Darigabat

CEO Richard Gonzalez was clear that AbbVie did its due diligence and he does not expect big problems from the U.S. Federal Trade Commission. AbbVie’s $8.7 billion acquisition of Cerevel will help fill in gaps in the Chicago pharma’s pipeline with new areas to explore in neuroscience, but will regulators play ball? CEO Richard Gonzalez was clear that AbbVie did its due diligence and he does not expect big problems from the U.S. Federal Trade Commission, even though both companies have a schizophrenia drug. “Obviously we looked very carefully at the FTC risk before we proceeded forward. I can tell you, this acquisition is not anti-competitive,” Gonzalez said in a Thursday investor call. He noted that psychiatry is a very “crowded and fragmented” market with “literally dozens” of available medicines. Most entrants only capture portions of the market, leaving plenty of room for new options. Gonzalez also said that there are no overlapping mechanisms between Cerevel’s pipeline and AbbVie. Cerevel’s emraclidine is a muscarinic M4 selective positive allosteric modulator currently in phase 2 testing. As for Vraylar, which AbbVie markets for schizophrenia, Gonzalez said the therapy has a pretty low share of that market with the bulk of sales coming from bipolar disorder. “We have a lot of confidence that we will be able to get this through the FTC,” Gonzelez said. Analysts seemed to agree with Gonzalez. Mizuho Securities flagged overlap in schizophrenia, Parkinson's disease and major depressive disorder as areas that the FTC could take a closer look at—specifically the former. Mizuho’s Graig Suvannavejh, Ph.D., similarly noted the fragmented market that already exists in schizophrenia, with more than 20 available treatments and many companies involved. So even if the FTC does zoom in on this area of the overlapping portfolios, “we don't see a particular reason to be concerned,” Suvannavejh wrote. William Blair analysts similarly pointed to schizophrenia and the deal’s focus, emraclidine, but suggested there are other areas that could draw some additional scrutiny including Parkinson’s, where AbbVie has Duopa/Duodopa approved and ABBV-951 in development. Cerevel has tavapadon in phase 3 in the indication. “Despite the overlap, we note that these assets are all exploring different mechanisms and different lines of use, and the CNS space offers multiple generic and brand therapies that lessen the risk of market concentration,” William Blair wrote in a Thursday morning note.   A well-behaving molecule Emraclidine emerged as the highlight of the deal on AbbVie’s investor call. Chief Operating Officer Robert Michael called the therapy a “multibillion-dollar peak-sales opportunity” with significant potential to contribute to AbbVie’s growth in the 2030s. The therapy is going up against Karuna Therapeutics’ KarXT in the muscarinic class. That therapy was recently accepted by the FDA for review. Michael said that Cerevel’s asset is differentiated as a positive allosteric modulator that targets the M4 subtype, compared to KarXT which activates M1 and M4. Emraclidine is also just one active ingredient, whereas KarXT is a combination of xanomeline and trospium. Cerevel’s option is dosed once daily and does not need titration. Ease of dosing is key with the schizophrenia population, Michael noted. “The molecule itself, it behaves quite well. It has a good half-life and has minimal food effect. It is once a day, and I think that's a critical differentiator, especially in schizophrenia,” said Roopal Thakker, M.D., chief medical officer. Finally, “contrary to what has been reported for the most advanced muscarinic receptor modulator,” emraclidine has also had low rates of gastrointestinal side effects such as nausea, vomiting, dyspepsia and constipation. AbbVie plans to quickly bulk up the emraclidine program once the deal closes. Michael detailed a plan to add additional studies to expand the use case in schizophrenia, particularly in international markets such as Europe and Japan. The company will also target an adjunctive indication to pair emraclidine with existing anti-psychotic drugs which could help address an unmet need in psychiatric care. The drug will also be developed in a long-acting injectable formulation, which could help with patient adherence, Michael said. Other potential indications for emraclidine include dementia-related psychosis in patients with Alzheimer's and Parkinson's diseases. Thakker expects an initial approval for emraclidine in 2026 with international regulatory clearance in the following years. “It is clear to us that the majority of the deal value is likely ascribed to emraclidine,” William Blair wrote. But Cerevel also brings tavapadon, a dopamine D1/D5 selective partial agonist for Parkinson’s, darigabat for treatment-resistant epilepsy and CVL-871 for dementia-related apathy.   Done deals This is AbbVie’s second acquisition in a week, following the $10.1 billion cash offer for ImmunoGen, the maker of antibody-drug conjugate ovarian cancer treatment Elahere. Gonzalez has made no secret of his desire for deals on recent earnings calls and suggested today that these two could quell his appetite for bigger outlays—for now. “We have previously said that our BD efforts were focused on identifying assets that can drive growth in the next decade and we've accomplished that by adding to our oncology and neuropsych pipeline through both the Immunogen and Cerevel deals,” Michael said. “I would not anticipate similar-sized transactions for the foreseeable future. That said, we will continue to pursue smaller size, early stage opportunities that can further support growth in the next decade.” And that’s not because AbbVie can’t do another big deal. Michael said the company has the balance sheet capacity. “It's because of the strength of our current on market and pipeline portfolio, plus five key growth areas which both Immunogen and Cerevel both very nicely complement,” he said. Mizuho expects the deal will go ahead as announced, with both boards already in support and few outside pharmas likely to make a better bid.