Welcome to the Lundbeck financial statements for the full year 2022. If you have dialed into this call by the Danish line, stutter may occur. To avoid this, please dial into the Norwegian line instead. Sorry for the inconvenience this may have caused. For the first part of this call, all participants are in a listen-only mode. Afterwards, there'll be a question and answer session. To ask a question, please press 5 star on your telephone keypad. Today, I'm pleased to present Deborah Dunsire, President and CEO, Joerg Hornstein, Executive Vice President and CFO, and Johan Luthman, Executive Vice President of Research and Development. Speakers, please begin.
Hello, everyone, welcome to the financial update for 2022 for Lundbeck. You see here one of our patients, the people who we serve every day living with migraine. Next slide, please. The forward-looking statements you've seen before, so I won't dwell on them, because I'd far prefer to turn to the next slide and say we had an outstanding year at Lundbeck and achieved the highest ever revenue for the company in its history. Revenue was up 12%, and our strategic brands, which are really the engine driving that growth, were up in aggregate 31%. VYEPTI, the newest of the strategic brands, grew 104%, and the strategic brands are now approximately 67% of the total revenue.
The growth came across all regions, and it's really gratifying to see the growth of the strategic brands and the momentum developing across all our regions. That, of course, drove profit growth higher despite the fact that we've been investing behind the launches for 9 countries for VYEPTI, with the EBITDA margin up 25%. The pipeline has made very strong progress, and Johan will be talking through that. Of course, key dates for us will be May 10th for the PDUFA date for our agitation in Alzheimer's disease submission for Rexulti, and April 27th for the 2-monthly version of ABILIFY ASIMTUFII. Very pleased to say we finished enrollment in both of our phase 2 trials. There were a host of other achievements that Johan will touch on. Next slide, please. You can see here the markets growing across the world.
The U.S. now 49% of the revenue in 2022, but strong growth coming from all our regions. The strategic brands up 31% reported, 20% in local currencies. Yes, there were tailwinds, particularly from the dollar, but the underlying momentum in the business is extremely strong. Next slide, please. VYEPTI, the newest of the strategic brands. You can see the, on the left, the growth in U.S. demand vials, and you see strengthening growth at the back end of the year. We achieved a 5.4% volume share within the prevention market, and this is really driven by the way the brand continues to perform for those heavily impacted patients. We've seen key opinion leaders and patients speaking out about the effectiveness.
We've been working with our sales force, and they are doing an outstanding job, and we are getting those new patient starts and showing that persistency, people who stay on Vyepti for second, third, and fourth doses is going up. We've got a growing number of loyalists, people who use Vyepti for their patients and describe its efficacy as transformative. We see that continuing traction with the clinical efficacy messaging. You can also see in the middle chart, the beginnings of the growth of Vyepti outside of the U.S. as the markets that launched late in 2021 and through 2022 begin to contribute. Of course, we'll see that grow over time. Next slide, please. We have had strong adoption across the markets where we did launch, nine countries in all in 2022. We've had significant penetration.
UAE, which launched towards the end of 2021, a 13% volume market share, 6% in Switzerland within 7 months, and already in the third month, 1% in Germany. Canada launched late in the year and have had very strong uptake. The most recent launches in 2023 are France and the U.K., and in total, we've got about 15 launches planned during this year. A lot of excitement as we roll this brand out globally. Next slide, please. Brintellix, Trintellix really has continued to grow 13% in local currency. Japan, in its third year on the market, 10.1% value market share, which is outstanding as we together with our partner Takeda build this brand.
We can see a movement forward in the lines of therapy as we see physicians use Trintellix, like its profile, and begin to move it earlier and earlier in their treatment paradigm. Europe had a particularly strong year as we've seen growth in that segment we've spoken about for a while. As patients have come back after COVID expressing the need for help with mental health challenges, they've seen their GPs, and we've seen GP prescribing pick up, particularly in Spain. We also had a great year in Canada, in China, and Italy, the others of our key markets driving the growth. Really everywhere we did see good growth. The U.S. antidepressant market has taken longer to come back to pre-COVID levels, but it's just achieving that towards the end of 2022.
We together with Takeda in the U.S. now have our field force fully in place. You know that there was some disruption during 2022, and beginning to drive new patient starts and seeing that overall demand growth coming back in Trintellix. Next slide, please. Rexulti had a very strong year in 2022, with demand rising significantly. That momentum really coming from the MDD market in the U.S. as physicians have used the adjunctive therapy together with their initial therapy as we've seen continued use of telemedicine and that willingness to add a therapy rather than change therapies. We've really got going with our Alzheimer's agitation launch preparations, which are progressing rapidly. Countries outside the U.S., Canada notably had great growth, with a 30% year-on-year growth and a volume market share of 3.6%.
Brazil, a more recent launch right in the midst of the pandemic, doubled sales with a volume market share at 1.9%. Rexulti really continuing to perform for patients, particularly with major depressive disorder. Next slide, please. Abilify Maintena also continues to grow well with 16% in local currency. We see the U.S., Spain, and Canada being the strongest growth drivers for Abilify Maintena. Europe has also had a very strong year, exceeding 30% market share in several countries, including Italy, Switzerland, the U.K. In a lot of key markets in Europe, we're seeing Abilify Maintena growing faster than the overall LAI market. The regulatory process for the two-month formulation was initiated during the year, and the PDUFA date's set to April 27th for the U.S. and the review is progressing in Canada and Europe. Next slide, please.
I'm gonna hand over here to Joerg to take you through the financials in more detail.
Thank you, Deborah. We delivered exceptional revenue and profit growth for 2022. The +12% of reported revenue growth can be decomposed as follows. We're delivering an underlying organic growth rate of +7% due to the strong performance of our strategic brands. The strength of predominantly the US dollar has led to a positive FX impact of +9% that has been backstopped by a negative hedging impact of -4%. Please keep in mind that the negative hedging effect of DKK 640 million for the year is impacting EBITDA one-to-one. Our gross margin is 0.7 percentage points higher compared to 2021, despite the provision for Vyepti inventory obsolescence in the amount of DKK 228 million taken in Q4, which is an important topic to understand and that I will cover in more detail on the next slide.
Adjusting the gross margin for this provision, it would be 5 percentage points higher for Q4 and 1.3 percentage points higher for the full year. SG&A costs grew +13% with an underlying organic growth rate of +5%. The increase is driven by higher promotion and sales costs predominantly for VYEPTI, but also to an extent due to the return to pre-COVID activity levels that still impact our full year 2021 numbers in comparison. R&D costs declined by -2%, which was impacted by a year-over-year decline in activities for marketed products. Our core EBIT grows +18% with an underlying organic growth rate of +17%. Our EBITDA grew +25% overall with an underlying organic growth rate of +25%.
The positive EBITDA FX impact of +17% was fully offset, as mentioned earlier, by the negative hedging effect of -17%. Overall, we improved our EBITDA margin here from 22.8% to 25.6% for 2022. Next slide, please. Before we go into our reported numbers, allow me to provide you with more background on the shift of the antibody backbone of VYEPTI. With the acquisition of Alder BioPharmaceuticals Inc. in 2019, we inherited a fixed batch quantity supply agreement for 5 years with an external CMO that is effective up to June 30th of this year, producing VYEPTI on the back of a Pichia cell line. Shortly after closing the acquisition, we started a process on how we could potentially shift the antibody backbone of VYEPTI from a Pichia cell line to a CHO cell line.
The CHO cell line itself is a more modern, high yield, and lower cost producer cell line. That transition is actually progressing well, and especially with progress made towards the end of 2022, the likelihood of success transitioning to CHO has significantly increased. As a result, we have built a provision of DKK 228 million in 2022 for inventory obsolescence for VYEPTI based on Pichia-based inventory on hand that has been recognized in cost of sales in Q4 2022. We have reflected an additional provision in the amount of DKK 300 million in our guidance for 2023. Next slide, please. Let's focus on our reported numbers. Our EBIT grew +42% overall, with an underlying organic growth rate of +43%. The positive FX impact of +21% was more than offset by a negative hedging impact of 22%.
Overall, we improved our margin here from 12.3% to 15.6% in 2022. Our net financial expenses decreased for the year by -12%. The lower expenses are driven by a mix of lower net interest costs due to higher deposit rates and a gain from other financial assets. The lower expenses were partially offset by the fair value adjustment of the contingent consideration for EMA's approval of Vyepti, which amounted to DKK 331 million in 2022 compared to DKK 110 million in 2021. The effective tax rate has increased significantly, but as expected, to 22.6% compared to last year's 16.6%.
The increase is due to 2021 having been positively impacted by the recognition of tax credits, whereas 2022 is negatively impacted by the non-deductible CVR payment for EMA's approval of Vyepti mentioned before, which is partially offset by the Danish R&D incentive. The reported net profit corresponds to an EPS of 1.93 versus an EPS of 1.33 in 2021. Next slide, please. The cash flow from operating activities is landing at DKK 4.1 billion in 2022 compared to DKK 2.9 billion in 2021. This is, of course, a reflection of the stronger EBIT performance, partially benefited by adjustments for non-cash items of around DKK 1.6 billion deriving from higher amortization and depreciation in 2022 and a net change in other provisions of DKK 0.3 billion.
This is partially offset by a higher net change in working capital, driven by higher receivables due to higher sales, net increases in inventory, and timing of accruals for short-term liabilities. From the total CVR payment of DKK 1.6 billion in Q1 2022, DKK 0.5 billion are reflected in other changes in operating activities. The remaining DKK 1.1 billion are reflected in the cash flow from investing activities. In case we would have not incurred the CVR payment, our free cash flow would amount to DKK 3.2 billion, which would constitute an increase of more than 100%. The changes in the cash flow from financing activities are driven by loan repayments in 2021 and loans obtained in 2022.
Our net debt position decreased to DKK 2 billion, leading to a net debt EBITDA ratio of 0.5 for the rolling 4 quarters, and we are making our planned progress on further deleveraging the company. Next slide, please. For the financial guidance for 2023, Lundbeck will focus on revenue performance and from first quarter 2023 onwards on adjusted EBITDA. This will provide an improved and more consistent assessment of the underlying business performance. The adjusted EBITDA information for comparative periods will be made available no later than May 10, 2023, when we release our interim financial statements for the first 3 months of 2023. For this interim period, we provide EBITDA guidance. Our guidance for 2023 is as follows.
We target revenues of DKK 19.4 billion-DKK 20 billion and an EBITDA of DKK 4.8 billion-DKK 5.2 billion. At the same time, allow me to put our guidance into the following context. The exchange rates from the end of November 2022, when we started our budgeting process from the basis for this guidance. We have set off energy inflation well in 2022, but merit and non-energy-related inflation is impacting us significantly in this year. We will continue the rollout of Vyepti in around 15 additional markets this year. We plan to launch the 2-month version of Abilify Maintena, and we plan to launch Rexulti in Alzheimer's agitation, requiring significant launch spending together with our partner, Otsuka, in fully utilizing this blockbuster opportunity over the coming years.
Last, an additional provision, as mentioned earlier, of approximately $300 million for Vyepti inventory obsolescence is reflected in the guidance for 2023. Next slide, please. Our midterm financial targets are based on organic development of our business, pointing towards a solid growth in both revenue and EBITDA. We foresee a continued double-digit growth for our strategic brands in aggregate, partially offset by slight erosion of sales of our mature brands, leading to a mid-single digit CAGR for our midterm revenue aspiration overall. We're planning for investments for Vyepti, Rexulti in AD, and the two-month version of Abilify Maintena. Also, we see further investments in life-changing medicines. We foresee R&D costs to remain broadly stable from an absolute R&D spend perspective.
This leads us to a midterm target for an EBITDA margin of around 30%-32% to be reached in the next 3 to 4 years. With that said, I hand over to Johan.
Thanks a lot, Joerg. Let us turn page for the R&D update. During 2022, we had a very strong year for the R&D pipeline, with several submissions and regulatory approvals among our key brands. We had a solid progression in our innovation pipeline. A major R&D event during the year was the readout of the brexpiprazole indication expansion trial in agitation Alzheimer's disease dementia, a program that we're running together with our partner, Otsuka. I will get back to this program a bit more in the next slide. I like to highlight that the sNDA submission was done at the end of last year. By the beginning of this year, we obtained information that the review will be under priority, and an outcome is expected during the spring.
The priority review means now an expected PDUFA date on May 10. The clinical and CMC development of the new aripiprazole two-monthly ready-to-use, RTU, injectable formulation was completed during the spring of last year. Subsequently, during mid 2022, we and our partner, Otsuka, submitted for market authorization in the U.S., Canada, and EU. The submission is based on an innovative development approach, including a large PK study providing robust data demonstrating bridging to Abilify Maintena. The FDA decision for aripiprazole two-monthly RTU is expected first, with a PDUFA date on April 27th. Important regulatory decisions for two key brands are expected during the spring. The Vyepti regulatory path in 2022 included, of course, the granting on marketing authorization by the European Commission on January 21st, 24th, sorry.
Subsequently, during the year, several additional market authorizations were obtained for VYEPTI, including some Asian countries like Hong Kong. Indeed, overall, 2022 was an important year for the global rollout of VYEPTI, obtaining market authorization in 37 countries. Joerg covered earlier the program, aiming to replace the current Pichia-based manufacturing of VYEPTI to a much higher yield CHO platform. Our critical relevance for the possibility of such a switch, we completed a PK study during the year that demonstrated clinical comparability between the drug products generated from the 2 different manufacturing platforms. As you heard me report several times during the last years, we have had really great data generated in very supported trials on Brintellix, that really clearly demonstrate the strong and unique profile of this product.
Last year, we successfully concluded the brand's LCM program with a strong home run in a row of positive studies, such as the VIVRE study, a head-to-head study on vortioxetine versus desvenlafaxine in patients with major depressive disorder. We also concluded the V-GOAL-J study showing real life effectiveness in Japan for MDD patients, a study that was very well-received by the ECNP conference, and MEMORY that showed reduced depressive symptoms and improved cognition performance in patients with MDD that have comorbid dementia. This set of studies nicely complements earlier reported studies such as COMPLETE, a study on emotional blunting, and RECONNECT, which showed effects in patients with MDD and comorbid generalized anxiety disorder. Really nice wrapping up of that program.
In our innovation pipeline, as Deborah mentioned, we progress well on our 2 POC studies, achieving last patient included. I will come back to both of those programs in subsequent slides. During 22, we managed to enter clinical development with 2 very exciting programs. 1 was early in the year with the start of the CD40 ligand inhibitor 515, a program we obtained from AprilBio. By that, we initiated our first-ever step into development of an immunology mechanism action molecule. This program offers a broad repertoire indication opportunities. Very late in the year, we managed to squeeze in initial clinical development with our ACTH antibody, 909, that has the potential to address various critical neurohormonal dysfunctions, even possibly into the psychiatry space.
Finally, we saw a tremendous advancement in our early research pipeline with well over 10 programs of highly attractive target biologies initiated or progressing. Among those, I like to highlight that we now are addressing RNA as drug targets utilizing small organic molecules. Next slide, please. As promised, I will now move over to some more details on the brexpiprazole program in agitation Alzheimer's disease. In the 3rd phase 3 trial called 213 that had a readout in end June last year, we explored a broader dose range, 2 to 3 mg, as requested by the FDA. That was a higher dose than in the previous 2 prior phase 3 trials.
The trial showed a very clear-cut and highly significant effect versus placebo on the primary outcome measure, the Cohen-Mansfield Agitation Inventory, and also on key secondary outcome measures, the Clinical Global Impression subscale severity of illness. In addition, we saw effects on several other supportive measures. I like to remind you that there is yet no drug approved on the U.S. market to address behavior and psychological symptoms of dementia, of which agitation behaviors are critical. The medical need is substantial to address those symptoms, which are a common reason for the need to transition from home care to nursing care. Agitation remains a clinical challenging problem even under professional care. In the U.S., there is currently an estimated 6.5 million patients with AD, but those numbers are growing.
Most of the AD patients experience periods of agitation during the course of the disease. Over 30% of patients are prescribed antipsychotics off-label at some time point. Unfortunately, there are severe limitations in their use due to the tolerability issues primarily. It's therefore very comforting to see that brexpiprazole across the AD program has showed very good tolerability and safety reporting. This is in line with what we already know from the established on current label patient populations. The data from Trial 213 were very well received when presented at key conferences in major sessions during the year, such as AIC in the summer and CTAD at the end of the year. Next slide, please.
I'm also happy to note that during the end of 2022, the brexpiprazole program on post-traumatic stress disorder, PTSD, that is run entirely in the U.S., regained some momentum when the pandemic abated. Thus, the 2 ongoing trials of the program have been seeing some recovery of the randomization. After various interactions with FDA, we have decided to keep the 2 trial analysis as they are with an accelerated path for completion. We're now looking forward to finally have a readout for brexpiprazole in PTSD during the second half of 2023. The unmet need in PTSD is also very high, with over 8 million people assumed to be affected in the U.S. The condition is highly underdiagnosed, however, so the exact number is unknown. PTSD is sadly enough a growing societal burden, and current approved therapies, the SSRIs, provide inadequate treatment responses.
The initiation of the two pivoted trials was based on findings from an exploratory POC trial where the combination of brexpiprazole and sertraline showed an improvement on the primary endpoint, a clinician-administered PTSD scale, while neither brexpiprazole nor sertraline showed an effect versus placebo. The two ongoing phase 3 trials are thus studying a flexible and fixed-dose regimen of brex in combination with 150 mg per day sertraline against either sertraline or placebo. Next slide, please. Yeah, from our NME innovation pipeline, I'd like to start to provide some more details on two two two, our anti-PACAP monoclonal antibody. The molecule is being evaluated in a migraine prevention trial in people that fail to respond to 2 to 4 prior treatments.
The POC trial, which we call HOPE, achieved last participant included by the end of 2022, and we can therefore look forward to phase 2 readout during this year. It is important to note that Lu AG09222 binds to PACAP peptides, the ligands and not the various receptors that can bind PACAP peptides. That is also an IgG1 isotype antibody, meaning that the antibody is blocking upstream in the signaling cascade with an efficient clearing mechanism of PACAP. The blocking of PACAP signaling is an interesting approach, given that it's differentiated from CGRP class of drugs and provide a different and broader set of biological effects. In this program, we very recently obtained PK data bridge, which is a bridging study where we establish the possibility to transition from the current IV formulation to subQ administration if the program continues past POC.
In addition, I'd like to remind you that we have previously shown that 222 inhibits PACAP-induced vasodilation, which is a proof-of-target engagement study. Next slide, please. 422 is a monoclonal antibody targeting an assumed pathological form of the alpha-synuclein protein in multiple system atrophy. 422 is in a biomarker-supported POC trial that we call AMULET that has raised considerable interest from investigators and patients. With this tailwind, our team managed to do a great job in fast enrollment, finishing the randomization during last year. We are very much looking forward to the patients completing the up to 72-week treatment period to get the readout by next year from this innovative trial. A trial readout that is also supported by a natural progression study called TALISMAN, which lends the possibility to strengthen the placebo arm analysis. Next slide, please.
This is the status of our R&D pipeline. I mentioned most of the programs here. I'd like to highlight a few things, though. First, I'd like to highlight our cluster headache program on Vyepti, which is part of an indication expansion effort of that franchise. Cluster headache is, as you probably know, a very devastating headache disorder, a very intense one-sided frontal headache, which affects mainly men. Our main pathway is a randomized controlled trial called ALLEVIATE in episodic cluster headache. This is, I have to say, operationally a very challenging population to study, given that the randomization is event-driven, and therefore it's hard to really predict timelines for the trial completion. I also like to draw your attention to our dual dopamine agonist 996. This program is progressing during the year towards completing phase 1B that includes a dose escalation in Parkinson's patients.
We have already some encouraging observations on its pharmacokinetics and safety, also on eventual efficacy. Therefore, this might be an entrant into phase II within a year's time. To summarize the activities during 2022, we saw really good achievements, much thanks to our transformed and streamlined R&D organization. We are now in a clinical development across all our four strategic biological cluster areas. We are also able to further apply our tactics for the really best molecules, investing in programs with better understood pathophysiology. Use stringent biomarker-driven development striving for very early and clear-cut decision making. We have seen a strong progress in both late LCM as well as in the early and late mid-stage pipeline.
This means that with our current brand support, innovative development pipeline assets reinforced with further clinical entrants from our exciting preclinical pipeline, and hopefully matched with careful additions from BD, we are in a good position moving forward. Next slide, please. Recap what key deliverables you can expect in 2023. We have the back-to-back almost PDUFA dates for AD in of Brex and of course the aripiprazole two-monthly RTU during the spring. We continue our strong efforts to progress the geographical and indication expansion of Vyepti. We have the exciting readout in phase two, our HOPE PACAP trial. Finally, we have the eagerly awaited readout for brexpiprazole in PTSD during the year, the latter part of the year. With that, I'd like to leave over to Debra again.
Thanks, Johan. Important to comment that while we drive to bring new medicines to patients, we also have a clear focus on how we do that business, and sustainability is integral to how we do everything at Lundbeck. We have made continued progress towards our ambition of being net zero by no later than 2050. We achieved our eighth consecutive year achieving a Carbon Disclosure Project leadership score. 100% of the electricity from our Lundbeck sites in Denmark is now covered by electricity produced in a solar plant south in Denmark. We reduced the emissions from all our sites by 29%. We updated our climate targets according to the new SBTi guidance and made progress on that low carbon transition plan. I'm very proud of the progress that we have made as we think about our planet.
Our business is about people. We reach over 8 million people a day with our product, the products in our portfolio, changing their health, their brain health for the better. We increased donations in low and middle income countries. We also moved the agenda on diversity and inclusion forward, making sure that we are a neurodiverse workplace and that we enable neurodiverse people to be able to work effectively. We additionally made progress of the share of women in senior management up from 31.5% to 33.8%. On the governance side, we're making progress around the world, making sure the selection of third parties and suppliers are based on good governance compliance and appropriate and ethical treatment of employees around the world. Next slide, please.
When we go forward into 2023, we are building on an incredibly strong momentum coming out of 2022, with a great engine driving our strategic brands being able to deliver a robust cash generative business. As Joerg pointed out, we've got a very strong balance sheet, and so we have that capacity, financial capacity for long-term growth. We remain focused on sustainability in everything that we do, and we're progressing towards CSRD readiness, which all of you are probably aware is a big lift. Importantly, we're advancing the progression in our R&D pipeline, the molecules already in the house, and you've seen that with our progression towards what we hope to have be approval of AAD and the 2-monthly Abilify.
It's exciting to see the pipeline maturing with that promising science coming through from our early stage programs and from our internal research. There are a number of data readouts over the next 12 to 15 months. Of course, as Johan frequently points out, we build the business internally and externally, always bringing in ideas from the outside, even into the earliest target discovery, but also when we do deals with other companies. You know that we're focused on niche or specialty neurology and psychiatry and rare diseases, and there has been somewhat of a renaissance in that area with new neuroscience companies forming, approvals coming through in the area of neuroscience. We are focused in our external access to external innovation on how do we replace the product growth that we need into the mid and late decade.
We also focus on expanding that early and mid-stage pipeline that will yield the growth on a continuous basis. Lundbeck is a strong and growing business and will remain so long into the future. We look forward to an exciting year in 2023. With that, I'll stop for all of us to take questions. Of course, Jacob Tolstrup, our EVP of Commercial, is here with us to assist with all of your detail questions.
If you have a question for the speakers, please press five star on your telephone keypad. To withdraw a question, please press five star again.
We'll have a brief pause while questions are being registered. The first question will be from the line of James Gordon from JP Morgan. Please go ahead. Your line will be unmuted.
Hello. James Gordon from JP Morgan. Thanks for taking the questions. A couple of quick questions, please. One was on pricing pressure and gross margins. I think there was a reference to pricing pressure in the release. How much pricing pressure do you think we might see? Is that just in Europe? What does that mean for the gross margin in the three or four year time period you talk about? Once we get past the Vyepti impairment, is Lundbeck gonna be an 80% plus gross margin company? The second one was also on guidance. Just I think the guidance doesn't include business development. The fact that you've given this long-term guidance, not including that, does that mean you're now not thinking that there would be big business development that might mean you don't get there?
Could we see that you're not doing quite so well on the EBITDA margin because you might need to leave room for a big step up in R&D if you do some pipeline deals? Just the final question was on Vyepti. The comment about the impairment on Vyepti inventory, which I think is just over DKK 500 in total, could we read it that the product's selling a little bit less than what Alder had planned when they entered into that manufacturing agreement? Is there any risk that you might have to write down the value of Alder if the product's not doing what their original projections were?
Okay, thanks for the questions. I'll ask Joerg to take the question on pricing pressure and the gross margins.
I think if you look in 2022, we thought of energy inflation quite well. We see an uptick specifically in 2023, from direct material, but also basically services across our business. We see these effects and expect these effects to be moderating going forward.
Any comments on the gross margin or?
I don't think we give specific guidance on the gross margin. I tried to provide some transparency on the impact of Vyepti, but I believe the gross margin is contributing as well to achieve our overall profitability aspiration.
Thank you. You asked about the guidance not including BD. I think within our hands, we have a great business to drive forward, and we know what we need to do in internal R&D for the things that we know about. BD is something that we actively look for, and we will do the right deals that come across at the time that they're available and make sense for Lundbeck shareholders. It's for that reason that we don't try to create an envelope that includes all eventualities, because we can't plan for that. We want you to know what does this business organically deliver. I don't know whether you'd add anything, Joerg.
Not on this one, but I would take the other one regarding the question on the Vyepti impairment.
Sure.
The sales forecast. I think it's fair to say that there are always different parameters that factor into how we build provisions for inventory. Sales volume, transition timelines, approval dates for transitioning to CHO. All of these are numerous of the factors we take into consideration. I think I can only reiterate we finished 2022 extremely strong, growing Vyepti 104%, and we also are intending to roll this out in more than 15 countries this year.
I think it's important to say that the reason that this is coming now is because of a good thing, and that is that the level of certainty increased during the year as we found we would be able to scientifically, we believe, transition to the CHO backbone. For that reason, we know that this technology shift is potentially possible. Of course, there's still a lot of unknowns, and we still have to go through all kinds of, you know, taking it through regulators, but it's that increase in certainty that makes us consider this at this time. It's also important to know that no single gram or ounce of Vyepti has been moved out. We'll continue to use this product, into the future for as long as possible.
Thank you.
Thank you, James. The next question will be from the line of Charles Pitman-King from Barclays. Please go ahead. Your line will be unmuted.
Hi. Thank you very much for taking my questions. Charles Pitman-King from Barclays. I have a couple of questions here. Just, firstly, to Joerg, since becoming CFO in August, I was just wondering what takeaways you've got over the past, what, 8 months you've been in the job now and, in terms of how the company is run and how you yourself plan to kinda make changes going forward. I think we've already seen some of that with the changing guidance. Secondly, on Vyepti, currently you say that it has a 5.4% prevention share of the migraine market.
I was wondering if you could give us any details on how you expect that to develop going forward, and what your strategy is for competing in the increasingly competitive anti-CGRP market as large cap US player, I guess, normally do. Specifically how the launch of Qulipta has impacted the Vyepti launch. Thank you.
Great questions. Take it away, Joerg.
Charles, maybe I start. Thank you very much for your question. Eight months passed by very quickly, and I'm incredibly proud, happy, honored, and humbled to be CFO at Lundbeck. I've experienced a great management team, terrific collaboration, a strong competence across all levels, and I only have very positive impressions so far. I think in terms of focus areas, I think there are a couple. We of course, are very diligent and laser-sharp focused on costs. I think you've also seen especially a strong Q4 that demonstrates that. I think we are very focused on what exactly is needed for the two months Abilify Maintena version to be launched successfully, what we require to achieve the desired uptake in AAD, and also to clear have a very strong and detailed tracking of the individual business cases around the Vyepti rollouts.
These are probably some of the first impression and focus areas, but I'm sure over the next months there will be numerous coming on top.
Perhaps, Jacob, you'd like to take the Vyepti question.
Absolutely. Thank you so much. Also, thank you, Joerg, for the great comments on your colleagues. Thank you. On Vyepti, a little bit mixed comment here. The 5.4% market share I think is quite impressive. In that light, you have to look also on Qulipta coming in at the same time. Qulipta has made a, I would say, rather significant impact in the market, so there's no doubt around that. What's important to note is around Vyepti is that we are the one that has also managed to keep and growing our market share during that entrance period. The strategy continues to be the same going forward. We focus on severely impacted patients and also patients that are in risk of or having a medication overuse headache. That strategy seems to be working.
You've seen, I would say, accelerated growth, especially over the last three quarters, in the U.S. What we also see from our physicians that we survey is that we have increasingly number of what we call loyalists. The loyalists not only prescribe Vyepti for the targeted, persistent patients, but also try to use Vyepti earlier in the line. I think what you'll see over time is that Vyepti will continue to grow and also grow not only in the segment where we focus first, but also in the more episodic segment going forward.
Thanks, Jacob. Next-
Brilliant. Thank you very much.
Thank you, Charles. The next question will be from the line of Jo Walton from Credit Suisse. Please go ahead. Your line will be unmuted.
Thank you. Just a few, please. You talk about your ambition now, as a margin at the EBITDA level. Assuming that there isn't too much adjustment there, because we know your core EBIT, so it's presumably core EBIT plus depreciation. That's taking us from around about 26% operating margin today to the 30-32% in, let's say, 2026. I wonder if you could just help us with your sort of fresh eyes from a finance director's point of view, where we should see the majority of that leverage come. You say that R&D is stable. Is that stable as a percentage of sales or stable as an absolute number? If you could also, for the net interest charge and tax rate, give us a little bit of help for modeling in the coming years.
You had a positive net interest charge at the core level in the fourth quarter of the year. Some idea of what the net finance charge at the core level might be in 2023 would be helpful. You mentioned the one-time distortions on the tax. Presumably, the tax rate should go back on a sustainable level to roughly the level it was in 2021. Thank you.
Jorg?
Okay. Well, let's start probably with the R&D question. The guidance we've given was not as a percentage of revenue, but from an absolute spend perspective. The first comment here is that you've seen already in 2022 that we more or less kept R&D flat because we had less spend compared to the previous year in marketed products. We still have a significant spend in marketed products also in 23, but already now we can, at the same time, with the relief versus the history, invest more in innovation. I think that's the question on R&D. I think focus for the margin expansions is mostly around continuing the global rollout of Vyepti, keeping R&D expenses stable.
Seeing also a bit of, I would say, if we exclude the spend required for AAD, a bit more of a normalization level on other SG&A-related investments. We also predict continued strong growth in our strategic brands and hopefully with the positive approval on AAD receive the desired uplift as well. I think you had a question on core EBIT versus adjusted EBITDA. Like I said, in Q1 we will provide a reconciliation of comparative numbers for the history as well as a guidance on this KPI going forward. I would say in generally the categories very much align, but we probably are a bit more consistent here in terms of using less of materiality thresholds. You had a question on the tax rate. The tax guidance we give going forward is more around 22%-24%.
The main reason for the slightly higher guidance of the tax rate is basically a reduction of the R&D incentive in Denmark, which goes from 100 to 30% up to 22%, now down to 108%. That is driving the higher tax rate. I think in terms of net finance, the guidance we give is roughly around DKK 100 million.
Thank you very much. That's very helpful.
Thank you, Jo. The next question will be from the line of Keyur Parekh from Goldman Sachs. Please go ahead. Your line will be unmuted.
Thank you for taking my questions too, please, if I may. One, what do you expect to be the main focus of the upcoming advisory committee for the AAD indication? Based on your conversations with the FDA so far, where do you expect that focus to be? Separately, kind of coming back to Jo's question, if you're going to guide to and measure the business on adjusted EBITDA going forward, is there a reason you can't guide to that today? I mean, you're kind of telling us you guided to an EBITDA margin for the year or long term, and you're telling us you're going to change the baseline guidance in three months' time. I'm kind of just confused on why you can't give us adjusted EBITDA guidance today.
Thanks, Keer. Johan will take the first question.
Yeah, thanks a lot. Of course, I don't want to second-guess so much what they're going to say because it's up to the FDA, how they formulate the key questions to the outcome committee and what other questions that will come up. There are some obvious ones that we can expect here, and I can speculate a little bit about it. It will be the traditional ones, efficacy, clinical meaningfulness, the strength of the readout, and it's, the primary readout is a scale that has not been used for approval. There will be probably a little discussion around that efficacy data. If we look at the efficacy data we have, we have presented this at scientific meetings. We have very consistent effect across the different sub-items of the Cohen-Mansfield scale.
It's very, very robust readout across the different subcomponents of it, which is a good sign that the scale was not driven by one parameter, sub-parameter. We also have consistency across the trials, which is very important. I'm pretty confident about the efficacy discussion. Obviously, there will always be some subgroup analysis they like to discuss. I think the bigger conversation will probably be around the tolerability, because this is really the key factor against the off-label label use of antipsychotics. As you may be aware of, there's a black box warning for the use of neuroleptics there. Obviously, we have data that are remarkably strong here. I have to emphasize that across this program and from the previous use and other indications.
I think one could be a discussion, is this an applicable black box warning across into this product, which has a little different mechanism action. This is a partial dopamine agonist with rich pharmacology. There could be a rationale to discuss with whether it's applicable. At least we're looking forward to that tolerability discussion because we have that strong data. Those are the key questions I think will emerge. In terms of the medical impact, there is always some discussion about how important could a therapy like this be. I'm looking forward to that with great confidence because the medical need is enormous, and this is a key symptom as I outlined. That aspect, I think, will be great to converse about. I'm actually looking forward to this outcome. If it happens, it can be always canceled.
Since there's a new indication in the field, I think, yeah, it would be great to have an outcome and discuss these things with regulators and other people in the group.
Joerg.
Taking your question on, the adjusted EBITDA, it is, in my opinion, good practice that if you introduce a new KPI, you make historical numbers available. That is something we're currently looking at, and that's purely the only reason that we don't use it now. I think as earlier said, the categories of adjusting are very similar to core EBIT. Please rest assured, we will always provide a full reconciliation and full transparency in case any adjustments would have been made.
Thank you. Next.
Thank you. Could I perhaps just sneak in a quick third one? On the studies for kind of PTSD, you're going to give us data from the 2 kind of phase III trials, headline data, second half of this year. Could I perhaps just check kind of where you are with the FDA on that end? Do you need both of them to be positive for you to be able to file, or are you still planning to do the meta-analysis? If so, have you reached an agreement with the FDA on the statistical plan for that? Thank you.
Yeah, thank you for that question. I guess it's for me, so I start. Yeah, as you heard from us earlier, we have had some, quite some discussions with FDA during the journey here. Obviously, we had an alignment before we went into this program. They expected the classical two studies, replication across two studies. That's a very traditional approach, particularly in the behavioral sort of psychiatric indications. We're not surprised about that. Some of the conversation we had was, can we pool data? I think they're really still very eager to see the prime analysis being across the two different studies. Relating to your question, if one misses and one hits, yeah. It remains to be seen how the data looks across.
In this very, very high medical need area where there is no drug from this type of class approved, I think there is a really worthwhile having a conversation, whatever data we get out, unless it's flat negative. Any positive sign in a trial like this, you would like to discuss with the regulators. Obviously, we're hoping for the best, that we have two clear cut studies, and there would really be no conversation about it.
Great. Moving on to the next question.
We have some technical issues. Please be patient.
Mark Goodman waiting to ask a question.
I'm sorry for the inconvenience. This is by calls. The next question will be from the line of Michael Novod from Nordea. Please go ahead. You'll now be unmuted.
Thank you very much. Three questions from my side. First of all, maybe you could detail a bit on sort of the, the sort of the step change in gross margin relating to Vyepti from changing the production method. I'm aware you can't give exact numbers, but just give a bit of feeling of what is actually the magnitude of improvements here. Secondly, maybe Jacob for you, what are sort of the top prios for the new head of the U.S.? It's sort of not been discussed. You changed head of the U.S. business. Is it to sort of reinvigorate the Trintellix franchise together with Takeda preparing for the launch of AAD?
What are sort of the top prios for Tom in the U.S.? Regarding Firepower. You've always been quoted for in media saying that you don't see any sort of big things perhaps coming up, more in licensing, smaller bolt-ons. If that's the case and you are so highly cash generative, have you then considered to do a share buyback also in light of where your stock is trading for the time being?
Maybe I'll start in the end, and then we work our way up, Michael. First of all, thank you for your question.
Sure.
Share buyback is currently not something we have been contemplating or communicated to the market. We stick to our existing policy of a dividend payout of roughly 30% to 60%. That is that topic. I think in terms of cross-margin step change of Vyepti, we don't provide individual numbers. What is of course fair to say, and Johan can fill in here, is of course significant improvement in the yield.
Yeah, that's of course one of the key things, and it's substantial. It's a manifold increase in yield, that's really the secret or the source here. That's what we're aiming for. You should also know the Pichia platform is actually, quite frankly, becoming an obsolete platform. It's really hard to get providers for the platform. With the CHO, we buy ourself also flexibility in terms of where we can manufacture. That's very, very critical because the mainstream is CHO now. Back in the days, Pichia was an attempt to get alternative platform. They didn't pay out when it came to yield. The volume, as you saw that big container in that graph, you basically go down substantially in the volume you need in the reactor size.
Great. Then you've asked for the priorities for the U.S. Well, never in my career have I had 2 PDUFA dates within a matter of a couple of weeks of each other. Anytime an organization's launching, there's a laser focus needed on making sure those launches are well prepared and really ready to roll. Additionally, of course, we're still in that growth phase for Vyepti. There's a tremendous amount of work to be done in the U.S. organization. We have been working with our partner, Takeda. As you know, there was substantial realignment and restructuring of that Trintellix field force. We did some downsizing at the end of 2021. Takeda downsized very significantly given the Vyvanse expected patent expiry coming up now, I believe, in this first quarter.
That disruption lasted far longer during 2022. We worked very closely together with Takeda, making sure that we're aligned on our field force execution and aligned on our messaging around Trintellix. The profile of Trintellix is an extraordinary tool in addressing depression, and in a way that people are able to be at work. I know that we can get great utilization. The market has significantly changed, you know, maybe Jacob, you want to amplify on that.
Yeah, no, absolutely. You can say finally we see the U.S. market coming back to growth rates that sort of resembles what we had before the pandemic. It is clear that the rate of remote consultation by psychiatrists are still relatively high in the U.S. compared to see what we see elsewhere. We also see fewer patients that are being diagnosed, and most of them are getting a first-line treatment and not progressing to a third and a fourth line.
Whether this is related to sort of an understaffed situation in the U.S., that question still remains. It's clear that the U.S. antidepressant market hasn't recovered, you can say, to what we, what we knew of before the pandemic began, which is contrary to what we see outside of the U.S.
The next question.
Thank you, Michael. The next question will be from the line of Mark Goodman from SEB. Please go ahead. Your line will now be unmuted.
Thanks. Yes, thank you. A couple questions. First, the gross margin, the $300 million hit, is that going to be any one particular quarter, or is that just spread across 2023? Second of all, the operating margin was supposed to be over 30%, I believe, next year previously, but now we're moving it to 30%-32% in 2026. Is that accurate? I'm just kinda curious just what has changed there. Lastly, on the neurohormone, it seems to be a new area. I'm just curious, did the science lead you there? Is this a new area of focus? I think you said you were gonna take it into psychiatry, does that mean like depression? I'm just curious what you meant there. Thanks.
Great. I think the first two questions go to Joerg, but I'm gonna start with Johan on the neurohormonal.
Yeah. Thank you for asking about this. Obviously, this is a program that just is going into phase I and being tested, so it's very, very early days. Number one is we like to see that we deliver on the pharmacokinetics that we really need to fine-tune here. We like a very homeostatic sort of response on the ACTH levels. Of course, safety and tolerability, that works fine. This is a very validated biology which is an interesting way for us to work. A really good sign where we like to be, where we can very, very early have very clear-cut biomarker readers that it's working. Obviously here, one of the key things we like to see is an effect on different steroids, cortisol levels, et cetera, in the blood.
We take it into congenital adrenal hyperplasia as a first population. It's a mechanism action primarily pathway to see that the drug is delivering in a population where you really have pathological changes of the levels. Where we take this can be multiple pathways. There are obvious indications here, in the neurohormonal space, the hormonal space. Cushing's congenital adrenal hyperplasia is of course something we could contemplate. All these diseases come with CNS symptoms, so it's there definitely within our frame, but it's on the outer limb of our frame, I could say, being a neuroscience company. There's been a long, long story about the so-called HPA axis and psychiatry, and you mentioned depression. People have tried this before. Our approach to this is that we go, again, going to be very strongly biomarker driven.
We're going to look for populations where you have an abnormal HPA axis using biomarkers to guide us. Exactly which indications is still a discussion. We're early days, as I said, but they're way beyond depression where you can go with this. There are anxiety disorders, panic disorders where you can take it.
I think just a reminder that this antibody came to us out of the Alder acquisition, so it's the third of the molecules coming out of that acquisition, Vyepti, our PACAP inhibitor, and ACTH. Great exploration of this biology, and it's early days, but it's great to be able to explore it. Joerg, I'm gonna hand over to you for the.
Yeah, two questions. I think phasing for the Vyepti provision, I consider this more of an event for H1 this year. In terms of specific guidance, the guidance we gave before was on EBIT. The guidance we give now is on EBITDA because we have a significant amount of amortization. Even the earlier question I got on gross margin, keep in mind about a third of our cost of sales are basically amortization of product rights and 50% are denominated in dollars. You can see quite some swings here that somewhat cloud the underlying, let's say, strong operational performance we have. The EBITDA target or range we communicate for the midterm guidance rests on the, I would say predominantly strength in our strategic brands and also the aforementioned key significant launches we are undertaking.
Next question. Question.
Thank you, Mark. The next question will be from the line of Michael Leuchten from UBS. Please go ahead. Your line will now be unmuted.
Thank you. Thank you for taking my questions. Could I please go back to the Vyepti inventory obsolescence? Two questions for that. One, why does it come in two provisions? Why not one? Looking at the size of revenues that Vyepti has delivered so far, the size of the provision is quite meaningful. I guess it's not just inventory recalculations. What else is booked that makes that provision so large? A question about the guidance now that you're focusing on EBITDA. Does that have any implications on KPIs or management incentives going forward, or is it just a different way of looking at the underlying performance of the business? Thank you.
I think the first question, why not one provision instead of two, of course, we can only build provisions for inventory on hand, and I think, as I said earlier, the external CMO stops producing during the course of 2023, and that also is one of the reasons that only then we can basically build that provision. The other question was on the.
The size of the provision.
The size of the provision.
Is there anything else?
No, there's nothing else. This is purely value for inventory we received from our CMO.
Yeah, I think the one comment, and we did mention this in the release, there was a fixed batch quantity supply agreement written by Alder, and then during the years, the yield, even from Pichia, went up from what had been expected. Actually, there were two levels of, I'd say growth in the size of that inventory. It's very important to remember that the timing of bringing it in now is based on our increased certainty of being able to transition the backbone, and it's a financial provision, not an action on the drug. Coming back to your question on EBITDA guidance, does it change management incentives? The answer is not in 2023. That's it for today.
We really appreciate your attendance. It's great to be celebrating Lundbeck's highest revenue year ever and great performance across our business. Thank you for joining us.