AbbVie's (NYSE:ABBV) extraordinarily generous buyout of Pharmacyclics (NASDAQ:PCYC) is a crystal clear example of how keen big pharma is to boost its prospects with biotech drugs with blockbuster potential. The transaction's $20B tab, backing out PCYC's $1B cash balance, values Imbruvica (ibrutinib) at $40B since Pharmacyclics' commercial partner Johnson & Johnson (NYSE:JNJ) gets 50% of Imbruvica's revenue. This implies a multiple of almost 7x Imbruvica's projected peak sales of $6B. By comparison, Amgen's (NASDAQ:AMGN) takeout of Onyx Pharma and Sanofi's (NYSE:SNY) takeout of Genzyme were both at 5x premiums.
The looming patent expiration for Humira ($12.5B in sales the past four quarters) undoubtedly provided AbbVie extra incentive to get the deal done.
Adding 50% of Imbruvica's sales to AbbVie's top line should increase its revenue growth 3 - 7% and EPS growth 8 - 11% through 2020.
According to RBC analyst Michael Yee, other biotechs on the big ticket acquisition radar are: BioMarin Pharmaceuticals (NASDAQ:BMRN), Dyax (NASDAQ:DYAX), Esperion Therapeutics (NASDAQ:ESPR), United Therapeutics (NASDAQ:UTHR), Vertex Pharmaceuticals (NASDAQ:VRTX), Intercept Pharmaceuticals (NASDAQ:ICPT), Juno Therapeutics (NASDAQ:JUNO), Kite Pharma (NASDAQ:KITE), PTC Therapeutics (NASDAQ:PTCT) and Receptos (NASDAQ:RCPT).
In an all-stock transaction, privately-held Tobira Therapeutics will merge with a wholly-owned subsidiary of Regado Biosciences (RGDO +59.3%). The combined organization, renamed as Tobira Therapeutics, will focus on the development of novel treatments for liver and inflammatory diseases. Tobira CEO Laurent Fischer, M.D., will lead the firm.
Tobira's lead product is cenicriviroc (CVC), a Fast Track-designated anti-fibrotic agent currently in Phase 2 development for non-alcoholic steatohepatitis (NASH).
A Tobira investor syndicate has committed to invest up to $22M to fund CVC's development through Phase 2. Tobira's quick asset balance will be ~$60M after the investment.
Under the terms of the merger, Regado shareholders will own ~32% of the combined entity while Tobira shareholders will own ~68%. The specific allocation will depend on Regado's net cash balance at the time of the transaction.
Intercept Pharmaceuticals' (ICPT) shares are -30% on what appears to be light volume after the stock skyrocketed 516% on Thursday and Friday following news that a trial for the company's (ICPT) beticholic acid (OCA) for the treatment of nonalcoholic steatohepatitis (NASH) was stopped early due to high efficacy.
Intercept believes that an increase of "bad" cholesterol and decrease of "good" cholesterol in patients will probably be similar to results reported in 2009 regarding a trial of diabetic patients with nonalcoholic fatty liver disease.
The efficacy, safety and tolerability profile of OCA was the basis for the drug's selection for treating NASH.
There is also preclinical evidence that OCA may be "able to shunt excess lipids away from collecting in arteries and other organs, which could also be beneficial," Intercept says. (PR)