CEO Schultz has Lundbeck back on track with Q1 swing to profit


Lundbeck was in a bad place when former Novo Nordisk ($NVO) exec Kåre Schultz stepped into its top spot last August. But one year and 1,000 layoffs later, profits are looking up.

The Danish company posted DKK 483 million ($73.2 million) in Q1 operating profit--a big leap over the DKK 32 million it lost in the same period last year. That tally--helped by a vast cost-cutting initiative Schultz announced last summer--also vastly exceeded analysts’ expectations, which came in at DKK 254 million, according to Reuters.

Overall revenue grew, too, with Lundbeck’s DKK 3.77 billion ($573 million) haul coming in 6% higher than last year’s Q1 total. Execs thanked key products including the long-lasting antipsychotic Abilify Maintena, the antidepressant Brintellix and Parkinson's remedy Northera--each of which expanded by more than 100% year-over-year to more than cover the decline of off-patent Huntington’s drug Xenazine.

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And Schultz sees that combination of lower-than-anticipated costs and higher-than-expected sales continuing through the next three quarters, which prompted the company to raise its guidance, he told investors on a conference call. Lundbeck now predicts revenue to fall between DKK 14.2 billion and DKK 14.6 billion, up from the previously guided range of DKK 13.8 billion to DKK 14.2 billion. On the profit side, it expects to rack up between DKK 1.3 billion and DKK 1.5 billion instead of the DKK 1.0 billion to DKK 1.2 billion it initially forecast.

It’s a good sign for the drugmaker, which was still foundering amid patent-cliff losses on blockbuster antidepressant Lexapro when a breached code of conduct forced then-helmsman Ulf Wiinberg out of the CEO’s seat back in late 2014.

But Schultz has helped the company buckle down and keep its new products rolling out strong, and his plan to save DKK 3 billion per year by 2017 has gone over well with investors. Since he stepped in, Lundbeck’s stock has marched upward, and it now sits more than 78% higher than it did this time last year.

That’s not to say everything’s coming up aces for the Valby-based drugmaker. In March, the FDA issued a surprise complete response letter on new cognition-related labeling that could have given Brintellix a leg up in a crowded antidepressant arena.

With that setback, Lundbeck will now be requesting a meeting with U.S. regulators, and then “we have to decide what the next steps are from here,” EVP of R&D Anders Gersel Pedersen said on the call. “… We are obviously very disappointed about FDA's current position.”

- read the release (PDF)
- see the call transcript

Related Articles:
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Troubled Lundbeck targets 1,000 layoffs in HQ, commercial revamp
Lundbeck bags Novo exec Schultz to engineer a much-needed turnaround
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