Robbins Arroyo LLP: Acquisition of Pharmacyclics, Inc. (PCYC) by AbbVie Inc. (ABBV) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Pharmacyclics, Inc. (NASDAQ: PCYC) by AbbVie Inc. (NYSE: ABBV). On March 4, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which AbbVie will acquire Pharmacyclics for $261.25 per share. Under the terms of the agreement, Pharmacyclics shareholders may elect to receive cash, AbbVie common stock, or a combination thereof.
Is the Proposed Acquisition Best for Pharmacyclics and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Pharmacyclics is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $261.25 merger consideration represents a premium of only 18.6% based on Pharmacyclics’s closing price on February 25, 2015. This premium is significantly below the average one-week premium of nearly 38.8% for comparable transactions within the past Five years.
On February 18, 2015, Pharmacyclics reported strong earnings for its fourth quarter 2014. Total revenue for the quarter ended December 31, 2014, increased to $290 million from $124 million in the same period in the prior year. In the first full year of IMBRUVICA® (ibrutinib) sales, the company recorded total revenue of $730 million, driven by U.S. net product revenue of $492 million for the year ended December 31, 2014, compared to U.S. net product revenue of $14 million for the prior year. Pharmacyclics also reported GAAP net income for the year ended December 31, 2014, of $86 million, or $1.10 per diluted share, compared to GAAP net income of $67 million or $0.87 per diluted share for the year ended December 2013. Additionally, Pharmacyclics has beat consensus analyst estimates for adjusted EPS and adjusted net income in three out of its last three quarters, and has beat sales estimates in the last seven consecutive quarters.
In commenting on these results, Pharmacyclics Chairman and Chief Executive Officer Bob Duggan remarked, “2014 was a year of significant progress across many fronts for IMBRUVICA and for Pharmacyclics. The high clinical adoption rate by prescribers, steady regulatory advancement inside and outside of the U.S. generation of important clinical data, and quarter-over-quarter increase in product revenue and demand have been important elements in our success to date. With the elevation of IMBRUVICA to Category 1 status within NCCN guidelines, continued growing demand within our approved indications, and market expansion in support of our new FDA label/fourth indication, we anticipate IMBRUVICA 2015 U.S. net product revenue of approximately $1 billion.”
In light of these facts, Robbins Arroyo LLP is examining Pharmacyclics’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Pharmacyclics shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Pharmacyclics shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.