Denmark's Lundbeck has agreed to buy Alder BioPharmaceuticals in a deal valued at almost $2 billion, hoping to reap profits from a potential blockbuster migraine drug.
The move comes as Lundbeck, which specialises in treatments for illnesses such as Alzheimer's and depression, is under pressure from patent expirations and competition from generics.
Alder, whose board unanimously approved a takeover pitched at a 79% premium to Friday's share price close, develops preventative treatments of migraine in adults.
It submitted a licence application for its eptinezumab antibody to the FDA in February.
Lundbeck expects the drug, used in intravenous infusion therapy, to be launched in the United States in the first half of 2020.
"The acquisition will accelerate and diversify Lundbeck's revenue growth starting in 2020 as well as enhancing our antibody process development capabilities," said Lundbeck Chief Executive Deborah Dunsire.
In a subsequent call with analysts, the CEO added that eptinezumab was a potential blockbuster drug, a term for popular drugs reaching annual sales of at least $1 billion.
Lundbeck shares fell 3% at Monday's market open, but were up 4.5% at 10:20 GMT following the call with analysts.
It is offering an upfront payment of $18 per Alder share, plus an additional $2 per share contingent upon approval of eptinezumab by the European Medicines Agency.
On Monday, Alder was trading more than 80% up, at roughly $18.40 per share.
Lundbeck said it expects the deal, to be funded through cash and bank financing, to close in the fourth quarter of this year.
Lundbeck, which bought U.S.-based research hub Abide Therapeutics in a $250 million deal May, will continue to look for new takeover and licensing opportunities as well as partnerships, Dunsire said.
Copenhagen-based Lundbeck, founded in 1915 as a trading company, began developing and producing pharmaceutical products in the 1930s. It is 70% owned by the Lundbeck Foundation, one of Denmark's biggest industrial foundations.
Roughly 39 million Americans suffer from migraine headaches, according to the Migraine Research Foundation.
Annual global drug sales to treat migraines could total $8.7 billion by 2026, according to the GlobalData analytics firm.
If the transaction, valued at up to $1.95 billion, is closed on Nov. 1, the company expects transaction costs of about 200 million Danish crowns ($30 million) and integration and retention costs of 400-500 million crowns.
In the same scenario, Lundbeck said it would pay two months of Alder's operating costs, seen at around 325-400 million crowns.
Lundbeck expects to submit the eptinezumab antibody for regulatory approval in the European Union during 2020, and later in China and Japan.