The AbbVie-Allergan Acquisition and the Road Ahead

Contributors : Faisal A. Khan, Lead Analyst, Company & Drug Insights; Andrea S. Witt, Ph.D., Exec. Director, CNS & Ophthalmology; Jonathan W. Searles, Sr. Director, CNS & Ophthalmology; Bethany A. Kiernan, Ph.D., Sr. Director, CNS & Ophthalmology; Emma McFadden, Ph.D., Sr. Director, CNS & Ophthalmology; Natalie C. Taylor, Ph.D., Principal Analyst, CNS & Ophthalmology; Angela Sparrow, Ph.D., Principal Analyst, CNS & Ophthalmology

Publish date: 02 Jul, 2019

Have Allergan’s CNS and Ophthalmology Franchises Been Underestimated?

AbbVie’s long-term growth strategy finally shapes up with the acquisition of Allergan. The acquisition gives an immediate scale and profitability to AbbVie’s growth, bringing new therapeutic segments which include Allergan’s leading medical aesthetic business. AbbVie’s strategic portfolio diversification was widely anticipated to minimize its overt dependence on Humira. AbbVie now obtains commercialization rights to Botox, a major aesthetic brand with lower biosimilar erosion risk. The acquisition will pay-off Allergan & AbbVie shareholders with enhanced value and provides an opportunity for new and additional investment in R&D, with immediate and significant accretion on attractive return on capital invested, and debt reduction. This will further strengthen AbbVie’s long-term R&D funding capacity and focus on innovative science and advancement of an industry-leading pipeline. The acquisition also provides AbbVie an opportunity to enhance its global commercial presence by maximizing the value of Allergan’s attractive portfolio of fast-growing products in therapeutic areas like medical aesthetics, eye care, CNS, and gastrointestinal disorders.

Allergan’s blockbuster products such as Botox and Vraylar will see a major impetus driven by AbbVie’s commercial strength, marketing prowess, and further international infrastructure. The acquisition opens the door to new opportunities for AbbVie.

A Facelift for AbbVie’s Mature CNS Portfolio and an Established Position in Ophthalmology

With the acquisition, AbbVie will add established brands to in its small and mature CNS franchise and gain a strong foothold in the ophthalmology space. Despite AbbVie’s CEO, Richard Gonzalez, declaring the acquisition was less focused on Allergan’s pipeline, Allergan has a range of late-phase assets with moderate revenue potential in the near- and mid-term, helping to offset the loss of Humira revenue.

CNS is one of AbbVie’s smallest therapeutic areas and includes mature products such as Depakote and Luvox, and the newer, but niche, Parkinson’s disease (PD) product, Duodopa. Moreover, its CNS pipeline is still in early stage and high risk, but innovative, focusing on novel disease-modifying therapies in neurodegenerative diseases including Alzheimer’s disease (AD), PD, multiple sclerosis (MS), spinal cord injury (SCI), and progressive supranuclear palsy (PSP). The Allergan CNS portfolio, with marketed therapies (i.e., Vraylar, Saphris, Viibryd, Fetzima, Namzaric, Botox), also promises near-term launches, that partially derisk AbbVie’s neurology portfolio.

Though AbbVie’s presence in ophthalmology is minor (Humira is approved for non-infectious uveitis of the posterior segment), AbbVie has no pipeline assets in this area. In contrast, Allergan is well established in ophthalmology with multiple current and late-stage therapies that could provide a stable revenue stream in the near-term.

Psychiatry: Stable, If Moderate, Revenue from Allergan’s Portfolio

Vraylar, Viibryd, Saphris, and potentially the late-phase antidepressant rapastinel, re-establish AbbVie’s limited foothold in psychiatry which comprises Depakote (bipolar disorder) and Luvox (major depressive disorder [MDD]). Vraylar and rapastinel target underserved populations in these indications. Vraylar is approved to treat schizophrenia and manic or mixed episodes in bipolar disorder, and an expanded approval from the FDA in May 2019 for the treatment of bipolar depression provides the antipsychotic with the broadest label among therapies prescribed for bipolar disorder.

In depression, Allergan continues to analyze data from late-phase studies of rapastinel after the drug failed three Phase III trials in MDD. As an N-methyl-D-aspartate (NMDA) receptor-targeting antidepressant promising rapid symptom improvement in treatment-resistant depression (TRD) patients, rapastinel offers a distinct mechanism of action and a mild side effect profile, notable advantages compared with current standards of care. Whether AbbVie’s acquisition of Allergan alters the prospects for rapastinel remains to be seen. Coupled with this uncertainty is external competition in this space. Janssen has a significant head start over Allergan with its own intranasal NMDA receptor-targeting antidepressant, Spravato, launched for TRD in the United States in March.

Migraine: Near-Term Revenue from Allergan’s Botox and Anti-CGRP Pipeline

Allergan is a leader in migraine, with Botox approved for chronic migraine prevention. Adding to this are two oral calcitonin-gene related peptide (CGRP) receptor antagonists in late-phase development: ubrogepant, currently under FDA review for the acute treatment of migraine, and atogepant, in Phase III development for migraine prophylaxis. These agents will capitalize on the present buzz around CGRP as an effective target in migraine, following the launch of three subcutaneous anti-CGRP MAbs in 2018 from Novartis/Amgen, Lilly, and Teva. Atogepant and ubrogepant’s oral formulation will provide convenient acute and preventive alternatives for potentially millions of migraineurs. Allergan’s migraine portfolio, which DRG has forecast to be worth upwards of $2.5 billion in the United States by 2027, could now be a key contributor in AbbVie’s future growth.

Neurology: Modest Synergies Provide Support for AbbVie’s Ambitious Pipeline

AbbVie is developing elezanumab (ABT-555), a novel RGMa-targeting MAb with neuroprotective potential, as an adjunctive treatment in relapsing and progressive MS and SCI. Botox’s approval for MS spasticity provides inroads to MS specialists. Allergan also markets Namzaric for AD, providing AbbVie with sales force experience and institutional knowledge ahead of a potential launch of AbbVie’s investigational anti-tau antibody ABBV-8E12 (Phase II; also in development for PSP).

Ophthalmology: Stable Revenue if AbbVie Successfully Executes on Near-Term Launches

Besides marketing ophthalmology brands across the globe, Allergan has multiple early-to-late-phase assets in several indications, including glaucoma, wet AMD, dry eye disease, and presbyopia. This therapeutic area will contribute stable revenue for AbbVie going forward, as it has for Allergan in recent years. However, with the expected loss of exclusivity for Restasis in the United States in 2019, the future of the ophthalmology portfolio will hinge on the success of key emerging therapies, including abicipar pegol in wet AMD and bimatoprost SR in glaucoma, both of which are expected to launch in the United States in 2020.

Allergan’s Assets Buy Time for AbbVie’s Neurology Pipeline

Allergan’s psychiatry, migraine, and ophthalmology assets will infuse revenue into AbbVie’s bottom line in the near-to-mid-term, if AbbVie can successfully commercialize Allergan’s late-phase pipeline products. This revenue will partially offset AbbVie’s losses due to Humira biosimilars and will help finance AbbVie’s potentially transformative, but highly risky neurology R&D candidates including its alpha-synuclein MAb for PD (ABBV-0805, Phase I), ABBV-8E12, and elezanumab. Should any of these MAbs launch, they would be met with tremendous commercial success given the significant unmet need and high prevalence in these indications, and would be bolstered by AbbVie’s and Allergan’s proven lifecycle management expertise with Humira and Botox, respectively. Another “Humira” might well emerge if AbbVie commits to Allergan’s pipeline.



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