AbbVie (NYSE:ABBV) shares are rallying sharply following word that it won a victory against Coherus Biosciences (NASDAQ:CHRS) in a patent challenge and the release of positive late-stage trial data for upadacitinib in eczema patients.

The patent victory could help AbbVie delay entrance of biosimilars to its top-selling Humira, while the upadacitinib data puts AbbVie on track to challenge Regeneron Pharmaceuticals' (NASDAQ:REGN) recently launched eczema drug, Dupixent.

Keeping competitors at bay

AbbVie's Humira is complex biologic that's used to treat a variety of autoimmune diseases, including rheumatoid arthritis. Humira is so effective that it is the world's best-selling drug, with $16 billion in sales in 2016 alone.

Gold and silver pills spill out of a larger gold and silver pill onto a pile of money.


Humira's success is a good thing, but it also presents AbbVie with a problem. The company's main patent protecting Humira from biosimilar alternatives has already expired, and with Humira accounting for over 60% of AbbVie's sales, management is relying heavily on Humira's remaining patents to hold off competitors as long as possible.

One of these competitors, Coherus Biosciences, is a clinical-stage biosimilar drug developer that's set its sights firmly on challenging Humira as soon as possible.

Coherus had been hoping to secure an inter partes review of AbbVie's U.S. Patent 9,085,619, which is related to Humira's formulation, but the U.S. Patent Office announced today that it has denied Coherus' petition.

The decision doesn't derail Humira biosimilars altogether, but it could push back their launch timelines, and in the process, give AbbVie more time to diversify its revenue away from Humira.

Expanding its portfolio

AbbVie is spending billions of dollars on R&D so it can roll-out new treatments and reduce the impact of Humira biosimilars.

One of the most intriguing of its R&D projects is JAK1 inhibitor upadacitinib, and today, AbbVie reported positive results from a phase 2b study evaluating its use in atopic dermatitis, or eczema.

Specifically, AbbVie says that a once-daily dose of upadacitinib resulted in clear or almost clear skin in 50% of patients with moderate to severe eczema. Also, 69% of patients achieved a 75% improvement in skin clearance or better. 

These results are good enough to suggest it could eventually face off against Regeneron Pharmaceutical's recently approved eczema drug, Dupixent, in a billion-dollar marketplace.

In two Dupixent phase 3 trials, 36%, and 38% patients, respectively, achieved clear or near clear skin after receiving a dose of Dupixent every two weeks, and 51% and 44%, respectively, saw a 75% or better reduction in disease severity.

It's bad science to compare results from these two distinct trials to determine which drug is better, but the available data suggests to me that both of these drugs could be effective, and ultimately, that's not good news for Dupixent's market share if phase 3 upadacitinib trials are a success.

More work to do

The patent and trial wins are good news for AbbVie investors, but the company's not out of the woods yet.

Humira biosimilars will eventually launch, and the company has yet to prove that when they do, it will be able to fully replace any lost sales. Additionally, while the phase 2b data is intriguing, investors shouldn't do victory laps until phase 3 data is in hand confirming its efficacy and safety. Until then, there are still question marks longer-term that shouldn't be completely forgotten.