CORPORATE RELEASE
AUGUST 16, 2023
Corporate Release No 745/2023
Financial report for the period January 1 to June 30, 2023
Lundbeck’s revenue increased by 13% (+10% CER) to
DKK 10 billion in the first six months of 2023
Key highlights
Lundbeck’s revenue increased by 13% (+10% CER
1
) to DKK 9,982 million in the first six months of 2023,
representing growth in all regions with the U.S. and Europe contributing strongly
• United States: DKK 4,787 million (+16%; +14% CER)
• Europe: DKK 2,333 million (+13%; +13% CER)
• International Markets: DKK 2,736 million (+2%; +5% CER)
The revenue of Lundbeck’s strategic brands increased by 18% (+18% CER), reaching DKK 6,632 million,
representing 66% of total revenue
• Brintellix
®
/Trintellix
®
: DKK 2,156 million (+5%; +6% CER)
• Rexulti
®
/Rxulti
®
: DKK 2,135 million (+21%; +18% CER)
• Abilify Maintena
®
/Asimtufii: DKK 1,584 million (+14%; +14% CER)
• Vyepti
®
: DKK 757 million (+94%; +91% CER)
Adjusted EBITDA
2
increased to DKK 3,338 million (+46%; +32% CER) and adjusted EBITDA margin reached 33.4%
equivalent to an increase of 7.5 percentage points. Adjusted earnings per share (EPS) reached DKK 2.47 equivalent
to an increase of 36%.
In connection with the corporate release, Lundbeck’s President and CEO, Deborah Dunsire said:
“Lundbeck continues to deliver an excellent performance, achieving the strongest-ever revenue for the first six
months of 2023 and having now launched Rexulti
®
in a potential blockbuster indication in agitation associated with
dementia due to Alzheimer’s disease (AADAD). I am delighted with Lundbeck’s continuous sustainable growth and
results. I am fully confident that Lundbeck is well positioned for the future given our successful transformation.”
Key figures
1
Constant Exchange Rates (CER) previously denominated Local Currency (LC). Change at CER does not include effects from hedging.
2
EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. Adjusted EBITDA is defined as EBITDA adjusted by certain items, for details see section
4 Notes, note 3 Adjusted EBITDA.
DKK million
H1 2023
H1 2022
Change
Change
(CER)
1
Q2 2023
Q2 2022
Change
Change
(CER)
1
Revenue
9,982
8,847
13%
10%
4,938
4,475
10%
10%
EBITDA
3,078
2,339
32%
19%
1,334
1,049
27%
16%
Adjusted EBITDA
3,338
2,291
46%
32%
1,493
1,001
49%
35%
EPS (DKK)
1.49
0.92
62%
-
0.60
0.51
18%
-
Adjusted EPS (DKK)
2.47
1.82
36%
-
1.11
0.80
39%
-
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 2
Corporate Release No 745/2023
Recent events
On June 26, 2023, Lundbeck announced that Deborah Dunsire is leaving Lundbeck after having successfully
strengthened Lundbeck’s position since her appointment in 2018. The Board of Directors has appointed Charl van
Zyl as new President and CEO of Lundbeck. Deborah Dunsire will continue to serve as President and CEO until
Charl van Zyl assumes the position on September 1, 2023.
On June 16, 2023, Lundbeck released new data confirming long-term benefit of treatment with Vyepti
®
(eptinezumab) in migraine prevention. The findings from the DELIVER extension study were presented at the 65
th
Annual Scientific Meeting of the American Headache Society (AHS) on June 15-18, 2023, in Austin, Texas.
On May 11, 2023, Lundbeck and Otsuka Pharmaceutical, Co. Ltd. (Otsuka) announced that the U.S. Food and Drug
Administration (FDA) approved the supplemental New Drug Application (sNDA) of Rexulti
®
(brexpiprazole) for use
in treatment of agitation associated with dementia due to Alzheimer’s disease (AADAD). This approval makes
Rexulti
®
the first and only pharmacological treatment approved in the U.S. for agitation associated with dementia
due to Alzheimer’s disease.
On April 27, 2023, Lundbeck and Otsuka Pharmaceutical, Inc. (Otsuka) announced that FDA approved the New
Drug Application (NDA) for Abilify Asimtufii
®
(aripiprazole) extended-release injectable suspension for intramuscular
use, a once-every-two-months injection for the treatment of schizophrenia in adults or for maintenance monotherapy
treatment of bipolar I disorder in adults.
2023 Guidance
Lundbeck raises its full-year guidance for 2023. Lundbeck now expects revenue to reach DKK 19.5 to 20.1 billion
compared to previously DKK 19.4 to 20.0 billion. Adjusted EBITDA is now expected to reach DKK 5.2 to 5.6 billion
compared to previously DKK 5.1 to 5.5 billion. Further details are available in section 2.8 Outlook.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 3
Corporate Release No 745/2023
CONTENT
1 Financial highlights ................................................................................................................................................ 4
2 Business performance ........................................................................................................................................... 5
2.1 Revenue by product ....................................................................................................................................... 5
2.2 Revenue by geographical area ...................................................................................................................... 7
2.3 Gross profit ..................................................................................................................................................... 8
2.4 EBIT and adjusted EBITDA ............................................................................................................................ 9
2.5 Net profit and adjusted EPS ......................................................................................................................... 10
2.6 Cash flow and balance sheet ....................................................................................................................... 10
2.7 Summary of the key developments in the second quarter of 2023 ............................................................... 11
2.8 Outlook ......................................................................................................................................................... 13
2.9 Lundbeck’s development portfolio ................................................................................................................ 14
2.10 Sustainability update .................................................................................................................................. 16
2.11 General corporate matters ......................................................................................................................... 17
3 Condensed financial statements .......................................................................................................................... 20
4 Notes ................................................................................................................................................................... 25
Financial calendar 2023 .......................................................................................................................................... 27
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 4
Corporate Release No 745/2023
1 FINANCIAL HIGHLIGHTS
For the six months ended June 30
DKK million
H1 2023
H1 2022
Change
Change
(CER)
1
Revenue
9,982
8,847
13%
10%
Gross profit
7,803
7,036
11%
8%
Gross margin
78.2%
79.5%
Adjusted gross profit
2
8,975
7,777
15%
12%
Adjusted gross margin
89.9%
87.9%
Sales and distribution costs
3,501
3,087
13%
14%
S&D ratio
35.1%
34.9%
Administrative expenses
564
509
11%
11%
Administrative expenses ratio
5.7%
5.8%
Research and development costs
1,665
1,943
(14%)
(14%)
R&D ratio
16.7%
22.0%
EBIT (profit from operations)
2,073
1,497
38%
20%
EBIT margin
20.8%
16.9%
EBITDA
3
3,078
2,339
32%
19%
EBITDA margin
30.8%
26.4%
Adjusted EBITDA
4
3,338
2,291
46%
32%
Adjusted EBITDA margin
33.4%
25.9%
Net financials, expenses
138
322
(57%)
-
Profit before tax
1,935
1,175
65%
-
Income taxes
455
258
76%
-
Effective tax rate (reported)
23.5%
22.0%
Net profit
1,480
917
61%
-
Adjusted net profit
2,457
1,804
36%
-
Other key numbers
Assets
37,242
37,275
0%
-
Equity
21,572
19,596
10%
-
Cash flows from operating and investing activities
(free cash flow)
1,384
(516)
(368%)
-
Net cash flow for the period
134
(36)
(472%)
-
Return on invested capital – rolling four quarters
11.2%
7.4%
Net debt/EBITDA – rolling four quarters
0.3
1.2
(75%)
-
Number of shares for the calculation of EPS (millions)
993.0
992.9
0%
-
Earnings per share, basic (EPS) (DKK)
1.49
0.92
62%
-
Adjusted earnings per share, basic (DKK)
2.47
1.82
36%
-
1
Constant Exchange Rates (CER) previously denominated Local Currency (LC). Change at CER does not include effects from hedging.
2
Adjusted gross profit is the gross profit excluding depreciation and amortization and other adjustments linked to sales.
3
EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization.
4
EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. Adjusted EBITDA is defined as EBITDA adjusted by certain items, for details see
section 4 Notes, 4.3 Adjusted EBITDA.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 5
Corporate Release No 745/2023
2 BUSINESS PERFORMANCE
2.1 REVENUE BY PRODUCT
Revenue reached DKK 9,982 million representing a
growth of 13% (+10% CER). The revenue growth is
driven by the strong performance across the strategic
brands (Abilify Maintena
®
/Asimtufii, Brintellix
®
/
Trintellix
®
, Rexulti
®
/Rxulti
®
and Vyepti
®
) reaching
DKK 6,632 million, representing a growth of 18%
(+18% CER) and equivalent to 66% of total revenue.
The largest markets for the strategic brands are the
U.S., Canada, Spain, Italy and Australia.
DKK million
H1 2023
H1 2022
Growth
Growth
(CER)
Q2 2023
Q2 2022
Growth
Growth
(CER)
Brintellix
®
/Trintellix
®
2,156
2,051
5%
6%
1,079
1,061
2%
4%
Rexulti
®
/Rxulti
®
2,135
1,771
21%
18%
1,075
940
14%
16%
Abilify Maintena
®
/Asimtufii
1,584
1,393
14%
14%
799
716
12%
13%
Vyepti
®
757
390
94%
91%
406
220
85%
85%
Strategic brands
6,632
5,605
18%
18%
3,359
2,937
14%
16%
Cipralex
®
/Lexapro
®
1,200
1,254
(4%)
(2%)
536
572
(6%)
(1%)
Sabril
®
224
322
(30%)
(32%)
114
170
(33%)
(32%)
Other pharmaceuticals
1,800
1,712
5%
6%
837
818
2%
5%
Mature brands
3,224
3,288
(2%)
(1%)
1,487
1,560
(5%)
(1%)
Other revenue
132
156
(15%)
(15%)
69
91
(24%)
(21%)
Total revenue before hedging
9,988
9,049
10%
10%
4,915
4,588
7%
10%
Effects from hedging
(6)
(202)
23
(113)
Total revenue
9,982
8,847
13%
10%
4,938
4,475
10%
10%
Strategic brands
Brintellix
®
/Trintellix
®
(vortioxetine) is approved for
the treatment of major depressive disorder (MDD).
Revenue reached DKK 2,156 million representing a
growth of 5% (+6% CER) following a continued
robust demand in Europe and International Markets
mainly in Spain, Canada and Japan partially offset by
continued lower demand in the U.S. and China.
Increased emphasis on Trintellix
®
strategic brand
positioning focusing on efficacy, together with field
force and omnichannel execution, is expected to
drive new patient starts and overall demand growth
over the near-to-medium term in the U.S. In Japan,
the market share of Trintellix
®
continues to grow with
stronger positioning as a first-line treatment being
established among psychiatrists. The revenue
distribution by region was 32%, 35% and 33% in the
U.S., Europe and International Markets, respectively.
The largest markets for the product are the U.S.,
Canada, Spain, Italy and Brazil.
Rexulti
®
/Rxulti
®
(brexpiprazole) is approved as an
adjunctive therapy for the treatment of adults with
MDD and as a treatment for adults with schizophrenia
in markets such as the U.S., Canada, Brazil and
Saudi Arabia. Further, it is approved for the treatment
of agitation associated with dementia due to
Alzheimer’s Disease (AADAD) in the U.S. since May
2023. In the early weeks following the approval, the
brand has seen an increased usage in 65+ patients
versus the pre-AADAD trend. In Australia and
Europe, the product is approved only for
schizophrenia. Revenue reached DKK 2,135 million
representing a growth of 21% (+18% CER) as a result
of strong demand and market share growth mainly in
the U.S. The revenue distribution by region was 93%,
1% and 6% in the U.S., Europe and International
Markets, respectively. The largest markets are the
U.S., Canada, Brazil, Australia and Mexico.
Abilify Maintena
®
(aripiprazole) is approved for the
treatment of schizophrenia in Europe and for both
schizophrenia and bipolar I disorder in the U.S.,
Canada and Australia as a once-monthly injection.
On April 27, 2023 FDA approved a New Drug
Application (NDA) for aripiprazole as an every-two-
months injection denominated Abilify Asimtufii
®
which has been launched in the U.S. in June 2023.
Revenue for Abilify Maintena
®
and Abilify Asimtufii
®
reached DKK 1,584 million representing a growth of
14% (+14% CER) driven by a combination of strong
demand, price increases and timing of shipments. All
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 6
Corporate Release No 745/2023
regions presented revenue growth in the first six
months of 2023. The revenue distribution by region
was 37%, 45% and 18% in the U.S., Europe and
International Markets, respectively. The largest
markets are the U.S., Spain, Canada, Australia and
Italy.
Vyepti
®
(eptinezumab) is approved as preventive
treatment of migraine in adults. Vyepti
®
presented
significant performance in the first six months of
2023, almost doubling revenue compared to the
same period last year and reached DKK 757 million
following a growth of 94% (+91% CER) mainly driven
by strong demand in the U.S. The volume market
share has increased to 7.0% by June 30, 2023. The
product is approved in around 45 markets including
the U.S., Australia, Canada and Europe for the
preventive treatment of migraine in adults. Vyepti
®
was launched in April 2020 in the U.S. and has since
been launched in around 20 markets with the majority
of those taking place recently including Spain, the
Czech Republic and Hong Kong. The largest markets
are the U.S., U.A.E., Germany, Switzerland and
Canada. In the second half of 2023, Vyepti
®
is
expected to be launched in around nine additional
markets. The revenue distribution by region was
93%, 4% and 3% in the U.S., Europe and
International Markets, respectively.
Mature brands
Cipralex
®
/Lexapro
®
(escitalopram) is approved for
the treatment of MDD. Revenue reached DKK 1,200
million representing a decline of 4% (-2% CER)
mainly as a consequence of generic competition in
Japan since November 2022. The revenue
distribution by region was 70% and 30% in
International Markets and Europe, respectively. The
largest markets are China, Japan, South Korea,
Brazil and Italy.
Revenue from Other pharmaceuticals, which
comprise the remainder of Lundbeck’s products,
reached DKK 1,800 million representing a growth of
5% (+6% CER) benefiting from quarterly fluctuations
partially offset by lower sales of certain mature
products such as Northera
®
. As of January 1, 2023,
Onfi
®
is being reported together with Other
pharmaceuticals, comparative figures for 2022 have
been adjusted accordingly. The largest markets for
Other pharmaceuticals are the U.S, China, France
and South Korea.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 7
Corporate Release No 745/2023
2.2 REVENUE BY GEOGRAPHICAL AREA
DKK million
H1 2023
H1 2022
Growth
Growth
(CER)
Q2 2023
Q2 2022
Growth
Growth
(CER)
United States
Rexulti
®
1,980
1,653
20%
17%
1,001
879
14%
15%
Vyepti
®
704
387
82%
78%
376
220
71%
72%
Trintellix
®
695
736
(6%)
(7%)
357
387
(8%)
(7%)
Abilify Maintena
®
/Asimtufii
580
487
19%
16%
298
255
17%
17%
Strategic brands
3,959
3,263
21%
19%
2,032
1,741
17%
17%
Mature brands
828
869
(5%)
(7%)
418
473
(12%)
(12%)
Revenue – United States
4,787
4,132
16%
14%
2,450
2,214
11%
11%
Europe
Brintellix
®
745
630
18%
18%
374
329
14%
15%
Abilify Maintena
®
715
657
9%
9%
360
330
9%
9%
Rexulti
®
/Rxulti
®
28
20
40%
35%
15
9
67%
56%
Vyepti
®
27
-
-
-
15
-
-
-
Strategic brands
1,515
1,307
16%
16%
764
668
14%
15%
Mature brands
818
759
8%
7%
395
376
5%
7%
Revenue – Europe
2,333
2,066
13%
13%
1,159
1,044
11%
12%
International Markets
Brintellix
®
716
685
5%
8%
348
345
1%
7%
Abilify Maintena
®
289
249
16%
20%
141
131
8%
15%
Rexulti
®
127
98
30%
33%
59
52
13%
23%
Vyepti
®
26
3
767%
767%
15
-
-
-
Strategic brands
1,158
1,035
12%
15%
563
528
7%
14%
Mature brands
1,578
1,660
(5%)
(2%)
674
711
(5%)
2%
Revenue – International
Markets
2,736
2,695
2%
5%
1,237
1,239
0%
7%
Other revenue
132
156
(15%)
(15%)
69
91
(24%)
(21%)
Total revenue before hedging
9,988
9,049
10%
10%
4,915
4,588
7%
10%
Effects from hedging
(6)
(202)
23
(113)
Total revenue
9,982
8,847
13%
10%
4,938
4,475
10%
10%
Lundbeck’s largest markets are the U.S., China,
Canada, Spain and Italy.
United States revenue reached DKK 4,787 million
representing a growth of 16% (+14% CER). The
strategic brands reached DKK 3,959 million
increasing by 21% (+19% CER), representing 83% of
the revenue for the region. Rexulti
®
was expanded
with the AADAD indication following the approval in
May 2023 and Abilify Asimtufii
®
was launched in June
2023. The revenue growth was driven by strong
demand for Rexulti
®
, Vyepti
®
and Abilify
Maintena
®
/Asimtufii. Revenue development in the
U.S. market was slightly impacted by a decline in
Trintellix
®
and the erosion of mature brands such as
Northera
®
and Sabril
®
.
Europe revenue reached DKK 2,333 million
representing a growth of 13% (+13% CER). The
strategic brands reached DKK 1,515 million
increasing by 16% (+16% CER), representing 65% of
revenue. The revenue growth was mainly driven by
strong demand for Brintellix
®
and Abilify
Maintena
®
/Asimtufii. Europe contributed positively to
the performance of mature brands reaching DKK 818
million representing a growth of 8% (+7% CER). The
largest markets in Europe are Spain, Italy and
France.
International Markets comprise all Lundbeck’s
markets outside the U.S. and Europe. Revenue
reached DKK 2,736 million representing a growth of
2% (+5% CER) driven by all strategic brands which
reached DKK 1,158 million increasing by 12% (+15%
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 8
Corporate Release No 745/2023
CER), representing 42% of the revenue. The
performance in the region was affected by the erosion
of certain mature brands. Lexapro in Japan is
negatively impacted by the entry of generic versions
at the end of 2022. The biggest markets are China,
Canada, Brazil, Australia and South Korea. China
and Canada constitute approximately 43% of
regional revenue.
Lundbeck hedges a significant part of the currency
risk for a period of 12 - 18 months. Hedging had a
minor negative impact of DKK 6 million in the first six
months of 2023, compared to a negative impact of
DKK 202 million in the same period last year.
2.3 GROSS PROFIT
DKK million
H1
2023
H1
2022
Change
Change
(CER)
Q2
2023
Q2
2022
Change
Change
(CER)
Revenue
9,982
8,847
13%
10%
4,938
4,475
10%
10%
Cost of sales
2,179
1,811
20%
22%
1,138
966
18%
21%
thereof adjustments
260
-
-
-
159
-
-
-
thereof amortization of product rights
789
624
26%
25%
385
315
22%
22%
thereof depreciation/amortization
123
117
5%
5%
63
58
9%
9%
Gross profit
7,803
7,036
11%
8%
3,800
3,509
8%
7%
Gross margin (%)
78.2%
79.5%
77.0%
78.4%
Adjusted gross profit
8,975
7,777
15%
12%
4,407
3,882
14%
12%
Adjusted gross margin (%)
89.9%
87.9%
89.2%
86.7%
Cost of sales reached DKK 2,179 million increasing
by 20% (+22% CER), mainly driven by higher
revenue, the Vyepti
®
provision for inventory
obsolescence of DKK 245 million, restructuring costs
of DKK 15 million due to the closure of the sterile
manufacturing line in France and increased Vyepti
®
amortization recognized in the first six months of
2023 related to the European approval of Vyepti
®
.
Gross profit reached DKK 7,803 million, increasing
by 11% (+8% CER) in the first six months of 2023.
The gross margin was 78.2% representing a decline
of 1.3 percentage points.
Adjusted gross profit is the gross profit excluding
depreciation and amortization and other adjustments
linked to sales. The adjusted gross margin was
89.9% representing an increase of 2.0 percentage
points and in-line with revenue performance.
Amortization of product rights was DKK 789 million,
increasing by 26% (+25% CER) driven
mainly by an increase in Vyepti
®
amortization.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 9
Corporate Release No 745/2023
2.4 EBIT AND ADJUSTED EBITDA
DKK million
H1
2023
H1
2022
Change
Change
(CER)
Q2
2023
Q2
2022
Change
Change
(CER)
Revenue
9,982
8,847
13%
10%
4,938
4,475
10%
10%
Gross profit
7,803
7,036
11%
8%
3,800
3,509
8%
7%
thereof adjustments
260
-
-
-
159
-
-
-
thereof depreciation/amortization
912
741
23%
22%
448
373
20%
20%
Sales and distribution costs
3,501
3,087
13%
14%
1,828
1,652
11%
13%
thereof adjustments
-
(43)
-
-
-
(43)
-
-
thereof depreciation/amortization
47
47
0%
2%
23
24
(4%)
0%
S&D-ratio
35.1%
34.9%
37.0%
36.9%
Administrative expenses
564
509
11%
11%
306
273
12%
13%
thereof depreciation/amortization
10
8
25%
25%
5
4
25%
25%
Administrative expenses ratio
5.7%
5.8%
6.2%
6.1%
Research and development costs
1,665
1,943
(14%)
(14%)
826
962
(14%)
(14%)
thereof adjustments
-
(5)
-
-
-
(5)
-
-
thereof depreciation/amortization
36
46
(22%)
(20%)
18
26
(31%)
(27%)
R&D-ratio
16.7%
22.0%
16.7%
21.5%
Total operating expenses
5,730
5,539
3%
4%
2,960
2,887
3%
4%
OPEX-ratio
57.4%
62.6%
59.9%
64.5%
EBIT (profit from operations)
2,073
1,497
38%
20%
840
622
35%
16%
Depreciation/amortization
1,005
842
19%
19%
494
427
16%
16%
EBITDA
3,078
2,339
32%
19%
1,334
1,049
27%
16%
EBITDA margin (%)
30.8%
26.4%
27.0%
23.4%
Restructuring expenses
15
(48)
(131%)
(131%)
15
(48)
(131%)
(131%)
Other adjustments
245
-
-
-
144
-
-
-
Adjusted EBITDA
3,338
2,291
46%
32%
1,493
1,001
49%
35%
Adjusted EBITDA margin (%)
33.4%
25.9%
30.2%
22.4%
Total operating expenses (OPEX) reached DKK
5,730 million corresponding to an increase of 3%
(+4% CER) mainly driven by higher sales and
distribution costs as well as administrative expenses
offset by lower R&D costs. The OPEX-ratio declined
by 5.2 percentage points.
Sales and distribution costs reached DKK 3,501
million corresponding to an increase of 13% (+14%
CER) driven by higher Vyepti
®
sales activity in the
U.S., the global roll-out in 15 countries in 2023 and
preparations around the availability as well as
promotion activities for Rexulti’s
®
additional indication
in AADAD in the U.S.
Sales and distribution costs corresponded to 35.1%
of revenue, representing an increase of 0.2
percentage points.
Administrative expenses reached DKK 564 million
increasing by 11% (+11% CER) corresponding to
5.7% of total revenue mainly driven by expenses from
digital IT investments, CEO transition and higher
legal costs.
Research and development costs reached DKK
1,665 million with an R&D ratio of 16.7%. The decline
in R&D costs of 14% (-14% CER) was mainly driven
by lower late development and reduced phase IV
activities. Last year, the phase IV trials on
Brintellix
®
/Trintellix
®
were completed and the pivotal
trial on Rexulti
®
was finalized. Further decreases in
the first six months of 2023 can be attributed to lower
costs for Lu AG09222 (anti-PACAP) phase IIa HOPE
trial and Lu AF82422 phase II AMULET,
predominantly due to timing of costs.
EBIT reached DKK 2,073 million increasing by 38%
(+20% CER) reflecting the operating leveraging effect
of higher revenue, combined with a lower OPEX-
ratio.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 10
Corporate Release No 745/2023
Amortization of product rights amounted to DKK
789 million corresponding to an increase of 26%
(+25% CER). Total amortization, depreciation and
impairment losses reached DKK 1,005 million
representing an increase of 19% (+19% CER) mainly
driven by an increase of Vyepti
®
amortization.
Adjusted EBITDA reached DKK 3,338 million
representing a growth of 46% (+32% CER) reflecting
EBIT and EBITDA development in addition to
adjustments of DKK 245 million of Vyepti
®
inventory
obsolescence and DKK 15 million of restructuring
costs for the closure of the sterile manufacturing line
in France.
2.5 NET PROFIT AND ADJUSTED EPS
DKK million
H1 2023
H1 2022
Change
Q2 2023
Q2 2022
Change
EBIT (profit from operations)
2,073
1,497
38%
840
622
35%
Net financials, (income)/expenses
138
322
(57%)
55
(25)
(320%)
Profit before tax
1,935
1,175
65%
785
647
21%
Net profit
1,480
917
61%
600
505
19%
thereof other adjustments
260
(48)
(642%)
159
(48)
(431%)
thereof depreciation/amortization
1,005
842
19%
494
427
16%
thereof adjustments on financial items
-
278
-
-
-
-
thereof tax on adjustments
288
185
56%
151
89
70%
EPS (DKK)
1.49
0.92
62%
0.60
0.51
18%
Adjusted net profit
2,457
1,804
36%
1,102
795
39%
Adjusted EPS (DKK)
2.47
1.82
36%
1.11
0.80
39%
Net profit
Net financial expenses reached DKK 138 million
equivalent to a decline of 57%. The first six months of
2022 was impacted by the European approval of
Vyepti
®
which triggered a fair value adjustment of
contingent consideration of CVR to former Alder
shareholders amounting to DKK 278 million.
The effective tax rate for the first six months of 2023
was 23.5% (22.0% for the first six months of 2022).
The tax rate is in line with the full-year expectation,
reflecting the reduced deduction benefit from the
Danish research & development incentive of 108%
(130% in 2022).
Net profit reached DKK 1,480 million corresponding
to a growth of 61%.
Adjusted net profit and EPS
Adjusted net profit is the net profit excluding
depreciation and amortization and other adjustments,
net of taxes. Adjusted net profit reached DKK 2,457
million, representing an increase of 36%. The
adjustments mainly relate to the amortization of
product rights and the Vyepti
®
provision for
obsolescence.
Adjusted EPS was DKK 2.47 corresponding to an
increase of 36%.
2.6 CASH FLOW AND BALANCE SHEET
Cash flows from operating activities amounted to
an inflow of DKK 1,649 million compared to an inflow
of DKK 711 million in the first six months of 2022. The
positive development is primarily driven by higher
revenue and EBITDA in 2023 and 2022 being
negatively impacted by the milestone connected to
the European approval of Vyepti
®
and offset by higher
working capital mainly due to Rexulti
®
sales
milestone payout and inventories.
Lundbeck’s net cash flows from investing
activities were an outflow of DKK 265 million
compared to an outflow of DKK 1,227 million in the
first six months of 2022, mainly arising from the CVR
payment triggered by the European approval of
Vyepti
®
.
Lundbeck’s net cash flows from financing
activities were an outflow of DKK 1,250 million
compared to an inflow of DKK 480 million in the first
six months of 2022. The financing cash flows in 2023
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 11
Corporate Release No 745/2023
mainly relate to dividend payment approved at the
Annual General Meeting in March 2023 as well as
repayment of debt. The first six months of 2022 were
impacted by a drawdown on a loan to pay the CVR
following the European approval of Vyepti
®
.
The net cash inflow reached DKK 134 million
compared to an outflow of DKK 36 million in the first
six months of 2022.
Net debt has decreased from DKK 4,287 million at
the end of June 2022 to DKK 1,428 million at the end
of June 2023. Net debt/EBITDA ratio declined to 0.3x
at the end of June 2023 compared to 1.2x at the end
of June 2022. Interest-bearing debt was DKK 5,091
million at the end of June 2023 compared to DKK
6,585 million at the end of June 2022.
On June 30, 2023, Lundbeck’s total assets
amounted to DKK 37,242 million compared to DKK
37,452 million at the end of 2022.
On June 30, 2023, Lundbeck’s equity amounted to
DKK 21,572 million.
2.7 SUMMARY OF THE KEY DEVELOPMENTS IN THE SECOND QUARTER OF 2023
For the quarter ended June 30
DKK million
Q2 2023
Q2 2022
Change
Change
(CER)
1
Revenue
4,938
4,475
10%
10%
Gross profit
3,800
3,509
8%
7%
Gross margin
77.0%
78.4%
Adjusted gross profit
2
4,407
3,882
14%
12%
Adjusted gross margin
89.2%
86.7%
Sales and distribution costs
1,828
1,652
11%
13%
S&D ratio
37.0%
36.9%
Administrative expenses
306
273
12%
13%
Administrative expenses ratio
6.2%
6.1%
Research and development costs
826
962
(14%)
(14%)
R&D ratio
16.7%
21.5%
EBIT (profit from operations)
840
622
35%
16%
EBIT margin
17.0%
13.9%
EBITDA
3
1,334
1,049
27%
16%
EBITDA margin
27.0%
23.4%
Adjusted EBITDA
4
1,493
1,001
49%
35%
Adjusted EBITDA margin
30.2%
22.4%
Net financials, expenses
55
(25)
(320%)
Profit before tax
785
647
21%
Income taxes
185
142
30%
Effective tax rate (reported)
23.5%
22.0%
Net profit
600
505
19%
Adjusted net profit
1,102
795
39%
1 Change at CER does not include effects from hedging.
2 Adjusted gross profit is the gross profit excluding depreciation and amortization and other adjustments linked to sales.
3 EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization.
4 EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. Adjusted EBITDA is defined as EBITDA adjusted by certain items, for details see section
4 Notes, note 3 Adjusted EBITDA.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 12
Corporate Release No 745/2023
REVENUE
The increase in revenue is mainly driven by strong
performance across the strategic brands (Abilify
Maintena
®
/Asimtufii, Brintellix
®
/Trintellix
®
, Rexulti
®
/
Rxulti
®
and Vyepti
®
) reaching DKK 3,359 million,
representing a growth of 14% (+16% CER) and
equivalent to 68% of total revenue (see section 2.1).
Rexulti
®
revenue reached DKK 1,075 million,
increasing by 14% (+16 % CER) in the second
quarter of the year, driven by higher demand across
all regions, with particularly strong growth in the U.S.,
Europe and South America.
Mature products in the U.S. are mainly impacted by
reduced revenue of Sabril
®
and Northera
®
.
The U.S. and Europe had strong revenue
performance in the second quarter of 2023, reaching
DKK 2,450 million (+11%; +11% CER) and DKK
1,159 million (+11%; +12% CER) respectively (see
section 2.2).
GROSS PROFIT
In the second quarter of 2023, gross profit reached
DKK 3,800 million increasing by 8% (+7% CER).
The gross margin was 77.0% representing a decline
of 1.4 percentage points. Adjusted gross margin
was 89.2% in the second quarter of 2023
representing an increase of 2.5 percentage points.
Cost of sales increased to DKK 1,138 million, driven
by higher revenue, impact from increased Vyepti
®
amortization and provision for Vyepti
®
provision for
obsolescence of DKK 144 million recognized in the
second quarter of 2023.
EBIT AND ADJUSTED EBITDA
Total operating expenses (OPEX) reached DKK
2,960 million corresponding to an increase of 3%
(+4% CER) mainly driven by higher sales and
distribution costs offset by lower R&D costs. The
OPEX-ratio declined by 4.6 percentage points.
Sales and distribution costs reached DKK 1,828
million corresponding to an increase of 11% (+13%
CER) mainly driven by a higher sales activity level for
Vyepti
®
and Rexulti
®
across the world.
Administrative expenses reached DKK 306 million
increasing by 12% (+13% CER) corresponding to
6.2% of total revenue.
Research and development costs reached DKK
826 million with a R&D ratio of 16.7%. The decline in
R&D costs of 14% (-14% CER) is due to lower project
costs in the second quarter of 2023 as anticipated
(see section 2.4).
EBIT reached DKK 840 million increasing by 35%
(+16% CER) reflecting higher revenue, combined
with a lower OPEX-ratio and a negative impact of
Vyepti
®
provision for obsolescence.
Amortization of product rights amounted to DKK
385 million corresponding to an increase of 22%
(+22% CER). Total amortization, depreciation and
impairment losses reached DKK 494 million
representing an increase of 16% (+16% CER) mainly
driven by an increase in Vyepti
®
amortization.
Adjusted EBITDA reached DKK 1,493 million
representing a growth of 49% (+35% CER) reflecting
higher revenue and lower OPEX-ratio.
NET PROFIT AND ADJUSTED EPS
Net financial (income)/expenses reached DKK 55
million equivalent to a decline of 320%.
The effective tax rate for the second quarter of 2023
was 23.5%.
Net profit reached DKK 600 million corresponding to
a growth of 19%.
Adjusted net profit reached DKK 1,102 million,
representing an increase of 39%.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 13
Corporate Release No 745/2023
2.8 OUTLOOK
Financial guidance 2023
Lundbeck raises its full year guidance for 2023.
Lundbeck now expects revenue to reach DKK 19.5 to
20.1 billion compared to previously DKK 19.4 to 20.0
billion – an implied growth of around 7-10%
compared to 2022. The growth is driven by strong
demand of the strategic brands which more than
offsets the continued erosion of the mature portfolio
and despite depreciation of the main currencies when
compared to 2022. The revised financial guidance for
2023 is provided based on the exchange rates at the
end of June 2023.
For the second half of 2023, Lundbeck expects
continued strong growth of the strategic brands.
Lundbeck will continue the global roll-out of Vyepti
®
with approximately nine additional launches. Rexulti
®
was launched with the additional AADAD indication in
May 2023 and Abilify Asimtufii
®
was launched in June
2023, both in the U.S. Brintellix
®
/Trintellix
®
is still
impacted by low growth in the U.S. and increased
generic pressure in Brazil. Abilify Maintena
®
was
favorably impacted by timing of shipments to the
Middle East in the first half of 2023 which is not
expected to occur in the second half of 2023.
The mature brands are expected to face stronger
generic erosion in the second half of 2023, especially
on Cipralex
®
/Lexapro
®
in Japan, Deanxit
®
in China
and Sabril
®
in the U.S. Sabril is expected to be
negatively impacted by a potential supply outage as
a consequence of a third-party manufacturing quality
issue, which is likely to be solved in September. The
second half of 2023 is also expected to be dampened
when compared to the first half of 2023 by timing of
shipments in the first half of the year to countries such
as Saudi Arabia and Taiwan. Additionally, currency
devaluation in Egypt will constrain Letter of Credit
insured shipments, and in Turkey, local inflation
levels are expected to reduce local demand.
Lundbeck now expects Adjusted EBITDA to reach
DKK 5.2 to 5.6 billion compared to previously DKK
5.1 to 5.5 billion. The financial guidance for 2023
reflects the investments needed in the important
launches driving significant future growth. Adjusted
EBITDA in the second half of 2023 will be impacted
by the required investments in the U.S. to launch
Rexulti
®
in AADAD and Abilify Asimtufii
®
. Vyepti
®
will
also launch in approximately nine additional countries
later this year. R&D investments will rise in the
second half of 2023 to develop clinical material ahead
of planned initiation of clinical studies for Lu AG09222
(anti-PACAP mAb), Lu AF82422 (anti-α-synuclein
mAb) and Lu AG22151 (anti-CD40L blocker).
Lundbeck mainly carries foreign currency risk in USD,
CNY and CAD. The financial guidance for 2023 is
based on expected hedging rates for the main
currencies, i.e. USD/DKK (~7.21), CNY/DKK (~1.02)
and CAD/DKK (~5.22) and includes an expected
hedging gain of approximately DKK 135 million.
Based on assumptions for product and geographical
mix, it is estimated that a 5% change of the USD/DKK
exchange rate will impact revenue by approximately
DKK 150 million for the remaining period of 2023.
The previously communicated expected provision of
approximately DKK 300 million for Vyepti
®
provision
for obsolescence was reflected in the EBITDA
guidance for 2023. Of the total expected provision,
DKK 245 million has been recognized in the first six
months of 2023.
FY 2022 actual
Previous
FY 2023 guidance
Revised
FY 2023 guidance
Revenue
DKK 18,246 million
DKK 19.4 - 20.0 billion
DKK 19.5 - 20.1 billion
Adjusted EBITDA
DKK 4,823 million
DKK 5.1 - 5.5 billion
DKK 5.2 - 5.6 billion
Mid-term targets are confirmed
Lundbeck is in a period with limited impact from major
regional losses of exclusivity and anticipates solid
growth of its strategic brands.
In 2023 and 2024, we plan targeted investments
behind the potential blockbuster opportunity for
Rexulti
®
in the treatment of AADAD. Based on
organic growth, we expect revenue to show a mid-
single digit compound annual growth rate (CAGR)
over the mid-term (3-4 years).
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 14
Corporate Release No 745/2023
At the same time, we remain focused on driving
efficiencies and being prudent in our spending. Based
on these assumptions, we target an adjusted
EBITDA-margin of 30-32% for the current business,
excluding any business development activities, by
the end of the mid-term period.
Forward-looking statements
Forward-looking statements are subject to risks,
uncertainties, and inaccurate assumptions. This may
cause actual results to differ materially from
expectations. Various factors may affect future
results, including interest rates and exchange rate
fluctuations, delay or failure of development projects,
production problems, unexpected contract breaches
or terminations, governance-mandated or market-
driven price decreases for products, introduction of
competing products, Lundbeck’s ability to
successfully market both new and existing products,
exposure to product liability and other lawsuits,
changes in reimbursement rules and governmental
laws, and unexpected growth in expenses.
2.9 LUNDBECK’S DEVELOPMENT PORTFOLIO
Lundbeck is developing several new and promising
medicines for the treatment of brain diseases.
The pipeline developments are summarized below.
1
CGRP: Calcitonin gene-related peptide.
2
Two phase III clinical trials, supporting registration in Asia, including China and Japan: SUNRISE, and SUNSET trials.
3
Long-
term safety study.
4
PACAP: Pituitary adenylate cyclase activating peptide.
5
Adrenocorticotropic hormone.
6
Acts as a partial agonist at 5-HT
1A
and dopamine D
2
receptors
at similar potency, and an antagonist at 5-HT
2A
and noradrenaline alpha1B/2C receptors.
7
Monoacylglycerol lipase inhibitor (“MAGlipase”) previously denominated 466/Lu
AG06466.
8
Approved in the U.S.
Hormonal / neuropeptide signaling
Eptinezumab - development and regulatory
status
In December 2020, Lundbeck initiated a phase III
clinical trial investigating the efficacy of eptinezumab
in patients with episodic cluster headache
(ALLEVIATE). In this trial (NCT04688775), patients
receive treatment consisting of two infusions of either
eptinezumab or placebo in a cross-over manner. The
total duration of the study is 24 weeks, including a
safety follow up period of 8 weeks. During 2021,
Lundbeck further initiated a one-year safety and
tolerability trial in participants with chronic cluster
headache (CHRONICLE). The study
(NCT05064397) recently completed recruitment.
Lu AG09222 (‘222) – phase II
’222 represents a potential new therapeutic option for
the treatment of migraine, which unlike the recently
available calcitonin gene-related peptide (CGRP)
migraine treatment drug class, targets pituitary
adenylate cyclase-activating polypeptide (PACAP).
PACAP and its receptors are broadly expressed in
the nervous system, including at sites implicated in
migraine pathophysiology.
In November 2021, Lundbeck initiated the HOPE-
trial, a randomized, double-blind, phase II, proof of
concept study to assess efficacy, safety, and
tolerability of ’222 as a treatment for the prevention of
migraine (NCT05133323) which recently reported
results. The target population for this trial was defined
as patients diagnosed with migraine as outlined in the
Project
Area
Phase I
Phase II
Phase III
Filing/
Launch
Hormonal / neuropeptide signaling:
Eptinezumab (anti-CGRP)
1
Migraine prevention
SUN-studies
2
PROMISE 1 & 2
Cluster headache
CHRONICLE
3
ALLEVIATE
‘222/Lu AG09222 (anti-PACAP mAb)
4
Migraine prevention
HOPE
‘909/Lu AG13909 (anti-ACTH mAb)
5
Neuro-hormonal dysfunctions
Circuitry / neuronal biology:
Brexpiprazole
6
Agitation in Alzheimer’s disease
8
PTSD
Aripiprazole 2-months injectable
Schizophrenia/bipolar I disorder
8
MAGLi program
7
Neurology/Psychiatry
’996/Lu AF28996 (D
1
/D
2
agonist)
Parkinson’s disease
Protein aggregation, folding and clearance:
’422/Lu AF82422 (anti-α-synuclein mAb)
Multiple system atrophy
AMULET
’908/Lu AF87908 (anti-Tau mAb)
Tauopathies
Neuroinflammation / neuroimmunology:
‘151/Lu AG22151 (anti-CD40L blocker)
Neurology
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 15
Corporate Release No 745/2023
International Classification of Headache Disorders
Third Edition (ICHD-3) and with unsuccessful prior
preventive treatments. A total of 237 patients were
randomly allocated to one of three treatment groups:
high/low dose of ’222 or placebo. The primary
analysis concluded that there was a statistically
significant difference (p=0.01) between ’222 and
placebo in the mean change from baseline in the
number of monthly migraine days over weeks 1 to 4.
‘222 was generally well tolerated. As of the next
steps, a phase IIb study to start in second half of 2024
to establish the full dose range and subcutaneous
efficacy.
Circuitry / neuronal biology
Brexpiprazole – phase III in patients with agitation
associated with dementia due to Alzheimer’s
Disease
On May 10, 2023, the U.S. Food and Drug
Administration (FDA) approved the supplemental
New Drug Application (sNDA) of brexpiprazole for
use in the treatment of agitation associated with
dementia due to Alzheimer’s disease.
The approval was based on two positive phase III, 12-
week, randomized, double-blind, placebo-controlled
fixed-dose studies that evaluated the frequency of
agitation symptoms in patients with dementia due to
Alzheimer’s disease based on the Cohen-Mansfield
Agitation Inventory (CMAI) total score, making
brexpiprazole the first and only pharmacological
treatment approved in the U.S. for agitation
associated with dementia due to Alzheimer’s
disease.
Further, a supplemental New Drug Submission
(sNDS) was formally accepted by Health Canada for
review as of April 12, 2023, with anticipated action in
2024, while a joint application using the Access
pathway was submitted on May 31, 2023 for
Australia, Singapore and Switzerland with anticipated
action in the second quarter of 2024.
Brexpiprazole – phase III in adolescent patients
(13-17 years old) with schizophrenia
The phase III trial 331-10-234 in adolescent patients
with schizophrenia (NCT03198078) read out during
the second quarter of 2023, with the trial meeting its
primary endpoint, as measured by the PANSS total
score change from baseline to week 6 and
demonstrated a significant improvement for
brexpiprazole compared to placebo (p<0.05).
The active reference for the study, aripiprazole, also
separated from placebo on the primary efficacy
analysis, thus validating the study methodology and
patient population.
Brexpiprazole was generally well tolerated in the trial,
and the safety profile was similar to that observed in
adult patients with schizophrenia.
The trial forms part of the brexpiprazole EMA
Paediatric Investigation Plan (PIP), as well as an FDA
Post Marketing Requirement (PMR) following the
U.S. approval of brexpiprazole for treatment of
schizophrenia in adolescent patients. The U.S.
indication was obtained in December 2021 based on
pediatric PK comparability data and extrapolation of
adult efficacy data. For Europe, results of the study
will be submitted to EMA later in 2023.
The EMA PIP includes two further studies that are
currently ongoing:
1) A phase III open-label 2-year extension
study 331-10-236 (NCT03238326) enrolling
patients completing Trial 234
2) An extrapolation study 3331-201-00185
assessing the long-term efficacy in
adolescent subjects with schizophrenia, by
extrapolating data from completed
brexpiprazole trials in both adolescents and
adult subjects with schizophrenia.
Brexpiprazole – phase III in Post-Traumatic
Stress Disorder (PTSD)
Following an exploratory phase II trial, Lundbeck and
Otsuka initiated two pivotal phase III trials
(NCT04124614; n=577 and NCT04174170; n=733),
investigating the use of brexpiprazole in combination
with sertraline in the treatment of PTSD, subsequent
to an End of Phase II meeting with the FDA in May
2019. The execution of those two ongoing studies
was challenged by the COVID-19 pandemic,
primarily impacting enrollment rates. After FDA
feedback, it was decided that the two trials will be
concluded with reduced sample size. Recruitment of
both studies concluded in April 2023 and headline
results are expected in the second half of 2023.
Aripiprazole – 2-month Injectable (LAI)
formulation
The new 2-month formulation is an innovative
addition to the long-acting injectable (LAI) franchise
and has patent protection until the early part of the
next decade.
Lundbeck and Otsuka submitted the Marketing
Authorization Application (MAA) for aripiprazole as
an every-two months ready-to-use (RTU) long-acting
injectable for the maintenance treatment of
schizophrenia in adult patients stabilized with
aripiprazole to the European Medicines Agency
(EMA) on May 26, 2022. Due to a Committee for
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 16
Corporate Release No 745/2023
Medicinal Products for Human Use (CHMP)
procedural objection, Lundbeck withdrew its MAA
under the “hybrid” procedure and re-submitted to
EMA in June 2023, under the “line-extension”
procedure instead. This change is procedural only,
and unrelated to product quality or safety.
A supplemental New Drug Submission (sNDS) was
filed with Health Canada for the treatment of
schizophrenia and bipolar I disorder in the third
quarter of 2022. In July 2023, following a CMC related
Notice of Deficiency (NOD) from Health Canada, the
submission will enter a new review cycle.
Protein aggregation, folding and clearance
Lu AF82422 (‘422) – phase II
’422 is a monoclonal antibody (mAb) targeting the
pathological form of the protein alpha-synuclein that
is believed to play a pivotal role in the development
and progression of neurodegenerative diseases such
as multiple system atrophy (MSA), Parkinson’s
disease (PD), and other synucleinopathies. By
targeting pathological alpha-synuclein with an
antibody that will inhibit aggregation and potentially
clear pathological alpha-synuclein from the brain, the
project aims to demonstrate delay of disease
progression and therapeutic effect on disease burden
and function. ’422 has been demonstrated to be well-
tolerated in a phase I single-ascending dose study,
which was completed in July 2021. A phase II study
(AMULET) was initiated in November 2021
(NCT05104476) and is presently fully accrued with
ongoing follow-up in the U.S. and Japan. The primary
objective of the study is to evaluate the efficacy of
’422 versus placebo on disease progression in
patients with MSA.
Orphan drug designation for MSA was granted by
EMA in April 2021 and SAKIGAKE pioneering drug
designation was granted by the Japanese Health
Authorities in March 2023.
Neuroinflammation / neuroimmunology
Lu AG22515 (‘515)– phase I
In October 2021, Lundbeck acquired an exclusive
license to ‘515 (formerly APB-A1) from AprilBio Co.
Ltd in South Korea. ’515 is a CD40L/serum-albumin
bispecific antibody-fragment that blocks the
CD40L/CD40 pathway through direct neutralization
of CD40L, thereby affecting adaptive and innate
immune responses. ’515 holds potential in the
treatment of autoimmune-related CNS disorders and
neurological diseases with autoreactive T-cells, B-
cells and marked presence of autoantibodies and
inflammation. A First-in-Human study
(NCT05136053) testing single ascending doses of
’515 in healthy volunteers was initiated in the U.S. in
March 2022.
2.10 SUSTAINABILITY UPDATE
Category
1
H1 2023
H1 2022
Change (%)
Scope 1 GHGs (Tonne CO
2-
e)
2
11,597
11,590
0%
Scope 2 GHGs – market based (Tonne CO
2-
e)
2
1,947
2,065
(6%)
Scope 1+2 GHGs (Tonne CO
2-
e)
2
13,544
13,655
(1%)
Scope 3 GHG's: Purchased goods and services (Tonne CO
2-
e)
2
39,919
46,162
(14%)
Scope 3 GHG's: Up-stream transportation and distribution (Tonne CO
2-
e)
2
3,618
3,603
0%
Scope 3 GHG's: Business travel (Tonne CO
2-
e)
2
4,194
3,628
16%
Energy consumption (MWh)
2
55,565
56,996
(3%)
Recycling rate – General waste (%)
74
66.4
11%
Frequency of lost time accidents (Frequency)
3
2.9
6.2
N/A
Work-related accidents with absence (Number)
3
14
11
N/A
Compliance Hotline reports (Number)
40
50
(20%)
Due Diligence screenings of suppliers and Third Parties (Number)
107
67
60%
1
See Lundbeck Sustainability Report 2022 for accounting policies and definitions.
2
Comparative figures were updated to reflect changes in our estimates.
3
Scope for accidents has changed to include sales force. The previous scope for frequency would be 6.2 considering a total of 11 accidents in the first six months of 2023.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 17
Corporate Release No 745/2023
2.11 GENERAL CORPORATE MATTERS
Pending legal proceedings
Legal cases and proceedings for which it is either not
probable that there will be an outflow of resources or
for which it is not practicable or possible to make a
reliable estimate is disclosed in this section and is
considered contingent liabilities.
Lundbeck is involved in a number of cases and legal
proceedings, including patent disputes, the most
significant of which are described below. Some of
these involve significant amounts and are subject to
considerable uncertainty. Management continuously
assesses the risks associated with the cases and
legal proceedings, and their likely outcome. It is the
opinion of the management that, apart from items
recognized in the financial statements, the outcome
of these cases and disputes are not probable or
cannot be reliably estimated in terms of amount or
timing. Such proceedings may, however, develop
over time, and new proceedings may occur, in a way
which could have a material impact on the Group’s
financial position and/or cash flows.
In June 2013, Lundbeck received the European
Commission’s decision that agreements concluded
with four generic competitors concerning citalopram
violated competition law. The decision included fining
Lundbeck EUR 93.8 million (approximately DKK 700
million). Lundbeck paid and expensed the fine in the
third quarter of 2013. In March 2021, the European
Court of Justice rejected Lundbeck’s final appeal of
the European Commission’s decision. So-called
“follow-on claims” for reimbursement of alleged
losses, resulting from violation of competition law,
often arise when decisions and fines issued by the
European Commission are upheld by the European
Court of Justice. The below mentioned “follow-on
claims” are ongoing or threatened. Lundbeck
disagrees with all claims and intends to defend itself
against them.
At the end of first quarter 2023, the UK health
authorities served their claim form on Lundbeck and
several generic companies. Lundbeck has handed in
its defense and an initial Case Management
Conference is scheduled for the third quarter of 2023.
In late October 2021, Lundbeck received a writ of
summons from a German health care company
claiming compensation for an alleged loss of profit
plus interest payments, allegedly resulting from
Lundbeck’s conclusion of agreements with two of the
four generic competitors, which were comprised by
the EU Court of Justice ruling. Lundbeck filed its first
defense in May 2022 and the parties have
subsequently exchanged additional pleadings. The
first instance court hearing is scheduled for the third
quarter of 2023, and a first instance ruling is expected
within a few weeks thereafter. It may take several
years before a final conclusion is reached by the
German courts.
Lundbeck has been informed about potential claims
in other European countries, however, it is still
uncertain whether the potential claims will be actively
pursued.
In Canada, Lundbeck is involved in three product
liability class-action lawsuits relating to
Cipralex
®
/Celexa
®
(two cases alleging various
Celexa-induced birth defects and one case against
several SSRI manufacturers (incl. Lundbeck) alleging
that SSRI (Celexa
®
/Lexapro
®
) induces autism birth
defect), three relating to Abilify Maintena
®
(alleging
i.a. failure to warn about compulsive behavior side
effects) and one relating to Rexulti
®
(also alleging i.a.
failure to warn about compulsive behavior side
effects). The cases are in the preliminary stages and
as such there is significant uncertainty as to how
these lawsuits will be resolved. Lundbeck strongly
disagrees with the claims raised.
In 2018, Lundbeck entered into settlements with three
of four generic companies involved in an Australian
federal court case, in which Lundbeck was pursuing
patent infringement and damages claims over the
sale of escitalopram products in Australia. Lundbeck
received AUD 51.7 million (DKK 242 million) in 2018.
Lundbeck’s case against the last of the four generic
companies, Sandoz Pty Ltd, went up to the High
Court of Australia, who has now decided that Sandoz
Pty Ltd infringed Lundbeck’s escitalopram patent
between 2009 and 2012. The High Court has now
sent the case back to the first instance court for
recalculation of the damages awarded to Lundbeck in
first instance which amounted to AUD 26.3 million. In
the meantime, Lundbeck’s appeal of the Australian
Patent Office’s decision to grant Sandoz a license is
restarted and if a license is maintained in any form,
the first instance court will have to decide if such a
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 18
Corporate Release No 745/2023
license can have impact on the damage awarded by
the High Court.
Together with Takeda, Lundbeck instituted patent
infringement proceedings against 16 generic
companies in response to their filing of Abbreviated
New Drug Applications (“ANDAs”) with the FDA
seeking to obtain marketing approval for generic
versions of Trintellix
®
in the U.S. Two opponents have
since withdrawn and Lundbeck has settled with eight
opponents. As communicated by Lundbeck in
company release no. 706 dated October 1, 2021, the
cases against the six remaining opponents (the
“ANDA Filers”) have been decided by the U.S. District
Court for the District of Delaware (the ‘Court’). The
Court found that Lundbeck’s compound patent (U.S.
Patent No. 7,144,884) is valid. The compound patent
expires on June 17, 2026, with an expected six-
month pediatric exclusivity period extending to
December 17, 2026. Assuming the ruling is confirmed
at appeal, final approval will not be granted to the
relevant ANDA Filers until after expiration of the
compound patent, including any extension or
additional periods of exclusivity. A total of seven other
patents asserted at trial were found by the Court to
be valid or their validity was not challenged during the
trial. The Court decided that none of the seven other
patents were infringed by the relevant ANDA Filers,
except that Lupin was found to infringe a patent
covering Lundbeck’s process for manufacturing
Trintellix
®
. Unless and until the Court’s ruling is
reversed on appeal, the patents found not infringed
by a particular ANDA Filer will not prevent that ANDA
Filer from receiving final approval. For details on each
of the patents comprised by the case, please see
company release no. 706. The Court’s decision has
been appealed by Lundbeck to the U.S. Court of
Appeals for the Federal Circuit. Lupin has appealed
with respect to the process patent and the ANDA
Filers have cross appealed with respect to the validity
of two of the seven other patents. The validity of the
compound patent has not been challenged under the
appeal. The appeal hearing has been scheduled for
the third quarter of 2023.
Lundbeck received a Civil Investigative Demand
(“CID”) from the U.S. Department of Justice (“DOJ”)
in March 2020. The CID seeks information regarding
the sales, marketing, and promotion (including the
promotional speaker program) of Trintellix
®
.
Lundbeck is cooperating with the DOJ.
Lundbeck and Otsuka have received a Paragraph IV
certification from Mylan Pharmaceuticals with respect
to certain of the patent listed for Abilify Maintena
®
in
the U.S., and Lundbeck and Otsuka have instituted
patent infringement proceedings against Mylan and
Viatris Inc. The FDA cannot grant marketing
authorization in the U.S. to Mylan or Viatris Inc.
before the patents expire unless they receive a
decision in their favor. The trial has been scheduled
to start on April 1, 2024 and a District Court decision
is currently expected by August 2024. Abilify
Maintena
®
is covered by several U.S. patents relating
to specific forms of the active ingredient,
formulations, processes, devices, indications and
methods of use, which will expire in different years,
with the latest patent expiry date in the U.S. being in
2034.
In June 2022 in the U.S., several entities created for
the purpose of receiving assignment of claims from
payors providing health insurance coverage pursuant
to Medicare Parts C and D and Medicaid filed a
complaint against Lundbeck and others. The
complaint alleges that Lundbeck and the other
defendants conspired to increase the unit price and
quantity dispensed of Xenazine
®
. Lundbeck denies
the allegations in the complaint and intends to defend
itself.
In June 2023 in the U.S., Humana Inc., an insurer,
filed a complaint against Lundbeck U.S. legal entities.
The complaint alleges that Lundbeck engaged in an
illegal kickback scheme to increase the sales and
sale price of Lundbeck’s Xenazine
®
. The complaint
alleges that Lundbeck’s activities targeted Humana
Inc. and other private Medicare insurers who were
forced to bear the costs of the alleged illegally
subsidized drug sales. Lundbeck denies the
allegations in the complaint and intends to defend
itself.
Conference call
Today at 13.00 CET, Lundbeck will be hosting a
conference call for the financial community. You can
find dial-ins and a link for webcast online at
www.lundbeck.com under the Investor section.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 19
Corporate Release No 745/2023
Registered Executive Management
Board of Directors
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 20
Corporate Release No 745/2023
3 CONDENSED FINANCIAL STATEMENTS
CONDENSED STATEMENT OF PROFIT OR LOSS
DKK million
H1 2023
H1 2022
Q2 2023
Q2 2022
Revenue
Cost of sales
Gross profit
Sales and distribution costs
Administrative expenses
Research and development costs
Profit from operations (EBIT)
Net financials, expenses
(25 )
Profit before tax
Tax on profit for the period
Profit for the period
Earnings per share, basic (EPS) (DKK)
Earnings per share, diluted (DEPS) (DKK)
STATEMENT OF COMPREHENSIVE INCOME
DKK million
H1 2023
H1 2022
Q2 2023
Q2 2022
Profit for the period
Actuarial gains/losses
Tax
Items that will not be reclassified subsequently to profit or
loss
Exchange rate gains/losses on investments in foreign subsidiaries
(125 )
Exchange rate gains/losses on additions to net investments in
foreign subsidiaries
(40 )
(48 )
(39 )
(40 )
Hedging of net investments in foreign subsidiaries
(168 )
(1 )
(142 )
Deferred gains/losses on cash flow hedge, exchange rate
(408 )
(11 )
(265 )
Deferred gains/losses on cash flow hedge, interest rate
(16 )
(7 )
Deferred gains/losses on cash flow hedge, price
(41 )
Exchange gains/losses, hedging (transferred to the hedged items)
(23 )
Tax
(11 )
Items that may be reclassified subsequently to profit or loss
(87 )
(19 )
Other comprehensive income
(87 )
(19 )
Comprehensive income
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 21
Corporate Release No 745/2023
CONDENSED STATEMENT OF FINANCIAL POSITION
DKK million
30.06.2023
31.12.2022
Assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Other financial assets
Other receivables
Deferred tax assets
Non-current assets
Inventories
Receivables
Cash and bank balances
Current assets
Assets
Equity and liabilities
Share capital
Foreign currency translation reserve
Hedging reserve
Retained earnings
Equity
Retirement benefit obligations
Deferred tax liabilities
Provisions
Bank debt and bond debt
Lease liabilities
Other payables
Non-current liabilities
Retirement benefit obligations
Provisions
Trade payables
Lease liabilities
Income taxes payable
Other payables
Current liabilities
Liabilities
Equity and liabilities
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 22
Corporate Release No 745/2023
STATEMENT OF CHANGES IN EQUITY
DKK million
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Total
equity
Equity at January 1, 2023
Profit for the period
Other comprehensive income
(144 )
(87 )
Comprehensive income
(144 )
Distributed dividends, gross
(578 )
(578 )
Dividends received, treasury shares
Buyback of treasury shares
(43 )
(43 )
Incentive programs
Tax on other transactions in equity
Other transactions
(600 )
(600 )
Equity at June 30, 2023
DKK million
Share
capital
Foreign
currency
translation
reserve
Hedging
reserve
Retained
earnings
Total
equity
Equity at January 1, 2022
(162 )
Profit for the period
Other comprehensive income
(21 )
Comprehensive income
(21 )
Distribution of dividends, gross
(398 )
(398 )
Dividends received, treasury shares
Buyback of treasury shares
(45 )
(45 )
Incentive programs
Tax on other transactions in equity
Other transactions
(429 )
(429 )
Equity at June 30, 2022
(183 )
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 23
Corporate Release No 745/2023
CONDENSED STATEMENT OF CASH FLOWS
DKK million
H1 2023
H1 2022
Q2 2023
Q2 2022
Profit from operations (EBIT)
Adjustments for non-cash items
Change in working capital
(1,481 )
(816 )
(120 )
Cash flows from operations before financial receipts and
payments
Financial receipts and payments
(85 )
(488 )
(34 )
(3 )
Cash flows from ordinary activities
Income taxes paid
(226 )
(118 )
(160 )
(54 )
Cash flows from operating activities
Contingent consideration, payment from acquisition of company
(1,076 )
Purchase and sale of intangible assets and property, plant and
equipment
(265 )
(151 )
(188 )
(64 )
Cash flows from investing activities
(265 )
(1,227 )
(188 )
(64 )
Cash flows from operating and investing activities
(free cash flow)
(516 )
Proceeds from loans and issue of bonds
Repayment of bank loans and borrowings
(588 )
(266 )
(274 )
(168 )
Dividends paid in the financial year, net
(576 )
(397 )
Other financing activities
(86 )
(91 )
(21 )
(21 )
Cash flows from financing activities
(1,250 )
(295 )
(189 )
Net cash flow for the period
(36 )
Cash and bank balances at beginning of period
Unrealized exchange gains/losses on cash and bank balances
(19 )
(7 )
Net cash flow for the period
(36 )
Cash and bank balances at end of period
Interest-bearing debt, cash, bank balances and securities, net,
is composed as follows:
Cash and bank balances
Interest-bearing debt
(5,091 )
(6,585 )
(5,091 )
(6,585 )
Net cash/(net debt)
(1,428 )
(4,287 )
(1,428 )
(4,287 )
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 24
Corporate Release No 745/2023
STATEMENT OF PROFIT OR LOSS – ADJUSTED EBITDA RECONCILIATION (H1 AND Q2)
H1 2023
H1 2022
DKK million
Reported
Adjusted
Reported
Adjusted
Revenue
9,982
9,982
8,847
8,847
Cost of sales
2,179
1,007
1,811
1,070
Gross profit
7,803
8,975
7,036
7,777
Sales and distribution costs
3,501
3,454
3,087
3,083
Administrative expenses
564
554
509
501
Research and development costs
1,665
1,629
1,943
1,902
Profit from operations (EBIT)
2,073
-
1,497
-
Depreciation/amortization
1,005
-
842
-
EBITDA
3,078
3,338
2,339
2,291
EBITDA margin
30.8%
33.4%
26.4%
25.9%
Adjustments to EBITDA
Integration costs
-
-
-
-
Restructuring expenses
15
-
(48)
-
Gains/losses on divestment of businesses
-
-
-
-
Acquisition expenses
-
-
-
-
Other adjustments
245
-
-
-
Adjusted EBITDA
3,338
3,338
2,291
2,291
Adjusted EBITDA margin
33.4%
33.4%
25.9%
25.9%
Q2 2023
Q2 2022
DKK million
Reported
Adjusted
Reported
Adjusted
Revenue
4,938
4,938
4,475
4,475
Cost of sales
1,138
531
966
593
Gross profit
3,800
4,407
3,509
3,882
Sales and distribution costs
1,828
1,805
1,652
1,671
Administrative expenses
306
301
273
269
Research and development costs
826
808
962
941
Profit from operations (EBIT)
840
-
622
-
Depreciation/amortization
494
-
427
-
EBITDA
1,334
1,493
1,049
1,001
EBITDA margin
27.0%
30.2%
23.4%
22.4%
Adjustments to EBITDA
Integration costs
-
-
-
-
Restructuring expenses
15
-
(48)
-
Gains/losses on divestment of businesses
-
-
-
-
Acquisition expenses
-
-
-
-
Other adjustments
144
-
-
-
Adjusted EBITDA
1,493
1,493
1,001
1,001
Adjusted EBITDA margin
30.2%
30.2%
22.4%
22.4%
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 25
Corporate Release No 745/2023
4 NOTES
4.1 BASIS OF PREPARATION
The interim condensed consolidated financial statements for the six months ended June 30, 2023, have been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and additional Danish
disclosure requirements for interim financial reporting of listed companies. The interim condensed consolidated
financial statements do not include all the information and disclosures required in the annual financial statements
and should be read in conjunction with the Group’s annual consolidated financial statements at December 31, 2022,
published February 8, 2023. The accounting policies, judgements and significant estimates are consistent with those
applied in the Annual Report 2022.
Further IAS 34 disclosure requirements for interim financial reporting are included in section 2, Business
Performance. For disclosures regarding revenue and segment information see section 2.1 Revenue by product and
section 2.2 Revenue by geographical area, for disclosures regarding inventory obsolescence see section 2.3 Gross
profit and for disclosures regarding pending legal proceedings (contingent liabilities), see section 2.11 General
corporate matters.
A number of new amendments came into effect from January 1, 2023. The Group did not have to change its
accounting policies or make retrospective adjustments as a result of adopting these amended standards.
4.2 FAIR VALUE MEASUREMENT
Financial assets and financial liabilities measured or disclosed at fair value
DKK million
June 30, 2023
Level 1
Level 2
Level 3
Financial assets
Other financial assets
1
42
-
27
Derivatives
1
-
295
86
Total
42
295
113
Financial liabilities
Contingent consideration
1
-
-
340
Derivatives
1
-
109
-
Bank debt²
-
789
-
Bond debt²
3,232
-
-
Total
3,232
898
340
1 Measured at fair value
2 Disclosed at fair value
The fair value of listed securities is based on publicly quoted prices of the invested assets. The fair value of
derivatives is calculated by applying recognized measurement techniques, whereby assumptions are based on the
market conditions prevailing at the balance sheet date. The fair value of contingent consideration is calculated as
the discounted cash outflows (DCF method) from future milestone payments, taking probability of success into
consideration. The fair value of other financial assets is calculated through the financial performance of the market
inputs (i.e. interest swap rates) and other market conditions prevailing at the balance sheet date.
4.3 ADJUSTED EBITDA
For the financial guidance for 2023 and onwards, Lundbeck will focus on revenue performance and adjusted
EBITDA.
Lundbeck’s previous performance measure (Core EBIT) adjusted for amortization of product rights and for each
non-recurring item that Management deemed exceptional and/or which accumulates or was expected to accumulate
to DKK 100 million.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 26
Corporate Release No 745/2023
Adjusted EBITDA provides an improved and more consistent indicator, measuring the underlying operational
profitability. Adjusted EBITDA enables a better understanding of the underlying operational performance, as the
operating result is adjusted to exclude depreciation and amortization, impairment losses and reversals of impairment
losses, as well as adjustments restricted to the following categories:
• Integration expenses,
• Restructuring expenses,
• Gains/losses on divestment of businesses,
• Acquisition expenses,
• Other adjustments.
Adjusted EBITDA, adjusted gross profit and adjusted EPS are non-IFRS performance measures.
FINANCIAL REPORT FOR THE PERIOD JANUARY 1 TO JUNE 30, 2023 Page 27
Corporate Release No 745/2023
FINANCIAL CALENDAR 2023
November 8, 2023: Financial statements for the first nine months of 2023
February 7, 2024: Financial statements for 2023
Lundbeck contacts
Investors:
Media:
Palle Holm Olesen
Thomas Mikkel Mortensen
Vice President, Investor Relations
Media Relations Lead
PALO@lundbeck.com
THMR@lundbeck.com
+45 30 83 24 26
+45 30 83 30 24
Sophia Nørskov-Erichsen
Senior Manager, Investor Relations
SONQ@lundbeck.com
+45 30 83 24 60
About Lundbeck
brain diseases. For more than 70 years, we have been at the forefront of neuroscience research. We are tirelessly
dedicated to restoring brain health, so every person can be their best.
Too many people worldwide live with brain diseases – complex conditions often invisible to others that nonetheless
take a tremendous toll on individuals, families and societies. We are committed to fighting stigma and discrimination
against people living with brain diseases and advocating for broader social acceptance of people with brain health
conditions. Every day, we strive for improved treatment and a better life for people living with brain disease.
We have approximately 5,600 employees in more than 50 countries, and our products are available in more than
100 countries. Our research programs tackle some of the most complex challenges in neuroscience, and our
pipeline is focused on bringing forward transformative treatments for brain diseases for which there are few, if any
therapeutic options. We have research facilities in Denmark and the United States, and our production facilities are
located in Denmark, France, and Italy. Lundbeck generated revenue of DKK 18.2 billion in 2022 (EUR ~2.5 billion;
USD ~2.6 billion).
For additional information, we encourage you to visit our corporate site www.lundbeck.com and connect with us on
Instagram (h_lundbeck) and via LinkedIn.