Second quarter 2009 report - Lundbeck records 18% revenue growth.
Double digit growth in all regions
(Thomson Reuters ONE) - H. Lundbeck A/S (Lundbeck) reports second quarter revenue of DKK3,432 million growing 18% in constant exchange rates compared tosecond quarter 2008. Revenue in the US rising to DKK 1,025 million,with Lundbeck Inc. for the first time contributing a full quarter.* Key products Cipralex®, Ebixa® and Azilect® all experienced double digit growth in constant exchange rates and continues to gain market shares.* Lundbeck Inc. reports second quarter revenue of DKK 400 million, with Xenazine® i sales already contributing DKK 81 million.* The performance of Xenazine® combined with the acquisition of LifeHealth Limited strengthens the US platform and supports further earnings from the second half of 2009 and onwards.* Profit from operations (EBIT) was DKK 719 million, including adjustments for acquisition accounting lowering EBIT with DKK 98 million. The EBIT margin for the period was 21%. Operating profit before depreciation and amortisation (EBITDA) was DKK 872 million corresponding to an EBITDA margin of 25%.* The tax rate for the full year is now expected to be 25-26%, as opposed to previously guided 28%.* Lundbeck maintains the financial guidance for the full year.Distribution of revenue Q2 2009 Q2 2008 Growth DKKm DKKm Growth at CER*Cipralex® 1,345 1,234 9% 12%Lexapro® 625 692 (10%) (4%)Ebixa® 539 467 15% 18%Azilect® 88 63 40% 43%Xenazine® 81 - - -Europe 1,711 1,574 9% 10%USA 1,025 692 48% 49%International Markets 671 621 8% 13%Total revenue 3,432 2,938 17% 18%In connection with the interim report, Lundbeck's President and CEOUlf Wiinberg said:"We are very pleased with the overall performance in the secondquarter. Our businesses in Europe and International Markets continueto show high growth. Lundbeck Inc. is delivering solid results on theback of the launch of Xenazine®. With our achievements in the firsthalf of the year we are now well under way to deliver on ourfinancial expectations for 2009."Management reviewFinancial highlights and key figures 2009 2008 2009 2008 2008 Q2 Q2 H1 H1 FYFinancial highlights (DKKm)Revenue 3,432 2,938 6,657 5,820 11,282Profit from operations beforedepreciation andamortisation (EBITDA) 872 976 1,951 2,041 3,417Profit from operations (EBIT) 719 365 1,666 1,290 2,354Net financials (109) 2 (90) 16 (28)Profit before tax 609 351 1,577 1,273 2,283Tax 139 99 410 346 620Profit for the period 470 252 1,167 927 1,663Equity 8,101 6,874 8,101 6,874 7,511Assets 16,984 12,261 16,984 12,261 12,526Cash flows from operating andinvesting activities 852 168 (950) 1,235 2,193Property, plant and equipmentinvestments, gross 45 22 85 41 229Key figuresEBIT margin (%)1 21.0 12.4 25.0 22.2 20.9Return on capital employed(%) 6.8 4.4 18.1 16.2 30.0Research & Development costsas a percentage of revenue 24.1 35.6 23.2 26.9 26.5Return on equity (%)1 5.8 3.6 14.9 13.3 22.8Solvency ratio (%)1 47.7 56.1 47.7 56.1 60.0Capital employed (DKKm) 10,772 8,774 10,772 8,774 9,438Share dataNumber of shares for thecalculation of EPS (million) 196.1 196.4 196.1 197.6 196.8Number of shares for thecalculation of DEPS (million) 196.1 196.4 196.1 197.6 196.8Earnings per share (EPS)(DKK)1 2.40 1.29 5.95 4.69 8.45Diluted earnings per share(DEPS) (DKK)1 2.40 1.29 5.95 4.69 8.45Cash flow per share (DKK)1 4.60 4.23 7.61 8.57 14.12Net asset value per share(DKK)1 41.31 35.05 41.31 35.05 38.30Market capitalisation (DKKm) 19,761 22,388 19,761 22,388 21,657Share price end of period(DKK) 100.37 108.01 100.37 108.01 110.00OtherNumber of employees 5,750 5,131 5,750 5,131 5,3181) Definitions according to the Danish Society of Financial Analysts'Recommendations & Financial Ratios 2005.Lundbeck's development portfolioLundbeck is developing a number of new and promising pharmaceuticalsin the existing fields of specialties; depression, anxiety andpsychotic disorders - and in new areas such as epilepsy, stroke andalcohol dependence. At present Lundbeck's pipeline consists of: Two compounds under FDA regulatoryreview Five compounds in clinical phase III Five compounds in clinical phaseII Two compounds in clinical phase IPipeline development is summarized as follows:Regulatory reviewIn June Lundbeck received a Complete Response Letter (CRL) from theUS Food and Drug Administration (FDA) for Serdolect® (sertindole) forthe treatment of schizophrenia. The Agency's complete responseincluded a request for additional data to best understand theappropriate patient population for which Serdolect® could be madeavailable. Lundbeck will engage with the FDA to determine the bestway forward.Lundbeck is still in active dialogue with the FDA in order to obtainfinal approval on Sabril® (vigabatrin) for the treatment ofrefractory complex partial seizures and the treatment of infantilespasms. Label discussions are progressing and approval is expectedwithin months.Clinical phase IIIThe results from the first three clinical trials in the phase IIIdevelopment programme with Lu AA21004 in major depressive disorder(MDD) showed that the low dosage (2.5 mg) did not reach significancecompared to placebo across studies, whereas 5 and 10 mg showedpromising results compared to placebo. In all of these trials, LuAA21004 was well tolerated and confirmed the previously observedfavourable safety profile. As a result, the most appropriate dose ofLu AA21004 needs to be established. It is anticipated that this workwill postpone submission of the new drug application (NDA) in the USwith approximately 18-24 months. Lundbeck and Takeda will continue towork with the US Food and Drug Administration (FDA) and otherregulatory agencies on the clinical development program andsubmission plans.It has recently been decided to stop all joint R&D activities forSolvay's compound bifeprunox, as interim results on the ongoing phaseIII trials showed that efficacy data did not support pursuing theexisting development strategy of stabilisation of non-acute patientswith schizophrenia. Lundbeck's financial investment in this clinicalphase III programme has been modest.Furthermore, Lundbeck has desmoteplase, nalmefene, I.V. carbamazepineand clobazam in clinical phase III development. The clinical phaseIII studies for all the projects are enrolling patients andprogressing as planned.Clinical phase IIIn July Lundbeck reported positive headline results from a dosefinding clinical trial with the compound Lu AA24530 for the treatmentof major depressive disorder (MDD) demonstrating the potential valueof the compound. Lu AA24530 consistently produced statisticallysignificant improvements on the primary efficacy endpoint and on keysecondary endpoints compared to placebo. The combination of efficacyand good tolerability for Lu AA24530 clearly supports furtherdevelopment of the compound as a future treatment option forphysicians and patients.RevenueLundbeck saw continued strong growth in key products and withLundbeck Inc. for the first time contributing a full quarter, revenuefor the second quarter reached DKK 3,432 million, growing 17% (18% inconstant exchange rates) compared with the same quarter last year.Total revenue Q2 2009 Q2 2008 Growth Q1 2009 DKKm DKKm Growth at CER DKKmCipralex® 1,345 1,234 9% 12% 1,363Lexapro® 625 692 (10%) (4%) 626Ebixa® 539 467 15% 18% 526Azilect® 88 63 40% 43% 78Xenazine® 81 - - - 12Serdolect® 17 14 17% 25% 16Otherpharmaceuticals 713 416 71% 63% 450Other revenue 24 51 (53%) (56%) 155Total revenue 3,432 2,938 17% 18% 3,226Revenue from Cipralex® (escitalopram) for the treatment of depressionand anxiety rose to DKK 1,345 million, an increase of 9%. Lexapro®revenue, escitalopram marketed in the US by Forest Laboratories, Inc.(Forest), was DKK 625 million for the quarter, down 10% compared withthe same period last year.Ebixa® (memantine) for the treatment of Alzheimer's disease generatedsecond quarter revenue of DKK 539 million, an increase of 15% on theyear-earlier period. Lundbeck has marketing rights to Ebixa® in mostcountries in the world apart from Japan and the US.Revenue from Azilect® (rasagiline) for the treatment of Parkinson'sdisease rose 40% during the period to DKK 88 million. Lundbeck hascommercial rights to Azilect in most European countries (inco-promotion with Teva in France, Germany and the UK) and a fewcountries outside Europe.Xenazine® [1] (tetrabenazine) for the treatment of chorea associatedwith Huntington's disease, generated revenue of DKK 81 million in thesecond quarter. Xenazine® was launched in November 2008 in the US.Other pharmaceuticals, which comprise Lundbeck's maturepharmaceuticals, Circadin®, for the treatment of insomnia, andrevenue from Lundbeck Inc. (excl. Xenazine®), rose to DKK 713million. Excluding Lundbeck Inc., revenue from other pharmaceuticalsfell to DKK 394 million during the period, decreasing 5% comparedwith the second quarter of 2008.Other revenue was DKK 24 million. The large decrease compared to lastquarter owes to an income of DKK 124 million from the divestment ofinterests in LifeCycle Pharma in the first quarter of 2009.EuropeRevenue in Europe rose 10% at constant exchange rates to DKK 1,711million. The increase continued to be driven by Cipralex®, Ebixa® andAzilect® growing 9%, 18% and 41%, respectively, at constant exchangerates relative to the year-earlier period. Revenue from otherpharmaceuticals declined 6% at constant exchange rates.Revenue Europe Q2 2009 Q2 2008 Growth Q1 2009 DKKm DKKm Growth at CER DKKmCipralex® 926 857 8% 9% 913Ebixa® 448 387 16% 18% 431Azilect® 80 58 39% 41% 70Serdolect® 11 9 25% 31% 11Otherpharmaceuticals 246 264 (7%) (6%) 250Total revenue 1,711 1,574 9% 10% 1,675Cipralex® generated second quarter revenue of DKK 926 million inEurope and continues to gain market shares across most major markets.Cipralex® is the most prescribed antidepressant in Europe measured invalue, and at the end of May 2009 Cipralex® held a market share invalue terms of 18.9%, as compared with a market share of 16.0% a yearearlier. The growth in market share is driven by the growingunderstanding of Cipralex® as a leading antidepressant, as well asthe patent expiry on venlafaxine, the latter also resulting in flatto negative growth in the antidepressant market as a whole measuredin value.Revenue from Ebixa® rose to DKK 448 million during the period, and atthe end of May 2009 the product held 16.4% of the EuropeanAlzheimer's market. This compares to a market share of 15.8% at thesame time in 2008. As a consequence of receiving public reimbursementin Italy at the end of the first quarter 2009, Ebixa revenue in Italyis experiencing very positive growth. Memantine, the activeingredient in Ebixa, is continuously the second-most prescribedpharmaceutical in Europe for the treatment of Alzheimer's disease.Second quarter revenue from Azilect® amounted to DKK 80 million,holding a market share in value of 7.6% at the end of May 2009 of thetotal European Parkinson's market. This compares to a market share of5.4% at the same time in 2008. There is an increasing interest amongphysicians for the ADAGIO study. The ADAGIO study shows that Azilect®may have an effect on disease progression.USALundbeck's second quarter revenue in the US rose to DKK 1,025million, while revenue from Lundbeck Inc., for the first timeconstituting a full quarter, was DKK 400 million for the period.Revenue USA Q2 2009 Q2 2008 Growth Q1 2009 DKKm DKKm Growth at CER DKKmLexapro® 625 692 (10%) (4%) 626Xenazine® 81 - - - 12Other pharmaceuticals 319 - - - 49Total revenue 1,025 692 48% 49% 687Revenue from Lexapro® fell to DKK 625 million, a decline of 10% or 4%at constant exchange rates. Lexapro® revenue is pressured by genericcompetition in the US market, a market which currently isexperiencing limited growth. At the end of May 2009, Lexapro® held amarket share in the US of 23.8% in value terms, as compared with amarket share of 22.7% at the same time last year.As the only branded antidepressant approved for the treatment ofmajor depression in adolescents, Lexapro® recently achieved FDAapproval for a medical condition that affects approximately 2 millionadolescents in the US. The adolescents claim is being launched andwill help to sustain the prescription level of Lexapro®.Prepayments from Forest, recorded in Lundbeck's balance sheet - thedifference between the invoiced price and the minimum price ofForest's inventories - was DKK 563 million at 30 June 2009 comparedwith DKK 889 million at 30 June 2008. At the end of June 2009,inventories were on a level corresponding to approximately six monthsof commercial supply.Sales from Lundbeck Inc. reached DKK 400 million in the secondquarter corresponding to 82% growth compared to Ovation (now LundbeckInc.) revenue in the second quarter last year (56% in constantexchange rates). Revenue from Xenazine®, which was launched inNovember last year, amounted to DKK 81 million for the quarter.In July 2009 Lundbeck acquired additional rights to Xenazine® byacquiring LifeHealth Limited (LifeHealth) in the UK, and as aconsequence reducing the royalty range paid to third party onXenazine® sales to approximately 40-47% down from 65-72%.International MarketsRevenue in International Markets, which comprises all Lundbeck'smarkets outside Europe and the US, rose to DKK 671 million. Theincrease was driven by the key products Cipralex® and Ebixa®, revenuefrom both products rising 18% at constant exchange rates. Azilect®and Serdolect® are continuously only marketed by Lundbeck in a fewmarkets in the region and consequently contribute with a relativelysmall share.Revenue Q2 2009 Q2 2008 Growth Q1 2009International Markets DKKm DKKm Growth at CER DKKmCipralex® 419 377 11% 18% 450Ebixa® 91 81 13% 18% 95Azilect® 8 5 53% 70% 7Serdolect® 6 5 5% 15% 5Other pharmaceuticals 148 152 (3%) (3%) 151Total revenue 671 621 8% 13% 708Cipralex® generated revenue of DKK 419 million in InternationalMarkets, and despite continued generic competition in most majormarkets, Cipralex® continues to show significant growth. The brandnow holds a market share in terms of value of 11.8% of the aggregatemarket for antidepressants in International Markets (Q1 2009),compared to a market share of 10.9% in Q1 2008.Cipralex® sales in Canada continue to show growth after receivingpublic reimbursement in the Ontario province. The brand now holds amarket share in terms of value of 8.6% compared to 6.5% in theyear-earlier period. Cipralex® in Canada now represents more than 20%of Cipralex® sales in International Markets.Ebixa® generated second quarter revenue of DKK 91 million and held10.9% of the total market in terms of value for pharmaceuticals forthe treatment of Alzheimer's disease in International Markets (Q12009), as compared with a market share of 11.0% in Q1 2008. Ebixa®continues to hold a stable market share in International Markets - amarket that continues to expand with significant growth rates.ExpensesTotal expenses for the period were DKK 2,713 million, up 5% comparedto second quarter last year and up 23% excluding Research &Development (R&D) expenses. The increase in cost of sales and SG&Acosts (Selling, General and Administrative Expenses) is mainly due tothe inclusion of Lundbeck Inc. Costs in the remaining businesscontinues to be under control and is seeing low single digit growth.Distribution of costs Q2 2009 Q2 2008 Q1 2009 DKKm DKKm Growth DKKmCost of sales 623 468 33% 487Distribution 799 632 26% 673Administration 464 427 9% 401Research & Development 826 1,046 (21%) 717Total costs 2,713 2,573 5% 2,279Total cost of sales rose 33% to DKK 623 million amounting to 18% ofLundbeck's total revenue, up from 16% in the year-earlier period.Costs of sales for the period was affected by higher costs of goodssold in Lundbeck Inc., as a result of purchase price accounting usedin connection with the acquisition of Ovation, impacting costs by DKK98 million.Distribution costs were DKK 799 million corresponding to 23% ofrevenue and up 26% compared to the same quarter last year. Theincrease is mainly due to the inclusion of Lundbeck Inc. and acontinued high spending on the promotion of Azilect® following theresults of the ADAGIO study. Administrative expenses increased by 9%to DKK 464 million, accounting for 14% of total revenue compared with15% for the second quarter of 2008. SG&A costs were DKK 1,263million, compared with DKK 1,060 million in the year-earlier period,and corresponding to 37% of revenue (36% in Q2 2008).R&D costs for the quarter were DKK 826 million, a decrease of 21%compared with the same period last year. Second quarter saw higherspending on a number of phase three studies, while R&D costs for thesecond quarter last year included the DKK 481 million write-down ofthe rights to Flurizan®. R&D costs for the period accounted for 24%of total revenue, compared with 36% in the year-earlier period.Operating profit before depreciation and amortisation (EBITDA)EBITDA was DKK 872 million compared with DKK 976 million for thesecond quarter of 2008. EBITDA margin for the period was 25%.Depreciation, amortisation and impairment chargesDepreciation, amortisation and impairment charges, which are includedin the individual expense categories, amounted to DKK 153 million,which is 75% lower than in the same period of 2008. Amortisation forthe second quarter 2008 includes a DKK 481 million write-down ofFlurizan®.Depreciation, amortisation and Q2 2009 Q2 2008 Q1 2009impairment charges per expensecategory DKKm DKKm Growth DKKmCost of sales 50 50 (1%) 48Distribution 28 7 277% 9Administration 18 16 11% 16Research & Development 58 538 (89%) 58Total depreciation, amortisation andimpairment charges 153 611 (75%) 132Depreciation and amortisation included in distribution costs grew277% compared to the same period last year. The large increase isprimarily explained by amortisation on product rights acquired inconnection with the acquisition of Ovation.Profit from operations (EBIT)Including adjustments for acquisition accounting lowering EBIT withDKK 98 million, EBIT for the second quarter amounted to DKK 719million, corresponding to an increase of 97% on the same period in2008 (DKK 365 million). Second quarter 2008 was impacted by thewrite-down of Flurizan®, which explains the majority of the growth inEBIT.The EBIT margin for the period was 21% compared with 12% in theyear-earlier period.Net financialsLundbeck generated a net financial loss of DKK 109 million in thequarter, compared with a net income of DKK 2 million in 2008.Net financials Q2 2009 Q2 2008 Q1 2009 DKKm DKKm DKKmNet items relating to trading (19) - (4)Accounting translation of currency items (56) 10 6Net currency items relating to financialitems (75) 10 2Unrealised gains concerning other investmentsexcl. exchange rate adjustments 1 4 -Net interest income (35) (12) 18Net financials (109) 2 20Net items relating to trading were a net loss of DKK 19 million,owing to reclassification of hedging contracts.Accounting translation of currency items was DKK (56) million for thequarter, primarily due to an increase in GBP/DKK and a decrease inUSD/DKK.Net interest income, including realised and unrealised gains andlosses on the bond portfolio, amounted to a net loss of DKK 35million, as compared with net loss of DKK 12 million in the sameperiod of 2008. Net financials were negatively affected by lower netinterests compared to 2008 as a consequence of the acquisition ofOvation.Change in accounting policies in respect of foreign currencytranslation for non-monetary assets and exchange differences arisingfrom the translation of foreign subsidiaries, had a positive effecton net financials for the second quarter of 2008 of DKK 12 million.For further details on change in accounting policies, see page 13.TaxThe income tax expense for the period was DKK 139 million as comparedto DKK 99 million in the year-earlier period. The tax rate was 23%,down from 28% last year.Profit for the periodProfit after tax for the second quarter of 2009 was DKK 470 million,up from DKK 252 million in the same period of last year. Profit forsecond quarter 2008 was negatively affected by the write-down ofFlurizan®.Cash flowsLundbeck had a cash inflow during the quarter of DKK 1,128 million,compared with an outflow of DKK 465 million in the year-earlierperiod.Cash flows Q2 2009 Q2 2008 Q1 2009 DKKm DKKm DKKmCash flows from operating activities 902 831 591Cash flows from investing activities (50) (663) (2,393)Cash flows from operating and investingactivities 852 168 (1,802)Cash flows from financing activities 277 (633) 1Change in cash 1,128 (465) (1,802)Cash at beginning of period 1,123 2,415 2,921Unrealised gains 4 6 4Cash at end of period 2,256 1,955 1,123Operating activities generated second quarter cash inflow of DKK 902million compared with DKK 831 million in the same period last year.Cash flows from investing activities represented an outflow of DKK 50million, compared to an outflow of DKK 663 million in the same periodof 2008, which was influenced by the purchase of the rights toFlurizan®.Lundbeck's total net investments exclusive of financial investmentsamounted to DKK 111 million in the second quarter, against DKK 569million in the year-earlier period. Financial investments were aninflow of DKK 61 million compared to an outflow of DKK 94 million inthe year-earlier period.Cash flow from financing activities was an inflow of DKK 277 million,which stems from a new loan of DKK 728 million and dividend pay outof DKK 451 million. Second quarter 2008 saw an outflow of DKK 633million, which was due to our share buyback programme, terminated inMay 2008, and payment of dividend amounting to DKK 504 million.Cash at 30 June 2009 was DKK 2,256 million, against DKK 1,123 millionat the end of March 2009 and DKK 2,921 million at the end of 2008. Atthe end of the period, Lundbeck had interest-bearing net debt of DKK365 million compared with net debt of DKK 766 million at the end ofMarch 2009 and net cash of DKK 1,949 at the end of December 2008.Balance sheetAt 30 June 2009, Lundbeck had total assets of DKK 16,984 million,against DKK 16,000 million at the end of first quarter 2009 and DKK12,526 at the end of 2008. The significant increase since December isdue to the acquisition of Ovation.At 30 June 2009, Lundbeck's equity amounted to DKK 8,101 million,corresponding to a solvency ratio of 47.7%, compared with 50.7% atthe end of March 2009 and 60.0% at the end of 2008.HedgingLundbeck hedges income from its products using currency hedging. As aresult of Lundbeck's currency hedging policy, foreign exchange lossesand gains on hedging transactions are allocated directly to thehedged transaction. Hedging had a negative effect on profit of DKK 9million in Q2 2009 compared with a situation where the income is nothedged and included at the current rates of exchange during theperiod. The effect was a DKK 31 million gain in the year-earlierperiod. The currency with the most impact financially in Q2 2009 wasthe US dollar and of the total effect DKK (9) million stems from thehedging of the dollar.Lundbeck hedges the cash flow in US dollar on a rolling basis around12 months in advance. The average rate for 2009 for the existing USdollars hedging contracts is approximately USD/DKK 536. Thecorresponding rate for 2008 was approximately USD/DKK 531. For thenext 12 months the average rate for the existing US dollar hedgingcontracts is approximately USD/DKK 572.Financial guidance and forward looking statementsLundbeck maintains financial guidance for the full year and estimatesrevenue of DKK 13.1-13.6 billion in 2009, EBITDA of DKK 3.5-3.7billion and EBIT of DKK 2.8-3.0 billion. As communicated in July, inconnection with the takeover of LifeHealth, Lundbeck anticipatesEBITDA to be in the high end of the guidance range.However, as a consequence of the acquisition of Ovation and a changein the geographical earnings split Lundbeck is now expecting a taxrate for the full year 2009 of 25-26% as opposed to the previousguidance of approximately 28%. Lundbeck also expects the group's taxrate to be 25-26% for 2010.The guidance includes one-off expenses of approximately DKK 183million owing to acquisition accounting related to the acquisition ofOvation and income of DKK 124 million from the divestment ofinterests in LifeCycle Pharma.Lundbeck continues to forecast an R&D ratio of 23-24% of revenue for2009. 2008* 2009Lundbeck's financial guidance guidance DKKm DKKbnRevenue 11,282 13.1-13.6EBITDA 3,417 3.5-3.7EBIT 2,354 2.8-3.0Tax rate 27.1% 25-26%R&D ratio 26.5% 23-24%* As reported in the annual accounts, but restated to reflect newaccounting policies.This announcement contains forward-looking statements that providecurrent expectations or forecasts of events such as new productlaunches, product approvals and financial performance.Forward-looking statements are subject to risks, uncertainties andinaccurate assumptions. This may cause actual results to differmaterially from expectations. Factors that may affect future resultsinclude interest rates and exchange rate fluctuations, delay orfailure of development projects, production problems, unexpectedcontract breaches or terminations, government-mandated ormarket-driven price decreases for Lundbeck's products, introductionof competing products, Lundbeck's ability to successfully market bothnew and existing products, exposure to product liability and otherlawsuits, changes in reimbursement rules and governmental laws andrelated interpretation thereof and unexpected growth in costs andexpenses.Change in accounting policiesThe interim report has been presented in accordance with IAS 34"Interim Financial Reporting" as adopted by the EU.At 1 January 2009, the accounting policies were changed in respect offoreign currency translation for non-monetary assets and exchangedifferences arising from the translation of foreign subsidiaries.Non-monetary assets acquired in foreign currencies are translated atthe exchange rates at the balance sheet date, whereas they werepreviously translated at the exchange rates at the time ofacquisition. On recognition of foreign subsidiaries, non-monetary aswell as monetary items are translated at the exchange rates at thebalance sheet date. Exchange differences arising from the translationof both the balance sheets and the income statements of the foreignsubsidiaries are recognised in the Group directly in equity. Theseexchange differences were previously recognised under net financialsin the income statement.The change in accounting policies concerning foreign currencytranslation for non-monetary assets and exchange differences arisingfrom the translation of foreign subsidiaries has resulted in anincrease of the profit for 2008 of DKK 154 million, a decline inequity for 2008 of DKK 81 million, and a decline in total assets for2008 of DKK 81 million. For the second quarter of 2008, the change inaccounting policies caused a DKK 13 million profit increase, areduction in equity of DKK 119 million and a reduction of totalassets of DKK 120 million. The comparative figures have been restatedaccordingly.Other than as set out above, the accounting policies are unchangedfrom those applied in the annual report for 2008, which contains amore detailed description of the Group's accounting policies.See appendix for a breakdown of the financial effects of the changes.The interim report is unaudited.Protection of patents and other intellectual property rightsA prerequisite for Lundbeck's continued substantial investments ininnovative pharmaceuticals is that intellectual property rights arerespected. Lundbeck believes that the Group's intellectual propertyrights are valid and enforceable, and it is Lundbeck's policy toenforce its intellectual property rights energetically, wherever theymay be violated.Lundbeck is involved in pending patent trials in Australia, Austria,Belgium, Canada, Denmark, France, Germany, Hungary, The Netherlands,Norway, Portugal, UK, and the US in respect of the Group'sintellectual property rights concerning escitalopram.Decisions in key patent casesDuring the period the Full Court in Australia (second instance)upheld the escitalopram product patent. The court also maintained thefirst instance decision to deny a five year extension of the patenton escitalopram in Australia. Lundbeck is in disagreement with thelatter part of the decision and will seek to appeal the decision tothe court of third instance (the highest court in Australia).Lundbeck will, if winning the appeal, claim damages of any companytaking advantage of the decision. At present at least two genericcopies of Cipralex® has been launched in Australia.In July 2009 Lundbeck and Forest entered into a settlement agreementwith Caraco Pharmaceuticals Laboratories, Ltd. (Caraco) and SunPharmaceuticals Industries, Ltd. (Sun Pharmaceuticals) in a pendingpatent infringement regarding the patent on escitalopram (Lexapro®)in the US. Under the agreement Caraco will be able to enter the USmarket as of the date that any third party generic, other than thefirst filer or a generic authorised by Lundbeck or Forest, enters themarket. As part of the agreement, Lundbeck will gain license to afamily of patents and patent applications, owned by SunPharmaceuticals, relating to a process for the production ofcitalopram and escitalopram. Forest and Lundbeck will reimbursecertain of Caraco's legal costs in connection with these patentlitigations.Risk factorsLundbeck's overall risk exposure is unchanged and reflects the riskfactors described in the annual report for 2008.Conference callToday at 2.00 pm (CET), Lundbeck will be hosting a conference callfor the financial community. You can listen to the conference on theGroup's website www.lundbeck.com under the section "Investors -Presentations".Income statement 2009 2008 2009 2008 2008 Q2 Q2 H1 H1 FY DKKm DKKm DKKm DKKm DKKmRevenue 3,432 2,938 6,657 5,820 11,282Cost of sales 623 468 1,110 944 1,837Distribution costs 799 632 1,473 1,199 2,459Administrative expenses 464 427 865 820 1,642Profit before Research & Developmentcosts 1,545 1,410 3,210 2,858 5,344Research & Development costs 826 1,046 1,543 1,568 2,990Profit from operations (EBIT) 719 365 1,666 1,290 2,354Income from investments in associates (1) (16) - (33) (43)Net financials (109) 2 (90) 16 (28)Profit before tax 609 351 1,577 1,273 2,283Tax on profit for the period 139 99 410 346 620Profit for the period 470 252 1,167 927 1,663Earnings per share (EPS) (DKK) 2.40 1.29 5.95 4.69 8.45Diluted earnings per share (DEPS)(DKK) 2.40 1.29 5.95 4.69 8.45Statement of recognised income andexpenses 2009 2008 2009 2008 2008 Q2 Q2 H1 H1 FY DKKm DKKm DKKm DKKm DKKmProfit for the period 470 252 1,167 927 1,663Exchange differences regarding foreignsubsidiaries (190) 15 (299) (84) (138)Adjustment, deferred gains/losses,hedging 96 (19) 7 148 43Realised gains/losses, hedging 56 (77) 113 (112) (104)Realised gains/losses, trading(transferred from hedging) - - - (12) (16)Other equity entries concerningassociates - (9) - (3) 1Fair value adjustment ofavailable-for-sale financial assets 1 (23) 2 (31) (7)Tax on income and expenses recognised inequity 3 24 48 (6) 19Income and expenses recognised directlyin equity (35) (89) (130) (100) (202)Recognised income and expenses for theperiod 435 164 1,037 827 1,462Balancesheet 30.06.2009 30.06.2008 31.12.2008 DKKm DKKm DKKmAssetsIntangible assets 7,219 1,965 2,016Property, plant and equipment 3,064 3,111 3,123Financial assets 219 544 247Non-current assets 10,502 5,621 5,386Inventories 1,342 931 837Receivables 2,834 2,612 2,223Securities 50 1,142 955Cash 2,256 1,955 2,921Assets held for sale - - 205Current assets 6,482 6,640 7,140Assets 16,984 12,261 12,526Equity and liabilitiesShare capital 984 1,036 984Share premium 224 224 224Other reserves (736) (382) (437)Retained earnings 7,629 5,996 6,740Equity 8,101 6,874 7,511Provisions 1,323 577 689Debt 1,920 1,892 1,904Non-current liabilities 3,242 2,469 2,594Provisions 20 6 18Bank and mortgage debt 751 7 23Trade payables 840 658 867Other payables 3,467 1,356 916Prepayments from Forest 563 889 597Current liabilities 5,640 2,918 2,421Liabilities 8,882 5,387 5,015Equity and liabilities 16,984 12,261 12,526Statement of changes in equity at 30 June 2009 Share Share Other Retained Equity capital premium reserves earnings DKKm DKKm DKKm DKKm DKKm2009Equity at 31.12.2008 984 224 - 6,384 7,592Change in accountingpolicies:Exchange differencesregarding foreignsubsidiaries - - (437) 356 (81)Equity at 01.01.2009 984 224 (437) 6,740 7,511Recognised income andexpenses for the period - - (299) 1,336 1,037Distribution of dividend,gross - - - (453) (453)Distribution of dividend,treasury shares - - - 2 2Incentive programmes - - - 4 4Other transactions - - - (447) (447)Equity at 30.06.2009 984 224 (736) 7,629 8,1012008Equity at 31.12.2007 1,036 224 - 5,925 7,185Change in accountingpolicies:Exchange differencesregarding foreignsubsidiaries - - (298) 202 (96)Equity at 01.01.2008 1,036 224 (298) 6,127 7,089Recognised income andexpenses for the period - - (84) 911 827Distribution of dividend,gross - - - (531) (531)Distribution of dividend,treasury shares - - - 27 27Buyback of treasury shares - - - (538) (538)Incentive programmes - - - 1 1Other transactions - - - (1,042) (1,042)Equity at 30.06.2008 1,036 224 (382) 5,996 6,874Cash flow statement 2009 2008 2009 2008 2008 Q2 Q2 H1 H1 FY DKKm DKKm DKKm DKKm DKKmProfit from operations (EBIT) 719 365 1,666 1,290 2,354Adjustments 134 614 115 699 1,031Working capital changes 189 (66) (100) (155) (88)Cash flows from operationsbefore financial receipts andpayments 1,043 913 1,682 1,834 3,296Financial receipts andpayments (84) (11) (14) 27 11Cash flows from ordinaryactivities 958 902 1,667 1,862 3,307Income tax paid (57) (71) (175) (168) (527)Cash flows from operatingactivities 902 831 1,492 1,693 2,780Acquisition of company - - (3,535) - -Investments in and sale ofbonds 3 23 944 394 612Investments in and sale ofintangible assets, property,plant and equipment and otherfinancial assets (53) (686) 148 (852) (1,199)Cash flows from investingactivities (50) (663) (2,443) (458) (587)Cash flows from operating andinvesting activities 852 168 (950) 1,235 2,193Cash flows from financingactivities 277 (633) 277 (1,045) (1,016)Change in cash 1,128 (465) (673) 190 1,177Cash at beginning of period 1,123 2,415 2,921 1,772 1,772Unrealised exchangedifferences for the period 4 6 8 (7) (28)Change for the period 1,128 (465) (673) 190 1,177Cash at end of period 2,256 1,955 2,256 1,955 2,921Interest-bearing net cash andcash equivalentsis composed as followsCash 2,256 1,955 2,256 1,955 2,921Securities 50 1,142 50 1,142 955Interest-bearing debt (2,670) (1,900) (2,670) (1,900) (1,927)Interest-bearing net cash andcash equivalents,end of period (365) 1,198 (365) 1,198 1,949Management statementThe Supervisory Board and the Executive Management have discussed andadopted the interim report for the period 1 January - 30 June 2009 ofH. Lundbeck A/S. The interim report is presented in accordance withIAS 34 "Interim financial reporting" as adopted by the EU andadditional Danish disclosure requirements for the interim reports oflisted companies.We consider the accounting policies applied to be appropriate.Accordingly, the interim report gives a true and fair view of theGroup's assets, liabilities and financial position at 30 June 2009and of the results of the Group's operations and cash flows for thesix months ended 30 June 2009.In our opinion, the management's report gives a true and fair view ofdevelopments in the activities and financial position of the Group,the results for the period and of the Group's financial position ingeneral and describes fairly significant risk and uncertainty factorsthat may affect the Group.The interim report is unaudited.Valby, 13 August 2009Executive ManagementUlf Wiinberg Peter Høngaard Lars Bang AndersenPresident and CEO Executive Vice Executive Vice President PresidentAnders Götzsche Anders Gersel Stig Løkke Pedersen PedersenExecutive Vice President, Executive Vice Executive ViceCFO President PresidentSupervisory BoardPer Wold-Olsen Thorleif Krarup Egil BoddChairman Deputy ChairmanKim Rosenville Christensen Peter Kürstein Jørn MayntzhusenMats Pettersson Birgit Bundgaard Jes ÿstergaard RosenmeierFinancial calendar 20093 November Interim report for 3rd quarter2009Lundbeck contactsInvestors: Media:Jacob Tolstrup Mads KronborgDirector, IR & Communication Media Relations+45 36 43 30 79 +45 36 43 28 51Palle Holm Olesen Kasper RiisHead of Investor Relations Media Relations+45 36 43 24 26 +45 36 43 28 33Magnus Thorstholm JensenInvestor Relations Officer+45 36 43 38 16About LundbeckH. Lundbeck A/S (LUN.CO, LUN DC, HLUKY) is an internationalpharmaceutical company highly committed to improve the quality oflife for people suffering from central nervous system (CNS)disorders. For this purpose Lundbeck is engaged in the research anddevelopment, production, marketing and sale of pharmaceuticals acrossthe world, targeted at disorders like depression and anxiety,schizophrenia, insomnia, Huntington's, Alzheimer's and Parkinson'sdiseases.Lundbeck was founded in 1915 by Hans Lundbeck in Copenhagen, Denmark,and employs today over 5.500 people worldwide. Lundbeck is one of theworld's leading pharmaceutical companies working with CNS disorders.In 2008, the company's revenue was DKK 11.3 billion (approximatelyEUR 1.5 billion or USD 2.2 billion). For more information, pleasevisit www.lundbeck.com.Recent Corporate Releases from H. Lundbeck A/S31 July Total number of voting rightsand size of share capital as of 31 July 2009 fter reduction of theshare capital of H. Lundbeck A/S30 July Pipeline update - followingan interim analysis the studies with bifeprunox for the treatment ofschizophrenia is discontinued7 July Lundbeck increases its shareof Xenazine® and strengthens the US profitability - transactionimmediately accretive2 July Lu AA24530 shows positiveresults in major depressive disorder phase II study25 June Lundbeck receives FDAComplete Response Letter on Serdolect® for the treatment ofschizophrenia11 June Update on Lundbeck Inc. (US)8 June Update on Lu AA21004 clinicaldevelopment programme in major depressive disorder (MDD)18 May Lundbeck provides update onNDA for Serdolect® for the treatment of schizophreniaPlease visit www.lundbeck.com for further information on thereleases.Appendix - Changes in accounting policies Effect of Reclassification change ofChange in accounting Before adj. in other operating Afterpolicies accounting adj.- effect on income DKKm policies - Items1 - DKKm DKKmstatement DKKmQ2 2008Revenue 2,938 2,938Cost of sales 469 (1) 468Distribution costs 632 632Administrative expenses 427 - 427Research & Development 1,047 (1) 1,046costsProfit before other 363 2 - 365operating itemsOther operating items - - -Profit from operations 363 2 - 365(EBIT)Income from investments (16) (16)in associatesNet financials (9) 12 2Profit before tax 338 14 - 351Tax on profit for the 98 1 99periodProfit for the period 240 13 - 252Earnings per share 1.22 1.29(EPS) (DKK)Diluted earnings per 1.22 1.29share (DEPS) (DKK)H1 2008Revenue 5,820 5,820Cost of sales 945 (1) 944Distribution costs 1,199 1,199Administrative expenses 826 (7) 820Research & Developmentcosts 1,570 (2) 1,568Profit before otheroperating items 1,280 3 7 1,290Other operating items 7 (7) -Profit from operations(EBIT) 1,287 3 - 1,290Income from investmentsin associates (33) (33)Net financials (33) 49 16Profit before tax 1,221 53 - 1,273Tax on profit for theperiod 354 (8) 346Profit for the period 867 61 - 927Earnings per share(EPS) (DKK) 4.39 4.69Diluted earnings pershare (DEPS) (DKK) 4.39 4.691) The line item "Other operating items" has been removed from theincome statement as it is considered immaterial for the Group. Theincome and expenses previously included in this line have beenreclassified to administrative expenses in the comparative figures. Effect of Reclassification change ofChange in accounting Before in accounting other operating Afterpolicies adj. adj.- effect on income DKKm policies - Items1 - DKKm DKKmstatement DKKmFY 2008Revenue 11,282 11,282Cost of sales 1,837 1,837Distribution costs 2,459 2,459Administrative expenses 1,651 (9) 1,642Research & Development 2,992 (2) 2,990costsProfit before other 2,342 2 9 2,354operating itemsOther operating items 9 (9) -Profit from operations 2,352 2 - 2,354(EBIT)Income from investments (43) (43)in associatesNet financials (185) 158 (28)Profit before tax 2,123 160 - 2,283Tax on profit for the 613 6 620periodProfit for the period 1,510 154 - 1,663Earnings per share (EPS) 7.67 8.45(DKK)Diluted earnings per 7.67 8.45share (DEPS) (DKK)1) The line item "Other operating items" has been removed from theincome statement as it is considered immaterial for the Group. Theincome and expenses previously included in this line have beenreclassified to administrative expenses in the comparative figures.Change in accounting policies Effect of change- effect on balance sheet - Before adj. in accounting After adj.30.06.2008 DKKm policies - DKKm DKKmAssetsIntangible assets 2,048 (83) 1,965Property, plant and equipment 3,173 (61) 3,111Financial assets 520 24 544Non-current assets 5,741 (120) 5,621Current assets 6,640 6,640Assets 12,381 (120) 12,261Equity and liabilitiesShare capital 1,036 1,036Share premium 224 224Other reserves - (382) (382)Retained earnings 5,733 263 5,996Equity 6,993 (119) 6,874Liabilities 5,388 - 5,387Equity and liabilities 12,381 (120) 12,261Change in accounting policies Effect of change- effect on balance sheet - Before adj. in accounting After adj.31.12.2008 DKKm Policies DKKmAssetsIntangible assets 2,079 (63) 2,016Property, plant and equipment 3,154 (30) 3,123Financial assets 234 13 247Non-current assets 5,467 (81) 5,386Current assets 7,140 7,140Assets 12,607 (81) 12,526Equity and liabilitiesShare capital 984 984Share premium 224 224Other reserves - (437) (437)Retained earnings 6,384 356 6,740Equity 7,592 (81) 7,511Liabilities 5,015 5,015Equity and liabilities 12,607 (81) 12,526[1] Xenazine is a registered trademark of Cambridge LaboratoriesLimited (Ireland)http://hugin.info/130085/R/1334270/316780.pdfhttp://hugin.info/130085/R/1334270/316781.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 13.08.2009 - 08:01 Uhr
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