Abbvie Wins Pharmacyclics

Just months after abandoning its $54 billion bid for specialty drug maker Shire, AbbVie is shelling out $21 billion for Sunnyvale, Calif.-based Pharmacyclics. The purchase furthers AbbVie’s ambitions in the field of hematological cancer and reduces its reliance on one major product.

The hefty price tag is the result of heated competition. “I’ve been through a lot of these, and I’d say this is one of the most competitive ones I’ve seen,” AbbVie’s CEO Richard A. Gonzalez said on a March 5 call with investors. Three companies were bidding against each other until the bitter end, he said. Indeed, just hours before the deal was announced, some media outlets reported that Johnson & Johnson had won out.

Pharmacyclics’s key asset is Imbruvica, a BTK inhibitor acquired in 2006 from Celera Genomics for just $2 million and some equity. FDA approved Imbruvica in late 2013 to treat mantle cell leukemia, and the drug has since won the agency’s nod in three other blood cancers. It is expected to bring in $1 billion in sales this year for Pharmacyclics and its marketing partner J&J.

Imbruvica represents “a pipeline in a molecule, much like Humira did,” Gonzalez said. AbbVie’s Humira is the world’s top-selling drug, bringing in $12.5 billion in sales last year across a range of inflammatory diseases, but its patent is set to expire in late 2016. AbbVie believes its portion of peak sales for Imbruvica could exceed $7 billion per year.

The deal also advances AbbVie’s goal of becoming a powerhouse in treating hematological cancer, a market worth $24 billion in 2014. AbbVie sees synergies between Imbruvica and two small molecules in its pipeline: ABT-199, which blocks Bcl-2 and is in Phase II studies to treat acute myelogenous leukemia and duvelisib, a PI3K inhibitor in Phase II studies to treat several blood cancers.

Last October, AbbVie walked away from the Shire deal after a change in U.S. tax law. Gonzalez said the two deals are strategically “very different.” Shire was viewed as an avenue to lowering AbbVie’s tax base, whereas Pharmacyclics complements its oncology portfolio.