Welcome to the Lundbeck financial statements for the first six months of 2021. For the H1 of this call, all participants will be on listen-only mode, and afterwards there will be a question and answer session. Today, I am pleased to present Deborah Dunsire, President and CEO, Anders Götzsche, Executive Vice President and CFO, and Johan Luthman, Executive Vice President of Research and Development. Speakers, please begin.
Operator. Welcome everybody to our 1st half financial results. Thanks for joining us today. With me I have Anders Götzsche, our CFO, Johan Luthman, Head of R&D, Jacob Tolstrup, Head of Commercial Operations, and joining us by phone from Chicago, Peter Anastasiou, 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 three. Thank you. We're very proud of robust financial results for the 1st half of 2021, in spite of significant impact from our LOE of NORTHERA. The strategic brands have good momentum, being up 13% in local currency, reaching DKK 4.4 billion. VYEPTI has had strong momentum, reaching DKK 177 million, 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 H1. We've delivered a very solid Core EBIT margin of 26.1% and made good progress on de-leveraging. Anders is going to go through our updated guidance with you in a few slides from now. Next slide, please. 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. All of them are expected to have continued double-digit growth as we go into the H2 of 2021. As I've said, we're getting strong performance across regions. Europe and international markets have been delivering strongly. We know that the pandemic is still out there. Growth was impacted in the H1 and is still somewhat impacted.
We're still seeing a bit of a diagnosis gap, not having patients and physicians fully back to pre-COVID levels of interaction. We are making progress in the world opening up, and right now our call levels are also increasing. We're getting back towards normal. We're still not quite there around the world, but definitely in the Q2 made strong progress versus Q1. Next slide, please. Vyepti has continued to show very strong momentum in vial growth, as I said, reaching DKK 177 million in the H1, 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 million 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 Vyepti's 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 Vyepti. We're looking forward to the global rollout of this brand, ramping up starting in the Q3 of this year. Johan will cover that in a bit more detail. Next slide, please. We've had also robust performance across the other three strategic brands. Looking at Brintellix, TRINTELLIX, we've had growth of 12% in local currency, 18% in Q2.
Japan's been a bright spot into its second year of launch, achieving 4.1% market share, that's growing very nicely. Just a reminder, we look forward to sustained growth over the next six to eight years because these strategic brands are well protected in their intellectual property. TRINTELLIX patents are issued last until March of 2032, the composition of matter expiring in December 2026. With REXULTI, 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 2032, composition of matter expiring in 2029. ABILIFY MAINTENA, the long-acting injectables have strengthened. Their market growth has resumed, ABILIFY MAINTENA grew 5% in local currency, having been resilient through the pandemic, and up 11% in Q2. The one-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 two-month formulation of ABILIFY MAINTENA forward, and that has patent protection to the mid-2030s, giving us the opportunity to really extend this franchise 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. 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. It was our 3rd-largest brand, an extremely successful brand built by a very strong commercial organization. In North America, the strategic brands are up 12% in local currency and now make up 69% of sales, and we're seeing VYEPTI really start to contribute to growth. International markets have had strong growth in the strategic brands. Japan's been a strong contributor. China's growing by 7% in the 1st 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. They're showing robust growth across most markets, driven by demand, because of course, price increase is not an option in Europe. 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 reported revenue. That is a couple of things impacting. Of course, the NORTHERA decline is the main reason. 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. We are keeping up a good traction there. SG&A down some DKK 200 million. That is due to lower sales and marketing activities or level of activities. R&D down due to that we last year had the foliglurax write-off. That's the main reason for the decline in R&D cost.
We are extremely happy with the solid performance in earnings, close to DKK 1.5 billion in the H1 and an 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 H1, actually creating a solid foundation for the financial guidance that we are coming to in a minute. We go to the next slide, you can also see from the quarterly release that the cash flow is solid, and that also means that we will end the year at a net debt level around DKK 3.5 billion. That is our best guess now. Net debt to EBITDA is expected to stay unchanged from 2020 around a ratio of one. Next page, please.
We have tried to make a slide to actually explain the moving parts in the H1 and also in the H2 to hopefully that will help adding up the numbers for the full year guidance. What you can see here is that the H1 has, as I said before, mainly the decline in revenue is mainly driven by the loss of exclusivity for NORTHERA and then the FX partly absorbed by the hedging. As Deborah alluded to, we are down 60% for NORTHERA, and that will accelerate in the H2. 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 will actually accelerate.
We will see more growth in the H2 if you exclude the impact from NORTHERA, 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 flipping the other way around. We hope that this will explain a bit about how we expect the H2 to actually perform. Next slide, please. That turns into the guidance, and based on mainly two factors, we have reduced the upper end of our revenue guidance with DKK 300 million, and that is purely due to contract manufacturing and NORTHERA, because the strategic brands and VYEPTI 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 activities from a promotion point of view, we have also been able to compensate by cost savings, therefore we have increased the lower end of our guidance for EBITDA, Core EBIT and EBIT with DKK 200 million, also expecting a bit better financial performance for the year. You should expect financial expenses to be some DKK 350 million, of which approximately DKK 200 million has cash flow impact. The rest is mainly unrealized FX positions. With that, I would like to hand over to Johan to start going through the strong momentum for VYEPTI.
Thanks, Anders. Please turn to next slide. Let me start with VYEPTI. We have progressed very well with its global expansion, and approval Australia was obtained in early June, leading to four approvals so far. The rollout of regulatory submissions continue at a rapid pace, and VYEPTI 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 a substantial clinical program ongoing for VYEPTI, 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 on VYEPTI are advancing well currently. The DELIVER trial, a phase III-B study that evaluates the effects of VYEPTI for the prevention in migraine of patients with prior unsuccessful preventive treatments, has completed recruitment. We are looking forward to the results in the H2 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-centric study. Those trials are up and running and are actually currently enrolling well.
On VYEPTI, 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. 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 VYEPTI. Next slide, please. Recently, we received the 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 assessed flexible doses, two to three milligrams of brexpiprazole as monotherapy in other subjects with borderline personality disorder. On the primary efficacy endpoint, predefined as the 10-week timepoint readout on the Zanarini Rating Scale for borderline personality disorder, the brexpiprazole arm did not show statistically significant separation from placebo on change from baseline.
However, we saw improvements greater than placebo on the Zanarini Rating Scale at other timepoints 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 two other LCM programs we are running on brexpiprazole, the agitation Alzheimer's disease study is on track to report headline results mid-2022. However, our ongoing post-traumatic stress disorder trials are in a major way impacted by the pandemic, making recruitment very challenging, and it's not possible for me to provide a timeline for the program at this timepoint. We progress very well. We're broadening the early-stage proof-of-concept pipeline. The Phase I portfolio has been expanded with new entrants, novel mechanism and molecules are being evaluated in humans with gatekeeping experimental medicine studies faster.
For example, we have now three differentiated MAG lipase inhibitor molecules introduced into humans, with the lead molecule going 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 AF82422. During next half of the year, we will commence a phase II study using our anti-alpha-synuclein antibody in patients with multiple system atrophy, MSA for short. MSA is a rare neurodegenerative disorder affecting autonomic processes, including blood pressure, breathing, bladder function, as well as control of motor functions. This makes MSA sharing many features with Parkinson's disease, such as slow movement, rigid muscles, and poor balance. The condition progresses rapidly and eventually leads to death.
Apart from symptomatic medications for motor function improvements of lifestyle changes, et cetera, there is really no treatment that can delay the progression of this devastating disease. We see a substantial potential for 422 in MSA. It is 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 422 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, Bayesian statistics-driven larger pivotal part. Next slide, please. I also like to mention some impactful collaborations we have recently established to further feed innovation in research. In a new strategic collaboration with the Wyss Institute for Biologically Inspired Engineering at Harvard University, Lundbeck will explore effective approaches to deliver drugs across the blood-brain barrier.
The main goals of the initiative will be to identify transporter target proteins that facilitate the delivery of future therapeutics, such as antibodies into the brain. We have also very recently entered into a new strategic collaboration with the U.S.-based company Rgenta Therapeutics to discover small molecules targeting RNA regulation and splicing of disease-causing genes. The strategic R&D collaboration with Rgenta 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 one in brain health. 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 eptinezumab.
We'll continue to build our internal pipeline focused in four 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 projects that Lundbeck has brought in from the outside. NORTHERA is one of those. We'll look to leverage the commercial infrastructure and invigorate growth through potentially near-term accretive transactions, and then build the earlier-stage pipeline assets with novel technologies to accelerate innovation, like building alliances and partnerships as we have with Rgenta. Next slide, please. We've got very good growth visibility from these strong, growing strategic brands over the next six to eight years, with no major loss of exclusivities on the horizon.
Our goal is today, as it has always been, to deliver long-term, sustainable, profitable growth. In the short to midterm, our goal is to continue to deliver mid-single-digit revenue growth over the next six to eight years and restore the EBIT margin to 25% by 2024 that we spoke about when we did the acquisition of Alder BioPharmaceuticals. That would imply a core EBIT margin exceeding 30%, and we are committed to keeping our dividend policy of 30%-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 Cipralex, Lexapro, TRINTELLIX, and building very strong assets using external development like REXULTI and ABILIFY MAINTENA in our partnerships, or building strength from the acquisition of Chelsea Therapeutics with NORTHERA or ONFI/SABRIL/XENAZINE 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. The must-wins in the H2 of 2021 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 VYEPTI, accelerating in the U.S. and getting those next markets up and running. Strengthening our mid and late-stage pipeline as we bring forward assets into phase II 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 one in brain health. With that, I'd like to thank you for attending today, and we open the floor to questions.
Thank you. If you'd like to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Wimal Kapadia of Bernstein. Please go ahead. Your line is open.
Oh, great. Thank you very much for taking my questions. Can I first just ask about the sequential growth of 2021 versus 2022 for the major growth drivers? In particular, TRINTELLIX and REXULTI seem to be impacted by COVID. 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 next year for these two key brands? My second question is just on the pipeline. Could you provide a little bit more color on the phase I data for Lu AG09222, the PACAP inhibitor, and maybe give us some context on the phase II trial design, which you plan to start later this year?
I'm just curious if a combination with VYEPTI will be part of the trial?
I thought you were saying something else, Wimal. Anders will take the first part of the question on REXULTI, TRINTELLIX growth to 2022. Although I remind you, we're not giving you any guidance for 2022 right now. Johan Luthman, perhaps you can start with the pipeline question on PACAP.
Yeah.
Go ahead, Johan.
Yeah. I start with the pipeline question then. Yeah. We are really steadily building up our phase I assets, and we have a couple assets now that are ready to go into phase II. One I mentioned now, the MSA. The other one is PACAP. We are just finishing up some studies, and we are looking forward to talk about that very soon. 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 MSA?
It was a combination with the Vyepti, considering the package.
Combination with VYEPTI. Yeah, it's way too early to say how this will pan out. PACAP is a new mechanism of action, a broader mechanism action than CGRP in some degree, and more interesting. It goes into more symptomatic functions, parasympathetic nervous system effects, and also inflammatory processes. It could have a broader potential. Obviously, we are considering how it may work in combination with CGRP antagonists.
Yeah, our first phase II proof of concept would not be a combination study.
I think the first thing that we need to be successful is of course to continue the double-digit growth for the H2 of 2021. Of course we have the ambition to continue to deliver double-digit growth. As the brands are continuing to grow, of course at some point it will be challenging to keep up with that pace. Definitely when we look into 2022, we have the ambition for the totality of the three brands, or for the two brands you asked, REXULTI and TRINTELLIX, to deliver double-digit growth. That is definitely ambition.
Great. Thank you.
Thank you. Our next question comes from the line of James Gordon at J.P. Morgan. Please go ahead, your line is open.
Hello, James Gordon, J.P. Morgan. Thanks for taking the questions. First question was just about SG&A and where we are, because I know the release talked about lower sales and marketing as a result of COVID-19. The presentation also said 2021 less impacted by COVID-19 savings. Not asking for guidance for 2022, but just how much benefit do you think you actually are going to have had on SG&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 was on VYEPTI. The trajectory looks like it's continuing, but it's the same line, and that hasn't really been an inflection yet. Do you still think the product could do something like or could do more than half a billion DKK this year, or does that now look like a bit of a stretch?
A third and final question. On slide 17, you lay out the six to eight 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 REXULTI Alzheimer's agitation is unsuccessful and X any acquisitions, or does that already bake in something for Alzheimer's agitation being successful and/or getting an M&A boost?
Okay. Starting with the SG&A, Anders will take that one.
The guidance we have made with the SG&A and what we have said is that the SG&A this year will be approximately between 41%-44% of revenue. That is what we anticipate, and that leads into a SG&A level comparable with last year. When you go into 2022, what will be added in 2022 is definitely that Vyepti is being launched in more territories and therefore the spending for supporting Vyepti will increase. 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. When it comes to asking about growth from six to eight years, of course it goes without saying that six to seven years down the road, we strongly believe in double-digit growth.
When it comes to year eight, we are getting more challenged, but we also, as you can see, we have patients that are actually protecting the business longer, and we believe there's an opportunity to actually be a bit more ambitious also in the eight years timeframe. We believe based on our internal pipeline and based on our existing brands, there is an opportunity to actually create that. We also know after TRINTELLIX, we will of course be a bit more challenged, but we still look into growing the business after that.
I think to your question on VYEPTI, we're very pleased with how it's performing. It has continued to grow. It's on track to achieve our expectations. We look forward to the continued opening up. Q2 opened up a bit more than it had in Q1 with respect to the pandemic. 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. As things open up, we anticipate the continued growth of VYEPTI, and it is on track with our expectations.
Thank you. Maybe if I could just, I don't know if you can still hear me, but just to clarify on what was my third question. It was less about the growth outlook beyond eight years. It was more the growth outlook going up to the six to eight-year period, whether this is guidance that you could do irrespective of what happens for the upcoming REXULTI Alzheimer's agitation readout.
We anticipate that we'd be able to deliver that mid-single-digit growth irrespective of the REXULTI Alzheimer's agitation readout. 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 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 Vyepti in the U.S. Are you seeing or what proportion of patients are coming back for repeat prescriptions versus new patients? Just giving us some sense of the degree of satisfaction that a patient has when they get on the product. If you can 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 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 1 of the non-infused products? Just a little bit more on that pushback.
TRINTELLIX, you talk about the patent situation there, and you highlight the 2032 patents. There is a court case ongoing, isn't there? You've settled with a number of players. Is it reasonable for us to assume that the patent really would go out that far? Given that you've settled, we should think about a realistic time being shorter than that? My final question will just be on the margins. 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 the R&D won't be that different because you've got lots of great ideas of things to do.
That's suggesting to us a very meaningful reduction in SG&A. Just checking that you think you can deliver all of this sales and have a meaningful reduction in SG&A for the whole of 2024.
Great. We'll start with the dynamics of VYEPTI in the U.S. and infusion centers, and I'm going to ask Peter Anastasiou to take that. Peter?
Yes. Thanks, Jo, 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. We are seeing that be on track with what we thought it would be. We're also seeing the expansion of more prescribers and the depth of that prescribing by those clinicians. 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.
Because we have such a robust network of infusion centers, and as Debra 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. 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, 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 VYEPTI is what holds back any new product, and that is familiarity. It certainly takes quite a few visits for some clinicians who are maybe slower adopters to really understand the clinical profile, the value that VYEPTI brings. That's not unique to VYEPTI. That's true of any new product launch. Certainly, that process has been delayed a bit because of the pandemic impact, particularly last year. 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 their patients and their practice. That's the feedback we get. Hopefully that addresses your questions.
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 we'll, together with our partner, Takeda, support 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. You'd have to make your choice on that. We've kind of given you the bookends of the compound patent and the out years. We do expect a decision coming up in this quarter at least, knowing that there have been COVID delays before with the court. 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% and 80%. That is how we anticipate it with the existing product mix. You will see a slight increase in our SG&A line due to that we are making the global rollout of VYEPTI. We have a couple of years now where we have elevated levels of R&D investment due to the VYEPTI trials, and then of course you would see a reduction again in the cost line there. You will see a bigger impact from the gross profit than you would see the growing cost base. That is a reason for the margin expansion.
Thank you.
Thank you. Our next question comes from the line of Michael Novod at Nordea Markets. Please go ahead, your line is open.
Yeah, thanks a lot. A few questions. Also to the slide regarding the patents on ABILIFY MAINTENA, it also seems that you have sort of increased your conviction in growth for that, or sustained growth for that product. How do you envision the trends for ABILIFY MAINTENA in the coming, let's say, five years? Is that just sort of a steady grower and then adding on or replacing with the two-month formulation? Secondly, to IO, we've seen a lot of companies do better in international operations and Lundbeck too. Maybe you could sort of go into your investment structure in IO. Are you sort of also investing into this strong growth that you may envision also in IO? Also adding too that it's not only the U.S. that is in focus, but also international operations and Jacob's area there.
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.
Thanks, Michael, for the question. Starting with ABILIFY MAINTENA, we do see this being a continued grower, sort of slow and steady. I think the new patents that were listed recently in the Orange Book go out to 2034 in the U.S. They don't influence the rest of the world. Again, we believe the patents are valid and enforceable. We'd anticipate bringing the two-month, which also has patent coverage to the middle of the '30s, and being able to work to transition from the one-month to the two-month, given that it's more convenient for patients. The two-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 Jacob.
Yeah, thanks. I can give you a few comments on that. If we look at our global infrastructure today, I think it's fair to say that we are a global company that is covering all important markets within our field. That also means that we do not plan to increase our investments into the existing infrastructure, except for VYEPTI, of course, that we are launching. You'll see investments going into VYEPTI, but for the other brands, we do not foresee an increased spending level going forward on that.
Borderline.
Yeah. 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. The biology and the involvement of dopamine and serotonin made us do this proof of concept study. The data, we picked a signal for the main readout at a 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. 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. 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 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 Lønborg of SEB. Please go ahead, your line is open.
Yeah. Thank you very much. First question is regarding VYEPTI marketing. As you say, Peter, this is a matter of being known in the market. I was wondering, how much will you or Lundbeck be willing to commit in terms of marketing spend for VYEPTI? We have seen some quite explosive launches of the two tablets in the market by Biohaven and AbbVie. The market is now at more than half a billion U.S. dollars on a quarterly basis. You have around 3% of it. It's a cramped market, and it seems that you need to make a rather significant step up in terms of marketing costs. Any sort of color on that would be great.
Secondly, on the VBP in China, the impact we are seeing on Ebixa here these quarters, is this what is in the plans for now, or do you know about more coming up, maybe not this year, but next year? What's your view on that? Thank you.
Peter, over to you.
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. A big reason for that is because they're very different markets. 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. The acute market is more than 2x the size of the prevention market that we play in. 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 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. 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 Dunsire and Anders Götzsche our profit ambitions. We believe we're making the right level of investments, in both sales force. 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.
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.
Yeah. Thanks.
All right. Thanks.
Yeah. On China, I can tell you that on Ebixa, we have lost approximately half of the revenue level that we had last year about the same time. I wouldn't say that we have leveled out in terms of generic erosion on Ebixa. Revenue-wise, we may have as underlying market growth also helps us in China, which is significantly high and double digits in the Alzheimer's space, also in depression. I think we're reaching a level where we can stabilize and potentially start to grow Ebixa a little bit again. I would say we have a very strong year in China. We are looking outside of Ebixa, we're growing some 26%, and we are also particularly successful in our online detailing where that accounts for about 6% of our total revenue in China now.
You haven't heard about any plans to include other drugs on coming VBPs or anything like that?
No. The recently announced round five did not include any Lundbeck products. Then we would 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 Leuchten of UBS. Please go ahead. Your line is open.
Thanks very much. three questions, please. One, just going back to your slide about the VYEPTI 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 million 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. Then two questions for you, 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? Then a question on 82422.
Interesting comment on your slide about the phase II design, also the phase III with the Bayesian 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. How do you make sure that this novel design is actually okay from a regulatory perspective in the MSA setting? Thank you.
Okay. Peter, do you want to comment on the VYEPTI?
Sure. A couple things.
dynamics of free drug?
A couple things. First of all, at the beginning of the launch, we tried to set all of your expectations that you're not going to have a perfect visibility into VYEPTI. 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. 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 Carsten'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 subQ and other competitors have done.
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. There's very, very little free drug in the marketplace.
Great. Johan?
Yeah. Thanks for the question. On the PTSD studies, we are about one-third into the study. There are two 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. Obviously, we are considering options how to deal with this study. We have a highly decentralized trial already. We have reached out and talked to the regulators in expanding that effort. We have, right now, an ongoing dialogue with FDA, 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.
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. I cannot say more than that we are in active dialogue with the regulators about it. You may also know that there are not so many competing trials out there. There are a 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?" All speaks to that is the pandemic. That is the main problem. For 422, yeah, it's a great question. I could talk at length about this, but it's actually a de-risking phase III approach. Yes, Bayesian designs, adaptive designs are not usually what you do in the later stage of the trials.
I do have personal experience, done that for pivotal trials 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 like to remind you that this is an orphan indication, where you have more leverage in what you can do in terms of innovation. There is no prior really to build on here. I would say that particularly U.S. regulators have been very supportive in building the entire program with us here. We are actually de-risking the phase III by having this adaptive 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 would look at a stop-go element built around strong biomarkers and clinical readouts.
We're not going to go into that phase III with that Bayesian design if we don't have the phase II signal that's required. We are very stringent going into phase III anyway.
Thank you.
Thank you. Our next question comes from the line of Rosie Turner at Barclays. Please go ahead, your line is open.
Hi, good afternoon. Thank you very much for taking my questions. Two from me. Just to follow on from Jo'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 REXULTI. Then in the release this morning for ABILIFY MAINTENA, you flagged some quarterly fluctuations in the inventory. I just wondered if we could go through specifically what that was. Thank you very much.
Your question, Rosie, thanks, was on REXULTI patent trials. We don't have anything underway right now, so no comment on that. Then with respect to the second question?
Yeah. 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, fluctuations. It's nothing that is impacting dramatically. The trend that we have seen with ABILIFY MAINTENA is extremely strong growth in both international markets and Europe, and in the U.S., we have had a steady growing business. There is fluctuation between the quarters, but the level on hand at the distribution level 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 something reported by Reuters back in April. Maybe that's all been sorted at this point, or there's no comment. Thanks.
We'll go back and get you an answer if there's anything that we've missed.
Cool. Thank you.
Thank you. We have one further person in the queue, that's Marc Goodman of SVB Leerink. Please go ahead. Your line is open.
Yes, hi. A couple questions. First of all, Peter, can you just talk about 2022 U.S. payer negotiations? Will there be any major changes in coverage or anything we need to be concerned about? There was a comment about inventory with ABILIFY previously, but maybe 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. Then third, obviously, dev asset prices have come down quite a bit over the past, I guess this calendar year. Just curious if.
If things are looking more attractive, if we seem to be moving forward just with discussions more now, just given better pricing. Thanks.
Thanks, Marc. Peter, would you like to start with the questions on inventory and VYEPTI payer negotiations?
First, no major inventory fluctuations like Anders Götzsche said, specifically about ABILIFY MAINTENA. The others, there's always quarter to quarter, but nothing noteworthy or certainly we would have flagged that. In terms of payer coverage, I wasn't sure which product you were referring to. Perhaps you were referring to the whole strategic portfolio, the answer's the same for really all of them.
Yeah, the strategic portfolio.
Yeah. 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 Viibryd was disadvantaged in a couple of formularies. Moving into 2022, I expect it to be stable. Of course, for VYEPTI being the newest product in the portfolio, we believe that we have established good coverage for the product. We have 235 million lives that have access to it. 110 million 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.
I'll also remind you 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 USD. That's our intended continued posture with VYEPTI. I expect the coverage to be comparable to what it is now with some small tweaks here and there.
Will you comment on the Alzheimer's field changes?
Thanks, Marc. Obviously, I think you referred to particularly aducanumab and the accelerated approval based on the biomarker, which changes a little bit the opportunities in this space. Previously, we've seen a few examples of surrogate biomarkers supporting accelerated approval. It all depends on the validation of the biomarkers. We've seen that in small indication where orphan indications like Duchenne's in the past. Now we see this for a much broader, bigger indication, which is a major step forward. Obviously, we are welcoming this opening up in the neuro space, which you've seen much more in oncology in the past. 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?
Yeah, that's a bigger question because obviously Alzheimer's trials are still 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 early phase I. 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 tracers for tau as well. We are not really taking on that big beast ourselves.
Thanks, Johan.
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. If you look at the half year, there's basically no inventory fluctuations. You have seen this DKK 1 million up in the Q1, or down, that was due to stocking last year due to the pandemic, then it has rebounded in the Q2, that's of course due to that there was a destocking in Q2 due to the pandemic. 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. That just to make it razor clear.
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. I think it's a question of the right thing at the right time and the right price. As you well know, asset prices have been extremely high. 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 and be on the market?
Johan.
Yeah. Obviously, this is the big attraction now because the pathway is laid out. 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 our program, technical problems, so we don't have any active program on amyloid in development right now, so we are quite far behind the field. 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 beasts that I talked about, are getting more fragmented into sub-indications. This will create, in the future, more opportunities within this space.
Alzheimer's is not the good old Alzheimer's type dementia that you saw 20 years ago. It's going to segment up to smaller and smaller indications eventually with different approaches. That is the opportunity we see in this space.
I don't think we'd be licensing a lookalike for aducanumab to bring in. 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.
Yeah. Others have announced that they will go with phase II data to the regulators. Those data packages are substantially smaller than aducanumab. We'll see how that evolves.
Good. Well, thank you all for your attention today, and thanks for your questions. Have a great day.