Danish drugmaker Lundbeck to buy Chelsea Therapeutics for $658 mn

H Lundbeck A/S, a Danish pharmaceutical company specialising in brain disease, yesterday struck a friendly deal to buy US-based Chelsea Therapeutics for $658 million.

Under the terms of the agreement, Lundbeck will offer Chelsea stockholders $6.44 per share in cash and contingent value rights or CVRs that may pay up to $1.50 upon achievement of certain commercial milestones related to brain drug Northera's commercial performance in the period 2015-2017.

The total value of $658 million represents a premium of 59 per cent over Chelsea's closing price on 7 May.

The terms of the CVR payments reflect the parties' agreement over the sharing of potential economic upside benefits from certain future net sales of Northera and do not necessarily reflect anticipated sales of the product. There can be no assurance such levels of net sales will occur or that any or all of the contingent payments will be made, Lundbeck said in a release.

Lundbeck plans to fund the deal through existing cash reserves.

The transaction will allow Lundbeck to leverage its expertise in rare neurologic disorders in the US through the upcoming launch of Northera, which was approved by the US Food and Drug Administration (FDA) in February 2014 for the treatment of symptomatic neurogenic orthostatic hypotension (NOH).

Northera is the first and only therapy approved by the FDA that demonstrates symptomatic benefit in adult patients with NOH caused by primary autonomic failure (Parkinson's disease, multiple system atrophy and pure autonomic failure), dopamine beta hydroxylase deficiency and non-diabetic autonomic neuropathy.

Northera is expected to be launched in the second half of 2014 and will strengthen Lundbeck's existing neurology franchise in the US, which currently includes Onfi, Sabril and Xenazine.

"The proposed strategic acquisition of Chelsea - and the launch of its lead therapy, Northera - aligns with Lundbeck's core strengths in addressing rare and challenging neurological disorders. As a company committed to people living with brain disorders," said Ulf Wiinberg, president & CEO of Lundbeck.

Lundbeck is a global pharmaceutical company specialising in brain diseases. Its key areas of focus are alcohol dependence, Alzheimer's disease, depression/ anxiety, epilepsy, Huntington's disease, Parkinson's disease, schizophrenia and stroke.

The Copenhagen-based company has around 6,000 employees in 57 countries and its products are sold in more 100 countries. It has research centres in China, Denmark and the US, and production facilities in China, Denmark, France, Italy and Mexico.

Lundbeck generated revenue of $2.7 billion in 2013.