Ladies and gentlemen, welcome to the presentation of the Q4 results for SOBI. I will now hand over to CEO, Guido Oelkers, and CFO, Mats-Olof Wallin. Please go ahead.
Yeah. Hi, everybody. This is Guido Oelkers. Just a quick intro, let's say, who is here on the call. Obviously, Mats-Olof Wallin, our CFO. Also our Chief Medical Officer, Milan Zdravkovic , and Phil Wood, head of hemophilia. If you have more detailed questions at the end of the presentation, we would be very happy to take those. It's really my pleasure to introduce to you the results of 2017. Maybe what we could do is go really right into the deck. We go straight into page three. When you look at, let's say, a quick snapshot, what have we achieved during 2017. For me, this is a great opportunity to present what we think are pretty stellar results. We had fantastic sales growth. Excluding the one-time credits in 2016, company has grown 45%.
Basically, when you look at the hemophilia business, the product business, we have a six-fold increase. Very strong underpinnings of the business. We have not only done, I think, a great operational job, we have also complemented our portfolio by the new extended partnership agreement with Bioverativ, giving us access to the new [beta fusion] EXTEND molecule to factor VIII and factor IX. With this basically creating a long-term pathway for the group to also be at the edge of hemophilia treatment in the years to come. When you look at some of the endpoints we have shown in a recent trial, let's say that Elocta has very beneficial effects on joint health. The publication by Professor Oldenburg in Bonn.
We are very gratified because these data have not only demonstrated fantastic results in patients from on-demand move to prophylactic treatment, but also from prophylactic treatment with other EHLs to Elocta. Giving rise to the belief that Elocta with the Fc fusion technology has more to offer than just extended half-life. We have also been able to get a new dosing regimen for Alprolix, let's say, with two weeks and longer, allowing us to provide patients more choice in their individualized treatment. What is also very reassuring is that we now brought into the real-world evidence that we are collecting comprehensively for our molecules in hemophilia. We got A-SURE out of the woodwork and basically are now recruiting patients, obviously. Have also for our ReITIrate trial.
For patients with inhibitors and who failed on previous ITI treatment, we have got this off the ground and have now quite a few patients already enrolled in the trial. Bioverativ has done the same for, also now recruiting for their inhibitor trial in the naive patients to the ITI treatment. When you think about the, what is also obviously key is not only having access to the EXTEND molecule, but we have also now first patient into the trials in phase I now commencing. It's a very important milestone for the company that we were able to move this project from pre-clinical into clinical. Obviously now when you think about it, Elocta, while it's not launched everywhere, has obviously made significant strides to further internationalize, to be internationalized.
On the specialty care side, this is something that we have set up, obviously in Q2. You remember that we basically one of the first decisions was not to sell the partnering business because I think we thought it was just too good. This has proven to be the right decision. You look at the growth of our more specialized molecule in specialty care, the KINERET, the anti-IL-1 and ORFADIN. Both products have shown double-digit growth and particularly the ORFADIN performance is very gratifying, considering that we have lost patent in one or the other country. We have been able to overcompensate this impact with the help of new formulations, but also with the help, obviously, of a very customized patient-oriented commercialization approach.
With regard to ORFADIN, I mean, we have got the product also approved, the new formulations approved in a couple of countries, in Saudi Arabia and Canada. For KINERET, I think it's fair to mention that we also got approval in NOMID in Canada, whilst we kicked off the studies in gout and Still's for KINERET. Very important indications for the product that will be particularly important in the midterm when we commercialize this product and bring it to an additional group of patients. Which has also given the race to our belief in our R&D strategy, is that we were able to move a preclinical project into clinical, and this is SOBI003 and MPS IIIA. We can talk more about it later. Basically, when you talk about the events in the reporting period, we talked about SOBI003.
I think this is a fantastic achievement for the company, also, that we have been able to be accepted by the Irish board to be the standard treatment now in hemophilia A and B on an exclusive basis for extended half-life products. This is a phenomenal achievement, and it gives you an impression of what can be done with these products in the right setting. On that note, I'll go straight to the financials. I mentioned the 45% on a, very positive also for Q4. Gross margin obviously substantially increased to 71%, coming from 67%, and very strong earning increase, of 195%, and this coupled with strong cash flow. I'm sure you will see later in the section that not all of it presenting, that we were able to pay back debt and increase our cash position.
Very positive from a financial standing perspective. With regard to the financial highlights, as I mentioned, our SEK 6.50 billion achieved. That's also clearly we were beating quite a few forecasts that have been around related to our company. 25% absolute growth. Organic growth, taking away the one-time credits, 45%. Gross margin on a full-year basis, 72%. With over SEK 2 billion EBITDA, SEK 2.053. That's a 33% increase on an absolute basis, obviously substantially more if you take away one-time credit. Very gratifying cash increase. When you look at the companies now, where do we stand today? It's obvious that we are primarily present in Europe. That's clearly where we come from, where the company is emanating from. This is our stronghold position where we have the two divisions. North America, obviously for us, quite important.
It's clearly an area that we feel very strong about and that we want to expand, as we have previously alluded to. I think our sales in other markets, in MENA, we start becoming a factor and also the recent successes in Saudi Arabia in hemophilia, I think give rise to believe that these positions will expand. Let's say now, I would think over years, when we build portfolio, maybe there is also an opportunity to further internationalize the company. At this stage, we are very centric on Europe and North America. When you look at the commercial results, I think for us, obviously, I mentioned the kind of growth momentum is We are obviously very excited about it also. Needless to say, but not just by the absolute number.
When you look at it on a quarterly basis, you see a substantial increase and uplift again in Q4, which is very gratifying, that basically we picked up the speed and that our commercial effectiveness efforts and our efforts within the organization that focuses on execution appear to show results. This coupled with very strong molecules, obviously, is propelling growth here. It's also very positive to see that our colleagues from Bioverativ have done a spectacular job, hence the pretty significant revaluation of royalties, particularly when you take away the one-time credits that we had last year. That basically you have to take away this and you see, obviously, very substantial growth in America, even though they are in the commercialization around two years ahead of us, given the reimbursement situation of the product.
When you look at Elocta, which is our flagship, you'll see, obviously, a very nice uplift of the product. The growth is driven across all countries. Given the patient number and the, let's say, the commercial success primarily driven by France and Germany to a certain degree. We're very happy to see now that we further internationalize products. For us, as we had outlined during previous events, we see a couple of vectors of growth, let's say, for us and one of them is obviously further internationalization and further penetration and building then upon some other factors which we can talk about later. When you talk about the landmark commercialization of Elocta, we had a fast launch sequence.
We were beating benchmarks for regulatory, but also in particular in the reimbursement area, that clearly demonstrating that the company is very proficient when it comes to patient access and payer negotiations. We had very good results with a couple of tenders, for instance, in Ireland, in Saudi Arabia, but also in the U.K. We have now leading positions, let's say for instance, in France, in Ireland, or in Switzerland. We have been recognized by a couple of payers that this is a very cost-effective treatment. We think that the effectiveness of the molecule could be leveraged more in the interest of the patient in order to increase further trough levels and protection level. There is this opportunity to individualize this. Obviously, there has been quite a bit of evidence generation, as I pointed out with regards to inhibitors or ITI treatment.
Also for Alprolix, we see a very similar evolution now, like Elocta, very strong uplift during Q4. That's very positive because it's a little bit behind at the launch sequence given the negotiations with payers. Now launched in 14 countries, but more countries to come and we'll keep you up to date in this regard. When you think about, let's look at this uptake, obviously very substantial increase in Q4. The product, we believe, is one of those that actually when you look at this profile with a half-life of, with an application of more than four weeks. More than two weeks, excuse me. And with its profile, that we talk later about it, I think it's one of these very strong forward positions for the company. What have we done? Our strategic imperatives.
We have collected quite a bit of real-world evidence, which clearly demonstrates our safety profile and efficacy profile. We provide individual choices. We have shown very favorable bleed rates where the products are individualized in prophylactic treatment, but it can also be used, obviously, on demand and when you need it most, in surgery or in other serious condition. We have been able to demonstrate, to eliminate inhibitors. Let's say this is in the case now, but very encouraging results from case records, and 19 of those were published at the latest ISTH meeting. That encouraged us to go now into a clinical trial environment. Hence, the ITI program with Bioverativ. We are driving, obviously, the joint health agenda because we feel important not only to focus on bleeds, but also on subclinical bleeds that affect joints. Here we have now very strong data, as I outlined earlier.
We feel that this gives us, for the years to come, a very strong position. On the next slide, we wanted to show you why the market for Alprolix is obviously smaller given the incidence of hemophilia B versus hemophilia A. This is a very strong proposition with the Fc fusion technology and a very strong extended half-life. I think it's also more, let's say, important to say that Alprolix has benefits that go beyond trough levels. I think this is one of our challenges and task in the weeks and months ahead to make sure that this is more widely recognized and explained why this product has much favorable bleed rates versus competition. On the next slide, now we come maybe to the specialty care position. I mean, for us, specialty care is really built on three strengths. We provide, we believe, a world-class commercialization platform.
These services or this capacity we have not only in Europe but also in North America. When you look at the track record that we have been able to achieve with the transformation of KINERET in both parts of the Atlantic with the commercialization build-up for ORFADIN. All this in conjunction with our R&D capabilities also to prolong life cycle, to do indication expansion. We feel that we have demonstrated here quite a bit. We are very excited also with the successes that we have been achieving on the partnering side of the business. I talked about the life cycle indication expansion. We gave some examples at the earlier stage with regard to KINERET and ORFADIN. We have a true partnering approach.
We feel that this platform in Europe makes us an interesting partner, particularly for U.S. companies who might not want to afford or cannot afford commercialization in Europe. Equally speaking, we feel also figured that our platform in U.S. is quite attractive for European biotech companies who are considering on how to unlock value in United States and cannot afford to fail first try. When you basically look at the business in specialty care, I think it was a fantastic year as well. I mentioned double-digit growth of the two lead compounds, KINERET and ORFADIN. Let's say when you look at the total business and you take away the loss of Cometriq, the business has increased by 9%. That shows, let's say this business has actually a very strong organic growth profile, and it's clearly an asset of the board.
This across the board. We have very exciting products in the stable, like for instance, Xiapex, that is a very meaningful product from Endo in the United States. We have the rights to our territory in Europe. When we go to ORFADIN, here you can see that we have been able to launch new formulations, 20 mg oral suspension, and got approval for once a day, which is a fantastic achievement for our organization and have pretty strong performance across the entire EMEA region. Hence, very substantial growth. Obviously picked up the pace a little bit in Q4, but had a very strong year overall, this 12%. When we go to the next product, KINERET. This is even more stellar growth, given that this product has been repositioned for growth for quite a while and is now stable.
We are excited about the opportunities related to this anti-IL-1. It goes far beyond where it is currently utilized. This understanding, when you look at the literature, how many times now KINERET has been quoted or referenced. You can see over the last five years an exponential rise in publications, which gives you an impression why this product is really at the heart of many physicians and why they have so much interest, but also why they have such a strong underlying growth related to the product. When you go to the next slide, you see the molecule connecting to IL-1. Basically, just two takeaways. Gout and Still's are very substantial indications. We basically figured that there's a very significant opportunity. For Gout, we are in phase II. The trial is ongoing. In Still's, we are already in phase III.
We think that this will propel the product further. We need to be obviously recognizing the regulatory timeline. This is not something for this year, at least not in U.S., but it's clearly a very important driver for our midterm growth. Last but not least, we come to the, from a commercial perspective, to factor business, where factor has been an important generator of earnings for the company historically. It's a very stable business. Doesn't look so stable when you look at the chart, but this has nothing to do with the sellout from Pfizer. Let's say so when you look at the Pfizer report, you can see the in-market development. We are not privileged to comment more on this. What we understand is that this product is in a pretty stable condition.
Our revenues are more related to inventory adjustment at the level of Pfizer than to the demand that has been created in the market. Basically we come to pipeline. Basically here we just wanted to outline the following, that the two studies in Gout and Still's. SOBI003, one more time, very one of those rare diseases that is completely underserved with high unmet medical needs. The preclinical results, let's say, make us believe that this product is significantly different than preceding products in this product group that might not have achieved all endpoints. We are very excited about it. We filed an IND, got approval for it, and during the later part of this year, we will have first patient in. It's a tangible proof of our ability to bring products through clinical development and then eventually to market.
From an overall standpoint, we are, as a management team, obviously extremely happy with the operational results. I think it's not a story only of operational results, but it's a story also of moving important strategic endpoint, building the pipeline, securing EHLs was very, very important. Now demonstrating that we can products into clinical development from preclinical was an important endpoint. Overall, I feel it was a pretty good year that makes us optimistic for the future. On this note, I would like now to hand over to Mats-Olof Wallin who will bring our financial results more alive.
Thank you, Guido. As you have heard from Guido, also, the revenues in Q4 came in at an all-time high of SEK 1,875 million, which is 45% higher than the same period last year. For the full year 2017, the revenues came in north of SEK 6.5 billion. Number to number, we have a 25% increase. Also, we have to consider that 2016 full year was impacted by two one-time credits of SEK 708 million, and they were of non-cash flow impact. Disregarding those two, revenues for the full year increased 45% 2016 to 2017. Gross margin for the quarter came in at 71% versus 67% last year, same period, and that is due to the improved product mix that we have had seen continuously throughout the year. For the full year, gross margin came in at 72%.
EBITDA for the quarter came in at SEK 619 million, which is also an all-time high for a quarter for SOBI. EBITDA for the full year came in at SEK 2.053 billion, versus SEK 1.543 billion last year. That should also be taken into consideration, the SEK 708 million Swedish crowns in one-time credit. That goes also on the EBITDA line. In reality, EBITDA increased from SEK 335 million to SEK 2.053 billion, an increase of 146%. The EBITDA of SEK 2.053 billion and also the top line of SEK 6.5 billion is higher than the latest outlook that was given after the Q3 report. After the Q3 report, the outlook was SEK 6.3 billion-SEK 6.4 billion. The revenues came in at SEK 6.5 billion. Guidance on gross margin was around 70%, and the year-end numbers came in at 72%.
EBITDA guidance was SEK 1.9 billion-SEK 2 billion, and the actual result was SEK 2.053 billion. Net profit for the period was SEK 357 million, and net profit for the full year was SEK 1.149 billion versus SEK 802 million last year. Last year should also consider the SEK 708 million in one-time credit. Net profit has increased from SEK 94 million to SEK 1.149 billion. Turning over to the balance sheet. The balance sheet has been strengthened during the year with a positive operating cash flow of more than SEK 1.3 billion during the year. This means also that long-term debt has been paid back, the company is now debt-free and has a cash and cash equivalents of close to SEK 1.5 billion at the end of December 2017.
Inventories and accounts receivables have increased due to that business is growing, and intangible assets have been reduced with the amortization. Equity has increased from close to SEK 5.4 billion end of December 2016 to SEK 6.7 billion end of December 2017. By that, I hand over to our CEO, Guido Oelkers.
Thank you. Thank you, Mats. Now we come to the outlook. What do we expect for 2018? As you know, we are traditionally a company that is more focusing on delivery than the big on aspirational projections. What we basically see is a strong uplift of sales between SEK 7.5 billion-SEK 7.7 billion. We have here a range, reflecting that there are the one or the other uncertainties related to the business. Feel very strong about our hemophilia performance. Obviously you have to recognize, let's say the situation with ORFADIN, maybe the one or the other uncertainty regarding also manufacturing priorities. Gross margin clearly should be at least 70%. On the earnings side, we feel very strong about achieving between SEK 2.5 billion-SEK 2.7 billion, which would be up to more than 31% increase. That's it, we're very strong about this.
This is a reflection of top-line growth and our effective net programs. When you think about our strategic positioning, I don't want to dwell too much into this. I think we have made very substantial inroads into hemophilia, something that is not very trivial to achieve considering that we were a rather small player not a long time ago. I think we earned our respect as recent surveys also show we are driving obviously commercial effectiveness. We have built a pretty formidable specialty care business that we want to expand further. We have made great strides in terms of late-stage pipeline. We have not yet made a substantial move with regard to our North American presence. Basically, when you look at it from a future direction perspective, want to further internationalize our business.
That this will basically be a function primarily of our launches of hemophilia in more countries, particularly of Alprolix, but also there's still some room to capture now with regard to Elocta. We want to build further our specialty care position and be eligible as a preferred partner, particularly for U.S. biotech companies. Strengthen our commercial position in both part of the Atlantic and build, obviously, our pipeline. Really emerging from becoming a pioneer in rare diseases to somebody who is aspirationally becoming a leader. I think on this note, I want to now hand over the floor for questions, if there are any. Would love to provide more color.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad now. Our first question comes from Eun Yang from Jefferies. Please go ahead. Your line is now open.
Thank you. Good morning. I understand the guidance that you want to provide a conservative guidance so that you can meet or exceed. Based on your revenue guidance, it's like a no growth or like a low single-digit growth from fourth quarter run rate. Aside from hemophilia, is there any area that you think that could provide a difference in performance from 2017 to 2018? The second question is on the U.S. business. What percent of, I would say, 4Q revenue was from the U.S.? Given the growth in KINERET and ORFADIN in North America, what do you expect the U.S. growth would be in 2018? Thank you.
Yes. Thanks, Eun. Obviously, as you alluded to, we are in the business of delivering. Hence, we provide a forecast that we can attach a high probability of success to. Anything else, I think, would not be reasonable. The tradition of the company, we have no interest to change this. When you look at the different vectors for growth, let's say, why we are where we are. You've seen the acceleration, of course, in hemophilia in Q4, very encouraging. We think that we have a strong role here to play also in 2018, no doubt. With regard to other parts of the business, I think, where you see an effect, there's uncertainty when you are in a patent expiry situation with ORFADIN. You don't know how this effectively will impact your business.
We are able, as you have seen in Q4, to have a good shot at this and have been able to drive growth. This shows our connection, and we clearly are committed to the product as we go along. To predict that this continues growing double digit is more difficult. When you then look at the manufacturing business, there we are really in the hands of our partner which we cannot influence. Basically, we don't have material insights that make us now believe the world is coming to an end. We have to recognize that we are dealing here with uncertainty. This uncertainty is reflected in our forecast, while we see continued strong growth for KINERET but also obviously with our hemophilia business.
When you look at the growth of the U.S. business, was one of your questions, this we typically don't comment on. We don't show revenue by product, by company. In our scenarios, we see that the KINERET growth is contributed across the two regions of the Atlantic, meaning the U.S. and Europe, obviously.
Thank you.
You're welcome, Eun.
Thank you. Our next question comes from Peter Östling from Pareto Securities. Please go ahead. Your line is now open.
Okay. Thank you. I acknowledge that you have a history of providing very cautious guidance, I think that this year you're probably taking it to a higher level. I'm just wondering what is the logic and reasoning behind the current guidance if you don't clearly see the market differently than, for instance, your partner Bioverativ. Second question, just if you could talk a little bit about how many of the patients on ORFADIN has actually been switched to the new 20 milligram and oral solution formulations. Thank you.
Yeah. Why don't we talk about hemophilia. When you basically see the data point Q4, you basically look at it, you feel very encouraged. For hemophilia, I'm sure you have done this, you model the growth uptake, take away the adjust for the price difference. You basically will find us that we don't have to hide behind the Bioverativ forecast whereby the Bioverativ performance, just adjusting for the later time that we came into the market. We have no data point that would make us now, based on what we know and how we performed, that makes us believe that we should be more conservative. We have to recognize, obviously, that there will be new competitors entering the market. I think, as everybody knows. We also are convinced that we have a very strong proposition with our products.
Based on the data, based on the indication we got, indicated across all age groups, on our very clean safety profile, and then on the additional effects that we have just alluded to with joint health, but also the immunological effects that's manifesting itself in the case records in ITI patients. Overall, we'll be good. It's also good to recognize that other companies also have something to offer. These are pretty formidable companies, so we don't go ahead of ourselves. With regard to ORFADIN, let's say we have a give and take now, depending on the countries, between 30%-40% of our business on the new formulations.
Okay. Thank you.
Thank you.
Thank you. Our next question comes from Erik Hultgård from Carnegie. Please go ahead. Your line is now open.
Yes. Hi there. A couple of questions, if I may. First, on market share, if you could provide the market share update on EU's top five countries for Elocta. Secondly, could you remind us of the price gap per unit, on average, between the U.S. and Europe? Finally, how close are you to deliver on your strategic priorities to expand into North America and establishing a late-stage pipeline? Thank you.
Yeah. Erik, maybe I just start and then I hand over to Phil. Normally, I think we have not provided, if I'm not mistaken, market shares by market. Maybe because we have talked about it, there are more ranges. There's a broad range that probably rank from above 25 to lower than 10. That basically gives you a little bit of a range. That also gives you an indication that we feel it's quite strong, that we can still grow. Taking away now, obviously, Eylea, where it's actually simply 100. We think there's substantial growth still. The price difference, Phil, you want to comment on this, between the U.S.? Because it's a bit difficult given the nominal price and the effective net price. You know that in the U.S. you have different reimbursement systems.
We probably cannot ascertain to really have, and this is privileged information that Bioverativ do not share with us. At most, we can provide maybe a dimensional perspective. Phil, do you have a dimension?
Yes. Good afternoon, everybody. Hi, Erik. Phil Wood here from the hemophilia business. As I'm sure you're aware, the pricing environment in Europe is much more restrictive than it is in the U.S. As such, what we aim to do is to offer competitive pricing that reflects the premium that we believe that the product value brings to the people in the communities and people with hemophilia. We have a very competitive approach to pricing, but it is where we see value that we can drive into the business.
Is it possible to be a little bit more specific on the price gap without providing any exact numbers?
No, I think it's probably not up to us now to speculate here. I see, Phil. These are privileged information from Bioverativ, and we cannot even vouch for the accuracy of the data. I think it's not acceptable. It's not good. When you just adjust for volume. Volume is basically there, we have a pretty good idea that we are following their performance.
Okay, thanks. On the expansion into North America and building a late-stage pipe?
Yeah. We have screened the market very substantially. We are currently pursuing a couple of projects. It's early days. As you know, it's still binary. You either get it or you don't. Cannot really speculate about the future, but we are working on a couple of projects now to address this and hopefully can inform you when we have scored. Until then, it's purely speculative.
All right. Thanks a lot.
Thank you.
Thank you. As another reminder, if you do wish to ask a question, please press 01 on your telephone keypad now. Our next question comes from the line of Peter Sehested from Handelsbanken. Please go ahead. Your line is now open.
Hi, it's Peter from Handelsbanken. Thank you for taking my question. I would like to follow up, to start with Erik's question regarding the strategic. When you talk about the strategic things, the conversation always gets a bit high level and very knotty. To get to the nitty-gritty stuff in the U.S., what exactly is it that you want to achieve in terms of sales force presence, et cetera? Let's say, what is your medium-term view?
If we could just take the current phase that you have in the U.S. right now, could you elaborate a little bit on what kind of presence you have there in terms of sales reps, in terms of whether what you want to do there is adding something that would expand your overall presence, your commercial presence in terms of the market, or whether it's something you just add a pipeline product or a very late-stage product or a product on the market that you could leverage with your current infrastructure to get some more feelings for your thoughts on this issue. Then I have a couple of follow-ups when we're finished with that. Thank you.
Thanks, Peter. Unfortunately, we probably could not provide, let's say, with a detailed overview of our commercialization structure at this juncture. What I can tell you is that we have an adequate representation, let's say, in the U.S. which is in line with the needs of rare diseases. When you have an ITI 1 with the indication that you have, let's say the good news is you don't need hundreds of reps, let's say, to cover this. Hence, our structure is accordingly. It's competitive in these areas where we are in, but it doesn't extend beyond. Let's say now, what are we looking for? We will look for both, let's say, obviously, late-stage, but also bolt-ons. We'll see what we can in the end get. It's a marketplace, you might get something or you don't. You'll find out.
Ideally, obviously, we find something where we can leverage the people that we have, because that would allow us to be even more competitive and build on the strength. I'm afraid that let's say at this stage, I cannot be more specific, but once we have got something going, we're happy to provide you with more details on this.
Okay. Thank you very much. My follow-up question regarding your exclusive contract in Ireland. You will not talk about the price, but could you provide some flavor on the potential for, let's say, further similar deals like that in Ireland, or is this just a special case given the size of the country? My second question relates to, I guess it's sort of intertwined with your strategic potential question. I mean, is sort of the potential for returning cash to shareholders, I guess, with your strategic thoughts, we should forget all about cash distributions to shareholders in the near term. Is that correct? Thank you.
Yeah.
By the way, congratulations on a good quarter.
Excellent. I appreciate it. Thanks, Peter. Yeah. With regard to the Irish situation, let's say we cannot and obviously won't comment on any prices. Let's say it's, I think, one of these very unique scenarios where you have payers, patients associations, and also physicians collaborating extremely well and assessing product on their own merits and then making choices which are in the interest of patients. We don't expect that this becomes now the prevailing model in all countries. Clearly, we see obviously a merit to make sure that the patient has a voice, and we can only commend the Irish patient organization, how they have been able to assert themselves in making sure that the patient voice is heard. Phil, you want to comment on this?
Thank you. Just to say, I think that's exactly the point here, really. Because whilst we don't expect to see this procurement process replicated, let's say, in many places as the tender, what we do see increasingly is patients having their voice heard in reimbursement decisions. I think we'll see many situations going forward, particularly in hemophilia, as the patient organizations gather pace and momentum. I think interesting to see that in France, we've recently had Alprolix pricing approved and currently the only approved extended half-life factor nine treatment, even though we've been reviewing others as well.
Yeah. Basically, Peter, and I think there was another question, let's say, which was regarding, sorry.
Yeah, it was regarding use of cash distribution to shareholders in view of your.
When you give a forecast of up to more than 30% EBITDA growth, we think, let's say, that this actually suggests that there's still a great future in this company. We hope that shareholders agree with us and that we can make efficient use of their funds, let's say, in the interest of the business and continuing investing into this business. When you look at the vectors of growth for hemophilia, we still have a lot of ground to cover from a penetration, let's say, but also from an internationalization perspective. Recognizing obviously that the competitive landscape is going to change. We are fully aware of this and let's say that this will have one or the other impact, we are convinced that we have a strong offering.
Okay. Thank you very much.
Thank you.
Thank you. We have a follow-up question from the line of Peter Östling from Pareto Securities. Please go ahead. Your line is now open.
Okay. Thank you very much. Two quick ones. On your comments on the potential price gap between Europe and U.S., I acknowledge your replies there, but I think that you, sometime in the past, have said that the commercial value for your markets are similar to the ones that Bioverativ controls, mainly due to even if there is a pricing difference, there is, for instance, I guess, the use of prophylactic is more common in Europe. It maybe evens out a little bit. That's my first question, if you could just-
Yeah
reiterate if that's the case still. Also if you could comment a little bit around the extended half-life market, related to hemophilia B. Some of your competitors in that space, or several ones, have said that they are market leaders. If you could put some flavor to the dynamics into the hemophilia B market. Thank you.
Yeah, absolutely. Maybe with regard to the S. Clearly, as long as I'm here, I've never commented on the U.S. versus Europe, let's say, as equal potential. The only thing I said is that there have been analyst reports out there when I started suggesting that They have recognized, surprise, the difference, let's say, as they saw it at the time, that suggested a higher sales line for the U.S. versus, let's say, versus Europe. We are also recognizing now we are at the beginning of all penetration. I cannot say more. I don't think we have really commented on price differences, at least not since I'm there. Therefore, I want to refrain from this.
With regard to the second part, it's a bit like this phenomenon when you ask 10 country managers, "Are you going to grow above market?" Eight will tell you, "Yes." Which is mathematically obviously difficult. Obviously, many people want to feel like leaders. I think we can safely say that we have more room to cover because I think we have to explain, let's say, still, I think, the stronger to the community that you have actually superior protection with Alprolix. It's obviously difficult to ascertain some of these comments. We have got X% of switches because there's no real database that in an objective fashion can support either of those. Then you have to basically try to extrapolate from data that are available in a certain, let's say, confined space.
We don't make a secret out of this that we are not yet satisfied with our performance. I think it's also good sometimes to have an area that you can improve. Clearly, given the product profile, given what the product has achieved in U.S., we are encouraged to improve.
Okay. Just to follow up on the market. It was not the price difference I was after, could you verify my notion or comment on my notion that prophylactic use of factor-based products is more common in Europe than in the U.S.? Thank you.
Sure.
That is the case. That prophylaxis tends to be more widely used across the European regions because of the way that the products are reimbursed. In the U.S., there is a higher degree of on-demand therapy due to the insurance system.
Okay. Thank you.
That's it.
Thank you. We have a follow-up question from the line of Eun Yang from Jefferies. Please go ahead. Your line is now open.
Thank you. Both Elocta and Alprolix have been in the EU market more than a year. Are you seeing some price adjustment in certain countries, including Germany?
No, we don't. Obviously, when you have in the customary negotiations with accounts, there's an ongoing process. Sometimes, this can go different ways. You have not seen, let's say, an adjustment as an enforced measure, let's say, to our price situation. Let's say, at this stage, we're still encouraged by the fact that people recognize the superior profile of Elocta and Alprolix and what it can do to patients.
Okay. A quick follow on the pipeline. You have provided some color on MK-[inaudible] enzyme replacement therapy. How about SOBI005, the antibody for C5, as well as IL-1 antibody programs?
Maybe Milan can give you some color, Jørgen.
Hi, Jørgen. It's Milan Pavlovic, head of R&D. Regarding SOBI005, this is our C5 blocking agent antibody. We are currently conducting pre-clinical experiments to figure out how we could potentially differentiate this in this space. This is an early pre-clinical project. Regarding SOBI006, which essentially has the same pharmacological profile as anakinra, it's an IL-1 alpha and beta blocker. This is currently in CMC development.
Okay. Thank you very much.
Welcome.
Thank you.
Thank you. We have a follow-up question from Peter Sehested from Handelsbanken. Please go ahead. Your lines are open. Hello, Peter. Your line is now open.
Sorry, I had it on mute. Yeah, you should be able to hear. I was on mute. Starting off with a couple of highly exciting housekeeping questions such as tax rates and CapEx for 2018. I have a few follow-up questions. Thank you.
Thanks. Thanks, Peter. Maybe Mats -Olof can provide.
Tax rate is currently 25% for the year 2017. The actual tax rate is around 22%. Do you hear me?
Peter, background noise. Yes, there's some background noise where I am here, so just go ahead.
The actual tax rate is around 22%. Due to the new tax reform in U.S., we had to take a hit of around 3 percentages also on the tax rate for 2017 of a one-time nature. Around 22% is the actual tax rate. Regarding CapEx, what was the real question? Need for CapEx in 2018, was that your question? Sorry.
That is correct, yes.
We don't see any extraordinary need for CapEx to run the normal business in 2018 compared to 2017. No. The answer is no. No additional beyond 2017. Same rate.
Thank you very much. Perhaps just a final question on tendering in Europe, because there are some reviews out there in the public domain. We can see there are so many countries, particularly in Southern Europe, where you only have access to the market if you were engaged in tendering. Could you just elaborate a bit on perspectives in terms of access for your products in countries with and countries without tendering, and what is your strategy in that respect? Thank you.
Yeah, I think we obviously have to adopt to the system that is prevailing. Yeah. We try to provide in these tender situations, we try to provide attractive prices, but we are not obviously going to levels that sometimes may be more commoditized competitors are willing to accept. We want to get still some recognition for a superior product. Obviously, at the center of our intent is also the patient, because we feel that more patients should be able to benefit from Elocta, hence we are doing this extensive donation program. That's really at the heart of the philosophy of the company. We don't go down to this level. Basically, yes, there are quite a number of tender countries out there. We just got a price approved in Poland as well. We're thinking of how we can deal with this.
Normally our philosophy is make the product available also in our private markets on the strength of science and on the strength of a superior product profile. We have got a very positive recognition. In a non-tender market, what we do is we try to provide medical interesting propositions to physicians as everybody else tries. We think that we have a little bit of an edge. As you have seen in our clinical trial program, we try to generate more evidence to even more cement our safety profile and our superior features of the product.
Thank you.
Give some flavor. Thank you, Peter Östling.
Thank you. Our final question comes from the line of Peter Östling from Pareto Securities. Please go ahead. Your line is now open.
Okay, thank you. I promise this is my final one. Maybe for Mats-Olof Wallin. Could you comment a little bit about the operational cost in the quarter that was a little bit high? Are there any one-time items included in that, or should we use that run rate into 2018 also?
I think that's a run rate that you probably can use for 2018 as well. We don't give any guidance on the cost development per se, you have seen our guidance on top line, on gross margin, on EBITDA, and doing the math, you can see where we will land given that if you believe in our outlook for the stream.
If you look at 2017 and the selling and admin expenses, they fluctuated quite significantly between the quarter. Would we see the same kind of pattern in 2018?
Yeah, I would guess that Q3 is always a very low quarter or the lowest quarter in terms of cost. Yes. Of course, Q4 has been a high quarter in terms of cost. Also our EBITDA is also very, very high in Q4.
Yeah. Okay. Thank you. Stellar quarter, by the way, if I didn't say that before. Thank you.
Appreciate it. Thank you. I think on this note, we probably can close the conference given the timing that everybody has. Really like to thank you for your attention and for pretty interesting dialogue. Obviously, you know how to reach out. We have Jørgen and Linda if you have further questions. We are happy to be at your disposal. Thank you so much. Wish everybody a great weekend. Thank you.
Thank you. This now concludes our presentation. Thank you all for attending. You may now disconnect your lines.