Danish drugmaker Lundbeck will buy La Jolla, CA-based Longboard Pharmaceuticals for $2.6 billion in cash, the companies said Monday morning, marking the largest biopharma M&A deal since July.
Neuroscience-focused Lundbeck will get access to a 5-HT2C superagonist known as bexicaserin. The experimental medicine just entered a Phase 3 last month that will include patients with Dravet syndrome, a severe type of epilepsy found in infancy, and other developmental and epileptic encephalopathies like Lennox-Gastaut syndrome.
The drugmaker also gets an S1P receptor modulator dubbed LP659 that is in Phase 1 and could be tested in multiple neurological diseases. But Lundbeck CEO Charl van Zyl told Endpoints News the company has “ascribed no value” to that asset.
Lundbeck projects a launch of bexicaserin in the last quarter of 2028 and global peak sales potential of up to $2 billion. Van Zyl highlighted bexicaserin’s blockbuster potential and said Lundbeck has “studied Longboard very carefully.”
“What we liked about it is its breakthrough designation from the FDA so it really has the differentiation potential in patient populations where there’s still very high unmet need,” the CEO said.
Longboard spun out of Arena Pharmaceuticals with $56 million in October 2020. It went public five months later. Pfizer then bought Arena for $6.7 billion in December 2021. On Jan. 25, Pfizer sold off its remaining stake in Longboard for $24.25 per share $LBPH.
Longboard will be bought for $60 per share, a 77% premium to the company’s 30-day volume-weighted average price. Its share price skyrocketed 50% to $58 in premarket trading. The deal is slated to close this quarter, and both boards have approved it, the companies said.
“When we look at the premiums, we are very much in a benchmark premium for assets and companies that are at this late stage in their development: Phase 3 ready. So we believe we have fundamentally not overpaid for this asset, but there might have been a competitor for sure,” van Zyl said. “We don’t know, and we will only know once clearance has been given.”
B Riley Securities analyst Kalpit Patel wrote in a Monday morning note that the price was “highly reasonable, particularly considering Longboard’s regulatory alignment for targeting a basket-style format for its pivotal program focused on DEEs (the first company to do so).”
The deal comes amid a relatively dull past few months for public biopharma M&A, with many of the recent deals falling below $1.3 billion. There has been no deal of $5 billion or higher yet in 2024.
Lundbeck itself has been relatively quiet on the acquisition front since its $1.95 billion Alder BioPharmaceuticals deal in September 2019. That led to a migraine drug approval a few months later for Vyepti.
“I don’t believe that we will stop here, but today we need to digest what we have, fundamentally make sure that we have a very smooth transition once the clearance has been given,” the CEO said. “But we will continue to scout as part of our process of continuing to look at what else we would bring into the long-term pipeline.”
Editor’s note: This story was updated to include details from an interview with Lundbeck CEO Charl van Zyl.