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 Shares of AbbVie rose 1.3 percent in afternoon trading.
The suburban Chicago drugmaker said it would buy privately held
Stemcentrx and its experimental treatment for small cell lung
cancer, which accounts for about 10 percent to 15 percent of all
lung cancers and is notoriously difficult to treat.
It brings AbbVie into the broad and lucrative arena of solid tumors,
such as lung cancer, breast cancer and colon cancer. AbbVie's
current drugs, including leukemia treatment Imbruvica, focus on
blood cancers, a smaller group of patients.
Companies with innovative cancer drugs, especially ones that spur
the immune system to attack tumors, are attractive takeover targets.
These life-extending new treatments can command extremely high
prices that health insurers seem willing to pay for, unlike some
other therapeutic categories where they are putting pressure on
price.
"The mantra to reimbursement is innovation, and AbbVie is heading
down the right path" by its widening focus on oncology, said John
Boris, an analyst with Suntrust Robinson Humphrey.
AbbVie last year bought Pharmacyclics Inc and its half-ownership of
Imbruvica for $21 billion. It sells the drug with Johnson & Johnson.
U.S. rival Bristol-Myers Squibb has been particularly successful
with its oncology focus. It predicted on Thursday its earnings will
jump as much as 29 percent this year, fueled by its new Opdivo
treatment for melanoma and lung cancer. A similar new drug from
Merck & Co also has a list price of $150,000.
Also on Thursday, French drugmaker Sanofi announced its $9.3 billion
offer to buy Medivation, which makes prostate cancer treatment
Xtandi.
Stemcentrx's drug, called Rova-T, is a toxic chemical that has been
loaded onto an antibody. It targets a protein called DLL3 found in
more than 80 percent of patients with the cancer. A biomarker is
used to help select patients whose cancers express the protein.
Late-stage trials involving patients who have already failed to
benefit from chemotherapy and radiation are under way and AbbVie
expects the drug to be approved by 2018.
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"Oncology is an important growth driver and an area we plan to build
a leading portfolio," Michael Severino, AbbVie's chief scientific
officer, said in an interview.
But he said AbbVie will remain heavily involved in arthritis,
psoriasis and other inflammatory diseases that are treated by Humira,
which generates $14 billion in annual sales.
AbbVie's quarterly earnings results on Thursday demonstrated its
reliance on Humira, for which sales jumped 15 percent to $3.58
billion, accounting for 60 percent of company revenue. As sales of
Humira rise by double-digit percentages each year, investors are
growing ever more fretful because its main U.S. patent lapses in
December. AbbVie says other patents will stave off introduction of
cheaper biosimilar forms of Humira until at least 2022. AbbVie said
it would pay about $2 billion in cash for Stemcentrx and fund the
remainder with stock. Stemcentrx shareholders may also receive up to
$4 billion in cash if certain performance milestones are achieved.
AbbVie, which expects the deal to close in the second quarter,
lowered its full-year adjusted profit forecast to $4.62-$4.82 per
share, from its earlier view of $4.90-$5.10.
It said the deal would be dilutive this year and for several years
to come.
(Additional reporting by Rosmi Shaji in Bengaluru, and Caroline
Humer and Bill Berkrot in New York; Editing by Savio D'Souza,
Matthew Lewis and Bernard Orr)
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