Swedish Orphan Biovitrum AB (publ)

Ladies and gentlemen, welcome to the Q4 2023 Report Conference Call and Live Webcast. I am Sandra, the Chorus 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 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcasting. At this time, it's my pleasure to hand over to Guido Oelkes, CEO. Please go ahead, sir.

Yeah, thank you so much and hello everyone. This is Guido, CEO of Sobi. We are delighted to welcome you into the fourth quarter and full year 2023 conference call for investors and analysts. Overall, we can say that we are pleased with our performance in 2023 and the year has exceeded our expectations. posted this presentation to sobi.com earlier today, and this is, let's go to slide number two. We would like to remind you, as per usual, of the forward-looking statement, and unless others stated otherwise, we liked making comments that most related to the fourth quarter, full-year performance in 2023 at constant exchange rate in million Swedish krona. With that, please turn to slide number three. Today, we plan to cover key aspects of our Q4 and full year report. I'm joined by Henrik Stenqvist, our CFO, and Lydia Abarth-Franzsch, head of R&D and chief medical officer, doing the Q&A session by Armin Reininger, our senior scientific advisor. We plan to review the presentation first and then have Q&A until around 2 o'clock p.m. Swedish time. For those on the phone, please join in the queue of these questions by pressing star one. We propose you ask only one question, maximum two at a time. Please turn to slide number four. As said, we are pleased with the 2023 performance, which has been driven successfully executing on our strategy throughout the year. 15% growth in Q4 and 12% growth for the full year, make us one of the fastest growing company in the rare disease space. And it is around 22 times faster than the expected growth for the rare disease market globally. Habitat margin of 34% at the higher end of our guidance, but still allowed us to significantly invest into our future for most launches and pipeline progressions. Strategic portfolio with our launch medicines changing rapidly the composition of our company, progressing our pipeline, just some highlights that I find particularly remarkable before Lydia leads you through the entire part is really the exciting phase two data and the nephrology indication of Asparveli and the phase three data for SEL212. We continue to build a leading rare hematology franchise The growth drivers were Vonjo in the second half of the year, continued growth of Doctylet and launch of Aspavelli. Whilst we have a stable growth in our Haemophilia franchise of 6%. In the second half of the year, we focused on the integration of CTI, which has taken some time, but we feel we have the right elements in place right now and look forward to bring Vonjo to an inflection point in 2024. Immunology growth, Reflected strong Gummy Fund sales, growing an impressive 59% in Q4 outside of China. The strong royalty revenues obviously of Bifortis need to be outlined. Forward-looking, we have a very strong momentum in the SOBI business and we are pleased to announce our guidance for 2024. We expect high single-digit growth and mid-30s for the adjusted EBITDA margin. As usual, we are rather impressed by what we are doing than what we promised. We expect material growth for Wonjo, Doctolet, Asper Valley, Gamifan and Bifortis whilst looking forward to making first steps with our launch of FNS Octocock Alpha. Geographically, we foreshadow material growth from our international franchise. This growth will help us to overcompensate a potential negative evolution of synergies and the loss of the China Fosun business. Let's move to slide number five, performance review, and let's look at the overall performance a little bit more in detail. Our growth of 15% in the quarter was both driven by hematology and immunology, especially our launch medicines. Very strong performance of our hematology franchise with 21% growth in Q4. For the full year, we can see a solid growth across all regions. Of note is a strong performance in the international region. When excluding the effect of doptolate in China, we grew impressively 54% in the year. The increasing importance of our North American franchise will help us to improve EBITDA margins, even though part of the synergist revenues were exchanged against royalties most related to Bifortis. Let's move to slide number six. SOBI's strategic portfolio has led to very strong results and is primarily driven by our launch medicines. and our royalty income from Bifortis and FNS Octococc Alpha in the US. The strategic portfolio will be our main driver of growth, also during the forthcoming years. We have built this portfolio on top of a strong foundational portfolio, which has delivered an impressive 6% sales growth last year. Our legacy portfolio consisting of Synergis, Manufacturing and Domtele China will have a reduced importance over time. Please turn to slide number seven. The metrics visualizes our sources of growth. Current and future growth is driven by our strategic portfolio and launch medicines, as well as our royalty streams formed by Fortis and AFA. Our late stage pipeline consisting of SEL212 and AFA, as well as the important indication expansions for Asper Valley and Gummy Fund will become important elements for future growth. Internationalization will remain a key driver for SOBI. We have enabled the organization to process multiple applications in international markets in parallel, prepare international supply, and deploy competitive commercial capabilities. Asper Valley, Doctolet, Celonta, Gamifan, and Bonjo are examples of current and anticipated growth in new markets. We are excited about the potential of Avonis Octococc Alpha, which had a very strong start in the U.S. under our partner Sanofi, who stated Altuvio is capturing 50% of switches in the total U.S. hemophilia market in its first year of launch. We look forward to bring this important medicine to hemophilia A patients in Europe. Filing is progressing well, and we expect a decision during the first half of the year. We are working on expanding the indication for Asper Valley, Zalonta, Gamifund and, of course, Wonjo. The new development projects for Wonjo are expected to be announced in due course. This puts Sobe into a new phase of sustained growth, driven by a novel range of products built on a strong foundation of existing medicines. Let's have a look at Doctylid, slide number eight. Dr. Led had a very strong Q4 excluding China with 59% growth and 62% for the full year. There were no sales to China during the second half of 2023. Sales growth was driven by increased uptake in the US and ongoing launches in Europe and international. In the US, there's a continued positive evolution of new patients, new prescriber and higher market share and duration of treatment. There's also an accelerated growth in Europe and international markets driven by ongoing launches. We expect this positive trend to continue even with our China sales. We launched Dr. Lead in Japan in the second half and expecting future growth. Let's turn to slide number nine, Aspa Valley. The launch of Aspa Valley continued well the quarterly sales of 186 million Swedish kronor, continuing a solid launch trajectory. We have launched 27 countries across Europe, international and Canada. Product has material growth opportunity in the existing market and new launch countries. The recent positive CHMP opinion on first-line therapy offers opportunity for broadening the usage in various markets. It is fair to say that the expected development of Aspervalli into nephrology will open a much larger opportunity than the existing indication. We presented positive Phase II results in C3G and ICMPGN at the ANS conference in Q4 last year, and we look forward to seeing the variant Phase III trial study results during the second half of 2024. Let's move to Wanzhou, slide number 10. Wanzhou sales were 322 million sec in the quarter in the Q4 with continued launch progress and already contributing 706 million in revenues for 2023. Q4 saw the highest number of new patients starting treatment since launch, reflecting initial positive results of the integrated sales force post the CTI acquisition, and we are therefore very confident to have the right elements in place for a stronger trajectory in 2024. We experienced a minor decrease in Q4 versus Q3 related to a negative new patient evolution during the transition period in Q2 and Q3. This effect may still mildly influence our Q1 numbers, even though we expect a positive evolution of leading indicators. Our positive outlook for the product was confirmed by recent market research. The ENSI updated NCCN guidelines recommending the use of pacritinib as a potential treatment option in patients with myofibrosis also associated with anemia. We're expecting material growth by penetration and duration of treatment driven by a differentiated mode of action and strong clinical data. Please turn to slide number 11 in hematology. Our foundational business continues to be underpinned by stable hemophilia growth at 6% in 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 development that we experience particularly in Europe. For Alokta, we see continued growth in patients, geographic expansion and favorable facing of deliverables. Government interventions compress prices in various European markets while we see a positive evolution in demand and patient expansion in Europe. As a result, Elocta grew 6%. Alpolix grew also by 6%, with patient growing offsetting unfavorable pricing development. Let's turn to the next slide, number 12. Turning to immunology. In Q4, the new dynamics of the RSV market showed material growth of bifortis. We received 890 million in Q4, in royalties from the US sales of Bifortis, contributing significantly to our overall growth. On the other hand, this positive evolution negatively affected synergies that also had reduced sales due to the late start of the RSV season. In summary, the composition of our RSV franchise has positively evolved and was ahead of last year's exceptional performance and in terms of top and bottom line. We expect this dynamic to continue in the 24-25 RSV season with a significant shift to bifortis. Please turn to slide 13. Immunology is also doing well with growth of 10% in the quarter and 9% for the full year. As a franchise, in this Gummy Fund we saw the continued significant sales increase since Q2 with 497 million SEC in Q4. This is the result of an enhanced go-to-market model, more experience with GAMI Fund and recent publication of new data reinforcing the belief of interferon gamma in this setting. We see increased interest from both existing and new physicians and new prescribers, Given the experience with the product, the initial dosing has been increased and the region of treatment has been prolonged. All this has contributed to a very strong three-quarter performance for Gummy Fund and full-year sales of more than 1.6 billion SEC. Kineret, as anticipated in July, with the COVID effect being washed out in H1, Kineret has returned to normal growth. as there is an elevated interest in the IL-1 mechanism. Growth is driven by the US and Europe. Sales grew by 11% in Q4. With this, I would like now to refer to Henrik, our CFO. Please, Henrik, continue.

Thank you, Guido. Hello, everyone. Please turn to slide 15. And the key financials for the fourth quarter in 23. So looking at the bars to the left, we see the consistent trend in hematology, similar to last quarter, with contribution to growth from doctorates outside of China, Elocta, Astavelli, and the addition of Bonjo. In immunology, Gamifan continues its strong momentum with over 100% year-on-year growth at CER. Synergy cells declined due to a later start of the RSV season, as well as the launch of 840s. and the B40s royalties of 890 million, mostly compensated for the lower synergy sales in the quarter. Over to the table on the right, revenue reached 6.8 billion, and that was the highest quarter ever, as reported in ZEC, as we continue to grow our strategic portfolio. Reported growth was 14%, and that corresponded to 15% at constant currencies. The adjusted gross margin in the quarter was 80% compared to 78% in the same period last year. The improvement is mainly due to having no low-margined obsolete sales to China in the quarter. The gross margin was also improved by royalties from Bay Fortress, but was somewhat offset by lower synergy sales, which is another high-margin product for us. The adjusted EBITDA margin reached 38%. below last year of 41%, and this is explained by the increase in operating expenses in the quarter. As a reminder, the CTI business was not included until Q3 of this year, and in addition to Vonjo, costs, the higher spend in marketing and sales related to the launches of Doctolet and Asper Valley, and pre-launch activities for IFA-Alfa. The increase in R&D spend relates mainly to Vonjo, and EFA-alpha. For EFA-alpha, we are running additional Phase IIIb studies and also ramping up medical affairs and making geographic expansion efforts. The non-recurring costs or items affecting comparability of some 80 million in Q4 relate to the ongoing integration following the CTI acquisition. We expect some further non-recurring costs in coming quarters, but at a lower level compared to Q4. For further details on items affecting comparability in the quarter, please see page 3 in the Q4 report. Operating cash flow in the quarter was just above 1 billion, bringing net debt at the end of the quarter to 19.3 billion, corresponding to a net debt to EBITDA ratio of about 2.5. As a reminder, we completed the 6 billion rights issue in Q3. And if we go to slide 16 and the financial outlook for the full year, 24, for revenue growth at constant exchange rate and adjusted EBITDA margin. So as we heard for 2024, revenue anticipated to grow by a high single digit percentage at CER and adjusted EBITDA margin to be in the mid 30 percentage of revenue. Expect the main drivers of growth in 2024 to be the uptake of Vonjo and including, of course, the full year impact. The launch product stops the let outside of China as the valley gamifant and royalties for Fortis. Pending approval, IFA Alpha will launch in Germany in the second half of 2024, with most other markets coming in 2025, following the customary reimbursement processes on a country-by-country basis. This makes 2025 the main launch year for EF-Alpha in our markets. On the other hand, we do not expect any sales of Doctolet to our partner in China in 2024. Doctolet sales to China in 2023 were almost 600 million. In addition to the usual uncertainty in the timing and severity of the RSV season, We do expect that the successful uptake of Bay Fortis will have an impact on sales of synergies next season. The guidance on the beta margin in the mid-30s reflects the slight increase in margin from 2023. Just as with revenue, we will have the full year impact of Bonjo in 2024 in both SG&A and R&D costs. In SG&A, we will continue with a strong launch support for ongoing launches, and also increased investment into the launch and pre-launch of IFA in Europe, as well as continued geographic expansion. In R&D, we will increase our efforts related to studies and the ramp up of medical affairs activities for IFA, as well as the filing preparations for Cell 212. The continued investment in bringing our assets to approval and launching them successfully are, of course, critical for unlocking the long-term value of these assets. And with the outlook covered, I will now hand over to Lydia. Thank you.

Thank you, Heinrich. Hello, everyone. And let's start with the pipeline milestones on slide 18, please. So we hit quite a few R&D milestones in the quarter. There are three notable developments for Aspavelli. In nephrology, we are making good progress. The Balayan study, our pivotal phase three clinical trials for pexetacoplant in C3G and ICMPGN was fully recruited in December, and we are looking forward to the data. And in November, we presented the positive phase two novel results at the American Society of Nephrology. We are very confident about the potential of pexetacoplant for these indications in nephrology. There are currently no approved targeted therapies that can prevent or reverse renal injury and failure for C3G or primary ICMPGN. As the only complement target therapy that can block the main pathophysiologic driver for these conditions, pexetacoplant has a convincing mechanism of action. For PNH in Europe, CHMP issued a positive opinion for pexetacoplant use in first-line treatment. And we terminated the phase three study for colaglutinin disease as part of realigning our joint activities with our partner, Apellis. We are facing recruitment challenges due to availability of alternative therapeutic options that limited the number of patients eligible for this study. Important to note is that there are no safety concerns and efficacy has not been evaluated due to the blind design of the study. For Bon Jovi, the National Comprehensive Cancer Network issued new guidelines in December. And importantly, a new section on myelofibrosis-associated anemia is now part of the guidelines. And pacretinib is included as an option for all aspects of management of patients with MF-associated anemia. This NCCN update further supports pacretinib's potential role in treatment of a broad range of MF patients. It is the preferred agent for its indication patient population of intermediate or high-risk MS patients with platelet counts below 50,000. And it's also noted as a potential option for high-risk patients with higher platelet counts. Finally, Kineret received its first approval in China, to which I will come back to on the next slide. Please. So looking ahead, we have a lot of news to share. 2024 will be the year to launch a Phansoctococcalpha. We believe that we have convincing and strong data and are preparing for the anticipated EU decision. The process has been going smoothly so far, and we answered the 820 questions and received certification for the device. We are also preparing for important U.S. submissions. First, for CELTO-128 chronic refractory gout, for which SOVI now has the full responsibility after taking over the selected team in November to keep the submission preparations on track. And we are still aiming to file with FDA in the first half of 2024. Later in the year, we will receive the full data from the gamifan STILS cohorts from the MRL study. This will enable us to file in secondary HLH for macrophage activation syndrome in STILS disease in the second half of this year. And lastly, we continue our geographic expansion with anticipated Chinese decision for doptellate in ITP and submission in Japan. And after receiving the FMF and CAPS indications for kineret in China last year, we're also looking forward to the steel syndication, which is the most significant of the three. As you can see, we are taking the momentum from 2023 and accelerating further in 2024. And with that, I would like to hand back to Guido. Next slide, please.

Thank you, Lydia. We are pleased with Sobi's development as pointed out during Q4 and the full year. As we outlined, we saw 15% for the quarter growth, 12% for the full year. This reflects a strong performance of our launch medicines and foundational business in all regions. In addition, obviously, we received a strong contribution from Biforces. Our R&D pipeline progressed with key milestones for AFA, Nasoctococc Alpha, Aspar Valley and Doctolet. We have a strong momentum in the business and look forward to a successful 2024. And with this said, let's move to the question and answer session. And maybe the operator takes over.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. you will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets and eventually turn off the volume of the webcast. Anyone with a question may press star and one at this time. The first question comes from Young Eun from Jefferies. Please go ahead.

Thank you. I have a question on Vangio first. So understanding that there is an integration phase that impacted the growth in 4Q, but 4Q sales are lower than 3Q, so you didn't see the integration issue in 3Q. And despite the fact that you have about 22% new patient starts in 4Q, I'm just wondering why 4Q sales came down. lower than 3Q, and was there any impact from GSK launch? And another question is on hemophilia A royalty exchange rate with Sanofi. It could be that I must be mistaken, but my understanding was that the royalty rate on Altovio was negotiated to 8% range, a high single percentage range from 12% on a Loctite. Was it a renegotiated range or was it from the start that it was 8%?

Yeah, thank you, Yoon. Maybe we start with Wonjo. I mean, basically, where we are right now with Wonjo, given the fact that we have a stronger propensity to, you know, there's more severe patients with platelet counts below 50,000. What we have right now, and obviously also the way the product is used in the treatment algorithm, we have a shorter treatment period than other JAK inhibitors. And this is basically, you know, right now it turns out, you know, that this is impairing overseas sales, but It's also an opportunity when this is corrected, particularly now with the new guidelines. But what it means is that, essentially, you have an average duration of treatment of eight months. With this, if you don't replenish your new number of patients on time, then this has an effect, obviously, over time on the patient buildup. We haven't seen this that much in Q3, that's correct, but we have seen it more in Q4, which was an accumulated effect of Q2 and Q3. And, you know, when we modeled this one out and tried to really get to the bottom of this. So why it's, you know, I would agree. I mean, if it was the other way around and we wouldn't have seen the patient growth in Q4, then I would have agreed with your suggestion that maybe this is related to GSK, but as we have seen the uptake in Q4, I mean, I'm not saying that we are completely free from GSK effect, but, you know, it is right now, it has more to do with our, you know, to be honest, probably CTI lost a little bit of the eye of the ball in Q2, and, you know, we had quite a bit of, you know, there was a bit of a cultural gap alignment that needed to happen and quite a few people actually left also to deliver the synergies that we wanted to have so that's really behind this and then sure enough we also clarified that we could improve the messaging create more clarity here but all of this has been agreed and the team has a very clear target audience so I think What you see has more to do with us and we had to do our housekeeping. Sometimes in life you wish you could compress life into a spreadsheet and just extrapolate. Sometimes it's not the case. And let's say we just have to accept that we now need to give this team a bit of time. But from what we understand, we are in a good way. and we should be able to demonstrate growth from here. And with regard to the royalty agreement, maybe, Henrik, you share your views, what has been agreed.

Can you repeat the question?

Sure. So the exchange royalty rate with Sanofi, my understanding is that it looked at about 12% both ways. But Artevio started with 12% but you were the negotiated recently and we went down to 8%. So question to you is that was it renegotiated down to 8% recently or was it 8% from the start?

It was 8% from the start. You know, it was not only a royalty that was negotiated. We made... an early opt-in to the product. So it was a larger deal than only the Royal deters.

And you and I can very well remember when we announced this deal, we actually clarified this with eight and nine percent, nine that we pay, eight that they pay us. And we clarified that, you know, by the expanded market share that you would expect for EFA on the total earning side or revenue side, for more royalties, we should have a positive. Thank you.

The next question comes from Charlie Mabut from Morgan Stanley. Please go ahead.

Hi, thanks very much for taking my questions. Charlie Mabut from Morgan Stanley. I guess, firstly, just back to Vangio, I guess. It would be interesting to hear your thoughts on how the debate actually is playing out on the market in terms of the relative importance of thrombocytopenia and anemia because I appreciate that you're on the NCCN guidelines for both but obviously you're the preferred regimen for thrombocytopenia and mamalotinib is preferred in anemia so just thinking about dynamics would be really helpful and then I don't know if you can but I think following the process we've been having today if you could sort of help give any assurances on the level of growth we should expect maybe through 2024 and how much of sort of the long-term revenue opportunity for the product you believe is in MF versus other indications outside of MF. I think those factors would all be very helpful. Thanks very much.

Yeah. You know, I mean, our ambition for 2024 is unchanged. We want to make this an important medicine When you look, when you think about the market, you know, and, you know, basically, and you segment it, and let's assume, you know, you segment it according to two dimensions, hemoglobin level, and you say, okay, anemic below 8 to 10 gram per deciliter, and then thrombocytopenic below 100,000, then that segment below 100,000, irregardless whether you are dynamic or not, is more than 65% of the market. And this is where we believe we have a positive preference here based on market research and also now confirmed with the guidelines. Granted, guidelines is not labeled, but I think the main topic is when you are a cytopenic patient. There's a large group, obviously, of JAK inhibitor-treated patients who are not getting a full dose. And if they don't get full dose, they don't get full effect. And the dosing is related to, you know, also to the mechanistic effect of JAK1 inhibition. We are JAK1-sparing a JAK2 inhibitor So logic would suggest that basically, why would you use another JAK1 inhibitor if basically you're underdosing because of the mechanistic effect in the first place? And that basically makes us quite confident. Obviously, proof is as a pudding. I mean, I get it. I could have also lived with a higher number for Q4, very straightforward. But I think what you can sense is we think that we have the right product in our hands and we will make this a very significant product for Solbi this year. And nothing has changed this. I don't think we have set out any specific target for the product for this year, but that this will be a material product let's say, and you have seen the expectations, we would think that this product will be an important contributor this year. Does this give you some flavor? Maybe Armin, because historically you have done quite a few interviews with some of the KOLs, you know, maybe you can give some color how you see the topic, thrombocytopenia versus anemia.

Yeah, I'm happy to do so. Thank you very much, Charlie, for your question. I think it's a really important one because the way we look at this, and there's also discussions that we have a lot, anemia clearly affects the well-being of the patient, their fatigue and other things, but if you look at the real heavy outcome that is life expectancy. This is much less driven by low red cell counts, but clearly determined by the low platelet counts. And if you look at that aspect, and if you see that Monjo really has positive effects, even in the worst patient group, platelet counts below 50,000, but has not only good effects on the platelets, but as well on the anemia, We feel strongly that we have shown in the worst patient group that this drug, our drug, Wanjo, is really helping those patients. And that should also be the case in the ones with higher platelet counts. So for us, we feel that if you compare the different aspects, particularly from the outcome and life expectancy, we feel that we have a great product. It's not a direct comparison that exists. but we feel that only looking at the anemia part doesn't give justice of what the patients truly need. And that is more than just improved anemia.

Thank you very much.

Thank you. Maybe we go to the next question.

The next question comes from Alexander Neil from Deutsche Bank. Please go ahead.

Hi, how's it going? It's Neil Alexander from Deutsche Bank. Thanks for taking my questions. So question on RSV. For Synergis, we're seeing consensus forecast a 35% decline in 2024 and then a 30% decline in 2025. And we're seeing Bay Fortress doing well in the US so far with Sanity commenting that they expect Bay Fortress to be a blockbuster product. So question is, do you feel the 35% decline in Synergis over the coming years is reasonable to assume? And that's the first question. And then just a second question, a quick one. Q423 SG&A came in ahead of consensus estimates, so it would just be good to get a feel of how we can expect SG&A to trend going forward. Thanks.

Yeah, thank you. I mean, you would expect, you know, with an increase of obviously of bifortis in line with the guidance of Sanofi that this will affect us. And no matter what, but I think a good indicator, because there's a bit of uncertainty, I mean, we obviously have two factors that have influenced Synergist's performance in Q4, also when you think about now the coming year. And the first factor was that the season started late, which basically didn't allow us to get enough doses administered. And then the second reason was that, you know, obviously there was a supply then in the end that I think, you know, was able, even though maybe not to be anticipated in the late stage of the quarter, which was then obviously, you know, was consumed and obviously affected also our ability, you know, to sell synergies. Now the question is, you know, where will we land? I think, you know, that you will have to expect an effect on our business. You will have to expect, you know, just by the virtue that, you know, we have a certain group of patients now that are using the product. There will be quite a few that will continue treatment, but it's clearly less, you know, than we had the year before in synergies. And that basically will affect us to what degree will we be affected in the second part of the year, meaning the 24-25 season. I can't tell you, this is a bit part of the uncertainty, but what I can see is when you look at the dynamics of royalties from Bifortis and our business, it's a bit like a yin and a yang. And it is, let's say, quite beautifully offsetting each other So, you know, we would not necessarily anticipate, you know, a decline of the franchise, definitely not in terms of profitability. Yeah, so I think that's how we are thinking about it. But, you know, it is, you know, there is an asymmetric element with Synergis where we obviously have higher sales than Synergis patients and we get effectively the royalties from Bifortis. So that basically creates a little bit of an uncertainty and that's what basically also is included in our guidance. So I hope that gives you a little bit of some perspective of this.

Then on your question on the SG&A, I mean Q4 and reality most of 2023, the SG&A is, of course, a reflection of our five ongoing launches. So we will, of course, continue in 2024 with, you know, strong launch support and also then, of course, intensify pre-launch and launch of EFA. So that is what I can say about the trend in 2024.

Yeah, but I think it's, you know, And this is basically what you have seen also in Q4. We saw the opportunity to invest into our pipeline and into our launches, which I think this is what we are supposed to do and what we should be doing, building the company out for the future. But we are also recognizing the fact that obviously people want to see profit improvement and that is also incorporated as part of our guidance.

Brilliant. Thank you very much. Thank you.

The next question comes from Alistair Campbell from Royal Bank of Canada. Please go ahead.

Thanks so much for taking the questions. I guess, too, first of all, you know, obviously we're now learning a lot more from Sanofi about Altuvio's launch in the U.S. And I just kind of wonder, you know, from what you've seen from those U.S. dynamics, what do you think will be similar in Europe and what do you think actually may be different as that molecule comes to market? And then another question, if I may, so chance my luck a bit. If I look at the most recent consensus, it's got an EBITDA margin of about 43% by 2026. Now, clearly, we're trying to wrestle with the positive impacts from a significant bay fortress royalty against other things as well. But just get a sense of how realistic you think that margin level can be in terms of attaining that level by that time frame. Thank you.

Yeah, thank you. I mean, you know, what can we learn from i2vio in the US? I think, you know, obviously we have a larger relative franchise of Elocta, you know, so basically I think, you know, what is, and that, you know, may influence this, but, you know, what you can see is that there are certain ear gels and SA gels, you know, which clearly, would be the natural sources of growth for a 2-view. There will be also quite a few patients from Hemlibra that may want to switch back to a factor VIII, to AFA, simply because they're needing additional factor or they want to benefit from additional protection. Structurally, when you think about it, where growth comes from, Factor and Hemlibra, maybe structurally it may not be so dissimilar. When we look at what the share of Elocta is versus the share in the US, we'll figure it. I think that there's a certain amount that we're getting from short acting and from long acting, and then obviously also getting some share back from M-Libra, and then you will see how the momentum is built up, how the community is reacting. Patient experience, they will be typically very much shared within the community. We have shared with you the anecdotal evidence you know, from patients who are on the product who really, you know, where the vast majority of patients who have been in the clinical trials definitely want to stay on the product because they have such a wonderful experience. So there's a lot of good things coming into this direction. And maybe later, because Lydia is just now actually at the EHUD conference, she can provide you maybe with some feedback on this. And then just a snapshot on EBITDA. EBITDA is going to be a function on how much we're going to invest into our future, you know, obviously on the Bifortis and it basically also obviously how we are able to build up scale. You know, we unfortunately don't provide guidance at this stage beyond 2024. And, you know, but, you know, we understand that the more Bifortis royalties we have, the more profitable the company becomes and the more it allows us to make those educated choices. But we want to build obviously the company out for long-term growth. Let's see where we stand at the end of the year, whether we are conservative or we have been right on. will tell but you know we want to make sure that we drive this for start for strong growth despite obviously a few uh headwinds yeah that are quite material on the scale of soviet lydia maybe you want to give in the uh let's say snapshot from from ehad as you are right now there yeah thank you yes i think there is a lot of excitement here at ehad with effa we have six

abstracts that have been accepted. One is an oral presentation on the pediatric data because that's the piece that we will be publishing this year as well. So it's generating a lot of interest in the community, not only for the adult creators that we have published the data, but it's also very highly expected by the pediatricians. And what we hear is that there is still very high interest due to the fact that for many factories is still fundamental, that the expected levels of protections are something that has never been able to be achieved. And the one sharing the expertise from the clinical trials is really positive. So I think that here in our territories, we will see switches from all the alternative treatment options that are currently available in the market, including factor and non-factor. So looking forward to having it approved and launched here.

I think this gives you a bit of a flavor of where we are. Maybe we go to the next question.

The next question comes from Christopher Ude from SEB. Please go ahead.

Hi there, Christopher Ude. Thanks for taking my questions. So I guess I'd like to start on OPEX going forward. So for 2024, does Q4, does the base there represent sort of a fully loaded SG&A that we can expect sort of going through 2024 on the existing portfolio? And then when it comes to syringes, are there any subgroups of patients where you've been more resilient to cannibalization from Bay Fortis? And also, how much can we sort of how much can working capital improve as synergistic clients. And then lastly, on Vonjo, you've talked about potentially doing trials in the future, expanding Pacifica for one thing, looking at other indications and also combinations with other myelofibrosis drugs. But you had the asset for more than half a year, and so far we haven't seen anything happening there. Have you changed your mind on this? And sort of as an aside to that, the anemia guidelines are 2B recommendations, so it's not an easy ride for reimbursement there. Is that good enough, or do you need a trial?

Thanks. Yeah, maybe, you know, thank you. I mean, thanks for asking only one question, Christopher. Very much appreciated, let's say. But, you know, with regard to Bonjoe, Let's start the other way around here because that was quite loaded. With Bonjo, we are progressing quite a lot. But unfortunately, for competitive reasons, we can't tell you right now. But that's the reason why we set you course. So we haven't changed our mind. And the NCC guidelines is good enough for reimbursement. Yeah. And let's say that basically, so hence, you know, I mean, obviously, it's, you know, we have to work for it, it needs to be understood, but, you know, we think that this was an important milestone for the company, for the product. So we stand fully behind this, nothing has changed. And then maybe with the SG&A side, Hendrik, you want to take this?

Yeah, so on the question whether Q4... OPEX was fully loaded and representative for 2024. Of course, there are ups and downs between quarters, but Q4 was for sure fully loaded. I can take also your question on you were expecting an improvement in cash flow when Synergis is switched to Bay Fortress, and that's not really the case because Before this, we get paid after the quarter, whereas in the case of synergies, when we've been invoicing ourselves, we have collected money before that. But of course, Bay Fortress is, relatively speaking, much more profitable and will, from that point of view, generate a lot of cash.

Does this give you, there wasn't another element in your question? Sorry.

Those are great answers. The last element on the synergist was are there any subgroups of the patients where you're seeing more resilience to cannibalization?

No, I think the subgroups is more driven by the profile at this stage of the physician. and there are some who are quite resilient and believe in the advantageous profile of the product and want to see more evidence. And as we historically have said, with increasing evidence, obviously they accrue quite a lot of evidence by the number of patients that are now on the product. that basically may or may not change. But for now, we have quite a large group still supporting the product. Thanks very much. Good. Maybe we move to the next question.

Yeah, and if we could get to one question, please, because we have three people left on the line. We're running out of time.

The next question comes from Liu Yufing from HSBC. Please go ahead.

Hello. Thanks for taking my question. I have one on the RFC. For your 2024 guidance, especially both on revenue and margins, I was just wondering how much sort of the share between Senegers and Bay Forters are you sort of penciling in from your implied margin and revenue? And secondly, on if alpha, you mentioned that you're doing additional phase three trial and just trying to understand what does it differ from your current data package and what value does it add? Thanks.

I'm sorry that we have not provided, let's say, the breakout of synergies and also not of bifortas. And, you know, probably the best indicator on how we think about it, but we won't tell you, is what some of you are saying about Bifortis revenues next year in the U.S. And with regard to, you know, let's say this is, with regard to AFA, this is more long-term safety and Phase 3B. And, Lydia, I want to comment on this.

Yeah, so it's a phase 3B trial that we are running in our territories to collect additional data focusing on physical activity. So patients will have physical activity trackers and that will provide additional data that was not collected in a continuous way in the pivotal trials.

Yeah. But, you know, we are well on track. Yeah. Good. Next question, maybe.

The next question comes from Victor Sundberg from Nordea. Please go ahead.

Yes. Hi, guys. One question here on Vonjo and your integration of CTI. Could you quantify or maybe guide for us the synergies here? Do you think the product here will be highly margin-accretive going into 2024, for example, versus your mid-30s margin target for the combined sales of your products. I guess there's some overlap here between Dova and CTI. That's the reason for my question. Maybe as a very quick one on Valiant also, started to read up here mid-2024. What's the commercial opportunity here in your view for that indication? Thanks.

Yeah, I mean, I start with, you know, we said accretive in 2024 for Bonjo and we stick to it. Yeah. Let's say it's not massively accretive, but it's a very profitable product and it will make a contribution to the franchise. Henrik?

Victor, obviously, since we are speaking about an uptake here, the accretion will be building during the year.

Yes. So we know that we have work cut out, and we're not shying away from this. And we think we have enough what it takes to make this. With regard to valiant, this is always the, you know, when you think about the number of patients, you basically have substantially more patients in the nephrology indication for Asparvalli than you have for PNH. And in addition, it's what we can expect is it's a two horse race given the effect in one of the diseases even called C3G. So no surprise that you would expect a C3 inhibitor having a very direct effect and therefore we are super excited and also when you think about the deposit removal data and the images that were shown as part of the Phase 2, we are really excited about this. We think that, first of all, a lower number of competitors, secondly, a very direct way, and thirdly, we think that the data we can also look forward to may be quite positive. That's where it's all exciting.

Thank you. Thanks very much.

Thank you. Next slide. Next question, sorry.

The next question comes from Eric from Carnegie. Please go ahead.

Thanks for taking my question. On Aspa Valley and the opportunity in rare renal diseases, can you talk a bit about how you see, obviously, there is no approved therapy within 3CG, but Novartis, Iptacopin, announced positive headline data in, I think it was in December. So we're just curious to hear your thoughts there on potential differentiation, looking at sort of earlier stage data, what we should anticipate there. Thank you.

Yeah, thank you. I mean, we basically look at this market from the following axis. It's pre-post-transplant and ICMPGN and and also the C3G. We think that basically what you have to believe in or what you believe in is that by that time we have a new applicator that Appellate has launched in the US for the product that makes the administration of the product much easier and more convenient based on recent data points. So we think that this with this device twice a week, subcutaneous will then, you know, we compared obviously with twice a day oral and then basically you say, okay, what will be the compliance with the oral? I mean, we have certain reference points, you know, on how compliant patients are with oral therapy in different settings and, you know, and obviously non-compliance could lead to complications. And hence, we think that there will be a fair share of physicians electing subcutaneous direct CC inhibition, particularly if the data will stack up. And we're actually quite positive, based on the Phase II data, that we will show some strong data also in Phase III. so that this will be a strong alternative treatment option for physicians. We have now quite a few patients also in early access because it's there in such a desperate stage. If we make product available, we see really spectacular data from this. Proof is in the pudding, but the opportunity is very material. And I think there may be a bias in the ICMPGN patient potential and also post-transplant. So you may have a strong target audience. Thank you, Eric, for your question. So guys, I think we are a little bit ahead of time. So sorry that we were a bit extensive. But as you can see, We don't feel sorry with 12% growth. We are bullish about our future and we try to delight and make sure that we can live up to your expectations. Appreciate it. I wish everybody a great week. Thank you.

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