Swedish Orphan Biovitrum AB (publ)
STO:SOBI
Earnings Call Analysis
Q4-2023 Analysis
Swedish Orphan Biovitrum AB (publ)
As investors, it's essential to look for companies manifesting robust growth and strategic acumen—such is the case with this company. They've reported a notable 15% growth in Q4 and 12% for the full year, outpacing the expected growth for the global rare disease market significantly. This performance is bolstered by an impressive EBITDA margin of 34%, showcasing the company's ability to invest in its future while delivering on profitability.
A diverse set of products including Elocta and Alprolix are expanding their patient base and geographic reach, compensating for price pressures, particularly in Europe. Elocta saw 6% growth driven by increased patient numbers and strategic delivery timing. Despite pricing challenges, both Elocta and Alprolix managed to achieve 6% growth through patient volume expansions.
Key revenue generators include the company's immunology and hematology products. The introduction of Beyfortus significantly boosted the revenue, with impressive royalties of SEK 890 million in Q4. Gamifant sales surged by 59% outside China in Q4, marking an exceptional year with total sales surpassing SEK 1.6 billion. Kineret, another flagship product, returned to growth with an 11% increase in Q4, riding on heightened interest in its mechanism.
The company is progressing with clinical trials and achieving key R&D milestones, particularly with Aspaveli in nephrology and CHMP's positive opinion for pegcetacoplan's use in first-line treatment. The company also reports that Kineret received its first approval in China, marking a significant step in its global expansion efforts.
Financially, Q4 saw the highest-ever reported revenue at SEK 6.8 billion, with a 15% increase at constant currencies. The adjusted gross margin improved to 80% from the previous year's 78%, mainly due to an improved sales mix and strategic royalty agreements. Their EBITDA margin of 38%, while lower than the previous year's 41%, reflects strategic investments in R&D and marketing, essential for sustaining long-term growth.
Looking forward, the company is aiming for high single-digit revenue growth and an adjusted EBITDA margin in the mid-30s for 2024. These targets are anchored on the performance of key products like Vonjo, Doptelet, Aspaveli, Gamifant, and Beyfortus's royalties. Moreover, efa alfa is expected to make significant market debuts starting in Germany in the second half of 2024, with broader market introductions slated for 2025.
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Ladies and gentlemen, welcome to the Q4 2023 Report Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to hand over to Guido Oelkers, CEO. Please go ahead, sir.
Yes. Thank you so much, and hello, everyone. This is Guido, CEO of Sobi. We are delighted to welcome you into the Fourth quarter and Full Year 2023 Conference Call for investors and analysts. Overall, we can say that we are pleased with our performance in 2023, and the year has exceeded our expectations. We posted this presentation to sorbi.com earlier today. And with this, let's go to Slide #2. We would like to remind you, as per usual of the forward-looking statement. And unless stated otherwise, we like making comments that mostly related to the fourth quarter, full year performance in 2023 at constant exchange rate in million Swedish krona. With that, please turn to Slide #3. I Today, we plan to cover key aspects of our Q4 and full year report. I'm joined by Henrik Stenqvist, our CFO; and Lydia Abad-Franch, Head of R&D and Chief Medical Officer. During the Q&A session by Armin Reininger, our Senior Scientific Adviser. We plan to review the presentation first and then have Q&A until around 2:00 p.m. Swedish time. [Operator Instructions] Please turn to Slide #4. As said, we are pleased with the 2023 performance, which has been driven successfully executing on our strategy throughout the year. 15% growth in Q4 and 12% growth for the full year make us one of the fastest-growing company in the rare disease space, and it is around 2x faster than the expected growth for the rare disease market globally. EBITDA margin of 34%, at the higher end of our guidance, but still allowed us to significantly invest into our future for most launches and pipeline progression. Strategic portfolio with our launch medicines, changing rapidly the composition of our company, progressing our pipeline, just some highlights that I find particularly remarkable before Lydia leads you through the entire part. It's really the exciting Phase II data in the nephrology indication of Aspaveli and the Phase III data for SEL-212. We continue to build a leading rare hematology franchise. The growth drivers were Vonjo in the second half of the year, continued growth of Doptelet and launch of Aspaveli. Whilst we have a stable growth in our hemophilia franchise of 6%. In the second half of the year, we focused on the integration of CTI, which has taken some time, but we feel we have the right elements in place right now and look forward to bring Vonjo to an inflection point in 2024. Immunology growth reflected strong Gamifant sales, growing an impressive 59% in Q4 outside of China, the strong royalty revenues, obviously, of Beyfortus need to be outlined. Forward-looking, we have a very strong momentum in the Sobi business, and we are pleased to announce our guidance for 2024. We expect high single-digit growth and mid-30s for the adjusted EBITDA margin. As usual, we are rather impressed by what we are doing than what we promise. We expect material growth for Vonjo, Doptelet, Aspaveli, Gamifant and Beyfortus, whilst looking forward to making first steps with our launch of efanesoctocog alfa. Geographically, we foreshadow material growth from our international franchise. This growth will help us to overcompensate a potential negative evolution of synergies and the loss of the China [indiscernible] business. Let's move to Slide #5, performance review. And let's look at the overall performance a little bit more in detail. Our growth of 15% in the quarter was both driven by hematology and immunology, especially our launch medicines. We saw a very strong performance of our hematology franchise with 21% growth in Q4. For the full year, we can see a solid growth across all regions. Of note is a strong performance in the international region. When excluding the effect of Doptelet in China, we grew impressively 54% in the year. The increasing importance of our North American franchise will help us to improve EBITDA margins, even though part of the Synagis revenues were exchanged against royalties mostly related to Beyfortus. Let's move to Slide #6. Sobi's strategic portfolio has led to a very strong result and is primarily driving -- or is at least primarily driven by our launch medicines and our royalty income from Beyfortus and efanesoctocog alfa in the U.S. The strategic portfolio will be our main driver of growth also during the forthcoming years. We have built this portfolio on top of a strong foundational portfolio, which has delivered an impressive 6% sales growth last year. Our legacy portfolio consisting of Synagis, manufacturing and Doptelet in China will have a reduced importance over time. Please turn to Slide #7. The metrics visualizes our sources of growth. Current and future growth is driven by our strategic portfolio and launch medicines as well as our royalty streams from Beyfortus and Efanesoctocog alfa. Our late-stage pipeline consisting of SEL-212 and Efanesoctocog alfa as well as the important indication expansions for Aspaveli and Gamifant will become important elements for future growth. Internationalization will remain a key driver for Sobi. We have enabled the organization to process multiple applications in international markets in parallel, prepare international supply and deploy competitive commercial capabilities. Aspaveli, Doptelet, Zynlonta, Gamifant and Vonjo are examples of current and anticipated growth in new markets. We are excited about the potential of efanesoctocog alfa which had a very strong start in the U.S. under our partner, Sanofi, who stated ALTUVIIIO is capturing 50% of switches in the total U.S. hemophilia market in its first year of launch. We look forward to bringing this important medicine to hemophilia A patients in Europe. Filing is progressing well, and we expect a decision during the first half of the year. We are working on expanding the indication for Aspaveli, Zynlonta, Gamifant and of course, Vonjo. The new development projects for Vonjo are expected to be announced in due course. This puts Sobi into a new phase of sustained growth, driven by a novel range of products built on a strong foundation of existing medicines. Let's have a look at Doptelet, Slide #8. Doptelet had a very strong Q4, excluding China, with 59% growth and 62% for the full year. There were no sales to China during the second half of 2023. Sales growth was driven by increased uptake in the U.S. and ongoing launches in Europe and international. In the U.S., there's a continued positive evolution of new patients, new prescriber and higher market share and duration of treatment. There's also an accelerated growth in Europe and international markets, driven by ongoing launches. We expect this positive trend to continue even with our China sales. We launched Doptelet in Japan in the second half and expecting future growth. Let's turn to Slide #9, Aspaveli. The launch of Aspaveli continued well in the quarterly sales of SEK 186 million, continuing a solid launch trajectory. We have launched 27 countries across Europe, International and Canada. Product has material growth opportunity in the existing markets and new launch countries. The recent positive CHMP opinion on first-line therapy offers opportunity for broadening the usage in various markets. It is fair to say that the expected development of Aspaveli into nephrology will open a much larger opportunity than the existing indication. We presented positive Phase II results in C3G and IC-MPGN at the ANS conference in Q4 last year, and we look forward to seeing the VALIANT Phase III trial study results during the second half of 2024. Let's move to Vonjo, Slide #10. Vonjo sales were SEK 322 million in the quarter -- in the Q4, with continued launch process progress and already contributing SEK 706 million in revenues for 2023. Q4 saw the highest number of new patients starting treatment since launch, reflecting initial positive results of the integrated sales force post the CTI acquisition. And we are, therefore, very confident to have the right elements in place for a stronger trajectory in 2024. We experienced a minor decrease in Q4 versus Q3 related to negative new patient evolution during the transition period in Q2 and Q3. This effect may still mildly influence our Q1 numbers, even though we expect a positive evolution of leading indicators. Our positive outlook for the product was confirmed by recent market research, the NZ updated NCCN guidelines recommending the use of pacritinib as a potential treatment option in patients with myofibrosis also associated anemia. We're expecting material growth by penetration and duration of treatment, driven by a differentiated mode of action and strong clinical data. Please turn to Slide #11, hematology. Our foundational business continues to be underpinned by stable hemophilia growth at 6% in 2023. We expand the leading presence of Elocta and Alprolix to more patients in new territories. This confirms the community's confidence in these treatment and has been able to overcompensate for price development that we experienced, particularly in Europe. For Elocta, we see continued growth in patients, geographic expansion and favorable phasing of deliveries. Government interventions compressed prices in various European markets, while we see a positive evolution in demand and patient expansion in Europe. As a result, Elocta grew 6%. Alprolix grew also by 6% with patient growing offsetting unfavorable pricing development. Let's turn to the next slide, #12. Turning to immunology. And in Q4, the new dynamics of the RSV market showed material growth of Beyfortus. We received SEK 890 million in Q4 in royalties from the U.S. sales of Beyfortus, contributing significantly to our overall growth. On the other hand, this positive evolution negatively affected Synagis that also had reduced sales due to the late start of the RSV season. In summary, the composition of our RSV franchise has positively evolved and was ahead of last year's exceptional performance and in terms of top and bottom line. We expect this dynamic to continue in the '24, '25 RSV season, with a significant shift to Beyfortus. Please turn to Slide 13. Immunology is also doing well, with growth of 10% in the quarter and 9% for the full year. As a franchise with Gamifant, we saw the continued significant sales increase since Q2 with SEK 497 million in Q4. This is a result of an enhanced go-to-market model, more experience with Gamifant and recent publication of new data reinforcing the belief of interferon gamma in this setting. We see increased interest from both existing physicians and new prescribers. Given the experience with the product, the initial dosing has been increased and duration of treatment has been prolonged. All this has contributed to a very strong 3 quarter performance for Gamifant and full year sales of more than SEK 1.6 billion. Kineret, as anticipated in July with the COVID effect being washed out in H1. Kineret has returned to normal growth as there is an elevated interest in the IL-1 mechanism. Growth is driven by the U.S. and Europe. Sales grew by 11% in Q4. With this, I would like now to refer to Henrik, our CFO. Please, Henrik, continue.
Thank you, Guido, and hello, everyone. Please turn to Slide 15, and the key financials for the fourth quarter '23. So looking at the bars to the left, we see the consistent trend in hematology, similar to last quarter, with contribution to growth from Doptelet outside of China, Elocta, Aspaveli and the addition of Vonjo. In immunology, Gamifant continued its strong momentum with over 100% year-on-year growth at CER. Synagis sales declined due to a later start of the RSV season as well as the launch of Beyfortus. And the Beyfortus royalties of SEK 890 million, mostly compensated for the lower synagis sales in the quarter. Over to the table on the right, revenue reached SEK 6.8 billion, and that was the highest quarter ever as reported in SEK, as we continue to grow our strategic portfolio. Reported growth was 14%, and that corresponded to 15% at constant currencies. The adjusted gross margin in the quarter was 80% compared to 78% in the same period last year. The improvement is mainly due to having no low-margin Doptelet sales to China in the quarter. The gross margin was also improved by royalties from Beyfortus, but was somewhat offset by lower Synagis sales, which is another high-margin product for us. The adjusted EBITDA margin reached 38%, below last year of 41%, and this is explained by the increase in operating expenses in the quarter. As a reminder, the CTI business was not included until Q3 of this year. And in addition to Vonjo cost, the higher spend in marketing and sales related to the launches of Doptelet and Aspaveli and prelaunch activities for efa alfa. The increase in R&D spend relates mainly to Vonjo and efa alfa. For efa alfa, we are running additional Phase IIIb studies and also ramping up medical affairs and making geographic expansion efforts. The nonrecurring cost or items affecting comparability of some SEK 80 million in Q4 related to the ongoing integration following the CTI acquisition. We expect some further nonrecurring costs in coming quarters, but at lower level compared to Q4. For further details on items affecting comparability in the quarter, please see Page 3 in the Q4 report. Operating cash flow in the quarter was just above SEK 1 billion, bringing net debt at the end of the quarter to SEK 19.3 billion, corresponding to a net debt-to-EBITDA ratio of about 2.5. As a reminder, we completed the SEK 6 billion rights issue in Q3. And if we go to Slide 16, and the financial outlook for the full year '24, for revenue growth at constant exchange rate and adjusted EBITDA margin. So as we heard for 2024, revenue anticipated to grow by high single-digit percentage at CER and adjusted EBITDA margin to be in the mid-30s percentage of revenue. Expect the main drivers of growth in 2024 to be the uptake of Vonjo and including, of course, the full year impact, the launch products Doptelet outside of China, Aspaveli, Gamifant and royalties for Beyfortus. Pending approval, efa alfa will launch in Germany in the second half of '24, with most other markets coming in 2025, following the customer reimbursement processes on a country-by-country basis. This makes 2025 the main launch year for efa alfa in our markets. On the other hand, we do not expect any sales of Doptelet to our partner in China in 2024. Doptelet sales to China in '23 were almost SEK 600 million. In addition to the usual uncertainty in the timing and severity of the RSV season, we do expect that the successful uptake of Beyfortus will have an impact on sales of Synagis next season. The guidance on EBITDA margin in the mid-30s reflects a slight increase in margin from 2023. Just as with revenue, we will have the full year impact of Vonjo in 2024 in both SG&A and R&D costs. In SG&A, we will continue with a strong launch support for ongoing launches and also increased investment into the launch and prelaunch of efa in Europe as well as continued geographic expansion. In R&D, we will increase our efforts related to studies and the ramp-up of medical affairs activities for efa as well as the filing preparations for SEL-212. The continued investments in bringing our assets to approval and launching them successfully are, of course, critical for unlocking the long-term value of these assets. And with the outlook covered, I will now hand over to Lydia. Thank you.
Thank you, Henrik. Hello, everyone, and let's start with the pipeline milestones on Slide 18, please. So we hit quite a few R&D milestones in the quarter. There are 3 notable developments for Aspaveli. In nephrology, we are making good progress. The VALIANT study our pivotal Phase III clinical trial for pegcetacoplan in C3G and IC-MPGN was fully recruited in December, and we are looking forward to the data. And in November, we presented the positive Phase II NOBLE results at the American Society of Nephrology. We are very confident about the potential of pegcetacoplan for these indications in nephrology. There are currently no approved targeted therapies that can prevent or reverse renal injury and failure for C3G or primary IC-MPGN. As they only complement target therapy that can block the main pathophysiologic driver for these conditions, pegcetacoplan has the convincing mechanism of action. For PNH in Europe, CHMP issued a positive opinion for pegcetacoplan use in first-line treatment. And we terminated the Phase III study for collaborating indices as part of realigning our joint activities with our partner, Apellis. We are facing recruitment challenges due to availability of alternative therapeutic options that limited the number of patients eligible for this study. Important to note is that there are no safety concerns and efficacy has not been evaluated due to the blind design of the study. For Vonjo, the National Comprehensive Cancer Network issued new guidelines in December. And importantly, a new section on myelofibrosis associated anemia is now part of the guidelines. And pacritinib is included as an option for all aspects of management of patients with MF associated anemia. This NCCN update further supports pacritinib's potential role in treatment of a broad range of MF patients. It is the preferred agent for its indication patient population of intermediate or high-risk MF patients with platelet counts below 50,000. And it's also noted as a potential option for high-risk patients with higher platelet counts. Finally, Kineret received its first approval in China, to which I will come back to on the next slide, please. So looking ahead, we have a lot of news to share. 2024 will be the year to launch efanesoctocog alfa. We believe that we have convincing and strong data and are preparing for the anticipated EU decision. The process has been going smoothly so far, and we answered the 120 questions and received certification for the [indiscernible]. We are also preparing for important U.S. submissions. First, for SEL-212 in chronic refractory gout for which Sobi now has the full responsibility after taking over the Selecta team in November to keep the submission preparations on track. And we are still aiming to file with FDA in the first half of 2024. Later in the year, we will receive the full data from the Gamifant and still cohorts from the MRL study. This will enable us to file its secondary HLH for macrophage activation syndrome in Still's disease in the second half of this year. And lastly, we continue our geographic expansion. We've anticipated Chinese decision for Doptelet in ITP and submission in Japan. And after receiving the FMF and CAP indications for Kineret in China last year, we're also looking forward to the Still's indication, which is the most significant of the 3. As you can see, we are taking the momentum from 2023 and accelerating further in 2024. And with that, I would like to hand back to Guido. Next slide, please.
Yes. Thank you, Lydia. We are pleased with Sobi's development as pointed out during Q4 and the full year. And as we outlined, we saw 15% for the quarter growth, 12% for the full year. This reflects a strong performance of our launch medicines and foundational business in all regions. In addition, obviously, we received a strong contribution from Beyfortus. Our R&D pipeline progressed with key milestones for efanesoctocog alfa, Aspaveli and Doptelet. We have a strong momentum in the business and look forward to a successful 2024. And with this said, let's move to the question-and-answer session. And maybe the operator takes over.
[Operator Instructions] The first question comes from Yang, Eun from Jefferies.
I have a question on Vonjo first. So understanding that there was an integration phase that impacted the growth in 4Q, but focused sales are lower than 3Q, so you didn't see the integration issue in 3Q. And despite the fact that you have -- you had about 22% new patient starts in 4Q. I'm just wondering why focus became lower than 3Q? And was there any impact from GSK launch? And another question is on hemophilia A royalty, exchange rate with the Sanofi, could be that I must be mistaken, but my understanding was that the royalty rate on ALTUVIIIO was negotiated to 8% range, high single percentage range from 12% on [indiscernible]. Was it the renegotiated range? Or was it from the start that it was 8%?
Yes. Thank you, Eun Yang. And maybe we start with Vonjo. I mean, basically, where we are right now with Vonjo, given the fact that we have a stronger propensity to the more severe patients with platelet counts below 50,000, what we have right now and obviously and also the way the product is used in the treatment algorithm, we have a shorter treatment period than other JAK inhibitors. And this is basically, right now, it turns out that this is impairing obviously, sales. But it's also an opportunity where this is corrected, particularly now with the new guidelines. But what it means is that essentially you have an average duration of treatment of 8 months. With this, you loose -- where you don't have replenish your new number of patients on time then this has an effect, obviously, over time on the patient buildup. We haven't seen this that much in Q3. That's correct. But we have seen it more in Q4, which was an accumulated effect of Q2 and Q3. And when you -- when we remodeled this one out and tried to really get to the bottom of this, so whilst I would agree. I mean if it bought the other way around, and we wouldn't have seen the patient growth in Q4, then I would have agreed with your suggestion that maybe this is related to GSK. But as we have seen the uptake in Q4, I mean, I'm not saying that we are completely free from GSK effect, but it is -- right now, it has more to do with our, to be honest, product CTI lost a little bit the eye off the ball in Q2, and we had quite a bit of -- we need -- there was a bit of a cultural alignment that needed to happen and quite a few people actually left also to deliver the synagis that we wanted to have. So that's really behind us. And then there we sure enough, we also clarified that we could improve the messaging, create more clarity here. But all of this has been agreed and the team has a very clear target audience. So I think what you see has more to do with us, and we had to do our housekeeping. Sometimes in life, you wish you could compress life into a spreadsheet and just extrapolate, sometimes it's not the case. And let's say we just have to accept that we need to give this time -- give team a little bit of time but from what we have, what we understand we are in a good way, and we should be able to demonstrate growth from here. And with regard to the royalty agreement, maybe Henrik, you share your views, what has been agreed.
Yes. Can you repeat the question, Eun?
Sure. So the exchange royalty rate with Sanofi, my understanding is that locked rate is about 12% in both ways. But [indiscernible] started with 12%, but you had negotiated recently, and we went down to 8%. So question to you is that was it renegotiated down to 8% recently? Or was it 8% from the start?
It was 8% from the start. It was not only a royalty that was negotiated, we made an early opt-in to the product. So it was a larger deal than only the royalty terms.
And can very well remember when we announced this we actually clarified this with 8% and 9%, 9% that we pay, 8% that they pay us, and we clarified that by the expanded market share that you would expect for efa on a total earnings side or revenue side for royalties, we should be -- we should have a positive.
The next question comes from Charlie Mabbutt from Morgan Stanley.
Charlie Mabbutt from Morgan Stanley. I guess, firstly, just back to Vonjo, I guess. It would be interesting to hear your thoughts on how the debate actually is playing out on the market in terms of the relative importance of thrombocytopenia and anemia. Because I appreciate that you're on the NCCN guidelines for both, but obviously, you're the preferred regimen for thrombocytopenia and omilotinib is preferred in anemia. So just thinking about the dynamics would be really helpful. And then I don't know if you can, but I think following [indiscernible] we've been having today, if you could sort of help give any assurances on the level of growth we should expect maybe through 2024? And how much of sort of the long-term revenue opportunity for the product you believe is in MF versus other indications outside of MF, I think those factors would be very helpful.
Yes. I mean, our ambition for 2024 is unchanged. We want to make this an important medicine. When you look -- when you think about the market and basically -- and you segment it, and let's assume you segmented according to 2 dimensions, hemoglobin level and you say, okay, anemic below 8 to 10 grams per deciliter, and then cytopenic below 100,000, and then that segment below 100,000, irregardless whether you are anemic or not, is more than 65% of the market. And this is where we believe we have the positive preference share based on market research and also now confirmed with the guidelines. Granted guidelines is not label, but the -- and I think the main topic is, when you are a cytopenic patient, there's a large group, obviously, of JAK inhibitor-treated patients who are not getting the full dose. And if they don't get full dose, they don't get full effect. And the dosing is related to -- also to the mechanistic effect of JAK1 inhibition. We are JAK1 sparing JAK2 inhibitor. So logic would suggest that basically why would you use another JAK1 inhibitor if basically you're under dosing because of the mechanistic effect in the first place? And that basically makes us quite confident. Obviously, proof is in the pudding. I mean I get it here that I could have also lived with a higher number for Q4, very straightforward. Let's say, but I think what you can sense is, we think that we have the right product in our hands, and we will make this a very significant product for Sobi this year. And nothing has changed. I don't think we have set out any specific target for the product for this year. But that this will be a material product, let's say, until -- and you have seen the expectations. We will think that this product will be an important contributor this year. This is -- does this give you some flavor? Maybe, Armin, you can -- because historically, you have done quite a few interviews with some of the KOLs, maybe you can give some color how you see the topic thrombocytopenia versus anemia?
Yes. Happy to do so. I think it's a really important one because the way we look at this, and there is also discussions that we have a lot, anemia clearly affects the well-being of the patient or fatigue and other things. But if you look at the real heavy outcome that is life expectancy, this is much less driven by low red cell counts but clearly determined by the low platelet counts. And if you look at that aspect and if you see that Vonjo really has positive effects even in the worst patient group platelets count 50,000, but has not only good effects on the platelets, but as well on the anemia, we feel strongly that we have shown in the worst patient group that this drug -- our drug Vonjo is really helping those patients, and that should also be the case in the ones with higher platelet counts. So for us, we feel that, if you compare the different aspects, particularly from the outcome and life expectancy, we feel that we have a great product. It's not a direct comparison that exists, but we feel that only looking at the anemia part doesn't give justice of what the patients truly need, and that is more than just improved anemia.
The next question comes from Alexander Niall from Deutsche Bank.
Niall Alexander from Deutsche Bank. So a question on RSV and procedures. We're seeing consensus forecast of 35% decline in 2024 and then a 30% decline in 2025. And we're seeing Beyfortus is doing well in the U.S. so far with Sanofi commenting that we expect for it to be blockbuster product. So the question is, do you feel the first 35% decline in Synagis over the coming years is reasonable to assume? And that's the first question. And then just a second question is a quick one. Q4 '23 SG&A came in ahead of consensus estimates. So just be good to get a feel of how we can expect SG&A to trend going forward?
Thank you. I mean you would expect with an increase of -- obviously of Beyfortus in line with the guidance of Sanofi that this will affect us. And no matter what, let's say. But we -- I think a good indicator because there's a bit of uncertainty, I mean, we obviously have 2 factors that have influenced Synagis performance in Q4, also when you think about now the coming year. And the first factor was that the season started late, which basically didn't allow us to get enough doses administered. And then the second reason was that obviously, there was a supply than in the end that I think was April, even though maybe not to be anticipated in the late stage of the quarter, which was then obviously was consumed and obviously affected also our ability to sell Synagis. Now the question is where will we land? I think that you will have to expect an effect on our business, you will have to expect just by the virtue of that we a certain group of patients now that are using the product. There will be quite a few that will continue treatment, but it's clearly less than we had the before on Synagis. And that basically will affect us to what degree will we be affected in the second part of the year, meaning the '24, '25 season. I can't tell you.
This is a bit part of the uncertainty. But what I can say is, when you look at the dynamics of royalties from Beyfortus in our business, I mean, it's a bit like a [indiscernible], yes. And it is, let's say, quite beautifully offsetting each other. So we would not necessarily anticipate a decline of the franchise, definitely not in terms of profitability. So I think that's how we are thinking about it. But it is -- there is an asymmetric element with Synagis where we obviously have higher sales in Synagis patients, and we get effectively then royalties from Beyfortus. So that basically creates a little bit of an uncertainty, and that's what basically also is included in our guidance. So I hope that gives you a little bit of some perspective on this.
Then on your question on the SG&A., I mean, Q4 and reality, most of 2023 the SG&A is, of course, a reflection of our 5 ongoing launches. So we will, of course, continue in 2024 with strong launch support and also then, of course, intensify prelaunch and launch of efa. So that is what I can say about the trend in 2024.
Yes. But I think it's -- and this is basically what you have seen also in Q4. We saw the opportunity to invest into our pipeline and into our launches, which I think this is what we are supposed to do and what we should be doing, building the company out for the future. But we are also recognizing the fact that obviously, people want to see profit improvement and that is also incorporated as part of our guidance.
The next question comes from Alistair Campbell from Royal Bank of Canada.
I guess 2, first of all, obviously, we're now learning a lot more from Sanofi about ALTUVIIIO's launch in U.S. And I just kind of wonder, from what you've seen from those U.S. dynamics, what do you think will be similar in Europe, and what you think actually may be different as that molecule comes to market? And then another question, if I may, so chance my luck a bit. If I look at the most recent consensus, it's got an EBITDA margin of about 43% by 2026. Now clearly, we're trying to wrestle with the positive impacts from a significant Beyfortus royalty against other things as well. But just to get a sense of how realistic do you think that margin level can be in terms of attaining that level a time frame?
Yes. Thank you. I mean what can we learn from ALTUVIIIO in the U.S., I think the -- obviously, we have a larger relative franchise of Elocta. And so basically, I think what is -- and that may influence this, but what you can see is that there're certain EHLs and SHLs, which clearly would be the natural sources of growth for ALTUVIIIO. There will be also quite a few patients from Hemlibra that may want to switch back to a Factor VIII to efa simply because they're needing additional factor or they want to benefit from additional protection. And so these will be fully -- but structurally, when you think about it, where growth comes from, factor and Hemlibra, maybe structurally, it may not be so similar. When we look at our, let's say, what's then the share of efa, of Elocta versus the share in the U.S., we'll figure it. But I think that there is a certain amount that we're getting from short-acting and from the long-acting. And then obviously also getting some share back from [indiscernible] then you will see how the momentum is built up, how the community is reacting, patient experience, they will be typically very much shared within the community. We know the -- we have shared with you the anecdotal evidence from patients who are on the product, who really -- where the vast majority of patients who have been in the clinical trials definitely want to stay on the product because they have such a wonderful experience. So there's a lot of good things coming into this direction and maybe later because [indiscernible] just now actually at [indiscernible] conference, we can provide you maybe with some feedback on this. And then just a snapshot on EBITDA. EBITDA is going to be a function on how much we are going to invest into our future, obviously, on the Beyfortus and it basically also obviously how we are able to build up scale. We unfortunately don't provide guidance at this stage beyond 2024, and -- but we understand that the more Beyfortus royalties we have the more profitable the company becomes, and that the more it allows us to make those educated choices, but we want to build, obviously, the company out for long-term growth. And I hope -- let's see where we stand at the end of the year. Whether we are -- we have been conservative or we have been right on, but time will tell, but we want to make sure that we drive this for a strong growth despite obviously a few headwinds that are quite material on the scale of Sobi. Lydia, maybe you want to give the, let's say, snapshot from EHA as you are right now there on the sentiments?
I think there is a lot of excitement here at EHA with efa. We have abstracts that have been accepted, one as an oral presentation on the pediatric data because that's the piece that we will be publishing this year as well. So it's generating a lot of interest in the community, not only for the adult treaters that we have published the data, but it's also very highly expected by the pediatricians. And what we hear is that there is a still very high interest due to the fact that for many factors still fundamental that the expected levels of protections are something that has never been able to be achieved and the one sharing the expertise on the clinical trials is really positive. So I think that here in our territories, we will see switches from all the alternative treatment options that are currently available in the market, including factor and nonfactor. So looking forward to having it approved and launch here.
I think this gives you a bit of a flavor where we are at. Maybe we go to the next question.
The next question comes from Christopher Uhde from SEB.
This is Christopher Uhde from SEB. So I guess I'd just like to start on OpEx going forward. So for 2024, does Q4 -- does the base there represent sort of fully loaded SG&A that we can expect sort of going through 2024 on the existing portfolio. And then when it comes to Synagis, are there any subgroups of patients where you've been more resilient to cannibalization from Beyfortus? And also how much can we sort of -- how much can working capital improve as Synagis declines? And then lastly, on Vonjo, you've talked about doing trials in the future, expanding Pacifica for one thing, looking at other indications and also combinations with other myelofibrosis drugs. But you had the asset for more than half a year, and so far, we haven't seen anything happening there. Have you changed your mind on this? And sort of this -- and aside to that, the anemia guidelines, the 2B recommendation, so it's not an easy ride for reimbursement there. Is that good enough? Or do you need a trial?
Yes. Maybe -- thank you. I mean, thanks for asking only one question, Christopher. Very much appreciated, let's say. And with regard to Vonjo, let's start the other way around because that was quite loaded. With Vonjo, we have obviously -- we are progressing quite a lot. But unfortunately, for competitive reasons, we can't tell you right now. But that's the reason why we said due course, yes. So we haven't changed our mind. And the NCCN guidelines is good enough for reimbursement. Yes. And let's say, and that basically -- so hence, we -- I mean, obviously it's -- we have to work for it. It needs to be understood, but we think that this is -- this was an important milestone for the company, from the product. So we stand fully behind this. Nothing has changed. And then maybe with the SG&A., so Henrik, you want to take this...
Yes. So on the question whether Q4 OpEx was fully loaded, I mean -- and representative for 2024. Of course, there are ups and downs between quarters, but Q4 was, for sure, fully loaded. I can take also your question on you were expecting an improvement in cash flow when we -- when Synagis is switched to Beyfortus and that's not really the case because Beyfortus, we get paid after the quarter, whereas in the case of Synagis, when we've been invoicing ourselves, we have collected money before that. But of course, Beyfortus is, relatively speaking, much more profitable and will, from that point of view, generate a lot of cash.
Does this give you -- there was another element in your question, sorry...
Those are great answers. Last element on the Synagis. Was are there any subgroups of the patients where you're seeing more resilience to cannibalization?
No. I think the subgroups is more driven by the profile at this stage of the physician. And there're some who were quite resilient and believe in the advantageous profile of the product and want to see more evidence. And as we historically have said, with increasing evidence, obviously, they grew quite a lot of evidence by the number of patients that are now on the product, that basically may or may not change. But for now, we have quite a large group still supporting the product. Good. Maybe we move to the next question?
Yes. And if we could keep to one question, please, as we have 3 people left on the line on the other time.
The next question comes from Yifeng Liu from HSBC.
I have one on your -- on the RSV specific, your 2024 guidance and start both on revenue and margins. I was wondering how much sort of the share between Synagis and Beyfortus are you sort of penciling in from your implied margin and revenue? And secondly, on efa alfa, you mentioned that you're doing an additional Phase III trial and just trying to understand what does it differ from your current data package and more value that you add?
I'm sorry that we have not provided, let's say, the breakout of Synagis and also not of Beyfortus. And you're probably the best indicator on how we think about it, but we won't tell you is what some of you are saying about Beyfortus revenues next year in the U.S. And with regard to, let's say, this is -- with regard to efa, this is more long-term safety and Phase IIIb. And Lydia, want to comment on it?
Yes. So it's a Phase IIIb trial that we are running in our territories to collect additional data focusing on physical activities. So patients will have physical activity trackers and that will provide additional data that was not collected in a continuous way in the pivotal trials.
But we are well on track.
The next question comes from Viktor Sundberg from Nordea.
Yes. One question here on Vonjo and your integration of CTI. Could you quantify or maybe guide for us that Synagis here? Do you think the product here will be highly margin accretive going into 2024, for example, versus your mid-30s margin target for the combined sales of your products there? I guess there's some overlap here between [indiscernible] and CTI that is my first question. Maybe just a very quick one on VALIANT also, is study readout mid-2024. What's the commercial opportunity here in your view for that indication?
Yes. I mean, I start with we said accretive in 2024 for the -- for Vonjo, and we stick to it, yes. And let's say, it's not maybe massively accretive, but it's a very profitable product and it will make a contribution to the franchise, Henrik?
Yes. Viktor, obviously, since we are speaking about an uptake here, the accretion will be building during the year.
So we know that we have worked that out, and we are not shying away from this. And we think we have enough what it takes to make this. With regard VALIANT, this is obviously -- when you think about the number of patients, you basically have substantially more patients in the nephrology indication for Aspaveli and then you have for PNH. And in addition, it's -- what we can expect is it's a 2-horse race, given the effect in one of the diseases even called C3G, yes. So no surprise that you would expect a C3 inhibitor having a very direct effect, and therefore, we are super excited. And also when you think about the deposit removal data and the images that were shown as part of the Phase II, we are really excited about this. So we think that, first of all, a lower number of competitors; secondly, a very direct way; and thirdly, we think that the data we can also look forward to maybe quite positive. So that's [indiscernible].
The next question comes from Erik Hultgard from Carnegie.
On Aspaveli, this opportunity in renal diseases, can you talk a bit about how you see? Obviously, there is no approved therapy within C3G but Novartis iptacopan announced positive headline data in, I think, it was in November. So just curious to hear your thoughts there on potential differentiation looking at sort of earlier-stage data, what we should anticipate there?
Yes. Thank you. I mean we basically look at this market in terms of the following access. It's a pre, post-transplant and IC-MPGN and also the C3G. We think that -- and basically, what you have to believe in or what you believe in is that by that time, we have a new applicator that Apellis has launched in the U.S. for the product that makes the administration of the product much easier and more convenient based on recent data points. So we think that this device, twice a week, subcutaneous, will then -- we compare it obviously with twice a day oral. And then basically, you say, okay, what will be the compliance with the oral. I mean, we have certain reference points on how compliant patients are with oral therapy in different settings and obviously, noncompliance could lead to complications. And hence, we think that there will be a fair share of physicians electing subcutaneous direct C3 inhibition, particularly as the data will stack up. And we're actually quite positive based on the Phase II data that we will show some strong data also in Phase III. So that this will be a strong alternative treatment option for physicians. And we have now quite a few patients also in early access because it's there in such a desperate stage and that we make product averment we see really spectacular data from this. So we are really -- proof is in the pudding, but the opportunity is very material. And if you are -- and I think there may be a bias in the IC-MPGN patient potential and for also post-transplant. So we may have that strong target audience. Yes. I think this gives you... Thank you, Erik, and for your question. And so guys, I think we are a little bit ahead of time. So sorry that we were a bit extensive. But as you can see, we don't feel sorry with 12% growth and we are bullish about our future, and we try to delight and make sure that we can live up to your expectations. I appreciate it. I wish everybody a great week. Thank you.
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