Bay Area's Pharmacyclics Mulls Possible $18 Billion Sale; Johnson & Johnson,Novartis AG Interested

February 26, 2015
By Mark Terry, BioSpace.com Breaking News Staff

Rumors are spreading that Sunnyvale, Calif.-based Pharmacyclics, Inc. may be looking for a buyer, with unidentified sources telling Bloomberg Wednesday that Johnson & Johnson and Novartis AG may be interested.

Pharmacyclics markets Imbruvica (ibrutinib) for the treatment of chronic lymphocytic leukemia (CLL), Waldenström’s macroglobulinemia (WM) and Mantle cell lymphoma (MCL). Designated a breakthrough therapy by the U.S. Food and Drug Administration (FDA), Imbruvica is a first-in-class Bruton tyrosine kinase (BTK) inhibitor, which helps prevent B-cell activation. It appears to be particularly useful in the treatment of fast-growing cancers.

It is estimated that Pharmacyclics could sell for $17 to $18 billion. At close of trading day Tuesday the company had a market capitalization of about $14 billion. On May 29, 2014 company shares sold for $85.85. It rose to a high Wednesday Feb. 25 of $221.63 and is currently selling for $217.22.

Imbruvica comes in a pill form and costs about $100,000 a year. It is noted for fewer side effects of typical chemotherapy and patients can use it for an extended period of time. It is projected to bring in $4.2 billion in sales in 2019 according to analysts.

The drug “certainly has the potential of Gleevec-like revenue,” said Brian Druker, director of the Knight Cancer Institute at Oregon Health & Science University, in a statement. “It’s a big deal and the responses have been impressive.” Gleevec is a blockbuster cancer drug marketed by Novartis AG.

Pharmacyclics acquired Imbruvica in 2006 when it acquired a portfolio of drugs for $2 million in cash and 1 million in shares. “It is one of the major advances in CLL treatment in the past couple of years,” said Jae Park, a leukemia physician at Memorial Sloan Kettering Cancer Center, in a statement. “It is not a cure, but it is relatively easily tolerable.”

The drug is currently approved for treatment of four different blood cancers and the company expects to add one or more every year. It has a partnership with AstraZeneca PLC to develop the drug for immuno-oncology treatments. It also has a partnership with Johnson & Johnson ’s Janssen Biotech Inc. to manufacture Imbruvica.

“I don’t think this is a crazy valuation based on the peak sales of this thing,” said Morningstar Inc. analyst Stefan Quenneville in a note to investors. “I would call it a primarily one-asset company. It’s not surprising to see a buyout. It’s very clean and straightforward for a bigger company that can say, ‘We can do a better job with our sales force.’”

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