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AbbVie seeks lift from 'guided missile' cancer drug with $10 billion ImmunoGen deal

Published 11/30/2023, 07:45 AM
Updated 11/30/2023, 12:08 PM
© Reuters. FILE PHOTO: A sign stands outside a Abbvie facility in Cambridge, Massachusetts, U.S., May 20, 2021.    REUTERS/Brian Snyder/File Photo

By Leroy Leo and Manas Mishra

(Reuters) -AbbVie will buy ImmunoGen (NASDAQ:IMGN) for $10.1 billion in cash, it said on Thursday, the latest major drugmaker to acquire a maker of promising "guided missile" cancer therapies as its top-selling treatment Humira faces newer rivals.

ImmunoGen's Elahere belongs to a new class of treatments called antibody-drug conjugates (ADC) that precisely targets cancer cells, potentially reducing toxicity for other cells.

With the deal, AbbVie (NYSE:ABBV) is taking a meaningful step to close the gap from Humira's loss of exclusivity by "integrating ImmunoGen's potentially multi-billion dollar Elahere," BMO Capital Markets analyst Evan Seigerman said.

Interest in ADC-makers have surged over the past year. Pfizer (NYSE:PFE) is in the middle of buying ADC pioneer Seagen in a $43 billion deal while Merck last month said it would pay Japanese drugmaker Daiichi Sankyo $5.5 billion to jointly develop three ADCs.

AbbVie has offered $31.26 per ImmunoGen share held, representing a premium of 94.6% to the stock's last close.

ImmunoGen's shares surged 83% to a near 23-year high of $29.34 in morning trading on the news. They have more than tripled in value this year.

Still, the deal is balanced by low clinical risk as Elahere is approved for ovarian cancer patients, said Barclays analyst Carter Gould.

Elahere generated $212 million in sales for the nine months ended September, and is projected to become a blockbuster drug by 2030 even as competition rises.

The acquisition, expected to close in mid-2024, bolsters AbbVie's business when it stares at a sharp erosion in Humira sales following the entry of over half a dozen biosimilars this year.

© Reuters. FILE PHOTO: A sign stands outside a Abbvie facility in Cambridge, Massachusetts, U.S., May 20, 2021.    REUTERS/Brian Snyder/File Photo

Meanwhile, sales of its blockbuster cancer 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 insurance plans, expected to come into effect starting 2026.

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