Buying up shares of AbbVie Inc. (ABBV -0.76%) at the beginning of 2018 seemed like a brilliant idea when the stock shot up 27% before the end of January, but that was simply the first leg of a long roller-coaster ride. By Nov. 1, 2018, AbbVie stock had fallen 35% from its peak earlier in the year and at recent prices, it's given up just 5.4% so far in 2018.
Results from AbbVie's clinical-stage pipeline and rising sales of the world's bestselling drug have given investors plenty of reasons to cheer this year. Unfortunately for AbbVie, its megablockbuster also makes investors nervous. Here's what you need to know about the levers that keep pushing this battleground stock up, then down, on a repeat cycle.
The good news
AbbVie began the year with a bang at the J.P. Morgan Healthcare Conference by sharing expectations for annual Humira sales that suggested they'll continue climbing to $21 billion by 2020. This seems entirely possible considering the anti-inflammation injection is on pace to achieve $20 billion in 2018.
The main U.S. patent for Humira has expired, but AbbVie encased the franchise in a fortress of additional patents that appear to be working as planned. Momenta Pharmaceuticals (MNTA) recently became the sixth drugmaker to delay the U.S. launch of its biosimilar version of Humira until 2023, and Momenta won't even receive payment from AbbVie in return for the favor.
In January, AbbVie also soothed investor concerns with a bold prediction that non-Humira sales would rise from $9.8 billion in 2017 to $35 billion in 2025. To achieve this goal, AbbVie had eight key growth drivers in mind, four of which hadn't launched yet. Although one of these key assets has already imploded, the rest of the company's leading growth prospects have performed better than expected.
During the first nine months of the year, revenue from AbbVie's share of the blood-cancer tablet Imbruvica jumped 39% higher, to $2.5 billion. Venclexta sales are still getting started, but recent data from a study with leukemia patients could send them into blockbuster territory soon. During the Murano study, 53% of those given Venclexta plus standard care were completely disease-free after nine months compared to just 12% of the group given standard care on its own.
A pipeline ready to deliver
Earlier this year, AbbVie launched Orilissa, the first new treatment for endometriosis-associated pain in over a decade, and it recently took another big step. Endometriosis is a large indication, but uterine fibroids are non-cancerous growths that affect roughly three-fourths of women by age 50 and the leading reason to seek a hysterectomy.
AbbVie has been surging lately because of trial results that suggest Orilissa could make a big difference for millions of women in need of new treatment options. During twin pivotal studies that will support an upcoming application, women taking Orilissa were at least six times more likely than the placebo group to achieve a blood-loss reduction of 50% or better.
Earlier this month, AbbVie told analysts the company's on track to launch two new immunology drugs with blockbuster potential in 2019. The Food and Drug Administration (FDA) is currently reviewing an application for psoriasis candidate risankizumab, which is supported by studies that show it helped more than half of patients achieve complete skin clearance.
Before the end of 2018, AbbVie should have another submission ready for the FDA -- this time, for a rheumatoid arthritis treatment that could become a standard first-line treatment down the road. After 24 weeks of treatment, half of the patients in a group given upadacitinib achieved clinical remission compared to just 18% of those given methotrexate.
The bad news
AbbVie's list of eight key assets lost an important member in March, and the loss stung a bit more than usual. Rova-T's phase 3 flop was especially disappointing because AbbVie ignored lackluster early data and spent $5.8 billion to get its hands on the troubled lung cancer candidate a couple of years earlier.
Rova-T caused investors to lose some confidence, and more recently, investors were rudely reminded of what's at stake in the U.S. several years from now. In October, Humira biosimilars priced to compete launched throughout Europe, a region where AbbVie's peers have been losing market share to low-cost biosimilars for years.
International Humira sales reached $4.9 billion during the first nine months of 2018 and comprised 20% of total revenue during the period. Analysts will be surprised if biosimilars don't cut international Humira sales in half over the next couple of years, and a recent White House proposal backed by Pfizer means U.S. Humira sales could be in trouble sooner than expected.
A ride worth the ticket
Although AbbVie's stock price has been on a roller-coaster ride throughout 2018, this Dividend Aristocrat's payout has steadily risen 168% in five short years. European Humira biosimilars will make similar gains difficult in the years ahead, but it would take multiple catastrophes to derail this company's payout.
AbbVie shares offer a juicy 4.7% yield, but don't wait too long to make up your mind. The next leg of this roller-coaster ride could be around the corner.