AbbVie Provides Outlook For 2015: Let's Analyze It
- Analysis of AbbVie's projections using our free cash flow system.
- Issues possible buy prices for the conservative as well as the more aggressive buy and hold investor.
- Talks about the author's concern over management's recent failed attempt to buy Shire PLC.
Abbvie Retreats On Gilead, Anthem Deal. Buying Opportunity?
- Abbvie declined nearly 3% on the recent HCV deal Gilead struck with Anthem.
- BofA also downgraded ABBV, citing expectations are already priced into the stock.
- If Abbvie receives its share of the HCV pie, it should exceed analysts' expectations for 2015.
AbbVie Has Some Excellent Entries In Rheumatoid Arthritis
- To hedge against biosimilars for its $10 billion blockbuster Humira, AbbVie has 5 drugs in 8 Phase II trials.
- Intriguing in-house agent ABT-122, which inhibits not one but two pro-inflammatory cytokines, is in a head-to-head with Humira.
- Three partnered candidates have novel structures and mechanisms of action and have prior success in past Phase II Rheumatoid Arthritis (RA) studies. One posted best-in-RA proof of concept results.
While Gilead's Profits Soar, Uncertainty Reigns Supreme At AbbVie
- This article analyzes AbbVie using the DRAG framework and compares the company's fundamental attributes with those of Gilead Sciences.
- While AbbVie's dividend yield and dividend growth profile are impressive, its balance sheet is highly levered and analysts offer only modest earnings growth projections.
- Furthermore, Gilead generates a higher return on invested capital and trades at a lower forward earnings multiple than AbbVie.
- While much uncertainty exists surrounding the future of hepatitis C treatment, AbbVie shares appear slightly overvalued at the current time, making Gilead the more compelling opportunity.
- AbbVie generates about 70% of its revenue just from Humira.
- The company's highly concentrated pharmaceutical portfolio makes investors like Warren Buffett and Seth Klarman seem extremely well-diversified by comparison.
- Is AbbVie as safe as the other Dividend Aristocrats?
- See the companies that are already conducting trials on biosimilar Humira knock-offs to steal market share when the drug losses exclusivity at the end of 2016.
If Gilead Has The Ace, Is AbbVie Holding The Big Joker?
- In a mid-stage study, Abbvie's HCV cocktail cured 97% of liver transplant patients who contracted the virus.
- Assuming FDA approval, AbbVie's HCV cocktail is expected to generate at least $2B in sales in 2015.
- If AbbVie's patents for Harvoni - Gilead's blockbuster HCV treatment - holds up in court, AbbVie will trump Gilead. I am long the stock.
- Abbvie Inc. is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013.
- The company owns the best-in-class immunology drug Humira, which accounts for over 50% of its sales. Humira's U.S. patent expires in late 2016.
- ABBV is currently trading at a discount to my calculated fair value.
- On September 22, 2014, Treasury and the IRS issued a joint Notice that set out their regulatory agenda to curb corporate inversion deals.
- Political data clearly shows a pattern in how the government has targeted some inverters over others.
- As predicted by VogelHood, both ABBV / SHPG and MYL / ABT have been the most vulnerable to government action.
- With strong political engagement metrics, MDT / COV is in the safe zone.
Update: AbbVie's Share Repurchase Plan And Dividend Hike Makes It Even More Attractive
- The company announced a share repurchase plan worth $5 billion and increased dividends by about 17%.
- The announcement makes it an even more attractive investment for both income and growth investors.
- We maintain that AbbVie is a solid long-term investment for both income and growth investors.
AbbVie Does Not Stand To Lose Much If It Drops Shire Deal Now
- AbbVie has said that it is reconsidering the planned acquisition of Shire, a transaction that would have allowed AbbVie to relocate to the U.K. and reduce its tax rate significantly.
- AbbVie’s decision to reconsider comes shortly after the Treasury issued a notice that reduces the economic benefit of corporate inversion.
- Although AbbVie has said that inversion is not the main motivation for the deal, it has been clear from the start that the company pursued Shire to relocate .
- With the main incentive for the deal taken away, I think AbbVie should walk away from the deal.
AbbVie: Growth Story Or Patent Expiration Nightmare?
- AbbVie's Humira treatment is growing rapidly worldwide, propelling the company's revenue.
- The company has a strong dividend yield of 3%.
- AbbVie faces serious questions from patent expirations after 2016.
AbbVie's Acquisition Of Shire: Skepticism Creates Buying Opportunity
- AbbVie has agreed to buy Shire for $54B.
- One of the drivers for the acquisition was a tax inversion, which may be derailed due to political opposition.
- The acquisition has many other positive drivers, and will likely be consummated even without a tax inversion.
- The uncertainty surrounding the acquisition has provided a buying opportunity - in particular, options strategies offer good risk-reward.
- The acquisition of Shire would not only provide a tax advantage to AbbVie but would also help the company to grow its revenue base through portfolio expansion.
- Shire has reported a very strong performance in its latest reported quarter indicating that it would help AbbVie to add growth to its revenues and profits.
- AbbVie has a robust pipeline which along with the Shire acquisition would reduce its reliance on Humira and expand its sales base.
- ABBV announced a $54 billion acquisition of Shire PLC, and a new tax domicile in the UK, lowering its corporate tax rate by 9%.
- The merger will also result in a more diversified product lineup for ABBV.
- Sales for ABBV in the second quarter of 2014 were $4.926 billion, an increase of 5 percent.
- We are positive on ABBV given recent developments and historical strength and suggest investors be so, as well.
Market Ignores AbbVie's Impressive Sales Due To Reliance On Humira
- AbbVie posts solid second quarter results.
- After the Shire acquisition, all eyes are on the anticipated HCV launch later this year.
- Success is required in HCV and the remaining pipeline to tackle the upcoming expiration of Humira in 2016.
Surprise: The Real Costs Of Inversions Are Paid By Ordinary Shareholders
- An inversion is achieved when a US based company buys a foreign corporation, and as a result moves its legal domicile in the foreign country.
- As a result, the new combined company would be treated as a non-US company in the eyes of the US tax authorities. This results in lower tax rates for corporations.
- As I dug deeper however, I learned that there is a tax that ordinary shareholders like you and me have to pay on inversions.
Sat, Jan. 24, 8:25 AM
- In a low-yield world, the newly launched iBillionaire High Dividend Index - which tracks the trading moves of 25 investing-savvy billionaire investors such as Stanley Druckenmiller, James Dinan and Nelson Peltz - actually lives up to its name with a dividend yield of 5.34%.
- At 24%, the index has a high allocation of energy shares, including OXY, TRP, CNP, COP, BP, ATLS, CVI, WMB, APL, RIG and ARP.
- Also worth noting is that the index contains some high-yielding mortgage REITs, an area most investors hate right now but where billionaires seem to find value; examples are NRF, AGNC and CIM.
- No mutual fund or ETF tracks this index, but it offers a fishing pond of income investment ideas to research further.
- The top 20 holdings: TLM, CVC, GM, TIME, AEE, D, STAY, KMI, TROX, EXC, STNG, PPL, IRM, PFE, KKR, KAR, F, MIC, LO, ABBV.
Tue, Jan. 20, 6:58 AM
- AbbVie (NYSE:ABBV) has entered into an agreement with the ADAP Crisis Task Force to provide Viekira Pak at a substantial discount to more than 50 state-based AIDS programs. In total, the programs serve ~150K patients. The specific price is undisclosed, but Britten Pound, Associate Director of Healthcare Access for the National Alliance for State and Territorial AIDS Directors, says it is substantially less than the 23% mandated discount under program 340B, which sets the price for programs that serve poor and under-served patients.
- ADAP doesn't have a deal with Gilead Sciences (NASDAQ:GILD) although it tried to get one with Sovaldi, but the company declined to negotiate. It hopes to restart discussions with Harvoni.
Sat, Jan. 17, 12:28 PM
- AbbVie's (NYSE:ABBV) outlook for this year, as presented by CFO William Chase at JPM15, includes EPS of $4.25 - 4.45 (+30%).
- Sales guidance, including product-specific expectations, will be provided during the Q4 earnings call on January 30. Management is pleased with the U.S. Viekira Pak launch to date.
- Regulatory submission in Japan for HCV 2-pill/once/day combination in Q1 with approval expected in H2.
- Next generation one pill/day ribavirin-free pan-genotypic HCV product on track for launch in 2017.
- Operating margin is expected to improve this year and years to come.
Fri, Jan. 16, 10:41 AM
- The FDA approves (actually several days ago) AbbVie's (ABBV -0.4%) Orphan-Drug designated Duopa (carbidopa and levodopa) enteral suspension for the treatment of motor fluctuations in patients with advanced Parkinson's disease (PD). Duopa is administered using a small portable infusion pump. The medicine is directly delivered into the small intestine for 16 continuous hours via a procedurally-placed tube in order to bypass the stomach. Oral versions of the medications are effective for only four hours.
- The tube is placed by a procedure called a percutaneous endoscopic gastrostomy with jejunal extension (PEG-J). In patients with advanced PD, spontaneous emptying of the stomach is unpredictable which can affect the timing when orally administered drugs transition into the small intestine for absorption.
- Carbidopa and levodopa enteral suspension is currently approved in 41 countries under the brand name Duodopa.
Fri, Jan. 16, 9:49 AM
Fri, Jan. 16, 7:58 AM
- The European Commission approves AbbVie's (NYSE:ABBV) Viekirax (ombitasvir/paritaprevir/ritonavir tablets) + Exviera (dasabuvir tablets) for the treatment of chronic hepatitis C infection, genotypes 1 with or without ribavirin, including patients with compensated liver cirrhosis, HIV-1 co-infection, on opioid substitution therapy and liver transplant recipients. It its also approved, with ribavirin, for patients with chronic hepatitis C infection, genotype 4.
- HCV-1 is the most prevalent form in Europe (60% of cases). HCV-4 is the most common form in the Middle East, sub-Saharan Africa and Egypt with increasing prevalence in Italy, Greece and Spain.
- Related tickers: (NASDAQ:ENTA) (NASDAQ:GILD)
Wed, Jan. 14, 9:13 AM
- Express Scripts' (NASDAQ:ESRX) success in containing the prices of new HCV therapies by pitting Gilead Sciences (NASDAQ:GILD) against AbbVie (NYSE:ABBV) is sending shock waves through the biotech/pharma industry. Most of the big players slumped yesterday as investors fear that ESRX's tactics will spread to other high cost areas like cancer and cholesterol.
- At JPM15 yesterday, CEO George Paz said that the new cholesterol-lowering post-statin PCSK9 inhibitors will be the next big opportunity to pit drug firms against each other in order to drive costs down. FDA clearance of the first two therapies, one from Amgen (NASDAQ:AMGN) and the other from Regeneron Pharmaceuticals (NASDAQ:REGN) (NYSE:SNY), is expected to occur at about the same time.
- The prices of emerging cancer therapies will also be in payers' crosshairs. Amgen's Blincyto, for example, costs $178,000 per standard course of treatment while Merck's (NYSE:MRK) Keytruda is close behind at $150,000.
- Related tickers: (NYSE:AZN) (NYSE:GSK) (NYSE:LLY) (ABBV) (NYSE:PFE) (NASDAQ:BIIB) (NYSE:ABT) (NASDAQ:CELG) (NYSE:BMY) (OTCQX:RHHBY) (NYSE:JNJ) (NYSE:NVS) (OTCPK:BAYRY)
Mon, Jan. 12, 1:50 AM
- Shire (NASDAQ:SHPG) is buying NPS Pharmaceuticals (NASDAQ:NPSP), a maker of treatments for rare diseases, for $5.2B ($46 per share), a 51% premium to its share price on December 16, before rumors of the deal first surfaced.
- The all-cash acquisition comes just three months after Shire’s proposed $54B sale to AbbVie (NYSE:ABBV) collapsed as a consequence of U.S. government efforts to limit tax-inversions. Shire received a $1.6B breakup fee after AbbVie walked away.
- Previously: NPS Pharma up 20% on takeover buzz (Dec. 17 2014)
Fri, Jan. 9, 2:07 AM
- AbbVie (NYSE:ABBV) is predicting higher earnings for the new year, driven by its rheumatoid-arthritis drug Humira and the launch of its new hepatitis C virus treatment - Viekira Pak.
- Abbvie's current estimate for 2015 earnings, excluding items, is $4.25 to $4.45 a share, in line with the consensus.
- The midpoint of that range marks a jump of more than 30% over the company’s 2014 guidance.
Thu, Jan. 8, 4:08 PM| 107 Comments
Thu, Jan. 8, 8:59 AM
- Neurocrine Biosciences (NASDAQ:NBIX) jumps 25% premarket on higher-than-normal volume in response to collaboration partner AbbVie's (NYSE:ABBV) announcement of positive top-line results in a Phase 3 trial assessing the safety and efficacy of elagolix in premenopausal women with endometriosis. The study met its co-primary endpoints (p<0.001) of reducing scores of non-menstrual pelvic pain (NMPP) and menstrual pain associated with endometriosis at Month 3 as measured by the Daily Assessment of Endometriosis Pain scale.
- Patients in the trial will continue in either post-treatment follow-up or a blinded six-month extension study. AbbVie plans to present the results at a future medical conference.
- Neurocrine Bio and AbbVie entered into an exclusive worldwide collaboration agreement to commercialize elagolix in June 2010.
Mon, Jan. 5, 12:57 PM
- CVS Health (CVS -1.3%) bestows Preferred Status to Gilead Sciences' (GILD +2.3%) Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir) for the treatment of HCV infection. The pills will be the exclusive treatment option for beneficiaries on CVS's Medicare, Medicaid and other drug benefit plans. AbbVie's (ABBV -2.9%) Viekira Pak will be available only via a medical exception or prior authorization. Recently, AbbVie announced a similar deal with Express Scripts.
- Previously: AbbVie's new hepatitis C drug gets boost (Dec. 22, 2014)
Dec. 31, 2014, 8:12 AM
- RBC's Michael Yee believes that AbbVie's (NYSE:ABBV) launch of Viekira Pak (V Pak) for HCV-1 will be a gradual ramp up akin to Gilead's (NASDAQ:GILD) launch of Sovaldi and Harvoni, which logged 151 and 444 prescriptions, respectively, in their first week on the market. He forecasts that V Pak will pick up 5 - 10% of the HCV-1 market over time which would translate into ~$1.2B in sales.
- He expects Gilead's run rate to continue at least through Q1. He points out that Sovaldi is the only drug approved to treat HCV-2,3 which is ~25% of the HCV population. Even if AbbVie captures 20% of the HCV-1 market, it would represent less than 15% of the total HCV group.
- Mr. Yee has an Outperform rating on GILD with a $125 price target.
Dec. 29, 2014, 5:06 AM
- Firm upgrades Gilead Sciences (NASDAQ:GILD) to Overweight from Equalweight.
- Upgrades price target to $104 from $100. Implied upside: 10.9%.
- "We see fear over AbbVie (NYSE:ABBV) pricing as an opportunity."
- Says shares are pricing in 40% HCV price- and market-share declines vs. 2014, "which we see as unrealistic. We believe the net pricing impact from AbbVie is ~15%, and that Gilead can maintain ~75% share."
- "Market's misinterpretation of the extent of the pricing risk presents an attractive entry into GILD."
- Source: @germantrader71
- Previously: RBC: Gilead could launch $10B+ accelerated buyback (Dec. 26)
Dec. 25, 2014, 12:41 PM
- Endo International plc (NASDAQ:ENDP) subsidiary Endo Pharmaceuticals and BioDelivery Sciences (NASDAQ:BDSI) submit a New Drug Application (NDA) to the FDA for Buprenorphine HCl Buccal Film for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate.
- The product uses BioDelivery's BioErodible MucoAdhesive (BEMA) technology to deliver buprenorphine across the buccal mucosa (inside lining of the cheek) via a thin film that adheres to the cheek lining in less than five seconds and then completely dissolves.
- Buprenorphine is a partial mu-opioid receptor agonist and a kappa antagonist which is different than full mu-opioid agonists like morphine. It is a Schedule III controlled substance which has a lower abuse potential than Schedule II drugs.
- Opioid-related tickers: (NASDAQ:ZGNX) (NYSE:PFE) (NASDAQ:EGLT) (NASDAQ:ACUR) (NYSE:MNK) (NYSE:ABBV) (NYSE:TEVA) (NASDAQ:ALKS)
Dec. 23, 2014, 10:49 AM
- Biotech's negative money flow notwithstanding, investors shun Gilead Sciences (GILD -7.3%) and Achillion Pharmaceuticals (ACHN -17.5%) in light of AbbVie's (ABBV -2.5%) exclusive HCV deal with Express Scripts.
- Previously: Express Scripts/AbbVie HCV deal should not be surprising (Dec. 22)
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