Welcome to the Lundbeck Financial Statements for the 1st 6 Months of 2021. For the first part of this call, all Today, I am pleased to present Deborah Dunsier, are President and CEO Anders Scott Scheer, Executive Chief Vice President and CFO and Johan Lofmann, Executive Vice of Research and Development. Speakers, please begin.
Operator, welcome, everybody, to our first half financial results. Thanks for joining us today. With me, I have Anders Goertsche, our CFO Johan Lutmann, Head of R and D Jakob Tolstrup, Head of Commercial Operations and the rest of the world. And joining us by phone from Chicago, Peter Anastacio, our Head of North America. Next slide, please.
You can see our forward looking statements and you've seen them before, so we'll move right on to Slide 3. Thank you. We're very proud of robust financial results for the first half of twenty twenty one in spite of significant impact from our LOE of Northera. The strategic brands have good momentum being up 13% in local currency, reaching DKK 4,400,000,000. VIEpti has had strong momentum reaching 177,000,000 and is fully in line with our growth expectations.
International Markets in Europe have been strong performers with growth of 6% and 3%, respectively. Northera has been a challenge, more so than we had anticipated, with a stronger decline of 60% in the first half. Nonetheless, we've delivered a very solid EBIT core EBIT margin of 26.1% and made good progress on deleveraging. Participants. Anders is going to go through our updated guidance with you in a few slides from now.
Next slide, please. So the strategic brands are really the revenue drivers for the company and have returned to double digit growth in the Q2 of 2021. In total, they grew 13% in local currency, and all of them are expected to have continued double digit growth as we go into the second half of twenty twenty one. As I've said, we're getting strong performance across regions, but Europe and and international markets have been delivering strongly. We know that the pandemic is still out there and growth does was impacted in the first half and is still somewhat impacted.
We're still seeing a bit of a diagnosis gap, not are having patients and physicians fully back to pre COVID levels of interaction. But we are making progress in the world opening up. And right now, our core levels are also increasing. So we're getting back towards normal. We're still not quite there around the world, but definitely, in the second quarter made strong progress versus Q1.
Next slide, please. Participants VIEpti has continued to show very strong momentum in vial growth, as I said, reaching 177,000,000 in the first half, And we're on track to achieve our expectations for this brand based on the fact that it really is delivering for patients who receive it. We've also got good market access with over 235,000,000 individuals in the U. S. Having access to Vyepti when their physicians feel it's the right product for them.
We've been accelerating the launch with really focusing on the strength of VIEpti's are in a powerful profile and setting up an excellent prescribing experience for physicians. We reach out to physicians who are migraine treaters regardless of whether they have infusion capability because we've made good progress in establishing a network of sites, alternative sites of infusion, where patients can go close to home. And we've also started to work with some home infusion, so making it easier and easier for patients to get access to VIEpti. We're looking forward to the global rollout of this brand, ramping up starting in the Q3 of this year, and Johan will cover that in a bit more detail. Next slide, please.
We've had also robust performance across the other 3 strategic brands. Looking at Brintellix, Trintellix, we've had growth of 12% in local currency, 18% in Q2. Japan's been a bright spot with its into its 2nd year of launch, achieving 4.1% market share, and that's growing very nicely. Just a reminder, we look forward to sustained growth over the next 6 to 8 years because these strategic brands are well protected in their intellectual property. Trintellix patents are issued last until March of 2,032, the composition of matter expiring in December 26.
With Rexalti, we've seen good growth, 13% up in local currency in Q2, returning to that double digit growth. It also has a long lifespan to continue growing, with patents issued out to 2,032, composition of matter expiring in 2029. Abilify MNTENA, the long acting injectables have strengthened. Their market growth has resumed. And Abilify MNTANA grew 5% in local currency, having been resilient through the pandemic and up 11% in Q2.
The 1 month formulation has had some Patents issued, the Orange Book listing goes up until March 2034, and, the formulation patent expires in the rest of the world in 2024. You know that we're going to be bringing a 2 month formulation of Abilify MNTANA forward, And that has patent protection to the mid-30s, giving us the opportunity to really extend this franchise are out into the future. Next slide, please. All three regions of the world had very strong progress with respect to our strategic brands, and we're glad to be emerging from the pandemic. Of course, there is uncertainty out there with some of the New waves that we're seeing.
But in general, all regions are progressing back to much more normal interactions. North America is, of course, impacted significantly by the loss of Northera, was our 3rd largest brand, an extremely successful brand built are in the market by a very strong commercial organization. In North America, the strategic brands are up 12% in local currency and now make up 59% of sales, and we're seeing VIEpti really start to contribute to growth. International markets have had strong growth in the strategic brands. Japan has been a strong contributor.
China is growing by 7% in the first half, even in spite of Ebixa being included in the volume based procurement. Europe has also grown well, with the strategic brands up 10% in local currency, making up 62% of sales now. And they're showing robust growth across most markets driven by demand because, of course, price is not an option price increase is not an option in Europe. Participants. Next slide, please.
Over to you, Anders, to take us through the financials.
Thank you very much. A couple of financial highlights. In spite of a really strong performance by the strategic brands, growing 19% in Q2, We have a decline in revenue, reported revenue, and that is a couple of things impacting, of course, the noethera decline is the main reason, but also the depreciation of FX is actually hampering the revenue growth. The gross margin and the core gross margin is pretty much in line with last year. So we are keeping up a good traction there.
SG and A down Some $200,000,000 and that is due to lower sales and marketing activities or level of activities are indeed down due to that we last year had the full liquor ex write off. So that's are the main reason for the decline in R and D cost. We are extremely happy with the solid performance in earnings, close to $1,500,000,000 in the first half and EBIT margin of 18%. We are, as a management team, really proud of that. Core EBIT and core margin also delivering a strong performance in the first half, actually creating a solid foundation for The financial guidance that we are coming to in a minute.
When we go to the next slide, you can also see from the quarterly release that the cash flow is is solid. And that also means that we will end the year at a net debt level around SEK3.5 billion. That is our best guess now. And net debt to EBITDA is expected to stay around unchanged from 2020 around a ratio of 1. Next page, please.
We have tried to make a slide to actually explain the moving parts in the first half and also in the second half to hopefully that will help adding up the numbers for the full year guidance. And what you can see here is that the first half has, as I said before, mainly the decline in revenue is mainly driven by the loss of exclusivity for Nothera and then the FX partly absorbed by the hedging. And as Deborah alluded to, we are down 60% for Natera and that will accelerate in the second half. Now we believe that we'll see a decline of more than 80% adding up to a total decline for the year of 75%. It's also super important to highlight that we believe that the revenue line the revenue will actually accelerate.
We will see more growth in the second half if you exclude the impact from Nothera. And then the FX hedging will be more muted due to that we are more on par with the last year's FX numbers, but then the hedging is living the other way around. So we hope that this will explain a bit about how we expect the second half to actually perform. Next slide, please. So that turns into the guidance.
And based on mainly two factors, we have reduced the upper end of our revenue guidance with $300,000,000 and that is purely due to contract manufacturing and Nothera because the strategic brands and why Ipzy is delivering exactly as we have expected. We have seen a strong performance and we are on track to deliver what we said in the beginning of the year. Due to the fact that we have seen a lower level of from a promotional point of view, then we have also been able to compensate by cost savings and therefore we have increased the lower end of our guidance for EBITDA, core EBIT and EBIT with 200,000,000 are also expecting a bit better financial performance for the year. You should expect financial expenses to be some €350,000,000 of which approximately €200,000,000 has cash flow impact. The rest is are mainly unrealized FX positions.
So with that, I would like to hand over to Johan to start going will be strong momentum for Vyepdi.
Thanks, Anders. Please turn to next slide. Let me start with Vyepdi. We have progressed very well with its global mentioned and approval in Australia was obtained in early June, leading to 4 approvals so far. The rollout of regulatory submissions continue at a rapid PACE and VIEpti is currently under regulatory review for market authorization with 14 health authorities within Europe, South America, Asia and the Middle East.
The EMA review is progressing according to plan. We have also substantial clinical program ongoing for Vyapti, both within the existing indication of migraine prevention and further expansion of data on its effectiveness in medication overuse headache as well as indication expansion into cluster headache. All clinical trials underway FDA are advancing well currently. The DELIVER trial, a Phase 3b study that evaluates the effects of Aeepti for the prevention in migraine of patients with prior unsuccessful preventive treatments has completed recruitment, and we are looking forward to the results in the second half of the year. Additionally, we have initiated a pivotal global program supporting major filings in Asia with the so called SUNLIGHT study that is a China centric study and the SUNRISE study that is a Japan are currently enrolled in the study.
Those trials are up and running and are actually currently enrolling well. Finally, on VIApti, I want to state that we broadly presented on the program at the Annual Scientific Meeting for the American Headache Society in June with 10 posters. And recently, we also had published a relief study in the prestigious Journal of the American Medical Association, JAMA. As you may recall, the relief study demonstrated a very fast and powerful onset of action of Iepti. Next slide, please.
Recently, we received a headline data from the proof of concept study on brexpiprazole in borderline personality disorder. I'd like to remind you that this 12 week randomized double blind placebo controlled study sets flexible doses, 2 to 3 milligram of piprazole as monotherapy in other subjects with borderline personality disorder. On the primary efficacy endpoint predefined as the have a 10 week time point readout on the Sanarini Rating Scale for Borderline Personality Disorder. The Brexby, Brasol arm did not show statistically significant separation from placebo, unchanged from baseline. However, we saw improvements greater than placebo on the Sanarina scale at other time points in the study.
The observed safety and tolerability of brexpiprazole in borderline personality disorder patients were consistent with the safety and tolerability we have observed for brexpiprazole treated patients in other indications. Regarding the 2 other LCM programs we're running on Brexsprudyperisol degradation Alzheimer's disease study is on track to report headline results mid are in a major way impacted by the pandemic, are making recruitment very challenging and it's not possible for me to provide a timeline for the program at this time point. We progressed very well. We're broadening the early stage proof of concept pipeline. The Phase folio has been expanded with new entrants, so novel mechanisms and molecules are being evaluated in humans with gatekeeping experimental medicine studies faster.
Are into a broadened set of exploratory patient cohort studies. We also are progressing selected assets into proof of concept Phase II studies. Next slide, please. The one I'd like to highlight here is LU AF82-four twenty two. During the next half of the year, we will commence a Phase 2 study using our anti alpha synuclein antibody in patients with multiple system atrophy, MSA are A for short.
MSA is a rare neurodegenerative disorder affecting autonomic processes, including blood pressure, breathing, bladder function as well as control our motor functions. This makes MSA sharing many features with Parkinson's disease, such as low moment, rigid muscles and poor balance. The condition progresses rapidly and eventually leads to death. Apart from symptomatic medications, from other function improvements of lifestyle changes, etcetera, there is really no treatment that can delay are of this devastating disease. We see a substantial potential for 4/22 in MSA.
It's designed to break the core of the pathophysiology by binding to the alpha synuclein seeds that spread the disease throughout the brain. Overall, the clinical program for 42 will be highly innovative with early readouts of the treatment effect on neurodegenerative processes using combined biomarkers and clinical outcome measures for decisive decision making followed by an adaptive basin statistics driven larger pivotal part. Participants. I also would like to mention some impactful collaborations we have recently established to further feed innovation in research, in a new strategic collaboration with the Weisz Institute for Biologically Inspired Engineering at Harvard University, will be supported target proteins that facilitate the delivery of future therapeutics such as antibodies into the brain. We have also very recently entered into new strategic collaboration with the U.
S.-based company, Argenta Therapeutics, to discover small molecules targeting RNA regulation and splicing of disease causing genes. The strategic R and D collaboration with argenta critically expands our research platforms by enabling us to pursue RNA processing targets linked to rare neurology indications that were previously considered undruggable. With that, I'd like to leave over to Deborah.
Thanks, Johan. As we look forward into the future, our long term ambition is to be number 1 in brain health, And that's going to require us to continue to build our pipeline internally, as Johan has described, But also externally, and that's something that Lundbeck has been doing in the past and been very good at executing upon. When we think about how we'll develop that pipeline, our future focus is in the targeted indications niche neurology, niche psychiatry and rare disease neurology, With the purpose of making sure that we have a focus on specialist indications of high unmet need, where we can have a focused commercial footprint and where we have tractable biomarker driven development programs, as Johan has outlined with our Asimab. So we'll continue to build our internal pipeline focused in 4 are clusters of promising biologies where we can bring forward new transformative medicines, and we'll continue to look for the right assets externally to bring in to supplement our pipeline and portfolio. Looking at later stage opportunities, we'll be looking at Assets that can leverage our infrastructure.
We've been extremely successful with multiple are in the process of the new projects that Lundbeck has brought in from the outside. Northera is one of those. And so we'll look to leverage the commercial infrastructure and invigorate growth through will be able to identify potential new partnerships and then build the earlier stage pipeline assets with novel technologies to accelerate innovation, like building alliances and partnerships as we have with Argenta. Next slide, please. We've got very good growth visibility from these strong growing strategic brands over the next 6 to 8 years with no major loss of exclusivities on the horizon.
And our goal is today, as it has always been, to deliver long term sustainable profitable growth. In the short to mid term, our goal is to deliver continue to deliver mid term will be able to get a good start to the year. Mid single digit revenue growth over the next 6 to 8 years and restore the EBIT margin to the 25% by 2024 that we spoke about when we did the acquisition of Alda Biopharmaceuticals. That would imply a core EBIT margin are exceeding 30%, and we are committed to keeping our dividend policy of 30% to 60% payout of the net result. Lundbeck's been successful over many years, delivering a compound annual growth in those mid single digit range, building on internal assets such as Ciprolex, Lexapro, Trintellix and building very strong assets using external development like Rexalti and Abilify MNTenna in our partnerships are building strength from the acquisition of Chelsea Therapeutics with Northera or Onphi, Sabril, Zenazine from Ovation.
As we go into the longer term, we retain that goal of continuous profitable growth and work to build a pipeline that delivers a steady flow of transformative medicines, both from our internal and external innovation. Next slide, please. So the must wins in the second half of twenty twenty one is continuing to build those strategic brands, drive that double digit growth that we've seen in the Q2 forward as the world continues to open up post pandemic continue to build the successful launch of VIEpti, accelerating in the U. S. And getting those next markets up and running are strengthening our mid- and late stage pipeline as we bring forward assets into Phase 2 from our internal pipeline and seek to supplement through business development, continuing to accelerate our digital transformation and building towards that sustainable profitable growth as we deliver over time the premier neuroscience pipeline to take us towards our goal of being number 1 in brain health.
With that, I'd like to thank you for attending today, and we open the floor to questions.
Are ready to take
questions.
And our first question comes from the line of Ronald Kapadia of Bernstein. Please go ahead. Your line is open.
Great. Thanks very much for taking my questions. So let me first just ask about the sequential growth of 'twenty one versus 2022 for the major growth drivers. In particular, Trintellect and Ruxulte seem to be impacted by COVID. So just curious if the right assumption is for an acceleration in growth in 2022 versus the growth we are seeing this year.
I know you talk about double digit growth. What I'm really asking is, will we see an acceleration in that growth are next year for these 2 key brands. And then my second question is just on the pipeline. So could you provide a little bit more color on the Phase 1 data for 9, constitute the PACAP inhibitor and maybe give us some context on the Phase 2 trial design, which you plan to start later this year. I'm just curious if a combination of VIApti will be part of the trial.
Participants. I thought you were saying something else, Ramon. So Anders will take the first part of the question on Rexalti Trintellix growth to 2022, Although I remind you, we're not giving you any guidance for 2022 right now. And Johan, perhaps you can start with the pipeline question on PACCAR.
Joao. Yes. So I start with the pipeline question then. Yes. So we have we are really steadily building up our Phase have a couple of assets now that are ready to go into Phase 2.
1 I mentioned now, the MSA. The other one is PACAP. We are are just finishing up some studies, and we are looking forward to talk about that very soon. But we have the package ready more or less to progress also with proof of concept study with that asset. The primary interest is, of course, migraine.
That's where the biology is strongest. In terms of the design, was that a question about Esmab? It was
a combination with the VYFT, considered
Combination with VYFT. Yes. I mean, it's way too early to say how this will pan out. PACAP is a new mechanism of action, a broader mechanism of action than CGRP in some degree and more interesting, it goes into more symptomatic functions, sympathetic nervous system effects and also inflammatory processes. So it could have a broader potential.
But obviously, we are considering how it may work in combination with CGRP antagonists.
Yes, but our first Phase 2 proof of concept would not be a combination study.
So I think The first thing that we need to be successful is, of course, to continue the double digit growth for the second half of twenty twenty one. And then of course, we have the ambition to continue to deliver double digit growth. But as the brands are going continuing to grow. Of course, there will be it will be at some point, we'll be challenging to keep up with that pace. But definitely, when we look into 'twenty two, We have the ambition for the totality of the 3 brands, Brantelix, Rich of the 2 brands you asked, Rig Xolgi and Brantelix to deliver double digit growth.
That is definitely ambition.
Great. Thank you.
Thank you. Next question comes from the line of James Gordon at JPMorgan. Please go ahead. Your line is open.
Participants Hello, James Gordon, JPMorgan. Thanks for taking the questions. First question is just about SG and A and where we are. So I know the release talks about lower sales and marketing as a result of COVID-nineteen. Then the presentation also says 2021 less impacted by COVID-nineteen savings.
So not asking for guidance for 2022, but just How much benefit do you think you actually are going to have had on SG and A for 2021 that we need to bear in mind when we're trying to forecast 2022? That's the first question, please. Second question is on VIApti. So the trajectory looks like it's continuing, but it's sort of the same line. That hasn't really been an inflection yet.
Do you still think the product could do something like or could do more than DKK0.5 billion this year? Or does that now look like a bit of a stretch? And a third and final question. So on Slide 17, you lay out the 6 to 8 year aim of the company, so the mid single digit top line growth and the margin expansion. Just to clarify, is that something you think you can do even if Rexalti Absanders Agitation is unsuccessful and ex any acquisitions?
Already baked in something about Sun's vegetation being successful and or getting an M and A boost?
Okay. So Starting with the SG and A, Anders will take that one.
So the guidance we have made with the SG and A and What we have said is that SG and A this year will be approximately between 41% 40 4% of revenue, that is what we anticipate. And that leads into SG and A level comparable with last year. Then when you go into 'twenty two, what will be added in 'twenty two is definitely that then YEPTI is being launched in more territories. And therefore, the spending for supporting YEPT will increase to with how much it will increase, we don't expect it to increase significantly, but there will be an increase and that is what you should expect. And then when it comes to asking about growth from 6 to 8 years, of course, it goes without saying that 6 to 7 years down the road, we strongly believe in double digit growth when it comes to year 8, Then we are getting more challenged.
But we also, as you can see, we have patients that are actually are protecting the business longer and we believe there's an opportunity to actually be a bit more ambitious also on the longer in the in the 8 years timeframe. So we believe based on our interim pipeline and based on our existing brands, there There is an opportunity to actually create that. We also know after Trantelix, we will, of course, be a bit more challenged, but we still look into growing the business after that.
Participants Yes. And I think to your question on VIEpti, we're very pleased with how it's performing. It has continued to grow. It's on track are expected to achieve our expectations. We look forward to the opening up, continued opening up.
Q2 opened up a bit more than it had in Q1 with respect to the pandemic. But we have seen patients able to come in. And Chronic migraine is so impactful, and the need for prevention is great. So patients and physicians did work out during 2020 how to do that safely. So as things open up, we anticipate the continued growth of VIEpti, and it is on track with our expectations.
Participants. Thank you. Maybe if I could just maybe just to clarify what was my third question. It was less about the growth outlook beyond 8 years. It was more the growth outlook, so going up to the 6 to 8 year period, whether this is guidance that
you could do irrespective of what happens for
the upcoming West salty outside the vegetation readout?
We anticipate that we'd be able to deliver that mid single digit growth irrespective of the Rexalti Alzheimer's agitation readout. And as Anders mentioned, it is considering our strategic brands, the portfolio that we have in our hands. Of course, we will look to accelerate and build in business development, but we can't We can't forecast that in right now.
Sure. Makes sense. Thank you.
Thank you. Our next question comes from the line of Jo Walton at Credit Suisse. Please go ahead. Your line is open.
Thank you. Three questions, please. I wonder if you can tell us a little bit more about the dynamics of Vyapti in the U. S. Are you seeing or what proportion of patients are coming back for repeat prescriptions versus new patients, so just giving us some sense of the degree of satisfaction that a patient has when they get on the product, can you tell us a little bit more?
You talk about infusion centers. If you think about what the gating item is to stop getting more prescriptions from doctors. Is it is lack of a nearby infusion center The key pushback or is it the fact that there isn't any free product to give away that there might be if it was one of the non infused products? So just A little bit more on that pushback. Trintellix, you talk about the patent situation there and you highlight the 2,032 patents.
There is a court case ongoing, isn't there? And you've settled with a number of players. So is it reasonable for us to assume that The patent really would go out that far? Or given that you settled, we should think about a realistic time being shorter than that? And my final question would just be on the margin.
So going from a midpoint, your core margin this year is going to be about 21%, But you're telling us that it will be exceeding 30% by 2024. Can you just tell us which is the area where you could see the biggest change? Is there any chance that the gross margin will be substantially different? I suspect that your R and D won't be that different because you've got lots of great ideas of things to do. So that's suggesting to us a very Meaningful reduction in SG and A.
So just checking that you think you can deliver all of these sales and have a meaningful reduction in SG and
Great. So we'll start with the dynamics of Vyapti in the U. S. And infusion centers, and I'm going to ask Peter and Astacio to take that.
Peter? Yes. Thanks, Joe, for the question. You had a few questions in there that I'll try to address. With regard to new and repeat, We certainly are seeing a combination of both.
In fact, all of our metrics keep going up, the number of new patients, the repeat customers, The repeat use in terms of patients coming back for second, third infusions is consistent with our expectations. So we are seeing that be on track with what we thought it would be, but we're also seeing the expansion of more prescribers and the depth of that prescribing are by those clinicians. And the reason the infusion centers have been important is because at first, at the early days of launch, our focus was on clinicians that have high volumes of migraine patients certainly, but also have the infusion capabilities. Now because we have such a robust network of infusion centers and as Deborah mentioned, we're beginning to get some traction with in home infusion that we can really focus in on the customers that have the highest degree of volume of migraine patients irrespective of their ability to do infusion because they can refer to a local infusion center and then, of course, do all the care and follow-up for those patients. So that's been a big enabler for the growth and we expect that to continue and we're constantly optimizing the support we provide for our customers within compliant means and of course support for patients and continuing to work on, as we mentioned before, are broadening the in home infusion to make it as convenient for the patients as possible.
In terms of pushback, you had asked, the main thing that holds back Vyepi is what holds back any new product, and that is familiarity. It certainly takes, quite a few visits for participants who are maybe slower adopters to really understand the clinical profile, the value that VIEpti brings, And that's not unique to VIEpti. That's true of any new product launch. And certainly, that process has been delayed a bit Because of the pandemic impact, particularly last year, but we're really getting some good traction on driving that efficacy message. It's being well received, and clinicians are for sure seeing that with our patients and their practice.
That's the feedback we get. So hopefully that addresses your questions.
And then to comment on the Trintellix patent. We've got these patents listed for the compounds, and we believe that they're valid and enforceable and will, together with our partner, Takeda, support those, The validity of those patents as we go through, we have settled certain cases. And what we build in, we don't give guidance on because we believe that the patents are valid and enforceable. So you'd have to make your choice on that. We've kind of given you the bookends of the compound patent And the outjays, we do expect a decision coming up in this quarter at least, knowing that there have been COVID delays before with the court, so But we would expect something potentially this quarter.
What is actually creating the expansion in the core margin, it goes without saying delivering growth in the revenue line is a big contribution, you should expect that the gross profit margin will stay around this between 78% 80%. That is how we anticipated with the existing product mix. You will see a slight increase in our SG and A line due to that we are making the global rollout of Vyepci. And then we have a couple of years now where we have elevated levels of R and D investment due to the biopsy trials. And then, of course, you would see a Reduction again in the cost line there.
So you will see a more A bigger impact on the from the gross profit than you would see the growing cost base. So that is the reason for the margin expansion.
Participants. Thank you.
Thank you. Our next question comes from the line of Michael Novod at Nordea Markets. Please go ahead. Your line is open.
Yes, thanks a lot. A few questions. So also to the slide regarding the patents. On the Billify Maintainer, it also seems that you have sort of increased your conviction in growth for that sustained growth for that product. So how do you envision the trends for Buildify Maintainer in the coming, let's say, 5 years?
Is that just sort of a steady grower and then adding on or replacing with the 2 months formulation? And then secondly, to IO. We've seen a lot of companies do better in international operations and Lundbeck, too. So maybe you could sort of go into your sort of investment structure in IO. Are you sort of also investing into This strong growth that you may envision also in IO and also adding to that it's not only the U.
S. That is in focus, but also international operations and Jakob's area there. And then lastly, maybe Johan could elaborate a bit on the next steps regarding borderline personality disorder and potential FDA dialogue. Is this something that you will go to the FDA with and discuss? Or should we just consider this to be sort of over and out for BPD?
Thanks.
Participants Thanks, Michael, for the question. Starting with Abilify MNTenna, we do see this being a continued grower, are sort of slow and steady. And I think that the new patents that were listed recently in the orange book go out To 2,034 in the U. S, right? They don't influence the rest of the world.
And so Again, we believe the patents are valid and enforceable. So we'd anticipate bringing the 2 months, which also has patent coverage to the middle of the 30s And being able to work to transition from the 1 month to the 2 month, given that it's more convenient for patients. So the 2 monthly, I think, gives us some good opportunities for the brand to continue that steady growth into the years ahead. With respect to international operations, I'll hand it over to Jakub.
Yes. Thanks. I can give you a few comments on that. So If we look at our global infrastructure today, I think it's fair to say that we are a global company that It's covering all important markets within our field. That also means that we do not plan to sort of increase our investments into the existing infrastructure, Except for YEPTIA, of course, that we are launching.
So you'll see investments going into YEPTIA. But for the other brands, we do not foresee an increased And
then, Borderline.
Yes. So first, remind you that although we have a lot of very good data on brexpiprazole in many indications, this indication we did not have any prior data, but the biology and the involvement of dopamine and serotonin made us do this profile concept study. The data, we picked the signal for the main readout at certain time point, 10 weeks in the trial, we did see signals across, but it's a little mixed data, which you often get from a proof of concept study. So we need to sit down and look at this data in its totality. We also need to get some follow-up data.
Patients are coming back for follow-up visits. So it's too early to say exactly how we're going to handle this data. It's not a clear cut proof of concept, but it's not a clear cut in either way, negative or positive. We We have to work also with our alliance partner, Otsuka, to determine the next steps. It may be an interaction with FDA.
It may be publishing the data, it may be some other considerations for the program.
Okay. Thanks a lot.
Thank you. Our next question comes from the line of Carsten Lombore of SEB. Please go ahead. Your line is open.
Yes. Thank you very much. First question is regarding biopsy marketing. As you say, Peter, this is a matter of being known in the market. And I was wondering how much will you or Lundbeck will be willing to commit in terms of marketing spend for VIEpti.
We have seen some quite explosive launches of The 2 tablets in the market by Biohaven and AbbVie. And the market is now at more than 0.500000000 dollars on a quarterly basis, you have around 3% of it. So is a cramped market, and it seems that you need to make a rather significant step up in terms of marketing costs. So any color on that would be great. And then secondly, on VBP in China, the impact we are seeing on FX here these quarters, is this what is in the plans for now?
Do you know about more coming up, maybe not this year, but next year, what should we view on that? Thank you.
Peter, over to you.
Yes. Thanks for the question, Carsten. With regard to the resources, I think you've probably already seen from us already, we haven't had the same size of sales forces that some of our other folks, our other competitors have and certainly haven't committed some of the resources that you see with the orals. And a big reason for that is because they're very different markets. So the acute market is an example, which the orals primarily play in, and I know at least one of them has recently been approved in prevention and another one will likely be approved.
But the acute market is more than 2x the size of the prevention market that we play in. And so I think that's why you see the kind of resources and dollars and primary care investment and big sales forces and DTC that you see from those others, the prevention market that we play in is certainly are still very, very sizable, but it is a different dynamic. And we believe that the kind of investments that we're making certainly are going to deliver the growth that we expect from the brand, and we're seeing that now with the product performing on track with our expectations, But certainly with profitability in mind as well. You heard from Deborah and Anders our profit ambition. So we believe we're making the right level of investments are in both sales force and we do expect to do DTC at the proper time when all the conditions are set up to allow us to help take full advantage of that opportunity, but I don't think you should ever expect us to see the kind of sales force sizes and the kind of resources that particularly that the orals are putting in the market because they are playing in a very different segment of the market than we are.
Participants. Yes. So on China, I can tell you that on IBIXA, we have lost half of the revenue level that we had last year about the same time. And I wouldn't say that we have leveled out in terms of of generic erosion on Ipyxa. But revenue wise, we may have as underlying market growth also helps us in China, which is Significant high and double digit in the Alzheimer space also in depression.
So I think we're reaching a level where we can stabilize and potentially start to grow Ebixa a little bit again. And then I would say we have a very strong year in China. We are Looking outside of EBITDA, we're growing some 26% and then we are also particularly successful in our online detailing where That accounts for about 6% of our total revenue in China now.
And you don't have any you haven't heard about any plans to include other drugs in coming BBBs or anything like that?
No. So the recently announced round in the U. S. And then we'd have to wait for the next one, which is Supposedly coming out here after the summer at some point.
Okay. Thanks.
Thank you. Our next question comes from the line of Michael Luchten of UBS. Please go ahead. Your line is open.
Thanks very much. Three questions, please. One just going back to your slide about the VIApti vials. When I compare that to The sequential revenue progression, it looks like the percentage of free drugs seems to be going up. Can you give us a little bit of a steer how the dynamics could work from sample to commercially relevant given that you've got 235,000,000 patients with good access.
I would assume that repeats at some point naturally become commercially relevant, but maybe that's the wrong way to look at it. Any comment would be helpful. And then two questions for Johan. Just your comments around PTSD, you said significantly impacted as in the trial. At what point does it become a problem where it's just not feasible to drag it out anymore?
And then a question on A2422, interesting comments on your slide about the Phase II design, but also the Phase III with the base and response adaptive treatment allocation. In the past, you've commented that taking risks in Phase III in central nervous system diseases is a tricky thing to do. Like how do you make sure that this novel design is actually okay from a regulatory perspective in the MSA setting?
Okay. So Peter, do you want to comment on the Vyapti With respect to
Sure.
A couple of things. Yes,
a
couple of things. First of all, at the beginning of the launch, we said we tried to set all of your expectations that you're not going to have a perfect visibility are into VIEpti, and that's because, of course, it's not a retail product. It's not even really that much of a specialty pharmacy product. It's 90% going through specialty distributors directly to both physicians and also infusion centers that do buy and bill. So the data correlation is not going to be perfect, and it's tough for you guys to fully rely on what you see in the system.
Having said that, to answer your question about free drug, back to the to Carson's question about resources, we decided from the beginning of launch, we weren't going to do a broad sample program like many of our subcu and other competitors have done. And so we have not put much free drug into the marketplace. We have done some pilots here and there, but not enough that I think would affect any of the numbers you're seeing. So there's very, very little are free drug in the marketplace.
Great. Johan?
Yes. Thanks for the question. On the The studies, we are about 1 third into the study. And we just got the studies there are 2 trials, as you may recall, one slightly bigger than the other one. And we were just into the study when the pandemic hit us and since then it's been a constant struggle.
We are far from the enrollment levels we need to have. So obviously, we are considering options how to deal with this study. We have a highly decentralized This is a U. S.-only trial. What we can do about this study?
There are many, many options on the table. We are still having major efforts going on, yes, to improve enrollment, but they are not paying off, to be honest, right now. And with the pandemic bouncing back in this particular patient group, we are not very optimistic about it. So we're looking at alternatives to handle this, but I cannot say more than that we're in active dialogue with the regulators about it. You may also know that there are not so many competing trials out there.
There are few small studies in PTSD going on. So there are very few analogs for us to really say, is this us? Is this the drug? Or is it the actual indication? But all speaks to that is the pandemic that is the main problem.
For 422, yes, it's a great question. I could talk at length about this, but it's actually a derisking Phase III approach. Yes, base gen designs, adapted designs are not usually what you do in the later stage of the trials. I do have personal have done that for Pivotal Drives before and had good experience with the regulators. We have had very repeated interactions with the main regulators on the design of this program.
They are very familiar what we're trying to do. And I'd like to remind you that this is an orphan indication Where you have more sort of leverage in what you can do in terms of innovation. There is no priority to build on here. And I would say that particularly the U. S.
Regulators have been very supportive in building the entire program with us here. So we are actually derisking the Phase 3 by having this adapt the element rather than betting on fixed doses. That gives us flexibility. And we also have an early part, as I talked about, where we really will look at stop go element built around strong biomarkers and clinical readouts. So we're not going to go into that Phase 3 With that base in design if we don't have the Phase 2 signal that's required.
So we are very stringent going into Phase 3 anyway.
Will be able to take questions. Our next question comes from the line of Rosie Turner at Barclays. Please go ahead. Your line are open.
Hi, good afternoon. Thank you very much for taking my questions. And 2 for me. And just a follow on From Joe's earlier question around patent trials, I just wondered if you could give us a bit of an update in terms of what we're seeing with Brex Salty. And then in the release this morning for Abilify and Montana, you flagged some costly fluctuations in inventory.
I just wonder if we could go through kind of specifically what that was.
So the question your question, Rosie, thanks, It was on Rick Zolte. Patent trials, we don't have anything underway Right now. So no comment on that. And then with respect to the Second question?
Yes. There's basically not a lot to what we also see is that between the quarters, there might be fluctuation in inventory level, and it's nothing material. But there are, of course, fluctuation. It's nothing that is impacting Dramatically, the trend that we have seen with Abilify Materne is extremely strong growth in both international markets and Europe and in the U. S, we have had a steady growing business.
And but there is fluctuation between the quarters. But the level On hand at the distribution level, it seems to be leveling out. So it's nothing you should be concerned about.
Okay. Thank you. I thought regarding the patent trial, I just thought there was something with Sandoz. I think there was only something reported by Reuters back In April, but maybe that's all being sourced at this point, so there's no comment. Thanks.
We'll go back and get you an answer if there's Anything that we've missed. Thank you.
Thank you. And we have one further person in the queue. That's Mark Goodman of will be leaving. Please go ahead. Your line is open.
Yes. Hi. A couple of questions. First of all, can you just talk about 2022 U. S.
Payer negotiations? Will there be any major changes participants in coverage or anything we need to be concerned about. There was a comment about inventory with Abilify previously, but Any of the other products, were there any major inventory issues that affected the quarter? Just want to make sure we cover that. Second question is Alzheimer's.
There's been a lot of changes going on in Alzheimer's over the past couple of months. I'm just curious about Your thoughts and if your strategy has changed just overall about how to pursue that opportunity. And then 3rd, obviously, the asset prices have come down quite a bit over the past, I guess, this calendar year. Just curious If things are looking more attractive, if you seem to be moving forward just with discussions more now, just given better pricing?
Thanks, Mark. So Peter, would you like to start with the questions on inventory and VIEpti payer negotiations?
Yes. First, no major inventory fluctuations like Anders said, specifically about umbilify maintaina, but of the others, I mean, there's always quarter to quarter, but nothing noteworthy or certainly we would have flagged that. In terms a payer coverage. I wasn't sure which product you were referring to. Perhaps you were referring to the whole strategic portfolio, but the answer is the same for really all
of them.
Yes. The answer is the same for all of them is that we have good coverage. Of course, for the established psychiatry products, we've had good coverage for many years, And it's been stable. In fact, we've had some small improvements to it, particularly for Trintellix this year, where Vibrid was this manage in a couple of formularies. But moving into 2022, I expect it to be stable.
And then, of course, for VIApti being the newest product in the portfolio, we believe that the teams that we have established good coverage for the product. We have 235,000,000 lives that have access to it, 110,000,000 of them don't even require any kind of branded step. And that's certainly plenty of coverage for us to be able to achieve our forecast. And I'll also remind you, I mean, you have have great visibility each quarter to our ASP. And you can see our ASP is very, very stable each of the first three quarters, which indicates that we're not giving away tons of discretionary gross to net dollars.
And so that's our intended continued posture with VIAVI. So I expect the coverage to be comparable to what it is now with some smart tweaks here and there.
Will you comment on the Alzheimer's field changes?
Yes. Thanks, Mark. Obviously, I think you referred to particularly aducanumab and the accelerated approval based on the biomarker, which changes a little bit the have a very strong start to the year. Previously, we've seen a few examples of surrogate biomarkers supporting accelerated approval, And it all depends on the validation of the biomarkers. We've seen that in small indication, more orphan indications like Duchenne's in the past.
Now we see this for a much broader, bigger indication, which is a major step forward. So obviously, we are welcoming this opening up In the neuro space, which you've seen much more in oncology in the past. And that depends because we have now much better validation on many of the biomarkers. And we will apply this kind of strategy across the board. Will that change overall how we look at Alzheimer's?
Yes, that's a bigger question because obviously Alzheimer's trials are still very, very big and costly exercises and would require even if you would aim for an accelerated approval, which of course gets exceedingly harder the more programs you have there, would still require a big investment, also including in the biomarkers. We have a tau antibody that we have in already Phase 1. We probably wouldn't bring that forward without having a strong partnership, Which obviously is possible even for accelerated approval pathways because there are tools that are very similar to the ones you saw with aducanumab with PET for TAO as well. But we are not really taking on that big beast ourselves.
Thanks, I just wanted to clarify. There was a couple of questions about this. We wrote in the release about the fluctuations in inventory level for Abilify. And if you look at the half year, there's basically no inventory fluctuations. But you have seen this $1,000,000 up in the Q1 and that was due to or down that was due to stocking last year due to the pandemic and then it has rebounded in in the Q2 and that's of course due to that there was a destocking in Q2 due to the pandemic.
So It's minor. It's correct that there were some fluctuations between the quarters, but it's totally to the minor. It's not very material. For the full half year, no impact. So that's just to make it razor clear.
And then your last question On asset prices, obviously, we're continuously evaluating the landscape for the right additions to bring into Lundbeck to continue to drive our growth And rebuild the pipeline. And so I think it's a question of the right thing at the right time and the right price. But as you well know, asset prices have been extremely high, so they've come down a bit, maybe not necessarily where some of them need to be, but we continue to look diligently at many different opportunities.
Part of my question was in Alzheimer's, does it make sense to look for an amyloid type product in order to move that quickly can be on the market.
Yes. Obviously, this is the big attraction now because the pathway is laid out and other companies that are in Phase II and Phase III with interesting assets are planning for this obviously. We don't have an antibody. We had a vaccine program. We had issues with that program, technical problems.
So we don't have any active program on amyloid in development right now. So we are are quite far behind the field. And the field is right now pretty narrow when it comes to amyloid. It's really the monoclonal antibody approach. We will not resurrect our vaccine program because of the technical issues.
May I just add one element to my answer before? I think what we're seeing now is that big indications, the big beast that I talked about are getting more fragmented into sub indications. And this will create in the future more opportunities within this space. Alzheimer is not the good old Alzheimer type dementia that you saw are going to segment up to smaller and smaller indications eventually with different approaches. So that is the opportunity we see in this space.
Participants So I don't think we'd be licensing a look alike for aducanumab to bring in. And as Johan Right on pointed out, even if you can get approved on an accelerated basis on a biomarker, you still need to have the scale of trials To demonstrate the clinical benefit, and those trials are very large.
Yes. Have announced that they will go with Phase II data to the regulators, but those data packages are substantially smaller than aducanumab. So we'll see how that evolves.
Good. Well, thank you all for your attention today, participants.