AbbVie’s $10.9 billion acquisition of Massachusetts-based biotech Apogee Therapeutics doesn’t represent a pivot into new territory. Rather, it strengthens the immunology portfolio that built the drugmaker’s powerhouse reputation.
Shares of Apogee Therapeutics spiked on Monday after AbbVie said it plans to acquire all shares outstanding for $135.11 each in cash. The transaction has been approved by both companies’ boards and is slated to close in the third quarter.
Apogee stock surged 47% to $132.55, a new closing high as well as the largest same-day percentage increase on record, according to Dow Jones Market Data. AbbVie shares rose 6.3%, the largest single-day jump since November 2020.
The deal aligns with AbbVie’s highly lucrative immunology business, which is largely driven by the success of its blockbuster drug Skyrizi. Last quarter, the segment brought in $7.3 billion, representing nearly half of the company’s total revenue for the period.
This wasn’t always the case. Although Skyrizi and Rinvoq lead the portfolio today, the segment was previously anchored by Humira—an anti-inflammatory drug that reigned as the industry’s most valuable medicine for half a decade.
AbbVie lost U.S. patent exclusivity for Humira in 2023, opening the door to cheaper, “copycat” biosimilars. This sudden influx of competition triggered a steep drop in the drug’s revenue.
Even AbbVie’s market-leading products haven’t been immune to pressure. Skyrizi faces a new threat from Johnson & Johnson’s daily pill, Icotyde. While Skyrizi only requires four injections a year, Wall Street anticipates that many patients may prefer the convenience of an oral pill over an injection.
AbbVie remains confident that demand will hold steady. However, the Apogee deal is a logical way for the company to bolster its portfolio, guarding its reputation as a leader in immunology and doubling down on what has historically driven its success.
Apogee’s lead candidate, zumilokibart, is designed for patients with atopic dermatitis. Analysts at BMO Capital Markets recently noted that the drug appears slightly more effective than Regeneron and Sanofi’s Dupixent while offering a more convenient dosing schedule.
As seen with drugs like Skyrizi and Icotyde, delivery methods can be a key differentiator that offer a competitive edge. Both Dupixent and zumilokibart are subcutaneous injections, but zumilokibart is administered every three to six months as opposed to every two weeks for Dupixent.
This strategy contrasts with other drugmakers’ recent efforts to embrace what they see as emerging growth areas. Last week, Eli Lilly acquired 4E Therapeutics to expand into non-opioid painkillers, representing a renewed push into a space where the company has yet to established a foothold.
The payoff from the Apogee deal won’t be immediate. AbbVie expects the acquisition to dilute adjusted earnings by roughly 14 cents a share this year and 46 cents in 2027, before finally increasing the company’s earnings per share in 2032.
Some on Wall Street were quick to justify the price tag. Citi Research analyst Geoff Meacham asserted Monday that AbbVie’s premium is “defensible” given zumilokibart’s clinical efficacy and market potential. Still, he conceded that the clearing price likely reflected a premium from Apogee’s recent $3 billion collaboration with Blackstone to support the drug’s development and commercialization.
AbbVie itself believes the deal complements its existing immunology portfolio and accelerates its “clinical presence in the respiratory space.” Humira may have launched the company’s empire, but AbbVie is ensuring it has the firepower to defend it.
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