Lundbeck Expands Neuro and Rare Disease Portfolio with $2.6B Longboard Acquisition

Lundbeck, a Danish pharmaceutical company, announced on Monday its acquisition of Longboard Pharmaceuticals, a specialist in neurology and rare diseases, for an equity value of $2.6 billion. The deal involves Lundbeck purchasing all outstanding shares of the California-based biopharma's common stock at $60 per share in cash. On a net cash and fully diluted basis, the total value of the transaction is around $2.5 billion. Both companies' boards of directors have given unanimous approval for the acquisition.

The acquisition is anticipated to be finalized in the fourth quarter of this year, contingent upon the tendering of at least a majority of Longboard's total outstanding voting shares. Additionally, the transaction is subject to regulatory clearances and other customary conditions.

Lundbeck's CEO, Charl van Zyl, described the acquisition as "transformative," stating that it will significantly contribute to Lundbeck's neuro-rare franchise and has the potential to drive growth for the company into the next decade. The primary focus of this acquisition is Longboard's leading asset, bexicaserin, an orally available and centrally acting superagonist of the 5-HT2C receptor. Bexicaserin is designed to mitigate the hyperexcitability that triggers seizures, with high specificity for the 5-HT2C receptor subtype, potentially reducing the safety concerns associated with other 5-HT2-targeting drugs.

Joon Lee, an analyst from Truist Securities, commented that the acquisition arrived earlier than anticipated and undervalues bexicaserin. Lee noted that while the outcome is favorable for shareholders, some value might have been overlooked. Lundbeck anticipates that bexicaserin could generate peak sales between $1.5 to $2 billion. The company plans to launch bexicaserin in the fourth quarter of 2028, viewing it as a cornerstone of its neuro-rare disease portfolio.

Bexicaserin is currently in late-stage development for seizures linked to developmental and epileptic encephalopathies (DEE), such as Dravet syndrome and tuberculosis sclerosis complex. Last month, Longboard initiated the Phase III DEEp SEA study for Dravet syndrome, aiming to evaluate the safety and efficacy of bexicaserin in approximately 160 patients aged between two to 65 years. The candidate has previously received the FDA's Breakthrough Therapy designation for DEE seizures.

Lee highlighted that the acquisition of Longboard signifies the growing interest in DEEs and rare epilepsies within the industry, which bodes well for companies like Jazz, Marinus, and Praxis, all of which have drugs either approved or under development for DEE. Van Zyl emphasized that bexicaserin meets a critical unmet need for patients suffering from rare and severe epilepsies, where effective treatment options are scarce.

In addition to bexicaserin, the acquisition will provide Lundbeck with access to an early-stage asset known as LP659. This asset is being evaluated for multiple neurological diseases and acts as a centrally modulating agent of the S1P receptor subtypes 1 and 5. LP659 has potential therapeutic benefits for conditions such as Parkinson's disease, Alzheimer's disease, multiple sclerosis, and lupus.

Overall, this acquisition represents a significant strategic move for Lundbeck, as it aims to strengthen its position in the neuro-rare disease market and expand its portfolio with promising new treatments for challenging neurological conditions.