H. Lundbeck A/s Class A · OMXCOP:HLUN_A
H. Lundbeck A/s Class A — H1 2019 Earnings Presentation
51 slides from H. Lundbeck A/s Class A's earnings presentation, August 2019
Slide 1: Investor & Analyst Presentation - 2019
Investor & Analyst Presentation - 2019 August 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 in brief
Lundbeck in brief SPECIALIZED IN BRAIN HEALTH REVENUE (FY2018) GLOBAL PRESENCE ➢ ~70 years of expertise in CNS ➢ Headquartered in Denmark ➢ ~60% generated in North ➢ Among the first to develop and market ➢ Operating in 50+ countries America antipsychotics ➢ China 2nd largest market 70 yrs ~$2.8bn 50
Slide 4: H1 2019 highlights: Strong performance of strategic brands
H1 2019 highlights: Strong performance of strategic brands and executing on our Expand and Invest to Grow strategy +27% +4% +7% Strategic Brands International Markets Europe +22% in local currencies +5% in local currencies +7% in local currencies Strategic brands constitute 51% of Strategic brands g
Slide 5: Lundbeck's four strategic brands added DKK 0.9 billion in sales
Lundbeck’s four strategic brands* added DKK 0.9 billion in sales in H1 2019 compared to H1 2018 Strategic brands*: Up 27% (22% Strategic brands’ growth Sales by product# in L.C.) to DKK 4,289 million (H1 2019 - DKKm) (H1 2019) representing 50% of revenue# Brintellix/Trintellix: Up 30% to 11% Brintel
Slide 6: Brintellix/Trintellix continues consistent strong momentum
Brintellix/Trintellix continues consistent strong momentum Brintellix/Trintellix sales Brintellix/Trintellix sales Grew 30% (27% in L.C.) to DKK 1,299 million in H1 2019 (Quarterly - DKKm) (H1 - DKKm) Continued solid traction in 800 1.600 North America +31% volume share gains Int. Markets +30% >2.5%
Slide 7: Rexulti shows significant growth driven by demand
Rexulti shows significant growth driven by demand and roll-out in new markets continues Rexulti sales Rexulti sales Grew 37% (28% in L.C.) to DKK (Quarterly - DKKm) (H1 - DKKm) 1,032 million in H1 2019 600 North America +44% 1.200 In the U.S., volume is up 26% in +37% Other regions Q21) Launched in
Slide 8: Abilify Maintena continues its solid growth
Abilify Maintena continues its solid growth Abilify Maintena sales Abilify Maintena sales Grew 23% (20% in L.C.) to DKK 951 million in H1 2019 (Quarterly - DKKm) (H1 - DKKm) +20% Largest markets are the U.S., 500 1.200 Spain, Canada, Australia and North America France which in general also are Int.
Slide 9: Northera shows solid growth in sales and demand
Northera shows solid growth in sales and demand Northera sales Northera sales Grew 19% (11% in L.C.) to DKK (H1 – DKKm) (Quarterly - DKKm) 1,007 million in H1 2019 +26% 600 1.250 Volume is up 24%1) +19% In general, Northera sales are 1.000 impacted by normal quarterly 450 fluctuations driven by seas
Slide 10: North America – strategic brands up 26%
North America – strategic brands up 26% North America revenue North America – strategic brands Declined 14% (19% in L.C.) to (H1 - DKKm) (Quarterly – DKKm) DKK 4,562 million in H1 2019 6.000 2.000 Impacted by generic -14% +30% introductions of clobazam in 5.000 October 2018 1.500 Excluding Onfi, sal
Slide 11: International Markets - strategic brands up 35%
International Markets - strategic brands up 35% Grew 4% (5% in. L.C.) to DKK International Markets revenue International Markets – 2,004 million in H1 2019 (H1 - DKKm) strategic brands (DKKm) Strategic brands# grew by 35% 2.400 240 to DKK 356 million and +4% constituted 18% of sales in H1 +45% 2.000
Slide 12: Europe – strategic brands up 28%
Europe – strategic brands up 28% Grew 7% (7% in L.C.) to DKK Europe revenue Europe – strategic brands 1,631 million in H1 2019 (H1 - DKKm) (Quarterly – DKKm) Strategic brands# grew 28% to 1.800 +7% 500 DKK 823 million and constituted 1.600 +24% 50% of sales in H1 2019 400 1.400 Continued strong perf
Slide 13: Promising early-stage pipeline with efforts under way
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 Agitation in Alzheimer’s disease ~2021 Brexpiprazole PTSD ~2024 Brexpiprazole Borderline Personality Disorder ≥20
Slide 14: Abide - adding new drug discovery platform
Abide - adding new drug discovery platform with potential to deliver first-in-class compounds across multiple CNS indications The transaction: Serine hydrolase (S-H) Enzyme Superfamily Upfront payment: USD 250 million Now Lundbeck La Jolla Research One of the largest and most Center diverse enzyme c
Slide 15: Lundbeck La Jolla Research Center now established
Lundbeck La Jolla Research Center now established Transition of Abide to pure discovery site is completed ABX-1431 currently in phase IIa progressing as planned Headline results due 2020 Strong progress of the early portfolio FIH for next project expected in 2020 15
Slide 16: First Target: Endocannabinoid modulation through MGLL inhibition
First Target: Endocannabinoid modulation through MGLL inhibition - A compelling therapeutic target for a wide range of CNS diseases Monoacylglycerol lipase inhibitors MGLL inhibition Multiple future potential (MGLLi) regulate endocannabinoid indications in psychiatry and tone, which regulates Increa
Slide 17: ABX-1431: First-In-Class drug with broad potential in CNS
ABX-1431: First-In-Class drug with broad potential in CNS ABX-1431 modulates the Exploratory phase IIa trial ongoing ABX-1431: First-in-Class drug (NCT03625453) with broad potential in CNS endocannabinoid system preferentially in areas where Initiated in October 2018 neuronal circuits are excessivel
Slide 18: Brexpiprazole in pivotal programme for agitation in Alzheimer's
Brexpiprazole in pivotal programme for the treatment of agitation in Alzheimer’s Ongoing phase III study1: Agitation in Alzheimer’s Two studies in the pivotal (AAD) programme finalized Compares the efficacy of 2 doses of brexpiprazole with >20% of individuals in a A third study commenced In placebo
Slide 19: Brexpiprazole to enter a pivotal programme in PTSD
Brexpiprazole to enter a pivotal programme in PTSD during Q4 2019 PTSD epidemiology PoC study* showed… Planned pivotal programme: Combination of brexpiprazole End-of-phase-II meeting with FDA and sertraline demonstrated provide the basis for trial design improvement in symptoms of >8m – U.S. prevale
Slide 20: Brexpiprazole to enter PoC study in Borderline Personality Disorder
Brexpiprazole to enter PoC study in Borderline Personality Disorder (BPD) BPD epidemiology Borderline Personality Planned PoC study: Disorder (BPD) 2-arm flexible dose N=200 adult patients Dysfunctions in the serotoninergic and dopaminergic systems is considered as Primary endpoint: ZAN-BPD4) ~5m –
Slide 21: 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 Agitation in • Programme to compare the efficacy of 2 doses (2 mg and 3 mg) of brexpipr
Slide 22: Foliglurax – new pipeline asset in PoC testing in Parkinson's
Foliglurax – an interesting new pipeline asset currently in PoC testing in Parkinson’s patients Increase activity of a specific Levodopa-induced Motor complications of glutamatergic target (mGluR4) dyskinesia levodopa Symptomatic treatment of OFF-time in Parkinson’s and levodopa induced PD-LID is th
Slide 23: 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 patients (major countries) Phosphodiesterase 10A inhibitor with schizophrenia (PDE10Ai) Primary cause for inability to live Potential novel MoA for the treatme
Slide 24: Lu AF82422: Potential disease modifying antibody in Parkinson's
Lu AF82422: Potential disease modifying antibody in Parkinson’s Pathogenesis of Parkinson’s (PD) Ongoing phase I study1: Lu AF82422 is a human IgG1 mAb that recognizes all major Healthy non-Japanese and alpha-synuclein forms including Lewy body Genetic Japanese subjects and in Cellular aging aggrega
Slide 25: Lu AF28996: Oral treatment for Parkinson's motor fluctuations
Lu AF28996: A potentially highly efficacious oral treatment for Parkinson’s patients experiencing motor fluctuations Ongoing phase I study1: Lu AF28996 is highly potent agonist at the D1- and D2-type Single- and sequential- dopamine receptors ascending-dose of Lu AF28996 to healthy young men D1/D2-t
Slide 26: ABX-1431 in phase Ib study in neuropathic pain
ABX-1431 in phase Ib study in neuropathic pain MGLLi have shown to reduce Neuropathic pain (NP) Ongoing phase I study1: pain in preclinical models of NP results from damage to the Designed to identify a titration inflammatory, post-surgical, nervous system in the brain or spinal regimen of ABX-1431
Slide 27: Finance
Finance x PATIENTS ON INNOVATIONS | PROFITABILITY oncanizarion a=) | 30 USED icioe TES a SIBLE2 cae 2014 x SLOBAL LEADERSHIP PSYCHIATRY NEUROLOGY IMPROVING LIVES OF PATIENTS ANNUAL REPORT 2016, 27
Slide 28: Robust profitability despite LOEs
Robust profitability despite LOEs Gross margin: Down from DKKm H1 2019 Δ% y/y Q2 2019 Δ% y/y 81.6% to 80.7% (H1) Revenue 8,480 (9%) 4,246 (10%) Gross margin 80.7% -0.9pp 80.8% -0.4pp SG&A ratio: Up from 31.6% Gross margin (core) 85.7% -0.3pp 85.8% +0.4pp to 35.8% Operating expenses 4,535 3% 2,326 3%
Slide 29: Strong financial position provides flexibility to pursue further growth
Strong financial position provides flexibility to pursue further growth Net cash flow: Down DKK 2,280 Net cash flow Net cash and million to DKK -1,864 million (Quarterly - DKKm) Net debt/EBITDA 8.000 3 800 Net debt/EBITDA: -0.5x based on rolling four quarters 400 6.000 Net cash (DKKm) – l.h.s. 2 FY
Slide 30: Europe and International Markets have returned to strong dynamic growth
Europe and International Markets have returned to strong dynamic growth Regional growth Sales by region# Strong improvement in both growth and profitability in (H1 2019 - DKKm) (H1 2019) Europe International Markets shows North America -14% 20% solid growth driven by Australia, Japan, Korea and Sout
Slide 31: H1 2019: Continued strong growth from strategic brands
H1 2019: Continued strong growth from strategic brands and negative impact from generic erosion on mature products as expected Revenue Core EBIT Revenue: Down 9% (8% in L.C.) (H1 – DKKm) (H1 – DKKm) to DKK 8.5 billion 10.000 4.000 Performance driven by strategic -9% -24% brands mitigating effect fro
Slide 32: Lundbeck's financial guidance for 2019 is maintained
Lundbeck’s financial guidance for 2019 is maintained Continued growth for strategic brands 2019 financial guidance Significant negative impact from 2018 2019e ~ ∆% generic erosion (DKKm) (DKKbn) (y/y) Effects from hedging is a loss of DKK Revenue 18,117 16.3 − 16.7 -10% − -8% 200-250 million OPEX fr
Slide 33: Cash flow impacted by acquisition of Abide, DoJ payment and dividend
Cash flow impacted by acquisition of Abide, DoJ payment and higher dividend pay-out Cash flow from operating Operating cash flow Net cash flow activities: Reached DKK 850 million (Quarterly - DKKm) (Quarterly - DKKm) in H1 2019 following negative 2.400 800 impact from working capital 2017 2.000 400
Slide 34: Core gross margin improved in Q2 2019 despite LOE on Onfi
Core gross margin improved in Q2 2019 despite LOE on Onfi Cost of sales and gross margin (core) 900 Core gross margin (%) 90% Cost of Sales (core): Down 7% to Cost of sales (DKKm) DKK 1,216 million in H1 2019 Gross margin (core): Slight 85% decline to 85.7% in H1 2019, but improvement in Q2 2019 Ope
Slide 35: Balance sheet is strong with limited debt
Balance sheet is strong with limited debt and strong operating cash flow Assets (DKKbn) Liabilities (DKKbn) Cash & cash equivalents: Declines following the acquisition of Abide, 23,0 23,0 22,1 22,1 increased dividend pay-out and payment of DoJ settlement 8,0 Intangible Working capital: Declines DKK
Slide 36: Selected deliverables
Selected deliverables Start PoC study on Lu AF11167 in schizophrenia Commence the launch of Rxulti/Rexulti in Europe Abide acquisition – acting in line with strategy Pivotal data for Rexulti in bipolar mania Continue LCM activities on brexpiprazole Obtain approval of Trintellix in Japan (Q3) Achieve
Slide 37: Lundbeck continues its mission to restore brain health
Lundbeck continues its mission 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 reputat
Slide 38: Thank you!
Thank you!
Slide 39: Solid volume growth in the U.S. for all strategic brands
Solid volume growth in the U.S. for all strategic brands +17% 100.000 800.000 +26% 75.000 600.000 50.000 400.000 25.000 200.000 0 0 Q2.18 Q2.19 Q2.18 Q2.19 300.000 12.000 +24% +26% 9.000 200.000 6.000 100.000 3.000 0 0 Q2.18 Q2.19 Q2.18 Q2.19 Source: Symphony Health (ref Bloomberg) 39
Slide 40: Lundbeck's strategic brands deliver solid double-digit revenue growth
Lundbeck’s strategic brands deliver solid double-digit revenue growth +20% 500 North America 800 +31% Europe+Int. Markets 600 North America Europe+Int. Markets 250 400 200 0 0 Q2.17 Q2.18 Q2.19 Q2.17 Q2.18 Q2.19 +26% 800 600 +44% 600 North America Europe+Int. Markets 400 300 200 0 0 Q2.17 Q2.18 Q2.1
Slide 41: Total molecule sales (gross) - USDm
Total molecule sales (gross) - USDm 1.250 1.200 1.000 1.000 +58% 800 750 +80% 600 500 400 250 200 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 1.000 Abilify Maintena: US approval (Feb. 2013); EU approval 800 (Nov. 2013) +161% 600 Brintellix/Trintellix: US approval (Oct. 2013); EU approval 4
Slide 42: Onfi impacted negatively by introductions of generic clobazam
Onfi impacted negatively by introductions of generic clobazam Onfi sales Onfi demand Declined 64% (67% in L.C.) to DKK 627 million in H1 2019 (Quarterly - DKKm) (Quarterly – TRx) 1.000 150.000 Numerous generic tablets and -76% -65% oral suspensions launched from October 2018 800 Aggressive generic p
Slide 43: Currency hedging at Lundbeck
Currency hedging at Lundbeck USD, CNY and CAD vs. DKK Development of Lundbeck’s key The main currency risk concerns (index 1 Jan. 2018=100) currencies fluctuations in USD, CNY and CAD followed by JPY and KRW 110 Key 2018 H1.18 H1.19 Spot currency Avg. Avg. Avg. rate Current hedging rates: USD 105 (6
Slide 44: H1 2019 and FY 2018 - Product distribution of revenue
H1 2019 and FY 2018 - Product distribution of revenue DKKm FY 2018 FY 2017 H1 2019 H1 2018 Growth Growth in local % of total currencies TOTAL: Abilify Maintena 1,595 1,333 951 771 23% 20% 11% Brintellix/Trintellix 2,182 1,663 1,299 999 30% 27% 15% Cipralex/Lexapro 2,257 2,392 1,205 1,339 (10%) (10%)
Slide 45: Geographic distribution of revenue - 1
H1 2019 and FY 2018 - Geographic distribution of revenue - 1 DKKm FY 2018 FY 2017 H1 2019 H1 2018 Growth Growth in local % of total currencies NORTH AMERICA: Abilify Maintena 695 591 397 325 22% 15% 9% Trintellix 1,239 974 697 542 29% 21% 15% Northera 1,806 1,644 1,007 849 19% 11% 22% Onfi 3,165 3,0
Slide 46: Geographic distribution of revenue - 2
H1 2019 and FY 2018 - Geographic distribution of revenue - 2 DKKm FY 2018 FY 2017 H1 2019 H1 2018 Growth Growth in local % of total currencies EUROPE: Abilify Maintena 770 637 474 385 23% 23% 29% Brintellix 547 376 345 260 33% 32% 21% Cipralex 572 643 286 323 (11%) (12%) 18% Rexulti/Rxulti - - 4 - -
Slide 47: H1 2019 and FY 2018 - Cash generation
H1 2019 and FY 2018 - Cash generation DKKm H1 2019 H1 2018 FY 2018 Cash flows from operating activities 850 3,369 5,981 Cash flows from investing activities (284) (1,370) (2,907) Cash flows from operating and investing activities (free cash flow) 566 1,999 3,074 Cash flows from financing activities
Slide 48: H1 2019 and FY 2018 - Balance sheet and dividend
H1 2019 and FY 2018 - Balance sheet and dividend Dividend (DKK) DKKm 30.06.2019 31.12.2018 Intangible assets 9,870 8,023 15 5% Dividend Other non-current assets 3,634 3,339 12 4% Yield (r.h.s.) Current assets 8,578 11,649 9 3% Assets 22,082 23,011 6 2% Equity 13,498 14,251 3 1% Non-current liabiliti
Slide 49: 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 50: 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 51: For more information, please contact Investor Relations
For more information, please contact Investor Relations Listed on the Copenhagen Stock Number of shares 199,136,725 IR contact Exchange since 18 June 1999 Treasury shares 366,019 (0.2%) Palle Holm Olesen Insider holdings 122,665 (0.06%) VP; Head of Investor Relations Deutsche Bank sponsored ADR Clas