H. Lundbeck A/s Class A · OMXCOP:HLUN_A
H. Lundbeck A/s Class A — 9M 2018 Earnings Presentation
60 slides from H. Lundbeck A/s Class A's earnings presentation, November 2018
Slide 1: Investor & Analyst presentation 9M 2018
Investor & Analyst presentation 9M 2018 – November 2018
Slide 2: Company disclaimer
Company disclaimer This presentation contains forward-looking statements that provide our expectations or forecasts of future events such as new product introductions, product approvals and financial performance. Such forward-looking statements are subject to risks, uncertainties and inaccurate assu
Slide 3: Profitable, sustainable growth ambition based on Lundbeck's core strengths
Profitable, sustainable growth ambition based on Lundbeck’s core strengths Lundbeck’s core strengths Long and successful history of innovation in Growth neurology and psychiatry expansion Strong understanding of disease biologies across arising from indications based on long history of specializatio
Slide 4: Key product growth drives top and bottom line
Key product growth drives top and bottom line Revenue: Up 12% in L.C. (8% Revenue (DKKm) EPS (DKK) reported) to DKK 13.9 billion in 9M 2018 +12% 18 +56% 12.000 15 Key products*: Up 29% in L.C. (21% reported) to DKK 7.9 Other Products# 12 billion representing 60% of 9.000 revenue# 9 6.000 +29% EBIT:
Slide 5: Solid revenue growth of 12% in local currencies to DKK 13.9 billion
Solid revenue growth of 12% in local currencies to DKK 13.9 billion in 9M 2018 – reported growth reached 8% Key products* grew by DKK Key product* revenue Revenue distribution** 1,343 million with all products (DKKm) (regional split) showing double digit growth in 9M 2018 (L.C.) 8.000 +42% Strong im
Slide 6: Solid growth in all three regions in 9M 2018
Solid growth in all three regions in 9M 2018 North America Europe +10% in L.C. (2% +7% in L.C. (7% reported) to DKK reported) to DKK Int. markets 8.1bn 2.3bn +13% in L.C. (5% Key products grew Key products grew reported) to DKK 28% in L.C. 29% in L.C. 2.8bn Label update of Rxulti to be Key products
Slide 7: Mood disorders
Mood disorders 300 million people worldwide are estimated to live with depression Cognitive symptoms (difficulty concentrating, forgetfulness and/or indecisiveness) appears 94% of the time during major depressive episodes The WHO lists depression as the leading disability worldwide Majority of patie
Slide 8: Brintellix/Trintellix grew 36% in local currencies
Brintellix/Trintellix grew 36% in local currencies to DKK 1,543 million in 9M 2018 – reported growth was 28% North America grew by 31% in L.C. (23% reported) to DKK 853m Brintellix/Trintellix Total Rx count (DKKm) (U.S. retail) Continued share increase – 21.4% 600 value share1) in the U.S. Europe +
Slide 9: Trintellix first FDA-approved MDD treatment with processing speed data
Trintellix is the first FDA-approved treatment for MDD to have data on processing speed, an aspect of cognitive function which is impaired in many patients with MDD Standardized effect The prevalence of Trintellix U.S.-label updated to include data showing size (DSST) relative to cognitive symptoms
Slide 10: Further potential strengthening of Trintellix U.S. label
Further potential strengthening of Trintellix U.S. label FDA accepted sNDA for Trintellix Completed studies in Change from baseline for Treatment-Emergent Sexual TESD in CSFQ-14 Total Score Dysfunction (TESD) in patients Study #1 Study #2 with depression (NCT01364649) (NCT02932904) PDUFA on 21 Octob
Slide 11: Psychotic disorders
Psychotic disorders The WHO estimates that over 21 million people suffer from schizophrenia Schizophrenia is among the most financially costly illnesses in the world The disease is marked by positive symptoms (hallucinations and delusions) and negative symptoms (blunted emotions and social withdrawa
Slide 12: Rexulti grew 42% in local currencies
Rexulti grew 42% in local currencies to DKK 1,204 million in 9M 2018 – reported growth was 32% Continued share increase – 13.2% Rexulti sales Total Rx count value share1) in the U.S. (DKKm) (U.S. retail) Upcoming launches in Europe, 500 70.000 North America Saudi Arabia and Mexico Europe + Int. Mark
Slide 13: Comprehensive LCM programme ongoing for brexpiprazole
Comprehensive LCM programme ongoing for brexpiprazole for further product value expansion Brexpiprazole • Several clinical programmes ongoing to address unmet medical needs and aiming for product value maximation Bipolar I disorder • Two studies to demonstrate the efficacy in acute treatment of mani
Slide 14: Brexpiprazole pivotal programme in acute manic episodes, Bipolar I
Brexpiprazole pivotal programme ongoing in acute manic episodes associated with Bipolar I disorder Expected brexpiprazole profile: The studies Bipolar disorder Established efficacy and Study #1 Study #2 More than 6 million affected in treatment of bipolar I disorder (NCT03259555) (NCT03257865) the U
Slide 15: Brexpiprazole Proof-of-Concept study in PTSD
Brexpiprazole in a Proof-of-Concept study in Post-traumatic Stress Disorder (PTSD) 4-arm, 12-week trial using 1-3 PTSD What causes PTSD? mg of brexpiprazole* ~8.6m American adults Monotherapy or in combination affected1), but ~80% is with sertraline undiagnosed 1 Rape 1 Rape Growing economic and soc
Slide 16: Abilify Maintena grew 23% in local currencies
Abilify Maintena grew 23% in local currencies to DKK 1,180 million in 9M 2018 – reported growth was 23% Europe and International Abilify Maintena sales Share of total LAI Markets grew 22% in L.C. (20% reported) combined to DKK 681 (DKKm) market (net sales)* million 400 Europe + Int. Markets 18% Nort
Slide 17: Alzheimer's disease
Alzheimer’s disease 50 million people worldwide have dementia (Alzheimer’s is the most common cause of dementia contributing 60-70% of cases) It is predicted that the number of people affected by dementia will almost double every 20 years People with Alzheimer’s live an average of 8 years after thei
Slide 18: Brexpiprazole in pivotal programme for agitation in Alzheimer's
Brexpiprazole in pivotal programme for the treatment of agitation in Alzheimer’s Agitation in Clinical programme Alzheimer’s (AAD) Two studies in the pivotal >20% of individuals in a programme finalized community setting and >50% of nursing home residents with A third study commenced In dementia hav
Slide 19: Grossberg: fixed-dose brexpiprazole for agitation in Alzheimer's
Grossberg: “Efficacy and safety of fixed-dose brexpiprazole for the treatment of agitation in Alzheimer’s type dementia” (AAGP2018) Brexpiprazole 2 mg/day Primary endpoint Study I (NCT01862640) showed a statistically significant improvement over N = 433 patients (recruited from placebo on the primar
Slide 20: Cummings: flexibly-dosed brexpiprazole for agitation in Alzheimer's
Cummings: “Efficacy and safety of flexibly-dosed brexpiprazole for the treatment of agitation in Alzheimer’s type dementia” (AAGP2018) Post-hoc analysis – Primary efficacy endpoint subgroup of patients Study II (NCT01922258) (CMAI) numerically favorable titrated to 2mg for flexibly-dosed brexpiprazo
Slide 21: Novel treatment concepts in Alzheimer's
Lundbeck is active in the investigation of various novel treatment concepts in Alzheimer’s Reduce formation of Aβ by inhibition of BACE1 BACEi Aβ1-42 AD Prevent TauAb spreading of misfolded Tau Reduce levels of APP* Lu Aβ by increased Reduce levels γ-secretase inhibitors may AF20513 clearance have u
Slide 22: Lu AF20513 – active immunotherapy targeting β-amyloid
Lu AF20513 – an active immunotherapy targeting β-amyloid AutoVac – unique and Lu AF20513 induce specific Study design*) proprietary concept antibodies against Aβ using AD Open-label, dose escalation study patients’ own immune system 35 patients from centers in Formed antibodies binds to and Europe e
Slide 23: Lu AF20513 to enter proof of concept-study during H1 2019
Lu AF20513 to enter proof of concept-study during H1 2019 Lu AF20513 • An active vaccine inducing high affinity polyclonal antibodies that target beta- amyloid (“Abeta”), for the potential injectable prevention of progression of Alzheimer's dementia Ongoing • Open label study to determine if multipl
Slide 24: Parkinson's disease
Parkinson’s disease Approximately 6 million patients are estimated to be affected by Parkinson’s The prevalence of Parkinson’s in the U.S. will double by the year 2040 (compared to 2010) Many Parkinson’s patients also suffer from disease related non-motor symptoms such as: Low blood pressure when st
Slide 25: Foliglurax – new pipeline asset in PoC testing in Parkinson's
Foliglurax – an interesting new pipeline asset currently in PoC testing in Parkinson’s patients Foliglurax (PXT002331) Levodopa-induced Motor complications of Increase activity of a specific dyskinesia levodopa glutamatergic target (mGluR4) PD-LID is the most important Symptomatic treatment of OFF-
Slide 26: Foliglurax phase II compound for Parkinson's disease
Foliglurax is an innovative and highly attractive phase II compound being developed for symptomatic treatment of Parkinson’s disease Foliglurax • A small-molecule positive allosteric modulator of group III metabotropic glutamate receptor 4 (mGluR4 PAM), for the potential oral treatment of Parkinson'
Slide 27: Lundbeck's R&D pipeline is advancing
Lundbeck’s R&D pipeline is advancing Project Indication Phase I Phase II (PoC) Phase III (pivotal) Exp. filing Psychiatry: Lu AF35700 - Project under review - Brexpiprazole Bipolar mania 2019 Brexpiprazole PTSD ≥2025 Lu AF11167 Undisclosed Phase II planned to start Q4.2018 ≥2025 Abilify Maintena 2-m
Slide 28: DayBreak results not supportive for further development in TRS
Headline results from DayBreak were not supportive for further development in patients with TRS Lu AF35700 did not show statistical superiority versus conventional therapy with atypical antipsychotics on the primary endpoint (change in Total PANSS) in patients with treatment-resistant schizophrenia
Slide 29: 2018 achievements and 2019 goals in R&D
2018 achievements and 2019 goals in R&D 2018 2019 FDA updates Trintellix label to Two year extension Pivotal data for Acquisition of Start PoC study on include data on of exclusivity on Rexulti in Bipolar foliglurax Lu AF20513 cognitive dysfunction Lexapro in Japan mania and TESD in MDD Third phase
Slide 30: Higher transparency in future revenue drivers
Higher degree of transparency in future revenue drivers than Lundbeck has had historically Indicated LOE 2018 2020 2025 >2030 Brexpiprazole LAI and Abilify Maintena 2-month Lu AF35700 (Treatment Resistant Schizophrenia) Pipeline Foliglurax (Parkinson’s) Lu AF20513 (Alzheimer’s) Lu AF82422 (Parkinson
Slide 31: Financial highlights
Financial highlights * PATIENTS seit) SIBLE2 cae ON INNOVATION J | PROFITABILITY oncanizarion x 4=_ | 30m | 2014 SLOBAL LEADERSHIP PSYCHIATRY NEUROLOGY IMPROVING LIVES OF PATIENTS 3 Landbech K
Slide 32: Northera continues to show solid growth in local currency
Northera continues to show solid growth in local currency Grew 16% in L.C. (7% Northera sales Total Rx count reported) to DKK 1,282 million (DKKm) (U.S. retail) in 9M 2018 500 4.000 Northera impacted by quarterly inventory fluctuations, 400 temporary backlog of patients 3.500 in process, and high ou
Slide 33: Onfi shows solid growth, but will be hit by generic clobazam
Onfi shows solid growth, but will be impacted negatively by introductions of generic clobazam Oral suspension pricing as % of +30% in local currency (20% Onfi sales branded price reported) to DKK 2,669 million (DKKm) in 9M 2018 1.000 Numerous generic tablets approved on 22 October 800 Several of the
Slide 34: Continued strong growth in earnings
Continued strong growth in earnings Growth for all key products and Revenue Financial results in all regions (reported vs. L.C) DKKm 9M.18 9M.17 ∆% DKKm 9M.18 ∆ ∆% Significant negative impact from DKKm L.C. FX reducing revenue growth Revenue 13,921 12,842 8% Revenue 13,921 +1,079 +12% EPS growth of
Slide 35: Maintaining cost discipline while investing in the business
Maintaining cost discipline while investing in the business Total costs down 3% while COS, S&D, G&A and growing topline by 8% in 9M 2018 Gross & EBIT* margin R&D ratio EBITDA margin of 38.1% vs. 50% 32.5% in 9M 2017 80% Gross margin (%) S&D ratio (%) 40% EBIT margin of 32.0% vs. 27.1% in 9M 2017 60%
Slide 36: Solid improvement in net cash position since year-end 2017
Solid improvement in net cash position since year-end 2017 Net cash increased DKK 1,678 million (+46%) since 2017 to DKK 5,356 million and is expected to reach DKK ~5.5 billion at the end of 2018 Operations generated DKK 5.3 billion in positive cash flow Investments include acquisition of Prexton in
Slide 37: 2018 financial outlook raised
2018 financial outlook raised Growth in all three regions in local 2018 financial guidance currencies DKKbn 2016 2017 Previous Revised ~∆% Continued growth for key products 2018 2018 (y/y) to outpace the decline from generic guidance guidance erosion Revenue 15.6 17.2 17.6-18.0 17.7-18.1 3-5% Net fi
Slide 38: Sum-up
Sum-up Continued solid growth in revenue and profitability Key products continue to show solid growth Lundbeck remains on track to deliver the best-ever financial results Financial strength is the foundation for working to strengthen the pipeline for future growth 38
Slide 39: Thank you!
Thank you! 39
Slide 40: Key priorities
Key priorities Sustain sales momentum of key products Continue to focus on high profitability Deliver on innovation High dividend pay-outs 40
Slide 41: North America up 10% driven by key products
North America up 10% driven by Abilify Maintena, Onfi, Rexulti and Trintellix – currency headwind had significant negative impact North America grew 10% in North America revenue North America’s L.C. (2% reported) to DKK (DKKm) contribution*) 8,072 million in 9M 2018 +2% 8.000 Key products# grew 19%
Slide 42: International Markets grew 13% in 9M 2018
International Markets grew 13% in 9M 2018 – up 5% reported International Markets increased International Markets International Markets’ 13% in L.C. to DKK 2.8 billion revenue (DKKm) contribution*) in 9M 2018 +5% 2.000 Key products# grew by 27% and constituted 14% of sales Int. 1.500 Markets 21% Main
Slide 43: Two new markets that represent significant growth opportunities
Two new markets that represent significant growth opportunities Enhancing our position in Japan Significant growth opportunity in China The market for anti-depressants constitutes Lundbeck’s four disease categories constitute USD 1.1bn in sales USD 1.3bn in sales Market exclusivity for Lexapro exten
Slide 44: Europe grew 7% driven by Abilify Maintena and Brintellix
Europe grew 7% in both local currencies and reported in 9M 2018 driven by Abilify Maintena and Brintellix Europe grew 7% to DKK 2.3 Europe revenue Europe’s billion in 9M 2018 (DKKm) contribution*) Key products# grew 29% and 2.400 constituted 43% of sales +7% Largest markets are France, Italy Europe
Slide 45: Capital allocation
Capital allocation Dividend increased from DKK Dividend and Net cash and 2.45 to DKK 8.00 per share free cash flow (DKKm) Net debt/EBITDA 3.000 5.500 16 Net debt/EBITDA of -1.0x in 9M 2018 vs. -0.5x in 9M 2017 2.000 Net cash (DKKm) – l.h.s. 3.500 12 Net cash expected to reach 1.000 DKK ~5.5 billion
Slide 46: Hedging at Lundbeck
Hedging at Lundbeck The main currency risk concerns USD hedge rate vs. fluctuations of USD, JPY, CNY USD/DKK market rate and CAD 7,4 7 Lundbeck hedges a significant 6,6 part of the risk (at EBIT level) for 7 a period of 12-18 months 6,2 From Q1 2018, gains/losses 6,6 (net) is shown as a separate lin
Slide 47: Strong cash flow generation and improved ROIC
Strong cash flow generation and improved ROIC Cash flows from operating Operating cash flow Invested capital and activities increased from (DKKm) ROIC% DKK 2,698 million in 9M 2017 2.400 12.000 75 Invested capital (DKKm) – l.h.s. to DKK 4,575 million in 9M 2.000 2018 60 1.600 9.000 ROIC increased fr
Slide 48: Product distribution of revenue
9M 2018 and FY 2017 - Product distribution of revenue DKKm FY 2017 FY 2016*) 9M 2018 9M 2017 Growth Growth in local % of total currencies TOTAL: Abilify Maintena 1,333 1,114 1,180 999 18% 23% 9% Brintellix/Trintellix 1,663 1,105 1,543 1,202 28% 36% 11% Cipralex/Lexapro 2,392 2,518 1,894 1,873 1% 7%
Slide 49: Geographic distribution of revenue - 1
9M 2018 and FY 2017 - Geographic distribution of revenue - 1 DKKm FY 2017 FY 2016*) 9M 2018 9M 2017 Growth Growth in local % of total currencies NORTH AMERICA: Abilify Maintena 591 526 499 432 16% 24% 6% Trintellix 974 706 853 694 23% 31% 11% Northera 1,644 1,087 1,282 1,194 7% 16% 16% Onfi 3,022 2,
Slide 50: Geographic distribution of revenue - 2
9M 2018 and FY 2017 - Geographic distribution of revenue - 2 DKKm FY 2017 FY 2016*) 9M 2018 9M 2017 Growth Growth in local % of total currencies EUROPE: Abilify Maintena 637 508 587 490 20% 20% 26% Brintellix 376 220 396 272 45% 46% 17% Cipralex 643 760 467 492 (5%) (4%) 21% Other pharmaceuticals 1,
Slide 51: 9M 2018 - Cash generation
9M 2018 - Cash generation DKKm 9M 2018 9M 2017 FY 2017 Cash flows from operating activities 4,575 2,698 4,045 Cash flows from investing activities (2,298) (1,409) (1,830) Cash flows from operating and investing activities (free cash flow) 2,277 1,289 2,215 Cash flows from financing activities (1,583
Slide 52: Balance sheet and dividend
9M 2018 - Balance sheet and dividend Dividend (DKK) DKKm 30.09.2018 31.12.2017 Intangible assets 8,151 7,565 9 4% 8 Dividend Other non-current assets 3,001 3,347 7 3% Yield (r.h.s.) 6 Current assets 11,250 8,844 5 2% 4 Assets 22,402 19,756 3 2 1% Equity 13,536 12,181 1 Non-current liabilities 993 1,
Slide 53: Costs – Full year figures
Costs – Full year figures DKKm 2017 2016 2015 2017 (∆%) 2016 (∆%) Revenue 17,234 15,634 14,594 10% 7% Cost of sales 3,881 4,082 5,395 (5%) (24%) Sales & Distribution costs 5,649 5,488 6,706 3% (18%) Administrative expenses 833 805 1,160 3% (31%) R&D costs 2,705 2,967 8,149 (9%) (64%) Total costs 13,
Slide 54: Financial targets
>90% Financial targets Targets within the 2018-2020 period Target achievements EBIT margin ROIC Cash to earnings 9M.18 2017 2016 2015 25% 25% >90% EBIT margin 32.0% 25.6% 14.7% (46.7%) ROIC (annualized) 51.9% 30.8% 13.2% (45.4%) Cash to earnings 101.0% 141.8% 230.3% N/A Dividend pay-out Net debt/EBI
Slide 55: 2017 - CNS market overview
2017 - CNS market overview Market size (2017) Market leaders (2017) Value Value Volume # of Share USDbn Growth Growth patients* Unmet medical needs Compound value Total pharma 1,011 +3% +1% - - - - Total CNS 146 0% +1% - - - - • Disease modifying treatment 1. Memantine 44% Anti- • Disease slowing ag
Slide 56: Volume growth in four key disease areas
Volume growth in four key disease areas Antipsychotics Antidepressants CAGR CAGR +3% +4% 19.168 19.550 19.915 43.477 44.981 17.976 18.489 39.747 41.772 38.465 LU share LU share 1.1% 2.4% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Anti-Alzheimer’s Anti-Parkinsons CAGR CAGR +3% +3% 3.435 11.009
Slide 57: Four key disease areas that represent a USD ~40bn opportunity
Four key disease areas that represent a USD ~40bn opportunity Europe North America Japan Depressants: $ 3.0bn Depressants: $ 5.6bn Depressants: $ 1.1bn Psychotics: $ 3.7bn Psychotics: $ 11.1bn Psychotics: $ 1.1bn Alzheimer’s: $ 0.8bn Alzheimer’s: $ 1.6bn Alzheimer’s: $ 1.1bn Parkinson’s: $ 1.6bn Par
Slide 58: Financial terms and territory structure of the Otsuka alliance
Financial terms and territory structure of the Otsuka alliance entered in November 2011 Milestone payments Lundbeck’s share of revenue and costs Payment to: Abilify Abilify Maintena Rexulti Selincro Maintena Rexulti Selincro Development EUR USD 200m USD 600m3) USA 20% 45% - milestones/upfront 105m*
Slide 59: For more information, please contact Investor Relations
For more information, please contact Investor Relations Lundbeck’s shares have been Number of shares 199,098,422 IR contact listed on the Copenhagen Own shares 388,327 Palle Holm Olesen Stock Exchange since 18 June Classes of shares 1 VP; Head of Investor Relations 1999 Restrictions None Mobile: +45
Slide 60: Thank you!
Thank you! 60