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Alder (ALDR) Stock Up on Acquisition Agreement With Lundbeck

Zacks Equity Research

Shares of clinical-stage biopharmaceutical company, Alder BioPharmaceuticals ALDR skyrocketed 83.9% after it announced an acquisition agreement with Danish pharmaceutical company, Lundbeck A/S, for $1.95 billion.

Notably, shares of the company have soared 80.5% in the year so far against the industry’s decline of 1.7%.

 

Per the agreement, Lundbeck will commence a tender offer for all outstanding shares of Alder for an upfront payment for $18.00 per share in cash, a 79% premium to the latter’s share price of $10.06 on Sep 13. Additionally, Alder’s shareholders will also receive one non-tradeable Contingent Value Right (CVR) that entitles them to an additional $2.00 per share upon a potential approval of pipeline candidate eptinezumab by the European Medicines Agency (EMA). Hence, the total potential consideration comes to $20 per share.

Alder’s board has unanimously approved the transaction and the deal is expected to close in the fourth quarter of 2019, subject to customary closing conditions.

We note that the company is developing eptinezumab, an investigational monoclonal antibody (mAb), for the preventive treatment of migraine in adults. Eptinezumab was designed for immediate and complete bioavailability with high specificity and strong binding for suppression of calcitonin gene-related peptide (CGRP). Alder had submitted a Biologics License Application (BLA) to the FDA for the candidate in February 2019 and the agency has set an action date of Feb 21, 2020. Per the company, a potential approval in the United States will make it the first IV CGRP therapy for migraine prevention. The company also expects to submit an application for the same to regulatory authorities in the European Union during 2020.

Moreover, Alder plans to initiate a phase III clinical study evaluating the same as a treatment for acute migraine in the second half of 2019.

Apart from eptinezumab, the company is also developing ALD1910, a mAb designed to inhibit pituitary adenylate cyclase-activating polypeptide (PACAP) for migraine prevention.

The addition of eptinezumab will broaden Lundbeck’s brain disease franchise. A potential approval and the U.S. launch of the candidate for preventive treatment of episodic and chronic migraine in 2020 will diversify Lundbeck’s portfolio. Moreover, Lundbeck will gain an early-stage antibody, ALD1910, against a separate target for migraine and other pain syndromes. The transaction is expected to be accretive to the core bottom line in 2023, assuming FDA approval in the first quarter of 2020 followed by regulatory approvals in other regions, including Europe.

Lundbeck is a global pharmaceutical company, which specializes in brain diseases with drugs like Rexulti (depression and schizophrenia), Brintellix (depression) and Abilify Maintena (schizophrenia). The acquisition of Alder will solidify Lundbeck’s position in the brain diseases space.

In May 2019, Lundbeck closed the acquisition of U.S. biotech Abide Therapeutics Inc, which enables it to develop new classes of drugs for a broad spectrum of brain diseases based on the latter’s world-class discovery platform. The acquisition added ABX-1431, a first-in-class MAG Lipase inhibitor explored in clinical trials as a first-of-its-kind compound for the treatment of Tourette Syndrome (exploratory phase IIa) and neuropathic pain (phase I), to Lundbeck’s pipeline.

While the migraine market holds potential and approval of late-stage candidate eptinezumab will be a significant boost for Lundbeck, competition is stiff in this space from the likes of Novartis NVS/Amgen AMGN’s Aimovig, Eli Lilly’s LLY Emgality, and Teva’s Ajovy, among others.

Alder currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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