AbbVie's Stock Hit By Citron Tweet

In a speech on Wednesday, U.S. Food and Drug Administration commissioner Scott Gottlieb ripped drug makers for blocking competitors from bringing potentially cheaper biosimilar drugs to the market. On Thursday, Citron Research, which is known for its short theses, tweeted that Gottlieb’s speech was addressed directly at AbbVie Inc ABBV.

What To Know

Gottlieb’s FDA has no jurisdiction over potential antitrust claims against drug companies like AbbVie, but his new “Biosimilars Action Plan” is aimed at supporting biosimilar drug development. The initiative will make it easier for biosimilar drugs to make it to the market, and Gottlieb said Americans could have saved $4.5 billion last year if FDA-approved biosimilars had been available to U.S. patients.

Why It’s Important

AbbVie’s rheumatoid arthritis and Crohn’s disease treatment Humira raked in $18.4 billion in sales last year, but the drug is now faced with a number of biosimilar competitors. To fend off this new competition, AbbVie has been negotiating licensing deals with these competitors that included delayed launches of their drugs. This week, Mylan NV MYL signed a licensing deal for its Humira biosimilar drug, and AbbVie already has other deals in place with Amgen, Inc. AMGN and Samsung Bioepis.

What’s Next?

According to Citron, Gottlieb’s speech and the new FDA initiatives make AbbVie stock a great short idea.

“Gottlieb's comments for biosimilars and the removal of safe harbor is a DIRECT hit on Abbvie's abuse of Humira,” Citron tweeted on Thursday.

Citron said President Trump and the FDA are set on promoting biosimilar competition, and Amazon.com, Inc. AMZN entering the drug business simply creates too many headwinds for AbbVie’s current business model.

Is there something about $ABBV and the Humira patents (including the already announced settlements with biosimilar makers) that the market doesn't already know about? Or is @CitronResearch just going to huff and puff the stock lower?

— Adam Feuerstein (@adamfeuerstein) July 19, 2018

Citron predicted AbbVie’s share price will hit $60 within the next year, roughly 32 percent downside from its current price.

AbbVie's stock traded lower by 4.6 percent Thursday to $90.04 following Citron’s tweet.

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