AbbVie: Q2 highlights and key takeaways

AbbVie continued the theme seen in many second quarter earnings for 2017, reporting revenue that was slightly above expectations- though unlike many of its compatriots such as Gilead Sciences, Celgene, and Alexion, it didn't offer an incremental increase in guidance. 

Humira longevity

Humira sales grew 18 percent in the US and 14 percent globally on a reported basis to $4.7 billion, beating a $4.6-million consensus and successfully showing continued growth even towards the end of its life cycle. Management didn't provide much colour on their updated thinking on incoming biosimilar competition for the product, which was the sole source for about 68 percent of the company's revenue. However, CEO Richard Gonzalez did note that he expects Humira to maintain a leadership position even after biosimilar entry; analysts at Suntrust Robinson Humphrey were also bullish, saying that "the near-term risk from Humira biosimilars in the US is overly reflected in consensus estimates," predicting biosimilar entry in 2022.

Imbruvica

Sales of Imbruvica were up 43 percent on the year to $626 million, topping a $609-million consensus. Imbruvica is the key drug to sustain the company as its pipeline matures beyond Humira; analysts are looking towards upcoming label expansions to further stimulate growth. A decision from the FDA is expected in the second half of this year for Imbruvica to treat chronic graft versus host disease (cGvHD), along with Phase III data in second line follicular lymphoma and interim Phase III results in first line mantle cell lymphoma.

Upadacitinib

Eli Lilly's disclosure last week that Olumiant (baricitinib) was rejected by the FDA in part due to concerns around thromboembolic events has led analysts to scrutinise the safety of other JAK inhibitors, including AbbVie's upadacitinib. Queried on the compound's safety profile on the investor call, chief scientific officer Michael Severino said "the short answer is we've looked. And we don't see anything that we'd consider a signal or rates that exceed expected background." He went further and backed up from the potential association of JAK inhibitors and thromboembolisms, saying that "for starters, we don't know whether baricitinib does, in fact, increase risk. Here, the FDA has just asked for more data. We also don't know the detailed data that Lilly and the FDA are looking at. For example, what's the total number of cases, including not only the placebo-controlled portions but also the open-label periods? What are rates overall and are they increased? What's the nature of the cases? Is there evidence of a dose response or not?"

Severino also noted that upadacitinib treatment has "a tendency towards modest decreases in platelets." Gilead made the same argument last week when defending JAK inhibitor filgotinib from an association with thromboembolic events. AbbVie will present its SELECT-NEXT rheumatoid arthritis (RA) data in November at the American College of Rheumatology meeting- See Gilead: Q2 earnings and key takeaways.

Jefferies analysts expect upadacitinib to reach the market in 2019, and model $3.5 billion in peak sales. The IL-23 inhibitor will need to contend with an IL-targeting portfolio from Johnson & Johnson, which includes Tremfya (guselkumab) and Sterala (ustekinumab). AbbVie expects Phase III data comparing upadacitinib to Sterala next half - See ViewPoints: Tremfya provides Johnson & Johnson a chance to double down in psoriasis.

HCV

Viekira sales missed expectations, coming up light at $225 million versus a $257-million consensus. While there are near-term growth drivers, including an EU approval for AbbVie's pan-genotypic Maviret HCV regimen announced with second quarter earnings, Gonzalez told the call that he doesn't expect material revenue from the product before 2018. He also noted continued pricing pressure for HCV products in the US, saying that the company's reimbursement strategy will initially focus on public payers. "About 70 percent of the patients are in this public channel, Medicare, Medicaid, VA, et cetera, and 30 percent are in the commercial channels. And so it's a significant opportunity. And it's the part of the market that's still growing, where the commercial channel tends to be flat to declining from a patient volume standpoint. So once we get approval, that will be the area of focus within the US."

M&A

Gonzalez said he's not expecting any big deals for the company, but it still might keep an eye out for smaller partnerships. "We have filled out a lot of the major gaps that we had in our therapeutic strategies and we're looking more now for individual assets, rather than larger platform kinds of plays, but that's always the first priority," he said.

He also added that there was a dearth of viable candidates on the market, from both a product and price perspective. "I can't say that there's a lot out there that either fits what our strategic objectives are or has a value proposition at this point that is something that we are comfortable with from a return standpoint. And that really is what's been driving the lack of activity versus any strategic intent not to go forward on transactions."

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