Swedish Orphan Biovitrum AB

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.