EP Vantage Interview - Lundbeck sticking to CNS path

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It has been almost three years since Ulf Wiinberg took the helm at Lundbeck, and the former Wyeth veteran has been busy. The company’s pipeline has grown and its geographical reach extended, through the acquisition of US drug developer Ovation Pharmaceuticals for $900m and deals in Latin America, Canada and China.

In terms of therapeutic focus, however, Lundbeck remains seated firmly in the CNS space. Undaunted by the seemingly mounting challenges in this area and the exit of former big players, Mr Wiinberg remains convinced progress can be made and will be rewarded; further deals are being sought, he tells EP Vantage. Investors seem happy – shares in the company have advanced 60% in the last 12 months. With a painful patent expiry approaching and three late stage, novel candidates approaching pivotal stages, this CNS-focused strategy will soon be put to the test.

Turning point

The deal to buy Ovation marked a big turning point for Lundbeck, establishing a US presence for the company for the first time. As well as providing tangible infrastructure, Mr Wiinberg views the move as a platform for greater things, which will allow the company to strike strategically stronger deals in the future.

“We can now do business development deals in a totally different way, with global models and be much more competitive when there is competition for assets,” he says.

So far, the company has only struck early stage technology deals on a global level, but the company’s ambitions are greater.

“We are looking at everything we have a chance to look at, within CNS. We have a strong balance sheet so if we find a product that we think can make a difference we will pursue the opportunity,” he says.

The “whole chain” is under consideration, he adds, pointing to recent deals struck over gene therapy research in Parkinson’s disease, with Zenobia, biotechnology products with an antibody research deal with Genmab, and the acquisition of rights to late-stage products from Merck and Cephalon.

Mr Wiinberg says he would also be happy to strike another deal the size of Ovation – if a target could be found.

“It’s not obvious there’s one to be had. If we could find something that helps us be a stronger CNS player globally or in the regional market then we would be interested,” he says.

Unmet need

While companies like GlaxoSmithKline have vocally exited certain areas of CNS research, Mr Wiinberg sees huge opportunity in diseases like Alzheimer’s, depression and Parkinson’s, where the need for more effective therapies is evident.

“One of the reasons that room is there, is that is hard to do it. But if you come through with a product, you have the opportunity to improve millions of people lives.

“There is a tremendous need for better treatments and when one or two new drugs come through, everyone will be back in [CNS] again,” he predicts.

He points to the company’s late-stage pipeline as reason for optimism.

“We have several products about to come on to the market and that’s the key point for us. If we had nothing in phase III or II it would be hard to argue our CNS focus is right,” he says.

Meanwhile, the company has guided that investment in R&D is likely to remain at around 20% of sales over the next three years, and that early stage research will be carried out. A floor for projected sales and earnings over the next three years has also been given – providing essentially a worse case scenario projection of the base business’ performance through the patent expiry of blockbuster antidepressant Lexapro, first in the US next year then two years later in Europe.

“While we cannot count on year on year growth we have said we will be highly profitable for at least three to four years and hopefully returning to growth after that, and that allows us to do earlier stage deals.

“If you are going to bring breakthroughs you have to do early deals,” Mr Wiinberg argues.

Late-stage progress

But with Cipralex’s patented life drawing to an end – the drug is sold in the US by Forest Laboratories as Lexapro – it is the late stage candidates that need to progress.

The drug brought in $1.5bn last year for Lundbeck through direct sales and alliance revenue from Forest, a substantial sum to replace.

Equity analysts are attaching most value to company’s novel anti-depressant, LuAA21004, which it hopes to file with regulators in the middle of next year. Pivotal trials conducted in the US are being repeated after previous studies failed – the company believes trial execution is to blame – and will report early next year.

Meanwhile, nalmafene for alcohol dependence is more advanced and will be filed before the end of the year. The company believes the pill represents a “paradigm shift” in treating heavy drinkers, a novel patient group to attempt to treat with a drug (Nalmefene data positive but concerns remain, June 15, 2011).

And finally, stroke treatment desmoteplase is expected to generate data next year, although Mr Wiinberg says recruitment in the phase III trial has been much slower than anticipated. Considering the hurdles in treating stroke, this candidate is viewed as very high risk.

Analysts believe these candidates could be generating $527m by 2016, consensus data from EvaluatePharmashows. Clearly, the company still has some way to go to replace Cipralex, a fact that Mr Wiinberg readily admits.

“We’ve made tremendous progress, but we haven’t solved all of our problems,” he says.

Shares in Lundbeck are currently trading at DKr127.50; the stock touched a three-and-a-half year high of DKr130.7 last month, showing investors appear to be looking beyond Lundbeck's patent cliff.

However, the company still needs to show it can get at least one of these products to market, to justify its CNS devotion.

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