Lundbeck to pay up to $1.8B to Otsuka under global psychiatric and neuroscience products accord

Danish CNS drug specialist Lundbeck A/S (LUND: DC) and Japan’s Otsuka Pharmaceutical (TYO: 4768) have entered into an agreement for the development and commercialization of up to five innovative psychiatric and neuroscience products worldwide.

Under what is called a “historic” deal signed in Japan today, Lundbeck will make an upfront payment of $200 million. Otsuka is eligible to receive a total of up to around $1.4 billion including upfront payment and development and regulatory milestone payments. With the addition of sales milestones in connection with products coming to the market, Lundbeck will pay up to about $1.8 billion to Otsuka.

The alliance includes two late stage compounds from Otsuka: aripiprazole depot formulation and OPC-34712, and up to three early stage projects from Lundbeck. Aripiprazole is already marketed as Abilify for schizophrenia, bipolar disorder and depression by Otsuka and US drug major Bristol-Myers Squibb, but original formulation is due to lose patent protection. Abilify generated sales of $4.5 billion in the 2010 financial year and is a big profit driver for Otsuka. Otsuka receives the rights to enter into co-development, and eventual co-promotion following approval, of up to three compounds after Phase IIb clinical trials.