Abbott's Arthritis Drug Humira Is on Track to Hit Targets
Monday March 10, 2:11 pm ET
By Daniel Rosenberg
CHICAGO -- Abbott Laboratories' Humira rheumatoid-arthritis drug has been available for less than two months, but it appears well on its way toward achieving or even exceeding analysts' sales expectations of $150 million this year.
"We're tracking exactly where we projected," said Tim Walbert, vice president and general manager of the Abbott Immunology division.
Abbott is giving Humira away to Medicare-eligible seniors until a Medicare drug benefit is enacted. The program will continue as long as necessary.
"Our intention is to provide it free to seniors until there's a Medicare drug plan -- whether it's in 2003, 2004 or 2010," Mr. Walbert said. "It's the right thing to do."
The free-drug program is charitable, and it doesn't hurt Abbott in its quest to gain market share in a very tough area.
Humira, part of a class of drugs called anti-TNF agents that stop overactive immune systems from damaging joints, was launched into a $3.2 billion market dominated by Johnson & Johnson's Remicade and Amgen Inc.'s Enbrel.
Around two million Americans suffer from rheumatoid arthritis, and anti-TNFs are the most up-to-date treatments. They must be injected, and Abbott hopes it can win the battle of convenience by allowing patients to inject themselves just once every two weeks with Humira. Enbrel must be injected twice a week, and Remicade patients must travel to a special facility for their treatments every four to eight weeks and spend half a day getting an infusion.
The wholesale price for Humira is $13,500 a year, equal to Enbrel. Insurance coverage for the treatments is mixed, with some plans covering and others not. Medicare covers neither, but it does cover Remicade.
Physicians say all anti-TNFs effectively treat rheumatoid arthritis, and it's sometimes a matter of patient preference which one is prescribed.
"Humira is more convenient because it's injected less frequently," said Dr. Michael Schiff, director of clinical research at the Denver Arthritis Clinic. " Remicade has the advantage of being covered by Medicare, and Enbrel has the advantage of being the longest on the market."
Dr. Schiff has been prescribing Humira to Medicare patients so they can get treated at no charge, and to patients who have to travel a lot and don't want to go on the road with syringes and needles.
Dr. Oscar Gluck, a rheumatologist in Phoenix, said the Medicare program "is definitely a draw" for putting patients on Humira. He has prescribed it to eight of his patients, but said it's too early to judge Humira's effectiveness. He hasn't seen any problems so far, and expects to know better how well the drug works within a couple of months.
He said it's important to get patients onto these drugs early in their illness because anti-TNFs can slow or halt disease progression.
Betty Timms-Ford, 61, Denver, has been taking Humira since August 2000, originally as part of a clinical study. She says the drug has changed her life.
"Not much holds me down," said Ms. Timms-Ford, who is back to skiing and playing with her grandchildren after she suffered years of unrelenting pain.
One question is whether Humira can attract patients from the other two drugs.
"A lot of doctors -- once a patient is on Enbrel and the patient is doing well -- are reluctant to change, and the patient is, too," said Dr. Joel Rutstein, director of the Arthritis Diagnostic & Treatment Center in San Antonio.
Making Presence Felt
Trying to track prescription data is an art, not a science, but analysts believe that, as of last week, Humira was picking up about 12% of new prescriptions. However, that doesn't include Remicade, which is sold primarily to physicians rather than through retail prescriptions, and can't be tracked.
"We remain enthusiastic about the prospects for Humira, but after seven weeks of Rx data, the product is tracking in line, not ahead of our current forecast," said analyst Scott Wilkin of SG Cowen. He rates Abbott a "market perform." Mr. Wilkin doesn't own shares but there is an investment banking relationship between the firm and the company.
Mr. Wilkin said that to meet his expectations for sales of $1.1 billion in 2006, Abbott will have to gain an average of 40% of all new anti-TNF patients each year through 2006. That forecast also assumes U.S. market penetration of anti-TNFs moves from 16% to 36% of rheumatoid-arthritis patients.
Weekly Humira sales are at around $1.5 million, putting Abbott on track to sell $17 million this quarter and $150 million this year, reaching 5% market share in the total anti-TNF market, said Dan Lemaitre, analyst with Merrill Lynch & Co. He rates Abbott a "buy" and doesn't own shares. There is an investment banking relationship.
Mr. Lemaitre expects Humira sales to reach $650 million to $700 million in 2004.
"And that's what it takes for people to get excited about Abbott, because that takes top-line growth to 10% and earnings-per-share growth to the mid-teens," Mr. Lemaitre said.
In afternoon trading on the New York Stock Exchange (News - Websites), Abbott shares were trading at $34.99, representing a price-to-earnings multiple of almost 14, based on Thomson First Call's (News - Websites) estimate of $2.50 a share for 2004. Shares are well below the 52-week high of $55.85.
Some analysts see Humira as Abbott's best hope for getting back into the groove after some tough times. Sales gains at the company has been well under 10% a year in recent quarters, and Chief Executive Miles White called Humira " the biggest pharmaceutical launch in the company's history."
With that in mind, Abbott is starting an aggressive marketing campaign. Analysts expect the company to spend as much as $200 million on Humira's introduction.
The Medicare assistance program is one strategy. Abbott also has established a Web site called Ra.com. The site is educating primary physicians about the disease so that they can quickly refer patients to rheumatologists, and it will soon begin a direct-to-consumer marketing program that may put Humira in television and magazine ads.
The company has 100 to 200 sales representatives working on Humira, comparable with the sales teams for Enbrel and Remicade, Abbott's Mr. Walbert said.
-By Daniel Rosenberg, Dow Jones Newswires; 312-750-4118; daniel.rosenberg@dowjones.com |
