Abbott Labs Drug Pipeline on a Hot Streak

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 |  About: Abbott Laboratories (ABT)
by: Todd Campbell
Big pharma companies like Abbott Laboratories (NYSE:ABT) walk a fine line. They need to set aside enough cash to satisfy investor appetite for buybacks and dividends, and they need to invest enough into research to develop drugs to offset future competition from generics. While some companies have struggled to develop pipelines, Abbott Labs' R&D department has reported a string of recent success. That's good news for investors.
One of its drugs is Bardoxolone, which treats chronic kidney disease ("CKD") in type 2 diabetes patients. Unfortunately, diabetes is on the rise. People worldwide are eating more and exercising less. With the increase in diabetes comes an increase in kidney failure. Of the 220 million people on the planet with diabetes, some 10-20% will likely die from kidney disease. Currently, treatment for end stage renal failure is dialysis, so the ground is fertile for an effective drug. Abbott may have just that type of drug in Bardoxolone. At the 2011 World Congress of Nephrology conference, the company presented data indicating the treatment not only slows the disease, with 90% of patients improving, but also shows signs of reversing the disease's progression. Similar data was released from a Phase II b study. If this data is confirmed in Phase III, Bardoxolone has blockbuster potential.
Another attractive drug in the pipeline targets hepatitis C. Hep C is getting a lot of attention, with the FDA recently approving competing Vertex and (NASDAQ:VRTX) Merck (NYSE:MRK) treatments. Both of these newly-approved options carry stiff price tags; a standard course of treatment for Vertex's Incivek is nearly $50,000, so it's no wonder there's a lot of development happening in drug pipelines.
Abbott's ABT-450 could capture its fair share of the pie. The company recently presented Phase II trial data at the annual meeting of the European Association for the Study of the Liver. The data showed 92% of patients taking Abbott's ABT-450, in combination with standard of care, achieved complete early response after 12 weeks. With 3.2 million hepatitis C patients in the U.S., and another 17,000 new cases each year, the market opportunity is big.
Abbott also has Daclizumab, a treatment for Multiple Sclerosis, on the way. There are 2.5 million people living with MS worldwide, making MS treatment a $14 billion market. Abbott has a nice chance of capturing market share if the drug is approved, particularly given pitfalls of other existing treatments, including Tysabri, which has been linked to PML, a rare brain disorder. The drug is currently in Phase III trials, is fast-tracked and is expected to have data presented in late 2012.
Duodopa is in Phase III too and treats advanced Parkinson's. The drug is already approved for use in 38 countries; in June, Abbott presented compelling data at the International Congress of Parkinson's Disease and Movement Disorders. Patients treated with Duodopa for at least 12 weeks reported 3.9 fewer hours of "off-time" and 4.6 hours of "on-time." The drug offers improvement in quality of life to the 1 million patients in the U.S. suffering from Parkinson's.
In oncology, Abbott has Elotuzumab. Elotuzumab data for the treatment of multiple myeloma was presented in June at the ASCO conference. Multiple myeloma is the second most common blood cancer in the U.S., with some 20,000 new diagnoses each year. The data presented at ASCO showed Elotuzumab, used in combination with Revlimid, produced a positive response to the treatment in 82% of patients.
Finally, the company's Elagolix, used to treat endometriosis, could be the next Abbott drug to report positive data. Endometriosis affects 8-10 million American women, and current treatment options, including hysterectomy, are far from ideal. The company will offer data on the drug in September, when presentations are scheduled for the World Congress on Endometriosis.
While these drugs are still far from approval, each has the chance to be a blockbuster drug. Given their progression through trials, Abbott could find itself the beneficiary of a series of high profile FDA approvals in the next decade -- and that means upside for investors.
Disclosure: I am long VRTX.