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  • Jonathan Poyer

AbbVie's Acquisition Spree Lifts the Market...For Now

The S&P Select Biotech Index held the 200 day moving average as Abbvie (ABBV) treated investors to an M&A doubleheader.

Cerevel Therapeutics (CERE) became the second ABBV deal this month with the announcement of an $8.7 billion takeout. Deal timing was notable given CERE has yet to report registration-enabling clinical data with most such trials expected to read out over the next several quarters. Eyebrows were further raised as CERE shares gained ~40% on >8x average volume, adding $2 billion of market cap, during the two days prior to the public deal announcement. The proposed transaction is not expected to be accretive until 2030+ (assuming clinical success) given the earlier stage of the lead program making the price paid to appear to be quite high (4-5x 2030 consensus revenue).

The deal drowned out competing headlines that the Biden administration unveiled a new framework to use "march-in rights" to repossess drug patents funded by taxpayer dollars to lower prices. Analysts expected litigation to ensue should this framework actually be utilized. Fortunately, the regulatory environment is comparatively constructive as evidenced by the landmark approval of the first medicine incorporating gene editing technology.

Crisper Therapeutics' (CRSP) Casgevy was approved for Sickle Cell Disease (SCD) and will be priced at $2.2 million per treatment.

Bluebird Bio's (BLUE) competing gene therapy drug Lyfgenia was also approved for SCD, but will be priced higher at $3.1 million per treatment despite being given a "black box" warning on the label for hematologic malignancy. Shares of both companies traded down following the approvals as investors debated the launch trajectory and ultimate revenue opportunity given the harsh pre-treatment regimens, potential permanent side effects, lack of long term response data, and other treatment options.

Clinical data updates cut a few additional stocks in half including Cogent Biosciences (COGT) and Replimune (REPL). COGT came under pressure after presenting data at the American Society of Hematology (ASH) Conference from the Phase 2 SUMMIT trial evaluating Bezuclastinib in patients with nonadvanced systemic mastocytosis that was not clearly differentiated from leading competitor Blueprint medicines (BPMC).

BPMC rallied to a 52 week high in an apparent zero sum game.

REPL announced the CERPASS trial missed both primary endpoints in locally advanced/metastatic CSCC and will discontinues related indications to extend the cash runway into early 2026.

Reductions in force announcements continued from IGM Biosciences (IGMS, 22% RIF), Ventyx (VTYX, 20% RIF) and Hansa Biopharma (HNSA SS, 25% RIF).

Bristol-Myers Squibb (BMY) announced a new $3 billion buyback reminding investors that capital return to shareholders appears to be a better way to create value as opposed to spending on additional marginal pipeline programs

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