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May 8, 2014

H. Lundbeck Acquiring Chelsea Therapeutics for Up to $658M

  • H. Lundbeck will acquire Chelsea Therapeutics for up to $658 million, the companies said today. The deal strengthens the buyer’s neurologic drug portfolio with the soon-to-be-launched Northera™ (droxidopa) for the rare neurological disease symptomatic neurogenic orthostatic hypotension (NOH).

    FDA approved Northera on Feb. 18 as the first and only therapy approved by the FDA that demonstrates symptomatic benefit in adult patients with NOH caused by dopamine beta hydroxylase deficiency, non-diabetic autonomic neuropathy, and primary autonomic failure—such as in Parkinson's disease, multiple system atrophy and pure autonomic failure.

    According to the companies, Northera is expected to be launched in the second half of this year. When that happens, Northera will join a Lundbeck portfolio of neuro drugs that includes Onfi® (clobazam) for seizures in patients with Lennox-Gastaut syndrome; Sabril® (vigabatrin), a seizure treatment for epilelsy; and Xenazine® (tetrabenazine) for involuntary movements or chorea associated with Huntington’s disease.

    The deal also gives Lundbeck six additional pipeline products. They include desmoteplase, a highly fibrin-specific thrombolytic agent in Phase III trials for acute ischaemic stroke; and Lu AE58054, a 5-HT6 receptor antagonist for Alzheimer’s disease and other cognition disorders also in phase III. Also in the pipeline is I.V. Carbamazepine for epilepsy, a sodium channel blocker that is a new and injectable formulation of the oral antiepileptic drug carbamazepine, for which a registration application has been filed.

    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, we are uniquely positioned to make Northera available to those who need it most," Ulf Wiinberg, President & Chief Executive Officer of Lundbeck, said in a statement.

    Lundbeck plans to offer owners of all outstanding shares a total $7.94 per share—consisting of $6.44 per share cash or $530 million, the remainder in contingent value rights totaling $1.50 per share and tied to commercial milestones for Northera’s future net sales from 2015-2017. The tender offer represents a 59% premium over the closing price of Chelsea shares on May 7.

    Lundbeck said the deal would be cash-accretive by 2015, and contribute to its earnings by 2016. The company said it will be able to finance the deal from its cash reserves, and intends to acquire any shares of Chelsea not tendered into the tender offer through a merger for the same price to occur as soon as possible after the closing of the tender offer.

    Chelsea’s board of directors has approved the deal, which is expected to close in the third quarter of 2014, subject to the tender of a majority of shares and customary regulatory approvals, including a Hart-Scott-Rodino review in the U.S.


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