© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to the Sobi presentation of the Q4 results. I will now hand you over to Guido Oelkers, CEO.
Yes. Thank you so much. This is Guido. I'm joined today by Milan Zdravkovic, Head of R&D; and by Henrik Stenqvist, our CFO. It's really a great pleasure to share with you the results, and I think I would like to go straight into the meat of the presentation to give time for Q&A.You've seen our results. Total revenues for the year now increased 40% and 74% on the earnings. In Q4, we had a nice increase as well. We are with SEK 2.571 billion revenues and which represents a 37% increase and an EBITDA of SEK 916 million for the total year at SEK 3.571 million. So when you look at these earnings per shares increased as a consequence as well to SEK 8.97 and the whole thing was quite cash accretive so we were able to build in a year of investment also our net cash position.I think very important to us is that we made substantial progress with our hemophilia franchise with Elocta and with Alprolix, so essentially we doubled the franchise during the year and this was very positive, so we made great strides and we picked up momentum in Q4 again. And I think this is -- this was nice to see and it gives credit to the commercial effectiveness of the organizations that we have been focusing on quite a bit on and invested into growth.When you look at the -- at the other side of the medal for Q4, we not only basically took care of operational effectiveness and getting leverage into the company, but we also managed to acquire the perpetual rights to Synagis and as you know the deal later on the 23rd of January and was subsequently announced. And with the Synagis deal we not only got a product, but more than 130 professionals -- extremely well qualified and we got the candidate drug called 8897. That gives us rights to believe that there is more longitudinal earnings stream, we'll come back to this later. We were very happy to see Gamifant getting approval in November and we had the first patient into Gamifant before the end of the year. The product became a reality and we are now in the midst of off the launch. So we -- overall, we thought it was a very eventful and very strong quarter for us and we're quite satisfied with this.So when you think about -- go now to the business review, basically what we wanted to share with you is -- we start with hemophilia. And you know our 2 products, they are very well established and -- but we wanted to make sure that you -- let's say, we see [ hem out ] because there's so much noise now out there in the hemophilia space. We have a very well established safety and efficacy profile in real-world evidence with thousands of patients that's a real world -- in the real world. We replaced what is fundamentally missing -- we replaced the factor we addressed in a natural what we call is what needs to be done. We have become now standard of care in quite a couple of countries, but there's still room to grow. And we -- the good news is that this product is suitable for all types of patients and we create possibilities with this franchise to be in charge of your disease and create an active life.And basically, when you think -- when you summarize this on the next page, we feel that we are extremely well positioned also for the future with our hemophilia franchise. We think that we have an exception momentum. The trend is our side. We have seen the very strong growth that is underlying this business. There's a clear recognition, let's say, of the therapeutic benefit and we believe that with the further opportunities for penetration in key accounts and we have the quite a bit of transparency and also further internationalization we have room to grow.The other thing is that, we don't believe, let's say, that hemophilia is going to be a one size fits all. But we believe that we have an important role to play, because there's a clear wish on the physician level, let's say, but also on a patient level to be in charge and to control your life and have an active lifestyle. With our franchise, and you will see later some data, we have the opportunity of an individualized, personalized therapy that gives phenomenal outcomes for patients. We think this is important that patients do not forget about the disease, but actively manage it.The other part is that we have also, we feel, a big chunk of the future in our hands. And when you think about the results that were presented for BIVV001 at ASH, we think that this -- gives rise to belief that there is much more in this franchise than what you see today. And with this data that we've presented and we will talk about this in a few moments, there is a clear indication that you can achieve an area under the curve that surpasses what has been shown even this -- previously with new -- in new therapies. So we think that the future is in our hand as well. There is a great promise. But coming back to the exceptional momentum, and let's say, so when you look at both products, so we have picked up the pace, let's say, again in Q4 and have a very nice patient acquisition in both -- for products and -- which basically clarifies that we are making significant progress in our territories again. And this is built primarily in terms of absolute numbers in the EU5 countries.When you come to the second item, which is the individualized therapy. For me, when you look at this data, and you look at the left side in the circle 0.7 overall bleed rate and you have a spontaneous joint bleed 0, and you think, well that's actually is extremely impressive. So when you take care, like in the case now of these individuals arm in the ASPIRE study in a personalized way, you can achieve extremely impressive results. And I would like maybe to ask Milan from a physician perspective to provide some additional color.
Absolutely, Guido, I think I very much agree. I think it's important also to start with recognizing you can say the breadth and width of this data set. So these 2 studies essentially represents a long term safety and efficacy data experienced with Elocta and Alprolix to the tune of around 4 years treatment on a median basis. For Elocta this represents over 250 exposure days and for Alprolix a little less than 150 exposure days. And as Guido mentioned, if you compare the individualized therapy with the on demand therapy in the 2 treatment algorithms, I think there are 2 key messages.Firstly, there's a very, very strong efficacy profile with individualized therapy with, a very, very low median bleeding rate for both Elocta and Alprolix and this is in contrast to the substantially higher bleeding rate you see in patients on demand therapy. Clearly, supporting the notion that individualized therapy improves patient outcomes with Elocta and Alprolix.Lastly, I just want to mention that not only does this data confirm the long term efficacy profile and durability of effect, but it also adds the safety data to these 2 treatments and we did not observe any inhibitors during this 4 year the treatment neither Elocta or Alprolix.And with that I'll hand back over to you Guido.
Yes. Thanks, Milan. The other important element is that we feel that we have a significant promise in our future related to BIVV001 foremost. And I would like to draw your attention to the right. And then you think -- when you look at basically what was achieved, at the end of a 1-week term 18.45% top level. Then it gives you a sense of what kind of breakthrough treatment this is potentially going to be, obviously to be proven in the Phase III. Because when you think about what has been shown in -- recently by other products and you draw a line, you can you can get a sense, because don't forget this is a logarithmic scale. What's the difference between the area under the curve is potentially to be proven in further clinical trials versus other 3 therapies that have come recently on the market.Milan, maybe you also would like to maybe from the medical perspective give this much more color.
Yes. So I think, I agree, Guido. These data are truly remarkable. This is the data from the emerging clinical Phase I/II with BIVV001, which is the first investigation molecule that has been able to overcome the von Willebrand factor mediated half-life ceiling. As Guido mentioned, on the left-hand side of the slide, you see the low dose of 25 units per kilogram. Here, there was a half-life with BIVV001 of around 1.5 days and a trough level after 7 days treatment -- after single dose, but after 7 days of just about 5%. And on the right-hand side, again, after a single dose of 65 units, you see trough levels at the 65 units per kilogram just north of 18% and a half-life just below 2 days.We think these data are truly remarkable and I just want to maybe add a few more highlights around why we're really excited about this opportunity. We think that this provides an opportunity to fundamentally, let's say, improve the treatment for patients, the outcomes for patients with hemophilia A by providing better protection, but potentially also with prolonged dosing intervals. And, I think, if you look and consider, for instance, once weekly dosing regimen, at least for the high dose group there would be a normalization of factor activity for duration of 5 days. And this area under the curve in the first 5 days represents a very substantial activity of factor A activity level with a normalization for these patients.I think it's also important to recognize that this technology builds on the well-established principle of factor replacement therapy, which was the cornerstone has hemophilia A treatment. So I think, all in all we're very excited about the data with BIVV001 and we look forward to sharing more information as they become available.
Perfect. Thank you so much, Milan. And maybe now it's time to talk about the other emerging pillar of the Sobi franchises and this is immunology. And I think it's fair to say that we built this franchise on a strong base, meaning, the Kineret franchise. So we have quite a bit of -- gained quite a bit of experience over the last years in the IL-1 area, and this is a very nicely growing franchise for us as you've seen in the data in over 16% growth over -- during the last year. We have well expanded this platform and the footprint with Synagis in the U.S. that gives us -- gave us a significant boost in terms of reach, coverage but also in terms of opportunities or leverage points.We launched in addition now a newly -- a new monoclonal antibody called emapalumab, and as we told you, we got approval in November. This is for us a -- it's a very significant opportunity and as we have given you guys beforehand, just think about, we've got primary HLH indication approved, but we have significant program, let's say running, that is mining basically the other HLH patients totality EU, U.S. and Japan, 5,000 patients. And when you multiply this obviously with the customary pricing in these rare disease areas, it's a very significant commercial opportunity for us. Hence we are very excited and hence, we are investing into it on a commercial side, but also on the clinical development side.And we have the opportunity now with the indication expansions for emapalumab, obviously to -- considerably and we have access to MEDI8897, which we share in the U.S. with Sanofi -- the commercial proceeds. And 8897 being a much broader product, gives us -- makes us believe that the earning stream for Synagis, which we believe is a growing business, is a more longitudinal earning stream for the company because the opportunity for 8897 is substantially broader than what we have for Synagis.When we go to the next slide, I just wanted to show where we are coming from. So Specialty Care, let's say is a substantial part of the company. But we expect already, the vast majority of our sales in Specialty Care this year to be immunology, driven by the fact that we have obviously the patent expiry that we're facing for Orfadin but also the one or the other loss of contracts in the partnering business. So basically immunology, and with the growth that we have in the immunology franchise, they become more -- much more important for us as we go along. But it's really about immunology building this franchise, moving into the future, we think that the overall trajectory for Kineret is on a good way and 16% increase during the last year was a positive outcome for us.And when we go straight into the next opportunity for Synagis, let's say, then it's fair to say on the next slide that Synagis is the largest product for us in immunology with a core product for the group. When you look at the demand curves of the product, we have taken it over on the 24th of January this year, it's -- the latest data for Q4 suggest a 1.5% demand growth. It is not -- it is a growing business. It fits as a team mostly ex-MedImmune people, fits very beautifully to the DNA of our company, and for us, this is obviously totally in focus. We think that with the expansion of the field for us that was to a large degree already executed prior to our takeover, the product will do extremely well. We see opportunities also in driving -- in an improving adherence to the treatment protocol, but also in the expansion of the patients that are potentially eligible according to the guidelines. We think there's opportunities for growth here.It, obviously, creates scalability for U.S. organization. It will also gives us opportunities to have leverage for us in the pediatric setting. And, clearly, as we have told, we see some opportunities already now to create more awareness at one stage in the HLH area or primary HLH here to be precise. And when you think that through with 8897 coming and based on the communications last year, the product met the primary endpoint in Phase IIb that was announced and the full readout of Phase IIb is in Q2, so we are looking forward to this. But from whatever we can see now, it is a very promising opportunity for the group that makes this a more longitudinal earnings stream.So very excited about Synagis, very excited to have the team onboard that basically is now trying to drive this business, but the real impact of Sobi on this business will be only surfacing, to be quite frank, during the next season which would start somewhere in October this year, because essentially the work now for the next season will start as soon as April and this is when you don't see a lot of output in terms of sales. But this does not mean that we are not very focused on preparing the next season. Thus, we're very excited about Synagis. Touches a lot of points that we felt were important according to our strategy.And now we are in the launch phase -- this is the next slide of Gamifant, got the approval and the midst of launch, have now couple of patients on the product. Very exciting to make a difference to patients in high -- in a highly unmet need area and it's early days, obviously. But when you think about the potential of this product, you'll hopefully will gain an understanding that we believe it's worth investing for, because the commercial opportunity, economic opportunity of this product is extremely significant for the group. And maybe Milan explain to you a little bit what we are doing in the clinical development area, because this is a very significant effort in terms of our investment, particularly when think about forward-looking guidance on earnings.
Absolutely. Thanks, Guido. Yes, I very much agree. This is a very, very exciting molecule and I think it opens up a number of opportunities to potentially change the lives of patients. And this is also the reason that we are planning a number of clinical activities in 2019 is illustrated on this slide.We, of course, want to continue in primary HLH over the procedural focus also on quality of life. We want to continue and expand the ongoing clinical strategy in secondary HLH in children with autoimmune SJIA, developing macrophage activation syndrome. And then we also start planning activities in adult patients with HLH both malignancy and non-malignancy induced. And then finally we want to branch outside HLH by studying -- by planning a clinical study in preemptive treatment of graft failure in children undergoing hematopoietic stem cells transplantation. And this fundamentally is based on data suggesting an early increase in interferon gamma before the graft's rejection. And we want to see if we can enable that in a different way, and that's why we are planning the 2 large studies. So I think, in summary, we are very excited about this opportunity and what it may bring for improvement in patient's life in the future.
Very good. Thank you, Milan. Maybe on this note, we go straight now what this means in terms of financial results. And maybe Henrik, you can share with us all this is taking together.
Of course. Thank you, Guido, and good afternoon, everyone. So let's then look at some financial highlights from the quarter. Revenues for Q4 amounted to -- close to SEK 2.6 billion, corresponding then to CER growth of 29%, and as you're seeing, the main growth driver for the quarter were Elocta and Alprolix, as expected. Full year revenues reached SEK 9.1 billion, slightly ahead of our guidance for the year of SEK 8.9 billion to SEK 9 billion. Gross margin came out about 74% both for Q4 and the full year, in line with our full year guidance of 73% to 74%. The ongoing positive product mix effects driven by the hemophilia franchise explain the improved gross margin compared to last year.EBITA reached SEK 916 million for the quarter, corresponding to a margin of 36% and the year-to-date EBITA margin to SEK 3.571 billion, again ahead of our full year guidance which was SEK 3.4 billion to SEK 3.5 billion. And finally, then from a -- then our perspective, net earnings from Q4 amounts to SEK 595 million corresponding to an EPS growth of 66% and a 110% growth for the full year. Furthermore, we continued with a very strong cash generation with operating cash flow for the quarter amounting to more than SEK 500 million which translates to the conversion over EBITA of 59%, both for the quarter and for the year.If we move into the next slide, this is the balance sheet at the year-end, where we can conclude that there are no major changes compared to Q3, because closing of Synagis/MEDI8897 transaction occurred in Q1 of 2019. So let's therefore flip to next slide, which illustrates the pro forma impact of this large transaction on our balance sheet. Starting from the left, we ended 2018 with total assets of some SEK 17 billion. Through the transaction, we will add non-current assets of about SEK 14 billion small inventory, and we will reduce our cash position by about SEK 3 billion, adding up to balance sheet total that has moved up from SEK 17 billion to SEK 28 billion.On the equity and liabilities side, we issued some SEK 4.5 billion in equity as part of a payment for the assets, and refinanced SEK 6 billion with debt, and we recorded deferred payments for future payments of SEK 0.5 billion. So the transaction is transformational also from a balance sheet perspective. But with the net debt of about SEK 6 billion and a pro forma net debt with EBITDA of not so much more than one, there is still plenty of headroom for our continued expansions both organically and through M&A activity.And I hand over to Guido again.
Yes, thank you so much, Henrik. So how does it all fit together and basically relate to our strategy. I mean, we told you in September 2017, what we intended to do. And actually, we did exactly this here. So and drove our hemophilia penetration, invested into the growth of our franchise. We developed the Specialty Care and articulated the focal point of Specialty Care now towards immunology, particularly with the Gamifant and obviously the Synagis acquisition.We grew substantially in our U.S. business -- or growing our U.S. business on the strength of the organic growth potential around Kineret, but also now the opportunities related to Synagis and to Gamifant to overall positioning our geographies on a stronger scale. Obviously, Gamifant also benefitting EMENAR, and we have submitted the file in August last year.And we are strengthening our R&D portfolio. So when you think about it, BIVV001 during the course of this year likely moving into Phase III. 8897 being a product that is in Phase IIb and having a readout, let's say, in Q2. And then subject to this moving into late stage, we have let's say brought 003 into clinical and on a good way to recruit patients in this study and then in a not too farthest in future also moving into the Phase III. And we have well set our pipeline with emapalumab, line extensions -- indications extensions. And this is all yet to drive not only today's growth, but also tomorrow's growth, because we are interested as management in driving a sustainable business evolution. And we think that this is -- we have significant progress in this regard.So when we look at -- when we have the outlook in mind, SEK 12.5 billion to SEK 13 billion of growth, this is reflected now in the combination of very strong growth in haemophilia with, let's say the business -- obviously additional of Synagis, initial benefit obviously from the growth of Gamifant, which we think is a material opportunity for us. And obviously, recognizing that we have, let's say, some erosions to -- or expect some erosions with Orfadin on the patent side. And let's say -- and then not more -- having a stable outlook for the other -- the rest of the business.The investment that we put into the commercial launch of Gamifant into the indication development Gamifant or emapalumab. In the commercial drive of hemophilia, and I hope you -- we could give you a glimpse why we are extremely confident about our hemophilia franchise and why we believe in the future of this franchise so much. Is this resulting then in an earnings forecast of SEK 5 billion to SEK 5.3 billion, that is a significant increase, obviously versus previous year, but doesn't up bring the operating leverage. And the reason is really that we believe in our future, and that we want to take advantage of these opportunities. But basically we are guiding here 37% to 42% top line growth that is very material. And let's say -- and you don't get to say -- you don't get to leverage as much into the P&L because we are investing into the future. That's the end. And we hope that this combination in a way, you want us to spend this money because we are having an interest and hopefully, you have an interest as well to see this company further evolving in towards the direction of leadership in rare diseases.And I think on this note, I would like to stop here and would maybe give room for questions as they may arise.
[Operator Instructions] And our first question comes from the line of Kyung Yang from Jefferies.
So on hemophilia Elocta, Roche noted that they saw increasingly strong penetration in non-inhibitor patients with Hemlibra in the U.S. and they also mentioned there kind of a imminent approval of Hemlibra in Europe in severe patients. So question to you is, Guido, is it your revenue guidance assuming potential in proper Hemlibra launch in Europe?
Yes, I mean, we obviously looked at this. We are not ignorant to the emergence obviously of Roche. And we think that -- obviously, we have to think about them. But, basically, what we think is that this market is going to fall into different camps. There are those patients who want to more actively control life and the individualization of therapy is giving a clear opportunity to do so. And we see also there, let's say, people also in the community of KOLs clearly advocating for this. And then there are -- and there's -- there are people who will look for convenience. We think that in the European context, the group that will look for individualization, personalization will give us enough opportunity to grow our business at a very substantial rate. And we think that, let's say, more of the first generation, let's say, of recombinant factors will probably give opportunities for taking share, which is still a material part. And we think that we need to focus more on our opportunity for growth on the base of the strength of our portfolio than rather being worried too much about those who don't actually have to share -- I mean, to gain the share. And, let's say -- and yes, there will be people who will want this product. But we think, based on our interactions that there will be a significant -- still there is a significant opportunity for us, particularly as Europe -- somehow the markets work little bit different than in the U.S. for us to take significant share in Roche's business. Obviously, no guarantee, there's never a guarantee in life. But we have made some further changes to our commercial infrastructure and we are confident that we can deliver this.
And the second question is on BIVV001. Sanofi mentioned that they are expecting to start the Phase III in second half of 2019. Can you confirm the timeline, and if indeed it starts in the second half of this year, when do you expect 001 to be marketed?
I think the -- we have no reasons not to confirm Sanofi said, as we are collaborating obviously with them and this is accurate. And on the timeline of launch there, I think, we have not given any guidance and we won't give either today. So it takes what it takes, but it is a priority program obviously for the Sanofi and clearly for us, hence we are very excited about this opportunity.
Last question is on gross margin. So you exited the year with about 74%, but I don't think I saw guidance for 2019. And so could you provide a guidance for that, at least, can you say whether it's trending upward?
Yes. It is trending upward by definition because of the SYNAGIS integration, but we have not given guidance, that's correct. But it will trend upwards, yes. Thank you, Kyung, appreciated.
Our next question comes from the line of Carl Mellerby from SEB.
So in terms of guidance for 2019, given you're historical conservative, when initially guide for EBIT at the start of the year looking at historical outcomes which have been materially higher, is there anything in particular you would like to draw our attention to this year that makes it any different?
I mean, the big -- obviously, when you grow your business, let's say, between 37% and 42%, you will have an uplift of SG&A. I mean, there's some leverage particularly when you're integrating a new organization in U.S., also more than 130 people that want to transition services from AstraZeneca to [ us ] we will add another 40 people. So it is a very material increase. But that's part of the story that -- where you would still expect obviously more leverage. But what is the difference is, is what we are investing now in the clinical development. And just to basically clarify this to a certain degree, if you think about the Gamifant indication where we're coming from, the evolution from primary into the full scope of secondary HLH mining 5,000 patients potentially. This is for the size of our company, a very material opportunity. You, clearly, don't want to miss this by now trying to shortcut, let's say, your expenses. So the business is there. The business is producing growth margin. So the earning capacity of the company is huge. But we have elected to make choices in building our future. We feel that this is important. We feel that this gives rise to believe that the company has a very nice future growth story ahead of itself. And then, you basically go into the sense of transportation which goes beyond in HLH. And then, you have in Europe, and in North America, there are 40,000 of those in a year. So, give or take, not everybody is obviously, let's say in danger of having graft failure. I mean, I'm not suggesting this but there will be a selection and we don't know exactly how many of those will be elective to our treatment. But you can sense that we are now working on something very material. Hence, we have taken the -- make the choice in discussions obviously with our board to invest into this business. Therefore, you don't see the leverage as much on the board. Yes. So very simple. But the good news is, the business is there. The earning capacity of the company is there. We have just made choices because we feel so strong about our growth opportunities moving forward to invest in our business. You're welcome.
Our next question comes from the line of Hans Mähler from Nordea Markets.
Hans Mähler here. Firstly, question on pricing. Ahead of the rollout of Hemlibra in Europe, have you noted any change in the price dynamics for hemophilia A? And also secondly, in terms of Kineret sales in the quarter, yes, it was basically flat in organic terms and you talked about a strong Q3. But I guess growth rate in Q3 was probably the same as in Q2. I wonder has something changed in terms of all Kineret. It's the first quarter in a very long time where we have basically no growth, if you can add some color to that.
Yes. Let me start with the pricing. I mean, we have not seen any material changes to the pricing. Obviously, this area will always have certain segments tendering mechanism, we had some changes in Sweden during the course of last year. But that basically -- when you look at the overall, let's say, size of the business, we have not seen things now that would suggest that we should be -- we should now provide you with warnings. I mean, this is -- we are predicting, obviously, the price to not go up, but this is more in a small single digits area that -- let's say, that we see efficiencies in industry structure which is normal. But when you look at the -- into Kineret, yes in Q4, we have not made as much progress. Now you can say for product and maybe there have been an overlap. You cannot totally exclude it from Q3 to Q4 when you look at the overall progress for the year with 12% at CER, 16% in total, probably not too bad, yes, let's say. Now could it have been better in Q4. We had some alignments of the distribution in the U.S. that affected this, but we are confident that we can resurge the business for growth. We still have some leverage on the new indication. So we think that Kineret will remain a growth product and yes, we will -- though, Q4 was not the strongest quarter, but we don't think that this is now the new normal, because there have been some alignments in the supply chain as a consequence of a distributor change that basically led to this. So we still believe that this is a growth product and it's a right time we would like also to share with you some ideas on current indication expansion for the product.
So is it fair to look for double-digit growth also in 2019?
I mean, we don't give guidance on a product level, but we are confident to growth the product, yes.
And finally, in terms of the other category in Specialty Care, any ambitions there that, I guess, explains the accelerated growth in Q4?
No, I think we had a good growth momentum in the other part with -- first of all, at least on an absolute -- at actual rates Orfadin was reasonably stable, but the -- we are still having some growth with Ravicti and [ Synagis ] that let's say that are doing well and let's say other than this I think there's nothing too much happening. We had an uplift because of the supply chain on the manufacturing side in Q4. That's the reason why we had a significant increase here which maybe offset the lower portion in Q3.
Our next question comes from the line of Peter Sehested from Handelsbanken. And it seems that we have lost his line, so our next question comes from the line of Erik Hultgård from Carnegie.
First on Gamifant. You're, obviously, very excited about the commercial opportunity for this product and --
Yes.
So my question is more related to what type of uptake we should expect here in 2019 for primary HLH. Do you expect a rapid adoption in clinical practice or do you see the requirement of significant education of physicians and patients before we start to see some meaningful sales?
Yes.
Then maybe if you could say something about the overall market growth for hemophilia A and B respectively in your territories if you're seeing, if it's sort of similar to previous years, if it's decelerating or accelerating.
Yes, I mean, maybe with regard to Gamifant, I mean, is this going to be a vertical launch and the answer is, no. I mean, this is, let's say -- let's say this will take some time. We are -- we need to make sure that physicians understand when the product is indicated and when not. We need to go through a certain process, but we -- it is -- we believe that, obviously, there will be already material sales surfacing during the course of this year. Not only just it, but it is probably more weighted towards the second half than towards the first half while we have already quite a number of patients now on the drug right now, so there will be also some -- because people have been waiting for the choice. And when you have children and your alternative is cytotoxic agents and high dose steroids, it's a tough choice, yes? It's a tradeoff that has to be made. So we think that this product is going to help to make tradeoff decisions and treatment decisions. And we see some -- we will see some uptake, but in terms of materiality, I think, probably more weighted towards the second half and then it -- it basically will come. And then with regard to the overall hemophilia growth, I think we have -- I mean, that's very tough to see the data points. But I mean, we -- I think, basically in -- maybe a slightly, very slightly less than maybe in the last 5 years. But it's still a 3% to 5% growth game. Very hard to speculate, because that depends also now on pricing of new therapies and let's say -- and there we have not complete visibility yet on then their impact. But give and take it's a growing category still and with substantial shares in [ saline ] plasma and in first-generation products. So we feel that the best is still to come to be honest.
Once again we go over to Peter Sehested from Handelsbanken.
I have bunch of questions, but I think I'll just kick off with some housekeeping accounting stuff. My first question relates to the booking of the intangible assets for Synagis. Could you give us a split into goodwill and amortizable assets to give a feeling for the amortization built on that one? In terms of the costs for 2019, could you elaborate a bit on how you see the increments in SG&A costs, in R&D costs. Secondly, your guidance range, could you please specify the assumptions of the line high and upper end of the guidance respectively. And finally, at least for this round, you stated that you see Synagis as a growing business and you sort of elaborated to some drivers of the potential growth. But what kind of development for Synagis would you be comfortable with us baking into a numbers instead of just looking and say the declining business that we'd modeled AstraZeneca numbers had factored into this business.
Thank you, Peter. I can start. The question on the asset such as amortizable, there is no goodwill in the assets. Then your -- on your question on the cost split, we don't guide line by line here. I mean, we provide a top line guide and an EBITDA guidance, but that's already has been indicated here. There is an expected uplift in the growth margin, but other than that we don't go any further at this point in time.
Yes. And with regard to the what we see basically -- what you should expect from Synagis in the long run. I mean, we basically think that there is -- this is the product that we would believe will respond well to our ownership models. That means we will -- this is not maybe a high growth asset anymore. I think this is -- this would be not realistic, but this is a product that we probably can steadily grow. And, let's say -- and the reason is that we still see opportunity on the adherence to protocol. That we see more ways we could potentially benefit. We have increase in the overall field force. We believe that we can do maybe little bit better on one or the other lever there. Simply because for us this is, obviously, a very big product, yes? For AstraZeneca this was probably a non-core us. So for -- and that should do something. Do we believe that we -- it's realistic to dream of guideline change, we don't know. But we will look into the -- we look into all areas and let's say -- but what we think at least this is more of a steadily growing business where we hopefully can improve further. Improve -- and the footing is going to what are we -- what can we do already in the next season. Because the lever for this season is relatively limited, we took it over on the 23rd of January. And I think that this should give you maybe some hints, because we don't provide, obviously, guidance by products. And this is how we look at this. We'll spend quite a bit of time on this as it is so important. And then, let's see whether we can -- how far we can leverage this phenomenal set up in the pediatric setting maybe in terms of awareness programs for primary HLH, but also maybe at one stage for other sales in the pediatric setting. So -- but we feel that we have this team is well supported by the earning stream that we have. And we want to make sure that we give justice to Synagis first, because we are very well aware that, let's say, about one or the other, let's say, view on this. But we believe we can grow it.
So just before returning back to my question on the guidance, perhaps just a follow-up question to the accounting on the Synagis. What is the time period that you have factored in for writing off the intangible assets related to Synagis?
20 years is a reasonable estimate.
And with respect to the upper and lower end of the guidance assumptions in terms of sales.
Sorry guidance on sales, let's say...
Yes. Just a flavor on what kind of -- no, my question was relating to what kind of assumptions you have baked into your upper and lower ends of your full year sales guidance?
We basically said that, obviously, there is a bit of variability in -- let's say in the forecast. You don't know how quick patent erosion will there Orfadin, for instance. We don't know what if it is, let's say, we'll see how quickly the ramp up is. There is the opportunity that more patients, let's say, could benefit from Gamifant faster. We'll see how quick is there possibility for changes of guidelines. We'll find out as we go along. Then there's -- this could be an uplift and then there could be -- and then obviously we don't -- we are not so arrogant to believe that we can accurately forecast the exact number of patients that we are going to switch, let's say, during the course of this year, so we allowed for this as well -- but -- in hemophilia. But, overall, it's not -- the range is not that, let's say, too broad when you think about it. We think also there's going to be, let's say, maybe also give and take. There is going to be a mix, but we -- that's the reason why we allowed for March
Our next question comes from the line of Christopher Uhde from ABG.
So you mentioned in the report here that Gamifant is expected to be approved in the EU at year end. And I guess, I was thinking -- maybe I'd seen somewhere, but -- or -- I will see August submission that -- well, that seems a little long. Has there been a delay? That's the first question. Then also, just in terms of the timing of the change in gross margin on Elocta. Can you give any indication of, when you'd be surprised if it's not gone up yet? And then, third, let's say -- so you mentioned 4 out of 5 major markets in the EU are driving growth in hemophilia. What can you say about uptake in Spain? Is there anything that we should be aware of that's a little bit different about it that would explain why you don't say that it's one of those drivers?
Yes. No, I mean, we are -- maybe with the overall uptake, we will be very happy with the growth in Spain as well, recognizing that we came from a lower base, but that now seems that the products gets both -- get really recognized or it'll also get recognized in Spain. So it's a good growth. And with regards now to let's say the regulatory process, as you would expect in the regulatory process, we got discussions with authorities and that takes the time it takes. Milan, you want to comment maybe?
No, I think the dialogue is ongoing. I don't think we can comment beyond that.
Yes. So it's a normal process. And we -- basically we gave guidance when we submit it. At the end, it will the eyes of the beholder and we have to respect this when an approval begin, so I don't think we have that presumptions, to speculate on this. And with regards to gross margin expansion on hemophilia maybe Henrik, you want to comment?
I think the gross margin we alluded to -- the expansion, it was not so much related to Elocta, but rather to Synagis, and obviously you will see the impact during the season, which is basically Q1 and Q4. So that's the answer to that.
Our next question comes from the line of Erik Hultgård from Carnegie.
I have 2 follow-up questions, one for Henrik on the tax rate post the Synagis acquisition. Will that change? Or should we expect a similar tax rates as 2018 for 2019? And secondly, just on the guidance, assuming if sort of take out the expected contribution from Synagis on EBITDA, given the 60% margin guidance that you issued in conjunction with the acquisition. It just seems like you are sort of projecting a flat to slightly growing underlying EBITDA for 2019 over '18. So I just wanted to confirm that that's how we should look at it?
Your first question, Erik, concerning the tax rate. No, we don't expect any material difference to the tax rates due to the Synagis consolidation. When it comes to margin excluding Synagis, and I can confirm that we expect an improved margin also without Synagis, but we are not quantifying that.
[Operator Instructions] And as we seem to have no more questions registered, I'll now hand back to our speakers.
Yes, thank you so much for your interest. As you can see we substantially grew the business, but we also built the future. And hopefully over time, over the next couple of weeks, we can explain ourselves better in this regard so that you can, let's say, understand us better how we think about it. But we felt given the opportunities that are in front of us, it would have been a big shame not to make sure that we build the future and that's what we are interested in obviously as a management team. So appreciate your interest, and thank you so much and we look forward to staying in contact. Thank you.
This now concludes our conference. Thank you all for attending. You may now disconnect.