The flurry of end-of-the-year deal making raises the competitive pressure on AbbVie (ABBV) - Get Report, which could now see AstraZeneca and Gilead cutting into the growth outlook for some of its most important drugs.
AstraZeneca said Thursday it is buying a 55% stake in privately held Acerta for $4 billion to gain controlling rights to an experimental blood cancer drug acalabrutinib. AstraZeneca has an option to acquire the remaining stake in Acerta for another $3 billion.
Investors have dubbed acalabrutinib the "Imbruvica killer" because strongly positive results from mid-stage clinical trial published last week suggest the drug could be a more potent version of AbbVie's blockbuster blood cancer drug Imbruvica.
Acerta has already announced the start of a phase III study which will compare acalabrutinib head-to-head against Imbruvica in patients with chronic lymphocytic leukemia. If the results are positive, acalabrutinib could be submitted for approval in the second half of 2016, AstraZeneca said.
Buying Acerta gives AstraZeneca another targeted cancer drug with high potential to strengthen its cancer business. The pharma giant is also trying to catch up to cancer immunotherapy rivals Bristol-Myers Squibb and Merck.
In March, AbbVie paid $21 million to acquire Pharmacyclics, and with it, half the commercial rights to Imbruvica. The other 50% of the drug was, and remains, under the control of Johnson & Johnson.
Some investors questioned AbbVie for paying $21 billion to acquire half of a blood cancer drug, even one as successful as Imbruvica. In its defense, AbbVie said it expected Imbruvica to generate peak annual sales for the company of $7 billion, suggested total end-user sales of around $12 billion.
But that rosy forecast for Imbruvica could be under significant threat from AstraZeneca if acalabrutinib lives up to its potential. And if acalabrutinib does come out on top over Imbruvica, AbbVie's decision to spend $21 billion to acquire half of an inferior blood cancer drug will turn out to be a monumental waste of money.
In the other deal announced Thursday, Gilead Sciences licensed the oral Jak inhibitor filgotinib from Galapagos Pharmaceuticals (GLPG) - Get Report for $300 million in cash and a purchase of Galapagos stock valued at $425 million.
Under Galapagos' development, filgotinib has demonstrated promising efficacy as a treatment for rheumatoid arthritis and Crohn's disease in mid-stage studies. Gilead and Galapagos now plan to advance filgotinib into phase III studies against inflammatory diseases starting next year.
In a note to clients Thursday, RBC Capital analyst Michael Yee called Gilead's decision to license filgotinib an "incremental positive" which strengthen its late-stage pipeline. Filgotinib, Yee added, "(1) appears to have high-end efficacy/safety, (2) high probability of success, (3) is an identifiable growth driver which helps investors' visibility, and (4) adds to growing rheumatoid arthritis/inflammatory pipeline."
Earlier this year, AbbVie relinquished development rights to filgotinib in favor of its own, internally developed JAK inhibitor, ABT-494.
Piper Jaffray analyst Josh Schimmer was critical of Gilead's decision to license filgotinib, calling it "second-hand shopping" which is unlikely to make a meaningful improvement in the company's future growth.
Pfizer's Xeljanz was the first, oral JAK inhibitor to secure approval for rheumatoid arthritis. Eli Lilly is developing a JAK inhibitor, baricitinib (licensed from Incyte) for rheumatoid arthritis.
Not to be left out of the competitive discussion, there's also
, which is developing two different oral drugs (with different mechanisms of action) for multiple sclerosis, Crohn's disease and other inflammatory diseases.
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