AbbVie, Inc.'s ABBV stock has declined 7% this year so far against an increase of 2.1% recorded by the industry.
A couple of pipeline setbacks as well as concerns about the impact of EU biosimilar launches on sales of its blockbuster drug Humira hurt the stock this year despite several regulatory approvals and pipeline successes.
In early December, AbbVie stopped enrolment in a late-stage study, TAHOE, evaluating its cancer candidate rovalpituzumab tesirine or Rova-T in second-line small cell lung cancer (SCLC). In March, Rova-T fell short of expectations in a phase II TRINITY study evaluating it in third line or later SCLC.Rova-T was added to AbbVie’s portfolio following the $5.8 billion acquisition of Stemcentrx in June 2016. The failure of TRINITY and the clinical hold on TAHOE raised skepticism about Rova-T’s potential and has brought into question the viability of the Stemcentrx deal.
Meanwhile, Humira has been performing well based on strong demand trends despite new competition. Though Humira sales continue to be impressive, direct biosimilar competition in Europe can erode Humira revenues in 2019.
Several companies have made biosimilar versions of Humira. Per settlements, Amgen AMGN, Pfizer PFE, Mylan MYL, Fresenius Kabi, Momenta, Sandoz and Samsung Bioepis/Biogen’s Humira biosimilars are expected to be launched in the United States in 2023. In the EU, Amgen, Sandoz and Biogen’s biosimilars were launched in October this year while others like Momenta, Pfizer and Fresenius Kabi will launch their versions as soon as they get EMA’s approval. Direct biosimilar competition in the EU is expected to erode AbbVie’s $6 billion international Humira business in 2019. With Humira accounting for around 65% of AbbVie’s sales, the entry of biosimilars will have a huge impact on the company’s financials.
Nonetheless, AbbVie looks well poised to witness a turnaround in the New Year. In October, AbbVie had said it is confident of delivering double-digit earnings growth in 2019 despite negative impact from EU Humira biosimilar entry, a difficult comparison year (as HCV sales ramped up rapidly in 2018) and significant investments to support product launches.
Humira sales are expected to remain strong as it sees strong prescription volume growth. Meanwhile, AbbVie’s oncology/haematology (including Imbruvica and Venclexta) sales should remain strong.
AbbVie has also been successful in expanding approvals for Imbruvica and Venclexta in 2018. Regulatory applications seeking approval for Venclexta plus Rituxan for relapse/refractory CLL (based on MURANO study data) were approved in the United States in June and in the EU in October 2018. Label expansion for this indication has expanded the patient population for Venclexta significantly, which will boost its commercial potential.
Also, in November AbbVie gained FDA approval for Venclexta in first-line AML. Imbruvica was approved by the FDA in combination use with Rituxan for the treatment of Waldenström's macroglobulinemia (WM), a rare form of Non-Hodgkin’s lymphoma in August
These line extension approvals can bring in additional sales in 2019.
AbbVie’s newest HCV medicine Mavyret gained approval in the United States, EU, Canada and Japan in 2017. Mavyret performed beyond expectations in the first year of launch recording sales of almost $500 million in 2017. The drug recorded sales of $2.6 billion in the first nine months of 2018, commanding a global market share of 50%. Mavyret is expected to keep up the strong performance in 2019.
Meanwhile, AbbVie has a deep pipeline consisting of several interesting late-stage candidates. In 2019, we expect FDA approvals for two key pipeline candidates — risankizumab for plaque psoriasis and upadacitinib for rheumatoid arthritis — both of which are under FDA’s review. Meanwhile, these candidates are also being studied for additional indications, which can provide further growth opportunities.
AbbVie currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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