Lundbeck Acquires Longboard Pharma for $2.6B, Securing Key Neuro-Rare Drug

Lundbeck, a company specializing in neuroscience drugs, is expanding its portfolio to include treatments for epilepsy through the acquisition of Longboard Pharmaceuticals. This $2.6 billion deal will see Lundbeck acquiring Longboard, whose main drug candidate is undergoing late-stage clinical trials to treat a rare, inherited seizure disorder with limited treatment options.

According to the terms of the agreement, Lundbeck will pay $60 per Longboard share, which signifies a 54.2% premium over Longboard's stock price at the end of last week and a 77% premium over the average stock price for September. Longboard, based in La Jolla, California, went public in 2021 with shares initially priced at $16 each.

Longboard's leading drug candidate, bexicaserin, is being developed to treat developmental and epileptic encephalopathies (DEEs). This group of disorders includes rare epilepsies like Dravet syndrome and Lennox-Gastaut syndrome. Bexicaserin is an oral small molecule designed to act as an agonist for the 5-HT2C receptor, which plays a part in controlling seizure severity. This receptor is also targeted by Fintepla, a drug from UCB approved for treating seizures related to Dravet and Lennox-Gastaut syndromes, but Fintepla has a black box warning for cardiovascular risks. Bexicaserin aims to selectively target the 5-HT2C receptor without affecting other receptors that could trigger adverse effects.

Jazz Pharmaceuticals' Epidiolex, derived from cannabis, is approved for treating Dravet and Lennox-Gastaut syndromes and tuberous sclerosis complex without any black box warnings. Despite some setbacks in DEE treatments, such as Takeda Pharmaceutical's failed Phase 3 trials for their drug candidate soticlestat, Longboard has been promoting bexicaserin as a standout treatment for epilepsy. In January, Longboard released Phase 1b/2a data showing a median 53.3% reduction in seizure frequency in DEE patients over a 75-day treatment period, which led to significant increases in Longboard's stock price.

Bexicaserin's positive results have been consistent, with a Lundbeck investor presentation reporting a 57.7% reduction in countable motor seizures over nine months of open-label data. Longboard started a global Phase 3 trial in September for Dravet patients aged two and older, which is part of a broader program to evaluate the drug in around 480 patients with various DEEs.

In addition to bexicaserin, Longboard's pipeline includes LP659, a modulator of the S1P receptor, which may be useful in treating neuroinflammatory disorders. While a Phase 1 single-ascending dose study for LP659 has been completed, plans for a Phase 1 multiple-ascending dose study are pending resolution of a partial clinical hold. Both bexicaserin and LP659 were licensed from Arena Pharmaceuticals.

Lundbeck, headquartered in Copenhagen, is known for its neuroscience drugs, with its top-selling product being Rexulti, a medication for schizophrenia and depression that recently gained approval for treating agitation due to Alzheimer's disease. Rexulti generated about $661 million in revenue last year, marking a 16% increase from the previous year.

Lundbeck's executives have identified rare neurological diseases as a key area for expansion. They project launching bexicaserin in the fourth quarter of 2028, with potential peak sales estimated between $1.5 billion and $2 billion. Lundbeck's President and CEO, Charl van Zyl, expressed that this acquisition would significantly strengthen their neuro-rare franchise and drive growth into the next decade. The boards of both companies have approved the acquisition, which still requires the majority of Longboard's outstanding voting shares and regulatory approval. The transaction is expected to be completed by the end of this year.