When the Food and Drug Administration updated warnings on JAK inhibitors, it sent AbbVie's (NYSE:ABBV)stock down by 10% last week. Before that happened, the drug manufacturing giant enjoyed an uptrend, peaking at $121.53.
The FDA requires warnings on Janus kinase inhibitors. It determined that those using Pfizer’s (NYSE:PFE) Xeljianz have a higher risk of serious heart conditions. AbbVie’s Rinvoq (upadacitinib) is a JAK inhibitor. Rinvoq is also the basis of its blockbuster atopic dermatitis drug.
Regeneron (NASDAQ:REGN) made billions in revenue selling Dupixent, a drug treating mainly atopic dermatitis. AbbVie investors anticipated its AD drug would compete with Regeneron. Markets are discounting AbbVie on the risks of Rinvoq sales slowing and weak initial sales for its atopic dermatitis drug.
The fears are real and would justify the market’s swift reaction. Yet AbbVie is a highly diversified firm. It acquired Allergan to strengthen its product portfolio. As it replaces its reliance on drugs facing patent expiration, the strong cash flow is more than enough to service the current debt.
Investors get a dividend of $5.20 a share, which has a history of increases at least annually. Unfortunately, the selling volume last week is at levels not seen in over one year. Those who sold may know more bad news is potentially on the way.
AbbVie is still a good long-term investment for patient investors seeking income and modest growth.
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