AbbVie's Humira Overhang Could Spell Trouble For Co.'s Future Upside

Credit Suisse has lowered AbbVie Inc (NYSE: ABBV) to Neutral from Outperform, as it is “increasingly concerned about Humira's longevity given the more challenging payer environment and increasing calls for greater pricing transparency.”

The downgrade follows the company’s recent mixed third-quarter results.

In addition to these overhangs, the brokerage sees relatively limited catalysts from the key pipeline assets, especially in oncology and autoimmune disorders, as well as business development in the near term.

Moreover, analyst Vamil Divan now expects biosimilar Humira entry in the United States in 2021 (versus 2022), in line with company guidance. Growth would be hit upon the entry of novel branded competitors in various indications.

“We also now expect biosimilars to make a significant, rapid impact on both price and volume upon market entry, with increased scrutiny on US drug pricing making it more challenging for Humira to maintain preferred formulary positions once biosimilar versions are available, in our view,” Divan wrote in a note.

Divan models Humira sales of $18.1 billion in 2018, declining to about $11.3 billion in 2022 and about $5.2 billion in 2025.

That said, some upcoming catalysts include phase 3 data for next generation hepatitis C regimen at AASLD next month. Next year, the company expects to read out phase 3 data for Rova-T (3rd line DLL3+ small cell lung cancer), ABT-494 (rheumatoid arthritis) and risankizumab (psoriasis). But, Divan said these catalysts are not meaningful enough to offset the Humira overhang.

“Positive results with some of these important assets could make us more constructive,” Divan added.

However, the analyst cut his target price to $60 from $70, while the shares closed Friday’s trading down 6.28 percent at $57.60.