AbbVie knocks down earnings forecast due to IPR&D charge

AbbVie knocks down earnings forecast due to IPR&D charge

AbbVie is revising down earnings predictions for the upcoming year, citing a $150 million charge from acquired in process R&D that was disclosed late Wednesday.

The company is revising its expected earnings per share down by 8 cents. A spokesperson for AbbVie did not immediately respond when asked for additional details on the charge.

AbbVie’s original full-year earnings per share estimates presented in February fell below Wall Street’s expectations, at a range of $10.70 to $11.10. The IPR&D charge knocks the estimate down to between $10.62 and $11.02. Barron’s reported that the consensus heading into the year was $11.73 per share.

CEO Rick Gonazlez admitted during the February earnings call that the earnings range was “a little bit wider than what we normally project.”

The guidance revision is due in part to the unpredictability of the new Humira biosimilars market, which launched earlier this year. Sales of Humira—one of the best-selling drugs of all time—are expected to drop by more than a third in 2023. This places increasing pressure on the company’s immunology successors, Skyrizi and Rinvoq.

But Gonzalez was also bullish with respect to AbbVie’s potential involvement in M&A, telling investors they should “expect [AbbVie] to act” if the right opportunity presents itself. As evidence of this, Gonzalez lifted a $2 billion business development cap that had been in place since the $63 billion acquisition of Allergan in 2019.

The company was busy with deals in 2022, buying UK-based antibody maker DJS Antibodies for $255 million in October and Syndesi Therapeutics for up to $1 billion in March 2022. AbbVie also walked away from existing deals, including one with Exicure that was absorbed in the Allergan buy.

The Chicago-area pharma consistently has one of the smallest R&D budgets among its peers, ranking 10th among pharmaceutical companies in 2022. AbbVie spent $6.51 billion in R&D last year, down 6% compared to 2021. That budget was 11.2% of AbbVie’s total revenue, also the lowest among the top 10 pharmas.

error: Content is protected !!