On The Fly: What to watch in AbbVie earnings report
AbbVie (ABBV) is scheduled to report results of its third fiscal quarter before the market open on October 28, with a conference call scheduled for 9:00 am ET. What to watch for: 1. POSITIVE TRENDS IMPACT GUIDANCE: Along with its last quarterly report in late July, AbbVie raised its yearly earnings per share guidance to $4.73-$4.83 from its prior vies of $4.62-$4.82. At the time, the company said, "AbbVie is issuing GAAP diluted EPS guidance for the full-year 2016 of $3.82 to $3.92. AbbVie is raising its adjusted diluted EPS guidance for the full-year 2016 to $4.73 to $4.83 from $4.62 to $4.82, reflecting strong underlying business performance year-to-date and the expected continued positive trends over the remainder of the year. This updated guidance represented 11.4% growth at the midpoint versus 2015, and includes the dilutive impact of the Stemcentrx and Boehringer Ingelheim transactions. The company's 2016 adjusted diluted EPS guidance excludes 91c per share of intangible asset amortization expense, acquisition related costs and accounting impacts, the impact of the Venezuelan currency devaluation, and other specified items." 2. HUMIRA FRANCHISE: AbbVie's biggest revenue producer is its arthritis treatment Humira. According to a Bloomberg report from May 17, Humira generated $14B in 2015 revenue, or 61% of the company's revenue. Last quarter, AbbVie reported Global Humira sales increased 17.4% on a reported basis. Operational Humira sales increased 17.7%, excluding a modest impact of foreign exchange. The company added that strong global growth was driven by continued momentum across all three major market categories -- rheumatology, dermatology and gastroenterology. On September 23, Amgen (AMGN) announced the FDA had approved Amjevita across all eligible indications of the reference product, Humira. Amjevita is the first adalimumab biosimilar approved by the FDA and has been approved for the treatment of seven inflammatory diseases, including moderate-to-severe rheumatoid arthritis, moderate-to-severe polyarticular juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, moderate-to-severe chronic plaque psoriasis, adult moderate-to-severe Crohn's disease and moderate-to-severe ulcerative colitis. Amjevita is Amgen's first biosimilar to receive regulatory approval. On October 18, Leerink analyst Geoffrey Porges said he sees "significant uncertainty" about the durability of the company's dominant franchise, Humira. The analyst started AbbVie with a Market Perform rating and $70 price target. 3. PIPELINE: At an R&D Day on June 3, AbbVie Chief Scientific Officer Michael Severino said, "AbbVie's late-stage pipeline has the potential to deliver more than 20 new medicines or indications by 2020, with the approval of seven new medicines or indications expected in 2016. These new medicines, combined with our early-stage clinical programs, have the potential to address medical need, elevate the standard of care and improve patient outcomes." More recently the CEO Richard A. Gonzalez said, "A key element to our long-term sustainable performance is our advancing pipeline and this quarter we saw several regulatory approvals, including Venclexta and Zinbryta. We also made progress on a number of clinical development programs and completed the acquisition of Stemcentrx, which adds a promising late-stage asset for solid tumors and brings a target discovery platform to AbbVie's oncology portfolio, further enhancing the robustness of our pipeline."