AbbVie announced Thursday it is acquiring privately held Stemcentrx for $5.8 billion in cash and stock, with additional milestone guarantees of up to $4 billion.
The purchase gives AbbVie access to Rova-T (rovalpituzumab tesirine), Stemcentrx's stem-cell treatment for small-cell lung cancer. The drug is in late-stage testing.
The deal also gives AbbVie four more cancer treatments in the early stages of clinical testing.
With the deal, AbbVie has made a significant addition to its cancer drug pipeline, picking up several treatments that have shown early promise in testing.
Rova-T looks especially positive. Phase 1 and 2 studies demonstrated "overall response rates of 44 percent in DLL-expressing small cell lung cancer (SCLC) patients who have previously failed one or more standard therapies," AbbVie reported in announcing the news of the acquisition.
Stemcentrx has been seeking breakthrough therapy designation from the FDA for Rova-T. AbbVie is looking to position it as a third-line SCLC treatment, an area where there currently is no approved therapy.
The deal involves about $2 billion in cash and the remainder in AbbVie stock, plus the milestone guarantees. AbbVie expects the deal to reduce earnings per share by about 20 cents in 2016, but to be profitable by 2020.
AbbVie has been active in building out is presence in oncology. Earlier this month, the company signed two separate oncology collaboration deals for preclinical cancer drugs. And last year, it bought Pharmacylics for $21 billion, gaining access to the blockbuster blood cancer drug Imbruvica. In addition to its own R&D, these efforts should help AbbVie offset the threat of generic competition to its mainstay drug Humira.