AbbVie Inc (ABBV) Has Much More Upside Reward Than Downside Risk

Gilead Sciences, Inc. (NASDAQ:GILD)’s all-oral hepatitis C treatments cured 95% of patients after eight weeks of the therapy, and the drugs are currently in the third of three stages of clinical trials. Once available, the treatment may be sold as a single pill taken once a day. On the other hand, AbbVie’s treatment resulted a slightly lower cure rate of 90% in a Phase II trial and requires three pills in the morning and one at night for the treatment. With faster cures and less side effects, the first drug to the market could quickly grab billions of sales. Marshall Gordon, a New York-based analyst, stated that Gilead will be first, and AbbVie will be on roughly the same timeline. The analyst also noted that AbbVie Inc (NYSE:ABBV) is not getting the same credit as Gilead Sciences, Inc. (NASDAQ:GILD), however, as the market has anticipated Gilead to dominate the market. In all actuality, the race is too close to call this early.

Bottom line

With the continuous growth and potential margin expansion from Humira, as well as the declining impacts of lipid patent expiration, AbbVie is a stable long-term growth play. Humira should continue to dominate the market as its competitor, Xeljanz, has a hard time penetrating the market. AbbVie has a limited downside protected with its solid cash flow and steady Humira growth. However, much more upside can be expected if AbbVie can launch its all-oral hepatitis C drugs first to capture the estimated $20 billion market.

Nick Chiu has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences. Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article AbbVie Has Much More Upside Reward Than Downside Risk originally appeared on Fool.com is written by Nick Chiu.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.