Earnings Call: Q1 2016

Apr 27, 2016

Ladies and gentlemen, welcome to the presentation of the Interim Report Q1 2016 for Sobe. I will now hand you over to Geoffrey McDonnell, CEO. Please go ahead. Thank you, Annika, and good afternoon, everybody. Good morning. Thank you for joining this review of the Q1 2016 for Sobeys. Today, we'd like to briefly review what we feel are quite strong financial results for the quarter, but also quite a wide spectrum of activity, including of course the early launch experience with our hemophilia franchise starting with Elocta and the regulatory status of Alprolix and also to cover a series of pipeline milestones and developments, which would be relevant for the future of the company as well. As usual, we flash up our Safe Harbor statement just to say that everything we hope will occur may not. Looking at the business events, which were relevant to the quarter, obviously, the most significant are related to our hemophilia franchise. We began commercial launch for LOCKDA in the 1st European countries. And of course, we'll cover some of that experience in detail today. We also received CHMP recommendation for the treatment of hemophilia B patients with Alprolix. And as I'll say later, we also received a positive opinion from the COMP to maintain orphan status for Alprolix, which really positions us now to be ready for NEC approval at any time. We also added to the partner products portfolio with 3 products from PharmaSwifts. And on the pipeline side, we received a patent for Orphan oral suspension through 2,032 in Europe, a patent that had previously been granted already in the U. S. And other territories. The clinical pipeline was also added to with 2 programs for KINARET-one and acute gout and still these in combination with a new patent for a novel formulation for KINARET give us a different view of the future of KINARET over the next 10, 15 years as that patent will take us also into the early 2030s. Finally, we announced that Holkon Bjorklund has been nominated as for the Bojosper Hansen as our Chairman and we hope if that is ratified that it will become effective at our Annual General Meeting in late May this year. We also had several events after the quarter. As I mentioned earlier, the comp recommendation for Alprolix, we had a European patent granted for our new formulation for Kineret. We have executed a license agreement with Aphibody for a novel inhibitor of the IL-one receptor. And finally, as of the other day, received approval for the Orpadin liquid oral suspension in the United States. So a nice series of events to round out the beginning of 2016. From the point of view of the financials, total top line was in excess of CHF 1,200,000,000 representing a growth of about 47%. Product revenues were especially strong at $1,100,000,000 showing a growth of 75% and refacto due to phasing was SEK 165,000,000 down by about a third compared to the same quarter last year. Margin was 74%. EBITDA came in at about flow from operations was $235,000,000 Now obviously, everyone likes the shape of this curve, but it's not quite this way. As you all know, we have a one time credit delivered to us in the quarter as a result of the first commercial sales for Elocta. So if we neutralize for the impact of that one time item, you can see here that the total revenues were SEK951,000,000 with a growth overall of 10% and product growth was 24%, resulting in a top line contribution of SEK786,000,000. Refacto, of course, is unchanged in this analysis. So you can see that the underlying business retained very strong growth based on a combination of royalties and income from hemophilia and on the underlying growth of the rest of the franchise. Margin, if we adjust for the impact of the one time credit, was 65%. If you look at the layout of our business segments, as usual, you can see that genetics, inflammation, the partner portfolio and refacto are all relatively it would be US55 million dollars sum here by about US38 million dollars over the US55 million dollars sum here by about US38 million dollars related to the one time credit. But even so, the hemophilia franchise is already taking on a serious contribution to the overall portfolio. As usual, I'll cover Refacto and then turn over the rest of the portfolio to Alan Ratzberger, our Chief Operating Officer. The Refacto business is on track and moving as we normally would expect it to. The difference in this year is that the Q1 was not as outside proportionally as it was in the Q1 of 2015. But of course, we expect as usual that the volumes will normalize or average throughout the course of the year, as it normally does. So with that, I'll turn it over to Alan. Thank you very much, Jeff. Revenue for Kineret reached DKK 227,000,000 in Q1 versus Q1 last year for overall increase of 15%. We experienced solid growth in all major markets driven by the continued launch of the caps indication in Europe combined with a fully loaded effect of the new specialty distribution model in the U. S. Via Rx Crossroads. This new patient centric distribution model combined with a greater focus by our commercial and medical affairs team is resulting in good volume growth as well. We also look we also took the important decision during the Q1 to kick off 2 clinical development programs for KINRAID, 1 for acute gout and one for Stills disease as Jeff mentioned. Revenue for Orifedean reached DKK 198,000,000 in Q1, which is a 10% increase over Q2. Growth was spread across all markets. During the quarter, we expanded the launch of oral targeting oral suspension and we are now currently selling the product in Germany, Finland, the Netherlands, Norway and the UK. The overall suspension version of Orpigene has been developed to help make the treatment more convenient to receive and manage, which benefits both the child and the caregiver in addition to supporting dosage accuracy and adherence. Some of you may already have seen yesterday's press release that we also received FDA approval for Orphodene and oral suspension in the U. S. Moving on to our partner products portfolio, Q1 revenue decreased by 11% to DKK 187,000,000. The negative deviation was attributed to one off milestone of service fee from Exelixis for COMETRIQ during Q1 2015 in addition to 3 discontinued products which were returned to partners by Q4 last year. However, we experienced solid growth with our largest partner products brand, XIAPEX in Q1. XIAPEX is indicated for Dupuytren's contracture and Peyronie's disease. We also signed an agreement during Q1 with PharmaSwiss and have now initiated sales for RILISTIR, DEFLEX and SOLESTA in a territory including Western Europe, Czech Republic, Slovakia, Hungary and also for RILISTAR in Russia. Moving on to our hemophilia business, I would first like to highlight the progress being made by our partner Biogen in North America and the rest of the world. Eloctate sales reached a total of $108,000,000 and Alprolix sales reached $75,000,000 for a total of $188,000,000 in combined sales for Q1. The performance of Eloctate and Alprolix in North America and the rest of the world is important for our royalty revenue and is running at an annual rate of almost $800,000,000 Our hemophilia Q1 revenue totaled DKK 465,000,000 which is comprised of royalties from Biogen sales in the amount of $123,000,000 a one time royalty credit of $322,000,000 and Elocta sales here in Europe of $20,000,000 During the quarter, Sobe became the marketing authorization holder for Elocta. In addition, we received a positive recommendation from the CHMP and from the comp in regards to classifying Halprolix as an orphan drug on February 25 and we expect EC approval shortly. I know you're all interested to hear more about the launch of Alokta during Q1. Revenue from the quarter is derived almost exclusively from Germany. Germany is the only market in the EU where pharmaceuticals are immediately reimbursed upon EU approval and we are fully on track since the first sale in January in Germany. As of the end of Q1, a total of 12 hemophilia treatment centers currently providing support for roughly 40% of all hemophilia patients in Germany have prescribed the LOCKTA to their patients. Switches have come from recombinant and plasma and we are several planned immune tolerance patients as well. Just prior to the end of Q1, reimbursement was granted in the Netherlands and Ireland. In the U. K, we have a limited number of patients on olocta so far, but full reimbursement for all patients will not take place until the framework agreement is established at midyear. I can also announce some late breaking news that just today the Pharmaceutical Benefits Agency in Sweden announced that Alocta will be fully reimbursed for hemophilia A patients in Sobeys home market here in Sweden. Preparations for gaining access to other markets preparations for the launch of Alprolix are fully underway. The launch sequence preparations for the launch of Alprolix are fully underway. The launch sequence of Alprolix will be similar to Alokta depending on early access markets like Germany starting being followed by other markets requiring reimbursement decisions. I would now like to hand over our earnings call to our CFO, Mats Solotelli. Thank you, Alan. Looking into the profit and loss statement, we can see that the total revenues increased by 47 percent to SEK 1,273,000,000. Gross profit came in at CHF 944,000,000, meaning a gross margin of 74%. Both revenues and gross profit has, of course, been impacted by the onetime royalty credit for Elokta. And excluding the onetime credit, gross margin came in at 65%. But the improved gross margin is, to a large extent, due to the increased royalty revenues. The increase in sales and administration expenses reflects the buildup of the hemophilia organization, which now to a large extent is in place. EBITDA came in at $502,000,000 if we compared to $172,000,000 last year. If we exclude the royalty credit, EBITDA came in at $180,000,000 dollars Regarding 2015 and Q1, that was very much impacted also by the extraordinary large deliveries Cash flow has been very good in the Q1, and cash is now at €1,108,000,000 dollars versus $904,000,000 at year end and $682,000,000 12 months ago. Inventories have increased, and that is due to the buildup of inventory for the planned and ongoing launch of the hemophilia products. Turning over to net cash. With a cash of 1,000,000,000 dollars in the balance sheet, we can see that our net cash position now is $305,000,000 dollars which is the best ever for Sobeys. Regarding the P and L impact of Elocta launch, we'd like to share with you the accounting treatment. And we've done this at last year's presentation for 2015 earnings, but we would like to do that again because we'd like to share this with you. The accounting treatment is such that after launch, the base case base cross royalty is 12% between Serbia and Barjan. However, sobi receives 2% royalty on the sales in the Barjan territory will be booked as revenue, and that is up to 2015. And the remaining 12% 10% royalty is accumulated as a credit. Going into January 2016, which is the Q1 this year, the 10% gets as a onetime credit and is booked as a revenue of US38 million dollars 322,000,000. And this is booked as a onetime revenue with no cash impact. The royalty now when Sobi has launched is 7% as cash, 12% is booked as revenue and 5% of these 12% is booked as a credit to the liability towards Biogen. Royalty 2 Biogen on Sobeys sales in Sobeys territories is cash out 17% and 12% is booked at cost of goods sold and 5% is credit rewards liability. At MAH Transfer, which was effective March 1 this year, so we now assume 50% of the development costs, and that has materialized as of March this year. The estimated total repayment obligation to Biogen for Elocta was has now been revised to US210 $1,000,000 And as of March 31, the current liability is now US162 $1,000,000 This is the accounting treatment and how it is set up. And it is the same setup technically for Alcolyx. With that, I hand over to Jeff McDonough. Thank you, Mats. I'd just like to revisit the guidance for the year and simply to say first that it is unchanged. We feel good about this view of the full year performance. I do want to draw your attention to this small print at the bottom of the guidance, which just emphasizes again the size and timing of the one time credits that are associated with the first commercial sales for each of eloxa and Alprolix. And as Mazzulos just reviewed, of course, that is important trigger for the change in the way that the royalty flows are exchanged between the companies. We already in Q1, of course, have received the SEK322 1,000,000 related to the first commercial sale of Elocta. And I think now it's reasonable to expect that the Alprolix one time credit could occur in Q2. It may occur in Q3, but it could occur in Q2. If so, I just want to raise this point for you so that you're aware that up to 650,000,000 crowns could fall asymmetrically between the first and second half. So if our first commercial sale for Alcorlyx were to fall into Q2, you shouldn't be surprised to see that the $650,000,000 will not recur in the second half of the year. So I know that's probably clear, but whenever something is in fine print, it's good to highlight it and make sure that you're aware of it as an issue. Finally, again, with all the things that are moving and developing here at the company, just want to reemphasize that we remain within the balance of the growth and the profitability of our base business and our primary regions here in Europe and North America. We are intensely working Aloxa and to prepare for the launch of Alprolix as Alan and Musil have reviewed here and we stay very committed now to continuing to build the business, not only organically, but also through M and A as we go forward. Perhaps before we stop for questions, it's worth just reminding everybody that our annual report was published today and I think it is the best reflection yet of both financial priorities, the strategic positioning, but also the culture and the way of working that has infused and supported our efforts here at the company over the last several years. So I would encourage you to either take a copy and pay for form or to visit our interactive version of the annual report, which is available on our website. With that, Annika, let's pause and open the phones for questions, please. Thank you. Thank The first question comes from the line of Nina Young from Jefferies. Please go ahead. Thanks, Vicky, Ji Yoon. Good afternoon. Couple of questions on hemophilia and one question on Kineret. So I know it's early, but through April, how do you characterize the Elocta launches so far? Is that in line with your expectations or above or slightly below? Yes. I think, Eun, for me, in the Q1 of experience here recognizing that the Q1 really represents experience in Germany only. I can just reflect that what we're seeing in prescribing and switching is very consistent with the feedback we had prior to launch from KOLs in Germany and for that matter elsewhere as well. In other words, they're very focused on the ability of the product to elevate levels of protection and to reduce cleaning rates. And they are very aligned around the kinds of patients that could benefit and to be open. I think the reality is that patients with virtually all clinical phenotypes can benefit from switching. So I would say that so far the experience is very much in line with our expectations. Of course, there are going to be ins and outs for the 1st 12 months of launch experience here related to access decision making as we move country by country. So we've had some earlier than expected successes in markets with approvals and some markets have moved back in the sequence and that's to be expected with the European launch. So I think at the moment we're pleased, but not surprised. And we continue to be focused on executing this launch over the course of 12 to 18 months. In Germany, the patients who are switching to Locter, are they switching I mean, have they switched from a short acting recombinant or plasma or both? Yes, Eun, it's Alan here. They're actually switching from both. I think I mentioned that and that's very encouraging to see. Okay, great. And then so recently, BioMarine presented hemophilia A gene therapy data. So I want to get your thought. 50% factor levels looked very encouraging, although it's too early to tell regarding durability. So I want to get your take on the data. Sure. I mean, I think the way you characterize it is exactly right. There are elements of the early data that look really encouraging. I mean, first of all, they have demonstrated the ability to get expression from a very large transgene and I think that's always been one of the biggest hurdles for hemophilia A. And I think with respect to the levels of expression and durability, as they said, I mean, it's just early. I mean, they have a very variable degree of experience across the data that's been reported so far in the A patients. So some are at very early time points and some are at medium time points. So I think this is one to really watch and see how things develop over time with respect to safety and as you said, the durability of expression. Thank you. And then lastly, Kenrette, so new formulation, can you formulation that we have, the new formulation that we have, the new patent protection for is set up in such a way that we've been able to remove citrate. Citrate was initially a component of the formulation designed to facilitate intravenous administration when the product was initially developed by Synergen for sepsis. And our view and it's come to become our view as a result of feedback from physicians that citrate can be associated with the pain or stinging that the subcutaneous administration of Kinaract can cause. And so our hope is that the citrate free formulation, in addition to providing longer term protection for the product and therefore a wider view on how we might develop it would also potentially be better tolerated if the removal of citrate results and less subcutaneous stinging. I see. Is this going to be used this new formulation going to be used in IL-one antibody development or are they totally different product? Do you mean, sorry, did you say the antibody development? Yes. Yes. So I'm glad you asked that, Yaron. That's an entirely discrete program. We have a very different objective in mind with the Applebody platform. There we are seeking to create a similar level of activity. We want a similar PD profile to what we have today with KINRET, but we're looking for a different PK profile as a result of using a different platform there. Correct. Thank you very much. Sure. Thanks, Tim. The next question comes from the line of Elena Fann from Goldman Sachs. Please go ahead. Hi, thanks for taking my questions. 3, if I may, mainly on M and A. Firstly, with the headlines mentioning that you're looking to expand your portfolio, wondering what the sweet spot is in terms of indication phase and cost? Secondly, with the recent headlines that Biogen may be interested in selling their hemophilia assets, curious on your interest in acquiring and financing these. And finally, just thinking about your strategy, curious on your thoughts of when you look out 5 years after having done a number of acquisitions and portfolio reshaping, what do you envision Sobeys' focus areas to look like? Thank you. Sure. Okay. Hi, Eleonore. Those are 3 really big, really good questions. So I'll try to do my best to capture them all here. Maybe I'll pause after each one. So I think the first one you asked was around M and A focus. And our view is that we have a particular skill set around integrated commercialization, bringing medical affairs, patient access and orphan drug commercial expertise in a highly integrated way to high touch indications. And we try where we can to combine that skill set with drugs that have very high degrees of effect size. And that's where we, I think, can add the most value given our history and interests and values. So for us, the natural indication areas that we would look out would be either inside or closely adjacent to the areas where we have skills today and those are in genetics and metabolism and inflammation and hemophilia and benign hematology. And we're evolving quite a reasonable set of expertise in specialty oncology in our partner portfolio. So those four areas I think are quite reasonable to look at. With respect to phase, I mean, I think we have 2 different views of for 2 categories that we're looking at. We're obviously interested in expanding our commercial portfolio with the product that are relatively early in their launch trajectory. Those could fall into any one of those TAs that I mentioned. But we're also interested in mid to late stage development assets to support launches in the time period 2018 through 2021. And finally, with respect to sizing, our view is that with all of our operational focus, as I mentioned earlier on the base business and our launches, this is not a time to bet the company on something that is at the outer limits of our capacity. So we're focused on doing transactions that are meeting the goals that I've mentioned, but allow us to absorb them and to integrate them in a way that doesn't distract us. So for me, that means a bite size that's within the reach of our current debt capacity and maybe to a lesser degree, the use of equity if the target were to present itself in a good way. I think with those kinds of thoughts in mind, for us acquiring Biogen Bassets, if they were ever to be for sale and we have no view on whether that's the case today or not. Obviously, that's quite a large quantum. So it doesn't fit with the 1st category that I've mentioned. And then lastly, with respect to the 5 year view, I think we continue to drive our business decisions and capital allocations against these criteria that I mentioned earlier, our ability to add value, the degree to which our products has a significant effect size and the indication. And then finally, whether it's in a space where there's a sustainable mechanism for providing access, which is usually some combination of a high degree of unmet need and the relative cost dynamics of the therapy. So 5 years from now, I would expect that we'll be roughly oriented to similar therapeutic areas. But I think the technology platforms we're working in could be quite different because we're rather agnostic about the technologies we're working with. So I'm not sure if I covered all the pieces that you're interested in, Eleonore. Did I miss anything that you were after there? Pretty much it. Just a follow-up though is, would you be interested in embarking or partnering your own gene therapy program? Thanks. Would we yes, would we want to mount our own gene therapy effort? Is that what you're asking? Unbark your own or partner, yes. Thanks. Yes, sure. So I mean, I think we're certainly open to a gene therapy platform. I think the application and the therapeutic area where we would work on such a platform is not clear just yet. But certainly we're open to it. I think it's more likely in that case that we would partner since it's a very specific skill set. Got you. Okay. Thanks, Eleanor. The next question comes from the line of Johan Teneris from Swedbank. Please go ahead. Yes, good afternoon. Thanks for taking my questions. Those are smaller ones. Referring to the guidance, it seems rather modest. One part of it would be the incremental R and D. You mentioned $250,000,000 to $300,000,000 And is that the line of thinking we should have that will increase the R and D by that amount plus some incremental increase on the organic side? It can be the first question. Sure. Well, maybe 2 comments about 3 comments about the guidance. I think the first one is that the metrics are going to be difficult to work with for the 1st couple of quarters if both of these credits fall into the 1st two quarters. And what I mean by that is they will inflate or support the EBITDA line and the gross margin line in a very strong way that will not recur in the second half. The second issue is that there will be this imbalance between the first and the second half. So the guidance, if both of these credits occur in the first half of the year, we'll look conservative in the first half, but of course we'll even out and match our expectations once the full year is through. And then lastly, to your point, Yaron, about the R and D, we do expect the full range of this R and D increment to come into our P and L this year. And so I think our view on the guidance for EBITDA takes that into account. Thank you. Yes, that's helpful. And that partly answered my second question, the lag between Amparivics approval and your when you will book the that credit. So that was clearly in your guide, you clearly assume that, that will happen during this year, possibly even during the first half of the year. So that alludes to that the R and D uptake will be rather steep. Otherwise, we'll be looking at different levels of EBITA for 'sixteen. Right. Okay. And what about sales and marketing in terms of the step up? I think earlier in the call, it was mentioned that you started to reach where you need to be in terms of the organization, but presumably, you will have incremental increase on that side as well? For sure, we will. And that's right. I mean, the way that we've thought about this is really 80% of the effort is in the top 10 markets and in Europe, but there is a tail and we will continue to staff to bring ourselves through the second and third waves of countries really through the end of 2017. But it will be the that's the tail. We've got the body already in place. So we should take that as on the 80% of the top 10, most of that is in place now? Yes, correct. Okay. Thank you very much. Okay. Thank you, Jan. The next question comes from the line of Lars Hebby from Danske Bank. Please go ahead. Yes. Thank you. In terms of the upcoming rollout of Elocta and the products, could you tell us whether there are any countries in Europe which had had a portion bigger portion of patients enrolled in clinical trials? And also if you could say something about the current regional distribution by patients involved in clinical trials today and whether we should expect that to have some kind of correlation with the sales uptick and really whether it's beneficial for you to have patients in clinical trials in terms of the pace of the launch uptick? Yes. Thanks, Lars. It's a great question. So number 1, there's no question that the familiarity and expertise that derives from being an investigator translates into greater comfort with any early approved products. So we see those dynamics for sure in the markets where we have had the clinical trials here in Europe. I should just mention for perspective that of course the active phase of our clinical trials now are sort of 3 years in the past in Europe. And one thing we have a great benefit from is the fact that both of ALON and BELON have been extended in the ASPIRE outcome study and that has allowed us to generate almost 3 years now of real world experience by following those patients. So while the pivotal clinical trial experiences at some years in the past now, the familiarity engagement with the product is still very current. So I think that dynamic is clearly in place here. I think that the question you asked about the distribution, many of the European countries did participate in the trials, Germany and the UK as they usually are, were the most prominent countries that participated, but we certainly have centers in most of the major countries. But there's not a kind of quantitative correlation between the number of centers or patients in any given market and the commercial uptake. We don't see it working in quite that way. Okay. And the number of users currently enrolled in your territories, I would say, do you have a rough figure for how many people are currently enrolled? Yes, but I don't have it in my mind. I have no problem sharing that number with you, Art. I just don't know what it is. The level of continuity and participation in ASPIRE is very, very high. But just to give you a sense of scale, I think the total number of trial patients between hemophilia A and B programs is fewer than 200. So you could expect an is fewer than 200. So you could expect that in our territory, the number who are still participating in the follow-up trials would probably be fewer than 70 or 80 in that range. Okay. And then lastly, in terms of in Q1, the net financial cost of SEK 23,000,000. Was there anything particularly included, currency effects or something similar to that? There are definitely currency Matulofradimir, there are definitely currency effects including that. And comparing to last year, there were positive currency effects in the financial net last year. So that explains the difference. Okay. Thank you. Anything else for you, Lars? Okay. Go ahead, Annette. The next question comes from the line of Peter Offling from Perrier Securities. Please go ahead. Yes. Thank you. I have a couple of questions. I start with the current ongoing launch of Elocta in Europe. You mentioned in the report that about 14% of the centers in Germany has prescribed Elocta. You have talked about it a little bit about switches, but I was just curious if you could talk a little bit about are the new patients that start to use Elocta, are they coming mainly from switches? Or how many are actually starting for the first time on Elocta? Yes. So thanks, Peter. The vast majority of patients are switches and we do expect that that will be the case for some time. There are patients who are starting on Eloctate as previously untreated patients in the U. S. And we are aware of a few individual cases here in Europe, but the vast majority of previously untreated patients are gaining exposure to Elocta or Eloctate in the context of our previously untreated patient clinical trial. Okay. Do you just to follow-up, do you expect that patients starting treatment on Elocta and later Alprodix will come when the community has get a bigger knowledge of the product, these long acting maybe 3, 4 years out? Yes. I think you raised a really key point. I mean, the way that we've experienced the launch up to now and I think this is very consistent with what Onagen saw in the U. S. Is that in any given center, the first sort of 3 or 4 patients are really crucial in setting the expectations and comfort with the product for any given physician or sensor. And we have the advantage here of fairly quickly, a relatively rapidly apparent difference in the way patients experience these products compared to what they're taking today, whether that's as a result of taking fewer infusions or as a result of lower bleeding rates. I think it's relatively short period of time before physicians and patients can gain a sense of whether they feel different. So what we see is that the timing to the first 2 or 3 patients who switch in any given center is relatively short or long depending on the attitude and experience of the treating physician. But that once that occurs, the center picks up momentum relatively quickly. And I must say that's not uncommon for any new and any new product. So I think you're exactly right that we expect the full momentum here to develop over the 1st 12 to 18 months or so. I will say too that one dynamic in this therapeutic area that's quite special is that patients carry a certain amount of stock at home. So you see the prescription being written for Elocta, but the patients of course are not going to throw away the product they have and that sometimes can take weeks to work itself out before they begin on a Lacta per se. And just finally, small question on Kineret. These new indications that you plan to start studies for, what kind of potential do we see for these new indication? And when do you expect them to be approved for those indication? Sure. Well, we hope we're planning that the stills indication would be ready in the U. S. Market by around 2019 and that we would expect acute gout to come very shortly after that within a year or so. Obviously, we haven't started those clinical trials yet. I mean, we're in the planning and initiation phase today, but I think those timelines are consistent with our plans. We see STILT as a relatively modest financial opportunity. It potentially could double our U. S. Revenues for KineRad in that range. But I think acute gout could be significantly greater, depending on how consistent our data looks when we develop it in a clinical context. But there's just a much larger number of eligible patients with acute gout. And even though that you would use Kenrath for a shorter period of time, the weight of numbers makes that a more significant financial opportunity. Yes. And sorry, Jeff, just to follow-up on that one. You probably saw the deal that AstraZeneca signed with Ironwood in the U. S. For Cerampic yesterday. Would that be a product that could have fitted into your organization? In this case, you had been able to learn a little bit about gout ahead of expansion of Kineret label? Yes, it's an interesting question. I mean for us, living in the broader rheumatology space for gout is not necessarily something that fits well with our commercial infrastructure. I think that's one of the reasons why that asset is interesting and a good fit for AZ. I think our feeling is that the specific focus on the precise niche for KINARET as a short acting and safe alternative for patients who can't tolerate NSAIDs or colchicine. It also gives us a very small and addressable population of treaters to work with and that really does fit the way that we work and where we can add value. So I think that's part of the reasoning for why we are perhaps not as good as a partner for a broader product that requires a broader group. Okay. Thank you. Yes. Thank you, The next question comes from the line of Hans Mirra from Nordea Markets. Please go ahead. You. I wonder a bit for what you have heard so far from the launch of adeno-eight in the U. S. In terms of impacting the sales of Eloctate. And also, you were rather precise on where we should know more about backing of Eloctate in the U. K. I wonder if you can comment on similar timelines also for other important markets in Europe? Sure. I guess I should say upfront that with respect to Adynovate, I don't have any particular insights or expertise in terms of how things are going. I think the my intuition is that adonisinib is being offered as a niche line extension as opposed to a replacement for adynovate whereas for Abate rather, whereas I think our view is that Eloctate or Eloctate is a next generation product for all patients and perhaps that's a slight difference in the way we see these products. But I think time will tell, of course, how that will unfold. I think as it relates to key timelines and Alan can give more color on this. The UK is a relatively structured market and there is a specific mechanism of a framework agreement, which allows us to be more precise. I think in Italy, for example, there's a more fluid negotiation that occurs with IFA. In France, there's a more structured negotiation that occurs as the different bodies sort of render their opinions. And if you look at the coming period, completing the reimbursement in the UK, in Denmark, in Italy and France. These are the main priorities that are in front of us in the coming months. And Alan, if you want to offer or add anything there? Tom, hi. Alan here. Jeff is right about that. I'd also add though, it's quite difficult in some cases to predict exactly what month they'll receive reimbursement and gain access to a market. I mean, we didn't expect to gain approval by the Pharmaceutical Benefits Board here in Sweden. We had actually thought that was going to come a bit later and actually came through today. So it is not easy to predict, but we're pretty we feel pretty good about the UK, about the timing for the framework agreement and that's the next main market that will come online. If we continue to talk about those 4 main markets, should we expect that they would come before year end? Or is that a safe bet or not? So looking at the main markets in the largest markets in Europe, yes, we would expect that and to come online by year end. Again, I can't I can only speculate on what month, but we feel very confident that by year end we should have that. Okay, brilliant. Thank you. Thank you. The next question comes from the line of Richard Katz from SEB. Please go ahead. Hi. What sort of uptake of Alokht and Alprolix are you really expecting? I mean, are you looking at or what I'm looking at Biogen market shares in the U. S, is that what are the reasons that you will be significantly below what they have accomplished after a certain time? Richard, I can take that. Alan here. The way we look at it over here in Europe is that if you compare it to the U. S, every individual market here will have a similar trajectory to the U. S. But if you look at Europe as a overall, this is where we have the staggered kind of a staggered approach to it. But if we just look at Germany, for example, we're pleased with the development there and you have to correlate each individual market back to the U. S. Specifically versus all of Europe to the U. S. Okay. And in those markets where you have launched and come a long way, how is the pricing? Is it different among those regions? And then how have you priced it compared to the previous treatment? So we've tried to strike a balance here between recognizing the significant advance that each of these products represents over the current standard of care on the one hand and on the other hand balance those benefits against the desire to make them broadly accessible and also sustainable payers. It's obviously a it's a difficult environment for most payers in the current time here in Europe. So we've really tried to make a pricing scheme that makes in the case of Veloxa, the per unit costs really within striking distance of what payers are expecting and are currently paying for the existing recombinant therapies. Obviously, there are lots of dynamics that go into any payers consideration among them being the dosing, the dosing regimen, the number of bleeds that are expected in a given year on conventional versus extended half life therapy and other medical costs and so forth. So we would obviously work through a more comprehensive value argument when we have these discussions. But broadly speaking, our ambition is to have both eloxant and Alprolix become mainstream therapies. We do not see these as meeting a niche need or a small proportion of the market. Our goal is to make them broadly accessible so that preventative therapy actually does prevent bleeds. Okay. And you mentioned dosing, how often those patients that are using elocta now, what is the dosing frequency? Is it the same as the previous short acting? Or is it are they actually using it less frequently? So I don't have data on that yet, at least from our territory, but we have very robust data from 36 months of follow-up in sort of real world terms for Eloctate and for Alprolix. And that data supports that the vast majority of patients are on the doses they were on and intervals they were on in the clinical trial or have extended their interval. And so I would expect our experience here in Europe to be absolutely the same that when patients start on twice a week or every 4 or 5 days that they will stay there over time. The one thing that may turn out to be a little bit different here, although it's hard to say, you can spend, if you will, the extended half life dynamics of these products in a couple of different ways. You can try to really maximize the interdose interval or you can try to use less of that interdose interval and give the drug a little more frequently, certainly no more frequently than they're treated today. But at that end of the spectrum, you're achieving much, much higher, both very under the curve and also especially trough levels. And for certain patient profiles, maximizing protection is really the goal rather than trying to reduce the burden of therapy. So I think there will be some individualization is what I'm trying to say of those decisions by physicians to match the specific needs of patients. But we would expect our experience to be the same as what we've seen in the U. S. Okay. And lastly, talking about the patients that are switching both from recombinant and from plasma, Are you also seeing patients switching from on demand treatment into prophylactic treatment with Elocta? Yes, I think we would expect it, Richard, but again, it's too early to say we have any real experience there yet. I'm sure it's occurring, but it's just too early for us to say. Okay, thanks. Yes, thank you. There are no further questions registered at this point. I'll hand the conference back to you. Okay. Thank you, Annika. Let me say first thank you to all of you for spending your time with us to review the Q1. As usual, if there are questions that came out today that didn't fully satisfy what you're looking for, please don't hesitate to be in touch with us. We're very happy to expand further. And if you have new questions that occurred to you after the call, please do the same. We're more than willing to be available to address those. So with that, again, thank you very much, Annika. Thank you for hosting and we'll see you for our quarterly earnings next quarter. Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect your