Abbott Continues Win Streak With Humira Biological Drug

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Abbott Continues Win Streak With Humira Biological Drug

http://money.cnn.com/news/newsfeeds/articles/newstex/IBD-0001-23786263.htm

Mar. 17, 2008

It's six for six at Abbott Labs. That's six regulatory approvals on six

applications for the company's biological drug, Humira.

Two of those approvals came in January and February, giving Humira new

market opportunities for 2008.

Humira, which targets autoimmune disorders, is Abbott's ABT biggest seller.

The drug is poised to deliver more than $4 billion in global sales this

year, says Luce, vice president of Abbott's immunology division.

" As we went down the road studying the drug, it obviously did better than

our expectations, " he said.

Humira had $3.1 billion in worldwide sales in 2007. The U.S. accounted for

$1.7 billion of that.

Abbott's total sales hit $29 billion, half of which came from

biopharmaceuticals. This year Humira should account for about 30% of

Abbott's drug sales.

" We pushed guidance up several times last year and momentum continues for

Humira in 2008, " Luce said.

Spreading The Wealth

Despite a 15% sales increase in 2007 and the promise of Humira's market

expansion, Abbott shares have lost ground, dropping about 14% of their value

since mid-January.

Still, the firm has plenty of respect on Wall Street. Leerink Swann analyst

Bruce Cranna ranks the stock an outperform. His emplayer has done business

with Abbott.

It's also a top pick by Phil Nalbone of RBC (NYSE:RY) Capital Markets, which

has also done business with Abbott.

Humira is a type of drug often called a platform. Many products spring from

that single scientific base.

The drug has Food and Drug Administration approval for rheumatoid arthritis,

psoriatic arthritis, ankylosing spondylitis, Crohn's disease, plaque

psoriasis and juvenile rheumatoid arthritis. It's approved in 72 countries

and used by 250,000 patients worldwide.

Clinical trials are in progress to test Humira for other autoimmune

disorders.

It's in phase three trials for ulcerative colitis and pediatric Crohn's

disease. Abbott also plans to start trials for pediatric psoriasis.

Humira is a biologic that's identical to a normal human antibody. That means

a lower risk of side effects than rival medicines, Cranna says.

Enbrel, made by Amgen and marketed by Wyeth is a fusion of two human protein

components. Though it's similar to a protein found naturally in the body,

it's developed in the lab. One potential risk is that antibodies might form

against the drug.

Remicade, from & (NYSE:JNJ) JNJ, uses mouse and human

proteins.

Humira has another edge, Nalbone says. " It requires one shot every couple of

weeks as opposed to a couple of shots a week with Enbrel. "

Both Humira and Enbrel can be self-administered with pre-filled, penlike

devices. Remicade requires a clinical visit for intravenous infusion, which

takes two hours.

Eye To The Future

All three drugs are TNF-inhibitors. That is, they stop the inflammatory

effects of a protein called TNF-alpha.

And all three could face competition from Celgene. In February the company

announced promising phase two clinical data for apremilast, its drug for

patients with moderate-to-severe psoriasis.

The results were so good that Celgene said it will speed up its program to

get apremilast on the market for psoriasis and psoriatic arthritis. It also

plans to see if it works on other rheumatic, dermatologic and inflammatory

diseases.

Apremilast is not a biologic. It's chemically based. It's easier to take

because it's an oral drug that requires no injections or infusions.

Analyst Reddoch of Friedman Billings Ramsey figures apremilast could

be a blockbuster -- and give Humira, Enbrel and Remicade a kick in the

shins.

" Phase two data for apremilast compares favorably to biologics currently on

the market, " Reddoch wrote in a recent research note.

Abbott isn't waiting around for rivals to catch up. Last year it opened a

$450 million plant in Puerto Rico to make Humira and other biologics.

Abbott is also hard at work on a successor drug, ABT874, though Humira's

patent is good until 2016.

For now, the company is not worried about generic competition, Luce says.

There's no approval process in place for biological generics in the U.S.

Even if there was, generic makers might not be able to duplicate the

formulation of Humira, or any biologic.

So why would Abbott want a new drug for the same conditions? Management

reckons that bringing ABT874 to the market gives patients more options.

" Patients who may be nonrespondent to one mechanism of action may respond to

another, " Luce said. " Our goal is market leadership. "

Abbott's follow-on to Humira could eat into Humira's market, Cranna says.

" There's bound to be some cannibalization, no doubt about it. "

Competitor J & J's Centocor unit is also working on a successor drug to

Remicade, called CNTO 148. Schering-Plough has a stake in the project and

marketing rights in some markets outside the U.S.

CNTO 148 is in phase two and three trials for many of the same disorders now

treated by Humira, Enbrel and Remicade.

The effect of so many competitors is not entirely negative, Cranna says. By

giving patients more choices, " it broadens the market. "

One of Humira's advantages is that it tends to get speedy FDA approvals.

" We believe Humira has best-in-class clinical results, " Nalbone said.

In the meantime, Humira is taking share from Enbrel and Remicade.

" There are not a lot of dogs nipping at Abbott's heels, " Cranna said.