Earnings Call: Q3 2017

Oct 25, 2017

Ladies and gentlemen, welcome to the presentation of the Q3 results for Sobe. For the first part of this call, all participants will be in a listen only mode and afterwards we'll have a question and answer session. Today, I'm pleased to present CEO, Guido Ilkhus and CFO, Mats Olof Wallin. Speakers, please begin your meeting. Yes. Good morning and good afternoon to everybody. It's this is Peter Horkers, and it's really a pleasure to welcome you to this call. I mean, we want to familiarize you today with our obviously with our Q3 earning results and give you a little bit of an insight where we stand in the progress of company development. We have here as the moderator was just introducing, Madsula Walin, our CFO and also Phil Wortz, who is the Head of Hemophilia because we thought it's a good idea to provide you with some additional insights and where the business is going. On this note, I would like to go straight into the to Page 3 of the presentation. I mean, I think the forward looking statement is understood and the limitations according to this. Basically, what we had a fantastic quarter, at least, the way, let's say, the management is looking at this, 37% growth in top line on a quarter to, let's say, to quarter basis quarter to last year basis. We had phenomenal growth in Ophelia with over 600 growth, a little bit of growth and also Orfordin and Kinered, when you actually adjust for currencies, we're growing very nicely double digit. And that tells you that the company overall is in a pristine condition. So basically, this prompted us also to revise outlook for the year, and we will talk about this later. And coming to the next page, what did we do in terms of organizational development? We have reduced the number of direct reports, let's say, to myself and focused the team in an executive committee, because we wanted to make sure that we have a smaller group of people driving the main decisions of the company. We have brought in a new Head of Specialty Care. And as you know, this was one of my first decisions that we did not sell the partnering product. And we saw this as an integral part of forming a specialty gear franchise. So we brought in now Norway to a true entrepreneur and let's say to basically now build upon this and build out this business, which we believe is concentrated widely. And we are going to have a new chief legal by January 2018 and have signed an agreement with Torbjorn Horberg, who is going to join us from Takeda. So when we look at the financial highlights, Page 5, I mean, there you can see quarter on quarter the growth story of the company. And we will have we have adjusted for the onetime credits in the color of orange. So you see that we had a very strong quarter on quarter growth, why it's really, let's say, the Q3 would have actually also increased if it wasn't for some inventory adjustments for Refracto and some currencies effect. Let's say, considering that this is normally a slower quarter due to all of these deals in Europe, actually, we're very satisfied with the result. Strong gross margin is 70% And let's say, and very powerful EBITDA was SEK 536,000,000 and healthy cash flow as you can see on the slide is SEK 580,000,000. Going now to the next slide. And I should find out outline that obviously, Max all of Berlin is going to lead you to the financial section in much more great detail. We'll make sure that we give proper justice to this part. So when you come to the earnings side, let's say, basically, you look at it, we have strong gross margin. We have our EBITDA is 1,400,000,000 let's say on a year to date basis and let's say the cash flow over €1,000,000,000 So we think that the company with a 4 €600,000,000 revenue line is in a nice condition and the 18% increase is let's say not considering the adjustments. So when you basically on this note, I think it's important there has been a lot of debate and discussions around prospects in hemophilia. Hence, I thought it's a good idea to bring Phil Worten in law. We just had quite extensive interactions with our key opinion leaders and customers to share a little bit about and bring some perspective on where do we stand with hemophilia and what are and give you maybe a glimpse why we are extremely bullish about the future of our products. Phil? Yes. Thank you. Good morning, good afternoon, everybody. And so before we head into the numbers, let's take a look at where we are with our hemophilia franchise. The Loctrin and ALFILEX both represent the first real advances in therapy in hemophilia for many years and have been established now for a number of months years in many countries and really are very well established. These products have an established safety profile with a strong efficacy profile and as such offer really reliable and predictable therapies in the care of people with hemophilia. The SC technology has a room to extend the half life is a natural approach. So we feel we don't face the concerns and issues around accumulation of the extension of the molecule. And our approach to pricing has been designed to enable rapid and widespread access without delays and long discussions with payer authorities. And to your point, when I listen to the feedback from the field, I've just come back from a week in the Middle East and I've been around many of our territories across Europe as well, it's consistent in the confidence that the community and the patient community have in our franchise for now and in the future. So let's look at the numbers. Yes. Thank you so much, Phil. I mean, when you look at Slide 9, when you look at total revenues, I mean, we have now SEK805,000,000, and let's say, and of which, let's say, SEK 550,000,000 are product revenues and EUR291,000,000 are related to the royalty stream. So as you can see also our partner, let's say, these are estimated royalties. But from any indication, we are getting this is they are having they are also maximizing the value of their part of the territory. So it just shows the confidence in the franchise. Very, very powerful growth year to date, EUR 2,100,000,000. And let's say, obviously, with a very significant uplift, that is exemplified by the 600%. So overall, very pleased with the results so far. So when you basically look at the Galoxta launch, and we did some code benchmarking with our cost from external sources. I looked at this. It's probably fair to say that this is the most successful launch. If you look at patients converted in their Ophelia over the last 20 years and which gives credit to the strength of the product GoFa. And Elocta, we are extremely bullish about it because it's really, I think, an important need of improving protection. And I'm sure that it will be one of the other questions that we can address at a later stage. We have now got reimbursement in 20 countries. And we'll announce shortly that we just got another country approved. And let's say, so we feel that we are really on the ramp. And let's say, when you look at the quarter to quarter uplift, I mean, we see strong confirmation. When you go to the next slide, Uprolix, I mean, it's really also taking off now. And granted, let's say, this uplift is still a little bit delayed due to the lack of reimbursement in a number of countries still. And we're working very hard on this to correct this. But let's say this is forthcoming. But considering all this, she's quite satisfying and gratifying with us also 5 colleagues. And that is obviously quite given the nature of the number of patients is a little bit the smaller cousin of Elocta, but the progress is quite formidable from our perspective. When you look at the operating situation on Page 12, you basically you see, I mean, an increase of 5% in absolute terms, but let's say, 8% of the quarter, correct, for currency, 10% on a year to date basis, correct, it's for currency. So overall, we think it's a strong growth. Let's say, Q2 was obviously exceptionally strong, probably affected to a certain degree, Q3 as well. But we haven't yet felt the pinch of generic expiry we talked about this, let's say, earlier. I mean we can also not walk on water and pretend that generic entry will have no impact. But so far, let's say, we are managing quite well. We have some tailored formulations, new formulations for patients that are we believe are extremely relevant to address patient needs. But we also have a very tailored approach to customers. I mean, and don't forget, many of our customers, let's say, basically owe their life to the existence of offered in. So there's a different maybe also customer loyalty in this sector than you would expect, maybe the one or the other primary category. And let's say when you no longer look at the Thyroid, I mean Thyroid is a fantastic product, very strong growth. So year to date, adjusted for currency, 11%. Let's say, the quarter was a little bit softer with 6%, adjusted for currency in absolute 3%. But this is more, I would say, as a seasonal effect. We don't see that this is now a new trend for Kynareth. We were quite bullish for the product, particularly also now forward looking, entering new areas. This product is very relevant in many areas of information. And we are very encouraged also that you see this with our commitment to further integration development in the garden skills that we believe in this product and want to build it out. It's an important pillar for our company. When you then look at the next slide, which is Refacto. And Refacto, the revenues, they're always quite choppy. And it's not because the product in market sales is moving up and down like Yoyo. It is more that this is a result of the inventory management of our partner Pfizer that basically depending on their needs, we basically see these adjustments. You want to look at the end market development, which is more stable. And let's say, I think you have to go to the Pfizer website. But we basically what you see here is more of a result of our supplies into Pfizer. As a consequence, we had a consolidation after a very strong quarter in Q3, which is really not beyond our control. We just supply according to the demand and requirements that are pent first. But when you look at it as a whole, I think management is very satisfied with the outcome of the quarter. And let's say, Mats Olof, I think on this note, would familiarize you with more details on the financial results and provide more light. As Rodolfo? Thank you, Guido. Good morning and good afternoon. As to Guido, Holger mentioned initially, the revenues for the quarter came in at SEK 1,600,000,000 which is 37% higher than the same period last year. Kopi has negatively been affected by currency and at constant exchange rates, the revenues increased by 41%. For the 1st 9 months, revenues came in at $4,006,000,000 which is 18% higher than the same period last year. However, if we adjust for the 2 one time credits that were received in Q1 and Q2 2016 of a total of SEK 782,000,000. The increase for the 1st 9 months is 45%. Gross margin came in at 70% in the quarter versus 67% in the same quarter last year. Accumulated, so we have 72% in gross margin versus 71% last year. However, there were some onetime effects for 2017 in Q1, and there was another inventory adjustment. And in 2016, as I just mentioned, the 2 onetime credits. If we exclude these extraordinary items, revenues accumulated January, September 2017 should be 70%. And for the same period last year, the 1st 9 months 2016 should be 65%, which means that we have increased 5 percentage units between the years. The operating expenses for sales and administration came in at €371,000,000 versus €327,000,000 in the same period last year. The increase mainly relates to continued organizational investments and to strategy development initiatives. And operating expenses for the 1st 9 months amounted to $1,167,000,000 versus $967,000,000 in the same period last year. Research and development costs came in at $240,000,000 $214,000,000 versus $171,000,000 in the same period last year. And for the accumulated 9 months, dollars 679,000,000 for 2017 versus $520,000,000 the same period last year. The cost increase reflects increased spending on programs for Kymriah, Elocta and Solvio-three as well as Sobi assuming its 50% share of Bioverativ's ongoing development costs. EBITDA for the quarter came in at $536,000,000 versus $282,000,000 the same period last year and accumulated the revenue EBITDA came in at $1,434,000,000 versus $1,333,000,000 the same period last year. Again, adjusting for the onetime credits in 2016, EBITDA increased with $750,000,000 for the 1st time. Profit and loss for the period all the way down on the profit loss estimates, the profit was $324,000,000 after tax for the quarter versus $135,000,000 the same period last year. Turning over to the balance sheet. As you can see, the cash position has improved during the quarter. And so we ended with a cash position of $1,758,000,000 at the end of September 2017 versus $1,189,000,000 at the end of June and EUR 786,000,000 at the end of 2016. Cash flow from operations in the quarter came in at $780,000,000 and for the 1st 9 months, it is 1,076,000,000 The good Q3 results reflect, of course, the good performance overall, but also that cash collection has been good in the quarter, meaning that the accounts receivables have been reduced since June 30, but also that there are slightly longer short term liabilities. By that, I hand over to our CEO, Guy Dorkel. Thank you so much, Nathalie. When you look at the outlook, I mean, you can see that we are quite excited actually about the results of the quarter that prompted us to revise revenues for the year. And let's say, basically, new guidance is SEK 6,300,000,000 to SEK 6,400,000,000. Let's say, we think that we and I think I've seen from Mazumab that we have built out gross margins with this previous year, and we think that we can sustain the debt to lower. And it's an increased level. And when you then basically make a deduction and say, we're better than we on an earning perspective, EBITDA. We increased guidance to €1,900,000,000 to €2,000,000,000 and from 1,700,000,000 to 1,800,000,000. That's basically in our so we debate this is in the management team and we think that we can deliver this. When you think about now the future growth prospects, what do we want to do, whether we want to take this business forward. So obviously, when you have 600% growth in hemophilia sales, this is not the time to consolidate that. So this is the time now to take your fair share. We have made great progress in terms of patient acquisition rate during the last quarter. We believe that there is much more out there that we can do. We are convinced that we have even with EHL, this might arrive the best product to fully in our hands, and we will go for it. And we will have made, as a company, trade off decisions in this regard to basically show that we are really as a company totally committed that these companies in the feed products in a way they shape reshape the products, but ultimately, they shape the company. And when you think about Specialty Care, we believe that there's great prospects. This is coming back to what I mentioned at the beginning. We felt that this is an underrated franchise. This is a very good portfolio. I mean, to have a market access platform like we have in terms of access to payers, access to the to KOLs, access to other relevant stakeholders, this is not trivial to replicate. It would have been a big shame to lose this, hence rebuilding upon this. And this was, as I mentioned, first decision that I took. And now basically, it is up for us with the new leadership to make and build a very promising portfolio and connect us also with our R and D efforts. In R and D, it's a that you can see that we don't make a big deal now around strategy. We call it more focus on future growth. But essentially, what it means is we're obviously looking for the right assets now, let's say, to complement our R and D pipeline and trying to move, let's say, things into more later stage, but also very satisfied with the progress that we have made. We just announced that we have recruited 2 patients, IPI patients, inhibitor patients for our IPI trial, which is very gratifying and shows that we what we articulate and what our beliefs are that these are fundamentally product, we document and back up with action. We also, let's say, have some made some good progress in other areas. And if there are questions in this regard, we have Mila here who can the Head of R and D who can answer this in the Q and A session. And then there's another important aspect of our company. When you basically look at us and I understand that there have been the 1 or the 1 question, how will we measure up versus the competitors that are going to enter particularly hemophilia space. And I think it is kind of 2 things to consider: a) when you are operating in an often rare disease space, company scale does not necessarily mean that you have a competitive advantage. But basically, our pathway is very clearly that we need to be an agile, very nimble organization. We have demonstrated great success in this regard in the past. Otherwise, we could not have shown the results that we have shown this year. But I think that more, let's say, to come. So from our perspective, that's what we mean by empowering and creating a nimble organization where we connect with the therapy areas. Let's say, for instance, film, who is representing hemophilia. That's another function, but we make sure that the accountability and responsibility is as close to the customer as it gets. And we think this is a great opportunity for a company of our size. So it's basically economies of speed that we try to achieve here. I think on this note, we'd like to open the floor for questions and answers. And And we have our first question from the line of Eun Yang from Jefferies. Please go ahead. Your line is now open. Hi, this is Carmen on for Eun. Thanks for taking the question. We saw that there was a tender order in Saudi Arabia this quarter for Allotek. Could you quantify the magnitude of effect that had on total Elocta sales this quarter? And is that something we can expect to repeat in future quarters? No. Unfortunately, we do not want to divulge this. And but obviously, the number of patients that we were able to get committed are very significant. But I think this would be not appropriate for us. Okay. And what about repeating in future quarters? Excuse me? Do you expect those kind of tender orders to repeat in future quarters? Yes, absolutely. I mean, this is going to be this is an annual commitment. And let's say that we got some of our partners and we have no reasons to doubt that we can fulfill this commitment. So we have won this tender, which is very substantial. Okay. And then for the recently initiated REITERATE study of ALOKTA, how do you expect the potential upcoming approval of ACE910 to enrollment, if at all? So we're asking whether we expect whether we are expecting baseline terms having an effect on enrollments? Yes. I mean maybe Mila, you want to comment on this. So this is Mila. As far as we said on R and D, we do not expect that to affect enrollment. We are confident that we have a very strong preclinical evidence supporting Elocta and the use of IPI. We have case studies that support this. And we feel fundamentally and members of the community agrees essentially to the fact that eradicating the inhibitors is the way to go and the bispecific antibodies are not able to do that. And we just enrolled the 2 first patients in North Ireland in our rescue ITI study. We are happy with our collaboration with Bioverge. They are working on their first RTI study. So we do not feel that would have any impact. I think it's also important to note in the recent case studies actually in hemophilia Bien in Germany where basically the inhibitors were eradicated within 6, respectively, 8 weeks. So it just tells you that we are extremely bullish about this and very confident that we can find the number of patients for our choice. Okay, great. And then one more if I could and I'll get back in the queue. Bioverativ mentioned in the Q2 that Alokta captured around 15% share of the U. S. Market. Do you have a comparable figure for Alokta in Europe? No. We are not I think we have some internal yard stakes obviously, and we have made significant progress, let's say, according to those internal yardsticks. But we don't think that we want to divorce this. The next question comes from the line of Erik Holzgolf from Carnegie. Please go ahead. Your line is now open. Thank you so much. A couple of questions, if I may. First, what level of gearing would you feel comfortable operating with? Secondly, is your M and A strategy focused exclusively on bolt on deals? Or would you consider transformative deals as well, which would include equity as a source of funding? Yes. I mean, let's say, I mean, obviously, as you can see, we have cash flow that's still €1,800,000,000 cash in the bank. So we are not yet in the gearing stage. And let's say and it's and as you would expect from us, we are obviously reviewing all alternatives of external growth as you would do in a situation like this. But it would be probably not would be premature to speculate now where this lease is given the fact that there is no price for silver metal when you pursue assets, yes. Okay. And on sort of size of assets that you're looking for, Is it mainly smaller bolt ons? Or would you consider transformative deals? Yes. I mean, let's say, it's a good point. I think it's not the size that, let's say, that matters what we would look for. Our assets that, let's say, if you can find some, that obviously creates a lot of value and for the company. And that is what is driving us. And what we feel, let's say, obviously, there's a lot of encouragement now. But basically but it's purely speculative to now to think about the size of the asset. But we will make if we make deals, we will make deals that are accretive in terms of value generation. Okay. Great. Then just one final operational question. On Alprolix, do you have any information about market share in the UK and Italy, which is your biggest markets presently? And also has competition from Idelvion had any significant impact on the uptake of Alplix in Europe so far? I mean, we don't have, let's say, validated market share information on the U. K. And Italy that we can also not share because nothing would be not serious. Let's say, the and with regard to Ideavir, yes, I mean, as you would expect, let's say, it's a formidable competitor with a long heritage. Yes, they have also one or the other, let's say, here, whilst we have also made some significant imports. And let's say, yes, that could have impacted, let's say, obviously, the uptake. But let's say, it's also very natural when you think about it. It's a big opportunity, obviously, for the commercial organization is in hemophilia A. And let's say, to what extent this has played a role cannot I mean, one can speculate, but the yes, Aderiv is a good competitor. And you always have to be pay respect to the people you are dealing with in a competitive area. But we I think we have got a very significant share. So significant share, do you feel that you are on par with CSL in terms of share for Factor IX? Or are you above or below? What's your impression so far on the markets where both products are available? I think our impression is that we have a very competitive product. All right. Fair enough. Thank you. Thank you. The next question comes from the line of Lars Erving from Danske Bank. Can I just ask about the guidance for the remainder of the year? I mean, we would assume the midpoint of the sales guidance and then the gross margin, 70% as you have said. That indicates discretionary spending is broadly flat year over year and around the same level, around SEK 600,000,000 or so in the Q4. Is that how we should see the phasing on your investments and the ramp up of the marketing organization, etcetera? Yes. I mean when you have obviously when you're growing, let's say, year to date basis 600% with a franchise, you obviously feel encouraged to continue investing into this. I mean, it would be a myth to believe now that we should stop. I mean, right the opposite. We are encouraged to invest into this business. We have some areas, obviously that basically will come into the Q4 result. It will affect us. You might have read about our broader commitment to society and to hemophilia patients as such. We are working on a very significant donation program there with our partner, Bioverativ. And let's say this is a very significant effort that both parties are, let's say, supporting the hemophilia society beyond what the rest of the industry is doing, yes? And just to give you a sense of magnitude. And that will affect our operating results, let's say, in Q4, let's say. But we felt, let's say, considering the upgrade of the forecast that we are still doing the right details. Okay. Can I just ask about the I mean, the donation program? Is it possible to give any indication of the on the number of treatments, how many have been donated as a portion of your total deliveries? And how many have been sold through normal commercial distribution patterns? I mean the let's say, I mean, this is always a little bit difficult obviously, to get exact numbers. But let's say, but in terms of magnitude, Phil, the comment on this. You had a couple of thousand patients because some of them are not on prophylactic treatment but on demand. Phil, you want to comment on this? Yes, Sandy. Thank you. So in terms of numbers of patients treated through the donation program with the WFH, it's into the tens of thousands, actually over 10,000 people have received treatment. And there are around 1,000 life saving surgeries or treatments that have been carried out as a result of those donations. So it's an extremely significant program for a large number of people. The next question comes from the line of Richard Kutch from SEB. Hi. Looking at the partner product or I guess this is what you call the other part in specialty care that's been quite poorly in Q3. Could you comment on what happened there? Yes. I mean the underlying growth of the business is flat. I mean, what you see as partner product on a year to date basis is more the effect of the discontinuation of some of the partnering products. So underlying actually, it's not as dramatic. But the let's say but you have to be also realistic that the let's say, the effort margin profile at this stage is not in an optimal condition, let's say. So and basically this is now something that we want to correct. I'm personally very optimistic about this franchise, but it needs to be furnished. So maybe we'll see 1 or the other breadth in that. And let's say, you will see very nice results because fundamentally, the organization is good. But yes, you're correct that there are let's say, when you look at it on a quarterly basis, it's not exciting. Do you mean that you've been cleaning out low margin portions of Yes. We have lost in particular 2 contracts that have affected our business performance. Okay. Yes. And we're basically now we have hangover, yes. And in hemophilia with the lockdown and Albrex, were you positively surprised about the performance this quarter? I mean given the fairly strong Q3 figures despite that having both July August the summer periods which are normally slow or was this according to your expectations? I mean, it's I think it's in line with what we expected from this price because there's a lot of rules where do you see the future. We are 100% behind these products. We believe in them. We get these very encouraging results when we gain number of patients. We obviously monitor this very, very carefully by account and get a very good view on the situation. So the results were in line with what basically we would have expected based on the patient acquisition rate. And let's say, and we see this trend continuing. So yes, I mean, it's always nice when the money is in the bank, yes, let's say, but it is a consequence of activities that we have performed. Okay. Coming back to the targets for the R and D pipeline, you didn't want to comment too specifically on that. But could you talk anything about whether I mean, is it going to be products that's just about to reach the market? Or can it be still a couple of years out? Or how do you see that? Yes. I mean, it's obviously, we have so far, we haven't done anything. Let's say, I haven't scored a deal, so it's really premature to speculate. But based on the interaction we had with this number of, let's say, of the attendees of the call, The recommendation that we obtained is more late stage, let's say, more Phase 3 or Phase 2b or so than early. But proof is in the pudding. We can speculate a lot. Let's say, at the end, we are only as good as what we have signed up, and therefore, we didn't want to comment on this. When it comes, it comes. It's pretty binary. Okay. And just lastly to housekeeping things. What do you expect for the full year for net financials and tax rate? Well, we do not give any guidance on except revenues, gross margin and EBITDA. Those are the only committed guidance that we give out. But I would say that if you make extrapolate where we are right now on financial net and tax, I think that's probably in the right ballpark. Okay. Thank you. And the next question comes from the line of Peter Oslink from Pareto Securities. Please go ahead. Your line is now open. Okay. Thank you. Can you hear me? Yes. Yes. Okay. Just one housekeeping question. The split of royalties between Alperics and Elocta, could you just give us that? And then I would like to know what made you increase your guidance between Q2 and Q3. I think this is the it's not the first time, but it's still one of the first time that you actually increase your guidance or outlook two times a year. Usually, you give an outlook at the beginning of the year and you revise it at the Q2 report and then you keep that until you report the full year. So what happened between the Q2 and Q3 that make you revise your guidance? And lastly, when it comes to your strategy and your ambition to add assets, It seems like since you say in the report that you will rebalance your efforts somewhat towards North America, Given the competitive environment when it comes to these kind of late stage assets, What will make you successful in order to get any of those deals done without paying too much for those assets? Thank you. Yes. Maybe, Madolov, first on the first, the technical side, and then I'll comment on May 1 guidance and on the North America part. Program. Yes. Thank you, Peter. Thanks for asking the questions. However, we do not comment further on the estimated royalty revenues beyond what we have said in the report. It is estimated royalty revenues. It also includes a correction for Q2. So we do not comment upon the individual products as Bioverativ is distributing their Q3 reports on Friday morning this week. So that is an agreement we have with Bioverativ also and we pay respect to that. Yes. And Peter, maybe regarding the guidance, why did we change the rhythm? Let's say, I mean, the good news is that the business is actually doing very well. And let's say, when you go through a phase of exuberant growth, I mean, let's say, you basically say, where do you pick it? I mean, 600%, 550%, 650%. So basically, as the more data points you get, let's say, is we want to give, obviously, a fair representation of what we believe in. And that's basically what you see here. So I hope this was okay that we didn't feel bound to the historical rhythm, but the business is actually doing well. And with regard to, let's say, the North America, I think this is yes, I mean, for you can argue, let's say, that for European companies, North America most European companies in North America is a little bit more difficult. But when you look at what our North American team has done with products like Kynareth and Orfadin, like how they have repositioned these products that basically were existing, then basically invested into them, repositioned them for growth. The team that we have there and also the business development resources, they are actually Americans, yes? I think they are pretty this is a pretty good team, yes? I mean, so let's say, why would we now believe that we could not compete head on, let's say, with other companies? And these segments that we are looking for, they are not traditionally the segments that you would face for Pfizer or for merger and Dovia. So this is a more it's a smaller group of companies. And as I said, that's the reason why we don't want to comment too much on what may be or should be Let's say, we hopefully, we can do something. And then you know what the strategy is, let's say, by the action and not by what we might elucidate to. So I think let's let us surprise you, let's say, with what we do. Okay. As you mentioned just a follow-up, quick follow-up. As you mentioned Kinaret, I expect that your search will include already launched assets that is maybe underperforming or maybe is misplaced in the market where you see that repositioning could make some good value? Yes. I mean everything is possible, yes. I mean we will look for good opportunities that suit the skill set that we have in this company. Do you have a goal of actually striking a deal, if you want to say, within the next 12 months? No. I mean, this is to be honest, in all due respect, we'll not comment on it. Okay. Thank you. The next question comes from the line of Peter Seyfried from Handelsbanken. Please go ahead. Your line is now open. Hi, it's Peter from Handelsbanken. Thank you for taking my questions. Question at least relating to your visibility into potential future competition coming into the market. And what sort of kind of things are you looking for in the profile of competing products in order for you to sort of judge the future. I think it's basically to address investor concerns or concerns among those investors that believe that it's game over after competing products come in? And also the sort of needs for you to do M and A or business development, call it whatever you want, how dependent is that on your assessment of the situation as soon as competition either releases data or comes into the market sort of just to gauge your thinking on strategy and sort of the sequencing of events that may lead you to take one or the other action? Thank you very much. Yes. No, thank you so much. I mean, I think it's a very relevant question that obviously has been extensively debated. And frankly, we have a more positive view of life. First of all, we believe that we have the 2 best DHLs in our hands today. Secondly, we have access to 2 even more extended half life products in the wings. Let's say that are and let's say one of them going into patient within the next weeks, let's say, is imminent, let's say. So for this reason, we are actually quite confident. And we basically we also asked people who should know, did we make the wrong career choice, yes? Let's say, and again, is there something that we are missing? Actually, from the key opinion leaders that are determining the therapy today, as Milad said, the first goal is to eradicate inhibitors. And let's say and this is exactly what we believe based on the case studies that we have that we are doing. Secondly, there is given the nature of the disease, there's a lot of concerns regarding safety, particularly when you look at the history, longer history of this therapy area. This is what we're addressing with many 1000 patients now in our data base and safety, real world evidence. Let's say, when you see the progress, let's say, that we are now making, yes, I mean, we think this is widely acknowledged as a conservative area, but we have been able to make inroads. So yes, while we see, let's say, that there are new therapies coming, let's say, like bispecific agents, we think we are quite well equipped. I'm sure that they find a place, but we don't see that the place is as broad as now some people are speculating that there is going to be a case for EHLs, let's say, given their very positive efficacy safety profile. And so we remain confident in this regard to gene therapy. I mean, Armin Reininger was our Head of Medical. And he has been following this area for many years. And he said recently in a conference 17 years ago, there was a great prospect, which is going to change hemophilia therapy, which was gene therapy. 17 years later, there is still this great prospect of gene therapy that is going to come in the next couple of years. So I don't want to downplay this. Let's say, I think there were some, let's say, encouraging signals, but there are not yet data on a couple of 1,000 patients in this real world evidence. And so basically, we live in a world with, let's say, with a certain degree of uncertainty. But frankly, I'm extremely happy to be in our close and not in somebody else's close at this juncture. And we have the real data. We have, let's say, the uplift. We can see the traction. We have the connection with the key opinion leaders. It's not so easy to replicate this, yes? So let's roll let's say, die is rolling or we will find out. Let's say at the end, so we can speculate a lot. But I don't feel that we are in an export situation as visualized by the one or the other commentary whatsoever. And we will also, obviously, in the forthcoming months as you know, evaluating, well, this will be a consistent evaluation what is the of new therapies, what will be the, let's say, therapies that have mid- to long term prospects and we will not be that ignorant to this. But for now, we feel extremely confident and positive about our close. Phil, you want to look at something? Yes. Thank you, Giv. And I'll just echo your thoughts really. I mean consistently what we hear back from the community is that they see replacement therapy as the future. And there are interesting things potentially on the horizon, but they're likely to be interesting for a very small portion of the community treated for hemophilia. And so I absolutely echo your thoughts. We feel very confident in Aloksa, very confident in Alprolix. The evidence and real world experience really underlines the value that they bring to the community and hence the enthusiasm that is increasing for the conversion from existing treatments to them. Yes. I hope this gives you a little some data points, let's say, that helps you to evaluate the space. But we are not as you can see, we are not in a situation where we feel, well, the world is coming to an end at a certain given point of time for our franchises whatsoever, we are encouraged 600%. You can speculate a lot, but numbers talking. Okay. And perhaps just a follow-up question. You said something about continuing investments to build up the business. I think this is talking into 2018, but can you provide us a little bit with some modeling input with respect to how we should think about the incremental level of SG and A and R and D spending going into 2018? Thank you. I appreciate, obviously, that this would be an interesting aspect, but unfortunately, this is not part of our guidance. The next question comes from the line of Samir Devani from Rx Securities. Please go ahead. Your line is now open. Thanks for taking my questions. Congrats on a good quarter. I've just got a couple. First question is just on Aluktai. Just want to confirm that there were no unusual stocking effects because, obviously, it was a very strong quarter. So if you could just confirm that for me. Yes. Not I mean, definitely not encouraged by management. Definitely, we are not aware of any stocking. Let's say, can I 100% guarantee you that there is not a representative that has found something? No. But I don't think we have we can see any anomalies whatsoever in our supply chain, and we are very vigilant on this. Okay, very good. And then just secondly, just you mentioned Guido and Orphadin that you haven't really felt too much of the pinch of generics. But I'm just wondering if you could just remind us what roughly what proportion of Orphadin sales still in the U. S? And what penetration of the new formulations that you've recently launched have you achieved to date? Yes. I think the U. S. Business is roughly half, let's say, of our opening business. And let's say, I mean, we have a considerable share already on the new formulations. And let's say, the generic for Freikle Pharma, at least to our knowledge, has not made any growth yet. And we have a follow-up question from the line of Erik Huftel from Carnegie. Please go ahead. Your line is now open. Please go ahead, Erik. If you're on mute, could you unmute yourself? Yes. Thank you. A few follow ups. Given the strategy review suggesting increased investments for future growth, would you do you feel comfortable with consensus earnings expectations for 2018, which I believe ahead of the quarter was at SEK 2,700,000,000 on an EBITDA level? Then secondly, will the Specialty Care model change from now on? I would you consider paying more upfront for product rights to gain higher returns long term compared to the previous model? Yes. I mean to the first one, obviously, the time for guidance, let's say, as far as I think, if I'm not mistaken, Q4, yes, when we have this Q4 discussion and then we will, at that time, obviously, provide you guidance. Obviously, when you look at comfortable is always a big expression, but we are in the delivery game. But we will give guidance when we are let's say, when we have reached Q4, and then we can talk more about this. With regard to, let's say, in all of the investment strategy and into new assets, I mean, it's purely speculative. Obviously, it's a juncture, but I think we are cognizant about the fact that if you want to increase your margin and you don't want to, let's say, have a distributor model, well, then you have to show also a certain commitment. And that typically includes milestone payments or upfront payments. And let's say, we don't know. Otherwise, you will not achieve that. And that's the end. And I think we are cognizant about it. Okay. Great. And will it continue to be sort of a diversified approach within Specialty Care? Or will you look for more sort of focused a more focused approach on a few larger products? I mean let's say, I mean, at this stage, it's obviously purely speculative. But to the extent we can align this therapeutically, we would be not. I mean, let's say, but this will depend on the opportunities. It will be an iterative process. Let's say, we want to make sure that we take this in a very measured approach. And when the time is there, I'm sure we can update you on what we have done soon. And we have another follow-up question from the line of Peter Siester from Handelsbanken. Please go ahead. Your line is now open. Thank you for taking this follow-up, which I just forgot before. I mean, the story or notion of share buybacks, dividends, etcetera, that sort of that has been popped on and off during the course of the past couple of years. Given your investment strategy, is that something that we should essentially forget everything about over the next for the foreseeable future? I mean it's a growth story, let's say. But maybe Matoslav was very good custodians of our finances and he can comment on this. Well, thank you. Thanks for the question. Regarding share buyback or dividends, that's a decision by the Board that should be approved by the AGM. And so far, the company has not been in that position. But what the future hold remains to be seen. But no decisions yet, and it's not management's decision. It is a decision of the Board and of the AGM. Okay. Thank Yes. I think we might have room for one more session, and then we have to probably close the call. It's 3 There appears to be no further questions. Thank you so much for your interest in the company. We are obviously as you can hear, we are excited about this about our prospects and about what we have done so far. Look forward to updating you in the latest in the quarter from now. Thank you so much. This now concludes the conference call. Thank you all for attending. You may now disconnect your