In order to boost its pipeline,
) inked a collaboration agreement with Infinity Pharmaceuticals (
) to develop and commercialize the latter's oncology candidate
duvelisib (IPI-145). Infinity Pharma's shares jumped over 44%
following the announcement.
The Deal in Details
AbbVie will be making an upfront payment of $275 million to
Infinity Pharma to jointly commercialize duvelisib in the U.S. and
will share the potential profits or losses equally. The companies
will also share the royalty obligation in the U.S. equally relating
Outside the U.S., AbbVie will be solely responsible for the
development and commercialization of duvelisib. Infinity Pharma
will receive tiered double-digit royalties (23.5% to 30.5%) on net
sales of duvelisib following approval.
Apart from the upfront payment, Infinity Pharma is also eligible to
receive additional payments of up to $530 million on duvelisib
achieving certain development, regulatory and commercial
milestones. The amount includes a payment of $405 million through
the first commercial sale of duvelisib.
Duvelisib is currently being developed in the phase III DUO study
for the treatment of patients suffering from chronic lymphocytic
leukemia (CLL) and in the phase II DYNAMO program for the treatment
of indolent non-Hodgkin lymphoma (iNHL). The candidate is also
under development in several other studies. As per the agreement,
AbbVie and Infinity Pharma will be initiating several phase II and
phase III studies on duvelisib in hematologic malignancies in the
next several years.
The second pact struck by AbbVie is a research and development
(R&D) agreement with Calico Life Sciences to jointly discover
and develop candidates to treat age-related diseases including
neurodegeneration and cancer.
As part of the deal, both AbbVie and Calico will be funding up to
$250 million each initially and may also contribute another $500
million each later. Calico will be responsible for the early
R&D programs for the first five years and will continue to
advance the programs through phase IIa over a ten-year period.
AbbVie on the other hand will support Calico in early R&D
stages and will have the option to manage late-stage development
and commercial activities. The companies will be sharing costs and
AbbVie maintained its adjusted guidance for the third quarter and
full year 2014 following the announcement of the two deals as the
expenditures will be treated as special items. Third quarter
earnings are still expected in the range of 77 cents to 79 cents
per share. The Zacks Consensus Estimate is 77 cents. AbbVie
continues to expect 2014 earnings in the range of $3.06 to $3.16
per share. The Zacks Consensus Estimate of $3.15 is on the higher
end of the guidance range.
The two agreements will significantly boost AbbVie's pipeline.
Infinity Pharma's duvelisib is a great strategic fit for AbbVie's
existing oncology pipeline. With AbbVie's expertise the candidate
may hit the market faster. However, the question remains whether
duvelisib is worth as much as $805 million?
We remind investors that AbbVie is working on strengthening its
portfolio with the impending acquisition of Shire (
). This deal will not only boost its portfolio but will also help
to lower its tax rates.
AbbVie carries a Zacks Rank #3 (Hold). A better-ranked stock in the
health care sector is Allergan Inc. (
), carrying a Zacks Rank #1 (Strong Buy).
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