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Edited Transcript of SOBI.ST earnings conference call or presentation 29-Apr-20 11:00am GMT

Q1 2020 Swedish Orphan Biovitrum AB (publ) Earnings Call

Stockholm May 12, 2020 (Thomson StreetEvents) -- Edited Transcript of Swedish Orphan Biovitrum AB (publ) earnings conference call or presentation Wednesday, April 29, 2020 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Guido Oelkers

Swedish Orphan Biovitrum AB (publ) - CEO & President

* Henrik Stenqvist

Swedish Orphan Biovitrum AB (publ) - CFO

* Milan Zdravkovic

Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer

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Conference Call Participants

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* Brian Balchin

Barclays Bank PLC, Research Division - Research Analyst

* Christopher Winston Uhde

SEB, Research Division - Analyst

* Eun Kyung Yang

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

* Johan Unnerus

Pareto Securities, Research Division - Analyst

* Peter Sehested

Handelsbanken Capital Markets AB, Research Division - Research Analyst

* Mark Nussbaumer

Direct News - Analyst

* Viktor Sundberg

ABG Sundal Collier Holding ASA, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Sobi presentation of the Q1 results. (Operator Instructions)

I will now hand over to Guido Oelkers, CEO. Please go ahead.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [2]

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Yes. Welcome, everybody. It's really a great pleasure to have you here on the Sobi call knowing that we are competing with quite another -- quite a few other earnings calls. So I go right into it. We'll start with the forward-looking statement as per usual, and please take note of this. And then I come to the presenters of today, this is Henrik, our CFO; and Milan, our Head of R&D, who will join me for this call.

And with this having said, these are obviously unprecedented times, so I go to Slide #4, and very challenging times. So before we talk about our very significant top line and -- top and bottom line growth, just wanted to tell you that we absolutely take this situation very seriously and take charge. So for us, the first priority was to make sure that patients requiring any of our products get access to and we have achieved this. So we made sure that the supply chain has been ramped up in view of this new situation. For us, it was also important to make sure that our team is protected, and we took the right measures at an early stage in terms of virtuality of our office environment and also travel restrictions. But we also want to make sure that we are staying in contact with our HCPs in a proper way and make sure that we respect, obviously, their priorities of today, but still make sure that they also understand that we do care.

In addition, we have been able to launch indeed and bring onboard the digital agenda for Sobi. We have launched Florio, and Florio is really all about liberating life and making sure that there's as few compromises for haemophilia patients as possible. I think this was an important strategic move for the group. And we have expanded our footprint internationally into China, and we are on the way to do the same in Japan. And this bolstered by a very strong financial profile that Henrik is going to explain further during his part.

With this having said, what are the results? I mean, I think you have all seen the headline results, 42% growth on the top line, 44% earning growth. So pretty strong results. And when we go straight into the different business areas, you can see these results become pretty much alive. We had a very significant uptake also at constant currency with Kineret, driven by the COVID-related indications of the hyper-inflammation as a result of the COVID infection. We had spectacular growth with Synagis. So we ended the season very, very strongly, and have been able to confirm our Q4 results with Synagis. So the product has performed extremely well under our ownership. And with Gamifant, I think it's important to note that we had 17% at actual currency, 11% at constant, but we had a quarter-on-quarter patient growth. And please remember that the Q4 results were very strong of 21% patient growth. And this current sales situation is basically a transition into a larger patient pool that we have followed with some concessions on pricing.

So when we come to Haematology, I'm very happy that we have been growing to drive this franchise at 34%, obviously driven by our haemophilia products, and I will come back to in the later part in the presentation, and we made our first strides with Doptelet.

Basically, when you think about, on Page 6, how the group is developing. So basically, what we have told you in the past is happening now and is supported by our results, the 2 core businesses have really grown exponentially, and Immunology has become an important second pillar in this franchise. And that's very gratifying that basically our strategy is yielding the results.

When you go to the next slide on Page 7, basically, the -- if you summarize this, we still have the appetite to grow haemophilia and we see the positive momentum to do so, and I will talk about the -- some of the markets in a few moments. We have launched Florio as just 1 example. With Doptelet, we have made our first imprints, the first 450 patients in ITP, so not insignificant already the impact in a very difficult environment. And CLD, we are planning for launching in the EU and we just got recently also the CLD indication approved in China.

And basically, when you come then to Immunology, we really want to further expand Gamifant, as we told you earlier, into secondary HLH indication and acute graft failure. Milan will talk about the clinical trials that we are currently -- that are currently ongoing and the clinical activities with Gamifant and also with Kineret. And obviously, for us, it's important that we continue driving Synagis.

So basically, what we want to leave you with is that these challenging times really stimulate our appetite to do more and to do more in terms of supply chain ramp-up, making sure that our products go through the clinical process and obviously that we make sure we are at least staying connected to our key customers and think about new tools and new ways of interacting with our customers and staying true to our values, noted about ambition, about urgency, ownership, but also about care.

With this having said, I go to -- straight to the Haematology business review on Page 10. As you have seen from our report already, the Haematology business has been doing extremely well. I just wanted to bring a little bit of light to the first data points for Doptelet, so SEK 65 million in the first quarter was quite gratifying for us, particularly as we were in the transition on the CLD indication in the U.S. to transition out of Salix and taking charge ourself. We think that with Doptelet we made the first impact. Obviously, it's not easy to launch a product in a more virtual access model, but we believe that we will have a stronger second quarter and we're currently adjusting our commercial model accordingly.

So going into the haemophilia products on Slide 11. Elocta has made significant strides and the growth countries that the customer is coming from is Spain and CEE, but it's also -- it's Germany and Italy that have significantly contributed to the growth. One should also highlight that the largest part of this growth is really coming from patient acquisition and share gains, and Henrik will talk about -- more about this. And let's say, there has been a supply chain effect, but this is a minority part of these gains.

With regard to Alprolix, also here, it's a very strong demand growth, and this continues in key markets. And it's quite nice to see that we have got Spain approved.

With this having said, I just want to have a couple of words on our digital platform called Florio. So as you can see here, this is a fully integrated platform that allows patients to basically know exactly what they can do at one given point of time and how they can adjust their life and basically are in a position to have a very active life, so manage their disease as opposed to forget about it. And on top, we are connecting the patient with the physician. So we feel that this is a very relevant tool, and we are now in the launch phase. We have set up a separate company to enable this technology. And we think it will be very useful for the patient community.

Coming to Immunology, as you can see here on Page #14, the Immunology business has benefited from a fantastic season in this Synagis. So a significant uplift. And the product is really performing well. We had some initial topics with the supply chain. So we are now in the process to fix those and be even stronger for the next season. And so for us, this is a -- this was a fantastic acquisition and supported the strong organic growth.

Kineret, I will come back later and so also for Gamifant. But overall, the franchise has performed very well.

And when you come to Kineret, the good news is we keep growing our existing business very well. We got a positive CHMP opinion for the specialized indication called Familial Mediterranean Fever. Basically, our original, let's say, strategy to build this business based upon rare disease indication, we continue. And now basically, we got on top the opportunity in the COVID-19 pandemic. And here, we have utility in the hyper-inflammation as we rise out of this and already a few thousand patients have been treated, and the product is in clinical research corporations, over 500 patients. And this number is bound to increase over the next couple of weeks. So very excited that Kineret can help patients in this very serious situation.

Coming to Gamifant, I think it's important to have a relatively quick recap what the product is really all about. The -- what we can say is there's a compelling evidence that interferon gamma contributes to clinical condition seen in HLH patients. It has demonstrated efficacy in neutralizing interferon gamma. Our clinical development programs are continuing very well and Milan will talk about this, but only as much, the MAS/sJIA study enrollment has been completed. So we are on track with this study, very gratified that we were able to do so. The secondary HLH adult patient study has been opened for enrollment, and we are also preparing the graft failure study. So basically, what we announced some time ago, we are doing and we are staying true to our strategy.

In addition, interferon gamma now has very likely and some significant role in the cytokine storm syndrome. And this led us to believe that we should study this, and this we have been doing -- what we're doing currently in the Italian trial that Milan will talk about later.

So when you think about our Gamifant strategy, we are basically in the midst right now to evolve from an ultra-niche rare indication, primary HLH in a narrowest definition to a primary HLH that basically according to the natural definition that covers in the U.S. a broader patient pool. And we are trying very hard to enable this move and basically the 21% patient growth versus Q4 is the first proof point of this [development]. But this will take some time during the next 12 to 18 months to basically take a fair share of this larger indication. MAS/sJIA is going to come after we have submitted our trial and Milan can give you there an outline, but we are on track as we told you and we expect to submit before end of year. And basically, then we will take this franchise internationally with these indications into Europe, Japan and China and followed by other indications that will open up the product. So we are very happy that we have this product. It's in a very exciting compound. We are obviously now with the potential utility in COVID-19-induced cytokine storm syndrome. We have -- we are on the way to show additional utility. That's the reason why this is more of an illustrative example that built upon what we have already announced, but we think that we may be able to do more for this product and would like to update you in due course.

But at this point of time, I would like to refer now to Milan who will share with you some of these exciting developments that we are currently doing in R&D and then has a particular, let's say, part of his presentation where he talks about the cytokine storm syndrome and the role of our products in this. Thank you. Milan, please?

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [3]

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Thank you very much, Guido, and hello, everyone. On this slide, we're illustrating the role of the cytokine storm syndrome within patients with severe COVID-19 infection. So as you're probably well aware of, there's accumulating evidence now indicating that hyper-inflammation caused by cytokine storm syndrome contributes to the complications of severe COVID-19 infection, which also includes the acute respiratory distress syndrome that significantly contributes negatively to the mobility and also the mortality of the disease. And what we find is that this disease has some characteristics that are similar to what we're seeing in HLH, including the elevated cytokines.

If I can have the next slide, please. So this is what we're illustrating on this slide where essentially an overactivation of the immune system following the COVID-19 infection leads to an uncontrolled self-stimulatory activation of the immune system with some of the main culprits being IL-1 and interferon gamma. And it's on this basis and also in response to a request from the Italian government that we initiated the clinical study looking at anakinra and emapalumab on top of standard of care in patients with known hyper-inflammation and with a high risk of requiring ICU admission and also mechanical intervention. And our fundamental hypothesis is that anakinra and/or emapalumab, these interventions would reduce the number of patients requiring mechanical ventilation.

And if I can have the next slide. So this slide illustrates our R&D pipeline. As Guido mentioned and as discussed previously, we have made a significant effort to strengthen our pipeline within the areas of our core strengths, being within Haematology and Immunology. So we have 2 ongoing Phase III studies, one with the BIVV001 in collaboration with Sanofi and one for avatrombopag in chemotherapy-induced thrombocytopenia. Then we have the Phase II/III study with emapalumab in adults with nonprimary HLH, and we have the COVID-19 study that we just mentioned and the Phase II study where we recently completed enrollment in patients with MAS, being treated with emapalumab.

In the registration phase on the right-hand side, we have the primary HLH indication with emapalumab in Europe. As Guido mentioned, we have favorable opinion from CHMP for Familial Mediterranean Fever with anakinra. We have the chronic immune thrombocytopenia application with the avatrombopag under review in Europe. And we've hence, also filed the -- or to submit to FDA the indication DIRA, or deficiency of the interleukin-1 receptor antagonist, in the U.S. in 2020.

So in addition to that, we have the option for the immuno-oncology at Phase I asset on the left-hand side, and we also have the financial rights to the follow-on molecule within RSV virus, which is in Phase III now.

So all in all, we have a very strong pipeline, I think, with the potential to really keep the company growing also into the future.

And with that, I want to hand over to Henrik for the financial results.

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Henrik Stenqvist, Swedish Orphan Biovitrum AB (publ) - CFO [4]

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Thank you, Milan, and good afternoon, everyone. So let's start with the revenue bridge since Q1 '19. Revenues for Q1 amounted to SEK 4.639 billion, and that's corresponded to an increase of 42% and 37% at constant currency. SEK 179 million of the reported number was related to the impact from positive FX movements. Our Haematology franchise, consisting of haemophilia and Doptelet, was the largest contributor to growth, with SEK 588 million, an increase of 34% at CER. Elocta and Alprolix both showed strong growth, 33% and 41% at CER, respectively. This growth was mainly driven by continued patient growth, but was also impacted by increased stockings due to the uncertainty of COVID. And for clarity, outside of Haematology, we saw only limited stocking impact during the quarter. Furthermore, we also saw first full quarter of Doptelet sales with reported revenue of SEK 65 million.

In Immunology, we saw Synagis sales of SEK 1.196 billion, corresponding to a growth of SEK 471 million at CER year-on-year. And as a reminder, the year-on-year growth was partially impacted by the full quarter of sales compared to Q1 '19. AstraZeneca reported sales of $26 million in Q1 2019 for the period before we took over the product. And since we need to evaluate Synagis not on a quarterly basis, but rather over the RSV season, we should also consider the season-to-date revenue number, which was $312 million from Q3 to this quarter. And we do not expect any material sales in Q2, but this is anyway a double-digit growth compared to the previous season.

Kineret sales for the quarter were SEK 501 million, an increase of 39% at CER. And as we heard, we saw continued strong underlying growth fueled by the increased clinical interest related to the potential treatment in connection with COVID-19.

Gamifant sales of SEK 104 million continues to show the volatility in the quarters due to the nature of the disease and the still small patient population.

In the Specialty Care area, revenue for the quarter declined by 2% at CER to SEK 445 million. And as we mentioned in Q4, we expect Specialty Care to decline by SEK 300 million to SEK 400 million in 2020 compared to 2019 as we are discontinuing various products now.

And if we go to next slide, please, and move from -- move on from the revenue, we saw gross margin of 78% in Q1 compared to 76% in Q1 2019. And due to the seasonal product mix effect, primarily driven by Synagis, gross margin will likely be slightly lower in Q2 and Q3. The adjusted EBITA number reached SEK 2.173 billion for the quarter, an increase of 48% and corresponding to a margin of 47%. Obviously, the margin in this quarter as well as in Q4 is impacted favorably by the seasonality that I just mentioned. Also, the adjusted EPS adjusting for nonrecurring items for the quarter was up 32%.

Furthermore, operating cash flow of SEK 2 billion for the quarter, signaling continued strong operating cash flow, coming from a controlled working capital and a very strong underlying performance. And as a result of the strong operating cash flow, net debt decreased from SEK 15.4 billion at the end of last year to SEK 14.2 billion at the end of this quarter, which we will now take a look at on next slide, please.

And we turn to the development of net debt per quarter. In 2019, we completed the acquisitions of Synagis, emapalumab and Dova, and with that, we levered up to a net debt of SEK 15.4 billion. Now in Q1, we reduced net debt by SEK 1.2 billion due to the strong operating cash flow of SEK 2 billion, but partially offset by negative currency effects from our debt in euro and dollars. And at the end of Q1, this gives us a pro forma leverage of well below 2.5x and an available liquidity of about SEK 7 billion, which provides us with opportunities going forward.

And if we go to the next slide, please. Finally, I wanted to give a perspective of where we stand with our business during COVID times. And this relates to what we've seen in Q1, and we are, of course, aware of the considerably uncertainty related to this pandemic going forward. First of all, we continue to see an unchanged strong demand for our products. In some cases, like in Kineret, even an increased demand. And next, thanks to our technical operations team and our partners, we continue to be able to supply product to our customers. And furthermore, our strong cash flow relies on receivables being under control, and we do get paid timely by our customers. And finally, we have very strong liquidity reserves with available liquidity of about SEK 7 billion, which provides not only a safety net for our business but also allows us to continue to invest in our business and to look for new business opportunities.

And with that, I say thank you, and back to Guido again.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [5]

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Yes. Sorry, we have a technical glitch here. So I just wanted to share with you that we -- just to summarize, we have an appetite to further expand our position in haemophilia. We think that there are significant opportunities, and we see that we can still convert patients. When you think about it, we had a high single-digit percentage growth of patient growth versus Q4 and Q1 for both products. And this does show that we are still relevant and we have a fantastic team to drive growth in this area.

With avatrombopag, we are obviously super excited to drive the product into the new indication here for more CIT. We have over 100 patients now recruited or enrolled in the study, and this means that we're actually well on track to meet our endpoints with the study. In ITP, we are filing in Europe. CLD, we got approved in China. So we think that this is going to be a significant product for us.

With regard to Immunology, we -- as we explained, we have anakinra and emapalumab now in COVID-related hyper-inflammation studies in the pivotal environment. We have also tried numerous research collaborations that we would like to update you on this during the Q2. And we think that there is potentially quite a bit of utility beyond, particularly with regard to emapalumab.

Synagis, we obviously want to further improve our value chain and basically ensure that we have the correct dosing cycle reducing leakage. And obviously, we are quite gratified that we can further internationalize our business into relevant markets such as Japan and China for the rare disease player like us.

And basically, with this having said, as you can see, we have a lot of very positive data points in -- from the business in Q1. We are quite bullish about our business. But given the uncertainty of today's environment, we didn't think it was appropriate at this time to increase guidance. And that's the reason why we stick to the guidance and focus on the business and to keep driving this. And obviously, our ambition, let's say, remains unchanged. We want to drive double-digit growth in our 2 core businesses, Haematology and Immunology. And our earnings forecast or earning guidance stays the same, and we still believe that with emapalumab and Doptelet, we have products in our hand that will make a very significant difference to the group over the years to come.

And yes, with -- basically with this having said, I think we are open to questions. I'm sorry for this little technical glitch.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from the line of Eun Yang from Jefferies.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [2]

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I have a few questions. One on haemophilia. So for the first quarter of this year and now, have you seen some extra buying of haemophilia products because of the pandemic? And also, are you seeing any impact from Hemlibra yet?

And second question is on Doptelet. I think you -- on the slide about 400 patients on the drug, I'm assuming it's commercial patients. Where these patients come from? Are they switching from other TPO mimetics or are they new patients?

And the last question is on COVID-19 trial. Recently, Regeneron's IL-6 data doesn't seem very promising. So when you look at your current trial, assessing Gamifant as well as Kineret, do you have any view whether Gamifant could be more efficacious than Kineret?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [3]

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Yes. Thank you, Eun. Maybe I start off and then hand over to Milan later for the COVID-19 trial. With regard to haemophilia, I think what we have seen is -- I mean, given this is not accurate signs, but magnitudinally, probably around 2/3 demand, 1/3 is stocking effect or basically an effect where we make product available for patients who want to secure supply, and so there is an effect. But as Henrik pointed out, it's not the majority of effect. So the products are doing quite well, and we keep seeing conversions of patients even in the virtual environment, which is quite gratifying.

So did we see an impact of Hemlibra? Yes, I mean, they are obviously a factor there, but I think they are probably more focusing or their current conversion is probably more from other products. And let's say, the -- for us, let's say we are focusing, obviously, on the benefits of our products. And hence, we enable the patients now with Florio, with this digital solution, to really manage the disease, don't have to worry too much about compromises in terms of safety or side effects and having liberating their lives. So this is our story. So we haven't really seen any material effect here on our business.

With regard to Doptelet, yes, this is basically we -- I mean, it's quite difficult for us to see really the -- we have, I would say, a significant chunk are switches from other TPOs. We're really focusing on the TPO market alone, and this market is large enough for us. And there are some new patients. But to quantify, this is -- I think we -- is currently not -- we don't have this granularity of data. Probably, we'll look into this in the -- as part of the Q2, but it's quite nice to see that the product is actually considered relevant and there is an uptake.

With regard to COVID-19, maybe, Milan, you want to share your thoughts on the efficacy, yes.

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [4]

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Absolutely. Absolutely. And thanks for your questions. So I think we, as a company, are sort of affected also by the COVID pandemic and wanted to do as much as we could for the community, and it was on that basis that we also initiated the trial in Italy, also as a response to the Italian government. I think it's too early to say whether we -- what that trial would have as a readout. But what I can say is that we have seen some similarities between the HLH phenotype and some of the characteristics that we see in the patients that are most severely affected by COVID-19. So these hyper-inflammatory characteristics and this -- the unperpetuated activation of the immune system. So we think there is potential to study emapalumab in this disease, but I think it's too early to say what the readout would look like.

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Operator [5]

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The next question comes from the line of Christopher Uhde from SEB.

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Christopher Winston Uhde, SEB, Research Division - Analyst [6]

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So congrats on a good quarter, obviously. My first question is about the timing of the shift to higher royalty rate from Sanofi, lower rate to them from you guys on Elocta and Alprolix, what can you -- when should we expect that for both products? And then what kind of a discount did you have to offer in Saudi Arabia to convert the entire market? And, I guess, last on haemophilia would be with BIVV002, it was not listed on your slide. Obviously, it's a preclinical. Out there on Slide 21, it wasn't showing that. But can you give us any update on that?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [7]

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Yes. Maybe on the royalty. Henrik, do you want to comment?

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Henrik Stenqvist, Swedish Orphan Biovitrum AB (publ) - CFO [8]

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Yes, sorry. Yes, but that is at the time of launch of BIVV001.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [9]

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Yes. I think that we are not increasing our royalty now this year for Elocta. I think that the royalties will increase when we have the BIVV launch, but that's still a few years ahead.

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Christopher Winston Uhde, SEB, Research Division - Analyst [10]

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I thought they shift from 7% to 12% when you pay off the debt for the development of Elocta?

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Henrik Stenqvist, Swedish Orphan Biovitrum AB (publ) - CFO [11]

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No, that is not the case.

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Christopher Winston Uhde, SEB, Research Division - Analyst [12]

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Okay. Sorry about that.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [13]

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Yes. And with regard to discounts in Saudi Arabia, I think we were quite gratified that in Saudi Arabia people were thinking that there's a high utility obviously of extended half-life products versus other therapies and newer therapies. And actually, there was not so much commercial stretch necessary. So the -- this was mostly done on the strength of the product profile.

And maybe with regard to the other question, Milan, do you want to come back to this?

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [14]

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Absolutely. So with regards to BIVV002, correctly, it's in the preclinical phase and that's why we don't include it in our pipeline slide. We will give an update when and if it progresses. It is correct that it's for haemophilia B. So it's a -- you could say, it's a factor IX-based product, but it's too early to include it in the pipeline slide because it's -- we have set the lens to Phase I and onwards.

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Christopher Winston Uhde, SEB, Research Division - Analyst [15]

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Okay. And then on Doptelet. So when should we actually expect top line for the CIT study? I mean, can you guide to that? And then can you also talk about the rationale for doing a pivotal trial without survival as an endpoint?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [16]

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Milan?

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [17]

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Yes. So with regards to the CIT trial, enrollment is progressing well. We have just over 100 patients enrolled. So we are on track towards delivering top line results in the second half of 2020. As we discussed, I think also on previous call, the primary endpoint was agreed with the FDA. It is a composite endpoint, and it is not different from another compound in this class. So this -- the primary endpoint that we are starting has been agreed with the FDA.

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Christopher Winston Uhde, SEB, Research Division - Analyst [18]

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Okay. And lastly, then so for now on treating cytokine release syndrome in COVID-19, so Gamifant and Kineret trials in Italy, I guess, obviously, the epidemic there is receding. So is there a risk that the trial will not be able to fully accrue similarly to the remdesivir in China? And can you just comment on the timing of the planned CRS trial that was mentioned in the report? And, I guess, lastly would be, so yes, into -- tocilizumab has read out positively in RCT. Can you perhaps give us some guidance around where we might see Gamifant fitting into and, for that matter, Kineret fitting into the treatment algorithm for severe COVID?

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [19]

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Yes. It's Milan here. So maybe if I start with the Italian Phase II trial. So at this point in time, we have enrolled 80 patients out of the 54 patients. We have 4 sites in Italy. We plan to enable more sites, and we may even go outside. I think you're right in the sense that the pandemic is decreasing, which is good, you can say, for the population as such. And I think what we are doing now is we are finding the sites where we can see the right population. So actually, for us, we are less -- the lens that we have applied in our trial is we want patients with hyper-inflammation, but we don't want patients that are already mechanically ventilated. So I think there will be a switch in the population, but we see that we will be able to fulfill enrollment of the trial, and we have said that we expect to be able to have top line results in Q3 this year.

I think when it comes to tocilizumab, I think I will probably answer the same way as I just did. I think we see some encouraging similarities in the underlying biology between what is being seen in these COVID-19 patients with severe respiratory distress. That gives us reason to hope that this looks similar to HLH and emapalumab, but it's too early to comment on what role either anakinra or emapalumab would play. We have seen quite a lot of interest in anakinra in the medical community, and I think that's also reflected in the numbers. And anakinra is also included in a number of ISS studies that are ongoing right now.

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Operator [20]

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The next question comes from the line of Peter Sehested from Handelsbanken.

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Peter Sehested, Handelsbanken Capital Markets AB, Research Division - Research Analyst [21]

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It's Peter from Handelsbanken. I had a few with respect to the pricing of Gamifant with (technical difficulty) patients. And you also said at the same time that the quarter-on-quarter increase in patients both for Gamifant (technical difficulty) are we -- should we see this as sort of a new normal in terms to revenues to in terms of lowering our price assumptions? Or could you just give us some hints as to how we should understand your comments regarding these patient volumes (technical difficulty) cost because so far, the volatility has been seen as due to limited patient numbers, but also the high variation due to the weight dosing. So just to give us some...

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [22]

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Yes, absolutely. I mean, basically, if you would have the same weight of patients like in Q4, we would have seen a significant increase versus Q4 despite the, let's say, price decrease. I mean, the price decrease essentially is in the magnitude -- is a little bit lower than what basically we have had as a volume increase. But the key driver was here that we have had lighter younger patients. And basically, the -- for us now -- and this is basically -- just come back to the Slide 17, I think that explains, basically, there's a -- for us, the price is now, say -- to say it, how can we reposition the product to a target population, which is essentially tenfold where we are today. And that's the reason why we had made -- had some concessions. And basically, now trying to appeal to this larger audience. And we are now in the transition.

Obviously, COVID doesn't help. But even in the situation, what I wanted to say is we have -- excuse me, we have increased patient numbers quite considerably. So for us now, the key is really with our medical team, and we have made some changes there to really propel growth towards this larger indication and make a significant impact there. And then I think you will not see this volatility as much anymore because when you are fishing in a pond of 100, 150 patients, let's say, 150, that is -- you can have different bias. And we obviously -- this is obviously influencing this. So -- but if you are able to get a significant share of 1,300 patients, yes, then, obviously, the product will gain relatively quickly in terms of materiality, and this is what we are currently working on. So I hope that in the second half that we will get to a more -- you will see the -- this effect of a lot of medical work, obviously, in the community, and providing clarity on the data and that this will yield the right results.

The opportunity for the product is very significant here. And it's -- so there's -- it is basically, we are now in the in-between situation, but we want to enable this broader patient pool and then, obviously, relatively quickly then broaden it further with MAS and sJIA. And then obviously, hope to see already Europe approval by end of year or before end of year and then also go into the other geographies. So that basically then -- we should then get into this more upward spiral.

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Peter Sehested, Handelsbanken Capital Markets AB, Research Division - Research Analyst [23]

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Okay. I just have a couple of additional questions before I jump into the line. In terms of staying on Gamifant, I believe it was alongside the Q4 report. You mentioned some interim data in macrophage activation symptom study where you saw good responses in [6] patients. Could you give us an update there? And then I have a question for Henrik after that.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [24]

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Yes. Milan, you want to comment on the MAS/sJIA trial?

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [25]

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Yes. So absolutely. So we continue to be encouraged by the evidence that we get out of the macrophage activation syndrome trial secondary to juvenile idiopathic arthritis. And once we have all data from the 14 patients that we have enrolled, we plan to meet with the FDA and discuss what could the next steps forward be, including a potential indication. So we continue to be encouraged by the evidence with emapalumab here.

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Peter Sehested, Handelsbanken Capital Markets AB, Research Division - Research Analyst [26]

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Okay. So my question for Henrik is this, looking at the -- I'm just trying to understand the underlying cost development. Looking at your cost development in Q1 of last year and just looking at costs, excluding depreciation and amortization, I see an increase of around SEK 380 million compared to Q1 and you had some acquisitions since then to use it, but could you just give me a little flavor on this increase of SEK 381 million in total OpEx, excluding depreciation and amortization, decomposing that and how much comes from the Dova acquisition, how much of this is related to SG&A, et cetera, et cetera? Just to get a feeling for how I should model this for the rest of this year, potentially also going into next...

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [27]

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Henrik?

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Henrik Stenqvist, Swedish Orphan Biovitrum AB (publ) - CFO [28]

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Sorry, I was on mute. Peter, thank you for the question. Well, if you're comparing Q1 with Q1 last year, I mean, obviously, we are comparing slightly different businesses because, first of all, we have a full quarter of Synagis, which is a major product during the season, and then we also have the consolidation of Dova where we are in launch phase and where we are running clinical trials. So it's difficult. It's almost 2 different animals. But if you look at Q1 and you compare it more with Q4, you see that it's actually a similar level. Having said that, we don't guide on a quarterly basis, but our OpEx base is likely to increase slightly in the quarters to come.

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Peter Sehested, Handelsbanken Capital Markets AB, Research Division - Research Analyst [29]

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Yes, I guess that's also, I guess, what is anticipated. My sort of -- basically what I'm trying to get at is you are mentioning that you have great opportunities with Gamifant (technical difficulty) and whether this also implies substantially higher costs than we currently anticipate to generate those opportunities?

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Henrik Stenqvist, Swedish Orphan Biovitrum AB (publ) - CFO [30]

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Yes. Now maybe to help you further, if I repeat what we've said about Doptelet and how that will impact us, we said that Doptelet would impact our earnings by about minus SEK 500 million during 2020, and that still stands.

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Operator [31]

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The next question comes from the line of Johan Unnerus from Pareto Securities.

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Johan Unnerus, Pareto Securities, Research Division - Analyst [32]

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Yes, the understanding or the impression we get is that Kineret, especially, I guess, is to some extent already used among severe COVID patients. Is that correct? Of course, they have very few alternatives medically.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [33]

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Yes. No, that's correct. Yes, it is used, let's say, by physicians upon their own decision, obviously. Yes. Because when you have these patients about to enter the ICU, you have to make some choices. And given the role of Interleukin L-1, there are quite a few choices made in favor of Kineret.

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Johan Unnerus, Pareto Securities, Research Division - Analyst [34]

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That's helpful. And even if at this stage, it would be very anecdotal and not subject to any statistical relevance, but do you have any sort of flavor or feedback from that use?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [35]

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I think we have -- we hear positive feedback. And -- but the proof is obviously in readouts of studies. And we think that there will be quite a bit of data for Kineret in particular coming up within the next couple of months.

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Operator [36]

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The next question comes from the line of Viktor Sundberg from ABG.

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Viktor Sundberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [37]

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So do you see any different prescribing patterns among physicians that are prescribing Synagis in the COVID-19 pandemic? Maybe that they prescribe that product more to protect patients? Or how do you think we should view this strong sales in Q1 and how to extrapolate that going forward?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [38]

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Yes. I think the Q1 data are influenced by the fact that our hub that we had in place started working much better in Q1 even than Q4. So basically, we were able to improve compliance on the prescribed dosing scheme because we -- there was always an issue that patients would not get -- it takes a full cycle. And also what basically COVID has helped is that basically people don't want to make or take any chances to protect their preterm babies or their compromised babies. And I think that helps here, but I think it's primarily really the job of the team that really shaped up in Q1. And yes, and basically was able to work on some of these inefficiencies in the chain. But I don't -- I'm not aware that the product is used for COVID-related indications.

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Viktor Sundberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [39]

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Yes. And on Doptelet also, the trajectory in the U.S. is still quite flat, but how do you see that going forward in 2020? When do you expect a larger adoption of that product and more switches going forward?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [40]

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I think what we realize is the product was a little bit held back by some of the transition period on CLD. So we had a bit of more decline on CLD. Actually, the patient acquisition in ITP is quite positive. I think in the moment we -- our teams can have a direct face-to-face interaction again, which is now partially opening up. You will see material increases because we have seen that basically -- once we basically get really started on this, the product is responding well. So it is -- and we are now doing some other programs that basically are more in line to today's access realities and let's see whether they bear fruits already. But I think the real impact, you will see already when we have the team again in the field because the product has distinct advantages as we have discussed. And it will make -- it will find its way. And I'm not -- honestly, I think will -- for the -- in this environment, I think the first quarter was a decent quarter. And I think -- we think that we can do better in Q2.

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Viktor Sundberg, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [41]

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And just a final question. So you have some clinical trials now in Phase III, such as BIVV001, nirsevimab and CIT for Doptelet. Have you seen any impact on these trials due to the COVID-19 pandemic? Or could you give any update on recruitment for these studies?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [42]

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I think maybe we start with the CIT trial. Milan has pointed out, we have well above some 100. We have now the first patient also coming in out of China. That basically makes us quite hopeful that we can deliver the goods in line with the time line that we have outlined. With regard to BIVV001, Milan, do you want to comment? But I don't think we have any indications yet, but maybe you want to give a perspective.

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [43]

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Yes. So I think with the CIT trial, we have all sites up, and it's going well, and we have just enrolled about 100 patients, and we are on track towards delivering the results in second half. I think when it comes to BIVV001, we have a few patients enrolled. It's too early to say whether there would be an impact of COVID. We have seen a decreased ability to initiate sites. But I think it's too early to say whether this would have an impact on time lines.

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Operator [44]

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The next question comes from the line of [Mark Nussbaumer] from [Direct News.]

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Mark Nussbaumer, Direct News - Analyst [45]

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Yes. I was wondering a little bit about the stocking effect. If you could tell me the magnitude of the stocking effect in the Q1. Could it possibly be quantified as well? Also, I was wondering about the Florio. Could you tell me a little bit about the revenue model behind it? And what do you see the potential for it?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [46]

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Thank you. Maybe we start with the stocking effect. Henrik, do you want to give it a little bit more color?

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Henrik Stenqvist, Swedish Orphan Biovitrum AB (publ) - CFO [47]

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Yes. Sure. When it comes to stocking, we have observed stocking almost exclusively in the haemophilia product. So not really any measurable outside of that. We see that it's about 1/3 to 40% of the Elocta growth that we'll be stocking, which means that the major part of the growth compared to previous quarters is really demand growth.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [48]

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Yes. And so I think...

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Henrik Stenqvist, Swedish Orphan Biovitrum AB (publ) - CFO [49]

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And in the case of Alprolix, it's similar that it's only a minor part which is stocking.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [50]

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So maybe we -- and I give you some color on Florio. So Florio is a platform where -- which basically allows the patient to see quite a few parameters coming that he inputs and basically that cover different areas of well-being. And -- but also combines it with an individualized PK profile. So essentially, the patient can see at any given point of time what his factor activity level is. And this basically means that the patient knows, if I want to play soccer now, then I need to have a certain activity level in order to avoid bleeding. So this -- and this is basically fully enabled for different devices like an iWatch or a mobile phone. And basically, the revenue model, I mean, we have -- we make this available to the community. There is no -- for us, we believe that the best product, and we think that this is Elocta and Alprolix, that they will benefit from this simply because they -- of the advantageous profile. And that basically, patients will want to be basically know how they can actively live, let's say, manage their life and not believe that they are healthy and then start bleeding because they're thinking of it's so convenient to get maybe once a week subcut but not realizing that their activity level is not high enough to cover -- the factor activity level to cover more active life. So that's basically the thought process behind this. And we think that this will pay dividends, and you will see, hopefully, the payback and via increased revenues in our core product.

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Operator [51]

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The last question comes from the line of Brian Balchin from Barclays.

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Brian Balchin, Barclays Bank PLC, Research Division - Research Analyst [52]

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I only have one on the Doptelet Phase III study in CIT. Can you just remind us of any trial design or patient recruitment differences versus the Promacta trials that you think would favor a positive outcome in H2?

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [53]

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Sure. I mean, Milan, you want to take it?

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Milan Zdravkovic, Swedish Orphan Biovitrum AB (publ) - Head of Research & Development and Chief Medical Officer [54]

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Yes. So I think we are quite comfortable with the CIT indication with avatrombopag. I think there is a wealth of data that supports a TPO agonist to increase platelet counts in patients that are undergoing chemotherapy-induced or have chemotherapy-induced thrombocytopenia. We have taken the learnings from the other programs and implemented that into our program. As we discussed before, we have a composite primary endpoint that, I think, is clinically meaningful and that has been agreed with the FDA, which essentially is proportion of subjects who do not require platelet transfusion, who do not require dose reduction and who does not have to have a chemotherapy delay. So -- and our patients essentially they have to go through 1 cycle where we document that they have low platelet counts and this is when we initiate treatment. So we think this trial has been optimized in order to show an effective avatrombopag, but also something that is clinically meaningful for the patients and the medical community.

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Guido Oelkers, Swedish Orphan Biovitrum AB (publ) - CEO & President [55]

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Yes. So basically, what you can see in summary maybe is that the business is performing well. On the key endpoints that we are driving, we think that we can make substantial progress. Hence, we think that we are very well equipped for the rest of the year.

Any other questions? If not, then I would like to close this conference call. Really appreciate your interest in Sobi, and wish you a great day, yes. Talk to you soon. Bye.

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Operator [56]

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Thank you. This now concludes our presentation. Thank you all for attending. You may now disconnect.