IDIX (MM)

Abbott Laboratories (ABT) recently announced promising data from the phase IIb Aviator trial evaluating the combination of ABT-450/r, ABT-267, ABT-333 and ribavirin for the treatment of patients suffering from hepatitis C (HCV). ABT-450/r (protease), ABT-267 (polymerase) and ABT-333 (NS5A) are also being evaluated in other clinical studies.   

The combination regimen demonstrated impressive sustained virological response in genotype 1 (GT1) HCV patients at 12 weeks post treatment in treatment-naïve (99%) and null responders (93%). Investors have reacted positively with the share price up 4% on the news.

We note that a few companies have suffered hepatitis C related pipeline setback in the last few months. In August 2012, Idenix Pharmaceuticals, Inc. (IDIX) received a verbal notice from the FDA placing a partial clinical hold on its HCV candidate, IDX184.

Apart from Idenix, Bristol-Myers Squibb Company (BMY) suffered a pipeline setback in August 2012, when it announced the discontinuation of the development of its HCV candidate, BMS-986094 (formerly known as INX-189) due to a safety issue.

Abbott to Report Third Quarter Results

Abbott Labs is set to release its third quarter 2012 results on October 17, 2012 before the opening bell. The Zacks Consensus Estimate for the third quarter is $1.28, representing a year-over-year increase of 8.5%. Abbott Labs has surpassed earnings estimates consistently in the last four quarters with a trailing four-quarter average of 1.34%. Third quarter 2012 earnings could exceed expectations by 0.78%.

Estimate revisions for Abbott Labs have been scarce over the past month. Over the past 30 days, 4 of the 14 analysts providing estimates for Abbott Labs have increased their earnings estimates for the third quarter of 2012.

The annual estimates for 2012 have not been revised by the majority of the analysts providing the same. Only 5 of the 19 analysts providing estimates for Abbott Labs have revised their estimates for 2012. All 5 analysts revised their estimates upward.

In the last 7 days, 3 analysts have revised their third quarter and 4 analysts have revised their full year 2012 estimate upwards.

We believe that although concerns like the impact of the US health care reform, foreign exchange headwinds, EU pricing austerity and generic competition will continue to hurt Abbott Labs, its pharmaceutical products should continue to drive growth led by key drug Humira, an anti-inflammatory product.

Humira is quickly becoming the anti-tumor necrosis factor (TNF) drug of choice, gaining sizable market share despite the presence of  Amgen/Pfizer’s (AMGN/PFE) Enbrel and Johnson & Johnson’s (JNJ) Remicade. Growing awareness, favorable clinical data, additional indications and expansion into new markets like China and Japan should help the product to continue contributing significantly to its top line.

Neutral on Abbott Labs

We currently have a Neutral recommendation on Abbott Labs, which carries a Zacks #2 Rank (short-term Buy rating). Abbott Labs remains on track to split into two separate publicly traded companies by the end of 2012. One company will deal in diversified medical products, while the other will focus on research-based pharmaceuticals. We are positive on the split, which should allow the two separate entities to perform in a more focused manner.

 
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