AbbVie has agreed to acquire Cerevel Therapeutics for $8.7 billion, the companies said, in a deal designed to expand the buyer’s pipeline with Cerevel’s seven neuroscience and psychiatric drug candidates being developed across nine programs—including indications such as schizophrenia, Parkinson’s disease (PD), and mood disorders.
The deal, announced Wednesday after the close of the markets, marks the second time in as many weeks that AbbVie has sought to expand its pipeline through acquisition. The first came on November 30, when Abbvie shelled out $10.1 billion to buy ImmunoGen, a transaction intended to add long-term revenue growth to the buyer’s oncology franchise by accelerating its entry into the commercial market for ovarian cancer.
AbbVie is intent on recouping revenues now that its longtime multi-indication blockbuster Humira® has lost patent exclusivity, with the FDA having approved nine biosimilar versions of active ingredient adalimumb. While Humira has racked up $11.1 billion during the first three quarters of this year, the drug’s net revenues are 29% below those of a year ago.
Neuroscience is one of AbbVie’s areas of therapeutic focus, along with immunology, oncology, eye care, and aesthetics.
“Our existing neuroscience portfolio and our combined pipeline with Cerevel represents a significant growth opportunity well into the next decade,” said Richard A. Gonzalez, AbbVie chairman and CEO, said in a statement. “AbbVie will leverage its deep commercial capabilities, international infrastructure, and regulatory and clinical expertise to deliver substantial shareholder value with multibillion-dollar sales potential across Cerevel’s portfolio of assets.”
Taking a risk
Michael J. Yee, equity analyst with Jefferies, said that while the deal made sense, AbbVie was taking a risk acquiring Cerevel because of its six planned data readouts from clinical trials, of which five expected to occur in 2024, while the timing for the sixth has yet to be determined.
Four of Cerevel’s candidates are anticipated to be reading out data:
- Darlgabat—Phase II REALIZE trial in focal onset epilepsy, set for mid-2024.
- Tavapadon—Phase III TEMPO-3 trial in late-stage PD, first half of 2024; Phase III TEMPO-1 trial in early-stage PD, second half of 2024; Phase III OLE-TEMPO-2 trial, also in early-stage PD, and also set for second half of 2024.
- Emraclidine—Phase II EMPOWER-I and EMPOWER-2 trials in schizophrenia, second half of 2024.
- CVL-871—Phase IIa trial in dementia-related apathy, data release date to be determined.
“We are actually slightly surprised at the timing of the deal because CERE key Phase II/III schizophrenia data is not fully de-risked and all reads out in H2/24 so ABBV is taking on the clinical trial risk of those studies,” Yee wrote in a research note.
Emraclidine is a positive allosteric modulator (PAM) of the muscarinic M4 receptor which according to Cerevel is a potential best-in-class, next-generation antipsychotic that could effectively treat schizophrenia patients. Following a Phase Ib study in which emraclidine showed promising efficacy and safety in schizophrenia, the drug is currently completing two Phase II trials that are designed to be registration enabling.
Additional potential
AbbVie and Cerevel also reason that emraclidine has potential in dementia-related psychosis in PD and Alzheimer’s disease (AD). In AD, emraclidine is in a Phase I study in elderly healthy volunteers in support of a potential Alzheimer’s disease psychosis program.
Tavapadon, a first-in-class dopamine D1/D5 selective partial agonist for the management of PD, is currently in Phase III studies, with potential for both monotherapy and adjunctive treatment. AbbVie and Cerevel assert that tavapadon’s efficacy and safety-tolerability profile could make it a useful treatment for early PD, where it could serve as a near-term complementary asset to AbbVie’s existing symptomatic therapies for advanced PD.
Darigabat, now in Phase II development, is an alpha 2/3/5 selective GABAA receptor PAM for treatment-resistant epilepsy and panic disorder.
“ABBV has synergy with CERE’s lead asset emraclidine being evaluated in schizophrenia and makes sense with ABBV’s neuropsych business with their Vraylar [cariprazine] schizophrenia franchise which is approved,” Yee observed, using thee stock ticker symbols for both companies.
“[The U.S. Federal Trade Commission] (FTC) might see this as overlapping risk but there are numerous schizophrenia drugs and plenty of competition in schizophrenia. ABBV has some assets in Parkinson’s as well (Duodopa) so FTC decisions on these therapeutic overlaps would be unclear,” Yee added.
The threat of FTC scrutiny over the deal was also raised as a concern by William Blair analyst Tim Lugo.
“We would not be surprised if the deal faced FTC scrutiny given that Vraylar, which is estimated to generate $2.7 billion in revenue in 2023, is approved for the treatment of schizophrenia, bipolar I disorder, and adjunctive major depressive disorder (MDD), and AbbVie also has an approved product in PD (Duopa/Duodopa; about $450 million annual revenues) and a late-stage product in ABBV-951 (subcutaneous levidopa/carbidopa) that is expected to be approved in the first half of 2024,” Lugo wrote in a research note.
Lugo added: “AbbVie has not been shy about its interest in expanding its presence in neuroscience, and this deal looks to fit squarely within its stated strategy, adding five clinical-stage candidates and two preclinical candidates across several diseases including schizophrenia, Parkinson’s disease (PD), and mood disorders, which should drive growth in the latter part of this decade and into the 2030s.”
Benefit beyond Cerevel
The AbbVie-Cerevel deal is likely to benefit other neurologically-focused drug developers, wrote Sumant Klukarni, of Canaccord Genuity in a research note.
“In general, we believe this type of event could be a rising tide that lifts several neuro boats,” Kulkarni observed. “Our quick thoughts on this transaction are that it underscores our long-held view that neuro assets afford significant scarcity value to the right strategic interests.”
AbbVie has agreed to acquire all outstanding shares of Cerevel for $45 per share cash—a roughly 80% premium to the $25 a share range where the stock was trading last week, before shares rose on news of a potential buyout.
AbbVie said its proposed acquisition of Cerevel is expected to add to its adjusted diluted earnings per share (EPS) beginning in 2030.
The boards of both companies have approved the transaction, which is expected to close in the middle of 2024, subject to Cerevel shareholder approval, regulatory approvals, and other customary closing conditions.
“With AbbVie’s long-standing expertise in developing and commercializing medicines on a global scale, Cerevel’s novel therapies will be well positioned to reach more people living with neuroscience diseases,” stated Ron Renaud, Cerevel’s president and CEO. “The talented, passionate, and dedicated Cerevel team has made great progress over the past five years in developing our innovative suite of potential medicines, and we are pleased that AbbVie has recognized the tremendous potential of our pipeline. This acquisition reinforces the renaissance we are seeing in neuroscience, and we are proud to be at the forefront.”
Alex Philippidis is senior business editor of GEN.
