AbbVie Goes On The Offensive With $10.9 Billion Takeover

 AbbVie (ABBV) announced Monday a $10.9 billion plan to acquire Apogee Therapeutics (APGE), strengthening its immunology pipeline and sending Apogee stock flying.

The deal "helps partially solve one of the biggest investor concerns of what drives growth beyond Skyrizi/Rinvoq," RBC Capital Markets analyst Trung Huynh said in a report. Skyrizi and Rinvoq are AbbVie's immunology powerhouses, bringing in a collective $6.6 billion in first-quarter sales.

Apogee Therapeutics' leading asset is a drug called zumilokibart. Zumilokibart is in testing to treat eczema, asthma and eosinophilic esophagitis. Huynh says zumilokibart is worth more with AbbVie, where it will benefit from an established salesforce, payer leverage and launch expertise.

AbbVie stock jumped about 5% to 227.25 in early action on today's stock market. Shares are forming a cup-with-handle base with a buy point at 230.47, according to IBD MarketSurge charts.

"The deal doubles down on core competencies and, importantly, signals management will deploy capital offensively (we don't think this will be the last bolt-on)," Huynh said.

The deal values Apogee stock at $135.11 per share, roughly a 49% premium to its closing price on Friday, Leerink Partners analyst David Risinger said in a report. AbbVie will spend just under 3% of its market cap to close the deal. The company expects the Apogee takeover to be accretive to earnings in 2032.

Apogee had planned to begin Phase 2 and Phase 3 studies of zumilokibart in eczema and eosinophilic esophagitis, respectively, in the second half of this year. It also had expected to start a midstage study in asthma in the first half of 2027.

If approved, zumilokibart could compete with Dupixent, an injectable treatment for eczema and asthma, from Regeneron Pharmaceuticals (REGN) and Sanofi (SNY). Dupixent requires about 26 shots a year, while zumilokibart looks to be just two to four shots a year.

Beyond zumilokibart, Apogee has preclinical-stage drugs in testing for eczema and asthma/chronic obstructive pulmonary disease, or COPD.

These assets will help diversify AbbVie's pipeline and portfolio, offsetting expectations for Skyrizi and Rinvoq to account for more than half of the company's topline by 2028. Though both are sales behemoths, that would create "meaningful concentration risk," Huynh said.

"We think the Apogee deal goes part way to addressing this without diversifying into unfamiliar territory," he said. "ABBV shares historically outperform when management buys assets in core competencies and deploying $10.9bn (net $10.1bn of APGE cash) here beats buybacks at current valuations and M&A in lower-return areas."

https://www.investors.com/news/technology/abbvie-apogee-therapeutics-acquisition-apogee-stock/