Ladies and gentlemen, welcome to the Sobi presentation of the Q4 results. I will now hand you over to Guido Oelkers, CEO.
Yeah, thank you so much. This is Guido. I am joined today by Milan Zdravkovic, our head of R&D, and by Henrik Stenquist, our CFO. It is really a pleasure to share with you the results. I think I would like to go straight into the meat of the presentation to give time for Q&A. You have seen our results. Total revenues for the year now increased 40% and 74% on the earnings. In Q4, we had a nice increase as well. We have SEK 2.571 billion revenues, which represents a 37% increase, and an EBITDA of SEK 916 million for the total year, SEK 3.571 billion. When you look at this, earnings per share increased as a consequence as well, to SEK 8.97. The whole thing was quite cash accretive, so we were able to build in a year of investment, also our net cash position.
I think very important for us is that we made substantial progress with our hemophilia franchise, with Elocta and with Alprolix. Essentially we doubled the franchise during the year and better even. This was very positive. We made great strides and we picked up momentum in Q4 again. I think this was nice to see, and it gives credit to the commercial effectiveness of the organization so that we have been focusing on quite a bit on and invested into growth. When you look at the other side of the metal for Q4, we not only basically took care of operational effectiveness and getting leverage into the company, but we also managed to acquire the perpetual right of Synagis®. As you know, the deal closed later, on the 23rd of January, and was subsequently announced.
With the Synagis® deal, we not only got a product but more than 130 professionals extremely well qualified, and we got a candidate drug called ADA97. That gives us rise to believe that there is a more longitudinal earnings stream. We will come back to this later. We were very happy to see Gamifant® getting approval in November, and we had the first patient into Gamifant® before the end of the year. The product became a reality and we are now in the midst of the launch. Overall, we thought it was a very eventful and very strong quarter for us and we are quite satisfied with this. When you think about going now to the business review, basically what we wanted to share with you is, we start with hemophilia. You know our two products, they are very well-established.
What we wanted to make sure that you, let's say, we hammer out because there's so much noise now out there in the hemophilia space. We have a very well-established safety and efficacy profile in real world evidence with thousands of patients that in the real world, we replace what is fundamentally missing. We replace the factor. We address, in a natural way, what needs to be done. We have become now standard of care in quite a couple of countries, but there's still room to grow. The good news is that this product is suitable for all types of patients. We create possibilities, with this franchise to be in charge of your disease and to create an active life. Basically, when you summarize this on the next page, we feel that we are extremely well-positioned also for the future of our hemophilia franchise.
If you think that we have an exceptional momentum, the trend is our friend. You have seen the very strong growth that is underlying this business. There's a clear recognition, let's say, of the therapeutic benefit. We believe that with the further opportunities for penetration in the key accounts and we have there quite a bit of transparency and also further internationalization, we have room to grow. The other thing is that we don't believe, let's say, that hemophilia is going to be a one-size-fits-all. We believe that we have an important role to play because there is a clear wish on the physician level, let's say, but also on the patient level, to be in charge and to control your life and have an active lifestyle.
With our franchise, you will see later some data, we have the opportunity of an individualized, personalized therapy that gives phenomenal outcomes for poor patients. We think that this is important that patients do not forget about the disease but actively manage it. The other part is that we have also, we feel a big chunk of the future in our hands. When you think about the results that were presented for BIVV001 at ASH, we think that this gives rise to believe that there is much more in this franchise than what you see today. With the data that were presented, and we will talk about this in a few moments, there is a clear indication that you can achieve an area under the curve that surpasses what has been shown even previously with new therapies.
We think that the future is on our hand as well. There's a great promise. Coming back to the exceptional momentum, let's say, when you look at both products, we have picked up the pace, let's say, again in Q4. I have a very nice patient acquisition for both products and which basically clarifies that we are making significant progress in our territories again. This is built primarily in terms of absolute numbers in the EU5 countries. When you come to the second item, which is the individualized therapy, for me, when you look at these data and you look at the left side in the circle, 4.7 overall bleed rate, and you have a spontaneous joint bleed of zero, and you think, well, that actually is extremely impressive.
When you take care, like in the case now of this individualized arm in the ASPIRE study in a personalized way, you can achieve extremely impressive results. I would like maybe to ask Milan from a physician perspective to provide some additional color.
Absolutely, Guido. I think I very much agree. I think it's important also to start with recognizing, you can say the breadth and wealth of this data set. These two studies essentially represents long-term safety and efficacy data experience with Elocta and Alprolix® to the tune of around 4 years treatment on a median basis. For Elocta, this represents over 250 exposure days, and for Alprolix®, a little less than 150 exposure days. As Guido mentioned, if you compare the individualized therapy with the on-demand therapy in the two treatment algorithms, I think there are two key messages. Firstly, there's a very, very strong efficacy profile with individualized therapy, with a very, very low median bleeding rate for both Elocta and Alprolix®. This is in contrast to the substantially higher bleeding rate you see in patients on-demand therapy.
Clearly supporting the notion that individualized therapy improves patient outcomes with Elocta and Alprolix®. Lastly, I just want to mention that not only does these data confirm the long-term efficacy profile and durability of effect, but it also adds safety data to these two treatments, we did not observe any inhibitors during this 4-year treatment with neither Elocta or Alprolix®. With that, I'll hand back over to you, Guido.
Yeah. Thanks, Milan. The other important element is that we feel that we have a significant promise in our future related to BIVV001 foremost. I would like to draw your attention to the right, and when you look at basically what was achieved at the end of the one-week term, 18.45% trough level, then it gives you a sense of what kind of breakthrough treatment this is potentially going to be. Obviously to be proven in phase III. When you think about what has been shown recently by other products and you draw a line, you can get a sense because don't forget, this is a logarithmic scale. What the difference between the area under the curve is potentially to be proven in further clinical trials where those other three therapies that have come recently on the market.
Milan, maybe you also would like to from a medical perspective, give this much more color.
I think I agree, Guido. These data are truly remarkable. This is the data from the emerging clinical phase I, a true study with BIVV001, which is the first investigational molecule that has been able to overcome the von Willebrand factor-mediated half-life ceiling. As Guido mentioned, on the left-hand side of the slide, you see the low dose of 25 units per kilogram.
Here there was a half-life with BIVV001 of around one and a half days, and a trough level after 7 days treatment after single dose, but after 7 days of just above 5%. On the right-hand side, again, after a single dose of 65 units, you see trough levels at the 65 units per kilogram, just north of 18% and a half-life just below 2 days. We think these data are truly remarkable, and I just want to maybe add a few more highlights around why we're really excited about this opportunity. We think that this provides an opportunity to fundamentally, you can say, improve the treatment for patients, the outcomes for patients with hemophilia A by providing better protection, but potentially also with prolonged dosing intervals.
I think if you look and consider, for instance, a once-weekly dosing regimen, at least for the high dose group, that would be a normalization of factor activity for a duration of 5 days. This area under the curve in the first 5 days represents a very substantial activity of factor A activity level with a normalization for these patients. I think it's also important to recognize this, that this technology builds on the well-established principle of factor replacement therapy, which is the cornerstone of hemophilia A treatment. I think all in all, we are very excited about the data with BIVV001, and we look forward to sharing more information as they become available.
Perfect. Thank you so much, Milan. Maybe now it's time to talk about the other emerging pillar of the Sobi franchises, this is immunology. I think it's fair to say that we built this franchise on a strong base, meaning the Kineret franchise. We have quite a bit of experience over the last years in the IL-1 area. This is a very nicely growing franchise for us, as you have seen in the data, over 16% growth over the last year. We have then expanded this platform and the footprint with Synagis in the U.S. That gave us a significant boost in terms of reach, coverage, but also in terms of opportunities or leverage points. We launch in addition now, a new monoclonal antibody called emapalumab, and as we told you, we got approval in November.
This is, for us, it's a very significant opportunity. As we have given you guides beforehand, just think about, we've got primary HLH indication approved, but we have significant program, let's say, running that is mining basically the other HLH patient totality, EU, U.S., and Japan, 5,000 patients. When you multiply this, obviously, with the customary pricing in these rare disease areas, it's a very significant commercial opportunity for us. Hence, we are very excited, and hence we are investing into it on a commercial side, but also on a clinical development side. We have the opportunity now with the indication expansions for emapalumab, obviously, to considerably. We have access to MEDI8897, which we share in the U.S. with Sanofi, the commercial proceeds.
MEDI8897, being a much broader product, makes us believe that the earning stream for Synagis, which we believe is a growing business, is a more longitudinal earning stream for the company because the opportunity for MEDI8897 is substantially broader than what we have for Synagis. When we go to the next slide, I just wanted to show you where we are coming from. Specialty care, let's say, is a substantial part of the company. We expect already the vast majority of our sales in specialty care this year to be immunology, driven by the fact that we have, obviously, the patent expiry that we are facing for Orfadin, but also, the one or the other loss of contracts in the partnering business. Basically, immunology and with the growth that we have in the immunology franchise, will become much more important for us as we go along.
It is really about immunology, building this franchise moving into the future. We think that the overall trajectory for Kineret is on a good wave. 16% increase during the last year was a positive outcome for us. When we go straight into the next opportunity for Synagis, let's say, then it's fair to say, on the next slide, that Synagis is the largest product for us in immunology. It's a core product for the group. When you look at the demand growth of the product, we have taken it over on the 24th of January this year. The latest data for Q4 suggests a 1.5% demand growth. It is a growing business. It fits as a team, mostly ex MedImmune people, fits very beautifully to the DNA of our company. For us, this is obviously totally in focus.
We think that with the expansion of the field force that was to a large degree already executed prior to our takeover, the product will do extremely well. We see opportunities also in improving adherence to the treatment protocol, but also in the expansion of the patients that are potentially eligible according to the guidelines. We think there's opportunities for growth here. It obviously creates scalability for our U.S. organization. It will also give us opportunities to have leverage points in the pediatric setting. Clearly, as we have talked, we see some opportunities already now to create more awareness at one stage in the HLH area or primary HLH area, to be precise.
When you think that through, with MEDI8897 coming and based on the communication last year, the product met the primary endpoint in phase IIb, that was announced, and the full readout of the phase IIb is in Q2. We are looking forward to this. From whatever we can see now, it is a very promising opportunity for the group that makes this a more longitudinal earning stream. Very excited about Synagis, very excited to have the team on board and basically now trying to drive this business, but the real impact of Sobi on this business will be only surfacing, to be also quite frank, during the next season, which will start somewhere in October this year. Essentially the work now for the next season will start as soon as April.
This is when you don't see a lot of output in terms of sales, but this does not mean that we are not very focused on preparing the next season. Also, we're very excited about Synagis. Touches a lot of points that we felt were important according to our strategy. Now we are in the launch phase. This is the next slide of Gamifant. Got the approval. Are in the midst of launch, have now a couple of patients on the product. Very exciting to make a difference to patients in a highly unmet need area. It's early days, obviously, but when you think about the potential of this product, you hopefully will gain an understanding that if we believe it's worth investing for, because the commercial opportunity, economic opportunity of this product, is extremely significant for the group.
Maybe Milan explains to you a little bit what we are doing in the clinical development area, because this is in a very significant effort in terms of our investment, particularly when we think about forward-looking guidance on earnings.
Absolutely. Thanks, Guido. Yes, I very much agree. This is a very exciting molecule, I think it opens up a number of opportunities to potentially change the lives of patients. This is also the reason that we are planning a number of clinical activities in 2019, as is illustrated on this slide. We, of course, want to continue in primary HLH with a particular focus also on quality of life. We want to continue and expand the ongoing clinical study in secondary HLH in children with SJIA developing macrophage activation syndrome. Then we also start planning activities in adult patients with HLH, both malignancy and non-malignancy induced. Then finally, we want to branch outside HLH by planning a clinical study in preventive treatment of graft failure in children undergoing hematopoietic stem cell transplantation.
This fundamentally is based on data suggesting an early increase in interferon gamma before the graft's rejection. We want to see if we can enable that in a different way, that's why we are planning the two last studies. I think in summary, we're very excited about this opportunity and what it may bring for improvement in patient lives in the future.
Very good. Thank you, Milan. Maybe on this note, we go straight now what this means in terms of financial results. Maybe Henrik, you can share with us how all this is hanging together.
Of course. Thank you, Guido. Good afternoon, everyone. Let's then look at some financial highlights from the quarter. Revenues for Q4 amounted to close to SEK 2.6 billion, corresponding then to CER growth of 29%. As you've seen, the main growth drivers for the quarter were Elocta and Alprolix, as expected. Full year revenues reached SEK 9.1 billion, slightly ahead of our guidance for the year of SEK 8.9 billion-SEK 9 billion. Gross margin came out about 74%, both for Q4 and the full year, in line with our full year guidance of 73%-74%. The ongoing positive product mix effects driven by the hemophilia franchise explain the improved gross margin compared to last year. EBITDA reached SEK 916 for the quarter, corresponding to a margin of 36%.
Year-to-date, EBITDA amounted to SEK 3,571 million, again, ahead of our full year guidance, which was SEK 3.4 billion-SEK 3.5 billion. Finally, from a P&L perspective, net earnings for Q4 amounted to SEK 595 million, corresponding to an EPS growth of 66% and 110% growth for the full year. Furthermore, we continued with a very strong cash generation, with operating cash flow for the quarter amounting to more than SEK 500 million, which translates to a conversion over EBITDA of 59%, both for the quarter and full year. We move to the next slide. This is the balance sheet at year-end, where we can conclude that there are no major changes compared to Q3 because closing of the Synagis MEDI8897 transaction occurred in Q1 of 2019. Let's therefore flip to the next slide, which illustrates the pro forma impact of this large transaction on our balance sheet.
Starting from the left, we ended 2018 with total assets of some SEK 17 billion. Through the transaction, we will add non-current assets of about SEK 14 billion, small inventory, and we will reduce our cash position by about SEK 3 billion. Adding up to a balance sheet total that has moved down from SEK 17 billion to SEK 28 billion. On the equity and liability side, we issued some SEK 4.5 billion in equity as part of the payment for the assets, and we financed SEK 6 billion with debt, and we will record a deferred payment for future payments of SEK 0.5 billion. The transaction is transformational also from a balance sheet perspective. But with a net debt of about SEK 6 billion and a pro forma net debt, EBITDA of not so much more than one, there is still plenty of headroom for our continued expansion, both organically and through M&A activity.
I hand over to Guido again.
Thank you so much, Henrik. How does it all fit together and basically relate to our strategy? We told you in September 2017 what we intended to do. Actually, we did exactly this. We drove our hemophilia penetration, invested into the growth of our franchise. We developed specialty care and articulated the focal point of specialty care now towards immunology, particularly with the Gamifant® and obviously the Synagis acquisition. We grew substantially now our U.S. business or are growing our U.S. business on the strength of the organic growth potential around Kineret but also now the opportunities related to Synagis and to Gamifant® to overall positioning our geographies on a stronger scale. Obviously, Gamifant® or the benefiting Gamifant, and we have submitted the file in August last year. We are strengthening our R&D portfolio.
When you think about it, with 001 during the course of this year, likely moving into phase III. MEDI8897 being a product that is in phase II-B and having a readout, let's say, in Q2, and then subject to this moving into late stage. We have, let's say, brought BIVV003 into clinical and on a good way to recruit patients in the study, and then in a not too far distant future, also moving into phase III. We have bolstered our pipeline with emapalumab indication extensions. This is all geared to drive not only today's growth but also tomorrow's growth because we are interested as management in driving a sustainable business evolution, and we think that we have made significant progress in this regard.
When we have the outlook in mind, the SEK 12.5 billion-SEK 13 billion of growth, this is reflected now in the combination of very strong growth in hemophilia, where let's say the business, obviously addition of Synagis. Initial benefit, obviously, from the growth of Gamifant®, which we think is a material opportunity for us. Obviously recognizing that we have, let's say, some erosions or expect some erosion with Orfadin on the patent side. Let's say in that more having a stable outlook for the rest of the business.
The investment that we put into the commercial launch of Gamifant® into the indication development of Gamifant® or emapalumab in the commercial drive of hemophilia, and I hope we could give you a glimpse why we are extremely confident about our hemophilia franchise and why we believe in the future of this franchise so much, is resulting then in an earning forecast of SEK 5 billion-SEK 5.3 billion. That is a significant increase, obviously, versus previous year, does not bring the operating leverage. The reason is really that we believe in our future and that we want to take advantage of these opportunities. Basically, we are guiding here 37%-42% top-line growth that is very material, you don't get the leverage as much into the P&L because we are investing into the future.
In the end, we hope that this combination, in a way, you want us to spend this money because we are having an interest, and hopefully, you have an interest as well to see this company further evolving towards the direction of leadership in rare disease. On this note, I would like to stop here and would maybe give room for questions as they may arise.
Thank you. Ladies and gentlemen, if you do have any questions for the speakers, please press zero one on your telephone keypad now. If you would like to withdraw your questions, that is zero two. Once again, to ask a question, it is zero one on your telephone keypad. Our first question comes from the line of Ian Yang from Race. Please go ahead. Your line is open.
Thank you. Few questions or so on hemophilia, Elocta. Roche noted that they saw increasingly strong penetration in non-inhibitor patients with Hemlibra in the U.S., and they also mentioned the imminent approval of Hemlibra in Europe in severe patients. Question to you is, Guido, is it your revenue guidance assuming potential impact from Hemlibra launch in Europe?
We obviously looked at this. We are not ignorant to the emergence, obviously, of Roche. We think that obviously we have to think about them. Basically, what we think is that this market is going to fall into different camps. There are those patients who want to more actively control life, and where the individualization of therapy is giving a clear opportunity to do so. We see also there are, let's say, people also in the community of the KOLs clearly advocating for this. There are people who will look for convenience. We think that in a European context, the group that will look for individualization, personalization, will give us enough opportunity to grow our business at a very substantial rate.
We think that, let's say, more the first generation of recombinant factors will probably give opportunities for taking share, which is still a material part. We think that we need to focus more on our opportunity for growth on the strength of our portfolio, than rather being worried too much about those who don't actually have the share, and to gain the share. Yes, there will be people who will want these products, but we think, based on our interactions, that there is a significant opportunity for us, particularly as Europe will Somehow the markets work a little bit different than in the U.S., for us to take significant share in Grifols business. Obviously, no guarantee, as there is never a guarantee in life. We have made some further changes to our commercial infrastructure, and we are confident that we can deliver this.
Okay. The second question is on BIVV001. Sanofi mentioned that they are expecting to start the phase III in second half of 2019. Can you confirm the timeline? If indeed it starts in the second half of this year, when do you expect 001 to be marketed?
I think, we have no reasons not to confirm what Sanofi said. As we are collaborating, obviously, with them, this is accurate. On the timeline of launch, there, I think we have not given any guidance and we won't do it either today. It takes what it takes, but it is a priority program, obviously, for Sanofi and clearly for us. We are very excited about this opportunity.
Okay. Last question is on gross margin. You exited the year with about 74%, but I don't think I saw guidance for 2019. Could you provide a guidance?
Yeah.
If not, at least can you say whether it is trending upward?
Yeah. It will trend upward by definition because of the Synagis integration. We have not given guidance, that's correct, but it will trend upwards. Yes.
Okay. Thanks very much.
Thank you, Ian. Appreciate it.
Thank you. Our next question comes from the line of Carl Mellaby from SEB. Go ahead, your line is now open.
Yes, hi. Thank you for taking my questions. In terms of guidance for 2019, given your historical conservatism, when initially guiding for a beat at the start of the year, looking at historical outcomes which have been materially higher, is there anything in particular you would like to draw our attention to this year that makes it any different? Thank you.
Obviously, when you grow your business, let's say between 37% and 42%, you will have an uplift of SG&A. There's some leverage, particularly when you're integrating a new organization in the U.S., of more than 130 people that, once they transition services from AstraZeneca, I suppose we will add another 40 people. It's just a very material increase. That's part of the story where you would still expect, obviously, more leverage. What is the difference is what we are investing now in the clinical development. Just to basically clarify with this to a certain degree. You think about the Gamifant indication, where we are coming from. The evolution from primary into the full scope of secondary age range, mining 5,000 patients, potentially. This is, for the size of our company, a very material opportunity.
You clearly don't want to miss this by now trying to shortcut, let's say, your expenses. The business is there. The business is producing gross margin. The earning capacity of the company is built, but we have elected to make choices in building our future. We feel that this is important. We feel that this gives rise to believe that the company has a very nice future growth story ahead of itself. Then you basically go into the stem cell transplantation, which goes beyond HLH. There you have in Europe and in North America, there are 40,000 of those in a year. Give or take. Not everybody is obviously, let's say, in danger of having graft failure. I'm not suggesting this, but there will be a selection, and we don't know exactly how many of those will be elective to our treatment.
You can sense that we are now working on something very material, hence we have made the choice, in discussions obviously with our board, to invest into this business. Therefore, you don't see the leverage as much on the board. Yeah. Very simple. The good news is the business is there. Yeah. The earning capacity of the company is there. We have just made choices because we feel so strong about our growth opportunities moving forward to invest in our business.
Okay. Thank you.
You're welcome.
Thank you. Our next question comes from the line of Hans Mölle from Nordea Markets. Please go ahead. Your line is now open.
Yes. Good afternoon. Hans Mölle here. First, a question on pricing. Ahead of the rollout of Hemlibra in Europe, have you noted any change in the price dynamics for hemophilia A? Secondly, in terms of Kineret sales in the quarter, I guess it was basically flat in organic terms, and you talked about the strong Q3, but I guess growth rates in Q3 was probably the same as in Q2. I wonder, has something changed in the terms of Kineret? It's the first quarter in a very long time where we have basically no growth, if you can add some color on that. Thank you.
Yes. Let me start with the pricing. We have not seen any material changes to the pricing. Obviously, this area will always have, in certain segments, tendering mechanisms. We had some changes in Sweden during the course of last year. That basically, when you look at the overall, let's say, size of the business, we have not seen things now that would suggest that we should now provide you with warnings. We are predicting, obviously, that prices do not go up. This is more in a small single-digit area that, let's say, that we see efficiencies in the systems. Which is normal. When you look at the Kineret, yes, in Q4, we have not made as much progress. Now you can say for a product, and maybe there has been an overlap, you cannot totally exclude it from Q3 to Q4.
When you look at the overall progress for the year, with 12% at CER, 16% in total, probably not so bad. Let's say, now could it have been better in Q4? We had some alignment of the distribution in the U.S. that affected this, but we are confident that we can research the business for growth. We still have some leverage on the new indication. We think that Kineret will remain a growth product. Yes, Q4 was not the strongest quarter, but we don't think that this is now the new normal because there have been some alignment in the supply chain as a consequence of a distributor change that basically led to this. We still believe that this is a growth product, and at the right time, we would like also to share with you some ideas on further indication expansion for the product.
Is it fair to look for double-digit growth also in 2019?
We don't give guidance on a product level, but we are confident to grow the product, yeah.
Finally, in terms of the other category in specialty care, any additions there that explains the accelerated growth in Q4?
No. I think we had good growth momentum in the other part. First of all, at least in an absolute at actual rate, Orfadin was reasonably stable. We are still having some growth with Ravicti and Xiapex that are doing well. Let's say in addition to this, I think there's nothing too much happening. We had an uplift because of the supply chain on the manufacturing side in Q4. That's the reason why we had a significant increase there, which basically offset the lower portion in Q3.
Okay, great. Thank you very much.
You're welcome.
Thank you. Our next question comes from the line of Peter Sehested from Handelsbanken. Please go ahead. Your line is now open. It seems that we've lost his line. Our next question comes from the line of Erik Hultgård from Carnegie. Please go ahead. Your line is open.
Yes. Hi. Thank you for taking my questions. First on Gamifant, you're obviously very excited about the commercial opportunity for this product. My question is more related to what type of uptake we should expect here in 2019 for primary HLH. Do you expect a rapid adoption in clinical practice, or do you see the requirement of significant education of physicians and patients before we start to see some meaningful sales?
Yeah.
That's my first question. Maybe if you could say something about the overall market growth for hemophilia A and B, respectively, in your territories, if you're seeing if it's similar to previous years, if it's decelerating or accelerating. Thank you.
With regard to Gamifant, is this going to be now a vertical launch? The answer is no. This will take some time. We need to make sure that physicians understand when the product is indicated and when not. We need to go through a certain process. We believe that, obviously, there will be already material sales surfacing during the course of this year. It is probably more weighted towards the second half than towards the first half, whilst we have already quite a number of patients now on the drug right now. Because people have been waiting for a choice, and when you have children and your alternative is cytotoxic agents and high-dose steroids, is a tough choice. It's a trade-off that has to be made. We think that this product is going to help to make trade-off decisions and treatment decisions.
We will see some uptake, but in terms of materiality, I think probably more weighted towards the second half, and then it will come. With regard to the overall hemophilia growth, it's very tough to see the data points, but I think basically it may be very slightly less than maybe the last five years. It's still a 3%-5% growth gain. Very hard to speculate, because it depends also now on pricing of these therapies and versus where we have not complete visibility yet, and then their impact. Give and take, it's a growing category still and with substantial shares still in plasma and in first-generation products. We feel that the best is still to come, to be honest.
Thank you.
You're welcome, Erik.
Thank you. Once again, we go over to Peter Sehested from Handelsbanken. Peter, please go ahead. Your line should now be open.
Yes, hello. Can you hear me?
Yes.
Okay. Thank you. I have a bunch of questions, I think I'll just kick off with some housekeeping accounting stuff. My first question relates to the booking of the intangible assets for Synagis. Could you give us a split into goodwill and amortizable assets together, if even for the amortization dose on that one? In terms of the costs for 2019, could you elaborate a bit on how you see the increments in SG&A costs, in R&D costs? Secondly, your guidance range, could you please specify the assumptions underlying the high and the upper end of the guidance, respectively? Finally, at least for this round, you stated that you see Synagis as a growing business, you sort of elaborated to some, let's say, drivers of that potential growth.
What kind of development for Synagis would you be comfortable with us baking into our numbers instead of just looking at, say, at the declining business that we modeled AstraZeneca numbers perhaps had factored into this business? Thank you very much.
Thank you, Peter. I can start. The question on the asset as such, it's amortizable. There is no goodwill in the asset. On your question on the cost split, we don't guide line by line here. We provide a top-line guidance and an EBITDA guidance. As already has been indicated here, there is an expected uplift in the gross margin. Other than that, we don't go any further at this point in time.
Yeah. With regard to what you should expect from Synagis in the long run. We basically think that this is a product that we would believe will respond well to our ownership model. That means this is not maybe a high-growth asset anymore. I think this would be not realistic, but it's a product that we probably can steadily grow. The reason is that we still see opportunities on the adherence to the protocol, that we see more babies who could potentially benefit. We have increased in the overall field force. We believe that we can do maybe a little bit better on the one or the other lever there. Simply because for us, this is obviously a very big product. For AstraZeneca, this was probably a non-core business. That should do something. Do we believe that it's realistic to dream of guideline change?
We don't know. We look into all areas. What we think at least, this is more of a steadily growing business where we hopefully can improve further. The proof in the pudding is going to be what we can do already in the next season. Because the lever for this season is relatively limited. We took it over on the 23rd of January. I think that this should give you maybe some hints. Because we don't provide, obviously, guidance by product in detail. This is how we look at this. We'll spend quite a bit of time on this as it is so important. Let's see how far we can leverage this phenomenal setup in the pediatric setting, maybe in terms of awareness programs for primary HLH, but also maybe at one stage for other things in the pediatric setting.
We feel that this team is well supported by the earnings stream that we have. We want to make sure that we give justice to Synagis first, because we are very well aware that the, let's say, about the one or the other view on this. We believe we can grow it.
Just before returning back to my question on the guidance, perhaps just a follow-up question to the accounting on the synergies. What is the time period that you have factored in for writing off the intangible assets related to synergies? Thank you.
20 years is a reasonable estimate.
With respect to the upper and lower end of the guidance assumptions in terms of sales?
Sorry, guidance on sales?
Yeah.
What do you mean by-
Just a flavor on what kind of. My question was relating to what kind of assumptions you have baked into your upper and lower ends of your full-year sales guidance.
We basically said that obviously there is a bit of variability in the forecast. You don't know how quick patent erosion will work. For Orfadin, for instance, we don't know. We'll see how quickly the ramp-up is. There's an opportunity that more patients could benefit from Gamifant faster. We'll see how quickly is there a possibility for changes, even of guidelines. We'll find out as we go along. This could be an uplift, and then there could be. Obviously we are not so arrogant to believe that we can accurately forecast the exact number of patients that we are going to switch during the course of this year. We allowed for this as well, but in hemophilia. Overall, the range is not that too broad when you think about it. We think also there is going to be maybe also a give and take.
There is going to be a mix. That's the reason why we allowed for a mark.
Okay. Thank you very much.
You're welcome, Peter. Appreciate it.
Okay. Thank you.
Thank you. Our next question comes from the line of Christopher Uhde from ABG. Please go ahead. Your line is now open.
Hi there. I have a few questions. You mentioned in the report here that Gamifant is expected to be approved in the EU at year-end. I guess I was thinking maybe I'd seen it somewhere, but or else the August submission that seems a little long. Has there been a delay? That's the first question. Also, just in terms of the timing of the change in gross margin on Elocta, can you give any indication of, let's say, when you'd be surprised if it's not gone up yet? Third, you mentioned four out of five major markets in the EU are driving growth in hemophilia. What can you say about uptake in Spain?
Is there anything that we should be aware of that's a little bit different about it that would explain why you don't say that it's one of those drivers? I guess that's it.
Maybe with the overall uptake, we'll be very happy with the user growth in Spain as well, recognizing that we came from a lower base. Now it seems that the products get really recognized, or Elocta gets recognized in Spain. It's good growth. With regard now to, let's say, the regulatory process, as you would expect in the regulatory process, you have discussions with the authorities, and that takes the time it takes. Milan, you want to comment, maybe?
I think the dialogue is ongoing. I don't think we can comment beyond that.
Yeah. It's a normal process. Basically, we gave the hints when we submitted. At the end, it's in the eyes of the beholder, and we have to respect this. When then approval will be given.
Yeah.
I don't think we are that presumptuous to speculate on this. With regard to gross margin expansion on haemophilia, maybe Henrik, you want to comment?
I think the gross margin we alluded to, the expansion is not so much related to Elocta, but rather to Synagis®. Obviously, you will see the impact during the season, which is basically Q1 and Q4. That's the answer to that.
Okay. Thank you very much.
You're welcome.
Thank you. Our next question comes from the line of Erik Hultgård from Carnegie. Please go ahead. Your line is open.
Yes. Hi again. Two follow-up questions. One for Henrik on the tax rate post the Synagis® acquisition. Will that change, or should we expect a similar tax rate as 2018 for 2019? Secondly, just on the guidance, assuming if we sort of take out the expected contribution from Synagis® on the EBITDA, given the 60% margin guidance that you issued in conjunction with the acquisition, it seems like you are sort of projecting a flat to slightly growing underlying EBITDA for 2019 over 2018. I just wanted to confirm that that's how we should look at it. Thank you.
Your first question concerning the tax rate. No, we don't expect any material difference to the tax rate due to the Synagis® consolidation. When it comes to margins excluding Synagis®, I can confirm that we expect an improved margin also without Synagis®, but we are not quantifying that.
All right. Thank you.
You're welcome.
Thank you. Once again, if you do have any remaining questions, it is zero one on your telephone keypad. As we seem to have no more questions registered, I'll now hand back to our speakers.
Thank you so much for your interest. As you can see, we substantially grow the business, but we also build the future. Hopefully over time, over the next couple of weeks, we can explain ourselves better in this regard, so that you can understand us better, know how we think about it. We felt, given the opportunities that are in front of us, it would have been a big shame to make sure that we build the future, and that's what we are interested in, obviously, as a management team. Appreciate your interest, and thank you so much, and we look forward to staying in contact. Thank you.
This now concludes our conference. Thank you all for attending. You may now disconnect.