Ladies and gentlemen, welcome to the Sobi to Acquire Synagis US Rights from AstraZeneca Webcast. I'll now hand over to Guido Oelkers, CEO. Please begin.
Yeah, thank you so much, and welcome to everybody. Yeah, today is a super exciting day for us here at Sobi. And before we, let's say, talk a little bit about the transaction, I just wanted to do a little recap to bring this transaction into perspective and touch base regarding, let's say, the strategy that we set out in September 2017. So if you'll bear with me, we go straight to page four. And I will be joined today by Henrik Stenqvist, our CFO, and Milan Zdravković, our Head of R&D. So you will get a very detailed perspective on this deal from different angles. So I'll fire it off. And basically, what we wanted to share with you, obviously, as we laid out, hemophilia was a no-brainer.
We wanted to build this business, and we're still, obviously, in pursuit of it and getting our fair share with our excellent products. But we already laid out in September last year that we wanted to build a second leg in specialty care. And that was the reason why we didn't sell as a partnering business, but we felt that there was much more in it. Thirdly, we clearly wanted to strengthen our position primarily in the U.S., and we felt that there was more room to cover, let's say, in our late-stage pipeline. So when we go to the next slide, what you see is our performance, including the LE for this year. I think we have done a pretty tremendous job with hemophilia.
Even though maybe some of, let's say, the reports that we have received, we're doubting a little bit of our progress in Q3, we actually have made substantial progress in the patient acquisition in Q3 also with hemophilia. Hence, we're optimistic for this business also till end of year. We have shown double-digit growth with Kineret. Obviously, we still believe that there's opportunity for growth in hemophilia, but there's also, let's say, a lot of room to cover in the area of the U.S. presence. As you can see on slide five, despite considerable growth in the U.S. business, the relative share of the U.S. business to the total business declined. It's now 14%.
Given the fact that around 50% of the global rare disease market is in the U.S., this is clearly a situation that was not ideal for us and clearly prompted us to think about how to correct this rapidly. Basically, when we go now to the next slide, what is this deal all about? First, I explain a little bit what are we buying. When you go to the left, we buy essentially the perpetual U.S. rights for Synagis, which is a monoclonal antibody, and it is the only approved respiratory syncytial virus prophylaxis for high-risk infants. This means it's a small patient group in a rare pediatric condition. This is when Sobi is in its comfort zone.
Secondly, we get the rights to 50% of the earnings through the follow-on compound MEDI8897 for the prevention of lower respiratory tract infection caused by RSV in a much larger patient population. When you go to the next slide, what is our thesis for this deal? What do we try to achieve here? What we try to achieve is, let's say, first of all, we believe that the two assets in combination provide the opportunity for a longitudinal earnings stream. We have a product that we, Synagis, that we believe will perform extremely well under our ownership. We have, in addition, MEDI8897 that we are extremely excited about with a much broader patient population, and we will participate with 50% in the earnings. We think that this is a very good position for us to be in because of the breadth of this product.
We rather rely, to be honest, on the strength of Sanofi, the largest vaccine company in the world, because probably this is beyond, let's say, our current scope. With regard to, let's say, the other part of this deal, Synagis really connects with Sobi's DNA. It means it connects. It is a rare condition. It connects with our expertise in the pediatric field, and thirdly, we get access to a fantastic talent pool that has been extremely experienced in the US in this rare pediatric condition. It will double our commercial footprint in the US, and it will allow Sobi to expand its presence beyond Synagis. Just a quick recap, so essentially, this transaction will touch three areas of our strategy that we laid out in September 2017. It will help us to develop the specialty care portfolio.
It will articulate, as we will see later, specialty care with a strong bias toward immunology. It will help us to expand substantially our U.S. platform, and it will allow us to make choices in R&D, and we get access, at least from an earnings standpoint, to a very exciting compound that is in phase 2b. On this note, let's say, without taking too much of your time, I would like now to refer to our CFO, Henrik Stenqvist, who will share with you the transaction highlights.
Thank you, Guido, and good afternoon, everyone. Let's go through the transaction terms. As you will have seen, firstly, there is an upfront payment of $1.5 billion. This upfront payment is split between a cash portion of $1 billion and an equity portion corresponding to $500 million. This cash portion will be financed through fully committed credit facilities, which are in place. And given our net cash position before the deal, we estimate that our net debt position after the transaction would be about SEK 6 billion . The equity portion will consist of about 24.2 million newly issued Sobi shares, which will represent an AstraZeneca ownership in Sobi of just above 8% after this transaction. In addition to the upfront consideration, there are deferred payments and milestones. For Synagis, there are up to $470 million in sales-related milestones.
These are linked to an enhanced long-term performance of Synagis and may become due from the year 2026 and onwards. For MEDI8897, there are deferred payments of nearly $20 million for the period 2019 to 2021. That is, in total, $60 million. Furthermore, there is a $175 million milestone due upon the BLA submission to the FDA. And finally, there are other potential net milestones of about $110 million for MEDI8897. If we go to the next slide, this illustrates some of the financial impact of this transaction. This is a large transaction with a transformative nature, both in terms of absolute scale and the strategic importance for Sobi. In terms of pro forma numbers, in 2018, Sobi standalone is expected to deliver revenues in the range of SEK 8.9-SEK 9 billion and EBITDA in the range of SEK 3.4-SEK 3.5 billion .
This corresponds to a margin of between 38%- 39%. This is all according to the latest guidance that we gave in connection with Q3 release. When it comes to Synagis, you will become aware that Synagis is a seasonal product with a vast majority of sales taking place in Q1 and Q4 of the year. In order to cover the latest full RSV season, we have therefore, on a pro forma basis, added the latest 12-month sales as of June 2018. As you can see, this would add revenues of about SEK 2.4 billion with an EBITDA margin in excess of 60%. As a result, on a combined current pro forma basis, revenues would reach SEK 11.4 billion with an EBITDA margin well above 40%. In conclusion, and needless to say, this transaction represents a step change in Sobi's financial scale and capacity.
We expect significantly higher earnings with solid cash flows, and our intention is, of course, to leverage this enhanced position both to accelerate organic growth but also for further strategic acquisitions, and with that, I hand over to Milan, and thank you.
Thank you very much, Henrik. My name is Milan Zdravković, and I'm Head of R&D and Chief Medical Officer at Sobi. This first slide provides background information on respiratory syncytial virus, or RSV. RSV is a major cause of respiratory illness in young children, and almost all children have been infected by the age of four years. The severity of the disease may vary from being mild in nature, with symptoms such as a common cold, but can, in more severe cases, develop into bronchiolitis and pneumonia. Severe disease in children most often occurs in premature children and/or children with underlying cardiopulmonary disease, so-called high-risk infants. There are around 57,000 hospitalizations in the U.S. each year in under 5-year-olds due to RSV and hereby associated morbidity. In high-risk infants, prevention is critical.
This slide provides an overview of palivizumab, or Synagis, the only approved and available treatment for prevention of serious RSV infections in high-risk infants. It is a recombinant humanized monoclonal antibody that provides passive immunity against RSV. It has a very well-established safety and efficacy profile, and it is indicated for the prevention of serious lower respiratory tract infections in high-risk infants. Clinical studies have shown reduced risk of hospitalizations in high-risk infants being premature and/or with underlying cardiopulmonary disease. As already mentioned, beyond Synagis, the agreement also includes rights to participation in 50% of the future earnings of the candidate drug MEDI8897 in the U.S. This is a potential follow-on molecule that I'll describe in more detail on this slide. It is an extended half-life human antibody against RSV with greater potency than palivizumab based on data both in vitro and preclinical models.
It was optimized to target the pre-fusion conformation of the RSV fusion or F protein, and the binding is illustrated on the left hand of the slide. The fusion protein is important in the pathogenesis of the disease as it brings together the virus and host cell membranes. The molecule was engineered with amino acid substitutions in the Fc domain and thereby prolonging its half-life, potentially enabling a single dose to cover an entire RSV season. It received fast-track designation from the U.S. FDA in 2015. A phase 2b study is currently ongoing, and the current development plan includes initiation of a phase 3 trial in healthy full-term and late preterm infants. As I want to say, in summary, we are very excited about this agreement. It fits very well into our existing focus on smaller patient population diseases in children with a large unmet medical need.
It has a very strong therapeutic area linkage with our other opportunities in immunology, notably Kineret and Emapalumab. And finally, it transforms our U.S. footprint. And with that, I would like to hand over to Guido Oelkers.
Thank you, Milan. And I'd like to continue with page 17, the strategic rationale. So what does this deal do for us strategically? And I think, as you can guess from the discussion that we had earlier, this deal really deserves a couple of looks because it's much more than an S deal of one product. There are multiple angles to this. So first of all, this deal diversifies Sobi's revenue base into immunology. And I will touch base upon this, what this means. Secondly, it accelerates the buildup of our U.S. platform, commercialization platform, because we are not only acquiring an asset and a right, but we are also confident to have access to 130 professionals that are transferred as part of this transaction. And thirdly, it enhances our financial capacity to do deals in the way we have structured the deal with the inclusion of an equity base.
It allows us now to retain our gunpowder and the strategic flexibility to do more deals. So what does this deal do? On the next page, this deal now creates a situation that immunology, which is consisting of our three products, Kineret, and you have seen the results of Kineret in the last quarter, growing, accelerating growth to 28%, Emapalumab, PDUFA date, November 20th this year, and Synagis as a very strong now-based business. So essentially, immunology now becomes the second leg to Sobi, and it helps us to articulate what specialty care is about. At the same time, we still have the other businesses that will give us opportunities for further diversifying the group at a later stage. So when you go to the next page, you can get a sense on page 19 how now this contribution looks like.
So this is on a pro forma basis, 2018, prior to the launch of Emapalumab. And what you can see here is that 70% of our revenues in specialty care are now related to the area of immunology. And when you think about now these franchises, you have Kineret in an accelerated growth phase with new indications ahead of itself. You have Emapalumab with PDUFA date, as mentioned here, and with additional indications for further expansion opportunities. And you have Synagis, a product that we are extremely confident will perform well under our ownership, which gives us an economic foundation. And with MEDI8897 as a further add-on that will allow us to prolong the earning streams and create a longitudinal earning stream. So immunology now becomes the second leg, is an important play for Sobi.
But not only from a strategic therapeutic area perspective, this deal has helped us to progress, but it also helped us to progress with regard to our representation in the U.S. Again, using the pro forma 2018 numbers, you can see now that our contribution in North America as a part portion of total sales increases now with this transaction from 14%-32%. So significant progress, but not only a significant progress in terms of the number of sales, but also when you look at the fact that we more than double our number of team members in the U.S., it will make us a much more credible player for partnering, but it will also help us instantly already to leverage synergies with regard to the Emapalumab launch. So the U.S. is for us of critical importance as we move into the future.
Synagis will play a significant role to expand here. In summary, this deal, as you can come back to this original slide, this deal really allows us to create a second leg for the company in immunology. We more than double our contribution in the U.S., and we have been able to enhance the financial capacity to build a business. On this note, I like to close and open the line now for questions and answers because we clearly want to get the best value out of your time. Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. So once again, that's zero one to ask a question or zero two if you need to cancel. There'll be a brief pause now while we register your question. Our first question comes from the line of Peter Sehested of Handelsbanken. And please go ahead. Your line is open.
Yeah, hi. It's Peter from Handelsbanken. I have a bunch of questions, but I'll just kick off with a couple and then jump back into the queue. The first question relates to the cost of debt. Could you just provide us a little bit on that in order for us to model properly? Second question relates to the P&L structure that we should expect in 2019, also including the Emapalumab development cost. We talked about this in the Q3 call, but perhaps a little bit more flavor. And thirdly, when you started at Sobi, Guido, a couple of, I mean, almost a year ago, I mean, you said that you and we sort of, on the analyst side, we sort of punched you with respect to the Hemlibra threat. And we were then talking about hemophilia.
You said, well, you wouldn't take a position in Sobi if sort of the hemophilia business was going down the drain or how we should phrase it. And now you are adding sort of a lot of revenues to your top line. I mean, is this a signal that you are more concerned about the erosion to your hemophilia business from competition? And could you, at this point in time, now that your top line is actually more hedged than it was before, and you might be a little bit more open to speak about your view on the hemophilia, could you put some comments on that? That would be very appreciated. Thank you very much.
Yeah, thank you so much. Maybe I kick it off, and then I refer to Henrik later for the P&L and cost of debt situation, but let's talk about the Hemlibra threat. I mean, obviously, as everybody knows, it's a doorstep now also in the non-inhibitor segment, let's say, and I mean, I have been open about it, and I will remain open about it because that's just the nature of this thing, and we basically are very convinced that we can continue taking share in this market on the strength of the two products. Clearly, I mean, as I alluded to in the first place, the Q3 results on the financial side are not indicative of the strategic progress that we have made, and secondly, let's say, so I believe that also forward-looking, this is a large market. There's not one winner takes it all.
We have the products built on real-world evidence. We are devising, as we speak, strong strategies to provide freedom of choice and security to patients to basically dose when they need it. And it allows personalization that, given the variability of the results of Hemlibra, are not possible with a very low risk of, or basically comparably, hardly any risk on complications in comparison to Hemlibra. We think that for this indication, given also the momentum that we have today, we are going to remain one of the driving forces in this business and are on the way up. And our view, let's say, has not changed.
We believe that our access to BIVV001 will be strong-held and will allow us to keep driving this business with full force because we see a lot of excitement around this compound, particularly now when it comes to the recruitment of phase three. We think, let's say, that we are well positioned. The products are very good with the Fc fusion, strong data, patients feel good. We have a strong alliance with the key opinion leaders. Yeah, I mean, we can obviously there's risk in everything even when you walk out of the door in the morning. I mean, let's say, but we think that we are well positioned. I mean, this has not changed our view.
And yeah, I mean, we recognize that Roche is a formidable competitor, but we think that we have also something to give and that we have a certain intimacy built up in this sector over the last couple of years. So I mean, so I'm still bullish. And when the time has come to provide you guidance for next year, you will understand maybe also why we are still optimistic. On this note, let's say, I mean, maybe I want to hand over to Henrik, who will talk to you about the cost of debt and the P&L structure.
Yes, thank you. Well, when it comes to the P&L structure in 2019, I'll see if I can answer your question without giving any new forecast because today isn't the time to do that. But what I can say is that if you compare the 2019 P&L with the 2018, we will obviously be in the launch phase when it comes to Emapalumab. And then we will have this significant addition, obviously, of Synagis revenues with what we expect to be a strong profitability. And I don't want to elaborate much more than that. When it comes to the cost of debt, you also won't get any specific number at this stage, but I think you should model our cost of debt as you would do with a company with a relative modest leverage, which is the case here with Sobi after this transaction.
Thank you.
Thank you.
Thank you. Our next question comes from the line of Erik Hultgård of Carnegie. Please go ahead. Your line is open.
Yes, hi. Thank you for taking my questions. I have a few, if I may. First, Synagis has been a declining asset since AstraZeneca acquired the product through MedImmune back in 2007. So my first question is, do you see an opportunity to reverse the negative sales trend that we've seen even post the guidance, RSV guidance update a few years back? And then secondly, how should we think about the sales opportunity of the follow-up compound? I assume it will cannibalize Synagis sales. And given that you only have 50% profit, 50% of profits, the simple math would be that you need to double revenues in order for it to have a neutral impact on earnings beyond the launch of MEDI8897. So if you could give us some color on how we should think about sort of the earnings post the follow-up launch, that would be very helpful.
Thank you.
Yeah, thanks, Erik. Appreciate, let's say, the comments. Basically, quick explanation. I mean, we obviously, as you can imagine, we didn't spend the $1.5 billion light-heartedly. We did obviously quite extensive DD on this. And basically, I share with you what our premise is or our understanding. Yes, it's true that Synagis has been declining, but it has been declining because of a change of guidance. Then actually, it reached pretty much of a new plateau where it was pretty stable for two years. And now recently, let's say, the product, let's say, showed on a calendar basis a decline, let's say, when you look at the annual reports provided by AstraZeneca. Now, we made ourselves, when you look at it on a season, the last season, midpoint last year, midpoint this year, you basically say it's a $270 million, give and take, product.
We made ourselves comfortable during the DD that we believe this product will perform well under our ownership. We are excited about the opportunity to bring the team along and basically make it part of and familiarize it with our DNA that is obviously extremely patient-focused and is extremely focused also on the pediatric conditions. And we have on top a potential synergy with the Emapalumab launch. And what we see is that Synagis, let's say, even with the change of guidelines, is by far not maxed out. So it's the only product that is available, but there's quite a bit of headroom still available to further the penetration of the product.
Let's say, basically, the kind of sales is not that the product has nothing to do with the fact that the product is out of fashion or it's an asset that basically people don't like to be connected with. [It] has more to do with other reasons. Therefore, we believe with the right focus and with, let's say, for us, obviously, Synagis is going to be a very important product. I mean, it's very different if you run a multi-billion-dollar company like AstraZeneca or like our company where this product is obviously very much in force. Secondly, to your second question, what is the opportunity now for the 8897? Now, 8897, let's say, is also a monoclonal antibody, as I pointed out.
We are playing in a pond that is eligible and of people who have babies who have access to this product of around 60,000 patients out of the total population of babies in the U.S., 4 million. Now, this is just driven by the reimbursement guidelines. MEDI8897, and that's the reason why it's driven by the vaccine division of Sanofi. They will have a different approach to this product. They will look at this opportunity, let's say, more from a vaccine perspective. That means that they believe that this product could become a product, let's say, that provides usage and utility potentially to all 4 million babies. In terms of volumes and in terms of opportunity, this is a much larger opportunity potentially at a different price point.
But in terms of overall economics, and it's for me not here to speculate, we'll have, let's say, publication on the phase 2b results mid of next year, then it's the right time. But it is a significantly larger opportunity in terms of economics than what Synagis is today. So we believe, let's say, that in a way, the 50% access to the earnings position us well, let's say, to ensure that we have a longitudinal earning stream. And so to your point, first thing is we think that we can do something with Synagis, develop the product further. Secondly, we believe, let's say, that the MEDI8897 will provide a very interesting earning stream beyond the lifecycle of Synagis.
Great. Thank you so much. Just to follow up, the IP situation for Synagis in the U.S., could you give us just a brief overview of that? Thank you.
Yeah. I mean, Synagis is a product that is surrounded by quite a lot of IP, some of them patents, some of them, let's say, just trade secrets, as you would do. It's not trivial to get this product right. So there's a lot of intellectual property that was built up over years at MedImmune. And as a consequence, you don't see biosimilars at this juncture in clinical.
Thank you.
You're welcome.
Thank you. Our next question comes from the line of Peter Östling of Pareto Securities. Please go ahead. Your line is open.
Okay. Thank you. Just a couple of short ones. Could you say anything about the gross margin for Synagis? That's my first one. And then the second one, just clarification, the $13.6 billion that we'll pay for Synagis, will that be booked as an intangible asset on the balance sheet? And the last one, just a clarification, is it so that MEDI8897, will Sanofi book all the revenue and you will just share on the earnings side? Thank you.
Yeah. I mean, let me come back to the first, the last question, the easy part, and then I will throw back to the CFO for the more tricky ones. Let's say those revenues will be booked by Sanofi, very clear-cut. We will only get the earnings. And Henrik, you want to comment on Peter's other questions?
Sure. We are not going to be specific on the gross margin, but we can reveal that the gross margin is supposed to be very strong in relation to Sobi's gross margin. When it comes to how to deal with the asset from an accounting point of view, yes, most of it will be an intangible asset.
Okay. Just a quick follow-up. The 2026 date for the potential additional $470 million regulatory milestones for Synagis, how did you come up with that?
This was obviously a matter of negotiations. Yeah. I mean, if you want to make such a transaction work, you have to share the same dream, let's say. And basically, the transaction-related milestones for Synagis are primarily sales-dependent. I would say that I would personally be very happy if we come into the situation that we have to pay those milestones because it means that we have done a phenomenal job in building this business. Yeah. And let's say, and therefore, let's say, the payment of these milestones will be essentially recovered by the business that we are developing. But essentially, it was a situation that, for instance, if there are changes of guidelines that could allow the product to be repositioned, yeah, then obviously, you're looking at a much larger opportunity. Yes, then obviously, we can share this.
Equally, if we perform extremely well, then let's say, and we will do everything we can, I think AstraZeneca want to obviously participate in this opportunity as well.
Okay. But maybe a more important question is that does this imply a further decline in sales or stabilization, or does it imply that the 2026 numbers will actually show some kind of growth for Synagis?
Yeah. I mean, as I alluded to, I mean, we provide guidance, obviously, as we do usually when we combine the Q4 results. But we are bullish about the opportunity, let's say, for Synagis, let's say, not to be a declining asset, but to have its momentum. And that's the reason why we are excited about it. We don't like to buy declining revenue streams. Yeah. So we are confident that the product will perform well.
Okay. Thank you.
You're welcome.
Our next question comes from the line of Kerry Holford of Exane BNP Paribas. Please go ahead. Your line is open.
Thank you. Yes, Kerry Holford from Exane. Two questions, please. Firstly, on the timing of deal closure, you talk of it closing potentially late this year or into next year. Astra's talked about some potential additional information if closing conditions were achieved earlier. I wonder if you could just tell us what those factors are that determine whether the deal closes this year or next. And then secondly, on MEDI8897, can you just confirm when you aim to start the phase three studies? Will you wait for those phase two results middle of next year? And then also just to clarify, based on your earlier comments, am I correct in thinking then we could also have another phase three in a total birth cohort to treat those non-high-risk patients? Thank you.
Yeah. So maybe we start with Milan on the phase 3b, and maybe Milan, you can shed some light on this.
Yeah. So regarding start of phase 3, it's premature to comment on when that would be. It would require that completion of phase 2 and then also end-of-phase-2 meeting with the FDA. And the other question was around the phase 3. At this point in time, what we are saying is that the studies that have been planned is in, say, healthy term and preterm infants. And this is as far as we can comment on what the phase 3 plans look like today.
Yeah. Yeah. So, regarding your first question with regard now to closing, I mean, today is the 13th of November. Yeah. Let's say we obviously will do everything we can to put all the documents together. But it's not like we have endless time now before year-end. I would see basically the uncertainty on closing either this year or beginning of next year more driven by this that we obviously need to collect all the necessary information and then obviously have uncertainty of approval. And hence, let's say there's a bit of variability. And when you come to other stipulations versus AstraZeneca, I think you should directly ask AstraZeneca. But that's basically, at least from our perspective, this is how we view this.
Thank you.
Thank you.
Thank you. Our next question comes from Christopher Uhde of ABG Sundal Collier. Please go ahead. Your line is open.
Hello. Thanks. So I just have a couple of questions on the financing or the effects on the P&L. I know some things have already been asked. But can you say anything about how long it'll be amortized over, for example, and the effects on OPEX?
Henrik, you want to comment on this?
Yeah. As we've said, we expect an initial net debt of about SEK 6 billion. We don't necessarily plan to pay it off because, as we said, we will use our new financial, our enhanced financial strength also to pursue new opportunities. But of course, if we would take all the cash and repay debt, that would be a fairly quick exercise. And I don't know, was it a P&L question your second?
Yeah. It was about the OPEX. If you can just, I mean, I guess it's SG&A basically, right?
Yeah. Well, we're at this juncture not more specific than to say that we expect the business to generate an EBITDA margin of more than 60%. And you also know that it has a strong gross margin. So then I think you could model out of that.
Okay. Thanks.
Thank you. Our next question comes from Srajan Sharma of Deutsche Bank. Please go ahead. Your line is open.
Hi. I just had two questions. The first one, could you just share your thoughts on the competitive dynamics in the field, in particular, threat of oral therapies in development? And the second one, just on the margin, how much of that do you expect to kind of drop down to the bottom line in longer term? How much will be available to reinvest in R&D? Thanks.
Yeah. So I think we did a pretty thorough mapping on products in the space before we acquired it. And we think that Synagis is going to remain, let's say, a very strong choice for quite a couple of years to come and don't see any immediate threat, let's say, to the product to be disintermediated or fighting for share. And with regard to the oral developments, maybe Milan, you want to share some thoughts?
Sure. So I think, as Guido pointed out, we, of course, did a thorough DD. I think we continue to be of the opinion that you can say passive immunization will play an important role in prevention of RSV disease. You can say Synagis point of view in high-risk infants and potentially, you can say, for 8897, also in a wider population. I think this is a space that has had significant challenges in developing vaccines. You can say both children-based and also maternal-based vaccines. For children, the question is, the child is susceptible early on. That's not the best time when you want to mount an immune response, not even thinking about the potential passive transfer of antibodies that occur over the placenta to the early child.
Second, you can say maternal vaccines. You need to time the vaccine so actually the mother becomes immunized at a point in time where the disease is actually prevalent in the population. So you almost have to think about the pregnancy needs to be timed in relationship to the RSV season for this thing to work. On top of, you can say the benefit-risk challenges of vaccinating a pregnant mother, which I think has its own challenges. And then coming to the oral RSV space, of course, there's the Bavarian that is used, but I mean, I think has some significant liabilities. And we have also followed, you can say, J&J and the fact that they had to discontinue their oral product in mid-stage due to some unspecified requirements for additional preclinical data. So we think this is a good space. It fits extraordinarily well into what we are doing.
We are very comfortable with, you can say, the competitive profile of Synagis and also the potential that 8897 may harbor.
Good. Did we address your question?
Yeah. Thanks. And then just on the other question about how much of the margin we can expect to drop down to the bottom line?
Yeah. I mean, basically, we explained to you that we at this stage expect 60%+ beta margin of the product then, and obviously, we'll provide more specific guidance, let's say, in conjunction with the guidance for next year after the availability of Q4 results. Yeah, so it's a substantial earning generator when you multiply it with the seasonal sales, and if you basically then have in mind that we believe that this is a great opportunity for this product for us and will perform well under our ownership, I think maybe this gives you already some indications.
Okay. Thanks very much.
You're welcome. Thank you.
Thank you. And we have a follow-up from Peter Sehested of Handelsbanken. Please go ahead. Your line is open.
Yeah. Hi, it's Peter again. Thank you for taking my follow-up question. I would just like to understand a little bit about your thinking on your strategy going forward. As you say, you are alluding that you want to reinvest in potentially business development, at least further diversify the company. And in that line of thinking, I would like to know, I mean, with Synagis, you're adding a hospital-based product in one disease area. You're building a commercial infrastructure. So what are your plans going forward? Is that to add on to this particular commercial platform? Is it to expand and diversify into another third business area? Because, I mean, the more concentrated pharma companies which have more concentrated therapeutic fulfillments typically have higher margins, etc., etc. So I just want to essentially have your view on how you're thinking and how we should view Sobi, I mean, going forward.
Clearly, with respect to research, you are a relatively weak company. So should we expect you to sort of drop or give up or sell off Sobi 003? So what will this be? Will this be a commercial platform, or are you still open for taking late-stage products and develop from there? And I mean, so your broad thoughts in general about how we should view Sobi as a company going forward and what your plans are for Sobi. Thank you.
Yeah. I think what is our view? I mean, we have now with the Synagis acquisition clarified two legs: one hemophilia with a follow-on compound 001 moving into phase 3 next year, and the other one being immunology where we have Emapalumab in the launch phase pretty soon, PDUFA date November this year, about 20 years of November this year. And we have new indications, potential new indications for Kineret and Emapalumab. And we have Synagis with an access to the earning stream of the follow-on compound 8897. So that gives you a pretty strong base. And it's always good in strategy to build on strengths. Yeah. So we will feel encouraged, obviously, to reinforce those verticals, even though I have to say with, particularly on the hemophilia side, we feel already pretty good, to be honest. And I'm really excited.
So what we will look for is, can we strengthen further immunology? Can we support late-stage development pipeline? And I think our job is now, in the next couple of months, also to explain to you that maybe we are better than the wide perception is today in the R&D area and actually can progress. And for me, 003 is a testifying to this. We brought this product from the bench into preclinical. And it looks pretty good. And we might also be able to accelerate the development of this compound. So we clearly want to be seen, to your point, with a very strong, let's say, therapeutic focus. The remainder of the specialty care gives us the opportunity to diversify further. It's not the time for us now to speculate on this. We rather now focus on further reinforcing those two legs and building our commercial infrastructure around this.
But we are going to be, let's say, we're going to think about, and we want to basically be seen and recognized that we can move late-stage compounds into commercial. Yeah. And this basically will be for us, particularly now around Emapalumab, around Kineret, and about BIVV001. And then obviously being, let's say, a beneficiary of 8897. So when you think about the way Sobi will transform, I mean, substantially, we will transform now over the next 12 months from a company that was in late stage. I mean, at least we were not confused by the number of projects. Yeah. Now to a company that has a very deep and broad, let's say, bench and access to these products.
And we want to make sure that we can not only by talk, but by the way what we are doing, explain to you that we are actually a formidable R&D-oriented company. And obviously, we will be very religious when it comes to internal projects in terms of prioritization. There is no doubt. Yeah. But our idea is clearly to take this company forward, make sure that you recognize value in immunology, and that basically this, let's say, not only in hemophilia, then underpins this with strong underlying performance. Kineret now, last quarter, when you see it, I mean, already during this year, nice pickup in terms of acceleration of growth. So you can see that commercially we're doing well. Now, hopefully, we can do the same magic for Synagis and have a strong Emapalumab launch. And so that's really the kind of company you should think about.
But we will try to reinforce this. We'll try to bring in late-stage compounds and think about some other opportunities to build out this business more. I think we could not articulate at this stage.
Could I have just a follow-up question? Could you just elaborate a bit on how your commercial infrastructure in the U.S. will look like when Synagis and the surrounding infrastructure there is completely integrated? Thank you.
Yeah. So we will have a team, give and take, 250 people. Yeah. And let's say, this is for rare diseases, pretty formidable infrastructure that is obviously allowing us to take on more products, but clearly it positions us very well for the launch that is now knocking at our door.
I mean, could I just squeeze in my last follow-up question?
Sure.
Clearly, I mean, you are going to integrate some people from another company with a completely different structure, perhaps a bit more bureaucratic than a smaller company than Sobi is, I suppose. At least that's the perception. It will be key for you to retain the right people, I guess. I mean, you've been through this whole exercise. I'm quite sure of that. But I mean, just your thoughts on that, because I know it's a couple of questions I received from investors today. They are sort of concerned about that. Yeah.
I think I feel that based on the interaction we had, and we will have now very soon with more people, I think that this could be very refreshing. Yeah. I think basically for, I mean, people like to make, typically see that they make a significant contribution to a company. And obviously, the relative importance of what this team is generating to Sobi will be so much larger in our world than it could have possibly been at AstraZeneca, where the strategic focus, as you have seen the announcement, is clearly pointing into other directions.
So I hope, and this is what we think after the discussion with the members of the leadership team that we had, that this could be potentially even liberating and actually provide a new opportunity to be repositioned in the balance sheet from corporate balance sheet inverted commas from non-core to total core, total focus. Yeah. And yeah. And then we and I think one should not underestimate the agility of AstraZeneca and the commercial focus. I happen to know the leader of the North American unit for now a good 20 years, yeah, of AstraZeneca. And I think he would not necessarily want to be considered at scale. Yeah. So clearly, I think this is a strong unit, very experienced, very well entrenched with pediatricians. We are excited, I think, and this team, I mean, our first impression is the team will respond very well.
And it will be up to us. It's a bit like life is an interview. Yeah. So we will interview them. They will interview us. But I hope, let's say, that the interview works out well. And we are excited of welcoming them. And we'll try our best effort to make them feel welcome at Sobi.
Thank you very much. Appreciate the comments.
You're welcome.
Thank you. Our next question is a follow-up from Erik Hultgård of Carnegie. Please go ahead. Your line is open.
Yes. Hi, Jan. A quick follow-up. I'm just trying to understand your EBITDA margin guidance post-transaction of in excess of 60%. And according to data that Astra has published, the pretax profit margin in the U.S. for Synagis was more in the range of 35% back in 2017. So is the only difference here amortizations, or is it any contributors from planned cost cuts or cost avoidance related to the Emapalumab launch? Could you just sort of walk us through the drivers of your margin guidance compared to the data that Astra has reported?
Absolutely. Henrik, yeah.
Sure. We are not in the position to walk you through AstraZeneca's results, but the difference you're speaking about, we believe and we are confident that that includes amortization and perhaps other charges of a magnitude that we simply would not have, and that is where you have the difference.
So there is no planned cost cuts in your numbers?
No.
No, no, no.
No, no, no. No, we take this team, and we will hopefully be able to give this team more to do. And we think this team is an asset.
And then it changes to the cost forecast for Emapalumab based on the acquisition of Synagis rights?
There are potential synergies, as we've said, in the U.S. salesforce and cross-selling opportunities. But we have no change to any forecast at this stage.
No. No. We will provide you with detailed guidance, obviously, when we have the Q4 results at the time when we think it's in January, yeah, when we do this. Oh, sorry, February. In February, we do this, but we'll update you in due course because we see there is an opportunity, but at this stage, we think that the focal point is on building the business, and this is clearly our mission now.
Great. Thank you so much. That's all from me.
Excellent. Thanks E rik.
Thank you. And our next question is from Peter Östling of Pareto Securities. Please go ahead. Your line is open.
Yeah. Thank you. Just a quick follow-up. Did you say over how many years you will amortize the intangible arising from this deal?
Henrik?
I didn't say it, but I can say it now. Between 15- 20 years.
Okay. Thank you.
You're welcome.
Thank you. And the last question in the queue so far is from Richard Koch at SEB. Please go ahead. Your line is open.
Yeah. I just had a question on one of the things that you were asked before on the cannibalism between Synagis and the MEDI8897. Did you not expect there to be any, or how did you think that was going to pan out?
I mean, it will obviously, cannibalization will depend on the data and the label that the product will obtain at the time of launch. That is obviously at this juncture speculative. In our own mind, let's say, 8897, when it meets its target product profile, will be a formidable business that we have to reckon with. As a consequence, we are happy that we have access to 50% of the earnings stream because, yes, as I mentioned, it could become a product that provides access to a much larger patient population with a more favorable profile in terms of dose administration. Then we will have to wait for the data that will be published first half next year, how, let's say, the phase 2b data that will give you, I think, a strong data point in this direction, how good the product is in reality.
And then obviously, it will have to be confirmed in phase 3. Let's say if the product doesn't live up to the target profile, I think we would be very excited to continue selling Synagis. Let's say, so we feel that on either side, let's say, quite comfortable.
Okay. Thank you.
You're welcome.
Thank you. Once again, if there aren't any further questions, please dial zero one on your telephone keypad now.
Yeah. I think we also maybe have a maximum of one more question because in the interest of everybody's time. Yeah. So if there is another question, then happy to take it. But I think, and if you have further questions, please relate obviously to our team. Yeah. We will not try to make sure that you fully understand this deal and we can provide clarity.
No. No further questions at this time. So I'll hand back to our speakers for the closing comments.
Thank you so much. Thank you for your interest. So I hope we were able to explain within what we are able to explain at this juncture that this deal is right on strategy. It gives us a significant opportunity to build our business. It has a lot of elements that are probably worth to have a second look because there's a lot of opportunity in this deal. And don't forget, this is a biologic. So if you compare it also with other transactions, you will find that this is clearly fair value. Yeah. Thank you so much for your interest. And now it's time for us, let's say, to go back to our main job and trying to build the business. Appreciate it. Wish you a great day. Thank you.
This now concludes the conference. Thank you all very much for attending. You may now disconnect.