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Alder BioPharmaceuticals Shares Surge 80% on Acquisition News

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Shares of migraine treatment research firm Alder BioPharmaceuticals opened 84% higher today after the company announced that it has agreed to be acquired by H. Lundbeck for $1.95 billion.

Early this morning, clinical-stage biopharmaceutical company Alder BioPharmaceuticals Inc. (ALDR:NASDAQ), which is developing migraine treatments, and Danish global pharmaceutical company H. Lundbeck A/S (HLUKF:OTC Pink sheets), which specializes in brain diseases, announced a definitive agreement for Alder to be acquired by Lundbeck.

Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Alder, whereby Alder stockholders will be offered an upfront payment for $18.00 per share in cash, along with one non-tradeable Contingent Value Right (CVR) of $2.00 per share. The upfront cash consideration represents a 79% premium to Alder's shareholders based on the closing price on September 13, 2019, and an approximately 3% discount based on the 52-week high share price.

The non-tradeable CVR will be paid upon the approval by the European Commission of a Marketing Authorization Application in the European Union, through the centralized procedure. The terms of the CVR payment reflect the parties' agreement over the sharing of potential economic upside benefits from such approval. There is no assurance such approval will occur or that any contingent payment will be made.

Alder's Board of Directors unanimously approved the transaction, and the company will file a recommendation to shareholders recommending they tender their shares to Lundbeck. The transaction is expected to close in Q4/19 subject to customary closing conditions including the tender of more than 50% of all shares of Alder outstanding at the expiration of the offer and receipt of required regulatory clearances including a Hart-Scott-Rodino review in the U.S.

Alder is currently developing eptinezumab for the preventive treatment of migraine in adults. Migraine is a disabling neurological disease characterized by recurrent episodes of moderate to severe headache accompanied by nausea, vomiting and sensitivities to light and sound. More than 134 million people are estimated to experience migraine annually and it is estimated to be the second leading cause of years lived with disability among all diseases causing disability.

Eptinezumab is an investigational monoclonal antibody (mAb) that is administered as a quarterly 30-minute IV infusion. Eptinezumab was designed for immediate and complete bioavailability with high specificity and strong binding for suppression of calcitonin gene-related peptide (CGRP), a neuropeptide believed to play a key role in mediating and initiating migraines. If approved by the U.S. Food and Drug Administration (FDA), it will be the first IV CGRP therapy for migraine prevention. Alder submitted a Biologics License Application (BLA) to the FDA for eptinezumab in February 2019 and the FDA has set a Prescription Drug User Fee Act (PDUFA) action date of February 21, 2020. Alder is also presently developing ALD1910, a mAb designed to inhibit pituitary adenylate cyclase-activating polypeptide (PACAP) for migraine prevention.

Lundbeck asserts that through this acquisition it will continue to expand the range of brain diseases for which the company brings its leading and best-in-class therapies to patients, and that by acquiring Alder, it will further enhance its capabilities to deliver future biological innovations in brain diseases. Eptinezumab, together with ALD1910, could help establish Lundbeck as an emerging leader in migraine and other pain syndromes.

Adler's President and CEO Bob Azelby commented, "As a global leader in neuroscience research with products registered in more than 100 countries and a strong network of neurology specialists, Lundbeck is the ideal partner to advance Alder's mission of changing the treatment paradigm for migraine prevention. We believe this positions eptinezumab for a successful launch both in and outside of the U.S...Importantly, today's news provides Alder shareholders with significant and immediate cash value, as well as the ability to benefit further once eptinezumab is approved by the EMA. Looking ahead, we expect Lundbeck will leverage Alder's expertise in antibody development to explore additional indications for eptinezumab and continue the development of ALD1910."

Alder BioPharmaceuticals is headquartered in Bothell, Wash., and describes its business as a clinical-stage biopharmaceutical company focused on transforming migraine treatment through the discovery, development and commercialization of novel therapeutic antibodies.

H. Lundbeck is a global pharmaceutical company specialized in brain diseases based in Valby, Denmark. The company has operated for more than 70 years, and states that it has been at the forefront of neuroscience research. The firm employs approximately 5,500 employees in more than 50 countries. The firm generated revenue of $2.8 billion in 2018 and has research centers in Denmark and California and production facilities in Denmark, France and Italy.

Alder BioPharmaceuticals started the day with a market capitalization of about $841.4 million. The company has 83.64 million shares outstanding, and as of Friday, had a short interest of around 19.2%. The stock has a 52-week price range of $8.3918.88/share. This morning, ALDR shares opened much higher at $18.48 (+$8.42, +83.70%) over Friday's $10.06 closing price. The stock has traded on more than 40-times average volume today between $18.34-18.88/share and at present is trading at $18.56 (+$8.50, +84.49%).

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