Ladies and gentlemen, welcome to the Sobi Acquire Dova Pharmaceuticals Creating a Global Growth Platform in Hematology webcast. I will now hand over to Guido Oelkers, CEO. Please go ahead.
Yes, good morning. Thank you. Good morning, everybody, and thanks for your early attention to our story. And what I would like to share with you today is really the thoughts behind the Dova acquisition, Dova Pharmaceuticals acquisition, and also shed some light on the other announcements that we have made recently with regard to the early opt-in regarding the BIVV001, so maybe with this, let's go right into the action. I will be joined during this call by our Chief Financial Officer, Henrik Stenqvist, and our Chief Medical Officer, Milan Zdravkovic. With this having said, so basically, what is Dova? And our DOPTELET, Dova is a single-asset company. And DOPTELET, meaning being the main asset, is an orally administered TPO. We think it's quite differentiated, given that you can take it with food and that it is not associated with hepatotoxicity.
The product is geared now for three indications: CLD and ITP. It's already launched in those two indications in Europe and in CLD approved in, sorry, in the US and approved in CLD in Europe. In CIT, let's say we expect the readout of the phase 3 trial mid-2020, so when you think about the deal terms, this is a $950 million transaction, give or take. We pay in shares for per share, $2.75, and then another $150 million upon approval of DOPTELET in the CIT indication, so this represents the premium versus the close on Friday of Dova, around 36%, and we will finance this transaction through existing cash and bank facilities. The transaction will end, we expect the closing end of 2019. Obviously, this is always subject to approval of competition authorities.
So, when we go to the next slide, slide number four, what we want to do is this acquisition is really what we believe right on target. It is fully aligned with our strategy that we articulated in 2017. And what we basically said then is we want to grow in our hematology franchise. At that stage, we had hemophilia. But basically, we told you some time ago that we see hemophilia broader into the area of hematology because we felt that there was not so much also that we could do more in hemophilia. And we felt that the broader area of hematology will give us nice synergy. So it's a growth product. It's differentiated. It will further expand our geographic footprint, given that this is a global, we have global rights.
It will definitely strengthen our U.S. franchise and also will benefit us in Europe right away with the CLD indication, and ITP is the next indication in Europe. Yeah, we will expect filing in 2020, also not in the too distant future, and then there's this area where we expect DOPTELET to be the first in class in CIT, and the phase three we expect to have a readout mid-2020. This is, for us, a very exciting area, so this gives you a little bit of an impression of the highlight of the transaction, what it is all about. I would like now our Chief Medical Officer to share with you some thoughts on the disease and what the product is actually doing. Milan.
Thanks, Guido. This slide provides an overview of thrombocytopenia, a low blood platelet count, and the indications that avatrombopag currently has or is pursuing. Thrombocytopenia is a serious bleeding disorder, and typical symptoms include bleeding in skin or mucosal tissue such as the gut. In chronic immune thrombocytopenia, or ITP, uncommon but serious symptoms include intracranial hemorrhage. Thrombocytopenia can be the result of low production, increased rate of destruction, spleen sequestration, and also transfusion dilution. With avatrombopag, some of the leading causes of thrombocytopenia are being pursued. As Guido mentioned, for chronic liver disease requiring a procedure, then this was approved in the U.S. in 2018 and in Europe in 2019. For chronic immune thrombocytopenia, this was approved in the U.S. in 2019, and we anticipate European submission in 2020. Finally, the chemotherapy-induced thrombocytopenia with an expected phase 3 readout in mid 2020.
And if I can have the next slide, please. So this slide shows the profile of avatrombopag. There are currently three thrombopoietin receptor agonists on the market. And based on the totality of evidence, including efficacy, safety, and convenience, we consider avatrombopag to be clinically well differentiated. As mentioned, avatrombopag is approved in adults with thrombocytopenia for chronic liver disease undergoing a procedure in both Europe and the US, and for chronic immune thrombocytopenia with an insufficient response to previous treatment in the US. Importantly, as also Guido mentioned, avatrombopag can be given orally with food and does not have a black box warning for hepatotoxicity. Therefore, we think that avatrombopag represents a very, very exciting opportunity in hematology that fits very well into our strategy. And Guido, then back to you.
Yeah, thank you so much, Milan. On this note, basically, how will the DOPTELET now enhance our hematology franchise? So first of all, as Milan pointed out, we believe it's a differentiated asset with orally administered. It's really a second-generation TPO and serving really on high unmet medical need. The good news for us is the TPO market is relatively large and well structured. So we are entering here into a category of $2 billion, of which the ITP market represents $1.4 billion. And so here, we will have to assert ourselves with a differentiated product against competition, but we think that this is a doable mission. And the product is approved today in ITP and CLD in U.S., in CLD, as we mentioned, in Europe, and we intend to globalize this product. And in CIT, we are now in a phase 3.
We hope, let's say, that this product will have then a readout of the phase 3 in mid 2020, and this should enable a launch as a first-in-class in 2021, late 2020, depending on the approval timelines, so this gives you a little bit of a feel of what the product does, and when you think about the market, what we believe is that the CIT market will open up and will expand the category, and as a product, let's say, that will be first into this segment, we expand the market to expand while the market is currently growing with a 5% growth rate at this juncture. Next slide, so we believe this is really like a marriage in heaven. It will definitely strengthen our position in the United States, where we have now close to 350 people on the ground.
It clearly will strengthen our, let's say, footprint in terms of field-based activities in the broader medical marketing area. So the majority of Dova employees of the 125 are really field-based. What it does also is today, we have in the U.S. more of a medical affairs-oriented function. But with Dova, we get a full-fledged R&D team that focuses, obviously, at this juncture fully on the CIT indication. But we are excited about the team, and we think that we could do more with the team in the years to come. And then there are obviously support functions. So for me, let's say, what I really like about this transaction is that we essentially establish now a full value chain in the largest market of the world with Dova. And we intend to build upon the Dova team in Raleigh and build out functions there as well.
Coming to the next slide, so what really this transaction does now, when you think about our own franchise where we launched really the first true innovation in the hemophilia field over 20 years with the Elocta and Alprolix, now these products are state-of-the-art. Now, what the DOPTELET does, it gives us access to a very exciting market. As described already, it's a $2 billion market with 5% compounded average growth rate over the years, and we are here now to compete in the sector, and it gives us the opportunity in the new indication in CIT, let's say, to assert ourselves in a new segment and broaden the overall category, and we feel that with this differentiated product, we should claim a significant share in today's market, but also in the growing market, obviously.
And this will trigger now a broad sequence of launches internationally, and this will definitely increase the agility and the growth momentum of the entire franchise. And as you heard earlier, yesterday, we announced also that we have deepened our partnership with Sanofi. And when we looked at the interim results of BIVV001, where we had for a large time of the week in a once-a-week dosing, normal trough levels, we felt it was time for us to opt in early and actively now drive the development together with Sanofi as a development partner. And we think that this will do as well for existing hemophilia franchise, but we are very excited about the opportunity around BIVV001 that will come in 2023. So it is now a very comprehensive hematology franchise that we are having and that we think is very relevant for physicians and patients.
When we come to the next slide, I think this visualizes it a little bit more in that basically we have our legacy brands with the Elocta and Alprolix that we still believe we can grow. And let's say, despite increasing competition, but we are confident that this franchise in the area, particularly of personalization, we have more room to grow. We have BIVV001, where we now play an active role in the development, expected to come in 2023. And now we have a sequence of launches with DOPTELET, right? We have already ITP and CLD in the United States approved, as well as CLD in Europe. And maybe, Milan, you can give us a view from an R&D standpoint, how you see this launch sequence playing out.
Yeah. So as we talked about, we already have the approval in chronic liver disease and ITP in the U.S. We want to unlock more of the value and the unmet medical need with this asset, so in particular, the ITP in Europe and also the chemotherapy-induced thrombocytopenia across Europe and U.S. Beyond that, we have opportunities, say, more globally, and we also want to unlock that value. So I think with avatrombopag, we create a value and use flow that supplements our current story extremely well and fits really well into our hematology franchise story.
Excellent. Yeah. So I think this gives you a little bit of a feel that we have actually brought ourselves now a product, but in three indications that will give us rights to believe that this is going to be a growth driver for us moving forward. So on the next slide, I would actually like to ask Henrik to comment on the transaction terms and, in particular, how we organize the funding so that you get a little bit of a feel for this as well. Henrik.
Thank you, Guido, and good morning, everyone. Let's look at the transaction terms and some of the financial aspects of this transaction. The Dova shareholders will receive $27.50 per share in cash upfront. In addition, there is a $150 per share contingent payment on CIT approval in the U.S. This values the transaction at $915 million on a fully diluted basis, including the contingent payment. We expect the transaction to be accretive to EPS in 2022 and significantly accretive in the years after that. In terms of funding, the transaction is fully funded through existing cash resources and new bank financing. We expect an initial leverage of around 3.5 times EBITDA on a pro forma basis. With our strong underlying cash flows, we will continue to create headroom for additional value-creating deals.
In terms of timing, we will launch a tender offer for the purchase of all outstanding shares, and this is expected within two weeks. Shareholders representing a majority of the Dova shares have agreed to tender their shares. As we heard, we expect closing by the end of the year, subject to customary closing conditions. Thank you. Back to Guido.
Yes. So basically, just to round it up and summarize, so we think that this deal and also, obviously, the early opt-in give us reason to believe that we are on this pathway to create a leadership position in the broader area of hematology. And we see that these are important stepping stones that build upon our existing franchise within Elocta and Alprolix. With Dova, we will further diversify and expand our geographic footprint as it is a global business in a very structured market. You will appreciate that we will not hesitate now to internationalize this franchise in our own footprint, but also thinking how this could be done beyond. And then certainly, obviously, the CIT indication is a fantastic addition to our overall R&D platform with the late-stage asset that clearly will bolster our overall presence, but also the strength of our R&D portfolio.
I think on this note, we should now offer questions as they may arise to make best use of your time.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad. The first question comes from the line of Peter Seested from Handelsbanken. Please go ahead.
Good morning, Peter.
Thank you for taking my questions. I have a couple, if I may. Many of them relate to the financial outlook. I can see in Dova's latest 10-Q report that they have an annualized expense rate of around $80 million. I would like you to give a flavor of whether this is a number that we should factor into our numbers or whether we should also increase it, as you might have to add some infrastructure in the EU ahead of launch. That's question number one. Question number two, consensus estimates for DOPTELET are up to $500 million in 2023 per Bloomberg collated numbers. Could you give a flavor on that number? Is that something that you are looking into as well, just to get your sense of it?
While we are here, I know that it's not related to this particular call, but could you potentially just give us a flavor or feel for how you see the hemophilia market developing right now? Those were my questions. Thank you.
Yeah. Thank you, Peter. I mean, let's start with the easy bit on the setup on how you expect the revenue forecast, yeah? And I think we typically don't forecast revenues, and this is a reasonably well-structured market. Now, you come with a differentiated product into a category that is $2 billion today, $1.4 billion in ITP. And basically, essentially today, it's a two-horse race with Nplate and PROMACTA, but you have some differentiation on the product side. And we have a team running. So we are confident that we can assert ourselves there, let's say. And let's say, but we will not say anything, let's say, we probably can't give you more guidance. And we will be, if the readout of the Phase 3 trial is positive, we are likely to be the first in the CIT indication that is affecting a significant number of patients.
Depending on which number you choose, there is around 10% of the chemotherapy patients in the United States. There are certain estimates around 70,000 that are used. That gives you a little bit of a frame, let's say, to do the calculation. It is, for us, a pretty significant opportunity. Now, regarding the cost base, there we think, let's say, that on an annualized basis, we want to invest into this franchise, let's say, obviously, not only in terms of bringing this product to the market, but also in developing the indications, but also further internationalizing this business. There we will be north of what you, let's say, quoted. Henrik, would you like to mention anything on the investment into the product?
Yeah. When it comes to the infrastructure, I mean, outside of the US for internationalizing the product further, we have a very strong commercial infrastructure in Europe. So we will not see a high uplift in cost for that reason.
Yeah. Yeah, so I think probably that's as far as it goes. I think with regard to the overall hemophilia, I just have to be respectful that our Q3 report will come soon, so I would like to comment on this in the frame of the Q3. Peter, I hope this gives you some sense.
Yep. That's very appreciative. I have a couple of more, but I'll just jump into the Q.
Yeah.
Yeah. Be back later. Thank you.
Thank you.
The next question comes from the line of Johan Unnérus from Pareto Securities. Please go ahead.
Yes. Thank you for taking my question. Yes. Well, first question relates to how we should understand market dynamic in the ITP segment. Earlier, I think it was referred to as sort of chronic idiopathic thrombocytopenia, and now it's called immune. There are different sort of uncertain cases, I guess, where you don't know where it comes from. Is this in reality a broader label than it might seem to be? That could be the first question, just to get a bit more insight into the market dynamics. And secondly, you seem very convinced that the completion is a formality. You have the board approval, the majority of the shareholders. What is the rate of the majority? How big is the majority that you have? Maybe I missed that, but please clarify it. Thank you.
I mean, I started off basically the deal certainty, let's say, is as much certain as public market transactions can be at this stage. Obviously, here we have an understanding with the majority shareholder that makes this transaction a little bit easier. But I don't want to comment over and above this, let's say, but we are confident that we can consummate this transaction. But what this means in today's environment, I cannot guarantee. Regarding the ITP indication, maybe Milan would want to comment on this. Yeah, so avatrombopag is approved in the U.S. for treatment of thrombocytopenia in adult patients with chronic immune thrombocytopenia that have had insufficient response to previous treatment. We think there is a significant unmet medical need in this space, and when I also went through some of the symptoms, some of these patients actually have quite severe symptomatology.
On top of that, as we also mentioned, we believe that avatrombopag is a differentiated asset in this space. So when you add it all up, including the potential additional value that can be realized through chemotherapy-induced thrombocytopenia, on top of the fact that this is within our core strategy, we are very excited about this opportunity. Yeah. And we did quite a bit of in-depth market research, had a lot of focus group interaction, and also patient interaction, and basically trying to go a little bit underneath the skin of what motivates prescribers and patients here. And we felt that this topic of food interaction, which may not appear to be such a big thing, is actually quite serious. And let's say it left an open opportunity in unmet medical need here.
And here, coming with an oral formulation that is not having these issues and has more of a clean safety bill, we felt is an important addition. But we have to assert ourselves. In the United States, the category of TPOs is around a $900 million category. And let's say, so we are coming into this now, and we're trying to make an impact.
Great. Thank you. What is the sort of average price? I mean, sometimes there's a difference in list and net prices, of course, and is it something to be said about what is this about 1,400 Rx or patients or prescriptions so far? Are they a very heterogeneous group, or is it sort of very much the core label?
I mean, the prices in this category are very much aligned. So there is no differentiation from what we understand. And there is a relative, and this is not an extensive gross-to-net. So it is all in a certain range. And basically, competitors are competing on the strength of the product quality.
Yes. Thank you.
You're welcome.
The next question comes from the line of Rajan Sharma from Deutsche Bank. Please go ahead.
Hi. Thanks for the question. Firstly, I just wanted to ask about how you see ITP treatment paradigm evolving given the approval of the FcRn inhibitors, which have been investigated in the indication and those in development? So kind of be interested to get your thoughts on that. And then secondly, do you think there's any evidence for potential use of DOPTELET in patients who are refractory to other TPO agents?
I mean, maybe I comment on the emergence now of the SYK inhibitor. We think that the product has, DOPTELET has a clear place based on its once-a-day dosing, its strong efficacy profile, yeah, and also the fact that we are not associated with hepatotoxicity. Now, we think that the strength of this profile will provide a beneficial risk-benefit ratio of DOPTELET versus also emerging treatment. And let's say, in the end, this is our hypothesis. Obviously, it needs to be validated by individual physician decision, but that's our perspective. Maybe Milan, you want to take the second part of the question?
Yeah. I agree with you. I think when you look at the totality of evidence, we see avatrombopag to be differentiated, let's say, in the currently approved treatment landscape, but also vis-à-vis potential new entrants into this space. When it comes to the question about refractory TPO patients, I think there is a little bit of evidence that some patients that have failed may benefit, but I think that's too early to comment on.
Okay. Thanks.
You're welcome.
Once again, ladies and gentlemen, if you would like to ask a question, there's 1 on your telephone keypad to register for a question. The next question comes from the line of Rikard Anderkrans from ABG Sundal Collier. Please go ahead.
Good morning, and thank you for taking my questions. So I have three questions. Dova communicated that the CLD indication could be worth up to $800 million. Would you view this as realistic given that DOPTELET is meant for patients with severe TCP? How many or how big is the share of the patients with severe TCP looking at the population as a whole? So that's my first question. And my second question relates to, could we expect any antitrust issues? Would you say that your sort of key markets are overlapping in that sense? And the third question is that of what will happen with the deal that there's a current co-promotion deal with Salix Pharmaceuticals where revenues are divided? Could you comment on that, please?
Yeah. I mean, maybe, let's say, I come to the indication. I think I'm not sure that actually Dova announced $800 million for CLD. I think they probably saw the value for CIT. At least what I can tell you is that we saw the largest value in this product in the ITP and CLD area—TIT area, sorry. CIT area, so the chemotherapy-induced thrombocytopenia and in the chronic immune thrombocytopenia, yeah. So these are the two main indications for us that are really driving the value in our view. And there we think that, as I told you, in the structured market, we think that we can take a considerable share. Now, with regard to the Salix agreement, I mean, we just announced the deal. So obviously, we'll look at this partnership in the CLD area, which is the smaller indication.
We'll have a discussion with them, and we'll see what their view is. I mean, to be honest, we are not a gastro hepato company either. So it is not something that we believe is a big issue or whatever. It's a co-promotion deal that would allow Dova also anyway or us to step in. So I think this will be. We will deal with this when we get there. But we are excited about the opportunities in the other two indications, and sorry, I may have missed one other aspect of your question.
Yeah. Just a quick flavor on the antitrust issues as well, if there's an overlap in the discussion.
Yeah. Yeah. The good news is for companies of our size and Dova size that we are not maybe—we are not having really dominant positions. And clearly, as we are not in the TPO area, we don't expect, let's say, too many issues here. But then again, we don't want to profess that we can speak on behalf of the competition authorities. They have to clear this. But we would not expect it given our—well, still, in the global picture, relatively small representation in the U.S. and no representation in the sector.
Excellent. Thank you very much for taking my questions.
You're welcome. Thank you.
The next question comes from the line from Eun Yang from Jefferies. Please go ahead.
Thank you. I have a couple of questions. Hello.
Yeah. Hi, Eun. I mean, thank you for taking this call so early. And I'm sorry that we have this terrible timing for you. Thank you.
No problem. First question is, I think you mentioned that for ITP indication, you are filing for approval in Europe next year. Given that both PROMACTA and Nplate are already on the market in Europe, do you think that you need a competitor trial for approval? Second question is, my understanding is that PROMACTA is going generic sometime mid-2020. Can you give us your assumptions for market exclusivity expiration for PROMACTA in the U.S. and E.U.? Thank you.
Yeah. Thank you. Hi, Eun. Yeah. No, so I think there are ongoing discussions. And let's say in EU, currently, we have a certain, our assumption is that we would not have to do a new phase three program. Milan, you want to comment?
No, I totally agree. There was already one head-to-head study that ended early due to difficulties with enrollment. We think the current data package would be able to support an approval of ITP in Europe. But of course, that ends up being a regulatory decision. But we feel that the current data package is sufficient.
Yeah. So then regarding PROMACTA, I mean, let's say you know that there is an LOE in 2026. There is a possibility. And I think this is really something, let's say, that you need to ask Novartis, not us, really. But we think there are possibilities for them maybe to extend this. And let's say, in our, let's say, model, we think that we could drive this market for longer than 2026. But that will basically be in an unaffected way from generics. But this really is a question you need to ask Novartis.
Thank you very much.
You're welcome, Eun.
Thanks.
Once again, ladies and gentlemen, if you do have a question, please press 01 on your telephone keypad. There are currently no further questions registered. I hand the conference back to you, speakers.
Yeah. Thank you so much for your interest. And we are excited about the acquisition and the early opt-in in BIVV001. We think that this is really fabulously complementing our strategy to build leadership in hematology. On this note, really, thank you for your interest. And wish everybody a great day. Thank you.