Lundbeck increases its share of Xenazine® and strengthens the U.S. profitability - transaction immediately accretive

Lundbeck increases its share of Xenazine® and strengthens the U.S. profitability - transaction immediately accretive

In March 2009 H. Lundbeck A/S (Lundbeck) acquired Ovation Pharmaceuticals, Inc. (now Lundbeck Inc.) to establish a US platform and Xenazine® is an important growth driver at Lundbeck Inc.


Lundbeck and UK-based LifeHealth Limited (LifeHealth) today announced that the companies have entered into a definitive agreement under
which Lundbeck acquires all shares of LifeHealth, the holder of Xenazine rights. The deal is an all-cash transaction valuing LifeHealth at USD 147 million or approximately DKK 780 million. The Supervisory Board at Lundbeck and the Board of Directors of LifeHealth have unanimously approved the transaction.

Strategic rationale

The acquisition is a logical next step in the acquisition and integration of Lundbeck Inc. earlier in 2009 as LifeHealth owns approximately 25 percent of the sales in the U.S. and Canada of Xenazine (tetrabenazine) less production costs and about 50 percent of non-North American sales of the product to distributors into the territories. By acquiring LifeHealth, Lundbeck substantially increases its economic share of the tetrabenazine asset and retains certain rights to all future indications, including the controlled-release formulation currently in development. In addition, as the company responsible for selling and marketing Xenazine in the U.S., this further enhances Lundbeck's opportunities in this very important market.

"Xenazine is the only FDA-approved product for patients suffering from chorea associated with Huntington's disease and we are very
encouraged by what our U.S. subsidiary, Lundbeck Inc., has achieved since they launched Xenazine in the U.S. at the end of last year", says Ulf Wiinberg, President and CEO at Lundbeck. "This new transaction strengthens Lundbeck's U.S. platform and materially improves the earnings outlook in the U.S." In November 2008, Xenazine for the treatment of chorea associated with Huntington's disease was launched in the USA, where approximately 20,000 to 25,000 patients suffer from the disease. Xenazine is expected to provide significant revenue contribution to Lundbeck and Lundbeck expects the US sales potential to be more than USD 250 million.

Financial highlights
Under the terms of the transaction, Lundbeck will make an upfront payment of USD 147 million (or approximately DKK 780 million) immediately upon closing of the transaction. The transaction will reduce the royalty range paid to a third party on Xenazine from approximately 65-72% to approximately 40-47%, and the acquisition is therefore expected to be immediately accretive to Lundbeck's EBIT. The transaction will be financed using currently available cash resources. The acquisition price of LifeHealth will be booked as "Product rights" under intangible assets in Lundbeck's balance sheet and will be amortised with approximately DKK 90 million annually and DKK 45 million in 2009.

Lundbeck financial guidance
Lundbeck is maintaining the financial guidance for 2009. The acquisition of LifeHealth will have a positive impact on EBITDA and to a low degree EBIT. For 2009 Lundbeck expects an EBITDA of DKK 3.5-3.7 billion and following the acquisition of LifeHealth Lundbeck expects EBITDA to be in the higher end of the interval for 2009.

About LifeHealth Limited
LifeHealth, based in Berkshire, United Kingdom, was established in
February 1995. The company holds certain rights to tetrabenazine in
17 countries throughout the world.

About Xenazine (tetrabenazine)
Xenazine is the first and only FDA-approved therapy for the treatment
of chorea associated with Huntington's disease. Xenazine was approved
by the FDA in August 2008 and was launched by Lundbeck Inc. in
November 2008. Xenazine was granted Orphan Drug status from the FDA,
providing seven years of market exclusivity.

About chorea associated with Huntington's disease
Chorea is the most common symptom of Huntington's disease, which
affects approximately 20,000 to 25,000 people in the U.S. It is
characterized by jerky, involuntary movements throughout the body,
often appearing as writhing, twisting and turning in a constant,
uncontrollable dance-like motion. As chorea progresses, the
involuntary movements worsen, making it difficult for individuals to
carry out voluntary movements associated with daily living, such as
speaking, eating and dressing. Over time, chorea presents an
increasing safety risk to Huntington's disease patients, often
resulting in the need for assistance and supervision, and even
institutionalisation. Currently, there is no known cure for
Huntington's disease and the disease is ultimately fatal.

Important Safety Information and Boxed Warning
Xenazine can increase the risk of depression and suicidal thoughts
and behaviour (suicidality) in patients with Huntington's disease.
Anyone considering the use of Xenazine must balance the risks of
depression and suicidality with the clinical need for control of
choreiform movements. Close observation of patients for the emergence
or worsening of depression, suicidality, or unusual changes in
behaviour should accompany therapy. Patients, their caregivers, and
families should be informed of the risk of depression and suicidality
and should be instructed to report behaviours of concern promptly to
the treating physician.

Particular caution should be exercised in treating patients with a
history of depression or prior suicide attempts or ideation, which
are increased in frequency in Huntington's disease. Xenazine is
contraindicated in patients who are actively suicidal, and in
patients with untreated or inadequately treated depression.

Xenazine is also contraindicated in patients with impaired hepatic
function, and in patients taking monoamine oxidase inhibitors or
reserpine. At least 20 days should elapse after stopping reserpine
before starting Xenazine. Although Xenazine has been shown to
decrease the chorea associated with Huntington's disease, it was also
shown to cause slight worsening in mood, cognition, rigidity and
functional capacity and prescribers should periodically re-evaluate
the need for therapy. Some adverse effects such as depression,
fatigue, insomnia, sedation/somnolence, parkinsonism, akathisia, QTc
prolongation and interactions with CYP2D6 inhibitors may be dose
dependent, and resolve or lessen with dose adjustment. The most
frequent adverse events reported with Xenazine compared to placebo in
a randomized, 12-week, placebo controlled clinical trial of
Huntington's disease subjects include sedation/somnolence (31% vs.
3%), fatigue (22% vs. 13%), insomnia (22% vs. 0%), depression (19%
vs. 0%), akathisia (19% vs. 0%), anxiety (15% vs. 3%) and nausea (13%
vs. 7%). For more information, please see full prescribing
information including Boxed Warning or go to www.xenazineusa.com.

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