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AbbVie Stock Up More Than 30% So Far in 2H17: Here’s Why

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AbbVie Inc. ABBV shares have gained 32.1% so far in the second half of the year, comparing favorably with a gain of only 3.8 % recorded by the industry.

The share price surge was supported by a series of positive news in the past few months. AbbVie presented promising data from several pivotal studies, gained key regulatory approvals and settled its Humira patent disputes with Amgen.

Resolution of Amgen Lawsuit


AbbVie announced the resolution of a patent dispute with Amgen Inc. AMGN in September, which has delayed the launch of the latter’s biosimilar version of AbbVie’s blockbuster arthritis drug, Humira in the United States to 2023 and in most countries in the EU to October 2018.

This agreement has removed a major overhang on AbbVie’s shares though the company is still facing a patent challenge from Boehringer Ingelheim, which gained approval for its biosimilar version of Humira, Cyltezo, in August. Moreover, the agreement gives AbbVie ample time to focus on developing its pipeline and launching new products that will help make up for the loss of revenues once biosimilar Humira enters the market.

Key Regulatory Approvals

AbbVie’s 8-week, pan-genotypic, ribavirin-free, once-daily HCV treatment, Mavyret/Maviret, gained approval in the United States, EU and Canada in the third quarter of 2017. Mavyret, AbbVie’s next-generation HCV program, is a combination of glecaprevir, a potent protease inhibitor and pibrentasvir, a NS5A inhibitor. Maviret has the potential to rejuvenate growth in the HCV franchise. According to AbbVie, Mavyret may be used in up to 95% of HCV patients, depending on the stage of liver disease and prior treatment history.

In August, AbbVie gained approval for the sixth indication for Imbruvica. The drug was approved for chronic graft versus host disease (GVHD), a serious and potentially life-threatening condition with high unmet medical need. cGVHD is the first indication of Imbruvica outside of cancer. Also, Imbruvica is the first treatment specifically approved for cGVHD.

Positive Data from Studies

AbbVie announced positive data from the phase III MURANO study of Venclexta plus plus Roche’s RHHBY Rituxan in relapse/refractory CLL last month. The data showed that Venclexta plus Rituxan met the primary endpoint of prolonged progression-free survival compared with Treanda (bendamustine) plus Rituxan in patients with relapsed/refractory chronic lymphocytic leukemia (“CLL”). Label expansion for this indication should expand the patient population for Venclexta significantly and boost its commercial potential.

AbbVie’s oral JAK-1 selective inhibitor, upadacitinib (ABT-494) met primary endpoints in a phase III study for the treatment of RA with highly statistically significant and clinically meaningful results for both the doses (15 mg and 30 mg) of upadacitinib compared to placebo. Upadacitinib also met primary endpoints in a phase IIb study for the treatment of adult patients with atopic dermatitis, also known as eczema. The company plans to advance the candidate into phase III studies next year. Data from both the upadacitinib studies were announced in September.

In October, AbbVie announced that three pivotal head-to-head phase III studies evaluating risankizumab versus Johnson & Johnson’s JNJ Stelara and Humira, for the treatment of moderate-to-severe chronic plaque psoriasis, met all co-primary and secondary endpoints.

Conclusion

With several pivotal data readouts and regulatory milestones expected in 2018, the bullish run in the stock should continue next year. Importantly Humira has been generating strong sales. Despite new competition, AbbVie raised its long-term target for Humira sales in October based on strong demand trends for the drug. Imbruvica, AbbVie’s second most important drug, is also doing consistently well and has multibillion dollar potential. AbbVie is exploring the possibility of label expansion into solid tumors and autoimmune diseases. All these factors bode well for the stock.

AbbVie carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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