• by Thom Forbes  @tforbes, March 5, 2015

AbbVie, the North Chicago-based pharmaceutical firm whose $52-billion bid to buy the Dublin, Ire.-based Shire Plc. fell apart last year over tax rule changes, swooped in last night to snatch biopharmaceutical maker Pharmacyclics from the talons of Johnson & Johnson, which co-markets the cancer drug Imbruvica with it. 

In acquiring the Sunnyvale, Calif,-based company for $21 billion, AbbVie is “gaining access to what is expected to be one of the world's top-selling cancer drugs and expanding its reach in the profitable oncology field,” write Reuters Supriya Kurane in Bengaluru and Ben Hirschler.

“Aside from Imbruvica, [Pharmacyclics] has three more drugs in clinical development and several at preclinical stages,” the AP reports.

Imbruvica is “an easy-to-use pill that costs about $100,000 a year, avoids certain serious side effects of chemotherapy, and is already approved for four different blood cancer uses,” observes Bloomberg’s Drew Armstrong.

Although “it will overlap with one of AbbVie’s top pipeline products, ABT-199, there should be room for both, said Asthika Goonewardene, an analyst with Bloomberg Intelligence,” Armstrong writes. “It may take until 2016 for ABT-199 to be approved, and while Imbruvica has shown itself to be a preferred drug for many patients, others may benefit from a different therapy.”

Johnson & Johnson “had been thought to be the frontrunner … as it has been collaborating for years with Pharmacyclics to develop Imbruvica,” write the James Fontanella-Khan, Arash Massoudi, Neil Hume and David Crow Financial Times, where a hed earlier today had been suggesting that a deal for $17.5 billion was imminent. They were not alone.

“Several news outlets including Bloomberg News as late as Wednesday evening were reporting Johnson & Johnson would announce a deal for Pharmacyclics,” writes Forbes contributor Bruce Japsen. Novartis was also interested, he reports.

“According to one person familiar with the situation, J&J will continue working with AbbVie in spite of failing to win control of the Californian company,” the FT reports.

“Team Pharmacyclics is honored and enthusiastic to join the AbbVie organization,” Pharmacyclics chairman and CEO Robert W. Duggan said in a statement reported by USA Today’s William Cummings. “Together and as one, our focus remains to create a remarkable difference for patient betterment around the world.”

“Mr. Duggan had made fortunes investing in and helping run companies as varied as a maker of children’s embroidery sets, a cookie bakery and Computer Motion, a pioneer in robotic surgery, which became part of Intuitive Surgical,” Michael J. de la Merced and Andrew Pollack tell us in TheNew York Times. “He became an investor in Pharmacyclics in 2004 because he had a son with a brain tumor. The company was developing a drug for brain cancer that eventually failed to win approval from the Food and Drug Administration.”

Duggan then gained control of the board in 2008 and pushed for the development of Imbruvica, they report,

The deal gives AbbVie, which was spun off from Abbott Laboratories in 2013, a big boost in a different pasture than its cash cow grazes in.

“The company has relied heavily on the sales of Humira, a rheumatoid arthritis drug, and has been looking to expand its pipeline of drugs,” writes Ellen Jean Hirst on the chicagotribune.com. Humira will go off patent and face stiff competition from biosimilars in 2016.

“The acquisition of Pharmacyclics is a strategically compelling opportunity. The addition of Pharmacyclics’ talented and innovative team will add enormous value to AbbVie,” said its chairman and CEO, Richard A. Gonzalez, in a release announcing the cash-and-stock deal.

Imbruvica had $548 million in worldwide net product revenue last year — its first on the market — and Pharmacyclics projects sales will reach $1 billion this year, Jonathan D. Rockoff and Peter Loftus report in TheWall Street Journal. “Some analysts, citing Imbruvica’s impressive performance in clinical trials, estimate sales could peak at $5 billion a year,” they write.

“This deal could further inflame enthusiasm as investors look for the next company to be snapped up at a hefty premium,” points out the Financial Times’ Andrew Ward in an analysis of why AbbVie was willing to pay a premium for Pharmacyclics.

But the risks are high in the sector. “Only about 7% of experimental drugs in early stage trials go on to reach market and by the time it becomes clear a product, such as Imbruvica, is destined for success, investors and Big Pharma are being asked to pay an increasingly high price for a share of the spoils,” Ward writes.