Lundbeck slides after FDA rejects label claim against AdComm recommendation

Lundbeck (CPH:LUN) suffered the biggest drop in its share price in three years after the FDA rejected its filing to expand the label for Brintellix. The decision, which followed a favorable vote by an advisory committee, puts a dent in Lundbeck's ambition to market its Brintellix as a treatment for certain aspects of cognitive dysfunction that affect people with major depressive disorder.

Lundbeck CEO Kåre Schultz

Copenhagen, Denmark-based Lundbeck and its partner Takeda based their filing on data from a pair of trials of Brintellix, in which cognitive function was assessed as the primary endpoint using the Digit Symbol Substitution Test (DSST). The neuropsychological test measures executive function, processing speed and attention. Both trials met their primary endpoints, leading to the Psychopharmacologic Drugs Advisory Committee voting 8-2 in favor of expanding the label. The advisory committee vote marked the start of a double-digit increase in the stock price of Lundbeck, a rise now stymied by FDA.

Lundbeck hasn't released the complete response letter it received from FDA, but the reliance of the trials on DSST may have proven to be a sticking point. While voting overwhelmingly in favor of the label expansion, the advisory committee flagged up concerns with using DSST in isolation. The regulator may have had other issues with the submission, too. "We were concerned parts of FDA may shy away from setting a precedent by approving a label claim relating to cognition, thereby establishing a pathway for other drugs in the future," Welford wrote in a note to investors.

The setback leaves Lundbeck and Takeda to pick through the decision and decide on a way forward for Brintellix, which has struggled to live up to its blockbuster billing since winning approval. On the upside, Lundbeck now has confirmation that FDA views cognitive dysfunction in major depressive disorder as a legitimate drug development target. However, given the doubts about the reliance on DSST, it is questionable whether a reanalysis of existing data will convince FDA to reverse its ruling. If that is the case, Lundbeck will need to run additional trials before taking a second run at FDA.

Faced with the loss of a near-term way to win market share in depression, Lundbeck saw its share price drop as much as 11%, before it rallied slightly to close down 8%. The drop was the largest the company has experienced since it forecast two years of lower-than-expected sales and profits late in 2012, Bloomberg reports.

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