Markets
MRK

Key Takeaways from AbbVie's Q4 Call: Humira and the Pipeline

Market data chart with calculator

AbbVie Inc.'sABBV shares were down 2.1% following the release of fourth quarter and full year 2016 results on Friday. Although earnings were in line with expectations, revenues fell short mainly due to Imbruvica and Viekira sales (Read more: AbbVie Q4 Earnings Meet Estimates, Revenues Lag ).

Here's a look at what management had to say on the fourth quarter call.

Why Did Imbruvica and Viekira Sales Lag? Viekira's performance fell short of the company's original expectations with sales just about crossing $1.5 billion in the year. The company said that it experienced market share loss and price erosion due to competitive dynamics within the hepatitis C virus (HCV) market. Competition is intense given the presence of companies like Gilead Sciences Inc. GILD and Merck & Co., Inc. MRK . Viekira sales are expected to decline to $1 billion in 2017.

Cancer treatment, Imbruvica's sales in the U.S. were down slightly on a sequential basis. On the conference call, AbbVie said that IMS prescription growth was up 6% sequentially while lower revenues were mainly due to some inventory issues.

Going forward, AbbVie expects to record Imbruvica global revenues of more than $2.4 billion with sales in the U.S. expected to cross $2 billion. Imbruvica sales are expected to grow in the high-single digits sequentially in the first quarter. The chronic lymphocytic leukemia (CLL) segment represents the largest revenue contributor for Imbruvica's growth while expansion into non-Hodgkin's lymphoma (NHL) and other indications will be major growth drivers for Imbruvica.

Humira Continues to Show Strength: Humira is AbbVie's flagship product and key growth driver. The product continued to perform well across the rheumatology, dermatology and gastrointestinal markets despite increasing competition given the presence of new classes of drugs as well as indirect biosimilar competition in international markets. Humira should continue to be driven by its overall level of efficacy and safety, long physician experience and continued biologic penetration across disease categories.

Pipeline Catalysts Ahead: The company has several late-stage assets in its pipeline that represent multibillion dollar peak year sales and represent an opportunity for meaningful revenue growth in the next few years. AbbVie has a significant number of regulatory and clinical milestones lined up for 2017. Key assets in the hematologic oncology segment include Imbruvica and Venclexta. AbbVie expects interim data on Imbruvica in front-line mantle cell lymphoma later this year as well as additional potential interim analysis in other forms of NHL while a regulatory application for the use of Imbruvica in patients with chronic graft versus host disease who failed prior systemic therapy is slated for later this quarter in the U.S.

Data from the MURANO study on Venclexta is expected later this year - positive data would support a broader label in relapsed/refractory CLL.

Within the solid tumors segment, data from the TRINITY study on Rova-T is scheduled for the second half of the year with regulatory submission expected soon thereafter. The latter part of the year could also see the company presenting initial data on Rova-T for several neuroendocrine tumors. Moreover, data from three late-stage studies on PARP inhibitor, veliparib, should be out this year while data on ABT-414, an antibody drug conjugate, for second line glioblastoma multiforme (the most common and most aggressive type of malignant primary brain tumor) should be out in the second half of 2017.

Risankizumab (anti-IL 23 monoclonal antibody) and ABT-494 (selective JAK-1 inhibitor), the key assets in AbbVie's immunology program, are tracking ahead of the company's initial development timelines. Data from pivotal studies on risankizumab for psoriasis are expected later this year with commercialization expected in 2019. Mid-stage data on Crohn's disease and psoriatic arthritis should also be out this year while a mid-stage study in ulcerative colitis is scheduled to commence in the second half of the year.

Meanwhile, late-stage data on ABT-494 from the rheumatoid arthritis (RA) program should also start coming out later this year with mid-stage data on Crohn's disease expected in the first half of the year.

Within virology , AbbVie is currently seeking approval for its once-daily oral combination of two antivirals - the company expects to launch this new regimen in both the U.S. and EU later in the year.

The third quarter of 2017 could also see AbbVie seeking approval for Elagolix for endometriosis. Elagolix, a part of the women's health segment, is in late-stage studies for uterine fibroids, with data expected towards year-end.

Bottom Line

Although Humira continues to do well, investors remain concerned about the product's long-term growth prospects considering the prospect of biosimilar competition. In this scenario, it makes sense for AbbVie to focus on its pipeline -- 2017 will be a year of significant R&D investment for AbbVie as well as several late-stage readouts which will give an insight into the company's long term growth prospects. AbbVie is a Zacks Rank #3 (Hold) stock. Over the last one year, AbbVie has outperformed the Zacks-categorized Large Cap Pharmaceuticals industry with the company gaining 10.3% compared to the industry decline of 2.4%.

Eli Lilly and Company LLY is a better-ranked stock in the pharma sector with the company carrying a Zacks Rank #2 (Buy). Lilly, which will be reporting fourth quarter results tomorrow before the market opens, has a positive Earnings ESP of 1.01%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Zacks' Top Investment Ideas for Long-Term Profit

How would you like to see our best recommendations to help you find today's most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Eli Lilly and Company (LLY): Free Stock Analysis Report

Merck & Company, Inc. (MRK): Free Stock Analysis Report

Gilead Sciences, Inc. (GILD): Free Stock Analysis Report

AbbVie Inc. (ABBV): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MRK GILD LLY ABBV

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More