AbbVie/Allergan: Commission Set to Vote to Clear Biopharma Tie-up

Published on May 01, 2020

The Federal Trade Commission is set to vote to accept a consent order clearing the way for AbbVie (ABBV) to close its $63 billion acquisition of biopharma giant Allergan (AGN), sources familiar with the matter said.

The final commission vote is expected within the next few days, the sources said.

FTC clearance is the last regulatory condition to the deal’s close. The merger is also subject to Irish High Court approval, where a court date is set for May 6.

The commission vote will mark the conclusion of a lengthy FTC review of the deal, which the companies inked on June 25, 2019. AbbVie initially projected that the merger would close in the first quarter of this year, but subsequently revised its timing guidance to May.

The companies on March 17 disclosed that they had executed a consent order with FTC staff that would require Allergan to divest pancreatic enzyme therapies Zenpep and Viokace to Nestlé (SWX: NESN), and brazikumab, a pipeline interleukin-23 inhibitor, to AstraZeneca (AZN).

The consent subsequently won a positive recommendation from Bureau of Competition Director Ian Conner.

Since the consent order moved to the commission level, the commissioners have barraged FTC staff—and in turn the companies—with questions about various aspects of the agreement, including the sale of Allergan’s pancreatic therapies to Nestlé, the sources said.

Nestlé’s Health Science division is largely focused on nutrition and consumer health products, and doesn’t market a particularly robust portfolio of prescription drugs.

The brazikumab sale to AstraZeneca has also attracted commission-level questions, the sources said.

AstraZeneca led brazikumab’s development and commercialization efforts until October 2016, when it licensed the drug’s rights to Allergan subject to a $250 million upfront payment and milestone and sales-based payments of up to $1.27 billion. However, AstraZeneca isn’t paying upfront to recover the drug’s rights, and Allergan is also agreeing to fund brazikumab’s development up to completion.

This consideration structure could raise questions about whether AstraZeneca has sufficient skin in the game to be an effective steward of the drug—especially if brazikumab faces unexpected setbacks during clinical trials or the company otherwise pursues a near-term change in strategy.

The vote to accept the proposed consent order won’t be unanimous, and the Nestlé and AstraZeneca issues are both poised to play roles in the split commission vote, the sources said.

An FTC spokesperson declined to comment. AbbVie and Allergan representatives didn’t immediately respond to requests for comment.