Lundbeck Agrees to Acquire Biopharm Company Chelsea TherapeuticsBy
H. Lundbeck A/S (Lundbeck) has agreed to acquire for $658 million Chelsea Therapeutics International, Ltd., a biopharmaceutical company based in Charlotte, North Carolina. In February 2014, Chelsea Therapeutics received FDA approval for its orphan drug, Northera (droxidopa), for treating symptomatic neurogenic orthostatic hypotension (NOH). It is indicated for the treatment of orthostatic dizziness, lightheadedness, or the “feeling that you are about to black out” in adult patients with symptomatic 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.
Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Chelsea, whereby Chelsea stockholders will be offered an upfront payment and contingent value rights (CVRs), representing a total potential consideration of up to $7.94 per share, or $658 million on a fully diluted basis. Consideration includes $6.44 per share in cash, or approximately $530 million on a fully diluted basis, as well as CVRs that may pay up to a total of an additional $1.50 upon achievement of certain commercial milestones related to Northera’s commercial performance in the period 2015-2017. Lundbeck intends to acquire any shares of Chelsea not tendered into the tender offer through a merger for the same per share consideration as will be payable in the tender offer. The merger will be effected as soon as possible after the closing of the tender offer
Northera is expected to be launched in the second half of 2014 and will strengthen Lundbeck’s existing neurology franchise in the US, which currently includes: Onfi (clobazam), a drug to treat seizures associated with Lennox-Gastaut syndrome in people 2 years of age or older; Sabril (vigabatrin), an antiepileptic drug; and Xenazine (tetrabenazine), a drug to treat the involuntary movements (chorea) of Huntington's disease; and future products, such as desmoteplase and Lu AE58054 currently in clinical Phase III development.
The board of directors of Chelsea has unanimously approved the transaction. The transaction is expected to close in the third quarter of 2014, subject to the tender of a majority of Chelsea’s outstanding shares in the tender offer, and the receipt of customary regulatory approvals, including a Hart-Scott-Rodino review in the US. The terms and conditions of the tender offer will be described in the tender offer documents, which will be filed with the US Securities and Exchange Commission (SEC).
Droxidopa, the active ingredient in Northera, was initially developed by Dainippon Sumitomo Pharma Co., Ltd. (DSP) and first commercialized in Japan in 1989. Chelsea acquired global development and commercialization rights to droxidopa from Dainippon Sumitomo Pharma in 2006, excluding Japan, Korea, China and Taiwan.
See related story, “Finding the Niche in Orphan Drugs“