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3 Reasons to Expect Smooth Sailing for AbbVie's Mission-Critical Candidate

Cory Renauer, The Motley Fool

As one of the world's largest drugmakers, AbbVie Inc. (NYSE: ABBV) is made of many moving pieces. The big one at the top, Humira, can't keep growing forever. In fact, its main U.S. patent has already expired.

Luckily, a key component of the company's Humira replacement strategy is firing on all cylinders. Upadacitinib has some pretty big shoes to fill, but there are a few reasons we can look forward to smooth sailing ahead.

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Upadacitinib hit the mark again

AbbVie's rheumatoid arthritis (RA) candidate recently passed its fifth pivotal trial designed to support new drug applications to be submitted later this year. This one bodes well for the drug's potential to reach a large portion of around 23.7 million people with RA that can't tolerate effective doses of the most common first-line treatment, methotrexate. It won't be easy to replace inexpensive methotrexate as the first treatment in a rheumatologist's arsenal, but upadacitinib certainly has the efficacy numbers to make it happen. During the Select-Early trial with methotrexate-naive patients, half of those given 30 mg of the experimental treatment showed no sign of disease activity at 24 weeks versus just 18% in the group receiving methotrexate.

Methotrexate intolerance is awfully hard to define because the severity of symptoms such as abdominal pain and nausea vary widely from patient to patient. It's hard to pin a number down, but I think at least a fifth of RA patients simply can't take enough methotrexate, and just as many more don't take it as often as they should to avoid damaging flare-ups.

Given this huge population with unmet need, more enthusiastic peak sales estimates for upadacitinib run past $5 billion annually, and AbbVie's suggestion of $6.5 billion isn't outside the realm of possibility. To get anywhere near there, though, AbbVie needs to convince regulators the drug is safe enough to be taken for years on end. 

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Image source: Getty Images.

The FDA kept a big lane open

Earlier this month, the Food and Drug Administration handed down a complicated approval decision for upadactinib's potential rival, Olumiant from Incyte Corporation (NASDAQ: INCY) and Eli Lilly and Co. (NYSE: LLY). The partners were more than a little disappointed when the agency limited its approval to a dosage that's probably too small to be a major threat to AbbVie's candidate, at least in the U.S.

It's still a bit early but Olumiant sales in Europe are growing fast, suggesting a strong market for new RA treatments. Despite an approval limited to adults that already know they can't use older drugs, Olumiant sales jumped 39% from the fourth quarter of last year to the first quarter of 2018.

Strong early uptake in Europe where governments are notoriously hesitant to pay for pricey new therapies suggests a class leader has a solid shot at becoming a blockbuster drug in the lucrative U.S. territory. With Olumiant mostly out of the way, AbbVie's candidate has a much better shot at success at home.

Probably safer than you'd think

Rheumatoid arthritis can be debilitating, but it isn't dangerous enough to expect the FDA to make exceptions regarding safety. That could be a problem because several people have died after receiving upadacitinib during clinical trials intended to prove it's safe.

Of particular concern were dangerous venous thromboembolic events (VTE), or blood clots that break free and clog up blood vessels that supply the lungs. The FDA's limited approval of Olumiant is a direct result of unexplained blood clots observed during clinical trials leading to its approval.

Incyte and Lilly's main problem is a lack of evidence to convince regulators that Olumiant wasn't responsible, but that probably won't be an issue for AbbVie. After more than 3,300 patient years of clinical trial exposure, those taking upadacitinib experienced VTEs at a slightly lower rate than patients in control groups.

Looking ahead

It might seem silly to argue safety issues when a drug appears safer than a placebo or standard care, but the FDA will probably try anyway. There have simply been too many fatal and near-fatal events associated with the candidate to let it slide. 

Although it looks like smooth sailing ahead, AbbVie investors need to brace themselves for an unfortunate ruling. Upadacitinib isn't the only important new drug candidate barreling through the company's pipeline, but without its success, replacing eventual Humira losses could be a struggle.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.