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

Ladies and gentlemen, welcome to the Lundbeck teleconference headline results from the AAD trial. [Operator Instructions] Today, I am pleased to present Deborah Dunsire, President and CEO; and Johan Luthman, Executive Vice President and Head of Research and Development. Speakers, please begin.

Thank you, operator, and welcome, everybody, to today's headline results call. We are delighted to be presenting to you the outcome of the third of the Phase III trials with brexpiprazole in agitation in Alzheimer's disease patients. I need to preface this by saying we only just have the data and we only just have the headline results. So we will not be going into great detail on the studies, as we are conducting further analyses. But let me start by saying we have obviously our disclosures that we have forward-looking statements. So moving on to the next slide. One of the reasons that this is incredibly important is that there is no FDA-approved pharmacological treatment for agitation in a patient experiencing Alzheimer's dementia. Agitation is a common feature of Alzheimer's disease, indeed with the prevalence of up to 75% in the moderate-to-severe patient, and it is the single symptom which causes care to have to move from a home setting into an institutional setting. And so it has a very high burden for caregiver, patient, and the institutional caregivers. So having a safe and effective treatment for agitation in Alzheimer's disease has been a goal of the field for many years. The symptom of agitation is also prevalent across the settings with approximately 45% of patients in a community setting experiencing agitation and over 53% experiencing it in nursing homes. So this is a very important area for patients to have effective and safe therapy. I'm going to hand over to Johan Luthman to take you through the program of 3 Phase III studies and the top line results of this particular study. So over to you, Johan.

Thanks a lot, Deborah. So let's go to the next slide. So here, you see an overview of the Phase III program for brexpiprazole in agitation in Alzheimer's dementia. As we have previously talked about, there were 2 trials that were done with readout in 2017, in May 2017. And those trials were called 283 and 284. We don't mention that here in the slide, but you may have heard those numbers. And then based on the data and discussions with regulatory agencies, we started the Study 3 in May 2018. And that's the study now we have the readout from, Study or Trial 213, as we call it also. In parallel, there was also start of an open-label extension part of this study, Study 4 in this slide, which is still ongoing. So we still have part of the design of the Study 3 and Study 4 ongoing. And as Deborah said, we just have the top line data. So this is a very, very high level look at the data from Study 3 or Study 213. So next slide, please. So let me remind you about the previous data. So this is trial 283 or Study 1, as you saw on the previous slide. That study, as I said, was a readout in 2017, and it was a reasonably big study for 133 patients. And the doses used here were a fixed dose setup with 1 milligram and 2 milligram and placebo. 12-week treatment duration, and the primary endpoint was the Cohen-Mansfield Agitation Inventory. And as a secondary, the Clinical Global Impression Severity of Illness readout. The study came out with brexpiprazole 2 milligram per day statistically significant over placebo. The CGI-S score, the Clinical Global Impression Scale, did not reach a superiority against placebo on a statistical level, but there was a numerical improvement in that study. The other study -- next slide, please. Study 2 or study or trial 284. Similar design, smallest patient number, but it was a flexible dose study with 1 -- actually starting with 0.5 milligram and later on 1 milligram to 2 milligram per day. It was a 12-week treatment duration. And the primary endpoint, again, CMAI, the Cohen-Mansfield scale; and the secondary, the Clinical Global Impression Severity of Illness scale. In this study, the primary endpoint did not reach statistical significance, but the post-hoc analysis of the subgroup of patients that received 2 milligrams showed actually a significant effect. In contrast to the previous study, the CGI-S readout was significant in this study. So based on those 2 studies, it was decided to move on, so next slide, please, with a third study, which was very similar in duration, 12-week, multicenter, randomized, but in this case, fixed dose of 2 milligrams and 3 milligrams versus placebo, pooled analysis and 2 milligram and 3 milligram. The size of the study ended up to be 345 patients included, and participating countries were primarily the U.S. and a big part from Ukraine, and then we had several other countries like Bulgaria, Hungary, Serbia, Slovakia and Spain. Again, the readouts were the same, the Cohen-Mansfield Agitation Inventory and the Clinical Global Impression Severity of Illness score. Next slide, please. So here you see a better overview of the trial design. So there was a screening phase for 2 to 42 days and then an up-titration of the dose to eventually reach the 2 milligram or 3 milligram level. Then there was a duration of a 12-week study, and then at the end of the treatment, at 12 weeks, there was the main readout, and then patients had the ability to either leave the study or go into the open-label part of the study. Next slide, please. So here are the key criteria for inclusion and exclusion; male, female, outpatients or in institutions, 55 to 90 years old. The MMSE score, which is the Mini-Mental State Examination, was between 5 and 22, which means that patients were in the moderate-to-severe range of Alzheimer's disease. Of course, this is a caregiver reported part of the scale, so one needs also to have access to the caregivers. And in terms of the exclusion criteria, they were the severity of disease, and of course, exclusion based on stroke and other histories of antipsychotics high use or other comorbidities like diabetes or hypertension. Obviously, also immunotherapies for Alzheimer's disease or vaccines were excluded. Next slide, please. So here you see a summary of the headline data we reported today from this Study 213 or Study 331-14-213. So on efficacy, the treatment of brexpiprazole demonstrated a statistically significant difference with a p-value 0.0026 in comparison to placebo on the primary endpoint, the CMI Agitation score. Then on the Clinical Global Impression scale, there was also a significant difference at the p-value of 0.0055 in comparison to placebo, which is the key secondary endpoint. These data are consistent with the prior studies, the 283 and 284 studies. In terms of safety and tolerability, the only Treatment Emergent Adverse Events with more than 5% incidence were on headache, which didn't separate much from placebo, you see 6.6% versus 6.9% for placebo. So really no Treatment Emergent Adverse Event at that level. There was one death of observed on brexpiprazole 3 milligram per day treatment group, which was not assessed to be related to drug treatment. So the safety and tolerability across the study 213 against the 2 prior studies, 283 and 284, were very consistent. So in terms of the safety profile, we are happy to see that it's at the low level that we've been seeing in the prior studies. So with this, I'd like to hand over to Deborah again.

So as you can imagine, we are delighted for patients and for Lundbeck and our partner, Otsuka, to be presenting very strong data from our third study in this program, and we're extremely grateful to the patients, their caregivers, and the investigators who have participated throughout this program, particularly in very difficult times through the COVID season where it was difficult for these vulnerable patients to enter the trial. So reiterating, the study demonstrated a robust efficacy signal of a p-value of 0.0026 on the CMAI total score, the primary endpoint, as well as significant at the level of 0.0055 on the Clinical Global Impression of Severity of agitation. As you may remember, this program was granted a fast-track designation by the FDA in February of 2016. And we will be working to fully analyze this data set and to integrate it with the other parts of the program to put together a new drug application and submit to the FDA later this year with the supplemental NDA. So of course, we'll be working very diligently to get that done as quickly as possible. And then we look forward to the discussions with the FDA later in the year. So with that, we'll conclude the presentation and go over to your questions.

[Operator Instructions] The first question is from the line of Michael -- No, we have a new one. We have James Gordon. Please go ahead, James Gordon. Your line is now unmuted.

Two questions, please. One is on peak sales. I think you previously suggested, the size of the opportunity might be bigger than schizophrenia, but smaller than depression. So my question, is that still the case? Because it looks that it could be very big. And I think you said there's 1.5 million patients with Alzheimer's agitation and 1/3 are already receiving antipsychotics, and if approved, you'd be the only approved option. So just latest thinking on the peak sales opportunity. That was the first question, please. And the second question was just one next for the company. So on the back of this success and share prices being a little bit higher, how are you now thinking about deal making. There's a lot of firms without biotech companies out there, which maybe have more attractive valuation. And I know at one point you talked about maybe you would look to do, firstly, an accretive deal and then down the line a pipeline view. But what's the latest thinking there on the back of this data? Do you now have any change there? Could we see something that involves equity? And would it be more about near-term accretion or more about pipeline for you?

Okay. So thanks for the questions, James. For the commercial opportunity to be available to us, we first need an FDA approval. So our focus is on that. Should we achieve approval, then we've said that the opportunity was between the MDD and schizophrenia. And obviously, it is an important advance if patients do have access to an approved therapy. So we're not changing our communication, all being more specific at this time. But obviously, should we achieve approval, we would work diligently to make sure that all the appropriate patients could be eligible to receive Rexulti. With respect to deal making, what we've previously said, and we'll reiterate today, is that the agitation in Alzheimer's data was not the driver for us one way or another in terms of deals. We continue to look for the possibility to build the company both with near-term accretive or potentially pipeline deals. During 2020 and 2021 and into '22, when we have had a very significant investment behind not only the Rexulti trials, but also the Vyepti global trials, achieving approval and reimbursement in Europe, we said that we didn't want to bring in earlier stage or mid-stage pipeline at that point because we already had a capacity constraint, both from people and a financial point of view. As that investment comes down somewhat, it gives us the opportunity to think of both near-term accretive and potential pipeline deals. And then the question of the right fit and the right strategic opportunities comes into play. When we announced the share split, we said that we did not have any deal on the table that would look at the use of equity, and that is still the case today. But that is a tool that we have put into the toolbox for use in the longer term. So I think I'll stop there. With respect to Rexulti, I think a piece of your question was also about what's next for Rexulti. And of course, we've said that we have these 2 Phase III trials accruing in post-traumatic stress disorder. You know they've been challenged with accrual, and we've been in discussion with the FDA about bringing those trials together to be able to close accrual towards the end of the year, and we are on track right now to be able to do that. So I'll stop there.

Great. [Operator Instructions] The next question comes from the line of Michael Novod.

It's Michael Novod from Nordea in København. 2 questions. So first of all, the primary endpoint is on the pooled dose 2 milligrams and 3 milligrams. Could you comment whether -- and I know you don't want to release too much data, but could you comment on whether you see the strong efficacy on both the 2 milligram and the 3 milligram doses? And then secondly, given the very beneficial tolerability of Rexulti, should we think of this as sort of a very long-term chronic treatment. So as soon as these patients get treated, they would stay on sort of until the end. Is that how we should think of this given the tolerability profile of results?

Yes. Thanks, Michael. Yes, at this stage, we have only the primary headline data on the primary outcome here, which is the pooled analysis 2 milligram to 3 milligram. And we are not revealing any further analysis because, quite frankly, we haven't really seen that breakdown yet. So this is only on the combined doses. That is the assessment that we have right now, and the p-value is based on that. Just to remind you, 3 milligram is the new dose in this study. And you saw the tolerability here. It's been in line with the previous study. So I think it's also important to emphasize that the tolerability even at 3 milligram included in the third trial here is at par with what we've seen before. So that's very encouraging. In terms of long-term treatment, yes, that's a really good question. So current use of neuroleptics, which is obviously off-label, is limited by, of course, tolerability issues, but it's often rather short-term treatment. You have a few months of treatment. But that's often because of the tolerability issues. So it's very hard to really tell how long treatment there will be. And obviously, there will be a label discussion also how long the treatment is going to be allowed to be. This is a 12-week study. So that's the data we have right now. So obviously, the data is up to 12 week, and that is the main data set we have. In terms of what will be allowed and what will be done in clinical practice, it's harder to guess right now. But the common practice today is relatively short. I'm talking about a month of treatment rather than years of treatment.

I think to add to that, we could always expect that if a patient is no longer agitated, physicians would not continue to treat. And it is also clear that as the disease progresses, agitation worsens and then subsides more as the patient's Alzheimer's, unfortunately, progresses. So I wouldn't assume that patients are put on this type of therapy and continued for the rest of their life.

No, no, for sure. But obviously, if you expanded from 2 months and then, let's say, it's 5 or 6 or 8 or 9 months due to the tolerability profile being superior. That's obviously also what we hear from KOLs, a completely game changer in terms of the use of antipsychotics in Alzheimer's disease.

Yes. I just like to emphasize, we are really very pleased to see the AE reporting being so low in this study. That is different from what we've seen in other trials. And people have tried several times in this field with neuroleptics. So that's obviously very encouraging. What that will translate to in clinical practice, we cannot really talk about right now.

The next question comes from the line of Michael from UBS.

Johan, just going back to your point about the tolerability of the 3 milligram. How do you think this is going to feed into the label discussion. Is this about accumulation of dose such that AEs aren't an issue. And hence, you could expect sort of quite open dosing allowance from the regulator. Just wondering how you take what you have flagged in the past that including the 3 milligrams in the study was really all about confidence around safety profile? Like how would you want this to be reflected in the label, if regulators allow?

Obviously, it's the regulators that set the label and we have label negotiations in the process. So I don't want to really second guess what goes into the label. The dose is -- I think I talked about this before that we started this program years back with a careful approach in terms of tolerability using 1 milligrams to 2 milligram, which was very prudent at that time point. I think we know much more about the drug today. And obviously, in this population, and after this study with the 3 milligram, we have a wider range of possibilities here. The efficacy is primarily at the 2 milligram from the previous studies. And here, you have the pool 2 milligram to 3 milligram. So I think after titration period, that's probably going to be very commonly used. We will probably stay around that area of 2 milligram to 3 milligram dosing. I think the nice thing here is that they don't need to be extremely worried about that narrow tolerability index that you deal with, often with these kind of drugs. So the drug has a very unique mechanism of action that really played out extremely well in this population. The label, apart from that, is really up to submitting first and getting to that stage. And hopefully, we have good label discussions.

The next question is from the line of Martin Parkhøi from SEB.

I'm Martin Parkhøi with SEB. A couple of questions. Firstly, do you expect to see an impact on your guidance or at least on your sales and earnings already this year, given that the awareness of this will, of course, maybe impact the current usage, and in particular, after it has been shown in some kind of scientific conference or journal. And then secondly, what are the covered stages of Rexulti in U.S. right now? And can that change? And then thirdly, now you are building an on-label market for agitation in U.S. with the patent expiring of Rexulti sometime in 2029. What options do we have to actually have a new product already for this indication already at the time of the patent expiry of Rexulti?

Okay. So thanks, Martin. There will be no impact in our estimation this year on any guidance. There is no promotion of this product until there is a label. So clearly, no impact on guidance. Rexulti is well covered in the U.S. as an adjunct in major depressive disorder after patients have failed SSRIs, SNRIs. So there are step therapies, but an adjunctive therapy in major depressive disorder, Rexulti has good coverage. And certainly, in schizophrenia, there is also good coverage. We're building towards a label for Rexulti in this indication. And then you asked about are there any other products behind that? And I'll hand over to Johan to...

Yes, I would say I wish there were a long row of good products for Alzheimer's disease, because this has been a very challenging field. In terms of Lundbeck, you know our pipeline. We don't have any late-stage programs that aim to agitation in Alzheimer's disease or dementia at this stage. Of course, we'll see how this field pans out. And with the effect of the drug seen here, we have a little bit better understanding maybe what it takes from this kind of drug class to work in this field. So I would assume other people get interested in this eventually. But as you know, it's been a very, very, very challenging field. So I don't think really this will lead to massive change in -- many of the neuroleptics are also, of course, generic today that were originally tested. So I don't think you will see a massive sort of effort to run into this field by others. And we will build our knowledge in this field and see what we can do in other programs, but there is a gap definitely in the world out there and in our pipeline.

Sorry, just adding to Johan's discussion. As you know, we have, together with Otsuka, looked into a long-acting formulation and brexpiprazole has been difficult to formulate into a long-acting formulation. So that's not something that we would have imminently, but we still continue to investigate that together with Otsuka.

[Operator Instructions] And we have a question from Martin from Deutsche Bank. Martin withdrew his question. Well, as there are no further questions at this moment, I will now hand the word back to the speakers.

So we'd like to thank you for calling in at short notice today. It's always a great day when we can report positive outcomes for patients who need new therapies. And once again, our thanks to all the patients, caregivers and investigators who have been part of this program. And we look forward to talking to you down the line at our Q2 earnings. Thanks for calling in.