AbbVie Inc. (NYSE:ABBV) shed $3.41 to $56.86 on news of its $21 billion acquisition of oncology play Pharmacyclics Inc. (NASDAQ:PCYC), a signal that shareholders are questioning whether the deal will fill AbbVie's revenue gap as the company looks to reduce its dependence on blockbuster Humira adalimumab.
When Abbott Laboratories announced plans in 2011 to spin out its branded marketed drugs and innovative drug pipeline, the company believed the newco, AbbVie, would drive high-single-digit sales growth starting in 2015 without the need for large acquisitions.The strategy depended on three pipeline programs in large indications to keep AbbVie on a growth trajectory even as patents for Humira begin to expire in December 2016.
One of the three programs, bardoxolone methyl for chronic kidney disease, was put on hold due to toxicity. The other two programs, in HCV and multiple sclerosis (MS), showed positive results in the clinic, but the evolution of the HCV and MS treatment landscape has since diminished their potential for commercial success. Harvoni ledipasvir/sofosbuvir from Gilead Sciences Inc. (NASDAQ:GILD) appears to be beating AbbVie's Viekira Pak in the HCV marketplace. And new oral drugs, in particular Tecfidera dimethyl fumarate from Biogen Idec Inc. (NASDAQ:BIIB) are winning in the MS marketplace (see BioCentury, July 21, 2014).
Humira is the largest selling biologic and accounts for over 60% of AbbVie's $12.5 billion in 2014 sales. However, biosimilar versions of the human mAb against tumor necrosis factor (TNF) alpha are in Phase III development by Amgen Inc. (NASDAQ:AMGN) and the Sandoz unit of Novartis AG (NYSE:NVS; SIX:NOVN).
AbbVie Chairman and CEO Richard Gonzalez said on a conference call that peak annual sales of blood cancer drug Imbruvica ibrutinib, Pharmacyclics' only marketed product, are estimated to exceed $7 billion. He said the drug's growth potential stems from additional indications in which it has "a very high probability of success." Pharmacyclics expects sales of the Bruton's tyrosine kinase (Btk) inhibitor that covalently binds to cysteine residue 841 to reach $1 billion this year (see BioCentury Extra, Jan. 13).
FDA approved Imbruvica for its fourth indication, Waldenstrom's macroglobulinemia (WM), in January. It is also approved to treat chronic lymphocytic leukemia (CLL) in patients with 17p deletion and to treat CLL in patients who have received one prior therapy, and has accelerated approval to treat mantle cell lymphoma (MCL) (see BioCentury Extra, Jan. 29).
Pharmacyclics shares Imbruvica's U.S. rights with the Janssen Biotech Inc. unit of Johnson & Johnson (NYSE:JNJ) under a 2011 deal; Janssen holds ex-U.S. rights to the drug. Gonzalez said AbbVie is "not assuming any fundamental change" to the agreement's terms.
AbbVie will acquire Pharmacyclics for $261.25 per share, with 58% in cash and the remainder in stock. AbbVie expects the deal to be accretive to revenue and earnings by 2017. Both companies' boards approved the deal, which is expected to close in mid-2015.
Morgan Stanley was AbbVie's financial advisor and Wachtell, Lipton, Rosen & Katz was its counsel. Centerview Partners and JPMorgan were Pharmacyclics' financial advisors and Wilson Sonsini Goodrich & Rosati its counsel.
Pharmacyclics gained $23.74 (10%) to $254.22 on the day. The company has gained $5 billion in market cap since Feb. 24, before rumors of an impending deal started to circulate (see BioCentury Extra, Feb. 26).
Mallinckrodt plc (NYSE:MNK) will acquire Ikaria Inc. (Hampton, N.J.) for $2.3 billion from an investor group led by private equity firm Madison Dearborn Partners.
Ikaria markets INOmax inhaled nitric oxide to treat hypoxic respiratory failure in term and near-term infants. The company also markets Lucassin terlipressin, a synthetic analog of lysine-vasopressin, outside the U.S. to treat Type I hepatorenal syndrome (HRS).
Mallinckrodt said the deal will strengthen its presence in hospitals. The company expects the acquisition, slated to close next quarter, to be accretive to Mallinckrodt's FY15 EPS by at least $0.23 per share.
Madison Dearborn acquired a majority stake in Ikaria in 2013 in a deal that valued the business at about $1.6 billion. Several of Ikaria's existing shareholders still held stakes after that deal (see BioCentury Extra, Dec. 26, 2013).
Madison Dearborn now holds a 52% stake in Ikaria; Arch Venture Partners and Venrock told BioCentury they still own shares. New Mountain Capital declined comment, and 5AM Ventures did not respond to inquiries.
Goldman Sachs was Mallinckrodt's financial advisor, Wachtell, Lipton, Rosen & Katz and Arthur Cox its legal advisors. Kirkland & Ellis was Ikaria's counsel.
Arrowhead Research Corp. (NASDAQ:ARWR) rose $0.43 to $7.94 on Thursday after it acquired the RNAi business of Novartis AG (NYSE:NVS; SIX:NOVN) for $10 million in cash and $25 million in Arrowhead stock.
The deal includes IP covering RNAi-trigger chemistry and intracellular targeting ligands that enhance activity of RNAi-triggers, a license to IP developed at Alnylam Pharmaceuticals Inc. (NASDAQ:ALNY) covering 30 specified gene targets, and three preclinical RNAi candidates.
The company declined to disclose the preclinical candidates or provide a timeline for starting clinical trials.
On a conference call, Arrowhead President and CEO Christopher Anzalone declined to discuss therapeutic areas the company plans to pursue, but noted that the 30 targets covered by the Alnylam license include several in oncology.
Novartis is eligible for undisclosed milestones and single-digit royalties.
FDA granted Fast Track designation to AXS-02 from Axsome Therapeutics Inc. (New York, N.Y.) to treat complex regional pain syndrome (CRPS). The oral, non-opioid candidate has Orphan designation in the U.S. and EU for CRPS. Axsome did not respond to requests for information about the compound and its phase of development.
Gary Burgess resigned as SVP of clinical research and CMO of Conatus Pharmaceuticals Inc. (NASDAQ:CNAT), effective April 2. The company did not name a successor.
Aura Biosciences Inc. (Cambridge, Mass.) hired Alison Lawton as COO, a newly created position. Lawton was COO at OvaScience Inc. (NASDAQ:OVAS).
Quanterix Corp. (Cambridge, Mass.) named Executive Chairman Kevin Hrusovsky CEO, following a stint as interim CEO. Hrusovsky succeeds Paul Chapman.
Tetraphase Pharmaceuticals Inc. (NASDAQ:TTPH) named Maria Stahl as SVP and general counsel, a newly created position. Stahl was SVP and general counsel at Idenix Pharmaceuticals Inc.
Perthera Inc. (McLean, Va.) named Andrew Mignatti CEO. Dendy Young, the company's co-founder and chairman, had been acting CEO since its inception in 2013.
The BioCentury 100 rose 185.74 to 7,092.82 on Thursday, driven by gains among oncology and specialty pharma stocks on news of the $21 billion acquisition of Pharmacyclics Inc. (NASDAQ:PCYC) by AbbVie Inc. (NYSE:ABBV). The deal signals pharmas' continued appetite for such companies and willingness to pay premium prices to replenish their pipelines.
Oncology company Puma Biotechnology Inc. (NYSE:PBYI) jumped $36.21 (18%) to $243.17, while gene therapy play bluebird bio Inc. (NASDAQ:BLUE) added $12.11 (12%) to $112.17.
Pulmonary company Vertex Pharmaceuticals Inc. (NASDAQ:VRTX) rose $6.91 to $126.96, immune disease play Receptos Inc. (NASDAQ:RCPT) gained $13.19 to $141.19, and cancer drug developer Merrimack Pharmaceuticals Inc. (NASDAQ:MACK) added $0.70 to $12.48.
The closely watched CAR T sector also made gains. Juno Therapeutics Inc. (NASDAQ:JUNO) rose $2.03 to $52.03 and Kite Pharma Inc. (NASDAQ:KITE) picked up $1.78 to $64.97.
Aura Biosciences Inc. (Cambridge, Mass.) raised $21 million in a series B round led by Advent Life Sciences. New investors Chiesi Ventures, Ysios Capital and Alexandria Venture Investments also participated, as did existing investors Li-Cor Biosciences (Lincoln, Neb.) and Henri Termeer, former president and CEO of Genzyme Corp.
Aura expects to start a clinical trial by YE15 of lead candidate AU011 to treat rare ocular cancers. AU011 consists of viral nanoparticles that target tumor cells conjugated to Li-Cor's IRDye 700DX, a laser-activated cytotoxin (see BioCentury Nov. 14, 2011).
Advent's Dale Pfost, Ysios' Joel Jean-Mairet and A.M. Pappas' Art Pappas joined Aura's board.
Karolinska Development AB (SSE:KDEV) named Jim Van heusden CEO. Van heusden was a partner at Gimv from 2007 to 2013 before founding his own firm, bioskills bvba. Van heusden succeeds Bruno Lucidi. Terje Kalland, who was acting CEO, will return to his roles as deputy CEO and CSO.
Chinese Premier Li Keqiang told China's 12th National People's Congress in Beijing that the central government would stop setting maximum retail prices for most pharmaceuticals and delegate more power to provincial governments.
Li's statement is in line with a draft pricing plan released in November by the National Development and Reform Commission (NDRC), China's top economic planning agency under the State Council. The draft plan calls for scrapping price controls in favor of standard reimbursement amounts for each molecule and formulation, regardless of whether it is a local generic or a multinational off-patent drug. While companies could charge above reimbursed amounts, patients would pay the difference out of pocket (see BioCentury, Dec. 22, 2014).
Still unclear is how provincial tenders would work under the new system. One possibility is that tender results could determine the reimbursed price for off-patent drugs, experts told BioCentury in December. While particulars must be worked out, removing price controls signals that the government plans to open the healthcare sector gradually to more market-driven dynamics.
Li said the government would take "timely action to accelerate price reform," but provided no timeline for the changes.
Experts agree: antibiotic-resistant bacteria is a growing threat but the pipeline for novel antibiotics has virtually dried up. What's holding back new treatments to combat these infections? Jonathan Kfoury offers solutions to unleash a new wave of antibiotic development by fixing a broken pricing and reimbursement model in L.E.K.'s Executive Insights.