With topline growth of 7% in 2019, margin improvements and pipeline success, LEO Pharma paves the way for an ambitious future

LEO Pharma helped 92 million patients and reached revenue of DKK 10,805 million in 2019

-       2019 revenue up by 4% to DKK 10,805 million – with a strong fourth quarter demonstrating further momentum. This was driven by strong performances of Enstilar®, Kyntheum® and the prescription portfolio acquired from Bayer.

-       Underlying revenue grew by 7%. This excludes currency effects, divestments of non-core business to Karo Pharma and other one-time effects.

-       Revenue in region Europe+ grew 5% to DKK 6,840 million, due to Enstilar®, Kyntheum® and the acquired Bayer portfolio.

-       Sales in region International grew 12% to DKK 3,117 million, due to the acquired Bayer portfolio.

-       US sales declined 22% to DKK 848 million, due to generic competition and price pressure. We continue to see the US as a key growth driver in the future and are stepping up the launch preparations for tralokinumab accordingly.

Established business remains the backbone with continued growth and improved profitability

-       Topline of the established dermatology portfolio (ie, excluding thrombosis) grew by 10% compared to 2018, driven by Enstilar®, Fucidin® and the prescription portfolio acquired from Bayer. Europe+ and region International with solid growth.

-       Enstilar® is now the best-selling product in the psoriasis portfolio and continues to gain market share from corticosteroid generics. More than a third of all worldwide topical psoriasis treatments by volume are produced by LEO Pharma.

-       Adjusted for the non-recurring divestment of products to Karo Pharma, EBITDA for the total established portfolio was DKK 3,198 million, with margin improving by 4 percentage points from 27% in 2018 to 31% in 2019.

LEO Pharma invested 23% of its revenue in R&D in 2019 and saw significant advancement across the pipeline

-       Tralokinumab met the primary and secondary endpoints in its pivotal phase 3 studies. These results enable LEO Pharma to prepare filing in the US, Europe and Japan, for its first global biologics launch.

-       Patidegib (developed and owned by partner PellePharm) is now in phase 3. The partnership with PellePharm represents LEO Pharma’s entry into rare dermatology.

-       LEO Pharma now has one product in phase 3 (tralokinumab) with an option for a second (patidegib) through an acquisition of PellePharm, and two in phase 2 (delgocitinib and an oral PDE4 inhibitor), which is a significant advancement of its late-stage pipeline.

-       With these advancements, LEO Pharma is well positioned to address dermatology, which is among the three fastest growing therapeutic areas.

-       New partnerships – Ubiquigent Ltd. option agreement for two novel compounds, Elektrofi to co-develop formulation technologies for antibodies, Epicore Biosystems on their wearable technologies, and Portal Instruments on innovative needle-free drug delivery systems.

Adjusted for the non-recurring divestment of non-core products to Karo Pharma, EBIT rose by 5%

-       Significant investments in innovative new treatments within atopic dermatitis, eczema, psoriasis and Gorlin Syndrome.

-       R&D investments increased from 18% to 23% of revenue, primarily due to investments in tralokinumab.

-       Net loss in 2019 is a consequence of increased research and development costs, integration cost for the Bayer portfolio and an impairment loss.

Focus on profitability improvements and increased investments in innovation for 2020

-       Anticipated revenue growth of 2-5% to DKK 11.0-11.4 billion in 2020.

-       Continued focus on profitability improvements in the established portfolio, while also significantly increasing spending on research and development activities after the successful development in the pipeline in 2019 to continue the transformation into an innovative-driven growth company.

-       Anticipated operating loss in 2020 of DKK 1.8 – 2.0 billion.

Catherine Mazzacco, CEO and President of LEO Pharma commented:

“2019 was a significant year for LEO Pharma with a solid clinical and financial performance. With an underlying growth of 7%, we met expectations and a strong fourth quarter gives us confidence for 2020. At the same time, we made significant progress with our transformation into an innovation-driven growth company. The tralokinumab phase 3 data enables us to soon file for marketing authorization in US, Europe and Japan, and we have progressed important projects and partnerships. With the improved profitability of our established business we are well positioned to continue the transformation. Our overall results reflect these investments.

Innovation is critical to LEO Pharma’s long-term success in dermatology which is among the three fastest growing therapeutic areas. On the back of clinical success in 2019 we will invest even more in our pipeline in 2020. We are building on a strong legacy towards our ambition to be the leader in terms of market position, breadth of portfolio and pipeline, and in how we enable patients to live healthy lives free of interference from their disease.”

Key figures

DKK million	2019	2018	∆	∆ LC*
Revenue	10,805	10,410	+4%	+7%
EBITDA	(130)	2,366	(105%)	(24%)
Operating profit (EBIT)	(1,313)	1,605	(182%)	+5%
Net profit	(1,287)	1,258	(202%)	N/A
EBITDA margin established portfolio	31%*	27%*
R&D investments (% of revenue)	23%	18%
Number of patients reached	92m	76m	+21%

*Change in local currencies and adjusted for divestments and other one-time effects

Annual report 2019

The full results are available in the LEO Pharma Annual Report 2019 on the company’s website at www.leo-pharma.com/annual-report-2019

ENDS#