AbbVie Inc. ABBV reported earnings of $2.34 per share for the second quarter of 2020, comfortably beating the Zacks Consensus Estimate of $2.24 and exceeding the guided range of $2.10-$2.16. Earnings rose 3.5% year over year.

Meanwhile, the company’s revenues of $10.43 billion beat the Zacks Consensus Estimate of $10.12 billion. Meanwhile, the top line improved 26.3% on a reported basis, year over year.

Please note that AbbVie completed the acquisition of Allergan in May. Revenues include Allergan’s product revenues from the date of the acquisition till quarter end.

However, on operational basis, revenues declined 5.3%, due to the COVID-19 pandemic.

AbbVie’s shares were up 1.3% in pre-market trading. AbbVie’s shares have gained 8.4% so far this year compared with the industry’s 0.4% increase.

Quarter in Detail

Key drug Humira recorded sales decrease of 0.2% on an operational basis with revenues from the same coming in at $4.84 billion. Sales in the United States climbed 4.8% to $3.97 billion. However, Humira sales in the ex-U.S. markets were down 17.4% on an operational basis and 19.9% on a reported basis to $863 million. International sales were affected by the launch of several direct biosimilar drugs in Europe by other pharma companies including Amgen, Sandoz and Biogen.

New immunology drugs Skyrizi and Rinvoq registered sales of $330 million and $149 million, respectively. In the previous quarter, Skyrizi and Rinvoq recorded sales of $300 million and $86 million, respectively. Strong sequential growth in sales of both drugs in the past couple of quarter reflects strong uptake.

While Skyrizi (risankizumab) was approved in the United States and Europe for plaque psoriasis in April 2019, Rinvoq (upadacitinib) won the FDA nod in August 2019 for moderate-to-severe rheumatoid arthritis (“RA”). Rinvoq was also approved in the EU in December 2019.

AbbVie’s oncology/hematology (including Imbruvica and Venclexta) sales rose 25.8% on an operational basis to $1.59 billion in the quarter, driven by strong growth of both Imbruvica and Venclexta.

Second-quarter net revenues from Imbruvica were $1.29 billion, up 17.2% year over year operationally. U.S. sales of Imbruvica grossed $1.06 billion, up 19% from the year-ago figure. AbbVie’s share of profit from International sales of the drug rose 9.4% to $233 million. Notably, AbbVie shares international profits earned from Imbruvica with Johnson & Johnson JNJ.

The company’s leukemia drug Venclexta generated revenues of $303 million in the reported quarter, reflecting growth of 81.5% year over year on an operational basis. AbbVie has a partnership with Roche RHHBY for Venclexta.

Other products that delivered an encouraging performance include Duodopa, which recorded revenue growth of 4.6% on an operational basis. Creon and Synthroid, generating sales only from U.S. markets, witnessed a revenue decrease of 1.9% and 9.7%, respectively. Orilissa sales were up 58.1% year over year. Sales of Mavyret were $376 million, down 51.4% operationally.

AbbVie added several drugs to its portfolio with the acquisition of Allergan. Key among them include multi-indication drug, Botox, and Vraylar. Botox is sold as a cosmetic as well as therapeutic. Botox Cosmetic net revenues were $226 million, a decrease of 43.1% on an operational basis while Botox Therapeutic net revenues decreased 22.3% to $297 million. Sales declined as spending on those products was deferred during the economic downturn.. However, Vraylar sales were up 70.4% to $192 million.

Adjusted SG&A expenses increased 47.7% to $1.6 billion while R&D expenses were $1.3 billion in the second quarter, rising 8.1% year over year. Adjusted operating margin represented 47% of sales.

2020 Guidance

AbbVie issued new EPS guidance for 2020 to include results of Allergan following the closing of the acquisition till 2020-end. The company now expects adjusted EPS to be in the range of $10.35-$10.45. The Zacks Consensus Estimate for current-year earnings per share is pegged at $10.45.

On its first-quarter earnings call, AbbVie had provided EPS guidance for the standalone company (excluding Allergan impact). The company expected adjusted EPS to be in the range of $9.61-$9.71 for 2020.

Zacks Rank & Key Pick

Currently, AbbVie is a Zacks Rank #3 (Hold) stock. A top-ranked stock in the biotech sector is BioMarin Pharmaceutical Inc. BMRN, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BioMarin’s earnings per share estimates have risen from $1.51 to $1.57 for 2020 and from $2.46 to $2.80 for 2021 over the past 60 days.

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