Lundbeck to acquire Longboard Pharmaceuticals in a strategic deal, significantly enhancing its neuroscience pipeline

Lundbeck to acquire Longboard Pharmaceuticals in a strategic deal, significantly enhancing its neuroscience pipeline

·       The proposed acquisition represents a significant step forward in Lundbeck’s Focused Innovator strategy, adding a highly innovative and complementary product in late-stage development for Developmental and Epileptic Encephalopathies (DEEs) - an area of high unmet medical need

·       The acquisition will enhance and complement Lundbeck’s capabilities and presence within neuro-rare conditions

• The lead asset, bexicaserin, holds blockbuster potential and is in development for the treatment of DEEs in a program enrolling patients diagnosed with Dravet syndrome, Lennox-Gastaut syndrome, and other DEE syndromes
• Bexicaserin has shown encouraging anti-seizure effects to date in preclinical and clinical studies, with its next-generation superagonist mechanism specifically targeting 5-HT_2C receptors, supporting bexicaserin’s potential to offer a highly differentiated and best-in-class profile

·       A global phase III trial (DEEp SEA) evaluating bexicaserin for the treatment of seizures associated with Dravet syndrome was initiated in September 2024

·       Total transaction value of approximately USD 2.6 billion equity value and USD 2.5 billion net of cash (approximately DKK 17 billion). Funding will be through existing cash resources and bank financing

Valby, Denmark and La Jolla, California, USA, October 14, 2024. H. Lundbeck A/S (Lundbeck) and Longboard Pharmaceuticals, Inc (NASDAQ: LBPH) (Longboard) today announced an agreement for Lundbeck to acquire Longboard. Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Longboard common stock, whereby Longboard shareholders will be offered a payment of USD 60.00 per share in cash. The transaction is valued at approximately USD 2.6 billion equity value and USD 2.5 billion (approximately DKK 17 billion) net of cash, on a fully diluted basis.

The board of directors of both companies have unanimously approved the transaction.  The transaction is expected to close in the fourth quarter of 2024, subject to the tender of at least a majority of the total number of Longboard outstanding voting shares, receipt of required regulatory clearances, and other customary conditions.

Longboard is a clinical-stage biopharmaceutical company focused on developing novel, transformative medicines for neurological diseases. Its lead asset, bexicaserin, has shown encouraging anti-seizure reduction to date in preclinical and clinical studies, with its next-generation superagonist mechanism specifically targeting 5-HT_2C receptors, which support bexicaserin’s potential to offer a highly differentiated and best-in-class profile. Bexicaserin is now being evaluated in a global phase III clinical program (the DEEp Program).

“This transformative transaction will become a cornerstone in Lundbeck’s neuro-rare franchise, with a potential to drive growth into the next decade. Bexicaserin addresses a critical unmet need for patients suffering from rare and severe epilepsies, for which there are very few good treatment options available. With this acquisition, we continue to execute on our Focused Innovator strategy, transforming the lives of patients suffering from severe brain disorders," said Charl van Zyl, President and CEO of Lundbeck.

“Longboard was founded to transform the lives of people living with devastating neurological conditions. I am incredibly proud of what our team has achieved; delivering groundbreaking data with a differentiated and inclusive clinical approach to address the needs of a wide range of DEEs and obtaining Breakthrough Therapy designation,” stated Kevin R. Lind, President and Chief Executive Officer of Longboard. “I would like to thank the entire DEE community, in particular bexicaserin’s study participants and their caregivers as well as the advocacy groups, investigators, sites and coordinators for their support and partnership. Lundbeck’s remarkable capabilities will accelerate our vision to provide increased equity and access for underserved DEE patients with significant unmet medical needs.”

Strategic benefits

The acquisition of Longboard marks a strategic milestone for Lundbeck, enhancing and complementing our Focused Innovator strategy and advancing our goal of building a neuro-rare disease franchise.

Through the acquisition of Longboard, Lundbeck gains access to bexicaserin, a novel 5-HT_2C agonist in development for the treatment of seizures associated with DEEs, including Dravet syndrome, Lennox-Gastaut syndrome, and other rare epilepsies. This aligns with Lundbeck’s expertise in delivering innovative treatments and re-establishes our scientific and commercial leadership in rare epilepsies. Bexicaserin has entered a global phase III trial (DEEp SEA Study) evaluating bexicaserin for the treatment of seizures associated with Dravet syndrome in participants two years of age and older. The DEEp SEA Study is part of a broader DEEp Program (DEEp SEA, DEEp OCEAN and DEEp OLE) which is planned to take place across ~80 sites globally and include ~480 participants with a range of DEEs. Bexicaserin has received Breakthrough Therapy Designation (BTD) from the U.S. FDA and is set to become a cornerstone of Lundbeck’s new neuro-rare disease franchise. Recent nine-month open-label data further supports the de-risked nature of its 5-HT_2C mode-of-action, highlighting its superior target product profile.

The bexicaserin asset complements Lundbeck’s mid- to late-stage pipeline and diversifies revenue growth following the expected launch in the fourth quarter of 2028 and with a global peak sales potential estimated by Lundbeck between USD 1.5 - 2 billion.

Terms, closing conditions and financing

Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Longboard common stock, whereby Longboard shareholders will be offered a payment for USD 60 per share in cash. The cash consideration represents a 77% premium to the 30-day volume-weighted average price (“VWAP”) of shares of Longboard common stock as of September 30, 2024.

If the tender offer is consummated, Lundbeck will acquire any shares of Longboard common stock 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 occur as soon as practicable after the closing of the tender offer.

Lundbeck expects to fund the acquisition through existing cash resources and its existing bank financing facility. Following closing of the transaction, Lundbeck will focus on de-leveraging and leverage is expected to be in Lundbeck’s target range of <2.5x NIBD/EBITDA within 18-24 months.

The terms and conditions of the tender offer will be described in the tender offer documents, which will be filed with the U.S. Securities and Exchange Commission.

We expect to recognize integration costs in the amount of approximately USD 80 million (approximately DKK 550 million), which predominantly will impact 2024 and will be adjusted for in Adjusted EBITDA. Lundbeck’s financial guidance for 2024 is confirmed.