Biotech Values

[DewDiligence]

Humira Is Gaining Share in Crohn’s and Psoriasis

[To be the world’s largest-selling drug (which Humira will almost certainly become in 2012), it has to be more than just a drug for RA. Crohn’s and psoriasis are two of the “ancillary” indications that have been driving the spectacular sales numbers (an $8B annualized rate in 2Q11—see #msg-65403784).]

http://www.bloomberg.com/news/2011-07-20/abbott-s-freyman-says-humira-gained-market-share-in-crohn-s-psoriasis.html

›By Alex Nussbaum - Jul 20, 2011

Revenue from Abbott Laboratories (ABT)’ top-selling drug, Humira, surged 25 percent after wresting sales from rival treatments for psoriasis and Crohn’s disease, Chief Financial Officer Thomas Freyman said.

“We’re seeing an acceleration of market growth for that product and improved market share, particularly in the Crohn’s disease and psoriasis areas,” Freyman said in a telephone interview. “We’ve also made some progress in rheumatoid arthritis.”

Humira, a treatment for autoimmune disorders that accounts for about one-fifth of Abbott’s revenue, brought in $2 billion in the second quarter. That contributed to a 9 percent gain in the company’s sales from a year earlier. Earnings jumped 50 percent to $1.94 billion, helped by a one-time tax benefit of $594 million, the Abbott Park, Illinois-based company said today in a statement.

Whether Abbott can maintain the current pace for Humira “is the $64,000 question,” said Jeff Bagley, a portfolio manager in Haverford Financial Services in Radnor, Pennsylvania, which holds 1.2 million of the company’s shares. “The uptake of this drug continues well beyond most analysts’ expectations.” [LOL—perhaps the analysts didn’t do their homework!]

The earnings gains may not have satisfied investors who had already driven up the stock this year, said Damien Conover, a Morningstar Inc. analyst in Chicago, in a telephone interview. Sales of artery-opening heart stents and diabetes supplies also declined, after taking out gains for currency-exchange rates, he said.

“Expectations may have been even higher than what they delivered,” he said in a telephone interview. “In our view, it was a very solid quarter.”

Abbott raised its forecast for full-year profit to $4.58 a share to $4.68 a share, from as much as $4.64 a share. [The old EPS range was $4.54-4.64 on a non-GAAP basis.]

Humira has been helped by expansion into countries outside the U.S., as well as approvals to treat new conditions including a form of juvenile arthritis in Japan, said Larry Peepo, Abbott’s investor-relations director, on a conference call with analysts. New indications may add $1 billion to the treatment’s peak sales, he said.

“Globally, we’re just seeing good market growth, good share performance and very good execution,” Freyman, the CFO, said on the call.

Humira, which generated $6.55 billion in sales last year, treats diseases that occur when the body’s immune system attacks the skin, joints and digestive system.

The global market for treating rheumatoid arthritis reached about $16 billion in 2010 while psoriasis and Crohn’s disease combined for $6.6 billion, said Jerry Rosenblatt, a partner at Foster Rosenblatt, a Princeton, New Jersey-based consultant that studies pharmaceutical sales.

The main threat to Humira may come from a class of experimental drugs called JAK inhibitors, led by Pfizer Inc. (PFE)’s tofacitinib [but see the counterpoint in #msg-61383188], Rosenblatt said by telephone.

Humira’s performance suggests Abbott is “going to compete right to the end and they’re going to expand right to the end,” Rosenblatt said by telephone. “That’s certainly what they’re telling the market.”

Abbott saw prescriptions decline about 5 percent for the heart medication Niaspan after a study in May questioned the treatment’s benefit for patients [#msg-63617748], Peepo said.

Niaspan Study

The National Institutes of Health said on May 25 that it had stopped the study after Niaspan failed to prevent heart attacks and may have boosted stroke risks. It’s too soon to gauge the long-term impact on the product, Peepo said.

Sales of Abbott’s nutritional supplements, led by the Similac baby formula, grew 5.4 percent. Freyman declined to comment on whether the company would be interested in bidding for the baby food unit of New York-based Pfizer. Pfizer said earlier this month that it was considering selling the division.

“In the M&A area, we’ve talked about more focus on pharmaceutical licensing opportunities and more complementary niches,” he said. “But we’re always open to anything that can add shareholder value.”

Earnings climbed to $1.23 a share from 83 cents a year earlier, Abbott said in its statement. Excluding restructuring and acquisition charges and the tax benefit, profit of $1.12 a share topped by 1 cent the average estimate of 16 analysts in a Bloomberg survey.

Revenue rose to $9.62 billion, with about half the gain due to the dollar’s slide in value against other currencies, the company said. The dollar’s decline boosted the value of sales earned outside the U.S.‹