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New chairman to prepare Leo Pharma for IPO with new launches and financial discipline

July 4, 2021
Life sciences

2021 has been a busy year for Leo Pharma.

In March, the company announced that Nordic Capital had secured minority ownership of the company with a DKK 3.4bn (USD 540.9m) investment. Since then, both the pharmaceutical company and the owner fund, the Leo Foundation, have changed their chairmen. On Thursday, Leo Pharma’s new chair was announced.

Jesper Brandgaard, who has previously worked as the Chief Financial Officer for Novo Nordisk for 17 years, will now help kickstart a new growth journey at Leo Pharma as the new Chairman of the Board of Directors.

“It is an incredibly exciting task to be on a journey with Leo Pharma towards turning it into a stocklisted company,” says Brandgaard, who sees  a lot of potential in Leo Pharma’s new ownership structure and pipeline.

“I am joining the company at a point in time when a new owner has joined the firm who will contribute to the process of giving the company a competitive advantage and making it more focused on becoming a global leader in dermatology,” says Brandgaard.

He continues:

“At the same time, the company currently has a very promising pipeline, which means it is moving from a historical emphasis on topical treatments towards more biological drugs, which is a significant change in the way that dermatological diseases are dealt with. It will be exciting to be part of that process.”

Brandgaard notes that he sees “significant development opportunities” for Leo Pharma, including through the launch tasks that are ahead of the company. His initial time frame is 3-5 years.

“I think this transformation of Leo Pharma will take three to five years and will encompass most areas of the company.”

Is three-to-five years also the time horizon for potentially going public?

“It’s likely that the company will aim for going public, but it’s up to the owners to take a stance on this. Looking at the short-term picture, our primary task is to focus on the launch of tralokinumab for the tratment of eczema in both Europe and the US. This is an absolutely key focus, and the board and management wish to improve the financial performance in future years, says Brandgaard, adding:

“Looking further ahead, this work will hopefully create a situation where the board can go to the two owners and say that now we can consider moving Leo Pharma towards an initial public offering.”

Brandgaard has been in a similar situation before:

“Based on my experience from Novo Nordisk, and from NNIT and Novozymes going public, which I played an active role in, it is incredibly healthy to have a strong and stable owner, but also to be able to discipline and point out places in which the company can do better.”

“I believe that stock exchange ownership can be an incredibly attractive ownership strategy for Leo Pharma in the long term, but we’re not there yet. We need to have a structured approach within the company’s board and management in order to create this opportunity, which will be possible on a 3-5 year perspective,” says Brandgaard.

If Leo Pharma went on the stock exchange tomorrow, it would perform badly compared with similar companies in terms of its ability to generate a profit. It has only delivered a margin for earnings before interest and taxes (EBIT) of more than 10 percent once since 2010. In this industry, the EBIT margin is usually around 25 percent.

Can you increase the EBIT margin this much within the 3-5 year time horizon?

“I see improving our EBIT margin as an integral part of the journey towards an IPO (initial public offering). This naturally linked. Our EBIT margin will be improved if we launch new biological drugs successfully and if we improve our operational performance and efficiency, all of which will make the IPO possible. So it is naturally connected,” says Brandgaard.

You highlight Nordic Capital, which recently invested DKK 3.4bn. What opportunities has this created for the company in recent years?

“This creates the possibility that someone can enter from the outside with a significant investment which makes new launches possible. When launching new products with significant market potential, even blockbuster potential, we most definitely need to invest in creating these products. This is not realized from one day to the next without sizeable investments.”

“However, this also creates possibilities for bringing a wide range of competencies to the table. Nordic Capital has successfully owned other pharma companies, and I think this is crucial to the development of Leo Pharma,” says Brandgaard.

You mention your own toolbox, where you played an important role in the significant growth of Novo Nordisk for many years. How can you contribute to Leo Pharma?

“During our Novo Nordisk journey, I contributed by looking at the benchmarking of Novo Nordisk and comparing it to the companies we compare ourselves with, and examining where we could improve,” says Brandgaard.

He highlights that benchmarking should not only be understood in a financial sense.

“You can benchmark in terms of the organization, developmental speed, warehouse sizes, production units and a number of other parameters that can help you keep track of how the company is developing and identify where the company can improve,” says Brandgaard.

Brandgaard will take on the role of chairman of the board of directors at Leo Pharma on Aug. 1. He is taking over from Olivier Bohuon.

The incoming chairman is also a member of the boards at William Demant Fonden, William Demant Invest and Chr. Hansen Holding.


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