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Chelsea Therapeutics International Ltd. (Nasdaq: CHTP) stock soared 31.30% to $6.59 today (Thursday) after agreeing to be acquired by Danish pharmaceutical company H. Lundbeck in a deal valued at $658 million.
Under terms of the deal, shareholders of the Charlotte, N.C.-based development-stage biotech company will receive some $7.94 per share. Investors will get $6.44 in cash, plus contingent value rights (CVRs) that may pay up to $1.50 upon certain drug milestone achievements. The total package represents a healthy 59% premium over the closing price of CHTP on Wednesday, May 7.
Terms of the CVR payments are related to the performance of Chelsea's key drug Northera during the 2015-2017 time period. Northera is used to treat patients with neurogenic orthostatic hypotension (NOH), a rare and lingering type of low blood pressure.
Chelsea received accelerated U.S. Food and Drug Administration (FDA) approval for Northera on Feb. 18. The drug is scheduled to launch in the second half of 2014. It's the first and only therapy approved by the FDA that demonstrates symptomatic benefits in adult patients with NOH caused by primary autonomic failure (Parkinson's disease, multiple system atrophy, and non-diabetic autonomic neuropathy).
Northera is Chelsea's first approved drug. Also in its promising pipeline of products are potential treatments of rheumatoid arthritis, fibromyalgia, and intradialytic hypertension. But, it's Northera that lured Lundbeck to do a deal.
A global pharmaceutical company specializing in brain diseases, Lundbeck is headquartered in Valby, Demark. With Northera's rollout, Lundbeck can expand its presence and weight in the rare neurological disorders therapy sector in the United States.
Lundbeck expects the acquisition to be cash accretive in 2015 and earning accretive the year after. It's also consistent with Lundbeck's "strategic and disciplined approach to acquisitions" and represents an "attractive offer to Chelsea shareholders," according to Lundbeck's President and Chief Executive Officer Ulf Wiinberg.