AbbVie (ABBV 1.26%) shareholders didn't have a lot to get excited about last year. The stock finished 2019 down 4%, while the S&P 500 surged 29%. But the big drugmaker's future is a lot more important than its past.
Rick Gonzalez, AbbVie's CEO, along with a couple of other top executives had an opportunity to talk about AbbVie's future on Wednesday at the J.P. Morgan Healthcare Conference in San Francisco. Here are five key things that investors should look forward to in 2020 for AbbVie, according to the company's management team.
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1. Close of the Allergan acquisition
Probably the most significant near-term event for AbbVie is the close of its pending acquisition of Allergan (AGN). Gonzalez said that the company expects the deal to close in the first quarter of 2020. And he thinks that acquiring Allergan will allow AbbVie to "reposition the business in a way that's even stronger" than its historical track record of success.
AbbVie recently announced plans to set up Allergan's medical-aesthetics business as a stand-alone unit with its own research and development team. Gonzalez said at the J. P. Morgan conference that this approach is similar to what the company did when it first acquired Pharmacyclics. He thinks doing so will "accelerate the advance of innovation" with Allergan's aesthetics business.
2. Humira rocking along (for now)
Most of the recent attention for Humira has centered on sinking international sales for the drug in the wake of competition from biosimilars in Europe. But Gonzalez said that Humira should continue to grow in the huge U.S. market in 2020.
It will be a different story beginning in 2022, though. Gonzalez expects U.S. sales growth for Humira will begin to slow even before biosimilars hit the U.S. market in 2023. He also predicts that the sales decline will be steep initially before stabilizing somewhat.
3. Strong momentum for new immunology drugs
Two new immunology drugs should go a long way toward offsetting the inevitable sales decline for Humira. Gonzalez said that both Rinvoq and Skyrizi are doing very well in the early stages of their launches. He also noted that Skyrizi already claims 25% of its "in-play market" (which includes treatment-naive patients, newly diagnosed patients, and patients switching from other drugs) in treating psoriasis. Rinvoq claims a 9% market share in its in-play market of treating rheumatoid arthritis, and Gonzalez said the drug is gaining around one point of additional market share each month.
Look for both drugs to pick up momentum in 2020. Earlier this week, AbbVie announced encouraging results from a late-stage study evaluating Skyrizi in a head-to-head matchup with Novartis' Cosentyx. This data should help motivate physicians to prescribe Skyrizi. The company also fully expects that Rinvoq will continue to deliver strong growth and eventually challenge the top leaders in the rheumatoid arthritis market.
4. Lots of pipeline updates
AbbVie president Mike Severino provided an update on the company's pipeline programs. There are quite a few milestones on the way this year.
Severino especially highlighted the results from the second of two late-stage studies of upadacitinib (Rinvoq) in treating psoriatic arthritis expected to read out in 2020. These results should support a regulatory filing in the additional indication. Results from a late-stage study of Skyrizi in treating Crohn's disease are expected this year, as well.
On the hematology/oncology front, AbbVie should announce results from a late-stage study of Imbruvica as a first-line treatment for graft-versus-host disease (GVHD) and from a late-stage study of a combination of Imbruvica and Venclexta. Severino also said there will be "a steady cadence of readouts" from early-stage programs this year and into 2021 and 2022.
5. Dividend growth (but at a slower pace)
AbbVie ranks as one of the most attractive dividend stocks on the market right now. Its yield stands at nearly 5.4%, and the company increased its dividend payout by 10.3% in November.
CFO Rob Michael stated that AbbVie remains "committed to a strong and growing dividend." But the rate of its dividend hikes could slow somewhat beginning in 2020. Michael said that the dividend growth won't necessarily grow at the rate of earnings growth.
