AbbVie Is a Great Short-Term Investment but Long-Term Is More Complicated

Over the last five years, AbbVie shares are up about 130 percent. It’s generally viewed as a volatile stock—although to be fair, almost all biopharma stocks are—but some have argued that although AbbVie is a great stock short-term, other, less-volatile stocks, like Pfizer, would be better investments long-term. Dividend Sensei, writing for Seeking Alpha, makes the argument that AbbVie will dominate the market for the next decade or longer.

Dividend Sensei notes that the company has a strong executive team, especially Rick Gonzalez, the company’s chief executive officer, and Bill Chase, its chief financial officer. “The reason that such deep industry experience is essential is because top quality management is capable of navigating the treacherous and fast-changing waters of this industry and generating strong returns on capital for shareholders.”

Most of AbbVie’s growth, which is considerable, has been driven by Humira, it’s mega-blockbuster drug for a variety of autoimmune diseases such as arthritis, psoriasis, Crohn’s disease and ulcerative colitis. It has about 25 percent market share for its approved indications. The company has projected Humira sales to hit $21 billion by 2020.

But the company also has a strong pipeline. It expects to get approval for elagolix for endometriosis-associated pain in this year’s third quarter. It has submitted an application for risankizumab for plaque psoriasis, and has upadacitinib, another autoimmune disease drug, that might be approved in 2019.

It should be noted that there’s quite a bit of competition coming down the road for AbbVie in the JAK inhibitor market. Physicians are increasingly prescribing JAKi after Humira.

Dividend Sensei appropriately notes, “Many investors have worried that Humira is AbbVie’s Achilles heel because it lost patent protection in 2017 in the EU and a key U.S. patent expired in 2016. Fortunately, the company has been able to strike deals with Amgen and Samsung Bioepisin recent months that means it won’t face any biosimilar competition until 2023.”

Looking a bit further down the road to 2025, Dividend Sensei notes that the company is expecting its neurological drugs for Alzheimer’s disease, Parkinson’s disease and multiple sclerosis to begin launching. That might be wildly optimistic. Alzheimer’s is where drugs go to die; it’s a desert wasteland of failed Phase III clinical trials with well over 127 drugs having failed in that arena in the last decade or so.

One negative for AbbVie is its debt, which is $37.3 billion, almost double the industry average. Dividend Sensei doesn’t seem particularly concerned about that because of a very strong investment grade credit rating, and an extremely low corporate tax rate—9 percent this year, increasing to 13 percent over the next couple years—and a high free cash flow minus dividend cost.

So Dividend Sensei is definitely a fan of AbbVie. Pfizer is less flashy, but more stable and reliable. While Humira makes up almost 60 percent of AbbVie’s total revenue, Pfizer had eight blockbuster drugs in 2017. It has a deep pipeline with 28 late-stage programs and an exceptionally strong vaccine program.

And in a January 2018 comparison of Johnson & Johnson to AbbVie, The Motley Fool’s Brian Stoffel, likes J&J a little bit better. He noted, “On the surface, these two are pretty evenly matched. Their price-to-earnings and free cash flow ratios are virtually identical. And both have very solid dividends, with only half of their free cash flow being eaten up to make the quarterly payments to shareholders. But when growth is taken into consideration via the PEG Ratio, AbbVie trades at a significant discount to Johnson & Johnson. That’s enough for me to give AbbVie the nod here…. Perhaps I’m being a bit more conservative by siding with the slower growth company, but I believe Johnson & Johnson’s moat and financial fortitude are enough to give it an edge over AbbVie’s drug portfolio and attractive price tag.”

AbbVie looks very strong for the short-term and probably strong for the long-term. What could go wrong? Humira sales could fall apart more quickly than expected. Biosimilar competition will begin later this year in Europe and in early 2023 in the U.S.

There is always the possibility of pipeline failures. The company already had disappointing Phase II results for Rova-T for small cell lung cancer, and betting on any company’s prospects in Alzheimer’s and Parkinson’s disease seems like a longshot. However, Keith Speights, writing for The Motley Fool, says, “While there’s always a chance that AbbVie will underperform the S&P 500 in the coming years, I think the odds are definitely in favor of AbbVie beating the market.”

https://bit.ly/2slwqdo

Janssen taking Legend CAR T therapy to clinic

Janssen Biotech Inc. said FDA cleared an IND for CAR T therapy JNJ-68284528 (LCAR-B38M) to treat multiple myeloma. The unit of Johnson & Johnson (NYSE:JNJ) expects to start a Phase Ib/II study next half of the therapy targeting BCMA (TNF receptor superfamily member 17; TNFRSF17; CD269).
At last year's American Society of Clinical Oncology (ASCO) meeting, Legend reported JNJ-68284528 led to a 100% objective response rate among 19 MM patients in the first phase of the Chinese Phase I/II LEGEND-2 study. No neurotoxicities, which can plague anti-CD19 CAR T therapies, were observed.
In December 2017, Janssen obtained a global license to the therapy from the Legend Biotech USA Inc. and Legend Biotech Ireland Ltd. subsidiaries of Genscript Biotech Corp. (HKSE:1548). The partners are developing JNJ-68284528 jointly worldwide.
The therapy is Janssen's first in the CAR T space. At the time of the deal, Janssen's Global Therapeutic Area Head of Oncology Peter Lebowitz told BioCentury BCMA was the first target to meet the company's safety and efficacy standards for the CAR T modality (see BioCentury, Jan. 5).
Janssen said the primary efficacy endpoint in the Phase II portion of its planned trial to treat relapsed or refractory MM will be overall response rate (ORR) as defined by the International Myeloma Working Group response criteria.
Several companies are evaluating BCMA-targeted therapies in the clinic for MM. The most advanced is bb2121 from bluebird bio Inc. (NASDAQ:BLUE) and partner Celgene Corp. (NASDAQ:CELG). It is in the pivotal Phase II KarMMa trial in relapsed and refractory MM, and could launch as early as 2020 (see BioCentury, Jan. 26).
https://bit.ly/2IYrdT6

Philadelphia sweeps aside 2 heroin camps in Kensington. What happens now?

Even as they celebrated clearing out two of the heroin encampments that have sprawled in Kensington for months, Philadelphia officials acknowledged they don’t have the money to tackle the two remaining camps in the neighborhood, which have been growing as temperatures have  become warmer.

OPIOID CRISIS

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  A father and son, evicted from a heroin camp, move on in Kensington

• 

  After an argument with dealers, a Kensington block captain’s house is firebombed

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  In the Navy Yard’s historic chapel, veterans help their own survive addiction

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  Cautious optimism as Kensington heroin camps prepare for eviction

The camp at Emerald Street in particular is one of the longest-running in the neighborhood and the most difficult to clear because of its entrenched drug market. City officials have requested from $7 million to $8 million in the next fiscal year’s budget for an overall opioid strategy that would include clearing that camp and its counterpart on Frankford Avenue.

But City Council hasn’t approved a budget yet. And so on Wednesday, city officials lauded “small successes,” as Councilman Mark Squilla said at an afternoon news conference while sanitation crews sprayed down the sidewalks at the now-cleared camps on Kensington Avenue and Tulip Street.

Meanwhile, protesters gathered on a street corner arguing that evicting people from the camps without enough shelter beds — and without an official safe injection site — could lead to more deaths in a city that had more than 1,200 fatal overdoses last year.

Squilla had said Tuesday that Council would add money to the budget for more low-barrier housing, such as shelters and apartments that don’t require residents to achieve sobriety before they can have a place to live. “We as a city do care, and we’re not here just to move people off and move people out, we’re here to get them help,” he said at Wednesday’s news conference. “We can make it even better as we move forward and put this pilot program into effect throughout the city of Philadelphia.”

City workers had been operating on a self-imposed deadline to clear the two camps by Wednesday, and only about 35 people remained there by morning. By the time trash trucks rolled through to collect abandoned tents, pallets, and other belongings, the last stragglers were carting out what they could carry.

A handful of holdouts accepted drug treatment or housing services offered by the numerous outreach workers who walked through the camps on the last day of a month-long effort to address the latest open-air drug crisis to hit this embattled neighborhood. Around 120 people had already accepted some kind of city services; about 40 percent of those had entered treatment.

The rest of the people who had been in the camps had either left already for shelters or a family member’s home. One man on Tulip told outreach workers that his mother and sister had visited him in the camps the night before and were coming to pick him up.

Others said they were planning to camp elsewhere. A few said they didn’t yet know where they would sleep.

“My mind is spinning,” said Tiffany Prinski, 38, who lived on the streets of Kensington for three years and in the Kensington Avenue camp for the last several months. She spent Tuesday night in her tent, wide awake and anxious, running through her options.

Aubrey Whelan

@aubreyjwhelan

The city is clearing out two heroin encampments in Kensington today. Some of the last stragglers are off to city shelters; others say they’re not sure where they’ll sleep tonight. “My mind is spinning,” one woman who’s lived in the encampments for months told me.

11:23 AM – May 30, 2018

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A group of protesters had plastered signs under the Kensington Avenue bridge that read, “Eviction = Death,” in an imitation of the AIDS activism group ACT-UP’s “Silence = Death” slogan. In addition to their concerns about aggravating the overdose rate, protesters said the city didn’t have enough nearby housing to accommodate all the neighborhood’s homeless, a fact city officials readily admitted. The Office of Homeless Services had set aside low-barrier shelter beds for 110 people on a list of camp residents it had compiled earlier — anyone else seeking shelter would have to look for it in other facilities.

“It’s very painful for us to say we don’t have beds for everybody, but it’s part of the reality of the homeless system,” said Liz Hersh, the city’s director of homeless services. Her office has requested money for additional permanent housing in next year’s budget.

Kensington residents staged counter-protests on Tuesday night, saying that the camps were a health hazard for the neighborhood and that their children have had to pick their way past discarded needles and open drug use on their way to school.

“We need our neighborhood to stop being like this,” said Shannon Farrell, president of the Harrowgate Civic Association. “We are all for them getting help, but we’re not in favor of them living here until they think they’ve gotten what they wanted.”

On Wednesday, police cordoned off the Tulip Street camp just after 10 a.m. and slowly walked through the train tunnel, checking inside tents for stragglers. Then sanitation workers scooped whatever had been left — tents, mattresses, pallets, tables — into a waiting trash truck.

A couple who asked to be identified only by their first names, Mark and Sarah, walked up the block with their cat, Little Bubs, in a carrier. All three were moving into one of the city shelters on Kensington Avenue. They’d been living on Tulip since February, after shuttling between another encampment and two abandoned houses since last July.

“I get what they’re doing, because it is kind of insane allowing a homeless encampment under a public bridge. They’re probably doing the best they can with what they have,” Mark said. “But they’re trying to force us into treatment because of this — I feel like it’s going to go really wrong. It’s going to displace everyone to somewhere else, and they’re going to have the same problem again in a new location.”

A father and son, who had been living together in a tent on Tulip for the last two months, lugged a plastic bin of belongings, headed to pitch camp elsewhere. Brian Holzworth of Somerton walked past with a shopping cart piled high with scrap. He’d gleaned every bit of metal he could from the abandoned camp to sell at the scrapyard down the block.

“I figured I’d capitalize,” he said. He’d been living rough for a year, including on Tulip for six months, and didn’t know where he would sleep Wednesday night, he said. Another sidewalk, perhaps.

On Kensington Avenue, news cameras and neighbors clustered to watch the sanitation crews work. A few advocates helped Prinski, now wiping away tears, dismantle her tent. Outreach workers in orange shirts encouraged her to walk down the block to a nurse who could treat an abscess on her forearm.

“It’s always uncomfortable,” said Kate Perch, the housing coordinator for Prevention Point, watching the cleanup on Tulip Street. Prevention Point is running two of the city shelters that have opened to accommodate camp residents. “We knew it was coming, and felt like all of us in the initiative did the best we could to engage people. And that’s not stopping just because [the camps are being cleared].”

https://bit.ly/2IZLmYO

Consumer Reports recommends Tesla’s Model 3 after braking fix

Influential U.S. magazine Consumer Reports said on Wednesday it was recommending Tesla Inc’s Model 3 sedan after its latest tests showed that a firmware update improved the car’s braking distance by nearly 20 feet.

The magazine last week flagged “big flaws” in the car, including braking slower than a full-sized pickup truck, while also highlighting many positives.

Tesla shares closed up 2.8 percent at $291.72 (£219.5) on Wednesday after the report.

The Model 3 sedan is seen as crucial to Tesla’s profitability at a time when it is battling to reverse production shortfalls, confronting reports of crashes involving its vehicles and facing increased scepticism over its finances.

The update improved the Model 3’s overall score enough for a recommendation, said Consumer Reports, which had also raised other concerns such as the car’s wind noise, stiff ride and uncomfortable rear seat.

“Really appreciate the high quality critical feedback from @ConsumerReports. Road noise & ride comfort already addressed too. UI improvements coming via remote software update later this month,” Tesla Chief Executive Officer Elon Musk said in a tweet https://twitter.com/elonmusk/status/1001863039308595201 in response to the report.

During the retest, Consumer Reports found that Model 3 stopped at 133 feet from 60 mph, matching Tesla’s earlier claims on the car’s braking distance.

Musk had acknowledged the brake issue last week, saying that the magazine’s tests had used two early versions of the car and that a firmware update could improve braking distance beyond initial specs.

Jake Fisher, director of automotive testing at Consumer Reports, said he had never seen a car that could improve its track performance with an over-the-air update in his 19-year career at the magazine.

Fisher, however, said the car controls are “a bit distracting and cumbersome” to use, with too many steps on screen to do routine functions.

“I don’t think this will ever be a very highly rated control system just because there are so few hard buttons or controls,” he told Reuters.

Fisher remained hopeful Tesla will bring changes to improve Model 3’s user experience, and said the company may consider a traditional transponder key in addition to the car’s keyless system.

Consumer Reports said it would test another Model 3, after Musk told the magazine that the electric car maker had already made changes to address the three other issues flagged in its initial report.

https://bit.ly/2J5UDLe

Amneal Gets FDA OK for Generic to Cytoxan

Amneal Pharmaceuticals, Inc. (NYSE: AMRX), a specialty pharmaceutical company, today announced it has received U.S. Food and Drug Administration (FDA) approval on its Abbreviated New Drug Application (ANDA) for Cyclophosphamide for Injection USP, the Company’s AP-rated therapeutic equivalent to Cytoxan® 500 mg, 1 g and 2 g Single-Dose Vials. The Company expects to begin shipping product shortly.

“This is an important milestone as Amneal continues to focus on enhancing its portfolio of complex injectable products and bringing these important medications to patients and healthcare providers,” said Rob Stewart, President and CEO of Amneal. “Our diversified pipeline of more than 145 filed ANDAs provides numerous opportunities to drive growth in 2018 and beyond.”

Cyclophosphamide for Injection USP, 500 mg, 1 g and 2 g had annual U.S. generic sales of approximately $332 million according to IQVIA^™ for the 12 months ending April 2018.

https://bit.ly/2xvjQNE

FDA moves Sage’s postpartum depression drug into regulators’ busy priority lane

The FDA’s priority review pathway is getting a workout.

Regulators agreed to give Sage Therapeutics $SAGE a quick 6-month review for IV brexanolone (SAGE-547) — the FDA’s third priority move in two days — which it hopes will go on to become its first marketed drug. And this one could be headed to a huge market, if the FDA approves it for postpartum depression, a condition that afflicts a significant minority of women after giving birth.

The target date for Sage’s drug is December 19, but first the FDA will put the drug through an expert panel assessment with a public inspection of an internal review on the table.

Sage has already won a breakthrough therapy designation for their drug, which could offer a big leg up in marketing if it’s OK’d. And that’s not a slam dunk.

While Sage scored a positive outcome against PPD in two relatively small Phase III studies, their drug — provided through an infusion that takes 60 hours to complete — didn’t do as well as it did in in Phase II, with the big gap that separated the drug and placebo arms narrowing significantly.

The main goal of both studies was a significant reduction in depression scores 60 hours after treatment. And on that level the drug scored a 17.7-point mean reduction for the high dose and a 19.9-point improvement for the low dose in the first study for severe PPD compared to 14 points in the placebo arm. In study two there was a 14.2-point vs 12-point difference in the moderate PPD group.

In Phase II, researchers reported a 12.2-point spread between the drug and the placebo, leaving Sage defending a significantly reduced margin of improvement. And there were mixed results on durability as well.

RBC’s Brian Abrahams has pegged peak potential sales at about $650 million, factoring in a price of $15,000 to $20,000 per infusion — if it gets the green light. And analysts have shown considerable enthusiasm for an oral follow-up that could overcome the infusion hurdle.

This new priority review comes a day after Loxo and Bayer gained the same pathway for larotrectinib, the same day Astellas bagged its own 6-month snap inspection for their AML drug. Regulators have been turning to priority reviews more frequently as FDA commissioner Scott Gottlieb delivers on his promise to speed things up for drug developers.

https://bit.ly/2LJ4mZy

FDA slaps a clinical hold on sickle cell filing by Vertex and CRISPR Therapeutics

The FDA has slapped a clinical hold on the IND filed by Vertex $VRTX and CRISPR Therapeutics $CRSP on a new gene therapy for sickle cell disease.

The two biotechs announced an alliance on sickle cell disease late last year, co-developing CTX001, which was made with CRISPR Cas9 tech. The drug is designed to produce high levels of fetal hemoglobin (HbF; hemoglobin F) in red blood cells.

In their statement, the companies neglected to provide much detail, saying only that the hold was put in place “pending the resolution of certain questions that will be provided by the FDA as part of its review of the IND.”

At the same time, researchers for the partners plan to proceed with a European study. CRISPR, which had been buoyed in recent days, saw its shares plunge 20% on the news.

https://bit.ly/2kzv22y