AbbVie Completes Acquisition of PharmacyclicsBy
AbbVie has completed its previously announced acquisition of Pharmacyclics, Inc., a biopharmaceutical company specializing in hematological oncology drugs, for approximately $21 billion. Pharmacylics’ lead product is Imbruvica (ibrutinib), a Bruton’s tyrosine kinase (BTK) inhibitor approved for use in four indications to treat three different types of blood cancers, including chronic lymphocytic leukemia, mantle cell lymphoma, and Waldenstrom’s macroglobulinemia.
Imbruvica received initial US Food and Drug Administration (FDA) approval in 2013 and received three Breakthrough Therapy designations by the FDA for these indications. (Breakthrough Therapy designations are provided if preliminary clinical evidence indicates the drug may offer a substantial improvement over available therapies for patients with serious or life-threatening diseases). As part of a worldwide partnership with Janssen Biotech, Inc., Imbruvica is approved in nearly 50 countries. Imbruvica is in mid- and late-stage development for additional hematological oncology indications, with more than 60 clinical trials underway, including 13 in Phase III development. Imbruvica is also in early-stage development for solid tumors. AbbVie will market Imbruvica in the United States.
Imbruvica works by blocking a specific protein, BTK, which transmits important signals that tell B cells to mature and produce antibodies and is needed by specific cancer cells to multiply and spread. Imbruvica targets and blocks BTK, thereby inhibiting cancer-cell survival and spread. In 2014, Pharmacyclics posted revenues of $730 million, compared to $260 million for 2013, primarily due to a $479-million increase in Imbruvica net product revenue in 2014, the first full year of the drug’s product sales. In its 2014 earnings release, Pharmacyclics said it expects US net product revenue of Imbruvica to be approximately $1 billion.
Across its oncology pipeline, AbbVie has five late-stage assets in clinical development positioned to launch within the next several years. Two programs, venetoclax, a Bcl-2 inhibitor, and duvelisib, a dual PI3 kinase inhibitor, are in development for hematological cancers. AbbVie intends to explore these assets in combination with Imbruvica to evaluate the potential for meaningful improvement beyond the current standard of care.
AbbVie’s decision to acquire Pharmacyclics follows its decision in 2014 to terminate a proposed $54.7 billion bid to acquire Shire. AbbVie’s proposed acquisition of Shire involved a tax inversion structure by which the New AbbVie was to become a holding company for the combined AbbVie and Shire and to be incorporated in Jersey, the UK, Shire’s place of incorporation. Through its incorporation in the UK, the AbbVie board expected the transaction to reduce New AbbVie’s effective tax rate to approximately 13% by 2016. A subsequent notice by the US Department of Treasury, however, which signaled a limiting of corporate tax inversions, cast uncertainty as to this practice, so AbbVie decided to terminate the proposed acquisition.
AbbVie’s move to acquire Shire last year and its decision to now acquire Pharmacyclics is based on a strategy to diversify its pipeline and commercial portfolio. The company’s total revenues are heavily reliant on Humira (adalimumab), which accounted for sales of $12.5 billion, or 63%,of the company’s 2014 sales of $19.960 billion (see Table I ). Humira is indicated for treating rheumatoid arthritis, juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn's disease, ulcerative colitis, and plaque psoriasis. A key issue for AbbVie in the near-term is the patent expiry for Humira. The United States composition of matter (i.e., the compound) patent covering adalimumab is expected to expire in December 2016, and the equivalent European Union (EU) patent is expected to expire in the majority of EU countries in April 2018.
Pharmacyclics will be a wholly owned subsidiary of AbbVie and will operate from its previous Sunnyvale, California headquarters. Wulff-Erik von Borcke, a longtime industry leader and former head of AbbVie’s global marketing, will lead Pharmacyclics as president. Combined with its existing facilities in Redwood City, California, AbbVie now employs more than 900 employees in California.