AbbVie finds its next growth catalyst with acquisition of oncology-focused ImmunoGen | ABBV Message Board Posts


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Msg  718 of 729  at  11/30/2023 12:55:01 PM  by

jerrykrause


AbbVie finds its next growth catalyst with acquisition of oncology-focused ImmunoGen

AbbVie finds its next growth catalyst with acquisition of oncology-focused ImmunoGen
 
Briefing.com

M&A activity has been subdued in this high interest rate environment, but one sector that has seen some high-profile deals come through the pipeline is healthcare and that continued this morning with AbbVie's (ABBV) $10.1 bln acquisition of ImmunoGen (IMGN). Pharmaceutical and biotech companies are looking to bolster their drug portfolios, particularly in the areas of oncology and immunology, leading to several recent blockbuster deals such as Pfizer's (PFE) $43 bln acquisition of Seagen (SGEN) and Merck's (MRK) $10.8 bln acquisition of Prometheus Biosciences (RXDX).

For ABBV, the addition of IMGN is especially appealing because it will significantly bolster its oncology treatment product line, at the same time that growth slows for its rheumatoid arthritis and plaque psoriasis drug Humira. However, the company is paying a steep price for IMGN and its high-growth ovarian cancer drug ELAHERE. The $31.26/share offer price represents a whopping 95% premium over yesterday's closing price for IMGN.

There doesn't appear to be any sticker shock, though, as shares of ABBV climb higher on the news. It is rare to see the acquiring company's stock also trade higher on the day of the announcement, but we can see why investors are applauding this deal.

For starters, ELAHERE, which gained FDA approval last year, is experiencing strong growth and is only in the early innings of its growth curve. In Q3, the drug generated U.S. sales of $105.2 mln, up 36% on a qtr/qtr basis, helping IMGN to post its first profitable quarter in its history.IMGN's revenue is expected to surge by a triple-digit rate in FY23 to over $370 mln, fueled almost entirely by the successful launch of ELAHERE in the U.S. By the end of FY24, ELAHERE is expected to gain approval in Europe and in China, providing another potent growth catalyst. Furthermore, the drug is being evaluated for earlier lines of therapy for ovarian cancer, potentially expanding the patient population pool. The acquisition also helps to take the sting out of sagging sales for Humira, which lost patent protection and U.S. exclusivity this year. In Q3, U.S. Humira sales plunged by 39% to $3.02 bln (22% of total revenue). ABBV's other immunology drugs, Skyrizi and Rinvoq, are performing well, generating growth of 52% and 60% in Q3, but that was not enough to prevent ABBV's overall revenue from falling by 6% in Q3 -- the company's third consecutive quarter of sales declines.
 

Although the acquisition isn't expected to be accretive to earnings until 2027, the acquisition removes some uncertainty regarding where ABBV's next major growth catalyst will come from. Therefore, an overhang on the stock, which was down by 14% year-to-date prior to today, has at least been partially removed.

 
 
 
 


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