57 slides from H. Lundbeck A/s Class A's earnings presentation, May 2018
Slide 1: Investor & Analyst presentation
Investor & Analyst presentation May 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: Lundbeck in brief
Lundbeck in brief DISEASE AREAS KEY PRODUCTS GLOBAL PRESENCE We are headquartered in Denmark and present in ~$1.5bn 50m patients 55 countries Alzheimer’s disease 6m patients 55 Parkinson’s disease 300m patients REVENUE ~60% of our revenue is Mood disorder 21m patients generated in North America Psyc
Slide 4: Our strategy for a focused Lundbeck
Our strategy for a Our strategy for a FOCUSED LUNDBECK FOCUSED LUNDBECK will set the direction sets the direction for our future success for our future success Four Independent DDdrug Independent and FourDiseases diseases Profitable ProfitableGrowth growth Commercialization development and commercia
Slide 5: Volume growth in our four focus disease areas
Volume growth in our four focus disease areas Antipsychotics Antidepressants CAGR CAGR +3% +4% 19.046 19.735 41.813 43.396 18.006 18.436 38.512 39.750 17.360 36.711 LU share LU share 1.1% 0.6% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Anti-Alzheimer’s Anti-Parkison’s CAGR CAGR +4% +4% 3.202
Slide 6: Four focus disease areas that represent a USD ~40bn opportunity
Four focus disease areas that represent a USD ~40bn opportunity Europe North America Japan Depressants: $ 3.1bn Depressants: $ 6.2bn Depressants: $ 1.1bn Psychotics: $ 3.5bn Psychotics: $ 11.7bn Psychotics: $ 1.3bn Alzheimer’s: $ 0.8bn Alzheimer’s: $ 1.8bn Alzheimer’s: $ 1.2bn Parkinson’s: $ 1.6bn P
Slide 7: Strong financial performance in the first quarter of 2018
Strong financial performance in the first quarter of 2018 Revenue: +9% (14% in L.C.) to Revenue (DKKm) Core EPS (DKK) DKK 4.6 billion +9% Hedging: contributed DKK 182 4.000 6 million in the quarter +74% Other Key products*: +23% to DKK 2.5 3.000 products billion representing 55% of revenue +23% 2.00
Slide 8: Solid revenue growth of 9% to DKK 4.6 billion in Q1 2018
Solid revenue growth of 9% to DKK 4.6 billion in Q1 2018 – in local currencies growth reached 14% Key products* continue the strong Revenue distribution** Revenue distribution** growth momentum (product categories) (regional split) Sabril and Xenazine are down 29% combined following generic Sabril +
Slide 9: Key products grew by 23% in Q1 2018
Key products grew by DKK 467 million or 23% in Q1 2018 – in local currencies growth reached 39% Reached DKK 2.5 billion – up Key product revenue Distribution of key from DKK 2.0 billion in Q1 2017 (DKKm) products Abilify Maintena – up 15% to 2.500 +23% DKK 364 million 2.000 Abilify Rexulti Brintelli
Slide 10: North America grew 4% driven by Northera, Onfi and Rexulti
North America grew 4% driven by Northera, Onfi and Rexulti – currency headwind had significant negative impact North America grew 4% (19% North America revenue North America’s in L.C.) to DKK 2,598 million in (DKKm) contribution*) Q1 2018 3.000 Key products# grew 22% and +4% constitute 79% of revenu
Slide 11: U.S. neurology products, Northera and Onfi, continue solid growth
U.S. neurology products, Northera and Onfi, continue to show solid growth in local currency Northera Northera sales Onfi sales (DKKm) (DKKm) Up 13% (29% in L.C.) to DKK 396 million in Q1 2018 500 1.000 Northera impacted by seasonal swings in demand 400 800 Expected continued growth 300 600 200 400 O
Slide 12: International Markets declined 5%
International Markets declined 5% – 5% growth in local currencies International Markets declined International Markets International Markets’ 5% (up 5% in L.C.) to DKK 941 revenue (DKKm) contribution*) million in Q1 2018 1.000 -5% Key products# grew by 31% and contributed 15% of sales 800 Int. Marke
Slide 13: Europe is up 5% in Q1 2018 driven by key products
Europe is up 5% in Q1 2018 driven by key products Europe grew 5% to DKK 745 Europe revenue Europe’s million in Q1 2018 (DKKm) contribution*) Key products# grew 30% and 800 contribute 41% of sales +5% Largest markets are France, Europe 600 Italy and Spain 17% Continued strong performance Other produc
Slide 14: 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 15: Brintellix/Trintellix grew 25% to DKK 467 million in Q1 2018
Brintellix/Trintellix grew 25% to DKK 467 million in Q1 2018 – in local currencies the growth was 38% North America grew by 13% Brintellix/Trintellix Total Rx count (28% in L.C.) to DKK 240 million (DKKm) (U.S. retail) 600 Europe and International 160.000 Europe + Int. Markets Markets grew 41% combi
Slide 16: Trintellix first FDA-approved treatment for MDD with processing speed data
Trintellix is the first FDA-approved treatment for MDD to have data on processing speed, an aspect of cognitive function that is impaired in many patients with MDD Standardized effect The prevalence of FDA updates Trintellix label to include data showing size (DSST) relative to cognitive symptoms in
Slide 17: Further potential strengthening of Trintellix label
Further potential strengthening of Trintellix label FDA acceptance of sNDA for Completed studies in Change from baseline Trintellix for Treatment-Emergent TESD in CSFQ-14 Total Score Sexual Dysfunction (TESD) Study #1 Study #2 (NCT01364649) (NCT02932904) PDUFA on 21 October 2018 Completed enrollment
Slide 18: Rexulti grew 32% to DKK 369 million in Q1 2018
Rexulti grew 32% to DKK 369 million in Q1 2018 – in local currencies the growth was 51% Approved in Saudi Arabia in both Rexulti sales Total Rx count depression and schizophrenia (DKKm) (U.S. retail) – launch expected in H2 2018 400 60.000 Submitted for approval in North America markets such as Braz
Slide 19: 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 20: Abilify Maintena grew 15% to DKK 364 million in Q1 2018
Abilify Maintena grew 15% to DKK 364 million in Q1 2018 – in local currencies the growth was 23% Europe up 19% to DKK 184 million Abilify Maintena sales Share of total LAI International Markets up 16% (26% (DKKm) market*) in L.C.) to DKK 29 million 400 Europe + Int. Markets 18% North America North A
Slide 21: Brexpiprazole pivotal programme in acute manic episodes in Bipolar I
Brexpiprazole pivotal programme initiated 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
Slide 22: Brexpiprazole in a 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 soci
Slide 23: First pivotal study using Lu AF35700 in Treatment Resistant Schizophrenia
First pivotal study using Lu AF35700 in Treatment Resistant Schizophrenia (TRS) on track Treatment Resistant Unique mode of action. In Clinical programme Schizophrenia contrast to current treatment, Around 1/3 of schizophrenia Three studies in healthy people antipsychotic effect at low D2 patients a
Slide 24: Set-up in first study (DayBreak1) using Lu AF35700
Set-up in first study (DayBreak1) in pivotal programme using Lu AF35700 in Treatment Resistant Schizophrenia Oral, once daily Approximately 1,000 patients Expected completion by Q1 2019 Primary endpoint Change in PANSS total score Secondary endpoints Clinical Global Impression Severity scale (CGI-S)
Slide 25: 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 26: Brexpiprazole in pivotal programme in agitation in Alzheimer's
Brexpiprazole in pivotal programme in 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 to commence by dementia have agitation mid-
Slide 27: 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 28: 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) were numerically titrated to 2mg favorable for flexibly-dosed N = 27
Slide 29: 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 Lu spreading of AF87908 misfoldet Tau Reduce levels of APP* Lu Aβ by increased Reduce levels γ-secretase inhibitors may AF20513 clearance h
Slide 30: Lu AF20513 – an active therapeutic vaccine against β-amyloid
Lu AF20513 – an active therapeutic vaccine against 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 Euro
Slide 31: 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 32: Lu AF82422 - Potential disease modifying antibody in Parkinson's
Lu AF82422 - Potential disease modifying antibody in Parkinson’s Pathogenesis of Lu AF82422 is a human IgG1 mAb Parkinson’s (PD) Parkinson’s disease that recognizes all major alpha- Affects ~1 million individuals in synuclein forms including the U.S. with ~60,000 new Lewy body Genetic aggregated/mis
Slide 33: 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 unmet medical need after Sympt
Slide 34: 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 a Landbech K
Slide 35: Continued cost discipline
Continued cost discipline Total costs down 8% while COS, S&D, G&A and growing topline by 9% in Q1 2018 Gross & EBIT* margin R&D ratio EBITDA margin of 41.2% vs. 50% 80% 30.6% in Q1 2017 Gross margin (%) S&D ratio (%) 40% EBIT margin also improved 60% significantly 30% COS%: Expected to show COS rati
Slide 36: Strong growth in earnings with more than a doubling of net profits
Strong growth in earnings with more than a doubling of net profits Significant negative impact from Financial results Revenue FX reducing revenue growth (Quarterly) (reported vs. L.C) Growth for all key products DKKm Q1.18 Q1.17 ∆% DKKm Q1.18 ∆ DKK ∆% L.C. and in all regions in L.C. Revenue 4,585 4,
Slide 37: Strong cash flow generation and improved ROIC
Strong cash flow generation and improved ROIC Operating cash flow Net cash flow Cash flows from operating (DKKm) (DKKm) activities increased from 2.400 1.000 DKK 651 million in Q1 2017 to DKK 2,003 million in Q1 2018 2.000 500 Acquisition of Prexton 1.600 Therapeutics impacts net cash 1.200 0 flow b
Slide 38: 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 4.000 16 Net debt/EBITDA of -1.7x in Q1 2018 vs. -0.8x in Q1 2017 2.000 Net cash (DKKm) – l.h.s. 12 Net cash expected to reach 2.000 1.000 DKK 5-5.5 billion
Slide 39: 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 7 Lundbeck hedges a significant 6,6 part of the risk (at EBIT level) for a period of 12-18 months 6,2 6,6 From Q1 2018, gains/losses (net) will be shown as a separate 5,
Slide 40: 2018 financial outlook maintained
2018 financial outlook maintained Growth in all three regions in local 2018 financial guidance currencies DKKbn 2016 2017 2018 ~∆% guidance (y/y) Continued growth for key products to outpace the decline from Revenue 15.6 17.2 17.2-18.0 0-5% generic erosion Net financial items of DKK ±50 EBIT 2.3 4.4
Slide 41: Financial targets
>90% Financial targets Targets within the 2018-2020 period Target achievements EBIT margin ROIC Cash to earnings Q1.18 2017 2016 2015 25% 25% >90% EBIT margin 36.1% 25.6% 14.7% (46.7%) ROIC (annualized) 57.6% 30.8% 13.2% (45.4%) Cash to earnings 101.5% 141.8% 230.3% N/A Dividend pay-out Net debt/EBI
Slide 42: R&D in Lundbeck
R&D in Lundbeck Innovation focused across four key disease areas Alzheimer’s Mood Parkinson’s Psychotic disease disorders disease disorders 42
Slide 43: Continued progression in our R&D pipeline
Continued progression in our R&D pipeline Trintellix: U.S. label update to include DSST data and sNDA accepted for TESD Foliglurax: Acquired in March 2018. Clinical phase II initiated in 2017 Brexpiprazole AAD: Third study (n=~300) to commence by mid-2018 New projects: Lu AF76432 FIH planned to star
Slide 44: Innovation through partnerships
Innovation through partnerships Selected recent partnerships In line with strategy, focus has been on early research projects and partnerships that support our Strategic R&D Supportive Access to assets own pipeline for the past 2-3 collaborations technologies years Continue to identify external earl
Slide 45: Pipeline
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 46: Key priorities
Key priorities Sustain sales momentum of key products Continue to focus on high profitability Deliver on innovation High dividend pay-outs 46
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Slide 48: 2016 - CNS market overview
2016 - CNS market overview Market size (2016) Market leaders (2016) Value Value Volume # of Share USDbn Growth Growth patients* Unmet medical needs Compound value Total pharma 1,005 +5% +2% - - - - Total CNS 149 0% +2% - - - - • Disease modifying treatment 1. Memantine 46% Anti- • Disease slowing ag
Slide 49: 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 50: Q1 2018 and FY 2017 - Product distribution of revenue
Q1 2018 and FY 2017 - Product distribution of revenue DKKm FY 2017 FY 2016*) Q1 2018 Q1 2017 Growth Growth in local % of total currencies TOTAL: Abilify Maintena 1,333 1,114 364 316 15% 23% 8% Brintellix/Trintellix 1,663 1,105 467 374 25% 38% 10% Cipralex/Lexapro 2,392 2,518 665 690 (4%) 5% 14% Nort
Slide 51: Geographic distribution of revenue - 1
Q1 2018 and FY 2017 - Geographic distribution of revenue - 1 DKKm FY 2017 FY 2016*) Q1 2018 Q1 2017 Growth Growth in local % of total currencies NORTH AMERICA: Abilify Maintena 591 526 151 137 10% 25% 6% Trintellix 974 706 240 213 13% 28% 9% Northera 1,644 1,087 396 352 13% 29% 15% Onfi 3,022 2,409
Slide 52: Geographic distribution of revenue - 2
Q1 2018 and FY 2017 - Geographic distribution of revenue - 2 DKKm FY 2017 FY 2016*) Q1 2018 Q1 2017 Growth Growth in local % of total currencies EUROPE: Abilify Maintena 637 508 184 154 19% 20% 25% Brintellix 376 220 122 81 50% 50% 16% Cipralex 643 760 163 168 (3%) (2%) 22% Other pharmaceuticals 1,1
Slide 53: Q1 2018 - Cash generation
Q1 2018 - Cash generation DKKm Q1 2018 Q1 2017 FY 2017 Cash flows from operating activities 2,003 651 4,045 Cash flows from investing activities (795) 30 (1,830) Cash flows from operating and investing activities (free cash flow) 1,208 681 2,215 Cash flows from financing activities (1,588) (157) (2,
Slide 54: Q1 2018 - Balance sheet and dividend
Q1 2018 - Balance sheet and dividend Dividend (DKK) DKKm 31.03.2018 31.12.2017 Intangible assets 7,933 7,565 9 4% 8 Dividend Other non-current assets 3,260 3,347 7 3% Yield (r.h.s.) 6 Current assets 8,560 8,844 5 2% 4 Assets 19,753 19,756 3 2 1% Equity 11,633 12,181 1 Non-current liabilities 1,125 1
Slide 55: 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 56: For more information, please contact Investor Relations
For more information, please contact Investor Relations Lundbeck’s shares have been Number of shares 199,047,808 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 57: Thank you!
Thank you! 57