- By acquiring Chelsea Therapeutics, Lundbeck gains the rights to
Chelsea Therapeutics' recently FDA-approved product, NORTHERATM
(droxidopa), which is expected to be launched later in 2014
- NORTHERA is an orphan neurology opportunity with strong
commercial and strategic fit with Lundbeck's existing U.S.
neurology franchise
- Chelsea stockholders are entitled to USD 6.44 per share in cash
and CVRs that may pay up to USD 1.50, for a total potential
consideration of up to USD 7.94 per share, or USD 658 million on a
fully diluted basis
- The offer provides Chelsea stockholders with immediate and
certain upfront value as well as participation in potential
commercial upside of NORTHERA
- The transaction is expected to be cash accretive to Lundbeck in
2015 and earnings accretive in 2016
H. Lundbeck A/S (Lundbeck) and Chelsea Therapeutics International,
Ltd. (Chelsea) (Nasdaq:CHTP) today announced that the companies
have entered into a definitive agreement under which Lundbeck will
acquire Chelsea.
Under the terms of the agreement, Lundbeck will commence a
tender offer for all outstanding shares of Chelsea, whereby Chelsea
stockholders will be offered an upfront payment and contingent
value rights (CVRs), representing a total potential consideration
of up to USD 7.94 per share, or USD 658 million (approximately DKK
3.54 billion) on a fully diluted basis. The total potential
consideration represents an attractive premium of 59% over the
closing price of Chelsea shares on 7 May 2014.
Consideration includes USD 6.44 per share in cash, or
approximately USD 530 million (approximately DKK 2.8 billion) on a
fully diluted basis, as well as CVRs that may pay up to a total of
an additional USD 1.50 upon achievement of certain commercial
milestones related to NORTHERA's commercial performance in the
period 2015-2017. The proposed upfront per-share price represents a
premium of approximately 29% over Chelsea's closing price of USD
$5.00 on 7 May 2014.
The terms of the CVR payments reflect the parties' agreement
over the sharing of potential economic upside benefits from certain
future net sales of NORTHERA as described in the CVR agreement and
do not necessarily reflect anticipated sales of the product. There
can be no assurance such levels of net sales will occur or that any
or all of the contingent payments will be made.
Lundbeck intends to acquire any shares of Chelsea 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 be effected as soon as possible after the closing of the
tender offer.
The transaction will allow Lundbeck to leverage its expertise in
rare neurologic disorders in the U.S. through the upcoming launch
of NORTHERA, which was approved by the FDA on 18 February 2014 for
the treatment of symptomatic neurogenic orthostatic hypotension
(NOH). NORTHERA is the first and only therapy approved by the FDA
that demonstrates symptomatic benefit in adult patients with NOH
caused by primary autonomic failure (Parkinson's disease, multiple
system atrophy and pure autonomic failure), dopamine beta
hydroxylase deficiency and non-diabetic autonomic neuropathy.
NORTHERA is expected to be launched in the second half of 2014 and
will strengthen Lundbeck's existing neurology franchise in the
U.S., which currently includes Onfi, Sabril and Xenazine, and ahead
of potential future products like desmoteplase and Lu AE58054
currently in clinical phase III.
"I believe this offer represents an attractive offer to the
stockholders of Chelsea and is consistent with Lundbeck's strategic
and disciplined approach to acquisitions," said Ulf Wiinberg,
President & Chief Executive Officer of Lundbeck. He continued,
"The proposed strategic acquisition of Chelsea – and the launch of
its lead therapy, NORTHERA – aligns with Lundbeck's core strengths
in addressing rare and challenging neurological disorders. As a
company committed to people living with brain disorders, we are
uniquely positioned to make NORTHERA available to those who need it
most."
Joseph G. Oliveto,President & Chief Executive Officer of
Chelsea Therapeutics, stated, "This transaction provides attractive
and certain upfront value to our stockholders, and enables them to
participate in the potential commercial upside of NORTHERA.
Lundbeck's expertise in commercializing rare disorder CNS products
will enable a rapid and successful launch of NORTHERA into the U.S.
market and ultimately will provide added benefit to patients
suffering from NOH."
The transaction is expected to be financed by Lundbeck's
existing cash reserves.
The board of directors of Chelsea has unanimously approved the
transaction. The transaction is expected to close in the third
quarter of 2014, subject to the tender of a majority of Chelsea's
outstanding shares in the tender offer, and the receipt of
customary regulatory approvals, including a Hart-Scott-Rodino
review in the U.S. 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 (SEC).
Moelis & Company acted as financial advisor and Cravath,
Swaine & Moore LLP provided legal advice to Lundbeck. Deutsche
Bank Securities Inc. and Torreya Capital acted as financial
advisors, and Morgan, Lewis & Bockius LLP provided legal advice
to Chelsea.
Financial guidance
If closed, this acquisition of Chelsea will impact Lundbeck's
financial guidance for 2014.
While the transaction is not expected to have a material
positive impact on revenue in 2014, it is expected to be dilutive
to both cash flow and EBIT for the year, and cash flow accretive in
2015. The expected impact on Lundbeck's profitability in 2014 will
depend on the timing of the closing of the transaction. However, on
a pro forma basis assuming the transaction is closed on 1 July
2014, Lundbeck expects to incur costs of approximately DKK 500
million in incremental costs related to the acquisition of Chelsea.
Approximately half of the costs are related to amortization
expenses.
Financial forecast 2014
DKK billion |
2013 actual |
"Old" 2014 forecast |
Potential revision of 2014
forecast |
Revenue |
15.3 |
~13.5 |
~13.5 |
EBIT |
1.6 |
0.5-1.0 |
0-0.5 |
|
|
|
|
Core EBIT |
2.3 |
1.2-1.7 |
0.9-1.4 |
Important information
The tender offer described in this press release has not yet
commenced. This press release is for informational purposes only,
and it is neither an offer to purchase nor a solicitation of an
offer to sell shares of Chelsea's common stock. At the time any
such tender offer is commenced, Lundbeck will cause a new
wholly-owned subsidiary, Charlie Acquisition Corp., to file a
Tender Offer Statement, containing an offer to purchase, a form of
letter of transmittal and other related tender offer documents with
the SEC, and Chelsea will file a Solicitation/Recommendation
Statement relating to such tender offer with the SEC. Chelsea's
stockholders are strongly advised to read these tender offer
materials carefully and in their entirety when they become
available, as they may be amended from time to time, because they
will contain important information about such tender offer that
Chelsea's stockholders should consider prior to making any
decisions with respect to such tender offer. Once filed,
stockholders of Chelsea will be able to obtain a free copy of these
documents at the website maintained by the SEC at www.sec.gov, or
by directing a request to H. Lundbeck A/S, Attention: Investor
Relations, Ottiliavej 9, DK-2500 Valby, Copenhagen, Denmark or to
the Information Agent for the tender offer which will be named in
the Tender Offer Statement. Copies of Chelsea's filings with the
SEC may also be obtained free of charge at the "Investors" section
of Chelsea's website at www.chelseatherapeutics.com.
Conference call
Today at 2.00 pm (CET), Lundbeck will be hosting a conference
call for the financial community, find dial-in numbers below. You
can listen to the call online at www.lundbeck.com under the
investor section.
DK: +45 354 455 83 UK: +44 203 194 05 44 US: +1 855 269 2604
About symptomatic neurogenic orthostatic hypotension
(NOH)
It is estimated that 80,000 to 150,000 patients suffer from
symptomatic NOH in the U.S. Symptomatic NOH is a chronic disorder
that is caused by an underlying neurogenic disorder, such as
Parkinson's disease, multiple system atrophy or pure autonomic
failure. Symptoms of NOH may include dizziness, lightheadedness,
blurred vision, fatigue, poor concentration, and fainting episodes
when a person assumes a standing position. These symptoms can
severely limit a person's ability to perform routine daily
activities that require standing or walking for both short and long
periods of time i, ii.
About NORTHERA (droxidopa)
NORTHERA is indicated for the treatment of orthostatic
dizziness, lightheadedness, or the "feeling that you are about to
black out" in adult patients with symptomatic NOH caused by primary
autonomic failure (Parkinson's disease, multiple system atrophy and
pure autonomic failure), dopamine beta hydroxylase deficiency and
non-diabetic autonomic neuropathy.
The NORTHERA approval was granted under the FDA's accelerated
approval program, which allows for conditional approval of a
medicine that fills a serious unmet medical need, provided
additional confirmatory studies are conducted. The package insert
indicates that effectiveness beyond two weeks of treatment has not
yet been demonstrated; therefore the continued effectiveness of
NORTHERA in patients should be assessed periodically. A
multi-center, placebo-controlled, randomized study, which is
designed with the goal of definitively establishing the durability
of the clinical benefits of NORTHERA, has been preliminarily agreed
to with the FDA.
NORTHERA carries a boxed warning for supine hypertension. The
most common ( > 5%) adverse events experienced in controlled
studies are headache, dizziness, nausea, hypertension and fatigue.
Please see NORTHERA full Prescribing Information for additional
Important Safety Information at
http://www.chelseatherapeutics.com.
IMPORTANT SAFETY INFORMATION
|
WARNING: SUPINE
HYPERTENSION See full prescribing information for complete
boxed warning. Monitor supine blood pressure prior to and during
treatment and more frequently when increasing doses. Elevating the
head of the bed lessens the risk of supine hypertension, and blood
pressure should be measured in this position. If supine
hypertension cannot be managed by elevation of the head of the bed,
reduce or discontinue NORTHERA. |
CONTRAINDICATIONS
WARNINGS AND PRECAUTIONS
- Supine Hypertension: NORTHERA therapy may
cause or exacerbate supine hypertension in patients with NOH, which
may increase cardiovascular risk if not well-managed.
- Ischemic Heart Disease, Arrhythmias, and Congestive
Heart Failure: NORTHERA therapy may exacerbate
symptoms in patients with existing ischemic heart disease,
arrhythmias, and congestive heart failure.
- Hyperpyrexia and Confusion: Postmarketing
cases of a symptom complex resembling neuroleptic malignant
syndrome (NMS) have been reported in Japan with NORTHERA use.
Observe patients carefully when the dosage of NORTHERA is changed
or when concomitant levodopa is reduced abruptly or discontinued,
especially if the patient is receiving neuroleptics. NMS is an
uncommon but life-threatening syndrome characterized by fever or
hyperthermia, muscle rigidity, involuntary movements, altered
consciousness, and mental status changes. The early diagnosis of
this condition is important for the appropriate management of these
patients.
- Allergic Reactions: This product
contains FD+C Yellow No. 5 (tartrazine) which may cause
allergic-type reactions (including bronchial asthma) in certain
susceptible persons. Although the overall incidence of FD+C Yellow
No. 5 (tartrazine) sensitivity in the general population is low, it
is frequently seen in patients who also have aspirin
hypersensitivity.
ADVERSE REACTIONS
- The most common adverse reactions (greater than 5%) were
headache, dizziness, nausea, hypertension, and fatigue.
DRUG INTERACTIONS
- Administering NORTHERA in combination with other agents that
increase blood pressure (e.g., norepinephrine, ephedrine,
midodrine, and triptans) would be expected to increase the risk for
supine hypertension; Dopa-decarboxylase inhibitors may require dose
adjustments for NORTHERA.
USE IN SPECIAL POPULATIONS
- Clinical experience with NORTHERA in patients with severe renal
function impairment (GFR less than 30 mL/min) is limited; There are
no adequate and well controlled trials of NORTHERA in pregnant
women; Women who are nursing should choose nursing or NORTHERA; The
safety and effectiveness of NORTHERA in pediatric patients have not
been established; No overall differences in safety or effectiveness
were observed between subjects aged 75 years and older, and younger
subjects in clinical trials, but greater sensitivity of some older
individuals cannot be ruled out.
About Chelsea Therapeutics
Chelsea Therapeutics (Nasdaq:CHTP) is a biopharmaceutical
development company that acquires and develops innovative products
for the treatment of a variety of human diseases, including central
nervous system disorders. Chelsea acquired global development and
commercialization rights to droxidopa (L-DOPS), or NORTHERA, from
Dainippon Sumitomo Pharma Co., Ltd. in 2006, excluding Japan,
Korea, China and Taiwan. For more information about the Company,
visit www.chelseatherapeutics.com.
For the twelve months ended 31 December 2013. Chelsea reported
an EPS loss of (USD 0.24). Total operating expenses were USD 16.4
million. R&D expenses were USD 10.4 million. SG&A expenses
were USD 6.1 million. As of 31 December 2013, cash and cash
equivalents totaled USD 45.3 million.
Lundbeck contacts |
|
Investors: |
Media: |
|
|
Palle Holm Olesen |
Mads Kronborg |
Vice President, Investor Relations |
Director, Media Relations |
PALO@lundbeck.com |
MAVK@lundbeck.com |
+45 36 43 24 26 |
+45 36 43 30 00 |
|
|
Jens Høyer |
|
Specialist, Investor Relations |
|
JSHR@lundbeck.com |
|
+45 36 43 33 86 |
|
|
|
Chelsea contacts |
|
Investors: |
Media: |
|
|
David Pitts |
Chuck Burgess |
Argot Partners |
Abernathy MacGregor |
david@argotpartners.com |
CLB@abmac.com |
+1 212-600-1902 |
+1 212 371 5999 |
|
|
|
Liz Micci |
|
Abernathy MacGregor |
|
EDM@abmac.com |
|
+1 212 371 5999 |
About Lundbeck
H. Lundbeck A/S (LUN.CO) (LUN DC) (HLUYY) is a global
pharmaceutical company specialized in brain diseases. For more than
50 years, we have been at the forefront of research within
neuroscience. Our development and distribution of pioneering
treatments continues to make a difference to people living with
brain diseases. Our key areas of focus are alcohol dependence,
Alzheimer's disease, depression/ anxiety, epilepsy, Huntington's
disease, Parkinson's disease, schizophrenia and stroke.
Our approximately 6,000 employees in 57 countries are engaged in
the entire value chain throughout research, development,
production, marketing and sales, and are committed to improving the
quality of life of people living with brain diseases. Our pipeline
consists of several late-stage development programs and our
products are available in more 100 countries. We have research
centers in China, Denmark and the United States, and production
facilities in China, Denmark, France, Italy and Mexico. Lundbeck
generated revenue of DKK 15.3 billion in 2013 (EUR 2.0 billion; USD
2.7 billion).
Lundbeck's shares are listed on the stock exchange in Copenhagen
under the symbol "LUN". Lundbeck has a sponsored Level 1 ADR
program listed in the US (OTC) under the symbol "HLUYY". For
additional information, we encourage you to visit our corporate
site www.lundbeck.com.
Safe Harbor/Forward-Looking Statements
The above information contains forward-looking statements that
provide our expectations or forecasts of future events such as the
tender offer and transactions contemplated by the merger agreement,
new product introductions, product approvals and financial
performance.
Such forward-looking statements are subject to risks,
uncertainties and inaccurate assumptions. This may cause actual
results to differ materially from expectations and it may cause any
or all of our forward-looking statements here or in other
publications to be wrong. Factors that may affect future results
include interest rate and currency exchange rate fluctuations,
delay or failure of development projects, production problems,
unexpected contract breaches or terminations, government-mandated
or market-driven price decreases for our products, introduction of
competing products, our ability to successfully market both new and
existing products, exposure to product liability and other
lawsuits, changes in reimbursement rules and governmental laws and
related interpretation thereof, unexpected growth in costs and
expenses, the possibility that the transaction may not be
consummated or that the expected benefits of the transaction may
not materialize as expected, Lundbeck's and Chelsea's ability to
timely complete the transaction, if at all, or to, prior to the
completion of the transaction, if at all, satisfy all closing
conditions, the possibility that the merger agreement may be
terminated, and the impact of the current economic environment,
fluctuations in operating results, market acceptance of NORTHERA,
and other risks that are described in Chelsea's Annual Report on
Form 10-K for the year ended December 31, 2013 and in its
subsequently filed SEC reports. Neither Lundbeck nor Chelsea
undertakes any obligation to update these forward-looking
statements except to the extent otherwise required by law.
Certain assumptions made by Lundbeck are required by Danish
Securities Law for full disclosure of material corporate
information. Some assumptions, including assumptions relating to
sales associated with product that is prescribed for unapproved
uses, are made taking into account past performances of other
similar drugs for similar disease states or past performance of the
same drug in other regions where the product is currently marketed.
It is important to note that although physicians may, as part of
their freedom to practice medicine in the United States, prescribe
approved drugs for any use they deem appropriate, including
unapproved uses, at Lundbeck, promotion of unapproved uses is
strictly prohibited.
i Freeman R, Wieling W, Axelrod FB, et al. Consensus statement
on the definition of orthostatic hypotension, neurally mediated
syncope and the postural tachycardia syndrome. Clin Auton Res
2011;21:69-72
ii Freeman R. Clinical practice. Neurogenic orthostatic
hypotension. N Engl J Med 2008;358:615-624. 3. Goldstein DS, Holmes
C, Kaufmann H, Freeman R. Clinical pharmacokinetics of the
norepinephrine precursor L-threo-DOPS in primary chronic autonomic
failure. Clin Auton Res 2004;14:363-368.
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