I think that this deal is going to end up looking either very smart or very stupid. AbbVie is paying almost ten billion dollars to acquire Stemcentrx, the startup I first wrote about here. That’s a lot of money to put down on the idea of cancer stem cells, so the first assumption is that Stemcentrx must have some mighty compelling data to present.
The problem is, you can’t be absolutely sure about that, because some pretty silly deals get made from time to time. (And there are some that aren’t dumb, but just very risky, the “it could have worked, but it didn’t”, category). The cancer field has been especially hot for a while now, which means that there are big opportunities to find something valuable, and equally big opportunities to chase something that looks valuable, but isn’t. I have no idea which way this one breaks. Here’s FierceBiotech:
The acquisition price says a lot about cancer R&D and stubbornly high valuations attached to promising oncology assets. Over the past few years cancer drug research has been revolutionized as the FDA has encouraged developers to accelerate their programs for new therapies, especially targeted ones like Rova-T. Now it’s not at all uncommon to see companies jump from Phase I with early evidence of success straight into a registration study looking for a fast approval followed by a larger, confirmatory study.
That’s what AbbVie will be doing with the lead compound from Stemcentrx, no doubt. At the very least, this is quite a vindication for the company’s early investors (such as Peter Thiel) – no matter what happens after this, they’re out with what has to be a good profit.