H. Lundbeck A/S (HLUNB) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the H. Lundbeck Q1 2021 Conference Call. [Operator Instructions] Today, I'm pleased to present Deborah Dunsire, President and CEO. Please begin your meeting.

Thank you, operator, and thanks to all of you for your interest in Lundbeck. Welcome to our teleconference covering the financial report for the first quarter of 2021. I'm joined today by our CFO, Anders Götzsche; Head of R&D, Johan Luthman; Head of Commercial Operations, Jacob Tolstrup; 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 first quarter of 2021 is one we feel very proud of. It's a continued unprecedented pandemic era, and we know that physician 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 brand. We saw growth in our strategic brands at 8% in local currency, and I'm very pleased with the momentum of Vyepti in the U.S. The Trintellix launch in Japan is accelerating, and we're also delighted that 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 Q-on-Q comparison are, of course, the stocking in Q1 2020, which was driven in the pandemic by people being told to refill their prescriptions. We've also seen significant currency headwinds. And in March, we experienced the first impact of the Northera 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, Brintellix/Trintellix achieved DKK 800 (sic) [ DKK 804 ] million sales for the quarter which is a growth of 7% in local currency. Rexulti showed a growth of 4% in local currency, achieving DKK 672 million. Abilify Maintena remain resilient through 2020 and into 2021. And I'll address Vyepti on the next slide, as I can have that slide, please. These is both strong momentum in vial demand for Vyepti and we've seen growth around 50% Q-on-Q, and it's developing as anticipated in the U.S. market, which is still experiencing some disruption in patient-physician interaction. The payer coverage for Vyepti has remained extremely good and patients with good access to Vyepti even in plans that require branded step-edits. The global rollout will get underway midyear with launches in the balance of the year for 5 countries, and we're taking the next steps on building the brand into a decade-plus growth driver for Lundbeck. Next slide, please. One of the things that we're most pleased with is how Vyepti is being received by the patients who take it. We see here Electra, who gave us permission to share her story, and her world has been transformed as her headache has been controlled when she received Vyepti. We look forward to more and more of these patient testimonials of lives transformed as the Vyepti rollout continues. Next slide, please. We all know that the COVID-19 related stay-at-home restrictions significantly reduced in-person visits, new diagnoses and therapy initiation and that's impacted new patient starts for both Rexulti and Trintellix. We're still experiencing some of the impact from 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 salespeople 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 NBRx, and now we're seeing that begin to recover. So that closed out together with the annual deductible reset, guide we gave 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 achieves 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 markets. In Japan, Trintellix has now reached a volume share of 3.5%, which makes it the strongest launch in a 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 first 12 months of any launch in Japan. The combined sales forces of Lundbeck and Takeda, driving the education around the brand have been tremendous in driving uptake. For Canada, that's our third largest market, I'm pleased to say that we've achieved public reimbursement for Trintellix there, and we expect that to further enhance 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. Vyepti delivered DKK 76 million in sales. We saw an encouraging growth of 8% for the strategic brands despite impact from the pandemic. Northera was down with 35% in the quarter due to a more aggressive launches from multiple generics than -- and more generics 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 million, 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 Vyepti. SG&A declined 11% or approximately DKK 200 million 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 charge we took last year of some DKK 800 million (sic) [ DKK 792 ] due to the foliglurax write-off. The R&D cost increased by 4%, and that is mainly due to the increased clinical activities for Vyepti. The operating result. EBIT reached DKK 882 million, corresponding to an EBIT margin of 20.6%. The core EBIT margin faced a modest decline from 29.7% to 29.3%. Overall, we see the financial performance in the first quarter 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 '21 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, seen 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 seen sizable depreciations 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 impacted by a change in working capital due to timing in payments from partners, but also receive shipments of inventory. To the right at the slide, it's shown that we have continued to reduce the net debt since the acquisition of all the pharmaceuticals, leading to a healthy net debt-to-EBITDA ratio of 1. We expect net debt to be around DKK 3.5 billion at the end of '21. Please turn to the next slide. The financial guidance for 2021 is unchanged, and we still expect revenue in a range of DKK 16.3 billion to DKK 16.9 billion. The generic erosion for Northera 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 DKK 1.7 billion, which is higher than what we communicated when we announced the full year expectation in February, where our expectation were approximately DKK 1.3 billion. This will, of course, put a bit pressure on our financial performance, but other strategic brands are expected to show high single-digit -- to show double-digit growth in the remaining part of the year and expected to partly mitigate the erosion of Northera. The mature brands are expected to decline around 10%, and that is due to normal generic erosion, but also VBP in China impacting Ebixa. Included here is also the sales impact from our handing back of Sycrest to Merck late last year. Sycrest realized the sales of DKK 31 million in the first quarter last year. The growth in revenue for the strategic and the mature brands is expected to be approximately DKK 1.1 billion which actually is better than we assumed in the beginning of the year. We assume negative currency impact of approximately DKK 600 million, and hedging effect of approximately DKK 50 million, which will result in a net impact of around DKK 500 million. The explained movements in revenue are expected to lead to overall decline in revenue for '21. The financial guidance for the earnings figures are unchanged compared to Lundbeck's financial guidance provided in February '21 -- 2021. For the full year, you should expect financial items to be a net expense of DKK 250 million to DKK 350 million 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 will continue to drive the rebound of the growth of our strategic brands in the second half of 2021. I'll now hand over the microphone to Johan for going a bit more into the details of R&D.

Thanks, Anders. Please turn to Slide 14. Let me start with Rexulti in agitation in Alzheimer's type dementia. As we wrote in the release on April 13, an independent interim analysis in the ongoing Phase III clinical trial, Study 213, supports progressing the recruitment of patients to the planned full enrollment of 330 patients. Completion of the trial is expected in the first half of 2022. With regards to Vyepti, 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 Vyepti are also advancing very well. The DELIVER trial, a Phase IIIB study that evaluates the effects of Vyepti for the prevention of migraine in patients with prior unsuccessful preventive treatment 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 this 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 I assets, including a couple of MAGLipase targeted molecules that are evaluated in a number of early exploratory patient core studies. We are also continuing the further advancement of 2 promising early development programs, the alpha-synuclein 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 regaining the enrollment momentum. Next slide, please. Now I'd like to turn to interesting new data on Trintellix/Brintellix. Firstly, we've very pleased to share the positive data from the RECONNECT study. This study evaluated the effects of Vortioxetine in patients with primary diagnosis of major depressive disorder, MDD, that had a comorbid diagnosis of generalized anxiety disorder GAD. This patient category represents the largest subpopulation of patients with MDD. The prevalence of comorbid anxiety disorder, perhaps as high as 60%. This is also a patient population that generally has a high 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 anxious, and the majority of the patients had already failed another antidepressant. Patients with treated open-label or flexible doses, 10 and 20-milligram vortioxetine with an up titration to 20-milligram after 1 week of treatment. Vortioxetine's effect on symptoms of depression was verified with an improvement on the Montgomery-Åsberg Depression Rating Scale. More importantly, there was also a 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 giving the poor over social, family and work-life function in this group of patients. Next slide, please. RELIEVE is a real-world study, in which the ability of Trintellix/Brintellix to improve functioning in people living with MDD was assessed. RELIEVE was a global prospective observational study conducted in patients with MDD that were prescribed vortioxetine. Data from 994 patients were collected at routine clinical visits at baseline, 3 months and 6 months. The study demonstrated ability of vortioxetine to improve the daily life of people working -- living with major depression and measure using the Sheehan Disability Scale. That's a scale that evaluates areas such as family and social life, home, work and school. Additionally, the trial met all its secondary endpoints, measuring quality of life, measures of depression, as well as reconfirmed vortioxetine's positive effects on cognitive symptoms as measured in 2 very different ways: the 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/Brintellix on family, work and social life functioning. In the RELIEVE study, it's also very nice to see that we clearly demonstrated that vortioxetine can restore brain health in an everyday clinical practice setting. With that, I turn it 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 the -- as many as possible with the 17 sustainable development growth mitigate any risks to the business and creates a diverse and inclusive organization where the best talent can thrive. Lundbeck 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 had 7 nationalities within our Board. Having achieved 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 2050, which is aligned with the Paris Climate agreement. Carbon emissions from our production in fleet will be reduced by 2/3 over the next 15 years. And we'll also reduce the so-called out scope 3 emissions as we work with our suppliers and customers to reduce their carbon emissions by nearly 1/5 over the next 15 years. Next slide, please. As we forge ahead in 2021, we'll be working hard to continue to mitigate any effects of COVID-19 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 Vyepti is continuing with expected approvals in Australia, as Johan said. And we're also expecting this recommendation from the European CHMP towards the end of the year with approval for Europe in the early part of 2022. Two of our early-stage projects are also getting ready for Phase II 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 years 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&A session.

[Operator Instructions] Our first question comes from James Gordon from JPMorgan.

James Gordon, JPMorgan. A couple of questions, please. First 1 was on Rexulti 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 have been in line with what I've been seeing for 1 week Rexulti in previous trials, it could be good enough to stop at interim. And so just 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 Rexulti while making previous trials? So the question here, how does this make you think about -- or how should we think about the chances of success at the final result, now we know it didn't stop at interim? Any reason why it might not have looked as good? So that's the first question. Second question sort of connected to Rexulti in Alzheimer's agitation. Business development, so given maybe some uncertainty around Rexulti and AA, and there isn't that much other late-stage pipeline shots on goal. Does that make it more urgent to do some other deals ahead of the final data of Alzheimer's agitation? Do you need to have a plan B in place? And then third and final question, just on SG&A. I think on the last call, there was a comment that SG&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&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&A question, and then I'll end with the BD question.

So just a few background in fact around 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-milligram 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 are 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 vitality, 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 effect. Obviously, with fewer subjects you accommodate for the variability being a little larger with fewer subjects. That we are 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 the 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 moving 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 patients into the study last year. We now have a number of activities, so we hopefully can speed up this trial.

Anders?

And yes, the SG&A, you should expect that the ranges that we have given is actually what we still expect 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 first quarter. 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'll always be 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 finding those assets, not by a specific readout time line, if that makes all that clear.

Our next question comes from Wimal Kapadia from Bernstein.

Wimal Kapadia from Bernstein. So can I just first ask on Vyepti, please. Recent trends have stepped up quite nicely in the U.S. and you say 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? And maybe you could comment in relation to consensus expectations of around DKK 530 million? My second question is on Rexulti and borderline personality disorder. We're expecting the Phase II in mid-'21. But just curious how we should think about this opportunity here. In the U.S., you suggest 1.7 million 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 VBP at the moment? And then my final question. And 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 this trajectory for the product from here? How much downside is less, if any, for this asset?

Wimal, I'll ask Peter to start on Vyepti 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 Anders, would you comment on Onfi.

Maybe I can start with Onfi. You should expect our best guess is 5% to 10% decline in '21 compared to 2020. And I can start with Vyepti, 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 DKK 500 million, which is comparable to the consensus. But then, of course, we need to built 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 you from there.

Wimal. Yes. In terms of Vyepti, 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 volumes 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 will continue to be on a quarterly basis. Market access situation is quite good. We have 235 million patient lives that have access to Vyepti 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. Will there be any 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 Rexulti, Peter? Just in terms of the inflection you want.

Yes. Obviously, I won't give specifics about what kind of 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 II 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, Rexulti 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 of several things. First of all, there is no established therapy. And the readouts are also new readouts. They are 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 time lines pretty well. We'll get it by the shift of the mid year. And basically, then we'll see what data we have and how we'll progress with this asset.

Our next question comes from Michael Leuchten from UBS.

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 would make the underlying growth less good than the quarter cosmetically looks like? Second question, Deborah, you commented on your sales force and your digital efforts. Is there any way of quantifying the level of effectiveness of the promotional 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 the way of measuring your impact at the moment, given that you're running at your strategy? And then the third question is on Vyepti DTC. Can you talk to timing on when you will rollout an initiative? And then when would you expect a return on that in terms of quarters, say, if you did it now, would that then be seen in Q2? Or what do you think it's going to take a little bit more time to convert that into revenue?

Peter, you can maybe start with stocking in the Vyepti DTC?

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 first quarter performance. There's no onetime 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 activities. 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 first quarter.

And then Vyepti DTC?

Yes, DTC is something that we intend to do with Vyepti. Timing of it is something that in a little bit, is out of our control for 2 reasons. One, we need feedback from the FDA. As you know, for all DTC campaigns, you need to have those precleared. 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 a 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 first doze 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 than the virtual engagements do. 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 script. 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 in in-person call.

Our next question comes from Martin Parkhøi from Danske Bank.

Martin Parkhøi from Danske Bank. First question is probably for Jacob. Just if you could elaborate a little bit on the -- on Japan and Trintellix 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 also active in Japan. How are these faring in combination with respect to market share position? And then a second question to Anders or maybe a Deborah, I think it was you quoted on newspaper 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 the U.S. in 2021?

Thanks, Martin. Jacob, over to you.

Absolutely, thanks Martin. As you've seen also from the release and the comments that we have made, I think, here probably during the day, 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 so on 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 markets share. Japan is now our best launch ever for Trintellix. So they have done a super job in Japan for Trintellix. I don't think we're commenting on how much sales that we get specifically for Japan on Trintellix margin. So 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 we look at the new scripts and we are climbing up fast, and we are a 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 for us. And I think 1 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 on fast. That means that I think we're building up a great reputation for the brand. So It's difficult to know. But of course, that always gives a different pressure in the market that you have 1 more generic entering. But I would say that, that has always been part of our plan. And looking ahead, we see no change compared to what we have estimated in terms of growth for the year.

And Jacob, Martin also asked about how Lexapro and Trintelli are coexisting?

Yes, that's a great question. And I will 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 promote Lexapro, the focus has been on anxiety, whereas for all markets, the focus for Brintellix/Trintellix has been around recovering your functioning, so sort of complete recovering of your function as a patient, not only looking at depressive symptoms, but 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 loss of exclusivities are behind us. And of course, we have to wash not there through, 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 Vyepti starting in '22, 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 '21, 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 -- and if you look at the majority of the products, the gross to net has not changed dramatically. Of course, when you come in the earlier phases, like Rexulti, the gross to net has changed slightly. And then you have on top of that, you, of course, have the price increases 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 the 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 overall, the underlying growth is actually pretty nice and also supported by the pricing actions this year and last year.

Our next question comes from Trung Huynh from Crédit Suisse.

Trung Huynh from Crédit Suisse. Three Questions from me. Firstly, on your guidance, just some of the reasoning why you're keeping the guide given Northera 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' question on SG&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&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's going to impact the stock indirectly? Any thoughts here would be interesting.

Anders, maybe you can please comment.

So if I start with the guidance, it goes without saying it is approximately a number. So we have -- we went from approximately a decline of 50% to 70%, and we have estimated in our books, it's around DKK 400 million 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 are a bit less for the strategic brands. But of course -- and that's due to we see that the vaccination levels start 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 Northera. 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 an SG&A and R&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&A ratio that we told you in February is still holding up. And that is around between 41% to 46%. So you could say, is it 43%, 44%, that is what we believe in now. And then we need to see how the quarter plays out. And regards to the share price and the inclusion in different indexes, I think you have as much knowledge as we have and your speculation around 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.

And anything to comment on the R&D cadence of the spend?

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&D percentage is -- should be between 22% and 24% for the full year, and that is still what we believe in. That is the spending level.

Our next question comes from Carsten Madsen from SEB.

I only have 1 left here. I was hoping to get a little bit more color on the emerging markets performance 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 VBP in China, et cetera. So I was just wondering, Jacob, could you give us some more color on what's the driver here because you are up in growth versus Q4? And maybe also, there's a lot of focus on this VBP in China is, is everything in the numbers now for Ebixa? Or do you expect anything, more in the coming quarters here?

To comment on that. There are different pools and pushes for the quarter, Carsten. You're absolutely right on VBP for Ebixa 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 posed in the other direction. And then for other markets, we had stocking going in, we had a product Sycrest 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 its performance that is driving the growth for the quarter for many of these markets. And on the VBP for Ebixa, 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. One of the generic suppliers last year were not able to deliver, and that gave us a little boost at the time. And now we are down at a level where we are promoting again. And we're actually able to grow Ebixa 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 expectations for Ebixa 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.

Our next question comes from Michael Novod from Nordea Equities (sic) [ Markets ].

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 also to sort of see the rebound in Trintellix, in particular in the U.S.? And the second question is to Vyepti 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 Vyepti? And then lastly, on the Trintellix generic court case, do you still expect this to be concluded during June, July?

Thanks, Michael. I think on RECONNECT and RELIEVE. We're delighted with the performance of Trintellix profile in major depression disorder. All of these things help. They don't change the label, as you know. So they will be presented at scientific meetings. They will 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 GAD, and it helps us with payers that we can really talk about how Trintellix does perform extremely well in the real-world because we get questions sometimes on placebo-controlled clinical trials, do they demonstrate what happens in the real world? Our RELIEVE really does that. So I think that they'll add to 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, who doesn't. So I'll stop there, and maybe, Peter, you have any further comment?

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 reaffirm the value that Trintellix brings to patients in the real-world and help us on those levels.

Jacob, perhaps you can comment on Vyepti in EU?

So hopefully, the plan is -- not hopefully, the plan is that we expect to have approval of Vyepti early next year, and then we will begin the European rollout. There's a couple of things that you have to look for here. First and foremost, this is an infusion product being a biologic. There is a little bit of a longer lead time for us to have product available in the market. So that's 1 factor from approval. But when it comes to market access, we believe at that time, we will have all the tools in place to have that discussion. And 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. So I don't expect it will take longer than what has happened for the other CGRPs. In fact, it should actually be more helpful for us that they've sort of established a pathway. And with the deliver trial that we 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 the markets where you 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 means that it takes anywhere between 2, 3 years before you were into all European markets, which is very common and not something to do with Vyepti. Also the same, that is true for Brintellix as an example.

Anders, perhaps, you can comment on the Trintellix generic lawsuit?

For Trintellix lawsuit?

I think the nature of it is that we -- there's nothing telling us that the time line has changed. 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 court's time line.

Our next question comes from KC Arikatla from Goldman Sachs.

KC Arikatla 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 for Northera? 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?

I'm not -- at this point in time, I'm not willing to go into speculation around if it's -- what kind of level where we are heading into the range. We still keep -- we believe we'll be within the range. And then we will see in the upcoming quarters where we're ending, if it's the top end or the low end, that I don't want to speculate on now.

Our next question comes from Peter Welford from Jefferies.

Four 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 Parkinson's? And secondly, just on the PACAP antibody. Anything you can give us with regards to what the Phase I told you? Were there any, if at all, conclusions from that? Or was it just the case of, it's passed and now going into Phase II? Thirdly, then just on contract manufacturing, revenue is obviously weak in 1Q. Is this just phasing, and we still sort of see similar for the year? Or is there anything that's happened their 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 Vyepti U.S. coverage. I appreciate that in terms of the number you've got access. But I wonder if you can talk a little bit about the type of access you have for Vyepti in the U.S. with those 235 million lives and how that's changing it all?

Good. So on ASmAb, I think the first indication of MSA, we think it's a great place for ASmAb to go. It will give us a lot of insight to 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 MSA to guide us in the path forward. And then, do you have any further comments on ASmAb and then PACAP question?

Yes. So just to add a little bit on the alpha-synuclein. Of course, we're going into MSA, as you heard, and we'll talk more about that in the fall. We expect to start 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 synucleinopathy. So we're considering several other things on the way. For PACAP, we're basically wrapping up Phase I. We have good data so far. It looks fine from a kinetic perspective, tolerability, et cetera, is acceptable to progress. We still have to go through some regulatory reviews to progress into Phase II and sorting that out with the Europe and FDA. We also need to see a little bit more of biomarker data, target engagement 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.

And Anders any on the contract manufacturing.

You should expect that 10% to 15% decline compared to 2020. That is our expectation for the time being.

Yes. And then, Peter, on the Vyepti coverage?

Yes. Thanks for the question, Peter. So to give a little bit more insight, about 110 million 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 million patients. There's another 33 million 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 million, 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 million. And then hopefully, those other details I gave you provide more insights.

Our next question comes from Rosie Turner from Barclays.

Rosie Turner from Barclays. Question, Just 2 from me and apology to being a third person to go back to Northera. But in the prepared remarks, you said you expect the strategic brands to partly mitigate this increased erosion. And obviously, kind of the top line is probably felt more than bottom line, given the kind of solid margin profile we expect for Northera historically. So just to clarify, do you expect the strategic brands 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 will be fantastic if you could comment on that. And then secondly, in terms of the strategic brands you are planning to grow and here, I mean, kind of [indiscernible] Trintellix/Brintellix. I mean, certainly before the pandemic, they were growing in the kind of 30% range. I think you said next year, we kind of see the plan is kind of uninterrupted growth. So does that mean we can expect getting back towards those levels in 2022? Or do you think that's a further out event or perhaps my being so pessimistic, and that's something we could expect to come through at the end of '21?

Anders, do you want to start with...

It was a bit difficult to hear the questions in the room. But if I understood your question right, it was around the Northera decline or...

And the strategic brand offset...

The mitigation by the strategic brand.

Yes.

Yes. So I'm not -- what you know is that it's -- we have tried to lay out in the presentation what is the equation you should look into from what is the decline in Northera? What is the growth for the strategic mature brands? And at top of that, we have also said that we believe that the 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. So 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.

Our last question comes from Marc Goodman from SVB.

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, at least expected on 1 product and then have these products -- a separate product for prevention comes. And just curious how you think that's playing into the market? And then just secondly, just in R&D, can you give us an update on where the Tau antibody is and the D1/D2 in Parkinson's? Are these moving forward? Are we going to see data anytime soon? In the same way that you helped us with the alpha-synuclein thought process.

Peter?

Yes. Thanks for the question, Marc. From our perspective, the oral CGRPs, we don't see that as having an interruption to the momentum that we now have with Vyepti. This market, as you know, is an enormous market. There's 14 million 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 subcu 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 Vyepti.

Great. And on your Tau question. The Tau antibody, it's a great antibody. We believe it addresses the right [indiscernible]. 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 partner it. Johan, you have any further comments and then perhaps you can comment on what we wanted to.

Yes. So the anti-Tau antibody is basically through Phase I, and it looks like a good antibody. And you heard the rest of the story. We have actually target engagement biomarkers also that we 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 feel on Tau antibodies. For alpha-synuclein data, what I think the question was when we can expect to see data obviously, we will come back to that in more detail, but we're going to run a sort of a stage Phase II/III program, which is going to be a 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, because it is 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 when...

Marc's question also went to the D1/D2.

D1/D2, I didn't hear that. Yes, that is progressing. It's the dot2D program, as we call it, for off time effect in Parkinson's disease. It's basically on its way out to Phase I in within sort of sometime next year. And we have really nothing that could stop us progress 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-concept study, of course.

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 our strategic brands the growth of Vyepti in the U.S. and the rollout of Vyepti globally. So thank you for your interest in Lundbeck, and we look forward to speaking with you at the -- when we report the second quarter. Thank you.

Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.