Shares of Alder Biopharmaceuticals (NASDAQ: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.
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.
Amgen (NASDAQ:AMGN), Eli Lilly (NYSE:LLY), and Teva Pharmaceuticals (NYSE:TEVA) 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.
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.