Boehringer Ingelheim's Humira Biosimilar Under Review by EMA, FDA

AbbVie's flagship drug faces increasing competition from biosimilars

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Boehringer Ingelheim, one of the world's 20 leading pharmaceutical companies, announced Wednesday through the PR Newswire that its BI 695501, a biosimilar of AbbVie Inc.'s (ABBV, Financial) Humira (adalimumab), has been accepted for regulatory review by the European Medicines Agency and the U.S. Food and Drug Administration.

Adalimumab is an anti-inflammatory drug used, alone or in combination with other drugs such as methotrexate (a medicine used to treat certain cancers and auto-immune diseases), to treat patients with a variety of ailments ranging from rheumatoid and poyarticular juvenile idiopathic arthritis to ankylosing spondylitis, Crohn's disease and psoriasis.

In patients affected by these diseases, a chemical messenger called tumor necrosis factor (TNF), which causes inflammation, is present in high concentrations. Adalimumab is a type of protein designed to bind to TNF, reducing inflammation and other symptoms.

Boehringer Ingelheim says “These disorders collectively affect the lives of five to 10% of the world population, including 23.5 million people in the U.S. and approximately 36.3 million people in Europe.”

According to thepharmaletter, Boehringer Ingelheim and many other companies are seeking approval of their biosimilar candidates to AbbVie's Humira, with Amgen Inc. (AMGN, Financial) being the first company to have its Amjevita (adalimumab-atto) approved by the FDA.

Humira is AbbVie’s flagship product. Approximately 61% of the company’s total net revenues in 2015 came from the sale of Humira. The company closed its third-quarter and full-year 2015 reporting sales of $4.06 billion (up 11.3% on a year over year basis), representing approximately 63.6% of AbbVie’s total third-quarter 2016 adjusted net revenues, and $22.9 billion (up 14.5% from 2014).

Competition from other companies has but AbbVie on edge.

“AbbVie […] has filed a law suit aiming to prevent Amgen’s version being marketed” and “there is also a law suit in the UK, started this Monday, against Japan’s Fujifilm Kyowa Kirin Biologics (FKB) and South Korean drug developer Samsung Bioepis,” thepharmaletter reported.

Income investors rely on AbbVie's dividend, which is mostly sustained by the sale of Humira. These investors should not be concerned about the mounting competition because the medications are just biosimilar to Humira and not interchangeable products.

Being biosimilar products, it will take some time before the competing medications become marketable. Therefore, AbbVie should be able to fight competition until 2022.

AbbVie closed at $ 61.66 per share on Wednesday, down 20 cents or -0.32% from the previous trading day, with a volume of 5,519,407 shares traded on the New York Stock Exchange.

The daily share price ranged between $61.31 per share and $62.14 per share versus a 52-week range of $51.60 to $68.12. The trailing 12-month price-earnings (P/E) ratio is 16.67 and the EPS is $3.7.

AbbVie has a market capitalization of $100.2 billion and an enterprise value of $129.89 billion. The stock is trading at 15.49 times the book value and at 11.62 times the Ebitda.

The company distributes a dividend of $2.56 per share for a dividend yield of 4.14%. AbbVie recently increased the quarterly payment from 57 cents to 64 cents.

The stock has lost 1.53% year to date and underperformed the S&P 500 by 3.01%. The stock is more volatile than the stock market with beta of 1.49.

Disclosure: I have no positions in any stock mentioned in this article.

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