Lundbeck holding an ace
Danske Invest's portfolio advisor visited a medical expert in Vienna to confirm his faith in Danish pharmaceutical firm Lundbeck's latest drug. And the message was clear: Lundbeck may be holding a winning hand with its new antidepressant.
Lundbeck already occupies a particularly strong position in the market for antidepressants, and recent phase 3 trials of a new pill to treat depression mean Lundbeck may be able to extend its lead. The trials showed, for example, that patients did not suffer increased nausea after taking the new pills and that the patients’ awareness, their so-called cognitive response, was better than with existing products.
To support his hypothesis and get confirmation that investing in Lundbeck was the right thing to do, senior portfolio manager at Danske Capital Claus Henrik Johansen travelled to Austria to consult with a leading specialist in mental illness at a psychiatric hospital in Vienna.
Need for an expert opinion
“I travelled to Austria in the spring to get an expert opinion on what would define a better alternative to existing antidepressants. His response was unequivocal: If you can produce an antidepressant that does not lower patients’ sex drive and at the same time gives patients greater awareness, you would really stand out from the competition. And there is much to suggest that Lundbeck may be on its way to overcoming these two challenges with its latest medicine,” explains Claus Henrik Johansen.
Claus Henrik Johansen explains that after the encouraging phase 3 trials of its new drug, Lundbeck now expects to file approval applications in both Europe and the US in the second half of 2012, meaning the Danish pharmaceutical company will have taken the first steps towards finding a replacement for Lexapro in the US and Cipralex in Europe. The patent on Lexapro expired in Q1 2012 in the US, while Cipralex, which is sold in Europe and the international markets, is still a so-called blockbuster for Lundbeck – i.e. sales of more than USD1bn a year. Claus Henrik Johansen estimates that the new drug could achieve sales of DKK5-10bn a year for Lundbeck – if final approval is given.
Calculating the price
“For Lundbeck the work will now start on calculating what price it should charge for the new medicine and how it should be marketed. That is the next task,” says Claus Henrik Johansen.
Danske Invest has invested in Lundbeck via a number of its funds and has recently increased its holding of Lundbeck shares. The shares are included in the Denmark Focus Class A fund where Lundbeck accounts for 3,19% of the portfolio.
