AbbVie share price down, posts loss on failed Shire merger

AbbVie Inc. reported on Friday quarterly results that exceeded projections boosted by strong performance of its arthritis Humira drug, but merger-related costs led to a net loss.

The US drugmaker reported net sales of $5.45 billion for the three months ended December 31, up 6.7% compared to a year ago. Analysts polled by Thomson Reuters had projected net sales of $5.36 billion.

Largely due to its failed merger with British drugmaker Shire, AbbVie stated a net loss of $810 million in the quarter, or $0.51 per share, compared with an income of $1.13 billion, or $0.70 a share, in the last quarter of 2013.

Excluding the merger-related expenses and other items, earnings per share stood at $0.89, better than the $0.86 analysts had projected.

Last July AbbVie agreed to acquire the British biopharmaceutical company in a $55-billion deal. However, the board of the US drugmaker withdrew its support from the deal in October, after the US government imposed new regulations over mergers with non-domestic companies.

The new rules limit the benefits from the so-called “inversion deals”, under which an US company would acquire an overseas peer and move its headquarters out of the US in order to significantly reduce tax expenses.

The move resulted in a $1.6 billion breakup fee for AbbVie.

The companys rheumatoid arthritis injection Humira was again the best selling drug and contributed more than half of the overall revenue. Sales reached $1.93 billion in the US, up 15.8% compared year-on-year, while international revenue climbed 4.3% to $1.43 billion.

AbbVie said its total revenue dropped 3.8% due to unfavorable foreign exchange rates.

The companys reliance on Humira to generate revenue could prove to be a threat, as most pharmaceutical companies face pressure once they lose their exclusive sales rights over top-performing drugs. AbbVies patent on the Humira drug is expected to expire in December 2016.

However, the company said the US Food and Drug Administration has approved its new treatment for hepatitis C virus infection on December 19th. Within the small window closing on December 31st the drug, dubbed Viekira Pak, generated $48 million in US sales.

By mid-January the regimen was also given the green light by the European Commission. According to analysts, Viekira Pak will bring AbbVie at least $2.5 billion in revenue in 2015.

“AbbVie delivered exceptional performance in 2014 with sales and earnings well above our original projections for the year,” said Chief Executive Richard Gonzalez. “For 2015, were focused on commercial and operational execution and the advancement of our promising pipeline as we build the company for long-term sustainable growth.”

AbbVie Inc gained 2.05% on Thursday and closed at $63.12 in New York. On Friday the stock fell 4.07% to $60.55 at 15:43 GMT, marking a one-year increase of 25.50%. The company is valued at $100.58 billion.

According to the Financial Times, the 14 analysts offering 12-month price targets for AbbVie have a median target of $73.00, with a high estimate of $82.00 and a low estimate of $54.00. The median estimate represents a 15.65% increase from the last close price.