AbbVie will spend about $21 billion to buy leukemia drugmaker Pharmacyclics in its first major deal attempt since walking away from a $55 billion takeover of Shire last fall.
The North Chicago, Illinois, company said late Wednesday that it will pay $261.25 a share for Pharmacyclics, which makes Imbruvica, a drug approved to treat three different types of blood cancers. That represents a premium of about 21 percent to the closing price of Pharmacyclics shares on Tuesday.
The stock had surged Wednesday after London's Financial Times, citing sources it did not name, reported that competing drugmaker Johnson & Johnson was close to buying Pharmacyclics. That report also cautioned that the J&J deal might unravel.
Shares of Sunnyvale, California-based Pharmacyclics Inc. jumped in premarket trading Thursday while AbbVie Inc. fell.
AbbVie will offer a mix of cash and stock to Pharmacyclics shareholders, who will be able to choose either option or a combination of the two. The drugmakers expect the tender offer to close in the middle of the year, once a majority of Pharmacyclics' outstanding shares have been tendered. AbbVie will then buy the remaining shares through a second-step merger.
In October, AbbVie scuttled a deal to buy another drugmaker, Shire, after the U.S. government created new limitations on the tax benefits of reincorporating overseas. The maker of the blockbuster anti-inflammatory drug Humira said then that it would pay a $1.64 billion breakup fee to end that deal. AbbVie would have reincorporated on the British island of Jersey, where Shire is incorporated.
AbbVie Chairman and CEO Richard A. Gonzalez said in a statement Wednesday that the latest deal represented a "strategically compelling opportunity," with Imbruvica complementing its own pipeline of cancer drugs.
The drug is currently approved in more than 40 countries. It treats chronic lymphocytic leukemia, which is the most common leukemia in adults; mantle cell lymphoma; and Waldenstrom's macroglobulinemia. The once-a-day capsule works by blocking a protein that allows the cancer to multiply and spread.
Pharmacyclics said last month that the drug brought in $548 million in total global revenue during its first full year of sales in 2014. Pharmacyclics makes Imbruvica and markets it with Janssen Biotech Inc., a unit of New Brunswick, New Jersey-based J&J. Janssen handles the drug's marketing outside the United States, and the companies split profits.
Overall, Pharmacyclics earned $86.1 million, or $1.10 per share, on $729.7 million in revenue last year.
Humira brought in more than $12 billion in sales last year for AbbVie, but it could eventually face competition from Amgen Inc., which is developing a biosimilar version of the drug. Biosimilars are similar, but not identical to, brand-name biologic drugs, which are grown in living cells, rather than made by mixing chemicals.
AbbVie also makes a new hepatitis C treatment, Viekira Pak, which received FDA approval last December. Company executives have told analysts that Viekira could reach annual sales of $3 billion by the end of 2015 with further growth in 2016.
The $21 billion AbbVie plans to pay in its latest acquisition attempt may be "highly debated," Jefferies analyst Jeffrey Holford said in a research note. But he also said Pharmacyclics was one of the best acquisition options out there for AbbVie.
Shares of Pharmacyclics were up more than 9 percent, or $22.12, to $252.60 in premarket trading Thursday. AbbVie, meanwhile, sank nearly 7 percent, or $4.13, to $56.14.