IHS Global Insight Perspective | |
Significance | Celgene (U.S.) will inherit Abraxis (U.S.)'s successful cancer drug Abraxane (paclitaxel protein-bound particles for injectable suspension) after successfully agreeing a deal to acquire the company for US$2.9 billion. The drug-discovery pipeline of Abraxis is also very strong in oncology, providing a fillip to Celgene's portfolio. |
Implications | Celgene's presence in the oncology drugs market is led by Revlimid (lenalidomide), its multiple myeloma drug, and the addition of Abraxane, which is already approved for metastatic breast cancer, offers the potential to expand the present business model. |
Outlook | The successful approval of the additional indications pursued for Abraxane could add to revenues, and, together with Celgene's marketing muscle, could elevate the drug to blockbuster status (US$1 billion in sales) in the near term. Celgene will also look to optimise Abraxis' cardiovascular franchise led by Coroxane. |
A definitive acquisition and merger agreement has been signed by U.S. firms Celgene and Abraxis BioScience for a total consideration of US$2.9 billion. Under the terms of the merger agreement, each share of Abraxis BioScience's common stock will be converted into the right to receive an upfront payment of US$58 in cash and 0.2617 shares of Celgene's common stock. The firms state that the transaction is expected to be dilutive in non-GAAP (generally accepted accounting protocol) earnings in 2011 and accretive from 2012.
The acquisition will see Celgene gaining from Abraxis' presence primarily in the oncology drugs market in the form of the marketed drug Abraxane. The drug was first approved in January 2005 by the U.S. FDA for the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy, and by the European Medicines Agency in January 2008. The drug also has orphan drug status for stage IIB-IV melanoma and pancreatic cancer. Abraxane garnered annual sales of US$314.5 million in 2009.
Apart from Abraxane's marketed indication, Celgene will now have access to the proprietary platform technology known as nanoparticle albumin-bound, or nab, technology that has spearheaded Abraxis' new drug discovery development. Looking at the table below listing the acquired firm's oncology drug pipeline, it is noted that Abraxane still dominates the late-stage lead compound potential with five indications being pursued. Of this the advanced lung cancer indication currently in Phase III clinical trials provides the best commercialisation opportunity for Celgene.
Abraxis Biosciences' Onco R&D Portfolio | ||
Drug Candidate | Indication/Therapeutic Area | Phases of Development |
Abraxane (nab-paclitaxel) | Breast cancer (adjuvant) | Phase II |
Breast cancer (taxane refractory) | Phase II | |
Lung cancer (advanced) | Phase III | |
Malignant melanoma | Phase II | |
Pancreatic cancer (advanced) | Phase II | |
ABI-008 (nab-docetaxel) | Prostate cancer (hormone refractory) | Phase II |
ABI-009 (nab-rapamycin) | mTOR inhibitor—solid tumours | Phase I |
ABI-010 (nab-17AAG) | Hsp90 (heat shock protein) inhibitor—solid tumours | Preclinical |
ABI-011 (nab-5404) | Solid tumours dual microtubule and topoisomerase-1 inhibitor | Preclinical |
ABI-013 (nab-CY196) | Oncology | Preclinical |
Source: Abraxis Biosciences | ||
For the full year ended 31 December 2009, Abraxis BioScience reported net revenue of US$359.1 million compared with US$345.3 million for 2008, and net losses of US$104 million.
Outlook and Implications
The move to acquire Abraxis BioScience by Celgene is clearly driven by the latter firm's strategy to bolster its oncology drug market presence. This was confirmed by the company's chief executive officer, Bob Hugin, who said that the acquisition of Abraxis BioScience is an exceptional strategic fit that will accelerate the firm's strategy to become a global leader in oncology. The potential of the expansion of Abraxane as a franchise is also brought forth as a prospect for enhancing revenues in the near term. Recent clinical data presented at ASCO (the American Society for Clinical Oncology) and AACR (the American Association for Cancer Research) for Abraxane in first-line non-small-cell lung cancer and first-line pancreatic cancer highlighted significant growth opportunities for Celgene. With five indications and one for advanced lung cancer being in late-stage clinical development, Celgene will look to deploy its commercialisation business model replicated from the successful Revlimid franchise to Abraxane. In fact, the U.S. firm could also look to optimise the current market potential of the drug as a metastatic breast cancer drug bolstering annual sales estimates beyond the current US$314.5 million. Hence, it is observed that Celgene may be seeking to build Abraxane into a potential blockbuster drug, with sales in excess of US$1 billion, over the next five years. In the near term, Celgene will accelerate efforts to integrate the operations of Abraxis BioSciences and seek to increase the usage of the acquired firm's nab technology into its own drug-discovery portfolio development.