Lundbeck jumps after a tweak to a collaboration deal

H. Lundbeck A/S (OMX: LUN) surged in early trading after it announced a license and development agreement with and Otsuka Pharmaceutical Co., Ltd (TYO: 4578) for 5HT6 receptor antagonist Lu AE58054 which is being developed as a treatment candidate for Alzheimer's disease . Lundbeck will get 150 million USD upfront upon signing and possibly up to 675 million in regulatory and sales milestones in exchange for co-development and co-commercialization rights in the U.S., Canada, East Asia including Japan, major European countries and Nordic countries. The companies will share sales, development, and commercialization costs based on the agreement with further financial details remaining undisclosed.

Last year Lundbeck announced that a 24-week Phase II study in 278 patients suffering from moderate Alzheimer's disease met its primary endpoint of an improvement in cognitive performance as measured by the ADAS-cog (Alzheimer's Disease Assessment Scale-cognitive sub-scale). The drug was administered in combination with plus10mg/day donepezil, a commonly used acetylcholinesterase inhibitor, and was placebo controlled vs. donepezil alone. Data from the study will be presented at the Alzheimer's Association International Conference (AAIC) in Boston on 13-18 July 2013. Pivotal phase- III program involving over 2500 patients is expected to begin this year.

The deal has an impact on Lundbeck’s financial guidance for 2013. The company now expects revenue of 14.4-15 billion DKK and EBIT of 1.9-2.4 billion DKK this year. . A further two co-development and co-promotion deal for Lundbeck’s drugs are expected to follow from the cooperation of the two companies. Lundbeck’s stock is still up more than 8% for the day above 107 DKK having briefly touched above 110 DKK in early trading.