AbbVie’s ownership of the world’s top-selling drug, $16-billion-a-year Humira, has been both a blessing and a curse: Looming generic competition threatens the top line while putting extreme pressure on the company to deliver follow-up blockbusters from its pipeline. Today the company took a big step toward putting investors’ minds at ease on both counts, with better-than-expected third-quarter results and one piece of good news from the FDA about a key pipeline asset.
AbbVie announced that revenues rose nearly 9% year over year during the quarter to $7 billion, boosted by U.S. Humira sales that jumped 19% to $3.2 billion. The company’s net earnings increased 2% year over year to $1.63 billion and its adjusted earnings per share came in at $1.41—up 16.5% over the same period last year and above the consensus analyst estimate of $1.37. It was enough to prompt the company to raise its EPS estimate for the full year, from $5.44 to $5.54 to between $5.53 and $5.55.
During a conference call with investors after the earnings release, AbbVie CEO Richard Gonzalez spent more than a half-hour recapping the company’s progress on a 5-year plan it established in 2015. “We forecasted annual revenue growth on average to be approximately 10%, with total revenue growing to $37 billion by 2020. For 2017, we’re on track to deliver revenue growth of more than 10.5% annually, and we remain committed to meeting or exceeding our revenue growth objectives for 2020,” he said, after apologizing in advance for the length of his remarks.
Gonzalez might have been forgiven for bragging, given the scope of the good news during the quarter. Global sales of AbbVie’s Imbruvica to treat B cell cancers also beat estimates, for example, jumping 37% to $688 million. Analysts had expected sales to come in at $626 million. What’s more, AbbVie got the thumbs-up from the FDA during the quarter to expand the label to include treatment of some patients with chronic graft-versus-host-disease.
Simultaneous to the earnings release, the company announced that the FDA granted priority review for elagolix, its investigational medicine to treat endometriosis with pain. That will cut the agency’s review time by four months, which means the drug could be approved in the second quarter of next year, AbbVie said.
The earnings results helped lift the Humira cloud that has been hanging over AbbVie all year. The company told investors to expect global sales of the drug, which is used to treat rheumatoid arthritis and other immune disorders, to approach $21 billion in 2020—handily beating the average analyst estimate of $19 billion. The sunny forecast no doubt stems from a settlement AbbVie reached with biosimilar maker Amgen in late September. Amgen will now have to wait until January 2023 to launch its Humira rival, Amjevita, in the U.S.
But AbbVie’s long-term outlook is brightening too, thanks to a string of positive performances from its pipeline. Just yesterday, the company said that its experimental plaque psoriasis drug, risankizumab, scored positive results in a phase 3 trial. After 16 weeks on the drug, 75% of patients in the trial had nearly clear skin. The drug bested both Humira and Johnson & Johnson’s Stelara. And in September, the company released good news from a phase 2b trial of its JAK-1 selective inhibitor upadacitinib to treat eczema—results that were so good some analysts knocked down their estimates for Sanofi and Regeneron's Dupixent.
AbbVie also turned in good news on Venclexta, the leukemia medicine it is testing in combination with Roche’s Rituxan. In late September, the companies stopped a trial of the combo and offered the treatment to control patients because an interim analysis indicated positive results for the treatment. That could allow them to file for FDA approval early.
Gonzalez left little doubt that AbbVie is counting on its oncology pipeline to fill the gap that will eventually be created when Humira loses patent protection. “Oncology will be a major growth driver for AbbVie over the next 10 years and beyond, further diversifying our business,” he promised.