Lundbeck just officially welcomed former CEO of Millennium, Deborah Dunsire, as its own chief in September. And as some might expect with a new leader, the central nervous system specialist is now undertaking a strategic review.
Aiming for “sustainable, profitable growth,” the company is evaluating opportunities to capitalize on its marketed products and accelerate its internal pipeline, and it will “continue to seek to supplement the pipeline with external innovation that fits our strategy and core strength in [CNS],” Dunsire said on the company’s third-quarter earnings call.
The company will announce the results of the evaluation with its annual report next February. And thanks to “a very strong financial foundation,” the company “can afford to be thoughtful and disciplined” in its investment choices, Dunsire said.
Indeed, Lundbeck has a robust balance sheet to support its ambition. By the end of the third quarter, its net cash had increased to 5.36 billion DKK ($825 million), compared with the DKK 3.68 billion it had at year-end 2017. Its equity amounted to DKK 13.5 billion.
Where exactly can Lundbeck put its money? Dunsire previously told FiercePharma in July on her appointment that she doesn’t plan to restructure the company significantly, as Lundbeck just cut loose about 1,000 staffers in a major restructuring under former helmsman Kåre Schultz.
M&A could be Lundbeck’s best option, Bernstein analyst Wimal Kapadia told FiercePharma, noting that costs have already come down with little room for further improvement.
“Their best option is to bring in assets,” Kapadia said in an email interview with FiercePharma. “[T]he revenue growth profile from now to 2025 is not particularly attractive and they need to supplement this with M&A as their internal pipeline is unlikely to contribute much in that time frame.”
Lundbeck just suffered a major setback a few days ago as lead pipeline candidate and one-time blockbuster hopeful Lu AF35700 failed a phase 3 trial in treatment-resistant schizophrenia. The company is combing through the data for silver linings, but as Lundbeck R&D chief Anders Gersel Pedersen pointed out on Wednesday’s call, prolonging the study—which is already longer than normal—will not likely produce better results.
Without Lu AF35700, Lundbeck lacks major late-stage catalysts. Before 2025, it only has brexpiprazole, expected to be filed in bipolar mania in 2019 and for agitation in Alzheimer’s in 2021, plus a longer-acting version of Abilify Maintena that it plans to file around 2020.
In terms of what kinds of assets Lundbeck might seek to get its hands on, “we don’t only have one thing in mind,” Dunsire said on the call. The company will “look at all potential avenues for growth, be it licensing, partnership or acquisition,” she said.
Meanwhile, some Lundbeck marketed products are under pressure as well. Epilepsy drug Onfi might have just enjoyed its last growth in the third quarter, as generics hit in October. Sales from the drug increased 30% in local currencies to DKK 2.67 billion in the first nine months of the year. Knockoffs “are coming in full force,” with 10 companies launching their products in both formulations at an aggressive discount of 80%, Kapadia noted in a late October analysis.
Sales of Northera, which is indicated for neurogenic orthostatic hypotension (NOH) among other conditions, also declined 6% in the third quarter to DKK 433 million, due to a prescription backlog caused by a processing call center relocation that executives said the company is working to resolve.
Lundbeck did pull off a third-quarter revenue beat, with strong growth from long-acting antipsychotic Abilify Maintena and major depression pair Brintellix and Trintellix. A better-than-expected performance from older drugs Cipralex and Sabril chipped in, too. But Kapadia said the fourth quarter could be “kitchen sinked to make for an easier comp in 2019.”
By Angus Liu
Source: Fierce Pharma
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