Denmark-based Lundbeck has signed a definitive agreement to acquire US-based biopharmaceutical company Chelsea Therapeutics International for $658m.
Under the deal, stockholders of Chelsea Therapeutics will be offered $6.44 per share in cash and contingent value rights that may pay up to $1.50, for a total potential consideration of up to $7.94 per share, or $658m on a fully diluted basis.
By acquiring Chelsea Therapeutics, Lundbeck will gain the rights to Chelsea Therapeutics’ symptomatic neurogenic orthostatic hypotension (NOH) drug Northera (droxidopa).
According to Lundbeck, Chelsea Therapeutics’ acquisition will allow the company to leverage its expertise in rare neurologic disorders in the US through the upcoming launch of Northera.
Northera obtained US Food and Drug Administration (FDA) approval in February and is expected to be launched in the second half of 2014.
Lundbeck’s existing neurology franchise in the US currently includes Onfi, Sabril and Xenazine, and ahead of potential future products like desmoteplase and Lu AE58054 currently in clinical Phase III.
Chelsea Therapeutics claims that Northera is the first 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.
Lundbeck president and CEO Ulf Wiinberg said that the proposed strategic acquisition of Chelsea and launch of 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," Wiinberg said.
The transaction is expected to be financed by Lundbeck’s existing cash reserves, and is expected to be cash accretive to the company in 2015 and earnings accretive in 2016.
Unanimously approved by the Chelsea Therapeutics’ board of directors, the transaction is expected to close in the third quarter of 2014.
Closing the transaction is subject to the tender of a majority of Chelsea Therapeutics’ outstanding shares in the tender offer, and the receipt of customary regulatory approvals, including a Hart-Scott-Rodino review in the US.
Moelis & Company acted as financial advisor to Lundbeck, while Cravath, Swaine & Moore acted as legal advisers. For Chelsea Therapeutics, Deutsche Bank Securities and Torreya Capital acted as financial advisors, while Morgan, Lewis & Bockius acted as legal advisers.
Image: Lundbeck headquarters in Valby, Denmark. Photo: courtesy of H Lundbeck A/S.