AbbVie Inc (NYSE:ABBV) is swimming upstream today thanks to Goldman Sachs adding the biotech to the Conviction Buy List. Analyst, Jami Rubin says the stock is on the way to $60, which translates to 20% upside potential, not including ABBV's attractive 3.3% dividend yield.
In case you haven't heard of the company, AbbVie is a research-based biopharmaceutical company that engages in the discovery, development, manufacture, and sale of pharmaceutical products worldwide.
On January 1, 2013, AbbVie became an independent, publicly-traded company as a result of the distribution by Abbott Laboratories (NYSE:ABT) of 100 percent of the outstanding common stock of AbbVie to Abbott's shareholders.
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Ms. Rubin says of ABT's spinoff, "With an $18 bn revenue base, ABBV has more pipeline leverage than most other mid-sized biopharma peers and is entering a long period of robust clinical trial read-outs beginning 4Q13. ABBV shares have outperformed its peer group YTD (up 42% vs. large cap pharma peers 27%), but the stock is still perceived as a one-product story. In our view, ABBV is a pharma converging with biotech, with one of the least vetted pipelines in the sector. We believe that with data read outs over the next 6-12 months, there will be greater recognition of ABBV's pipeline, leading to a re-rate of the stock."
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The "one trick" Rubin is referring to is the drug Humira, which is used to treat rheumatoid arthritis. Last quarter, sales of Humira increased 19%, so people are popping it rapid fashion. The drug remains patent protected until 2016, but could be difficult to generic it because Humira it is a complex biologic, which means combining math with science to work with both structure and function in biological organisms (At least that's what we think it means).
AbbVie has a number of other drugs in the FDA pipeline at various stages of approval, b! ut the potential "blockbuster" is most likely ABT-450/r + ABT-267 + ABT-333. What the heck is that, nobody said reading iStock stories requires algebra?
In English, the equation is intended to treat Hepatitis C. According to fiercebiotech.com, sales of the drug could "comfortably" approach $3 billion a year upon regulatory approval. Sean Williams at Motley Fool says the drug could change the life of millions in 2014.
Clinicaltrials.gov says enrollees are being invited by invitation only for "A Study to Evaluate the Safety and Effect of Treatment With Experimental Antiviral Drugs in Combination With Peginterferon Alpha-2a and Ribavirin in People With Hepatitis C Virus Who Did Not Respond to Treatment in a Previous AbbVie/Abbott Combination Study."
ABT-450/r + ABT-267 + ABT-333 was given "breakthrough" status by the FDA in the spring. Breakthrough status basically means that the Food & Drug Administration believes the therapy is worthy of a swift review, and possibly a shorter clinical trial process prior to rendering a yeah or nay.
Overall: AbbVie Inc (NYSE:ABBV) should continue to motor along on cruise control with Humira and a 3.3% dividend. A 2014 approval of ABT-450/r + ABT-267 + ABT-333 could put the stock in overdrive.
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