March 5, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Chicago-based AbbVie announced today that it is acquiring Sunnyvale, Calif.-based Pharmacyclics . AbbVie will pay $261.25 per share in a mix of cash and equity for a total of about $21 billion.
“The acquisition of Pharmacyclics is a strategically compelling opportunity,” said Richard Gonzalez, chair and chief executive officer of AbbVie in a statement. “The addition of Pharmacyclics’ talented and innovative team will add enormous value to AbbVie. Its flagship product, Imbruvica, is not only complementary to AbbVie’s oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of hematologic malignancies and raised the standard of care for patients.”
In premarket trading, AbbVie shares dropped about 5 percent to $57. It is currently selling for $58.46. It one-year high was $69.71 on Dec. 5, 2014. Pharmacyclics stock is currently selling at $254.77. It has been on a fairly steady increase since May 29, 2014, when it was selling for $85.85.
Imbruvica has been approved by the U.S. Food and Drug Administration (FDA) for the treatment of three different types of blood cancer. Sales of Imbruvica in 2014 totaled $548 million. Analysts have projected 2015 sales of $1 billion.
Imbruvica has been approved for use in four indications to treat chronic lymphocytic leukemia, mantle cell lymphoma and Waldenstrom’s macroglobulinemia. It is the only drug to have received three Breakthrough Therapy designations by the FDA. It has been approved for use in more than 40 countries.
AbbVie’s blockbuster drug is Humira, used to treat arthritis, Crohn’s disease and other related illnesses. In 2014 Humira sales totaled $12.5 billion, more than 60 percent of AbbVie’s total revenue. The drug The drug loses patent protection in December 2016. However, the drug is a biologic, not a small-molecule drug, and although generic competition is likely, analysts don’t expect a generic competitor for Humira until 2019 or later.
Analysts note that the acquisition price is very high, with AbbVie paying about seven times more than Imbruvica’s peak sales, which were $6 billion. This indicates that “pharma wants big drugs and is willing to pay up, perhaps to accelerate growth and to ‘get a better multiple’ like biotechs,” said RBC Capital biotech analyst Michael Yee in a research note this morning. “There is scarcity value for drugs that ‘move the needle’ and those command a premium.”
“Team Pharmacyclics is honored and enthusiastic to join the AbbVie organization,” said Bob Duggan, Pharmacyclics’ chair and chief executive in a statement. “We share a common purpose. Together and as one, our focus remains to create a remarkable difference for patient betterment around the world.”
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Last week controversy erupted over the compensation package for Sanofi’s new CEO, Olivier Brandicourt, with several French government officials decrying the amount, calling it “incomprehensible.” Brandicourt could walk off with as much as $4.5 million in a “golden handshake” payment in addition to making $4.76 million a year. That base figure is comprised by a fixed annual salary of $1.36 million a year, which is supplemented by a performance-related bonus of between 150 to 250 percent, as well as stock options and performance shares.
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