By David Wainer
AbbVies acquisition of neuroscience biotech Cerevel Therapeutics hasnt closed yet. But the latest results from Cerevels Parkinsons disease late-stage trial just made the deal look even better.
Notably, when AbbVie announced the $8.7 billion acquisition of Cerevel back in December, the main focus of the deal was the experimental schizophrenia drug Emraclidine, part of a new class of medications that target the muscarinic receptor. This category of medications has sparked renewed pharmaceutical interest in psychiatric drugs.
Late last year, Bristol Myers Squibb also announced its entry into the field, buying Karuna Therapeutics for $14 billion. The Food and Drug Administration is reviewing Karunas drug for the treatment of schizophrenia.
So it was a pleasant surprise for AbbVie and its investors that a separateand less hypeddrug for Parkinsons performed well in a late-stage study. The study showed that when Cerevels treatment, tavapadon, is used together with levodopa, a common treatment for the disease, it can improve Parkisons patients motor symptom control.
Most folks thought of tavapadon as very high risk, wrote Umer Raffat, an analyst at Evercore ISI. Emraclidine alone would have made [the] Cerevel deal very attractive. Now tavapadon adds a major upside. Jefferies analyst Michael Yee noted that given the lack of new approvals for this category, this drug has the potential to fetch $1 billion in annual sales.
AbbVie was up nearly 1% in recent trading. Cerevel was up about the same to $42, slightly below the $45 per share AbbVie agreed to pay.
Investors on both sides of this deal cant celebrate just yet. The biggest obstacle would be antitrust action: The Federal Trade Commission has been reviewing the deal, and it wouldn't be unthinkable for the agency to intervene, given FTC Chair Lina Khans scrutiny of pharma mergers. Analysts generally believe the deal is likely to pass, though perhaps with some delays.
For AbbVie, the sooner this deal closes, the better.
This analysis comes from the Journal's Heard on the Street team. Subscribe to their free daily afternoon newsletter here_._
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(END) Dow Jones Newswires
April 18, 2024 12:17 ET (16:17 GMT)
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