AbbVie (ABBV +1.98%) continues to reel from its announcement last week of very disappointing results for rovalpituzumab tesirine (Rova-T) as a third-line treatment for relapsed/refractory small cell lung cancer (SCLC). Over one-fifth of the big pharma company's market cap has been wiped out following news of the Rova-T setback, although some of the decline has stemmed from general market anxieties.
It's only natural that investors could be concerned about the risks for AbbVie's other candidates. After all, the clock is ticking for AbbVie to replace revenue that will be lost when top-selling Humira faces biosimilar competition in the U.S. How risky is AbbVie's pipeline? Let's look at its key late-stage candidates by therapeutic area.
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Oncology
Some might have already written off Rova-T altogether after the poor phase 2 results of the drug as a third-line treatment of SCLC. I suspect, though, that the drug could still have potential, particularly as part of a combo therapy. AbbVie and Bristol-Myers Squibb are evaluating Rova-T in combination with Opdivo and Yervoy in early-stage studies. Still, AbbVie's best chances in oncology appear to lie elsewhere.
Market research firm EvaluatePharma thinks Imbruvica will be the world's No. 4 best-selling cancer drug by 2022, with sales of $7.5 billion. AbbVie made $2.5 billion from the drug last year, with partner Johnson & Johnson making another $1.9 billion. One way for Imbruvica to reach its potential is to succeed in late-stage studies targeting treatment of diffuse large B-cell lymphoma (DLBCL), follicular lymphoma, and pancreatic cancer. Based on previous clinical-study results, Imbruvica appears to have the best chances of success in the DLBCL indication, with more modest prospects in the other two cancer types.
Venclexta is another important component to AbbVie's oncology hopes. The drug won FDA approval in 2016 for treating chronic lymphocytic leukemia (CLL) with 17p deletion. AbbVie hopes to win additional approvals for Venclexta in treating relapsed or refractory and first-line CLL, acute myeloid leukemia (AML), and multiple myeloma. The company should have pretty good odds of gaining approval at least in the relapsed or refractory CLL indication since late-stage results announced in December 2017 were positive.
AbbVie's other late-stage oncology asset is veliparib. However, the drug isn't considered to be as important for the company after it failed to meet primary endpoints last year in two phase 3 studies targeting treatment of squamous non-small cell lung cancer (NSCLC) and triple-negative breast cancer. AbbVie still has other late-stage studies of veliparib in progress as a treatment for non-squamous non-small cell lung cancer, BRCA1/2 breast cancer, and ovarian cancer.
Immunology
There are two promising late-stage immunology candidates in AbbVie's pipeline -- upadacitinib and risankizumab. Upadacitinib is being evaluated in late-stage studies for treating psoriatic arthritis and rheumatoid arthritis. Risankizumab completed the last of four late-stage studies targeting treatment of psoriatic arthritis.
AbbVie could have big winners with both of these drugs. All four of the pivotal studies of risankizumab in treating psoriatic arthritis demonstrated positive results. The company expects to submit the drug for regulatory approval in the first half of 2018.
Upadacitinib has already performed well in two late-stage studies for treating rheumatoid arthritis. AbbVie expects to report data from a couple of other pivotal studies in the first half of this year. If all goes well, the company will submit upadacitinib for approval in the second half of 2018.
More indications could follow for both immunology drugs. AbbVie should have results from two late-stage studies of upadacitinib in treating psoriatic arthritis next year. It's advancing the drug to a pivotal study in treating atopic dermatitis later in 2018. Upadacitinib is also in phase 2 testing for treatment of ulcerative colitis. And both upadacitinib and risankizumab are being evaluated in phase 2 studies targeting treatment of Crohn's disease.
Other
AbbVie's lone late-stage program outside of the oncology and immunology areas is elagolix. The company and its partner, Neurocrine Biosciences, announced positive results in November from a late-stage study of the drug in management of endometriosis with associated pain. AbbVie hopes to win approval for elagolix in the endometriosis indication in the second quarter of 2018.
The two partners also reported great results a few weeks ago from a second late-stage study of elagolix in treating uterine fibroids, with results from the first study coming less than a month earlier. Both of the studies demonstrated solid efficacy and safety. Additional late-stage studies in the indication are still in progress.
Risks great and small
In my view, elagolix is the least risky asset in AbbVie's pipeline. I expect FDA approval for the drug in treating endometriosis within a few months. And while potential approval for treatment of uterine fibroids is farther out, my take is that the chances for elagolix should be pretty good. AbbVie CFO Bill Chase recently stated that "even in a worst-case scenario, [elagolix] is clearly a $1 billion plus asset." I suspect that Chase is right.
Next on the risk scale, in my opinion, are AbbVie's two immunology candidates, upadacitinib and risankizumab. Upadacitinib is likely to become the bigger commercial success, but both drugs could easily be megablockbusters.
AbbVie's riskiest area is, unsurprisingly, oncology. I feel pretty good about Imbruvica's and Venclexta's prospects in securing additional indications. However, it wouldn't be shocking for either or both drugs to stumble in at least one indication. As for Rova-T, there's still a possibility the drug could succeed -- but you have to consider this drug as AbbVie's weakest link right now.
Perhaps the biggest risk of all with AbbVie's pipeline is that the company's management has a tendency to overpromise. For example, AbbVie has talked about peak sales potential for Imbruvica of $7 billion, but the jury is definitely still out on that target. And previous skepticism about AbbVie's prediction of $5 billion in sales for Rova-T certainly now seems to be justified.
Still, AbbVie has a very promising pipeline. I continue to view the stock as a buy at current levels. As is the case with any biopharmaceutical stock, though, it's important that investors be aware of the risks.
