Lundbeck (CPH:LUN) has initiated a rejig of its pipeline, taking an ax to undisclosed early-stage assets in order to funnel cash into what it sees as its most promising candidates. The schizophrenia drug Lu AF35700 is among the beneficiaries of the reshuffle, with Lundbeck using its reorganized balance sheet to advance the therapy through development unpartnered.
|Lundbeck R&D chief Anders Gersel Pedersen|
Copenhagen, Denmark-based Lundbeck unveiled the tweaks to its R&D priorities alongside sweeping changes to its operations, which will see it shed 1,000 jobs in an attempt to become profitable. The commercial operation is expected to bear the brunt of the cuts but R&D will be affected, too, with recently-appointed CEO Kåre Schultz committing to dropping certain early-stage assets. Trimming the pipeline will allow Lundbeck top focus its cash on programs in which it thinks it has the clearest understanding of the underlying science, such as the schizophrenia drug Lu Af35700.
"35700 is an antipsychotic with a profile that is somewhat different than most drugs available. What we see is that many of the drugs that are available on the market today are predominantly driving effects through D2," Lundbeck R&D chief Anders Gersel Pedersen said on a conference call. 35700, like clozapine, has a strong binding affinity to the D1 receptor. Lundbeck hopes to differentiate its pipeline candidate from clozapine through its side effect profile, giving patients who are resistant to D2-targeted drugs a treatment option that doesn't cause weight gain and metabolic disturbances.
Lundbeck's belief in this hypothesis has led it to conclude Lu Af35700 is among its most promising early-stage assets. "We have to put our bets where we think we have the best ability to translate science into products," Pederson said. The names of the affected assets are unknown, but the idea is to cut back in stroke and pain to focus on depression, schizophrenia, Parkinson's and Alzheimer's. Alm Brand analyst Michael Friis Jorgensen thinks the ax wielders will have plenty to aim at. Jorgensen said Lundbeck has "too much in the early stage pipeline," The Wall Street Journal reports.
As well as correcting this perceived overabundance of early-stage programs, Lundbeck also plans to trim its operations. Recently-appointed CEO Kåre Schultz said Lundbeck is closing its research site in Paramus, NJ, putting 68 people out of work in the process. Lundbeck cut its headcount at the site in 2011, too. Lundbeck CFO Anders Götzsche told investors the plan is to lower R&D investment from 20% of revenue today--a figure that has been held up as a positive by the company in its recent history--and to the benchmark for the industry by 2017.