On May 11, AbbVie (ABBV 1.06%) announced positive top-line results in its phase 3 clinical trial of patients receiving Rinvoq to treat moderate-to-severe Crohn's disease.
What was the specific data for the clinical trial results? And what could a Rinvoq Crohn's disease indication in the U.S. add to pharma stock AbbVie's annual revenue? Let's dig in to find out.
An especially potent, durable treatment
Crohn's disease is an inflammatory bowel disease (IBD) that leads to chronic inflammation and damage to the digestive tract, similar to the other form of IBD called ulcerative colitis. But there is a key difference between the two diseases. Unlike ulcerative colitis that affects only the colon and the rectum, Crohn's disease can impact any part of the digestive tract, such as the mouth or the anus.
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The symptoms of Crohn's disease can include fever, loss of appetite, fatigue, and abdominal pain. One common complication of Crohn's disease that's left untreated is anemia, which stems from blood loss.
Fortunately, there are more effective Crohn's disease treatments hitting the market with each passing year. With AbbVie expecting Rinvoq to be approved for moderate-to-severe Crohn's disease in 2023, there could soon be another treatment option on the market.
Patients randomly assigned to the group taking 15 or 30 milligrams of Rinvoq once daily achieved clinical remission (i.e., few or no symptoms) at rates of 36% and 46%, respectively, by week 52. This was more than double to triple the 14% rate of clinical remission for the placebo group at week 52.
And despite the concerns of increased risks for heart attack, cancer, and blood clots that have been assigned to Janus kinase (JAK) inhibitors, Rinvoq's safety profile looked promising. That's because the serious adverse event rate for Rinvoq at 15 mg and 30 mg was 25 and 21, respectively, per 100 patients over a year. This means that for every 100 patients in a clinical trial for a year, 25 and 21 had serious adverse events, respectively. This was meaningfully lower than the 37.4 rate for the placebo group.
Solid sales potential
Rinvoq is an intriguing potential treatment for Crohn's disease. But what is the sales potential of the drug?
First, an estimated 780,000 Americans have Crohn's disease. Assuming the prevalence of Crohn's disease patients with moderate-to-severe disease is the same as the 21% to 22% rate for ulcerative colitis, that would amount to approximately 168,000 such patients in the U.S.
Since Rinvoq will be a second-line treatment for Crohn's disease, I believe the drug will achieve an 8% patient share. This is because first-line treatments like AbbVie's Humira don't always work. That would give Rinvoq an eligible patient pool of 13,400.
The drug's annual list price is $68,000. Adjusting for patient assistance programs (depending on a patient's financial circumstances) and negotiations with health insurers, I will assume an annual net price of $40,000 per patient split between patients and their insurers.
This would equate to just over $500 million in annual sales potential for a Rinvoq Crohn's disease indication in the U.S. alone. Against the $59.6 billion in sales that analysts are expecting in 2022, this would be a 0.9% sales bump for AbbVie.
A stacked pipeline
Aside from AbbVie's Rinvoq Crohn's disease indication, the company has dozens of other potential indications in clinical trials. This should be more than enough to help AbbVie bounce back from the upcoming U.S. patent expiration of its blockbuster Humira medication in 2023.
AbbVie is trading at a forward price-to-earnings ratio of 10.6. This is well below the S&P 500 pharmaceutical industry average of 13.5, which builds in a margin of safety for income investors to buy the stock.
