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

Otsuka Holdings Co. agreed to pay H. Lundbeck A/S as much as $825 million to develop an experimental Alzheimer’s treatment. Lundbeck shares rose the most in more than four years in Copenhagen trading.

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. Tokyo-based Otsuka will get rights to the medicine, known as Lu AE58054, in the U.S., Canada, east Asia including Japan, major European countries and the Nordic region.

The agreement adds to a partnership between Otsuka and Lundbeck that began in November 2011 to develop and commercialize as many as five psychiatric drugs. The earlier deal could be worth as much as $1.8 billion to Otsuka. The companies won approval this month in the U.S. for a new formulation of the mood-stabilizing drug Abilify to treat schizophrenia.

“The global collaboration between Otsuka and Lundbeck continues to grow stronger,” Otsuka President Taro Iwamoto said in the statement.

The deal prompted Lundbeck to increase its sales forecast for 2013 today. The company now expects revenue of 14.4 billion kroner ($2.5 billion) to 15 billion kroner, while earnings before interest and taxes will total 1.9 billion kroner to 2.4 billion kroner, it said.

Shares Rise

Lundbeck rose as much as 12 percent, the biggest intraday gain since Feb. 9, 2009, and was up 9.9 percent at 109 kroner as of 2:18 p.m. The stock has gained 31 percent this year, while Otsuka has advanced 34 percent in Tokyo.

A late-stage trial of the drug will start this year and involve more than 2,500 patients, the companies said. Statistically significant improvement in cognition was observed in a mid-stage study, in which 278 patients with Alzheimer’s disease took Lu AE58054 in combination with donepezil, a generic version of Eisai Co.’s Aricept, for 24 weeks.

Detailed results from the study will be presented at a medical meeting in Boston in July, Otsuka and Copenhagen-based Lundbeck said. The drugmakers will share sales, development and marketing costs.

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. Biotie Therapies Oyj and GlaxoSmithKline Plc are among drugmakers also developing so-called 5-HT6 receptor antagonists.

Drug Setbacks

Progress toward new drugs for Alzheimer’s was dealt a setback last year when two late-stage candidates failed to show efficacy in clinical trials. Eli Lilly & Co.’s solanezumab, and bapineuzumab, from Pfizer Inc., Johnson & Johnson and Elan Corp., didn’t improve patients’ memory or thinking, though the drugmakers are pursuing ways to test the medicines in patients in earlier stages of the disease.

Without treatment breakthroughs, the number of people in the U.S. of 65 years of age and older whose memories and personalities are claimed by the disease will more than double to 13.8 million in 2050, according to a report released this month by the Alzheimer’s Association.

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.

(Updates with previous Alzheimer’s drug failures in 10th paragraph.)
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