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AbbVie Enters the ADC Market with $10.1 Billion Acquisition

On November 30th, AbbVie, the Chicago-based pharmaceutical company, entered into a definitive agreement to acquire Immunogen, a biotech company focused on the development of antibody-drug conjugate (ADC). The deal is valued at $10.1 billion in equity, and AbbVie will pay ImmunoGen's shareholders $31.26 per share, which represents a 94.6% premium above Immunogen's last closing price. After this announcement, Immunogen's shares rose by 83% to a near 23-year high of $29.34 in morning trading.

A strategic motive underpins this deal for AbbVie. Firstly, the company aims to enter the solid tumour market and bolster its oncology department. This market is valued at $20.61 billion in 2021 and is expected to reach $82.27 billion by 2029, with a CAGR of 20.0%. Due to its high growth potential, entering this market has been a "strategic priority" for the pharmaceutical company.

As part of the deal, AbbVie will gain access to ImmunoGen's antibody-drug conjugate (ADC) Elahere, which received accelerated approval from the US Food and Drug Administration last year to treat platinum-resistant ovarian cancer. Ovarian cancer is the leading cause of death from gynaecological cancers in the US, and approximately 20,000 patients are diagnosed with the disease each year. This asset is beneficial for AbbVie because Elahere is forecasted to generate around $500 million in sales in 2024. Additionally, according to Barclays, this drug is predicted to earn $2 billion in peak sales by the end of this decade.

This deal, the third largest biotechnology buyout this year, comes at a time when AbbVie's top-selling drug, Humira, and blockbuster cancer drug, Imbruvica are facing new competition and seeing a decline in sales. With this deal, AbbVie is taking a meaningful step to close the gap from Humira's loss of exclusivity by integrating ImmunoGen's potentially multi-billion dollar Elahere, according to BMO Capital Markets analyst Evan Seigerman. This is a promising move because 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.

ADCs are a new class of cancer therapies designed to precisely target and kill tumour cells while sparing healthy ones. In 2023, ADC programmes have received significant investor interest in the past few months. In March, Pfizer announced that it would be acquiring Seagan, an ADC pioneer, for $43 billion. Additionally, Merck revealed that it would be paying $4 billion to develop and commercialise three Daiichi Sankyo ADC treatments back in December. Other companies that have invested in ADC assets include AstraZeneca, BioNtech, GSK, and more.

For ImmunoGen, this deal puts it in a position to leverage AbbVie's global commercial infrastructure and deep clinical and regulatory expertise to accelerate geographic and label expansion and realise the full potential of ELAHERE as the first and only ADC approved in ovarian cancer.

This deal is expected to close in mid-2024. AbbVie's lead financial advisor is J.P. Morgan Securities LLC, and Wachtell, Lipton, Rosen & Katz is serving as legal advisor. Morgan Stanley & Co. LLC is also serving as a financial advisor to AbbVie. ImmunoGen's financial advisors are Goldman Sachs & Co. LLC and Lazard, and Ropes & Gray LLP is serving as legal advisor.

Written by: Mehak Mahajan

Sources: Reuters, Economic Times, Bloomberg, Fierce Pharma, Mergerlinks

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