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April 28, 2016

AbbVie to Acquire Stemcentrx for Up to $9.8B

  • AbbVie said today it will acquire Stemcentrx for up to $9.8 billion cash and stock, in a deal that adds the late-stage small-cell lung cancer (SCLC) candidate rovalpituzumab tesirine (Rova-T) to the buyer’s oncology pipeline.

    Rova-T is a novel biomarker-specific therapy derived from cancer stem cells that targets delta-like protein 3 (DLL3), which is expressed in more than 80% of SCLC patient tumors and is not present in healthy tissue. Rova-T combines a targeted antibody that delivers a cytotoxic agent directly to the DLL3-expressing cancer cells while minimizing toxicity to healthy cells.

    AbbVie said Rova-T is expected by year’s end to complete enrollment of patients for registrational trials of the compound in third-line SCLC for which there is no approved therapy.

    “The addition of Stemcentrx and its late-stage compound Rova-T provide AbbVie with a unique platform in solid tumor therapeutics and complement our leadership position in hematologic oncology,” AbbVie Chairman and CEO Richard A. Gonzalez said in a statement.

    In Phase I/II studies of relapsed SCLC patients who have previously failed one or more standard therapies, Rova-T demonstrated overall response rates of 44% in patients identified with high expression of DLL3. The expression of DLL3, according to AbbVie, suggests Rova-T also may be useful across multiple tumor types, including metastatic melanoma, glioblastoma multiforme, prostate, pancreatic, and colorectal cancers, where DLL3 expression ranges from 50% to 80%.

    In addition to Rova-T, Stemcentrx has four novel compounds in clinical trials across solid tumor indications that include triple-negative breast cancer, ovarian cancer, and non-SCLC. Stemcentrx has additional preclinical compounds advancing toward clinical trials in 2016 and its own technology platform, which is designed to apply stem cell biology to identify and screen potential targets against live tumor tissue.

    “We have worked for 8 years exploring the origins of cancer and drivers of its recurrence and have discovered novel therapeutic targets to attack the most difficult-to-treat tumors,” added Brian Slingerland, Stemcentrx founder and CEO. “AbbVie, with its long-term commitment and expertise in drug development, will help us turn our scientific discoveries into a mainstay of cancer treatments.”

    AbbVie’s cancer presence is anchored by two marketed drugs—Imbruvica®, a Bruton's tyrosine kinase (BTK)-inhibitor indicated for chronic lymphocytic leukemia (CLL), mantle cell lymphoma, and Waldenström's macroglobulinemia, and VenclextaTM, a B-cell lymphoma BCL-2 protein inhibitor approved to treat CLL in patients with a 17p deletion.

    The company also has an oncology pipeline 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.

    By building up oncology, AbbVie can reduce its reliance on Humira (adalimumab), whose numerous indications include rheumatoid arthritis, plaque psoriasis, Crohn's disease, and ulcerative colitis. Last year, Humira generated $14 billion in net revenues, 61% percent of AbbVie's total 2015 net revenues, but faces growing competition from biosimilars.

    AbbVie said it will pay at least $5.8 billion for Stemcentrx—approximately $2 billion in cash and the rest with stock. AbbVie also agreed to pay up to $4 billion in cash tied to achieving regulatory and clinical milestones.

    The deal is expected to close later in the second quarter, subject to customary closing conditions and expiration or termination of the applicable waiting period under the Hart–Scott–Rodino Antitrust Improvements Act. Upon completing the transaction, AbbVie said it intends to proceed with an accelerated repurchase of up to $4 billion in common stock.

    AbbVie added that it expects the deal to reduce ongoing earnings per share by 20 cents, and add to earnings per share (EPS) beginning in 2020. The company lowered its 2016 diluted EPS guidance to $4.62 to $4.82, from its earlier range of $4.90 to $5.10.

    The planned acquisition of Stemcentrx comes a week after AbbVie moved to build its oncology portfolio further through a trio of collaborations. On April 21, the biopharma announced an up-to-$500 million deal with CytomX to co-develop at least one and possibly more of its Probody™ drug conjugates against CD71.

    Also last week, AbbVie the biopharma agreed to develop and commercialize argenx’s preclinical cancer immunotherapy ARGX-15 in an up-to-$685 million partnership; and  joined the University of Chicago in launching a collaboration intended to advance research in several areas of oncology.

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