Swedish Orphan Biovitrum AB

Ladies and gentlemen, welcome to the Q2 2024 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 has been 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. Hello, everyone. This is Guido Oelkers, CEO of Sobi. We are delighted to welcome you to the second quarter 2024 conference call for investors and analysts. We posted this presentation to sobi.com earlier today. We would like to remind you, please go to slide number two, of the usual provisions on statements about expectations and projections of future events. And unless stated otherwise, we will be making comments that mostly relate to the second quarter at constant exchange rates in million Swedish kronor. Please turn to slide number three. Today, we plan to cover the key aspects of our Q2 report. I'm joined by Henrik Stenqvist, our CFO, Lydia Abad-Franzsch, our head of R&D and chief medical officer. During the Q&A sessions, we will be joined by Armin Reiniger, our senior scientific advisor as well. We plan to review the presentation first and then have a Q&A until around 3 p.m. Swedish time. For those on the phone, please join the queue for questions by pressing star one. We propose to ask only one or maximum two questions at a time. With this said, let's go right to the beef of the presentation. Please turn to slide number four. We are very pleased with the performance in the second quarter and overall strong first half which has been driven by successfully executing on our strategy and growth of our strategic portfolio. We saw a significant top line growth of 11% in Q2 and an EBITDA margin adjusted for was 28%. Please bear in mind that we consolidated the business to full zone. Taking away this effect, our top line growth would have been 26%. Hematology growth was driven by continued growth of Dopdelen and Asparvilli sales and the addition of Wonjo. We saw growth of Elocta and Alpolix, mainly driven by geographic expansion, but also by some phasing in tender markets. We continue to build the launch of Wonjo, which has taken time, and while we see progress, we believe that the product offers a broader potential than we currently yield. Given the strong scientific profile of the product and the feedback of physicians, we remain confident to change the trajectory by our new strategic initiatives and the broader and higher reach of our target audience during H2. Immunology reflects strong gamifan sales of $522 million. sex sales where no synergist sales in the quarter as we are now out of the RSV season. In terms of the pipeline, we have seen tremendous progress in the first half thanks to our strong development teams with the approval of Altowalked in Europe for hemophilia A and the filing of SEL212 to FDA under fast-track designation for the potential treatment of chronic refractory gout. Additionally, we received fast-track designation for Gummy Fund for the potential treatment of secondary HLH, which we intend to file in H2. We have a very strong momentum in the SOBI business, both commercially and in the development, and are pleased to update our guidance for 2024. We expect double-digit growth, previously high single-digit, and mid-30s for the adjusted EBITDA margins. Please turn to slide number five. Let's look at the overall performance in more detail. Our growth of 11% was driven by both hematology and immunology sales. We saw a strong performance of hematology with 13%. And the more gratifying is when we look at the underlying growth, you know, as I highlighted earlier, of 26%, excluding the effect of sales to FOSO. Growth came from all regions with the U.S. growing at 38% and international excluding adopted at China grows impressively 73%. We look forward to continuing the delivery of our global strategy in 2024. Please go to slide number six. Our growth strategy has led to strong results. which primarily driven by our strategic growth portfolio, which includes our medicines listed here, and Befortus and our two view royalties in the U.S., contributing to 41% of our total business in Q2. Here you see the five medicines from our portfolio, which impressively grow year-on-year growth, delivering significant growth to our business now, and most importantly, will be the future growth drivers of our business. We are excited to include Altovox sales as of now, based on the recent approval in Europe, and will further enrich our strategic growth portfolio in the second half of the year. please turn to slide number seven. Another look at the strategic portfolio. This is a graphical visualization, and it shows the other representation of growth in the quarter, again, demonstrating the growth of our strategic portfolio of 74%, while the vast majority of the strategic portfolio is driven by our own medicines. We have built This one on top of a strong foundation portfolio, which grew 9%, driven by Alokta, Alkorex, and Kinneret, all showing double digits on a year-to-date basis. Our legacy portfolio is expected shrinking, particularly this quarter with no RSE revenues, and our manufacturing of Refacto now closed as of the first quarter. Based on high growth rates at the early stage in lifecycle medicines in the strategic portfolio, we expected to demonstrate continuous growth fueled by geographic expansion and the new indications as illustrated on the next slide. Please turn to slide number eight. So we have been pushing growth across two dimensions as part of our overall strategy, pipeline development meaning bringing new products to market and extending indication. Geographic expansion, meaning expanding the market coverage of our medicines. For the pipeline, it has been a very productive first half of the year. Altuvox will now be launched in Europe, first in Germany in H2. This medicine has a tremendous first launch in the U.S. with our partner Sanofi. and we look forward to bringing this important medicine to patients in Europe and our territories. For Cell 212, we are very gratified that the FDA has granted fast-track designation, and we now initiated the submission to the US FDA. Fast-track designation will allow us to more access and support to the FDA during the filing and the recognition of the unmet medical need in chronic refractory gout. We are also very happy that we have received a second fast-track designation this year in Q2, this time for Gummy Fund in secondary HLH, which reflects the importance of our innovative potential medicine and what they can bring to patients. We are on track for filing this indication in the second half. At the same time, we continue building our geographic footprint with launches of Asper Valley, Doctolet, Celonta, and Gamifund in new markets, and for Wonjo as of 2035 at scale. This puts Poho Zobi into a new phase of sustained growth driven by new products, execution on our development commitments, and we look forward to the data of Asper Valley in nephrology and the filing of GAMI Fund in secondary HLH during the second half of the year. Please turn to slide nine. Dr. Lett has had another strong quarter with 61% growth excluding sales to China in Q2. Sales growth was driven by increased uptake in the US, ongoing launches in regions Europe and international, In the U.S., there's a continued positive evolution of patients, new prescribers, higher market shares, and duration of treatment. There's also accelerated growth in Europe and international driven by our ongoing launches and continued increased market share in the earlier launched markets. Please turn to slide number 10. The launch of Aspavelli continued well with quarterly sales of 251 million sec and 77% growth, continuing a solid launch trajectory. We have strong growth momentum across Europe, international, and Canada as more patients switch from C5 inhibitors to Aspavelli and Pavelli seeking optimal control of their PNH. In the quarter, the EU approved the broad label to include first-line treatment of PNH, enabling our teams to talk broadly about the benefits of this important medicine. We will see the next inflection point for ASPA Valley later this year with the data for the potential new indication in ufology. We look forward to seeing the Valley and Phase III study results in the second half of this year. Please turn to slide number 11. Wonjo sales were 347 million sec in the quarter. We have seen continued momentum from March and Wonjo is establishing its place especially in the below 50,000 microliter platelet patient population. However, we still have not seen the inflection point we want to see. in terms of market penetration of note in the first half we have seen from several sources that the overall volumes in the market myofibrosis market have been flat and is expected to grow during the later part of 2024. currently we have approximately eight percent market share in the myofibrosis market further progress hinges on broader acceptance of the on the unmet medical needs in these patients with less than 100,000 platelet and vital knowledge and acceptance of the NCCN guidelines. We are working hard with our enlarged teams on focused messaging and increasing our coverage and reach in the market. We firmly believe we have the best-in-class medicine as outlined on the next slide. Please turn to slide 12. As mentioned, we still have ample opportunity for Wonjo not only in the U.S. myofibrosis market, where we have a lot of potential, but also in terms of internationalization and new indications. We are progressing well with Pacifica, with the Phase III trial, which is important in two fronts. It is a confirmatory study to get full approval in the U.S., and it will allow us to file ex-US and more territories. Currently, we will have early access programs in country utilizing the FDA label, such as in the Middle East. However, Pacifica will be needed for Europe and Japan. We are also continuing our work on new indications and have advanced two indications and will give some update later in the year. Please turn to slide number 13. There's a tremendous unmet medical need in myofibrosis and Bonjoe represents an important advancement. You can see from the numbers shown here that the medium survival with low platelet counts, for instance, below 50,000 platelets per microliter is only 1.25 years. while with severe anemia, the median survival is almost 70% longer. When considering Wonjo's effect on platelets, we are convinced that Wonjo could play a much broader role in clinical practice. Along with the strong KOL support we have seen and the updated NCCN guidelines, with additional data emerging on various aspects of Wonjo benefits. such as fast and durable clinical response, symptom reductions, and real-world evidence, which Lydia will cover in more detail later on. We continue to generate new data and build upon the strong clinical rationale for Wonjo in the treatment of myofibrosis. We have made significant changes to the US setup with new leadership in the sales management and expanded the overall structure, both commercially and medically. We are increasing our targeting and digital approaches to reach more HCPs and patients and building on the education work around the benefits of WONJO and the unmet medical needs in myofibrosis treatment. Please turn to slide number 14. Our foundation business continues to be driven by our hemophilia medicines in the second quarter, especially for Elocta. We are expanding the leading presence of Elocta and Alprolex to more patients and in the new territories. This confirms the community's confidence in these treatments and has been able to overcompensate for price developments that we experience, especially in Europe. We saw some additional order phasing driving, autophasing driving growth in Q2. We are very excited and look forward to introducing Altoworked in Europe in the coming months and in this important therapy area for SOBI and building on the great legacy we have built with the hemophilia community in Europe. Please turn to slide number 15. We see continued growth for Gamifund in Q2 with sales of 522 million SEG, growth becoming more difficult in view of the strong Q2 in 2023. Overall, this positive development is a result of an enhanced whole-to-market model, more experience with Gamifund, and the belief of Interphone Gamma in the setting. We see increased interest from both existing physicians and new prescribing centers who are increasingly prescribing it for their patients, as well as a better balanced patient mix, including adolescents and adult patients. As far as Kineret is concerned, Kineret shows strong growth of 11% in Q2, further reinforced by the elevated interest in the IL-1 mechanism. Demand is coming from all regions. Please turn to slide number 16. I now hand over to Henrik for the financials. Thank you.

Thank you, Guido, and hello, everyone. Please turn to slide 17. And we will now review some key financial metrics for Q2. As said by Guido, Q2 was a strong growth quarter with a very solid business performance, reflected in 11% revenue growth of constant currencies and adjusted EBITDA margin of 28%. Two quick notes. First, and as we heard, there were significant sales adopts led to our partner in China last year. Excluding this, our revenue growth in the quarter at CER would have increased to 26%. Second, our EBITDA margin in Q2 and Q3, for that matter, is typically impacted by the lack of RSV sales, leading to a lower margin in these quarters than the average for a full year of business. Looking at the bar chart on the left, all our therapeutic areas exhibited a strong performance. Specifically, hematology reported a 13% increase. Immunology grew by 7%, and specialty care saw a 12% rise. Within hematology, hemophilia grew in the double digits in Q2. We see continued momentum in dopsulate with a growth of 61%, excluding China, and we see doplet growth in all regions. Then we have the addition of Vonjo, contributing 347 million in the quarter, and this is a slight quarter-on-quarter growth. In immunology, we continue to see a strong momentum with Gamifant, and this is the fifth quarter starting in Q2 2023 that we have delivered more than 400 million SEC in revenue, and the first quarter with sales in excess of 500 million, an all-time high for the product. Also, Kinrate continued to grow at double-digit, surpassing 700 million in the quarter. Referring to the table on the right, the revenue of over 5.4 billion corresponds to 11% at constant currencies. Topselet outside of China, Vonjo, and Loxan as the value of the key growth drivers in this quarter. The improved adjusted gross margin of 77% in the quarter compared to 71% in Q2-23 is mainly due to the absence of low-margin docile sales to China in the quarter, but also to other positive product and country mix effects in the business. The adjusted EBITDA margin reached 28% up from 26% last year, influenced by the high gross margin just mentioned. Looking at the operating expenses for the quarter, we observed a 22% growth at constant currencies compared to the same period in 2023. SG&A, excluding non-recurring items and amortization, increased by 7% at CER in the quarter, primarily due to Vonjo, which was not materially included until Q3 2023, and accelerated activities for launch products. We've managed to partly offset the impact of Bonjour on the SG&A line through savings in the synergies organization as we reported in Q1. But R&D expenses are the main driver in overall OPEX increase in the quarter. And this is about 350 million of increased spend reflecting the efforts to file cell 212 for FDA approval. The additional volume of costs and clinical and medical affairs activities related to out-of-box. Non-recurring costs or items affecting comparability amounted to 30 million in the quarter, resulting from the adjustment to COGS related to the fair value of acquired inventory in the CTI acquisition. And other than this item, we do not expect any significant additional non-recurring costs from the acquisition of CTI moving forward. For detailed information on items affecting comparability in the quarter, please refer to page 3 of the Q2 report. The operating cash flow for the quarter was $2.3 billion compared to $2.4 billion in Q2 last year. The very strong cash flow is due to higher operating profits, but also a lower net working capital buildup. This net working capital reduction is primarily due to lower gross to net settlements in the U.S. for synergies. Net debt at the end of the quarter was 16 billion, corresponding to a net debt to EBTA ratio of approximately two times. And in the first six months of 2024, we have reduced net debt by $3.2 billion, reflecting our solid cash flow generation. If we now turn to slide 18, we discuss the financial outlook for the full year 2024. And this is, as usual, based on revenue growth at constant exchange rates and adjusted EBITDA margins. We're upgrading our revenue guidance for the full year, anticipating a low double-digit revenue growth at cost of currencies, and we are reiterating an adjusted beta margin in the mid-30s percentage of revenue. The upgrade of the revenue guidance comes from the strong momentum that we've seen in H1 of this year, where we expect the main drivers of growth in H2 to continue to be Doctonet, Asta Valley, Bongeo, and the royalties for Bay Fortis. Naturally, overall growth rates in H2 are expected to decline versus H1 due to the more difficult comps from H2 2023. The margin guidance remains unchanged at the mid-30s percentage of revenue, considering the continued efforts in R&D, mainly related to the FDA filing of cell 212, which is a rolling submission, and gun default. In addition, we have the nephrology indications of Aspen Valley, C3G, and ICMPGM, as well as accelerated clinical and medical activities for the recently approved Outlooks. And with the Outlook covered, I will now hand over to Lydia. Thank you.