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

Ladies and gentlemen, welcome to the Lundbeck A/S Financial Statement for the first 3 months of the 2025 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] 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 hand over to Charl van Zyl, President and CEO. Please go ahead, sir.

So welcome, everybody, to the Lundbeck Earnings Call for Quarter 1, 2025. From the outset, I want to just make a quick statement to say again, these strong results of the first quarter are really serving as another proof point of the path we are on in terms of a focused innovative strategy, confirming very much that the path is very strong for us going forward. So let's go to the next slide, please. Of course, what we discussed today are forward-looking statements and of course, subject to change. Let me then go to the next slide, please. Of course, I have the privilege of being joined by my exceptional team here who will cover, of course, the commercial update, but also R&D, the financial update as well as the outlook for the 2025 period. So let's go to the key summary slide. And here, again, I want to emphasize, as we've been consistent with you on a very clear equity story, which is one of advancing focused innovative strategy around 3 areas: growing the assets we have, growing them well; making sure that we build a compelling innovative pipeline that will sustain the growth for the long term of the company, sustainable growth; and of course, funding, thinking through very careful allocation and deployment of our capital to where we see the most opportunities for growth or innovation. And of course, I'm really pleased with the first quarter results, which are a strong validation of a lot of the effort and work we've done over the last 18 months to build the path going forward for Lundbeck. Firstly, our total revenue is growing at 16% and our strategic brands, which now make up 77% of our revenue is growing at 24%. And most importantly, 2 key growth drivers for the long term, Vyepti at 62% and Rexulti at 28%. So again, a validation of a strong execution mindset of the company and making sure we focus our investment on where we can grow sufficiently for the midterm. On the innovation side, we are advancing, of course, the pipeline under 2 areas: neuro-specialty and neuro-rare. And in neuro-specialty, anti-PACAP in its Phase IIb is progressing now into Part B, which is the intravenous administration of anti-PACAP. We've also, of course, in the first quarter, focused significantly on the integration and smooth transition of Longboard with bexicaserin, which is now in full speed on enrollment in Phase III as well as amlenetug and enrolling according to our plan. And we're also advancing anti-ACTH in congenital adrenal hyperplasia Phase Ib. So of course, significant ongoing evolution of the pipeline with more of the late-stage Phase III opportunities emerging. From a financial perspective, of course, the first quarter results, as I said, is a clear confidence in terms of our underlying performance, the investments we've made, the operating model that we've established, which allows us to put ourselves in a position to raise the guidance as indicated on this slide. So when you think about Lundbeck going forward here, it's a company with clear strategic path, one of strategic clarity of where we focus. It's a company that is consistently delivering and executing on what we said we will do, and this is an execution-focused company. And of course, you also see very briefly here, and as you will hear from my colleagues, it's a company that is in transformation and progressing very well. So with that, I would like to hand it over to my team and have Tom and Michala comment specifically on the asset performance. Tom, please.

Great. Thank you, Charl. As Charl mentioned, we are pleased with our commercial performance for 1Q 2025, and this was primarily driven by 24% growth of our strategic brands. I'll first review the performance details for Rexulti. Next slide, please. Rexulti continues to perform well and deliver consistent growth and this is propelled by the continued strong progress within the AADAD segment in the U.S. U.S. reported revenue increased 29% for the first quarter of 2025 versus the prior year. Importantly, this revenue growth was driven by strong underlying TRx demand growth in the U.S. with 22% growth during first quarter 2025 versus the same period last year. Rexulti demand growth accelerated through the first quarter of 2025 in the U.S., recording record highs in market share, TRx and NRx volume. This demand growth is attributable to continued improvement and execution across the marketing mix, and this includes sales force execution across the alliance and optimize direct-to-consumer media mix and patient affordability programs. Growth in the U.S. was supplemented by continued strong demand growth in Europe and international operations, delivering growth of 27% versus the same period last year. Looking forward, we expect Rexulti to be a key driver of growth for Lundbeck, and this growth will primarily be driven by continued expansion of the AADAD franchise supported by solid growth of our base business in MDD. Let's take a deeper look at our progress in AADAD. Next slide, please. Rexulti AADAD volume is becoming increasingly important to overall Rexulti brand growth, and we expect this to continue through 2025 and beyond. AADAD monthly TRx volume has increased 472% versus baseline and the AADAD contribution to overall demand for the brand has grown to nearly 21% based upon the most recent patient claims data. Growth is being primarily delivered by expansion of the HCP prescriber base, growing 374% since launch to over 11,800 prescribers. Rexulti AADAD market share has grown from 0.67 share points prelaunch to 3.44 share points based upon February claims data. Importantly, we continue to see consistent growth on the non-AADAD side of the business, achieving 11.1% growth when comparing January 2025 monthly claims TRx volume to January 2024. The AADAD launch has also had a positive halo effect on the overall brand. AADAD has fueled 907% growth in the 65-plus segment when we look across all indications. The team is continuing to focus on the levers to even further accelerate growth for Rexulti, and this is informed by our marginal return on investment quarterly analysis. We are applying our dynamic resource allocation focused innovator principle and redirecting a portion of our AADAD direct-to-consumer funds to expand our primary care footprint and will allow us to drive greater breadth and depth of prescribing. Let's move on to Vyepti. Next slide, please. Vyepti again delivered strong results during the quarter, and this performance has been fueled by continued strong growth in the U.S. and supported by robust adoption of Vyepti and prioritized ex U.S. markets, including Canada, France, Spain and Germany. Vyepti global net revenue for 1Q 2025 was DKK 1.042 billion, and this represents 62% growth over the same period last year. Net revenue for Vyepti in the U.S. was DKK 916 million, representing 60% growth over first quarter 2024. 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 trial, and we expect to submit for approval by the end of 2025. I do want to take a moment to focus on the U.S. Over the past 18 months, we have made purposeful investments to refine our specialty patient-centric commercial model to support Vyepti. We believe our model is a competitive advantage because it enables our team to appropriately support the patient throughout their patient journey. We continue to see accelerating demand by driving depth and breadth of prescribing and continued positive momentum in new patient starts supported by higher written-to-infusion conversion ratios and best-in-class patient persistency. 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. Vyepti remains on track to achieve over $1.3 billion peak year sales at peak. Michala, over to you.

Thank you, Tom. Let's start with looking at the performance of Brintellix in the Q1 '25 results where we see a very strong performance overall, growing at 7% versus Q1 '24 and now delivering DKK 1.254 billion. We see a continued strong momentum in Europe and international operations, where we have seen double-digit growth in most of our markets. It's worth highlighting that we have a 17% growth in Europe, which was driven by Spain at 29% and Italy at 23% as well as continued strong growth in international operations at 8% with Japan delivering 12% and Canada growing at 22% compared to the same period last year. In Japan, I'm also pleased to share that we achieved -- in the month of April, we achieved a significant milestone and now hold value market share leadership in the market for antidepressants at an impressive 22.6% value market share. When we look ahead, we expect to see continued solid demand growth in Europe and Japan. And I want to remind you that we extended our market exclusivity in Japan by 2 years now with loss of exclusivity in 2031. If we look to the U.S., you can now see the effects of the revised agreement with Takeda, which reflects the lower revenue, but certainly also a higher profitability, and this is a dynamic that we expect will continue throughout the year. I also want to remind you that while we have seen an impressive growth of 22% in Canada in quarter 1, we do expect to see generic competition sometime during the year. Next slide, please. If we look at our Abilify franchise, also here, we see a solid performance in Q1 '25, growing at 16% and just now a little above DKK 1 billion versus quarter 1 last year. In the U.S. specifically, we see an accelerated growth of 18% versus Q1 '24, and this has been driven by Abilify Asimtufii and with a 1.6% market share growth for the franchise. Encouragingly, we continue to see a very strong uptake for Abilify Asimtufii with approximately 52% of the patients -- Abilify Asimtufii new-to-brand patients coming from either oral antipsychotics, other long-acting injectables or naive patients. In Europe and international operations, we saw a growth of 15% versus Q1 '24, and the Abilify LAI franchise continued to see strong growth across many markets, also driven by additional rollout and launches of Abilify 960 milligram, Asimtufii name in Europe. When we look ahead, we expect to continue to see strong uptake of Abilify Asimtufii or Abilify 960 milligrams, while we, at the same time, expect a negative impact in Europe from generic launches towards the end of this year. Let's zoom in specifically on the Abilify Asimtufii or Abilify 960 milligram performance. Next slide, please. When we specifically look at the performance of our Abilify Asimtufii 960 milligrams, we do see the penetration ramping up very nicely. In the U.S., Asimtufii growth is now outpacing other LAIs, as I just said, and more than 52% of new-to-brand patients are coming from orals, other long-acting injectables or naive patients. When we look at the conversion rate in the U.S., we see that Asimtufii has had an aggressive conversion rate, now constituting 16% of total franchise in TRx volume. And importantly, we now also see the 20% of the NBRx, which is a leading indicator of future TRx development, are Asimtufii prescriptions. As you may recall, we started launching Abilify Maintena 960 milligram in Europe, June of last year. And we now have the drug available in 18 EIO, or international operations markets with Australia launching just here in May. We see a strong increase in the conversion rate and have seen that both Spain and Finland have actually exceeded 20% conversion rate. The feedback we received from physicians is very positive, and early market research has suggested that around 1/3 of the patients are coming from oral aripiprazole. The rollout of Abilify 960 milligram continues throughout the rest of 2025 across Europe and international operations markets as we continue to see our regulatory approvals. That concludes the business update. I'd now like to hand over to Johan to give us an update from R&D.

Thank you, Michala, and thank you, Tom. It's very impressive to see the momentum our key brands, a testament to their strong therapeutic characteristics in the indications we're pursuing. So let us turn page for first quarter of '25 from an R&D perspective. Our 2 Phase III neuro-rare programs, bexicaserin in developmental and epileptic encephalopathies and the amlenetug in multiple system atrophy are progressing well, although still at early stages of enrollment in their pivotal trials. The DEEp SEA and the DEEp OCEAN trials for bexicaserin are active in the U.S. and are gradually starting in Europe with more countries expected to be coming on board mid-'25, including from the Asia region. We are not yet, however, at the time point of the trials where we have a firm validation of the projected timelines. Amlenetug, alpha-synuclein antibody, the pivotal MASCOT trial continues to expand into 4 geographies, with enrollment expected to be active globally within the coming months. That means that we successfully completed regulatory activities for the trial with all key agencies, a critical achievement for this pioneering innovative program. In addition, FDA has granted Fast Track Destination in February for the program and also in February, Japan granted Orphan Drug Designation for amlenetug. The latter, we have another Orphan Drug Designation from U.S., Europe and Japan. These destinations are a testament to the high medical need this program is aiming to address. Concerning the sNDA FDA application for brexpiprazole in combination with sertraline for the treatment of PTSD, FDA in early January informed about the postponed decision date and that they like to host an advisory committee meeting. After some delay, we now have a communication from the agency that this will be held on July 18 this year. For Rexulti, we are also pleased to have received approval in March for the treatment of adolescents in schizophrenia in Europe. Turning to Vyepti, eptinezumab. In our last call, I spoke about the interesting life cycle management trial resolution, reconfirming its strong efficacy. Let us now take a closer look at the trial as we obtain results from the 12-week open-label part of the trial. In the 12-week double-blind period of resolution trial by FDA, we confirmed the strong efficacy seen consistently with the drug. The resolution results show rapid treatment effects even in the most severely impacted migraine population, those with chronic migraine and medication overuse headache. As is evident from the right side of the graph, after the dotted line patients switching from placebo to Vyepti when going into the open-label period saw similar improvements to that seen in Vyepti treated patients during the placebo-controlled period, reaching a similar level of efficacy. In addition, the 12-week open-label period demonstrated sustained efficacy from onset of placebo-controlled phase to the end of the open-label trial. The robust and sustained efficacy seen on the primary endpoint was also confirmed on all key secondary endpoints in the placebo-controlled as well as during the open-label period. So yet another data set on Vyepti that verifies its strong clinical profile in very severe migraine conditions, underlining its best-in-class profile, not only in the CGRP area, but overall in migraine prevention treatment. Next slide, please. Anti-PACAP IV holds the potential to address an unmet medical need. I've already been talking about -- we're looking forward today -- sorry, around last time last year, we moved our next-generation migraine program 222 anti-PACAP IDD-1 antibody into Phase IIb trial called PROCEED. The PROCEED trial is an adaptive trial exploring different doses and routes of administration of 222 in patients with migraine for whom 1 to 4 previous preventive treatments have failed to provide the benefit. Also, the PROCEED trial has 12 weeks as main readout time point, while our previous HOPE trial had a readout at 4 weeks. Thus, we're aiming to expand our understanding of the molecule's potential to the PROCEED trial before initiating a future pivotal program. In the first part of PROCEED, we explored a range of subcu doses. In late March, a preplanned interim analysis triggered initiation of an IV dose finding part to build on the previous positive HOPE trial. The first patient was randomized to IV administration already in early April. Next slide, please. I'd like to remind you that the anti-PACAP program 222 is investigating a new and differentiated mode of action compared to anti-CGRP treatments. PACAP and its receptors are broadly expressed. Moreover, abnormal PACAP signaling is involved in pain sensation and neurogenic inflammation. Interference with PACAP signaling has, therefore, potential to affect multiple symptoms of headache disorders. It has also been shown in experimental human studies that PACAP induces migraine-like attack that differs from CGRP-induced headache. PACAP induces a more delayed migraine-like attack associated with more premonitory effects like photophobia and facial pain. With these biological and functional characteristics, we have the potential to see a differentiated clinical profile of anti-PACAP different from anti-CGRPs. In more severe types of migraine, anti-CGRPs have established themselves as effective treatments. However, still 30% to 40% of patients will not achieve adequate response leading a major unmet medical need. Anti-PACAP IV holds potential to address this unmet need. Also, I'd like to mention that with Vyepti, we have a well-established efficacy by IV treatment, and we built an infrastructure in migraine prevention. The future IV anti-PACAP can leverage this established clinical infusion infrastructure. Next slide, please. I have already been talking about looking forward to be able to hold an advisory committee meeting for brexpiprazole. Also in the coming months, we have a better clarity on the progression in our late-stage development programs for bexicaserin and amlenetug once the trials are fully active globally. Anti-PACAP, as I just spoke about, is enrolling very well in the IV part of the PROCEED trial. What I'd like to highlight here is more our early pipeline, where we see strong biology supporting our programs translating to interesting clinical data. A recent review of our data for 909, the anti-ACTH program in congenital adrenal hyperplasia and Cushing's syndrome supported progressing towards formal proof-of-concept evaluation. We're also very pleased to note that the regulatory agencies are also seeing a breakthrough potential of this program. That includes obtaining an Orphan Drug Designation from FDA yesterday for the congenital adrenal hyperplasia indication. Also for the 996, the oral active D1/D2 agonist program for symptomatic treatment in Parkinson's disease, we have now a very encouraging data set on so-called good On-time, supporting progressing towards a formal proof-of-concept trial. We are also outlining right now a more clear overall development plan for this program. This summer, we are also building Phase I further by a new chemical entity going into first-in-human initial evaluation. I hope that will be working out. So you will hear more about that program in the coming years. With that, I'd like to hand over to Joerg.

Thank you, Johan. Before we go into the key figures of Q1, let me summarize the following. We had a strong start to the year. Revenue reached an all-time high, up 16% constant exchange rates, with strategic brands growing 24%, now making up 77% of our total revenue. Growth was led by Vyepti and Rexulti in the U.S. and supported by strong demand momentum across our key strategic brands and regions. Importantly, this was not just about revenue. We saw solid underlying demand trends with volume growth as the primary driver of performance, particularly for our growth brands. Adjusted EBITDA increased by 24% and the margin expanded to 34.9%, reflecting strong operating leverage and disciplined resource allocation. We've been able to reinvest through our capital reallocation program while continuing to improve cost ratios. EBIT was up 33% and adjusted EPS increased 11% despite higher financial expenses from the Longboard acquisition, clear indication of robust underlying profitability. Let's move to the next slide to look at the financial highlights in more detail. Our revenue reached DKK 6.2 billion, growing 16% in the first quarter of '25 at constant exchange rates, driven by the continued strong performance of our strategic brands, which grew 24%. The adjusted gross margin was 88.9% and was in line with the same period last year. Sales and distribution costs increased 2% to DKK 1.9 billion. The slight increase reflects targeted investments in Vyepti and the normalization of Rexulti promotion activities in the U.S., including sales force expansion. These were partially offset by resource redeployment following the Trintellix U.S. transition and ongoing commercial model optimization. Administrative expenses increased 35% to DKK 359 million. The increase was primarily driven by legal provisions for ongoing litigation, structural investments, including Longboard integration and indexation effects. A portion of this increase reflects timing increase. R&D costs increased by 19.6%, reaching DKK 1.2 billion, mainly driven by the Phase III costs of bexicaserin and the anti-alpha-synuclein antibody. Adjusted EBITDA grew 24% at constant exchange rates as a result of the strong revenue growth despite continued investments in building the R&D pipeline. The adjusted EBITDA margin was 34.9%, representing an increase of 1.9 percentage points, reflecting strong operational leverage supported by disciplined capital reallocation, which helped fund investments in R&D and brand growth while continuing to improve cost ratios. Next slide, please. Our EBIT rose 33% to DKK 1.7 billion, reflecting the strong revenue performance, solid cost leverage and lower amortization of product rights despite continued investments in R&D pipeline progression and structural investments. Net financials reached an expense of DKK 221 million, development is mainly driven by higher interest costs due to the new debt obtained in connection with the acquisition of Longboard and unfavorable currency effects mainly due to the U.S. dollar. Our effective tax rate was 22%, down from 23% in the same period last year. Net profit increased by 15% to DKK 1.2 billion, while adjusted net profit and EPS rose by 11%, reaching DKK 1.5 billion. This growth reflects strong EBIT performance, partially offset by higher financial expenses. Next slide, please. Cash flow from operations was in line with the EBIT performance and offset by higher prepaid taxes, which reflected the expected income for the full year, resulting in total inflow from operating activities in the first quarter of '25 of DKK 632 million. The cash flow from investing activities were an outflow of DKK 111 million, mainly due to purchase of PP&E. The cash flow from financing activities were an outflow of DKK 2.5 billion in the first quarter of '25, primarily driven by the repayment of part of the loan facility for the acquisition of Longboard and higher dividends paid to shareholders in March '25. Next slide, please. The performance in Q1 gives us confidence that we are seeing sustained momentum across our strategic brands, particularly Rexulti and Vyepti. And that our resource reallocation efforts are supporting continued investment without compromising profitability. Based on the strong underlying demand trends and the progress in our disciplined capital reallocation program, we're raising our full year guidance. We now expect revenue to grow between 8% and 11% at constant exchange rates and adjusted EBITDA to grow between 8% and 14%. On a reported basis, revenue growth is now expected to be equal to constant exchange rate compared to around 1 percentage point higher previously. Adjusted EBITDA is expected to be around 0.5 percentage point below constant exchange rates versus 2 percentage points higher previously. Both changes are due to updated FX assumptions primarily related to the U.S. dollar. Our full year guidance is based on exchange rates at the end of March with the U.S. dollar at 6.9, now closely aligned with our hedge rate of 6.79. This neutralizes the prior expected upside from currency, but also significantly reduces our expected hedge loss to around DKK 150 million compared to DKK 425 million to DKK 450 million previously. We continue to guide for an adjusted gross margin between 88% and 89% and R&D spend between DKK 5 to DKK 5.2 billion. In addition, depreciation, amortization, impairment losses are expected to be in the range of DKK 1.7 billion to DKK 1.9 billion. Net financial expenses are expected between DKK 535 million and DKK 585 million, primarily reflecting the impact of Longboard related financing. Effective tax rate is unchanged at 21% to 24%. We remain mindful of the challenges ahead, particularly the anticipated loss of exclusivity on some of our strategic brands later in this year, including Brintellix, which is expected to face generic entry in Canada and the continued transition to Takeda in the U.S. We also expect further erosion in the mature brand portfolio with a projected mid-single-digit revenue decline. These dynamics remain fully reflected in our outlook and will continue to be closely monitor. With that, I would like to hand over to Charl.

Thank you, Joerg, and thank you to the team for the update. Let me make some closing remarks before we go to questions. So if we could have the next slide, please. Again, what you heard from us today is certainly strong confidence and strong validation of our path towards the focused innovator and the strategy that we follow, strong business momentum that we see across the board, across our key strategic assets and across the geographies. So the growth engine remains very strong, and it's a proof point, of course, of the work we've done over the last 18 months to ensure that engine is well funded for this growth. We see the advancement of the pipeline, as Johan has mentioned, but also see earlier pipeline opportunities coming to the fore. And of course, with this, we are able to -- with the confidence we have in the underlying performance, able to raise our guidance and maintain a very healthy financial picture in our capital redeployment either to innovation or growth. So again, strong performance, strong momentum and strong confidence from the management team on where we are heading with Lundbeck. With that, I think we can now open it for questions.

[Operator Instructions] Our first question comes from Marc Goodman from Leerink Partners.

This is Madhu on for Marc. Our first question has to do with bexicaserin. Could you please provide some updates regarding the enrollment in both DEEp SEA and DEEp OCEAN trials? And the second question has to do with the Phase Ib of the 13909, please. What should we expect about the data that's going to be released? Is it going to be safety data only? Or is it going to be some sort engagement data as well? And could you please remind us again how many dose cohorts were assessed in this trial?

Thank you for the question. Johan?

Yes, I'm not sure I heard the second question, but I will try. So bexicaserin, your question was about enrollment rates, right? And that's -- what I mentioned was that we are fairly early stage of the trials. We are just open up more globally. So this is not a fully global open trial yet. So we've not reached the stage where you really have solid proof points where you are. But so far, it's going well. We have had a number of regulatory interactions that also been very supportive. So we're kind of through that phase of the trial and opening up to site activations right now. That's all I can say at this stage. The second one was about -- again, I didn't hear exactly which -- did you talk about -- 909? Yes. Yes, that's a program we've been actually presenting a little bit before. It's the dual indication program that is going for both congenital adrenal hyperplasia in Cushing's, and we have data from both populations at this stage. We have mostly had open-label approach with that study, and we're looking at exploring further doses in a more controlled environment. That will be the next step of the trial. So basically, more referring to a placebo response in building it up. As I also said, we have an orphan drug designation on it now for congenital adrenal hyperplasia, but the program is really built on both indications moving forward. But we have flexibility in the program going for either of those 2 indications. In terms of doses, we're not at the stage where we're talking about the doses because we are still at an exploratory stage.

The next question comes from Michael Novod from Nordea.

First one for Johan. In terms of -- you try to detail a bit more the -- what your sort of sense being the main topics on the AdCom for Rexulti in PTSD and also how fast a potential decision can be made afterwards because now it's been in the hands of the FDA for quite a long time. So are you able -- do you think they will be able to act fast following the outcome of the vote? And then secondly, on the guide, can you try to sort of elaborate a bit more maybe in actual numbers, how much you actually sort of put in, in terms of generic erosion because if you just take your first quarter and multiply by 4, then you get to 13% growth in reported terms. So just to get a feeling for how much you actually put and how conservative you actually are and also whether you have already taken some cautiousness in should there be anything on tariffs, et cetera?

So Johan, you want to comment on PTSD?

Yes. I mean, obviously, the main topics we can expect to be for the AdCom. We can expect the usual 2, 3 questions, have we demonstrated efficacy sufficiently, risk-benefit profile. And then it's obviously a last question about the probability. Those are the general ones. There may be more specific questions. And obviously, in the actual meeting, there will be many more topics to discuss. We are basically looking forward to get to this meeting. It's been delayed a few times. In terms of the decision, we have no indication from FDA when and how we can expect a decision after the AdCom. I think they probably like to hear the AdCom and they like them [indiscernible] over what they get from the AdCom before they reach a decision. So we have no new date for decision. And as you know, they canceled the PDUFA date, which was the official approval date in February.

Michael, first of all, I think I would not just extrapolate Q1 because as we've also stated, in Q1, you had a, you can say, normalization of inventory levels. That's an effect, we would quantify approximately at DKK 150 million that impacted our Q1 numbers that, of course, is not reoccurring in following quarters. I think when it then comes to the outlook, it's mostly around the 3 areas we talked about. It's the early somewhat mid-year expected generic erosion on Brintellix in Canada. It's basically the generic entry for the latter half of the year for Abilify Maintena in Europe. And it is clearly also the divestment of our Takeda agreement or basically Trintellix agreement back to Takeda, which fully shifted into royalties. And that, of course, is on the back of a rolling brand towards the end of this year. And I think your last aspect was in terms of impact on tariffs on our guidance. We have given a disclaimer that, of course, our guidance focuses on the operating part of our business and excludes the impact from macroeconomic environment. I think it's fair to say that for '25, we see from a tariff perspective, so far, not a significant impact.

Maybe just one follow-up to Abilify Maintena. What is sort of the status for what you've seen in terms of generic activities trying to get approvals? What about price listings because I guess, price listings are extremely important in those markets as well. And if you don't have sort of applied for price listing, then it won't happen, at least not in 2025. So can you give an update to that?

I can give an update that the latest we've heard is that it's still a clock stop with EMA. So the regulatory file is still being processed. And in terms of payer activity, I don't have a lot of specifics at this point. But of course, that, of course, also follows the regulatory approval by EMA.

The next question comes from Manos Mastorakis from Deutsche Bank.

Congrats on the results. So two, if I may. First for Johan. What more can you share about what you've learned so far about the biology or administration of the PACAP molecule given the outcome with the subcutaneous? And what would you say is the impact on your strategy and investments moving forward? Is that potentially where the Vyepti increased investment is coming from? Just give us a little bit of a more high level impact of the PACAP developments. And maybe for Charl. I believe you previously said you've been providing more color on how the research allocation program is progressing. It's also a question for you, Joerg, really. But what can you share now to be more specific, how long is this going to go for this reallocation program? How much more room for further improvement in terms of margins do we have?

Yes. I can start with the PACAP question. At this stage, we are progressing with the control study. So we don't have full insight into data. This is a switch that was preplanned in the protocol to be able to occur. So it's the usual Phase IIab trial, where you try to really nail down the doses that are active from the initial very encouraging HOPE trial, which was an IV trial, as you may recall. So the whole idea here is, of course, to explore subcu dose range and IV dose range. So actually I don't have much more to say in terms of differentiation. It's a strong, differentiated profile biologically and quite frankly, also clinically as I went through. The translation of that into differentiation against CGRP class or any other class like with BOTOX for prevention of migraine is still unclear at this stage. We have some sniff for this in the PROCEED trial where we look at different populations. And I'd like to remind you, we're looking at people that failed prior preventive treatments. So that's also a part to really already at this stage, look at how the drug performs, which was also the HOPE population. I think you asked about Vyepti and further...

Yes. So I think, Manos, your question maybe alludes to are we, in a sense, focusing our investment role behind Vyepti? And the answer is no. Vyepti remains well funded for its growth and also the investment we make from a clinical development in anti-PACAP remains unchanged. And as Johan said, we will learn more as we read out the Phase IIb and enter into Phase III. Then I think, Manos, your question was on capital reallocation. As we've always stated, we have, in essence, a target of achieving an ability to have flexibility of around 10% of our capital, so DKK 1 billion to DKK 1.5 billion, and we are progressing very well with that. That's coming from either additional growth or from being very efficient in how we operate. And we see that we have a strong line of sight to be able to bake all of that into our midterm. And it allows us, of course, as an example, today to be able to absorb the Phase III results or Phase III program of bexicaserin into our P&L and remain within a healthy financial picture. So I think that gives you a sense that we're executing against it, transforming the company, but also being very mindful around how we redeploy the capital in the best place going forward.

The next question comes from Xian Deng from UBS.

Two, please. The first one is, I know there are still a lot of uncertainties, but just wondering what are your initial thoughts on most favored nation drug pricing, especially just wondering for Rexulti, when you -- where you have relatively limited European basically launch. Just wondering -- I know there's a lot of uncertainty. Just wondering how -- what are your initial thoughts on this? That's the first question. And the second one is for Johan. If I can -- if I may just maybe follow-up on the PACAP question. Just wondering because usually, the conversion from IV to subcu formulation is relatively straightforward. I mean, the KEYTRUDA, a lot of oncology drugs [ does that. ] Many use Halozyme's technology, which is relatively mature. So just wondering if you could give us color or any theories of what actually happens. So why do you -- why the subcu dosing didn't work out as planned?

So let me start with the first question on, I think, your question around overall policy outlook. Of course, as we are all again stating that today, we don't have knowledge that gives us a clear indication of where this will go. We are very focused as we are with all governments across all countries to make sure that access for patients is the top priority. But at this point, it's speculative to really quantify what this might mean for us. And so I think as an industry, we're working closely with all governments to ensure that access for patients to innovation remains unchanged. Johan, do you want to comment on anti-PACAP?

Yes. Thanks for the question. Let me start by reminding you about the HOPE trial, where we really went out to test whether this mechanism may work. So we had a high dose, what we call a high dose, which was really hammering the target, very high dose. And then we had a somewhat lower dose in a smaller group of patients. So that was really us finding whether the biology delivers anything. What we're doing in the PROCEED trial is going down in doses. We're pushing it downwards to see how far we can go down, which is extremely important, particularly for antibody therapies and the cost of goods, et cetera. So we're pressing the margin downwards. In terms of what happened when you do that, I can only speculate because as I said, I haven't seen the data. They could, of course, be other factors playing a role, but dose is one of those factors pressing it down. It's also pharmacodynamics. If you give a drug IV, you have a hit and run pharmacology much more than a subcu. Subcu is much more delayed way of interacting with the target. So it's very important for us to look at basically pharmacokinetics coupled to target engagement because the turnover takeup in -- which is the driver of the biology here. It's not extremely well known in migraine conditions or not even normal in [indiscernible]. So there are many PK/PD related things that we'll find out, hopefully, in the data set. Otherwise, I can't speculate, but it's better to get the data and we talk about it once we have it.

The next question comes from Charles Pitman King from Barclays.

A couple of quick clarifications. Just firstly, on your condensed statement of cash flows, I've just noticed there's a little bit less disclosure. So I'm wondering if you're going to be providing expanded cash flow financials? Or should we consider this to be the kind of level of disclosure to expect going forward, for example, the breakdown of depreciation and amortization in your cash flows? Secondly, just going back to the PTSD question. Given the kind of delayed launch time frame, I know previously you were saying no change to expectations if you achieve it by the end of 1H, 18th of July suggest maybe there's a quarter or 2 further delay to bring that to market. Does that impact your peak sales expectation for the indication? And then on the kind of Brintellix strength, you've kind of highlighted the double-digit European growth. What do you kind of credit this rather strong growth to so many years after its launch? Are you going to be reallocating efforts behind that following the end of the Trintellix and deal with Takeda? And can I just double check that you are expecting generic competition in Japan by the end of this year for Trintellix given Slide 9's market exclusivity extension of 2 years comment?

Thank you, Charles, for that question. Let's start with cash. Will let...

I'm happy to take the first question. Of course, in principle providing condensed statement of cash flows in the current form similar to as we've always done it over the past quarters, and that's actually exactly the way how we will also present it going forward.

Thank you, Joerg. Tom, would you like to comment on PTSD peak sales timing of launch?

Yes. So thank you for the question, Charles. When we look at the PTSD forecast, clearly, there will be a delay based upon the AdCom. And once we hear back from the AdCom, we will be able to mobilize our resource and launch, honestly, the next day related to beginning to start commercialization. On the forecast, you basically just do a lift and shift as it relates to the peak year sales. And because we're going to be going generic in 2029, we had peak year sales projected in 2028, and we believe that we can still achieve that number.

I'd just build on your comment, Tom, to remind all of those who've dialed in that, of course, we still remain with a 50-50 chance of an approval. Although we have an AdCom, it is not in our midterm guidance, and so this is, of course, to be very clear how we see this indication with the outside chance of approval. The question then for you, Michala, was around Brintellix. Your confidence around why it's going so well in Europe. Of course, I would say the organization, what you're putting in place. And then what is the timing on Japan Brintellix...

So thank you for the question, Charles. Let me start with Europe. We continue to see a strong execution of our strategy, which, of course, has a level of going deeper with our prescribers, but also in some areas, we've expanded into new segments of the prescribers. So that is what's bringing us strong growth. So continued strong execution in the marketplace and investing behind Brintellix to the tune that it's still relevant, given the stage of the life cycle. With regards to Japan, maybe a misunderstanding. The generic is not -- has not been intended for Japan this year. That was -- we were mentioning Canada that we expect to see generics in Canada this year. Japan, I can confirm that we have gotten an extension or indication that gives us a 2-year extension to 2031. So no generics expected for Brintellix in Japan. This year, it's Canada. So just wanted to confirm that.

The last question for today's call comes from Shan Hama from Jefferies.

A couple from me, please. Could you just clarify how you expect Rexulti performance to develop throughout the rest of the year, particularly in terms of a new goal for Alzheimer's agitation as a percentage of the Rexulti brand? And then I know sort of you pointed to a strong performance in Alzheimer's agitation and MDD. But are you seeing any weakness or perhaps share taking in schizophrenia? And then finally, your guidance rate at the EBITDA level implies potential for EBITDA growth at a higher level to revenue growth for the year. Could you just tell us some of the key levers to achieving the top end of that profit range?

Thank you for the question, Shan. As we look at Rexulti's performance, we're pleased with the progress that we made during the first quarter of 2025, and we expect that trajectory to continue for the rest of the year. As I said, this will primarily be driven by the continued uptake of AADAD supported by consistent performance for the MDD franchise as well. As it relates to schizophrenia, schizophrenia represents about 8% of our total business. So it's very, very small. And as we think about the -- if we look at source of business for the new competitors that have entered the marketplace, we really have seen a de minimis impact in terms of switches from Rexulti to the new competitors in schizophrenia.

And coming back to your question, I think, first of all, it's the strong revenue growth that drives the improvement of basically 3% increase in our guidance on adjusted EBITDA. Clearly, we have also reflected, I would say, towards specifically '25, a bit of a higher ambition on cost discipline around especially contribution out of a global procurement for growth program.

No other questions. So with that, I assume we can close the call and want to thank everyone for joining today. We look forward to seeing you very soon.

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