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

Ladies and gentlemen, welcome to the Lundbeck Financial Statements for the Full Year 2024 Conference Call. I am George, the Chorus Call operator. The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to handover to over to Charl van Zyl, President and CEO. Please go ahead.

Thank you, everyone, and thank you for joining, of course, today's call. It's my pleasure to be able to present to you the 2024 full year results, which we see as a transformative year for Lundbeck and of course, also provide you with guidance for 2025, which reflects really the confidence in our strategy as a focused innovator. If we go to the next slide, again, today, of course, is subject to forward-looking statements and subject to change. If we can go to the next slide, please. So as I opened up with my comments, I see this really as a transformative year for Lundbeck. 12 months ago, we introduced the focused innovative strategy. There are 3 pillars: 1 of growth, pipeline and funding of that future in growth and innovation. And I could say today, when you look at '24, the growth is a record year for Lundbeck. The pipeline has fundamentally changed over the last 12 months with a profile of more late stage. And with the funding that we are generating through capital reallocation, we are able to also absorb many of the incremental investments we're making in the pipeline. So truly a transformative year for Lundbeck in 2024. If we then go to the next slide. Of course, behind the transformation, this is a very strong leadership team that you have met before. And of course, today, I'm pleased to be joined by our 2 Executive Vice Presidents of our geographies, Tom and Nicola. You'll hear from Johan on an update on the pipeline, and Joerg will give us a financial update and more details on the outlook for 2025. Then go to the next slide. So let me go a little bit deeper into the results of 2024, and it is truly a remarkable year for the company. We -- and I want to thank all the Lundbeck employees, of course, who have generated these results and tirelessly work on serving patients. And what you see here is really the strong growth momentum. We look at our strategic brands, which is 21% growth on a constant basis year-over-year, which is 75% of the company's portfolio today growing at 21%. And really the targeted investments we've spoken to you many times about investing in Rexulti and Vyepti are truly paying off as we see the underlying trends of those assets really forming the basis of future growth and also for the 2025 guidance. When we look at innovation, we are seeing 2 very strong positions emerging in our neuro specialty space with the expansion, of course, of Vyepti with the Sunrise results now also able to file and launch in the future in Asia, which really makes it a global asset for us. And of course, anti-PACAP that will continue in its development program and provide there for a compelling severe migraine portfolio in the neuro specialty space for the long-term growth of the company. You also see a very strong position in neuro rare emerging, of course, with the Longboard acquisition. Adding to that also amlenetug in Phase III and a number of other assets that Johan will talk about later. So again, 2 very strong future positions we see as growth engines for the long-term success of the company. When we think about funding and you think about our future here, 2025, you see our guidance here is built on a very strong confidence of our strategy and belief in the underlying growth of the company, the growth engines and the strong cash flow generation that allows us to, of course, deleverage relatively fast, but also being able to, with the capital allocation absorb a significant amount of the additional R&D investment specifically coming from bexicaserin. So that allows us to really maintain a more healthy R&D investment of 2020 -- to 20%, 25% in terms of a corridor in the midterm and also our adjusted EBITDA at greater than 30%, which is, in our view, a healthy financial dynamic while, of course, building more on a pipeline for long-term success of the company. So with that, let me hand over to our geographic Executive Vice President, and I'll start here with Tom to take us through the performance on Rexulti. So over to you, Tom.

Great. Thank you, Charl. As Charl mentioned, we are pleased with our commercial performance in 2024, which was highlighted by 21% growth of our strategic brands. I will first review the performance details for Rexulti. Next slide, please. Rexulti continues to perform well, propelled by the continued strong progress of the AADAD launch in the U.S. Global reported revenue increased 16% in 2024 versus prior year. We did see some destocking in December with inventories in the U.S. exiting 2024 at the lower end of normal ranges. Importantly, though, revenue growth was driven by strong underlying TRx demand growth in the U.S. with 21% year-over-year growth. Rexulti growth accelerated throughout the year in the U.S. exiting 2024 with strong demand trends with weekly record highs in market share, TRxs and NRx volume. Growth in the U.S. was supplemented by continued strong demand growth in other prioritized markets, including Brazil, Canada, Australia and Mexico. Overall revenue growth in Europe and international operations was 32%. As we look forward, we expect Rexulti to continue to be a key driver of growth for Lundbeck, primarily driven by continued expansion of the AADAD franchise supported by solid growth of our base business in MDD. We will now take a deeper look at our progress in AADAD. Next slide, please. Rexulti AADAD volume is becoming increasingly important to overall Rexulti growth, and we expect this to continue through 2025 and beyond. AADAD monthly TRx volume has increased 426% versus baseline prelaunch and AADAD contribution to the overall demand for the brand has grown to 19%, based upon our most recent patient claims data for October 2024. And this is on track to meet our expectations for 20% or higher once data are available for December. Growth is being driven in AADAD primarily by an expansion of the HCP prescriber base growing from a baseline of 2,451 to nearly 11,000 prescribers. We're also encouraged by some of the leading indicator data that we track, particularly our awareness trial and usage market research from November, indicating that Rexulti is the most frequently cited product by HCPs as their first choice treatment more than any other product or drug class. The AADAD launch has also had a positive halo effect on the overall brand. AADAD has fueled 54% growth in the 65-plus non-AADAD segment since launch. Next slide, please. Moving on to Vyepti. Vyepti delivered strong results during the quarter and full year, and this performance has been fueled by accelerating growth in the U.S. and supported by the continued robust adoption of Vyepti and prioritize ex U.S. markets, including Canada, France, Spain and Germany. Vyepti global net revenue for 2024 was DKK 2.909 billion, and this represents 72% growth year-on-year. Net revenue for Vyepti in the U.S. was DKK 2.557 billion, and this represents 63% growth over 2023. We also saw some destocking by our specialty distributors for Vyepti exiting 2024 at the lower end of our normal range. Importantly, we are beginning to see meaningful contribution to global sales by ex U.S. markets with Vyepti now available in some 29 markets. These markets are exhibiting strong anti-CGRP market growth and Vyepti continues to gain meaningful market share across these markets. Ex U.S. sales will receive a significant boost, if approved, in Asia, based upon the positive SUNRISE data, and we expect to submit for approval by the end of 2025. I want to take a moment to focus on the U.S. Over the past year, we've worked very hard to refine our specialty commercial model to support Vyepti throughout the -- through a patient-centric focused ecosystem that appropriately supports the patient throughout their patient journey. We continue to see accelerating demand by driving breadth and depth of prescribing and continued positive momentum in new patient starts, supported by high written to infusion conversion ratios and patient persistency. Weekly market share for December hit an all-time high of 10.85% versus 6.8% in January 2024, which is attributable to strong underlining demand exiting 2024. Looking forward, we expect Vyepti to continue to deliver strong growth driven by new patient starts in the U.S. and expanded usage of Vyepti in all ex U.S. markets where the brand has launched. I'll now turn the presentation over to Michala to review our other strategic brands. Michala?

Thank you, Tom. Next slide, please. So let's start with a look at the Brintellix performance in 2024, where we saw a very strong performance across our key markets and continued double-digit growth. If you look at our global results, we delivered 14% growth in revenue versus last year at DKK 4.847 billion, a very strong performance overall for a brand that has been on the market for approximately 10 years. If we look further, you can look at this regionally and see that in the U.S., we saw 12% growth. And when you look at Europe and international operations, we delivered 16% growth versus last year. When we look across our key markets, we continue to see double-digit growth, and we continuously outgrow the market in several of our countries. I here want to highlight, especially Japan and Spain, where we've seen 28% and 24% growth, respectively, compared to 2023. When we look ahead to the year ahead of us with Brintellix, we expect to see continued solid demand growth in Europe and Japan. As you may recall, we extended our market exclusivity in Japan by 2 years. And in the U.S. with the revised agreement with Takeda that we announced earlier last year, we expect that this will slightly reduce our revenue, while we'll increase our profitability. In Canada, we expect to see generic competition sometime during the year. Next slide, please. If we look at the performance of the Abilify franchise in 2024, we also here see a solid performance, growing at 10% and now at DKK 3.5 billion in total and this is driven by increased conversions to Asimtufii. When we look at the U.S. specifically, we see growth at 12% versus 2023, and this is specifically driven by the Abilify/Asimtufii performance and we see a 2.2% market share growth for the franchise. Also encouragingly, we continue to see strong uptake with Abilify/Asimtufii where we now see that more than 50% of the neutral brand patients are coming from either orals or naive patients. When we look at Europe and International operations, the growth was at 9% versus 2023 at DKK 2.193 billion, and the Abilify LAI franchise has continued to see strong growth across many markets, also driven by additional launches of Abilify 960-milligram across Europe. When we look ahead, we expect the continued strong uptake of Abilify 2 monthly or Asimtufii in the U.S., while at the same time expecting negative impact in Europe from the generic launches during 2025. Let's take another look at the Abilify/Asimtufii or Abilify 2 monthly performance on the next slide, please. So if we dive a little bit more into the dynamics we're seeing with Abilify/Asimtufii, we see that the penetration generally is ramping up. If we start with the U.S. on the left side, you can see that the growth is outpacing other LLIs and as I said, more than 50% of our new-to-brand patients are coming from orals or naive patients. When we look at the conversion rate in the U.S., we see that Asimtufii now constitutes 14% of total Abilify franchise TRx volume, that's December data and we see that it's 18%, importantly, of the NBRx with November data, a leading indicator of future TRx development. So very strong conversion rates in the U.S. and also accelerating. As you may recall, we got approval for Abilify 960-milligram or Abilify/Asimtufii in Europe in last year and started the rollout of the launches in June of last year, and we have now rolled it out in 13 markets across Europe. We're also here beginning to see a meaningful contribution from these launches and a strong increase in the conversion rate, as you can see on the right graph. The feedback is very positive from the market. And all in all, we're very pleased with what we're seeing. If we look ahead, then we will continue the rollout of Abilify/Asimtufii across Europe and international operations as we see regulatory approvals. That concludes the business update. And with that, I'd like to hand over to Johan to give an R&D Update.

Thank you, Michala, and thank you, Tom. It's great to see the strong full year results with growth of our key brands. So let us turn to page 40 2024 summary of R&D activities. Coming out of '24, we can conclude that we had a strong pipeline progression last year with key regulatory activities, strong life cycle management activities, and an important progression in several development programs linked to positive readouts in some cases during last year. Among regulatory activities, we naturally had the validation to file of the sNDA submission to FDA of brexpiprazole in posttraumatic stress disorder. I come back to that a little bit more in a minute. As Michala already mentioned, we had an important approval of the 2 monthly long-acting injectable version of Abilify for the EMA covered markets in early last year. Brand addition in the Otsuka/Lundbeck antipsychotic LAI product portfolio. The product is available with the ready-to-use formulation for more convenient administration. For Vyepti, as mentioned by Charl and Tom already, we finished the SUNRISE trial in the fall of '24, which was ahead of the '25 planned readout. The trial showed again how impactful the drug is against severe migraine. The data from this trial form a cornerstone in the planned Asian regulatory submissions, together with the past spearheading sunlight (sic) [ SUNRISE ] trial as well as the pivotal PROMISE program. For Vyepti, we've also got results from some interesting life cycle management activities in June '24. Among those, I'd like to mention the resolution trial that we finished in December. In this randomized placebo-controlled trial, Vyepti confirmed the strong efficacy we see consistently with the drug. The resolution results show rapid treatment benefits even in both severely impacted patients, those with chronic migraine and medication overuse headache. Also in the review, real-world evidence study, we found an overall reduction in burden of migraine after Vyepti treatment, including improvements in so-called brain fog or cognitive symptoms. In review, the effectiveness of Vyepti was observed even for patients previously on other anti-CGRP treatments. In the NME pipeline, we have seen a buildup of development programs into late development during last year. After encouraging AMOLED proof-of-concept trial readout with our alpha-synuclein antibody, Amlenetug, at the start of '24, we present the late-breaking data at a major conference while moving as fast as possible with global regulatory interactions, enabling a Phase III start already in December of the innovative MASCOT trial. Through the Longboard acquisition, we went straight into the upstart of a pivotal program for bexicaserin in developmental and epileptic encephalopathies. During the late spring of '24, we also formally moved 222 our anti-PACAP antibody into late development with the initiation of the proceed Phase IIb adaptive dose-finding study. Also in the early development and research portfolio, we had important activities during '24. I'd like to highlight the initiation of the small Cushing's disease trial with our anti-ACTH monoclonal antibody 909. This trial is adding to the already ongoing congenital adrenal hyperplasia trial. Both programs already delivering interesting data for this first-in-class program. We also started a trial with 515, our CD40 ligand binder in thyroid eye disease or TED, during '24, a trial that is now progressing by actively randomizing patients. Phase 1 is also the place where we like to read out less promising molecules. So we terminated our peripherally restricted monoacylglycerol lipase inhibitor 74 last year after a comprehensive and decisive proof of principle study in pain indications. Next slide, please. As Michala already referred to, together with Otsuka, we already seen Abilify Maintena, Asimtufii obtaining approval in this year in Canada. And this was also followed this week by Australian approval. So we're looking forward how this brand is now rolled out in the rest of the world. This week, we also have received a positive CHMP opinion by EMA on our schizophrenia pediatric indication extension application for Rexulti for patients aged 13 to 17 years. Concerning our sNDA FDA application for brexpiprazole in combination with Sertraline for the treatment of PTSD. We learned from FDA in early January that they would like to host an advisory committee meeting to discuss the program. The target date for this outcome and a potential new PDUFA date are still to be set. If you're interested in the PTSD Phase III data, I'd like to highlight that we had key data from the program published in JAMA Psychiatry in December. As mentioned, amlenetug Phase III program got off the ground before Christmas with enrollment progressing already in the United States. For bexicaserin, 2 pivotal trials have been initiated called DEEp SEA, in Dravet syndrome and DEEp OCEAN in other DEE patients, including Lennox-Gastaut patients. Both trials are now actively enrolling patients in the United States. As we communicated last week for bexicaserin, we also obtained 12 months PACIFIC OLE data. PACIFIC is the Phase II study that was done with the program. So let us look at some data from this readout. Next slide, please. All patients in the PACIFIC II trial -- Phase II trial were offered to continue into an open label extension study or OLE study with those on placebo transitioning to bexicaserin. In the left side of the graph in the gray shaded area, you can see the treatment effects within the control part of the trial and then followed by the shift into active arm of the previously placebo treated patients through a dose titration. The 9-months data previously reported showed an overall median seizure reduction of almost 58%. Now the 12-month OLE data demonstrated a maintained durable response in motor seizures with bexicaserin, as shown in the right side of the graph in the yellow shaded area. At the 12-month OLE time point bexicaserin, achieved an overall median seizure reduction of over 59% in countable motor seizures. It is important to note that there was a remarkable high patient retention with almost 93% of patients staying through the full 12-month OLE period. Moreover, the favorable safety and tolerability profile of bexicaserin continues to be observed. Next slide, please. In the coming period, we expect a number of key events by progressing the pipeline towards milestones. I have already mentioned some of the upcoming events and the 12-month OLE readout for bexicaserin, but I'd like to call out the expected proof-of-concept readout for our anti-ACTH program, June '25. Additionally, in '26, we expect a proof of principle and possibly a proof-of-concept readout for our CD40 ligand binder program in TD. Two critical progression opportunities to further build a late-stage portfolio during the coming years with potentially first-in-class molecules in high medical need indications. With that, I'd like to hand over to Joerg.

Thank you, Johan. Great progress in our pipeline. 2024 was truly a landmark year for Lundbeck. We achieved a record revenue of DKK 22 billion, growing 14% at constant exchange rates. At the same time, becoming a focused innovator requires to perform and transform at one at the same time. So let's start with our performance in 2024 and take a look at our key figures. Next slide, please. Our revenue grew 14% in 2024, driven by the accelerated growth of our strategic brands of plus 21% and with significant contribution of Vyepti globally and Rexulti mainly in the U.S. The adjusted gross margin was 88.4%, increasing 0.1 percentage points and is in line with the previous year despite inflationary pressures in the beginning of 2024. Sales and distribution costs increased 10% to DKK 8.1 billion, reflecting mainly the continued investments in sales and promotion activities in Rexulti and Vyepti in the U.S. including PTSD preparation for Rexulti as well as the global rollout of Vyepti. Administrative expenses increased 11% to DKK 1.4 billion, primarily driven by legal provisions for ongoing litigations that were recognized earlier in the year. R&D costs increased by 30%, reaching DKK 4.5 billion, mainly driven by investments into anti-PACAP and [ anti-alpha-synuclein ] mAb. In addition, the DKK 4.5 billion of R&D costs include the impact of the MAGLi impairment loss of DKK 547 million that we recognized in Q3 '24. Adjusted EBITDA increased by 20% by the revenue growth, which more than offsets the increased investments in the R&D pipeline, the commercial investments to support the growth of our strategic brands. The adjusted EBITDA margin was 28.8%, representing an increase of 0.4 percentage points, primarily due to OpEx ratio improvements and strong growth, partially offset by higher R&D costs in an unfavorable currency and hedging effects. Next slide, please. Our EBIT increased by 15% to DKK 3.3 billion, growing in line with the underlying operating performance benefited by lower amortization of product rights. This growth was mainly offset by an impairment loss due to the negative MAGLi readout of DKK 547 million and transaction and integration costs related to Longboard acquisition of DKK 420 million. Net financials reached an income of DKK 450 million, equivalent to an increase of 322%. The positive development is mainly driven by the gain from a hedging transaction settled in connection with the acquisition of Longboard and the positive development in interest income. Our effective tax rate dropped significantly to 15.5%, down from 23.5% in the same period last year, mainly due to reversal of an uncertain tax position related to a tax audit that was closed. Net profit increased by 37% to DKK 3.1 billion. Adjusted net profit and EPS rose by 26% to DKK 5.3 billion and DKK 5.31, respectively. This growth reflects strong EBITDA performance, a positive net financial results and a lower effective tax rate. Next slide, please. Our cash flow statement and the overall net cash position is, of course, impacted by the Longboard's acquisition that we closed in Q4 '24. The cash flow from operating activities represents an inflow of DKK 3.3 billion compared to an inflow of DKK 4.1 billion. The decrease was driven by the settlement of liabilities regarding the acquisition of Longboard as well as higher receivables, partially offset by lower inventory levels due to the completion of the fixed supply agreement for Vyepti in '23. Of course, cash flow from investing activities, DKK 15.3 billion, mainly due to the settlement of the acquisition price for Longboard. Cash flow from financing activities, similar part here were an outflow of DKK 11.6 billion compared to an outflow of DKK 2 billion in '23 -- '24, primarily driven by loans related to the acquisition of Longboard of around DKK 12.4 billion, lower debt due to the repayment of the revolving credit facility initially and offset by higher dividend payment in '24. Net debt increased to DKK 12.2 billion in '24, driven by the strategic acquisition of Longboard. The net debt-to-EBITDA ratio rose to 2.4% with interest-bearing debt reaching DKK 16.8 billion. Next slide, please. Now the performance aspect of our strategy is demonstrated in our 2025 revenue guidance with continued momentum in our strategic brands, leading to an overall revenue guidance of 7% to 10% of growth based on constant exchange rates. The outlook for '25 sees a strong contribution from Vyepti and Rexulti in the U.S. robust double-digit growth. At the same time, for Abilify Maintena LAI franchise, we protect continued increased conversion to the 2-month formulation, offsetting the anticipated impact of generic entries in Europe. Brintellix/Trintellix will be affected by the modified collaboration with Takeda in the U.S. as well as generic entry in Canada. At the same time, we foresee double-digit growth continuing in Europe. Mature brands are expected to continue their erosion showing a mid-single-digit revenue decline. Overall, leading to the aforementioned revenue guidance of 7% to 10% of growth based on constant exchange rates. Next slide, please. The transformational aspects of our strategy are clearly bearing fruits. Our approach towards discipline but also forward-looking capital allocation allows us to safeguard current adjusted EBITDA margins despite significantly elevated R&D investment levels. We guide towards an adjusted EBITDA growth of 5% to 11% at constant exchange rates. The strong growth of Rexulti and Vyepti, together with the advancement of our capital reallocation efforts, this allows us to fully absorb the significant increase in our R&D costs driven predominantly by the Phase III investment in bexicaserin aiming in principle for a margin neutral addition of the largest acquisition in the company's history to our P&L. With that, I would like to hand over back to Charl.

Thank you, Joerg. And let me make some closing remarks before we open for questions. So if we can go to the final slide, Again, what I want to reiterate and what you've heard from my colleagues as well is really a path of strong sustainable growth that we see. We have a strong foundation we've built on from 2024 as our first year of our focused innovative strategy that gives us strong confidence in the underlying trends of our growth assets to also guide to 2025 with a very strong growth in Vyepti and Rexulti. You see a pipeline that has transformed essentially through 2024 and now building in '25 with the execution of the clinical programs of the late-stage pipeline. And of course, the funding reflects also a position where we are, of course, investing more in R&D, which is part of our strategy to fund the long-term innovation of the company. But of course, through the capital reallocation, we are able to remain within very competitive and healthy margins on adjusted EBITDA which, of course, gives us confidence that as we enter into the second year of our focused innovative strategy that we are on a good path with strong confidence that this is the right path to follow for Lundbeck for the long-term sustainable growth of the company. So with that, I think we can conclude the formal presentation and open the line for questions.

[Operator Instructions] Our first question comes from Charles Pitman-King from Barclays.

One first just on Vyepti. Just kind of noting that very strong performance over the course of the year, but then the presentation just shows a bit of a kind of dip recently. I just wanted to double check if there are any kind of seasonal effects that occur in January that you might want to kind of flag or whether or not I could push you for any quantification around that destocking that you kind of highlighted? I think you said it was toward the low end of our expectations, but just kind of what that really means. And then just kind of second point, 2 parts. Just if you could give us a little bit of an update on your expectations for the competitive dynamics within the major depressive disorder space. How do you expect that to progress over FY '25 with relation to kind of Rexulti and Brintellix/Trintellix outlook? And if I could just maybe squeeze a kind of final 1 just on the competitive expectations that you see going forward from J&J's acquisition of Intra-Cellular and with Caplyta coming potentially to compete in schizophrenia and depressive disorder. Obviously, a big read across your portfolio, how you think about those competitive pressures?

Yes. Thank you, Charles, for that. And -- just -- I will ask Tom to make a few comments on Vyepti and of course also Rexulti competitive environment. But just to mention again, we certainly are managing the company from an annual basis and not a quarterly basis. So we might see some of these fluctuations, but the underlying trend of Vyepti remains very solid and is, of course, feeding our confidence into 2025. So I would not read too much into the quarterly noise that you might see. But Tom, do you want to comment more on Vyepti and then also if you follow on with Rexulti competitive environment.

Yes. Thanks for the question, Charles. As Charl had said, when we look at overall Vyepti performance, we focus on what the underlying demand is. And as we look through -- over the course of the year, Vyepti is the fastest-growing anti-CGRP in the marketplace, and that includes the oral agents as well. As we look more specifically at December, December -- the 3 weeks of December that are normal weeks Vyepti performance was the highest that we've seen all year, approximately 10% higher than we saw in November. Now you will see some fluctuations when you have holiday weeks. So for example, because it's a medical benefit in the Christmas week and the New Year's week, there's only 3 business days. So that's where you see some volatility. But again, overall, when we look at where we exited December, we exited at an all-time high from a share point perspective, 10.85%, and we're confident in the demand moving forward. Moving on to Rexulti and the MDD marketplace. I think it's really important first that we take a look at where Rexulti is in MDD. It's been on the marketplace since 2015. But when we look at the growth rate for Rexulti for the last 3 months, the non-AADAD business grew at 9%, which was actually faster if we look at NBRx is faster than both Caplyta and Vraylar if we look at October versus May. So really have good underlying performance there. Now of course, the -- we do see an evolution of the competitive landscape with Caplyta getting an MDD indication. We expect that to happen in October of 2025. So we see minimal impact as it relates to the business for 2025. Looking forward with the purchase of Intra-Cellular by J&J, I think it's important to note that intracellular was investing significantly within the -- to support Caplyta, I think at the levels where J&J is likely to be supporting it. So from a competitive standpoint, we don't see that, that's going to be a major change as it relates to what we need to do to continue to grow Rexulti, not just being able to drive MDD, but more importantly, continuing to accelerate performance in AADAD where we are the market leader.

And Tom, you also see sometimes a halo effect of the AAD indication on MDD for the brand itself. So also a very important point.

Importantly, when we look at over the year, if we look at non-AADAD, specifically 65 and above, the AAD halo effect has helped propel 54% growth in that segment. So again, using that as a continued driver of growth having a halo effect in MDD.

The next question comes from Michael Novod in Nordea.

So 2 pipeline questions. One is on PACAP and sort of the evolution in that product depending on the data that sort of feasibility data you will get during the year. When will you have sort of a final decision on making the choice around either subcu or whether you need to do this on an IV basis? And whether you prefer this is going? Obviously, I would imagine that it's subcut in order to capture earlier patients, but maybe some more elaboration on that. And then on Amlenetug and the recruitment process. So you started recruiting patients. We know that in this area, it can be difficult to recruit. What is the status? I know it's early, but what is the status on recruitment for Amlenetug?

Thank you. Johan?

Yes. Thanks for those questions, Michael. So PACAP evolution is really we're in the midst, as you know, of this proceed trial, and we expect to be able to wrap that up maybe within this year, mid fall. So that's the aim. It's an adaptive trial. It has 2 parts and different parts are optional. So in the best scenario, we have full optionality with the different routes of administration, subcu and IV. I'd like to remind you that Vyepti is doing extremely well, being an IV product. So it's really hard to tell until you gather the full efficacy data and have a better grip on that aspect. And another important aspect progressing with this program primarily for the pivotal program is to build in further points of differentiation. Migraine is not just headache. Migraine has a number of symptoms, including brain fog, but also a number of autonomic symptoms, and we will look more deeper into those in the Phase III program, which could be possible to see effects on when you have a different mechanism of this kind that actually more broader reaches into autonomic system functions. So it's too early to say. In ideal scenario, we have more flexibility out of that study in less ideal. We may have to stick to 1 route administration in the coming program. For Amlenetug, yes, with our Phase II program, we didn't really see any problems with enrollment. It was actually going extremely well. It was a trial done in the U.S. and Japan. And enthusiasts for that trial, I went out visiting a lot of sites was really extraordinary clinicians. I didn't talk to patients, but clinicians really were very engaged in this trial. We don't expect that to be different for Phase III. We're adding more sites, of course, and more geographies. But I think there is a pretty big buildup interest of this. There's nothing else to offer for these patients. And we get actually quite a lot of outreach to join the trial. So it's more to get it off the ground in the proper geographies. U.S. is just the first start. And so far, it's going okay. But it's at the very, very first start of the trial. So we'll come back when we know better how it's progressing.

Next question comes from Shan Hama in Jefferies.

Just 2 for me. I understand that the data has yet to be provided for the FDA Adcomm for results in PTSD. But have you received any communication from FDA further to the initial announcement -- and then just secondly on Vyepti. So obviously, we know that now [Technical Difficulty].

So Shan, we could not really pick up your second question, but maybe we start with PTSD, which is the piece we could at least based on a bad connection here from you. So maybe Johan, you want to comment on PTSD first.

Yes. I actually don't have so much more to say. Of course, we have a few correspondence from FDA that's normal at this stage. We got at the beginning of the year, the information that they would like to have an outcome, which came fairly late in the review process. So that happens. Nothing extraordinary with this, but it's not routine, of course, because that's often at the time of validation, they communicate this. But given that there is no treatment here for the last 23 years approved. I think it's very diligent on them to look forward for an outcome. When it comes to the date of this and then maybe a new PDUFA date, we know nothing more than they basically say it's postponed, it's being worked on. And as you can imagine, there are certain things going on right now that may make this a little more unclear.

Just to add to Johan there that, of course, this is not in any of our guidance today, the PTSD indication. I don't know, Shan, if you want to repeat your second question, which we couldn't hear so well.

Yes. Can you hear me a bit better now?

Yes. Thank you.

Okay. Perfect. So I was just asking on Vyepti. So I know that you plan to submit in Asia by end of 2025. And is the expectation that commercialization will happen via a partner sales -- or are you planning on doing this by yourself?

Maybe you want to answer first the question on the regulatory timing of SUNRISE trial?

Yes, we have the data now from the SUNRISE trial. So we have all the clinical data we like to see. It's building up the files, having interactions with the regulators, et cetera, throughout the program, including the CMC package. Those interactions have gone well. So we are on the rails. We expect at least to progress with Japan during this year. But maybe, Michala, you can comment how we will perform thereafter.

Yes. Thank you. Thank you for the question. So I don't believe we've said we will go with a partner. I believe we've said that we are exploring our options, and I think it depends on the different markets. So we're still evaluating our commercial plans for Vyepti also depending, of course, on the regulatory time lines. So I think at this stage, options are open for us and we're exploring.

Our next question comes from Xian Deng in UBS.

Two, please. And the first one is kind of a follow-up on Charles' first question. It's just wondering for both Vyepti and Rexulti. You mentioned a bit of destocking for both of them. So just wondering if you could give us a bit more color on that. And just wondering, is this sort of a destocking because you shipped a bit more in Q3 -- so it's kind of a reversal of a positive effect from Q3? Or is that a negative impact in Q4, which we can expect to reverse somehow next quarter? That's the first question. The second one is on bexicaserin, please. So given now you have completed the acquisition of Longboard. So just wondering if you could give us some color on the FDA feedback on the broad label from the Phase III trials, please. Just wondering if there's any comment you could share in terms of, for example, has the FDA agreed with how many patients you could usually enroll for whatever subtype and that's sort of thing. And if the trial is positive, then there should be a straightforward broad label. So any color on that, that would be great.

Thank you, Xian. So Tom, you want to comment on inventory?

Yes. So thank you, Xian, for the question. And I just want to be clear that -- and when we look at what the normal ranges of inventory are it's between 10 and 20 days. And so long as the inventory stay within those range, we followed the purchasing patterns of the wholesalers or distributors. When we look at where we were in third quarter, it was where you would expect it in the middle of the range. What we saw over the fourth quarter as we exited at the lower end of the range, and we have seen a rebound in January to the normal middle of the range.

Thank you, Tom. And bexicaserin FDA view?

Yes. So obviously, we have a breakthrough designation for this drug, which gives a little bit more flexibility in terms of regulatory interactions with FDA. So there are different discussions going on now and then. Most of those happened before the end of the year. But there's really nothing new to say more than we have this indication possibility, orphan drug for DEE generally. It's a big tent, but it's not really different from any other trial. You look at the subset of patients in the trial. And the design the proper balance of the different studies, 2 studies with different patient balance has, of course, been through the regulatory approval process. So we assume that this is valid and we're building further on that framework. I'd also like to add, we are, of course, looking forward to a global trial. So this is being now rolled out to other regulators, Europe, Japan and other places. And that is also a process that is fairly early, but those activities are ongoing, and we learn more how different are the regulators may view. But the driving is, of course, the framework from the U.S. here.

Our next question comes from Marc Goodman from Leerink.

Number one, can you give us what we should be expecting when you give us the data on the CAH products in the second quarter? And then second of all, can you help us with how to think about the tax rate for this year, given that last year was so [ foggy ]. And then third, just on Vyepti, help us understand where are these patients coming from? Are you getting patients that are being switched from CGRPs? Are these naive patients? Just curious a little more flavor there.

Thank you, Marc, for those questions. Johan, you want to start with commenting on ACTH.

Yes. Thank you. And I think your question was really about the congenital adrenal hyperplasia study that we expect to read out this year. We have the benefit here of having biomarkers that are also registration endpoints. You have a very strong biomarkers linked to the access, signal and access here. So we expect to get primarily biomarker data that are also the type of biomarker you bring to regulatory approval. We are also, of course, looking at symptoms, and it's a smaller study. And the nature of the study makes it a little harder to really build strongly on symptoms only, but that's not entirely solely necessary for progression of the program. We have gradual proof of concept, I have to say, in this field, you're benefiting from having those readouts. So it's a program where we already have ideas where it's heading, and that's why we talk about it. I also like to mention that this is a very dynamic indication by itself with several players, but none with this mechanism of action, which is the broadest and has the potential to be differentiated.

Thank you, Johan.

And on your question for the tax rate, what we are forecasting is a range of 21% to 24%. That is in principle in line with historical levels, and it's reflected in the investor deck on Slide 28.

Tom, do you want to talk about source of business? I think it was the question.

Yes. Thank you, Marc. So as we look at Vyepti and we look at the overall contribution of the business, Vyepti has been used historically in later lines, which is after anti-CGRP. So if you look at third or fourth line, I think what's important that we saw over 2023 to 2024 is on a percentage basis, the growth rate has been greater, moving up to third line and second line, and that's consistent with our strategy where we believe we have the opportunity to move Vyepti up the treatment paradigm and not have to wait for the third or fourth treatment, but look at a first switch or a second switch, which we think represents the greatest opportunity for growth moving forward and a priority in 2025.

Our next question comes from John Priestner from JPMorgan.

So maybe just on the adjusted EBITDA guidance, which is about 6 percentage points wide. Can you help us understand the push and pulls around the potentially 28% to 30% margin? I know you announced the cost-saving measures at the CMD around SG&A. When do you expect those to start kicking in? But are you continuing to invest in the Brexpiprazole PTSD launch activities or are if those paused for now? And then maybe looking slightly further out, how should we be thinking about that margin progression towards the medium-term target of greater than 30%. Maybe a second question, if I can, on the Abilify franchise. I think you've guided for growth in 2025. But more specifically, how should we really be thinking about the development there? Could it be kind of mid-single-digit growth, high single-digit growth? And ultimately, what level of conversion are you targeting from the 1 month to the 2-month formulation in both the U.S. and EU.

Thank you, John. Joerg, do you want to comment on adjusted EBITDA.

Well, happy to do so. I think first of all, I think the range we're using for the adjusted EBITDA guidance is in line what we previously used. And I think predominantly from a midpoint perspective, that clearly supports our argument of onboarding Longboard without a principle any impact on the margins. When it comes to push and pull, I think there are a couple of impacts, of course. I think, first of all, just as a disclaimer, PTSD is not included in the guidance. Some push and pull always come a little bit around the foreseen generics entry that we see potentially in Canada for Trintellix as well as Abilify in Europe, which I think so far, we're saying we're more than able to offset with Asimtufii. R&D spend is significantly ramping up. That is always something that we watch and monitor very closely. I think that's a good part on the push and pulls. I think margin progression. We don't necessarily give an exact, let's say, ramp-up curve. What we did say was in the capital market event that we aim towards a greater than 30% margin in adjusted EBITDA. And I think if you look at the implied margin for the '25 guidance then we are in pretty good shape getting there. And I think you had 1 last question when it came to capital reallocation efforts. They're ongoing. And there, of course, to a large extent, already integrated into the 2025 adjusted EBITDA guidance, partially driven by the you can say disproportionate reallocation of spend into Vyepti and Rexulti, allowing us to grow faster than previously estimated. But at the same time, of course, what's the favorable development on the margin is, of course, also the divestment of Trintellix back to Takeda in the U.S. where we're in principle, taking promotion out and reallocate our sales efforts into Rexulti.

Thank you, Joerg. Michala, you want to comment on Abilify conversion, but also how we see maybe LoE.

Yes. So thank you for the question. So on Abilify, of course, we see a number of dynamics that we expect to continue into '25. So first of all, the continued penetration of the 2-monthly or Asimtufii where we see very encouraging data from the U.S. but also as we begin to roll it out in Europe, as I said, in 13 markets now and more to come. And also the rest of international operations, we, of course, will see that brand to continue to grow and help us. At the same time, we see in Europe, we expect to see generic competition some time in '25, and that will, of course, dampen the growth in Europe. You also asked about conversion and what our expectations is on conversion. We've previously said 20% to 25%, and we feel -- we still feel that, that is a good estimate. We are encouraged by the conversions we're seeing not only, of course, in the U.S., but also the early signs from Europe. So we still feel comfortable that we will be able to probably outperform analogues and 20% to 25% still feels like a reasonable ambition for us.

And just to build on Michala's comments, the conversion is not only from the 1-monthly, but we also see source of business coming from orals directly to the 2-monthly. So there's more potential we see in this asset as well.

Our last question for today's call comes from Manos Mastorakis in Deutsche Bank.

So question is on your latest views on the MSA competitive landscape, especially given development of an oral synuclein agent and as well as everything else you have on your radar in MSA. And if I can squeeze a question on time lines across bexicaserin and MSA as well as PTSD. So what gives you the confidence that an FDA outcome and decision could still take place in H1? Just to clarify if that came from the FDA or not.

Johan, so I think those 2 questions for you.

Thank you for those questions. Let's start with the MSA question. We have always been considering that there will be other competitors. It's not a very busy space. It's kind of the little brother of Parkinson and gets less attention. But as you noted, there was a readout very recently with a smaller trial, not so different from ours in size, but quite different in design with this [indiscernible] layer. And it definitely looked like something was going on there. We're looking over that data. We don't know more than what we presented in investor call. But I think I welcome more actors in this space. We are not particularly concerned about enrollment. We have a head start here. We announced that they will progress and that will obviously come after proper regulatory interactions. So they will probably be in the back end or enrollment activities, if you worry about that. And I think the more noise and more activities around one indication and it sometimes helps each other. This is an oral agent, yes, but there is so much less to -- we know so much -- we know so little and there's so much more to learn here. So I think it's really too early to say more than that. Sometimes IV administrations are better convenient for some patients that are immobilized and have hard times swallowing and speaking. So at some stage of the disease, it could be a benefit to have a parental administration. There are other programs in this space, other antibodies. They have not gone into MSA other than the Takeda program, together with AstraZeneca MedImmune that we will follow. We have not yet seen any readout from that trial -- Phase II trial. Maybe time line bexicaserin, if I understood. Yes, I mean, obviously, when it comes to time lines, the critical one is now to execute to pivot the trials that are starting up right now. As I said before, we asked at the very, very start of a trial and that's the period when there are a lot of things going on, site activation, rolling out new countries, et cetera. A lot of, lot of, lot of activities. We're very busy with all these things. As usual, we're starting up a big program. So time lines we have estimated being the same as we communicated before, but we need to come back when we really see how enrollments go around the world. Obviously, this is one of our top priorities. So it's -- and we have a good team integrated now into the Lundbeck team. So we're looking forward to continue the good work done by the former Longboard team, many other things. PTSD, yes, we -- as I said before, we don't really know much more than that they need more time, FDA and obviously, there could be other delays. It's in the hands of government and other organizations in the U.S. We just have to follow what they communicate to us. So H1 still remains what we believe is reasonable. If that wouldn't happen, it's an extraordinary situation.

Ladies and gentlemen, this was our last question.

Good. So thank you for joining the call today. And look forward to interacting with you for the rest of the year. Thank you so much.