49 slides from H. Lundbeck A/s Class A's earnings presentation, February 2019
Slide 1: Investor & Analyst Presentation
Investor & Analyst Presentation February 2019
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 achieved its best financial year ever in 2018
Lundbeck achieved its best financial year ever in 2018 Sales increased 8% in L.C. to DKK 18.1bn vs. initial guidance of DKK 17.2-18.0bn Key product sales grew 18% to DKK 10.5bn ✓ Outstanding operational EBIT increased 20% to DKK 5.3 billion vs. initial guidance of DKK 4.8-5.2bn performance EBIT marg
Slide 4: 2019 guidance, dividends and revised strategic objectives
2019 guidance, dividends and revised strategic objectives ✓ Lundbeck expects 2019 revenue to reach DKK 16.1–16.7 billion 2019 guidance EBIT expected to reach DKK 4.2–4.6 billion ✓ Revised dividend policy Dividend policy revised to 30-60% of net profit from 2019 The Expand and Invest to Grow strategy
Slide 5: FY 2018: Solid growth in both top and bottom line
FY 2018: Solid growth in both top and bottom line Revenue EBIT Revenue: Up 8% in L.C. (5% (FY – DKKm) (FY - DKKm) reported) to DKK 18.1 billion 20.000 +5% 6.000 Growth driven by key products +20% and especially Brintellix/ Trintellix and Rexulti 15.000 4.500 Other revenue: Up 64% to DKK 662 million
Slide 6: Lundbeck's five key products added DKK 1.6 billion in sales in 2018
Lundbeck’s five key products* added DKK 1.6 billion in sales in 2018 Key products*: Up 23% in Key product growth in L.C. Sales by product L.C. (18% reported) to DKK (FY - DKKm) (FY 2018) 10,471 million representing 59% of revenue# Brintellix/Trintellix +37% 9% Brintellix/Trintellix: Up 31% to DKK 2,
Slide 7: Revenue growth in all regions; Europe has returned to dynamic growth
Revenue growth in all regions; Europe has returned to dynamic growth Reported growth Sales by region Strong improvement in both growth and profitability in (FY 2018) (FY 2018) Europe North America impacted by Region Revenue Δ% Δ% 17% generic erosion and (DKKm) (L.C.) divestment of Canadian North onc
Slide 8: Brintellix/Trintellix continues consistent strong momentum
Brintellix/Trintellix continues consistent strong momentum driven by North America and Europe Grew 37% in L.C. to DKK 2,182 Brintellix/Trintellix sales Brintellix/Trintellix sales million in 2018 (FY - DKKm) (Quarterly - DKKm) Grew 39% in L.C. to DKK 639 million in Q4 2018 2.400 +31% 800 North Ameri
Slide 9: Rexulti shows significant growth driven by demand
Rexulti shows significant growth driven by demand; roll-out in new markets continues Rexulti sales Rexulti sales Grew 44% in L.C. to DKK (FY - DKKm) (Quarterly - DKKm) 1,723 million in 2018 +38% Grew 52% in L.C. to DKK 519 1.800 600 North America +56% million in Q4 2018 Other 1.500 Launched in Austr
Slide 10: Abilify Maintena continues its solid growth
Abilify Maintena continues its solid growth Abilify Maintena sales Abilify Maintena sales Grew 23% in L.C. to DKK (FY - DKKm) (Quarterly - DKKm) 1,595 million in 2018 Grew 23% in L.C. to DKK 415 1.800 +20% 500 North America million in Q4 2018 Int. Markets +24% 1.500 400 Europe Largest markets are th
Slide 11: Northera shows solid growth following normalization of patient backlog
Northera shows solid growth following normalization of patient backlog Northera sales Northera sales Grew 15% in L.C. to DKK (Quarterly - DKKm) (FY - DKKm) 1,806 million in 2018 2.000 +10% 600 Grew 13% in L.C. to DKK 524 +17% million in Q4 2018 Northera impacted by 1.500 450 temporary backlog of pat
Slide 12: Onfi impacted negatively by introductions of generic clobazam
Onfi impacted negatively by introductions of generic clobazam Onfi sales Onfi sales Grew 12% in L.C. (5% reported) to DKK 3,165 million (FY - DKKm) (Quarterly - DKKm) in 2018 4.000 1.000 -38% Declined 40% in L.C. to DKK +5% 496 million in Q4 2018 800 3.000 Numerous generic tablets and oral suspensio
Slide 13: Promising early-stage pipeline with efforts under way to ensure depth
Promising early-stage pipeline with efforts under way to ensure depth in all phases of development Project Indication Phase I Phase II (PoC) Phase III (pivotal) Exp. filing Brexpiprazole Bipolar mania 2019 Brexpiprazole Agitation in Alzheimer’s disease ~2021 Brexpiprazole PTSD ≥2025 Foliglurax (MGLU
Slide 14: Brexpiprazole in pivotal programme for agitation in Alzheimer's
Brexpiprazole in pivotal programme for the treatment of agitation in Alzheimer’s Two studies in the pivotal Agitation in programme finalized Alzheimer’s (AAD) A third study commenced In >20% of individuals in a community setting and >50% of June 2018 following nursing home residents with conclusions
Slide 15: Brexpiprazole pivotal programme ongoing in acute manic episodes in 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 treatment of bipolar I disorder Study #1 Study #2 More than 6 million affected in (NCT03259555) (NCT03257865) the U
Slide 16: Positive phase II headline results for brexpiprazole and sertraline in PTSD
Positive phase II headline results for the combination treatment of brexpiprazole and sertraline for treatment of PTSD Combination of brexpiprazole Post-Traumatic Stress and sertraline demonstrated Disorder (PTSD) improvement in symptoms of PTSD versus placebo ~8.6m U.S. adults affected1) (p<0.01) o
Slide 17: 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 18: 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 Increase activity of a specific dyskinesia of levodopa glutamatergic target (mGluR4) PD-LID is the most important Symptomatic treatment of OFF-
Slide 19: Lu AF11167: Addresses negative symptoms of schizophrenia
Lu AF11167: Addresses negative symptoms of schizophrenia that trouble patients most Negative symptoms most Prevalence bothersome symptom for (major countries) Phosphodiesterase 10A inhibitor (PDE10Ai) patients with schizophrenia Potential novel MoA for the Primary cause for inability to treatment of
Slide 20: New tools to potentially improve data translation and drug development
New tools to potentially improve data translation, increase efficiency in drug development and ultimately improve patient outcome Patient experience Drug Clinical Disease Pre-clinical interception Diagnosis Treatment Follow-up discovery development Designing, screening and Target and Personalized Pe
Slide 21: Finance
Finance * PATIENTS 3 USED: T gG GLO ONSIBLE2 i Reno PROFITABILITY ORcANizarion 4=_ | 30m | 2014 SLOBAL LEADERSHIP PSYCHIATRY NEUROLOGY IMPROVING LIVES OF PATIENTS ANNUAL REPORT 2016, 21 _ x
Slide 22: Lundbeck delivered best ever financial results for 2018
Lundbeck delivered best ever financial results for 2018 Gross margin: Increases DKKm FY 2018 Δ% y/y Q4 2018 Δ% y/y from 77.5% to 80.9% Revenue 18,117 5% 4,196 (4%) SG&A ratio: Down from Gross margin 80.9% +3.4pp 79.7% +1.7pp 37.6% to 33.3% Operating expenses 9,316 1% 2,619 5% R&D ratio: Up from 15.7
Slide 23: Strong cash flow generation
Strong cash flow generation Cash flow from operating Operating cash flow Net cash flow activities: Grew 48% to DKK (Quarterly - DKKm) (Quarterly - DKKm) 2.400 800 5,981 million in 2018 Investments: Include 2016 2.000 2017 400 acquisition of Prexton in 2018 March 2018 (EUR 100m) and EU approval miles
Slide 24: Strong financial position provides flexibility to pursue further growth
Strong financial position provides flexibility to pursue further growth Net cash: Up DKK 2,958 Dividend and Net cash and million (+80%) to DKK 6,635 free cash flow (DKKm) Net debt/EBITDA million in 2018 8.000 15 4.000 Net debt/EBITDA: -1.0x in Net cash (DKKm) – l.h.s. 12 2018 vs. -0.7x in 2017 3.000
Slide 25: Lundbeck's financial guidance for 2019
Lundbeck’s financial guidance for 2019 Continued growth for strategic brands Significant negative impact from 2019 financial guidance generic erosion 2018 2019e ~∆% (DKKm) (DKKbn) (y/y) Effects from hedging is a loss of DKK 150-200 million Revenue 18,117 16.1 − 16.7 -11 − -8% Net financial items of
Slide 26: Expand and Invest To Grow!
”Expand and Invest To Grow!” 26
Slide 27: Stellar execution on 2016 corporate strategy to restore profitability
Stellar execution on 2016 corporate strategy to restore profitability Long-term targets set in Operating profit Net cash February 2016 2018 Target 2018: 2018: EBIT margin 29.3% 25% ✓ DKK 5.3bn DKK 6.6bn ROIC 48.6% 25% ✓ Cash to earnings 117.6 >90% ✓ 2015: 2015: DKK -0.2bn* DKK -2.2bn *) Adjusted for
Slide 28: Expand and Invest to Grow
Continued strong growth of strategic brands not enough to compensate for LOEs – we introduce Expand and Invest to Grow Make a Drive difference business for results patients Purpose: ”Tirelessly dedicated to restoring brain health…so every person can be their best” 28
Slide 29: We will promote business efficiency and pursue additional growth opportunities
We will promote business efficiency and pursue additional growth opportunities We will maximize the performance of existing brands Expanding our global footprint Launching new indications and improved formulations We will enhance organizational agility and collaboration We will continue to maintain
Slide 30: We will expand our operating space in brain disease
We will expand our operating space in brain disease Our strong heritage and extensive neuroscience experience provide us with a competitive advantage and enable us to expand our focus to help people living with a broader range of brain diseases The redefined operating space focus on diseases with: C
Slide 31: Expanding product portfolio and R&D pipeline
Expanding product portfolio and R&D pipeline based on our strong heritage and expertise in neuroscience We will rebuild our pipeline across all clinical phases by: Accelerating business development efforts to access external innovation Selectively refine and progress the most promising internal proj
Slide 32: Our track record in successful collaborations makes us an attractive partner
Our strong track record in successful collaborations makes us an attractive partner for third parties 32
Slide 33: Selected deliverables for 2019
Selected deliverables for 2019 Start PoC study on Lu AF11167 in schizophrenia Commence the launch of Rxulti/Rexulti in Europe Pivotal data for Rexulti in bipolar mania Headline results (PoC) for foliglurax in Parkinson’s Obtain approval of Trintellix in Japan Achieve FIH in 1-2 R&D projects Execute
Slide 34: Lundbeck continues to restore brain health
Lundbeck continues to restore brain health, leveraging a strong platform and heritage to grow Strong financial foundation Highly profitable with strong cash generation, no debt Solid growth across key products Global footprint with growth in all regions of the world Long-standing reputation with pat
Slide 35: Thank you!
Thank you!
Slide 36: Lundbeck's strategic brands deliver solid momentum
Lundbeck’s strategic brands deliver solid momentum +24% +39% 400 Europe + Int. Markets North America 600 Europe + Int. Markets North America 300 400 200 200 100 0 0 Q4.17 Q4.18 Q4.17 Q4.18 +56% 600 +17% 450 North America Europe + Int. Markets 400 300 200 150 0 0 Q4.17 Q4.18 Q4.17 Q4.18 36
Slide 37: Volume uptake in selected markets for global strategic brands
Volume uptake in selected marlets for our global strategic brands 120.000 21.000 14.000 (Treatment days – x100) 100.000 18.000 12.000 15.000 80.000 10.000 12.000 8.000 60.000 9.000 40.000 4.000 6.000 20.000 3.000 2.000 0 0 0 2016 2017 2018 2019 2016 2017 2018 2019 2017 2018 2019 37
Slide 38: North America up 1% driven by Abilify Maintena, Rexulti and Trintellix
North America up 1% driven by Abilify Maintena, Rexulti and Trintellix – generic clobazam had significant negative impact North America revenue North America’s Grew 6% in L.C. (1% (FY - DKKm) contribution*) reported) to DKK 10,743 million in 2018 12.000 +1% Declined 6% in L.C. (3% reported) to DKK 2
Slide 39: International Markets grew 10% in local currencies
International Markets grew 10% in local currencies driven by key products – up 3% reported International Markets Grew 10% in L.C. (3% International Markets’ revenue (DKKm) reported) to DKK 3.5 billion in 4.000 contribution*) 2018 +3% Grew 1% in L.C. (down 4% reported) to DKK 694 million in 3.000 20%
Slide 40: Europe grew 6% driven by Abilify Maintena and Brintellix
Europe grew 6% in both local currencies and reported in 2018 driven by Abilify Maintena and Brintellix Grew 6% in L.C. (6% Europe revenue Europe’s (DKKm) contribution*) reported) to DKK 3.0 billion in 2018 +6% 3.000 Grew 3% in L.C. (3% reported) to DKK 701 million in 17% Q4 2018 Key products# grew 3
Slide 41: Hedging at Lundbeck
Hedging at Lundbeck USD, CNY and CAD vs. USD hedge rate vs. The main currency risk concerns DKK fluctuations of USD, CNY and market rate CAD followed by JPY and KRW 7,0 115 6,9 Current hedging rates: USD (6.32), CNY (0.91) and CAD 110 6,8 (4.82) USD hedge rate 6,7 USD market rate Lundbeck hedges a s
Slide 42: Q4 2018 and FY 2018 - Product distribution of revenue
Q4 2018 and FY 2018 - Product distribution of revenue DKKm FY 2018 FY 2017 Q4 2018 Q4 2017 Growth Growth in local % of total currencies TOTAL: Abilify Maintena 1,595 1,333 415 334 24% 23% 10% Brintellix/Trintellix 2,182 1,663 639 461 39% 39% 15% Cipralex/Lexapro 2,257 2,392 363 519 (30%) (28%) 9% No
Slide 43: Geographic distribution of revenue - 1
Q4 2018 and FY 2018 - Geographic distribution of revenue - 1 DKKm FY 2018 FY 2017 Q4 2018 Q4 2017 Growth Growth in local % of total currencies NORTH AMERICA: Abilify Maintena 695 591 196 159 23% 20% 7% Trintellix 1,239 974 386 280 38% 34% 14% Northera 1,806 1,644 524 450 17% 13% 20% Onfi 3,165 3,022
Slide 44: Geographic distribution of revenue - 2
Q4 2018 and FY 2018 - Geographic distribution of revenue - 2 DKKm FY 2018 FY 2017 Q4 2018 Q4 2017 Growth Growth in local % of total currencies EUROPE: Abilify Maintena 770 637 183 147 25% 25% 26% Brintellix 547 376 151 104 46% 46% 22% Cipralex 572 643 105 151 (30%) (30%) 15% Other pharmaceuticals 1,
Slide 45: Q4 and FY 2018 - Cash generation
Q4 and FY 2018 - Cash generation DKKm Q4 2018 FY 2018 FY 2017 Cash flows from operating activities 1,406 5,981 4,045 Cash flows from investing activities (609) (2,907) (1,830) Cash flows from operating and investing activities (free cash flow) 797 3,074 2,215 Cash flows from financing activities (24
Slide 46: FY 2018 - Balance sheet and dividend
FY 2018 - Balance sheet and dividend Dividend (DKK) DKKm 31.12.2018 31.12.2017 Intangible assets 8,023 7,565 15 5% Dividend Other non-current assets 3,339 3,347 12 4% Yield (r.h.s.) Current assets 11,649 8,844 9 3% Assets 23,011 19,756 6 2% Equity 14,251 12,181 3 1% Non-current liabilities 1,184 1,0
Slide 47: Costs – Full year figures
Costs – Full year figures DKKm 2018 2017 2016 2015 2018 (∆%) 2017 (∆%) Revenue 18,117 17,234 15,634 14,594 5% 10% Cost of sales 3,456 3,881 4,082 5,395 (11%) (5%) Sales & Distribution costs 5,277 5,649 5,488 6,706 (7%) 3% Administrative expenses 762 833 805 1,160 (9%) 3% R&D costs 3,277 2,705 2,967
Slide 48: 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 49: 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