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

Welcome to Lundbeck's financial statements for the first 3 months of 2023. [Operator Instructions] Today, I'm pleased to present Deborah Dunsire, President and CEO; Joerg Hornstein, Executive Vice President and CFO; and Johan Luthman, Executive Vice President of Research and Development. Speakers, please begin.

Hello, everyone, and welcome to first quarter update from Lundbeck. Next slide, please. You've seen our forward-looking statements a number of times, so we'll move right through because we have a lot that's exciting to talk about on the next slide on Q1 performance. First and foremost, this is the highest revenue quarter ever in Lundbeck's history with sales at a DKK 5 billion. That's an 11% in constant currency revenue growth, 15% reported. The strategic brands we'll talk about in more detail, but we're delighted with the progress that Vyepti is making. The strategic brands generally have grown extremely well, 19%, and now make up 65% of the global revenue. And we've seen in aggregate double-digit growth across all the regions of the world. So it's great to see that performance in every corner of Lundbeck. We also have had a phenomenal first few months in our R&D pipeline, achieving an approval for Abilify Asimtufii, right on time on the PDUFA date. We had a very strong [ outcome ] from our advisory committee together with Otsuka on agitation in Alzheimer's disease, and of course today is the PDUFA date. But we don't have any news for you yet. We are very excited and Johan will talk more about our PACAP results from the HOPE trial as a positive proof of concept in Phase 2. Next slide please. So just focusing on the strategic brands here. You can see that they're growing well all across the world. The U.S. up 21%, international markets and Europe both up 17% for the strategic brands and you can see that all the brands are delivering on growth and our mature brands have been quite remarkably resilient with only a minus 1%. Moving on to the next slide. Looking at Vyepti in the U.S., U.S. demand continues to be strong and we are seeing an 87% growth Q1 '22 to Q1 '23 as our share in the preventive market continues to grow up to 5.8% volume market share right now. Growth coming from both existing prescribers and new prescribers and we're seeing an increase in the number of Vyepti loyalists. We anticipate strong continued growth in the balance of the year. Next slide, please. Of course we've been enjoying the rollout of the launches globally and we're seeing a good uptake in the markets that we launched last year. Canada's now at 8.8% in its fourth month, Switzerland at 9.7% in its 10th month in terms of volume market share, and we've had 3 -- 5 launches already in the first months of the year: U.K., France, Austria, Indonesia, and most recently Spain, but also have 10 more markets to look forward to in 2023. And I just want to point out how excellent the execution has been against getting these approvals so that we can launch quickly into all countries. Next slide, please. Brintellix and Trintellix. There's good growth of the brand, up 7%. Europe is growing incredibly strongly with superb performance particularly in the GP sector and Spain and Italy really driving that performance. International markets, the growth is, Brazil and Canada continuing to grow and Japan being a standout with an achievement of a 12.7% market share. Trintellix new-to-brand prescriptions have reversed a declining trend and are now growing as a new-to-brand in the U.S. I think the refocused efficacy messaging and the strengthened field force targeting and execution together with our partner Takeda are contributing to that. Next slide please. Rexulti, as you know, this is mainly driven by the U.S. and MDD continues to be the main growth driver. Many have asked is AAD driving the growth? No, not yet. MDD is really that continued driver and we've seen it's really driven by strong execution in the field together with a very effective DTC campaign. We are making rapid advancement and preparing for our launch in agitation in Alzheimers disease. Next slide, please. Abilify Maintena is also growing strongly. Some of our markets have already achieved over a 30% market share. Of course our biggest growers are the U.S., Italy, and Canada. Abilify Maintena is demonstrating the strength of its profile as it is in many markets outgrowing the atypical LAI market. So with that, I'm going to hand over to Johan who's got lots of good news to talk about.

Thank you, Deborah. Yes, the first quarter this year and primarily the present quarter have been very rich -- very news rich for Lundbeck with several positive R&D events. This is obviously the culmination of several years of efforts, but it has indeed been a very intense spring. As Deborah already mentioned, Abilify Asimtufii [Technical Difficulty] is the brand name of aripiprazole [ intramuscular ] use, a once-every 2-month injection. The product comes as a ready-to-use long-acting suspension for intramuscular use. The MDA had a PDUFA date on April 27, and I will come back to the U.S. approval in a subsequent slide. This new product has also been submitted to Health Canada with a supplement to a new drug submission, so called sNDS in mid-August last year. We anticipate an action date this summer in late July. Abilify has also been submitted as aripiprazole in the European jurisdiction, EMA. And the submission was accepted in June '22, and the intended indication is for maintenance treatment of adult schizophrenia patients. The review process has essentially been encouraging and proceeded to the last stages. However, reaching that stage of the review, it became clear that the submitted approval path was not applicable for our type of submission. Thus, solely due to a CHMP procedure objection, the application must be withdrawn. This is entirely unrelated to product quality and safety. The MAA for the product will be resubmitted as soon as possible using a path that should be appropriate for completing the EMA review. We expect that time lines are going to be somewhat shortened this second round and have a current estimate for H1 '24. Another key event also, of course, the advisory committee discussion on the sNDA for brexpiprazole for the proposed treatment agitation associated with dementia due to Alzheimer's disease. I will come back to that as well. Brexpiprazole for the treatment of agitation in Alzheimer's disease was also recently submitted in Canada with Health Canada accepting the sNDS review in April. We expect the review to be concluded by Q1 '24. Then I would say finally, we have now closed the recruitment into the 2 trials, 71 and 72 that are exploring the efficacy and safety of brexpiprazole in combination with sertraline in post-traumatic stress disorder. Since the last patient was recruited already, we will obtain the headline results in H2 this year. Well, then we also had very encouraging positive outcome of the anti-PACAP '222, Phase 2 PoC, proof-of-concept HOPE trial that the investigated antibody in migraine prevention. I will also get back to that in more detail. I just like to add a few notes on some of the other early development programs. In our anti-alpha-synuclein '422 program that is right now in a PoC trial called AMULET, we obtained so-called Sakigake designation in Japan. Sakigake is a drug designation that aims to provide easier access to novel advanced treatments. Thus, this is another testament to the pioneering aspects of this program. We have also started dosing the first participants with congenital adrenal hyperplasia with the anti-PACAP -- sorry, the anti-ACTH monoclonal antibody '909. Congenital Adrenal Hyperplasia is a genetic condition that affects adrenal glands and leads to high levels of androgens, which also have CNS infections. Next slide, please. Yes. So we got the approval of aripiprazole extend the release for once-every-2-month injection by the FDA by the end of last month for the indication of treatment of schizophrenia in adults or for maintenance monotherapy treatment of bipolar disorder in adults. Thus the same population of treatment as Abilify Maintena, but naturally for a therapy that will be lasting double time after intramuscular injection. The basis for that approval was a large robust 32-week pharmacokinetic bridging study that evaluated multiple doses in patients with schizophrenia and bipolar disorder. The bridging doses, 720 and 960 milligram were identified by a solid combination of generating robust experimental data with excellent PK modeling. The efficacy of this product naturally builds on the adequate and well-controlled studies of the Abilify Maintena program. Next slide, please. Yes. I promise some more words about the advisory committee meeting for brexpiprazole and agitation in Alzheimer disease. The priority review of this program included a meeting on April 14 by the AdCom, a joint group of the psychopharmacological and CNS and PNS AdComs. The AdCom discussed at the end 3 questions presented by FDA to them: the overall benefit/risk assessment; population of patients with AAD for whom the benefit/risk of brexpiprazole appears acceptable; and finally, whether sufficient data available to allow identification of a population which benefits the drug treatment and outweighs the risk. And that was really the voting question, which you heard was the 91 supporting the data package. Indeed, the AdCom of agitation, Alzheimer's disease for brexpiprazole is a great testament to the solid data generated throughout the program. I just like to highlight the minor set of the data, but the critical set since it relates to improved patient and the caregiver outcomes from the Cohen-Mansfield Agitation Inventory scoring done in the study. As you can see in the table, there are several important readouts that relate to patients and caregivers, which all show a positive effect of the treatment, such as hospital admission, falls and psychiatric burden on caregivers. We are very much looking forward to the evening or the last -- maybe afternoon, evening or probably tomorrow morning, since the PDUFA date is today, as you heard from Deborah. If approved, brexpiprazole would not only be the first treatment for Alzheimer's disease agitation ever in the U.S., but the first-ever approval of a treatment for any symptoms related to behavioral and psychological symptoms of dementia. So if approved, this will be a critical addition to current treatment for this devastating disease. Next slide, please. Yes. Now I'd like to turn over to something completely different. On April 19, we announced a positive readout of the first-in-class anti-PACAP monoclonal antibody in the HOPE trial. I have been in this industry for many years, but it's not often you get the pressure to be part of such a critical readout. Science is hard to convert into therapies, but occasionally, you get rewarded for the efforts. Thus, we were very pleased to see the very robust readout in this proof-of-concept, a clinical trial. The positive headline results for '222 is the breakthrough for a new mechanism of action in migraine prevention. Just a few words on the molecule. '222 is a humanized IgG1 antibody against the receptor ligand PACAP, which is known to act through at least 3 different receptors. The PACAP biology is quite broad, but one of its action is as a potent vasodilator. Therefore, the PACAP biology provides a new approach to migraine prevention with potentially in other pain indications as well. The HOPE trial studied a prevention of migraine in episodic and chronic migraine patients and not helped by prior -- 2 to 4 prior treatments. As the primary reader, if we looked at change from baseline in the number of monthly migraine days at week 4, 237 patients were randomized, a little more than we expected. So randomization went very well in a 2:1:2 split using a high dose and a low dose and placebo. Next slide, please. The trial showed a statistically significant effect with p value below 1, reduction in the number of monthly margin days for patients treated with '222 from baseline to week 4, as I mentioned. Moreover, which is important, '222 was also well tolerated in the study. These findings brings an important new possibility for migraine. Despite the availability of effective therapies such as anti-CGRPs, there is still a large unmet medical need for migraine prevention therapies. So the outcome of the trial brings new hope for patients with severe migraines. Next, yes. So this result, of course, from PACAP adds an opportunity for Lundbeck to further build the migraine franchise. As we mentioned earlier, we've also shown the possibility of subcutaneous administration of this drug. So this may lead us to complete the molecule's potential for other pain conditions as well at some stage. So this is our pipeline, how it looks today. Apart from the programs I mentioned, I'd like to say that we have made good progress in several other programs. As one example, 966, our D1/D2 agonist program in Parkinson's disease is progressing well to conclude this Phase 1 this year with a solid data set so far giving it a potential to progress into Phase 2 proof-of-concept studies already next year. Generally, our R&D organization has been fully transformed, and we have now full programs even in development within our 4 chosen biological clusters for innovation. We are also stringently using biomarkers in our early development programs for go/no go decisions and for paving the way into later development. And also our research pipeline is fundamentally reshaped with several highly innovative programs, programs that I hope to be able to talk more about one day. To conclude, Lundbeck's R&D has lately shown great ability to deliver on our late-stage LCM for our brands. But maybe more importantly, we have shown great progress in advancing our mid-stage pipeline and continue to add strong programs into our very early stage pipeline. With that, I'd like to turn over to Joerg.

Thank you very much, Johan. As Deborah said, we start the year with the strongest revenue quarter Lundbeck has ever delivered. The plus 15% of reported revenue growth is driven by a constant exchange rate growth of 11%, mainly coming from the strong underlying performance of our strategic brands with FX and hedging both contributing 2%, respectively. The positive FX and hedging impact is driven by predominantly the increase of the U.S. dollar compared to the same quarter last year. Our gross margin is 1.3 percentage points lower actually compared to 22%, negatively impacted by the additional amortization of product rights related to the EU approval of Vyepti sales milestone achievement as well as by the provision for Vyepti inventory obsolescence of DKK 101 million booked in Q1. And I think that's why it's so important to also look at our adjusted gross margin. Because if we adjust for this provision as well as for the amortization and depreciation linked to sales, the adjusted gross margin Q1 is actually higher by 1.5 percentage points, reflecting the positive sales volume development in the quarter. Sales and distribution costs grew 17% with a constant exchange rate of plus 15%. The increase is driven by higher promotion and sales costs predominantly for the continued rollout of Vyepti as well as launch preparations for Rexulti AAD, but also to an extent due to the normalization of activity levels in Asia following with the return to pre-COVID pandemic levels in comparison to Q1 '22. R&D costs in Q1 declined by 15% or minus 14% at constant exchange rates, primarily impacted by lower project costs related to completion of Phase 3 and Phase 4 studies. I think timing [ and ] R&D projects has, of course, an impact as well, which is why we'll later when we discuss our full year guidance, reiterate our expected R&D costs to remain broadly stable in '23 in comparison to last year. All of these factors contributed to an EBITDA growth of plus 35% overall, with a constant exchange rate growth of plus 31%, contributing to an increase of the EBITDA margin by 5.1 percentage points compared to last year. You remember we introduced an adjusted EBITDA. And if we look here at -- we basically grew plus 43% or 39% at constant exchange rates because we adjust for the provision of the Vyepti inventory obsolescence. Next slide, please. Our EBIT grew 41% overall or 35% at constant exchange rates. Overall, we improved our margin by plus 4.4 percentage points. Our net financial expenses decreased for the quarter by a negative DKK 264 million to, yes, actually a negative DKK 83 million. The lower expenses are mainly driven by actually 3 factors. The first one is the nonrecurring DKK 278 million fair value adjustment of the CVR to Alder shareholders in Q1 '22, which was triggered by -- then by the Vyepti EMA approval and the 0 interest impact compared to a negative DKK 21 million impact last year due to significant increases in the general interest rates and lower debt levels. And the last factor that partially offset this development was actually a higher currency impact of around DKK 73 million, driven by the dollar decline we've seen in the quarter. The effective tax rate has increased to 23.5% compared to last year's 22%, and that's in line with the full year expectation, reflecting the reduced deduction from the Danish R&D incentive. Net profit increased by 114% to DKK 880 million and adjusted net profit increased by 34% to DKK 1.4 billion. The adjusted EPS growth is in line with the underlying performance when we adjust for the fair value adjustment of the CVR and the corresponding tax effect. Next slide, please. The cash flow from operating activities landed at an inflow of DKK 378 million in the first quarter of '23 compared to an outflow of DKK 205 million last year. The Q1 '23 operating cash flow is, of course, a reflection of the strong EBIT performance, further benefited by higher adjustments for noncash items of DKK 623 million, which are driven by: a, higher amortizations in Q1 '23; b, the provision for Vyepti inventory obsolescence, but negatively impacted by higher changes in working capital of DKK 1.3 billion, which are mainly driven by the increased receivables driven by higher sales and the increased inventory in Vyepti, which is related to the inventory buildup due to the fixed-term manufacturing agreement with our external CMO that expires in mid of this year. The cash flow from financing activities [ was ] an outflow of a negative DKK 955 million in the first quarter compared to an inflow of a positive DKK 699 million in the same period last year. This is primarily driven by the continued repayment in '23 of the last part of the loan in '22 that was connected to the payment of the CVR to Alder shareholders and the higher dividend payment in '23 connected to the improved net results in '22. Our net debt position continues to develop favorably and lands at DKK 2.5 billion in Q1 '23 compared to DKK 5 billion the same period last year, maintaining the leverage at 0.5 for the rolling 4 quarters, continuing our progress of deleveraging the company. Next slide, please. We maintain our full year guidance on revenues for '23 with a range of DKK 19.4 billion to DKK 20 billion, despite a significant currency headwind since November '22, which formed the basis of our original guidance. As previously communicated in February, we will focus on adjusted EBITDA from the first quarter of '23 onwards in order to provide an improved and more consistent assessment of the underlying business performance of our company. Reflecting this change in adjusting EBITDA with a provision for the Vyepti inventory obsolescence of approximately DKK 300 million. The EBITDA guidance is updated to adjusted EBITDA guidance for '23 with a range of DKK 5.1 billion to DKK 5.5 billion. I think if you look on the right-hand side, our housekeeping items and overall assumptions on revenues and profits, underpinning the guidance remain mostly unchanged. But important to notice the following: The end of March exchange rates were considered for reconfirming the guidance. We see continued solid growth of our strategic brands, with the strong momentum for Vyepti. We expect positive effects from hedging of around DKK 130 million for the year. Amortization of product rights is expected at approximately DKK 1.6 billion. And the R&D spend guidance remains unchanged, expecting an annual spend in the range of last year despite the lower spend in Q1 '23. And last but not least, as previously mentioned, the provision of DKK 300 million for Vyepti inventory obsolescence is reflected in the guidance for '23 whereof DKK 101 million have actually been recognized in Q1. And with that, I hand over to Deborah.

Thanks, Joerg. So finishing up, it's great to continue to deliver that very solid financial performance with the revenue momentum being strong, driven by the strategic brands. We've made that shift to adjusted EBITDA reporting starting this quarter. Continuing to drive those brands is a key focus for us as we drive the Vyepti global rollout, building with 10 more markets to come on the top of 5 already launched this year. There's a lot to do in the U.S. as we gear up the launch of Abilify Asimtufii and look forward to the approval and then subsequent launch of agitation in Alzheimer's disease for Rexulti. We have been working hard for a long time on the pipeline, and it's great to see the momentum coming through with the positive Phase 2 proof-of-concept results for a new mechanism of action, anti-PACAP '222 molecule and of course, we look forward to the PTSD headline results in the second half. You had mentioned it, but I'd also like to just reiterate that we also see that forward movement in our research pipeline and our early development portfolio as we move forward. Lundbeck is firing on all cylinders, and we are committed to deliver sustainable profitable growth into the future. So with that, I'll stop and take your questions. For questions we're joined here today in addition to Johan and Joerg with me, I have Jacob Tolstrup, EVP of Commercial Operations, who you know very well; and Tom Gibbs, who's our EVP for the U.S., who's newly joined Lundbeck in February. So we're open for questions.

[Operator Instructions] The first question is from the line of James Gordon from JPMorgan.

Firstly, just on PACAP. So you had a [ static ] Phase 2 headline. Where might we see more detail about that? And was it a static benefit for high and low dose? And could you also talk about next steps in terms of clinical development? Should we assume you need to do another Phase 2? Or could just go straight into Phase 3? And when could a product like this actually potentially hit the market? And then just a clarification on the tail performance maybe. So it looks like the key area where you did better than the market expected this quarter was on the tail of the [ older ] products. And was there anything exceptional or how much of it was exceptional? Or is this a good run rate for the rest of the year for the nonstrategic brands, the other the -- business, please?

Johan is going to dive in first and then Jacob will take the question on the mature brands.

Yes. I understand many people are eager to hear more about what we have seen in this study. We have only had the data for a few weeks. Obviously, we need to digest and we're looking at data as we speak here for the data. We will present this at some conference, but we have not announced when and how that will be. But we hopefully will do that during the coming year. And that's what I can say. We're trying to get the data out as soon as possible, but we also need to be able to digest it a little bit ourselves. Yes, the doses, we have not gone in so much detail. We talked about the headline data being positive. As you heard, it was a low and high dose used. We are very pleased overall with the results and it behaves very nicely, and that's why I call this a very robust proof-of-concept. So without revealing really the different doses, what we report here is primarily on the primary outcome, which was the high dose where we had most of the subjects. But obviously, we are looking at the lower dose and have a very good understanding about the drug's mechanism of action, really working throughout the tested doses. In terms of next development steps, yes, obviously, with this in your hand, you like to be able to move fast, you also like to do the right thing. This is a scientific proof-of-concept. It's nothing more. We've shown that the drug works. I think it's robust enough to believe in that read out. Then we have to carefully consider how we bring this forward. But as I mentioned before, it's a very big medical need still in migraine. Many patients are not served well with current therapies. And if you look at analogs in the past, like AMS and other indications, there is always a room for a new drug and how we'll positioned that is the matter for decisions later on. We'll come back how the Phase 2, Phase 3 or whatever we'll do would look like.

And those decisions will determine time to market, so we won't comment on that at this time. Jacob?

Yes. I would say, in general, we have a good mature business that is relatively sticky around the world. But of course, what you've seen in this quarter is better than we also anticipated internally. So it's a lot of moving parts for that part of the business. I would say, in general, we are benefiting from some inventory stock builds in certain parts of the world, pricing effects. So I would say the quarter is unusually good. But in general, we have a good portfolio here. When it comes to Lexapro, there are sort of 2 bigger moving parts. One is that we now have generics on the market in Japan. We have 11 generics there. So going forward, you will see Lexapro, Cipralex being impacted by that in our numbers. On the other hand, we see Lexapro growing in China. And for the rest of the world, it is a -- I would say, flat or slowly declining, Lexapro business. So a lot of moving parts, but the quarter is unusually strong.

The next question will be from the line of Martin Parkhøi from SEB.

I would like to know so have -- would like to ask, Jacob, that question because I think that basically, you have downplayed the estimates of the [ mature ] portfolio for as long as I can remember, and I will keep that as a comment and take a couple of questions. Firstly, on the Rexulti. How can you be sure that the development we have seen so far this year is not [ AFFO ] positive below from the presentation of the agitation data at the CTAD. And then secondly, what should we actually think about Abilify the 2-month version? Will it just be a complete cannibalization of existing sales of Maintena? Or do you think that this can be added? Will you actually report it as 2 separate products? Or will you just report it as one product? And then a final question on the adjusted EBITDA for the rest of the year. Of course, a very, very strong start to the year. So there must be some weaker quarters coming implied by your guidance. Can you maybe talk a little bit about quarterly phasing?

Lots of questions, Martin. I think Tom is going to take the first one on Rexulti, but what I'd just preface that with is we wish that physicians responded to every piece of good new data immediately. Never seen it happen. But over to you, Tom.

Sure. As we look at the Rexulti business, the best way to be able to measure the potential utilization within the AAD space is looking at subnational data with IQVIA. What we have seen is the percentage of utilization. [ 65 ] and above has been about -- between 12% and 14%, and it's been stable over time. So at this point in time, we do not see that there has been any inflection based upon the positive AdCom that was -- that occurred last month. We've also looked at claims data, and the claims data, although there are some challenges in terms of trying to discern the diagnosis, we don't see much there either. So we believe that this is upon approval, a significant opportunity.

And we've guided over time, don't expect a light switch like uptake. This is a market that needs to be built. Talking about Abilify Maintena and Abilify Asimtufii, this a straight cannibalization. Over to you, Tom.

So when we think about Abilify Asimtufii, I'm excited about this opportunity as it expands the long-acting injectable franchise for Abilify. And the way that I see this is that we're going to continue to be able to differentiate Abilify long-acting injectables based upon the molecule, based upon the sustained efficacy in bipolar and schizophrenia. And then this additional dosing opportunity provides greater flexibility for HCPs to determine what is the right interval of dosing for the patient, whether it be 1 month or 2. So I see this as an opportunity for us to grow the franchise and be able to retake and become the fastest-growing LAI in the marketplace.

Over to you, Joerg, on the adjusted EBITDA for the rest of the year?

He answered the question. Yet on the reporting of Abilify Maintena and Asimtufii, I think that was the first question.

Yes, they will be separate.

Okay.

Sorry.

And coming back to your question, I think in general, we don't really guide by quarter. But of course, you can see that we had very strong revenues and they traveled through to the bottom line in Q1 as expected. We had the benefit of probably a bit lower R&D costs than we originally estimated, but also in comparison to Q1 last year. Q1 last year was extremely high at the same time. So what we're guiding forward is to basically say don't bet on that underspend in R&D and also see, of course, that if we talk about AAD and Asimtufii that these are costs we are also phasing into over the coming quarters. So overall, we reiterate our guidance.

The next question will be from the line of Michael Novod from Nordea.

Two questions. So now talking about sort of the light switch on and off for Rexulti in AAD, but more -- if you could give a bit more detail to how fast you can sort of ramp marketing? How fast do you potentially plan to do DTC, if that's appropriate in this indication as well? Just for us to get a feeling of when could we sort of start to see the potential effects materializing besides just a normal interest for new product in the market? And then secondly, any updates to the anti-Tau monoclonal antibody would be appreciated. There are a lot of discussions both on this mechanism and others in recent time. So I just want to see, is this moving forward at all? Or is it something that sort of will leave the pipeline at some point in time?

Okay. Tom, would you like to start on --?

Sure. As I look back, I think the team has been working very hard in terms of preparing for the launch of Rexulti for over 1 year now, and I can tell you that the team is ready for positive news. As we think about the readiness, there's 2 key elements that I'm looking at. One is sales force readiness. And we are -- as we look at our target audience of about 36,000 physicians, both on the Otsuka side as well as the Lundbeck side, we are fully ramped up from a sales force point of view to be able to effectively call on that target universe. The second element, which I think is going to be important is really mobilizing caregivers to be able to accelerate presentation of their loved ones to physicians. And in doing so, there's going to be 2 parts to that. First is going to be an unbranded DTC campaign, which will be launched shortly after approval, and then it will follow with a branded DTC campaign later on in the year.

And I think what that means for us, Michael, in terms of what Joerg said about phasing of costs. We've just brought on the sales force there in training. The unbranded DTC, the branded DTC, the medical conferences. So I'd say that it grows over time in the year. And then if you're asking about how fast does it start to impact in the marketplace, I'd say we see that a very -- it will have a positive, but more limited impact on the growth in Rexulti this year. It really accelerates next year, and it's moving very strongly in '25. Next is anti-Tau. Yes, Johan?

Yes. I think you've been asking about this molecule a few times. And we're also asking ourselves sometimes what we should do with this molecule. This space is extremely hard to navigate. And I think one should be careful to have too much read-through from the amyloid therapies to Tau. Every antibody is -- every antibody approach, every proteinopathy is unique, and there is high risk in this field. We actually have had this in the pipeline for a long time because the study is active. The program is active, but we just completed enrollment in the Phase 1 target engagement study. Yes, that took a long time. It was a Phase 1 study that was struggling a lot during pandemic. It's also enormously hard to find healthy -- not healthy, but Alzheimer's patients as volunteers into these kind of studies. And we were, quite frankly, struggling operationally with the trial sites. We did some really good work at the end here with a person located in New Jersey helping to finish up the studies. What we'll get out of that study, the Phase 1 study is target engagement data, is the drug doing what it's supposed to do. That will not still trigger further development. We really have to think through what we'll do in this space. And it's primarily, as you know, for Alzheimer's disease, which is a big beast to take on and with really no external information supporting that approach. We do this very carefully. So I think you will hear more about us saying it's post. It's been in the pipeline until now because the study was active.

Yes. And I think it's great that we finished accrual. What we've always said about that is -- we like the antibody, right? We like the structure of the antibody, the epitope binding that we would certainly not go ahead on our own. And with Johan's deep knowledge in the field, we certainly wouldn't be going ahead until we feel we've got the right approach for Tau. And that's not clear, as Johan just said.

The next question will be from the line of Vineet Agrawal from Citi.

Just a couple of them. First, I was just wondering if you could share what was the price and volume mix to the growth in 1Q? Especially interested in strategic plans of the 19% year growth, if you could quantify the contribution from pricing and what was this like last year? And then second, on gross margin. How should we really think about gross margin going forward? In the past -- last quarter, you continuously spoke of yield improvement from Vyepti. Is the 1Q gross margin representative of the benefits realized from that? Or that is yet to flow through the gross margin, and it can expand further from here?

Over to Joerg.

I think in terms of the price volume split, we don't necessarily provide the exact numbers, but it's fair to say that this was mostly demand driven. And I think -- if I hope I understood your question on the gross margin correctly, I think the adjusted gross margin we are seeing for Q1 is probably also a good indicator for the quarters to come. We really established this key figure to really take the noise out that we have from -- approximately a 1/3 of our cost of goods sold is amortization of product rights, 50% of that is dollar. So we got a lot of questions in the past in terms of, if the dollar would increase or amortization would increase as it does related to the Vyepti EMA approval or certain sales milestone achievement. We always get the question of what is the variability in your gross margin. I think this we take out now by bringing the adjusted gross profit number -- gross margin number in and that probably is a good indicator also for the quarters to come.

The next question will be from the line of Brian Balchin from Jefferies.

Maybe just on Rexulti Phase 3 and PTSD. So give me if -- you've spoken about it before, but can you just talk about confidence in a positive outcome there? And then just remind us on the commercial opportunity? And then on PD, is the messaging still -- we're not looking for anything near term accretive given current levels of R&D spend?