Among pharmaceutical giants, few arguably get as little respect as AbbVie (NYSE:ABBV).
The reason AbbVie's become the Rodney Dangerfield of drug developers is its over-reliance on anti-inflammatory Humira. Global sales of Humira totaled $3.65 billion of AbbVie's $5.94 billion in net products sales in Q3 2015, and sales of the drug may top $13 billion in fiscal 2015. Wall Street fears placing too high a valuation on AbbVie considering that many of its U.S. patents begin expiring between 2022 and 2034, and biosimilar competition may be entering the market well before that.
However, Wall Street and investors may forget, or be ignorant of the fact that AbbVie's portfolio and pipeline extends beyond Humira. AbbVie's CEO Richard Gonzalez did his best to remind us of this fact last week while presenting at the Super Bowl of all healthcare conference, the J.P. Morgan Healthcare Conference.
During Gonzalez's 24-minute presentation -- which I'd strongly suggest you listen to -- he touched on AbbVie's three primary growth products, mentioned a handful of developing products that are showing plenty of promise, and laid out a laundry list of upcoming catalysts. The following three slides that outline this discussion provide a comprehensive look at where AbbVie is headed next.
AbbVie's three amigos
As you'll come to see, all three slides serve a purpose, but this one speaks wonders as it lays out projected peak sales potentials, lists off key pipeline targets, and estimates total market size for its three gigantic therapeutic indications: immunology, oncology, and virology.
The three amigos of AbbVie's pipeline are (not surprisingly) Humira in immunology, Imbruvica in oncology, and Viekira Pak in virology. Combined, AbbVie sees sales of these three products hitting approximately $18 billion, $5 billion, and $3 billion, respectively, by 2020. Later in the presentation, Gonzalez estimated that 2020 sales forecasts for the company could hit roughly $37 billion. In short, these three products could account for $26 billion of AbbVie's estimated $37 billion in sales five years from now.
Humira looks to be the real wildcard, here. AbbVie suggests that global Humira sales could actually expand almost $5 billion between 2015 and 2020, namely as a result of its extensive patent portfolio. The unknown, here, is how well this position will hold up in court when biosimilars enter the mix. In November, Amgen (NASDAQ:AMGN) submitted its first biosimilar application to the Food and Drug Administration for ABP 501, a biosimilar of Humira. Amgen anticipates launching the drug not too long after it's approved (if it's approved), so things could get very interesting for both companies in the not-too-distant future.
On the other hand, Imbruvica's future continues to look bright in treating blood cancers, as well as solid tumors and in combination with anti-PD1 immunotherapies. Imbruvica is a drug developed by Pharmacyclics and Johnson & Johnson (NYSE:JNJ), so what's good for AbbVie is also presumably good news for J&J. Label expansion opportunities into the frontline setting will be key for Imbruvica, with AbbVie suggesting peak annual sales for it could hit $7 billion from Imbruvica. It remains an exciting product for AbbVie's and Johnson & Johnson's shareholders.
Lastly, we have Viekira Pak, which is pacing almost $2 billion globally based on the $469 million in sales reported in the third quarter. We'll discuss this a bit more below, because next-generation hepatitis C innovations are really where the growth potential is.
An underappreciated pipeline
Gonzalez may have glossed over this slide during his presentation, but throughout his talk, he hit on a number of exciting components being developed, including ABT-494 in immunology, venetoclax in oncology, and its next-generation HCV product in virology.
ABT-494 is a JAK-1 inhibitor currently being studied in phase 3 trials for rheumatoid arthritis. The drug met its primary endpoint in two mid-stage studies (BALANCE I and BALANCE II) as a once-daily formulation by delivering ARC20 response rates ranging from 56%-71% in moderate-to-severe RA patients who'd previously responded poorly to anti-TNF treatments, and ARC20 rates of 65%-82% in methotrexate inadequate response patients. Considering its ability to tackle tough-to-treat RA patients, ABT-494 is definitely worth watching.
Next up, AbbVie's CEO wants you to pay attention to venetoclax, a BCL2 inhibitor that's being tested as a monotherapy and in combination with Rituxan as a treatment for relapsed and refractory (R/R) chronic lymphocytic leukemia. At the American Society of Hematology's annual meeting in December, AbbVie presented data on venetoclax in combination with Rituxan for CLL (R/R) patients that demonstrated an overall response rate of 86% and a whopping complete response rate of 47%. This is a therapy that could have expansive label potential.
Lastly, AbbVie is working on a once-daily HCV regimen that'll be able to take on Gilead Sciences (NASDAQ:GILD) Harvoni and Sovaldi. Gilead's once-daily pills and efficacy of 90% or higher in many HCV genotypes makes unseating it very difficult. However, AbbVie believes it'll soon have a pan-genomic, once-daily formulation that could achieve 90%+ HCV clearance in as little as eight weeks. The plan would be to launch its next-generation HCV therapy in 2017.
Catalysts to monitor
Finally, there's a lot going on with AbbVie in 2016 as it relates to regulatory submissions and data readouts.
It's obviously expected to be a big year for Imbruvica on both sides of the aisle. We could see Imbruvica handed a big expansion in first-line CLL, and there's the potential for data in mantle cell lymphoma, diffuse-large B-cell lymphoma (DLBCL), follicular lymphoma, and marginal zone lymphoma. Keep in mind that cancer trials are always event-driven, and it's very difficult to predict event timing when it comes to cancer.
We could also be looking at a strong year for venetoclax, which is looking for its first approval in CLL (R/R) for patients with 17p deletion, and it may also deliver mid-stage data in indolent non-Hodgkin lymphoma and DLBCL.
Importantly, we could be looking at the beginning of a long stream of top-line data from AbbVie's late-stage studies involving its next-generation HCV product beginning in the second half of 2016. We're talking about six ongoing studies that will likely begin reading out data over many months, meaning we may not see the end of the data until the first-half of 2017. Pay close attention to efficacy rates as they relate to the eight-week treatment timeframe.
AbbVie: buy or run?
After listening to AbbVie's presentation, I admit I'm feeling more positive about its future. AbbVie has a fairly steady track record of growth, and it's done a good job of returning cash to shareholders via a 4.2% dividend yield.
That doesn't mean it isn't without possible shortcomings, including the entrance of biosimilars for Humira, its heavy reliance on Humira, which will hurt once generics do enter the marketplace, and uncertainties surrounding Viekira Pak's future and whether or not it'll be able to effectively compete with Gilead and other potential entrants.
I would suggest approaching AbbVie with modest long-term growth expectations. It does have core products that could sustain strong cash flow, but it'll have some questions to answer in the coming years.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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