AbbVie defended its two medicines for treating hepatitis C as safe and effective for the vast majority of patients, and said risks of serious liver injury are limited to only 3 percent to 5 percent of patients with the most serious stage of the disease.
The company’s comments Friday followed a huge sell-off in AbbVie’s shares on Thursday, pushing the stock down as much as 15 percent, after the Food and Drug Administration warned that the drugs, Viekira Pak and Technivie, could cause serious liver injury. The FDA demanded that the company add stronger warnings to the labels.
In response, AbbVie said it agreed to add stronger language to warn doctors not to prescribe it for their sickest patients. Instead of saying the drug was “not recommended,” the label now says the drug is “contraindicated” for those patients — a medical term that strongly warns doctors not to use it.
“I think what happened was there was a lot of confusion, and people were extending this labeling change to the broader hepatitis C population,” said Dr. Scott Brun, AbbVie’s vice president of pharmaceutical development.
Some analysts called the sell-off an overreaction. Shares in the North Chicago company bounced back Friday, closing at $50.34, up 4.3 percent.
AbbVie said it had been discussing safety issues of the two drugs for weeks with the FDA after the agency found 26 cases of liver injury possibly related to the two drugs.
“This did not catch us out of the blue,” Brun said. “It was something we were monitoring.”
In its statement, the FDA warned the drugs could cause serious liver injury in patients “with underlying advanced liver disease.”
Advanced stages of the disease are marked by severe scarring on the liver, along with bleeding, fluid in the stomach, difficulty thinking or other symptoms.
Hepatitis C is transmitted through the blood. Most people become infected by sharing needles for street drugs or tattoos, Brun said. About 3 million Americans have hepatitis C, with about 20,000 to 30,000 new cases a year.
Some analysts agreed that Wall Street overreacted on Thursday. Chris Schott, an analyst with JPMorgan, said in a research note that the sell-off “appears overdone.” But he added that it’s unclear how much impact the FDA warning will have on sales of the two medicines. Pharmaceutical companies are developing “several more compelling products,” including AbbVie’s own next-generation medicine, which could hit the market in 2017, he wrote in a research note.
In recent years, AbbVie’s drug pipeline has come under scrutiny because the company’s powerhouse drug, Humira, loses its patent exclusivity next year, and several competitors are developing biosimilars, or low-cost versions of the drug. Investors want to know what AbbVie is developing to make up an expected fall-off in revenue. Humira, the best-selling drug in the world that treats a broad array of immune-related diseases, represented about two-thirds of AbbVie’s total revenue last year.
To boost its product line, AbbVie launched Viekira Pak in 2014 and Technivie this year. Viekira Pak is now the company’s second best-selling product, although sales have been relatively modest. In the second quarter, Viekira Pak rang up sales of $385 billion, slightly below analysts’ forecasts.
Andrew Baum, an analyst with Citigroup, said the revised labeling of the two drugs will “likely materially negatively impact” sales. He lowered his price target on the company stock from $60 to $56 and kept his recommendation on the stock at “neutral.”
“In hindsight, we are questioning the timing of last month’s upgrade from sell,” he wrote in a research note.
Twitter @johnrussell99
