UPDATE 2-Lundbeck gets boost from drug trial success

(Adds chief executive, analyst comment, updates share)

By Kim McLaughlin

COPENHAGEN, Oct 2 (Reuters) - Denmark's Lundbeck (LUN.CO) unveiled positive results on Tuesday from clinical trials of one of its candidate drugs, saying it could become the firm's next flagship product, sending its shares up 8 percent.

The outcome of the Phase II clinical study of Lu AA21004 compound, to treat major depressive disorders, boosts growth prospects at a firm hard-hit by two late-stage drug development failures this year.

"This is very, very important for us. We have been working on this project for more than five years and this is the moment of truth," Lundbeck Chief Executive Claus Braestrup told Reuters.

Lundbeck generates the majority of its revenues from depression and anxiety treatment Lexapro, sold outside the United States as Cipralex, but the patents for the drug expire in 2012-2014.

"Looking at what we know today, this has the potential to be a medication used at least as much as Cipralex," Braestrup said.

The firm, which has said the Lu AA21004 compound could reach markets as a fully fledged medication in 2011, will begin Phase III trials of the compound in a matter of months, he added.

The trial included 426 patients with major depression.

"Lu AA21004 showed highly significant improvements on the primary efficacy endpoints with both 5 and 10 mg compared to placebo and had an attractive safety profile," the firm said in a statement.

By 1335 GMT, Lundbeck shares were 8 percent higher 154.50 crowns, outperforming the Copenhagen bourse's top-20 OMX index , which had gained 0.7 percent on the day.

"It is vital that they show some good data. Had that not been the case, there would have been precious little in their pipeline," Jyske Bank analyst Peter Andersen said.

"This product is the next share price trigger for Lundbeck. It is crucial that Lundbeck is finally gaining some momentum considering all the headwind they have had."

STILL RISKS

Lu AA21004 is being jointly developed by Lundbeck and Takeda Pharmaceutical Company (4502.T).

"We are pleased that the encouraging results from this proof of concept study confirm our experimental expectations of Lu AA21004 as a potent and well-tolerated new drug for the treatment of major depression," said Anders Gersel Pedersen, Head of Development at Lundbeck.

Following analysis of the data, Lundbeck and Takeda will plan the next steps in the development of Lu AA21004, Lundbeck said.

"This is very important since it is the compound which has been developed the furthest and, really, one of two products in the pipeline," Sydbank analyst Rune Dahl said.

Dahl added: "There are still considerable risks both in terms of delays and whether it will, in fact, reach the market."

Lundbeck signed a drug development deal with Takeda last month to co-develop and commercialise compounds in its pipeline for treatment of mood and anxiety disorders.

The deal covers Japan and the United States. Lundbeck received an initial payment of $40 million and could land a maximum of $345 million in additional development milestone payments.

(Additional reporting by Karin Jensen in Copenhagen and Niklas Pollard in Stockholm)