(Reuters) - AbbVie (NYSE:ABBV) said on Wednesday it would buy Cerevel Therapeutics, a developer of drugs for neurological conditions, for about $8.7 billion in a bid to replace revenue as its arthritis drug Humira faces a raft of new competition.
It marks the second large deal for AbbVie in the past week, coming days after it agreed to buy cancer drug developer ImmunoGen (NASDAQ:IMGN) for $10.1 billion in cash, highlighting its appetite to place big bets on promising new medicines.
It is paying $45 per share in cash for Cerevel, which is developing drugs for Alzheimer's, Parkinson's, psychosis, epilepsy, and panic disorder. Its experimental drug emraclidine is in midstage trials as a treatment for schizophrenia that will yield data the company hopes can be used to seek regulatory approval.
The deal represents a 73% premium to Ceverel's closing share price on Dec. 1, before rumors started circulating among traders about a potential sale of the company. The stock had risen 42% since Dec. 1, when Reuters reported on Wednesday afternoon that AbbVie was nearing a deal to buy the company for $45 per share.
Trading in options on Cerevel had experienced an unusual surge along with its stock price in the days before Wednesday's deal announcement, with upside call options drawing hefty interest.
Revenue from Humira, once the top-selling drug in the world, is expected to fall precipitously following market entry of over half a dozen biosimilar versions of the drugs this year in the U.S. It already faced competition in Europe.
Humira sales, which topped out above $21 billion in 2022, are expected to be below $9 billion next year.
Meanwhile, sales of AbbVie's blockbuster leukemia drug Imbruvica dropped 20% in the third quarter due to competition from BeiGene (NASDAQ:BGNE)'s Brukinsa and AstraZeneca (NASDAQ:AZN)'s Calquence.
Imbruvica is also one of the 10 drugs that will be subject to the first-ever price negotiations by U.S. Medicare health plans, with new prices expected to come into effect in 2026.
Cambridge, Massachusetts-based Cerevel was started in 2018 when Pfizer (NYSE:PFE) carved out its division developing drugs for the central nervous system into a standalone company backed by a $350 million investment from Bain.
Cerevel was listed on the New York stock market in 2020. Bain and Pfizer hold stakes of about 36% and 15%, respectively.
Cerevel shares were up 15.5%, while AbbVie shares were flat in extended trading.