Capital Markets Event 2024: Lundbeck to showcase progress on Focused Innovator Strategy driving sustainable long-term growth

·     Execution of the Focused Innovator strategy is well under way with key elements delivering good progress and laying foundation for long-term sustainable growth

·     Mid-term targets are adjusted by including 2027. Revenue is expected to grow mid-single digit (CAGR) driven by high-single digit growth of strategic brands

·     Adjusted EBITDA margin is revised from 30% - 32% to now more than 30% at the end of the mid-term period, to account for the cost impact from Longboard Pharmaceuticals*

·     Building upon our psychiatry core, reinforcing our neuro-specialty position and strengthening the neuro-rare franchise where we recently announced the acquisition of Longboard that adds a potential blockbuster to the pipeline

·     Transformed R&D pipeline continues to deliver with up to four NMEs in phase III expected by 2026

·     Company intends to write down part of the book value of Abide Therapeutics acquired in 2019 following a negative data read out from a phase I project in the third quarter of 2024. There is still significant potential value remaining from this acquisition
 

H. Lundbeck A/S (Lundbeck) is hosting a Capital Markets Event (CME) today in Valby, Denmark where the company is providing a progress update on its Focused Innovator strategy.

Lundbeck operates in therapeutic areas with significant unmet medical needs and has made considerable progress over the past year in developing innovative medicines to ensure long-term, sustainable growth. Mid-term growth will be driven by capitalizing on key strategic brands, particularly Rexulti and Vyepti, while the R&D team continues to build a robust and innovative pipeline to secure future growth. These initiatives will be supported through disciplined capital allocation.

“We have a clear strategy to become a Focused Innovator and are already demonstrating our ability to execute against this, as shown by our proposed transformative and late-stage pipeline-enhancing acquisition of Longboard Pharmaceuticals announced last week. We are confident in setting our new mid-term guidance through 2027 by directing our investments into strategic areas,“ said Charl van Zyl, President and CEO of Lundbeck. “We guide towards mid-single digit CAGR revenue growth into 2027 on the back of a high-single digit CAGR growth rate for our strategic brands. As previously communicated through 2024, we see further growth in our two leading strategic brands, Rexulti and Vyepti, which are expected to account for approximately 70% of our strategic brands sales and nearly 60% of our total revenue in 2027. This activity, alongside a commitment to building our pipeline, will prime us for sustainable long-term growth into the future, and solidify our position as a leader in neuroscience that can deliver impactful treatments benefitting patients, people and society.”

At the event, Lundbeck will focus on its strategic ambitions, with senior management presenting on corporate strategy, research and early development, the R&D pipeline, and Lundbeck's strong performance in neuroscience, bolstered by the continued success of Rexulti and Vyepti. Additionally, Lundbeck will discuss its proposed acquisition* of Longboard Pharmaceuticals and its capital allocation strategy. Break-out sessions will include a tour of Lundbeck’s research facilities and a presentation on the AMULET data regarding amlenetug in MSA.
 

Key highlights of the day are:

Financial Update: Based on the assumptions and expectations in this release, Lundbeck adjusts its mid-term financial targets announced in February 2023 by extending the period by one year to include 2027 (compared to previously ending in 2026) and by revising its adjusted EBITDA-margin to reflect recent investments aimed at long term growth. This means:

• Based on organic growth, Lundbeck still expects revenue to show a mid-single digit compound annual growth rate (CAGR) over the mid-term period (2023 to 2027).
• At the same time, Lundbeck remains focused on driving efficiencies and being prudent in our spending. Based on this, we revise the current target of an adjusted EBITDA-margin from 30%-32% to now more than 30% at the end of the mid-term period in 2027, to adjust for the cost impact from Longboard Pharmaceuticals excluding any business development activities.

R&D update: To further invest in its growing pipeline, Lundbeck expects to see a steady increase in R&D spend towards 20-25% of revenue (17.3% in 2023) through the mid-term period. In May 2019, Lundbeck acquired Abide Therapeutics, Inc. providing Lundbeck with a novel and unique discovery platform and a U.S.-based research hub. Under the terms of the agreement, Lundbeck paid USD 250 million (approximately DKK 1.65 billion) upfront. Following a recent completion of a mechanism of action phase I trial with Lu AG06474, emanating from the acquisition of Abide, it has been decided to write down part of the book value of this asset in the financial report for the first nine months of 2024. There is still significant potential value remaining from this acquisition, including an additional ongoing program and a unique discovery platform. Lundbeck’s R&D costs will be impacted by a non-cash amount of DKK 547 million, which will be adjusted in the company’s EBITDA calculations and therefore will have no impact on the company’s financial guidance.

Commercial model: Lundbeck is currently evaluating its commercial model and go-to market approach to ensure it has the right capabilities for a more focused and specialty-oriented model across markets. The company is also determining appropriate investment levels into key areas of growth. This optimization of the commercial go-to-market model is expected to lead to a steadily decreasing sales & distribution cost ratio to 30%-35% of revenue in 2027 (37.6% in 2023). Lundbeck projects a global peak sales potential of around DKK 9 billion for Vyepti and more than USD 1 (one) billion for Rexulti (based on the core indications of major depression (MDD), schizophrenia, Agitation Associated with Dementia in Alzheimer’s Disease (AADAD) and excluding potential additional revenue from the PTSD indication, pending FDA approval^**).

Management presentations from the CME will be webcast live, and a replay will be available in the investor section of www.lundbeck.com. Presentation material from the CME will also be available in the investor section of www.lundbeck.com.

(*) Subject to deal closing. Expected by December 2024.

(**) Brexpiprazole (Rexulti) has not been approved for the treatment of PTSD. As previously communicated, the PDUFA action date for the sNDA approval is February 8, 2025.