Abbvie just bought one of the best pharmaceutical investments ever: Pharmacyclics’ Imbuvrica was worth just $6.6m a decade before the $21bn deal

That same cancer drug, Imbruvica, turned out to be a better investment than anyone could ever have imagined – this morning Pharmacylics was taken over by AbbVie for $21bn, after the US pharma giant fought against rivals to get its hands on the wonder drug.

 

Imbruvica, which is available in 40 countries worldwide, is set to become one of the best-selling cancer treatments ever according to Bloomberg, with analysts predicting sales of $4.2bn by 2019. Its success attracted the interest of a number of major companies in the sector, including Johnson & Johnson and Notavirus, but AbbVie won in the end.

 

"Imbruvica is not only complementary to AbbVie's oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of hematologic malignancies," said AbbVie Chief Executive Richard Gonzalez.

 

Taken in pill form, it helps to fight rare forms of cancer found in the immune system, and advantages include the avoidance of some chemotherapy-related side effects, meaning patients can stay on it for long periods of time. It also gained ground last month by winning approval from the US Food and Drug Administration (FDA) for the treatment of a rare  blood cancer called mantle cell lymphoma. 

 

Pharmacyclics's success was highlighted by its recent fourth quarter results, which showed that revenue for the three-month period was $290m (£190m) – over double the $124m (£81m) revenue gained in the fourth quarter of 2013. Considering Imbruvica revenue on its own, this went up by 31 per cent to $185m (£121m), meaning it accounted for two-thirds of the company's total.

 

According to Brian Skorney, an analyst at Robert W. Baird, the number of people using the drug has the potential to dramatically increase over time since patients using the drug live longer. Last month he said sales of the drug have “really blown away every other oncology launch with the exception of Avastin”, referring to another successful cancer drug produced by Roche.

It is the biggest pharmaceutical M&A deal to have taken place this year, worth even more than Pfizer's $15bn takeover of Hospira last month. 

 

Expected to close in the middle of the year, the deal will comprise around 58 per cent cash and 42 per cent AbbVe common stock. AbbVie says its shareholders can opt for either of these or a combination of the two. 

 

AbbVie will pay $261 per share in cash and stock, which is 13 per cent more than Pharmacyclic's closing stock price last night. 

 

According to Deutsche Bank analyst Robyn Karnauskas, the deal will help AbbVie diversify itself – he told Reuters the company would now be less dependent on its rheumatoid arthritis drug Humira, which currently accounts for the majority of its revenue.