By Jonathan D. Rockoff and Peter Loftus
AbbVie Inc. said late Wednesday it will buy cancer biotech
Pharmacyclics Inc. in a $21 billion deal that returns the North
Chicago, Ill., drug company to deal-making after backing away from
a big tax-lowering takeover last year.
The deal, a mix of cash and stock for $261.25 a share, would
give AbbVie a presence in the multibillion-dollar blood-cancer
market, and lessen its reliance on an aging rheumatoid-arthritis
drug that accounts for most of its sales.
AbbVie had reached a $54 billion agreement to buy Irish drug
company Shire PLC last year, before abruptly walking away after the
Obama administration took steps to deter such tax-lowering
deals.
AbbVie said it expects the deal to close in the middle of this
year.
Pharmacyclics, of Sunnyvale, Calif., sells a drug called
Imbruvica with partner Johnson & Johnson. Imbruvica has been
approved for two blood cancers--a rare lymphoma and a form of
leukemia. In January, the Food and Drug Administration greenlighted
Imbruvica's use for a rare form of cancer affecting the immune
system.
In its first full year on sale, the pill had $548 million in
world-wide net product revenue last year, Pharmacyclics reported.
The company projects sales will reach $1 billion this year.
Some analysts, citing Imbruvica's impressive performance in
clinical trials, estimate sales could peak at $5 billion a
year.
AbbVie will be counting on such high sales. Pharmacyclics shares
began the year at $124.46, before rising on reports in recent weeks
that the company was up for sale.
The deal also would give AbbVie an experienced sales force for
marketing to doctors who treat blood cancers, which would be
especially helpful if AbbVie's own blood-cancer drug in development
makes it to market.
AbbVie has a partnership with Roche Holding AG to co-develop
venetoclax, or ABT-199, for patients with chronic lymphocytic
leukemia. AbbVie may file for regulatory approval of the drug later
this year, pending results from a clinical trial.
AbbVie has been looking to branch out beyond its reliance on
rheumatoid-arthritis therapy Humira. It is AbbVie's biggest-selling
product, notching $12.5 billion in sales in 2014, more than 60% of
the company's total revenue. But a key U.S. patent for the drug
expires in late 2016, and equivalent patents expire in the majority
of European countries in 2018. The patent expirations could trigger
the introduction of competing, "biosimilar" copies of Humira,
eroding sales of the brand.
But some analysts question whether Imbruvica can reach the lofty
sales targets, unless it can prove effective against other kinds of
tumor types and perhaps different diseases--a big risk.
Another issue for AbbVie will be sharing Imbruvica with a rival
drug company. J&J helps sell Imbruvica and splits the profits
from the drug under the terms of a 2011 deal with
Pharmacyclics.
For Pharmacyclics, a takeover would culminate a topsy-turvy
history. It bought the molecule that became Imbruvica during a fire
sale by gene-sequencing company Celera Genomics in 2006.
J&J said in a statement that the deal confirms the potential
it saw in Imbruvica and the company is "looking forward to
continuing our collaboration with the team at AbbVie."
Write to Jonathan D. Rockoff at jonathan.rockoff@wsj.com and
Peter Loftus at peter.loftus@wsj.com
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