Swedish Orphan Biovitrum AB

Ladies and gentlemen, welcome to the Q3 2023 Report conference call and live webcast. I am Sandra, the course call operator. I would like to remind you that all participants have been listened only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Guido Oelkers, CEO. Please go ahead, sir.

Thank you so much, Sandra. Hello, everyone. This is Guido Oelkers, CEO of Sobi. We are delighted to welcome you to the third quarter 2023 conference call for investors and analysts. And as you can take from our previous announcement, we are pleased with our performance in 2023 so far. We posted this presentation to SUBI.com earlier today. Please turn to slide two. Forward-looking statement as per usual. We would like to remind you of those provisions in line with normal procedures. unless stated otherwise, we will be making comments that mostly relate to the third quarter performance in 2023 at constant currency rate and in million Swedish krona. Please turn to slide three. Today, we will cover the key aspects of our quarterly report. I'm joined by Henrik Stenqvist, our CFO, and Lydia Bart-Franz, head of R&D and chief medical officer, and during the Q&A session by Armin Reinecker, our senior scientific advisor. We plan to review the presentation first and then do a presentation around 2 p.m. Swedish time. For those on the phone, please join the queue in the queue for questions by pressing star 1. we propose you ask only one or two questions at a time. Please turn to slide four. We successfully delivered on our strategy in the last quarter. We saw a significant top line growth of 23%, 29 reported, and 11% for the first nine months, 19% recorded. This reflects a strong performance in both hematology and immunology, with a growing contribution from our launch medicines in all regions, primarily in the U.S. and in international. In addition, we received a strong contribution from Bongeo as well as by Fortis. The stable growth of Alocta and Alprox provides us with a solid basis from which we are expanding our position with our launch medicines. Hematology revenues were driven by the first full quarter of Wonjo, strong sales for Elocta and continued growth of Doctylid and the launch of Asperbeli. Immunology growth reflects strong Gabifund sales and first royalties of Bifortis. We continue to build the leading rare hematology franchise. This quarter, we focus on the integration of Wonju, which offers considerable strategic opportunities. Our R&D pipeline progressed with five milestones. We launched the Phase 3b Freedom Trial for FNS-Octococ-alpha, our doctor-led ITP studies for Japan, and for the pediatric indication that these are fully enrolled. We announced positive phase two data for the PaxCertical plan, for PaxCertical 1 and C3 and ICMPGL. And Niviracilumab received approval in the U.S. We have strong momentum in the SOBE business. We thus maintain our guidance that was raised in July. We continue to expect high single-digit growth and low 30s for the adjusted EBITDA margin. All four elements of the SUBI strategy contribute to this performance, building a leading position in rare hematology. Our pipeline is progressing. Our immunology franchise continues to grow, and our regional expansion contributes to the overall growth and launch success. Please turn to slide five. You need to be excited about the CTI acquisition, which has been the key focus of our company activities in Q3. The rights issue was fully subscribed, and we used the proceeds of 6 billion Swedish kronor to partially finance the acquisition. Wonjo will be a highly accretive product for us in terms of revenues and margins. We now recorded the first full-time quarter of sales with 347 million Swedish kronor, which is an increase of 13% quarter-on-quarter. The integration has been going on very smoothly. This one was one of our focus areas. We successfully retained key talents. We continue with our thoughtful strategy to maximize Wanzhou's potential and synergies beyond cost savings. We have ambitious near-term goals for our hematology franchise and see exciting LCM development opportunities. Please turn to slide number six. Let's look at our quarterly performance. Our growth of 23% was driven by both hematology and immunology, especially our launch brands. For the first nine months, revenues grew 11%. If we exclude the impact from COVID-19 on Kinect and sales to our Chinese partner, Doctylad, we grew by 15% in a year-to-date setting on a constant currency basis. Both North America and international grew significantly in the quarter, while Europe remained at the same level of last year. In the first nine months, international North America rule out fastest as you can see from this picture. Please turn to slide number seven. So we have been pushing growth in two dimensions or along two vectors. Geographic expansion, extending the market coverage of our medicine, pipeline development, bringing new products to the market, extending indications. For the geographic expansion, we have streamlined our organization so that we are able to process multiple applications in international markets in parallel, prepare international supply, and can rapidly deploy our commercial capabilities. Asfaveli, Dr. Red, Celonta, Gamifund, and Wonjo are examples of our current and anticipated growth in new markets. For the pipeline goals, our recent reorganization in R&D and medical affairs gives us improved reliability and scalability to master new products. Evanesce Octogoc Alpha SEL212 will be launched soon and by Fortis just have a rising start in North America. We are working on expanding the indication for Aspervali, Ceyloncha, Camifant, and This puts SoBe into a new phase of sustained growth, driven by a lot of new products, all on the stable basis of our established franchise. Please turn to slide number eight. This growth strategy has led to strong results, which is now primarily driven by our launch products, launch and host products, or as we call them in the report, launch medicines. 89% of the absolute growth is derived from this part of our portfolio, which you can see in orange here. This reflects their strong momentum. It also shows that despite our growth rate, we still have further headroom because there's still a lot of potential connected to these products from being early in the launch phase or benefiting from further geographic expansions or line extensions or lifecycle management. Please turn to slide nine. Our business continues to be underpinned by stable hemophilia growth at 4% in the first nine months of 2023. We expand the leading presence of Elocta and Alpolix to more patients in new territories. This confirms the community's confidence in these treatments and has been able to overcompensate for price developments that we experienced particularly in Europe. For Elocta, we continue seeing growth in patients, benefits from geographic expansion, and favorable phasing of deliveries. Government interventions compress prices in various European markets, while we see the positive evolution on consumption and patient expansion in Europe. As a result, oil octa grew by 4% during the first nine months. Alpolix was supported this quarter by phasing in the Middle East, slightly offset by unfavorable price developments. It grew 8% in the first nine months. Please turn to slide number 10. DoctorLed is up 15% in the quarter and 21% in the year to date. Sales growth was strong, driven by increased uptake in the U.S., ongoing launches in the regions Europe and international. In the U.S., there is a continued positive evolution of new patients, new prescribers, it shares and duration of treatment. There's also an accelerated growth in Europe and international. Key growth drivers were Spain, UK, Italy, and Germany. As expected, there were no sales of Doctylad to our partner in China in the quarter, excluding sales to China in the third quarter, 2022, sales grew 50 to 57% at CER in Q3 2023. We expect this positive trend to continue even without China sales. During the quarter, Dr. Net has also become available in Japan. Please turn to slide 11. The launch of Asper Valley continues doing very well with quarterly sales of 169 million Swedish kronor, continuing a solid launch trajectory. We have launched in Germany, the UK, France and parts of the Middle East, Australia as well as Canada and more European countries. We also have early sales in a number of other countries where reimbursement is starting to come in. one at a time. Aspirin is one of our candidates for a new indication. Here we have just released positive top-line data of the Phase II novel study. This is a very encouraging sign for our Phase III program, and we expect it to read this one out next year. Please turn to slide number 12. Immunology is also doing very well. with a growth of 27% in the quarter and 9% in the first nine months. Gummy Fund we saw in the second quarter of significant improved Gummy Fund sales. This is the result of an enhanced go-to-market model, more experience with Gummy Fund, and the recent publication of new data. Physicians have gotten more comfortable with the benefit-risk ratio, of Gummy Fund and are increasingly prescribing it for their patients. They are doing this also for a longer period of time. All of this has contributed to a very encouraging quarter for Gummy Fund with growth of 112%. As in Q2, more than half of this is from new patients. There's some volatility between the quarters because of a large number of high-dosing patients, which depends on the patient's body weight. Kineret is now, let's say, flushing out the COVID effects and returns to normal growth as there's a more elevated interest in the IL-1 mechanism. Growth is driven by the U.S. and international sales for the first nine months are down 3%, but are up 5% when excluding the COVID-19 effect. Please turn to slide number 13, and now is the time to hand over to Henrik, our CFO.

Thank you, Guido, and hello, everyone. So please turn to slide 14, and we go to the key financials for the quarter. So Q3 was another very strong quarter with solid business performance. Looking at the bars to the left, we see the consistent trend in hematology with contribution to growth, not only from the addition of Bonjo, but also from hemophilia adopted outside of China. In immunology, we are glad to deliver another very good quarter for Gamifant, while BayFortis royalties more than compensate for lower synergy sales. for which we see a decline in Q3, impacted by the late start of the RSV season. So back to the table, revenue reached almost 5.2 billion, and that was the highest Q3 ever, as reported in SEC, and this was driven by the underlying performance, but also benefiting from currency tailwinds. Reported growth was 29%, and that corresponded to 23% of cost of currencies. The adjusted gross margin in the quarter of 78% is a slight improvement compared to the same period last year, and this is mainly due to the absence of the low margins that stopped to China in the quarter, and also FX effect. The adjusted EBITDA margin reached 30%, slightly below last year of 31%, and this is explained by the increase in operating expenses in the quarter. driven by, first and foremost, the addition of the CTI business, which was not there before. But also in marketing and sales, higher spend related to the launches of Dobsolet, Asta Valley, and Sunlonta, and the pre-launch activities for Sansoctico-Galfa. In R&D, the increase relates also to volunteer activities, but also to the indication expansion of Asta Valley and the phase 3B trials of Sansoctico-Galfa. The non-recurring costs or items affecting comparability of 102 million in Q3 relate to the ongoing integration following the CTI acquisition, and we expect some further non-recurring costs in coming quarters, but at lower amounts. And for details on items affecting comparability in the quarter, please see page three in the Q3 report. Operating cash flow in the quarter was just above 1 billion, 42% higher than the same quarter last year, reflecting an improved working capital. And the net debt at the end of the quarter was 20 billion, a reduction from 27 billion at the end of Q2, reflecting the completion of the 6 billion rights issue in Q3. And if we go to slide 15, we have an illustration of our recent debt and leverage developments. resulting from the financing of the $1.7 billion acquisition of CTI. This acquisition was initially all debt financed and brought net debt up to $27 billion at the end of Q2, and this was equivalent to the net debt to the GA ratio of about 3.7 times. In Q3, the $6 billion rights issue and the underlying cash flow brought net debt down to $20 billion, and leverage to about 2.7 times. And this is a comfortable takeoff point for further deleveraging and further expansion. Please go to slide 16. We now go to the financial outlook for the full year, as usual for revenue growth at constant exchange rates and adjusted EBITDA margin. So we confirm the guidance for the full year from Q2. and that is that revenues anticipate to grow by a high single-digit percentage at CR, and that the adjusted ETH margin is anticipated at the low 30% of revenue. And this outlook is, of course, a reflection of the year-to-date performance and our continued investment in launches and pipeline acceleration. And needless to say, the main uncertainty to our forecast is what will happen to the RSV season in the short term. and how that can play out for synergies and avoid this from before this. And we believe this could be both an upside and a downside risk to this forecast. And with the outlook covered, I will now hand over to Lydia. Thank you.