Welcome to the H. Lundbeck Q1 2021 Conference Call. For the first part of this call, all participants will be in a similar journey. And afterwards, there will be a question and answer session. Today, I'm pleased to present Deborah Donziger, President and CEO.
Please begin your meeting.
Thank you, operator, and thanks to all of you for your interest in Limbic. Welcome to our teleconference covering the financial report for the 1st quarter of 2021. I'm joined today by our CFO, Anders Goethe Head of R and D, Johan Turkmann Head of Commercial Operations, Jacob Torflip our Head of North America, Peter Anastasiou. Next slide, please. You see our disclaimer, and I know you've seen it many times before.
So we'll move on to Slide 3. The Q1 of 2021 is one we feel very proud of. It's a continued unprecedented pandemic era. And we know that traditional interaction isn't yet back to normal and the promotional activity is still below the pre pandemic times. But we're glad to say there's movement towards a more normal world and we see this showing up in increased momentum in the brands.
We saw growth in our strategic brands of 8% in local currency, and I'm very pleased with the momentum of Vyecti in the U. S. The Trintellix launch in Japan is accelerating and we're also delighted with the strong data from 2 new studies, RELIEVE and RECONNECT, which further highlights the benefit of Trintellix in major depressive disorder. Important factors influencing the Q1, Q comparison
are of
course the sparking in Q1 2020, which was driven in the pandemic by people being told to refill their prescription. We've also seen significant currency headwinds. And in March, we experienced the first impact of the Noethera loss of exclusivity. Next slide, please. Our market shares remained stable or improved in many markets.
And even though we definitely saw an impact on demand from patients Not being able to see their physicians and also from our field teams being unable to work as normal. Despite those challenges, Vintellix, Trintellix achieved DKK800 1,000,000 in sales for the quarter, which is growth of 7% in local currency. Exarti showed a growth of 4% in local currency achieving DKK672 1,000,000. Abilify and maintainer remain resilient through 2020 and into 2021. And I'll address IFP on the next slide, if I can have that slide, please.
There's good strong momentum in dial demand for IFP. And we've seen growth of around 50% Q on Q and it's developing as anticipated in the U. S. Market, which is still experiencing some in patient physician interaction. The payer coverage for Vyaches has remained extremely good and patients who have only accessed the Vyaches even in plans that require a branded step up.
The global rollout will get underway mid year with launches in the balance of the year for 5 countries and we're taking the next steps on building this brand into an NDA plus growth driver for Lundbeck. Next slide, please. One of the things that we're most pleased with is how Vianti is being received by the patients who take it. We see here Elektra who gives us permission to share her story and whose role has been transformed as her headache has been controlled when she received Vyepdi. We look forward to more and more of these patient testimonials of lives transformed as the VIAVI rollout continues.
Next slide, please. We all know that the COVID-nineteen Related stay at home restrictions significantly reduced in person visits, new diagnoses and therapy initiation and that's impacted new patient starts for both Ryxalsi and Quintellix. We're still experiencing some of the impact From the pandemic, but I believe we're seeing the early signs of recovery. In Q4 of 2020 when the U. S.
Market was more open And we were seeing patients coming back to a degree and we were able to have our staff people interacting to educate physicians. We saw a good momentum pickup. We saw a close down a little bit in the beginning of the year, as you know, those next waves of COVID rollout and we saw a concomitant decline in new cases in NER access and now we're seeing that begin to recover. So that close down together with the annual deductible reset drives the dip in the early part of the quarter. But we're very pleased with the momentum as the quarter finishes.
At the end of Q1, we're at about 55% of our pre COVID in person calls. And together with the virtual interactions that achieved about 80% of the pre COVID calls. And we're expecting that to continue to advance and improve as the months go forward. Next slide please. There has been really good momentum for Brintellix, Trintellix in both North America and in international market.
In Japan, Gentellix has now reached a volume share of 3.5%, which makes it the strongest launch in the developed market among all our markets. We see a good growth inflection driven by the lifting of the 2 week prescription limitation, which is something that's required for the 1st 12 months of any launch in Japan. The combined sales forces of Lindeck and Takeda Driving the education around the brand has been tremendous in driving uptake. For Canada, that's our 3rd largest market. I'm pleased to say that we've achieved public reimbursement for Quintellix there and we expect that further Enhance update uptake.
Anders is now going to elaborate on the financial performance in more detail. Next slide, please.
In this waterfall diagram, we have illustrated the pushes and the pulls that have impacted the quarter. Yipti delivered $76,000,000 in sales. We saw an encouraging growth of 8% for the strategic brands despite impact from the pandemic. And Natera was down with 35% in the quarter due to a more aggressive or more aggressive launches from multiple generics And more generic than anticipated. In Q1 last year, the pandemic led to stocking of our products, which has Negatively impacted revenue growth this year and the negative impact is approximately 2 percentage points.
Depreciation of currencies have had a negative impact on the growth of approximately DKK 180,000,000 and that is, of course, Also the reason for having a total decline in revenue for the quarter. Next slide, please. When looking at the core gross margin, it was 86.6% and it's thereby unchanged Compared to same period last year, the reported gross margin declined due to amortizations of YEPTI. SG and A declined 11% or approximately DKK 200,000,000 compared to the same period last year, which is mainly due to less marketing and Promotion activities as a result of the pandemic. If you adjust for the impairment charts, We took last year of some DKK 800,000,000 due to the follicularx write off.
The R and D cost increased by 4% and that is mainly due to the increased clinical activities for YEPTI. The operating result EBIT reached DKK882,000,000 corresponding to an EBIT margin of 20.6%. The core EBIT margin Faced a modest decline from 29.7 percent to 29.3%. Overall, we see the financial performance In the Q1 as very solid. Please turn to Slide 11.
Basically, this Slide does not contain any material new information compared to when we announced the financial expectations for 2021 in February this year. I think it's important to remind you all that Lundbeck's main currencies are USD, Chinese yuan, Canadian dollar, Which together constitutes about 70% of our currency exposure. We have, as expected, Seeing depreciation for all the main currencies, which impacted the growth negatively in the quarter with approximately 4 percentage points. You should also be aware of that some of the other currencies such as Korean won and Brazilian real have also in the quarter. Next slide, please.
On the left hand side of the slide, you can see the development in our free cash flow. Profit from operations in the quarter has been quite robust, but the cash flow has been negatively Active by change in working capital due to timing and payment from partners, but also received shipments of inventory. To the right of the slide, it's shown that we have continued to reduce the net debt since the acquisition of Alder Pharmaceuticals, Leading to a healthy net debt to EBITDA ratio of 1. We expect net debt to be around DKK 3,500,000,000 at the end of 2021. Please turn to the next slide.
The financial guidance for 2021 is unchanged and we still expect revenue So in a range of DKK 16,300,000,000 to DKK 16,900,000,000. The generic erosion for Nothera following the LOE At the end of February 2021, has been faster than we anticipated. And we therefore now Expect a decline of approximately 70% in sales corresponding to around DKK1.7 billion, Which is higher than what we communicated when we announced the full year expectation in February, where our expectation We're approximately DKK 1,300,000,000. This will of course put a bit pressure on our Financial performance, but the other strategic brands are expected to show high single digit or to show double digit growth in the remaining part of the year and are expected to partly mitigate the erosion of Nothera. The mature brands are expected to decline around 10% and that is due to normal generic erosion, but also VBP in China impacting Bigger.
Included here is also the sales impact from our handing back of Cypress to Merck late last year. Sycrest realized the sales of DKK 31,000,000 in the Q1 last year. The growth in revenue for the strategic and the Mature Brands is expected to be approximately DKK1.1 billion, which actually is better than we assumed in the beginning of the year. We assume negative currency impact of approximately DKK 600,000,000 and hedging effect of approximately DKK 50,000,000 which We'll result in a net impact of around DKK 500,000,000. The explained movements in revenue are expected to lead to Overall decline in revenue for 2021.
The financial guidance for the earnings figures Unchanged compared to Lundbeck's financial guidance provided in February 2021. For the full year, you should expect financial items to be a net expense of DKK 250,000,000 to DKK 350,000,000 depending on the currency development. We believe that the rest of the year will still be a year of uncertainties with factors that are Beyond our control in relation to the pandemic, but we are, as a company, optimistic that the increasing number of vaccinated people Globally, we'll continue to drive the rebound of the growth of our strategic brands in the second half of twenty twenty one. I'll now hand over the microphone to Johan for going a bit more into the details of RD.
Thanks, Anders. Please turn to Slide 14. Let me start with Rixalti in agitation and Alzheimer's Type dementia. As we've wrote in the release on April 13, an independent interim analysis in the ongoing Phase 3 clinical trial, Study 213, Supports progressing the recruitment of patients to the planned full enrollment of 3.30 patients. Completion of the trial is expected in the first half of twenty twenty two.
With regards to Vyepdi, we are progressing very well with the global Expansion and we have regulatory reviews ongoing in 12 markets, including EU and Australia as well as countries in Asia and the Middle East. The clinical programs on Vyepdi are also advancing very well. The delivered trial, a Phase 3b study that evaluates The effects of Iepti for the prevention of migraine in patients with prior unsuccessful preventive treatments is well executed. And in spite of the pandemic, enrollment has been exceeding target and we're expecting forward to look at the results at the second half of this year. Additionally, we have initiated the pivotal global program supporting major filings in Asia with the so called SUNLIGHT study that is China centric, soon to be followed by the SUNRISE study that is Japan centric.
We also continue to keep expanding and progressing the early stage pipeline So programs can be evaluated in humans faster with gatekeeping experimental medicine studies. Overall, we expanded and built a broader set of Phase 1 assets, Including a couple of maglipase targeted molecules that are evaluated in a number of early exploratory patient cohort studies. We are also continuing the further advancement of 2 promising early development programs, the Alpha SNE Clean and the PACAP programs. We continue to see a fluid situation around the pandemic with clinical trial sites opening and closing again. This is primarily impacting study starts, especially the early development stage studies, which are less flexible since they are heavily dependent on few sites and countries.
In late development, the effects are more variable with studies in migraine doing very well, while others are more challenged to gaining the enrollment momentum. Next slide, please. Now I'd like to turn to interesting new data on Trintellix Brintellix. Firstly, we are very pleased to share the positive data from the RE CONNECT study. This study evaluated the effects of oreteoxetine in patients with primary diagnosis Some major depressive disorder, MDD, that had a comorbid diagnosis of generalized anxiety disorder, TAD.
This patient category represents the largest subpopulation of patients with MDD, with the prevalence of core morbid anxiety disorder perhaps as high as 60%. This is also patient population that generally has a higher severity of illness with consequently greater impairment in functioning and thus more difficult to treat. In line with this, the patients enrolled in ReConnect study were severely depressed and depressed and anxious and the majority of the patients had already failed another antidepressant. Patient with treated open label of flexible doses 10 and 20 milligram mortoxetine with an up titration to 20 milligram after 1 week of treatment. Mortoxetine's effect Our symptoms of depression was verified with improvement on the Montgomery Osprey Depression Rating Scale.
More importantly, There was also significant improvement in anxiety symptoms as measured by the Hamilton Anxiety Rating Scale. The improvement in depression and anxiety symptoms were strongly aligned with improvement in patients' overall functioning And health related quality of life measures, which obviously are particularly encouraging given the poor over a social, family and work life function in This group of patients. Next slide, please. Relieve is a real world In which the ability of Trintellix to improve functioning in people living with MDD was assessed. LEAVE was a global prospective observational study In patients with MDD that were prescribed vortioxutine, data from 994 patients were collected at routine clinical visits at baseline 3 months 6 months.
The study demonstrated the ability of oreotrioxetine to improve the daily life of people working with living with major depression when measured using the Xi'an disability scale. That's a scale that evaluates areas such as family, social life, home, work and school. Additionally, the trial met all its secondary endpoints, measuring quality of life, measures of depression as well as We confirmed borteoxetine's positive effects on cognitive symptoms as measured in 2 very different ways, a questionnaire and a neuropsychological test. As in the ReConnect study, the results of RELIEVE are particularly interesting in that it shows an effect on Trintellix for Intellix on Family work and social life functioning. In the relief study, it's also very nice to see that we clearly demonstrated that bortioxidine can restore Brain health in an everyday clinical practice setting.
With that, I turn over to Deborah.
Thank you, Johan. We also, as you know, We focus our business on medicines for brain health, but we also do it in a way that builds a sustainable company over the long term. Our sustainability strategy aims to ensure that the business activities are conducted in a way that supports as many as possible of the 17 sustainable development clause mitigates any risks to the business and creates a diverse and inclusive organization where the best talent can thrive. PMA remains in the top 5% of Comparable international workplaces on several parameters, and we've been proud to receive the accolades of Top Place to Work awards in multiple countries in the quarter. We drive diversity, equity and inclusion across our organization.
And also at our board level, with the addition of 2 new board members, We now have 30% of our directors being women and we have 7 nationalities within our board. Having achieved our 2006 long term climate goals, Lundbeck announced in February a new 15 year climate target, which was approved by the science based target initiative. There are 3 pillars in this new target, and that includes the commitment to being carbon neutral no later than 2,050, which is aligned with the Paris Climate Agreement. Carbon emissions from our production in fleet will be reduced by 2 thirds over the next 15 years. And we'll also reduce the so called Scope 3 emissions as we work with our suppliers and customers to reduce their carbon emissions by nearly a 5th over the next 15 years.
Next slide, please. As we forward ahead in 2021, we'll be working hard to continue to mitigate any effects of COVID-nineteen And driving those strategic brands forward to get to the patients who need them. We'll also be looking to drive forward the pipeline. The regulatory process for Vyecti is continuing with expected approvals in Australia, as Johan said. And We're also expecting the recommendation from the European CHMP towards the end of the year with approval for Europe in the early part of 2022.
2 of our early stage projects are also getting ready for Phase 2 testing. Next slide please. We're off to a good start this year and we aim to keep it moving. Our current top priority is to maximize the value of our brands and that continues to perform robustly as you've seen from the financial performance this quarter. The strength of the operating results over the past year as well as in this quarter give us that strong financial foundation to continue to drive our Expand and Invest to Grow strategy and deliver in a sustainably, profitably growing company in the decades to come.
As we focus on restoring brain health so every person can be their best. With that, I thank you for your interest and open the Q and A session.
Thank Our first question comes from James Gordon from JPMorgan. Please go ahead. Hello, James Gordon, JPMorgan. Thanks for taking the questions. A couple of questions, please.
First one was on the exalti Alzheimer's agitation and the interim and its implications. So if I remember correctly, I think there had been comments that If the interim efficacy has been in line with what we've been seeing for 1 mg prepsilte in previous trials, it could be good enough to stop interim. And so does the fact that it didn't stop at interim, does that suggest that maybe the benefit you're seeing in this trial isn't as good as what you saw for Acelity 1 making previous trials? So the question here, how does this make us think about or how should we think about the chances of success at the final result now we know it didn't stop interim? Any reason why it might not Looks as good.
So that's the first question. 2nd question sort of connected to Ruxulti and Alzheimer's agitation. Business development, so given maybe some uncertainty around Rexel T and AA and there isn't that much other late stage pipeline shots on goal. Does that make it more urgent to do some of the deals ahead of the final data for Alzheimer's vegetation? Do you need to have a plan B in place?
And then third and final question just on SG and A. I think on the last call, there was a comment that SG and A could be something like 41% to 46% of revenues for the full year. But it seems like COVID is continuing on longer in terms of delaying people getting back in the office. So should we assume SG and A is going to be the low end of that 41% to 46% range? And is it sort of Q2 similar to Q1 and then it's really the second half that it goes up at all?
Thanks, James. I'm going to ask Johan to start with the description around the interim analysis. And then Anders will take the SG and A question and then I'll end with the Beauty question.
Yes, thanks. So just a few background facts around the result in agitation. As you recall, We had 2 previous studies and the strongest data was in the 2 milligram group either with a fixed dose or a subgroup analysis of the flexible dose that We looked at, so the 2 milligram was the one that we showed earlier to work and show effect. And this study is looking at 2 and 3 milligrams in the pooled assessment. So there are sort of 2 arms here, a placebo arm And the pool group of 2 and 3 milligram where we aim to have at least 100 people on the 3 milligram dose.
The interim was done at 252 subjects and we're now aiming for 330 to full enrollment. In terms of, I guess, what you're Asking about are the bars that we set here. Let me first say the study continues. We didn't hit fertility, which was part of the analysis. So we obviously have a drug that is Working.
The question is how well it's working. And to hit the success interim criteria, we needed to have Pretty strong effects. Obviously, with fewer subjects you accommodate for the variability being a little larger with fewer subjects. But we're aiming for a very robust effect to be able to have a solid conversation with the regulators. So now we're looking forward to finish Trial and see what kind of data we get in the ball range of working or working extremely well.
That's what basically the design is now going forward. And I'd like to add also, we're doing our best to execute this trial as fast as possible. You may recall, we had some issues getting patient into The last year, we now have a number of activities. So we hopefully can speed up this trial.
And the SG and
A, you should expect that the ranges that we have given is actually what we still Because what we had also built into our estimate was that the promotion And marketing or the promotional sales activities will be less in the Q1 and hopefully they will ramp up During the year, so the range that we set in Q1 is still applicable also going forward.
Great. And I think that our expand and invest growth strategy, we're constantly looking at ways to build the future sustainability of Lundbeck. And we'd be active across all stages of the pipeline. So that remains true. And I think we've always said that we are going to be very disciplined about what we do.
So we're not rushing In any way to try and do something before the AAD readout, We've always been looking to do the thing that's right for Lundbeck and that we believe fits and owns the company. And It will be driven by this finding those assets, not by a specific readout timeline, if that's just to make myself clear. Thank you.
Our next question comes from Wilmar Kapadia from Bernstein. Please go ahead.
Great. Thank you very much for taking my questions. Will Markovada from Bernstein. So can I just first ask on VIApti, please? Recent trends have stepped up quite nicely in the U.
S. And you say the 1Q was in line with your expectations. So can you just provide a little bit more color on what that looks like for the rest of the year? Maybe you could Comment in relation to consensus expectations of around DKK 530,000,000. My second question is on ruxulti and borderline personality disorder.
We're expecting the Phase 2 in mid-twenty 1. But just curious how we should think about this opportunity here. In the U. S, you suggest 1,700,000 treated patients, but No approved drugs. So how much of an inflection could we actually see from this label expansion?
And then just tied to that, how much off label usage do you actually see for the product in BDP at the moment? And then my final question, is this on on fee, we've now had 4 or 5 quarters Producing similar revenue numbers. So I just wanted to get a sense of how we should think about the trajectory for the product from here. How much downside is there Please let's, if any, for this asset. Thank you.
Great. So thanks, Yamal. I'll ask Peter to start on By Epti and its performance and how we think about it in the rest of the year. And then, Johan, maybe you can talk about When we'll see the readout of Borderline and Peter talk about how you think about it in the marketplace? And then others would you comment on Opiant?
Maybe I can start with unfeed. You should expect our Best guess, it is 5% to 10% decline in 'twenty one compared to 2020. And I can start with VIEFTA and then Peter can take over. So the consensus, when you look at the trend line And if you just extrapolate that, then we are on the way to the €500,000,000 which is comparable To the consensus. But then, of course, we need to build in a caveat.
And that is, of course, we expect that Society is opening more and more up in the U. S. And then Peter can take it from there.
In terms
of Yes. Hi, Vimal. Thanks for the question. Yes, in terms of IEPI, It certainly was a good quarter and on track with our expectations. And I think it's a combination of a number of things.
You're seeing Patient volume starting to return although not anywhere close to full volume. Our reps are able to get in front of our customers, physician practices are getting closer to being fully operational and back online. And then also there's a number of things as you know that are now in place that are very important to create the momentum that we're seeing with ASP being published now for the first time and then we'll continue to be on a quarterly basis. Our market access situation is quite good. We have 235,000,000 patient lives that have access to Vyepdi in the U.
S. Which is great. And of course, J code. So all those things create A runway that we believe will get us where we need to be for the year. Of course, the big outlying uncontrollable factor is COVID.
Whether it be in future waves, that sort of thing. But we're pleased with the momentum that we have.
Great. And would you like to comment on borderline for Axalti? Just in terms of the inspection you want. Yes.
Obviously, I won't give specifics about what kind of A sales increase we would expect, but yes, there is of course off label use that we hear about. It's tough to quantify The product of course in terms of delivering remains to be seen with the Phase 2 readout, but the market opportunity is a meaningful one. There is no approved treatment. It's a sizable population in the U. S.
These patients create have a lot of disability and are very challenging patients for physicians to treat. And so they are looking for new therapies. And so we believe this is shaping up to be a meaningful label expansion when the study results come out and we see those.
Johan, any comments on timing?
Yes. Let me just fill in a little bit what Peter said there. This is of course, Rexalte has a great profile, but we're going into an indication that It's extremely hard. And we're actually running a proof of concept study here. It's a Phase II proof of concept study because several things.
First of all, there is no established therapy and the readouts are also new readouts. They're not established. So we have to pave the way here Completely new ground. So this is a challenging study and challenging indication. And we're looking forward to see the Outcome of the study, it's actually fully enrolled.
So we know the timelines pretty well. We'll get it by the shift of the midyear. And basically then we'll see what data we have and how we'll progress with this asset.
Great. Thank you very much.
Thank you. Our next question comes from Michael Leuchten from UBS. Please go ahead. Thank you. Three questions, please.
Michael Leuchten from UBS. Just a question for Peter. Has there been any stocking going into the year after Q4, anything that will make the underlying growth less good than the quarter cosmetically looks like. And second question, Deborah, you commented on your sales force and your the digital efforts. Is there any way of quantifying the level of effectiveness of the promotion activities now relative to where you would expect it to be if there hadn't been a pandemic, maybe it's impossible to say.
But I just wondered if there's a way of measuring your impact at the moment given that you're running a dual strategy? And then the third question is on Viapti DTC. Can you talk to timing on when you will roll out an initiative and then when would you expect the return on that in terms of quarter, say if you did it now, would that then be seen in Q2 or would you think it's going to take a little bit more time to convert that into revenues? Thank you.
Peter, you can maybe start with the stocking in the Biof2DTC.
Yes, Michael, you didn't specify a product. So I assume you mean overall. And the short answer is no, there's no stocking effects beyond normal quarter to quarter swings that would explain the Q1 performance. There's no one time events anything like that. This is true momentum.
I think I'll steal a little bit of the answer from Deborah's second question about promotional And you can see from the slides that Deborah showed that when we are able to get in front of our customers, The customers respond and the prescriptions go up in terms of new prescriptions. And there have been ebbs and flows in our ability to do that. But we feel confident that as the pandemic recedes as we can get in front of our customers and right now, we're doing a relatively good job of getting back in front of our customers and the brands are responding. And so that explains, I think the good performance that you saw from the strategic brands, in the Q1.
And then Vyep to DTC.
Yeah. DTC is something that we intend to do with Vyepdi. Timing of it is something that in a little bit is out of our control for two reasons. 1, we We need feedback from the FDA. As you know, for all DTC campaigns, you need to have those pre cleared.
And so, Feedback from the FDA is critically important and given all their other priorities with COVID and approving treatments it's tough to know exactly when we'd be able to receive that feedback. The other piece is of course the timing really does depend on COVID and patient volumes. We certainly want to make sure that we're launching the DTC campaign when the physician practices are ready for the influx of patients but also that the patient volumes are getting back to close to normal. So, it is in our plans in our armamentarium The timing remains to be determined.
Just commenting on the sales force effectiveness a little bit more. I think that What we do know is that the in person call converts to a prescription much more frequently and the virtual engagement story. And I think that we've seen that in our own interactions, but we also see it with telehealth. Physicians interacting virtually with patients also don't initiate a new school. So the virtual adds something and I wouldn't put a quantification on it, but it's certainly not as effective in converting to prescription as an end customer call.
Thank you. Our next question comes from Martin Parcoy from Danske Bank. Please go ahead.
Hello, Martin Parker, Danske Bank. First question is probably for Jacob. Just if you could elaborate a little bit On Japan and TransAlix, in absolute terms, how much are we talking about now in sales in Japan? And maybe also A little bit on the combination because of course also Lexapro is still also active in Japan. How are these Faring in combination with respect to market share position.
And then a second question, Charles or maybe Deborah, I think it was you were quoted on news people today talking about both For the next 6 to 8 years, if we look beyond 2021, maybe you can elaborate a bit on that and maybe discuss the growth on the regional development. And then just finally for U. S, Maybe you could talk a little bit about the net price development you are seeing on your products right now in U. S. In
2021. Thanks, Martin. Jager, over to you.
Absolutely. Thanks, Martin, as you've seen also from the beliefs and the comments that we have made, I think you're probably doing today, But I would say it's actually going really well in Japan. And we were hit during the pandemic last year. We have Now we have about 50% access to our clinics and university hospitals and so forth in Japan. Last year that gave us Issues in terms of getting started.
But as soon as the 2 week prescription ban was lifted in Japan, market share has climbed up very fast. And Looking at volume market share, Japan is now our best launch ever for Trintellix. So they have done a super job In Japan for Nutranext. I don't think we're commenting on how much sales that we get Specifically for Japan, on Gintellix margins, I can't help you with that. But of course, as you know, Takeda takes the lion's share and we get around 30% of that is Coming back to us in terms of royalty for the brand.
But I don't think we've given specific sales numbers. If you look at New scripts and we are climbing up fast and we are the leading brand in capturing new patients. But of course, we are still coming from a lower level than the others in terms of total market share, but Changing fast. And I think one dynamic that is about to change is that we will see generics on Cymbalta Relatively soon in Japan, so that could change some of the market dynamics there.
In which way do
you think it will change?
Yes. So right now, we are actually climbing up fast. That means that I think we're building up a great reputation for the brand. So For the brand, so difficult to know, but of course, that always gives a different pressure in the market That you have one more generic entering. But I would say that, that has always been part of our And looking ahead, we see no change compared to what we have estimated in terms of growth for the year.
Yeah, could Martin also ask about how Lexapro and PlinteX are coexisting?
Yes, that's a great question. And I would say Lexapro has done very well during the pandemic, one of the benefits of having a Bigger portfolio. So how we co position them hasn't changed, meaning that in many markets where we're able to For Motelixa Pro, the focus has been on anxiety, whereas for all markets, the focus for Intelix, Intelix has been around recovering The functioning, so sort of complete recovering of your function as a patient, not only looking at depressive symptoms, but For total functioning. And that has worked very well. So Lexapro is primarily used in an anxiety setting.
And
commenting on the growth in the coming years, I think that the major Lots of exclusivities are behind us. And of course, we have to wash North America too, and we'll see that this year. But then we will have a period of relatively uninterrupted growth over the coming years. So that's a good picture for us and with the robust financial base that we have, it's a great place to grow from. Anders, would you like to add any comments?
And of course, we expect The chance we will have is, of course, in Europe, but we still we will have the pan European launch of YF T starting in 2022, which We expect would fuel the growth there. So we strongly believe that we will see 6 to 8 years of growth in Coming through 2021, then we would see a continuously growing business. And with respect to the net pricing question you had, I assume it was related to U. S. And if you look And the majority of the products, the gross to net has not changed dramatically.
Of course, when you come in the earlier phases like Rig Salta, the gross to net has changed slightly. And then you have on top of that, you of course have the The price increase is taken. So overall, if you look at the average net price, then it has been increasing. And that is also part of the growth that you're seeing. And then in some of the regions, you would say, but it seems how can you speak about growth for the brands?
But if you look at the last in Q1, Last year, you would also see that we had a super growth for some of the products, which was due to the stocking in March pre pandemic. So Or the underlying growth is actually pretty nice and also supported by the pricing actions this year and last year.
Thank you. Thank you. Our next question comes from Chung Yang from Credit Suisse. Please go ahead. The line is now open.
Hi, guys. It's Choon Chung from Credit Suisse. Three questions from me. Firstly, on your guidance, just some of the reasoning why you're keeping the guide given North Air is now 70% erosion for the year. Is it simply that the expectations for the growth drivers just going much better than you thought since the start of the year?
And is there anything else that's doing much better than you originally thought? Secondly, just on costs, following up from James's question on SG and A, just to Clarify the cadence of spend through the year. So do you think 2Q is going to be a similar quarter than 1Q? And similarly, just on R and D spend, just how that progresses through the year? And then finally, just your opinion on Lundbeck being taken out the MSCI, I think it's tonight.
Do you think that that's going to impact the stock indirectly? Any thoughts here would be interesting. Thanks very much. So
if The
others, maybe you can comment.
So if I start with the guidance, it goes without saying, It is approximately numbers. So we have we went from approximately a decline of 50% to 70%. And we have Estimated in our books, it's around $400,000,000 down on revenue. That of course put a bit pressure on the guidance. But on the other hand, we have seen Some of the uncertainties we had when we entered the year seems that they're a bit less for the strategic brands.
But of course, And that's due to we see that the vaccination levels are going up. We see that societies are reopening. We also accept that some countries are Still suffering dramatically. But in the major countries, we see a good momentum. And that is why we believe that we can be balancing out The faster erosion from Nothera.
But of course, that needs to be seen during the year, but we are still confident that we'll be able To deliver the guidance. From SG and A and R and D perspective, I'm not going I don't want to go into details for each and every quarter, but it goes without Saying that we have been building into our estimate that we had a gradual Return to normal. So you would see that in Q2, we hope that we will have more pressure behind the sales and marketing efforts. And then it will We hope it will be more back to normal in Q3 and Q4, but that needs to we need to see how it plays out and then some activities Might be moved around the quarters. But for the time being, we expect that the SG and A ratio that we told you In February, it's still holding up and that is around between 41% to 46%.
So you could say, is it 43%, forty 4%, that is what we believe in now. And then we need to see how the quarters plays out. And with regards to the share price And inclusion in different indexes, I think you have as much knowledge as we have and your speculation around the impact on the share price is Actually better than ours. So I rely on that you're more capable of evaluating that than we are.
Anything to comment on the R and D cadence at Sprint?
Yes. So I think we have said I just need to double check, so I don't say anything that is out of context. But We have said that the R and D percentage is should be between 22% 24% for the full year and that is still what we believe in. That is the spending level.
Thank you very much.
Thank you. Our next question comes from Carsten Lundberg from SEB. Please go ahead.
Thank you very much. I only have one left here. I was hoping to get a little bit more color on the emerging markets Because you actually delivered 4% year over year growth in constant currencies despite having delivered 17% in Q1 last year And you have some headwinds from the VPP in China, etcetera. So I was just wondering, Jacob, could you give us So more color on what's the driver here because you are up in growth towards Q4 and maybe also there's a lot of focus on this VBP in China. Is everything in the numbers now for Ipiksa?
Or do you expect anything more in
the coming quarters here? Thank you.
To comment on that, there are different pulls and pushes for the quarter, Carsten. You're absolutely right on VBP for Ebix that that is something that has taken us down in terms of growth for the quarter. On the other hand, also remember that China last year was going through the pandemic earlier than everyone else. And That meant that early on, we were actually behind in China in Q1 last year. So that sort of pulls in the other direction.
And then for other markets, We had stocking going in. We had a product, Cypress, that we've handed back to Merck, which also has a smaller impact on some of the international markets. So it goes a little bit in both directions, but that also means that At the end of the day, all of those effects basically equals each other out. And that means that What we're looking at is demand driven. It's performance that is driving the growth for the quarter for many of these markets and on VBP for Abixa, we have lost market share After VBP, we are now at a level where we are able to then, you can say, promote and compete again.
1 of the generic suppliers last year were not able to deliver and that gave us a little boost at the time. Now we are down at a level where we are promoting again And we're actually able to grow Abixa a little bit again locally, but at a lower level, of course, than what it used to be.
But I think it's fair to say that our expectation for EBITDA for the upcoming quarters is also a bit lower. So there would be a bit more impact also in international markets in Q2 and Q3. So still, it has been rebased to some level, But we believe that we need to see a bit more decline in the upcoming quarters. What we believe on the other hand is that the strategic Products, they will actually be growing more in the upcoming quarters. But on the other hand, some of the mature products will be dragging a bit down.
Okay.
Thank you. Our next question comes from Michael Novak and Nordea Ma Equities. Please go ahead.
Yes. Thanks a lot. And three questions from my side. So first of all, to Trintellix and the Reconnect and Relieve data. So how fast and how wide can you start to use the data?
And how important is it To sort of see the rebound in TwinCelix, in particular in the U. S? And the second question is to YFT in Europe. Again, how fast do you expect sort of reimbursement to be concluded? We see that CGRPs in general have good access in Europe.
And do you expect this to also be sort of a fast reimbursement process for YEPT? And then lastly, on the Trintellix generic court case. Do you still expect this to be concluded during June, July?
Great. Thanks, Michael. I think I'm reconnecting with the performance of Nutranext profile in major depressive So all of these things help. They don't change the label, as you know. So they'll be presented at scientific meetings.
They'll be used in medical education, but they're not promotional in a sense. But what it does is it highlights the benefit of Trintellix on function even in patients who have concomitant GND And it helps us with payers that we can really talk about how Fincellix does perform In the real world because we get questions sometimes about placebo controlled clinical trials. Do they Demonstrate what happens in the real world, I really believe really does that. So I think that they will add So the body of evidence that this brand is an ideal brand for people facing major depressive disorder who need to Be able to function normally and frankly it doesn't. So I'll stop there and maybe Peter you Do you have any further comments?
No. Just to emphasize your points, these data are extremely helpful to be in the published domain and with key opinion leaders and other scientific exchange venues. And while I completely agree with your point, While we have excellent coverage, payer coverage with Trintellix, these data just further to reaffirm the value that Trintellix brings to patients in the real world that can help us on those levels.
And your first question comes from YFTA.
So hopefully, the plan is or not hopefully, the plan is that we expect To have approval of YFZ early next year and then we will begin the European rollout. There's a couple of things that you have to Look for here, 1st and foremost, this is an infusion product, BN biologic. There is a little bit of longer lead time for us to have product available in the market. So that's one factor From approval. But when it comes to market access, we believe at that time we would have all the tools in place to have that discussion.
And then actually looking at the other CGRPs and the success that they've had in most market of getting through and getting good pricing, we believe actually will help us in the discussion. And so I don't expect it to take longer than what has happened for the other CGRPs. In fact, it should actually The more helpful for us is they've sort of established a pathway. And with the delivery trial that we are coming through with, we believe we have all the data to go in to have a good discussion with authorities around that. So it will be a typical, you can say, European rollout where you begin with a market where Can easily get into and secure a price and then it will be sort of a phased rollout as soon as you can, but that still So means that it takes anywhere between 2, 3 years before you're into all European markets, which It's very common and not something to do with YFJ.
Also the same that it took for Brintellix as an example. Trintellix losses?
I think the nature of it is that we There's nothing telling us that the timeline has changed.
Okay.
We know that sometimes there's COVID delays, but right now We haven't heard anything different. But it's going to be driven by the old timeline.
Super. Thanks a lot.
Thank you. Our next question comes from Casey Arclaka from Goldman Sachs. Please go ahead.
Hello. Thank you for taking my questions. Casey Iyakatla from Goldman Sachs. I have 2 related questions, please. On your guidance, would be great if you could share your refreshed assumptions behind the top end of the range, especially given the steep decline that you now expect from Otero.
And on a similar note, relative to the start of the year, do you think you're more or less confident about achieving the top end of the sales guidance range? Thank you.
Yeah, thank you for the question. Thanks for the question. I'm not At this point in time, I'm not willing to go into speculation around if it's a what kind of level Where we are heading into the range, we are still keep we believe we'll be within the range and then we will see In the upcoming quarters, where are we ending? If it's the top end or the low end, that I don't want to speculate on now.
Thank you. Thank you. Our next question comes from Peter Welford from Jefferies. Please go
ahead. Hi, yes. Thanks. I've got 4 quick ones left over. Just firstly on with regards to the synuclein antibody, curious If you could outline, is the plan only now to consider orphan indications like MSA or are you still considering moving forward as well with a proof of concept study in And secondly, just on the PACAP antibody, anything you can give us with regards to what the Phase 1 Told you, were there any total conclusions from that?
Or was it just a case of it's passed and now going into Phase 2? Thirdly then just on contract manufacturing, revenues obviously weak in 1Q. Is this just phasing and we still sort of seem similar for the year? Or is there anything that's happened there contract wise That means we should be looking at a different number for this year on the contract manufacturing line. And then finally, just on Vyxe U.
S. Coverage, Appreciate that in terms of the number you've got access, but wonder if you can talk a little bit about the type of access you have for Vyecti in the U. S. With those 235,000,000 lives and how that's changing at all? Thank you.
So on Esmab, I think the first indication of MSA, we think it's a great place for Astinab to go. It will give us a lot of insight into the profile of the molecule. And then we'll be able to see, is it something that we can and should take into a broader indication in Parkinson's disease. But I think we want to see some clinical outcome data on NSA to guide us in the path forward. And then you have any further comments on ESMAB or and then the answer to the takeout question?
Yes. So just to add a little bit on the Alpha Sone Clean. Of course, we're going into MSA as you heard and we'll Talk more about that in the fall. We expect to start that study by the end of the before the end of the year. There are obviously many things you can do beyond that, but We like to see some encouragement in the data set.
There are many things beyond Parkinson you can do in alpha synucleinopathies. So we're considering several other things Underway. For PACAP, we're basically wrapping up Phase 1. We have good data so far. It looks fine from a pharmacokinetic perspective tolerability etcetera is acceptable to progress.
We still have to go through some regulatory reviews To progress into Phase II and we're sorting that out with Europe and FDA. We also need to see a little bit more of biomarker data, target And data really to fine tune the program Phase II proof of concept program that we expect also to start by next half Of the year.
Great. And Anders, on the contract manufacturer?
You should expect a 10% to 15% decline compared to 2020. That is our expectation for the time being. Yes.
And then Peter on the Vyaches coverage?
Yes. Thanks for the question, Peter. So, to give a little bit more insight about 110,000,000 covered lives have no branded steps that are required. There are generic steps that are required. That's the norm for all the CGRPs.
But branded steps, 0 required for 110,000,000 patients. There's another 33,000,000 patients that are required to have one branded step. But what we've seen actually is that irrespective of having branded steps or not, our market share is quite similar. And I think that that speaks to the fact that there is a high degree of dissatisfaction with current treatments whether they be the generics or even quite frankly some of the more recent launches in the space. That dissatisfaction is the norm.
And so, our market share is comparable irrespective of whether there's branded steps or not. And then the balance getting up to the $235,000,000 those are a variety of other restrictions that might be in place 2 or 3 branded steps that are required. But in total, that's what we were trying to describe that substantive access is available for 235,000,000 And then hopefully those other details I give you provide more insights.
That's great. Thank you. Our next question comes from Rosie Turner from Barclays. Please go ahead.
Hi, Rosie, Tanishka Buckner here. Thank you so much for taking my questions. Just 2 from me, an apology to being a third person to go back to Orsara. But in your prepared remarks, you said you That's the strategic brand to partly mitigate this increased erosion and obviously kind of the top line is probably felt more The bottom line given the kind of solid margin profile we expect for North America historically. So just to clarify, do you expect the strategic plans to mostly offset this increased erosion or are there going to be other levers you're going to have to pull to maintain guidance?
It would be fantastic if you could comment on that. And then secondly, in terms of strategic Brands are turning to growth from here. I mean, kind of, retorting from Telex to Intellix. I mean, historically before the pandemic, they were growing in a kind of 30% range. I think you said next year we kind of see the time kind of uninterrupted growth.
So does that mean we can expect Getting back towards those levels in 2022 or isn't that a further out event or perhaps might be some pessimistic and that's something This is expected to come through at the end of 'twenty one. Thank you.
Great. Amit, do you want to start with the
It was a bit difficult to hear the questions in the room. But if I understood your Question right, it was around the Nothera decline or?
And the strategic brand offset.
And the digital side of
the business. Okay. Okay. Yes.
Yes. So I'm not what you know is that it's we have tried to lay it out in the presentation what is the Equation you should look into from what is the decline in Nothera, what is the growth for the strategic and mature brands. And at top of that, we have also said that we believe that double digit growth for the Strategic brands in the second half of the year is pretty realistic. There's no we do not see any Roadblocks in front of us, why we shouldn't be able to generate the same kind of growth numbers that we saw before the pandemic. Journey?
That is what you need to take into the equation of looking into what is kind of
the
what is the what How should you evaluate the year? And we basically have no more input to that.
I think we'll have to take the last question. You're on time.
Our last question comes from Mark Edmond from SVB. Please go ahead. Yes. Hi, Peter. I was wondering if you could comment on how you think the oral CGRPs are impacting the migraine market so far and obviously with prevention indication coming least expected on one product and then have these product separate product for prevention comes.
I'm Curious how you think that's playing into the market? And then just secondly, just in R and D, can you give us an update on where the tau antibody is and the D1, D2 and Parkinson's are these moving forward? Are we going to see data anytime soon? Thanks. In the same way that you helped us with the alpha semiqureant part process.
Great. Peter?
Yes. Thanks for the question, Mark. From our perspective, the oral CGRPs, We don't see that as having an interruption to the momentum that we now have with Vyepi. This market as you know is an enormous market. There's 14,000,000 patients that qualify for prevention treatment.
Only half of those have either been treated in recent past or are currently being treated. So there are plenty of patients out there. And as you also know with the whole Anti CGRP market, that's only penetrated the market as a class by about 10%. So, I don't think we're anywhere close to A share battle between either the sub queue or the oral CGRPs, kind of taking share away from each other. All boats can rise.
All of us together can continue to have the greater penetration of the market. And so I don't see the oral CGRPs as being disruptive to biopsy.
Great. And on your tau question, the tau antibody, It's a great antibody. We believe it addresses the right disease. And we believe it's best Positioned in Alzheimer's disease. And therefore, we would look for a partner and we would not take that forward alone in a disease prevention in Alzheimer's disease.
So that is progressing, but we will not take it forward into further development unless we Part, right. And Johan, if you have any further comments and then perhaps you can comment on the B1, B2.
Yes. So the anti tau antibody is basically through Phase 1 and it Looks like a good antibody and you heard the rest of the story. We have actually target engagement biomarkers also that they looked at. So it's a good package around that antibody. But it's a little bit too beast for us to take on to move forward and you know the uncertainty in the field on For alpha synuclein data, what I think the question was when we can expect to see data.
Obviously, we will Back to that in more detail, but we're going to run a sort of a stage Phase 2, 3 program, which is going to be biomarker enhanced With readouts looking at neuroprotective effects and clinical effects. So we're going to gradually in the coming years, I have to say, It's a disease modifying approach, release data that will be package wise, more a proof of concept part and then more clinical Full pivotal data if we continue. So I cannot give more details then.
Mark's question also went to the D1, D2.
D1, D2, I didn't hear that. Yes, that is progressing. It's the DART 2 gs program as we call it for off time Effect in Parkinson's disease, it's basically on its way out of Phase 1 in within sort of Some time next year. And we have really nothing that could stop us progressing with it. It's of course a Matter of differentiation and get strong enough effects.
We do look at some patient effects right now and we'll see how that evolves. But it would require a proper proof of
That's the last question. So I think we'll wrap. Over to you, operator.
Thank you very much. There appears to be no further questions. So I'll hand back to you for any last remarks.
Well, we look forward to the rest of the year evolving, the world opening up and the momentum continuing to build in strategic brands, the growth of Vyaty in the U. S. And the rollout of Vyaty globally. So thank you for your interest in Lundbeck. And we look forward to speaking with you at the when we report the Q2.
Thank you.