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A flurry of activity
COPENHAGEN—Danish drugmaker H. Lundbeck A/S has been busy in recent weeks, buying Danish company NeuronIcon for an undisclosed sum and striking a research deal with scientists specializing in neurology at the University of Aarhus, where NeuronIcon was conceived, and forging a deal to buy U.K.-based LifeHealth Ltd. for $147 million, expanding its interest in Xenazine, a new treatment for Huntington's disease.
The flurry of activity spotlights Lundbeck's strategic shift toward neurological conditions as the patent expiration date for the company's depression drug Lexapro approaches in 2012. The company's new technology centers on brain disorders that trigger the elimination of nerve cells.
Through the acquisition of NeuronIcon, Lundbeck will gain ownership of technologies that may lead to a breakthrough in the treatment of brain damage following strokes or similar events. NeuronIcon was founded by scientists at the University of Aarhus and is based on research conducted there and at the University of Berlin. The scientists have made the world's first discoveries of how the body's own protein Sortilin kills nerve cells if activated in special situations that arise in connection with disorders such as stroke, spinal cord injuries and Alzheimer's and Parkinson's diseases.
According to Kasper Riis, a Lundbeck spokesman, the acquisition of NeuronIcon provides Lundbeck with opportunities to develop new therapies for acute brain damage after strokes or skull fractures, areas in which there is presently a great need for effective treatment options.
"Due to this lack of treatment options, patients often have to live with serious disabilities and strongly reduced quality of life, but new pharmaceuticals would change this situation," Riis adds.
Jan Egebjerg, divisional director of Lundbeck's biologic research unit, points out that by accessing NeuronIcon's know-how and technology, Lundbeck will get a better understanding of what it will take to avoid cell death.
"The trick is to avoid the activation of Sortilin, and Lundbeck has special expertise in controlling the interaction of molecules in the body," says Egebjerg. "We will now need to identify compounds that can prevent such activation, and in the course of a few years we will hopefully have the first pharmaceutical candidate in this area."
According to Riis, the acquisition is the result of Lundbeck's intensified collaboration with universities in Denmark and abroad. Having had an ongoing relationship with NeuronIcon, Riis said it was the appropriate time to secure rights to the technologies on a longer-term basis.
"We have been working together with them for some years now," Riis points out. "They have been doing the research and the biology, and we have been trying to take those findings and interpret into our system and our experience looking at how we can build upon that knowledge and identify the right substances."
Riis says Lundbeck hasn't disclosed financial terms of its deal for NeuronIcon, but adds that the terms of the deal with the University of Aarhus give Lundbeck certain rights to any new discoveries made over the next three years.
According to Anders Nykjaer, chief executive officer and co-founder of NeuronIcon, The deal with Lundbeck opens up new opportunities for his company.
"We have been very happy with our collaboration with Lundbeck these past few years. Lundbeck has the expertise to ensure the successful commercial utilization of NeuronIcon's discoveries in a number of disabling psychiatric and neuro-degenerative disorders," says Nykjaer.
Lundbeck's other major investment, the purchase of LifeHealth, will see Lundbeck acquire the rights to a unique chorea treatment. The LifeHealth deal is an all-cash transaction valuing LifeHealth at $147 million.
Following the purchase of Ovation Pharmaceuticals earlier this year, the company will take control of Xenazine, which is the only U.S. Food and Drug Administration (FDA)-approved product for patients suffering from chorea associated with Huntington's disease. Xenazine was launched in the U.S. last year, where between 20,000 to 25,000 patients suffer from the disease.
According to Ulf Wiinberg, president and CEO of Lundbeck, the deal "strengthens Lundbeck's U.S. platform and materially improves the earnings outlook in the U.S." LifeHealth owns approximately 25 percent of the sales in the U.S. and Canada of Xenazine, and about 50 percent of non-North American sales of the product to distributors into the territories.
Wiinberg added that the company has high hopes for Xenazine and said it wants to continue the development of the treatment.
"We are getting control of a drug with very large potential," Wiinberg told Reuters, adding that the company expects Xenazine annual sales to reach $250 million from 2012 to 2015. Lundbeck will have exclusive rights until 2016.
However, Lundbeck isn't necessarily measuring success in dollars and cents, though that would follow. Ultimately, it comes down to helping patients suffering with the effects of stroke, Alzheimer's and Parkinson's diseases, Riis says.
"If we can one day provide new effective medicines for patients based on these technologies, then clearly the agreements will have been a success," says Riis.