It seems that the decision of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board to rule “in favor of Coherus’ petitions for Inter Partes Review (“IPR”) of AbbVie’s U.S. Patent 8,889,135 (the 135 Patent)” as reported by Coherus Biosciences (CHRS, Financial) through its Web site, is not weighing so much on AbbVie Inc. (ABBV, Financial) whose shares have – in contrast – resumed their uptrending and are $65.40 each, up 3 cents or plus 6% from the previous trading day.
The decision of the Patent Trial and Appeal Board, reports Coherus Biosciences, to invalidate “all claims of the patent that were directed to a method for treating rheumatoid arthritis by administering 40 mg of HUMIRA® subcutaneously every 13 to 15 days,” opens the door to the launch on the market of Coherus Biosciences’ CHS-1420 as a biosimilar of Humira, the trade name under which AbbVie markets adalimumab, a drug used to treat patients affected with rheumatoid arthritis.
But before Coherus Biosciences’ CHS-1420 starts to erode the market share of Humira from which sale AbbVie makes approximately 60% of its total revenue, it can take years. This is for two reasons:
- First, because revenues of Humira are protected by a wide range of patents that cover the drug. Many of these patents have not been disputed yet.
- Second, because Coherus’ CHS is a biosimilar to Humira and not an interchangeable product, it is not identical to AbbVie’s product to treat the rheumatoid arthritis – in primis – in terms of clinical results and side effects, bringing for patients a risk of developing side effects and/or obtain clinical results that are “similar” but not identical to the reference product (Humira). This will lead the doctors who have of course knowledge of the matter to be very careful at the beginning prescribing any biosimilar to AbbVie’s adalimumab, and as a consequence, there will be, at least initially, fewer sales of Humira’s product competitors.
Global sales of Humira were $4.118 billion, up 15.1% year over year, approximately 63% of the company’s total revenue for the first quarter. For the next quarter analysts forecast Abbvie’s revenue will come in at $6.92 billion, a 7.70% increase from the same item of one year ago and at $27.77 billion for fiscal year 2017, an 8.70% increase on a year-over-year basis.
Concerning earnings, analysts expect that AbbVie will generate an EPS of $1.4 in the second quarter versus an EPS of $1.26 generated in the comparable quarter of 2016 and an EPS of $5.53 in 2017 versus an EPS of $4.82 generated by the company in 2016.
As of the most recent quarter, AbbVie had approximately $6.25 billion in cash and securities. The total debt amounted to $37.3 billion.
The long-term debt-equity ratio is 730.81 versus an industry average ratio of 9.04, according to Reuters. This suggests the company is highly indebted, but the interest coverage ratio is 7.19, which means AbbVie can easily pay the interest expenses on its outstanding debt.
AbbVie has 1.59 billion shares outstanding, of which almost 100% is float. The percentage of shares held by insiders is 0.10% and by institutions is 73.60%.
AbbVie has a market capitalization of $104.17 billion and an enterprise value of $136.19 billion. The pharmaceutical company is trading at 20.84 times the book value and at 12.22 times the EBITDA.
The 52-week range is between $55.06 per share and $68.12 per share. The forward price-earnings (P/E) ratio is 10.13.
In the first quarter, Richard Pzena increased his position in AbbVie by 19.97% to a total volume of shares held of 4,170 as of March 31.
Leucadia National and NWQ Managers established a position in AbbVie, buying 8,008 and 4,232 shares.
Joel Greenblatt, David Dreman, Mario Gabelli and Ken Fisher decreased their positions in AbbVie by 33.88% to 618,480 shares, 2.41% to 22,356 shares, 3.49% to 19,376 shares and 1.96% to 682,915 shares as of March 31, 2016.
AbbVie distributes an annual dividend of $2.56 to its shareholders, through quarterly payments of 64 cents, for a dividend yield of 3.83%.
Disclosure: I have no positions in any stock mentioned in this article.
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