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Lundbeck buys into migraine, acquiring Alder for $2B

Danish drugmaker Lundbeck will acquire Alder BioPharmaceuticals for $1.95 billion, adding a late-stage migraine treatment to its pipeline via a buyout deal the companies announced Monday.Alder, a small biopharma headquartered in Bothell, Washington, is essentially a one-drug company centered on the experimental CGRP inhibitor eptinezumab. A decision on the drug’s approval is expected from the Food and Drug Administration by February 2020. Lundbeck will pay $18 per Alder share along with a non-tradable contingent value right worth $2 if eptinezumab wins European approval. The upfront cash translates to a 79% premium over the closing price of Alder stock on Friday. The companies expect the deal to be completed during the fourth quarter of 2019.

Alder, as a neurology-focused company with a late-stage drug, frequently featured on lists of biotech takeover targets compiled by Wall Street analysts.

Having advanced eptinezumab through to regulators, Alder was facing the prospect of launching a CGRP inhibitor in a market that already features similar, competing drugs sold by Amgen and Novartis, Eli Lilly and Teva.

“We can’t imagine any investor wanted to see Alder launch eptinezumab alone,” Piper Jaffray’s Danielle Brill wrote in a Monday note to investors.

Instead, the challenge of playing market latecomer will shift to Lundbeck. Company executives said Monday they anticipate eptinezumab growing into a blockbuster product by tapping its pre-existing salesforce and resources.

Lundbeck’s neuroscience commercial capabilities could address many of the questions facing eptinezumab, RBC Capital Markets analyst Brian Abrahams wrote Monday. That Alder ended up in Lundbeck’s hands is a “missed opportunity” for Biogen, the analyst said, noting that drugmaker could have benefited from acquiring a late-stage neuroscience drug.

Lundbeck said it anticipates submitting eptinezumab to European regulators in 2020. The drugmaker also plans to continue developing ALD1910, a preclinical migraine treatment designed to inhibit PACAP, or the pituitary adenylate cyclase-activating peptide.

Since taking over last July, Lundbeck CEO Deborah Dunsire has inked two M&A deals to expand the company’s neuroscience pipeline. In May, for example, the drugmaker finalized an acquisition of Abide Therapeutics for $250 million. A data readout from Abide’s leading drug candidate is expected next year from a Phase 2a trial in Tourette syndrome.

While patient demand appears high, the market for CGRP drugs has featured rebating and formulary battles as well. Amgen, Lilly and Teva all launched their respective products with free drug programs in a three-way tug-of-war for market share.

Even with those issues, Abrahams calculated last month that the therapeutic class is on pace to bring in $1 billion in sales its first full year, indicative of Wall Street expectations that CGRP blockers could eventually sell $5 billion a year in the U.S.

While the three marketed CGRP drugs are all administered subcutaneously, eptinezumab is given as a quarterly intravenous infusion.

Analysts expect the FDA to approve oral CGRPs next year from Biohaven Pharmaceutical and Allergan, potentially adding more competition to the therapeutic class.

The deal also will wrap up a relatively short CEO stint for Alder’s Bob Azelby, who joined the company last June after serving as Juno Therapeutics’ chief commercial officer until that company’s acquisition by Celgene.

Alder’s share price opened Monday at $18.58, up 85% from previous close.

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