Wall Street Defends AbbVie, Says Reaction Overdone

Shares of AbbVie collapsed by more than 10 percent during Thursday's trading session, hitting a new 52-week low of $45.45. The stock heavily sold off after the FDA requested the company update its HCV treatment Viekira's label to reflect some cases of liver injury. The last time AbbVie's stock traded near $45 per share was in September 2013. Nevertheless, Matthew Harrison and some other dude defended the company following the FDA update.

Matthew Harrison of Morgan Stanley commented in a note that the market appears to be "overreacting" to the labeling update. The analyst offered three key facts from the release: "1) The FDA said there have been 26 cases of liver injury worldwide, but of these 26, 10 patients experienced hepatic failure resulting in transplantation or death while 16 experienced various degrees of liver dysfunction, 2) the postmarketing cases of hepatic decompensation and liver failure are difficult to interpret because they occurred mostly in patients with underlying advanced chronic liver disease. However, temporal association from starting Vieira Pak or Technivie and resolution of symptoms in some patients after the medicine was stopped suggest a potential casual association, 3) the presentation of liver injury in patients with advanced liver disease who receive treatment with Viekira Pak or Technivie may differ from patients with less-advanced disease." Harrison continued: "Transaminase elevations did not appear to be predominant presentation in the cases with advanced liver disease, in contrast to what has been observed in patients with less-advanced liver disease as described in the current prescriber's information." Finally, Harrison suggested that the market is "reacting strongly" to the news but based on his interpretation of the FDA labeling update, the fact that most of the cases involved patients with chirrosis or advanced liver disease suggest that Viekira is "unlikely" to be pulled from the market.

Chris Schott of JPMorgan commented briefly in a note that he "clearly expects" the label issue to impact Viekira sales although the magnitude of the impact beyond the cirrhotic population (20 percent of total) is "unclear." Schott added that over the long-term, expectations for Viekira are already "very low" with several more compelling products in development. Accordingly, Thursday's 10 percent decline "appears overdone."