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Shortly after Reuters broke the story that AbbVie (ABBV) was considering acquiring Cerevel Therapeutics (CERE), the companies confirmed after the market close yesterday that a deal was indeed agreed upon with ABBV purchasing CERE for $45/share in cash for a total value of $8.7 bln. The acquisition comes exactly one week after ABBV announced its intention to acquire oncology-focused ImmunoGen (IMGN) for about $10 bln.

• ABBV's aggressive M&A approach comes as the pharmaceutical company's growth has come to a halt in the wake of Humira losing its patent protection earlier this year. In Q3, sales of the blockbuster rheumatoid arthritis and plaque psoriasis drug plunged by 39% to $3.02 bln, causing ABBV's total revenue to drop by 6% yr/yr -- its third consecutive quarterly decline.
• While the acquisition of IMGN will pay more immediate dividends, thanks to the breakthrough success of ovarian cancer drug ELAHERE, which generated Q3 sales of $105.2 mln, the payoff from CERE is further out on the horizon.
• CERE, a clinical-stage biotech company focused on psychiatric and neurological disorders, has five drugs in development, but potential revenue generation from any of them is likely to be more than a year away.
• The drug candidate that's furthest along is Tavapadon, a treatment for Parkinson's disease that's currently in three separate Phase 3 studies (TEMPO 1, 2, and 3). In September of 2019, CERE reported that Tavapadon met its primary endpoint by recording a statistically significant improvement in patient's motor systems compared to patients treated with the placebo.
  • The drug also showed a favorable safety and tolerability profile.
  • Data for TEMPO 3 is expected in 1H24, while data from TEMPO 1 and 2 are anticipated in 2H24.
• Although Tavapadon is the most advanced drug candidate, Emraclindine may be the crown jewel of the acquisition. That drug is being developed as a treatment for schizophrenia, a debilitating neurological disorder that affects about 24 mln people globally.
  • There are treatments currently available for schizophrenia -- notably including Intra-Cellular's (ITCI) Caplyta -- but the side-effects and tolerability are oftentimes an issue. 
• In a Phase 1b study, Emraclindine demonstrated an encouraging efficacy and safety profile. Last December, The Lancet published key findings from the clinical trial, including data showing that the drug did not induce an increase in blood pressure -- an issue the FDA wanted more clarity on.
• Looking ahead, a data readout from the Phase 2 trial is expected to be released in 2H24, which is later than originally planned due to slower patient enrollment in the U.S, and delays at some international clinical sites.

The main takeaway is that ABBV is making a huge push to reload its drug portfolio and reignite its growth. With $13.3 bln in cash on the books as of September 30, 2023, the company has plenty of dry powder available and this pair of acquisitions looks like a good use of that cash.