Abbott Labs shares slide on kidney study
Shares of Abbott Laboratories slid Thursday because the company's partner on a potential kidney disease drug is stopping a late-stage study due to safety concerns.
THE SPARK: The drug and medical device maker said that Reata Pharmaceuticals decided to stop the trial because of a recommendation from an independent committee, which cited concerns about death and "excess serious adverse events" in patients taking the treatment, labeled bardoxolone.
Abbott plans to examine the study data with Reata to determine what future steps to take with bardoxolone, which was being tested on patients with advanced chronic kidney disease and type 2 diabetes.
THE BIG PICTURE: Abbott plans to spin off its pharmaceutical business into a separate company by the end of 2012. The new company, AbbVie, will focus solely on branded drugs, including top-seller Humira, an anti-inflammatory.
THE ANALYSIS: Jefferies analyst Jeffrey Holford said the bardoxolone development was another dose of disappointment for Abbott shareholders.
The company's shares dropped 4 percent Wednesday after it released third-quarter results. Analysts said the stock slid in part because Abbott announced a higher-than-expected tax rate for AbbVie.
"Investors were already reeling from yesterday's update on the tax rate for AbbVie and now one of the more visible pipeline assets has disappeared just the next day," he wrote in a Thursday research note, referring to drugs the company is developing.
Still, he said that the end of the trial will have a small impact on long-term revenue and earnings, since bardoxolone would not have added much to cash flows for the next few years.
SHARE ACTION: Down 4.1 percent, or $2.84, to $66.20 in Thursday afternoon trading.