Ladies and gentlemen, welcome to the presentation of the Q2 and full year report for Sobi. I will now hand over to CEO Guido Oelkers. Please begin.
Yeah. Good afternoon, everybody. This is Guido Oelkers. Today I'm joined here with this presentation by Mats-Olof Wallin, our CFO, and Armin Reininger. Before we go into the deck, mindful of the time, we have a solid hour. I just wanted to give you a quick brief on who I am. My first call, quarterly call. I'm here now for seven weeks. Very excited to be at Sobi because I consider the company as a fantastic platform to build a much bigger story than where we are today. We have fantastic three strongly differentiated products in the launch phase or still in growth phase. Solid earnings as you have seen, and obviously a fantastic team. With regard to myself, I want to make it brief. 30 years in the industry. Started my career at Hoechst.
More recently, I've been working for Nycomed as a Chief Commercial Officer, for Gambro as CEO, and then for BSN. It may be important to note this also that I was sitting on the board until the company was sort of made up. A bit of exposure, at least to Swedish context. I think what I've learned in the last years and what I hope I can bring here to the company. Discipline of private equity actually teaches you a little bit to focus on what matters. I hope that they can make a difference. The reason why I've been a little bit more "invisible" has been purely related to the fact that I really like to talk about what we have done, as opposed to only speculate what I might want to do. It's early days, seven weeks now on the job.
I still want to give you a little bit of a taste, where we stand today, and obviously, it's a great pleasure to present the quarterly results to you which I hope you will agree are pretty decent. All right. Before we start or go into the deck, forward-looking statements. Please take note of it, that obviously not everything that we might tell you might become true. On this note, I think we can go right into the beef of the presentation. On page three. When you look at the numbers, very strong quarter-on-quarter growth now propelled obviously by our hemophilia business. What we have also done is establishing a specialty care unit.
We mentioned this earlier, but for us, this was an important move for the simple reason that we saw, let's say, it would have been a shame to sell the partnering product because, associated with the partnering product is a very strong platform that we think can be leveraged and gives us reasons to believe that we can get more licenses and can be leveraged into broadening our specialty care platform and become a strong second leg. Both businesses are now of equal size, and I understand that we still owe you to show that this business actually has much more promise than what you might give them credit to at this juncture. In this deck, we provide you obviously with an updated outlook, and you will see that we have raised guidance. We'll come to this a little bit later.
As you can see, our franchise in hemophilia is really propelled by two growth drivers. One is, that we see obviously a great deal of penetration opportunities in existing markets, but also that we have not been taking full advantage of the territory that we have obtained as part of the deal with Bioverativ. As a consequence, for instance, we just got approval in Saudi Arabia, and we think that this will make a significant impact on our business. We are also very proud, and Armin, our head of medical, will talk a bit about more of this. That we were able to get a new dose regimen for Alprolix approved, which really makes a huge difference in terms of competitiveness for this product. We also, as a continuous effort of expanding the opportunities of Kineret, which we believe is a very differentiated IL-1.
We got recently approval in Neonatal-Onset Multisystem Inflammatory Disease in Canada. This is more of an example of how we're trying to expand the utility of Kineret across board. Going now to the next slide. When you think of financial highlights, you have seen probably the numbers. Be a bit more brief in this regard. We had SEK 1.6 billion on the underlying growth, and we talk a little bit about later. Without the one-time credit has been for the quarter 51%. Pretty stellar growth, let's say, driven really by the hemophilia business, but also very strong performance of the core brands. We had a nice gross margin expansion, as you can see, by eight points, and really driven by the fact that we focus on what matters. This triggers on to the EBITDA improvement to SEK 492 million.
This coupled with a nice cash flow growth. I think it's early days, so I can't really take credit for this development yet. Nevertheless, it's really exciting to present good news. On the next slide, let's say what you can see is, including the one-time credit, you can see the evolution, but that's really an anomaly. We have 12% growth, let's say, if you take account for this and for us, earnings stay the same. Coming back to the half year and let's say also on the half year results, the one-time credit make a significant difference, but underlying growth for the half year is 49%, so very satisfying. Let's say in the gifts just giving the timing, the growth margin improvement is a little bit less pronounced, but still very significant.
You see essentially an acceleration in Q2 and let's say an EBITDA of SEK 839 million, which we saw in August, a very nice evolution from where we're coming from last year. On the next page, you see basically the financial highlights, let's say including the one-time credit and then we are, let's say down to 11% growth and gross margin improvement. Let's say, well, this is a deterioration because obviously one-time credit is 100%, so that cannot be made up despite the still underlying growth. When you look at it's a very large company. On page eight, you can see the ReFacto, let's say, business for us. Why are we so excited about ReFacto? This is a stable source of income and basically allowed us to invest into and make choices that we would have not otherwise been able to do.
What we also like in ReFacto and what connected to this business is really the capabilities and bioprocessing that were clearly helpful when we got access to the hemophilia deal in the first place. I think this is a full circle. I wouldn't worry too much about these swings that you see on a quarterly basis because the underlying business growth, when you look at the Pfizer annual report, it's very stable. Its business grows at 1% and the quarterly movements are more a function of inventory movement and phasing. Getting now into the beef of commercial results and to the products. When you see, and this is what I mentioned, why we are so excited with still with Kineret, it's very, very strong underlying growth now with 18% for our product.
This shows that we see this product has much more legs and particularly in the U.S., we are very focused on the patient access programs and this seems to pay great dividends. For the quarter, we are growing at 20%, very strong underlying growth and coupled with some new indications. We believe that this is a business that has more legs. On Orfadin, let's say what you can see, we had a very good quarter and also half year results and let's say now it's 15% respectively 21% growth. Obviously, you know that the patent expiry in one or the other market has created some erosion, let's say for our growth. Overall, I think we feel very well positioned with our 20 milligram new formulation, 20 milligram tablet and/oral suspension. We'll have to find out where this is heading.
We're not hiding that there's a patent expiry, we think that we will make the most of it, thanks to the new developments. Now we come on page 12 to partner products and I think this is, let's say as I alluded to at the beginning, this franchise, taking away, let's say the discontinued products or terminated products, this business is around flat. It's not flat because it's not an exciting business. It's flat more the function of what we put into this business. We basically thought that there's much more legs, great infrastructure, fantastic access capabilities, particularly on the patient access side. We believe that we can grow in this business had we didn't sell it.
Let's say, and hope, proof is in the pudding but we are optimistic that we can A, grow this business and B, that they have a margin expansion by obviously new products. Now we're coming to the heart of the matter, the hemophilia business. Let's say here, as you all have read, we had a fantastic development. Now, on the chart you can see the impact of the one-time credit, but really underlying growth is very, very powerful, driven by our own product sales and that have grown very significantly. When you go into the products, Alprolix obviously accelerated extremely rapidly and 65% growth with this Q2, Q1 what we can see is that there's more market getting approved with higher penetration.
We are really on the ramp, as you can see now in the acceleration in Q2 the key markets for us is and what is doing extremely well is Germany, U.K. and Ireland and obviously the EMA approval of our new dosage regimen i s clearly very beneficial for this product as well. On the next page, we'll really like to talk about very quickly about Elocta and also here you can see an acceleration of growth during the first half.
40% growth versus Q2 to Q1. In the key markets here for us, France, Germany. On a [copy database], it's very gratifying developments also in Switzerland and in the U.K. We are very bullish and really think that Elocta and Alprolix. These are products that are more than extended half-life products. We are very encouraged by the ISO results that were presented at ISTH. On this note, I really would like to hand over to Professor Armin Reininger, who is Head of Medical, who will lead you a little bit through and will try to give you a little bit of a glimpse what is beyond Elocta and why we are so excited and why we believe that we have a rightful place to expand this product beyond where we are today. Armin.
Thank you very much, Guido. Good afternoon. Good morning, everyone on the call. Just maybe two sentences to my background. I joined Sobi beginning of the year. I work at the university clinic in Munich for quite some time at Harvard Medical School's Joslin Diabetes Center, and I had worked in companies Baxter, Baxalta/Shire in various roles heading up medical affairs for hemophilia hematology. Particularly coming out of ISTH, I really want to stress that half-life extension is one aspect that we actually really want to go beyond. The hemophilia patients for many years have not really a big change in treatments, but now with the product that are coming, they can go and really have not only less bleeds, but literally the goal is that those patients don't bleed anymore.
The Fc fusion technology products that we do have in hemophilia A and B reach beyond just that bleeds because it's well known and has been presented in one of our areas that not only the short-term bleed benefits or preventive bleed benefit is there, but also the subclinical bleed long-term outcome for joints so that you have patients that with subclinical bleeds have joint damage after 10, 20 years that actually is diminishing and we have ASPIRE data cuts year two and three that actually show even patients that have been on prophylaxis before and other products had improved joint scores after year two and three. I think this is indicating that the Fc fusion technology is going beyond.
Not just immune modulatory aspects, I want to come to that in a second, but also with respect to bleeds, it's a different and better product than the ones who are out there. Just a rough number when you think about the low trough level numbers, with Elocta you actually can reach three to five times higher trough levels as well as in the course of the treatment over every day and every hour of the day, you have better protection. I think this is crucial to understand about our product. When you go into the immune tolerance aspect and literally hemophilia patients that do have an immune reaction against the foreign protein that is given to them, namely an inhibitor, an inhibitory antibody. The treatment for that usually is to get rid of that inhibitor with immune tolerance induction.
Of course, there's a number of patients who do not really benefit because it doesn't work, it's failed attempts. We have now data, a chart review of 19 patients that was also presented at ISTH that showed that not only for the ones who tried for the first time, but actually some who have failed up to five times failed ITI attempts actually benefited and literally got rid of their inhibitors or the inhibitor title went down to zero. I think there is definitely something in those products that go far beyond just an annual bleed rate. With that, I also want to reach over to hemophilia B, Alprolix and I think there is also very clear you have a product that is going far beyond the usual treatment regimen. You can dose and give huge protection to patients with a once weekly dosing.
The label extension we had it in our clinical program and we actually got it also on the label 14-day dosing patients also benefited and could extend that interval with their dosing. I think just to give you the frame, this is something that is real world evidence and we have more than 5,000 patients now on Elocta and more than 3,000 on Alprolix. The real world evidence that generates more and more trust into the safety and efficacy of the product is what we're really proud of so far. Thank you. With that, I want to hand over to Mats Hultberg.
Thank you, Armin. Let's turn over to the financial statements. As Guido just presented, the revenues for the quarter came in at SEK 1,639 million. Looking at the statements, the revenues increased with 12% in the quarter. However, in Q2 2016, there was a royalty credit of SEK 386 million for Alprolix, which was a non-cash item. If we exclude that, revenues have increased with 51% in the quarter. For the first half year, revenues came in at SEK 3,035 million, which is an 11% increase versus the same period last year. However, there were two royalty credits, one for Elocta in Q1 2016 of SEK 322 million and one for Alprolix in Q2 2016 of SEK 386 million. If we exclude those, none of them were cash items, revenues increased with 49%.
Gross margin in the quarter came in at 71% due to an improved product mix. Versus last year, you can see on the financial statements that gross margin was 72%. However, again, if we disregard the royalty credit in 2016
The gross margin was 63%, which means that the company gross margin increased from 63% to 71%. For the first half, gross margin was 72% in the profit and loss statement, and 73% last year. If we disregard the royalty credits in 2016 and also a one-time effect of inventory release of SEK 59 million for Kineret, which we reported in Q1 2017. If we disregard those two, gross margin for the first half have increased from 74% to 70%. The cost for sales and administration and research and development have increased quarter-to-quarter, and that is due to continued investment in the organization and also in the commercial and R&D activities in the company. EBITDA for the quarter came in at SEK 492 million, versus SEK 550 million the same period last year. Again, disregarding the royalty credit, the EBITDA has increased from SEK 164 million to SEK 492 million.
Same goes for the first half year, also disregarding the royalty credits and the one-time Kineret release of SEK 59 million in Q1 2017. EBITDA has increased from SEK 344 million to SEK 839 million. Profit and loss for the period was SEK 246 million bottom line, and SEK 438 million for the first half 2017. Turning over to page 20, is outlined what I said about the royalty credits and the Kinerets. We can see how we mathematically can trace back the numbers that I've just recently presented, and you can see how the increase in revenues and EBITDA have developed if we disregard the one-time items. Going over to the balance sheet. On the balance sheet for Sobi, there is a large portion of intangible assets. However, they now decrease quarter-by-quarter as we amortize on several of those items.
The big-ticket items in intangible assets are goodwill relating to the acquisition of Swedish Orphan, and also two items relating to Elocta and Alprolix due to the opt-ins. On those two later ones, Sobi continue to amortize month by month and quarter by quarter. Inventories and accounts receivable have increased, and that is due to the growth of the business. As you can see, we are in the range of 50% growth. Bottom line cash flow, we have had a positive cash flow for the first half of the year, meaning that cash has increased from SEK 786 million at the end of 2016 to SEK 1,189 million by the end of the first half. By that, I hand over to our CEO, Guido Oelkers.
Thank you, [Adametzler]. Basically, what I would like to summarize now, also to give enough time for interaction and discussion is really when we looked at the numbers and at the business, the good news is that we saw, let's say, in a good way, a more promising outlook than the guidance you have obtained earlier. We raised the guidance to SEK 6.1 billion-SEK 6.2 billion from SEK 5.8 billion-SEK 6 billion. We basically also we left it at 70% gross margin and are forecasting earnings from SEK 1.7 billion-SEK 1.8 billion. I should say that obviously this is early days, seven weeks into the job. What we want to make sure is that we're not only talking about things that might happen, but things we are extremely confident about. That's basically how we think about this forecast.
It also allows us to invest in what we believe is a very solid business, particularly in hemophilia, where we think that we can support the one or the other activity. That's really where we stand today. We are bullish about the future. On the last page before we go into Q&A is really what we wanted to share is how you think about the business, two pillars, hemophilia, specialty care moving forward. In terms of sales contribution, both businesses, very similar, but we believe that we have still much more room to grow, let's say also on the specialty side. With some smart, let's say, activities in licensing and M&A, we believe that we can build this business up and let's say improve margins and move up the value chain.
On this note, maybe I can give the floor to Q&A and if you have any questions. Thank you.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad now. Our first question comes from Yun Yang from Jefferies. Please go ahead. Your line is now open.
Thank you. Welcome all the new people from Sobi. This is Yun from Jefferies. I have a question for Armin. You mentioned that currently, there are over 5,000 patients on Elocta and over 3,000 patients on Alprolix. Can you talk about what % of those patients are on prophylactic treatment versus on-demand?
That detail is actually something that we will look into. In general, the ones who are on-demand literally will benefit immediately once they see when they are on Elocta how much better they do. We have had actually a symposium at ISTH where a treater from the U.K. showed that some of his patients that were reluctant to go on prophylaxis moved to prophylaxis once they saw what Elocta can do for them. I think to answer your question a different way, I believe the more patients and physicians see the benefits of Elocta, the more we'll move to prophylaxis on Elocta, which is actually what, from my previous treatment perspective, this is what every severe hemophilia patient should be on. They should not bleed. I think that is what hemophilia treaters in general think.
Okay.
We actually want to give them the tools to do so.
Yeah. We should say that the 5,000 is obviously the combined experience with Bioverativ, and it doesn't include actually the donation program where we make the product available as well, which is a different dose regimen, obviously, than what will be followed in some of the more developed markets. Where it makes a very significant difference to this year, the WHO expects maybe 9,000 patients on this program. It just tells you now that we are extremely committed to the disease.
I see. Can I ask you what's the number for patients on Elocta or Alprolix commercially in Sobi's territories?
Yeah. We are at this stage around, and this is primarily the prophylactic patients who we can really follow. We had around 1,100 patients at this juncture.
Okay.
Of these are 750, give and take, Elocta. The rest is Alprolix.
Okay, great. Thanks. Coming out of ISTH, clearly there is a fair amount of enthusiasm regarding ACE910 from Roche, particularly obviously in patients with inhibitors. Roche is also going to present patients without inhibitors at ASH. With that, and as well as a potential gene therapy coming online next few years, how do you see the maximum market share that Elocta could gain in hemophilia A?
Yeah. For me, obviously, it's early days. You're young. We currently go through a strategy process with some external help and to see how far we can bend the curve. One thing is for sure, I don't want to comment too much on competitors. Maybe we give you in a few moments some further data points on how we believe the situation is. What we think is at this juncture, that when we look at the markets we have, let's say significant patient growth potential in the existing markets where we are. We see increased momentum because of the benefits that are connected with Elocta and with Alprolix for what Armin has mentioned, and very encouraging results, obviously on inhibitor patients, which out of the 19 case records that were presented at ISTH. Let's say more data coming along.
We believe that we have still a very significant room to grow as what we have today. We are just on the ramp. Now, is this going to change, question mark, once ACE910 is coming? Possibly. What we believe, and where we now invest quite considerably, is that they will still have to prove a lot. We have real-world evidence with thousands of patients, with a clean safety profile and with a clean utility. We do more to patients than basically just an extended half-life product, as Armin pointed out, with additional protection. We still feel encouraged that we are by far not at the point where we are yesterday's news. In fact, we'll further invest into the product. We recognize that this will be a busy place and let's say more choices will come. There's another element to this.
It's going to be price. We know from discussions with payers, this will not be an easy game, let's say, to pick the right price. Everybody's very conscious about health economics and outcomes and benefits. We'll see. I think they will have to show a little bit more than maybe what was shown. I think we need to also bring things into perspective. There's a difference between patient adoption and the hype at a conference which has a very strong scientific undertone. It's not for us to make here comments. I would say we have a healthy paranoia, but we are supremely confident that we can build this business out over the next year. Maybe I refer now to Armin, who will bring a little bit the ACE910 and other things into context.
Thank you very much, Guido. Back to your question, particularly from my previous experience as a treater, when I looked at things and I was medical director of some studies where I really thought this is the ultimate golden bullet for the hemophilia treatment or for inhibitor treatment in particular. It turned out once we were into the clinical study that we had to stop it, that we actually had to terminate it. We had positive results from clinics, actually real-world evidence, we thought that is already enough for us to be super positive. I would very much caution coming out of clinical trial data and reports at a congress and also in scientific journals to infer from that it will really be exactly the same in the real-world evidence. There's always a very, very important aspect.
You need to prove it over some time. As Guido just said, we have a super clean and super nice safety and efficacy profile for our products. I really would say that is very important. It doesn't matter if you go into bispecific antibodies or any other aspect of the clotting cascade where you want to interfere. I think all of that needs to be proven in the real world. That is my big caution, having been a treater for many years.
Thank you for the comment. Just one last quick question. The Kineret, the Still's disease, I think previously, Sobi was going to initiate phase III study beginning of this year. Can you comment on the status and then when we might expect the data from it? Thank you.
Sorry, I'm not-
Still's disease.
Oh, Still's disease. Yeah. With Kineret, we're actually looking into acceleration of the study to really get the recruitment going, and I think this is something, whenever we have something to report, it will be published, and it's also either in press reports, press releases. For me, it is also now being half a year into the company, it's very important that we look also into acceleration processes in medical affairs and how we actually can improve and really get the product to the patients as quickly as possible in all the indications.
The first patient is now due, let's say, is imminent. We keep you updated on the progress, maybe in our next quarterly report.
Thank you.
Thank you. Our next question comes from Richard Parkes from Deutsche Bank. Please go ahead. Your line is now open.
Hi. Thank you very much for taking my questions. I've got a few, but I'll just take them one by one. Firstly, given the decision to roll partnered products into the specialty care division and your commentary around that platform to build that business, I'm assuming that will include targeting in-licensing and M&A and maybe more sort of valuable type deals. I just wondered what your priorities were in terms of that business development, particularly geographically, because I had sensed kind of recently some of the focus in the past had been shifting towards the U.S. I wondered if it was now shifting back towards Europe, where maybe you're more differentiated end up being fewer medium-sized businesses with pan-European distribution capability. That's kind of the first question.
Absolutely. First of all, we are very committed to Europe, Middle East, Africa, and obviously United States or North America as such. The partnering product decision was actually, for me, an easy one. You have 130 very specialized individuals who can create within a short period of time a significant difference that has proven over and over again for a lot of in-licensing specialized products, rare disease products. Let's say, this platform we saw was just too good to let it go. Let's say, yes, we will use this, and we are currently already in ongoing discussions to do quite a bit, which is natural, quite a few in-licenses in a different economy than maybe some of the previous deals with us. Let's say where we take a little bit more ownership, and that means longer contract duration, but also higher margins.
The other thing is, yes, we will look at external goals. Let's say, we have to, it's evident, and there the emphasis will be, at this juncture on commercialized products and potentially companies. The outcome of this is seven weeks in the job, yeah. Let's say, it's early days. We'll be part of the strategic review, how big and how far we will think about it. I think this is a very good discussion maybe to have after the Q3, let's say, this year earnings call. Because we want to develop this business. We have a very motivated board. We have a very motivated, particularly one shareholder, let's say, who encourages us to build out this business and take advantage of the opportunities that are offered to Sobi.
Perfect. Thank you very much. The second question was just, sorry to sort of pull back the discussion back to ACE910, we're seeing companies developing second-generation bispecifics to factor IX, factor X, I think Shire Baxalta most recently. I know Bioverativ have a compound which I think there was some data at ISTH, which I assume falls outside of your collaboration. I just wondered how much of a priority it was for you to access your own program or are there options for you to partner with Bioverativ program progresses.
Yeah. Basically, what you have seen, we have a cooperation with Bioverativ on further extended half-life product in factor VIII and factor IX, which is the EXTEND program. Armin will comment on this. I think we will have an open mind, and this will be part of the strategic review process to think what should be our next step. Yeah. Let's say beyond factor VIII, factor IX, and extended half-life. This at this stage is still open. We are looking currently at a couple of choices as part of the strategic review. We're aligned with the board, obviously keep you up to date. It would be premature for me at this juncture to make any conclusive remarks in this regard. Armin, maybe you could talk about the EXTEND first.
Yeah. Thank you for the question. The EXTEND, particularly the EXTEND and addition of the von Willebrand factor, the DIII-D' molecules, is literally intended to go beyond the cap that the protective and transport protein for factor VIII is delivering, namely the von Willebrand factor. That is actually the factor that determines that all extended half-life in the A area, extended half-life products, are reaching that ceiling of 1.5-fold, roughly 1.6-fold half-life extension. The EXTEND VWF conjugates on our Fc fusion protein actually is intended to go and break through that ceiling and literally move around it. I think the promising data that we have so far indicate that that will happen to a very large degree.
I also have to caution, the proof is when we have evidence in human beings, that actually will happen hopefully very soon, we will really go in that direction. The science behind this is very promising. It's not just in silencing RNA, bispecific antibodies, or other areas, but literally with the product that you have, in particular with the factor VIII substitution of what is missing, which is the factor VIII. I think that is the approach that we are taking here and just overcome that ceiling.
Okay, perfect. Thank you very much. Just my last question, just on the hemophilia royalties, maybe for Mats-Olof Wallin. The royalties that you've been reporting have been a bit higher in the last couple of quarters than I was expecting, and I think it seems to be implying a slightly higher royalty than the 12% on one modeling. I just wondered if there was any other adjustments in there or what the royalty rate we should be assuming. Thanks.
Mats-Olof Wallin.
Yeah. Thank you. Thanks for the question. The royalty revenues that we report are estimated. They are not final. The cross-royalty agreement that we have with Bioverativ still stands. As they report substantially later than us, this is just so far only estimated royalty revenue.
Okay, thank you.
Thank you.
Appreciate it.
Our next question comes from Peter Östling from Pareto Securities. Please go ahead. Your line is now open.
Okay, thank you. Firstly, on the sales of Elocta and Alprolix in the quarter, can you confirm that there is no stocking driving up those numbers and that the sales that we see is actually end-user demand? That's my first question.
Yeah, no. Yeah. If I can take it right now. We spend quite a great deal of work on this to validate with the country managers that these are true sell-in data. Not, let's say, sell-in data, but true patient-driven data, and that there is no sell-in effect. There might be a little bit of stock movement in France there because of the, let's say, holiday season, but on a very marginal way. Clearly, every officer general manager has confirmed to us that there was no stock movement then, just to show a nice quarter, because clearly we don't encourage this. Clearly, if we would find out that there was, we would take stern action because it is not how we do business.
Okay. My next questions relates to, it still seems, or you state that in the report and the presentation, that sales for Elocta and Alprolix still is derived from a handful of countries, and now you have almost 20 countries where reimbursement is approved. What's holding back the sales from these countries outside the core ones? You have mentioned it in every report since, well, more than a year ago, that it's still a core number of countries where most of the sales is derived from.
Yeah.
What's holding back the expansion?
First of all, there's a different weightage, obviously, of patients related to the large EU5 markets than others. That by definition forces the distribution curve as for many other products, to be quite honest. We have now 18 markets registered. When you look at the theoretical patient pool, basically means that we have, for instance, at the example of Elocta, we've provided access to 55% of the patient pool, but on the other 45%, which we are now obviously, there are programs in place to unlock this. I'm talking Alprolix here. There what we do is we have also to discern, there are certain markets, for instance, in the northern parts of Africa, where we might have to make a decision, is this for us or not, given the price level that I established?
Is this more something for first-generation equivalent products or for more plasma-derived products? This is a decision that we will have to take very consciously. When you think about the uptake of the curve, it's also driven off the way this disease, these treatments work. First of all, this is a very conservative area. For the reasons that you all know, driven by these big scandals of the plasma issues that we had years ago. You look at some of the studies, you still have in today's studies sometimes up to 27%. I saw recently a study with HIV-infected patients, even today. This is not a disease area that is free of complications. Secondly, you have also to recognize that many times the patient is only seen by the physician once to twice a year.
You have not so many data points where you can influence and create the right momentum. Plus, you have a conservative patient population that is very well aware what happened a couple of years back. Those are our factors. The other thing that makes us positive is the more we talk about Elocta, the more you can see this in the quarterly numbers. People are excited to prescribe it. We had quite a few physicians who would tell us Elocta should be for all patients and not discriminating. We got some extremely positive feedback. Today, we have around 400 accounts. I think where we are now at the threshold when you think about our business model is to move from trial, from gaining experience to become more like standard of care.
You have a pretty broad distribution, so it's not in terms of centers, you have just a couple of centers who want to try. Many people see that they are now at a point where they have to make decisions. Do I give one out of four, one out of three patients Elocta or even more? This is the current period where we are in the business model.
Okay. Thank you. My last one is a quick one. It's probably for Mats-Olof. Could you give me the split of royalty between Alprolix and Elocta, please?
Uh-
You have provided that in the post.
I have provided that in the post. That's correct. However, we have an agreement with Bioverativ that we are not supposed to disclose the royalties by certification as it is still estimated. I ask you to wait until Bioverativ will publish their Q2 earnings.
Okay. Thank you.
I'll be happy to share that later when Bioverativ has shared their Q2 earnings or published their Q2 earnings.
Okay, great. Thank you.
Thank you. Our next question comes from Lars Hevreng from Danske. Please go ahead. Your line is now open.
Yes, thanks. Firstly, could you just make some comparative comments about the commercial uptake for Elocta in, say, France, U.K., Germany, a bit longer experience than also Spain and Italy. How these countries differ in terms of commercial uptake. The other question, if you could say something about the commercial relevance of your extensive donation program. How sizable it is to date, and what's the potential longer-term commercial benefits from that program?
Very good. Let's start with France. We have a fantastic uplift here. Let's say we have the most rapid uptake here. We made the product really in the interest of patient available at a very competitive price where they could take full advantage of the pharmacokinetic profile and the higher trough levels and higher level of protection. That then that has paid great dividends. Very strong, very rapid uptake in France. In Germany, it took us a bit longer, but in Germany also, you have to recognize that 40% of the market is driven by plasma products in order to basically reduce the average price per patient. This is a bit of a longer haul, but we saw a very nice evolution over the last two quarters in Germany whilst we had a very slow start.
Let's say that's probably a little bit driven also by the more conservative nature. In the U.K., we made some great strides. We were able to get acceptance. You know that this is a tender business primarily. Let's say in there, we basically have now on a patient basis, a very nice development-wise. Our products are a little bit more reduced there. Overall, nice uptake, let's say, in those three markets, and deferred in Germany, but very rapid in France. All markets point in the absolutely right direction, and you can see very quarter by quarter, month by month, significant uplifts. Yeah. With regard to the commercial relevance of the donation program, this is a bit of a tricky issue. I wasn't here when this was signed. We didn't go into this donation program to make money. Yeah.
Just to make it very clear, I went recently to Morocco and just to give you a little bit of an anecdote what we are talking here about, I saw a 19-year-old, let's say, who was crippled. All his joints were crippled, and he was sharing with me, let's say, that he was very grateful that we did this donation program. I said to him, "Well, when do you get operated?" He said, "No." Let's say, "I felt that my brother needed it more." Yeah. You will understand when we think of this donation program, we might think less of commercial relevance, to be honest. Let's say, what we hope for is that the medical community will give us kudos for being committed to this disease. When you think about hemophilia today, 400,000 patients, 100,000 are only treated.
Wait a minute.
I think that this is probably not something which you can put an ROI on with a six months return, but I hope that this is something that will clarify that we are committed to this disease, that we are able to provide product, let's say, when it's needed. Unlike other competitors, we provide fresh stocks to those so that these programs can be planned and patients can be treated when they need it. Yeah. Thank you.
Okay. Thank you.
Thank you. Our next question comes from Samir Devani from Rx Securities. Please go ahead. Your line is now open.
Thanks for taking my questions, and congrats on a good quarter, and congrats to you, Guido, on your appointment. A couple of questions, pretty much housekeeping really. Was there any price rises taken on Kineret in the quarter?
Sorry, I didn't catch this. The price.
Was there any price increases taken on Kineret in the quarter?
I mean, at this stage, you understand price increases in Europe, practically nil. Price increases in United States at a very moderate level, talking more like 2% or so in this range. With all the excitement around price increases in the United States, I think we have to be very careful. This is primarily volume driven.
Okay. Just on Orfadin, are you expecting any further generic launches in the remainder of the year?
In the remainder of the year, in a couple of markets, there will be launches. I think the big question is more, what will be the outcome in United States? We know that there's been one or the other filing, how will then this play out. Given the new formulation that we have, given the connectivity of this business with the individual patient, I met a couple of patients as well, and some of them wouldn't be around if Orfadin would have not been around. There is a bit of a more of a connection to this product than you would typically maybe have. I can't predict the future. This will clearly affect us, but to what extent is very speculative at this stage. Did I answer the question or do you have more?
Yes, you did. I'm just wondering, in light of the confusion over some of the hemophilia royalties, is there any reason why you can't report your results after Bioverativ?
Mats, you know?
Well, we have taken a bit of a historical view on this. Last year when Biogen was our partner, we were almost always reporting after them. Now they have a new company, as you know, the spin-off to Bioverativ. This year they are reporting substantially after us in all quarters. Our schedule were already set late 2016. We have been communicating with them and trying to align the reporting dates. Hopefully that will take place in 2018.
Thank you. Our next question comes from Peter Sehested from Handelsbanken. Please go ahead. Your line is now open.
Hi. Thank you. Peter Sehested. My questions, mainly housekeeping stuff. Could you remind us about the tax rate for the year? Also, could you give an indication about the expected end-of-year cash position? In terms of the market sales, trying to get a grip on those numbers. Could you provide a little bit more flavor on your geographical distribution of sales? If not, provide a little bit of information about what kind of market shares you have achieved in France and Germany, respectively. Thank you.
Peter, it might be our line, but we have really difficulties to hear you. Maybe, the first thing we heard at least was the tax rate. Maybe, Mats-Olof, or one of you can talk about the effective tax rate that we expect for the year.
Sorry, I didn't catch your question fully, I can try to answer it, please send me an email if you need further clarity. Our effective tax rate now are in the range of 20%-22%, that is due to that we are in the parent company, are in a tax position. In addition to that, there are deferred taxes that have been recorded. However, they are not of cash impact.
maybe, Peter, you could ask the question one more time because we had a bit of an echo in the line.
I've tried to cut out the background noise. I hope this is better. The second question was relating to an indication of your year-end cash position. Would you expect the third question was just to get a bit more flavor on the Elocta sales for the quarter. If you could indicate your geographical distribution of sales, and if not, some kind of indication of around market shares achieved in France and Germany, respectively. Thank you.
Maybe, if I got you right, it was more the geographic distribution of our business. Basically, we wanted to have market shares for hemophilia. Basically, at this stage, obviously, market shares are only that there's no real IMS data on this. Maybe I can give you a flavor. Let's say we have around 11% market share at this juncture in Europe. That tells you also that there's a few more % for us to grow to. Let's say whilst we had, let's say we are above 15 in France, and in some other markets, we are at an earlier stage now, probably more like three to four. Let's say in Germany, we are now basically at the average mark around 10, 11.
Let's say the distribution of our business as such, geographically. You have seen the numbers on the North America versus Europe. You have around about, let's say, SEK 1.3 or SEK 4 billion in North America. Then the rest, let's say in Europe, obviously taking away then the royalties and the ReFacto manufacturing business of SEK 600. I'm not sure whether you wanted to have more regional distribution on hemophilia.
No, that is perfect. The market share information was actually quite informative. The last question was regarding your expectations for a year-end tax position. Thank you.
I'm frank. I probably didn't get this question, Peter. What I would propose is in the interest of time, because we have nearly reached, we might be open for two more questions. If you can drop me an email, we're happy to address the question maybe offline after the call, yeah. Maybe we are open for two more other questions because it's very difficult to hear you, to be honest.
Thank you. Our next question comes from Erik Hultgård from Carnegie. Please go ahead. Your line is now open.
Yes. Hi. Most of my questions have been answered already. I have one more on the gross margin of your hemophilia products in Europe. Is there any upside in the gross margin from economies of scale, or are you purchasing the product at the fixed price from Bioverativ?
Yeah. At this stage, we have a fixed price agreement, but we have a philosophy that we get charged at cost, and this is an ongoing dialogue with our partner.
Excellent. Thank you. Just one more. The ITI opportunity. Where in time, obviously, I have a couple of studies ongoing, two studies with planned interim analysis. At what point in time can we expect to Or is it possible to see some more data from those two trials?
Armin?
With these data, as you know, it's always difficult to do interim data cuts because then you may really not see the full picture. Overall time of observation is a year, but we really need to look deeper into how quickly can we do this. As you can imagine, the one run by Sobi is one where we have already patients at failed, so they don't need to be found. They're already available. I think we do have opportunities where we can actually accelerate, and this is absolutely our intention here.
All right. Thank you.
Welcome.
You're welcome. Could be one more question.
As there appear to be no further questions, I'll return the conference to you.
Excellent. On this note, I hope you found this informative. As I said at the beginning, for me, it's early days. Team has done a great job, I believe, at least. Thanks for the patience with us, and we're happy and obviously very excited to tell you a little bit more about the progress in a quarter from now. We'll set up, obviously, various meetings via Jörgen, let's say, in the next couple of months. Thank you so much. Wish everybody a great holiday season, and look forward to staying connected. Thank you. Wish you have a great day.