AbbVie Inc. (ABBV, Financial) is all set to buy Pharmacyclics Inc (PCYC, Financial) at a deal valued at $21 billion. The deal will now boost AbbVie's oncology drugs pipeline. Pharmacyclics is famously known to have created Imbruvica® (ibrutinib), the cancer drug. The transaction is expected to close in the middle of the year. The board of directors of both the companies have approved the deal. AbbVie will shell out $261.25 per share in cash and stock, a 13% premium. The transaction is expected to be paid through 58% cash and 42% common stock. The acquisition will be funded through a combination of new debt, stock and existing stock. The company shares closed 1.1% higher at $60.27.
Company Proceeds
AbbVie separated ways from its parent company Abbott Laboratories (ABT) in 2013. Ever since, AbbVie has striven to strike a deal that most of the drug companies would wish for. The $21 billion deal will now enable AbbVie to have complete control of the blood cancer therapy. The company can now rely less on its current best-selling Humira. Humira is AbbVie's breakthrough in the field of rheumatoid arthritis treatment. Now that the company has entered the cancer division, the company can make promising strides in drug development. Imbruvica is sold at $100,000 per year and is used to cure four types of blood cancer. Two of them include a rare lymphoma and a type of leukemia. The FDA approved the use of Imbruvica in January for the cure of a rare form of cancer that affects the the immune system. More than 40 countries have approved its use for the treatment of cancer. The drug is also known to eliminate some ill-effects of chemotherapy. What may not be a known fact is that Johnson & Johnson (JNJ, Financial) tried its best to get a hold of Pharmacyclics Inc. by making an offer of $250 per share. Johnson & Johnson's spokeswoman Amy Jo Meyer did not wish to comment on the details. However, the company made a statement saying that they are looking forward to continue their collaboration with the AbbVie Team.
Pharmacyclics had reported that they had earned revenue of $548 million in the first year that the drug was sold. 2015 sales for the drug Imbruvica is estimated to reach $1 billion. Now that the drug has shown tremendous positive effects in clinical trials, analysts have projected the sales to reach around $5 billion a year.
CEO Talks
CEO and President of AbbVie Richard A. Gonzalez said that the flagship product will act as a complementary drug to AbbVie's oncology pipeline. The drug has shown high levels of efficacy in the treatment of hematologic malignancies, he said. Bob Duggan, CEO and chairman of Pharmacyclics, said that the company is honored to join AbbVie. If both the companies work towards attaining their common purpose, a remarkable difference can be made in the lives of patients. AbbVie is in the process of developing a new drug to treat blood cancer. The company has partnered with Roche Holding (RHHBY, Financial) to develop ABT-199, or venetoclax. This drug will be then used in the treatment of chronic lymphocytic leukemia. Once the clinical trial is through, AbbVie will file for venetoclax's regulatory approval.
The Acquisition Move
The acquisition will boost the process as Pharmacyclics' experienced sales force will assist the company in the marketing efforts.
AbbVie was formed in 2013 after separating from its parent company Abbott Laboratories and formed its own publicly traded company. Last year the company tried to acquire Shire PLC (SHPG, Financial), but the transaction failed to materialize. The company had tried its hands at developing treatments for cancer and neurodegeneration by collaborating with Calico Commerce (CLIC, Financial). The acquisition of Pharmacyclics will strengthen its efforts in the treatment of cancer.Â
