AbbVie Inc. Invests in Precision-Bombing Cancer Therapies

With annual sales likely to reach $10 billion, Humira is rocking. The party can't last forever, though. AbbVie could be filling that gap it leaves behind with an exciting new way to fight cancer.

Jan 13, 2014 at 6:30PM

Humira is really raking it in for AbbVie (NYSE:ABBV), but the good times will likely take a turn for the worse when the biologic goes off patent in a few years. For reasons I explained recently, Humira sales are more likely to slide down a bunny slope than fall off a patent cliff. Still, this revenue must be replaced somehow.

Trojan horses for cancer
Abbvie has extended its reach into targeted cancer treatments with antibody-drug conjugates (ADCs). These are monoclonal antibodies (MABs) that carry cell-destroying agents specifically to tumor cells. Instead of the carpet-bombing techniques used by standard chemotherapies, ADCs hang on to their toxic payload until they enter cancerous cells. In theory, patients should benefit from smaller, more effective infusions of toxic compounds.

Riskless in Seattle
Entirely content to take on the financial risk of developing a smaller biotech's compounds, AbbVie is leapfrogging into this interesting field of cancer therapies with ADC pioneers Seattle Genetics (NASDAQ:SGEN).

AbbVie expanded its partnership to include access to two proprietary technologies of Seattle Genetics: both pyrrolobenzadiazepine (PBD) dimer ADC and EC-mAb site-specific conjugation technologies. AbbVie paid $25 million upfront to use the technologies and will remain responsible for paying all the bills. Seattle Genetics also stands to earn up to $255 million in milestone payments and license fees, plus a percentage of any worldwide sales resulting from the partnership.

This is a huge win for both companies. AbbVie gets ahead in ADC technology fast. Seattle Genetics will turn either a small or large profit without further financial risk.

To please a regulator
In August 2011, the FDA approved Seattle Genetics' first therapy, Adcetris, for the treatment of two types of lymphoma. It was the first new therapy approved for Hodgkin's Lymphoma since 1977, and the first with a specific indication for anaplastic large cell lymphoma.

What is most interesting is the ease with which the FDA approved Adcentris. For each indication, its effectiveness was evaluated during just one relatively small clinical trial. The regulator also pushed it through the approval process via an accelerated approval program. No doubt, AbbVie is hoping to push more ADC therapies through the process with similar ease.

A second speedy approval
Supporting the notion of fast approvals for effective ADC cancer therapies is Kadcyla. This is a late-stage breast cancer therapy that Roche Holding Ltd. (NASDAQOTH:RHHBY) subsidiary Genentech developed in partnership with Immunogen (NASDAQ:IMGN). In February 2013, it won approval for treatment of HER2-positive, late stage breast cancer. It was also approved through one of the FDA's expedited pathways.

In December 2013, another Roche subsidiary, Ventana, announced it would apply the Herceptin companion diagnostic to screen for candidates. Armed with both target specificity and diagnostic testing, payers are more likely to approve its use.

It's important to remember that private insurers and government payers generally look at more than just price when deciding whether to approve a therapy for reimbursement. Treating patients genetically screened to be more receptive, as opposed to a trial-and-error approach, is a win for payers, physicians, and patients. It should also allow to Roche to recoup development costs without nagging reimbursement risk.

Building an oncology franchise
For breast cancers not responsive to Herceptin, or HER2 negative, Kadcyla isn't much use. AbbVie has a Phase 2 candidate that looks like it can fill the gap. During the San Antonio Breast Cancer Symposium last December, AbbVie presented some encouraging data from a Phase 2 study including veliparib, or ABT-888. The I-SPY 2 trial employed an adaptive design to screen for compounds that will be superior to chemotherapy alone, for specific cancer signatures.

Based on the responses seen in 115 patients, AbbVie's veliparib combined with carboplatin and chemotherapy showed a 90% probability of being superior to chemotherapy alone in triple-negative patients. It is possible that carboplatin alone, and not veliparib, was responsible, but I doubt it. Carboplatin has been available for over 20 years. It is very likely that Veliparib will enter Phase 3 trials.

Final thoughts
During the first nine months of 2013, Humira comprised $7.6 billion of the company's $13.7 billion in net sales. Antibody-drug conjugates aren't AbbVie's only plan for post-Humira survival, but they might be one of the smartest. Faster approvals with fewer trials should lead to more sales under patent protection and less development risk. The use of innovative screening procedures in the Phase 2 velaparib trial should also keep development costs down, making the company more profitable in the long run.

Top Stock Pick This Year

There’s a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Cory Renauer has no position in any stocks mentioned. The Motley Fool recommends ImmunoGen and Seattle Genetics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers