Otsuka to Pay Lundbeck $825 Million for Alzheimer’s Drug

(Corrects amount in headline.)

Otsuka Holdings Co. (4578) agreed to pay H. Lundbeck A/S (LUN) as much as $825 million to develop an experimental Alzheimer’s treatment.

Otsuka will pay its Danish partner $150 million when the deal is signed, and as much as $675 million if Lundbeck meets regulatory and sales goals, the companies said in a statement today. In return, Tokyo-based Otsuka will get rights to the medicine in the U.S., Canada, east Asia including Japan, major European countries and the Nordic region, they said.

A late-stage trial of the drug, known as Lu AE58054, will start this year and involve more than 2,500 patients, the companies said. Results from a mid-stage study will be presented at a medical meeting in Boston in July, they said. The drugmakers will share sales, development and marketing costs, Otsuka and Copenhagen-based Lundbeck said.

Lu AE58054 targets 5-HT6 receptors in the areas of the brain associated with cognition, resulting in increased concentrations of acetylcholine and glutamate, chemicals that aid learning and memory processes. About 18 million people worldwide have Alzheimer’s disease, and the population may almost double to 34 million by 2025, according to the Geneva- based World Health Organization.

Lundbeck raised its sales forecast for 2013 as a result of the deal, and said today that it now expects revenue in a range of 14.4 billion kroner ($2.5 billion) to 15 billion kroner. Earnings before interest and taxes will total 1.9 billion kroner to 2.4 billion kroner this year, it said.

To contact the reporter on this story: Kristen Hallam in London at khallam@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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