Denmark-based biopharma company Lundbeck announced today that it will acquire Alder BioPharmaceuticals (NASDAQ: ALDR) for $1.95 billion. Alder stock, which reached a new 52-week high ($18.88) in the morning session, rallied 83.9% to $18.50 when the market ended today. The Danish pharma company expects to strengthen its specialization in brain disesases with this transaction, which is estimated to close in the final three months of 2019.
The Bothell, Washington-based clinical stage biopharma firm is experimenting eptinezumab, a migraine drug, and has plans to start phase 3 clinical trial for evaluating the drug in the second half of 2019. Alder is also developing ALD1910, a migraine prevention drug. Alder had submitted a Biologics License Application (BLA) to the FDA for eptinezumab in February 2019 and the FDA has set the review date as 21 February 2020.
Lundbeck expects to submit eptinezumab for approval to regulatory authorities in the European Union during 2020, followed by submissions for worldwide approval, including in China and Japan. The proposed transaction is anticipated to strengthen Lundbeck’s business as early as 2020, accelerating the build of its late-stage pipeline.
The deal is expected to accelerate and diversify Lundbeck’s revenue growth with the expected U.S. launch of eptinezumab for preventive treatment of migraine in 2020. The transaction is expected to add to core EPS in 2023 assuming FDA approval in the first quarter of 2020 followed by regulatory approvals in other regions including Europe.
Under the transaction terms, Alder stockholders will be offered an upfront payment for $18.00 per share in cash, along with one non-tradeable Contingent Value Right (CVR) of $2 per share. The upfront cash consideration represents a 79% premium to Alder’s shareholders based on the closing price on 13 September 2019 and an approximately 3% discount based on the 52-week high share price.
Lundbeck expects to fund the acquisition through existing cash resources and bank financing. The Board of Alder has unanimously approved the transaction and Alder will file a recommendation to shareholders recommending they tender their shares to Lundbeck.
While the transaction is not expected to have impact on Lundbeck’s revenue in 2019, it is expected to be dilutive to both EBIT and cash flow for the year. Lundbeck confirmed the transaction is not expected to result in any change to its current dividend policy and continues to expect a pay-out ratio of 30-60% for 2019.
Alder stock has gained 80% so far in this year while it was just up 2% in the past one year.