H. Lundbeck A/S (Lundbeck) (CPH:LUN), a global pharmaceutical company specialised in brain diseases, and Abide Therapeutics Inc(Abide) announced on Monday the signing of a definitive agreement under which Lundbeck has agreed to acquire Abide.

Under the terms of the agreement, Lundbeck may pay USD250m upfront with a commitment to pay future development and sales milestones to the group of current owners of up to USD150m. This transaction is expected to be financed by Lundbeck's existing cash reserves.

Reportedly, this acquisition provides Lundbeck with a novel discovery platform and a US-based research hub.

According to Lundbeck, the acquisition of Abide provides it with a differentiated chemo-proteomic platform to discover new classes of drugs for a broad spectrum of brain diseases starting with those that harness the therapeutic potential of the endocannabinoid system. Abide's innovative R&D platform provides Lundbeck with a unique opportunity to strengthen its pipeline now and well into the future, putting Lundbeck in position to deliver multiple new and transformative treatments for brain diseases.

Abide has developed a world class platform to discover potent and selective serine hydrolase inhibitors, which are one of the largest and most diverse classes of enzymes found in nature, which include lipases, esterases, thioesterases, amidases, peptidases and proteasesi.

The lead molecule ABX-1431 is a potent selective inhibitor of the serine hydrolase monoacylglycerol lipase (MGLL) that potentiates endocannabinoid signalling to restore homeostatic balance in the central nervous system. It has the potential to address multiple indications in psychiatry and neurology and is initially being explored in clinical trials as a first-of-its-kind compound for the treatment of Tourette syndrome (exploratory phase IIa) and for neuropathic pain (phase I).

In addition to the clinical and pre-clinical programmes targeting MGLL, Abide has a rich pipeline of inhibitors targeting other serine hydrolases that may be pursued as future novel treatments to improve the quality of life for patients living with neurological and/or psychiatric disorders. The chemo-proteomic platform may also be further expanded to characterise other enzyme systems within the serine hydrolase family, leading to the development of additional active agents that modify enzyme function.

Upon completion of the closing of the acquisition, Abide's laboratory in La Jolla, California will become a US drug discovery hub for Lundbeck.

Credit Suisse and BofA Merrill Lynch acted as financial advisors, while Goodwin Procter LLP served as legal counsel to Abide. Baker McKenzie served as legal counsel to Lundbeck.

Also, the board of directors of Abide has unanimously approved the transaction. This transaction is expected to close during the second quarter of 2019, subject to the receipt of customary regulatory approvals, including expiration or termination of the waiting period under the Hart-Scott-Rodino Act in the US.

It is clarified that this transaction will not have any impact on Lundbeck's 2019 financial guidance range provided in February 2019. The expected operational costs related to Abide will be covered within the current guidance range for 2019.

Abide Therapeutics is a clinical-stage biopharmaceutical company focused on developing first-in-class drugs for serious diseases with significant unmet medical need.