Allergan has agreed to sell a marketed drug and a mid-to-late-phase drug candidate—both with gastrointestinal indications—to separate buyers for undisclosed prices as part of ongoing regulatory reviews of AbbVie’s planned $63 billion acquisition of Allergan, a blockbuster deal the companies said today they expect to complete this quarter.

Allergan said it will sell to Nestlé full ownership of Zenpep® (pancrelipase), a combination of porcine-derived lipases, proteases, and amylases approved as delayed-release capsules in the U.S. in 2009 for exocrine pancreatic insufficiency due to cystic fibrosis and other conditions. As part of that deal, Nestlé will also acquire the oral form of pancrelipase, marketed as Viokace® and approved in 2012.

Separately, Allergan said it will return to AstraZeneca brazikumab, an IL-23 inhibitor candidate now in Phase IIb/III development for Crohn’s disease, as well as in Phase II development for ulcerative colitis, including global development and commercial rights.

On January 10, the European Commission approved AbbVie’s planned acquisition of Allergan, announced last year—but hinged that approval on conditions that included Allergan divesting itself of brazikumab.

Allergan acquired rights in 2016 to brakizumab (then known as MEDI2070) from AstraZeneca for up to $1.52 billion—consisting of $250 million upfront, and potentially up to $1.27 billion tied to achieving milestones.

Allergan and AstraZeneca have agreed to terminate that agreement, with Allergan agreeing to pay AstraZeneca an undisclosed agreed amount, estimated to be the total costs expected to be incurred by AstraZeneca until completion of development for brazikumab in Crohn’s disease and ulcerative colitis, including the development of a companion diagnostic.

Amgen is entitled to receive a high single-digit to low double-digit royalty on sales of brazikumab if approved and launched, under a collaboration the company launched with AstraZeneca in 2012 to jointly develop and commercialize a clinical-stage inflammation portfolio, including the original inventor royalty.

Blockbuster bet on Skyrizi

In selling off brazikumab, Allergan and AbbVie are reasoning that the combined company will fare better holding onto AbbVie’s marketed IL-23 inhibitor Skyrizi® (risankizumab), which was launched in May 2019 and generated $139 million in net revenues worldwide during the second and third quarters of last year. Most of that revenue ($118 million) came from the U.S.

“Skyrizi is on track to become the next multi-billion blockbuster in autoimmune disease (peak sales forecast of $6.5bn), with first year sales expected to reach $1 [billion]. While investors have largely accepted that Skyrizi will remain with AbbVie, this announcement adds more confidence that Skyrizi’s position in AbbVie’s portfolio is secure,” Geoffrey C. Porges, MBBS, director of Therapeutics Research, Diversified Biopharma for SVB Leerink, wrote this morning in a note to investors.

AbbVie and Allergan also reason that some of the indications of brazikumab are shared by AbbVie’s multi-indication blockbuster Humira® (adalimumab), the longtime top-selling prescription drug.

However, while net revenues of Humira were still healthy at $14.405 billion for the first nine months of 2019, they had begun to decline year-over-year due to competition outside the U.S., where market exclusivity set to end in 2023. By then, at least eight biopharmas plan to launch biosimilar versions of Humira.

AbbVie and Allergan stated today that they still expect to complete their planned $63 billion deal during the first quarter.

“We are not changing our forecast or the timeline for the acquisition, and remain positive about the combined company’s prospects, mainly for its high dividend yield (likely to continue through 2022), significant cost synergies potential, stable revenue outlook and reduction in Humira concentration,” added Porges, who continues to rate AbbVie shares as “Outperform.”

“Allergan’s commercial and R&D teams have invested so much of themselves into the development of brazikumab and the commercialization of Zenpep, and these divestiture agreements will enable that work to continue following the close of our planned acquisition,” Allergan chairman and CEO Brent Saunders said in a statement issued by both companies.

Allergan’s divestment agreements are contingent upon receipt of approval for the AbbVie-Allergan merger by both the U.S. Federal Trade Commission and European Commission, as well as the closing of that deal and the satisfaction of other customary closing conditions.

“These definitive agreements represent significant progress toward the completion of our acquisition of Allergan,” AbbVie chairman and CEO Richard A. Gonzalez stated. “The new combined organization will be well positioned to deliver on our mission to patients with a broad portfolio of innovative therapies.”

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