Court Date For Litigation With Amgen And Other Expectations For AbbVie

The brokerage reiterated its Buy rating and $90 price target, as it is increasingly confident that the largely de-risked late-stage pipeline would protect the company beyond the eventual introduction of Humira biosimilars.

Lead analyst Jeffrey Holford said the management expects that the court date for litigation with the Buy-rated Amgen, Inc. AMGN should be announced before year end, and the case is expected to run for at least 3 to 3.5 years before any initial rulings are made.

Related Link: Chardan Rates Regeneraon A Sell, Advises Caution

"On this basis, we see significant optionality for the market to move toward a post-2020 US biosimilar Humira scenario over the next 12 months from the worst case of a 2018 launch currently assumed by consensus," Holford elaborated.

Despite the risk of a potential at-risk launch, the company believes it is unlikely given the broad patent estate on Humira and the significant potential damages that could be put against any company later found to infringe on Humira's IP.

Holford said management is confident in revenue and EPS growth above its peers, driven by strong volume growth for Humira, new product launches (Imbruvica, HCV, Venclexta, etc.) and margin expansion.

Other Drugs, Studies

Regarding pipeline, with the recent approval in first-line chronic lymphocytic leukemia (CLL), Imbruvica is being transitioned into this setting from the relapsed/refractory setting.

"We expect strong uptake in 1L CLL over the next few years, given the broad label achieved with the RESONATE-2 study, helped by further additional studies with other combinations," Holford continued.

AbbVie also expects label expansion beyond CLL as Imbruvica has already demonstrated encouraging data in follicular lymphoma and the 1L Diffuse large B-cell lymphoma (DLBCL) readout in 2017 could be an important growth driver given the large market opportunity.

Further, the analyst noted the pivotal TRINITY study in 3L DLL3+ SCLC is on track to read out in 2017 and AbbVie expects an accelerated approval decision based on response rates and duration of response data.

At time of writing, shares of AbbVie were up 0.97 percent to $63.61.

Full ratings data available on Benzinga Pro.