Morningstar | Lundbeck's Solid 3Q Results in Line with Our Expectations; Maintaining DKK 290 FVE
We do not anticipate a material change to our fair value estimate for Lundbeck following third-quarter results. The firm reported over DKK 4.6 billion in third-quarter revenue, a 6.6% increase from last year, with solid sales throughout its portfolio of CNS drugs. Abilify Maintena for various mental disorders and Brintellix for depression continued to post growth in the double-digits and gains in patient share, while Cipralex/Lexapro for depression has done better than we had expected, largely due to growth in international markets. After some near-term adjustments, we are maintaining our fair value estimate of DKK 290, and we continue to believe that the firm's expertise in CNS therapies underpins a narrow moat. Management raised full-year guidance, and our top-line expectations for 2018 are near the higher end of DKK 18.1 billion.As expected, several generic versions of Onfi for seizures associated with Lennox-Gastaut syndrome entered the market following approval on Oct. 22. Management indicated that they anticipate aggressive pricing declines, which follow our expectations of steep declines following this year. We had already removed Lu AF35700 for schizophrenia from Lundbeck's pipeline following disappointing results in October. The firm has several early-stage candidates for schizophrenia, bipolar mania, Parkinson's, and Alzheimer's disease in its pipeline, with a couple candidates expected to start Phase 2 studies next year. While Lundbeck's narrow moat is supported by expertise in this complex disease area, we emphasize how difficult it is to move an early-stage candidate all the way to regulatory approval.
H. Lundbeck develops, produces and markets drugs for treating diseases of the central nervous system. Products include antidepressants for the treatment of depression, panic disorder, and prevention of relapse/recurrence. Antipsychotic products for psychotic disorders; schizophrenia, anxiety, restlessness and insomnia; treatment of psychotic disorders; acute psychotic episodes, exacerbation of psychotic disorders. Co.'s products inclue Cipralex®/Lexapro® for the treatment of depression and anxiety; Ebixa® for the treatment of Alzheimer's disease; Azilect® for the treatment of Parkinson's disease; Xenazine®, Sabril®, Saphris® Sycrest®, Onfi, and other.
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