The total offer comprises $18 per share up front plus a contingent value right (CVR) worth another $2 per share, payable on a European approval for Alder's lead drug candidate, eptinezumab. The same drug is currently undergoing FDA review, with a target PDUFA date of Feb. 21, 2020. An approval on or before that date would represent the fourth antibody targeting calcitonin gene-related peptide (CGRP) to reach the market.
The up-front portion of the deal represents a 79% premium to Alder's share price (NASDAQ:ALDR) of $10.06 at Friday's close. The significant commercial risk attached to the program had weighed on Alder's stock, and shares in the Bothell, Wash.-based firm have been in the doldrums for most of 2019, trading in or around its 12-month low of $8.39. Its stock surged as high as $18.50 during pre-market trading Monday and ended the day at the same price.
That risk now shifts onto the shoulders of Valby, Denmark-based Lundbeck. The Danish firm, noted Jefferies analyst Peter Welford, is "facing a commercial challenge to differentiate against big pharma muscle" – all the more so because eptinezumab employs a "less convenient" dosing schedule. It is administered once per quarter during a 30-minute infusion, whereas the currently approved antibodies are administered subcutaneously.
Lundbeck obviously entered the deal with its eyes wide open, and its senior director of corporate communication, Mads Kronborg, had an upbeat assessment of the acquisition. "The sun is shining in Copenhagen," he told BioWorld. "Not only is it Lundbeck's biggest deal, it's the biggest deal ever done by a Danish pharmaceutical company." Lundbeck has moved on the asset because of its large commercial potential – the market for anti-CGRP drugs is forecast to grow to $7 billion by 2027. "That's a big market – that's a growth market," he said. "One would think there's enough space in that market for a number of products, generally," he added.
J.P. Morgan analysts forecast peak sales of about $800 million in migraine prevention for eptinezumab. Lundbeck has not issued any sales forecasts, but its ambitions go beyond that estimate. "We believe this has blockbuster potential," Kronborg said.
Additional competition could come from Dublin-based Allergan plc's oral CGRP inhibitors, ubrogepant, which is also undergoing FDA review in the acute setting, with a December PDUFA date, and atogepant, which is undergoing a phase III trial as a preventive therapy. Biohaven Pharmaceuticals Inc., of New Haven, Conn., is pursuing a similar small-molecule strategy. It filed an NDA in the second quarter for rimegepant as an acute therapy and is due to report data from a phase II/III trial of a second oral CGRP inhibitor, vazegepant, in development for prevention and for acute treatment, before year-end.
Jefferies previously noted that clinicians anticipate that eptinezumab will be largely used in patients who fail other anti-CGRP antibodies or in emergency settings. The present program is focused on its preventive use, but a phase III trial of eptinezumab in the acute setting is due to begin later this year.
Its I.V. route of administration has advantages as well as disadvantages. "What that gives you is 100% bioavailability," Kronborg said. That, in turn, leads to a rapid effect – patients respond to the therapy within a day, he said.
Amgen Inc., of Thousand Oaks, Calif. and Novartis AG, of Basel, Switzerland, have made the early running in commercializing CGRP-directed antibodies, posting combined global sales of $77 million and $107 million for Aimovig (erenumab) in the first and second quarters of this year, respectively. Indianapolis-based Lilly overtook Teva Pharmaceutical Industries Ltd., of Petah Tikva, Israel, in the second quarter, posting $34 million in sales of its antibody, Emgality (galcanezumab), vs. $23 million for the latter firm's Ajovy (fremanezumab). Lilly's first-quarter total was just $14 million, whereas Teva reported $20 million for the same period.
Teva has gained an economic interest in eptinezumab after prevailing in a European patent dispute with Alder early last year. It stands to receive two milestones of $75 million each should eptinezumab pass the $1 billion and $2 billion sales thresholds, and it will also receive 5% to 7% in royalty payments on certain sales. Those obligations now fall to Lundbeck. "There is no change in that at all," Kronborg said.
The Amgen-Novartis partnership is currently subject to a legal dispute arising from a separate manufacturing agreement between Alder – ironically – and Sandoz, the generic drug arm of Novartis. That runs until 2023, but Lundbeck will now need to put in place alternative arrangements, unless the agreement between Amgen and Novartis unravel before then. "If the Amgen/Novartis collaboration agreement is dissolved, we expect Novartis could be interested in a standalone CGRP asset and Alder's strategic position would be enhanced," Difei Yang, analyst at Mizuho Securities USA noted earlier this year. For Alder, now read Lundbeck.
Boosting its pipeline
In addition to eptinezumab, Lundbeck is also picking up a second, albeit early stage, antibody development program focused on migraine. ALD-1910, which is currently undergoing IND-enabling studies, inhibits pituitary adenylate cyclase-activating polypeptide. It is also inheriting Alder's equity position in Vancouver, British Columbia-based Vitaeris Inc., which in-licensed rights to Alder's anti-interleukin-6 (IL-6) antibody, clazakizumab, now in phase III for preventing organ rejection, after Bristol-Myers Squibb Co. exited an earlier alliance five years ago. Melbourne, Australia-based CSL Ltd. has an option to acquire Vitaeris. (See BioWorld, Dec. 6, 2017.)
Lundbeck is looking to boost its pipeline from both internal and external innovation. Earlier this year, it acquired San Diego-based Abide Therapeutics Inc., for $250 million up front and up to $150 million more in development and sales milestones for a platform based on the discovery of serine hydrolase inhibitors for central nervous system disease. Last year, it acquired Oss, the Netherlands-based Prexton Therapeutics BV for €100 million (US$110 million) up front plus up to €805 million in milestones for a first-in-class metabotropic glutamate receptor 4 (mGluR4) agonist in phase II for Parkinson's disease. (See BioWorld, May 7, 2019, and March 19, 2018).
"We will continue to look at all sorts of deals and across all phases," Kronborg said.
After reaching a one-year low of DKK225.9 (US$33.30), during trading Monday, Lundbeck's stock (Copenhagen:LUN) ended the day at DKK235.1, a drop of 0.6% on its previous close.
Alder rose to prominence on the back of a yeast-based platform, which employed Pichia pastoris for rapid generation and production of antibodies. For at least some Alder investors, the deal represents a highly profitable exit. It raised $80 million in an IPO five years ago, which it priced at $10 per share. It grossed $149.5 million from its most recent share offering, in March, which it priced at $11.50 per share. An offering in 2017 was priced at $10 per share, but those who bought into the stock through share offerings in 2016 and 2015 have lost out – those transactions were priced at $23.35 and $44.50, respectively.