Denmark's Lundbeck will buy U.S. drug developer Alder BioPharmaceuticals in a deal valued at almost $2 billion.
Lundbeck, specializing in brain diseases such as Alzheimer's and depression, has sought acquisitions and partnerships as it faces patent expirations and competition from generic drugs.
Alder, whose board has unanimously approved the takeover, develops preventative treatments of migraine in adults and has submitted a Biologics License Application for its eptinezumab antibody to the FDA in February this year.
"The acquisition will accelerate and diversify Lundbeck's revenue growth starting in 2020 as well as enhancing our antibody process development capabilities," Lundbeck's chief executive, Deborah Dunsire, said in a statement on Monday.
Lundbeck said the deal, to be funded through cash and bank financing, would impact its full-year operating profit forecast as well as cashflow, depending on the timing of closing, which is expected in the fourth quarter of this year.
"The deal comes as no surprise. There are some patent expirations due on key products in the coming years, so they have to strengthen their product portfolio," Sydbank's senior analyst Soren Lontoft told Reuters.
"They have been missing late-stage products, and that is what they get with this acquisition," Lontoft added.
Shares in Lundbeck dipped 1.18% when they opened on Monday.
If the transaction, valued at up to $1.95 billion, is closed on Nov 1, 2019, the company expects transaction costs of about 200 million Danish crowns ($30 million) and integration and retention costs of 400-500 million.
In the same scenario, Lundbeck said it would pay two months of Alder's operating costs, seen at around 325-400 million Danish crowns.
Lundbeck expects to submit the eptinezumab antibody for regulatory approval in the European Union during 2020, and later in other regions China and Japan.
"With patent protection going into the 2030's, eptinezumab will be a significant and sustainable growth driver for Lundbeck," Dunsire said.
Lundbeck will buy the outstanding shares of Alder for an upfront payment of $18 per share and a further $2 to shareholders upon approval of eptinezumab by the European Medicines Agency.
The deal will not change its dividend policy, it added.