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Shares of pharmaceutical behemoth AbbVie Inc. (ABBV - Free Report) dropped more than 11% in early morning trading Thursday after the company’s Rova-T program reported disappointing mid-stage results, forcing the drugmaker to abandon plans to seek accelerated approval for the treatment.
AbbVie was hopeful that its Rova-T, or rovalpituzumab tesirine, therapy would qualify for accelerated approval to treat third-line refractory small cell lung cancer, but the company has shifted its focus based on a phase 2 trial and the resulting “magnitude of effect across multiple parameters.”
The decision was made after consulting with the Food and Drug Administration, the company said. Nevertheless, AbbVie said that it does still believe the drug has potential in small cell lung cancer and other cancers with the DLL3 protein. Rova-T continues to be tested in phase 3 trials for first-line and second-line small cell lung cancer.
But investors appear to be disappointed with today’s news based on the scale of AbbVie’s investment in Rova-T. AbbVie acquired the drug in a $5.8 billion deal for Stemcentrix back in 2016. Rova-T was the purchased firm’s lead asset at the time.
Today’s selloff adds to recent headaches for AbbVie, which has seen its share price slump by nearly 20% since reaching new highs in late January. However, the pharmaceutical stock is still up over 50% within the past year.
Analyst sentiment has also been relatively solid for AbbVie recently. The company has witnessed 11 positive revisions for its full-year earnings estimates within the past 60 days, lifting our Zacks Consensus Estimate by 92 cents over that time. Still, a pair of negative revisions has kept the stock at a Zacks Rank #3 (Hold).
Regardless, 2018 is expected to be a year of aggressive top and bottom line growth for the North Chicago, Illinois-based company. Based on current consensus projections, Abbvie is on track to witness EPS growth of 34% and revenue growth of 14% this year.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Why Is AbbVie (ABBV) Stock Crashing Today?
Shares of pharmaceutical behemoth AbbVie Inc. (ABBV - Free Report) dropped more than 11% in early morning trading Thursday after the company’s Rova-T program reported disappointing mid-stage results, forcing the drugmaker to abandon plans to seek accelerated approval for the treatment.
AbbVie was hopeful that its Rova-T, or rovalpituzumab tesirine, therapy would qualify for accelerated approval to treat third-line refractory small cell lung cancer, but the company has shifted its focus based on a phase 2 trial and the resulting “magnitude of effect across multiple parameters.”
The decision was made after consulting with the Food and Drug Administration, the company said. Nevertheless, AbbVie said that it does still believe the drug has potential in small cell lung cancer and other cancers with the DLL3 protein. Rova-T continues to be tested in phase 3 trials for first-line and second-line small cell lung cancer.
But investors appear to be disappointed with today’s news based on the scale of AbbVie’s investment in Rova-T. AbbVie acquired the drug in a $5.8 billion deal for Stemcentrix back in 2016. Rova-T was the purchased firm’s lead asset at the time.
Today’s selloff adds to recent headaches for AbbVie, which has seen its share price slump by nearly 20% since reaching new highs in late January. However, the pharmaceutical stock is still up over 50% within the past year.
Analyst sentiment has also been relatively solid for AbbVie recently. The company has witnessed 11 positive revisions for its full-year earnings estimates within the past 60 days, lifting our Zacks Consensus Estimate by 92 cents over that time. Still, a pair of negative revisions has kept the stock at a Zacks Rank #3 (Hold).
Regardless, 2018 is expected to be a year of aggressive top and bottom line growth for the North Chicago, Illinois-based company. Based on current consensus projections, Abbvie is on track to witness EPS growth of 34% and revenue growth of 14% this year.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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