So I think the silence means it's probably okay to start. I want to wish you a very warm welcome to this, our first Capital Markets Day here at Sobi. It's really an honor to respect the interest and the attentiveness that your presence indicates. We're very eager to tell you our story today and give you a sense of where the company is. And as we've said, the objectives of spending this time together are to give you a feeling of where our operations stand. We're going to describe the business in a way that hopefully makes sense to you and is clear, gives you a way to follow what we're doing and understand our priorities.
We'd like to give you some insight in a practical way to our late-stage pipeline so that you can understand better their potential and, most importantly, how we get to that potential between where we are today and when we expect those pipeline elements to mature. As I said, this is the first Capital Markets Day that we've done. So I want to thank all of you who thought to write to me with advice and thoughts about what we should cover. Particularly, our good friends at Danske Bank sent me a letter and it said, "Dear Mr. President," and I've spent quite a while now living in the U.S., so I showed that to my kids and they think I'm really cool now. So feel free to write me letters like that anytime. That was very nice.
But of course, one of the questions that I've got from many over the last few weeks and months is, you know, why, Sobi, why now? What has attracted you to this beautiful company with a great potential? And this is why we wrote the agenda the way we did. We're going to give you a view of our priorities, how we think the parts and the potential go together in this unified company. Lars is going to give you a view of the operating performance described in the segments that I'm going to outline in the beginning of the session in his review of the financials.
And then we're very, very honored today to have a fantastic suite of experts in their field, representatives from our partners, in the case of Biogen Idec, to really give you a fulsome understanding of our two late-stage programs, first in Kiobrina and secondly in the hemophilia program. So this, I think, will give you that feeling of why I believe this story is so interesting. And hopefully also it'll give you a way to think and to understand its potential from the bottom up. Our intention is to really respect the view that you've all given, that you'd like to have a bottoms-up building block understanding of the business so that you can create a view of our future that reflects your own analytics. So of course, stay with us as we give you this whole picture so that you can assess whether we've done that.
Now we're going to do the day in three parts. Lars and I are going to do the first section, and when we've completed our view, we will have a Q&A that we'll share together on the business. We'll stop for coffee, and then we'll do Kiobrina as a section with Q&A, and then hemophilia as a section with Q&A, and then I'll wrap up very shortly at the end of the meeting. I should remind you that this is obviously a view of our forward-looking sense of many elements of this business. As we've said in the invitation, we are not going to make any forward-looking statements with respect to operational performance in 2012 or any time frame beyond that, but we will anchor your expectations, or at least our own expectations, about our pipeline timelines.
I'm just reminded here by the Attorney General of the United States to remind you that those are forward-looking statements, duty discharged. I should say, while we're talking about the U.S., a nice welcome to those of you who are joining by webcast. We haven't previously webcasted meetings that we've done. So we'll work with the technology. And please, those of you who are on the webcast, let us know how it works for you so we can integrate it or not in the future. So let me then begin my introduction by telling you how I think about this company. And as we've spent the last hundred days or so, we've really settled on this idea that we are truly an integrated biopharmaceutical company. And we have a leading position in the commercialization of niche and rare disease therapies.
And the components, the elements that I think are compelling in this picture are first that we have a diversified set of growth-oriented businesses. And I'm going to talk in a lot of detail about those businesses in this first introductory segment. We'll spend an equal amount of time in our meeting today talking about the late-stage pipeline, as I've said. But we also have retained a strategically important core set of late preclinical and early-stage biologics development capabilities, which I think are quite important. And I'll tell you in very clear terms why I think it's so important. And it's this combination of elements that I think make this quite an interesting place to be in this particular sector of the life science environment.
I really believe that we can build a vision towards creating our company as a recognized leader in this innovative biopharma space, delivering new, novel proprietary medicines to rare disease patients and their families around the world, and to do that in a holistic way that includes not only medicines but services, and we'll say more about why I think that's an important part of the model for any life science company in today's environment and the environment that's ahead of us. Now all the components of a great company are here, and I'm not going to go in detail through this slide, but I just want to emphasize that the world-class protein biochemistry that's here in the R&D function is complemented by a very unusual and deep set of CMC scale-up and development capabilities. In the building we're sitting in, one floor below us is a GMP lyophilizer.
I know I'm middle-aged because I think that's really cool. My kids don't think that's so cool. But the ability to combine this late-stage set of competencies, which have a 30-year history in the components of this company going back to Kabi, is quite important. And when you add to that the fact that we have two pilot-scale GMP reactors sitting just 2.5 kilometers from here in Strandbergsgatan, it's quite an important set of capabilities. You add to that the fact that we have an unusual positioning in the rare and niche specialty commercialization space. And we have a size that I think can be compelling to certain scales of customers and partners. We're not too big that we lose track of your product or program, but we're not so small that our existence or our commitment is in doubt.
I think that's quite important as we think about our future as well. And finally, from a commercial perspective, we're building an infrastructure today that's reasonably mature in Europe. And we have the ambition, of course, to build a controlled and thoughtful presence in the U.S., Middle East, and Russia. And I think these components, our people, and our partners are the things that can unlock a substantial potential here. Now, having said that, of course, what's important is the ability to focus and to be realistic about the environment that we're working and living in, which is how we've arrived at two very simple and very practical goals. The first is to focus on positive cash flow and on continually improving our profitability. That's the core operating characteristic of this company is one of the most important things we have to emphasize and deliver on today.
Secondly, of course, we need to efficiently commercialize the late-stage pipeline that we have, which we'll talk about during the day today. So simple objectives and a relatively simple set of actions to support those objectives. Focus primarily on driving operating performance by growing the businesses we have today. And the reason that we've arrived at a way of describing the businesses as I'll go through is that we believe these are the growth drivers that deserve our focus today and in the days ahead. Cost discipline is a very important part of our picture. It's been a part of our picture over the last couple of years. We're going to show you how we're making progress against that. There's still work to do. It's a continuous refinement of our cost structure. And we do focus a lot on the gross margin.
We'll tell you a little bit about how we think about that margin in more detail today and in mine and in Lars's presentation. If we do this well, then it will result in positive cash flow, both from operations and from working capital. To give you a flavor and a simple diagram of how we think about the business, at least how I think about the business here at Sobi, I draw your attention to the lower part of this pyramid. What I've tried to do here is show you at the base the idea that we have two very important growth platforms. First, the ReFacto manufacturing and royalty business. Second, what we're going to call the specialty distribution portfolio. I'll describe these in more detail, but these are essentially the core building blocks that provide stable and growth-oriented revenue in the medium term.
And we'll talk a little bit about how they perform in a moment. Secondly are the core products. These are the products which are global and proprietary, ones that drive growth in core areas of strategic focus. And then, of course, over the longer term, we talk more about the pipelines that we come to later in the day. So we'll repeat this figure a couple of times because it will help, I hope, reinforce the organizing principles that I'm going to describe for the business as we go forward. So let's start by talking about the operating components of the business. These are the segments which we intend to include in our reporting in 2012. So today is a way to try to give you a sense for how they've behaved, at least historically, so you have a sense of how it works.
The first is the ReFacto manufacturing and royalty business. You recall that we have three revenue streams from our relationship with Pfizer around ReFacto. Two of them are in this bucket: the global royalty paid to Sobi based on sales of ReFacto and on the ongoing manufacturing business that we have. At SEK 600 million, it's about a third or a little more than that in terms of our revenue base. The growth here is obviously very high. It reflects quarterization. This is a rolling four-quarters view of our growth. But the growth, nevertheless, is substantial. We expect on an underlying basis this year for this growth to be about 15%. And the margin for these combined elements is in excess of 60% for us. The second area is in our core products. These are the global strategic growth drivers.
They are fundamentally in two areas: inflammation, Kineret, and genetics and metabolism. And I'll talk more about the components there. Here at SEK 800 million, it's about two-thirds of our operating commercial business from a revenue perspective. Growth over the last four rolling quarters, adjusted for currency, has been about 6%. And the gross margin here is in the range of our corporate margin, which is in the range of 60% on a full-year basis. So the core products are a key part of this combination. And lastly, the specialty distribution portfolio comes to us as a heritage from Swedish Orphan Biovitrum. These are a collection of products mainly in niche specialty hematology-oncology, as well as rare disease, at about SEK 450 million, about a third of our operating business, growing at 8%, adjusted for currency, and removing discontinued products. Here, the margin is below 50%.
So when I describe these three pieces and I refer back to what I told you at the beginning about giving you a sense of our building blocks, this is what I'm talking about. These are the three essential components of our business as we think about Sobi today. I'm going to take each of these in turn and highlight some of the things that I think are important with respect to today's world and how we think in a general way about the future. With respect to ReFacto, I just remind you that this is a program that was licensed from Pharmacia by Wyeth. It's a relationship that has been enduring for both Pfizer and for Sobi. We've both turned it into a very productive partnership over the last several years. Pfizer has been investing in ReFacto.
They've been able to make this about a $400 million U.S. business worldwide. And partly the way they've been able to do that is by the continuous optimization and improvement of the product based on our manufacturing. So we've been able to make it albumin-free. We've substantially increased our capacity. And we've enabled expansion of Pfizer's business not only in their existing markets, but for the future into the developing markets for this brand. And of course, as I mentioned earlier, this revenue level is exceptional in 2011 by about SEK 40 million. And the reason for that is that Pfizer placed additional orders to support validation for their dual-chamber syringe, which has been a key part or key success factor for ReFacto in their core markets. In addition, we've had some scale-up validation batches, which have increased the volume in this year. But this is an exclusive relationship.
It's a long-term relationship. It's a stable, growth-oriented part of our story, which in today's environment is extremely important for a company at our scale. So now let's turn to the core products. And I transition now from the ReFacto manufacturing and royalty business to the core operating commercial components of the company. And these are grouped into two therapeutic areas. The first is inflammation, primarily Kineret today. And the other is genetics and metabolism, comprised of Orfadin, Ammonaps, Ammonul, and Ruconest. The reason for this segmentation as a whole is that they are growth-oriented global products where, for the most part, we're holding substantial regional or global rights and where we have the ability to fit these into our commercial model over time.
These are areas where we think we can expand in existing markets and also support our expansion, as I said earlier, in a focused set of geographies going forward. You can see here that in this portfolio, Kineret is about half, just over SEK 400 million. And on the other half, Orfadin is the dominant player at about SEK 320 million today. So I'm going to take the examples of Kineret, of Orfadin, and of Ruconest to give you a sense of some of these key parts of the commercial portfolio and how we think about them today and going forward. Again, without guiding you with respect to the future performance, but giving you a sense of how we think about them strategically. So first, a couple of comments about our commercial model. How do we think about that?
I think we have to start with the reality that prices have been under enormous pressure here in Europe and elsewhere, and that's not going to change. We have to be realistic that we're in an environment that today, for all that there is talk about a value orientation in healthcare and reimbursement, today it's about survival and cost control. That's fundamentally what we are encountering, and what we have to acknowledge is that products that are successful today fundamentally have to be innovative. They have to have a place where there's a draw from the patients, from the physicians, and from the payers, and we have to think about those stakeholders independently.
But that just begins what is essentially now a journey and a cycle moving from this idea of winning durable market access, delivering products in an efficient way, and then developing real-world outcomes to sustain the presence of products in the market. And this has to be the way, I think, in the modern context, we think about commercialization, particularly of rare and niche specialty products. So for us, that core competency of market access is key, a very focused approach to the market through centers of excellence and key account management, and a balance between medical affairs and commercial approach. Because at the end of the day, if we're not having a conversation in the office about value, about how to solve problems, real problems between clinicians and patients, then we won't have the access and we won't have the ability to add value that we're here to do.
That's why we joined together in this company. A second general point I want to make is about our infrastructure, and to give you some insight in this figure about where we're deployed today, you can see that the historical strength of the company has been here in the Nordic and the Baltic region, but we've recently expanded our operations in the CEE as well as in Russia. And I think that's a package of geographies that's quite important, and you can see here today that it's about a quarter of our total revenues in that region. Around the headquarters is the core of our manufacturing, R&D, and administrative personnel. The revenues from manufacturing and royalty are in this line. You can see the bulk of our FTE are here in Sweden as a result of the manufacturing and operations here.
In Europe, Middle East, and North Africa, we have again about a quarter of the revenue base. We're now building, as I told you in our Q3 earnings, a more independent Sobi incorporation in the United States market. It's very small at this moment with just under 20 employees. I'll remind you that we're only 18 months into our operations in the U.S. We see a very nice opportunity there to make further headway as we go forward. With that business model and this infrastructure, let me highlight, as I said, Kineret, Orfadin, and Ruconest. As you all know, we acquired Kineret from Amgen in 2008. When we did so, Amgen had been basically stepping out of active commercialization for Kineret for over three or four years.
We took the product at a time when it had not had a strong presence in the market. That required us to think pretty deeply about where Kineret belonged in the therapeutic approach to RA, which is the main labeled indication for Kineret. A lot of work basically brought us to the conclusion that Kineret had an important place in RA still to treat patients who had a high degree of comorbidity, who were not able to tolerate side effects or prolonged immunosuppression from TNF- alphas and other therapies, which has a short half-life and a strong safety profile. Although the use characteristics of Kineret for chronic therapy cannot compete head-to-head with longer-acting therapies, in patients who are more fragile, the short half-life and ability to remove the effect of the drug quickly becomes a huge advantage.
We believe today that of the 800,000 patients who are on biologics therapy in the RA space, somewhere close to a quarter of them at some point failed to tolerate frontline therapy. And again, as I said earlier, with Amgen having been out of this market and with us now really re-engaging, it comes as a bit of a surprise and a reminder when we're able to speak with physicians and patients and let them know that Kineret is a highly efficacious and safe alternative for patients who are in this bucket of 200,000 individuals. And you can see here that today, given our level of growth and performance, we're still at a very low market share in this segment. And that's a very important growth driver and opportunity for us as we go forward. And what does a short half-life mean?
For a patient who's IL-1 responsive in RA, it takes about eight hours to know whether they're having a response to anakinra or Kineret. That's very unusual in that space to have the relationship between the mechanism and the way a patient feels, so we're not talking about an abstract trial of therapy in this case, so what I want to point out here is that, of course, at reported rates, the effect of price and currency is not able to show the underlying growth of the business, but at constant rates, you can get the sense of momentum that we're developing around this product, and of course, it's one of the reasons that we put it in the center of our thinking strategically going forward. Now, another thing related to the manufacturer or the acquisition of Kineret is the manufacturing platform for it.
This is a key success factor for us with this brand. When we took it over, we agreed to take over the manufacturing. And to do that, we took on about 500 million SEK in inventory to allow us to tech transfer the manufacturing to a CMO in Europe. And as we said earlier this year, that process has been going well, but it's going slower than we expected it to. And it's going slower primarily because of some intricacies in getting one of the downstream columns to work in the right way. So that has had an impact for us in terms of costs this year. And we do expect that the process validation work will be completed now in quarter one. And of course, if for whatever reason there's an additional delay, we have maintained the option to purchase backup supply from Amgen.
This is one of the key success factors for the Kineret brand overall. And you might ask yourself, why take the trouble? Why would we invest at this point to maintain this component of our commercial business? And the fact is that IL-1 as a pathway and Kineret as a drug is really seeing a resurgence and renewed interest in its profile and in its mechanism. And I just give an example of this. We'll talk in more detail about Kineret as the year unfolds in 2012. But this example, I think, is quite important. If you look at the spread of prescriptions in this particular study, you can see that about 40%-45% are generated in the rheumatoid arthritis call point.
Then you can see in this set of red segments how many of the prescriptions for Kineret today are being used in the pediatric inflammation segment. And it's quite important to understand that it's not last resort use. This is the most effective product in many of these inflammatory syndromes in children. And you can see in this child who's suffering, in this case, from CAPS, how dramatic and visually apparent the response to Kineret is. And what I told you earlier about the very short half-life is quite important. This child underwent this transformation within 48 hours of initiation of therapy. And when he stops therapy, this child was part of an NIH trial in CAPS. His symptoms recurred within 24 hours. So we're talking about a highly effective medicine, which is in a leading position in many of these segments today.
The draw is coming to us from physicians and from patients. In fact, both the FDA and EMA now have said that they will support us in filing formally for an application for an indication in this area in 2012 when we plan to do so. That's important because it will allow us to support in a medical way the interest in use of Kineret across these indications. But again, this is just an example. There are many other areas where IL-1 and specifically Kineret have a lot of traction and interest. We're very concerned that we're able to engage in that opportunity as we go forward, given that we have many years left to work in a good way with Kineret in the market. Those are the key points I wanted to make about Kineret.
You'll see this kind of approach and thinking applied across the portfolio. Take Orfadin as the next example. Orfadin, of course, is one of the most important products that we have on a proprietary basis. You can get a sense here in the same portrayal of the figures, the momentum that's underlying the growth of Orfadin over the last rolling 12 months. These are in constant rates. We don't have the ability to accurately enough show you the volumes, but this gives you a flavor for the underlying performance. The key is to understand the elements that allow us to continue to support the performance of Orfadin in the future. There are some very tractable developments in this particular field that are important to think about.
The first one is that today the average age of treatment is over 10 years of age with Orfadin, and a disease where no children survived above infancy with tyrosinemia even 10 or 20 years ago. That has different challenges in terms of supporting adequate dosing. These are children who are getting heavier over time, of course, but also they're becoming teenagers, and we have to think differently about supporting their compliance with the product. Secondly, it's becoming increasingly evident that there are substrate levels in the disease, specifically succinylacetone , which are probably important to monitor from a therapeutic perspective, and the technology and the awareness of this monitoring and of drug levels is now becoming more mainstream, and I think that will be a component of helping to support the appropriate treatment of patients over time. Thirdly, and most importantly, newborn screening is becoming a reality.
Just take the example of the U.S. where today 46 states include tyrosinemia screening in their newborn screening panels. So as you can imagine, in a genetic disease, particularly a metabolic disease, early identification, early therapy are the keys to good outcomes. So this sort of trend of newborn screening on a broader basis is not only gaining traction in the U.S., but also in Europe. And I think that's quite important for a therapy like Orfadin. And finally, we have to recognize that in our world, we're still not fully deploying Orfadin on a global basis. We still have key countries and regions that don't have access to this product. And I take this global example to draw your attention to the Middle East and Russia.
Today, our distribution is divided between our partners, RDT and North America, and our own sales efforts here in the core regions where we have historically been. But two years ago, we established an affiliate in Russia, and we applied for registration for Orfadin, which has since been granted. Now, of course, in our wildest dreams, we hope that Russia would pass an orphan drug legislation, which would make Orfadin a more tractable part of their healthcare system. And in fact, they have done so. They have passed an orphan drug legislation. And Orfadin is specifically mentioned in the legislation as a qualifying orphan therapy. So what's important about that, of course, in a large country with a strongly and well-developed reference center infrastructure, we would expect to be able to really make Orfadin effectively available, at least in the large cities in the near term.
Making a more direct presence in Russia and supporting the product is a key part of the growth strategy for Orfadin going forward. On the basis of their population, we would expect to see between 15 and 20 newborns per year. We obviously would not be able to identify that many in any given year, but it's a very interesting place to start. We've got a very tractable position to start from. The other region that I think is quite important to think about is Middle East and North Africa. Here I focus mainly on Middle East. We're very interested in creating a balanced presence. We don't want to go fully direct in the region, but we'd like to have some direct presence and leadership there to make the most of our existing partner and distributor-based relationships.
The thing that's so important about the Middle East, other than its economic characteristics, is that from a demographic perspective, there's a high concentration of recessive disease. So we would expect that in this area, there's a high degree of need. We'd like to focus on meeting that need. That gives you a sense in about a 300 million person population that on an incidence basis, we'd expect to see 30-35 newborns. Again, not guaranteeing that they can be reached, but it is an important potential and a place that we'd like to be for a whole lot of other reasons, not least of them being the fact that we believe hemophilia has the same concentration in that region going forward. These are two of the key elements of our intention to, in a thoughtful, focused way, expand our geographic presence.
Now, Orfadin, of course, doesn't fully meet all of the unmet need today because it's delivered in a capsule, and it's not so easy to dose in the younger infant patients who are diagnosed in the very first days, weeks, months, and years of life. So we have now settled on a candidate for a liquid formulation. We have moved to CMC scale-up to support filing. We have made a pediatric investigation plan submission in May of this year. And we would hope that we'd have an answer with respect to approval in 2012. And of course, that's important because it would extend our orphan protection in Europe through 2017. But it could also be quite important in the U.S. market as well. And we will engage with the FDA next year to talk about how to bring this formulation forward.
Again, in many ways, a good example of how the CMC scale-up capability that we have can be applied increasingly to our own life cycle management areas within the pipeline. The last example which I'd like to touch on, and I'll do so briefly, is Ruconest. This is a product for hereditary angioedema, which we have in partnership with Pharming. This is a market which we believe is well established and relatively competitive today. As you can see, it's a market which we expect, or at least IMS expects to grow over time. I think the important thing that's emerging for us around Ruconest is that it does appear to have several leading characteristics, one of them being a fantastic efficacy with a very high first treatment response rate and no evident relapses on first treatment.
So this will not be an easy market for us to enter, but it's one that we have the capabilities and focus to enter successfully. And over time, we would hope to really become an important part of that marketplace with a product like Ruconest. So these are three examples from the kind of core product portfolio. They're obviously not exhaustive, but they give you a flavor for how we think about that part of the business going forward. Now, lastly, on the operating side is the specialty distribution portfolio. And obviously, when you look at this, you can appreciate that there's a co-promotion element, which is mainly based in the Nordics for ReFacto with Pfizer. Kepivance is in this bucket. But then you can see a number of substantial and relatively rapidly growing smaller products: Yondelis, Ferriprox, Betapred, Aloxi, Wilfactin, etc.
These are products building on the heritage of Swedish Orphan. And they are mainly concentrated in this region of the Nordics, Baltics, CEE, and to a lesser extent in the future, we would expect Russia to be part of that as well. Lesser extent today, but greater extent as we build capabilities in the future. The core to this business is understanding how to optimize its performance and how to bear down on the deal flow that's needed to renew and optimize the business over time. And we see this as a real opportunity to create a focused unit within the company to make sure that we do that well, that we meet the specific needs to grow this business in a way that fits within our overall company context. So this specialty distribution business is not only a platform, but also a growth driver.
We really are going to realign our resources in a way to exploit the leadership position that we brought into the company with the merger with Swedish Orphan. Now, you can't tell the commercial story without addressing the cost basis. And I want to take a couple of slides to focus on that before I make a couple of comments about the pipeline. As I said at the beginning of this conversation, the focus on cost control started a couple of years ago. And you can see here in 2010, following the merger, that about 40 FTEs were taken out of the base, mainly in the headquarters context in that year. This year, as previously announced, we have taken another 60 FTEs out, mainly through a focused restructuring in R&D.
That was a strategically driven decision around the R&D capability, but the impact on the cost base will be evident once we get into the run rate for 2012. In addition, you're sitting in the last remaining headquarters business, or building rather, here in Stockholm. We will come out of two additional facilities here in Stockholm, and we will then be based here in this facility and in our manufacturing facility in Strandbergsgatan. Finally, we are really focusing on transitioning our focus and spending to supporting our commercial activities. While you can see a steady decrease here in red in the R&D expenses, you can see that we have maintained a reasonably stable level of spending in SG&A. We are taking costs out of administration and R&D, and we are adding to our commercial capabilities.
We've added somewhere in the neighborhood of 35 sales and marketing FTEs over the last couple of years as a result. So that gives you a flavor for the kind of transformation that we're working through. To give you a little bit more color on that, related to our R&D capabilities, you can see here that in the trend, we've reduced by almost 35% our R&D spending since 2008. And I want to give you a view of how specifically that change has been tailored. We're trying to increase the leverage that we're getting from our late-stage capabilities on our commercial business. Here you can see in the green that we've systematically taken out our discovery capabilities and spending. In this gray bar, you can see the transition of our development spending on the long-acting factor programs as we restructured that agreement with Biogen.
And I'll say more about that, but that's an incredibly important efficiency for us and source of leverage. The preclinical activities have been streamlined and now are in a very focused level, and I'll say more about that in a moment. And you can see that we're spending an increasing proportion of our development spend on our life cycle management, on adding value to products we already have, as I gave the short example around Orfadin before. And lastly, of course, you can see that our clinical development spending is primarily reflecting us going it alone in Europe around the development for Kiobrina. So that explains that bucket. And the product support as a line is something we've been increasingly looking to really make more efficient and to bring slimmer over the years. But there is a unit cost to supporting our portfolio, of course, and that's what that represents.
What about this remaining preclinical and CMC development capability that I talked about on the first slide? What we're talking about here is retaining this particular part of the value chain: protein engineering, Pharm/To x, upstream and downstream development, GMP analytics, and CMC management and development. These are the kinds of early-stage characteristics combined with the facilities that I just mentioned around our pilot plants and our lyophilizer, which I'm so proud of. These are really demonstrated capabilities that can take early-stage programs and add significant value. You don't have to look for a theoretical example.
You can see here that in the case of Kiobrina, an early acquisition with Aurexis, and in the case of long-acting factor IX, a collaboration that predates the Biogen involvement in the program, these are exactly the capabilities that underlay those first collaborations and acquisitions and have resulted in the lion's share of our pipeline today. We believe this is a core capability that can be a differentiating source of partnership for us as we go forward. And we don't have an endless capability or capacity to do this, but it's a very unusual set of capabilities when you combine it with the other elements that are here in the company. So how does that work in practice? How does it play out? I'll just give you the example here of the involvement that then Biovitrum had in the Syntonix development of long-acting factor IX.
The reason that came about was that we had already a 20- or 30-year history through Kabi and Pharmacia and others of innovation in hemophilia. That allowed the initial 50/50 collaboration between Biovitrum and Syntonix in really helping Syntonix, a very small protein-focused startup with no CMC development and no plan and no capability to create scale for manufacturing around this product. That proof of concept scale and, in the end, engineering of scale-level manufacturing capability was value added by Biovitrum. And it was Biogen recognizing that value in Syntonix as well as Biovitrum that resulted in this acquisition, in which over time we've been able to scale into a very functional partnership together over the subsequent years.
And we're very, very pleased to have Glenn Pierce with us today, who's going to talk about the status of the development programs around hemophilia today in both hemophilia A and Hemophilia B. But as we said in the press release, and I'll say a few words now, we believe that we're entering a critical path time zone for us as it relates to commercialization of these products in the SOBI territories.
That's because, as I said earlier, the EMA has been very specific now about the need for pediatric data to support a filing in the hemophilia space, which is why now we expect that if, as we think, the pediatric trials will begin early next year, that over the course of the subsequent three or four years, we will be able to complete those trials, support a filing and approval, and allow us to see the first significant revenues from this program if it is successful in 2016. Just be careful as you think bout the language here, because we've tried to be as simple and as clear as we can be about it. Could we be approved before 2016? Absolutely.
But the realities of the world that we're dealing with in Europe, particularly as we think about 2016 or 2015, mean that market access and approval will not come in the same moment. It's going to take time to really build the story and to roll out into the proper market access context a product like this. So 2016 is a reasonable place, in our view, for you to be thinking about this as a contributor to our story in the future. And of course, we believe that the potential for a product like this is substantial. And we have tried to create the story, as we talked about hemophilia later in a way, that will give you a direct insight to why we believe the potential of this market is so attractive. Today, the market is about $3.4 billion.
And we feel very strongly aligned with Biogen to get there in our territories, which are outlined in the map here, a substantial part of the Western innovative drug market. And the structure of this agreement, as I referred to on the prior slide, allows us to be very efficient with our spending. And the way it's set up is that we pay back our share of the R&D costs for both programs in three ways. We pay milestones to enter the programs of the collaboration on MAA filing. We pay back out of royalties. And we give a true-up payment at six years out of revenues for any remaining payment that hasn't been made out of royalties or milestones together. So it's quite important that you understand the structure of the agreement and the way that it generates value for us as we go into the future.
Lastly, with respect to the pipeline, I wanted to speak a little bit about Kiobrina. And for me, this neonatal enzyme replacement therapy for prematurity is extraordinarily exciting. It's exciting for a few reasons. First, we're doing something that hasn't been done before in the neonatology space. And we're, I think, moving to address a need that is really becoming more and more evident as the clinical community struggles with how to allow patients at this very early stage of life to develop quickly and normally to get out of the NICU. And because it's our own product, it has global potential. And thinking about that global potential is quite important and interesting. The neonatology space, it's difficult to enter. And it's a place, though, that for that reason is not particularly competitive. And it is a space that can support innovative products.
So for us, being in that neonatology space is quite exciting. And we're really determined to get there. And we believe today that we can access or make Kiobrina available to 100,000 patients based on the European filing alone. And we'll talk more about that in the remaining sections around the pipeline. In general, today, the area of highest unmet need for innovative products is pediatrics. And so this concept of being ready to meet those needs over time, I think, is quite interesting. So you see some of those themes in the discussion that we've been having today and in the remaining parts of the day later.
So I bring you back to this diagram, not to repeat the elements, but just to refresh your mind that this is how we're thinking about our areas of focus in an operating way in three core parts of the business: ReFacto, specialty distribution, and core products. And then in terms of our pipeline in 2015 and 2016 for Kiobrina and the hemophilia factor programs, respectively. Just to reinforce, though, our focus now and in 2012 and in 2013 is on operating performance. We are very determined to grow and to be self-sustaining on the basis of our current commercial portfolio. And you will see that in our communications and in our focus in terms of building the capabilities and focus within the company month in, month out throughout the coming quarters.
So that, of course, just reflects the objectives I started with: operating performance and profitability and making sure that we get our pipeline to where we think it can be. And I think that kind of progress will allow us to begin building the blocks around this idea of really being a pioneer and partner in the rare disease space. So that's why I joined SOBI, in a very long-winded explanation. I'm going to hand over now to Lars Sandström, our CFO, who's going to give you a view of the performance in this view of the business through 2011 year-end estimate. And then the two of us will take questions together. And I think, Lars, I didn't blow up our timeline even, which is incredible since I never did that in our rehearsal. So, Lars, thank you.
Right. Thank you, Jeff.
My aim today is to improve clarity regarding the current development in revenues and gross margin. In addition, I will talk a little bit about the development of our expenses and the cost initiatives we have taken. Finally, I will give an overview on the working capital development. Here you can see the revenue development from 2009 to 2011, where 2011 is calculated at last 12 months to have annualized figures. On the left side, you can see the impact from reduced licensing revenues, discontinued products, and the stronger Swedish krona. These three items together constitute a revenue loss of some SEK 450 million, of which the stronger krona impacts with approximately SEK 200 million. On the other side, increased product sales and increased deliveries of ReFacto have increased revenues some SEK 200 million, resulting in underlying annual growth rate of 7%. The first bar, price volume, is some SEK 180 million.
Here, the impact from increased prices in the US are more or less offset by price decreases in Europe. Increased revenues from ReFacto are some SEK 65 million. And here, also, the additional revenue of some SEK 40 million that we receive from the validation batches are included. When looking at the growth for the three main business lines, you will here see the annual growth 2010 and year-to-date 2011. Starting with ReFacto manufacturing, in this business line, the revenue constitutes the manufacturing revenues and the royalty we receive on Pfizer's global sales. The decrease in 2010 and very large increase in 2011 is a reflection of the delivery patterns to Pfizer, but also the delivery of the validation batches in 2011, impacting with some SEK 40 million. This will, of course, impact the growth for the full year. The 34% year-to-date is expected to come down to more around 15%.
Core products, as mentioned before, consist of Kineret, Orfadin, Ammonaps, Ammonul, and Ruconest, where Kineret is the largest product based on revenues. This has increased 3% and 8%, respectively, in 2010 and 2011. This is a result of the investments made during the years within the marketing and sales organization. Orfadin, which is the second-largest product within core products, has had a growth rate this year of 6% year-to-date. When looking at the two years together, the cumulative aggregated growth rate is around 9% over the years. Additionally, Ammonaps and Ammonul, which is also included in core products, experienced delivery disturbances in 2011, which are now solved. In the specialty distribution portfolio, the increase has been 4% and 8%, respectively, during the years. This is despite significantly lower revenues of Kepivance as a result of the restricted label.
The increase is, to a large extent, related to the general growth and especially related to the launch product, Yondelis, contributing with SEK 35 million in 2011. When looking at the gross margin development from 2009, where the margin was around 68% and now at around 54% year-to-date 2011, the main reasons for the decline of 14 percentage points are the following. Lower licensing revenues have impacted with approximately 1% and were related to milestones and the sale of licensing rights. During 2011, a lower utilization of our pilot plant in R&D has impacted margins with another 1%. And this is, to a large extent, a reallocation of cost to margin from R&D costs. The stronger Swedish krona has also impacted our profitability substantially, as we are exposed to revenues in euro and dollar. And to a large extent, our costs are in SEK.
This has impacted our margin with some 6%. During 2011, we also had a margin impact from gradual write-down of Kepivance, the inventory of Kepivance. This is connected to the expected low revenues from this product. Additionally, the sale of ReFacto, where the validation batches and, to some extent, lower average price impacted margin this year with approximately 1%. These impacts we expect to come back gradually going forward. Another area which has impacted our margin has been the tech transfer of Kineret and the additional stock we acquired from Amgen during 2010. The cost for the tech transfer has impacted margin with approximately 2% and the acquired Amgen stock with another 2%. The gross margin for core products will be impacted when the cost from the tech transfer are phased out.
Supply of drug substance will start from BI at a lower cost compared to what we have currently. This is expected to come gradually during the coming years. To sum up the drivers of growth and profitability in the different business lines, I would like to highlight the following. For ReFacto manufacturing, we closely follow the focus Pfizer shows in the ReFacto product and the impact on underlying growth in these revenues. The impact from increased volumes on margin is, over time, impacted by the leverage effect from having a large share of the production cost fixed. For core products, the drivers for growth are what Jeff mentioned earlier, with, for Orfadin, a continued work on improving dosing and geographical expansion. For Kineret, growth following the investments made in the marketing and sales organization is expected to continue.
Here, as with Orfadin, different lifecycle management initiatives is the support for growth in the medium term. In the specialty distribution portfolio, the revenue growth will come from the continued growth from the launch products and addition from new distribution products. This can, of course, continue to be partly offset by some products which are handed back to the owners at the end of a contract. The gross margin is in focus through a continuous work on improving the efficiency within our distribution and to drive down the distribution costs. Coming over to operating expenses, I will be a little bit more brief on this since Jeff previously showed you the development within R&D with a shift to late-stage development and de-risking of the R&D portfolio.
I would, however, like to highlight the fact that since 2009, synergies of some SEK 100 million have been taken out and significant investments have been made in the marketing and sales organization during this period. To highlight this, during the period, we were 530 FTEs within Sobi at the end of 2009. And at the end of Q3 this year, we were around 500, a decrease of 30. During the same period, the number of FTEs within the marketing sales organization has increased 35 to around 139. In addition, we announced during the first quarter of 2011 a reduction within the R&D organization to reduce cost and increase flexibility with full effect as of 2012. The status on this is that all employees affected by this decision will have left the company by year-end.
We also, as Jeff mentioned, plan to leave two of our four sites that we rent today. This will be done during the first quarter of 2012. This has resulted in that operating expenses as a percentage of revenues has decreased from 55% to 49%. Coming over to working capital, here you can see the working capital development since 2009 until September 2011. The build-up of working capital during 2010 was, as many of you know, related to the acquisition of additional supply or drug substance of Kineret. The transformation of this into finished goods through filling and packaging will, to a large extent, be finalized during this year. The total value of this additional supply has been approximately SEK 500 million. The reduction during the first nine months of 2011 has partly been offset by this.
Now the finished goods will continue to be sold during 2012 and '13. Our goal is to come back to normal inventory levels during 2013, which should be more in line with the stock values we had in 2009. The increase in receivables, the red part, you can see during 2011. This is mainly related to increased receivables for ReFacto. In the Q3 report, we announced balance sheet adjustments, which we now are finalizing and are expecting to be in the range of SEK 300-320 million. These consist of two items in inventory. For Kineret, after the difficulties in the tech transfer and some failures in validation batches, this has led to a need for write-down of some SEK 70-80 million.
And for Kepivance, the change in label earlier in EU and US and now the stabilizing sales, we show a need for additional write-down due to the expected expiry. This will impact with approximately SEK 30 million. In trade receivables, a write-down of approximately SEK 20 million is made for receivables where the recoverable amount is deemed low. For intangibles, a write-down of an out-licensed project, the Leptin modular program, is necessary after the fact that the commercial potential of this project is expected to have decreased substantially after the development was stopped. This will impact amortizations with approximately SEK 130 million. Finally, in connection to the restructuring and leaving the two premises in Stockholm, additional cost for leaving and the write-down of assets will occur. This will impact with approximately SEK 60 million, whereof SEK 30 million will be included in amortizations.
To summarize this financial part, we have an underlying revenue growth, and we continue to focus on the growth within our three business lines. The reduced margin since 2009 consists of several items of more permanent character and others more of temporary character, with the tech transfer of Kineret as the main explanation. This, however, together with the continuous cost discipline and working capital focus, we intend to earn our way into the future through improved profitability in cash flows. Right. With this, I hand back to you, Jeff.
Okay. Don't go away, Lars. I think we're going to do this together. We'd like to take some time now to address questions on any of the content or material that we've presented so far. We'll just take it in an informal Q&A here in the room. Also, I'm not sure if people want to ask a question on the web stream if they can address it that way. If so, then we'll take those questions that way.
Okay. Very good.
So we have a microphone here, and we've got plenty of time. So let's take any questions that you have.
Yeah. Hi. Kristofer Liljeberg from Carnegie. If we could go back to the slide on the gross margin development in the last two years, is it possible to say how much of the short-term effects have been in 2011 and how much of that was in 2010, the tech transfer, for example?
Yes. If we look at the short-term effects, the write-down on Kepivance is mainly related to 2011. ReFacto, including validation, similarly, also mainly 2011. Tech transfer is also 2010 for both years. And the Kineret-Amgen stock has been phased in gradually and mainly in 2011, I would say. And of course, currency we have both years.
The tech transfer, is it fair to assume it's an even split between 2010 and 2011, I think?
I would say you can see that, yes, more or less, yes.
And finally, on the gross margin, the FX effect minus 6% in the last two years, most of that in 2010 or 2011?
That is, I would say, evenly spread. As you might remember, the dollar development during 2010, where we had a peak and so forth. So I would say this is what the impact is between 2009 and 2011. And I think you can calculate also quite well the currency development. As I said before, the main impact we have in the revenue flows we are having is in euro and dollars that you have.
When you're finished with the tech transfer, what will happen with the Kineret margin then? I guess you will have a better margin than before.
When the tech transfer is done, then of course the impact of the tech transfer is not there. We will also have the selling out of the Amgen stock when that is done. And then we will acquire new supply from Boehringer, as I said, a lower cost as what we have today.
Okay. I think at the scale and the strategic importance of Kineret, of course, that's quite an important component of the margin for the company overall. So the ability to be successful and to really achieve the potential that we believe Kineret can have is quite important. Will have quite an important impact for us.
But you need to sell out the stock you currently have before you see that positive effect on the gross margin.
And it will not be from one day to another since it's a gradual selling out the current stock and then acquiring new stock from the new supplier. So it will not be from one quarter to another. It will be a gradual phasing through.
You said you had had some problems with the Kineret tech transfer. What's your confidence now that those problems are solved?
Yeah. I'll take that question. So one of the complexities of a tech transfer of this nature is that the hands-on experience with the specific stages, of course, lives with Amgen. And then we're bringing that transfer across to our CMO. And so now we believe that the three parties have a very good handle on how to solve this. We won't know, of course, until the PV runs are completed, which is why we say we'll be able to take the decision and also to update you at the end of the first quarter or beginning of the second quarter. We just need them to do the work, essentially. Other questions, comments? Yeah. Let's start here with Mattias.
Thank you, Mattias Engström, Danske Markets. First of all, thanks for clarifications on gross margin. I guess very helpful for a lot of us who've been in the dark with the decline here recently. One question for you, Lars. I'd be curious to hear the chart that shows the positive benefit from price and volume. You have that together with the validation batch for ReFacto leading to 7% organic growth per year during this period from 2009 to 2011. Is it possible to break out the volume and price component? I guess some people would be interested to hear, given the pressure on prices we've seen and in particular also worries around orphan drugs, what the price versus volume component of that chart is. And I have a follow-up for Jeff, maybe.
Yes. As I said, the price impact of the price decreases in Europe are more or less offset by the price increases we have managed to put through in the US. And since we have a very large portfolio, and that is what I want to say today. And I really think, and we are working on to get a good so we can come into that going into 2012. I really hope I will be able to tell you more on the price mix and volume effects.
Okay. Thank you. Maybe for Jeff. I guess there were some comments around the earning our way out of this. And we talked about the balance sheet and how working capital will improve. But I guess one question would be, can we exclude the risk for rights issue, given that some people would say that you pop up in screens when people look at net debt to EBITDA and other gearing measures? And would then a share issue only be for, let's say, acquisition purposes or more aggressive offensive purposes?
Thank you. I think you've answered the question the way I would have answered it as well, in the sense that for me, a rights issue is not a component of supporting the operating performance of the business. The focus on operations and on cash flows and profitability is intended to be fully self-funded, self-financed, and sustainably profitable. Of course, we can exclude if at a certain moment we wanted to access the equity markets to support an acquisition. We're open to it in the way that I suppose any growth-oriented company would be open to it. But it is not part of our near or medium-term strategy. So I do not see a rights issue as part of our needs or as part of our strategy in the near term. Yeah. Question up here? Oh, sorry, here.
Sorry. Patrik Ling at Nordea Markets.
It's like my wedding. You know, I've got to be careful. Sorry.
Two questions. First one to you. You talked about the deal with Biogen Idec on hemophilia and how you're going to repay the development cost through three types of cash flow. Would you care to elaborate a little bit on what we should expect, sort of the total development cost or sort of your part, what that will be? And then secondly, given that you're postponing or at least pushing forward when the product is expected to be approved or launched on your territories, will you have to start to pay back to Biogen Idec already when they launch in the U.S., for example, at maybe a significantly earlier stage than you?
Sure. So the answer is no to the second question. We don't have that exposure earlier. The characteristics or the trigger of the repayment are in those three buckets and triggered at the time of joining the partnership on a commercial basis at MAA filing. So there's no prior liability in that sense. I won't comment on the scope or the cost of the R&D expenses today. Obviously, we're discussing with Biogen how we can, each of us, explain the economics of this relationship in a way that's useful for you as a community. But we have not yet reached an agreement about how to do that. So we'll come back to that issue over the coming years. We know it's the coming months. We know it's important to you to model our flows. But we're not ready to comment beyond what we have here today at the moment.
Okay. So even if they launch the product in the U.S., we should not expect you to have to pay anything until 2016?
Well, just to refine your comment, just until MAA filing. So that could be a very different date.
Then the second question, Lars, just out of curiosity, the bad debt expenses that you're writing down, are there any particular markets that have been troublesome or any particular customers that haven't paid you?
On that issue, there are two answers to it. First, yes, geographically, it is more related to the southern part of Europe, which is for us a very small part of our total revenues. And to some extent, there is also a part of it connected to very old receivables that we, as I said, deem the recoverability to be very low.
Okay. Great. Thank you.
Thank you.
That's fine. Erik Hultgård, ABG Sundal Collier, two questions. First, is there any specialty product distribution deals in the coming years that will run out? And how large are these? That's the first question. And secondly, if you could give some more color on the sort of royalties that will be paid from your territory to Biogen and if there are any cross royalties, i.e., will you get any revenues before 2016 from Biogen sales in the US? And if so, will you start to pay off the development costs for the hemophilia projects?
So both good questions. Let me answer the second one first. It's in that box of things that we'd like to clarify for you, but haven't yet reached a way to do so. So keep your attention on that with me. I will come back to you in partnership with Biogen, but I won't address that question today. As it relates to the first one, we do expect, as part of the business model for the specialty distribution portfolio, that agreements will expire and new agreements will come in. And that's an essential part of that business model. We would expect that a deal flow should be a relatively continuous part of our operation as it relates to that part of the business. There are no big looming expiries that are here in the near term.
But then again, as partners decide to go themselves or to take projects back, you should expect to see that as part of the business model. And you should equally expect to see us focusing on bringing the right kind of deals in. It's not a business, in other words, that we're holding on to. It's a business we'd like to invest in and renew and keep as a dynamic part of our company. That means deals out and deals in.
Just to follow up on that, I guess you said you will focus on improving gross margins, and given that gross margins are below or around 50%, you said in distribution deals. I mean, will you focus more on proprietary? Will you do that type of deals instead, or will you try to just?
Yeah. Let me try and link that comment with what Mattias raised earlier. We are focused on more distribution kinds of model deals, which are cash flow minimal or neutral to acquire, which means that in general, we would probably not be targeting proprietary deals in that sense, particularly not in the near term. We'd be targeting the kinds of deals that fit within the distribution business model that this business unit has as its organizing principle. So in other words, you won't see us pursuing large cash upfronts for proprietary products in this segment of the business. Yeah. Okay. Other questions, comments?
Okay. Can I ask about you mentioned price pressure on one slide? I guess you're thinking about European markets. Could you just mention something about when you think about price pressure, what declines you're thinking about?
Yeah. I think at this point, I can just tell you that it would probably not be wise for anyone in pharma or biotech, whether you're innovative or generic, to have a model that doesn't imply some global discount in the coming years in the European markets. So what I intend to model there is the idea that we will create our view of our future from an operating and growth perspective in a model that has a built-in discount applied globally to our expectations in Europe. So I don't have any particular products today that I feel are particularly vulnerable or a problem. But I can imagine, as someone living in the same world you're living in, that further price reductions are going to happen as part of the austerity measures that we see rolling out month on month in European countries.
Now, having said that, of course, it is part of why we're seeking to restructure from a balance perspective, meaning that we'd like to have operations that have relatively less exposure to the euro. So the Middle East, North Africa, Russia, U.S., these are parts of the balancing that I think we should take. So it's a general answer. But I think the easiest way to say it is we would expect to apply a low single-digit discount across the whole portfolio going forward. That's not a guidance. That's just a view of how I think the environment is going to develop.
Just regarding the manufacturing capacity you have, is it fair to say anything about utilization today or whether you could leverage your capacity going forward?
Do you mean specifically within ReFacto?
Yeah.
Yes. We have substantial capacity to meet the needs which we have now forecasted and understand Pfizer to be forecasting for the business, so we have just been through a scale-up in the facility, so we feel very good about the long-term capacity and our ability to meet the needs for Pfizer. It's a core part of our relationship with them.
The scale-up or the utilization today, could you say anything about that?
No. I won't speak about the capacity utilization today. But I'm not sure I can promise we will in the future either. But let me think about that. So it's good to know you're interested in it. Yeah. Other questions, comments? Yeah.
Can I just go back to the hemophilia deal?
Of course.
I understand you're not prepared to comment on the repayment, but can you just clarify that once the hemophilia pipeline will be filed and start to be commercialized in the U.S., that you're entitled to royalties from Biogen?
Yeah. So again, it's in the same bucket as the question here. I'd be delighted to answer it. I just haven't cleared it with Biogen. And we're very serious about making sure that our communications are aligned and coordinated. So we will come back to the point. But I can't speak outside of what I've got on the slide here today. But I'm willing to. And Biogen is willing to. We just need to work through a way to give you more insight.
Will you put out a press release at some point?
I don't think we'll release it. But I think we'll come back to it as part of our reporting as we get into the earnings next year, as long as we can come to a good understanding together about how to describe it. I recognize it's quite important for your view. Other questions?
Just to follow up on what you said about distribution and in-licensing, because with the previous management, the strategy seems to have been more to do in-licensing deals rather than pure distribution deals, and now you say something different. Should we see this as just the fact that this is because of what a balance sheet looks like today, or is it really a new strategy going forward?
No, so let me answer them in two different ways. First of all, we are very careful, and I think the purpose of this diagram is to help you think about this business as having fundamentally different operating characteristics. It has a different margin. It has a different business model. It has different targets from a business development perspective, and it is highly regionally focused in Nordic, Baltic, CEE, and Russia. It's not here because we don't believe it's the fundamental growth driver for our business model in the future, but on the other hand, it's an incredibly important part of our base, so we believe that this business model, in general, operates according to more of a distribution model. Of course, there may be exceptional cases where an in-license makes sense here.
But if you think about it from the point of view of in-licensing, that implies regulatory accountability as MAH. And of course, from our perspective, if we're going to take an MAH accountability, we want the totality of the EMA region in our hands. So because we're today focused on a subportion of the European region in this business model, that's why I guide you to think about deals in this portfolio that way. In-licensing deals, of course, come back to Mattias's point, which might be more in the sort of spirit of an acquisition around a product or a company. And again, that's not a near-term focus for us. Yeah. Yeah.
Yes. Just to follow up on these distribution deals, we have seen, obviously, a couple of these being terminated prematurely over the past years. Is there any general structure in these types of deals that basically tells us that there could be another termination any quarter at any time point? It's really tough to put an NPV or a multiple on these types of revenues if we don't know exactly how long into the future they last. Could you give us some more color on that?
Yeah. That's helpful. So I think the way I would think about this is you have a portfolio. And if I take you back to that slide, you can see it's an incredibly diverse portfolio of products, which is part of the strategy. We want a portfolio of partners and a portfolio of products that fit strategically, regionally, and from a contribution perspective. And the way that partners want to work with a company like ours in this model is basically in two buckets. They either want somebody to exploit the potential and create a market presence for their product while they consider building a direct presence at some point. And those are the kinds of agreements that at some point they may decide eventually, as Shire did, "Hey, we're mature enough now. We can take these products back.
And we can negotiate very good terms to allow them to do that." On the other hand, you have people who say, "That's never part of our strategy to really build in that region. And we'd be happy to give you an evergreen term for our products in that region. In fact, we'll just continue to load products in over time if the partnership works." So of course, as we do deals and as we think about the portfolio, we'll try to be as clear with you as possible about which is which. But of course, the reality is also partners change their mind. Partners who think they're not going to build do, and partners who think they will don't. So I think the way to think about it is as a portfolio of businesses.
And of course, the most important thing, as I said earlier, is that we renew and refresh that portfolio over time. We have time for a couple more questions before we have coffee, Melissa. I've got time if you've got time. We're all here, just standing in front of coffee.
Peter Östling at Red Eye. Can you just remind me about the patent status around ReFacto AF?
Thanks. I can't personally remind you. Is there someone from my team in the room who can give us a view of that? You're on.
2016 and 2017.
I think the piece around thinking about those terms is that I don't think it's any secret that Pfizer is now thinking about how to meet the global demand for ReFacto. So I think their view is that the use of a recombinant product in the developing world, which today is quite minimal, in fact, almost nothing, is an unmet need that they can uniquely match with our partnership. So I think the way they're thinking about their opportunity is in a balanced way between existing markets and then developing markets, which are not users of recombinant products so much today. Thanks, you're on for the detail. We will not force you to ask more questions. We won't force you to drink coffee either. But feel free to do that. We're going to take about a 15-minute break. We'd like to reconvene at 2:35 P.M.
When we do that, we'll take you first through Kiobrina and then through the hemophilia program. So if you could be back around 2:35 P.M., we'll get rolling again. Thank you.
The coffee is served just where you have lunch.
Okay. So welcome back. This is the first part of what will be the combined pipeline session, and we're very lucky to have several distinguished guests with us to help give some perspective from the outside world on these programs. I'm going to ask An van Es-Johansson, who is the head of our clinical development group, to introduce Dr. Koletzko and then to walk us through the Kiobrina program in its entirety, so An, welcome.
Thank you.
Welcome back after the coffee break. This is how big, or better said, how little a preterm baby is born at week 27 or week 28. A normal pregnancy is 40 weeks. So you'll understand this. This baby rolled out way too early. For the coming weeks, this baby is going to be in the NICU, the Neonatal Intensive Care Unit, leaving the parents and the rest of the family distressed about the outcome. Now, I can assure you what's on the head of those parents. They want their baby to live. They want to bring their baby home to their family, strong and healthy, sooner rather than later. They also know that they can't bring their baby home like this.
In order for them to be able to bring their baby home, they need to carry it in their arms, on their shoulder, so they can go home as a family. In order for that to happen, the baby needs to be 1.8 kilos. Then the family can go home. Now, what is needed for that to happen? Yeah, correct. That baby needs to grow. Growing better and growing faster will make those parents happy. They can go home as a family. But it's not only about making parents happy. Growing better and growing faster will also have long-term and short-term implications on the life of this baby. Growing faster and growing better will also create enormous value for this compound and a lot of cost spared for the health care system.
That is what Kiobrina is about, or enzyme replacement therapy. And from the agenda, which is here, I am soon going to introduce to you Professor Koletzko. He's going to tell you about the medical need and the challenges those babies face by being born so early and why improving growth is important for them. I'll then come back and tell you about our phase two data and our clinical program. And then I will hand over to Anders Edvell, who is the Vice President of Marketing and Sales in Sobi, who will tell us about understanding the value of Kiobrina. With that said, I am very pleased and very proud to introduce our dear friend, I am going to say, and key opinion leader and expert in the field, Professor Berthold Koletzko from the Dr. von Hauner Children's Hospital of the University of Munich. Bert is a professor in pediatrics.
He has a long-standing career in growth in nutrition in preterm babies and infants. He is also a member of our scientific advisory board. He has been with us and designing the clinical program right from the beginning. He's very instrumental in helping us understand the medical need of those babies. Bert, the floor is yours.
Thank you very much indeed. An, good afternoon. It's a pleasure to be here this afternoon and discuss with you why we are so interested in the growth of premature infants and how we think there may be opportunities to move forward. As a pediatric physician, I'm used to talking about this to parents and families. I'm used to talking to students. Sometimes I'm talking to payers. But this is a new experience for me to talk to experts in capital markets and investment. I hope you will be able to bring my points across here.
What I would like to do is to discuss with you some of the current challenges we face in treating babies that are born prematurely and look at the aspects of growth, why poor growth is really such a problem, and then go on to the opportunities we see from improving fat absorption by adding back human breast milk lipase, the BSSL, to the feeding of these babies. As you've just heard, human pregnancy normally is 40 weeks long. We talk about preterm birth if babies are born before 37 weeks of gestation. That is one in eight babies that is born preterm. We are particularly concerned about children that are born with a low birth weight, below 2,500 grams, 6.5% of babies, and the very low birth weight babies, 1.5 kilograms or less, which is close to 1% of all babies born.
We've seen an increase of the rate of preterm birth in affluent populations all over the world. This is data from the United States. The overall rate of preterm birth is 12.5%. It is higher in less privileged parts of the population. But there, the rate is relatively stable. And it really goes up in the more privileged parts of the population. And that is basically matched in other industrialized countries as well. All over Europe, we also see the same trend of an increasing percentage of preterm births. We have achieved an enormous success in making these children survive. These are data on survival rates in North America that have improved since 1990 to 2010 considerably in a relatively short period of time.
If you look at babies born at 26 weeks, in other words, only six out of the normal nine months of pregnancy, almost all of these babies survive. Today, 90% of these very, very immature babies survive. And if you're just going a little bit further up the duration of gestation, then almost all babies survive. So we've really achieved a lot of progress in making these babies survive. We are less good in making these babies survive healthy. And this is really the challenge. Now, the focus is moving from fighting for survival towards fighting for good survival, good outcome, good quality of life, and long-term performance. And here, the challenges are the greater, the smaller the baby is. There's an enormous rate of growth in the mother's womb.
If you look at these numbers, in only six weeks, between 30 and 36 weeks of gestation, the weight of the fetus doubles. And that, of course, needs a huge amount of energy, of substrates, of building blocks to support that very rapid growth. And clearly, when we treat preterm babies that are living outside of the uterus, we try to match as good as we can the growth rate that would normally occur in pregnancy. So if you think about this, a 1,000-gram baby born today, it would, after the Christmas break, have doubled its weight and be two kilograms in weight. And to achieve that, it needs 120 kilocalories or so per kilogram a day. So six grams of fat per day, 12 grams in January, 150 milliliters of milk per day. Perhaps these numbers don't impress you much. It doesn't look like much, does it?
But if you would extrapolate that to yourself, if you say today would weigh 70 kilograms and after Christmas would weigh 140 kilograms, even with the best of Swedish Christmas cookies and food, you perhaps wouldn't achieve that. You probably wouldn't even want to achieve that. To do that, you would have to eat today 8,500 kilocalories per day, 17,000 in January, a pound of fat today, two pounds in January every day, and 10 liters of milk or 20 in January. So you can imagine what a huge amount of food that is for the baby to not only eat and ingest but also to digest, absorb, and utilize. Imagine if you had to eat a pound of fat every day. What that would mean to you, to your gut, to your absorptive system. That's the normal amount that a preterm, relatively speaking, is getting.
Now, I said before we want to try to match the normal growth in pregnancy. This is the growth curve of a fetus in pregnancy, the 50th percentile, which is sort of the median growth. This is the lower range of normal growth, the 10th percentile. So we want babies that are born here to grow along this line. This is, however, the actual growth of preterm babies born at different time points in gestation in a North American Neonatal Network analysis. And you see, wherever you're born, whether it's above 24 weeks, 26 weeks, 28, 29 weeks, the actual growth lags behind the normal growth of the baby they would have if it would not be born prematurely. Babies drop off the normal growth. They become basically malnourished. They are below normal. And even during the later phase, they never catch up. They remain too small.
The challenge is particularly great early when these babies are in the Neonatal Intensive Care Unit, where most of the growth deficit occurs. But as you see, again, they don't catch up for a long period of time. Is that a problem? An already said there are many units in Europe. You need to be about 1,800 grams to go home. Now, if you think about that deficit in growth relative to the normal growth, it delays your discharge from hospital by at least a month, four to five weeks. In China, the rule is to send babies home at two kilograms. So that would even extend to about six weeks later discharge from hospital. As economists, you probably all know what a financial implication that is. Four, five, six weeks longer in hospital in neonatal care is a very expensive exercise.
As a pediatrician, I know it's associated with increased rates of complications. If these small, fragile babies stay longer in hospital, for example, they have a much higher likelihood to contract hospital-borne infections. And also, of course, the interaction between parent and child is much more disturbed in hospital, as a lot of studies showing that that affects bonding and has long-term consequences. So there's a number of reasons, in addition to the very high costs, to push for babies to go home as early as we can achieve. I also said before that the long-term outcome of these preterm babies is less than satisfactory today. A lot of studies have looked at that. This is just one example, looking at the outcome of preterm babies in the light blue at school age at eight years compared to a group of healthy babies born at term.
You can see clearly that the outcome of the preterm babies is markedly worse. In all these tests, whether it's verbal comprehension, picture comprehension, information processing, selective attention, and sustained attention, these preterm babies have a significant disadvantage. That is important. Just if you look at attention, for example, sustained attention is a key element for learning. If you are better in having sustained attention, you're much more likely to be successful in your school performance. Now, why is this? One of the key reasons for that is that these babies are born at a period of time when the peak brain growth spurt is yet to occur. To achieve that rapid growth of the brain and the development of the organ at that time, you need energy and you need building blocks to support that very rapid growth of the brain.
Between 24 weeks of gestation, when we now start to treat preterm babies and term births, the weight of the brain increases more than five times. So it's a lot of building blocks that need to be supplied. And of importance, the brain is a fatty organ. More than 50% of the brain is fat. And in contrast to our adipose tissue, the fat is not there as an energy store. But the fat is there as a structural component. It makes the brain membranes. The myelin sheath is very important for the function of the brain. We know from many studies that, in fact, the rate of growth of preterm babies is closely related to long-term outcome. This is a study from the U.K. looking at almost 600 preterm babies born with a birth weight below 1,850 grams.
They measured at school age, 7.5-8 years of age, intelligence, verbal IQ. You see here the rate of weight gain from 12-17 grams per day growth velocity. Clearly, the better babies grow, the better is the long-term outcome for intelligence. The best outcome is achieved if babies grow similar to intrauterine growth with 17 grams per day. It's not only this one study. There's many other studies. I just want to show you one more example of a study from the United States that didn't look at intelligence, but it looked at developmental handicap, perhaps even more important than intelligence. Again, almost 500 preterm babies in the United States. You see here they're grouped by different categories of weight gain from 12-21 grams per kilogram per day. You see here the number of children that have severe neurodevelopmental impairment, that are handicapped.
Going down from 55%-30% with a higher weight gain. Cerebral palsy, where children long-term have motor handicap, is reduced to one-third with a better growth rate. So clearly, improving growth is a very important target for us in treating these babies in order to support a better long-term outcome. What is the role of fat here? Fat is the main energy source for these babies. If you look at the composition of breast milk, half of the energy in breast milk is coming from fat. And in addition to providing calories, as I mentioned before, it's an important building block in all cell membranes, particularly in the brain, where the quality of fat incorporated has a direct implication on brain function. In addition, of course, fat provides essential nutrients, the essential polyunsaturated fats, the lipid-soluble vitamins.
If you think about the preterm baby that is born with 1,000 grams, it almost has no body fat. If you ever see such a baby, you see that under the skin, there is no fat. It looks like skin and bones. The total organism of that baby at 1,000 grams has no more than 20 grams of fat. 20 grams of fat, perhaps that's what you ate for breakfast with your bread. That's no more than that, just a little tiny bit of fat in the whole body of this baby. So clearly, the amount of fat that you supply and that is then absorbed to this baby will have a dramatic impact on the body composition and the growth of that baby. Now, the problem is that these babies are not very good in absorbing the fat that we supply.
We, as adults, absorb about 98% of the fat that we eat. In a preterm baby, where the digestion processes are still immature, the absorption is poor. If they are fed fresh breast milk, which contains the breast milk lipase, then the absorption is about 85% on average in the different studies. However, if the baby is fed a milk that doesn't have the lipase, the bottled milk, the infant formula, or a breast milk that is heat-treated, pasteurized to prevent infection transmission, then the absorption goes down to perhaps 75% on average in the different studies. So of the fat that is provided to these babies, one quarter is lost in the diapers. It's not available for the growth of these babies. The short-term consequences, of course, is that energy is lost for growth. Essential substrates are lost.
Along with the fat, also calcium is lost because the calcium from the milk binds to the fat and then also appears in the diaper. The functional consequences, of course, are slow growth. As you've seen before, that is associated with markedly impaired long-term outcome, poor neurodevelopment. Along with that, with the loss of calcium and the vitamin D, there's also less good bone health, poorer bone mineralization, which is important because most of the calcium incorporation into the skeleton in the intrauterine development is happening in the last part of pregnancy. Here you see the flow of events. The dietary fat provided is poorly absorbed. Along with that, energy intake is reduced, growth is reduced, and that, on the long term, will impact on developmental outcomes.
Now, the good news is we have reason to believe that this can be reversed by adding back to pasteurized human milk or to infant formula bile salt-stimulated lipase, the lipase that is naturally occurring in human breast milk. We see that from many studies that milk that contains lipase supports better growth. This is a study from France that just appeared last month in a journal published here in Sweden, where they looked at preterm babies that were all fed human breast milk, but they were fed different proportions of the fresh human milk, which contains lipase, or human milk that was pasteurized, as we usually do with banked human milk, donated human milk that is given to other babies than the baby or the mother who donated the milk to prevent infection transmission, or in very immature babies where we have a risk of cytomegalovirus infection.
Clearly, what you see, if there is a higher percentage of fresh breast milk compared to pasteurized milk, in other words, a higher proportion of milk with lipase, then the weight gain is going up. With this and other data, we clearly conclude that with more lipase, there is better growth. I think An will show you data from the recent trial that demonstrates with recombinant lipase markedly improved growth. In conclusion, small preterm infants now have a very good survival rate. We are proud of what has been achieved in perinatal medicine. The long-term outcome is less than satisfactory. Poor growth is very, very common. It's not the exception, but it's a rule. As you've seen from the mean growth in the U.S. studies, on average, we have severe growth failure. This predicts delayed hospital discharge as well as poor neurodevelopmental outcomes.
One of the key reasons is poor absorption of dietary fat and thereby calories. Adding breast milk lipase back to pasteurized breast milk used widely in Europe or to formula, which is also used widely in many units in China, basically all preterm infants are formula-fed, will improve fat absorption, growth, and most likely long-term outcome. Thank you very much indeed for your attention.
Thank you very much. Thank you. BSSL stands for bile salt-stimulated lipase. It is a digestive enzyme secreted by the pancreas, like we all have it. But newborn babies, and especially preterm-born babies, they don't have it yet. And therefore, Mother Nature has been so smart to provide that in the breast milk. Now, as Bert said, that not all babies have access or can get breast milk. And therefore, they need to be fed by either formula or by pasteurized milk.
Heating, which is needed to pasteurize the breast milk, will inactivate the enzyme. So more or less, it's kicked out, it's flat, it's dead. In formulas, it was never present because that is like designed and created in another way. As you learned from Bert, it's very important for growth, and it's also important for the absorption of omega-3 and omega-6. They especially are critical to brain development. Now, Kiobrina is a homolog to this natural BSSL enzyme. It's a recombinant human BSSL. It's actually very pure, and it has a high activity. It's given orally with this formula or with the pasteurized milk. So they drink it in the bottle or they get it through the tube in their nose. It prevents growth restriction in the preterms that do not receive breastfeeding.
It is actually truly an enzyme replacement therapy because we are administering this in exactly the same dose that is concentration that is found in the mother's breast milk. With all that said, let me then read for you the target indication that we are developing Kiobrina for. It is an enzyme replacement therapy to restore BSSL activity and prevent growth restriction in preterm infants receiving formula or pasteurized mother's milk. This is what our project is about. Having for the first time your drug administered to the first ever baby was a very big moment for us. Starting a phase 3 compound in those babies with your program, with your own compound, is another great moment if your passion is in drug development. In order to achieve that, we had secured a number of big regulatory important milestones.
The team successfully secured the approval of the Pediatric Investigational Plan, the PIP, which is nowadays necessary in Europe. EMA approved the endpoints and the clinical program. Discussions with FDA are ongoing in the US for the US program. Now, Sobi is great with people, and Sobi has great capacities. We are totally staffed and able to succeed with this program on all steps in the development. We have top-notch in-house protein development capabilities. We have international experience in clinical development. We have a great regulatory department and pharmacovigilance. We have market access planning underway, and Anders will tell you more about that. Both the development and the manufacturing is going according to plan. So we believe we can do this. We can deliver Kiobrina. The phase two data I'm going to show you. Let me talk you to this slide here.
Our endpoint is growth velocity that is expressed in gram per kilo per day. And what doctors strive for in the intensive care in the NICU is to come up to this target growth velocity of 15 gram per kilo per day, and if possible, more. But with the normal feeding regimen present, formula or pasteurized milk, this is like the target they really strive for and they want to come to. This is data on only one week of Kiobrina treatment. So this is like pretty spectacular. The group is 60 people. Those were two cross, how do you call it? Crossover. Crossover, sorry. Crossover studies. So we have 60 babies here in the non-treated group, and we have 60 babies in the Kiobrina-treated group.
What you can see again from this one week of treatment is that the babies that got the placebo had a mean growth improvement of 13.9 grams per kilogram per day. What you see from the Kiobrina group is that they had an improvement of 16.9%. Now, that's 20% improvement. But what does that mean? And does it actually mean something? Well, let me give you an example. You learned by now that in order to be discharged from the NICU, the baby has to weigh 1.8 kilo. What would this mean? If a baby is, no, oh, I know I'm doing this myself. I want to show you, but then it's this one. What this means, so if a baby in this group is one kilo here, and with this growth velocity, it will take this baby 42 days to get to 1.8 kilo.
For a baby in this group who is 1 kilo, it will take the baby 35 days to get to this 1.8 kilo. So if you calculate it like this, seven days quicker to reach your discharge weight, seven days quicker will have great impact on the short-term and long-term outcome of the baby. And it will also have a great impact on the value of the compound and the cost we can save by doing this. I'm bringing back the slide that Professor Koletzko showed because what he said is that with a growth velocity like over 17, this is really mimicking the growth velocity the baby would have if it would still be in the mother, the best place to be for a baby.
Also, why I want to show you is that if you think back of my previous slide, then the mean growth velocity was 16.9, but the range there was 15.7 to 18.0, pushing a lot of babies in this group into this bar. So it nicely relates then to what we are trying to achieve and to the long-term outcome of the baby. With those impressive data, we have now initiated our phase 3 study. This is the European Pivotal Study. It's a placebo-controlled double-blind study. It's four weeks of treatment this time because we want to see if treatment with Kiobrina secures also this growth velocity improvement over a longer period. The study will have 430 patients, and they're all younger than 32 weeks at enrollment. We will be in 11 countries, and we will open 70 sites.
And here on the map, you see the countries with the circles are the countries participating. There are most countries in Europe, and we're also having centers in Russia. This then is the design of the study. It is a placebo-controlled two parallel arms. One arm gets Kiobrina. The other arm gets the placebo. We are having four weeks of treatment. And after those four weeks of treatment, we are doing a 12-month follow-up with visits at three and visits at six months. Now, our primary efficacy endpoint is also the clinically relevant endpoint, and that is growth. And we measure that by growth velocity in gram per kilo per day. This is also the endpoint that has been approved by EMA to be the regulatory endpoint. So this is the endpoint we need to make in phase three. We're also. Oh, don't think I'm silly.
I just pressed the wrong buttons all the time. We also are looking at the number of secondary endpoints. And in those secondary endpoints, of course, are the health economy parameters we are looking at. So one secondary endpoint is NICU stay. And that is not only like the time to discharge, but we're also looking at the frequency of readmission. We're looking at early development and maturation parameters. One example of early development is suckle feeding. That's a very important parameter of maturation. What it means is the ability of the baby to coordinate breathing and swallowing, which is important. And another thing we're looking at is temperature control because the baby cannot leave the NICU before the body is able to control its own temperature. We're also looking at the effect of BSSL on tolerability. So we are looking at the frequency of infections.
We're looking at maturation of the gut in gastrointestinal tolerability. And we're also closely monitoring concomitant medication. And then at 12 months and also post-approval, we are looking at developmental functions. With all that said, I'm now going to hand over to Anders, who will guide us through how all this translates in the value of Kiobrina.
Thank you, An. First of all, I would like to say I think it's truly fascinating to be a part of a company that could develop these kinds of products for patients in great medical need. And I think I'm being asked to talk about the value of Kiobrina. And I think the true value of Kiobrina really goes to every patient that could get a better quality of life, actually taking this drug.
But of course, in order for us to be able to continue doing research and development, we also need to make a kind of a sustainable, how do you say, health economics of this. And this is what I'm going to focus on now for a couple of slides. So I would like to talk about the value of Kiobrina in three different parts. We have the acute part, which is here, which is basically covered in the first part of the trial, and also kind of coexist with the actual stay at the NICU. And we have a follow-up part, which is the subsequent 12 months. And we have a long-term part.
I think it's important to say that this study was actually designed, of course, to find the scientific endpoints, but also to be able to capture the health economics variables that could help us put a good value to the product. So if we look into the first part of this timeline, it's really about earlier discharge from NICU. We heard that with this increase in growth velocity, we could actually have the potential of reducing the stay at NICU with a week. But that is if everything goes well. We also heard that if you stay for a long time at hospital, you actually increase the risk of getting complications, infections, and other parts of complications. Of course, every infection will increase the cost for the treatment of that infant. Other, so to speak, cost drivers are, of course, concomitant medications.
And the more complications, the longer you stay at the hospital, the more need you might have for concomitant medications. And of course, these parameters are captured in the study. So it's possible to kind of transform that into a monetary value or a cost saving. So next part is the follow-up period, which is also captured in the study. And we also know that the longer you stay at hospital, the more frequent you will have follow-ups, and the more possibilities for you to have to go for readmission to hospital, which is, of course, a cost driver for society. And then on the long-term health outcomes, really it's about the neurodevelopment parts that we heard about previous today. That is various types of disabilities, learning disorders, executive functions, and so on. So this is really how the value could go temporarily.
Let's now see. Okay, this is where the value can be generated. How much value could be generated? First, if we look into the acute part, we know that the cost for staying at NICU is kind of impressive. And of course, this depends between countries and hospitals to some extent. But a rough value would be something between EUR 10,000 and EUR 17,000 for a week's stay at NICU. But that is more or less the hotel cost. This is if everything more or less flows as it should go. But then if you start to get infections or if you start to get other complications, this cost could go very, very much higher. This is really about kind of easy. It's straightforward. It's relatively easy to put the number on what are you actually saving with giving Kiobrina potentially.
But of course, we are also very, very interested in quantifying the benefits in terms of long-term outcomes. But how do you really put the price on avoidance of a cerebral palsy or a neurodevelopment deficit? How much is it worth? Well, not really as straightforward as this part, but of course, there are techniques today available to quantify this. And there are a lot of studies available on cost of illness for different conditions and so on. So depending on the potential of reducing this frequency, it's very kind of feasible to put the price tag on what you can gain with a product like this, even for long-term. So understanding a market potential, you need two parts. You need the price of the product, and you need the market size in terms of eligible patients. Every year, approximately 600,000 infants are born before week 32.
You can see here in the note what countries really are captured here. We talk about EU, Russia, Turkey, U.S., Canada, South America, China, Japan, Korea, etc. So it's a huge population. However, we also heard that if you get mother's milk, you're better off than if you get formula or pasteurized milk. So as we see, it's the primary population that would benefit most from Kiobrina is, of course, the guys that don't get breast milk. And that leaves us with a population of approximately 300,000 preterm infants. Of course, there are reasons for why infants don't get breast milk. It could be medical conditions, but it might be even more important, cultural paradigms and cultural, how to say, traditions.
For example, in some countries, it's very, how to say, it's really been advocated for a long time that breast milk is the way we should feed our children. But that's not the case in all countries. In Europe, with the registration of Kiobrina, the initial registration of Kiobrina, we will cover then approximately 30,000 preterm infants. So in Europe, you will realize that approximately 50%, a little bit more, receive formulas or pasteurized milk. However, with the European Kiobrina, you actually open up a lot of other markets. So with the European Kiobrina, you can address markets like MENA, Australia, Latin America, Russia. And even if you do a bridging study, which usually is a relatively small study, you can get access to the Japanese market and Korean market.
With the European file, if you have Russian patients in the program, you can also get access to Russia without having to do another study. So basically, with the European file, you will get access to a population of approximately 100,000 preterms having a formula or pasteurized milk today. As you have noticed, then two major markets are missing on the previous slides. The first one is really US. And in US, our ambition and strategy would be to insert Kiobrina into our growing infrastructure in the US. That's our key strategy. Of course, ongoing right now is discussions with FDA on exactly how the program should look. And the way of getting here is to actively seek a partner that will help us do this development for the US. But we will strive to keep the commercial control over the product. For China, it's a slightly different approach.
In China, we will try to find a partner, and we will gain or receive milestones and royalties for the product. But we will not ourselves primarily market China. My last slide, or second to last slide, is really about lifecycle management. So we've seen what the primary indication could bring us. But of course, that population is one part that's kind of the first that comes to mind in eligible patients for Kiobrina. But of course, we have a subset of patients here not covered by the initial indication that might still benefit from getting Kiobrina. And those are the patients that are getting both pasteurized milk and, to some extent, some breastfeeding. We saw a graph just recently that if you get some breast milk, but not enough, you will still have a deficit in growth.
That is kind of one next step in terms of lifecycle management. Of course, also prolonging the treatment period. In the study, we talk about four weeks. But in all honesty, we don't believe that just if you get an infant that is born at week 28 and get four weeks of Kiobrina, that the infant is still at week 32. And there is nothing to suggest that after week 32, you will not have any effect of Kiobrina anymore. So of course, there might be a great value of continuing giving Kiobrina for another four weeks. And understanding that dynamic is, of course, also a very interesting lifecycle management opportunity. So finally, trying to summarize this, we believe Kiobrina addresses significant medical need, specifically in these preterm infants not getting breast milk. We are sure that it has the potential to generate both short-term and long-term health value.
There is a significant population globally born before week 32. And with the European filing, we can open up markets which generate the population of approximately 100,000 patients. And last but not least, there is a vast amount of lifecycle management opportunities for the product.
Okay. Thank you. Okay. Great. So a very big thank you to you, Anders, to Professor Koletzko, and An to give us a view of this program. I think the building blocks around the program are quite clear from the presentation. But I do think it's worth taking some time to address questions or comments from the group before we go on to hemophilia. So let's start here.
Johan Unnerus, Swedbank, yes. On this difference in the advantage of giving breast milk compared with pasteurized milk, is there any indication that there are differences in sort of geographic or genetics of that sort of advantage?
Do you mean in terms of the impact of the therapy or the use time?
Yeah. It's clearly an advantage in terms of gaining growth in giving breast milk compared with pasteurized milk. And the question is if that sort of difference varies with geographic or genetics.
Sure. So far, there's no data to show that in different populations there would be markedly different lipase activity levels. We have no indications for that. And evolutionary, one would think that wouldn't make sense if lipase in human milk is so important for growth and for supporting the substrate utilization, then it would not make much sense that that would persist, human milk with low lipase activity. But we have no real data to show that.
Okay. And well, there are some others like diabetes type 1 and metabolism, but of course, we don't know. And what else?
Can I maybe respond to that point just because it's a fascinating point you make? What about the genotypic variance in any given either monogenic or polygenic disease? And I think one of the key differences here is that BSSL is a monogenic component. It has a monogenic sort of lineage, if you will. And so the phenotypic variety there is going to be much lower than a polygenic disease like type 1 diabetes. So you're quite right. The variance genetically for type 1 diabetes is massive. But I think the point here is with a single gene for a single essential enzyme, you wouldn't expect to have the same variety. But of course, we're going to learn once we really address these markets over time. And one thing I was learning from our colleagues who are recently in China is that you saw the sort of 175,000 infants there.
Evidently, in China, none of them are treated with breast milk in the NICU. They are really confined to the NICU apart from the family with no access to breast milk for the entire duration of their NICU stay. So there's the genetic question, but also the cultural question is quite interesting a s well.
Secondly, then on the phase two data, what's the setup? The patients, how's that? The country, where are they taken from?
Yeah. Shall I answer that question?
Please.
You mean in which countries we performed phase two? Indeed. Yes. We did that mainly in France and Italy, where we have a lot of pasteurized and formula use. Okay. Thank you. Why we have chosen the countries in phase three is exactly for that reason. For example, the Netherlands. I'm from the Netherlands. I would have loved my country there. Too much breastfeeding. Sweden, same.
Great country.
Too much breast.
Yeah, that's good.
But for the study, we have picked the countries where there either is a lot of use of formula or pasteurized milk.
I'm sorry, but just behind you first to the microphone, and then we'll come to you. Go ahead.
Me.
Sure.
Okay. Question regarding the phase 3. Patrik Ling here. Could you give us some more specifics on the timelines here? When do you expect it to be done? Will it be enough to do sort of an analysis after the four weeks of treatment, or do you have to also file on the 12-month follow-up data? And if that is the case, will we see sort of interim analysis after the initial four weeks?
There were a lot of questions. No, we must file on the 12-month follow-up after the four-week treatment.
What is special about this program as it is in preterm babies or pivotal trial is also the PIP. So that's an agreement with the authorities that we must do that, and that is for immunogenicity reasons and for safety. So that was one question. Another question was when we can do this. And we have timelines to get to market in 2015, and we will have data by the end of 2013, which we are on ti me with.
Okay. Thank you.
The variance of the variation that you saw in the phase 2 study when it comes to growth velocity, is it something that you know why you get that variation, or is it just because it's individual babies? Is it something that you can control in the phase 3 study to minimize the variation?
Would you like to answer that area?
Sure.
I can talk about phase three. There's many reasons for variation in growth in premature babies. They're not all getting the same amount of substrate. There's variation in the amount of energy protein they get. If you look at the use of donor breast milk from a breast milk bank, there's a large variation in nutrient composition. So even if you give the same amount, the same milliliters of milk, you have a big difference in the amount of nutrients that is given from one baby to the other. And in addition, there's other factors that affect growth. If a baby is more severely sick, if it has more lung problems, if it has more infectious disease burden, then the growth will be slowed. So you cannot expect that one factor will account for all the variation in growth.
The way we have addressed that in the phase 3 is that we have made stratifications, and we have also taken this variation into account. So that is why we need so many babies to prove a diff erence.
Okay. And then we'll go back to you, Matthijs. Let's go here first. Go ahead.
Yes. Hi. Erik Hultgård, ABG Sundal Collier again. Two questions. First, a short one. How many patients have you enrolled so far in the pivotal trial? My second question is on the duration of four weeks. If I remember it correctly, the phase 2 trial was actually shorter duration, like one week or something. Yeah. What type of work did you perform to come up with the four-week duration? I mean, why didn't you choose eig ht weeks right away?
Could you give us some type of info on how you arrived, how much work you performed on the duration of the trial?
Yeah. I can try to start to remember all your questions. We had the first baby enrolled in the summer, and we are very much scheduled to deliver our data by the end of 2013. That's what.
How many patients enrolled so far?
We are not disclosing that, but it's going really well. The other question was about one week versus four weeks. When we did the phase two study, we did a crossover study. Now, crossover study, why we did that? We had never been in humans or in babies with BSSL. So we very much were interested in finding, does BSSL deliver what it is supposed to deliver?
In a way, what we would have wanted then, or what we were looking at already then, was treating for four weeks because together with our experts, we thought from the beginning that four weeks, that was what would have been needed. If you do then a parallel study, two arms, that would have increased the number of babies by four. So by performing a crossover study, you can divide the sample size by four. That is why we wanted to do a crossover study because we wanted to know quicker if BSSL is doing something. Also, at that point, with no data at hand, we didn't want to expose more babies than were actually needed. A crossover study, what you would like to do is that the babies or the people, the population that you're studying before you crossover is more or less similar than before you crossover.
Now, you've understood. Now hopefully from our story, that a week or four weeks is really a lot for a baby. We saw those impressive data with one week of growth. None of our experts would have expected with what we knew then. But we want to see continuous growth, and we want to treat the babies with BSSL longer, longer than one week. And for the study, we must stick to four weeks. That is also why we have chosen a cut-off level of 32 weeks, because we need to do that for the study so they are still in the hospital. So there are things you need to do because of the fact you're doing a study that maybe in the setting, once it is on the market, the doctors will play around with differently.
Just to follow up on that more fundamental basic question, the growth velocity that you achieve in reporting trial, is that during the treatment period or also during the follow-up?
No, that was purely during the treatment. During that week. Yeah. During that week only.
Okay. One interesting component, just thinking about a financial group here, it really behaves like a compound interest because, of course, it's grams per kilo per day. So the grams you add on day two include the grams you gained on day one and so on as you go through the week. So it's quite impressive when it kind of piles up. When you go back to your comment about the fat and the energy needed to build and grow at that level, it's remarkable. It's almost you can see the babies grow day in, day out because they're starting from such a small base.
It's a fascinating place. It's not so common in the banking industry anymore, I suppose, but still happens in nature. Another question up here, and then we'll go to you, Mattias. Okay.
Can I just ask about parents' consent? Is it difficult to get acceptance to enroll their babies into these trials?
The reason why the phase 2 study was over time was that we had no data in babies. This was never, ever been put in babies. So to get the consent of the first parents, it took really a real long time. It's much easier now because we have great data. We have data on efficacy. We have data on safety. And when we're training and talking with the doctors, there are sessions after sessions, and Bert, maybe I'm answering now for you, but it's really, really difficult to get the parents' consent.
They do that because they trust the doctor. And that is why it's so important that we have professionals in this trial because you're in stress, your baby just rolled out, and then you also have to decide whether this baby is going to get it or not. What's good for us is twins. We have a lot of twins coming in because they don't want to give one baby the good stuff and the other not. So twins are good for us. But informed consent in this population, it's really difficult. Bert, maybe you want to add something here at the top. Well, you said it all, but it's a very good question.
We had in the beginning asked ourselves whether parents would be resistant to using recombinant proteins because if you talk to parents, at least I think in Scandinavia, in Germany, Switzerland, the thought of giving a recombinant protein with food to your child is meeting a lot of resistance. But in the preterm world, that's not an issue at all. We always give recombinant insulin. We give recombinant erythropoietin to our preterm population. It's a complete non-issue. There's no question. If the parents are convinced this has the potential to help my baby, they're all for it. It's more the question that you addressed in the beginning. If there is something that has not been tested before in preterm infants, do I really want my baby to be the first one to get exposed to that? Now, I agree.
It's going to be much easier because we can share with parents that it works, it improves growth, and that is useful. And so I think now it's going to be much easier to enroll subjects into the ongoing trial.
Can I just ask about the robustness of the data you expect? Will that also relate to the time to discharge in addition to the four-week follow-up data?
The study is powered for the primary efficacy endpoint. So time to discharge won't be. That's not a secondary parameter. It is a secondary parameter, but we have, as I said, the study is powered to meet this primary endpoint.
From a clinical perspective, is that what you would like to see?
What wo uld I like to see? Well, an improved growth would already be a huge benefit for the reasons that we discussed before. Earlier discharge would be an added benefit.
But from a clinical point of view, that's sort of the extra bit of cream on the dessert. But improved growth by itself, with all the implications for outcome, would be of tremendous value.
We have the next two lined up. One here, and then Matthijs.
Thank you for taking my question. Can we look some of them? Just a clarification question to start with. Did you say that you aim to apply for regulatory approval after the 12-month follow-up? Yeah. That's correct. Okay. Thank you. Then regarding the 70 sites that you aim to include in the study, have you initiated all these 70 sites, or? Almost all. Almost all. Yes. Thank you. Then you also said that it's more frequent that you have infection in preterm children.
Could you elaborate a little bit more on how frequent that is, how different it is from sort of Western Europe to Eastern Europe and so forth?
Very good question. I'm afraid I don't have exact numbers off the top of my head. The difficulty is always what are the criteria for diagnosing infection. Oftentimes, you have a clinical picture which is typical of infection, but you can't isolate bacteria from a blood culture or otherwise. And then you have patients where you suspect infection, but you don't have a confirmed infection. So I think it's very difficult to come up with exact numbers, but it's certainly so that preterm babies have a very immature anti-infective protection. They're very likely to get infections. And they are also getting invasive treatments, intubation, ventilation, venous catheters, which increase the risk of infection.
And just one quick question also.
You mentioned in the beginning of the presentation that it's more frequent, sort of it's sort of increasingly more frequent for preterm babies. W hat is the reason for this ?
There's probably a number of reasons. One obvious reason is that we have more multiple pregnancies today, in part due to more active fertility treatments now. So that is increasing the number of multiple pregnancies, and that is associated with more preterm births. Preterm births cluster both in the lower and the higher socioeconomic groups of the population, and why that is, you can discuss probably for an hour, but obviously, women who are under stress, who are in investment companies perhaps, have a higher likelihood of preterm births. Female physicians have a much higher likelihood of preterm births than the average population, so there's many factors involved.
I'm a little conscious of time because we need to transition to hemophilia.
Can I just have two quick questions? One here, and then I know Matthijs is waiting, and then we close the session. We'll come back to Q&A at the close of the entire afternoon so we don't miss a chance to get the additional questions in.
I have two, but I stick to one. Is there any reason to believe that the growth rate would slow after one week? Because the results were pretty impressive in the phase two trial. Are there any reasons to believe the growth rate would slow in the week second or week two, three, and four?
Well, there is some indication that the efficiency of fat absorption would increase with increasing maturity of the baby. But we're not sure at which time point that is really changing markedly the effect of adding BSSL. Our assumption is that this will be far beyond 32 weeks.
But clearly, if you give that close to term to a baby, you would suspect that the effect is less marked than at an early premature time. But we really have to look at the data.
Thanks. Last question.
Mattias, Häggblom from Danske Markets . Two questions, but I'll be brief. One for Professor Koletzko. Is growth velocity enough to make this standard of care? You touched upon this before, but or is a positive benefit on cognitive functions also necessary in order to make this a true standard of care? And then secondly, maybe for others, previous management had said peak sales potential of $400 million. I'm sure you won't talk about peak sales potential, but pricing is part of that. And you've given us the direct cost saving of $7,000, getting the babies out of the unit quicker, but there are other more indirect costs as well.
I think the previous guidance implied that pricing around $9,000-$10,000. Is that the right ballpark, or are there other products to point us to in order to understand potential pricing in the future?
Thank you for that question. Growth velocity itself is an important value. We've heard about the expected impact on duration of hospital stay with a major benefit for not only the baby, but the family, in addition to the economic benefit. Also with increased weight, the baby is less likely to contract infections and other complications. But clearly, if one can demonstrate a causal effect on neurodevelopment, which is not easy to demonstrate because it needs longer-term follow-up, more complicated measures than just weighing a baby, that would add to the benefit tremendously.
I think that's probably a good platform to address your second question.
I'll ask Anders to comment as well. Building the story is going to be just that, building the story. And we'll have components that come from the near-term endpoints and components that come from the medium-term, 12 months. And then, of course, components we'll have to guess at, but only find out in real-time development. So, of course, we can't price until we see the data. And that's why, of course, you won't get a guidance from us on either the market size or the price. But I think the idea we have is to try to approach this value story from many angles so that in the course of what we see at 12 months, remember when we close the data and report, we'll have some of the population with much more than 12 months of follow-up data available.
So we want to create the best story we can at the outset, but we recognize, going back to the model I showed earlier, that we're going to be building the story for several years after the approval of the product.
Yeah. And just comment on the numbers you referred to. One week shorter at NICU is actually mounting up to EUR 10,000 to EUR 17,000. So the saving just by reaching those seven days, that would be the kind of effect if the one-week study is really consistent across the four weeks, is actually not $7,000. It's between EUR 10,000 and EUR 17,000. And of course, that is a fundamental hospital, I would say, hotel cost, more or less. So everything you get on top of that, as you've said, is going to help building an even better, how do you say, value proposition for the price.
I spent some of my time training in the NICU, and I can strongly recommend that none of you check in for a week. It's not a hotel. It's not fun. But miracles do happen there. I do want to acknowledge, Professor Koletzko, your time. I know you and Anne have to leave to get on a plane. So if you want to just acknowledge.
Yeah. Bert, thank you very much for your presentation. A little token of appreciation. Thank you very much. I hope there's no fluid in it because you have a plane to catch. Give him.
Thank you very much.
Thank you. Thanks very much.
Yeah, I'll just take my coffee.
Okay. So thank you very much, all three of you, for that view of Kiobrina. I would like now to turn the floor over to Helena Rödberg, who is heading our hemophilia franchise.
She will take us through an overview and an introduction for the hemophilia section, and then we will make time for a hemophilia-specific Q&A at the end of this section and then leave time for any cleanup questions from the entirety of the day at that point. So Helena, can I turn the floor over to you?
Absolutely. Thank you, Jeff. So we're just trying to sort out the microphones and get them all going. Hemophilia. Quite often viewed as maybe one disease, but in reality, two. Hemophilia A and hemophilia B. And we're happy that in our development, we are indeed addressing both. Hemophilia is a lifelong disease. You're born with it, affecting about 850,000 individuals throughout the world today. But it's only about 15% that are diagnosed. Now, hemophilia treatment, it's really quite simple. It's all about replacing the missing factor.
Without it, a deadly disease, but once safely replaced, can bring the patients from debilitating handicaps and premature death to what we hope to be able to be a life, a quality of life equals to yours and to mine. We believe, and we hope to be able to show that to you today, that how we reason around the fact that we think our two-factor programs have the possibility to make a difference. Today's agenda will address the needs in today's hemophilia treatment and to see where in that scenario do the long-lasting products fit in. Glenn Pierce from Biogen, our partner, and who are the ones that are running the clinical projects right now, will take us through the current status of the two projects.
At the end, I will come back and try to give you a flavor of today's market of hemophilia, but also its dynamics. With that, I would like to start by introducing to you a world-recognized researcher in hemophilia, a driver of modern hemophilia care, and also, I'm proud to say, a true representative of the Swedish hemophilia tradition, still viewed as the golden standard in the world. Professor Erik Berntorp from the University of Lund and the Malmö Hemophilia Clinic. Please, Erik.
Thank you very much, Helena. You are too kind. It's a pleasure for me to stand here because, as Helena indicated, Sweden is considered to be the cradle of hemophilia care. I'm happy that Sobi, in fact, now is in pole position to take the next big step in hemophilia care and to improve the care of these patients.
So what is then hemophilia? We have hemophilia A and hemophilia B. They are two separate diseases with the same clinical manifestations. Hemophilia A lacks clotting Factor VIII and hemophilia B clotting factor IX , or these clotting factors do not function properly. Boys are the ones who get hemophilia, but females can be carriers. And the hallmark of these diseases is bleedings. So acute traumas or apparently spontaneous hemorrhages may occur, typically in joints, joint bleeds, hemarthrosis, which with time causes destruction of the joints and the patients become severely disabled. They can also get soft tissue bleeds, as you see here. And if a bleed occurs in a closed space, like intracranially, they can be life-threatening. So the therapies of hemophilia, and these therapies are very young. If you go back 50 years, the median life expectancy of hemophilia was 20 years.
Half of the patients died when they became around 20 years. Hemophilia care treatment started in the 1950s and has since been developed quite dramatically. Treatment is based on intravenous administration of clotting factors. It's replacement therapy. It can be given on demand when factor VIII or IX infusions are given to stop an acute bleed. It can also be given as regular prophylaxis or replacement therapy, which means regular infusions to maintain minimum level to avoid bleeds. Usually, two to four infusions per week are given, and the treatment starts very early in life. It is given by the family, and when the child turns around 10, 12 years old, he starts to give the infusions by himself. The treatment starts at around one to two years, ideally prior to any bleed.
The benefit of prophylaxis, which has been shown very strongly, is that the patients get a reduction in bleeding frequency or bleedings are, in fact, abolished if prophylaxis is given in the correct way. You get a preservation of joint structure in the patients. They can lead normal lives. They can take any job. They can do sports, etc. It reduces other morbidities. The biggest threat to hemophilia treatment is inhibitor formation, that is, antibodies against Factor VIII or IX, but prophylaxis can perhaps also lessen that risk. Prophylaxis improves quality of life and productivity and reduces healthcare utilization. This has been shown in several studies. The products we have today, they have a short half-life. They are short-acting, and this creates significant hurdles. Factor VIII has a biological half-life of around 12 hours. In small children, it's even less.
Factor IX has a biological half-life of around 18 hours, and this means that prophylaxis requires intravenous injections as often as every other day, and for Factor VIII, 150 to 180 intravenous infusions need to be given per year. It's a little less for Factor IX, and in small children, ports, subcutaneous ports, sometimes have to be implanted, which means a surgical intervention with all its risks, etc., so if we then go to longer-lasting factor products, which we are now discussing, they may provide several advantages, which are listed here. They allow reduced injection frequencies. You can substantially reduce the number of venipunctures. They will improve adherence to prophylaxis.
I mean, this needs to be shown, of course, but theoretically, if you don't need to puncture so often, if you only need to puncture, for example, once a week on a Sunday when you're not busy with a lot of other stuff, then it will probably increase compliance. It may avoid the need for central catheter implantation. These ports I discussed reduce total factor consumption. Also have a potential to increase protection with potential for fewer bleeding episodes. And again, compliance. Also, in patients treated on demand, there is a potential to improve protection. And the reason for this is shown in this slide. In fact, 70% of EU patients treated on demand use more than one injection per acute bleed. You can see here only one injection for 30% of the patients.
So if you have a long-lasting product, there is a potential that only one injection will be enough for all patients treated on demand. If we take a look at the development of hemophilia treatment, we can see that plasma derived factors were used from the 1950s, 1960s up to the early 1990s when recombinant factors were launched. And the recombinant factors have increased safety dramatically. I can just mention HIV and hepatitis, and you understand what I mean. And the next step now, which we are seeing, is improved half-life in development, where we have long-lasting factors, which has a potential for improved outcomes. It will decrease burdens for patients and caregivers, increase use of prophylaxis treatment, resulting in less bleeding episodes. Prophylaxis in severe hemophilia is used in very few countries and preferentially in children.
In a country like Sweden, for example, it's a lifelong treatment, which means a lot for the patients, and a long-lasting product has a potential to increase this worldwide, in fact. It has a potential to improve compliance and extend the protection with on-demand usage, so I think for people who treat hemophilia and also for the patients, the advent of long-lasting products, products with a prolonged half-life, is in fact a big step in hemophilia treatment. Okay, now I would like to hand over to Glenn Pierce, who will go more into detail into the products and current studies. Please, Glenn.
Thank you, Erik. Can you hear me? Yes. What I'd like to do is take you through the Factor IX and Factor VIII Fc projects. I joined Biogen about two and a half years ago to build out the program.
I'll give you the results and the status of the programs as we go through the presentation. I want to first begin by talking about exactly what this pathway is that results in producing longer-lasting molecules. It's a pathway that utilizes the normal endogenous pathway that is present to recycle immunoglobulin molecules or antibody molecules within the body. It's a long-standing pathway that is well recognized. It was discovered over the past 30 to 40 years and began to get exploited for use in therapeutics about 15 years ago. It involves the recovery of molecules that are circulating in the bloodstream, which is what's shown here. As these molecules circulate, some of them, as they age, get internalized into the cell and are normally destroyed within the cell.
And that's how older proteins are destroyed, and new proteins are then made from the amino acid constituents of the old proteins. However, if they encounter a binding protein within the cell that can recognize the back end of an immunoglobulin molecule, the so-called Fc region of the immunoglobulin, it shuttles this combination, this receptor binding molecule, shuttles it back out to the surface where it's recycled, and it continues to circulate. And so that's the principle by which immunoglobulins or antibodies have a much longer half-life than many other proteins do. And it's a process then that can be exploited by other therapeutics. And I'll talk about some of those in a few moments. I'll give a little bit of a background here on other therapeutic modalities to improve half-lives.
As Erik mentioned, there is a lot of interest in the field at this point, and there has been a lot of activity that's been generated over the past several years to take the next step beyond the short-acting recombinant factors that have been in use since the early 1990s to move toward a longer-lasting modality for therapy. And the approaches are shown here. There's a pegylation approach and a fusion approach. And what we see on the top of this slide is for Factor IX, three different types of proteins that are in the clinic. The first one is a glycopegylated Factor IX from Novo Nordisk that has just recently entered phase three clinical trials. And it involves putting a pegylation moiety, a polyethylene glycol, to the sugar molecules that are present on the Factor IX molecule. The second modality is an albumin fusion.
Albumin circulates in the blood, and so a recombinant albumin fusion protein can also be made. This is an approach that has just entered phase one clinical trials by CSL Behring. Then the third approach that is in advanced phase three clinical testing is the Factor IX Fc fusion that we'll be talking in more detail about. For Factor VIII, there also is a glycopegylated Factor VIII molecule that recently began phase three clinical testing, also from Novo Nordisk. Then the Factor VIII Fc fusion molecule from Biogen, which is in advanced phase three clinical testing. Then just in the last week or two, Baxter announced that they had entered an early phase one clinical trial also with a pegylated Factor VIII molecule. So you can see that there are a number of different approaches toward increasing the half-life of coagulation factor molecules.
I'll turn, though, to the Fc fusions and talk in more detail about those. The Fc fusion proteins have been utilized. This technology has been utilized over the past 15 years, and the first protein that was developed that utilizes this recycling technology is Enbrel or etanercept, which is marketed by Pfizer and Amgen for use in rheumatoid arthritis, and it involves taking the back end of an immunoglobulin molecule, or the Fc, and then putting an active moiety, an active substance on the front end of it that will then, because of the Fc fusion, give it a much longer half-life in the circulation, and then a number of other protein fusions have been developed and are currently on the market that accomplish the same sorts of things for a number of other kinds of diseases, so it's a well-established technology that utilizes this natural pathway.
However, it was difficult to do this following exactly that same format for the coagulation molecules because, in general, they're much larger in size and more complicated than the earlier molecules that I just showed on the previous slide. And so the predecessor company, Syntonix, when they got started in the early 2000s, developed a technology whereby they put a single coagulation factor on the dimeric Fc. And the dimeric Fc, or the two Fcs, are required to bind this protein and result in the recycling. So this approach is what's been used and is what has enabled us to move forward with the coagulation molecules and has proven to be very effective then in lengthening the half-lives of the coagulation molecules. The approach that's taken is a traditional recombinant DNA technology.
In the case of the recombinant Factor IX Fc, the work actually started at BioVitrum several years back when they began to do the process development work on this, and then it was transferred over to Biogen. But we began with cells that are well-characterized and quality-controlled that are frozen in cell banks. Those are thawed, put into small culture dishes, and then eventually scaled up into large bioreactors. These are 20,000-liter bioreactors that are in our North Carolina facility, and then it goes through a purification process that, again, was originally developed here at Sobi, and then transferred over, and then formulated and filled into pharmaceutical-grade recombinant Factor IX Fc. The recombinant Factor VIII Fc followed a similar process, except that process was developed entirely in the Cambridge facility but utilizes the same kind of technology.
We're talking about two diseases, the diseases that Erik referred to, hemophilia A and hemophilia B. There are two distinct programs, but they have a number of parallel tracks. For Factor VIII Fc, that's for hemophilia A. Factor IX Fc is for hemophilia B. The phase 1/2 trials are completed, and I'll highlight the summary of that in a moment. They're now in advanced phase 3 pivotal studies, known as B-LONG for the Factor IX and A-LONG for the Factor VIII. Number of patients is shown here, a little over 100 for the Factor IX Fc and about 150 or so for the recombinant Factor VIII Fc. They started nearly two years ago for the recombinant Factor IX Fc and about a year ago for the recombinant Factor VIII Fc. We will have data readouts in the second half of 2012 for both programs.
And the reason for that is that the Factor VIII Fc program, the duration on study is somewhat shorter than for the Factor IX Fc, so it has caught up. And then once we have accumulated a certain number of patients, we are permitted by the EMA guidelines to initiate pediatric studies. And so those will be starting in the first half of next year for both programs. We have received orphan drug designation in both the United States as well as the European Union, and then fast-track designation in the USA as well for both programs. And then we also have our pediatric investigational plan, the PIP, here in the EU that has been approved for both programs. The differences are shown here between the regulatory requirements between the United States and the European Union.
In the United States, specific guidelines have not been published, but it involves an ongoing dialogue with the FDA in order to really make the development plan and come to some agreement on the plan, and so there are some differences, and one must take these into account as one then develops the protocols that are required by the European Union, and these guidelines are very specific, very detailed, and have just been recently updated last July. In the United States, we don't require pediatric data for registration in the adult population, but as Jeff had indicated at the beginning of the session today, it is required for the MAA in the European Union, and there are some specific numbers of patients that are also required. We need to have at least 50 patients for Factor VIII, 20 patients for Factor IX that are 12 years of age or older.
And then we may go into the previously treated pediatric population from zero to age 12. And we need more patients in the Factor VIII category than we need in the Factor IX category. And then there are post-marketing commitments to study PUPs or previously untransfused patients, patients who have never been exposed to any factor products. But that can begin after approval. I'll turn now to some of the details on each of the studies and talk first about the recombinant Factor IX Fc, which is shown here. The initial phase 1/2 trial was completed in the 2009 timeframe. And it involved 14 previously treated patients with severe hemophilia B. It was a dose escalation study of six doses from one to about 100 units per kilogram. And that takes patients from about 1% to about 100% of normal levels.
It was a global study in the United States and Hong Kong at seven different hemophilia treatment centers. We studied the pharmacokinetic parameters and looked at the elimination half-life among other parameters. We found that for the recombinant Factor IX Fc in the 11 subjects in the higher dose groups where we could measure the pharmacokinetics, we had a mean elimination half-life of about 57 hours, as compared to historical BeneFIX or recombinant Factor IX half-life that's been established as about 19 hours. One can see the ranges between these two, which in this case are non-overlapping. So it's about a threefold increase in half-life relative to the historical data. This was sufficient for us to develop this further into a phase three study. Now, the results are shown on the next two slides. This shows you a little bit of the heterogeneity.
And it's probably important to point this out, as Erik talked about, the average half-life for Factor IX in a patient is 18 hours. But what that really means is that half the patients have a half-life less than 18 hours, and half the patients have a half-life of more than 18 hours. So patients have intrinsic variability and heterogeneity in their half-lives. And that is replicated when we develop the PK parameters for the longer-acting factors as well. So what we can see here is in the 50 unit per kilogram dose group, the patients had a range of half-lives from about seven days through about 12 days. And in the 100 unit per kilogram patients, they had a range of half-lives from, let's see, about 10 days up to about 15 days. So we did see a good dose-dependent effect in this case.
The study results are summarized here. We did not see any drug-related serious adverse events. We had two adverse events in the study attributed to the drug. One was an abnormal taste in the mouth and a headache, both in the same patient on the day of dosing, and we also saw no evidence of inhibitors or neutralizing antibodies or any other anti-drug antibody from the single dose that we administered in the study. No evidence of allergic reactions in any of the patients, and as I mentioned, the pharmacokinetic results for the Factor IX Fc showed good dose linearity and about a threefold increase in half-life compared to the historical BeneFIX data, so on the basis of that, we initiated the phase 3 pivotal study, the B-LONG study, and this is an open-label multi-center study.
We have a diagram of the world here, and it shows the Sobi territories in orange in which we're conducting the study, and the Biogen territories that we're conducting the study in blue. It's about 20 countries, 75 centers, about 105 subjects that are aged 12 or older. And if you would like more information, it's available either through clinicaltrials.gov or biogenhemophilia.com. We have four arms in the study. Arm one and arm two are prophylactic arms where we're administering the dose as a prevention, both a low-dose prophylaxis and a high-dose prophylaxis arm. And then we have an on-demand regimen for patients who do not use prophylaxis but take therapy in response to the development of an acute bleeding episode.
The fourth arm is a surgery arm in which we are required by both regulatory agencies to have a certain number of patients who undergo major surgery to demonstrate the capability of the product to provide a good hemostatic effect in this kind of an environment. So this is the trial that is currently ongoing, and we expect to see data readouts in the last half of next year. In the first half of next year, we will be starting the Kids B-LONG global pediatric study. The primary outcome measures are safety, looking at the frequency of inhibitor development. This is a very important measure that is intrinsic to all hemophilia clinical trials and is closely regulated in terms of the number of neutralizing antibodies that can form in patients by both the EMA and the FDA. And so we do monitor for that very closely.
Then we have a number of secondary outcome measurements. In this study, it's a simpler study where we'll have a single arm and administer the recombinant Factor IX Fc on a prophylactic basis to the children. I'll turn now to the recombinant Factor VIII Fc and take you through the same sort of description. In this phase 1-2 trial, we began with 16 previously treated patients with severe hemophilia A. We did a comparative pharmacokinetic evaluation with 15 of these patients versus Advate or the Baxter recombinant Factor VIII product. This was a global study involving the United States, Israel, and Hong Kong, six treatment centers. We studied a number of pharmacokinetic parameters. I'll focus here on the elimination half-life. What we found for the Factor VIII Fc is a mean half-life of about 19 hours.
And for the Advate, the mean half-life of about 11.5 hours, which is consistent with what's been published in multiple studies for the Advate. And one can see the range here of 18-22 hours for the recombinant Factor VIII Fc and 10-13 hours for the Advate. In the two dose groups that we looked at, we had an average of about a 1.5-1.75-fold increase in half-life versus Advate. And importantly, in each subject who was administered Advate and then the recombinant Factor VIII Fc, those subjects who received the recombinant Factor VIII Fc had a longer half-life than they did when they received the Advate. And so there was good consistency of the data in this case. We also saw no drug-related serious adverse events in this phase 1/2 study. Most of the adverse events were unrelated to the study drug.
We did have one drug-related adverse event, and that was an abnormal taste in the mouth in one patient. After a single dose, we also saw no evidence of inhibitors or neutralizing antibodies and no evidence of anti-drug antibodies in any of the patients. And as I mentioned, the pharmacokinetic results did give us dose linearity at 25 to 65 units per kilogram. These doses take the patient to about 50% of normal to about 130% of normal and about a 1.5-1.75-fold increase in half-life compared to the Advate. On the basis of these results, we initiated the phase 3 pivotal study, the study for hemophilia A patients that's called A-LONG. And this also was started as an open-label multi-center study.
The geographies are also shown here and are very similar to the ones shown for B-LONG, with the orange as the Sobi territories where we're running the study and the blue as the Biogen territories where we're running the study. In this case, we have about 25 countries with about 90 hemophilia treatment centers and about 150 subjects who are aged 12 or older who are enrolled in the study. More information is available at the same two websites. In this study, we've got three arms. We have arm one, which is a low-dose prophylaxis regimen. Arm two is a higher dose regimen designed to explore a higher dose of the recombinant Factor VIII Fc when given on a regular basis as prevention. Then the third arm is similar to what we saw in B-LONG.
It's for patients who treat their bleeds, their bleeding episodes on demand in response to a bleed, and so they're enrolled in this arm, and then among these three arms, we have surgery patients that will come out of these arms, undergo major surgery, and then go back into their individual arms, and so that's for the requirement for the need to really assess major acute hemostatic capability for these products, and so, as I mentioned, this study is well underway, and we will have data readouts that are in parallel with the Factor IX Fc data readouts in the second half of next year. On the basis of the results to date, we are initiating a pediatric study, which we have named Kids A-LONG. This is a global study, and it will be for children under 12 years of age starting in the first half of 2012.
The primary outcome measure is the same as what we saw for the Kids B-LONG study, frequency of inhibitor development, and the secondary outcome measures are the same as we saw before, looking at bleeding episodes, the response to Factor VIII, consumption of Factor VIII Fc, and a number of other hemostatic parameters, and this also is a simple study, a single arm, a prophylaxis regimen in the children with about 50 patients as required by EMA. This summarizes our results and compares our results to what's occurring within the field and gives us a snapshot of the entire long-acting, long-lasting field for Factor VIII and Factor IX. These are the Sobi Biogen Factor IX trials completed for phase one and the phase three well underway. The Novo Nordisk glycopegylated Factor IX trial, the phase one trial has been completed, and the phase three trial started earlier this year.
Then the CSL Behring phase one study for their albumin fusion Factor IX is open but not yet recruiting, and they haven't posted anything, of course, on the phase three yet. For Factor VIII, our trial, the recombinant Factor VIII Fc, the phase one is completed, and the phase three trial is well underway, began about a year ago. For Novo Nordisk, their phase one glycopegylated Factor VIII trial is completed, and they have not yet posted the initiation of their phase three trial. And Bayer, which has a site-specific pegylated Factor VIII molecule, has also completed their phase one trial and has not yet posted initiation of their phase three trial. To summarize then what I've told you and what Erik has told you, long-lasting coagulation products are a highly anticipated development.
There is a large unmet need within the hemophilia community for both patients on prophylaxis as well as patients who are on on-demand therapy for longer-lasting coagulation factors. Our two trials appear to be ahead of the competition. The Fc technology, as I've described it, is a natural pathway that we take advantage of, and it's designed to prolong the half-life of any protein that contains this Fc region in the circulation. This is a robust technology, well-established. The manufacturing for it is really very straightforward. It's recombinant DNA, eukaryotic cell expression, and is taking advantage of all of the state-of-the-art recombinant DNA technology that was initially scaled up in process development here at Sobi and now is well underway in our manufacturing facilities in Cambridge and Research Triangle Park, North Carolina, at Biogen Idec.
And then I've described the upcoming milestones, which include the initiation of our two pediatric studies next year in the first half of next year and our data readouts in the second half of next year for our pivotal studies for the age group 12 and above. So with that, I will turn it over to Helena Rödberg, who is going to talk about the market for hemophilia.
Thank you, Glenn.
You're welcome.
So hemophilia, an attractive, about $6 billion global market with more than 50% within the Sobi territory. Hemophilia A being the bigger of the two, around $3 billion in Europe. Competitive, though. More than 50 brands in Europe, although the vast majority of the product that is being used is recombinant. We anticipate that there are around 22,000 European patients that are regularly treated, being severe or moderate, either treated prophylactically or with regular occurring bleeds having significant on-demand treatment. Now, hemophilia B being the smaller disease, about $400 million, less competitive, and about 4,000 patients. Now, looking at treatment that Erik described, either prophylactically or on demand, the majority of the European patients are on on-demand treatment. Now, Europe is advanced in comparison to many other markets when it comes to hemophilia treatment.
One of the reasons is, just like Erik was saying, Sweden was the first country that really started to treat hemophilia more rigorously. We have seen the development of center of excellence in Europe at a relatively early stage in some of the countries. Also, the early recognition of prophylaxis with an attitude that is starting to come more and more, and that is not accepting a bleed. But also, we have seen strong patient advocacy groups pushing for more funding of hemophilia treatment. But although, having said that, there is a difference between the European countries. We can see that when we try to compare, and this is quite often done, compare the factor consumption as consumption per capita in a country.
Now, this example is for Factor VIII, where we can see that Sweden and Germany at the top have the highest consumption, somewhere between eight and 10 units per inhabitant, being the most advanced treatment in Europe. But we have a number of countries with lower consumption numbers, just showing that there is a potential for growth within our territory. Now, I was saying that the majority of the patients we're treating on demand, about 40% of the patients are on prophylaxis in Europe. That corresponds to about 70% of the units being used. And of course, it's extremely important for us, and to go along with what Erik said, to move the patients from on-demand treatment into the prophylactic treated group.
Now, long-lasting products, once again, we heard Erik say that they might offer, we hope, significant advantages in the prophylactic setting, hopefully making it easier for patients to move from on-demand into prophylaxis. We can see that as the reduced number of injections, somewhere between 50 and up to 100 IV infusions per year. That longer duration per se will hopefully improve the protection of joints and avoid joint bleeds and thereby improve the quality of life of the patients. But we could also hear Erik saying that in the on-demand treatment, the longer protection seen by the longer duration will most likely reduce the number of injections, reduce worries, and reduce the number of sick days for the patients. So in total, we should be able to also make cost savings by moving from short-lasting to long-lasting products.
I think the most important in this respect, though, is that both these segments, both the on-demand and the prophylactic segments, are addressed in our clinical program. Now, not all the patients are getting prophylaxis more than Erik, I think in Sweden where the vast majority of the patients are on prophylaxis today. But in Europe, and we are seeing U.S. coming abreast with us, the pediatric patients are more and more gaining the possibility of prophylactic treatment. Poland was one of the last countries, I think in the last year, that recognized the value of prophylaxis in pediatrics. But moving into the teens, we start to see adherence becoming a problem. Frustration over the disease in the teenage population, the cumbersome injection technologies make them refuse treatment, refuse the prophylaxis.
And moving into the adult population, we see that very few of the adults in Europe, this from one of our market researches, seem to be getting prophylaxis. So it is important for us at Sobi to partner with the hemophilia community and develop the documentation for the value of prophylaxis. Leaving the therapy and moving a little bit into the market, we can see that hemophilia is a very, very traditional market. In the beginning of the 1990s, Baxter launched the first recombinant short-lasting Factor VIII, and we can see that they still hold more than 50% of the market. There is a low switching rate between comparable products, and there is a very well-established relationship between healthcare and the industry.
Also the fact that the small orphan indication and patient population that this is makes it difficult to conduct the clinical trials for products that do not bring a difference to treatment. I believe that this is barriers that will make it difficult for the short-lasting products that are in development to gain a major impact into the market. But we can also see that products that are truly differentiated have had the possibility of making an impact, such as both BeneFIX and NovoSeven now leading their respective segments. We believe that the long-lasting products have the potential of making such a difference. This is a market research that we did during the summer among European healthcare professionals, ranking the longer-lasting agents the most important development, ranking it more than nine on a 10-grade importance scale.
But the longer-lasting agents were also the most likely development to propose a switch of current therapy. Now, having said that we have a growing market, having said that we have a need for the long-lasting products out there, how can Sobi make a difference? Well, I think that we are proud to say that we have a significant experience in this rather small, very integrated, very international society of hemophilia. We have heard Jeff saying that we go back to the roots of Kabi and the introduction of the first hemophilia treatment by Kabi in 1964, one of the pioneers, in fact. Researchers at Kabi Pharmacia, Pharmacia later on, developed ReFacto, and many of those scientists are still with Sobi.
When divesting ReFacto to Wyeth, now Pfizer, we retained some of the rights, and our commercialization of ReFacto in the Nordic territory has rendered us a 30% market share, and we are fighting with Baxter and Advate, who should be the leader. They happen to be now just waiting, but will hopefully be leading soon again. Sorry. But through this history we have, through the plasma-derived products that we do still have, and the divested plasma franchise that we had up till a few years ago, we have continued to engage in the hemophilia society. We are now building within our Sobi infrastructure to further interact with the hemophilia community, but we still do have significant contacts with key opinion leaders throughout Europe, Middle East, North Africa, et cetera.
What we are doing right now is we have quite an intensive program on supporting education and to improve management of hemophilia. We have addressed, and we are right now addressing the teenagers with a program for healthcare to further understand the development phases in the teenage boys and to try to see how we can minimize the development to interfere with treatment. We are looking at a totally new group being the elderly. As we heard Erik say, not many years ago, we hadn't seen an elderly hemophilia, severe hemophilia patients. Today, they are there, but that raises a number of new questions. So we have scientific advisory groups working together with us in identifying the role of treatment in treating comorbidities in the elderly population.
Through this, we have excellent subjects to stimulate the scientific dialogue, and this year, we have, together with Biogen Idec, some symposia around, but we have also in Europe arranged three symposia addressing the long-lasting products, and we are planning two in the beginning of next year. We are also supporting the hemophilia community, the ongoing research in Europe, as well as the patient societies and their continued lobbying for improved care. To summarize, we are building on our legacy. We see the European market as an attractive, more than $3 billion market. The long-lasting factor concentrates are highly desired. The two Fc programs address both the on-demand and the prophylactic segment of the market, and we are ahead of competition, we believe.
So it's important for us to continue to work together with the key opinion leaders, and we are establishing an even wider relation with all customer groups to earn the trust that has to be the foundation for our long-lasting relation in hemophilia. So. Maybe we go up together.
Yep.
Yep.
Thanks, Helena. What we'll do is undertake the Q&A for this group. I'll try not to stand with all four of us here together, so perhaps I can moderate the questions from here and not be on screen. So let's start. Maybe some new voices here. Do you want to begin? Yeah. Great.
Thank you. Gustav Vallner, AP3. I just have a question to Dr. Pierce, if I may. Apparently, the emergence of inhibitory antibodies is of key importance here for treating children with hemophilia. And I'm just wondering, since I'm not a protein chemist, I was just wondering, have you seen other recombinant proteins where you add an Fc part and the difference between the emergence of inhibitory antibodies?
I think the short answer to that is no. The Fc portion of these molecules is a natural part of the immunoglobulin molecule, which we all have circulating within ourselves. So there haven't been reports of anybody making an inhibitory antibody to that portion of the molecule. And then what's on the front end of the molecule, in most cases for this technology, are natural proteins that also are normal endogenous proteins that one doesn't make antibodies to.
So one wouldn't expect any differences in the emergence of inhibitory antibodies.
One doesn't, but whenever one develops a new product in hemophilia, that is the major risk factor that people are concerned about because inhibitory antibodies mean that patients can't take the factor any longer. It's no longer effective. And so the EMA and the FDA ask us to closely monitor that, and they have some very strict guidelines for what the endogenous rate of antibody development would be. For instance, for Factor IX, it's one out of 50 patients. For Factor VIII, it's one out of 80 patients, and it's based upon some statistical programming. And so we do monitor for that very closely, just like everyone else does. And should we see an increase in that, then the study would automatically stop.
Okay. Thank you.
Thanks, Glenn. Here.
Hi, Patrik Ling from Nordea Markets. Also two questions, actually, for Dr. Pierce. When it comes to the pediatric trials, how come that it, at least in, I think, the financial market's view, takes so long before you started it? If you started to recruit patients already in December 2009, and according to the Pediatric Investigation Program that you signed off with the EMA, you only need 10 patients really to start at least the preclinical or the pharmacokinetic studies in the younger population, how come that you do not see these kids' B-LONG trials start until the first half next year? Because in my eyes, it looks like the recruitment of the first 10 patients must have taken you forever, really.
It's the first 10 patients who have 50 exposure days. And so the longer a product lasts, then the longer it takes to achieve those 50 exposure days. So that's one reason for the difference between the recruitment rates in achieving the 50 exposure days between the Factor IX Fc and the Factor VIII Fc. But we also made a process change in the Factor IX Fc, so that wound up taking a little bit of time as well. And that's why both products are now on the same track.
You're not using sort of a fixed dosing scheme, say, once a week? Rather, you're monitoring every dose and see when it's really time to dose it? Because if you use a once-a-week treatment, it would take one year approximately from the sort of the 10th patient on the commercial material, which should have been already.
We have two different prophylaxis arms in the Factor IX Fc pivotal study. One is a low-dose prophylaxis. The other is a high-dose prophylaxis. We haven't really revealed anything else about those arms, so I'm not really going to go into the details of what those arms are. But we will be starting the pediatric studies in the first half of next year for both trials.
Okay. Second question regards the fact that it's a B-domain-deleted molecule. Does that matter from an inhibitor formation perspective, rather if it's been a full molecule?
ReFacto is a B-domain-deleted molecule. It's been used successfully for a dozen years or so without any evidence of increased inhibitor formation. And then the other long-lasting, most of the other long-lasting products that are in development are all B-domain-deleted molecules. The B-domain-deleted molecule is really, it can be thought of as part of the natural process of coagulation. So as Factor VIII enters into the coagulation cascade in an acute bleed, it gets activated. The B-domain is cleaved out, and one is left with a B-domain-deleted molecule in the context of the clot formation, which is really the reason why Genetics Institute at the time, Wyeth, Pfizer, now developed it as a natural molecule.
Okay. Thank you.
One here, and then we'll go to Mattias. Yeah.
Yes. Yeah, Kristofer Liljeberg . Two questions, one for Erik and one for Glenn, please. First, for Erik, in the A-LONG trial, it's 150 patients. How many patients would you, I mean, how many patients that develop inhibitors would you tolerate in order to feel confident to switch stable patients on other recombinant drugs to the long-acting drugs?
These are previously treated patients, so one or two patients, but not more than that.
One or two out of 150. Okay. And for Glenn, please. There seemed to be quite a large standard deviation in the half-life of the Factor IX long-acting project. Is there any evidence to believe that there might be a difference between different types of technologies to extend half-life? i.e., would it be less standard deviation in pegylated molecules and for Fc fusion?
Very little clinical data has been released on pegylated molecules, so we don't know at this point. But if one thinks about the metabolic pathways for Factor VIII and Factor IX and how they're eventually destroyed within the circulation, there is a lot of patient heterogeneity. So we see it with the short-lasting factors, and we would expect to see some level of heterogeneity with the long-lasting. We won't know until full phase 3 results are published on all of the long-lasting products whether or not there's any differences between the technologies. My guess would be no.
Okay. Thank you.
Yes.
Mattias from Danske Markets, three questions, please. One for each of the speakers, so to say. Starting off maybe with Dr. Pierce. Did I get you right that you obviously then have been monitoring the development of neutralizing antibodies, and the fact that you've been continuing to enroll patients for two years in the B-LONG trial and one year in the A-LONG trial means that you haven't seen that? So how often does you or the Data Safety Monitoring Board look at that data, the frequency of that? And then secondly, for Professor Berntorp, what proportion of your patients would you be seeing as suitable for a well-proven, safe, long-acting molecule, both for Hemophilia A and B?
So the neutralizing antibodies, the Data Safety Monitoring Board meets on a regular basis. We analyze for neutralizing antibodies on a real-time basis. Those results are sent off periodically to the labs. The results come back. Should an issue arise, it would be taken immediately to the Data Safety Monitoring Board. What I said before was that there are very, very prescribed guidelines. For Factor IX products, one out of 50 patients, two out of 70 patients, and it goes up from there, who have 50 exposure days are the allowable numbers for neutralizing antibodies because one doesn't expect to see much at all in previously transfused patients. For Factor VIII, it is something like one out of 80 patients, two out of about 105 patients, three out of 120 patients, all of whom have 50 exposure days. So it follows a prescribed statistical formula.
What I can tell you is that we haven't seen anything unusual in our studies. If we did, the studies would stop immediately. What I can't tell you is exactly what might be occurring in the studies because at Biogen, we don't reveal results while the studies are ongoing.
I was just trying to understand if there is a positive read across from the fact that the trials are continuing to enroll, and that appears to be the case. Thanks for that clarification.
Yeah, if the studies turn out well, if no unexpected results come up, I think we will come in a similar situation as we were when plasma-derived products were switched to recombinant products, and that means that I think practically all patients will switch to long-acting products.
Okay. And last question for me then. Jeff, you appear to have two programs that, according to Professor Berntorp, is in pole position to take the next step in hemophilia, and they target a total of $6 billion market opportunities. And according to the same key opinion leader, apparently most of the market will be transformed into a long-acting molecule, and the market currently puts probably not much value on that asset. So what can you do in order for the market to better understand that going forward?
I hope someone wrote that down because hopefully we'll print what you just said. I don't think I could have said it any better. I think this is potentially a very valuable asset, obviously. I think what's important for us, as Helena was saying, is to really demonstrate that we will be ready commercially to unlock the value of the product at the time that we enter the partnership in the commercial phase. You'll see from us a stronger investment in the medical field around hemophilia in the coming couple of years. Of course, we're already engaged in a very close collaboration with Biogen around building the value dossier because that starts today. That doesn't wait, of course, for the data.
So we're really looking to tailor the approach for our territory starting today and also building on the current presence we have in the market so that we're really demonstrably ready to take the products into the market at the time of approval. So I think these are the key things. Of course, the broader question is how well do people understand the relationship between the companies and the nature of the agreement. And in a session like this, we hope to begin to give you that insight that you need to really understand the value of the program. And as we talked about earlier in the session, we'll work together to get you more insight to that in the coming months. But I think today is a start on the challenge that you lay out.
Just a quick follow-up. Two years ago, others were giving peak sales potential of SEK 500 million and SEK 1.5 billion for these two products. You don't think that is the right approach to give a number out?
I think as we develop confidence to really say how we believe the opportunity will evolve, we may consider guiding on the total. I think, again, here, we'd like you to develop a sense of comfort with the levers that you think are important to demonstrate the value rather than try to tell you what we believe the value is and then justify it. I think in general, you'll see that approach from me and the company on all of our programs. Of course, we're not guiding in a forward-looking way today, but we will be, as I'll talk about to close the meeting eventually. We'll come back to that as we develop more of an understanding of the market. Again, in our case, this is a ways off, so I think it's early to be too specific about that.
Okay. Kristofer Liljeberg from Carnegie Investment Bank again. I have a question for Erik Berntorp. What would you like to see when it comes to duration for long-acting products to really help your patients?
I think once-a-week dosing is a very big advantage. Then you have a specific day for the patients to remember when to infuse. And if you put it on, as I said, on a Sunday when you're not at work, you have time to do this injection. So I think once-a-week dosing is very good. Then, of course, you can talk about once a month, et cetera. But once a week is a big improvement, I would say.
That's both for Factor VIII and Factor IX?
Yeah. I think it's most realistic for Factor IX. In fact, for Factor VIII, probably twice a week. But twice a week compared to now is also a big step. But on my wish list is, of course, once a week.
But if it's twice a week, you still think that all patients in Sweden, for example, would switch?
Yeah. I think so because today we are going from three times a week to every second day and even to daily dosing because you can reduce the factor consumption by daily dosing. So I mean, I think in the future, if we have to stick to the normal, so to say, half-life products that are currently available, I think we need to, in fact, shorten the intervals even more. And in that situation, twice a week, in fact, is a big step forward. Yes.
For Dr. Pierce, in the pediatric trial, what have you done to make sure the enrollment goes faster than for the adult trials?
I think the enrollment for the adult trials has really gone quite well. We're on timeline for that, and we are doing the same thing for the pediatric studies. We're making sure we've identified the appropriate sites and make sure that we have the requisite numbers of patients identified in advance, so.
But you haven't commented anything on when we should expect the readout from those trials?
No. It would be premature to do that. The trials haven't started yet. Pediatrics is more of a challenge than adults. The idea of entering children on an experimental therapy is a big decision that parents have to make. And so we're taking a number of steps in order to deal with some of that uncertainty. We recognize that that's a bigger hurdle than adults making decisions for themselves to enroll in these studies. As we accumulate more data, then there will be an increased comfort level, which will also help develop the pediatric study population.
Thank you.
Okay. Others? Okay.
Thank you, Kristofer Liljeberg, Carnegie again. Just a question on the market and the market development. You were talking about that among the adult population, there are about a few of the patients that are on prophylactic treatment. If you could divide that into the mild, moderate, and severe population among the severe patient with the severe disease, how common is it that they are on prophylactic treatment?
The market research that I presented was addressing the severe population.
But only.
The mild ones wouldn't be on prophylaxis because they rarely have a bleed. So this represents the severe population.
And then among the moderates, is there a change shifting towards a more use of prophylactic treatments among those as well?
I think I would turn.
Yeah. It is a change. More and more moderates go for prophylaxis, in fact, because with time, with years, also moderate hemophiliacs, a substantial proportion of them will develop some joint disease. Yes.
All right. And in the U.S., when it comes to insurance and the insurance policy in the U.S., how is it for prophylactic treatment? Are they sort of including adult patients, and how is that sort of trend going?
Helen?
Adult patients in the U.S. have a choice of taking prophylactic therapy. The Medical and Scientific Advisory Council for the National Hemophilia Foundation has issued a number of guidelines indicating that it should be the standard of care in pediatrics, and it should be available to adults who want it. And so for the most part, that's not the issue. The issue in adults, the numbers in the United States are similar to what Helena presented, where it does drop off as kids become teenagers, and then as they head off to college and get away from their parents, it drops off further. And so it's really a question of compliance.
As more and more kids, though, are going through this process who have only been on prophylaxis their entire lives, we are starting to see more adults starting to maintain prophylaxis because they don't know what it's like to experience a bleeding episode. In some cases, having one or two of those bleeding episodes can drive those teenagers, young adults, back onto prophylaxis. So the whole concept of developing preventative care is really important in the hemophilia community. It doesn't make sense to treat bleeding episodes after they've started. It makes sense to stop bleeding episodes from ever starting.
Glenn, perhaps could I ask you to comment on the speed of reaching therapeutic levels with the infusion of the Fc or the long-acting factors?
Sure. Both Factor IX Fc and Factor VIII Fc behave in an identical fashion to the short-acting Factor VIII and Factor IX in terms of clot formation. So there isn't any difference in the ability of these molecules to initiate clot formation compared to short-acting molecules. They all work essentially within seconds.
I think that's quite important in my mind as I think about one of the advantages of the program. Of course, Professor Berntorp, you can tell us if you think this is right. At least in my mind, as I think about the approach, it would be a balanced approach between prophylaxis and on-demand because I would see the advantages as being equally powerful in both segments. I'm curious about your thoughts about that. If you're able to have rapid onset but a single treatment, how do you feel about the relative priority? How would you guide us to think about those two segments of patients?
Persons with hemophilia today, they tend to live like all other people. And when the level is low, which it, of course, will be, and they know that they're going to do something, they can just take another infusion. But this has to be highly individualized. They need a standard dose, but then they know how they live, and they can supplement that.
Fred, did you want to come back with something? Then we'll go.
Can I just ask about the adoption of recombinants? Why is it still only 50% roughly of Factor IX and less, and 75% or so of Factor VIII?
I don't think it is.
Well, yeah.
In Europe, the data indicate that that is the case, and if we take the Factor VIII market, there are still a number of the European markets that are gradually moving into recombinants now. If we go into the CE, the former Eastern European markets, they have been slower. If we're looking at the adaptation in EU countries, it's, of course, higher. Now, when it comes to the Factor IX market, with only one recombinant product on the market, there has been, because of the intrinsic behavior of BeneFIX with a recovery that have demanded higher doses in some patients, it has been, in some countries, believed or interpreted, I would say, as less efficacious, and that is, of course, something that is more difficult to get rid of among patients.
So it's kind of either/or, but we have a number of the European countries that have adopted a recombinant-for-all policy.
Okay. Yeah. There seemed to be a diminishing marginal benefit of increasing the use or increasing the number of units per capita when you use coagulation factors. I was just wondering if you could sort of comment on what's the optimal level. Of course, we're at a very high level at around eight in Sweden, which is much higher than European average. Is it actually that the other countries will catch up, or are we maybe using too high levels to be motivated from a health economic perspective? I mean, in the beginning, you gain survival benefits, but later it's more functionality, I guess. Maybe sort of a philosophical question for you.
You're leading the race.
Firstly, I have to state that if you have diabetes mellitus, the goal is to have normal blood glucose. If you have a decreased metabolism because of a decreased function of your thyroid, then the goal is to replace 100%. And if you look at persons with hemophilia, they usually have just one or a few % of clotting factor compared to what is normal. So all persons with hemophilia, even if they are on prophylaxis, are severely underdosed, in fact. Then about the per capita use, and Sweden is very high up. I think that, well, the reason for why many countries have lower consumption than Sweden is mainly economic reasons, but also traditions of prophylaxis for adult patients. And the trend is to try to lower the per capita consumption in Sweden for cost reasons. We try to optimize the treatment schedule so we can use less factor.
But basically, we undertreat the patients. I don't think that other countries will catch up and increase the consumption, and I don't think Sweden will increase the consumption. But I mean, it's a large gap still for many countries to increase. So I think the market is really there. Perhaps I should add that 75% of all patients with hemophilia in the world don't get any treatment at all. So the market is there, yes.
But I think it's also we can comment, Erik, that there is also a discussion about what type of prophylaxis. There are different prophylactic regimes in different parts of the world. Holland has one, Canada has another, Sweden has a third, and I mean, it is comparisons coming out and trying to optimize that part. But I don't think there is that much of a discussion about prophylaxis contra on-demand. I think that everybody agrees that the standard of care should be prophylaxis.
So I think we're getting close to closing. Time for perhaps one or two more questions. One question and then one if there's a really excellent additional question.
[crosstalk] No pressure. No pressure. Think of it, but.
I'll just take one question, though. Question to Dr. Pierce or Dr. Berntorp. When it comes to pediatric patients, are there any differences in risks of previously treated pediatric patients to develop neutralizing antibodies compared to the adult patients that you see? Or are you using the same kind of statistical models for that, even in the pediatric groups?
The model will differ a little bit. What's been established is that patients and I'm referring to Factor VIII because that's really where the majority of the neutralizing antibodies or inhibitors develop. What's been established in prospectively looking at many patients is that the highest risk of developing antibodies is in the first infusions. So whether you say the first 10 or 20 or 30 infusions, that's where the highest risk is, and then it levels off. But even between 50 and 150, there still are a few that will come up. Just as there are a few in patients who have had 500 or 1,000 infusions, somebody can wind up getting a new antibody. So it approaches a top level, but it never quite gets there. It continues to develop. So your highest risk is in the first infusions.
And so in pediatrics, the previously transfused patients, the criteria are 50 previous exposures. And the risk should be very low, but it's not as low as the adult population where the cutoff is 150 previous exposures. Does that answer your question?
Yes. Thank you.
Okay. Great. Just to check the bar for excellence, is there anyone with a really one last remaining question? No? Well, we gave our game away a little bit early, but I do have a small token to thank each of you for coming to join us, Erik from the south of Sweden and Glenn, a much longer distance from the U.S. Thank you for taking the time, both of you. And since you're standing between me and the presents, I'll just sneak around.
I'll definitely move.
Just say a kind thank you to you for your time.
Thank you very much.
Thank you very much. I really appreciate it.
That's great.
Okay. And the same for you, Glenn. Thank you very much.
[Inaudible] Thank you. It was a pleasure.
Yeah. It's great. Thank you. Thanks, Helena. It's great, so I will say just a couple of words to close. Thank you very much, guys. Maybe to start by extending thanks to all of you, both in the room and those of you who have taken what must have been a long afternoon wherever you're sitting on the webcast to join us. We could talk about our business forever, so we won't do that today. We will try to wrap up. I hope we've given you a clear understanding of our core objectives around operating performance and cash flow and profitability and a sense of why we say our other top objective is to deliver on these programs.
I think in the case of Kiobrina and in hemophilia and very different fields at different times, we really feel that we have the chance to make a big difference with the pipeline that we have in the future. I've given you a sense of the business segments and how we think about focusing strategically and operationally on our work. And we will refer back to these segments in our reporting going forward so that you then again will have kind of a building blocks approach to understanding how we think about the performance and potential of the company in the future. But again, just to leave you with a last point, we'd like to be sure that we get the focus on operations right first before we do anything else. And we'll be communicating with you, of course, today.
We will be on the platform at J.P. Morgan on the 10th. I think it'll be at 4:30 P.M. in San Francisco. And then we expect to have our Q4 earnings call at the end of February. And that's when we would anticipate giving you a sense of how we think about our guidance going forward. And then, of course, our annual report will complete the communications points in a more formal way at the beginning of the second quarter. So these were the key points I wanted to leave you with. We certainly have a few moments if you'd like to ask a couple of questions to close the day if there was anything in the flow of the day that we didn't get to.
I'd be very happy to address a question or bring a question forward for any of the team members who are with us this afternoon. These don't have to be excellent, by the way. I didn't want to make that too difficult before. Have any of you ever put on a Capital Markets Day before in your prior lives? It's a lot of work. It really took a lot of time for us to put this together. So while you're thinking of any remaining excellent questions, I do want to take a moment to acknowledge Liana Bierforce and Åsa Stenqvist, both of whom were up many, many nights, including last night, to be ready today. Thank you both. I have a small token for each of you as well. So please come up and thank you very much, guys, for great effort. So I'll just say a short thank you.
Okay. Thank you both. That's great. Thank you.
Thank you.
Appreciate it. That's great. Thanks, Åsa. Okay. Now, if you don't know Åsa and Helena, you won't appreciate what a great pleasure it is to embarrass them like this. So please join me in thanking you for your efforts. Okay. There's nothing left behind the screen, so we have nothing left to cover. If there are any.