AbbVie Down On Humira Patent Loss: Is More Damage In Store?

AbbVie Inc.’s (NYSE:ABBV) shares declined more than 2% on Wednesday after it lost a lawsuit related to a patent protecting its key rheumatoid arthritis drug, Humira to small biotech Coherus BioSciences, Inc. (NASDAQ:CHRS) .

So far this year, AbbVie’s share price has increased 4.4%, comparing unfavorably with a gain of 9.4% recorded by the Zacks classified Large-Cap Pharma industry.

Coherus announced on Wednesday that it received a favourable ruling on an inter partes review (IPR) challenge to AbbVie’s dosing patent ‘135 for Humira. The Patent Trial and Appeal Board (PTAB) of the US Patent and Trademark office ruled to invalidate Humira’s ‘135 patent, which covers the method of treating rheumatoid arthritis with subcutaneous doses of Humira 40mg bi-weekly.

Coherus is looking to get approval for a biosimilar version of Humira. Its shares shot up almost 8% on Wednesday.

Patent ‘135, which expires in Jun 2022, faces two additional IPR challenges from Boehringer Ingelheim, with rulings expected by early July.

The PTAB ruling did not come as a surprise as it was broadly expected. The investment community generally believes that AbbVie has a robust intellectual property (IP) portfolio beyond the ‘135 patent, which should preclude biosimilars from the U.S. market until 2022. Sales should continue to remain strong until then.

However, another group of investors comment that though the PTAB ruling was a minor hit for AbbVie, it still increases the chance of a biosimilar Humira launch earlier than expected.

Humira is key driver of Amgen’s revenues, accounting for more than 60% of its total sales. The product continues to see strong growth in the dermatology and gastroenterology markets. Growing awareness, favorable clinical data, additional indications and expansion into new markets like China and Japan is helping the product contribute consistently to AbbVie’s top line. The company expects Humira to bring in total sales of more than $18 billion in 2020.

However, several companies including Amgen, Inc. (NASDAQ:AMGN) /Allergan plc (NYSE:AGN) and Samsung (KS:005930) Bioepis are working on biosimilar versions of Humira. Amgen’s biosimilar version of Humira, Amjevita, was approved by the FDA in Sep 2016 and in the EU (trade name: Amgevita) in Mar 2017 for the same indications as Humira. However, Amgen is not expected to launch the drug at-risk amid litigation.

The entry of biosimilars will have a huge impact on the company’s financials.

AbbVie carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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