Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Alder Biopharmaceuticals Is Rocketing Higher Today

By Cory Renauer – Updated Sep 16, 2019 at 1:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A generous buyout offer has given investors something to cheer about.

What happened

Shares of Alder Biopharmaceuticals (ALDR), a clinical-stage biopharmaceutical company, rocketed higher following a generous buyout offer from Lundbeck A/S. Investors thrilled about the huge premium Lundbeck is willing to pay have driven Alder's stock price 83.9% higher as of 12:55 p.m. on Monday.

So what

At the moment, Alder is waiting for the FDA to finish reviewing a new drug application for its lead candidate, eptinezumab, a CGRP inhibitor for the prevention of migraine headaches. If approved, eptinezumab will become the fourth drug of its class. Unlike the other injections, Alder's drug must be delivered through an inconvenient intravenous infusion.

Big rocket pointing toward the sky.

Image source: Getty Images.

Amgen (AMGN -0.39%), Eli Lilly (LLY 1.17%), and Teva Pharmaceuticals (TEVA 0.65%) are some of the biopharma industry's largest players, and all three have already begun jostling for a share of the migraine prevention space. That means Alder was facing an extremely difficult drug launch ahead.

Alder shareholders must have been thrilled with Lundbeck's offer to pay $18.00 in cash for each share of Alder plus a contingent value right (CVR) worth an additional $2.00 if eptinezumab earns marketing approval in the EU. Altogether, Alder shareholders could receive up to $20 per share, which works out to $1.95 billion.

Now what

Alder submitted an application for eptinezumab in February, and the FDA is expected to announce a decision on or before Feb. 21, 2020. Alder hasn't submitted an application to the European Medicines Agency (EMA) yet, so shareholders will have to wait for Lundbeck to submit one next year before becoming eligible to receive their $2.00 CVR.

It's hard to see how Lundbeck will realize a satisfying return on its investment while competing with Amgen, Eli Lilly, and Teva. At least that's no longer a problem Alder shareholders need to concern themselves with.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alder BioPharmaceuticals, Inc. Stock Quote
Alder BioPharmaceuticals, Inc.
ALDR
Teva Pharmaceutical Industries Limited Stock Quote
Teva Pharmaceutical Industries Limited
TEVA
$7.74 (0.65%) $0.05
Amgen Inc. Stock Quote
Amgen Inc.
AMGN
$225.99 (-0.39%) $0.88
Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$311.10 (1.17%) $3.60

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.