Count Denmark’s H. Lundbeck (OTCPK:HLUYY) (LUN.CO) (“Lundbeck”) as among those companies happy to see the back of 2020, as the company saw meaningful pressure on the psychiatry-dominated business from the pandemic, as well as additional clinical disappointments.
I wasn’t all that bullish on these shares back in August, and the stock hasn’t done much since, underperforming the broader pharmaceutical space by more than 10%. I am incrementally more bullish now, though, as I think expectations have been wrung out and the eventual normalization of life after the pandemic (including more face-to-face doctor visits in the second half of the year) will help drive better sales, particularly for Vyepti in migraine.
A lot of value rests on the outcome of the company’s pivotal label expansion study of Rexulti in Alzheimer’s agitation. Success could add more than a $1 billion to revenue over the next five to seven years, while failure would leave the catalyst cupboard bare and likely push management toward more aggressive M&A activity. With a high single-digit prospective long-term annualized return, I think these shares are worth considering, but it’s a riskier-than-average stock for Big Pharma investors and a lower-potential stock for biotech investors.
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