AbbVie Bolsters Immunology Business, Acquires Boehringer Drug
Big pharma AbbVie ( ABBV ) said Monday that it was acquiring rights to two immunology drugs developed by German counterpart Boehringer Ingelheim, but its stock was flat as Goldman Sachs warned of increasing competition. AbbVie agreed to pay $595 million upfront plus undisclosed milestone payments and royalties for the right to commercialize BI 655066, a drug in late-stage testing for psoriasis, and in earlier testing for Crohn’s disease, psoriatic arthritis and asthma. A phase-two trial comparing BI 655066 head to head with Johnson & Johnson ’s ( JNJ ) Remicade found that after nine months of treatment, 69% of patients on Boehringer’s drug had clear or almost clear skin, compared with 30% in the Remicade arm. AbbVie also acquired rights to BI 655064, an earlier-stage drug that attacks the CD40 protein, which may be connected to lupus nephritis, Crohn’s disease and ulcerative colitis. AbbVie said in its press release that it will decide whether to go forward with that drug “after completion of certain undisclosed clinical achievements.” AbbVie said that its success in developing and commercializing Humira, currently the world’s top-selling immunology drug, gives it the expertise to do the same with Boehringer’s products. Humira is nearing the end of its patent life, leading to much speculation on Wall Street about when biosimilar competitors might launch and how much of an impact they might have. Goldman Sachs analyst Salveen Richter took a pessimistic view of the matter Monday, saying that the current political focus on lowering drug prices will probably encourage cheap Humira knock-offs. “We are not changing our 2016-2020 AbbVie forecasts and continue to believe that Humira will remain a durable asset free of U.S. biosimilars, at least until the end of the decade,” Richter wrote as he removed AbbVie stock from his Conviction Buy list and cut his price target to 68 from 80. “However, we adjust our terminal value growth rate (from +1% to 0%) and model a faster decline curve post introduction of Humira biosimilars in the U.S. after 2020 through 2025.” AbbVie stock fell as much as 2.4% in early trading on the stock market today , but by midday it was flat, near 56. Meanwhile, Richter put BioMarin Pharmaceuticals ( BMRN ) on his Conviction Buy list in AbbVie’s place, setting his price target at 129. BioMarin, Richter noted, has guided that it will go into the black next year even without a contribution of its recently FDA-rejected muscular-dystrophy drug Kyndrisa, “showing opex restraint and a commitment to profitability.” He added that several data releases this year could bring upside for medications including BioMarin’s gene therapy for hemophilia and treatments for the rare diseases achondroplasia and phenylketonuria. BioMarin stock was up 2.5% midday Monday, near 89. Image provided by Shutterstock .