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3 Things You Need to Know About AbbVie's Monster Q1 Earnings

By Keith Speights – Updated Apr 27, 2018 at 3:50PM

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Humira still reigns, but not quite like it used to.

AbbVie (ABBV -1.79%) ended 2017 with a bang, posting tremendous fourth-quarter results in January. The company has started 2018 with a bang, too.

On Thursday, AbbVie announced its Q1 earnings results. Wall Street analysts thought the company would report revenue of $7.6 billion. AbbVie's actual revenue total was $7.9 billion. Analysts expected adjusted earnings per share (EPS) of $1.79. AbbVie reported adjusted EPS in Q1 of $1.87. 

How did the drugmaker hit a home run yet again? Here are three things you need to know about AbbVie's monster Q1 performance.

Two people in lab coats looking at monitor

Image source: Getty Images.

1. Mavyret is winning big-time

AbbVie's new hepatitis C virus (HCV) drug Mavyret appears to be giving Gilead Sciences (GILD -0.47%) a run for its money. In the first quarter, AbbVie's net HCV revenue came in at $919 million. That total includes both of the company's HCV drugs, Viekira and Mavyret. But there's virtually no question that Mavyret is contributing most of AbbVie's HCV revenue.

Consider that in the first quarter of 2017, Viekira generated sales of $263 million. The following quarter, sales for the drug dropped to $225 million. After Mavyret won FDA approval in August 2017, AbbVie began combining sales for both HCV drugs in its financial reports. However, it's a near certainty that Viekira's sales have continued to decline, while Mavyret's have soared.

Gilead reports its Q1 results next week. It should be interesting to see how its top HCV drug, Epclusa, performed. Based on the huge sales gains for Mavyret, I wouldn't be surprised if Epclusa had its second quarter in a row of year-over-year sales declines.

Gilead Sciences executives think that the market share for their HCV franchise will stabilize in the middle of 2018. That probably isn't a bad assumption. If so, the sales growth for Mavyret will flatten also. However, AbbVie definitely has a big winner on its hands.

2. Imbruvica keeps gaining ground

There's no reason to think that Imbruvica will slow down. Sales of the cancer drug soared 38.5% year over year in the first quarter to $762 million. That was a 7.6% increase from the previous quarterly sales figure for Imbruvica.

Imbruvica already claims a laundry list of indications for which it has won FDA approval: mantle cell lymphoma, chronic lymphocytic leukemia (CLL), Waldenstrom's macroglobulinemia, marginal zone lymphoma, small lymphocytic lymphoma, and chronic graft-versus-host disease. AbbVie hopes to add more to that list.  

The company is evaluating Imbruvica in late-stage studies targeting treatment of diffuse large B-cell lymphoma (DLBCL), follicular lymphoma, and pancreatic cancer. Probably the best chances for the drug are in the DLBCL indication.

Market research firm EvaluatePharma predicts that Imbruvica will become the No. 4 best-selling cancer drug in the world by 2022, with sales of $7.5 billion. While AbbVie shares profits on international sales with Johnson & Johnson, Imbruvica appears set to be a growth driver for AbbVie for a long time to come.

3. Humira still wears the crown for now

Although Mavyret and Imbruvica generated the most sizzling growth in Q1, Humira still wears the crown as the top-selling drug for AbbVie. The immunology drug generated revenue of $4.7 billion in the first quarter, a solid increase of 14.4% over the prior-year period.

Humira's growth could taper off somewhat later this year, though. Amgen and Samsung Bioepis will begin marketing their biosimilars to Humira in Europe in October. However, AbbVie makes nearly 64% of total sales of Humira in the U.S. Also, the company will receive royalties on sales of the Humira biosimilars.

Perhaps the most notable thing about Humira in the first quarter is that, for the first time ever, sales of the drug accounted for less than 60% of AbbVie's total revenue. That's good news for AbbVie, which has been aggressively seeking to reduce its dependence on Humira.

Looking ahead

Thanks to its blowout performance in Q1, AbbVie boosted its guidance for the full year. The company now expects adjusted EPS between $7.66 and $7.76. Previously, AbbVie had projected 2018 adjusted EPS between $7.33 and $7.43. 

AbbVie's long-term prospects also still appear to be good. The company did have a serious pipeline setback in March -- it announced disappointing results from a phase 2 study of Rova-T as a third-line treatment for relapsed/refractory small-cell lung cancer (SCLC). That clinical failure doesn't bode well for the drug's chances in a late-stage study targeting the first-line SCLC indication. However, AbbVie still has multiple promising candidates in its pipeline.  

I continue to view AbbVie as one of the more attractive pharma stocks on the market. And with a dividend yielding north of 4%, investors will get paid nicely as they wait for Mavyret, Imbruvica, Humira, and the company's pipeline to deliver more monster quarters.

Keith Speights owns shares of AbbVie and Gilead Sciences. The Motley Fool owns shares of and recommends Gilead Sciences and Johnson & Johnson. The Motley Fool has the following options: short May 2018 $85 calls on Gilead Sciences and short May 2018 $140 calls on Johnson & Johnson. The Motley Fool has a disclosure policy.

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