Lundbeck could get $825 million in further deal with Otsuka, for Alzheimer's drug condidate

Danish CNS specialist Lundbeck (LUN: CO) has entered a license and development agreement for its Lu AE58054, a selective 5HT6 receptor antagonist currently in development for the treatment of Alzheimer's disease, granting rights to the product in the USA, Canada, East Asia (including Japan) and major European countries and Nordic countries to Japanese drugmaker Otsuka Pharmaceuticals (TYO: 4578).

The news pushed Lundbeck’s shares 10.4% to 109.70 Danish kroner in early trading this morning, with investors seeing the deal as further evidence that the company can overcome the loss of patent protection on its former best-selling drug, the antidepressant Cipralex/Lexapro (escitalopram).

Under the terms of the deal, Lundbeck will receive from Otsuka an initial payment of $150 million upon signing. Both companies will share the sales, development, and commercialization costs. Lundbeck is also entitled to up to $675 million in regulatory and sales milestones. Additional specific financial terms of the agreement remain undisclosed.