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CHTP - usually like to hold cheap CVR's - not this time (contra FURX)

Lundbeck to Acquire Chelsea Therapeutics
GlobeNewswire Chelsea Therapeutics
9 minutes ago
By acquiring Chelsea Therapeutics, Lundbeck gains the rights to Chelsea Therapeutics' recently FDA-approved product, NORTHERATM (droxidopa), which is expected to be launched later in 2014
NORTHERA is an orphan neurology opportunity with strong commercial and strategic fit with Lundbeck's existing U.S. neurology franchise
Chelsea stockholders are entitled to USD 6.44 per share in cash and CVRs that may pay up to USD 1.50, for a total potential consideration of up to USD 7.94 per share, or USD 658 million on a fully diluted basis
The offer provides Chelsea stockholders with immediate and certain upfront value as well as participation in potential commercial upside of NORTHERA
The transaction is expected to be cash accretive to Lundbeck in 2015 and earnings accretive in 2016
VALBY, Denmark and CHARLOTTE, N.C., May 8, 2014 (GLOBE NEWSWIRE) -- H. Lundbeck A/S (Lundbeck) and Chelsea Therapeutics International, Ltd. (Chelsea) (CHTP) today announced that the companies have entered into a definitive agreement under which Lundbeck will acquire Chelsea.

Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Chelsea, whereby Chelsea stockholders will be offered an upfront payment and contingent value rights (CVRs), representing a total potential consideration of up to USD 7.94 per share, or USD 658 million (approximately DKK 3.54 billion) on a fully diluted basis. The total potential consideration represents an attractive premium of 59% over the closing price of Chelsea shares on 7 May 2014.

Consideration includes USD 6.44 per share in cash, or approximately USD 530 million (approximately DKK 2.8 billion) on a fully diluted basis, as well as CVRs that may pay up to a total of an additional USD 1.50 upon achievement of certain commercial milestones related to NORTHERA's commercial performance in the period 2015-2017. The proposed upfront per-share price represents a premium of approximately 29% over Chelsea's closing price of USD $5.00 on 7 May 2014.

The terms of the CVR payments reflect the parties' agreement over the sharing of potential economic upside benefits from certain future net sales of NORTHERA as described in the CVR agreement and do not necessarily reflect anticipated sales of the product. There can be no assurance such levels of net sales will occur or that any or all of the contingent payments will be made.

Lundbeck intends to acquire any shares of Chelsea not tendered into the tender offer through a merger for the same per share consideration as will be payable in the tender offer. The merger will be effected as soon as possible after the closing of the tender offer.

The transaction will allow Lundbeck to leverage its expertise in rare neurologic disorders in the U.S. through the upcoming launch of NORTHERA, which was approved by the FDA on 18 February 2014 for the treatment of symptomatic neurogenic orthostatic hypotension (NOH). NORTHERA is the first and only therapy approved by the FDA that demonstrates symptomatic benefit in adult patients with NOH caused by primary autonomic failure (Parkinson's disease, multiple system atrophy and pure autonomic failure), dopamine beta hydroxylase deficiency and non-diabetic autonomic neuropathy. NORTHERA is expected to be launched in the second half of 2014 and will strengthen Lundbeck's existing neurology franchise in the U.S., which currently includes Onfi, Sabril and Xenazine, and ahead of potential future products like desmoteplase and Lu AE58054 currently in clinical phase III.

"I believe this offer represents an attractive offer to the stockholders of Chelsea and is consistent with Lundbeck's strategic and disciplined approach to acquisitions," said Ulf Wiinberg, President & Chief Executive Officer of Lundbeck. He continued, "The proposed strategic acquisition of Chelsea -- and the launch of its lead therapy, NORTHERA -- aligns with Lundbeck's core strengths in addressing rare and challenging neurological disorders. As a company committed to people living with brain disorders, we are uniquely positioned to make NORTHERA available to those who need it most."

Joseph G. Oliveto,President & Chief Executive Officer of Chelsea Therapeutics, stated, "This transaction provides attractive and certain upfront value to our stockholders, and enables them to participate in the potential commercial upside of NORTHERA. Lundbeck's expertise in commercializing rare disorder CNS products will enable a rapid and successful launch of NORTHERA into the U.S. market and ultimately will provide added benefit to patients suffering from NOH."

The transaction is expected to be financed by Lundbeck's existing cash reserves.

The board of directors of Chelsea has unanimously approved the transaction. The transaction is expected to close in the third quarter of 2014, subject to the tender of a majority of Chelsea's outstanding shares in the tender offer, and the receipt of customary regulatory approvals, including a Hart-Scott-Rodino review in the U.S. The terms and conditions of the tender offer will be described in the tender offer documents, which will be filed with the U.S. Securities and Exchange Commission (SEC).

Moelis & Company acted as financial advisor and Cravath, Swaine & Moore LLP provided legal advice to Lundbeck. Deutsche Bank Securities Inc. and Torreya Capital acted as financial advisors, and Morgan, Lewis & Bockius LLP provided legal advice to Chelsea.

Financial guidance

If closed, this acquisition of Chelsea will impact Lundbeck's financial guidance for 2014.

While the transaction is not expected to have a material positive impact on revenue in 2014, it is expected to be dilutive to both cash flow and EBIT for the year, and cash flow accretive in 2015. The expected impact on Lundbeck's profitability in 2014 will depend on the timing of the closing of the transaction. However, on a pro forma basis assuming the transaction is closed on 1 July 2014, Lundbeck expects to incur costs of approximately DKK 500 million in incremental costs related to the acquisition of Chelsea. Approximately half of the costs are related to amortization expenses.

Financial forecast 2014

DKK billion
2013
actual "Old" 2014
forecast Potential revision of
2014 forecast
Revenue 15.3 ~13.5 ~13.5
EBIT 1.6 0.5-1.0 0-0.5




Core EBIT 2.3 1.2-1.7 0.9-1.4
Important information

The tender offer described in this press release has not yet commenced. This press release is for informational purposes only, and it is neither an offer to purchase nor a solicitation of an offer to sell shares of Chelsea's common stock. At the time any such tender offer is commenced, Lundbeck will cause a new wholly-owned subsidiary, Charlie Acquisition Corp., to file a Tender Offer Statement, containing an offer to purchase, a form of letter of transmittal and other related tender offer documents with the SEC, and Chelsea will file a Solicitation/Recommendation Statement relating to such tender offer with the SEC. Chelsea's stockholders are strongly advised to read these tender offer materials carefully and in their entirety when they become available, as they may be amended from time to time, because they will contain important information about such tender offer that Chelsea's stockholders should consider prior to making any decisions with respect to such tender offer. Once filed, stockholders of Chelsea will be able to obtain a free copy of these documents at the website maintained by the SEC at www.sec.gov, or by directing a request to H. Lundbeck A/S, Attention: Investor Relations, Ottiliavej 9, DK-2500 Valby, Copenhagen, Denmark or to the Information Agent for the tender offer which will be named in the Tender Offer Statement. Copies of Chelsea's filings with the SEC may also be obtained free of charge at the "Investors" section of Chelsea's website at www.chelseatherapeutics.com.

Conference call

Today at 2.00 pm (CET), Lundbeck will be hosting a conference call for the financial community, find dial-in numbers below. You can listen to the call online at www.lundbeck.com under the investor section.

DK: [phone]
UK: [phone]
US: [phone]

About symptomatic neurogenic orthostatic hypotension (NOH)

It is estimated that 80,000 to 150,000 patients suffer from symptomatic NOH in the U.S. Symptomatic NOH is a chronic disorder that is caused by an underlying neurogenic disorder, such as Parkinson's disease, multiple system atrophy or pure autonomic failure. Symptoms of NOH may include dizziness, lightheadedness, blurred vision, fatigue, poor concentration, and fainting episodes when a person assumes a standing position. These symptoms can severely limit a person's ability to perform routine daily activities that require standing or walking for both short and long periods of time i, ii.

About NORTHERA (droxidopa)

NORTHERA is indicated for the treatment of orthostatic dizziness, lightheadedness, or the "feeling that you are about to black out" in adult patients with symptomatic NOH caused by primary autonomic failure (Parkinson's disease, multiple system atrophy and pure autonomic failure), dopamine beta hydroxylase deficiency and non-diabetic autonomic neuropathy.

The NORTHERA approval was granted under the FDA's accelerated approval program, which allows for conditional approval of a medicine that fills a serious unmet medical need, provided additional confirmatory studies are conducted. The package insert indicates that effectiveness beyond two weeks of treatment has not yet been demonstrated; therefore the continued effectiveness of NORTHERA in patients should be assessed periodically. A multi-center, placebo-controlled, randomized study, which is designed with the goal of definitively establishing the durability of the clinical benefits of NORTHERA, has been preliminarily agreed to with the FDA.

NORTHERA carries a boxed warning for supine hypertension. The most common ( > 5%) adverse events experienced in controlled studies are headache, dizziness, nausea, hypertension and fatigue. Please see NORTHERA full Prescribing Information for additional Important Safety Information at http://www.chelseatherapeutics.com.

IMPORTANT SAFETY INFORMATION