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

Ladies and gentlemen, welcome to the Lundbeck Q3 Conference Call. [Operator Instructions]. Today, I'm pleased to present Deborah Dunsire, President and CEO; Anders Götzsche, Executive Vice President and CFO; and Johan Luthman, Executive Vice President of Research and Development. Speakers, please begin your meeting.

Hello, everyone. Welcome to the 9 month results for Lundbeck. We're pleased to have you with us today. I'm joined, as you heard by Anders Götzsche, our CFO; Johan Luthman, our Head of R&D; and also Peter Anastasiou, Head of North America; and Jacob Tolstrup, Head of our Markets Outside of North America. So a great team to answer your questions. You've seen our forward-looking statements before, so we won't belabor those. Let's go on to talking about the robust financial results for the first 9 months of 2021. We're very, very pleased with the growth of our strategic brands, which are up 17% in total for the 9 months. We've had an improvement in core EBIT to DKK 3 billion, and core EBIT margin reaching 24.3% and reduction of our net debt to DKK 3.2 billion from DKK 4.2 billion in the second quarter, a lot because we haven't yet been able to return to normal promotion. And so, some of the savings come through SG&A. In R&D, we've had some great results with Vyepti DELIVER trial, meeting the primary endpoint of reduction in monthly migraine days with 3 zeros to the right of the decimal point in the significance value, and I always love to see that. Significance was also achieved on all secondary endpoints. And Johan is going to give you a lot more detail on that a bit later. We're also very pleased to have our 82422 compound, the alpha-synuclein monoclonal antibody, having initiated the Phase II proof-of-concept trial in multiple system atrophy, a very severe orphan disease in the neurological space, and Johan will talk a bit more about that. But let me just say how proud we are of this homegrown molecule that is now achieving Phase II start. We are reconfirming our guidance for 2021, and Anders will go through that in more detail. And looking forward for the rest of the year for double-digit growth on all the strategic brands and putting a second program, 09222, our PACAP inhibitor into Phase II during the fourth quarter. Next slide, please. When we look at our major strategic brands, as I said, they grew 17% overall for the 9 months, but in Q3, all brands grew at double-digits in local currency and were up 26% as an aggregate of the full brands in local currency. There's been strong growth. We've seen excellent growth with Vyepti, but also Brintellix, Trintellix coming to growth Rexulti and Abilify Maintena being very resilient. The year-to-date growth has been impacted a bit by COVID dynamics, but we are seeing those ease up. And as we've told you before, we did see some financial exchange rate headwind, but that impact abated a bit in the third quarter. Next slide, please. Vyepti, we're very delighted with how this is performing for patients in the market. The percentages are rather eye popping, growing 731% in local currencies over the 9 months and 450% in local currencies in the third quarter. While demand is up 43% Q-on-Q. We're seeing the expansion not only in office where physicians have the capability to infuse, but expanding the use in these alternative sites of care where Vyepti is now about 25% of the volume is administered. And we're seeing continued penetration of the high-volume prescribing health care practitioners in migraine, which has been our focus since day 1. We're seeing patients being able to return to offices. So as the pandemic eases, we're able to grow the brand, and we're seeing an increase both in new prescribers, as well as, people who are getting repeat prescriptions, either their second, third or even fourth dose now that Vyepti has been on the market for a while. Next slide, please. The global rollout of this product, which is Lundbeck's first independent global launch. We have a very exciting time ahead with 15 launches in the balance of '21 and '22, including bringing Canada to launch in the early part of '22. That has already been approved. The EU, we look forward to an EMA approval in the first quarter. And Australia, which is already approved and going through market access, we'll be launching probably early in '22. DELIVER just confirms the powerful effect of Vyepti in people with migraine who have failed at least 2 older preventive therapies. Now we had some of those patients in our PROMISE 1 and PROMISE 2 trials but DELIVER exclusively has people who have failed on preventive treatment. And that's going to be important to us as we bring Vyepti forward in Europe for getting us market access. Vyepti's power in that it's an infusion, and it acts extremely quickly, delivers that powerful effect. And we saw the effect in PROMISE 1 and PROMISE 2, and we saw it reiterated in DELIVER. We also saw the speed of action in the RELIEF trial. And it is the only anti-CGRP with medication overuse in the label. We also see around the world, roughly 10% of the population is confronted with migraine, and it's the most common urological disease for people less than 50 years of age. And that, of course, spans all migraine from the acute all the way to the very chronic. About 15% to 20% of those patients are eligible for migraine prevention, but certainly not all of them get that right now. So we do see the possibility for this migraine market to grow significantly as these new and powerful agents enter. Next slide, please. Our 3 largest and very established strategic brands are continuing strong growth. Trintellix, Brintellix, the sales growth, a lot driven by China. Japan doing extremely well, together with our partner, Takeda, with a market share of about 4.61% in its second year on the market and also Iberia, particularly in Spain, we're seeing strong growth, as well as, North America returning to robust growth in Q3. Rexulti, as you know, the markets where we have both schizophrenia and MDD are the U.S. and Canada. And so the growth is driven a lot out of the U.S., but we're seeing very nice growth in Brazil. And Rexulti grew 13% in local currency in the first 9 months. Abilify Maintena has been very resilient throughout the pandemic. It grew 7% in local currency over the 9 months and 11% in Q3. And growth is being driven a lot in Europe, but also in Australia and certainly, our largest markets in North America have returned to solid growth. Next slide, please. I'm now handing over to Johan to take you through a very exciting quarter in R&D.

Thanks a lot, Deborah. Let us turn to the next slide and our R&D update for Q3. Let me start by commenting a bit further on Vyepti. As Deborah already mentioned, the global rollout of Vyepti is progressing extremely well, thanks to a very aggressive regulatory submission plan that we have. Vyepti is now under regulatory view in 13 markets as well as in the EU, for EU, as you heard, the CHMP opinion is expected imminently. The labels we obtained so far in the 7 regulatory approvals granted, validates the very strong data we have on the drug, including its effect in medication overuse headache. The ALLEVIATE trial, which is an indication expansion study in cluster headache, was launched in the height of the pandemic. And after some initial start-up challenges, the trial is now progressing very well. I also like to add that the Asia focused trials, such as SUNLIGHT and SUNRISE are progressing well. So far, keeping us on the expected time lines for the regulatory submissions in China and Japan. I will come back in a minute with some more details on the DELIVER trial that we are very excited about that Deborah also mentioned. For Rexulti, we are now on track to conclude enrollment of patients in Agitation and Alzheimer's trial by the turn of the year. The enrollment in this U.S., centric study was, as you may recall, extremely affected by the COVID-19 pandemic. But through very strong efforts across the Otsuka and Lundbeck joint team, we have managed to regain the momentum in that study. However, the Phase III program on brexpiprazole in PTSD is still severely affected. And the continued challenges in that program in a rolling patient has forced us to reconsider redesign of the 2 ongoing trials. On a more positive note, I'd like to mention the sNDA for Rexulti for treatment of schizophrenia in adolescents. This has been submitted now to the FDA. The submission was actually completed a year earlier than original plan based on clinical data and extrapolation and modeling our PK data. FDA expected to complete this review by the end of the year. As we had described earlier, all clinical bridging studies on aripiprazole, 2 months, long-acting formulation have been successfully completed sometime back. And we are now progressing according to plan when generating the required CMC data, such as stability and scale up and documentation of manufacturing before submission mid next year. So while we are fully exploring and documenting, expanding our late development, the marketed product portfolio, we are working in a very determined manner in steadily building a strong and long-term sustainable pipeline. Thus, I'm happy to report a number of progressions in the early and mid-stage development pipeline since last quarter. As just announced, I mentioned by Deborah, Lundbeck's anti alpha synuclein antibody AF82422 has entered into a Phase II proof-of-concept study for multiple system atrophy. I will comment further on this program in a later slide. Also our anti PACAP antibody, as you heard, is progressing very well, and has gone through a very rigorous Phase I evaluation of not only PK, safety and tolerability, but also verifying its target engagement and mechanism of action in a very elegant experimental medicine study. The molecule is now ready to enter into Phase II proof-of-concept testing. Also, our MAGLi program is progressing. The 466 molecule is now systematically being evaluated in a set of Phase Ib studies in various patient populations. And we are now looking forward to see the exciting mechanism also being investigated in multiple sclerosis, spasticity as well as focal epilepsy that in studies that have recently been started up in the U.S. Next slide, please. Yes, DELIVER study. We commented on this already. The headline results from this study were announced a couple of weeks ago, and I'm excited to share some further details with you on this today. The DELIVER study assessed efficacy and safety of Vyepti in a total of 892 patients. We actually enrolled very fast. We got some more than we expected from the beginning. Those were patients leaving with chronic and episodic migraine who experienced 2 to 4 previous preventive treatment failures due to lack of efficacy or intolerable side effects. I think it's important to remind you that when comparing data with -- particularly with prior competitors, Vyepti is given IV with 100 and 300 milligram doses or placebo. I'll come back to that point. The DELIVER study met all its clinical endpoints and shows excellent results across all subpopulations, including patients with the dual diagnosis, a chronic migraine and medication overuse headache, confirming the previous data we generated. Treatment by Vyepti 100 and 300 milligram reduced monthly migraine days by 4.8 and 5.3 days. And Deborah already mentioned the number of zeros the studies filled [ are p 0001 ] results throughout. And this is compared with a reduction of 2.1 days with placebo, which is actually a very low placebo response rate. The DELIVER study also reached a robust statistical significance on all the secondary endpoints, as I mentioned, which confirms the consistent efficacy profile seen in previous studies with the drug. Specifically, more patients treated with Vyepti and placebo share the response at 50% and 75% of greater reduction in migraine days during the first 12 weeks after infusion. So the outcome of the DELIVER study really confirms the powerful effects of Vyepti in migraine. In addition, the safety profile observed in the DELIVER study was very much consistent with what we observed previously with rates of side effects being close to what we see actually with placebo infusions. So the DELIVER results really confirm that Vyepti is a powerful preventive therapy, even with people that previously have been treated with other therapies. It's an effective tool for migraine experts to help the patients better manage the disease. Next slide, please. So I promise some more words about ASmAb, our monoclonal antibody against alpha-synuclein. Lundbeck has now initiated this Phase II study for a treatment of MSA. This molecule represent a novel approach for potential treatment of MSA, and it's a disease with very high and unmet medical need. It's a rapidly progressing disease, a rare condition luckily, but it causes severe damage to nerve cells in the brain, and it's severely debilitating and major disease burden to patients. In a person with MSA, you have an abnormal buildup of the protein alpha-synuclein, and that's sort of responsible for damaging areas of the brain that control functions like balance, moment and bodies normal functions. We have high expectations for this project and are pleased to advance the program into further clinical development. The program is actually progressing into a very innovative set of clinical trials through the AMULET study that will aim to obtain a robust biomarker, support the clinical evaluation of its clinical effects. We expect to follow-up that study with a novel basin trial design to confirm its effects in Phase III. We're also delighted that the European Medicines agency gave us an orphan drug designation for this drug. Next slide, please. So I'd like to speak a little bit about what we call our biological clusters. We have focused our R&D strategy on 4 clusters that have strong potential to deliver innovative therapies for diseases of the nervous system. These biological clusters allow us to go into indication areas where the largest medical need is and where we can identify impactful in innovative therapies. Within 2 other clusters, the circuitry in neuronal biology and the protein aggregation folding and clearance cluster. We have already strong heritage and background will multiple programs moving forward in the pipeline. Vyepti, is of course, our cornerstone in the hormonal neuropeptide signaling cluster. It acts as a magnet, but we also have pickup for migraine prevention and several other programs that are progressing now, and you will hear more from us in the coming period of clinical introductions in this cluster. Finally, the neuroinflammation and neuroimmunology cluster, is a cluster that we picked because it plays a key role in many neurological diseases. Working in this cluster gives us a rich repertoire indication opportunities with high medical need. This class is now being accelerated by the recent partnership with APRILBIO, which brings in a Phase I ready asset. So next slide, please. So I'm excited to describe a bit more on our partnership with APRILBIO around an interesting novel anti CD40 ligand antibody, which is ready to enter into Phase I, as I said, early next year. We have named the antibody, Lu AG22525, 515 targets the clinically validated CD40 biology, which is a central mechanism to range a very attractive neuroimmune indications. The concept is addressing this immune pathway and is built on a biology a proving its ability to therapeutically target various diseases. The antibody is novel and differentiated and comes with a very strong preclinical supportive data set. Based on this, the project has the potential to offer new potent therapies for different types of diseases driven by immune pathophysiology. What is also important that this program will accelerate our internal experience and expertise in neuroimmunology, enabling us to build a broader pipeline for Lundbeck in this area? Next slide, please. So I'm pleased to say that we have a broad portfolio of very interesting molecules of programs across the R&D value chain now with several advancements of promising molecules and drugs such as Vyepti that already shown a great medical potential. We are looking forward to the end of the year and into 2022 when we'll see further critical data on many of these programs. I will now turn over the presentation to Anders to comment on our financial performance.

Thanks, Johan. Please turn to the next slide. So as Deborah already alluded to, we had a strong Q3 with 26% growth for the strategic brands in local currency. That led to a 3% growth overall if we are excluding the decline of Northera. And the margin outcome of that or the earnings outcome was EBIT a bit above DKK 2 billion, which is a very strong performance for the first 9 months. And as you can see from this slide, SG&A and R&D are lower than last year. And of course, R&D line is lower due to that we had the write-off. But if you adjust for that, then we actually have a lower spending level. And that is, of course, cost avoidance for -- due to the pandemic had been out there. But at the same time, we have also been investing more in Vyepti. Please go to the next slide. When we started the year, net debt was expected to be around 3.5%, but due to the better operational performance and also, in general, good strong cash flow. We now expect a net debt level to be between DKK 3 billion to DKK 3.5 billion. And also net debt-to-EBITDA is expected to stay unchanged from 2020 at around 1. Next slide, please. During -- we had a solid start on the year. And therefore, we have also today confirmed our guidance, and you can see the ranges in the slide for revenue and the earnings numbers. It goes without saying that Northera is, as we also said when we started the year, will be declining. We have seen in the most recent quarter that we had an 85% decline for Northera, and we are still -- we still expect that we'll see a 75% erosion for the full year. But it also means that the strategic brands and the rest of the revenue portfolio is increasing. And if you then add in that we have a depreciation of our currencies, then we will end up revenue-wise between 16.3% to 16.6%. We will, in the fourth quarter, book a restructuring provision of between DKK 100 million to DKK 200 million. And as we have also stated in our stock release, is due to that we have made some fine-tuning due to the learnings we have taken from the pandemic. We have -- due to profitability issues in India closed our affiliate there. We have made -- we have restructured the organization. So it's following more the global nature of the business, our global R&D organization, but also the fact that Vyepti is a global brand. And therefore, we have adjusted some cost structures. We have taken out some 300 people or will take out 300 people. And some of those savings, we will redirect into investing behind Vyepti. We will invest in R&D. So that is simply to free up money to invest in the growth that we're seeing in the next 6 to 8 years. Financial expenses, you should expect that net of around DKK 400 million. And for the full year, and that is also what you have seen in the first 9 months, ballpark number is half of that is cash flow related. The other ones are actually currency adjustments and fair value adjustments of investments and CVR from the -- that we have to pay for the older transaction next year. From a tax perspective, you should expect the tax rate to be in a range in the quarter. It was 22%. For the full year, it might end a bit lower than 22% of revenue for the full year. Please go to the next slide. And this was concluding my presentation of the financial, and then I will hand over for Deborah for the closing remarks.

Thanks, Anders. Quick summary. We're focused at Lundbeck on delivering our growth today and building that growth into the future. The source of the growth is going to continue to be those strategic brands, building on those and then continuing to add new innovative brands. Vyepti, the global rollout is offering us substantial growth opportunities into the future. And those are simply underlined by the strong profile that we saw from Vyepti again in the DELIVER trial. Rexulti is also a substantial future growth driver as we look for the top line results for the pivotal Phase III trial in Alzheimer's agitation, which could come around the middle of 2022. So we have good growth visibility based on the strategic brands that are in our hands over the next 6 to 8 years with mid-single-digit growth. The current portfolio will continue to grow strongly. And of course, Lundbeck has a pretty resilient, mature based business. In fact, the resilience of a brand like Lexapro, which has actually grown in the first 9 months. We've seen great progress in our transformation of R&D. It's been a lot of work for Johan and his team, but we can see the results in us beginning to replenish the mid-stage pipeline and cultivating an interesting early-stage pipeline in our R&D. We're a financially strong company and retain a strong focus on efficiency. So we have a good, solid balance sheet and a strong cash generation ability to help us continue to invest behind the current brands but also build our business through external innovation into the future. So thanks for your attention, and we'll take any questions. Operator?

[Operator Instructions] Our first question comes from the line of Michael Leuchten from UBS.

Two questions, please. One for Anders. Just help me understand the moving parts with your guidance. You now have a restructuring charge that you book in the fourth quarter as you outlined, but your reported EBIT guidance hasn't changed. So there must have been offset there, but then your core EBIT guidance hasn't changed either. So whatever the offset and efficiency is, is not reflected there. Could you just help me understand how that hangs together? And then a question for Johan on the CD40. You're calling it a differentiated antibody. I know its early days. Just wondering where you see the differentiation for the molecule at this point in time.

So what you should expect is, of course, that -- or you can see from the numbers, the underlying performance is actually super good. And that also means that from a core EBIT perspective, you should expect us to be in high end of the range of the guidance. And you're fully right from both the EBIT and EBITDA perspective, we are offsetting the DKK 100 million to DKK 200 million, and that means that we are probably in the lower end of the guidance. But it's also in the guidance, we have also anticipated that we are able to spend. We have more activities on Vyepti in the fourth quarter. And therefore, when you look at the SG&A level that has been pretty stable during the year that we will have some more SG&A spending in the last quarter. So you should expect -- you should all expect for the full year that R&D spending will -- ballpark number be at par with 2020, if you exclude the write-off. And you should expect that SG&A, including the provision should more or less be on par with 2020.

Yes, the CD40 biology has been explored by others. And the reason I mentioned that this is differentiated is because we have, in this molecule, without going into details that I don't like to reveal now some different binding activities. It's primarily on the so-called FCN, where it binds and how it's activating the immune systems. And we learned a lot from actually previous programs that have been in this biology. So this is clearly a different molecule than you've seen from other companies. And unfortunately, I cannot go into exactly what is changed in the molecule. But we have a molecule that is working very differently in activating the immune system in terms of clearing the CD40 ligand.

And the next question comes from the line of Wimal Kapadia from Bernstein.

So first, maybe one for Anders. Could I just ask about costs in 2022. So '21, clearly, you've had some savings COVID related, but Vyepti spend is increasing, as you just mentioned, you're also moving forward with a few new trials in the earlier pipeline. So how should we think about the level of growth in SG&A and R&D in 2022, just factoring in the savings and reimbursement from the restructuring that you just mentioned as well? Should we be expecting double-digit growth for OPEX lines next year? Or is it more modest acceleration in cost expected? And my second question, just on that pipeline. Could you provide a bit more color on the Phase I data for 9222? And maybe a bit more context on the potential trial design for Phase II, which you plan to start later this year, will a combination with Vyepti part of the trial. And then just on 82422, you're not the only company that's looking at alpha-synuclein. So just curious how you think about the differentiation versus Roche's prasinezumab? And if that was a driver for you to focus on MSA.

So I can start with your cost question. So you should assume that SG&A will be increasing next year. And it goes to the 2 components, we really hope to -- that we will be able to spend more behind the Vyepti launch in the U.S. So we'll invest more there. And then we have some 15 additional launches in rest of the world. So in Europe and international market also for Vyepti. So you should expect that SG&A will be going up. We have not finalized our -- of course, we have not finalized, what should be the spending level, but you should expect it to go up. R&D, it will be ballpark the same level next year. I assume, just based on what we know now, but it's not giving a specific guidance because we haven't finalized the numbers yet.

Thanks for the interest in those 2 programs. So let's start to comment on the 9222, the PACAP molecule. The study we've done is, quite frankly, a study done in healthy volunteers. It's not even done in migraine patients, but it's a very solid mechanism action study, where we challenged subjects with the ligand. And we see that we can counteract that in vivo in humans, meaning that we have a better relevant readout on vascular changes. And that is our way to derisk the asset going forward in terms of that. We can see that it's working and doing its job in humans in vivo, which may seem trivial, but it's very, very important when we progress that we've demonstrated that the molecule is actually working as it should. The other one -- the other comment I'd like to have is this is a ligand binding antibody, which is very important to remember, other people have looked at receptor binding antibodies. And this biology has 3 receptors. And if you take out the ligand, you basically affect all 3. So it's a broader mechanism that other people have explored previously. We have competitors in this space. We are not tremendously different in terms of profile when it comes to ligand binding. But we're looking forward to get the data now, and we really know that it's working in vivo. In terms of the alpha-synuclein program, that's a really good question. First of all, what's different is that we bring it now aggressively forward in Multiple System Atrophy. And that differentiates us indication wise, because this is a very aggressive, rapidly progressing disease. Which we think is really worth looking into this mechanism, which is spot on mechanism that is central to the pathophysiology and disease progression. In terms of its characteristics, our antibody is quite different from some of the competitors. They are actually preclinical data where you can compare this published very recently from different other companies and our company. In terms of clinical effect it's way too early to comment, of course, and it's not head-to-head sort of because it's different indications primarily. If you think about the Roche program, Prothena program, that is still considering Parkinson's disease.

I think the one other question Wimal had was -- are we doing a combination Vyepti PACAP? And the answer in Phase II is no.

No, that's a good question, too. At this moment, we are not doing that.

And the next question comes from the line of Sachin Jain from Bank of America.

I had a couple of questions, if I may. Actually R&D update. I just wondered if you could clarify what news flow we should expect in '22. Outside of the resulting agitation, you mentioned there are a number of important markets next year. So if you could just highlight what those would be? The second question is just to go back on margins to Anders. Just trying to understand the commentary for '22 is the roughly flat R&D, excepting the budget not finalize the main driver of group margin expansion next year, which consensus has at around 100 basis points at the group level? And the final question was on the midterm growth for Deborah. You sort of rehighlighted the mid-single-digit growth over the next 6 to 8 years. And again, looking at the consensus had as modeled out 25%, but consensus is flattish thereafter, I guess, reflecting, Trintellix, Abilify patent pressure. I'm just trying to understand in that midterm period, sort of '24, '25 and beyond, what you think we are misunderstanding about the midterm growth.

So talking about the news flow in 2022. First and foremost, I think the EMA approval is expected in the first quarter. We'll hope to start the PACAP Phase II before the end of the year. So you'll see both ASmAb and PACAP Phase II trials running throughout '22. We would look to submit the file for the Abilify Maintena 2-month formulation. Somewhere towards the middle of 2022. And of course, we have the Rexulti outcome that you've already alluded to also in the midterm. And then Johan, is there anything else?

No. I mean, a minor thing that I mentioned, of course, that we had the Phase I start, hopefully, with the CD40 molecule, and we're looking forward to our Asia programs starting to get readouts, which are very fundamental to progress at least one of the studies we expect to read out next year. So this is critical for China and Japan registration or Vyepti.

So Anders to you for margins?

So I think too early to give any kind of very specific guidance, but what is -- our ambition is definitely to grow the top line and also make margin expansion until we come to our ambitious target of our ambition to deliver 25% margin in reported EBIT margin in '24. So of course, we need to expand the margin over the years to come. But at the same time, we would not shy away from investing in Vyepti to secure that it will be a global blockbuster. So that is our key priorities. But what I think we have shown in -- during -- even during the pandemic, it has been difficult out there with lockdowns, but we have been able to manage cost and also deliver double-digit growth. We promised you guys that in the second half, we would regain momentum and deliver double-digit growth. We definitely did that in the third quarter. So it is a combination of delivering substantial growth, but at the same time, also be cautious and secure that we invest wisely in the launches.

And I think with respect to the midterm growth, when we think about the ability of Vyepti to grow, both in the migraine indication, through the global rollout in migraine, the ability to expand in cluster headache, we know there's a very strong contribution from Vyepti to the growth. We did have the court case on Trintellix, which validated all our patents. So at a minimum, Trintellix's out to 2026 in the U.S. with the composition of matter and other patents that go beyond that. And then we have Rexulti delivering growth as we add both in schizophrenia and MDD as well as bringing the Alzheimer's agitation. So all of those are going to be contributing growth in that 6 to 8 year time frame. Of course, it goes without saying that the strongest growth is in those early years as Vyepti is ramping up, and then the growth mitigates a little bit beyond that. So hopefully, that helps.

And the next question comes from the line of Michael Novod from Nordea.

Just regarding Japan and Trintellix, maybe you could give a bit more color on also what we should expect going into 2022, it seems to have a very strong traction in Japan? And then secondly, also on the cost side. So it really seems that you want to spend and build further on the commercialization, but you also now take out around 300 people, where some of them are in the commercial side. So has it just become more difficult to really ramp the spend or just also become more cost efficient, partly due to sort of a combination of virtual plus physical marketing. So just some considerations on how to sort of look at the cost levels going forward without specific guidance for '22? And then maybe lastly on Vyepti and the DELIVER. So it seems to be very strong data, but should we just expect that it's going to be sort of similarly priced to other CGRPs in the market in Europe?

Okay. So I'll ask Jacob to comment on Trintellix in Japan and on the pricing in Europe for Vyepti.

We're very happy about -- with the launch of Trintellix in Japan. And when I look into '22, we actually see, I would say, fairly uninterrupted growth also next year for Trintellix in Japan. We have now generics of Cymbalta that have entered the market in Japan. We actually do not foresee any impact in any significant way on Trintellix uptake. So also next year, we expect growth. We have a 4.6% volume market share now of -- N6A market with Trintellix in Japan. So that's a very strong launch. Regarding my Vyepti, the short answer is, yes, we expect a pricing level which is similar to the other anti-CGRPs. And in many places, that would actually be sort of a comparator for us when we have the market access discussions. There are places predominantly outside of Europe where it will be more of a hospital discussion around price, whether you could see differences. But I think in general, it's fair to say, expect a level compared to the other anti-CGRPs.

Anders, you're going to comment on that?

And Michael, you're totally right that what we have learned during the pandemic. So we are more or less, instead of talking pre-pandemic, we are just saying how do we operate in the world that is in front of us? And how do we build a model that is ready for the future. And you have seen other companies, they have taken cuts in their sales force during the pandemic, we haven't done that. And we have made evaluated how should actually our cost structure be, going forward, how is the most optimal model to drive sales and profitability because we're extremely focused on profitable sales, and that has led to that we have taken out some 100 people in U.S., we will take out 50 in Japan, and then we have closed out Canada. Yes, we will not do anything in Japan. That is continuing to grow. And then we have closed our affiliate in India, which was not making any profit, and we have been struggling with that for a period. So we have a certain limit and then you need to take a decision. And that is what we have done. And you could, in principle, say we could make -- we could run existing operation with just increasing the salary levels next year. But what we -- you should add on top of that is that we will launch by Vyepti in Europe. That will cost -- what we have said is that we will have some 100 to 200 additional reps. And that will have a cost. And then we really hope that we will -- we have already initiated more initiatives in the U.S. in the fourth quarter. And we definitely hope that the pandemic will also allow us to do more in the U.S. next year. So that is the kind of what the components of the equation for next year. And now the next couple of months will actually give us more visibility in how is the pandemic actually impacting the world? And what is it we are confronted with in the beginning of '22.

And the next question comes from the line of Peter Welford from Jefferies.

I've got 3, please left. First of all, sorry, I'm going to go back to 2022 SG&A. I appreciate you're not going to be specific, but if you look at consensus now, it increases by roughly DKK 0.5 billion year-on-year versus this year. But it looks as though now this year's spend is going to be some DKK 200 million or so lower than consensus had previously assumed. So should we still be thinking about the same magnitude of uptick year-on-year? Or is there more mitigation of cost, do you think this year than perhaps initially assumed? So we should be thinking now about a greater increase than perhaps we had been assuming in 2022, but still not necessarily more than it was originally assumed for an absolute number. If we then just look at the net debt guidance, just a little bit confused by the DKK 3 billion to DKK 3.5 billion. I think you're already around DKK 3.2 billion. The fourth quarter typically, by looking at the profitability, should we still generate reasonable cash flows. So I guess, curious why you won't be significantly or at least meaningfully below that DKK 3 billion, lower end of the net debt, particularly given presumably now the pay away, obviously, to the CVR is not going to appear until next year. And then finally, just on business development. Just curious there whether we should look at what you've been doing with deals you've done so far is a good guide to what we should anticipate? Or is there still appetite to do something bigger, if you like, which obviously takes more time to consummate, but there's still the desire for management to pursue that? Or how should we think about sort of the type of BD perhaps looking forward into 2022?

You going to start?

Yes. I think it was a nice try with the cost question. So of course, I don't have a lot more to add, but it goes without saying that we will, of course, you're looking -- your question is great in the sense that, of course, we are running with a lower SG&A base. But if it's 300 up, 500 up, I'm not going to speculate on that right now. The component that you need to add to the cost base. That is in the factual lower this year is the 2 components of the Vyepti European international launch and then more activities in the U.S. And the net debt we have never overpromised and under delivered on the net debt. Is that a fair answer to your question? So I really hope that we'll be in the lower end, but there might also be swings. And you can see the guidance we have provided the financial guidance is broader than we normally do, and that is, of course, because there is some uncertainty in the world about the pandemic. In the fourth quarter, we also have some taxes to be paid, and there are things that we have a higher cash burn in the fourth quarter, and that is the reason for not going lower than the 3. But the time will show. I hope you're right that we are actually delivering better than that. But for the time being, that is our guidance.

Thanks, Peter, for your question on what type of BD can we expect? Well, I think if you look back over the last 3 years, we've done all different types of BD. We had the abide and other acquisitions. We've licensed CD40 from APRILBIO. We've done a partnership on 4 targets with Rgenta. So we have said before, we would operate across all different types of BD deals from M&A to license, to partnerships. And so, that's still true. What we have clarified most recently is that after the acquisition of Vyepti, building this global brand is taking a significant investment in R&D. We've completed the DELIVER trial -- the trials in Asia, the Sunrise and Sunlight trial are still ongoing. We're changing the cell line to a CHO cell line to address the cost of goods long term. So there's an investment there. So we felt that we would not do an acquisition that required another big bolus of R&D spend on top of what we're already doing right now with Vyepti. So in the immediate term, later stage acquisitions were there to be any, would be near-term accretive, but we'll continue to build the pipeline in those very early stages as and when we see the right technologies or approaches that will supplement what we're trying to do in the rebuilds of the pipeline. So hopefully, that helps.

The next question comes from the line of James Gordon from JPMorgan.

A couple, please. One, obviously on PTSD, I think there was the comment about looking for advice from the FDA. So how should we read that? Is that that you're exploring trying to potentially perform an intra-analysis with not so many patients because it's taking on time to enroll? And if you did that, what proportion of patients would you consider doing it on like 50% of enrollment? How much lower would the statistical hurdle be due to start relate short actually hitting something? The second question was on to competition. So it's an attempt in MDD, at least very low reported the positive results from 1 trial, mix and other. Do you see that product getting approved in the U.S.? And if it does, is that going to be a problem for Rexulti? That would be competing where I think about 80% of the sales come from Rexulti. And then the final one was just on OpEx. So the restructuring referred to in the release, how big a benefit could that be in terms of savings? And [indiscernible] the annual savings so that the one-off cost can be about the same as [indiscernible] savings. So is that a rule we could use it to work out how much of a help is in terms of the OpEx?

So Johan will start out with PTSD and Vraylar, and then Peter might want to amplify on Vraylar. And then Anders will take the restructuring question.

So on the PTSD Rexulti trial, so you heard we have not got the patients we need at the speed we need. So obviously, it's about a number of patients and what we can do with a reasonable amount of patients. That will be the conversation with primarily FDA now moving forward. And we have an idea how we're going to use these ongoing trials and maybe reengineer them to a degree. And that's the conversation, again, we're going to have. I'm not going to go in whether this entails some interim analysis or what we'll do. We have a fixed plan, and that will discuss, and we'll see the outcome of those discussions. But obviously, at the end of the day, it means fewer patients because it's been tremendously hard to get them in. We think this drug works well. We have a prior Phase II study that showed effect fit the drug. So we hope that, that will be part of the conversation we can have with the regulator.

And then do you want to comment on Vraylar missing the MDD endpoint?

I'd rather not comment on other programs from competitors. I think that they have to speak for missing the endpoint.

Great. Anders, on the restructuring?

So it goes without saying that when we fine-tune our organization, we are freeing up OpEx, we I'd say reducing OpEx, but this is actually to free it up for being able to invest it in other areas where we see growth opportunities. So that might be redirected into the launch of Vyepti. So I would be concerned if people start to go too optimistic on compared to consensus because there will be some investments next year also in the global Vyepti launch.

The next question comes from the line of Rosie Turner from Barclays.

3, if I may. Just on Vyepti for 2021, given the momentum, I just wonder if you could comment on your confidence around that DKK 500 million target and potentially surpassing that. Then on these alternative types of care for Vyepti. Is 25% the kind of number that you were expecting? Or is this kind of coming in higher? Is this always something that you are expecting kind of a significant penetration in this other area? And then just some clarification on the reps in Europe, sorry. Did you say the 100 to 200 additional reps will be hired next year? Or are they already on the books?

Peter will take the first couple, and then Jacob will talk about Vyepti in Europe.

Obviously, we won't comment on what we expect for the fourth quarter. But certainly, through the first 3 quarters of the year, we see that Vyepti is clearly on track in the direction of the stated goal for the year. And so, the one thing that I would point out is that we haven't yet fully had a normal year during Vyepti. So in the fourth quarter with holidays and what do wholesalers and specialty pharmacies and specialty distributors do with inventory, that sort of thing? That still remains unknown. Certainly, we had last year fourth quarter, but I think we can all agree last year was anything but a normal year. But we believe that the fundamental dynamics that exist that have helped us have such a strong first 3 quarters of the year are certainly still there for Vyepti. And it all starts with, I think, something that Deborah mentioned earlier, and that's the efficacy profile, not only that's been proven time and time again in clinical trials, including with DELIVER most recently. But in the real world, we hear that Vyepti is delivering. And when you're meeting patient needs, ultimately, you achieve your goals, and that's what we believe we're on track to do. In terms of the 25%, I don't know that we have a goal per se in terms of what percentage of the volume needs to come from ASOCS. But I will say that, that wasn't our strategy at the beginning. I think those of you who have been following us since we bought Alder were talking most -- we were talking mostly about those prescribers that have high-volume of migraine patients and the ability to do infusions, but we've expanded that dramatically. And so, now we've made it a concerted effort. The team has done a great job getting a number of ASOCS around the country up and running. And what that really does is it enables doctors who have high volume of migraine patients who want to use Vyepti to not have to build that capability in their practice, but just to refer a patient out, get the infusion and then they come back for their follow-up care. So it's certainly a big enabler, and it's something that we will continue to do, and I would expect that number to continue to grow.

And for Europe, at peak stage, we expect around 100 to 150 people that will be working with Vyepti added to the organization today in Europe. That also means you have to remember that the launch path in Europe is over several years for some of these markets. So if we look at '22, we are adding people, but that will be somewhat below 100 that will be on board next year for Europe to launch for it. We have a few people on board already. That's been part of the organization for a while. That's been sort of preparing us and paving the wave of our understanding for Vyepti. And then you'll see the sort of ramp up starting in '22, but 100 to 150 on board will be a few years from now.

And the next question comes from the line of Carsten Lønborg from SEB.

Just 1 or 2 questions left. I was looking at Rexulti local currency growth rates in the U.S. and also Trintellix exactly. It comes in quite a lot about what the prescription data -- volume data indicate. Is there any gross to net adjustments in the third quarter, price, inventory, channel mix, whatever, rebate provisions that impact the number? Or are we just at a higher gross rate now compared to the previous quarters of 2021? And then in terms of closing down India, what's the impact in terms of money on the top line from not being present in India anymore?

Peter, do you want to comment on Rexulti, local currency and Trintellix in the U.S. and what the contributors are? And then Jacob will take India?

Yes. Thank you, Carsten, for the question. It's a combination of things why we had strong performance. First, let me say that in the quarter, we were able to get more than 90% of our pre-COVID level of details to customers, and 80% of those were face-to-face. So we've always said that we believe that COVID hasn't permanently changed the product performance when we're able to get in front of the customers when patients are in the doctor's offices or on telehealth visits that the fundamental dynamics that have led to good growth for those brands in the past will happen again. And so, in that quarter, we saw that we were able to get in front of our customers. Presumably, there were more patients that were coming. And there's no onetime event per se that influences the strong performance, it's equally spread between demand. But also keep in mind, within demand, it's not just pure prescriptions. It's the numbers of pills per prescription. We have seen that continue to climb during the pandemic. So each prescription typically has more pills per script, which is certainly a contributor. But then also, we continue to be very prudent with our gross to net management. And so, that has added some benefits in the quarter. There's always quarter-to-quarter inventory swings, but I think it was a strong quarter because the fundamental dynamics were there for both Rexulti and with Trintellix.

And on India. As you know, India is a very difficult market, both when it comes to competitive situation and also pricing. I think our team did a very good job in trying to come to a level where we could have a profitable business in India without success. Unfortunately, I think from the outside, we'll probably not numbers that you will notice when you look at consolidated numbers going forward. So without giving you specific, I would say it's a lower double-digit million krone in revenue that we had in India.

And the last question comes from the line -- it comes from Keyur Parekh from Goldman Sachs.

A few questions, please. First, a big picture one for Deborah. Kind of as we look at the mid-stage pipeline and no income of the historical failure or success rate in CNS conditions. Can you give us a sense for when you might feel comfortable with whether what you have got currently in that pipeline is enough to drive that growth beyond 2025? Or is there kind of a couple of important studies that, in your mind, kind of to drive that growth outlook? When will you start potentially thinking about Plan B? Was this kind of -- whether study is not to pan out? That's kind of the first question. The second question is, as we think about kind of the growth outlook more near term, so to kind of 24, 25, how much of a role does the agitation in Alzheimer's kind of play towards that. So as we think about the importance of that study reading up positively next year, any help on that would be useful. And then lastly, as we look at kind of your program in MSA, it kind of feels like, at least if I'm reading the chart on Slide 13 correctly, that the Phase III readout could actually be multiple years kind of in the future, we're looking at 5, 6 years from now. Just wondering if there is a base for you to get an earlier read into the efficacy analysis? Or should we think of this as a late 2020s kind of Phase III readout?

Great. Thank you for 3 questions. In the mid-stage pipeline, you'll never ask a biotech or pharmacy CEO if the pipeline is good enough and get the answer, yes, right? We'd always like more. So this mid-stage pipeline is interesting. PACAP, very, very direct connection between the biology and the administration of the ligand inhibitor in PACAP. We've seen the Phase I, where -- as Johan pointed out, we see a very good pharmacodynamic activity along the biology. So that one, we hope will be a more straightforward. We've always said that the alpha-synuclein, any protein folding and protein degradation trials are always tougher. Multiple system atrophy, definitely driven by anti-synuclein -- alpha-synuclein accumulation. And so, we're very hopeful about the mechanism, but also cautious. And I think Johan was very specific in saying this was a high risk, high reward. And then as we -- maybe you can comment on the MSA Phase III?

First, a very, very quick comment from the first question. We really reengineered R&D a lot. So we do a lot of derisking very early. So we have a different type of programs going forward in terms of the supported instruments like biomarker and early readouts and also that we pick indications where we can go to more robust readout. So there is a difference, what you can do in CNS. And that actually speaks to what you just saw in that Slide 12, I believe it was. That program is really step rocket, where the first step is a major derisking activity. And that will only because we're talking about disease modification here, take about 2 to 2.5 years, and that will look at a very robust biomarker and clinical readout. So we're not running the entire program blinded. We're going to step into that interim analysis basically in the program between Phase II and III, where we're looking for a bus signal to continue into Phase III. And the Phase III in itself has a basin design, meaning that we can have looks at futility and efficacy throughout. So if you have very strong effect, you can actually have an option to exit earlier, which is a very good design for these kind of long-term disease-modifying trials.

So just in summary on the growth outlook. Yes, these 2 programs could add significantly. They will be in later into the 20s, but we will look for ways to accelerate them. We'll also look for ways to supplement the pipeline, as we've said, using external innovation. And with that, we need to call it a day, and thank you for your interest for some great questions, and we look forward to talking with you in the next quarter or over the next days for those investors and analysts that we're seeing in personal. Thanks so much.