This Pharmaceutical Giant Just Poured $11 Billion on an Acquisition. Time to Buy? |

AbbVie‘s (ABBV 2.44%) financial results have been strong recently, largely thanks to its key growth drivers, Skyrizi and Rinvoq. However, both of these immunosuppressants will lose patent exclusivity in the next decade. While these patent cliffs are still some ways away, considering the time it takes to develop brand-new therapies, now is as good a time as any for AbbVie to start figuring out how it will overcome them. The company recently made a move in that direction with a massive acquisition. Let’s find out whether these recent developments make AbbVie stock a buy.

Strengthening its immunology portfolio

On June 22, AbbVie announced that it would acquire Apogee Therapeutics (APGE +0.44%), a biotech company focused on developing medicines for immunological and inflammatory diseases. AbbVie will pay about $10.9 billion in cash for this buyout. In exchange, it will inherit a pipeline with several candidates, the most promising of which is zumilokibart, an investigational therapy for eczema. This medicine has performed well in mid-stage studies and could fill an unmet need in this niche. Many patients fail to achieve significant symptom improvement and still have to deal with dry, itchy patches of skin.

Zumilokibart has so far demonstrated that it could perform just as well as — if not better than — current standards of care while being more convenient, as it may require fewer injections than many competitors. Apogee planned on starting phase 3 studies for this drug later this year. The biotech also thinks zumilokibart could eventually earn label expansions in other areas, including asthma. The eczema market alone is vast, with some estimates putting it at $19.4 billion last year. If zumilokibart successfully passes phase 3 studies and earns approval, it could become an important growth driver for AbbVie.

Multiple reasons to buy the stock

AbbVie has historically generated much of its revenue from immunology. The company’s former best-selling medicine, Humira, treated several conditions in this market and peaked at $21.2 billion in annual sales. Skyrizi and Rinvoq, AbbVie’s current growth pillars, are also important drugs in this niche. Their combined revenue should exceed $31 billion this year, according to the company.

Acquiring another potential future immunology superstar fits right into AbbVie’s strategy. Of course, there is always the possibility that zumilokibart will fail to prove effective in phase 3 studies. Even with that possibility, AbbVie’s shares look attractive for several reasons. First, it wouldn’t be the first time AbbVie has overcome a late-stage clinical trial failure for a promising candidate. The company has a deep pipeline with promising products across several areas, including the fast-growing field of anti-obesity.

Besides, there is still plenty of time before Skyrizi and Rinvoq lose patent exclusivity. So, in case zumilokibart turns out to be a flop, AbbVie will regroup and try again. Second, the drugmaker has several other products in its lineup that are helping drive solid top-line growth. It doesn’t just depend on Skyrizi and Rinvoq for that. Medicines like Qulipta, a migraine treatment, are contributing as well. Lastly, AbbVie is a phenomenal dividend stock, with a streak of more than 50 consecutive years of payout increases (54, to be exact), making it a Dividend King. For all those reasons and more, AbbVie is a great pick, especially for income seekers.