Earnings Call: Q2 2018

Jul 18, 2018

Ladies and gentlemen, welcome to the presentation of the Q2 results for Sobeys. I will now hand you over to the CEO, Guido Aukus CFO, Mats Olof Wallin and Head of R and D and CMO, Milan Stagovich. Please begin your meeting. Yes. Hello, everybody. This is Guido. And as just introduced, I will be joined by Mats Olof and Milan. And we have also here the incoming CFO, but Henrik Stenqvist, but you know he obviously, Mats Olof is in charge for this meeting. So before we start, a quick forward looking statement on the next page, which is obligatory, obviously. And then I think we can go right into the results because I mean, as you have seen, we were quite excited to report positive results from our perspective. And I guess if I see the share price pause from many other people's perspective, 40% top line growth, clearly propelled by hemophilia, but also, let's say, very positive results in Specialty Care. And this basically puts up the revenues for the quarter to 2.89 percent. Very nice to see that we have operating leverage in the business. The earnings was 94% on an EBITDA level and healthy cash position now basically €800,000,000 ahead of where we have been, give and take, end of year. We had about €2,300,000,000 And I mean, really, as I pointed out, I think what we what is very gratifying to see is that the Elocta is still on a nice growth path, more than doubling with 126% growth. And basically, we were able to address the relative weakness for Alprolix and now growing at almost 200%, 2 15%. And this ensures that the work we have been doing with the teams in the field is gaining traction. And for me, on a different scale, but from a business perspective, equally positive is the fact that we have also acceleration into the Kynareth business. So now basically with 19% growth, we can see that the investment you put into this business, particularly into the U. S. And the approval of the Stills indication in Europe is paying dividends. And this in conjunction with the orphan end results growing at 7% despite the fact that we have not patent shows really that in rare diseases, yes, there is influence on patent expiry, but there is a certain loyalty given also the seriousness of the diseases that we are dealing with that goes beyond what you would typically expect in big molecules or small molecules or big pharma products. So the and in addition to this, and Nina will talk about this, we have been able to request quite a few of our R and D projects. And let's say, we have for those who have been part of WFH, I mean, pretty stellar results represented for 1, and we will try to explain this a little bit more detail given the fact that we have an optimal year for this compound in our territory, and we are very excited about the results. We have progressed 3, and now we're preparing everything to get the first with our first amendment in the second half of the year, and we have concluded the recruitment for Anagro. And all of these good news prompted us to lift guidance, And I'm sure you want to give more time for questions, let's say, later. So keep it a little bit shorter, but very positive mood in the company about the progress. And I think when you go to Page number 4, basically we show the quarterly results, you can get a taste why we are quite bullish because what you can see is now a strong acceleration on the quarter to quarter performance again in Q2, where basically gross margin had very strong earnings, 94%. And obviously, as a consequence, also EBITDA margin and EPS improved considerably. Let's go straight into the business review into Page number 6. So basically, just to remind everybody why we believe that we have a unique play in hemophilia. I think very important for us, we have products that have been have demonstrated safety in thousands of patients, not only in the study population. We feel that with the FD fusion technology, we have a unique pathway and a significant point of differentiation. And this is demonstrated, as we had talked about earlier, with the joint data, but also with the data that prompted us to go into ICI treatment. We believe that with the products that we have on hand, we can individualize treatment. And when you you're just to remind everybody, when you look at this one arm with 100 patients and the average bleed rate of 0.8%, let's say, prompted us to think that we can push the boundaries significantly for in the interest of patients. And obviously, what we clearly think is important is that this is a natural way of replacing factor is obviously the products in our offering and therefore being less associated with topics that have been reported for some of the competitive products. And let's say joint health I have talked about. So when you look straight into the numbers on Page 7, you can get a taste of what the results growth in our company in hemophilia. And there, obviously, the key that the first growth is really the product revenues. And on Slide 8, you can see the acceleration of Elocta. And with 126%, we got also approval in Croatia, so now we're immersed in 25 markets. But the growth is really coming from the large countries in Europe. And whilst we see positive trends now also recently in Spain after we intervened in the global organization. And let's say, when we go into Alcolex, and I think this is very gratifying on Page 9, we were basically now growing 2 15%, and there we had over a couple of quarters, we didn't make substantial progress or not enough progress. And now it seems that basically the business is very, very responding and that our message comes across. We go through the adoption funnel. Obviously, the reimbursement in France has helped, but the product seems to gain our significant acceptance, and that's for us extremely positive. So hemophilia, I think, on track, and I think we can maybe open up later for the floor for more questions. So it will spread into Specialty Care. We believe that we have a world class commercialization platform. We believe that verticalizing the focus of this business by appointing Nomad Oppert as the Head of Specialty Care was a very important move for us because this shed more light on this business and gave it a clear leadership. And let's say, basically, what we have been working on is, obviously, life cycle management and indication expansions, life cycle management for operating in various areas of indication expansion with regard to Kynaret and obviously looking at partnering opportunities. Yes, I just get a signal that maybe I should get a little bit more closer as it comes across even clearer. Anyway, let's go to Page 11, Specialty Care. Let's see how did the business perform. And obviously, overall, the business has performed very well with 11%. And we have launched RAVICTI, I think, which is an important addition to our business. And we have quite a bit of experience in the UCD business and with Amunabs. And for us, this is a fantastic launch, and we are now in a phase to expand on this. This helped us to overcome the discontinuation of the 1 or the other product that we had under other specialty products and obviously strong growth, as I pointed out earlier, with Kynuren. So regarding Kynuren on Page 12, you can see how we have been able to propel growth, basically with 19% nominal growth, very positive. And this is across our regions. But really, what drives it to a large extent is obviously U. S. But in Europe, we are benefiting also from the indication expansion. So we believe that the Tynuren franchise is really the platform for us in inflammation, and we are thinking about opportunities to expand in this area. And as you can see in the last quarter growth, it seems now that we get into a new acceleration mode. On the next slide, Page 13, when it comes to Oferdance, let's say, I think we are very gratified by the fact that we have been able to overcome the Q3 difficulty in 2017. Product is now positioned again for growth. And we have 1 attender in Canada. And basically, this gives the foundation, but it's really a very individualized focus, very supporting patients and ensuring that they have access to this elementary treatment. I think this in the interest of time and making time for the other presentation, I think I would like to close. Before we I hand over to Mads Uhloff, I would like really to thank him for a fantastic journey that I personally experienced over the last 15 months. I think he has done a fantastic job over many years for the company. This is his last earnings call. And frankly, if you can choose your time, this is sort of those results you probably chose well. We believe the best is still to come though. And on this note, Masulof's big thank you. But before we know, we get into sayonara mode, Masulof maybe will explain to us the financial results. Thank you, Guido. Thank you for the kind words. Well, as Guido said, initially so we had a very strong quarter. Q2 came up very, very strong. But if I may add a personal note, I don't think this is the end of the story. I think that there are many, many good quarters to come, but that's my personal opinion. Looking at the financials, revenues came in at SEK2.289 billion in the quarter, which is 40% higher than the same period last year, 36% increase at constant exchange rates. And for the 1st 6 months, revenues increased 40% to €4,253,000,000 Gross margin came in at 73% in the quarter versus 72% in Q1 and versus 71% in Q2 last year. Operating expenses increased with 10%, and please compare that to the 40% revenue increase. And with this combination, EBITDA came out very strong at €951,000,000 and that is an increase of 94% versus the previous year's Q2. And for the full year, the 1st 6 months EBITDA came in at 1,722,000,000 Net profit for the Q2 came in at 685,000,000 and for the 1st 6 months, dollars 1,200,000,000 and this $1,200,000,000 for the 1st 6 months is higher than the full year 2017. Turning over to the balance sheet. Intangible assets continue to decrease intangible assets. Inventories and accounts receivables have increased due to the increase of the business, the substantial increase of the business. And as we say that revenues increased with 40%, we should also pay respect to that the product revenues increased with 55%. So that has a substantial impact. Cash has increased to SEK 2,300,000,000 and the positive cash flow in the quarter came in at SEK 556,000,000 euros And equity now is getting very close to SEK 8,000,000,000 at the end of the quarter. With that, I hand over to our CEO, Guy Doelkers. Thank you so much, Matt Doeler. And I think it's now time to give you a little bit more of a deeper deep dive on the pipeline and where we stand today. Milan, please. Thank you very much, Guido. This is Miloslav R and D and CMO at Sobe. So this slide illustrates our pipeline and how we are working to increase the value of our pipeline. There are 3 assets that I will discuss in detail today. That's the BIVV001, a Bioverativ Mount Sanofi development program to which SOVI has added to our collaboration agreement, but we have not yet opted in. I'll speak more to the Phase 2 study with enderkenra and acute gout. And I will speak to the emerging clinical study with SOVI003 and lysosomal storage disorder, specifically MPS IIIA. If I can have the next slide. If we start with BIVV001, then this is the 1st novel investigational Factor VIII therapy to break the fundamental factor half life ceiling. The molecular format is illustrated on the right hand side of the slide. Essentially, it builds on Elocta to which there are to extend natural amino acid repeat sequences that have been added as well as parts of the von Willebrand factor domain. Upon trombin activation, both the 2 Xtend royalties as well as the von Willebrand factor domain is cleaved off, and you are left with the pharmacologically active asset being the eloctane molecule with its known safety and efficacy profile. Interim data represented at WFH, as mentioned by Guido, by Bioverativ. This was the first four patients that were dosed at a low dose of 25 units per kilogram. This showed a favorable safety profile. And quite impressively, the half life was 37 hours at this low dose of BIP001 single dose versus 13 hours for the comparison to recombinant Factor VIII. This also translated into very high Factor Factor VIII activity levels, which was just above 5% after 7 days, post again a single dose, which should be compared to the recombinant Factor VIII levels, which was less than 1% after 3 days. We are very encouraged by the emerging clinical data and the profile of BIVV001. We think not only does it bring a convenience offering, but even more importantly, potential to even take protection of patients with hemophilia A even further. The high dose cohort is currently ongoing, testing a twice monthly dosing regimen. If I can have the next slide. Here, we are providing a bit of background around MPS IIIA, which is a lysosomal storage disorder. Fundamentally, it's caused by a mutation in the gene for sulfamidase. This causes incomplete breakdown and increased lysosomal storage of heparan sulfate. This, in turn, is associated with significant CNS, morbidity and actually also mortality. There are up to 2,000 patients across Europe and the U. S. Estimated to be living with MPS IIIA, and there's currently no treatment available for this significant disease. We have been developing SOBE003, which is an enzyme replacement therapy that we have been modifying using our proprietary Modifa technology, which is we have been changing some of the glycan structures. And if I can have the next slide. This slide gives an illustration of the status. So we have orphan drug designation in Europe and in the U. S. We, earlier this year, received the fast track designation. And on the right hand side, you can see the first in man study that we are concentrating starting. This is a classical first in man sequential ascending multiple dose study. Patients will be treated over a period of 24 weeks with weekly IV administrations of SORP-three. And following a 4 week safety review of the first three patients that is the potential to escalate the dose to dose level 2 and dose level 3, respectively. Patients that have completed the initial 24 weeks will be offered to participate in an extension phase of 80 weeks for a total study duration of 2 years. We are very encouraged by the fact that we were able to screen the first patient recently, and we expect to be able to dose the 1st patient later this year. If I can have the next slide. Pierre will be providing a bit more detail around the Phase II study where we are examining the efficacy and safety of anakinra in patients with acute gout flares. Gout is a metabolic disease characterized by increased uric acid levels that leads to crystal formation that accumulates in joints and in other organs. These patients then eventually develop flares or acute attacks. And in the joints, this is associated with significant pain, tenderness and swelling and also in the associated tissue. Current treatment includes anthades, colchicine and steroids. There is also data supporting the potential use of IL-one blockade in this disease. And this is the basis for Sohuobi to initiate the Phase 2 study where Ladies and gentlemen, apologies for the interruption. Please bear with us while we reconnect your speakers. Hello again, Mina Stavitz. I'm sorry for the interruption. What I will do is I will start with the Gauff Phase 2 study and discuss this slide again to the extent that people are not able to hear it. So this slide illustrates the Phase 2 study that we have initiated studying the efficacy and safety of Anakinra in patients with acute gout flares. Gout is a metabolic disease characterized by increased uric acid levels that then forms eventually crystals that affects not only joints, but also other organs. The disease is characterized by acute flares, which leads to significant pain, swelling and tenderness in the joints and in the surrounding tissues. Current treatment of acute flares includes end dates, colchicine and steroids, but there's also evidence around the potential role of IL-one blockade in this disease to treat the acute flares. And this is the basis for Sobeys to initiate this Phase II study, where we enrolled approximately 160 patients with at least one flare within the last 12 months that were intolerant or unresponsive to NSAIDs and colticine. These were randomized to 2 doses of Anakinra, the 102 100 milligram dose as well as a 40 milligram dose of choamcinolone. The primary endpoint of the study is pain over an average of the 1st 3 days, 72 hours, and the primary result readout will be based on the 15 days data. Patients will be allowed to continue for a period of up to 2 years where we will accrue additional information around the efficacy and safety of enakinra in the treatment of acute flares. We are very happy that the enrollment was recently completed, and we expect to have results from the 1st 15 days, you can say, primary results analysis by the end of the year. Based upon those results and if they are favorable, we expect to be able to have an end of Phase II meeting with the FDA in the beginning of 2019 to get understanding and agreement hopefully around how Phase 3 could be initiated. And with that, I hand it back over to Guido for the summary and conclusions. Yes. Excellent. Thank you, Milan. And I think on this note, let's go straight into the outlook. And as you have seen, with the results that we have now been able to achieve in Q2 and with some of the insights and offer that we have obtained by now, we felt that it was indicated and to increase our guidance to 8.6% and to respectively 8.8% on the top line from 7.9% to 8.1% in the range. And gross margins, yes, minimum 70%. We see positive evolution, obviously, as you have seen in the earlier data. And with regard to the earnings, we also took it up to $3,400,000,000 to $3,600,000,000 And I think this will also reflect the confidence we have gained into the momentum on the business and that we see in all the that our commercial strategies are working and that we're making significant progress. So basically, when you bring this just into a strategic realm, so where are we at in terms of what we were set out to do? We further internationalized our business, obviously, drive commercialization in hemophilia. We got more markets approved. We but the main driver is clearly penetration and becoming more standard of care and more accounts. We are focusing on Specialty Care. We feel convinced that we got conviction that there's much big opportunity for us with Kynaret in inflammation. And we will let's say, we are working on strategies in this regard. We want to obviously work geographically on strengthening our position It's 40% organic growth. That's clearly what we are on the way to do. And working on the pipeline, as you can see from Milan's presentation, let's say, we have a couple of things now going. And that's, I think, distinctly different versus maybe our situation a year ago. So we have a couple of very exciting projects in our pipe now. And in particular, 1 is for us a priority. On this note, maybe we open the floor for questions because obviously, we are here to give make best use of your time. And maybe we can open the floor. Thank you. And our first question comes from the line of Eun Yang from Jefferies. Please go ahead. Your line is open. Thank you. Very impressive quarter. Congrats. Thanks. I have a couple of questions. One, on financials. So sequentially, Q2 is quite strong. Growth is pretty about 17%. So we saw that in 2017 as well. But when you look at quarterly growth from 2nd to 3rd quarter, it seems to be kind of flattish for the last couple of years. And so I don't know if there is a seasonality. So my question is, do you expect to see some seasonal weakness in Q3 if there is any seasonality? Or do you expect hemophilia franchise to continue to drive a strong growth sequentially? Yes. I mean, obviously, we don't make forward looking statements now at this point of time. But what we clearly have to see is that there is a seasonal effect on our business in Q3, driven primarily by the vacation period, to be honest, in Europe, where the activity level in the hospitals is reduced and the number of patients getting switched to other therapies is reduced. And that's basically and this effect you have seen and let's say, we cannot make the holiday season disappear in Europe, let's say, we think that the business has still strong momentum. So we'll have to see this. So I don't want to I want to refrain from predicting, but it could be, let's say, that there is let's say, that the business will be affected, but I don't want to make a forward looking statement. Okay. The second question is on the pipeline. So in May, you presented low dose of course data for Xtend program for 1. So in upcoming ASH, I think previously you mentioned that we would be able to see high dose cohort data there. So with the high dose cohort, is it reasonable for us to expect that the truffle levels of Factor VIII to be higher than the low dose cohort? And also, at ASH, do we also expect to see some update for Xtamp program for hemophilia B? Thank you. Ilhan, do you want to take this? Thank you very much, Joon. I think it's too early to comment on when we will be able to release further data on the ongoing clinical study. I think the thinking has been that a higher dose being the 65 units per kilogram would translate into a higher drug and that's also why the higher dose group is now being started with twice monthly dosing. But commenting when we would have, you can say, data from that cohort is premature. But Eun, I mean, when you look at the trough levels after 1 week and the low dose is over 5%, obviously, this gives rise to confidence, yes? Okay. And any comment on Xtamp program for hemophilia B? I think this is in a very early phase. We will update when there's additional information available. Okay. Thank you very much. Thank you, Jorgen. Thank you. Our next question comes from the line of Erik Hultgaard from Carnegie. Please go ahead. Your line is open. Yes. Hi. Thank you for taking my questions. Congratulations to another strong quarter. I have two questions, if I may. First on AltaVix, which was surprisingly strong in the quarter. I know that you highlight the reimbursement clearance in tranche during Q1 as one driver. Were there any other effects that explain the large performance like tender the major tender stocking? Should we see this as a sort of new level for continued growth? Or is this I mean, should we expect this strong quarterly over quarter growth rate to continue in the coming quarters? Or is it more of a one time step change and then we're back to sort of previous quarter on quarter growth levels? That's my Alprolix questions. And then I have one on BIVV001 as well. Yes. No, I mean, with Alprolix, I mean, basically, you have two effects. Obviously, France plays a significant role, and they're performing extremely well and making significant headwinds now to penetrate the market. But the it is generally carried by the other organizations who have also now significantly accelerated the business. We have overlaid the commercial effectiveness structure that basically we are working with and working with the teams to improve productivity in the field. And that's a significant driver and obviously felt that, let's say, there was a much bigger opportunity for us with Alprolix than what we had initially realized and has basically triggered 1 or the other performance based dialogue and hence the consequences. So there is I think the product was always great, but it didn't basically get to the place it deserves. I mean, we have clearly not that I know of anyway stopping effects here. This is we have created a new level and are now obviously very keen to go from here. Perfect. And then on DIVV001, do you think that a sequential Phase III study in pediatric patients will be required for approval in Europe as was the case for Locta? Or do you think it's should we expect similar launch time lines in Europe and U. S? Peter? Thank you. I think we would need to discuss with regulators before we would be able to comment on exactly which program would be required and associated time lines. Yes, it's probably too early yet. Thank you. Our next question comes from the line of Peter Asling from Pareto Securities. Please go ahead. Your line is open. Okay. Thank you. Also, I would like to extend my congrats on the very strong quarter. Most of my questions has actually been already been asked, but I have another one on BIVV001. You may have said this before, but could you just remind me what the time line is when it comes to your you opting in, in the program. Is there any specific event that would trigger this? I mean, we have a time in our agreement with Bioverativ, we are allowed to opt in after the availability of Phase III trials with Phase III results. So very much curious. But let's say given the excitement around the product, we might consider to opt in earlier. Okay. Yes. If you would opt in earlier, would that give you any additional benefits? No. I mean, it's I think when you look at the discussions at WFH, I think this was clearly the late breaker on BIVV001 was probably considered as one of the main highlights of the conference. And so to be associated with this product at an earlier stage, we would consider as an advantage here. Okay. Just a quick additional question. Could you give us a little bit more an update on your M and A activities. You have clearly said that you're looking to add products and or businesses within rare diseases to the future? Yes. Absolutely, Peter. I mean, we are obviously in very intensive dialogues as we speak. And let's say, unfortunately, at this juncture, I cannot disclose anything. It will be premature. But yes, I mean, we are working on things because we consider the expansion in Specialty Care and the bolstering of our pipeline as important elements of our strategy. Yes. Have you seen the M and A landscape or climate change in any way during 2018? No. I think the key is really to find projects and also addressing concerns that some of the investors fed back to us, you don't want to overpay. You want to have a project that gives you growth, yes, because you don't want to because companies like us as we get it need to grow, keep growing and you want to be you don't want to over diversify the company. So when you and that leaves you with some it's not like these products are we can pick up in a blink of a moment, you need to work on this. And we are doing this right now. And hopefully, we'll be able to communicate good news in the not too distant future. Okay. Thank you. Thank you. Thank you. Our next question comes from the line of Christopher Udi from ABG. Please go ahead, Christopher. Your line is open. Hi, there. Thanks and congratulations on a stellar quarter. So I guess my first question is about the geographic expansion rate for hemophilia. So it was obviously a little bit slower this quarter. Should we expect it to continue to be slow like this? Or do you think it's just very hard to predict? Or give us a little bit of a I think with Elocta now being in 25 markets, we are, I think, not too bad. I think we have nicely penetrated. We have I mean, the biggest market where we are not is now Russia. We're in a regulatory process and obviously to get approved reimbursement approvals at a larger level across Central Eastern Europe, whilst we have we got obviously in Otsna into Poland, which was fantastic, and Slovakia. So not too bad. I think there, let's say, these last areas are still missing who make a material difference to the valuation. On Alprolix, obviously, we are earlier stage and there we have, let's say, a launch plan, but we are in discussions also because sometimes with the payers, they would have different thoughts and they use the emergence of new products also as an opportunity to negotiate prices. And obviously, we are concerned about the entire franchise and basically are willing to discuss opportunities but not at any cost. So there and let's say, we have discussions with various regulators in this regard. And it's not that we are we try to be slow here, but sometimes we're just trying to adapt to a new landscape. But you can expect in the next year, but it's very difficult to speculate. And clearly, it wouldn't help some of the discussions that are ongoing if we make predictions, forward looking, on solving some of those discussions because we have to recognize that there are different incentives for different players in this market. Absolutely. And I think that makes perfect sense, obviously. So then I guess the second question, so you've highlighted in the past how important the science is in driving sales or penetration, let's say, of the FC products. So I'm wondering, looking at the REITERATE study poster presented at the WFH Congress, so do you have plans to undertake further studies for the EHL products that would permit more than well, just hypothesis generating conclusions to quote the poster? Elon, you want to comment? So, it's Neil and Harvey. So, at this point, we have 2 studies ongoing in collaboration with BioverativSanofi, the first ITI and then the study in patients that have had several failed ITR attempts. As part of and those studies are currently accruing patients. And as part of that, we will also be accruing additional, you can say, mechanistic information that would help us understand, you can say, a bit more around the molecular characteristics of the Fc portion and whether that and whether and the immunological effects that these may have. And I think based on, I'm going to say, the data from those two studies, we may even decide to do more. But I think that's a bit speculative at this point in time. Okay. Thanks. That was very helpful. So to what extent can you influence BIVV001 development? Yes. We are in discussions with, obviously, Bioverativ and also with Sanofi Genzyme in this regard because it's clear that the landscape in Europe and with the need for health economic data is a bit different than in the United States. And this dialogue is currently ongoing because there the understanding is that both parties sit together and trying to do the best for both businesses. So we have here clearly a seat and at the table, and we'll be taking charge of the seat. Okay, great. And so then how much of Kinere growth can you say was driven by stills? It's hard to say. I mean because we are we don't have yet a prescription data that will tell us how much of the stills sales how much of the product sales in Europe was driven by stills and how much is driven by other indications. And so, it would be very speculative. What I can say is that we and this is no coincidence that we saw now in Q2, a very significant uplift in the U. S, where we don't have stills, driven by the investment that we put behind, but also in Europe, where clearly stills was stills now the driver. Was it a prescription of stills? I can't tell you. Clearly, we have no more stills patients, but possibly also the let's say that the indication reconfirms the confidence in the product. And as it reconfirms the confidence in the product, it basically physicians see a broader utility of the product also in other indications. And I think that's probably at least as big of an effect as the effect of the indication as such. Okay. I guess the last one follow-up on the Pfizer. So how will the production shift to Pfizer impact China rate margins? I mean, I saw you said that you expect it to be cost efficient for you, but where should we expect that? We don't provide indications, I think, on the indicators. But we will have you will see a significant uplift on the gross margin of Kynaret by two effects, which is driven by royalties that are stopping from the originator and also the reduction of COGS. But I don't think that we are commenting on individual product in this regard. Okay. And my very last question, sorry, is that so you said in the report, Refactor results due to phasing effects. Can you elaborate? Does that mean you're expecting them to rebound? Yes. I mean, basically, you have 2 effects. And when you and it's not up to us to comment, obviously, on the performance of refractory, let's say, because it's driven by Pfizer. And but when you look at the Pfizer publication, you will see that maybe the progress of Refracto is not as large anymore as it maybe used to be in the years before. So that's, I think, is probably a fair description. And I leave it up to you to look at the half year report from Pfizer to get but what we also can see is that basically, as you would expect, our sales are sales to Pfizer and not sales out of Pfizer. Hence, you have inventory adjustments, and these inventory adjustments just happened right now and are coinciding with some of the slowdown of growth. And but there it's really we are really the wrong party to talk about it. This is something that should be asked to Pfizer. Okay. Well, thank you very much, and thanks. Congrats again on a great quarter. Appreciate it. Thank you. Thank you. Our next question comes from the line of Peter Seysert from Handelsbanken. Please go ahead. Your line is open. Peter from Handelsbanken. Please go ahead. Your line is open. Yes. Hi, Peter from Handelsbanken. And yes, another good question from my side. A couple of questions here. First of all, in terms of market share for Filofa and of course your market are right now, second on tax rate, what we expect for the full year? And again, yes, on Nidec Health, And finally, I have some additional questions, I can just bump into the queue again on the guidance. If we just accelerate both the current run rate your guidance that you just pre formulated, I'd say, you have conservative, sort of that your answer to that will be the usual one that you rather, let's say, try it positively once again? Thank you. Yes. Thanks, Peter. I mean, it might be our line, right? At least for us, it's quite difficult to get all the points. But I try to paraphrase what I understood anyway, Let's say, so maybe first to market share, let's say, where do we stand? I mean, as we have communicated in the past, we think that our market in Ophelia has give and take $3,500,000 in our territory. So basically, when you look at, let's say, the total sales we have in the quarter, let's say, in hemopiabrach sales, then you divide it, let's say, and you times the number of quarters and you divide it by €3,500,000,000 that gives you give and take where we stand in total market share. Our market share in certain markets is obviously higher. I mean, in the most extreme scenario, like Ireland, it's close to 100%. But we have markets also where we are around 30 and then markets where we are really at infancy. But basically, whilst we our market share in on demand is lagging behind because there is a timing like effect. We focus at this juncture more on prophylaxis. But that gives you order of magnitude, at least, a sense where do we stand in market share. Now the other part I understood, and maybe then you could give me the 3rd element to the question one more time because I didn't catch this, was on the guidance. They are basically when we look at the I mean, obviously, the big question when you go through this substantial growth is where I will lead you. And obviously, as pointed out in the past, we don't want to impress by promises. We're rather impressed by delivering results. And let's say, so we know what we basically felt is now that, yes, we have enough data points to raise guidance because we feel that we have a better sense where the offer in patent expiry will lead us. And we have, let's say, better view on particular after the acceleration in hemophilia, where the hemophilia situation could lead us to. And hence, we basically raised guidance. And so what we what I can say is, it is what the it's not a we cannot obviously guarantee this, but it is using looking at the data points, it is what management feels very confident about. And let's say we want to build this business, And that's really what prompted this. So there's and there's probably not much more to add to this. So maybe if you wanted, the second part the third element of your question, which I didn't acoustically really get. And if we cannot solve, then we can obviously come back to you offline and provide you with information. But maybe if you had this, if you could say this one more time. Yes. It was regarding I think I thought one regarding the tax rate, which you factor in for the year. And the other one was with respect to the formulary changes at UnitedHealth with respect to the Orpilin. As I can understand and see one of your competitors has been preferred instead of Orkadin? Yes. I mean maybe we start with the tax rate, and Mads Olof can give you a view on this. Sorry, I did not catch your question fully, but I'll try to give you an answer and please come back with further questions or we can take it offline. But the effective tax rate for the quarter was 17.9% and for the 1st 6 months, 19.8%. And also, yes, the applicable tax rate in Sweden for 2018 is 22%. But there was a decision by the Swedish government on June 14 that the corporate tax rate in Sweden should be reduced to 21 0.4% from January 1, 2019, and from to 20.6% from the 1st January 2021. We have also used that also to calculate on the deferred taxes, and that has a positive impact on the quarterly statements with €39,000,000 positive impact in Q2, but that is relating to deferred taxes. Yes. And with regard to the offer, Dean, situation, if this is and there, basically, we would not comment on individual countries, not only as such as basically we corrected our topic in Canada and basically gained back the largest tender there. But basically, there we have the good news is for us that we have a significant part of our business on new formulations, and patients appear to see utility in those oral suspension and the 20 milligram. And these products gain popularity and therefore market shares of over 50% depending on the market. Okay. Thank you. You're welcome. Thank you. Our next question comes from the line of Erik Hultgott from Carnegie. Please go ahead. Your line is open. Erik Hultegord from Carnegie. Please go ahead. Your line is open. Yes. Hi. A follow-up question or a few follow ups on the pipeline, please. In the quarter, you spent 10% of sales on R and D, which is below industry average and also below levels usually considered required for sustainable growth. Should we expect this level to increase gradually going forward as you sort of speed up or increase or accelerate the activity within your in house pipeline? Or should we wait for sort of a some bolt on acquisitions before you sort of get the R and D spending up to more sustainable levels. So that's sort of a strategic question for you, Guido. And then a more detailed question maybe on Kynareth, I was wondering if you're planning to develop that drug within oncology, giving some of the encouraging data that has been presented within IL-one from competitors the past year? Thank you. Yes. Erik, it's yes, absolutely. I mean, basically, where are we at now in R and D? We are basically in a transition. I mean, we are not oblivious to the fact, let's say, that in our industry, other percentages are spent. We think but it's not about the number. It is about the project, yes? So really, more preclinical is now not what we believe we need. What we need is late stage, and we cannot invent now create what has not been seeded many years back. So our strategy is obviously focusing, as we have articulated, on bringing in projects. And as a consequence, once we have successfully been successful, you will, by definition, see an increase of R and D spend, let's say, which will be driven by the investments in the Phase III programs. Yes, so that's so we are very cognizant about this, but we feel that we will basically make our way. We are committed to R and D 100%. We are not a brand new generic model. Cannot so hence, we need to do this, but we need now to start from late stage and making our way then to earlier stages as opposed to from earlier stages to late stage because we need projects now that kick in faster. And that was also our takeaway from the discussions that we had with a number of investors who felt that this was important. And then basically, with regard to Kynuren, I mean Milan should take this in a little more detail. But clearly, we have realized utility of this project also in other indications amongst those oncology indications. And but probably it's a bit early to, let's say, to talk about definitive projects. But let's put it this way, we are more confident about Kine Red than ever, yes? And maybe Milan, you want to comment. Thanks, Guido. I agree. You can say currently, we have 2 main programs ongoing. We have the gout study that we discussed, Phase II. And then we have the Phase III STILL study, hopefully enabling an approval in the U. S. And then beyond that, we have a number of programs that we are thinking of in oncology and you can say the encouraging data that came out of the canakinumab study prevention of lung cancer is one of the ideas that we are juggling with, but we have a number of other ideas and we'll prioritize those against each other and see where is it we have our strength and when is it the opportunity could arise. So I think it's a bit early to say exactly what we would do beyond, but we are aware of it, and we agree that it looks encouraging. All right. Thank you so much. Thank you. Thank you. Our next question comes from the line of Rajan Sharma from Deutsche Bank. Please go ahead. Your line is open. Hi. Just a question on Orfadin, please. Are you able to quantify the quantum of the contract in Canada? And how sustainable do you think the defense against generics is in the medium term? Yes. I mean, the quantum in Canada, I mean, we would not comment on, let's say, because we don't comment on a product by country level typically in terms of revenues. But all it is, we got, let's say, a significant part of the market back, and we're very happy about this. Let's say, is the defense for Orfadin everlasting? No. Let's say, I don't think that this is a reasonable assumption. But I think the utility of the product is there. There is a lot of loyalty. I mean, don't forget that patients are today 20 years old. They owe this to the availability of Orfadin. But it is very I don't want to speculate how this can be sustained. But I don't think that you will see also in the foreseeable future the classical erosion curve as you will have with this big pharma molecules that run out of patents. So we will and we have 7% growth, so the Q2. So we're quite encouraged, and we don't think that this is overnight changing. But we also are not saying that we can defy gravity. So at this stage, let's say, we have to accept that there are a couple of uncertainties, but we don't it will not fall off the cliff anytime I mean, in the short term. This is not what we're seeing yet. Okay. Thanks, Hans. You're welcome. Yes, I think we're approaching 3 o'clock and maybe one more question. Absolutely. Our last question comes from the line of Yun Yang from Jefferies. Please go ahead. Your line is open. Hi. Thank you for taking the follow-up question. Question on 1x10 product for hemophilia A. So as you increase the dose, is there like a kind of target truffle levels that you are going after given the competitive environment? Thanks for the question, Eun. It's Milan. I think we as I mentioned, I think we recognize convenience, but we also want to bring therapy forward and provide even better protection than the therapies today. So I'm unable to give you, you can say, a trough level that we're specifically targeting, but we are aware of. And we want to make try to make this product into more than a convenience offer. Okay. Just one quick question, the stool disease with Kineret, you are running Phase III trial for Astellas disease in North America. When do we expect the data? We are currently enrolling patients into the trial. We have enrolled 6 patients out of the planned 81 trial 81 that was preplanned. We are not entirely happy with the, I can say, rate of enrollment. So I think it's a bit premature for me to say when we would be done. Right now, we have opened quite a number of sites. So we are maybe running at fuller thrust, and then we'll have to see when we can accrue the patients. There is maybe a certain seasonality around stills. Maybe it occurs more, you can say, in the winter period. But nevertheless, I think it's too early for me to say when we would complete enrollment. Yes, on this note, I think we would like to end the call. If you have further questions, please do not hesitate to reach out to Jorgen or to Linda, and we'll try to address further questions as they may arise. Thank you so much and wish everybody a great day. Thank you.