H. LUNDBECK A/S

Lundbeck is a global pharmaceutical company that specialises in brain health. The Lundbeck Foundation owns 69% of the share capital and 76% of the votes.

In 2022, Lundbeck stayed the course on its strategy to ‘Expand and Invest to Grow’ and on revitalising its pipeline, with two projects entering Phase II clinical trials. 2022 saw exceptional growth from Lundbeck’s strategic brands1 and accelerated revenue growth across all three of the company’s regions. Lundbeck’s newest strategic brand, Vyepti®, continued to grow strongly, gaining momentum due to its proven efficacy for patients.

The largest brand, Brintellix®/Trintellix®, marketed together with partner company Takeda in the USA and Japan, continued to show accelerated growth, mainly in Japan and Europe. Also, the major brands, Rexulti® and Abilify Maintena®, partnered with Otsuka, continued to grow strongly in 2022 in all markets where they are launched. New indications and formulations of these two brands will be launched in 2023, pending regulatory approvals.

Ensuring Financial Capacity For Growth

In 2022, the Lundbeck Foundation proposed and worked together with Lundbeck to initiate a split of the H. Lundbeck A/S share into an A- and B-share. This facility gives Lundbeck an additional tool in its financial toolbox as it seeks to expand the options for long-term growth and value creation while, at the same time, securing the long-term stability ensured by the Lundbeck Foundation’s majority holding. The growth opportunities Lundbeck seeks to include will build and

1 Abilify Maintena® (schizophrenia), Brintellix®/Trintellix® (depression), Rexulti®/Rxulti® (depression/schizophrenia) and Vyepti® (migraine prevention) strengthen the additional capacity to invest down the line in the long-term future of the business pipeline and marketed product portfolio, to the benefit of all stakeholders. Although there are currently no immediate plans to use this financial facility, it does give Lundbeck additional capacity to invest down the line into the long-term future of the business.

GLOBAL ROLL-OUT OF VYEPTI®

In 2022, Lundbeck continued the global roll-out of its newest brand, Vyepti®. The product continued its steady, upward growth trajectory, as it was launched in nine markets in 2022 alone, including Canada, Australia and Germany, amongst others. Vyepti® reached sales of DKK 1,004m in 2022, compared to DKK 492m in 2021. In 2023, Lundbeck will continue to invest behind the global roll-out of Vyepti®, with approximately 15 further launches planned.

In China, Lundbeck hit a setback with the small SUNLIGHT study, which was conceived to gain faster-track market access for Vyepti® through studying it in patients with migraine and concurrent medication-overuse headache. The study did not achieve a statistically significant separation from placebo. The pivotal SUNRISE study is ongoing and has been expanded.

EXECUTING THE R&D STRATEGY

In 2022, Lundbeck continued to advance the R&D strategy to be premier in neuroscience. By maintaining focus on programmes with a strong biological rationale, integrating patient insights and building strong external collaborations,

Lundbeck is successfully progressing its pipeline. In addition, life-cycle management activities around Lundbeck’s strategic brands are also yielding results.

Lundbeck’s early-stage pipeline continued to progress, but also saw data-driven terminations. The two projects that entered proof-of-concept (Phase II) testing at the end of 2021, are progressed well, with headline results expected within the next 12 months.

In June 2022, Lundbeck, in partnership with Otsuka, announced positive results showing reduced agitation in patients with Alzheimer’s dementia treated with brexpiprazole in a Phase III study. Accordingly, Lundbeck recently announced FDA acceptance and priority review of a supplemental New Drug Application (sNDA) for brexpiprazole for the treatment of agitation associated with Alzheimer’s dementia. Currently,

Revenue (DKKm)

18,246

Operating profit (DKKm)

2,852

Net profit (DKKm)

1,916

Number of employees (FTEs) 5,399 there are no FDA-approved pharmacological treatments for agitation associated with Alzheimer’s dementia.

In 2022, Lundbeck and Otsuka submitted the Marketing Authorization Application (MAA) for aripiprazole as a 2month, ready-to-use, long-acting injectable for the maintenance treatment of schizophrenia in adult patients stabilised with aripiprazole to the European Medicines Agency (EMA), as well as to the US Food and Drug Administration (FDA) and Health Canada, for the treatment of schizophrenia and bipolar disorder. This will better support schizophrenia patients in adhering to their treatment plans.

In October 2022, Lundbeck successfully completed the lifecycle management programme for Brintellix®/Trintellix®, with the MEMORY trial showing reduced depressive symptoms, improved cognitive performance and quality of life in major depressive disorder patients with mild-to-moderate dementia. Lundbeck’s top priority continues to be to provide innovative treatments that create value for patients; value for Lundbeck will then ultimately follow.

Financial Performance Sales

Revenue reached DKK 18,246m in 2022 (DKK 16,299m), mainly driven by solid product sales and tailwinds from favourable foreign exchange rates, primarily with the US dollar. On aggregate, the strategic brands grew 20% in local currencies and accounted for 67% of total revenue.

The USA constituted 49% of total revenue in 2022, excluding effects from hedging and other revenue, which was a small increase over the previous year. Europe saw robust underlying demand offset by a continuous negative average price development and continued generic erosion on sales of the mature product portfolio.

Operating Profit

In 2022, total costs increased by 8% to DKK 15,394m (DKK 14,289m).

Cost of sales increased by 8% to DKK 3,951m in 2022, and the gross margin was 78.3% compared to 77.6% for 2021. Part of cost of sales related to the amortisation of product rights which was DKK 1,371m in 2022. Amortisations increased due to the appreciation of the US dollar and the additional amortisation of Vyepti® following its European approval.

Sales and distribution costs were DKK 6,610m in 2022, an increase of 12% compared to 2021, as the activity level in general increased, especially for Vyepti® launch preparations and patient-activation programmes in the USA. Sales and distribution costs corresponded to 36.2% of revenue in 2022, compared to 36.1% for 2021.

Administrative expenses increased by 16% to DKK 1,079m, corresponding to 5.9% of total revenue. The increase was mainly a result of legal costs, cloud-based software that is recognised directly in the income statement, currency exchange development, and a donation to the Red Cross.

R&D costs were DKK 3,754m in 2022 with an R&D ratio of 20.6%. R&D costs were mainly impacted by the completion of a Phase IV study on vortioxetine.

Operating profit grew by 42%, thereby reaching DKK 2,852m in 2022. The operating profit margin reached 15.6%, compared to 12.3% in 2021.

Net Profit

The effective tax rate for 2022 was 22.6% compared to 16.6% for 2021. The effective tax rate increased significantly compared to 2021, as 2021 was positively impacted by the inclusion of previously unrecognised tax credits.

Profit for 2022 reached DKK 1,916m (DKK 1,318m).

Figures for 2021 are shown in brackets