AbbVie gains late-stage lung cancer drug rovalpituzumab tesirine with $5.8-billion purchase of Stemcentrx

AbbVie said Thursday that it will acquire Stemcentrx, gaining the latter's experimental lung cancer drug rovalpituzumab tesirine, under a cash and stock deal worth approximately $5.8 billion. AbbVie noted that rovalpituzumab tesirine, which is derived from cancer stem cells and targets the protein DLL3, is currently in registrational trials for small-cell lung cancer (SCLC).

"AbbVie is committed to continued innovation in oncology, a critical component of our long-term growth," commented AbbVie CEO Richard Gonzalez. "The addition of Stemcentrx and its late-stage compound...provide AbbVie with a unique platform in solid tumour therapeutics," Gonzalez added. 

Under the deal, AbbVie will pay approximately $2 billion of the transaction value in cash and fund the remaining portion with stock. In addition, Stemcentrx investors are eligible to receive up to $4 billion in cash related to certain milestone payments. 

AbbVie noted that rovalpituzumab tesirine, which is currently under development as a third-line treatment for SCLC, was recently submitted to the FDA for breakthrough therapy designation. The company added that enrolment for registrational trials of the drug in this indication is expected to be completed by the end of the year. Gonzales estimated that the therapy, which is also known as Rova-T, could reach the market by 2018 and eventually amass as much as $5 billion a year in revenue.  

AbbVie said Stemcentrx also has four additional compounds in clinical development across several solid tumour indications such as triple-negative breast cancer, ovarian cancer and non-small cell lung cancer. The company additionally stated that Stemcentrx has a number of pre-clinical compounds that could reach clinical trials this year, as well as a proprietary technology platform that utilises stem cell biology to identify and screen potential targets against live tumour tissue to more predictably advance the discovery and development of new assets. 

J.P. Morgan analyst Chris Schott remarked that the acquisition “brings the company an interesting late-stage asset in small-cell lung cancer with the potential for much broader usage over time.”

AbbVie indicated that the transaction is expected to depress 2016 earnings by $0.20 per share, with accretion beginning in 2020. The drugmaker indicated that consequently it is adjusting its full-year earnings guidance to a range of $4.62 per share to $4.82 per share, down from prior guidance of $4.90 per share to $5.10 per share. 

AbbVie on Thursday separately announced that first-quarter revenue climbed 18.2 percent to $6 billion, with earnings totalling $1.4 billion. 

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