost of a representative indeed, that they are costing what a fully loaded come in the U. S. Cost. And that costs are higher than an average employee who would work in a factory or in an office environment, actually quite substantially higher. And that's correct. So these 135 people are more expensive than what our average cost per headcount would be as it is in every company who is active in the pharmaceutical industry. And with regard now to the headcount end of year, I mean, we have a headcount number that we have published, which is north of 900. But we have I don't think we have published an FTE, let's say, that basically gives you full account of all the full time equivalents. I think we have made a reference to HETC. We actually report 10.77 at the end of March full time equivalents. Full time equivalents. So sorry, I overlooked this here. Okay. I have some questions more, but I'll jump back in the queue. Thank you so much. Appreciate it. Thank you. Our next question comes from the line of Erik Hultgard from Carnegie. Go ahead. Your line is now open. Thank you so much. Most of my questions have been asked already, I have a few. First on Gamifant, could you comment on the number of patients on treatment or have been treated so far? And also, if you could help us to understand how much of the sales in the Q1 was inventory, if you could give the ballpark number on the inventory effect there? And then final on synergies, you mentioned the USD 34,000,000 in purchase price adjustment. Is that basically the sales that was generated the 1st 23 days of January? Or is it more complicated than that? And what was the inventory effect of Synagis? Is it possible for you to give some type of number on that impact in Q1? Yes. So let's so Eric, just help me out. Where should we start? I mean with with With Gamifant, you can start with Gamifant. Yes. So Gamifant, basically, we are not reporting on the number of patients on Gamifant. I would say, if you want to know, there's an inventory effect, but it doesn't seem to be a very significant effect. It's a minority effect of this, most of it, given the fact that it's an expensive treatment for a very compromised number of patients. It's not like you're building up inventory. It's an acute product as opposed to a chronic product. So the inventory effect is not significant. I'm sure there is one, but we cannot to be honest, we cannot account for every vial now. So it's from what we can see, it's really going to the patients. And if you basically would use the average cost of a product in that rare disease category, that will give you an indication magnitudinally of the number of patients, but we would not comment on this, yes? Now with regard, let's say, to this purchase price adjustment, the purchase price adjustment was actually more of a simple formula related to the number of days that we missed out. And as a reflection on the on it was an estimated was built on the estimation of earnings that we are missing out as a consequence of the late close, not of the sales, yes? That gives you also a good indication. And basically and the inventory effect, I mean, Henrik, you want to comment on this? We cannot be specific at this early stage. We are getting our arms around the product during this takeover. So we are not in a position to quantify it. We know it's significant and that inventory levels at the wholesaler level are lower. Yes. So but I think magnitudinally, when you think this through, it gives you an indication, particularly when you look at the Q2 results of the product last year, when there were negative sales, basically, so there was a washout. It gives you a sense, whilst we have seen sales anyway. So it gives you a dimensional effect. But, okay, and then in conjunction with the 2%, let's say, demand growth that we have seen, I think gives you a sufficient dimensional effect how to view the Synagis performance. All right. Thank you. Appreciate it. Thank you. Our next question comes from the line of Christophe Lueder at ABG Sundal Collier. Please go ahead. Your line is now open. Hi there. Yes. So I have a few questions. So let's start with Palocta. So versus some analyst expectations, it was a bit soft. Do you see signs of patients holding off from switching in advance of PEMLIBRA? Or I mean, what can you say about the rate of patients switching in your territory? That's the first question. Then when it comes to Synagis, you've talked about demand increasing. And I think those the things you pointed out makes sense. But when it comes to so sales when you announced the deal for the last 12 months were 269 $1,000,000 Then full year results came in $251,000,000 And you talked about then underlying growth having increased, but I had a struggle to make sense of that. I mean and now they're lower than expectations despite the currency tailwinds. I mean, how can we reconcile all of that? And then 3rd, Gamifant. So I mean, how volatile were underlying sales during the quarter? I mean, what should we expect going forward? I mean, it's an ultra rare disease. Yes. And then when it comes to the liberate campaign, is it really is it pure marketing? Or are you pushing for a higher peak level to go with it? Or is it just that you're talking about how yours gives a higher peak level already? That's all for me for now. Thanks. Yes. So, I mean, honestly, I mean, when you look at the switches, 46% Elocta growth, yes, and that's obviously on a much higher base than historically, we don't see a slowdown of that, yes? So we see strong demand increase despite the fact that people know that Hemlibra is knocking at the door. Now you can say, could it have been even more if Hemlibra doesn't come? I don't know. I mean, you know that but at this stage, we get very encouraging signals from the guys who are driving the therapy in Europe there is a lot of confidence to build this further. And maybe I'll take your last point on liberating life. Yes. This is more than just a marketing idea. There are multiple initiatives connected to this that will provide significant help to patients. And we are working with key centers on this initiative, whether it's in a clinical trial setting or beyond, and where we will further work this out. And at the right time, we will update you. So this is not just we believe in real stuff. And let's say and clearly, we want to make sure that people understand the trade off or what it means not to benefit from a peak. That's the forefront of this. Then the and you need to have, for instance, at least when I believe some of the KOLs, in the discussions, they tell me that if you want to play soccer, for instance, you need to have factor activity levels of above 50, five-zero, not 15, yes? So just to bring things into perspective. Then with regard to Gamifant, yes, I mean, it's a rare disease. I mean, we have commented on the number of HLH patients as part of the announcement. It's a significant patient pool, yes. It's not as big as hemophilia or diabetes. We understand this is a rare disease. Whether you call it ultra rare, depends probably on your definition. We are very comfortable in this area. We see significant opportunity in indications beyond HLH. And about 5,000 patients, let's say, out multiplied with an average cost of seraipi in this area, it still creates a very significant commercial opportunity. So I would not belittle this, yes? And we are very encouraged by the acute therapy. So yes, the patients either, let's say, are born with it and or they acquire it as a result as a secondary condition. So yes, we think that also here, we are just scratching the surface. And we have to acknowledge that this concept I mean, just to give you a little anecdote, we were with parents of patients and who basically for 2 years didn't have the right diagnosis for their child. 2 years going to many different institutions And then basically got the diagnosis and they said, well, basically, thank God it's not leukemia. And after they understood the disease, basically they told us they wished it would have been leukemia. So that gives you a bit of a flavor. There is a lot of educational work necessary, but we don't see that this is, let's say, after Q1, we are maxing out also. No, no. What I really meant was, I mean, so there are very few patients. If there were a high number of patients this quarter just by stochasticity, could we see a reduction in sales? I mean, is that something that rather than normally you'd see an uptake that is fairly consistently increasing early on. But is there a risk with so few patients that it could go down? I mean, if we see that, should we be alarmed? That's my question. Let's put it this way. I'm not alarmed. I'm looking forward to consistently building up this product. And there's always a risk that in a month, it's there's given the fact that it's an acute product that you have less patients, but that's normal. But when you look at it throughout the year, we are extremely encouraged by the results in Q1. Our next question comes from the line of Johan Hinojos from Pareto Securities. Please go ahead. Your line is now open. Thank you. My question has broadly been answered already, but some brief follow ups. Could you please remind us about the visibility on the royalties from hemophilia then on your about the royalties basically? To what extent can we actually see for a fact what the level of sales and to what proportion is it an estimate? That can be the first question. Okay. Royalty is indeed an estimate that we have obtained from Sanofi, and I would recommend you to ask the question at their earning call that will happen shortly, I think, this week. So in its entirety, it is an estimate. Put it that way. It is an estimate that we have obtained from Sanofi, yes. Yes. Okay. And on the Synagis, on the price, there was recently there's been a change in net gross price. Is that mainly or only related to Medicare? So what you can see? Yes. I think we haven't seen any significant increase of discounts. And obviously, when you take over a product, there's always a little bit of noise level. So we don't see this as a systemic impairment, let's say. But there has been some we don't see that there has been some crazy discounts over there. The majority of the effect is really the inventory level and it's basically the fact that we have we are not benefiting from 23 days. And there has been a different, we have also a different probably accrual mechanism taking place. But this would take us not lead us too far, but we don't see there like a significant impairment of the net price. And also any comment on the influenza season this year? It's been maybe a bit longer than normal perhaps. Is that correct? We will update you obviously on the Q2 sales in due course, yes. Just bear with us. Yes. And is it possible to say anything about the Gamifant outlook? You mentioned 5,000 patients. What sort of penetration rates can you go for? I think at this stage, it's early days. And we are not yet updating, I would say, at this juncture our forecast. But I think we obviously once we see because typically we don't give guidance on singular product sales. But I think you will get a good taste, let's say, already Q2 will tell us quite a bit. And then but the team is very focused on it. And what as I told you, we've got very encouraging signals. Okay. Thank you very much. Thank you. I think in the interest of time, let's say, because we said we make an hour, I think maybe one more question and then we should probably close the call. Thank you. Our next question comes from the line of Peter Sehersted from Handelsbanken. Please head. Your line is now open. Okay. Thank you for taking my additional question. I'll try to make short and more housekeeping into the modeling and the other stuff at the Capital Market Day. 2 here very short. In terms of the reported amortization costs for Q1, you should expect to be higher simply due to the fact that synergies will be fully consolidated the remaining quarters of the year? 2nd question by the way related to this one and it's with regards to your overall cost for the quarter, which was higher than mine, it appears to be substantially higher than mine. So the absolute number for OpEx, we should also expect that higher going to Q2 due to the synergies consolidation? And secondly, would you give us a little bit more also make us the modeling a bit sharper with respect to SG and A costs Maybe Henrik. Yes. So concerning the amortization charge of from Synagis, It will, of course, be consolidated for full quarters going forward. So it will be slightly higher than in Q1. Then when it comes to cost by quarter, we don't guide by quarter. I mean, I'm sure you have I'm sure you're able to estimate properly based on our full year guidance that we've given. We also don't want to provide guidance for specific products. So we refrain from that, unfortunately. Thank you. Yes. Maybe I round it up. I mean, obviously, you have seen that this is we are building the company to a new scale as you see it. There are really exciting opportunities ahead of us particularly with regard to Gamifant. And we also feel with Synagis, the best is still to come. We are as you can hear from us, we are excited about the opportunities in hemophilia and are yet to build. And I think this gives you a little bit of a flavor. And we have now very 2 strong pillars. So we feel that the company is in a good shape. And really happy to take more questions. Please refer to our IR department, so if you haven't been able to address all your questions right now. And other than this, we'll be happy to see those of you who can make it at the Capital Market Day and then go into much more granular depths. Thanks a lot for your interest and wish everybody a great day, yes? Thank you.