AbbVie is to pay $21bn to take full control of Pharmacylics, proving its M&A drive remains undaunted after the termination of its $54bn deal with rare drug specialist Shire last year.
The deal, expected to close in the middle of the year, comprises about 58% cash and 42% AbbVie common stock. AbbVie will pay $261.25 per share for the California biopharmaceutical company, bringing the total to $21bn.
This will substantially boosts AbbVie’s cancer drug pipeline and has surprised analysts, who had expected either J&J or Novartis to swoop on the company.
AbbVie, which relies heavily on its ageing $10bn a year auto-inflammatory drug Humira (adalimumab) has, since its split from Abbott in 2013, been looking for large merger deals that would re-stock its fairly sparse drugs pipeline.
Last year it looked as if Shire would fulfil this role as AbbVie was prepared to spend $54bn to acquire the Irish biotech – but at the eleventh hour the firm pulled out of the deal, citing new tax laws in the US that made the acquisition less attractive financially.
Deutsche Bank analyst Robyn Karnauskas said in a note to clients that the Pharmacyclics deal was ‘positive’ for AbbVie, predominately because of Pharmacyclics’ blood cancer treatment Imbruvica (Ibrutinib), which will help shore up sales once Humira’s patents start to fall from 2016. The firm also has three other main products currently in clinical trials.
AbbVie’s CEO Richard Gonzalez said: “Imbruvica is not only complementary to AbbVie’s oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of haematological malignancies.”
Pharmacyclics expects US sales of Imbruvica, which it co-markets with Janssen, to hit $1bn this year. By 2020, worldwide sales are forecast to reach $5.8bn.
Bob Duggan, chairman and chief executive officer, Pharmacyclics, said: “Team Pharmacyclics is honoured and enthusiastic to join the AbbVie organisation. We share a common purpose. Together and as one, our focus remains to create a remarkable difference for patient betterment around the world.”