HLBBF (HLBBF) Q2 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, welcome to the financial statements for the first 6 months of 2026 Conference Call. I'm Robert, your Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Charl van Zyl, President and CEO. Please go ahead, sir.

So welcome, everybody. Thank you for joining our call today for our first half 2026 earnings call. I'm, of course, pleased to have my executive leadership team joining me today, whom I will be introducing very shortly. So just a few opening remarks before we get into the main presentation. So again, very pleased to see the strong momentum that we see in the first half of this year. As you recall, we upgraded in Q1, and we see now the full year guidance confirmed through this halfway point through 2026. I want to again emphasize also that these results are not by chance. They're really through strategic choice through clear intent and disciplined execution of our Focused Innovator Strategy, which is predicated around growth, building a compelling innovative pipeline and being very disciplined around our capital allocation. Before we unpack these results, let me go to the next slide. So of course, today contains forward-looking statements, which are subject to change. So if you go to the next slide, here, I will just provide a very short overview of our performance as things stand at the halfway point 2026. First of all, as I mentioned, our strategy is now in its third year of a focused innovator approach, which is built around growing what we have, growing our key strategic assets, building a strong innovative pipeline and ensuring that we have disciplined funding and allocation to either invest in growth or in innovation. And just a few points to first unpack on the growth side. So again, our performance through the first half shows very strong strategic brand growth of 17%. This is underpinned by Vyepti at 46% and Rexulti at 17%. Again, these are assets that we have consciously invested in over the last 3 years, and we're truly seeing the fruits of those results with strong sustained growth coming from both those assets. We've also transitioned to a commercial model in our key countries, 27 partner markets. And of course, we are about 8 months into that partnership and continue to see strong momentum with this relationship in our commercial model. Let me then go to innovation, which is really a transformation that we've seen in Lundbeck over the last 3 years. And there are 2 parts to that. So let me talk to a few highlights on the early and mid-stage pipeline. First of all, our D1/D2 agonist is advancing into Phase II in Parkinson's. We have seen also really promising results of asedebart progressing in 2 indications, Congenital Adrenal Hyperplasia and Cushing's disease. And we also see very promising early results on our orexin program, which has been given Fast Track designation by the FDA. So really compelling early to mid-stage pipeline that are really promising for the future and long-term sustainable growth of Lundbeck. When I talk a little bit about the late stage, again, here, you've heard from us before, but very important and good to see the progress we're making on bexicaserin with the DEEp OCEAN study that has closed randomization ahead of time, and we expect our quarter 4 results -- headline results from this particular study. As we also published before, amlenetug, the MASCOT randomization has completed ahead of schedule and on track for a second half '27 readout. Bocunebart continues to advance following the Phase IIb, and we're preparing to enter Phase III later in 2026. Importantly, also to say the funding part, which has been, as you have come to known from us, very disciplined. We have maintained a very strong investment in R&D of 20% to 25% of our revenue, but we've done that through careful allocation and reallocation of capital throughout the company. And we've seen that free cash flow very strong in the first half of 2026, which has also allowed us to deleverage fast following the Longboard acquisition to a ratio of 1 for net debt to adjusted EBITDA. So as I mentioned in my opening remarks, we have upgraded in Q1 based on strong underlying trends, and we are, therefore, confirming our guidance at this halfway point to 7% to 9% constant on top line and adjusted EBITDA at 8% to 14% on a constant basis as well. So before I hand to the team, again, I want to just emphasize a few things. Lundbeck is continuing on a very strong path of transformation. We are today a much stronger commercial organization. We are financially in a much stronger position, and we have a really compelling pipeline to support the long-term sustainable growth of Lundbeck. So If we can go to the next slide and of course, my pleasure to introduce the rest of the speakers who will give you a more detailed update today. You'll hear from our 2 Executive Vice Presidents from our geographies, Tom and Michala. And it's also my pleasure to welcome our soon to be appointed Executive Vice President of Research and Development, Tarek, who will be joining Johan in this very smooth transition in our R&D organization. Of course, you'll be concluded with Joerg going in more detail to the financial results. So with that, it's my pleasure to hand over to Tom.

Great. Thank you, Charl, and hello, everyone. Overall, we are pleased with our commercial performance during the first half of the year. And once again, the highlight was Vyepti. Vyepti delivered strong market-leading growth during the first half of 2026, and we expect this to continue throughout the year. This performance has been powered by continued robust underlying demand in both the U.S. and our Europe and international markets. Global revenue reached DKK 2.865 billion in the first half of 2026, growing at 46% at constant exchange rates. In the U.S., revenue grew 47%, fueled by demand growth of 41.3%. This is nearly triple the growth rate of the market at 15.3%. This sustained outperformance reflects precision execution across the marketing mix, including the impact of our sales force and DTC investments, which are increasingly being guided by internally developed AI tools and advanced analytics. Our monthly market share in the U.S. reached an all-time high of 13.01% compared to 11% at the beginning of 2026 and surpassing Aimovig for the first time. This market share expansion is driven by continued growth in new patient starts, a high written-to-infusion conversion ratio and category-leading patient persistency. We continue to allocate resources in a disciplined and data-driven way as we move through the year to continue to drive market-leading growth. In Europe and International Operations, Vyepti grew 39% at constant exchange rates with strong uptake across key markets, also outpacing anti-CGRP market growth. Market share in these prioritized markets has increased approximately 2 percentage points year-over-year. Importantly, we're also making good progress towards expanding into Asia and preparing for the launches in China, Japan and South Korea. We see these as meaningful additional growth opportunities over time. Next slide, please. A key part of sustaining Vyepti's momentum is continuing to invest in building the evidence base, both through clinical trials and real-world evidence, with the goal of continuing to elevate the clinical and economic value proposition to further differentiate Vyepti and drive earlier use within the treatment paradigm. Our Phase III and IV programs created a strong clinical foundation demonstrating rapid and sustained efficacy. These data are now supported by DELIVER, which assess patients who have failed oral preventative treatments; INFUSE, which provides real-world evidence after anti-CGRP failures; and THRIVE, which is currently evaluating Vyepti efficacy and safety after insufficient response to prior anti-CGRP. These data are compelling. 60% of patients reported fewer than 4 monthly headache days sustained through 104 weeks. In DELIVER, 50% of patients with 2 to 4 previous oral preventative treatment failures achieved at least a 50% reduction in monthly migraine days. And in INFUSE, 44% of treated patients achieved at least a 50% reduction in monthly headache days despite prior exposure to more than 1 anti-CGRP. And importantly, in the ongoing THRIVE study, the interim analysis suggests 45% of patients reporting a PGIC response of much or very much improved after an inadequate response to anti-CGRP targeting preventative treatment. So overall, we are continuously adding complementary evidence that supports meaningful differentiation and clinical evidence to move Vyepti earlier in the treatment paradigm so that migraine patients have the potential to achieve the outcome that they deserve. Next slide, please. Turning to Rexulti, which continues to deliver strong double-digit growth. During the first half of 2026, global revenue reached DKK 3.297 billion, an increase of 17% at constant exchange rates versus the same period last year. In the U.S., TRx demand grew 16.3% on a rolling 6-month basis and AADAD is the main growth driver with TRxs up 37%, while MDD remains a solid contributor, growing 15.7%, really demonstrating strong underlying brand fundamentals. Rexulti AADAD volume is becoming increasingly important to the overall Rexulti brand. The 65-plus segment now contributes over 36% or more than 1 out of every 3 of Rexulti TRx claims based upon the most recently available claims data. In our latest awareness trial and usage market research survey, Rexulti was identified as the #1 preferred brand for the treatment of AADAD and remains an important driver for future growth for the brand. We're pleased with the momentum of Rexulti and demand is tracking to plan despite an increasingly competitive market. Precision execution across the marketing mix, including our expanded sales team in primary care is expected to reinforce long-term growth and help address increased competition. In Europe and International Operations, Rexulti delivered strong growth of 24% at constant exchange rates, and this reflects continued momentum across key markets. Next slide, please, and I'll hand it over to you, Michala.

Thank you, Tom. Let's turn our attention to the Abilify LAI franchise where we continue to see solid growth in the first half of the year, driven by the uptake of our 2-monthly formulation. Globally, we saw franchise growth of 7% at constant exchange rates in the first half, delivering DKK 1.97 billion in sales with Asimtufii growing 86%. Abilify Maintena 1 monthly declined by 3%, while the continued uptake of Asimtufii more than offset this development and also supported the growth of the overall franchise. If we look to the U.S., the franchise continues to grow market share. We gained 1.1 percentage point year-over-year, with Asimtufii contributing around 1 percentage point of that increase. And importantly, Asimtufii total prescriptions increased by approximately 38% compared to last year. If we look to Europe and International Operations, we also continue to see strong uptake of the 2-monthly formulation. Conversion is progressing well across key markets, as you can see, which gives us further confidence in the continued growth potential of the franchise. What is particularly encouraging across the geographies is where that uptake is coming from. Globally, we see that around 50% to 60% of the Asimtufii patients are new to the Abilify franchise coming from either oral antipsychotics, other long-acting injectables or being new to treatment. That gives us confidence that the Asimtufii brand is not just simply about converting patients within the franchise, but also helping us expand the franchise overall. Looking ahead, we continue to see -- we continue to expect limited impact from Abilify Maintena generic entry in our key markets during 2026, which gives us additional runway to drive franchise value. Next slide, please. If we turn to the partner markets, I briefly want to put the reported half 1 growth into context and take you through some of the underlying performance. As you've seen at the group level, revenue grew 16% at constant exchange rates. And as we also discussed in Q1, this includes the planned one-time inventory build of DKK 470 million as well as shipment timing and the structural impact of partner commissions. When we adjust for the inventory build, group revenue growth was approximately 13% at constant exchange rates. The transition itself is progressing according to plan across the 27 markets. And more importantly, the underlying demand signals remain strong. The partners have a broader local reach and distribution capabilities and the in-market performance continues to support our confidence in the model. I want to emphasize that the one-time inventory build occurred in Q1 and is not expected to reoccur. We do expect the inventory to normalize during the second half of the year, and the shipment patterns can continue to create quarterly variability, as we also explained in Q1. That is a timing effect of the model, not a change in the underlying demand trend. The key message is, therefore, that the transition to partners is on track. Our underlying half 1 performance is strong and the expected inventory normalization and shipment phasing is already reflected in our full year planning. With that, I'll hand over to Johan for the portfolio update.

Yes. Thank you very much, Michala and Tom. It's been a great pleasure working with you. Before turning to some of the more details on the progress of the portfolio, I want to recognize our leadership transition in R&D. As announced in June, upon my retirement, Tarek Samad will step in as the Executive Vice President and Head of R&D position as of 1st of September. Tarek brings deep experience in neuroscience and biopharma R&D. He has worked internationally in a career spanning Europe and the U.S. working across academia, big pharma and small biotech companies. I've had a great pleasure working with him for 5 years in Lundbeck, seeing him fundamentally transforming our research organization and building a highly innovative early portfolio of high-end drug candidates. He's with us on the call today, as you heard. And Tarek, a few words.

Thank you, Johan. I'm excited to be taking on the role of Head of R&D at Lundbeck and to be joining the executive leadership team. Having led Lundbeck's global research organization for the past 5 years, I've seen firsthand the strength of our capabilities and pipeline as well as our ability to harness partnerships to accelerate progress. I have also seen the exceptional talent across our R&D organization. I'm excited to build on these foundations to continue to advance innovation and improve the lives of people living with brain disease. I also want to take this opportunity to thank Johan and the entire R&D organization for the tremendous work over the past years to transform Lundbeck's pipeline, putting us on a strong footing for future success. Thank you. Over to you, Johan.

Well, thanks, Tarek. Yes, I'm really glad you're taking over this role as Head of R&D for Lundbeck. So let me now turn to some more details on the recent pipeline developments. Next slide, please. Yes, we're on it. So overall, we continue progressing our broad and diversified pipeline with several breakthrough therapy opportunities. But let me first highlight a little bit further on some key milestones on our migraine prevention brand, Vyepti. In South Korea, Vyepti received marketing approval on May 26, an important first geographic expansion in Asia. Further, the market authorization reviews are progressing very well in Japan and China with action date in Japan within very shortly. For the innovation pipeline, first, an update on bexicaserin. As you heard, our selective 5-HT2C agonist for developmental and epileptic encephalopathies, DEE for short, has in July, closed randomization in the DEEp OCEAN trial. This is the largest DEE study ever conducted with 367 patients included across many different DEE conditions, partially thanks to a strong uptick in screening before closing, we ended up very fast. With now the last patient randomized, the headline results are expected by the end of the year. In the other pivotal trial of the bexicaserin program, DEEp SEA in Dravet syndrome, we're also progressing well, having ended enrollment and target to close randomization already in mid-September. This means that the pivotal trials will read out very nicely close together in spite of covering different patient populations within the DEE spectrum. At the Q1 reporting, you already presented a very encouraging Phase Ib data on our orally dosed D1/D2 agonist Lu 996 in Parkinson's disease. Lu 996 showed a strong increase in GOOD ON-time alongside a substantial reduction of OFF-time versus baseline. Those results garnered major interest at the AD/PD '26 meeting in the spring. We have now, as you heard from Charl, initiated our Phase II program with a trial called DARE2 in patients with advanced Parkinson's disease with motor fluctuations. In our orexin program, Lu 593 received Fast Track designation from FDA in July for the treatment of narcolepsy. We have several development candidates in this program and are positioning them as potential best-in-class opportunities within daytime hypersomnolence disorders. On Lu 515, our CD40L blocker, ligand blocker, data from the Phase Ib study in thyroid eye disease, TED, established proof of mechanism, strong reductions in TSH receptor autoantibodies confirming an interesting mechanistic effect. However, this biological activity did not translate to robust enough clinical effect on disease outcomes in TED. And consequently, we are not progressing the program further for that indication. I'd also like to highlight that we currently are holding 14 special regulatory designations across several programs across our portfolio. That includes 9 orphan drug designations with a few more expected in the coming weeks. We have 3 Fast Track designations and 2 Breakthrough Therapy Designations. This illustrates the critical transformation of the portfolio we have undertaken in the last 6, 7 years, pivoting into a broad portfolio with several first-in-class even first in indication opportunities, the majority in rare diseases. So with that, let us discuss some more details on the asedebart program in Cushing's disease. Next slide, please. We have now established mechanistic as well as clinical proof of concept in this indication for asedebart. This is in addition to the proof of concept we already presented last year for Congenital Adrenal Hyperplasia. In both diseases, ACTH is a central driver of pathology. Asedebart is a monoclonal antibody binding ACTH directly. Consequently, we are targeting the upstream main driver of pathophysiology rather than the downstream consequences of excess of ACTH on cortisol and androgen production. Asedebart is being investigated in a Cushing's disease Phase II study called BalanCeD. BalanCeD has an A part with intravenous administration followed by a B part that evaluates subcutaneous administration, both with the titration scheme. We have now concluded the IV cohort of the study and presented the data at the end of '26 meeting this summer. You can see the expected rather large span of baseline urinary-free cortisol levels in the patients. After asedebart administration, we see a clear reduction independent on baseline values in urinary cortisol levels with 7 of the 8 available participants achieving normalization. The eighth patient marked here with asterisk, did actually reach normal urinary cortisol levels with higher doses, but after that, patients were shifted to subcu dosing with up titration scheme. Thus, an observable patient -- all observable patients did eventually respond with normalization. The observed hypocortisolism events were mild and transient, which is a clear differentiation from other therapeutic approaches. One participant unfortunately died during the study. However, that was assessed as not related to the drug. So the safety and tolerability profile of this compound remains supportive, a particularly important feature for a possible new therapeutic in this field. Naturally, since it is an antibody, we do not expect any drug-drug interaction liabilities. We have now started the process of finalizing the ongoing Part B, the subcu cohort. Therefore, with a new proof of concept established in both Congenital Adrenal Hypertension and now Cushing's disease, we are finishing up the ongoing Phase II studies and preparing for late-stage development to start within the coming year. Next slide, please. As I mentioned initially, R&D is providing some critical brand support, primarily for Vyepti. But let me dive further into our innovation development pipeline, how it evolves. Bexicaserin, as I already described, is now progressing to headline results for the 2 ongoing Phase III trials as next key events, concluding the pivotal trial program by beginning next year. Therefore, if all goes well with the data readouts, we have set the path for an NDA submission during next year. In our other ongoing pivotal program, amlenetug, we have completed the randomization in its pivotal MASCOT trial already early this year. Since this MASCOT trial has a 72-week double-blind treatment period with placebo, it will take until late '27 until headline results can be expected. As you recall, this is a pioneering trial, both in design and in its indication. In the bocunebart, our PACAP antibody program for migraine prevention, the preparations for Phase III initiations are progressing well. As you recall, we reported headline results from the comprehensive Phase IIb PROCEED trial in February this year with a statistically significant reduction in monthly migraine days versus placebo in patients with 2 to 4 prior preventive treatment failures. Some of the PROCEED data have now been presented at key scientific meetings such as the American Headache Society Congress in early June. We have also showed that bocunebart is well tolerated with concomitant use of Japan. The bocunebart program data have been very well received by clinical migraine experts that see the program as an exciting opportunity to establish anti-PACAP therapy as a novel option, in particular in the treatment of resistant chronic migraine patients. In the recent months, we have also conducted fruitful regulatory interactions that guide further our Phase III program design. As already mentioned, our orexin agonist platform, although very still early in development, presents opportunities for a set of strong contenders in this very recognized drug class. We think there are opportunities for best-in-class or possibly even first in indication across the field of many different daytime hypersomnolence disorders. So overall, we have rapidly expanding and diversified innovation pipeline that is increasingly maturing. Several assets have already shown strong scientific and clinical validation as well as supportive regulatory special designations. As this overview also shows, we have delivered on our ambitious target by having 5 to 6 indications in mid- to late development. We're indeed looking at the prospects ahead and enabled multiple programs entering pivotal stage by beginning next year. Our transformed pipeline, therefore, combines 7 near-term catalysts to match with longer-term innovation with multiple major value inflection points coming in the next 1 to 2 years. So with that, I'm concluding my last quarterly earnings call for Lundbeck. I'd like to thank analysts for great interactions over the years and hand over to Joerg for financial updates.

Thank you, Johan. Before I take you through the numbers, let me briefly put the H1 performance into a broader financial perspective. We continue to see strong underlying growth, which is supporting our strategic ambition to reallocate resources towards our highest value opportunities. Importantly, we're also stepping up investment in R&D as the pipeline matures, while strong cash generation and continued deleveraging are further strengthening our financial flexibility. So overall, H1 shows a business that is growing, becoming more efficient while continuing to invest for the future. With that, let me take you through the financial performance in more detail. Next slide, please. Revenue reached DKK 13.6 billion, up 16% at constant exchange rate with underlying growth of around 13%. This reflects continued strong commercial momentum led by Vyepti and Rexulti with additional contribution from inventory build and phasing dynamics in our partnership model in 27 markets. The adjusted gross margin was 86.7%, reflecting the impact of commission costs associated with the partnership model in 27 markets as well as unfavorable product and geographic mix. Sales and distribution costs increased 2% at constant exchange rates. The savings from the new commercial model have continued to be reinvested mainly into our strong growth of Vyepti in the U.S. as well as the launch preparations for Vyepti in Asia. Administrative expenses reached DKK 716 million, corresponding to a slight increase of 3% at constant exchange rates, which is in line with expectations. R&D costs increased according to plan by 24% at constant exchange rates, reaching DKK 2.8 billion, driven by the progression of our Phase III programs for bexicaserin and amlenetug and a maturing mid-stage pipeline. Other operating expenses reached DKK 141 million, primarily reflecting a one-off restructuring provision in Q1. And adjusted EBITDA grew by 19% at constant exchange rates, primarily driven by the strong performance of Vyepti and Rexulti as well as the gross profit benefit from the onetime inventory build supporting the transition to a partnership model. This was partially offset by higher cost of sales and continued investments in R&D. Next slide, please. EBIT increased 14% to DKK 3.7 billion, driven by higher gross profit from strong sales, including the one-time impact from the inventory build as well as a lower sales and distribution cost ratio. This was partially offset again by increased investments in R&D. Net financials were an expense of DKK 56 million, benefiting from favorable currency movements and lower interest costs following continued deleveraging. Our effective tax rate was 22%, in line with full year expectation. Net profit increased by 36% to DKK 2.8 billion and adjusted net profit grew 28% to DKK 3.7 billion. This translates into an adjusted EPS growth of 28%, consistent with the underlying performance of the business. So overall, profitability development reflects both strong execution and a disciplined financial framework. Next slide, please. Cash flow from operating activities was mainly driven by the higher EBIT performance, reaching DKK 2.6 billion, partially offset by higher working capital outflows and tax payments. Cash flow from investing activities was an outflow of DKK 261 million, mainly reflecting investments in property, plant and equipment. And cash flow from financing activities was an outflow of DKK 3.6 billion, reflecting net loan repayments related to the revolving credit facility and a higher dividend payment. As a result, net debt reduced to DKK 7.4 billion, again, reflecting strong cash generation and continued progress on deleveraging following the Longboard acquisition. Overall, our financial position remains solid, providing flexibility to continue investing into both growth and innovation. Next slide, please. We've had a very strong first half. And importantly, we continue to see strong underlying commercial momentum. As you will recall with our Q1 results, we increased and narrowed our full year guidance. Following the strong H1 performance, we are maintaining those upgraded ranges at constant exchange rates. The first half performance gives us confidence that we are tracking well within these ranges and at this stage, perhaps towards the upper end of the guidance. At the same time, we remain mindful that some of the H1 strength reflects inventory and shipment phasing, and we expect some normalization in the second half. Against that backdrop, we believe it is appropriate to maintain the guidance at this point rather than make a further adjustment. Cost-wise, we continue to invest in the pipeline and still expect R&D costs in the range of DKK 5.6 billion to DKK 5.9 billion for the full year. We've also updated some of our other financial assumptions for financial modeling considerations with several of these changes reflecting the development in exchange rates. At current rates, revenue growth is expected to be around 4 percentage points lower than constant exchange rates and adjusted EBITDA growth around 8 percentage points lower than constant exchange rates. We now expect a negative hedging effect of around DKK 150 million and net financial expenses of around DKK 200 million. Adjusted gross margin is expected around 87% and depreciation and amortization at DKK 1.8 billion to DKK 1.9 billion. Our tax rate and year-end net debt expectations remain unchanged. So overall, the strong first half supports the guidance increase and narrowing we made at Q1 and gives us confidence that we are currently tracking towards the upper end of our full year ranges. However, given the expected normalization and lower pace of growth in H2, we believe maintaining those ranges is appropriate at this stage. And with that, I would like to hand back to Charl.

Yes. Thank you, Joerg. And so let me make some concluding remarks before we go to questions. So if we can have the first slide there. So thank you. So first of all, I think what I want to take a moment here is just to depict a bit what has really evolved at Lundbeck over the last 3 years. And the first half results confirm that our ability to really deliver on what we have set as priorities and often exceeding those expectations. And if you think about the focus on growth, on innovation and on funding, we have truly set up a very strong commercial model led by Vyepti with strong momentum across all the key markets and also for the future launches that we will have. We have truly seen a transformation in the pipeline, both in breadth and in stage from mid-stage to late stage. And through our disciplined capital allocation, we've been able to strengthen the balance sheet with a strong cash position as we go into the next phase of our journey, '27 to '29, which is the scale phase, where we will see really a platform of a company that's able to expand in the space of severe preventative migraine with launches of Vyepti in the future, but also bocunebart as a new mechanism in this space. You'll see a company that has really a different pipeline more in rare diseases, but also in neuro specialty. And that breadth of the pipeline will continue to expand as we go into the scale phase. And we will also see a certain expansion of our AI capabilities to truly become a bionic company as we enter into this next phase of our journey. What you will expect from us in the second half is really strong momentum on the strategic brands as we continue that focused execution journey, but also strong execution in the pipeline with our next important readout of the bexicaserin OCEAN study in the fourth quarter of 2026. So when we think a little bit about Lundbeck and where we stand at this stage of our 3-year journey into our Focused Innovator Strategy is a company that's stronger commercially, that has a much stronger pipeline and stronger financial position as we enter into the next phase, which gives us a lot of confidence as we embark on the next phase of our journey. Before I open again for questions, I want to also take this moment to thank you, Johan, for your contribution and impact to really transforming our pipeline and take this moment also to welcome Tarek to our executive leadership team. So with that, I would open the line for questions, please.

[Operator Instructions] And the first question comes from Thomas Bowers from SEB.

Two pipeline questions from my table here. So just kicking off with bexicaserin and the OCEAN trial readout here. Can you maybe just comment a bit on patient demographics? So anything on the disease severity, baseline seizure frequency, background therapies, stuff like that? Anything that could mean that there are some meaningful differences between what you saw in the PACIFIC trial. Anything that could sort of affect the efficacy or placebo response here would be appreciated. And then last one on amlenetug. So as I understand it, futility analysis is coming up here near term. So can you maybe clarify what exactly will be assessed here? Will this primarily be probability on primary endpoint? So is there anything in this analysis that could change your view on sample size, increased sample size, trial design? Or is this just a strict stop-and-go decision that this is based on?

Yes. I guess that's for me. Thanks a lot. Let's start with the bexicaserin. So just to make it a little simple for you, if we look at the PACIFIC trial, we're not fundamentally different in the general baseline criteria and demographics. Of course, it's much broader because it's a very broad DEE. We actually -- when we announced the DEEp OCEAN closure, we said it was well over 60 different DEEs, and that is important. We like to really cover a wide span. It's in the DEEp OCEAN trial, a good balance between people that travel all the way to the Lennox-Gastaut diagnosis and those that remain with different DEE diagnosis. So it's a good balance. So we're very confident in terms of fulfilling what we would need to show in terms of the DEE label. Background therapies, it's the usual. It's not a big difference. Of course, this is a trial that travel around the world. So it differs a little bit depending on the geographies, but they are traditional the migraine therapies you would expect. Same thing with the number of baseline seizures. So there's really no major thing in difference from the PACIFIC trial. So we don't expect any surprises there. The Dravet trial, of course, is Dravet, and we have enrolled very well, as I said. So it's going to be a well-powered trial, that one as well as portion. For the amlenetug question, yes, we -- of course, every big trial, you may have different interims and look at that. We're never commenting on anything that we may or may not have in those pivotal trials. The trial is progressing well, and that is where we are at this stage.

And the next question comes from Kirsty Ross-Stewart from BNP Paribas.

So maybe just one more on bexicaserin to start. With the DEEp OCEAN trial now anticipated to read out before year-end, can I just come back on the filing strategy for the asset? Is it still your intention to have data from both trials before filing for approval with regulators? Or is there a possibility to file with the DEEp OCEAN data and follow up with the additional data as part of a rolling submission? And then perhaps one for Joerg on just looking ahead to 2027, you've got your midterm guidance framework, but consensus already high single digit above the implied '27 revenue and EBITDA from that midterm guidance. So just wondering if we should treat that framework as kind of effectively superseded by your current trajectory? Or do those targets still represent a ceiling that you're working to? And just lastly, thanks to Johan for your help over the years, wishing you a very happy retirement.

Yes. Thank you, Kirsty, for that. Let's take the question on bexicaserin filing strategy. We have Johan to take that.

I'd like to have help with Maria, I think she here, who is also going to comment on this. But first, thank you for congratulating me on the retirement. Yes, I even commented on this in my talking notes here. It's a big challenge when you have 2 very different populations as this is to have it lined up very nicely, and we do have it lined up very nicely. So that's already kind of an answer to you. If you have a year or half a year between, you may think about alternative strategies. But here, we're looking forward to have the totality of the pivotal program delivering in one go. And it's just a few months between the two. So that's actually very good. In terms of other strategic considerations, I think Maria should comment on that.

Yes. Thank you very much, Johan, and thank you for the question. As you know, we got Breakthrough Designation for the U.S. and also for China and also orphan disease designation for the U.S. So we followed a global development strategy for this program because we see the unmet need across different geographies and the intention is indeed to file and make the drug available to as many patients as possible.

And I'm happy to take the questions on the guidance. The current full year or basically midterm guidance targets remain in place. And that's, of course, what we are in principle aiming for. At the same time, we said we will provide an update on how we will look for midterm targets in the future, but that's probably something more towards the end of the year, beginning of next year.

[Operator Instructions] Then the next question comes from Xian Deng from UBS.

It's Xian from UBS. So I guess, first of all, Johan, wish you all the best with your retirement, and it was really, really nice working with you, and thank you very much for all your help. And then in terms of questions, I guess the first one to Joerg, please. So in terms of your full year '26 guidance, you had a nice beat in Q2, but I understand you're mentioning some of the inventory, but the underlying is still very strong. So just wondering, given you're not raising the guidance at this stage, just wondering, could you maybe elaborate a bit more with the push and pulls for the consideration? And what type of scenarios would drive the full year top line to go above your guidance versus let's stay within this range? So that's the first question. And the second one to Johan, please. Maybe just on the orexin program. So just wondering with the Takeda's drug that recently got approval in narcolepsy 1. So just wondering how is your program differentiated from the Takeda one? I'm just wondering are you after better side effects or better efficacy or potentially even targeting narcolepsy 2?

Well, let me take the first question, of course. We haven't upgraded our guidance, but I also tried to state that we are trending towards the upper end of the guidance to start with. I think what keeps us a bit of cautious for the second half, part of it is clearly the transparency we have on the partner markets to really be absolutely clear what can be traced to underlying demand versus timing effects. That can be a bit of a put and take at one at the same time. I think Vyepti is performing strong, and there are currently no concerns, and that was also one of the reasons why we have stepped up our Q1 guidance in the first place. I think when we look at Rexulti, we're pretty much in line with our expectations for the year. But at the same time, a bit cautious about -- we haven't seen enough data yet about competition coming in, especially around Auvelity. And last but not least, I would also say we are sure that there is no generics entry on Abilify Maintena in Europe this year. But in principle, there's still a bit of a question mark around Australia and Canada. So you can take that in principle either way and see it as an upside if it doesn't materialize, but a downside if it does.

Yes. Thanks, Xian, for the comment. And when it comes to orexin program differentiation here, obviously, we shouldn't comment too much on other companies' assets ORZEYFUL, good brand name is now approved in China and FDA. And of course, they publish some other data. We know very well what they have. We also know very well what other programs have. And there are some key ingredients everyone talks about public in the field. So I will comment on that what you like to see in a good orexin drug. First of all, all sleep drugs, they need to be squeaky clean. You cannot have much side effects, tolerability issues, et cetera. So there is very, very little tolerability for issues like liver signals, et cetera. So that's the main one. So make sure that you have a clean drug. As you may recall, this is a heavyweight chemistry. This is a breakthrough chemistry, and it's very rarely done that you get an orthosteric agonist for a peptide receptor. So it's been very challenging, and many of the companies are on the second or third compound. So that's really to get the right profile. When it comes to the more important ones you're after, half-life is fundamental. And the field is very well aware that you don't like to have a long half-life because this is daily dosing, maybe 2 or 1 time a day, if you can, and you don't want to run into insomnia problems in the nighttime. So that's a tricky finicky one to balance strong effect, lasting efficacy with the day and then get rid of the effect when you go to bed. I touched upon this a little bit when it comes to liver toxicity and safety. You also like to drive the doses down because you really like very potent drugs, particularly when you go beyond NT1 when you have loss of nerve cells, because you like to hit the system now that is essentially intact. And you need a very potent drug and to be able to dose enough to get an effect also in the non-degenerative conditions. And the field is talking about the three to fourfold more potent effect is needed. So that's what we're after, potent drugs, right half-life, low doses, and then we hope we can balance this out.

And the next question comes from Peter Hugreffe Ankersen from Nordea.

Peter Hugreffe from Nordea. So I need to continue the conversation around 2026 and particularly the second half. I know, Joerg, you said that you're trending towards the high end. But when I look at the so-called low end, then essentially you're implicitly guiding for minus 5% sales and minus 15% EBIT and an EBITDA margin of 26%. And just in my book it comes across as overly conservative. And I heard the 4%, 5% arguments you had, but is there anything else that we are kind of overlooking on that part? Or is it just poor leverage? And then secondly, I'm intrigued by the orexin program, you know that Johan, I noticed that you are enrolling [indiscernible] so is there anything [indiscernible] kind of particularly looking for? And of course, I know [indiscernible] a few question to ask whether there is any kind of [indiscernible] in it, but...

Peter, we didn't get your second question on orexin. There was a bit of a...

I'm sorry.

Could you -- yes, that's better.

Okay. Yes. So on orexin, I just noted that there is more than 100 patients planned to be enrolled. And that's, of course, quite intriguing as normally it's a fairly large portion for Phase I. So is there any reasons for that? Anything you can share in terms of why you have decided to have such a large completion? I'll stop there.

Well, I'm happy to take the first question. To build upon the reasons I gave to the earlier question is I think you have to look a little bit at the cost position. Our sales and distribution cost investments are geared towards the second half and probably center also a little bit around specific investments targeting in Vyepti as well as some, you can say, geographic investments we have held back in H1. The second one is clearly the step-up in R&D because in principle, you -- we've reconfirmed the range, but I would also say here that we're probably trending a bit more towards the higher end of it. And the last piece is plain and simply what we have seen as the impact on the gross margin, where you really have to differentiate between 2 things. One is the structural impact that you plain simply have because of the partnership model that accounts for, let's say, 1%. But there is also a bit of a, you can say, impact from contract work and Vyepti dynamics, which we get from a full gross profit contribution, but that is still currently a bit below the overall group margin. So I would say the second part of that gross margin implication also plays into these dynamics.

Yes. And thanks, Peter, for the orexin question. Risking going into a 1-hour lecture about what I think is important in early drug development. But to nail it down, we're really big fans of the Phase Ib studies. You really like to have the let the molecule speak as we call it, right? You like to see what's happening. So you need to have a lot of flexibility built in there. As you know, orexin field is some core indications where we have seen effect and you like to broaden out in different hypersomnolence indications. This is open label. Most of the things you do, and you can have very early readouts if you want. Sleep is particularly permissive for this. So this is an umbrella sort of number that we like to have. And quite frankly, we will also have other molecules progressing. We have 2 molecules already in clinical development. So this is a placeholder for activities that are going to happen. Once you have that signal, you can go fast wherever you like.

And the next question comes from Charles Pitman-King from Barclays.

Also I want to wish my congratulations to Johan for his retirement and thanks for your help. Firstly, for me, can we talk a little bit more about the dynamics with Rexulti? I mean I think you mentioned that the questions around Rexulti competition risk could be one reason not to raise guidance in FY '26. But also noting that AAD is now over 1/3 of prescriptions, this is quite a rapid acceleration at least versus my expectations. And yet Rexulti was in line with where consensus expected. So how should we think about how MDD is progressing? And are there any phasing elements between the indications that we need to take into account? And then secondly, question on BD. So obviously, your leverage is now down to 1x again. You're getting to the point where bexi can launch hopefully next year with positive data or be filed next year rather. So when we're thinking about further optionality, one area that seems increasing favor is the psychedelic space. I know we've spoken about it before. So Johan, specifically, any interested in your thoughts on whether or not Lilly and AbbVie moving into the space and the newly announced FDA Commissioner who has reportedly been quite active in psychedelic discussions with the office, whether or not that's making the area more of interest to you guys?

Thank you, Charles. So let's take Rexulti. Tom, if you would like?

So Charles, thanks for the question. I think most importantly, it's important to indicate that Rexulti performance is in line with our expectations given the competitive environment. And I'll first talk a little bit about AADAD. As I said before, new competitors in the marketplace can be friend or foe. In AADAD only, about 1/3 of patients are accurately diagnosed and treat. So the unmet need in AADAD is massive and an increase in resources to educate HCPs and caregivers on the disease burden of AADAD to accelerate diagnosis and treatment rates is welcome. Now although very early, we are beginning to see some incremental market growth in new patient starts with the entrance of Auvelity into the market. I do think it's important to note, though, that over the past 3 years, Lundbeck and Otsuka have firmly established Rexulti as the preferred treatment for AADAD. In our latest awareness trial and usage market research survey, 47% of HCPs identified Rexulti as their preferred treatment option, which is nearly twice the number of the nearest competitor. And in the same survey, 75% of respondents expected an increase in prescribing of Rexulti for AADAD and 70% of HCPs are very satisfied with the results they have seen with Rexulti in AADAD. And then if we look at prescription volume, based upon the most recent monthly data, Rexulti TRxs are about 11x the volume of Auvelity at this point in time. Now although there are some benefits of the Auvelity label, including no black box warning, we do continue to believe the clinical profile of Rexulti offers meaningful advantages that are very important in this AADAD population. Now turning to MDD. I think within this competitive marketplace, Rexulti has demonstrated significant resilience in MDD, continuing to drive double-digit growth. As I said, Rexulti MDD growth rates were 15.7% during the first 6 months of the year versus prior year. And I think as you think about the competitive marketplace for MDD, we did see significant investment of J&J as it relates to introducing CAPLYTA for MDD, both from a sales force expansion standpoint, also from a DTC standpoint. But as I said, Rexulti's clinical profile continues to distinguish itself in the marketplace. And for the first time, based upon the most recent data, Rexulti NBRx growth in the month of June was higher than what we saw for CAPLYTA.

Thank you, Tom. And just quickly, Charles, on the business development strategy. we remain acquisitive. I mean we think certainly that we have, of course, a much stronger pipeline, but business development is part of our strategy and continues to be one where we keep scouting for new opportunities. If you want to have a quick word on psychedelics, Johan, just how we see that?

Yes, very quick word. We are not active in this field right now. But of course, we're extremely well aware of what's going on in that field and how bigger companies are stepping in, in the more sort of well established, I would say, 5-HT2A agonist space. So it's an interesting space, proof of concept validation is there and programs are progressing. On the regulatory side, there is definitely feasibility and the guidance developed by FDA and other regulators in Europe and other places are open-minded about this. There is a very good consensus in the regulatory environment that you still follow the more conventional pathway. You need to show what you need to show, do trials, et cetera, in Phase III. We are following this path, and we'll see what could -- opportunities that may surface in that space.

And the next question comes from Shan Hama from Jefferies.

Just two, if I may. Just a follow-up on the midterm guidance. Is there anything further you can share about how many years perhaps the midterm will encompass given several LOEs upcoming, but then also several readouts? And then secondly, as Vyepti continues to account for a larger proportion of group sales, should we expect sort of further pressure on gross margins from the product mix? Or do you see this sort of normalizing over time?

Let me take both questions. I think the first one is, again, we'll provide an update on how we think about midterm guidance around Q4 and Q1. So I don't want to jump ahead of that and already give an answer on how long it will run out. The second one was a question on gross margin. I think like I said, look at the first impact as a structural impact because in principle, you take SG&A costs out of the partnership model, but you bring them into gross to net sales. So you still have your cost of goods sold sitting in there. And that is, in principle, the 1% step down. So for me, it is the consequence of a right strategic choice where personally, I take that 1 percentage point decrease any day of the week because ultimately, we have a much larger potential of really developing that into a growth business. In terms of outlook, I would say we've given the indication of the 87% right now for this year. And I think that's the best starting point.

And the next question comes from Alex Moore from Bank of America.

Just echoing congratulations to Johan and some interesting discussions over the past couple of years. So I was just wondering if I could push a bit more on Rexulti. I mean you comment to potential new competition expanding diagnosis and treatment rates in what remains a somewhat underpenetrated market. But TRx growth seems to moderate in 2Q relative to 1Q slightly. And your competitor recently commented to strong early indirect trends for its Alzheimer's agitation launch. So I mean, I assume this is broadly due to increasing competitive pressures in the space? Or were there any other dynamics we should be aware of? And then more broadly, I think consensus expectations for Rexulti growth has sort of moved from low teens to high single-digit percent for the full year. So with that in mind, how should we think about the balance between competitive pressures and opportunity for further market expansion when thinking about Rexulti's growth outlook from here?

Yes. So thank you for the question, Alex. I think as I suggested before, with the increasingly competitive marketplace as it relates to both MDD as well as AADAD, Rexulti is performing to expectations and the penetration of the new competitors is consistent with how we envision the marketplace. I believe, at least from an AADAD standpoint, this will continue to be a strong growth driver for the brand. All indications based upon the feedback that we're receiving from physicians is that Rexulti continues to play an important role as it relates to the increasing the diagnosis and treatment rates of AADAD as well as the clinical profile to help address the significant unmet needs. From an MDD standpoint, as I said, this brand has been -- continues to be very resilient. We look at double-digit growth for MDD within the marketplace, and we believe that the competitive dynamics are beginning to start to plateau based upon when we look at NBRx rates for MDD. And as I said, in the most recent monthly data that we have, the NBRx growth rate month-over-month for Rexulti exceeded CAPLYTA for the first time since their launch.

Ladies and gentlemen, this was the last question for today. I would now like to turn the conference back over to Charl van Zyl for any closing remarks.

Yes. Thank you, everybody, for joining, of course, today. And as I conclude here, I want to again say that we are very confident as we go through the first half of the year and our full year guidance that we will have another strong year and of course, underpinned by strong growth and a very compelling pipeline with some near-term catalysts coming up very soon with bexicaserin. So thank you again for joining today.