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UCB's Lectus Buy to Aid CNS Study

Zacks Equity Research

UCB (Other OTC:UCBJF.PK - News) recently announced that it has entered into a license and acquisition agreement with Lectus Therapeutics for the acquisition of the latter’s pharmaceutical assets. With this acquisition, UCB has taken over Lectus’s drug discovery and development programs, which are aimed at treating certain central nervous system (NYSE:CNS - News) disorders.

The drug discovery and development programs primarily focus on the use of Lectus’s proprietary LEPTICS technology used to identify compounds in a new area of chemical space. Thereby, the agreement also provides UCB with exclusive worldwide rights to commercialize products discovered from the use of the LEPTICS technology.

We believe that Lectus’s drug discovery and development programs will support UCB’s research efforts in the CNS field and add to its top-line growth, which amounted to €2,451 million in the first nine months of 2011. Strong growth of Cimzia, Vimpat, Neupro and Keppra helped boost revenues.

Cimzia, which is used for the treatment of Crohn’s disease (TSXV:CD.V - News) and rheumatoid arthritis (NYSE:RA - News) in the US, posted sales of €221 million in the nine months, reflecting an increase of 67% at constant exchange rates (TSXV:CER.V - News). Vimpat sales climbed 78% at CER to €154 million for the nine months. Vimpat is marketed as a treatment for partial-onset seizures. Neupro, which is used for the treatment of Parkinson’s disease (Toronto:PD.TO - News) and restless legs syndrome (:RLS), posted sales of €70 million, up 17%. The sales of another anti-epileptic drug Keppra increased by a mid-single digit percentage rate during the first nine months of 2011.

For 2011, UCB expects earnings to exceed €1.80 per share and revenues to surpass €3.1 billion.

We currently have a Zacks #3 Rank (short-term Hold rating) on UCB.

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