Coronavirus Outbreak AbbVie ABBV – GResearch Research Analyst Kevin Kedra 12720

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http://www.Gabelli.com • Invest with Us 1-800-GABELLI (800-422-3554) • • • • • Hello, I’m Kevin Kedra, healthcare analyst with G.Research. The coronavirus outbreak in China has sparked global concerns of a pandemic, and many pharmaceutical companies have begun looking for vaccine and antiviral solutions. Given the long development timelines for new drugs, healthcare officials in China and around the world are looking at existing antiviral medications that could have some activity against the coronavirus. • One of these drugs is a 15-year-old HIV drug from AbbVie called Kaletra in the US, and Aluvia in China and other international markets. The drug combines the protease inhibitor lopinavir with a second drug called ritonavir that increases the blood plasma levels of lopinavir. While AbbVie could see a modest benefit from stockpiling of the drug for coronavirus, we expect this benefit to be relatively immaterial to the company’s financial performance. Aluvia is priced as roughly 50 cents to 3 dollars per day as a chronic medication, it faces generic competition in many emerging markets, and even the acute treatment of a million coronavirus patients in China would only add a fraction of a percentage to the company’s expected $50 billion of revenue when combined with Allergan. • Coronavirus may be getting the headlines, but we see the pending acquisition of Allergan as being the true opportunity for investors. The two companies recently announced plans to divest several drugs, including Zenpep and bazikumab, in order to satisfy antitrust concerns. We continue to recommend Allergan as underappreciated asset and a means to gain exposure to AbbVie at a discount once the deal closes in the coming months.

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