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Image source: AbbVie.

Facing the loss of patent protection on its top-selling drug, AbbVie (NYSE:ABBV) forked over $21 billion earlier this year to buy Pharmacyclics and its blood cancer drug Imbruvica. Imbruvica's sales are surging, but late-stage trials are under way for a next-generation therapy that targets cancer in the same way as Imbruvica that may be better.

Abbvie

Image source: AbbVie.

Revolutionizing treatment
Imbruvica, a BTK inhibitor that targets a signaling molecule that is responsible for B-cell cancer cell survival and that was co-developed by Johnson & Johnson (NYSE:JNJ), is reshaping how doctors treat mantle cell lymphoma, Waldenstrom's macroglobinemia, and chronic lymphocytic leukemia (CLL).

Mantle cell lymphoma and Waldenstrom's aren't common, but there are 15,720 cases of CLL diagnosed in the U.S. every year and that makes that indication most interesting to investors.

Historically, CLL patients have been treated with chemotherapy and/or Rituxan therapy, but chemotherapy is highly toxic and it can cause life-threatening side effects that make it far from an ideal treatment. Fortunately, following robust efficacy in trials studying Imbruvica's use in recurring CLL, doctors have increasingly been turning to its use and away from these other agents.

That shift in treatment may accelerate too as Imbruvica recently aced a late stage study evaluating its use in newly diagnosed CLL patients. In that trial, Imbruvica monotherapy reduced a patient's risk of death by 84% when compared to the chemotherapy chlorambucil.  

Based on those results, AbbVie and Johnson & Johnson filed an application for approval in newly diagnosed CLL patients in September and if the FDA approves Imbruvica in that indication, then industry watchers estimate the widespread use of Imbruvica could turn this drug into a multibillion-per-year megablockbuster.

Emerging competitor
In order to deliver on industry watcher's lofty sales projections, Imbruvica may have to fend off competition from acalabrutinib, a drug that works similarly to Imbruvica and that is being developed by the privately held Acerta.

Like Imbruvica, acalabrutinib targets BTK to disrupt disease progression, but acalabrutinib could have a distinct advantage over Imbruvica because it more specifically targets BTK.

Despite Imbruvica's efficacy, the drug has been shown to impact non-BTK targets, such as EGFR, and it's thought that Imbruvica's off-target activity is why some patients suffer adverse events, including atrial fibrillation, that leads them to discontinue therapy. Off-target activity may also lead to cancer mutation, such as Richter's transformation, that results in the cancer's progression. Because acalabrutinib more precisely targets BTK, it may not suffer those drawbacks. Additionally, acalabrutinib has a shorter half life than Imbruvica, which may allow for twice-daily dosing that could reduce a patient developing resistance to it. That could prove to be another important advantage versus Imbruvica.

Recently, Acerta reported clinical-stage data for acalabrutinib in 60 CLL patients that appears to support the idea that this drug works better than Imbruvica.

Specifically, 95% of relapsed CLL patients who have received at least one prior therapy responded to acalabrutinib, including 100% of hard-to-treat patients who have the 17p13.1 deletion variation of the cancer. Moreover, there were no cases of Richter's transformation in the trial, and only one patient saw their disease progress in the 16-month evaluation period.

Additionally, acalabrutinib's safety profile appears to be best-in-class. Most adverse events were grade 1 or 2 and resolved over time. Only 2% of patients suffered grade 3 or grade 4 diarrhea, which is about half the percentage that has been observed in Imbruvica's trials. Also, no cases of atrial fibrillation or hemorrhage, another Imbruvica safety risk, were reported.

Astra

Source: AstraZeneca plc

Looking ahead
Given Acerta's trial results, it's not surprising that AstraZeneca plc (NYSE:AZN) is spending $4 billion to buy a 55% stake in the company. That deal, which was announced last week, includes $2.5 billion upfront to Acerta, plus another $1.5 billion conditional payment that will be paid upon regulatory approval of acalabrutinib or by the end of 2018, whichever comes first.

has confirmed it's in talks to acquire it in a deal that could be valued at $5 billion or more.

However, before AbbVie investors panic too much, they should remember that Acerta's trials are ongoing, and that its trial only included a small number of people, so it's far from certain that acalabrutinib's results will hold up in larger, later-stage trials.

Nevertheless, strong efficacy and a potentially better safety profile could make this a big threat to AbbVie and Johnson & Johnson's Imbruvica, and that means investors should keep tabs on Acerta's ongoing trials, including a phase 3 trial in which acalabrutinib is being studied head to head against Imbruvica in 17p deletion CLL patients. That trial has an estimated primary completion date of June 2018, so it may be a while before investors find out how acalabrutinib really stacks up to Imbruvica in these patients. 

Todd Campbell owns shares of Celgene. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Celgene. The Motley Fool recommends Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days.

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