Key Points

• AbbVie posted strong Phase 2a results for a potential successor to Skyrizi in Crohn’s disease.

• The company also has a promising eczema candidate that could cement its position in immunology.

• AbbVie’s growth outlook appears strong, and its dividend program is excellent.

AbbVie (NYSE:ABBV) is performing well this year. The company's shares have climbed 26% on the back of a strong financial performance. Further, the pharmaceutical giant's medium-term outlook appears bright. AbbVie has no significant loss of patent exclusivity remaining this decade, and its two growth pillars, Skyrizi and Rinvoq, are firing on all cylinders.

Still, AbbVie is already thinking about succession plans for its most important medicines, and recent developments suggest the company is well on its way to finding new drugs to pass the torch to.

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Better than Skyrizi?

First, a little background on Skyrizi. It is currently approved for several immunology disorders, including plaque psoriasis and Crohn's disease. Skyrizi is AbbVie's single biggest growth driver right now. In the first half of the year, the medicine generated almost $10 billion in sales, up 27% year over year and significantly more than any other product in the company's lineup.

However, Skyrizi's web of patents may begin to expire in the U.S. by 2033, potentially inviting cheaper biosimilar competition. That still seems far away, but considering Skyrizi's current sales trajectory, AbbVie will have to launch a next-gen drug years before 2033 to avoid a catastrophic decline in sales once (if) biosimilars enter the market by then.

Thankfully, the drugmaker is making progress on that project. On Oct. 19, the company announced encouraging Phase 2a results for a next-gen immunology drug, ABBV-466. This medicine combines risankizumab, the active ingredient in Skyrizi, with trosunilimab, another drug AbbVie is developing.

In the Phase 2a study, ABBV-466 achieved higher rates of remission among patients with Crohn's disease than Skyrizi and trosunilimab monotherapy. What's even more encouraging is that ABBV-466's advantage over Skyrizi and trosunilimab increased substantially by week 24 compared to week 12.

The combo treatment still has to confirm these results in Phase 3 studies. If it does, it may prove to be a strong successor to Skyrizi, at least for Crohn's disease and perhaps for ulcerative colitis.

An important acquisition

AbbVie's attempts to strengthen its immunology portfolio also received a boost earlier this year with its $10.9 billion cash acquisition of Apogee Therapeutics. The key asset from that transaction was zumilokibart, a medicine being developed to treat several conditions, including eczema, asthma, and COPD. AbbVie is looking to challenge the massive Dupixent empire.

Dupixent is approved across all those indications and generates over $15 billion in annual sales. It is one of the top-selling drugs in the world. But AbbVie's zumilokibart could have an advantage. It may need maintenance injections only every three months, or possibly even every six months, while maintaining competitive efficacy. Dupixent is typically administered every other week.

Zumilokibart’s more convenient dosing schedule could help make it a blockbuster. AbbVie will have to run Phase 3 studies before it can request approval, but it's yet another medicine that could help the company perform well long after biosimilars for Skyrizi enter the market.

Why the stock is a buy

AbbVie's other main growth driver, Rinvoq, should not face generics in the U.S. (its most important market) until 2037. The company has other important drugs contributing to sales growth, including Qulipta, a migraine treatment, Vraylar, a schizophrenia therapy, its Botox franchise, and the cancer drug Venclexta.

Further, AbbVie boasts attractive pipeline candidates in other areas. One of the more promising ones it is working on is an investigational long-acting weight-loss therapy called ABBV-295. And that's just the tip of the iceberg.

Finally, AbbVie is an excellent dividend stock. Counting the time it spent under the wing of its former parent company, Abbott Laboratories, AbbVie is a Dividend King, or a corporation with at least 50 consecutive years of dividend increases. It also offers a forward yield of 2.5%, much higher than the S&P 500's average of 1.1%. In short, AbbVie can deliver competitive returns over the long run, especially when dividends are reinvested.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool has a disclosure policy.

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