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Abbott Laboratories Message Board

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  • jd9919 jd9919 Nov 29, 2010 11:32 AM Flag

    Latest Goldman report on ABT

    "GS proprietary survey suggests JAK risk already priced into ABT - Given the pullback in ABT’s shares over the first positive P3 read-out of PFE’s JAK-inhibitor tasocitinib in rheumatoid arthritis, we conducted a physician survey to determine the potential competitive threat to Abbott’s
    most important driver, Humira. Survey results of 25 rheumatologists suggested that doctors perceived tasocitinib as differentiated and a meaningful competitor to the anti-TNF class by the first year on the market if the initial positive data bear out in the rest of PFE’s Phase III filing package (expected to be complete by mid-2011). However, our scenario
    analysis based on our proprietary immunology market model suggests that ABT’s shares already reflect PFE’s tasocitinib takes a 20% share of the market over the next several years.

    "Market may be early to punish ABT but near-term risk remains
    Given the tasocitinib data available thus far (three-month P3 data), we see the market being early to price in the competitive threat in ABT shares (down 13% since mid-October), for which PFE’s shares have not benefited. In our
    view, ABT appears undervalued, given near-term strong earnings power, but the JAK inhibitor overhang is unlikely to go away unless the program blows up or ABT engages in significant M&A activity that dilutes Humira’s importance to the bottom line. Humira makes up 50%+ of ABT’s earnings vs.
    <20% for Enbrel to Pfizer, and Remicade/Simponi to JNJ and MRK.

    "On the other side, tasocitinib could add net $1.50 to PFE shares
    On the flip side, PFE’s shares have largely shrugged off the tasocitinib data,
    given that it is still early to determine whether the drug is in fact a viable and sizeable competitor to the anti-TNFs. However, if PFE’s tasocitinib does in fact reach a 20% share of the market, we see it potentially reaching $2.5-
    $4.0 billion in global sales, (assuming a 20% discount to Humira), representing a net $1.50/share in NPV value to PFE (net of Enbrel loss) Updating estimates and price target

    "With our updated immunology market model, we are modestly reducing our Humira estimates by $100 mn in 2011 to $500 mn in 2015. We are also lowering our ABT 12-month price target to $54 from $58, which we arrive at by applying a lower 11.5X multiple to 2011E EPS to reflect the increased competitive risk to Humira. We have not reflected tasocitinib competition in our Humira estimates to, nor have we raised our PFE tasocitinib estimates."

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    • ahhh, so Goldman didn't realize the shares would go straight down and want to cause a bounce to get out higher. i see. Master manipulators.

    • "ABT shares already price in threat of oral competitors to Humira - Given the pullback in Abbott’s shares over the first positive Phase III read-out of Pfizer’s JAK-inhibitor tasocitinib in rheumatoid arthritis, we conducted a physician survey to determine the potential competitive threat to Abbott’s most important driver, Humira. Survey results of 25 rheumatologists suggested that doctors perceived tasocitinib as differentiated and a meaningful competitor to the anti-TNF class by the first year on the market if the initial positive data bear out in the rest of Pfizer’s Phase III filing package (expected to be complete by mid-2011). However, our scenario analysis based on our proprietary immunology market model suggests that Abbott’s shares already reflect
      Pfizer’s tasocitinib takes a 20% share of the market over the next several years. This may be a real possibility, given our survey results, but we maintain that a lot needs to fall in place before that happens. Given the tasocitinib data available thus far (3 month Phase III data),
      we see the market being early to price in the competitive threat in Abbott’s shares (down 13% since mid-October), for which Pfizer’s shares have not benefited. However, we also
      see Abbott shares as likely range-bound in the near-term as investors will assume Pfizer’s tasocitinib works until it does not, particularly given four tasocitinib Phase III data read-outs in 2011, including a head-to-head with Humira.

      "In our view, Abbott shares appear undervalued, given near-term strong earnings power, but the JAK inhibitor overhang is unlikely to go away unless the program fails or Abbott
      engages in significant M&A activity that dilutes Humira’s importance to the bottom line. The stock could be poised for a rebound through the end of the year given its poor ytd
      performance, but we maintain our Neutral rating on the stock. Certainly, if Pfizer’s tasocitinib were to emerge as a meaningful competitor, it would pressure not only Abbott’s
      Humira, but also other drugs in the class such as Pfizer/Amgen’s Enbrel and J&J/Merck’s
      Remicade. However, we have seen disproportionate attention and weakness in Abbott’s shares as Humira makes up 50%+ of Abbott’s earnings vs. <20% for Pfizer, J&J, and Merck.
      On the flip side, Pfizer’s shares have largely shrugged off the tasocitinib data, given that it is still early to determine whether the drug is in fact a viable and sizeable competitor to the anti-TNFs. However, if Pfizer’s tasocitinib does in fact reach a 20% share of the market, we see it potentially reaching $2.5-$4.0 billion in global sales, (assuming a 20% discount to Humira), representing a net $1.50/share in NPV value to Pfizer (net of Enbrel loss)."

      • 1 Reply to jd9919
      • "Survey results: Rheumatologists express excitement around JAKs - We surveyed 25 Rheumatologists, all of whom currently prescribe biologic disease modifying anti-rhemautic drugs (DMARDs; including TNF-alpha blockers) for their moderate to severe rheumatoid arthritis (RA) patients. All surveyed physicians were currently practicing, with experience ranging from less than 10 years (12%) to over 15 years (56%).

        "Key takeaways from rheumatologists treating RA: Currently, physicians place Humira well in the current treatment paradigm. However, survey results present several potential implications for the anti-TNF class if P3 tasocitinib trials continue to read out encouraging efficacy and safety
        results. Physicians highlighted tasocitinib’s unique and promising attributes, including its attractive oral dose formulation, its potential superior efficacy and
        comparable safety profile, and potentially lower pricing, all of which serve to drive adoption.

        "Within one year of launch, physicians expect to start prescribing tasocitinib in place of anti-TNF therapies. 76% of physicians expect to prescribe tasocitinib within the first year, with 44% expecting to utilize tasocitinib in place of anti-TNF therapies.

        "Ongoing tasocitinib P3 trials address the clinical data physicians expect. However, physicians were mixed as to whether superior efficacy would be necessary to a drive switch to tasocitinib from anti-TNF therapies.

        "Physicians are not currently concerned about safety and are relatively comfortable with the extent of the P3 safety database. Physicians do not see elevations in LDL
        levels as a significant concern that would negatively impact prescribing decisions towards tasocitinib."

 
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