AbbVie's Search For The Next Humira

| About: AbbVie Inc. (ABBV)

AbbVie (NYSE:ABBV) licensed the anti-IL-6R Nanobody, ALX-0061, from Ablynx, a Belgian company, for the treatment of inflammatory diseases.

In February, Ablynx reported that in a Phase 2a clinical study of ALX-0061 showed promising results and the drug was well tolerated by the 37 RA (rheumatoid arthritis) patients who took the drug over the course of 24 weeks with methotrexate. The drug is delivered by intravenous administration.

The deal is part of AbbVie's effort to reduce its dependence on Humira, which currently delivers the lion's share of the company's revenue.

The Ablynx deal

The deal with Ablynx is worth more than $840 million. This includes an upfront payment of $175 million and additional payments of up to $665 million on the achievement of development, regulatory, commercial and sales-based milestones. Ablynx is also entitled to double-digit tiered royalties on sales upon commercialization.

Ablynx will be responsible for completing the Phase 2 clinical trials in both RA and SLE (systemic lupus erythematosus). If successful, AbbVie will exercise its option to in-license ALX-0061, take over the Phase 3 trials and commercialize the drug. Ablynx will retain co-promotion rights in Belgium, the Netherlands and Luxembourg.

Ablynx will use the upfront cash to complete its share of trials before handing them over to AbbVie.


Ghent, Belgium-based Ablynx's specialty is producing so-called Nanobody medicines which are derived from llama antibodies. These antibodies are about one-tenth the size of normal antibodies and due to their small size they may be better able to reach disease targets in the body.

Llamas, along with camels and sharks, produce a sturdy antibody with a tiny binding site, about one-tenth the size of the binding site on a human antibody.

Because the binding site is so small, they're far easier and less expensive to engineer than other kinds of antibodies. And their simplicity makes them strong, they have a much longer shelf life, require no refrigeration and remain intact at temperatures up to 200 F.

Ablynx's Nanobodies are applied to a range of serious human diseases, including inflammation, hematology, cancer and pulmonary disease. Ablynx has 25 programs in its pipeline and six Nanobodies in clinical development. The company has partnerships with major companies like Boehringer Ingelheim, Merck Serono, Novartis (NYSE:NVS), Merck (NYSE:MRK) and now AbbVie.

In earlier research Ablynx had already highlighted the role that its work could play in RA, a field dominated by AbbVie's Humira. A segment of Humira patients produce neutralizing antibodies that can eliminate Humira's efficacy, and these patients are in need of a different treatment.

Wyeth had originally rights to the RA program at Ablynx, but after Pfizer (NYSE:PFE) had acquired Wyeth, it dumped the program in the fall of 2011.

ALX-0061 targets the interleukin 6 pathway via its IL-6R (IL-6 receptor), which plays a key role in the inflammation process in RA.

The small size of the molecule may allow ALX-0061 to penetrate more effectively into tissues. The monovalent (having only one site of attachment) interaction of the molecule with its target reduces the possibility of off-target effects. Its binding to human serum albumin prolongs the half-life of the product and can lead to improved trafficking to areas of inflammation. The Nanobody has a strong affinity for soluble IL-6R which could result in a fast onset of effect.

Clinical trials are planned in both RA and SLE during the course of 2014 and 2015.

RA is characterized by chronic and progressive joint inflammation that typically results in permanent, debilitating tissue damage, which is further compounded by joint deformation. Approximately 1 percent of the adult population worldwide suffers from RA.

SLE is a complex, autoimmune disorder in which the body produces antibodies against itself resulting in widespread tissue damage. Approximately 5 million people worldwide suffer from a form of lupus and 90 percent of people diagnosed are women.


In RA the three current best-sellers, based on IMS Health figures, are Humira; Enbrel, which Amgen (NASDAQ:AMGN) and Pfizer share; and Remicade, the drug that Johnson & Johnson (NYSE:JNJ), Merck and Mitsubishi Tanabe are partnered on. These three are forecast to hold the same top spots in 2018 as well.

Some newcomers will be moving into the list, one of them is Xeljanz, the new drug from Pfizer. Xeljanz is an entirely new type of RA drug, a Janus kinase inhibitor, or JAK inhibitor. It's approved for patients who can't tolerate treatment with methotrexate, or haven't fully responded to it.

Roche's (OTCQX:RHHBY) Rituxan gets most of its revenues from treating cancer, but also had RA sales during the June to June period of $1.2 billion.

Roche's Actemra had sales during that period of $1 billion. Today, Actemra is the only approved IL-6 pathway inhibitor to treat RA, as reported at the Ablynx webcast presentation on September 23, 2013.

Market value of IL-6 inhibitors estimated to grow from $555 million (5 percent of total RA market) in 2011 to $2.4 billion in 2021 (16 percent of total RA market), from the same presentation linked to above.

Methotrexate is generic, but it is usually the first drug doctors turn to for RA patients. Total sales of methotrexate for RA were $130 million in the 12-month period.

The anti-rheumatics market currently makes up the second largest treatment area by sales, with worldwide revenues of $41.1 billion. This is admittedly a lot smaller than the cancer category, which last year racked up $68 billion in revenues, but still very significant and growing.

Investors' summary

Ablynx is listed on the Euronext exchange in Brussels, (ABLYNX NV), recently traded around EUR 8.30, and the share price rose 89 percent in the last 52 weeks. It claims that its product, ALX-0061 has been designed to become a best-in-class therapeutic.

AbbVie Humira was the world's best-selling drug in 2012, bringing in $9.6 billion last year.

According to EvaluatePharma's forecast, Humira is going to remain the world's best selling drug for the next 5 years. That is despite the fact that its patent expires in 2016. According to the optimistic projection, sales of Humira will grow 56.5 percent through 2018, when it is forecast to have sales of $12.8 billion. With that it obviously will be the world's best-selling rheumatoid arthritis drug in 2018, holding a dominating 23.5 percent market share at that time.

AbbVie and its investors are reluctant to depend on forecasts alone and the company does its utmost to expand its pipeline in its specialty field, autoimmune disorders.

Earlier this year, AbbVie had extended its agreement with another Belgian company, Galapagos NV, for the development of autoimmune disease candidate, GLP0634 for Crohn's disease in addition to RA.

AbbVie has also signed a deal with Alvine Pharmaceuticals for a novel oral treatment for celiac disease, an autoimmune disease.

In the second quarter AbbVie's worldwide sales were $4.7 billion, up 4.4 percent from the same period last year.

Growth in the quarter was driven by Humira, which had global sales of more than $2.6 billion, (55 percent of AbbVie's total sales) up nearly 13 percent. In the U.S., Humira sales increased 16 percent driven by market expansion and share gains in dermatology and gastroenterology.

Second-quarter earnings per share were $0.82.

AbbVie is raising its earnings-per-share guidance for the full-year 2013 to $3.07 to $3.13 on a non-GAAP basis. At June 30 cash and cash equivalents were $8.7 billion.

The size of AbbVie's deal with Ablynx reflects its optimistic view of the drug's success as well as its drive to find a successor to Humira. This is a positive step toward attracting new investors to the company and pacifying existing ones who are concerned about the company's over-dependence on Humira sales.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.