What's next for AbbVie (NYSE:ABBV)?
That was the underlying theme for a question-and-answer session with two senior AbbVie executives at the Deusche Bank healthcare conference on Wednesday. Bill Chase, AbbVie's CFO, and Scott Brun, vice president of AbbVie Ventures, spoke candidly about what might be around the corner for the big biotech. Here are five things they said that you'll want to know.
1. Defending Humira
Humira continues to be the top moneymaker for AbbVie. In the first quarter, the autoimmune disease drug generated sales of $4.1 billion -- 63% of the company's total revenue. With Humira so important to AbbVie's fortunes, there is some angst among investors about the multiple challengers trying to dethrone the tremendously successful drug.
Bill Chase brought up the next development that could increase uncertainty even more: the inter partes review (IPR) filed by Coherus BioSciences (NASDAQ:CHRS) seeking invalidation of AbbVie's '619 patent for Humira. Chase noted that a ruling on this IPR is expected later this month. He admitted that "statistically what happens in an IPR hearing" is that the challenger prevails.
According to Chase, though, AbbVie remains confident in its intellectual property defense for Humira even if Coherus wins in the IPR hearing. He stressed that the value of AbbVie's intellectual property strategy "is in the totality of patents and not in any one patent going through IPR."
Chase pointed to AbbVie's ongoing battle with Amgen (NASDAQ:AMGN), which won U.S. approval for a Humira biosimilar in 2016. He stated that Amgen is a "very competent company" but that its product infringes on 61 Humira patents -- and AbbVie plans to assert its rights to all of them.
The court trial with Amgen has been set to begin in November 2019, which Chase said gives an idea about the timelines that are typical for intellectual property litigation. He reiterated that AbbVie continues to believe that it will be able to successfully protect Humira from U.S. competition through 2022.
2. Competition for Imbruvica
What about competition for AbbVie's No. 2 drug in terms of sales, Imbruvica? Scott Brun expressed confidence, saying the company has "established such a beachhead of data and clinical experience that it will be hard for any competitor to really overcome that lead."
Brun acknowledged that one potential rival to Imbruvica has received considerable attention -- AstraZeneca's (NYSE:AZN) acalabrutinib. He said that AbbVie doesn't see any significant differences in efficacy between AstraZeneca's BTK inhibitor and Imbruvica.
As for safety, Brun noted more cases of atrial fibrillation have been seen in additional reviews of data from acalabrutinib, which he said was not significantly different from Imbruvica. He added that "the ability of the competitor to be able to show materially different safety rates will be very challenging, especially with the size of the study they've got going on."
3. Mergers and acquisitions
Don't expect anything big on the merger and acquisition (M&A) front from AbbVie anytime soon. Bill Chase said that there's "not a compelling need to buy another platform through large M&A." He indicated that the Pharmacyclics and Stemcentrx acquisitions made by AbbVie last year have given the company the assets and clinical expertise it sought. He said that AbbVie didn't have plans to "rush out to add another franchise."
However, Chase noted that there's always a need to add to the pipeline for any drugmaker. Brun added that AbbVie has been making a number of pre-clinical deals to boost its pipeline that don't get a lot of attention.
4. Pipeline potential
Among the first words out of Bill Chase's mouth at the Deutsche Bank conference was the comment that AbbVie "has one of the most attractive pipelines in the industry." He stated that the company expects to have 20 new assets in place by 2020.
Scott Brun spoke about two especially promising pipeline candidates -- Rova-T and ABT-494. He stressed that there is no competition between Rova-T and immuno-oncology (I-O) therapies. Brun noted that AbbVie is working with combinations of Rova-T and I-O drugs, although there won't be any data readouts from those studies this year.
JAK1 inhibitor ABT-494, however, will begin data readouts beginning next month from a late-stage study targeting treatment of rheumatoid arthritis. Brun said that AbbVie believes the experimental drug could be best in class. He added that the design of the company's studies for ABT-494 should help avoid problems that some think led to the Food and Drug Administration's surprising issuance of a complete response letter (CRL) for Lilly and Incyte's baricitinib.
5. Tax reform
Chase said that AbbVie is "optimistic and encouraged" about the prospects for U.S. tax reform, especially that there could be major changes relatively quickly. While the company would like to have tax rates in the U.S. as low as in some other countries, Chase said that changes that would allow repatriation of overseas cash at lower tax rates would be most important to AbbVie.
What would AbbVie do with the extra cash if tax reform passes? The company's shareholders should like Chase's response. He said that AbbVie probably wouldn't make a large acquisition or pay off its debt. Instead, Chase thinks the company would find the best ways to get cash back into shareholders' hands -- perhaps in the form of even higher dividends.