Danish Company To Buy Migraine Drug Developer Alder Biopharma In Deal Worth Up To $1.95B

Merger Monday dawned with Danish pharma company Lundbeck announcing a definitive agreement to buy U.S.-based Alder Biopharmaceuticals Inc ALDR.

The Deal Terms

Alder shareholders will receive $18 per share in cash as part of the deal, along with one tradeable contingent value right that entitles them to receive an additional $2 per share upon approval of eptinezumab — a Phase 3 migraine prevention drug candidate — by the European Medicines Agency. This renders the total consideration to $20 per share, with a total transaction value of $1.95 billion net of cash on a fully diluted basis.

The upfront cash payment of $18 per share represents a 79% premium to the Sept. 13 closing price of Alder shares.

The boards of both companies have approved the transaction.

The proposed deal is expected to close in the fourth quarter of 2019, subject to customary closing conditions, including tendering of more than 50% of Alder shares at the expiration of the tender offer and the receipt of required regulatory clearances.

Lundbeck said it expects to fund the deal through its existing cash resources and bank financing.

Deal Logic

Lundbeck sees the deal as strengthening its business as early as 2020, helping it to accelerate its late-stage pipeline and granting it access to new capabilities in the monoclonal antibody field.

Alder is developing eptinezumab, a monoclonal antibody to be administered as a quarterly 30-minute intravenous infusion, as a preventative treatment of migraine in adults.

If approved, it will have the distinction of being the first IV CGRP therapy for migraine prevention.

Alder submitted a BLA to the FDA in February, with a PDUFA action date set for Feb. 21, 2020. The company is looking to make regulatory submissions in the EU in 2020, followed by other countries around the world, including China and Japan.

A second pipeline asset, ALD1910,  is also being developed for migraine prevention. It is an early stage asset designed to inhibit pituitary adenylate cyclase-activating polypeptide for migraine prevention.

"The transaction is expected to accelerate and diversify Lundbeck's revenue growth with the expected U.S. launch of eptinezumab for preventive treatment of episodic and chronic migraine in 2020 and the expected expansion of indications for the product," the companies said in Monday's deal announcement. 

Lundbeck expects the transaction to be core EPS accretive in 2023, assuming FDA approval in the first quarter of 2020 followed by regulatory approvals in other regions including Europe.

"As a global leader in neuroscience research with products registered in more than 100 countries and a strong network of neurology specialists, Lundbeck is the ideal partner to advance Alder's mission of changing the treatment paradigm for migraine prevention," Alder CEO Bob Azelby said in a statement. 

Alder shares were rallying by 83% tp $18.41 at the time of publication in Monday's premarket session. 

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