The Danish are coming!

Lundbeck establishes U.S. footprint with $900 million purchase of Ovation Pharmaceuticals

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COPENHAGEN—Danish drugmaker H. Lundbeck A/S in February reached an agreement to purchase Ovation Pharmaceuticals, a specialty pharmaceutical company focusing on central nervous system disorders, for $900 million, a deal that Lundbeck spokesman Mads Kronborg says will give the drugmaker access to the U.S. commercial market.

Under terms of the agreement, Deerfield, Ill.-based Ovation would receive up to $900 million, with $300 million of that contingent on whether its epilepsy drug candidate, Sabril, is approved. An FDA advisory panel has recommended that the agency approve Sabril as a second-line treatment in adults, despite the potential risk of irreversible vision loss. The acquisition, which still needs to clear antitrust law, is expected to close this month, according to Lundbeck. The boards of both companies already have approved the transaction.

"With this acquisition, we have a commercial platform in the U.S.," Kronborg says. "We don't have to build one from the ground up, which has inherent risks."

Ovation will operate as a wholly-owned subsidiary of Lundbeck and, at some point, may take on the company name, according to Kronberg. Ovation employs 283, including a sales force of 68 and an experienced management team that Kronborg said will stay in place after the deal is finalized.

"This purchase was not cost-driven," he says. "We were looking at gaining innovation, and part of that is the people within the organization."

Kronborg says Ovation's pipeline was attractive to Lundbeck, and adds that the companies are a good fit because both have a strong emphasis on diseases that affect the central nervous system (CNS). Ovation currently boasts a portfolio of 20 pharmaceutical products available in 85 counties, including recently launched Xenazine for chorea, the movement disorder associated with Huntington's disease; Tranxene for anxiety disorders; Nembutal for acute convulsive disorders; Cogentin for Parkinson's disease; and Desoxyn for attention deficit-hyperactivity disorder.

Lundbeck's acquisition of Ovation also could bolster its aging pipeline, replacing the sales of its antidepressant Cipralex/Lexapro, which faces patent expiration in major markets starting 2012, Ulf Wiinberg, the company's chief executive said in a conference call.

"In terms of replacing Lexapro, this goes a long way and it could well be that this will be the replacement ... it definitely goes a very long way towards achieving that," Wiinberg says.

For Ovation, the deal is an exciting opportunity for the company and its employees, Jeffrey S. Aronin, Ovation president and CEO, said in a statement.

"We've succeeded in achieving our mission of building a strong, fast growing business by developing important medications for unmet medical needs of severely ill patients—and Lundbeck shares that commitment," says Aronin.

Ovation spokeswoman Sally Benjamin Young agrees that the companies' commercial pipelines are complimentary.

"Lundbeck has strong R&D capabilities in CNS and a strong portfolio of products on the market and in development to address CNS disorders. Ovation brings Lundbeck a profitable portfolio of 19 products that are currently marketed in various countries around the world," Young says. "Ovation fulfills Lundbeck's strategic goal of building a commercial infrastructure in the U.S., in addition to bringing late-stage clinical development, commercialization on launch expertise and experience in Phase IV clinical programs."

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