AbbVie’s Cerevel deal hits an uncommon roadblock

20 Feb 2024
www.biopharmadive.com
Acquisition
AbbVie’s multibillion-dollar bid to acquire Cerevel Therapeutics has hit an unusual snag that could prevent the deal from closing for months.
The companies said that, on Feb. 16, they received a so-called second request from the Federal Trade Commission. These requests are part of the foundational antitrust law in the U.S. — the Hart-Scott-Rodino Act — and are seldom used. According to the FTC, they were issued in less than 1% of transactions reported to the agency last year.
A second request keeps a proposed acquisition from completing until the companies involved provide more information about their deal. Typically, that information pertains to the products and services the companies offer, or how a tie-up could affect market conditions and competition. The FTC can also conduct formal or informal interviews with the companies.
Cerevel and AbbVie “expect to promptly respond” to the request and “continue to work cooperatively with the FTC in its review,” according to documents filed Friday with the Securities and Exchange Commission. Cerevel still anticipates the deal will close in the middle of this year.
If significant delays happen, that could further unnerve some pharmaceutical and biotechnology investors. The FTC, under the leadership of chairperson Lina Khan, has taken a closer look at the drugmaking industry over the past couple of years, scrutinizing mergers as well as use of patents to impede market competition.
Last spring, the agency went so far as to sue Amgen to block its $28 billion purchase of Horizon Therapeutics, marking the first real challenge to a pharmaceutical merger in recent memory. A month later, Pfizer withdrew and then quickly refiled the notification paperwork for its planned $43 billion acquisition of SeaGen — a move some analysts guessed was strategic, meant to provide enough additional information to keep the FTC from pursuing a second request.
Michael Yee, an analyst at the investment bank Jefferies, wrote in a note to clients Friday that his team was not surprised AbbVie and Cerevel got a second request, given the overlap in their businesses. Cerevel’s research focuses on the brain and central nervous system, and its most advanced programs are directed at Parkinson’s and schizophrenia — two diseases for which AbbVie already has marketed products.
However, Yee argues that AbbVie’s products and Cerevel’s experimental drugs “are not truly competitive” with each other, and he therefore expects the deal will still close, although perhaps later than the companies have signaled.
Cerevel’s schizophrenia treatment has been of particular interest to investors, as it’s part of an emerging class of drugs that work differently than available antipsychotics. Karuna Therapeutics, which got snapped up by Bristol Myers Squibb just weeks after AbbVie and Cerevel inked their deal, is also developing one of these medicines and is poised to be the first to secure an approval from the Food and Drug Administration.
Analysts at Stifel have estimated a $10 billion market opportunity in schizophrenia alone for this class of drugs, known as muscarinic receptor agonistsmuscarinic receptor agonists.
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