Lundbeck Gets A Much-Needed Win, But The Investment Case Is Still Not Clear-Cut

Shareholders of Danish pharmaceutical company H. Lundbeck (OTCPK:HLUBF) (OTCPK:HLUYY) finally had something to celebrate recently, as the company followed up on better-than-expected first quarter earnings with positive clinical trial results in a key study of Rexulti in the treatment of Alzheimer’s-associated agitation. This clinical success opens up a market worth potentially more than $1 billion in revenue and gives the company some much-needed positive news from its pipeline.

The outlook for Lundbeck is better now than it has been in a while, but there are still significant challenges to consider. The pipeline is overwhelmingly early-stage, the company still has significant exposure to old, off-patent products, and management’s behavior hasn’t been what I would consider “shareholder-friendly”, particularly with a recent move to cancel the sponsored ADR program. While I do think the shares are undervalued, I’m not sure I can make a compelling argument that this is an investment option that is worth the hassle for most U.S. investors.

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Lundbeck Gets A Much-Needed Win, But The Investment Case Is Still Not Clear-Cut