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Why Shares in AbbVie Soared 18% in September

By Todd Campbell - Updated Oct 4, 2017 at 3:37PM

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Patent and trial victories sparked investor optimism for future sales growth.

What happened

A patent victory and pipeline advances that could lead to billions in additional sales helped catapult AbbVie Inc. (ABBV -0.92%) shares 18% higher in September, according to S&P Global Market Intelligence.

So what

On Sept. 7, the U.S. Patent Office refused competitor Coherus's request for an inter partes review of AbbVie's U.S. Patent 9,085,619. The decision added strength to claims by AbbVie's management that it can keep Humira copy-cats out of the market in the U.S. until the end of 2022.

Business people on a street catch money falling from the sky.

IMAGE SOURCE: GETTY IMAGES.

The news may have contributed to Amgen's (AMGN 0.02%) decision to cut a deal with AbbVie last month on its own Humira biosimilar. Despite having won FDA approval for its Humira biosimilar, Amgen hasn't launched it yet because of legal wrangling with AbbVie. On Sept. 28, AbbVie announced it's granted a nonexclusive license to Amgen that allows Amgen to begin marketing its Humira biosimilar in Europe in 2018 and in the U.S. on Jan. 1, 2023. In exchange, Amgen has agreed to drop its challenges to Humira's patents and pay royalties to AbbVie on future sales of its biosimilar.

AbbVie also reported last month that it's making progress toward its goal of diversifying itself away from Humira.

On Sept. 6, the company filed for FDA approval for the use of Elagolix in the treatment of endometriosis with associated pain. If approved, Elagolix will be the first new medication available in the indication in more than 10 years. Current treatments include surgery, off-label contraceptive use, or hormone therapy; however, those treatments don't work for everyone, and pain often returns after patients are taken off of hormone therapy. An FDA decision on Elgagolix is anticipated next year.

AbbVie also reported on Sept. 11 results from a phase 3 trial evaluating upadacitinib (ABT-494) in patients with moderate to severe rheumatoid arthritis (RA). Upadacitinib delivered significant improvements in RA symptoms versus a placebo in patients who were failing to respond to other available treatments. Additionally, AbbVie reported on Sept. 18 that using its Venclexta alongside Roche's best-selling Rituxan extended progression-free survival in patients with relapsing or refractory chronic lymphocytic leukemia (CLL). The results appear to pave the way for expanded use of Venclexta.

Now what

AbbVie still gets over 60% of its sales from Humira, so management's ability to keep competitors at bay and diversify its revenue is critical. 

Currently, AbbVie is telling investors that it expects Humira sales to increase to $20 billion in 2020 from about $16 billion in 2016, and that outlook is more bullish than it was two years ago. In 2015, its prediction was for Humira sales of at least $18 billion and total sales of $37 billion in 2020. In my opinion, if management can deliver on these forecasts, then investors' optimism last month will be rewarded. 

Editor's note: A previous version of this article stated that AbbVie granted Amgen an exclusive license to market its Humira biosimilar, rather than a nonexclusive one. The Fool regrets the error.

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Stocks Mentioned

AbbVie Inc. Stock Quote
AbbVie Inc.
ABBV
$150.57 (-0.92%) $-1.39
Amgen Inc. Stock Quote
Amgen Inc.
AMGN
$253.05 (0.02%) $0.04
Roche Holding AG Stock Quote
Roche Holding AG
RHHBY
$43.33 (0.79%) $0.34
Coherus BioSciences, Inc. Stock Quote
Coherus BioSciences, Inc.
CHRS
$7.66 (3.37%) $0.25

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