On Monday, Longboard Pharmaceuticals Inc (NASDAQ:LBPH) was downgraded from Buy to Neutral by a B.Riley analyst, despite an increase in the price target to $60 from $45. The adjustment follows Longboard's announcement of a definitive agreement to be acquired by Lundbeck for approximately $2.6 billion, equivalent to $60 per share. This acquisition price represents a 77% premium over Longboard's 30-day volume-weighted average stock price as of September 30, 2024.
The boards of directors for both Longboard and Lundbeck have given unanimous approval to the transaction, which is anticipated to finalize in the fourth quarter of this year. The acquisition is regarded as reasonable by the analyst, especially considering Longboard's unique approach to its pivotal program targeting developmental and epileptic encephalopathies (DEEs), making it the first company to use a basket-style format for such a program.
Longboard's strategy aims to expand its market reach beyond Dravet syndrome (DS) and Lennox-Gastaut syndrome (LGS), potentially tapping into a market twice the size of the DS and LGS space alone. During Lundbeck's conference call, management indicated that the acquisition price is about 1.5 times the estimated peak sales for Longboard, which is consistent with premiums paid for similar pre-phase III assets.
The analyst agrees with Lundbeck's management that Longboard's generated data has been promising. The acquisition is seen as a strategic move by Lundbeck, considering the de-risked profile of Longboard's program and its potential market expansion. The closing of this deal is set to mark a significant milestone for Longboard Pharmaceuticals as it joins forces with Lundbeck.
In other recent news, Lundbeck has reached an agreement to acquire Longboard Pharmaceuticals in a transaction valued at approximately $2.6 billion. The acquisition is expected to enhance Lundbeck's neuro-rare disease portfolio with the addition of Longboard's lead asset, bexicaserin, which is currently in phase III trials. Bexicaserin, a treatment for seizures associated with Developmental and Epileptic Encephalopathies (DEEs), has received Breakthrough Therapy Designation from the U.S. FDA.
Longboard has also initiated a global Phase 3 clinical trial for bexicaserin. The drug has been granted both Breakthrough Therapy and Orphan Drug designations by the FDA, which could potentially expedite its development and review process. Analyst firms, including H.C. Wainwright, Baird, and Truist Securities, have expressed confidence in Longboard's growth prospects, maintaining positive ratings for the company.
These recent developments highlight the ongoing efforts of Lundbeck and Longboard to address the significant unmet needs in epilepsy treatment, with a focus on enhancing their portfolios and advancing clinical trials.
InvestingPro Insights
To complement the analysis of Longboard Pharmaceuticals Inc's (NASDAQ:LBPH) acquisition by Lundbeck, InvestingPro data offers additional context to the company's financial position. According to InvestingPro Tips, Longboard holds more cash than debt on its balance sheet, and its liquid assets exceed short-term obligations. These factors likely contributed to making the company an attractive acquisition target for Lundbeck.
The acquisition price of $60 per share aligns with InvestingPro's observation of a "significant return over the last week" and a "large price uptick over the last six months" for Longboard's stock. This reflects the market's positive reaction to the company's potential and the premium offered in the deal.
It is worth noting that prior to the acquisition announcement, InvestingPro data indicated that Longboard was not profitable over the last twelve months and analysts did not anticipate the company to be profitable this year. This context underscores the strategic nature of Lundbeck's acquisition, focusing on Longboard's promising pipeline rather than its current profitability.
For investors seeking a deeper understanding of Longboard Pharmaceuticals and similar companies in the biotech sector, InvestingPro offers 12 additional tips, providing a comprehensive view of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.