The Supervisory Board of H. Lundbeck A/S today approved the Group's
interim report for the third quarter of 2007.
Q3 2007
§ Third-quarter consolidated revenue amounted to DKK 2,743
million exclusive of an initial one-off payment from Takeda
Pharmaceutical Company Limited of DKK 217 million, corresponding to
an increase of 22% relative to the year-earlier period (23% increase
at CER). Including the initial payment from Takeda, which is included
in Q3, revenue amounted to DKK 2,960 million.
§ Revenue derived from Europe amounted to DKK 1,408 million,
an 11% increase over the year-earlier period (11% growth at CER).
Revenue from International Markets amounted to DKK 569 million, a 28%
increase (37% growth at CER). Revenue from the USA rose by 45% (44%
increase at CER) to DKK 701 million.
§ Exclusive of the initial one-off payment from Takeda in Q3
2007, profit from operations was DKK 862 million, a 37% rise on the
same quarter of last year. The EBIT margin was 31.4%. Including the
payment from Takeda, profit from operations was DKK 1,079 million,
while profit after tax amounted to DKK 713 million, a 67% increase
relative to the year-earlier period.
§ Lundbeck's total net investments in Q3 2007 amounted to DKK
173 million, as compared with DKK 150 million in Q3 2006.
9 months 2007
§ Exclusive of the initial one-off payment from Takeda in Q3
2007, consolidated revenue for the first nine months of 2007 amounted
to DKK 7,937 million, an increase of 19% on the same period of 2006
(21% increase at CER), while the Group reported a profit from
operations of DKK 2,211 million, or an increase of 64%. During the
same period, Lundbeck's total net investments amounted to DKK 454
million.
Lundbeck's research and development
- events after 30 September 2007:
§ Proof of concept was achieved in a phase II clinical trial
with Lu AA21004
§ Lu AA24530 for the treatment of mood and anxiety disorders
entered clinical phase II
§ Phase I clinical trials were initiated with Lu AA24493 for
the treatment of stroke and other diseases
§ Lu AA47070 entered clinical phase I for the treatment of
Parkinson's disease.
Financial forecast 2007
§ Exclusive of one-off items, Lundbeck upgrades its forecast
for the Group's profit from operations to more than DKK 2.6 billion.
Lundbeck reiterates its guidance of an EBIT margin of 25% and a level
of investment of about DKK 650 million.
Share buyback
§ Lundbeck continues with the ongoing share buyback programme
and expects to complete the share buyback by the end of 2008.
In connection with the quarterly results Lundbeck's President & CEO
Claus Bræstrup says:"In the third quarter, sales of our new pharmaceuticals progressed
successfully in all of our markets, and this leads us to upgrade our
full-year earnings forecast for 2007. On the R&D side, our
development portfolio has progressed steadily during the past few
months, especially Lu AA21004 for the treatment of mood disorders,
and we have in-licensed Circadin® for insomnia, which we expect to
market in Europe already in the first half of 2008."
Financial highlights for the period
In respect of recognition and measurement, the interim report has
been prepared in accordance with International Financial Reporting
Standards as adopted by the EU which are expected to apply for the
presentation of financial statements for the full year 2007. The
interim report is unaudited.
Q3 2007 Q3 2006 Growth in Growth at Q2 DKKm DKKm DKK CER 2007
DKKm
Revenue 2,960 2,248 32% 34% 2,612
- Cipralex® 1,046 878 19% 21% 1,027
- Lexapro® 699 479 46% 44% 641
- Ebixa® 432 339 27% 29% 409
- Azilect® 46 19 143% 143% 40
- Serdolect® 10 3 259% 276% 6
- Other pharmaceuticals 444 475 (7%) (3%) 432
- Other revenue 282 54 427% 469% 57
Costs 1,881 1,618 16% 1,920
- Cost of sales 457 372 23% 398
- Distribution 584 500 17% 590
- Administration 358 322 11% 384
- Research and 485 420 16% 549
development
- Other operating (1) 4 - (2)
expenses, net
Profit from operations, 1,079 630 71% 692
EBIT
Net financials (35) 43 - 5
Net profit for the period 713 426 67% 498
Earnings per share, EPS 3.49 2.03 72% 2.41
(DKK)
Free cash flow 1,010 405 150% 779
Financial forecast for 2007
Lundbeck forecasts strong growth in consolidated profit for 2007
relative to 2006. Exclusive of one-off items, Lundbeck upgrades its
forecast for profit from operations to more than DKK 2.6 billion.
Lundbeck still expects an EBIT margin of 25% and to spend
approximately DKK 650 million on investments in 2007.
Lundbeck's financial forecast for 2007 is exclusive of one-off items
such as the initial one-time payment of DKK 217 million from Takeda,
which was recognised in Q3 2007, or a potential DKK 99 million
write-down of the balance-sheet value of desmoteplase for the
treatment of stroke.
Financial forecast
2007
forecast
Profit from operations (EBIT) More than DKK 2.6 billion
EBIT margin 25%
Investments Approx. DKK 650m
Revenue in Q3 2007
The Group generated Q3 revenue of DKK 2,960 million, which was a 32%
increase on the same period of last year and a 13% increase relative
to Q2 2007. Adjusted for exchange rate fluctuations, Group revenue
rose by 34% relative to the year-earlier period.
During the quarter, Lundbeck received an initial one-off payment of
DKK 217 million from the company's partner Takeda in connection with
the forming of an alliance for co-development and
co-commercialisation in the USA and Japan of several compounds in
Lundbeck's pipeline for the treatment of mood and anxiety disorders.
This payment is included under other revenue in Lundbeck's financial
statements. Exclusive of this payment, Lundbeck generated Q3 revenue
of DKK 2,743 million, which was a 22% increase on the same period of
last year and a 5% increase relative to Q2 2007.
Lundbeck Group revenue
Q3 2007 Q3 2006 Growth in Growth at Q2
DKKm DKKm DKK CER 2007
DKKm
Cipralex® 1,046 878 19% 21% 1.027
Lexapro® 699 479 46% 44% 641
Ebixa® 432 339 27% 29% 409
Azilect® 46 19 143% 143% 40
Serdolect® 10 3 259% 276% 6
Other pharmaceuticals 444 475 (7%) (3%) 432
Other revenue 282 54 427% 469% 57
Total revenue, Group 2,960 2,248 32% 34% 2,612
The Group's pharmaceuticals Cipralex®/Lexapro® and Ebixa® (for the
treatment of depression and Alzheimer's disease, respectively)
continued to grow combined with the recently launched pharmaceuticals
Azilect® and Serdolect® (for the treatment of Parkinson's disease and
schizophrenia, respectively).
Third-quarter sales of newer pharmaceuticals (Cipralex®/Lexapro®,
Ebixa®, Azilect® and Serdolect®) made up 75% of the Group's total
revenue. Exclusive of the initial payment from Takeda Pharmaceutical
Company Limited, the newer pharmaceuticals made up 81% of revenue,
compared with 76% in the same quarter of last year.
For reporting purposes, Lundbeck divides the world into three
regions; Europe, USA and International Markets. Effective from Q3
2007, Lundbeck has relocated five markets that were previously
reported under Europe to the International Markets category in order
to pursue a more stringent geographic breakdown of markets in the
regions. These five markets are Turkey, Israel, Russia, Ukraine and
Belarus. Comparative figures in this interim report and on the
company's website have been restated accordingly.
Europe
Q3 2007 Q3 2006 Growth in Growth at Q2
DKKm DKKm DKK CER 2007
DKKm
Cipralex® 728 643 13% 13% 706
Ebixa® 357 282 27% 27% 334
Azilect® 43 19 123% 123% 37
Serdolect® 6 1 290% 289% 4
Other pharmaceuticals 274 324 (15%) (16%) 281
Total revenue, Europe 1,408 1,269 11% 11% 1.364
Cipralex® and Ebixa® are Lundbeck's best-selling pharmaceuticals in
Europe in terms of revenue and continue to make positive
contributions to revenue in Europe, posting growth rates of 13% and
27%, respectively, relative to Q3 2006.
At the end of August 2007, Cipralex® held 13.8% of total
antidepressants sales in Europe, an increase of 19% compared with at
the end of August 2006. In terms of volume, Cipralex® is the most
widely used branded antidepressant in Europe.
At the end of August 2007, Ebixa® commanded 15.3% of the European
market for pharmaceuticals to treat Alzheimer's disease, as compared
with a share of 14.2% at the same time in 2006. Memantine, the active
ingredient in Ebixa®, is currently the second-most prescribed
pharmaceutical in Europe for treating Alzheimer's disease.
Azilect® has now been launched in more than 20 countries across
Europe, and the launch is proceeding as planned. At the end of August
2007, Azilect® held 4.2% of the composite European market for
pharmaceuticals to treat Parkinson's disease.
Serdolect® has now been launched in 20 countries across Europe,
including Spain and Germany.
Circadin® - On 24 September, Lundbeck and Neurim Pharmaceuticals Ltd.
announced that Lundbeck has in-licensed the exclusive rights for
Circadin® for the treatment of primary insomnia for the majority of
markets in Europe, corresponding to about 80% of the European markets
in terms of value. Circadin® was approved by the European health
authorities on 29 June 2007. Furthermore, Lundbeck holds the
exclusive option to evaluate commercialisation of the drug in markets
outside of Europe.
Lundbeck expects to launch Circadin® in the first markets in 2008,
which will cause an increase in selling and distribution expenses in
2008.
USA
Q3 2007 Q3 2006 Growth in DKK Growth at Q2
DKKm DKKm CER 2007
DKKm
Lexapro® 699 479 46% 44% 641
Other pharmaceuticals 2 3 (22%) (22%) -
Total revenue, USA 701 482 45% 44% 641
Lundbeck's income from sales of Lexapro® in the USA was DKK 699
million in Q3 2007, compared with DKK 479 million in the same period
of last year, an increase of 46%. The increase was partly
attributable to a low income level for Lexapro® in 2006 due to the
inventory reductions made in 2006, partly to rising Lexapro® sales in
the US market.
At the end of August 2007, Lexapro® held 22.3% of total
antidepressants sales in the USA, as compared with a share of 16.9%
at the same time last year. Measured by the total number of
prescriptions (TRx), the number of prescriptions written for Lexapro®
grew by 2.7% in Q3 2007.
Prepayments from Forest recorded in Lundbeck's balance sheet - the
difference between the invoiced price and the minimum price of
Forest's inventories - was DKK 942 million at 30 September 2007
compared with DKK 969 million at 30 September 2006 and DKK 935
million at 30 June 2007. At 30 September 2007, inventories were on a
level corresponding to just less than 9 months of commercial supply.
Lundbeck hedges income from Lexapro® and other products using
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. The hedging of the
company's foreign exchange income means that this income is in
reality included in the financial statements at the forward rates.
The effect on the profit was DKK 4 million in Q3 2007 against DKK 4
million in the year-earlier period compared to a situation where the
income is included at the current rates of exchange during the
period. Of the total effect, DKK 7 million compared with DKK 3
million in Q3 2006 stems from the hedging of USD. The gain from the
USD hedging is included in the income from sales of Lexapro®.
At 30 September 2007, forward exchange and option contracts had been
entered into to hedge foreign currency cash flows, primarily in USD,
equivalent to a value of approx. DKK 2.8 billion, most of which is
accounted for as hedging contracts. The average forward rates at 30
September 2007 for US dollars were USD/DKK 551.37. Deferred
recognition of net currency losses and gains amounted to DKK 80
million at 30 September 2007 against DKK 21 million at 30 September
2006 and DKK 33 million at 30 June 2007.
The average forward rate for the first nine months of 2008 for US
dollars will be approximately USD/DKK 545, using the existing hedging
contracts. The corresponding forward rate for the first nine months
of 2007 was approximately USD/DKK 578. For the 2007 financial year,
the average forward rate for US dollars is approximately USD/DKK 575.
International markets
Q3 2007 Q3 2006 Growth in Growth at Q2
DKKm DKKm DKK CER 2007
DKKm
Cipralex®/Lexapro® 318 235 35% 43% 321
Ebixa® 75 58 30% 38% 74
Azilect® 4 - nm nm 3
Serdolect® 5 1 228% 245% 2
Other pharmaceuticals 168 149 13% 23% 150
Total revenue, International 569 443 28% 37% 550
Markets
Revenue from International Markets rose by 28% relative to the
year-earlier period to DKK 569 billion in Q3 2007. Third-quarter
revenue in International Markets made up 19% of Lundbeck's combined
revenue in Q3, and net of the one-time payment of DKK 217 million
received by Lundbeck from Takeda in Q3, revenue in International
Markets represented 21% of Lundbeck's combined revenue. In
comparison, three years ago in Q3 2004 International Markets revenue
made up 14% of Lundbeck's revenue.
Revenue in International Markets is driven primarily by sales of
Lundbeck's two best-selling pharmaceuticals Cipralex®/Lexapro® and
Ebixa®. Combined, these two pharmaceuticals made up 69% of
third-quarter revenue in the region. At the same time, revenue from
the company's other pharmaceuticals in International Markets is
maintained at an unchanged level.
In Q2 2007, Cipralex®/Lexapro® held a market share of 10.8% of the
aggregate market for antidepressants in terms of value in
International Markets, an increase of 40% compared with at the end of
August 2006.
Ebixa®, Lundbeck's second-largest pharmaceutical, held 11.2% of the
total market for pharmaceuticals to treat Alzheimer's disease in
International Markets. In the same period of last year, the market
share was 10.9%.
Azilect® and Serdolect® have only been launched in a few of the
markets in International Markets, and revenue is therefore at a
relatively low level.
Expenses
Lundbeck's total expenses, exclusive of net financials and tax, were
DKK 1,881 million in Q3 2007, which is 16% higher than in the
year-earlier period and 2% lower than in Q2 2007.
At DKK 457 million, cost of sales amounted to approximately 16% of
total revenue (17% of revenue exclusive of the one-time payment of
DKK 217 million from Takeda). In nominal terms, third-quarter cost of
sales was up 23% relative to the same period of last year and rose
15% compared with Q2 2007. Cost of sales in Q3 2007 was primarily
affected by an increase in revenue and a changed product mix compared
with the same quarter of last year.
Distribution costs amounted to DKK 584 million, an increase of 17%
relative to the year-earlier period and a 1% decrease from Q2 2007.
Compared with Q3 2006, third-quarter distribution costs in 2007 were
marked by a higher level of activity in connection with the marketing
of Lundbeck's new pharmaceuticals and higher costs associated with
the restructuring of sales organisations in Europe.
Administrative expenses amounted to DKK 358 million, an increase of
11% compared with the year-earlier period and a 7% decrease relative
to Q2 2007. The increase in administrative expenses was partly due to
expenses related to the continued operation and expansion of the
Group's information technology infrastructure and expense recognition
of a warrant programme.
Third-quarter research and developments costs amounted to DKK 485
million, which was a 16% increase on the same period of last year and
12% lower than in Q2 2007.
Research and development costs accounted for 16% of revenue in Q3
2007. Exclusive of the one-off payment from Takeda, research and
development costs accounted for 18% of revenue in Q3 2007, as
compared with 19% in Q3 2006. As previously announced, Lundbeck
expects that research and development costs will account for
approximately 20% of total consolidated revenue for 2007.
Depreciation and amortisation charges, which are included in the
individual expense categories, totalled DKK 135 million in Q3 2007,
up from DKK 127 million in the same period of last year.
Depreciation/amortisation per expense Q3 2007 Q3 2006 Growth in Q2
group DKKm DKKm DKK 2007
DKKm
Cost of sales 59 55 8% 56
Distribution 3 4 (16%) 4
Administration 20 19 5% 22
Research and development 53 49 8% 53
Total depreciation/amortisation, Group 135 127 7% 135
The number of employees measured as full-time employees was 5,114 at
the end of Q3 2007 compared with 5,110 at the end of Q3 2006 and
5,159 at the end of Q2 2007.
Net financials
In Q3 2007, the Group's net financial expense totalled DKK 35 million
compared with a net income of DKK 43 million in the same period of
last year.
Q3 2007 Q3 2006 Q2 2007
DKKm DKKm DKKm
Net items relating to trading 1 (5) 1
Accounting translation of currency items (51) 9 4
Net currency items relating to financial (50) 4 5
items
Unrealised gain concerning other investments 2 23 1
excl. exchange rate adjustments
Net interest income/expenses 13 16 (1)
Net financials (35) 43 5
Net interest income, including realised and unrealised gains and
losses on the bond portfolio, amounted to DKK 13 million in Q3 2007.
The change in Q3 2007 relative to Q2 2007 was due to a small loss on
the company's bond portfolio.
Third-quarter foreign currency translation represented an expense of
DKK 51 million, and net income relating to trading amounted to DKK 1
million for a total of DKK 50 million in net currency items included
in net financials. Movements in the accounting translation of
currency items in Q3 2007 were primarily triggered by exchange rate
translation of equity in the company's subsidiaries in the USA and
the United Kingdom.
Net items relating to trading derives from income and expenses from
instruments that do not meet the criteria for hedging and is
recognised directly under net financials at market value.
Tax
In July 2007, a proposal for a new tax reform from the Ministry of
Taxation was adopted by the Danish parliament. As a result of the new
tax reform, the Danish corporate tax rate has been lowered from 28%
to 25%. Consequently, the Lundbeck Group's tax rate has been reduced
to 30%.
The income tax expense amounted to DKK 306 million in Q3 2007 against
DKK 227 million in the year-earlier period. The effective tax rate
was 30.0% as compared with 34.7% in Q3 2006.
The lower tax percentage in Q3 2007 was partly attributable to the
reduced corporate tax rate in Denmark, which had an effective impact
of about 2 percentage points.
Net profit for the period
Profit from operations was DKK 1,079 million in Q3 2007 compared with
DKK 630 million in the same period of last year.
At DKK 1,019 million, profit before tax rose 56% from DKK 653 million
in the year-earlier period, while the net profit for the period after
tax was DKK 713 million, which was 67% higher than in Q3 2006.
Investments
Lundbeck's total net investments in Q3 2007 amounted to DKK 173
million, as compared with DKK 150 million in Q3 2006 and DKK 154
million in Q2 2007. In Q3 2007, the Group invested primarily in
research facilities in Lundbeck Research, USA, the roll-out of SAP in
the Group's subsidiaries and the extension of headquarter facilities
in Denmark.
For the first nine months of 2007, Lundbeck's total net investments
amounted to DKK 454 million.
Share buyback
In August 2005, Lundbeck launched a treasury share buyback programme
of up to DKK 6 billion. The share buyback programme is being
implemented in accordance with the provisions of the European
Commission's safe harbour regulation, which protects listed companies
against violation of insider legislation in connection with share
buybacks. Lundbeck continues with the programme and expects to
complete the share buybacks by the end of 2008.
Once every seven trading days, Lundbeck will issue an announcement
concerning transactions made under the share buyback programme. At 30
September 2007, a total of 23,028,527 shares had been bought back,
corresponding to a transaction value of DKK 3,102,449,141 and an
average purchase price of DKK 134.7220, equal to about 52% of the
total programme.
Cash flows
Lundbeck's operating activities generated a cash inflow of DKK 1,183
million in Q3 2007, compared with an inflow of DKK 555 million in the
year-earlier period and DKK 933 million in Q2 2007. The free cash
flow amounted to DKK 1,010 million in Q3 2007 as compared with DKK
405 million in the same period of last year. Relative to Q3 2006, the
free cash flow is positively influenced by the higher operating
profit and an increase in shipments to the company's US partner
Forest Laboratories, Inc. compared with the year-earlier period.
Financing activities generated a cash outflow of DKK 317 million, as
compared to an outflow of DKK 370 million in the same period of last
year. The lower outflow was due to favourable movements in
interest-bearing debt. In Q3 2007, cash flows from financing
activities were affected by share buybacks of DKK 264 million. In Q2
2007, financing activities resulted in a cash outflow of DKK 589
million.
Lundbeck's interest-bearing net cash (the Group's holding of cash and
cash equivalents less interest-bearing debt) was DKK 1,916 million at
30 September 2007 against DKK 815 million at 30 September 2006 and
DKK 1,131 million at 30 June 2007. In addition to interest-bearing
net cash, Lundbeck has unutilised credit facilities of DKK 2.1
billion.
Unutilised credit facilities consist of drawing rights on the Group's
banks (overdraft facilities) and guaranteed committed loans.
Equity
Equity at 30 September 2007 amounted to DKK 7,496 million compared
with DKK 6,475 million at 30 September 2006 and DKK 6,961 million at
30 June 2007. In Q3 2007, return on equity was 9.9% compared with
6.7% in the same period of last year and 7.1% in Q2 2007. The changes
in equity are shown in appendix 4.
Litigation in respect of escitalopram
Lundbeck is involved in pending patent trials in the USA, the UK,
Australia, Canada, France and Germany.
USA
The appeal in the case concerning the US patent, which covers
escitalopram, the active ingredient in Lexapro®, was heard on 9 May
2007 before the U.S. Court of Appeals for the Federal Circuit. On 5
September 2007, Lundbeck and Forest Laboratories, Inc. announced that
the U.S. Court of Appeals for the Federal Circuit had affirmed a 13
July 2006 decision by the U.S. District Court for the District of
Delaware, which determined that the U.S. patent covering
escitalopram, the active ingredient in Lexapro®, is valid and upheld
the injunction preventing IVAX/Teva's proposed generic product
launch. This confirms Lundbeck's and Forest's patent rights
concerning Lexapro®, which expire in March 2012.
Lundbeck does not believe that IVAX/Teva have any further appeal
options and finds that the ruling in this case is final, thereby
closing the case against IVAX/Teva.
Germany
On 24 August, a German court returned a first-instance decision,
which ruled against Lundbeck in respect of escitalopram. The case has
been appealed, and Lundbeck does not expect a decision by the appeals
court within the next couple of years.
Lundbeck firmly believes that the Group's intellectual property
rights concerning escitalopram are valid and enforceable, and it is
still our policy to energetically defend our intellectual property
rights.
Lundbeck's development portfolio
Desmoteplase
Earlier this year, Lundbeck's partners PAION AG and Forest
Laboratories Inc. announced the results of the DIAS-2 (Desmoteplase
In Acute Ischemic Stroke) study with the compound desmoteplase for
the treatment of stroke, which showed that the primary efficacy
endpoint was not met. Since then, Lundbeck has analysed and evaluated
the results of the analysis subsequently initiated by PAION to create
an overview of the reasons why the results of the DIAS-2 study were
so different from the positive results obtained in previous clinical
trials with desmoteplase.
Lundbeck is still investigating whether there is an explanation for
the lack of efficacy and whether any such explanation could possibly
form the basis of a continuation of the project. This assessment will
be completed at the beginning of 2008 at the latest.
Development activities in Q3 2007
On 5 September, Lundbeck and Takeda Pharmaceutical Company Limited
announced a strategic alliance for the exclusive co-development and
co-commercialisation in the USA and Japan of several compounds in
Lundbeck's pipeline for the treatment of mood and anxiety disorders.
The partnership will initially focus on co-development and
co-commercialisation of the two most advanced compounds in Lundbeck's
pipeline for mood and anxiety disorders, Lu AA21004 and Lu AA24530,
with an option under certain conditions to replace one of the two
compounds with a third compound and to include a fourth compound of
the same class in the agreement. Assuming approvals, the companies
plan to co-promote the compounds in the USA and Japan.
Development activities after 30 September 2007
In October, Lundbeck announced positive headline results from a proof
of concept clinical study (clinical phase II) with the compound Lu
AA21004 for the treatment of Major Depressive Disorder. Later that
month, Lundbeck initiated phase I clinical trials with the
pharmaceutical candidate Lu AA24493 in patients suffering from acute
ischemic stroke and also launched phase II clinical trials with the
pharmaceutical candidate Lu AA24530 in patients with depression.
Furthermore, in November Lundbeck initiated clinical phase I trials
with the pharmaceutical candidate Lu AA47070 for the treatment of
Parkinson's disease.
Incentive plans
Lundbeck has established incentive plans for Executive Management,
senior employees and key employees, which are comprised by the
provisions of IFRS 2 "Share-based payment".
Equity-settled schemes
In August 2007, Lundbeck granted 804,500 warrants (equity-settled
remuneration scheme), which are comprised by the provisions of IFRS
2, to members of H. Lundbeck A/S' Executive Management and Danish and
foreign executives appointed by H. Lundbeck A/S' Executive Management
who are employed by H. Lundbeck A/S or H. Lundbeck A/S' subsidiaries.
Moreover, in September 2007, Lundbeck granted 40,000 warrants
(equity-settled remuneration scheme), which are comprised by the
provisions of IFRS 2, to the new member of Executive Management, CFO
Anders Götzsche.
Under the provisions of IFRS 2, this scheme is comprised by the
requirement on cost recognition and will therefore affect the
consolidated financial statements at the time of grant in the amount
of DKK 16.4 million. The market value is calculated using the Black
Scholes formula for valuation of options and is based on an exercise
price of DKK 156, a volatility of 28.6%, a dividend payout ratio of
1.2% and a risk-free interest rate of 4.3%.
In September 2005, Lundbeck granted warrants (equity-settled
remuneration scheme), which are comprised by the provisions of IFRS
2, to members of H. Lundbeck A/S' Executive Management and Danish and
foreign executives appointed by H. Lundbeck A/S' Executive Management
who are employed by H. Lundbeck A/S or H. Lundbeck A/S' subsidiaries.
Under the provisions of IFRS 2, these schemes are comprised by the
requirement on cost recognition at the date of grant. Accordingly, no
regular value adjustments will be made, and the schemes will not
affect the consolidated financial statements.
In January 2004, Lundbeck allocated warrants (equity-settled
remuneration scheme) to the management and a number of key employees.
These warrants are covered by the transitional provisions of IFRS 2,
as this scheme was established after 7 November 2002 with a vesting
date before 1 January 2005.
The programme expired at the end of August 2007, and 350,574 warrants
not exercised by this time were cancelled.
The liability based on the Black Scholes formula was DKK 25.8 million
at 30 September 2007.
Debt plans
In 2002, a share price based plan for employees of the foreign
enterprises was set up, and in 2004 a new share price based plan for
key employees of US enterprises was established.
The share price based plan for employees of the foreign subsidiaries
set up in 2004 expired at the end of August 2007.
The value adjustment at 30 September 2007 of the "debt plans",
including exercised plans, is recognised at an insignificant amount
in the income statement for Q3 2007. The liability for the debt-based
remuneration plans based on the Black Scholes formula was DKK 8
million at 30 September 2007.
Conference call
Today at 3.00 pm (CET), Lundbeck will be hosting a conference call
for the financial community. You can listen to the conference on the
Group's website www.lundbeck.com under the section "Investors -
Presentations - Teleconference".
Forward-looking statements
This announcement contains forward-looking statements that provide
current expectations or forecasts of events such as new product
launches, product approvals and financial performance.
Forward-looking statements are subject to risks, uncertainties and
inaccurate assumptions. This may cause actual results to differ
materially from expectations. Factors that may affect future results
include interest rate and exchange rate fluctuations, delay 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 competing products, 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
related interpretation thereof and unexpected growth in costs and
expenses.
Management statement
The Supervisory Board and Executive Management have considered and
adopted the interim report of H. Lundbeck A/S.
The interim report, which is unaudited, has been prepared in
accordance with the guidelines issued by the Copenhagen Stock
Exchange and, in respect of recognition and measurement, has been
prepared in accordance with IFRS and related interpretations of
International Accounting Standards Board (IASB), which are expected
to apply for the presentation of financial statements for the full
year 2007.
In our opinion, the interim report gives a true and fair view of the
Group's financial position at 30 September 2007 and of the results of
the Group's operations and cash flows for the period 1 January - 30
September 2007.
Valby, 14 November 2007
Supervisory Board
Per Wold-Olsen Thorleif Krarup Kim Rosenville Christensen
Chairman Deputy Chairman
Peter Kürstein Mats Pettersson Birgit Bundgaard Rosenmeier
William Watson Jes Østergaard
Executive Management
Claus Bræstrup Lars Bang
President and CEO Executive Vice President
Anders Götzsche Stig Løkke Pedersen
Executive Vice President Executive Vice President
CFO
Lundbeck contacts
Investors: Media:
Jacob Tolstrup Anders Schroll
Director, Corporate Reporting Head of Communication
+45 36 43 30 79 +45 36 43 20 81
________________________
Stock Exchange Release No 303 - 14 November 2007
About Lundbeck
H. Lundbeck A/S is an international pharmaceutical company engaged in
the research and development, production, marketing and sale of drugs
for the treatment of psychiatric and neurological disorders. In 2006,
the company's revenue was DKK 9.2 billion (approximately EUR 1.2
billion or USD 1.6 billion). The number of employees is approximately
5,300 globally. For further information, please visit
www.lundbeck.com
