AbbVie Inc agreed to buy Pharmacyclics Inc in a US$21 billion deal after beating out Johnson & Johnson for control of a blockbuster blood cancer therapy that will help it expand in the lucrative area of oncology.
Under the terms of the transaction, AbbVie will pay US$261.25 per share comprised of a mix of cash and AbbVie equity, the two companies said in a statement yesterday.
The price is 39 percent higher than Pharmacyclics’ closing price on Feb. 24, the day before Bloomberg News reported that the company was considering a deal. The purchase would help AbbVie reduce its reliance on Humira, its best-selling rheumatoid arthritis treatment, while expanding into cancer therapy, one of the most promising areas of drug development.
It would gain control of Imbruvica, an easy-to-use pill that costs about US$100,000 a year, avoids certain serious side effects of chemotherapy and is already approved for four different blood cancer uses.
Pharmacyclics was nearing an agreement to be acquired by Johnson & Johnson, which was discussing a price of about US$250 per share, before AbbVie topped the offer at the last minute, a person with knowledge of the matter said.
The person asked not to be identified as the details are private.
Johnson & Johnson spokeswoman Amy Jo Meyer declined to comment.
Pharmacyclics had net income last year of US$86 million, according to data compiled by Bloomberg. However, sales of Imbruvica are expected to grow to US$3.56 billion in 2018 from US$492 million last year, according to an average of estimates by analysts surveyed by Bloomberg, as it is used in more types of cancer.
While Imbruvica overlaps with one of AbbVie’s top pipeline products, ABT-199, there should be room for both, Bloomberg Intelligence analyst Asthika Goonewardene said.
It might take until next year for ABT-199 to be approved, and while Imbruvica has shown itself to be a preferred drug for many patients, others might benefit from a different therapy, Goonewardene said.
“Given all this, having two dogs in the race may not be a bad thing,” Goonewardene said in an e-mail.
AbbVie said it expects about 58 percent of the deal to be paid in cash, 42 percent in stock and for it to be finalized mid-year.
AbbVie shares closed 1.1 percent higher at US$60.27 in New York.
Since splitting off from parent company Abbott Laboratories in 2013, AbbVie has not completed one of the megadeals that have tempted much of the rest of the drug industry.
It has tried. AbbVie and Shire PLC in October last year agreed to terminate a planned US$52 billion acquisition by AbbVie that would have redomiciled the drugmaker abroad and given it a lower tax rate.
AbbVie pulled its support for the transaction after proposed changes to US rules.
Pharmacyclics is partnered with Johnson & Johnson on Imbruvica. The drug could eventually be used to treat solid tumors.
Pharmacyclics also has a partnership with AstraZeneca PLC to develop the drug for use with a new type of oncology treatment that triggers the body’s immune system to attack tumors.
“We’re looking forward to continuing our collaboration with the team at AbbVie to further develop and commercialize this important therapy [Imbruvica],” Johnson & Johnson said in an e-mailed statement.
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