Full year report 2010 - Lundbeck delivers at the top-end of guidance and momentum is expected to continue in 2011
H. Lundbeck A/S (Lundbeck) announces 2010 results, which meet all financial
expectations. Full year revenue was DKK 14,765 million and increased 7% compared
to 2009, driven by a positive development in all regions. Profit from operations
(EBIT) was DKK 3,357 million, increasing 17% and corresponding to an EBIT margin
of 22.7% for the year.
· Cipralex(®), Ebixa(®) and Azilect(®) continue to show strong growth of
9%, 11% and 34% respectively. Lexapro(®) revenue was marginally down compared to
2009
· Xenazine(®) contributed DKK 610 million growing 105% compared to last
year
· Operating profit before depreciation and amortisation (EBITDA) was DKK
4,393 million corresponding to an EBITDA margin of 29.8% and thereby exceeding
guidance
· Long-term growth prospects improved during 2010 as a result of six new
partnership deals and positive phase III data for three pipeline compounds
· Lundbeck expects revenue of DKK 15.3-15.8 billion, EBITDA of DKK
4.3-4.6 billion, EBIT of 3.3-3.6 billion for 2011 and net profit of DKK 2.3-2.6
billion
· 2011 guidance includes significant investments in preparation for new
product launches (Sycrest(®), Onfi(TM) (clobazam) and nalmefene)
· The Supervisory Board proposes to pay a dividend of DKK 3.77 per share,
corresponding to a payout ratio of 30%.
2010 2009 Growth
Distribution of revenue
DKKm DKKm Growth at CER*
------------------------------+------+--------------
Cipralex(®) 5,808| 5,320| 9% 6%
| |
Lexapro(®) 2,443| 2,451| - (7%)
| |
Ebixa(®) 2,403| 2,162| 11% 11%
| |
Azilect(®) 1,028| 769| 34% 32%
| |
Xenazine(®) 610| 298| 105% 95%
| |
Sabril(®) 179| -| - -
| |
| |
| |
Europe 7,815| 7,216| 8% 7%
| |
USA 3,722| 3,632| 2% (4%)
| |
International Markets 2,970| 2,621| 13% 5%
| |
| |
| |
Total revenue 14,765|13,747| 7% 4%
* Constant exchange rates
With the presentation of the 2010 full year results, Lundbeck's President and
CEO Ulf Wiinberg said:
"2010 has been a year of progress for Lundbeck. The good momentum is expected to
continue for our marketed products, and several positive pipeline events and new
partnerships allows for investments in commercialisation of a number of new
products already in 2011. During the fourth quarter we received positive phase
III data on nalmefene and an NDA was submitted for Onfi(TM) in the US."
Management review
Financial highlights and key figures
2010 2009 2010 2009
Q4 Q4 FY FY
--------------------------------------------------------------------------------
Financial highlights (DKK million)
| |
Revenue 3,530 3,540| 14,765 13,747|
| |
Operating profit before depreciation and 586 800| 4,393 3,728|
amortisation (EBITDA) | |
| |
Profit from operations (EBIT) 321 408| 3,357 2,858|
| |
Net financials 10 (73)| (68) (192)|
| |
Profit before tax 331 335| 3,289 2,666|
| |
Tax 93 99| 823 659|
| |
Profit for the period 238 236| 2,466 2,007|
| |
| |
| |
Equity 11,122 8,803| 11,122 8,803|
| |
Assets 18,005 17,127| 18,005 17,127|
| |
| |
| |
Cash flows from operating and investing (717) 366| 2,462 (2,040)|
activities | |
| |
Property, plant and equipment investments, 226 87| 383 258|
gross | |
| |
|
|
Key figures |
| |
EBIT margin (%)(1) 9.1 11.5| 22.7 20.8|
| |
Return on capital employed (%) 3.0 3.3| 27.6 28.0|
| |
Research and development ratio (%) 26.7 25.0| 20.6 23.2|
| |
Return on equity (%)(1) 2.2 2.7| 24.8 24.6|
| |
Solvency ratio (%)(1) 61.8 51.4| 61.8 51.4|
| |
|
|
Share data |
| |
Number of shares for the calculation of EPS 196.1 196.1| 196.1 196.1|
(million) | |
| |
Number of shares for the calculation of DEPS 196.1 196.1| 196.1 196.1|
(million) | |
| |
Earnings per share (EPS) (DKK)( 1) 1.21 1.20| 12.58 10.24|
| |
Diluted earnings per share (DEPS) (DKK)( 1) 1.21 1.20| 12.58 10.24|
| |
Cash flow per share (DKK)( 1) (0.57) 3.24| 16.65 15.47|
| |
Net asset value per share (DKK)( 1) 56.71 44.89| 56.71 44.89|
| |
Market capitalisation (DKK million) 20,788 18,582| 20,788 18,582|
| |
Share price end of period (DKK) 106.00 94.75| 106.00 94.75|
| |
Proposed dividend per share (DKK) - - | 3.77 3.07|
| |
|
| |
OTHER | |
| |
Number of employees (FTE) 5,644 5,733| 5,644 5,733|
1)( )Definitions according to the Danish Society of Financial Analysts'
Recommendations & Financial Ratios 2010.
Lundbeck's development portfolio
Lundbeck is developing a number of new and promising pharmaceuticals for the
treatment of central nervous system (CNS) disorders. The pipeline projects are
targeting areas where Lundbeck currently has a market presence, such as
depression, anxiety and other psychiatric disorders - as well as new areas such
as stroke and alcohol dependence. Lundbeck's pipeline includes:
Two compounds under regulatory review
Five compounds in clinical phase III
Four compounds in clinical phase II
Three compounds in clinical phase I
Eight compounds in Lundbeck's pipeline have demonstrated clinical proof of
concept. Pipeline development is summarised as follows:
Regulatory review
Following the positive and highly statistically significant findings from the
pivotal clinical phase III study with clobazam in the treatment of Lennox-
Gastaut syndrome, the filing process with the US Food and Drug Administration
(FDA) was initiated at the end of 2010. Lundbeck expects clobazam to provide
additional growth opportunities for the US operation. Assuming approval,
clobazam will be marketed in the US under the brand name Onfi(TM).
In September, Lundbeck's partner Mochida Pharmaceutical Co., Ltd. filed a New
Drug Application (NDA) for escitalopram for the treatment of depression with the
Japanese Ministry of Health, Labour and Welfare (MHLW). If approved, Lundbeck
expects escitalopram in Japan to contribute meaningfully to Lundbeck's financial
performance from 2012 and onwards
Clinical phase III
The four additional clinical phase III studies with Lu AA21004 in Major
Depressive Disorder (MDD) are recruiting patients according to plan. The studies
will include approximately 2,000 patients with moderate to severe depression. In
order to explore the full potential of Lu AA21004, the doses included in the
trials are 10 mg, 15 mg and 20 mg. The studies are based on the clinical data
obtained to date, which demonstrate positive results for the potential efficacy
and the tolerability profile of Lu AA21004. In addition to the ongoing phase III
programme, Lundbeck will initiate additional profiling studies in order to
further strengthen the profile of the compound ahead of commercialisation.
Lundbeck has completed a short-term efficacy study and a long-term safety study
in the overall pivotal programme with nalmefene. The data confirms the profile
of nalmefene as efficacious and safe in helping individuals to reduce their
alcohol consumption and demonstrate that nalmefene is the first potential
treatment alternative for many people in need of a reduction of their total
alcohol consumption. The data from the two studies is consistent with the
profile seen in previous clinical studies. It is Lundbeck's view that nalmefene
is on track for submission of the MAA in Europe in the second half of 2011
pending successful completion of the last pivotal efficacy study, which will be
reported in the second quarter of 2011.
The phase III studies for desmoteplase in ischaemic stroke, DIAS-3 and DIAS-4,
is experiencing slow patient recruitment and several initiatives are ongoing in
order to speed up recruitment.
Zicronapine is a new type of compound with a strong pro-cognitive effect in
animal models and the potential to treat a number of neurological and
psychiatric diseases. The pivotal program with zicronapine has been initiated.
The first study in the programme is focused on schizophrenia and is expected to
enrol some 160 patients. The primary objective is to assess the effect of
zicronapine versus risperidone on several metabolic parameters during six months
of treatment. The study will also include efficacy measures like change from
baseline in the Positive and Negative Syndrome Scale (PANSS) total score as well
as various safety objectives. The pivotal program is planned to include
additional phase III studies to further investigate the compound's benefit and
risk profile.
Clinical phase II
In July 2009, solid clinical phase II data with Lu AA24530 was reported. It has
been decided to delay the initiation of the clinical phase III programme with Lu
AA24530. This decision has been made in order to further optimise the
development programme and to prioritize the full Lu AA21004 clinical phase III
programme.
Lu AA24493 is in clinical phase II in the treatment of Friedreich's ataxia and
in clinical phase I in the treatment of acute ischaemic stroke. Ongoing studies
in both programmes are expected to report data in the first half of 2011.
Financial forecasts and forward-looking statements
Financial guidance 2011
For the full year 2011, Lundbeck expects revenue to be DKK 15.3-15.8 billion,
profit from operations before depreciation and amortisation (EBITDA) to be DKK
4.3-4.6 billion and profit from operations (EBIT) to be DKK 3.3-3.6 billion. Net
profit for 2011 is expected to reach DKK 2.3-2.6 billion.
2010 2010 2011|
Lundbeck's financial guidance guidance* reported guidance|
DKK billion DKK million DKK billion|
-----------------------------------------------------+-----------+
Revenue 14.6-14.8 14,765| 15.3-15.8
|
EBITDA 4.2-4.3 4,393| 4.3-4.6
|
EBIT 3.3-3.4 3,357| 3.3-3.6
|
Net profit - 2,466| 2.3-2.6
|
Effective tax rate 24-25% 25.0%| 26-28%
* As restated in the third quarter interim report 2010 (3 November 2010)
Forward-looking statements
Forward-looking statements provide current expectations or forecasts for events,
such as product launches, product approvals and financial performance. Forward-
looking statements are subject to risks, uncertainties and inaccurate
assumptions. Actual results may differ from expected results. Factors that may
affect future results include fluctuations in interest rates and exchange rates,
a delay in or failure of development projects, production problems, unexpected
contract breaches or terminations, government-mandated or market-driven price
decreases for Lundbeck's products, introduction of a competing product,
Lundbeck's ability to successfully market both new and existing products,
exposure to product liability and other lawsuits, changes in reimbursement rules
and governmental laws and their interpretation and unexpected growth in costs
and expenses.
Dividend
The Supervisory Board proposes to pay a dividend of 30% of net profit for the
year to shareholders of the parent company. This corresponds to DKK 3.77 per
share. Dividend payout is to be approved at the Annual General Meeting 30 March
2011.
Fourth quarter 2010
Revenue
Total revenue for the fourth quarter was DKK 3,530 million, and comparable with
2009.
Q4 2010 Q4 2009 Growth 2010
Total revenue
DKKm DKKm Growth at CER DKKm
-----------------------------+-------+--------------------+
Cipralex(®) 1,456| 1,354| 7% 4% 5,808|
| | |
Lexapro(®) 520| 600| (13%) (18%) 2,443|
| | |
Ebixa(®) 585| 548| 7% 8% 2,403|
| | |
Azilect(®) 271| 225| 21% 18% 1,028|
| | |
Xenazine(®) 172| 116| 49% 38% 610|
| | |
Sabril(®) 56| -| - - 179|
| | |
Other pharmaceuticals 415| 619| (33%) (37%) 2,036|
| | |
Other revenue 55| 78| (29%) (30%) 258|
| | |
Total revenue 3,530| 3,540| 0% (4%) 14,765|
Revenue from Cipralex(®) (escitalopram) for the treatment of mood disorders rose
to DKK 1,456 million, an increase of 7%, or 4% at constant exchange rates.
Revenue from Lexapro(®), escitalopram marketed in the US by Forest Laboratories,
Inc. (Forest), was DKK 520 million for the quarter. This was a decrease of 13%,
or 18% at constant exchange rates, compared to the same period last year. The
decrease was a result of the intention of keeping Lexapro(®) inventory levels at
six months of sales.
Ebixa(®) (memantine) for the symptomatic treatment of Alzheimer's disease
generated fourth quarter revenue of DKK 585 million, an increase of 7% compared
to the same period last year. The increase corresponds to 8% growth at constant
exchange rates. Lundbeck has the marketing rights to Ebixa(® )in most of the
world, except Japan and the US.
Revenue from Azilect(®) (rasagiline) for the treatment of Parkinson's disease
was DKK 271 million, an increase of 21%, or 18% at constant exchange rates,
compared to the fourth quarter last year. Lundbeck has commercial rights to
Azilect(®) in Europe (in co-promotion with Teva Pharmaceutical Industries Inc.
in France, Germany and the UK) and some markets outside Europe, including six
Asian countries.
Xenazine(® [1]) (tetrabenazine) for the treatment of chorea associated with
Huntington's disease generated revenue of DKK 172 million in the fourth quarter,
an increase of 49%, or 38% at constant exchange rates compared to the same
period last year. Xenazine(®) was launched in the US in November 2008.
Sabril(®) (vigabatrin) for the treatment of refractory complex partial seizures
(rCPS) and infantile spasms (IS) generated fourth quarter revenue of DKK 56
million. Sabril(®) was launched in the US in September 2009.
Other pharmaceuticals, which comprise the remainder of Lundbeck's products,
decreased 33% to DKK 415 million. This was primarily due to a decrease in
revenue from Lundbeck Inc.'s more mature products.
Other revenue was DKK 55 million, compared to DKK 78 million for the fourth
quarter of 2009.
Europe
Fourth quarter revenue in Europe increased 3% compared to the same quarter last
year. Growth in Ebixa(®) and Azilect(®) was offset by the decreasing revenue
from other pharmaceuticals.
Q4 2010 Q4 2009 Growth 2010
Revenue Europe
DKKm DKKm Growth at CER DKKm
-----------------------------+-------+-------------------+
Cipralex(®) 984| 973| 1% 0% 3,929|
| | |
Ebixa(®) 501| 465| 8% 7% 2,040|
| | |
Azilect(®) 245| 204| 20% 19% 932|
| | |
Other pharmaceuticals 211| 248| (15%) (15%) 914|
| | |
Total revenue 1,941| 1,890| 3% 2% 7,815|
Cipralex(®) generated fourth quarter revenue of DKK 984 million in Europe and
continues to gain market shares and reinforce its leading position in most
countries in Europe. Revenue increased 1% in spite of the impact from the launch
of generic escitalopram in Spain, Norway and Finland as well as health care
reforms implemented in some countries during the year including Greece and
Spain. At the end of November 2010, Cipralex(®) held a market share in value of
20.3% of the European antidepressant market, compared with a market share of
19.7% a year earlier. In February 2011, the Federal Joint Committee in Germany
(G-BA) recommended to group escitalopram together with citalopram in a reference
price group, indicating a fixed price for reimbursement on escitalopram in
Germany. The recommendation is pending approval by the German Ministry of
Health. Approval of this recommendation will have a negative impact on sales in
Germany going forward.
Revenue from Ebixa(®) rose to DKK 501 million during the quarter, and at the end
of November 2010 the product held 18.9% of the European Alzheimer's market
measured in value, compared to a market share of 17.2% at the same time in
2009. Italy continues to experience high growth as a consequence of the
reimbursement received in 2009 and the launch of the once-daily formulation in
the country. In November 2010, Ebixa(®) had a market share in Italy of 27.7%
compared to 23.5% a year earlier. Ebixa(®) revenue was negatively impacted by
healthcare reforms in Greece and price reforms in Spain, which were not in place
in the fourth quarter 2009. Recently, NICE (National Institute for Health and
Clinical Excellence), which is an advisory organ for the British health
authorities, decided to support the use of memantine for the treatment of
Alzheimer's disease. This is expected to have a positive impact in the UK going
forward. Memantine, the active ingredient in Ebixa(®), is the second-most
prescribed pharmaceutical in Europe for the treatment of Alzheimer's disease.
Fourth quarter revenue from Azilect(®) amounted to DKK 245 million, an increase
of 20% compared to the fourth quarter of 2009. Azilect(®) now holds a market
share in value of 10.4% of the total European Parkinson's market (November
2010). This compares to a market share of 8.0% at the same time in 2009.
Azilect(® )continues to gain market share in Europe, as it is increasingly
recognised as an effective and easy-to-administer medication. The reimbursement
of Azilect(®) in France early in the year continues to support sales. At the end
of November, Azilect(®) had achieved a market share in France of 13.5%. The
price reform in Spain had some negative impact on sales.
Revenue from other pharmaceuticals was DKK 211 million, a decrease of 15%
compared to last year. The decrease was primarily driven by decreasing revenue
from Cipramil(®).
USA
Lundbeck's fourth quarter revenue in the US was DKK 827 million, a decrease of
14%, or 19% at constant exchange rates, compared to the fourth quarter
2009.
Q4 2010 Q4 2009 Growth 2010
Revenue USA
DKK million DKK million Growth at CER DKK million
---------------------------------+-----------+-------------------------+
Lexapro(®) 520| 600| (13%) (18%) 2,443|
| | |
Xenazine(®) 171| 110| 56% 45% 577|
| | |
Sabril(®) 56| -| - - 179|
| | |
Other pharmaceuticals 80| 251| (69%) (72%) 523|
| | |
Total revenue 827| 961| (14%) (19%) 3,722|
Revenue from Lexapro(®) was DKK 520 million for the quarter, a decrease of 13%,
or 18% at constant exchange rates, compared to the same quarter last year. The
decrease is primarily due to lower bulk deliveries as a result of the intention
of keeping inventory levels at six months of sales. At the end of November,
Lexapro(®) held a market share in value of 24.4% of the US aggregate market for
antidepressants, compared to a market share of 23.6% in November 2009.
Prepayments from Forest, recorded in Lundbeck's balance sheet as the difference
between the invoiced price and the minimum price of Forest's inventories, were
DKK 517 million as of 31 December 2010. This compares to DKK 693 million as of
the end of 2009. At the end of the fourth quarter, the inventory levels
corresponded to approximately six months of commercial supply.
Revenue from Xenazine(®) was DKK 171 million for the quarter, an increase of
56%, or 45% at constant exchange rates, compared to the fourth quarter last
year. Xenazine(®) sales are progressing well and are on track to meet our
expectations.
Sabril(®) revenue for the quarter was DKK 56 million. The uptake of IS patients
continues to be encouraging, whereas enrolment of patients suffering from rCPS
is slower.
Fourth quarter revenue from Other pharmaceuticals in the US was DKK 80 million,
a decrease of 69%, or 72% at constant exchange rates, compared to same quarter
last year. The decrease in sales was mainly due to the temporary withdrawal of
NeoProfen(®) from the market at the beginning of the third quarter, as well as
the launch of generic chlorothiazide (Diuril(®)) in December 2009 and
indomethacin (Indocin(®)) in February 2010.
International Markets
Revenue in International Markets, which comprises all of Lundbeck's markets
outside Europe and the US, was DKK 707 million for the quarter. This is an
increase of 16% compared to the fourth quarter 2009, or 9% in constant exchange
rates. The growth was primarily driven by growth in
Cipralex(®).
Revenue Q4 2010 Q4 2009 Growth 2010
International Markets
DKK million DKK million Growth at CER DKK million
---------------------------------+-----------+-------------------------+
Cipralex(®) 472| 381| 24% 15% 1,879|
| | |
Ebixa(®) 84| 83| 1% 10% 363|
| | |
Azilect(®) 26| 21| 25% 13% 96|
| | |
Other pharmaceuticals 125| 126| (1%) (10%) 632|
| | |
Total revenue 707| 611| 16% 9% 2,970|
Cipralex(®) generated fourth quarter revenue of DKK 472 million in International
Markets, an increase of 24% compared to the same quarter last year, and
corresponding to an increase of 15% at constant exchange rates. Cipralex(®)
sales were experiencing continued growth in most International Markets. The
reimbursement of Cipralex(®) in the Canadian provinces of Ontario and British
Colombia continues to support revenue growth in the country and the brand now
holds a market share in terms of value of 14.1% in Canada (November 2010),
compared to 10.0% at the same time last year. At the end of the third quarter
2010, Cipralex(®) held a market share in terms of value of 11.0% of the
aggregate market for antidepressants in International Markets[2], compared to a
market share of 10.3% in the same period last year.
Ebixa(®) generated fourth quarter revenue of DKK 84 million, an increase of 1%,
or 10% at constant exchange rates. Ebixa(®) revenue was negatively impacted by
the launch of generic versions of memantine in Canada. In the third quarter,
Ebixa(®) held 8.4% of the total market in terms of value of pharmaceuticals for
the treatment of Alzheimer's disease in International Markets(2). This compares
to a market share of 10.3% in Q3 2009.
Other pharmaceuticals generated revenue of DKK 125 million during the quarter, a
decrease of 1%, or 10% in constant exchange rates, compared to the same quarter
last year.
Expenses
Total costs for the quarter were DKK 3,209 million, an increase of 2% compared
to the fourth quarter 2009.
Q4 2010 Q4 2009 2010
Distribution of costs
DKK million DKK million Growth DKK million
----------------------------------+-----------+------------------+
Cost of sales 802| 740| 8% 2,958|
| | |
Distribution 949| 989| (4%) 3,496|
| | |
Administration 515| 519| (1%) 1,909|
| | |
Research & Development 943| 884| 7% 3,045|
| | |
Total costs 3,209| 3,132| 2% 11,408|
Total cost of sales increased 8% to DKK 802 million. This corresponds to 23% of
Lundbeck's total revenue, compared with 21% in the fourth quarter of 2009. Cost
of sales for the period was affected by the higher cost of goods sold due to
increasing revenue from in-licensed products (i.e. Xenazine(®), Azilect(®) and
Ebixa(®)).
Distribution costs were DKK 949 million, corresponding to 27% of revenue and a
decrease of 4% compared to the fourth quarter last year. Administrative expenses
are at the same level as fourth quarter last year and correspond to 14% of the
total revenue for the period. SG&A costs were DKK 1,464 million, compared to DKK
1,508 million in the same period last year.
R&D costs for the quarter were DKK 943 million compared to DKK 884 million in
the same period last year. For the full year, R&D costs corresponded to 20.6% of
total revenue.
Operating profit before depreciation and amortisation (EBITDA)
EBITDA was DKK 586 million, compared to DKK 800 million for the fourth quarter
of 2009. EBITDA margin for the period was 16.6%, down from 22.6% in the same
quarter last year. The EBITDA margin was negatively impacted by increased R&D
expenses compared to the same quarter last year.
Depreciation, amortisation and impairment charges
Depreciation, amortisation and impairment charges, which are included in the
individual expense categories, amounted to DKK 265 million, a decrease of 32%
compared to the same period in 2009.
Depreciation, amortisation and Q4 2010 Q4 2009 2010
impairment charges per expense
category DKK million DKK million Growth DKK million
------------------------------------------------+-----------+------------------+
Cost of sales 76| 60| 27% 258|
| | |
Distribution 96| 243| (61%) 427|
| | |
Administration 16| 18| (8%) 74|
| | |
Research & Development 77| 71| 7% 277|
| | |
Total depreciation, amortisation and | | |
impairment charges 265| 392| (32%) 1,036|
The decrease in amortisation and depreciation included in distribution costs is
due to the write down of product rights to Circadin(®) (DKK 157 million)
included in the fourth quarter last year.
Profit from operations (EBIT)
EBIT for the fourth quarter of 2010 amounted to DKK 321 million, which
corresponds to a decrease of 21% compared to the same period in 2009 (DKK 408
million).
The EBIT margin for the period was 9.1%, compared to 11.5% in the same period
the year before. The quarter was negatively affected by high R&D costs as well
as lower income from Forest due to lower bulk deliveries. The EBIT margin for
the full year was 22.7% compared to 20.8% for 2009.
Net financials
Lundbeck generated net financial income of DKK 10 million in the fourth quarter,
compared with net expenses of DKK 73 million in the fourth quarter of 2009.
Q4 2010 Q4 2009 2010
Net financials
DKK million DKK million DKK million
-------------------------------------------------------+-----------------------+
Net items relating to trading (1)| (2) (1)|
| |
Accounting translation of currency items 37| 12 31|
| |
Net currency items relating to financial | |
items 36| 10 30|
| |
Realised and unrealised gains concerning | |
other investments excl. exchange rate 10| (21) 14|
adjustments | |
| |
Net interest income (36)| (62) (112)|
| |
Net financials 10| (73) (68)|
Accounting translation of currency items was a profit of DKK 37 million for the
quarter, primarily due to gains on foreign exchange cash positions.
Realised and unrealised gains concerning other investments were an income of DKK
10 million mainly due to a DKK 9 millions repayment of a written down item.
Net interest income, including realised and unrealised gains and losses on the
bond portfolio, amounted to a net expense of DKK 36 million, as compared to a
net expense of DKK 62 million in the same period in 2009. The difference was
primarily due to a smaller loan portfolio in 2010.
Tax
The income tax expense for the period was DKK 93 million, compared to DKK 99
million in the same period last year. The income tax for full year was DKK 823
million corresponding to a tax rate of 25.0% compared to 24.7% in 2009.
Profit for the period
Profit after tax for the fourth quarter of 2010 was DKK 238 million, compared to
DKK 236 million in the same period last year.
Cash flows
Lundbeck had a cash outflow during the quarter of DKK 712 million, compared to
an outflow of DKK 598 million in the same period last year.
Q4 2010 Q4 2009 2010
Cash flows
DKK million DKK million DKK million
--------------------------------------------------------+-----------------------
Cash flows from operating activities (111)| 634 3,265
|
Cash flows from investing activities (606)| (268) (803)
|
Cash flows from operating and investing |
activities (717)| 366 2,462
|
Cash flows from financing activities 5| (964) (2,162)
|
Change in cash (712)| (598) 300
|
|
|
Cash at beginning of period 2,995| 2,554 1,960
|
Unrealised exchange adjustments for the 11| 4 34
period |
|
Cash at end of period 2,294| 1,960 2,294
|
|
|
Securities 54| 59 54
|
Interest-bearing debt (1,918)| (3,475) (1,918)
|
Interest-bearing net cash and cash |
equivalents, end of period 430| (1,456) 430
Operating activities generated a cash outflow of DKK 111 million in the fourth
quarter, compared to an inflow of DKK 634 million in the same period last year.
Higher tax payments, mainly due to a higher result in 2010, were the primary
reason for the decrease in cash flows from operations.
Cash flows from investing activities represented an outflow of DKK 606 million.
The amount is primarily related to the partnership agreements, into which
Lundbeck entered during the quarter, including agreements with Merck & Co.,
Kyowa Hakko Kirin Co., Ltd. and Genmab A/S.
Cash flows from financing activities equalled an inflow of DKK 5 million,
compared to an outflow of DKK 964 million in the same period last year. The
fourth quarter of 2009 was impacted by repayment of loans related to the
acquisition of Lundbeck Inc.
Cash as of 31 December 2010 was DKK 2,294 million. This compares to DKK 1,960
million at the end of December 2009. At the end of December 2010, Lundbeck had a
net cash position of DKK 430 million, compared to a net debt of DKK 1,456
million at the end of December 2009.
Balance sheet
As of 31 December 2010, Lundbeck had total assets of DKK 18,005 million,
compared to DKK 17,127 million at the end of 2009.
As of 31 December 2010, Lundbeck's equity amounted to DKK 11,122 million,
corresponding to a solvency ratio of 61.8%, compared to 51.4% at the end of
2009.
In the second quarter 2010, Lundbeck paid out dividend of DKK 602 million.
In the first quarter of 2010, Lundbeck finalised the purchase price allocation
related to the acquisition of Lundbeck Inc. As a consequence, immaterial
reclassifications were made within intangible assets in the first quarter of the
year.
Hedging
Lundbeck hedges income from its products through currency hedging. As a result
of Lundbeck's currency hedging policy, foreign exchange losses and gains on
hedging transactions are allocated directly to the hedged transaction. Hedging
had a negative effect on profit of DKK 41 million in the fourth quarter of
2010, compared with a situation where the income is not hedged and included at
the current rates of exchange during the period. The effect was a DKK 59 million
loss in the fourth quarter 2009. The currency with the most financial impact in
the fourth quarter of 2010 was the US dollar and of the total effect was a loss
of DKK 21 million from the hedging of the US dollar. This compares to a loss of
DKK 56 million in the fourth quarter of 2009.
Lundbeck hedges cash flow in US dollars on a rolling basis, approximately 12
months in advance. The average rate for the US dollar hedging contracts for
2010 was approximately USD/DKK 541. The corresponding rate for 2009 was
approximately USD/DKK 536. For the next 12 months, the average rate for the
existing US dollar hedging contracts is approximately USD/DKK 567.
Events after the balance sheet date
In the beginning of January, Lundbeck announced the completion of two out of
three pivotal studies in the phase III clinical programme for nalmefene in
alcohol dependence (ESENSE1 and SENSE). In both studies, the overall safety
profile of nalmefene was consistent with observations and data provided in
previous studies. The most frequent adverse events included dizziness, insomnia
and nausea. The third and last phase III trial is expected to be concluded in
the second quarter 2011.
Also in January, zicronapine entered clinical phase III based on the positive
clinical phase II data. The first study in the clinical phase III programme is
expected to enrol some 160 patients with the aim to measure the efficacy of
zicronapine and risperidone and their relative impact on key metabolic
parameters. The pivotal program is planned to include further phase III studies
to investigate the compound's benefit and risk profile.
In February, Lundbeck was granted commercial rights to several Cephalon products
in Canada and Latin America. As part of the agreement, Lundbeck will register
and commercialise several key products which are currently available in the US
and/or Europe on behalf of Cephalon.
For more information on these events, please visit www.lundbeck.com
Accounting policies
Lundbeck's accounting policies are explained in detail in the 2010 annual report
also published today.
Incentive plan in the Lundbeck Group
The Supervisory Board of H. Lundbeck A/S has resolved, pursuant to the
authorisation in article 4.4 of the company's articles of association, to issue
warrants for up to a nominal value of DKK 7,500,000, corresponding to 1,500,000
shares of DKK 5 each. However, if the principles for determining the exercise
price mean that the value of an issued warrant is lower than the value of a
warrant calculated as per 23 February 2011 which entitles the holder to
subscribe one share at market price in April 2011, this may result in the
issuance of a greater number of warrants, however, no more than the total
remaining authorisation to the Supervisory Board in article 4.4 of the articles
of association, i.e. a total maximum nominal amount of DKK 16,250,000 of
warrants, corresponding to 3,250,000 shares of DKK 5 each.
Members of H. Lundbeck A/S' Executive Management and executives appointed by H.
Lundbeck A/S' Executive Management who are employed by H. Lundbeck A/S or H.
Lundbeck A/S' subsidiaries are eligible to receive warrants. The above-mentioned
subsidiaries comprise Danish and foreign enterprises in which H. Lundbeck A/S
directly or indirectly holds at least 50% of the shares. The members of the
company's Supervisory Board are not comprised by the scheme.
The right to subscribe for warrants pursuant to the applicable terms and
conditions will generally be granted in April 2011, although the right to
subscribe for warrants may be granted within the above-mentioned limits until
31 December 2011.
All of the warrants subscribed or a part thereof will be available to members of
the Executive Management 3 years after the grant in 2014 subject to H. Lundbeck
A/S obtaining a specific ranking in a peer group of companies, based on total
shareholder return performance, and also subject to the Executive Management
member's continuing employment in the period from the grant 2011 until and
including the 3 year period from grant. The warrants subscribed or a part
thereof will be available to other participants 3 years after the grant subject
to the participants continuing employment in the 3 year period.
The Supervisory Board has limited the value of warrants (incl. free shares) that
each member of the Executive Management Team might be granted. This corresponds
to no more than 8 months' worth of base salary in 2011 for the individual
Executive Management member and to no more than 12 months' worth of base salary
for the company's CEO. The value of the allocated free shares, which will be
deducted from the total grant value, represents up to a value of 20% of base
salary of each Executive Member's base salary in 2011.The shares are granted on
terms and conditions consistent with the remuneration guidelines for the
Executive Management of H. Lundbeck A/S that were adopted at the company's
annual general meeting held on 22 April 2008.
For each of the eligible recipients, which have been appointed by the Executive
Management, the Executive Management of H. Lundbeck A/S determines the number of
warrants that each eligible recipient is entitled to subscribe.
One warrant entitle the holder to subscribe 1 (one) Lundbeck share of DKK 5
nominal value. The subscription of shares will take place at a price per share
of DKK 5 nominal value, corresponding to the price of the H. Lundbeck A/S share
on NASDAQ OMX Copenhagen A/S (all trades) on the business days during the period
from 24 February 2011 - 2 March 2011, inclusive, however, the price per DKK 1
nominal value must not be lower than 85% of the market price of the H. Lundbeck
A/S share at the date of grant, all trades, divided by 5 and rounded up to the
nearest whole number of kroner (exercise price). The warrants may be exercised
during certain windows in the period from 3-8 years after the date of grant.
The number of warrants granted to Executive Management members is calculated
and determined when the exercise price is known. The value of the warrants
granted is calculated using the Black & Scholes formula based on the assumption
that H. Lundbeck A/S ranks number one in the above-mentioned peer group.
The market value of the warrants at the time of the award on in April 2011 is
calculated at approximately DKK 29.0 million using the Black & Scholes formula
based on market assumptions. The number of warrants granted is low compared to
the overall share capital of H. Lundbeck A/S, and therefore no adjustment has
been made for the dilutive effect of the warrants granted when calculating the
market value.
For executives in the US subsidiaries Stock Appreciation Rights and Restricted
Cash Units on economic terms essentially corresponding to the terms for the
warrants granted to other executive employees will be issued.
In the financial statements, the incentive programme will be recognised in the
income statement at fair value, and a probability calculation will be made in
respect of H. Lundbeck A/S' ranking in the above-mentioned peer group in terms
of warrants granted to the Executive Management. Shares and warrants will be
granted to Executive Management members subject to these members achieving
market goals, and the value of the award is therefore recognised in the income
statement over the vesting period (three years). The value of other awards is
recognised in the income statement at the date of grant.
Protection of patents and other intellectual property rights
Intellectual property rights are a prerequisite for Lundbeck's continued
investments in innovative pharmaceuticals. It is Lundbeck's policy to enforce
its granted intellectual property rights wherever they may be violated. Lundbeck
is involved in a number of trials around the world related to defending our
intellectual property rights. In terms of escitalopram Lundbeck is presently
involved in pending court trials in Austria, Belgium, Brazil, Canada, Denmark,
Finland, France, Germany, Hungary, Latvia, Lebanon, Lithuania, The Netherlands,
Norway, Portugal, Saudi Arabia, Spain, Taiwan, Turkey and the UK.
Risk factors
Lundbeck's risk exposure is explained in detail in the 2010 annual report, also
published today.
Conference call
Today at 2.00 pm (CET), Lundbeck will be hosting a conference call for the
financial community. You can listen to the call online at www.lundbeck.com under
the section "Investors - Presentations".
Further information
An electronic version of the annual report for 2010 and further information
about Lundbeck is available from the company's website www.lundbeck.com. The
printed version of the annual report for 2010 will be available on 18 March
2011.
Income statement
2010 2009 2010 2009
Q4 Q4 FY FY
DKK million DKK million DKK million DKK million
-------------------------------------------------------+-----------------------+
Revenue 3,530 3,540| 14,765 13,747|
| |
Cost of sales 802 740| 2,958 2,655|
| |
Distribution costs 949 989| 3,496 3,174|
| |
Administrative expenses 515 519| 1,909 1,864|
| |
Profit before research and 1,264 1,292| 6,402 6,054|
development costs | |
| |
| |
| |
Research and development costs 943 884| 3,045 3,196|
| |
Profit from operations (EBIT) 321 408| 3,357 2,858|
| |
| |
| |
Net financials 10 (73)| (68) (192)|
| |
Profit before tax 331 335| 3,289 2,666|
| |
| |
| |
Tax on profit for the period 93 99| 823 659|
| |
Profit for the period 238 236| 2,466 2,007|
| |
| |
| |
| |
| |
Earnings per share (EPS) (DKK) 1.21 1.20| 12.58 10.24|
| |
Diluted earnings per share 1.21 1.20| 12.58 10.24|
(DEPS) (DKK) | |
Statement of comprehensive income
2010 2009 2010 2009
Q4 Q4 FY FY
DKK million DKK million DKK million DKK million
-------------------------------------------------------+-----------------------+
Profit for the period 238 236| 2,466 2,007|
| |
| |
| |
Currency translation, foreign | |
subsidiaries 91 67| 295 (25)|
| |
Currency translation concerning | |
additions to net investments in | |
foreign subsidiaries 81 49| 240 (396)|
| |
Adjustment, deferred exchange | |
gains/losses, hedging (83) (58)| (213) 7|
| |
Exchange gains/losses, hedging | |
(transferred to the hedged | |
items) 27 (54)| 163 (1)|
| |
Exchange gains/losses, trading | |
(transferred from hedging) 1 22| 1 22|
| |
Exchange loss on divestment of | |
associate 2 -| 2 -|
| |
Fair value adjustment of | |
available-for-sale financial | |
assets (2) 16| (4) 27|
| |
Tax on other comprehensive | |
income (6) 11| (47) 93|
| |
Other comprehensive income 111 53| 437 (273)|
| |
| |
| |
Comprehensive income 349 289| 2,903 1,734|
Balance sheet
31.12.2010 31.12.2009
DKK million DKK million
Assets
-------------------------------------------------------------+
Intangible assets 8,012 7,724|
|
Property, plant and equipment 3,046 3,049|
|
Financial assets 191 199|
|
Non-current assets 11,249 10,972|
|
|
|
Inventories 1,491 1,481|
|
Receivables 2,917 2,655|
|
Securities 54 59|
|
Cash 2,294 1,960|
|
Current assets 6,756 6,155|
|
|
|
Assets 18,005 17,127|
|
Equity and liabilities
-------------------------------------------------------------+
Share capital 980 980|
|
Share premium 224 224|
|
Currency translation reserve (281) (757)|
|
Retained earnings 10,199 8,356|
|
Equity 11,122 8,803|
|
|
|
Provisions 930 1,116|
|
Debt 1,918 2,671|
|
Non-current liabilities 2,848 3,787|
|
|
|
Provisions 216 186|
|
Bank debt - 804|
|
Trade payables 1,237 997|
|
Other payables 2,065 1,857|
|
Prepayments from Forest 517 693|
|
Current liabilities 4,035 4,537|
|
|
|
Liabilities 6,883 8,324|
|
|
|
Equity and liabilities 18,005 17,127|
Statement of changes in equity at 31 December 2010
Currency
Share Share translation Retained
capital premium reserve earnings Equity
DKK million DKK million DKK million DKK million DKK million
2010
--------------------------------+-----------+-----------+-----------+-----------
Equity at 01.01.2010 980| 224| (757)| 8,356| 8,803
| | | |
| | | |
| | | |
Profit for the year -| -| -| 2,466| 2,466
| | | |
Other comprehensive -| -| 476| (39)| 437
income | | | |
| | | |
Comprehensive income -| -| 476| 2,427| 2,903
| | | |
| | | |
| | | |
Distributed -| -| -| (602)| (602)
dividends | | | |
| | | |
Incentive programmes -| -| -| 18| 18
| | | |
Other transactions -| -| -| (584)| (584)
| | | |
| | | |
| | | |
Equity at 31.12.2010 980| 224| (281)| 10,199| 11,122
| | | |
| | |
| | |
2009
--------------------------------+-----------+-----------+-----------+-----------
Equity at 31.12.2008 984| 224| -| 6,384| 7,592
| | | |
Restatement: | | | |
| | | |
Currency -| -| (436)| 355| (81)
translation, foreign | | | |
subsidiaries | | | |
| | | |
Equity at 01.01.2009 984| 224| (436)| 6,739| 7,511
| | | |
| | | |
| | | |
Profit for the year -| -| -| 2,007| 2,007
| | | |
Other comprehensive -| -| (321)| 48| (273)
income | | | |
| | | |
Comprehensive income -| -| (321)| 2,055| 1,734
| | | |
| | | |
| | | |
Distributed -| -| -| (453)| (453)
dividends, gross | | | |
| | | |
Distributed -| -| -| 2| 2
dividends, treasury | | | |
shares | | | |
| | | |
Capital reduction (4)| -| -| 4| -
and cancellation of | | | |
treasury shares | | | |
| | | |
Incentive programmes -| -| -| 9| 9
| | | |
Other transactions (4)| -| -| (438)| (442)
| | | |
| | | |
| | | |
Equity at 31.12.2009 980| 224| (757)| 8,356| 8,803
Cash flow statement
2010 2009 2010 2009
Q4 Q4 FY FY
DKK million DKK million DKK million DKK million
-------------------------------------------------------------------+-----------+
Profit from operations (EBIT) 321 408 3,357| 2,858|
| |
| |
| |
Adjustments 327 474 1,080| 699|
| |
Working capital changes 284 325 88| 312|
| |
Cash flows from operations | |
before financial receipts and | |
payments 932 1,207 4,525| 3,869|
| |
| |
| |
Financial receipts and payments (40) (72) (78)| (110)|
| |
Cash flows from ordinary | |
activities 892 1,135 4,447| 3,759|
| |
| |
| |
Income tax paid (1,003) (501) (1,182)| (725)|
| |
Cash flows from operating | |
activities (111) 634 3,265| 3,034|
| |
| |
| |
Company acquisitions - (103) -| (5,110)|
| |
Investments in and sale of | |
bonds and other financial | |
assets 8 (3) 21| 1,270|
| |
Investments in and sale of | |
intangible assets and | |
property, plant and equipment (614) (162) (824)| (1,234)|
| |
Cash flows from investing | |
activities (606) (268) (803)| (5,074)|
| |
| |
| |
Cash flows from operating and | |
investing activities (717) 366 2,462| (2,040)|
| |
| |
| |
Cash flows from financing | |
activities 5 (964) (2,162)| 1,065|
| |
| |
| |
Change in cash (712) (598) 300| (975)|
| |
| |
| |
Cash at beginning of period 2,995 2,554 1,960| 2,921|
| |
Unrealised exchange adjustments | |
for the period 11 4 34| 14|
| |
Change for the period (712) (598) 300| (975)|
| |
Cash at end of period 2,294 1,960 2,294| 1,960|
| |
|
|
|
|
Interest-bearing net cash and
cash equivalents is composed as
follows:
-------------------------------------------------------------------+-----------+
Cash 2,294 1,960 2,294| 1,960|
| |
Securities 54 59 54| 59|
| |
Interest-bearing debt (1,918) (3,475) (1,918)| (3,475)|
| |
Interest-bearing net cash and | |
cash equivalents, end of period 430 (1,456) 430| (1,456)|
Lundbeck contacts
Investors: Media:
Palle Holm Olesen Mads Kronborg
Chief Specialist, Investor Relations Media Relations Manager
+45 36 43 24 26 +45 36 43 28 51
Magnus Thorstholm Jensen Stine Hove Marsling
Investor Relations Officer External Communication Specialist
+45 36 43 38 16 +45 36 43 28 33
Jacob Tolstrup
Vice President
+1 847 282 5713
About Lundbeck
H. Lundbeck A/S (LUN.CO, LUN DC, HLUKY) is an international pharmaceutical
company highly committed to improving the quality of life for people suffering
from central nervous system (CNS) disorders. For this purpose, Lundbeck is
engaged in the research, development, production, marketing and sale of
pharmaceuticals across the world. The company's products are targeted at
disorders such as depression and anxiety, schizophrenia, insomnia, epilepsy and
Huntington's, Alzheimer's and Parkinson's diseases.
Lundbeck was founded in 1915 by Hans Lundbeck in Copenhagen, Denmark. Today
Lundbeck employs approximately 5,900 people worldwide. Lundbeck is one of the
world's leading pharmaceutical companies working with CNS disorders. In 2010,
the company's revenue was DKK 14.8 billion (approximately EUR 2.0 billion or USD
2.6 billion). For more information, please visit www.lundbeck.com.
Corporate Releases since last interim report (3 November, 2010)
8 February 2011
Lundbeck expands its commercial opportunities in Canada and Latin America
20 January 2011
The clinical phase III programme commenced on zicronapine
3 January 2011
First two clinical phase III studies confirm the profile of nalmefene as
efficacious and safe in helping individuals to reduce their alcohol consumption
16 December 2010
Lundbeck enters into drug discovery collaboration with Zenobia and Vernalis
14 December 2010
Lundbeck to establish a strong, dedicated sales force behind Lexapro(®) in China
as part of a new co-promotion agreement
4 December 2010
Lundbeck reports positive phase III study results for clobazam in the adjunctive
treatment of seizures associated with Lennox-Gastaut syndrome
23 November 2010
Financial calendar 2011
4 November 2010
Announcement of transactions with shares and linked securities in H. Lundbeck
A/S made by executives and their closely associated persons and legal entities
For more information, please visit www.lundbeck.com
--------------------------------------------------------------------------------
[1] Xenazine(®) is a registered trademark of Biovail Laboratories International
(Barbados) S.R.L.
[2] Market shares for International Markets are based on IMS data from
Australia, Brazil, Canada, China, Mexico, Saudi Arabia, South Africa, South
Korea and Turkey.
[HUG#1491790]
