Lundbeck to acquire Longboard for $2.6B

Danish drugmaker Lundbeck is making a significant move into the biotechnology sector by agreeing to acquire Longboard Pharmaceuticals for $2.6 billion. This acquisition, unveiled on Monday, entails Lundbeck paying $60 in cash for each outstanding share of Longboard, a 54% premium over the biotech's stock price as of last Friday. The transaction is anticipated to be completed by the end of the year.

If the acquisition is successful, it will provide Lundbeck with a potential treatment for a range of rare brain disorders that involve seizures and developmental delays. These disorders, collectively known as developmental and epileptic encephalopathies (DEEs), encompass more than 20 types and impact approximately 220,000 individuals in the U.S. Notably, half of these patients currently lack an approved therapy.

Lundbeck's interest lies in Longboard's experimental drug, bexicaserin, which has recently entered late-stage clinical trials for Dravet syndrome. This drug is also being tested for effectiveness against Lennox-Gastaut syndrome, another type of DEE. Lundbeck is optimistic about bexicaserin's potential to address all DEEs. The company projects the drug could achieve peak annual sales of $1.5 billion to $2 billion.

Charl van Zyl, Lundbeck's CEO, described the acquisition as a transformative transaction that will significantly bolster the company's focus on neuro-rare conditions and drive growth well into the next decade. Lundbeck aims to launch bexicaserin by late 2028. This timeline is crucial, as the patent for Lundbeck’s top-selling antipsychotic medication, Rexulti, is set to expire in 2029. Other major Lundbeck products, such as Abilify Maintena and Trintellix, are also approaching the end of their patent protection.

To emphasize the long-term value of the acquisition, Lundbeck highlighted that bexicaserin has patent protection extending until 2041. The drug demonstrated compelling efficacy in mid-stage studies by enhancing a protein that releases GABA, a neurotransmitter that calms brain activity. This mechanism could be particularly beneficial for treating conditions marked by excessive brain cell excitement, such as various forms of epilepsy.

Longboard Pharmaceuticals was established in late 2020 as a spin-off from Arena Pharmaceuticals, an immune system specialist. Shortly after, Arena Pharmaceuticals was acquired by Pfizer for around $6.7 billion. Longboard started with an initial funding of $56 million and subsequently raised an additional $80 million through a public offering the following year.

This acquisition is occurring during a period of reduced activity in biopharmaceutical mergers and acquisitions. The third quarter saw the lowest level of major dealmaking since early 2022, as reported by BioPharma Dive. Furthermore, 2024 has yet to see a deal exceeding $5 billion, a milestone that had been reached at least once annually for the past seven years.

In summary, Lundbeck's acquisition of Longboard Pharmaceuticals positions the company to expand its portfolio with a promising treatment for rare brain disorders, potentially driving significant growth and maintaining its market position in the face of upcoming patent expirations.