AbbVie has agreed to acquire Stemcentrx, a South San Francisco-based biopharmaceutical company, for approximately $5.8 billion in cash and stock. AbbVie will pay approximately $2.0 billion of the transaction value in cash and fund the remaining portion with stock. In addition, Stemcentrx investors are eligible to receive up to $4 billion in cash for additional, success-based milestone payments for the achievement of certain regulatory and clinical developments.

Stemcentrx’s lead late-stage asset is rovalpituzumab tesirine (Rova-T), an antibody drug conjugate, currently in registrational trials for small-cell lung cancer (SCLC). Rova-T is a biomarker-specific therapy that is derived from cancer stem cells and targets delta-like protein 3 (DLL3) that is expressed in more than 80% of SCLC patient tumors and is not present in healthy tissue, according to AbbVie. Registrational trials for third-line small-cell lung cancer are expected to complete enrollment by the end of 2016. Rova-T also has been submitted to the US Food and Drug Administration for breakthrough therapy designation.

Beyond Rova-T, Stemcentrx has four compounds in clinical trials across several solid tumor indications, including triple-negative breast cancer, ovarian cancer and non-small-cell lung cancer. Stemcentrx has additional pre-clinical compounds advancing toward clinical trials in 2016 and a proprietary technology platform that leverages stem cell biology to identify and screen potential targets against live tumor tissue to more predictably advance discovery and development of new assets.

The transaction is subject to customary closing conditions and expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in second-quarter 2016. Upon completion of the transaction, AbbVie intends to execute an accelerated share repurchase program of up to $4 billion of the company’s common stock.

The pending acquisition will add to AbbVie’s clinical oncology pipeline is comprised of more than a dozen assets, with five programs in late-stage development, spanning nearly 200 clinical trials across more than 19 types of tumors. AbbVie currently markets Imbruvica, a BTK-inhibitor approved to treat chronic lymphocytic leukemia (CLL), mantle cell lymphoma and Waldenstrom’s macroglobulinemia, and Venclexta, a BCL-2 inhibitor approved to treat CLL in patients with 17p deletion. AbbVie acquired Imbruvcia in its $21 billion acquisition of Pharmacyclics in 2015. Venclexta was developed in collaboration with Genentech/Roche.

Source: AbbVie