AbbVie stock definitively broke out Thursday after the pharma titan announced it had entered a settlement deal that will stave off generic Rinvoq until April 2037.
The deal adds four years to the patent-protected life for Rinvoq, one of AbbVie's two biggest moneymakers. Rinvoq treats inflammatory conditions like eczema, rheumatoid arthritis, Crohn's disease and ulcerative colitis. It was set to lose patent protection in 2033. Now, thanks to the deal AbbVie made with generic drugmakers, it will be protected until April 2037.
"This is clearly a positive development, supporting longer-term protection of the Rinvoq franchise, which continues to exceed Street expectations, and upside to our current estimates, as we had previously assumed a 2033 loss of exclusivity," William Blair analyst Matt Phipps said in a report to clients.
On the stock market today, AbbVie stock jumped 4% to 220.18. Shares easily topped a buy point at 212.45 out of a cup-with-handle base, according to MarketSurge.
AbbVie Stock: Rinvoq Catalysts Loom
The deal is a case of history repeating itself for AbbVie. Until 2023, inflammatory drug Humira was AbbVie's biggest cash cow. But a settlement agreement began allowing biosimilar versions of Humira that year. Sales quickly dropped off.
But Rinvoq and Skyrizi revenue also stepped up markedly. Though they work differently from Humira, the duo treat a number of the same conditions. Last year, Rinvoq brought in $5.97 billion in sales, accounting for almost 11% of total sales. Skyrizi generated $11.72 billion. That represented roughly 21% of AbbVie's topline.
William Blair's Phipps noted there are several catalysts in Rinvoq's near term. AbbVie recently put out positive reports from two studies of the drug in patients with alopecia areata. It plans to ask the Food and Drug Administration to approve Rinvoq for those patients.
The company also has several studies of Rinvoq in skin conditions called vitiligo and hidradenitis suppurativa, and in systemic lupus erythematosus.
"Management previously highlighted that the next wave of potential approvals in Rinvoq in these indications could add roughly $2 billion to peak-year sales for the product," Phipps said. "With the extension of four additional years of exclusivity, we assume this number will likely go higher."
AbbVie previously guided to north of $11 billion and $20 billion in sales of Rinvoq and Skyrizi in 2027, respectively. But this number could go higher, Phipps said. He rates AbbVie stock as outperform.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
