LEO Pharma A/S reported 10% revenue growth at constant exchange rates in the first half of 2026 as its newer dermatology products increasingly became the engine of the business, while the Danish pharmaceutical company simultaneously committed more capital to expanding its late-stage pipeline. Reported revenue rose 7% to DKK 7.257 billion, with dermatology revenue growing 12% at constant exchange rates and strategic brands Anzupgo, Spevigo and Adtralza/Adbry together increasing revenue by 50%.
The stronger top line, however, came with a deliberate profitability trade-off. Adjusted EBITDA fell 14% year on year to DKK 1.247 billion and the adjusted EBITDA margin declined to 17% from 21%, primarily as LEO Pharma increased commercial spending around its growth brands and stepped up research and development investment. The company also revised its full-year adjusted EBITDA margin forecast to 14% to 16%, from 15% to 18%, following an agreement to acquire worldwide rights to investigational rare-disease therapy dersimelagon from Tanabe Pharma.
That combination makes the first-half results less a conventional earnings story than a test of LEO Pharma’s strategic transition. Its established dermatology portfolio is no longer required to carry growth on its own. Instead, the company is trying to convert Anzupgo, Spevigo and Adtralza/Adbry into a larger commercial platform while using that infrastructure to absorb additional assets such as dersimelagon and the Replay gene therapy portfolio.
How much of LEO Pharma’s growth is now coming from Anzupgo, Spevigo and Adtralza/Adbry?
The change in portfolio mix is becoming increasingly visible. LEO Pharma’s strategic brands produced DKK 1.888 billion of H1 2026 revenue, up from DKK 1.327 billion a year earlier, while established brands declined to DKK 4.058 billion from DKK 4.181 billion. Strategic brands therefore represented roughly 26% of total first-half group revenue, and their DKK 561 million absolute increase was actually larger than the DKK 468 million increase in total reported group revenue.
That arithmetic matters because it shows that the newer portfolio is doing more than adding incremental sales. Growth from the strategic brands is increasingly compensating for pressure elsewhere in the portfolio. In the second quarter alone, strategic brands reached DKK 1.028 billion, equivalent to about 28% of quarterly group revenue, after growing 56% at constant exchange rates.
Anzupgo appears to be the most important organic growth driver. The delgocitinib cream has now been launched in 11 markets and is available through early-access programmes in another nine, with particularly strong growth in the United States following its September 2025 commercial launch. LEO Pharma also expanded formulary coverage and its prescriber base during the first half.
The regulatory foundation for that launch is significant. The United States Food and Drug Administration approved Anzupgo in July 2025 for the topical treatment of moderate-to-severe chronic hand eczema in adults who have had an inadequate response to, or for whom topical corticosteroids are not advisable. The European Medicines Agency similarly describes the medicine as authorised for adults with moderate-to-severe chronic hand eczema where topical corticosteroids are inadequate or inappropriate.
Spevigo adds a different growth profile. LEO Pharma obtained the product through its 2025 agreement with Boehringer Ingelheim and is now assuming greater responsibility for commercial and medical activities across key markets. The medicine is used for generalized pustular psoriasis, with United States regulatory approvals covering relevant adult and pediatric populations depending on formulation and use.
The concentration of growth in these newer brands is commercially encouraging, but it also raises the execution requirement. The company is spending ahead of revenue to expand sales forces, market access and disease-awareness activities, which means stronger product uptake must eventually generate enough operating leverage to offset the higher commercial infrastructure being built around them.
Why did LEO Pharma’s profitability fall even as gross margins and revenue improved?
The first-half income statement captures that investment cycle clearly. Gross profit increased 12% to DKK 4.772 billion and the gross margin improved to 66% from 63%, supported by lower sourcing costs, higher volumes and a more favourable sales mix. Yet operating expenditure increased 22%, causing the OPEX-to-revenue ratio to climb to 59% from 51%.
Sales and distribution expenditure rose 27% to DKK 2.854 billion, reflecting the expansion of the United States sales force and commercial activities supporting Anzupgo and Spevigo. Research and development spending increased 32% to DKK 767 million as LEO Pharma funded late-stage Spevigo activities, additional delgocitinib trials and the preclinical Replay gene therapy platform.
This explains why the fall in adjusted EBITDA is more informative than the steep decline in reported net profit. H1 net profit dropped to DKK 279 million from DKK 1.977 billion, but the previous-year comparison included the USD 250 million upfront payment associated with LEO Pharma’s Gilead Sciences STAT6 partnership. Excluding non-recurring items and related tax effects, LEO Pharma said net profit improved 52% to DKK 369 million.
The underlying business therefore looks materially stronger than the reported net-profit comparison suggests, but the company is also choosing to consume some of that improvement through pipeline and commercial investment. That decision becomes more consequential with dersimelagon.
What does the dersimelagon deal add to LEO Pharma’s rare dermatology strategy?
LEO Pharma agreed on August 18 to acquire worldwide rights to dersimelagon from Tanabe Pharma, with up to USD 435 million payable through upfront and near-term milestone payments. Tanabe Pharma could also receive downstream milestones and tiered royalties on net sales. The transaction is expected to close in the second half of 2026, subject to customary conditions.
Dersimelagon is an investigational once-daily oral melanocortin 1 receptor agonist being developed for erythropoietic protoporphyria and X-linked protoporphyria. Tanabe Pharma reported in January that the randomized, double-blind, placebo-controlled Phase 3 INSPIRE trial enrolled 165 adults and adolescents aged 12 to 75 and met its primary endpoint relating to sunlight exposure before the onset of prodromal symptoms. The company also reported that most adverse events were mild or moderate during the disclosed study period, while the open-label extension remained ongoing.
LEO Pharma said a United States regulatory submission was made at the end of June 2026 and that the asset could support a potential 2027 launch if approved. Dersimelagon has Fast Track and Orphan Drug designations from the United States Food and Drug Administration, but neither designation establishes efficacy or predicts regulatory approval.
The commercial proposition is potentially differentiated. Scenesse, or afamelanotide, is already FDA approved to increase pain-free light exposure in adults with EPP, but it is administered as a subcutaneous implant. Dersimelagon’s oral formulation and development across both adults and adolescents, as well as EPP and XLP, could create a different treatment proposition if the regulatory review is successful.
Still, LEO Pharma is not entering an empty development field. Disc Medicine is advancing oral bitopertin for EPP and XLP in the Phase 3 APOLLO programme. Enrollment has been completed, with topline data expected in the fourth quarter of 2026, and Disc Medicine has indicated that a successful APOLLO study could support its response to an earlier FDA Complete Response Letter and potentially lead to another regulatory decision in 2027.
That creates a potentially important competitive window. Dersimelagon may reach the market into a treatment landscape that is changing quickly, meaning LEO Pharma’s commercial advantage would depend not merely on approval but on label breadth, clinical differentiation, tolerability, patient convenience, reimbursement and the timing of competing regulatory decisions.
Why is LEO Pharma willing to accept lower 2026 margins to deepen its pipeline?
Management has effectively answered that question through capital allocation. The company now expects revenue growth of 9% to 11% at constant exchange rates in 2026, narrowing the lower end upward from its previous 8% to 11% forecast. At the same time, it cut adjusted EBITDA margin guidance because development and pre-launch spending on dersimelagon will arrive before meaningful product revenue can materialise.
LEO Pharma estimates that the dersimelagon and Replay acquisitions together will reduce the 2026 adjusted EBITDA margin by two to three percentage points. Dersimelagon-related development and pre-launch expenditure is also expected to pressure adjusted EBITDA in 2027. Free cash flow excluding mergers and acquisitions is now expected to exceed DKK 700 million this year, down from the previous expectation of more than DKK 1 billion.
The balance-sheet context makes disciplined execution important. Net interest-bearing debt was DKK 9.319 billion at June 30, only modestly below DKK 9.358 billion at the end of 2025, while the ratio of net interest-bearing debt to last-12-month adjusted EBITDA increased to 4.9 times from 4.4 times as investment reduced EBITDA.
This does not necessarily indicate deterioration in the underlying operating model. Rather, LEO Pharma is moving from a turnaround phase centred on cost control and profitability recovery toward a growth phase requiring larger investments in commercial infrastructure and externally sourced innovation. The strategic question is whether those investments create enough durable revenue to lower operating leverage again once the current launch and development cycle matures.
Can LEO Pharma turn its dermatology platform into a repeatable growth engine?
The emerging model is becoming clearer. Anzupgo provides a newly launched specialty dermatology product with significant international expansion still underway. Spevigo adds a rare inflammatory disease franchise. Adtralza/Adbry continues to expand in atopic dermatitis. Delgocitinib is also being evaluated beyond chronic hand eczema, including the Phase 3 DELTA CARE 1 trial in adults with lichen sclerosus.
LEO Pharma is simultaneously attempting to extend tralokinumab into younger pediatric populations and build a longer-duration rare genetic dermatology pipeline through Replay. The strategic logic is to create a commercial and medical affairs platform capable of supporting multiple dermatology products rather than rebuilding infrastructure for each asset individually.
The H1 numbers provide early evidence that the commercial side of that strategy is gaining traction. Strategic brands are growing much faster than the overall company, North America revenue increased 38% at constant exchange rates, and management has raised the lower end of full-year sales guidance. Yet those gains are now being recycled into development, launches and acquisitions rapidly enough to compress near-term margins.
The next phase will therefore be measured less by whether LEO Pharma can continue posting double-digit constant-currency dermatology growth and more by the quality of that growth. Anzupgo must continue expanding access and prescriber adoption, Spevigo must benefit from LEO Pharma’s commercial infrastructure, dersimelagon must clear regulatory review before its anticipated commercial opportunity can materialise, and newer pipeline assets must progress without turning today’s higher investment base into a permanent drag on profitability. If those pieces align, the margin compression visible in 2026 could prove to be the cost of building a broader dermatology franchise rather than a reversal of the financial improvement LEO Pharma has achieved over the past several years.
