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AbbVie adds to cancer portfolio with $9.8bn Stemcentrx deal

Continues to build its oncology business to lessen its reliance on Humira
AbbVie

AbbVie capped off a buoyant first quarter performance with a deal to buy Stemcentrx, the latest in a string of cancer-focused deals for the group.

The acquisition will give AbbVie access to Stemcentrx's pipeline of five drugs in clinical trials, including a lead candidate called rovalpituzumab tesirine (rova-T) for small cell lung cancer (SCLC) which is already in a pivotal phase II study.

SCLC accounts for around 15% of all lung cancers and is poorly addressed with current treatments, leading to speculation that it could achieve sales of up to $5bn if it makes it through development to market. AbbVie is working towards a possible launch in 2018 if the current phase II trial is a success.

The terms of the deal includes $5.8bn upfront - split $2bn in cash and the remainder in stock - with another $4bn in the offing for regulatory and commercial milestones. Cash on hand at Stemcentrx takes the total value of the company above $10bn - making this one of the largest-ever sales of a venture capital-backed biotech company.

AbbVie has made oncology a key focus for its business as it tries to reduce its reliance on top-selling immunology drug Humira (adalimumab), a $14bn brand that accounts for 60% its total turnover. With Humira showing signs of slowing down, AbbVie needs to bring forward new product franchises - including cancer and hepatitis C virus (HCV) - to maintain growth.

Last year, the company made a major bolt-on acquisition in oncology when it bought Pharmacyclics for $21bn, claiming ownership of fast-growing haematological cancer therapy Imbruvica (ibrutinib). Since then it has signed a series of other agreements to boost its cancer pipeline, including most recently a $685m license deal for an immuno-oncology drug developed by Argenx.

Stemcentrx's research focuses on the novel approach of blocking the actions of cancer stem cells, which are thought to be responsible for the spread of tumours around the body. Rova-T targets a protein called DLL3 that is found in high concentrations in SCLC and certain other tumour types such as large cell neuroendocrine carcinoma (LCNEC).

"The addition of Stemcentrx and its late-stage compound Rova-T provide AbbVie with a unique platform in solid tumour therapeutics and complement our leadership position in hematologic oncology," said AbbVie chief executive Richard Gonzalez.

The deal was announced as AbbVie reported an 18% increase in first-quarter sales to $6bn, with net profit rising from $1bn a year ago to $1.4bn.

A 15% increase in Humira sales drove the increase in revenues, along with a 79% rise in sales of HCV therapy Viekira Pak/Viekirax to $414m and a $381m contribution from Imbruvica.

Article by
Phil Taylor

29th April 2016

From: Sales

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