Cowen Cuts Abbvie (ABBV) to Market Perform; Analyst Calls Rova-T Data at ASCO 'Underwhelming'
(Updated - June 6, 2016 9:21 AM EDT)
Cowen downgraded Abbvie (NYSE: ABBV) from Outperform to Market Perform with a price target of $70 (prior $77). Analyst Steve Scala called Rova-T data at ASCO "underwhelming." Overall, he sees opportunities as balanced.
"Last Friday’s analyst meeting was solid, but provided limited news to bolster visibility on the L-T outlook. Rova-T data at ASCO was underwhelming and does not enhance confidence in capital deployment post the $5.8B Stemcentrx acquisition. ABBV stock has been a good performer, despite the recent Humira IPR, offering opportunity to lock in profits. We believe opportunities now balance risks," said Scala.
Discussing Rova-T data, the analyst said, "While mOS might not be the best metric on which to assess Rova-T (rovalpituzumab tesirine) in 3L SCLC, given the severity of patients and lack of other options, it is nonetheless the endpoint on which investors were focused. The data presented yesterday was very strong on response rate, but was underwhelming on OS. In 2/3L SCLC, Rova-T showed grade 3+ AEs of 38% with fatigue and pleural effusion being the most common side effects. Response rate was 18% in all patients and 39% in DLL3+. Median OS was 4.6 months in all patients and 5.8 months in DLL3+. In a similar patient population, the nivolumab + ipilimumab dose being pursued in Phase III showed a grade ¾ AEs of 30% (with 3 treatment related deaths), response rates of 23% and mOS of 7.7 months."
"We view the Rova-T data was underwhelming given: 1) response rates dropped vs prior update in both biomarker enriched and unselected population (18% vs prior 25% in unselected population and 39% vs prior 45% in the DLL3+), 2) mOS of 5-6 months is below expectations and below what nivo+ipi have shown in an unselected population (7.7 months), and 3) there was no sign of OS curve plateauing. Similar to chemotherapy, Rova-T appears to deliver responses that are transient and don’t translate into long-term survival benefits. In contrast, nivo+Ipi showed more durable responses with early signs of OS curve flattening. TRINITY, a 3L+ R/R SCLC registrational study targeting 125-150 patients, is enrolling with data in 2017. Stemcentrx is develop a biomarker for DLL3. DLL3 is not routinely tested for today, but routine methods could be employed to measure it, and a fresh biopsy would not be required. ABBV states that 65% of patients have high levels of DLL3, which is defined as it being present on greater than 50% of cells. Stemcentrx is pursing additional tumors with other targets, including NSCLC, breast, ovarian, and TNBC. Two of the novel targets are in development with PFE. ABBV also believes that there is strong preclinical data supporting the combination of Rova-T plus checkpoint inhibitors. We estimate Rova-T sales of $125MM in 2019, $250MM in 2020, and $1B in 2022," added Scala.
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Shares of Abbvie closed at $65.00 yesterday.