Pharmacyclics Considering Sale of Imbruvica a natural fit for J&J- already sells Imbruvica outside the USA

Sources: Pharmacyclics Considering Sale As Cancer Drug Lights Up Forecasts.

As prospects build for Pharmacyclics’ flagship cancer drug Imbruvica, Bloomberg News reports sources as saying that the company is considering a sale and is attracting interest from Johnson & Johnson, Novartis, and other drugmakers. According to Bloomberg, the sources said that Pharmacyclics could carry a price tag of $17-18 billion in a sale, but added “that deliberations are at an early stage and may not lead to a deal.” On Wednesday, shares of the Sunnyvale, California-based company rose 17 percent to close at $220.22 in New York. A deal at around $18 billion, observes Bloomberg, would value Pharmacyclics at around 200 times its 2014 net income of $86 million. But analysts predict that sales of Imbruvica will rise to $3.56 billion in 2018 versus $492 million last year. Observed Morningstar analyst Stefan Quenneville, “I don’t think this is a crazy valuation based on the peak sales of this thing. I would call it a primarily one-asset company. It’s not surprising to see a buyout. It’s very clean and straightforward for a bigger company that can say, ‘We can do a better job with our sales force.’” Bloomberg goes on to carry a quote from Robert W. Baird analyst Brian Skorney similarly trumpeting the sales potential of Imbruvica.

Exploring the Bloomberg piece, Fierce Pharma reports that a Pharmacyclics purchase would be a “natural” fit for J&J, whose Janssen subsidiary already sells Imbruvica “outside the U.S. and shares marketing duties with Pharmacyclics at home, and the pair is working together to try to expand Imbruvica’s patient pool.” An acquisition also “makes sense” for Novartis, which “has been active in the M&A arena” and has cancer “high on its priority list.”

Breakthrough Cancer Drug Imbruvica A Gold Nugget For Pharmacyclics. Bloomberg News reports that Imbruvica, an “overlooked drug” that Pharmacyclics paid only $6.6 million to obtain in 2006, “could become one of the biggest selling cancer treatments ever” and has the company “considering selling itself in a deal that could be worth as much as $18 billion.” Imbruvica is “projected to join the ranks of other top-selling oncology drugs,” continues Bloomberg, and according to Brian Druker of Oregon Health & Science University “‘certainly has the potential of Gleevec-like revenue.’” Bloomberg goes on to explore why Imbruvica has such promising potential, noting that in one study the drug “significantly delayed progression of the disease and lowered the death rate by more than half in patients who had failed other therapies or relapsed.”


5 Replies

  • Interesting news and you have to wonder at the apparent over valuation, given the standard financial spiel of "past results do not reflect future earnings". When a company only has one asset effectively, investors are taking a big risk that a competitor won't come along with something better. We all hope of course that something better will come along and perhaps we can take some comfort in the great deal of interest shown in this sale as it augurs well for future CLL drug development.

    Interestingly, this pattern of pharmaceutical businesses only having one or a few products that provide the majority of sales income is fairly common in the industry.


  • I spent a long deep session with Dr. Furman last week and from his comments that knock out will be ACP-196- same BTK target, better results and fewer side effects.

    His only concern was that the FDA would require Phase 3- head to head double blind trials of Imbruvica vs. ACP-196 and that would take several years to show the statistical benefit he sees in Phase 2 now.

    BTW- I bought Gilead stock when I started my trial and sold half when it was approved and the stock price doubled. I have the remainder up for sale on a Limit order right now.

    I would love to buy some Acerta stock but they are in the Netherlands, have only 8 Full Time Employees and no public offerings.

  • Len,

    I love to listen to Dr Furman. He is such an optimist. His voice is good for the soul.


  • > this pattern of pharmaceutical businesses only having one or a few products that provide the majority of sales income is fairly common in the industry.

    Very common. Most new drug break throughs are made by small bio-tech start ups. Some examples:

    - Biggest of them all, Amgen, started with just one product, Epogen, and sold the marketing rights outside the US to Johnson & Johnson in order fund their clinical trials. Exactly the same as the current Pharmacyclics - J&J hook-up. For their first decade that and Neupogen were their only products. (Saw that from the inside. My biochemist wife worked for Amgen during those early days.)

    - IDEC and Rituxan (their only product until they merged with Biogen)

    - Immunex and Enbrel (later bought out by Amgen)

  • Interesting. Is that because the pharmaceutical giants see their forte as managing clinical trials, gaining approvals, production and marketing while relying on small incubator businesses to take promising ideas forward into an effective drug so that the small company can repay their investment with the inevitable buy out/IPO?