Wall Street Defends AbbVie, Says Reaction Is Overdone
- Shares of AbbVie Inc (NYSE: ABBV) plunged more than 10 percent on Thursday, hitting a new 52-week low of $45.45.
- The FDA requested that the company update its HCV treatment Viekira's label to reflect several cases of liver injury.
- Matthew Harrison of Morgan Stanley and Chris Schott of JP Morgan commented that the market's reaction was "overdone."
Shares of AbbVie collapsed on Thursday 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.
Related Link: FDA Ruling Shakes Up Biotech: Gilead, AbbVie And More
Morgan Stanley: Market Is ‘Overreacting'
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) "[T]he 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) "[T]he 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 cirrhosis or advanced liver disease suggest that Viekira is "unlikely" to be pulled from the market.
JP Morgan: Stock Reaction ‘Overdone'
Schott 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."
Latest Ratings for ABBV
|Mar 2017||Goldman Sachs||Maintains||Buy||Buy|
|Oct 2016||Credit Suisse||Downgrades||Outperform||Neutral|
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.