Lundbeck pens $2B Alder takeover to boost brain disease pipeline

Lundbeck has struck a deal to buy migraine drug developer Alder BioPharmaceuticals for almost $2 billion (€1.8 billion). The takeover centers on a near-approval anti-CGRP antibody that could address Lundbeck’s need for near-term revenue drivers to mitigate the upcoming loss of patent protection on Northera.

To acquire Alder, Lundbeck has put together a deal worth $18 a share upfront, plus $2 a share tied to the approval of anti-CGRP antibody eptinezumab in Europe. Net of cash, the deal is valued at $1.95 billion.

At $18 a share, the upfront portion of the deal represents a 79% premium over Alder’s share price just prior to news of the takeover. Alder has traded above $18 within the past year, though. The slide in Alder’s share price, from highs of $18 a year ago to recent lows of around $8, covers a period in which doubts about its ability to compete in a highly competitive field have intensified. 

If the FDA approves eptinezumab in February, the drug will become the fourth anti-CGRP drug available in the U.S. after Amgen and Novartis' Aimovig, Eli Lilly's Emgality and Teva's Ajovy. Led by Aimovig, those drugs racked up sales of $233 million in the first half of 2019 and are tipped for further growth. 

Lundbeck, which plans to file for approval in the EU next year, will need to find a way to persuade payers and physicians to choose eptinezumab over the competition. 

In disclosing news of the takeover, Lundbeck highlighted the fact that eptinezumab could be the first intravenous CGRP drug to come to market. That results in a less onerous dosing schedule than the competition—12 weeks for eptinezumab versus four weeks for its rivals—but some physicians think the benefits of the subcutaneous administration of Amgen, Lilly and Teva’s drugs more than offset that advantage. That could limit the contexts in which eptinezumab is used. 

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“Given the need to infuse eptinezumab, the doctors believe that this less convenient CGRP product would be primary reserved for patients failing other CGRP treatments or perhaps it could find some use in emergency rooms,” Jefferies wrote in a note to investors after talking to doctors who prescribe migraine drugs earlier this year.

Responsibility for turning eptinezumab into a bigger product than those forecasts suggest will fall on Lundbeck. The Danish drugmaker thinks it will need a U.S. sales team of 100 to 125 people to target specialist neurologists who treat migraines. A similar team will be needed in the U.S.

Lundbeck lacks an existing presence in the migraine sector, but that is part of the appeal of the deal for the company. Under CEO Deborah Dunsire, Lundbeck has sought to expand into new areas under the broad umbrella of brain diseases, thereby lessening its reliance on drugs to treat depression, schizophrenia, Alzheimer's and Parkinson's. Multiple Lundbeck drugs targeting these diseases have struggled in the clinic in recent years. 

The Alder deal is the biggest manifestation of Dunsire’s strategy to date. Previously, Lundbeck spent $250 million on Abide Therapeutics to acquire a phase 2a Tourette syndrome program and boost its R&D capabilities.