AbbVie Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 30, 2024

There are 15 speakers on the call.

Operator

Good morning and thank you for standing by. Welcome to the AbbVie Third Quarter 2024 Earnings Conference Call. All participants will be able to listen only until the question and answer portion of this call. Today's call is being recorded. I would now like to introduce Ms.

Operator

Liz Shea, Senior Vice President, Investor Relations.

Speaker 1

Good morning and thanks for joining us. Also on the call with me today are Rob Michael, Chief Executive Officer Jeff Stewart, Executive Vice President, Chief Commercial Officer Rupal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer Scott Rentz, Executive Vice President, Chief Financial Officer and Carrie Strom, Senior Vice President, Appy and President, Global Allergan Aesthetics. Before we get started, I'll note that some statements we make today may be considered forward looking statements based on our current expectations. AbbVie cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in our forward looking statements. Additional information about these risks and uncertainties is included in our SEC filings.

Speaker 1

AbbVie undertakes no obligation to update these forward looking statements except as required by law. On today's conference call, non GAAP financial measures will be used to help investors understand AbbVie's business performance. These non GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Following our prepared remarks, we'll take your questions. So with that, I'll turn the call over to Rob.

Speaker 2

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie is performing exceptionally well and I'm extremely pleased with the execution against our strategic priorities, including continued double digit sales growth from our ex HUMIRA platform, the closing and integration of Cerevel Therapeutics and the progress we are making to build and advance a compelling pipeline of innovative medicines. Turning to our results. AbbVie's diversified portfolio delivered sales that were $260,000,000 above our expectations and reflect robust mid single digit operational sales growth.

Speaker 2

Our Eximera platform drove this over achievement including growth of nearly 18%. The momentum of SKYRIZI and RINVOC is especially impressive with combined sales expected to exceed $17,000,000,000 this year, which is $1,300,000,000 above our initial expectations and we see substantial opportunity for continued strong growth well into the next decade. Several other key products also delivered double digit sales growth including VENCLEXTA, VRAYLAR, UBRELVI and CULIPTA. This broad based performance further demonstrates the strength of our commercial portfolio. For the 3rd time this year, we are raising our full year revenue and adjusted EPS guidance.

Speaker 2

We are increasing our full year revenue guidance by $500,000,000 and have now raised total revenue by $1,800,000,000 since our initial guidance in February. We are also raising our full year adjusted earnings per share guidance by $0.15 and now expect adjusted EPS between $10.90 $10.94 In addition to achieving strong quarterly results, we have been very focused on investing in the business to generate sustainable long term performance in the 2030s and beyond. During the quarter, we successfully completed the acquisition of Cereval Therapeutics, strengthening our neuroscience pipeline. Cereval enhances our ability to help patients suffering from devastating conditions such as Parkinson's and schizophrenia. The integration has been seamless and we are excited to have the talented Cereval team join our organization.

Speaker 2

Within the Cereval pipeline, we are very pleased with the positive Phase 3 results and emerging profile of tivapadon in Parkinson's. And we remain on track to read out both pivotal studies for imracludine in schizophrenia in the 4th quarter. More broadly on the pipeline, we have been advancing key R and D programs across all stages of development. Some notable highlights include the U. S.

Speaker 2

Approvals of Violev for advanced Parkinson's and BOTOX for platysma bands, the U. S. Regulatory submission of TELUSO V for non squamous, non small cell lung cancer and the start of our Phase 2 Crohn's platform study, which is evaluating SKYRIZI in combination with several novel biologics. In summary, AbbVie continues to demonstrate strong commercial, operational and R and D execution. The robust performance of our growth platform once again exceeded our expectations and we see numerous opportunities to drive long term growth.

Speaker 2

Further underscoring our confidence in that growth, today we announced a 5.8% increase in our quarterly cash dividend beginning with the dividend payable in February 2025. Since inception, we have increased our quarterly dividend by more than 300%. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff?

Speaker 3

Thank you, Rob. I'm extremely pleased with the continued strong momentum across the therapeutic portfolio. I'll start with the quarterly results for immunology, which delivered total revenues of more than $7,000,000,000 up 4.8 percent on an operational basis. SKYRIZI global sales were $3,200,000,000 up 51.5 percent on an operational basis, exceeding our expectations. We are

Speaker 4

seeing robust prescription growth across psoriatic disease with SKYRIZI achieving in play biologic share leadership in approximately now 30 key countries.

Speaker 3

In the U. S, we continue to capture nearly 1 out of every 2 in play psoriatic disease patients on biologic therapy and we see substantial room for further total share growth. We believe that SKYRIZI's best in class profile with nearly complete skin clearance, high durability of response, easy onboarding and quarterly dosing for maintenance therapy sets a very high bar relative to other therapies on market or in development. KYRIZI has also demonstrated a compelling clinical profile in IBD, including strong endoscopic data paired with convenient dosing. This differentiated profile as well as our compelling head to head sequence data versus STELARA is supporting very rapid uptake in Crohn's disease, where SKYRIZI continues to gain market share globally, achieving in play patient leadership across all lines of therapy in the U.

Speaker 3

S, Japan and Canada. SKYRIZI's U. S. In play patient share is now approximately 32%, more than double the share of the second biologic treatment. And with SKYRIZI's total prescription share of approximately 8%, we see significant opportunity for revenue inflection in Crohn's going forward.

Speaker 3

While we are still very early in our launch in the U. S. And Europe, we also anticipate robust uptake for SKYRIZI in ulcerative colitis, the new indication. Initial prescription trends as well as feedback from gastroenterologists have been overwhelmingly positive. Physicians are particularly impressed with the data that has been demonstrated for naive UC patients who have not been exposed yet to biologics, where SKYRIZI achieved very high results for clinical remission and endoscopic response.

Speaker 3

We have now secured broad formulary access for SKYRIZI in UC with sales in this indication expected to ramp meaningfully over the next several quarters. So given the momentum we are seeing across all of these indications, we will be raising our full year sales guidance once again for SKYRIZI. Turning now to RINVOQ, which is also demonstrating robust growth. Global sales were $1,600,000,000 up 47.4 percent on an operational basis. We continue to see strong prescription growth across all 7 of RINVOQ's approved indications.

Speaker 3

I'm especially pleased with our performance in IBD, where RINVOX uptake is exceeding our expectations. RINVOX is now capturing double digit in play patient share in the U. S. For ulcerative colitis as well as Crohn's disease. Both indications are now available in more than 75 countries with reimbursement and share continuing to increase.

Speaker 3

I also wanted to highlight our recent performance in atopic dermatitis where RINVOC is seeing an acceleration of in place share following recent positive data from our second head to head study versus Dupixent. As an oral option that provides rapid skin clearance and itch relief, we believe RINVOQ's strong differentiated profile will continue to compete well in this highly underpenetrated AD market. As a result of this continued strong performance, we will also be increasing the full year sales guidance once again for RINVOQ. Looking forward, we see substantial momentum for both SKYRIZI and RINVOQ including continued share gains across existing indications on top of the typical underlying market growth across room, derm and gastro. Additionally, we are making excellent progress with several new indications for RINVOQ across sizable markets that will have the potential to provide another significant revenue inflection in the second half of this decade and into the 2030s.

Speaker 3

From a competitive perspective, a key element of SKYRIZI and RINVOC's success has been their strong differentiation with compelling head to head data against several novel therapies. This includes SKYRIZI superiority versus HUMIRA, Cosentyx, OTEZLA and STELARA in psoriasis as well as STELARA in Crohn's disease and RINVOX superiority versus HUMIRA and Orencia in rheumatoid arthritis as well as Dupixent in atopic dermatitis. To further support our differentiation, we have another head to head study ongoing for SKYRIZI versus Sotiktu in psoriasis with plans also underway now for a study comparing SKYRIZI versus ENTYVIO in ulcerative colitis. So given all of these factors, we feel very confident about the long term growth prospects for both SKYRIZI and RINVOG. Turning now to HUMIRA, which delivered global sales of $2,200,000,000 down 36.5% on an operational basis due to biosimilar competition.

Speaker 3

While HUMIRA share erosion to biosimilars in the U. S. Is largely in line with our expectations, we are now seeing more HUMIRA molecule volume moving to other novel mechanisms than previously anticipated. So while this has an unfavorable impact to HUMIRA sales, we are seeing a benefit to SKYRIZI and RINVOQ, which is a very favorable dynamic for immunology portfolio now and certainly over the long term. Moving now to oncology, where total revenues were approximately $1,700,000,000 IMBRUVICA Global revenues were $828,000,000 down 8.8%, reflecting continued competitive dynamics in CLL, partially offset by higher persistency rates for existing patients.

Speaker 3

VENCLEXTA is performing extremely well. Global sales were $677,000,000 up 18.2 percent on an operational basis. This reflects strong momentum in CLL, especially in Europe, where recent guideline changes recommend combination use of VENCLEXTA plus BTK inhibitors as a preferred fixed duration treatment versus continuous BTK treatment alone. Growth is also supported by our very strong share position in frontline AML, where VENCLEXTA is the leading treatment for patients who are ineligible for intensive induction chemotherapy. We are also seeing nice sequential revenue growth from Elahir and Epkimley, which are both demonstrating strong launch trajectories.

Speaker 3

Turning now to neuroscience, where total revenues were more than $2,300,000,000 up 16% on an operational basis. VRAYLAR is demonstrating robust performance. Sales were $875,000,000 up 16.6 percent on an operational basis, reflecting continued new prescription growth in both bipolar disorder and adjunctive MDD. Within migraine, our leading oral CGRP therapies contributed $445,000,000 in combined revenue this quarter, reflecting growth of approximately 22% as we continue to see increasing prescription demand for both UBRELVI and Culipta. Global BOTOX Therapeutic sales were $848,000,000 reflecting strong performance in chronic migraine as well as the other approved indications.

Speaker 3

Finally, we are very excited for the recent U. S. Approval of Vylev, a transformative therapy for patients with advanced Parkinson's disease who are uncontrolled on oral therapy alone. As a less invasive, non surgical delivery system that can provide meaningful improvements in on time and off time, we believe VioLEV has the potential to significantly expand use beyond current device aided therapies. Sales

Speaker 4

in

Speaker 3

the U. S. For Violev are expected to ramp gradually over the next several quarters as we work to establish the appropriate Medicare coverage and benefit determination. At the same time, we are very encouraged by the interest in uptake internationally, where we have approval now in 35 countries with several 1,000 patients already on treatment. Longer term, we anticipate peak sales of Violev to exceed $1,000,000,000 So overall, I'm very pleased with the continued commercial execution and performance across the therapeutic portfolio.

Speaker 3

And with that, I'll turn the call over to Keri for additional comments on aesthetics. Keri?

Speaker 1

Thank you, Jeff. 3rd quarter global aesthetics sales were more than $1,200,000,000 representing growth of 1.8% on an operational basis. In the U. S, aesthetic sales of $791,000,000 increased by 3.9%, driven by growth from BOTOX Cosmetic as well as other brands across our broad portfolio. U.

Speaker 1

S. BOTOX Cosmetic sales were $414,000,000 an increase of 6.5% versus the prior year. Favorable pricing dynamics and facial toxin market growth more than offset modest share erosion. BOTOX Cosmetic remains the clear market leader. U.

Speaker 1

S. TUVEDERM sales were $105,000,000 JUVEDERM's market leading share was consistent with last year and the overall filler market was roughly flat to the prior year. While the U. S. Facial injectable market remains largely stable, growth is below historical rates.

Speaker 1

As a result, there is a reluctance from customers to maintain traditional toxin and filler inventory levels. Based upon the relatively higher price point of filler procedures in a still challenging U. S. Economic environment, Juvederm is more impacted by this dynamic, which can be seen in Q3 results. Internationally, aesthetic sales were $448,000,000 reflecting a decline of 1.6% on an operational basis.

Speaker 1

Within China, the economic dynamics that weighed on our results during the first half of the year have continued to impact consumer spending. This has created challenging aesthetic market conditions that have been particularly impactful to Juvederm's performance. Primarily due to this circumstance, we are moderating our Juvederm sales outlook for the year. We are encouraged by the recently announced government stimulus in China. We will continue to monitor for any further developments and how it could positively impact consumer discretionary spending and aesthetic market growth.

Speaker 1

Although the current dynamics in China are challenging, its potential remains attractive and we are committed to bring innovation to this market that will drive long term growth. Along those lines, in China, we recently received approval for the BOTOX cosmetic indication in master muscle prominence, marking the 1st toxin in the world to have this indication. This approval enables us to market and train to this important treatment option that addresses a top aesthetic concern among many Asian patients. In the U. S, we are pleased that we received FDA approval for the use of BOTOX Cosmetic to treat platysma bands.

Speaker 1

This approval positions BOTOX as the only cosmetic toxin with 4 distinct indications and enables us to market and train beyond the face for the improvement of neck and jawline appearance. We also remain excited about the opportunity for BONTA E. Based upon its rapid onset and short acting profile, BONTA E has the potential to activate new patients that are hesitant to try facial toxins, driving long term market expansion. Looking to future, we continue to see significant growth potential for our aesthetics portfolio based upon low market penetration rates, our commitment to introduce novel treatments, our strong customer relationships and our position as the global aesthetics leader. With that, I'll turn the call over to Rubel.

Speaker 5

Thank you, Carrie. Starting with immunology, where we recently began our Phase 2 Crohn's disease platform study, which will evaluate SKYRIZI in combination with several other novel biologics. This study will initially look at combinations of SKYRIZI with our anti IL-one alphabeta bispecific ludikizumab and our novel anti alpha-four beta-seven antibody ABBV-three eighty two. We are planning to include additional novel biologics in the future. Our approach in immunology has been to pursue therapies that are well differentiated and have the potential to elevate standard of care.

Speaker 5

We have clearly achieved this with RINVOQ and SKYRIZI across multiple indications, including Crohn's disease and ulcerative colitis. As we think about how the IBD market will evolve, we view dual mechanism approaches as having the greatest potential to achieve levels of efficacy that are above current standard of care. We are very excited about the potential for these combination therapies in IBD and we look forward to sharing updates as the data mature. In oncology, we continue to make very good progress across all stages of our hem and solid tumor pipeline. In the area of solid tumors, we recently submitted our application to the FDA for accelerated approval of TALISSA V as a monotherapy in patients with previously treated c Met overexpressing EGFR wild type, nonsquamous, nonsmall cell lung cancer.

Speaker 5

Once approved, TALISA V will become the 1st c MET targeted ADC to enter nonsmallcell lung cancer, a segment with limited options and where patients tend to have a very poor prognosis, especially if their tumors express c Met. We anticipate an approval decision in the first half of twenty twenty five. In the quarter, we also received a positive CHMP opinion recommending Eliheir for the treatment of platinum resistant ovarian cancer in patients with high expression of FR alpha and treated with up to 3 prior therapies. This decision was based on the positive Phase 3 Mirasol trial where Elohir demonstrated an overall survival benefit and significantly reduced the risk of cancer progression. We anticipate an approval decision in Europe in the Q4.

Speaker 5

At the recent ESMO Congress, we presented new Phase 1 data for ABBV400 in advanced non small cell lung cancer and gastroesophageal cancer. Early efficacy data from the lung cohort are promising with an objective response rate of 48% across all patients in the study and response rates ranging from 60% to 78% in patients with overexpressed c Met. We are very pleased with the level of activity we're seeing from our next generation c Met ADC, which compares favorably to TALISO V, where we've seen objective response rates ranging from 23% in medium c Met expressors to 35% in patients with high c Met expression. 400 has the potential to expand our c Met portfolio into earlier lines of therapy and lower levels of c Met expression in lung cancer. Similarly, in patients with advanced gastroesophageal cancer, 400 demonstrated promising activity with an objective response rate of 29% across all patients.

Speaker 5

This compares well against combination and single agent chemotherapy, which are the standards of care for patients in second line and third line of therapy respectively. Based on these encouraging preliminary data, we plan to begin Phase 2 studies for 400 in both non small cell lung cancer and gastroesophageal cancer. Recall, we've also advanced 400 in late line colorectal cancer and we remain on track to begin a Phase 3 study later this year. In the area of hematologic oncology, we received approval in Europe for TEP Kinley as a monotherapy treatment for patients with relapsed refractory follicular lymphoma after 2 or more lines of therapy. Epkoritumab is now the only T cell engaging bispecific approved in the U.

Speaker 5

S. And Europe to treat both follicular lymphoma and diffuse large B cell lymphoma. Moving to neuroscience, we recently received FDA approval for Vylev as the 1st subcutaneous 24 hour infusion of levodopa based therapy for the treatment of motor fluctuations in adults with advanced Parkinson's disease. Our novel subcutaneous levodopacarbidopa delivery system offers meaningful benefits over current treatment options and others that are in development. Violev delivers significant improvements in on time and off time with a non surgical 24 hour delivery system.

Speaker 5

It can deliver high levodopa doses similar to the amount provided by DUOPA and it doesn't require a combination with oral drugs to achieve efficacy. We're extremely excited to bring this transformative therapeutic option to patients in the U. S. We also recently announced positive top line results from the Phase 3 TEMPO-one trial, which evaluated fixed doses of monotherapy tavapadon in early Parkinson's disease. In the study, both doses of tavapadon met the primary endpoint demonstrating a significant reduction in the severity of Parkinson's disease symptoms compared with placebo at week 26 as measured by decreases in the combined scores for Parts 23 of the Unified Parkinson's Disease Rating Scale.

Speaker 5

Key secondary endpoints were also met in this study. We are very pleased with the emerging profile for tivapadon, which shows it is generally safe and well tolerated and it can drive strong efficacy as a monotherapy in early Parkinson's and as an adjunctive treatment in patients with more advanced disease. Results from the 2 Phase 3 studies thus far look favorable compared to other dopamine agonists on the market. And we believe tavapadon has the potential to become an important new treatment option as a monotherapy for Parkinson's patients as well as an adjunct to oral levocarbidopa. We expect to see results from TEMPO-two later this year, which is our Phase 3 monotherapy study evaluating a flexible dose of tibapadon.

Speaker 5

Results from our long term safety study TEMPO-four are expected next year. As Rob mentioned, we remain on track to share data from the 2 emiraclatine pivotal studies in the Q4. We also continue to invest in external innovation to strengthen our neuroscience pipeline. We recently announced 2 deals in this area including an expanded collaboration with Gideon Richter to develop novel targets for neuropsychiatric conditions And the acquisition of Alieta brings an anti pyroglutamate A beta antibody, which uses a unique blood brain barrier crossing and amyloid aggregate clearing technology. Alieta's lead antibody has been able to achieve encouraging levels in cerebrospinal fluid with an extended half life and the potential to be delivered subcutaneously.

Speaker 5

This molecule could become a best in class treatment for Alzheimer's disease. Alleada's novel technologies for enabling therapeutics to access the central nervous system also have the potential to be used with other programs across our neuroscience pipeline. In aesthetics, we recently received approval for BOTOX in the U. S. For moderate to severe platysma bands, marking the 1st global approval in this indication for any neurotoxin.

Speaker 5

There is currently a lack of non surgical treatments available to improve the appearance of prominent platysma bands. And we believe BOTOX will represent an important new treatment option for patients who are looking to reduce the appearance of vertical neck bands and improve jawline definition. In our novel toxin portfolio, we remain on track to submit our regulatory application for BONTA around the end of this year. Our rapid onset short acting toxin has a highly differentiated clinical profile and once approved will offer patients a novel option compared to currently available neurotoxins. So in summary, this has been a very productive year thus far for our R and D organization and we are pleased with the progress we've made advancing our broad pipeline.

Speaker 5

With that, I'll turn the call over to Scott.

Speaker 4

Thank you, Rupal. Starting with our Q3 results, we reported adjusted earnings per share of $3 which is $0.10 above our guidance midpoint. These results include a $0.04 unfavorable impact from acquired IPR and D expense. Total net revenues were nearly $14,500,000,000 reflecting robust growth of 4.9% on an operational basis, excluding a 1.1% unfavorable impact from foreign exchange. Our ex HUMIRA growth platform, which covers more than 80% of AbbVie's total sales, delivered reported growth of nearly 18%, once again exceeding our expectations.

Speaker 4

The adjusted operating margin ratio was 46.7 percent of sales. This includes adjusted gross margin of 84.4%, adjusted R and D expense of 14.2%, acquired IP R and D expense of 0.6 percent and adjusted SG and A expense of 23%. Net interest expense was $591,000,000 The adjusted tax rate 16.2%. Turning to our financial outlook. We are raising the midpoint of our full year adjusted earnings per share guidance by $0.15 and now expect adjusted earnings per share between $10.90 $10.94 Please note that this guidance does not include an estimate for acquired IPR and D expense that may be incurred beyond the Q3.

Speaker 4

We now expect total net revenues of approximately $56,000,000,000 an increase of $500,000,000 At current rates, we expect foreign exchange to have a 0.7% unfavorable impact on full year sales growth. This revenue forecast includes the following updates to select key products and therapeutic areas. We now approximate SKYRIZI global sales of $11,500,000,000 an increase of $500,000,000 due to continued strong performance across all approved indications. RINVOQ total revenue of $5,800,000,000 an increase of $100,000,000 reflecting robust uptake in IBD. U.

Speaker 4

S. Total U. S. HUMIRA total sales of $7,400,000,000 a decrease of $400,000,000 reflecting more HUMIRA molecule volume moving to other novel mechanisms including SKYRIZI and RINVOQ. IMBRUVICA totaled revenue of $3,300,000,000 an increase of $200,000,000 reflecting higher persistency rates for existing patients.

Speaker 4

VENCLEXTA total sales of $2,600,000,000 an increase of $100,000,000 reflecting momentum in both U. S. And international markets. Aesthetics global revenue of $5,300,000,000 a decrease of $200,000,000 almost entirely due to lower Juvederm volume, which continues to be impacted by challenging economic conditions in key markets. VRAYLAR total sales of $3,300,000,000 a decrease of $100,000,000 reflecting continued strong prescription demand, partially offset by modestly unfavorable channel mix.

Speaker 4

And for BOTOX, we now expect global revenue in the therapeutic space of $3,300,000,000 an increase of $100,000,000 reflecting robust demand across all indications.

Speaker 5

Moving to the P and

Speaker 4

L for 2024. We continue to forecast a full year adjusted gross margin of approximately 84% of sales, adjusted R and D investment of 14%, adjusted SG and A expense of 23.5 percent as well as an adjusted operating margin ratio of roughly 44.5 percent of sales, which includes a 2.1% unfavorable impact from acquired IPR and D expense. Turning to the Q4. We anticipate net revenues approaching $14,800,000,000 At current rates, we expect foreign exchange to have a neutral impact on sales growth. We expect adjusted earnings per share between $2.94 $2.98 This guidance does not include acquired IPR and D expense that may be incurred in the quarter and excludes any potential impact from the recently announced acquisition of Alietta Therapeutics.

Speaker 4

Finally, AbbVie's robust business performance continues to support our capital allocation priorities. Our cash balance at the end of September was nearly $7,300,000,000 and we generated more than $11,000,000,000 of free cash flow, which includes approximately $1,500,000,000 of SKYRIZI royalty payments the 1st 9 months of the year. This free cash flow fully supports a strong and growing quarterly dividend, which we are increasing 5.8 percent to $1.64 per share beginning with the dividend payable in 2025. As well as debt repayment where we remain on track to pay down the roughly $7,000,000,000 of maturities this year and anticipate achieving a net leverage ratio of 2 times by the end of 2026. Our strong cash flow also provides capacity for additional business development.

Speaker 4

We have executed more than a dozen early stage deals so far this year and we continue to assess external innovation across all of our key growth areas. In closing, AbbVie has once again delivered strong top and bottom line results. I'm very pleased with the momentum of our ex HUMIRA growth platform, including continued robust performance from SKYRIZI and RINVOC, which further supports AbbVie's long term outlook. With that, I'll turn the call back over to Liz.

Speaker 1

Thanks, Scott. We will now open the call for questions. We are aware of a peer earnings call that begins at 9 a. M. Central, so we will do our best to wrap up our Q and A right around the top of the hour.

Speaker 1

So in the interest of hearing from as many analysts as possible, please limit yourself to just one question. Operator, first question, please.

Operator

Thank you. Our first question comes from Chris Schott with JPMorgan. You may ask your question.

Speaker 6

Great. Thanks so much for the question and congrats on the results. My question was really just centered around 2025 and just some preliminary outlook there. I guess specific question, you mentioned HUMIRA volumes are maybe shifting over to newer drugs. You commented all about just in terms of where the Street sits currently with HUMIRA.

Speaker 6

I think consensus number is up $6,800,000,000 Is that a reasonable forecast? Or is that something you could see higher erosion given what's happening with HUMIRA? And then bigger picture kind of tied to that, the mid single digit top line growth, it sounds like the trends you're seeing here may be a net positive where maybe HUMIRA volumes are declining, but that's largely moving over to SKYRIZI and RINVOK. I just want to get some context of is that mid single digit target still a reasonable one to think about for AbbVie next year? Thank you.

Speaker 2

Thanks for the question, Chris. This is Rob. I'll start and then I'll have Jeff supplement. So, yes, we are very confident in that robust mid single digit growth both top line, bottom line for 2025. I think you've interpreted correctly that the trends we're seeing are net positive and that we're seeing over performance from SKYRIZI and RINVOQ more than offsetting the dynamics with HUMIRA.

Speaker 2

And so as we look at consensus that's probably not reflected. So I think it's fair to say, there's a shift that's required there, but we're very pleased with the strong uptake for SKYRIZI and RINVOC. As I mentioned in my remarks, we have now delivered guidance increases of $1,300,000,000 for SKYRIZI and RINVOC in total. We're seeing tremendous momentum particularly with the IBD indications across really all indications, but particularly in IBD and we are starting to see the dynamic with the overall HUMIRA molecule where there is the switching that we're seeing now to other mechanisms including SKYRIZIIN RUN book, which is a long term very positive benefit. So as we look at the business, we're very well positioned.

Speaker 2

Essentially 2 years after the U. S. HUMIRA LOE, we'll be returning to robust top line and bottom line growth, and really performance across many parts of the business, not just SKYRIZI and RINVUX. You've seen us perform very nicely in oncology. We've obviously over performed our expectations in oncology, very pleased with the earlier returns on ELE here.

Speaker 2

VENCLEXTA is performing exceptionally well. The guidelines changes in Europe are positive as we think about the combination opportunities with BTK inhibitors. So VENCLEX is going to be strong. Epkinley is performing very nicely as well. And then when I look across the neuroscience franchise, Vraylar is a strong grower.

Speaker 2

We're very pleased with the migraine portfolio. Obviously, very excited about Cereval and doing a number of deals now on the early pipeline both with Gideon Richter and Aliada that really fortifies the long term view for neuroscience as well. And then with aesthetics, while it's below our expectations for this year, obviously the economic conditions have dictated that. We still have tremendous confidence in the long term outlook for that business. But as we look at 2025, we're very confident in our ability to return to that robust mid single digit growth.

Speaker 3

Yes. Thanks, Rob. And I'll just add a little bit more flavor. It's Jeff. So we saw this trend start to emerge in terms of this compression of the, let's say, the ADAM molecule or the ADAM market, the HUMIRA plus biosimilars, just prior to the CVS event and then it accelerated over Q2.

Speaker 3

And again, we saw it throughout Q3. So that's why we've adapted our approach here. Other than this dynamic, the biosimilar dynamics are playing out really exactly as we anticipated. And you can see this compression in the IQVIA data. So really the shrinking of the HUMIRA or the ADa market is something that's quite clear.

Speaker 3

It's a little difficult to quantify over time with full precision, but we can see that the molecule continues to decline sequentially and we continue to see strong share gains as I highlighted for SKYRIZI and RINVOQ. So this incremental flow from the molecule compression is clearly a contributing factor to some of the over performance that we saw in Q2 and Q3, but it's really only one of several. We've also had significant incremental investments in the consumer space, the sales force approaches we've taken, Chris, the integration of the head to head data I talked about. And certainly now we're starting to see the impact of the UC launch. So when we put all that together, we think that the dynamics are net net quite positive overall.

Speaker 3

And as Rob said, we're still looking good for 2025.

Speaker 1

Thank you, Chris. Operator, next question please.

Operator

Thank you. Our next question comes from Mohit Bansal. Your line is open. You may ask your question.

Speaker 7

Awesome. Thank you very much for taking my question. Just wanted to touch upon the trial you are running head to head against ENTYVIO. Could you help us understand based on preclinical or early data, what gives you confidence there? And are you looking at non inferiority or potential superiority over ENTYVIO there?

Speaker 7

Thank you.

Speaker 5

Hey, Mohit, it's Rupal. I'll take that one. So when we look at the data, in particular, I think Jeff highlighted this, in ulcerative colitis with SKYRIZI in this naive patient population, this is a patient population that hasn't seen biologics or other advanced therapies like JAK inhibitors. The endoscopic improvement and this is in label, the 76% in the maintenance portion of this. So it was quite high, in fact, higher than what we've observed even with RINVOC.

Speaker 5

So that gave us a good amount of confidence that we have the potential to differentiate with all other assets. You heard about the SKYRIZI versus, ustekinumab head to head in Crohn's disease. But this one gives us a unique opportunity there to go head to head with vedolizumab, especially looking at endoscopic improvement. So for that particular endpoint, you asked about the type of endpoint. There we would think about superiority because of it being an objective endpoint.

Speaker 5

Sometimes with symptoms like clinical remission, these could bounce around. That may be one where we consider as non inferiority. But I would say endoscopic improvements, in the field are now believed to be highly predictive of long term outcomes. So that would be how we're looking at this, Mohit.

Speaker 7

Thank you very much. Appreciate it.

Speaker 1

Thanks, Mohit. Operator, next question please.

Operator

Thank you. And this question comes from Vamil Divan with Guggenheim Securities. You may ask your question.

Speaker 8

Great. Thanks for taking the question. So, yeah, I'll keep you just one on imraquidine. Just getting a lot of questions from investors kind of leading up to that data release. So, maybe you can just the level of set expectations on what you're hoping to see from the data, especially obviously now we have the approval from Bristol with COPIMENTI.

Speaker 8

Just kind of what are you thinking in terms of efficacy safety profile relative to that competitor and also on the liver testing requirement that they had at initiation, is that something you'd expect as well based on your data? And then just tying to that just in terms of the group data releases, do you expect to get one press release Or do you think you're combining both studies? Or should we still expect for 2 separate releases? Thank you.

Speaker 5

Vamil, it's Rupl. I'll take that one. So a couple of things. Maybe starting with what we've observed with the approval. So we were encouraged by the lack of a boxed warning, meaning there's a recognition that this is a unique mechanism of action looking specifically at the muscarinic class.

Speaker 5

So we were pleased to see that. I think what was notable for us was the GI adverse events, including how that would play out in terms of longer term tolerability. Also anticholinergic effects bladder retention that was something I guess we did not anticipate. You mentioned hepatic monitoring that was something that we didn't anticipate. The other thing that was notable is along with the BID dosing, there is a food effect.

Speaker 5

So you have to wait a certain period amount of time when you eat and after you eat when you can take the pill. So when we think about our profile, we continue to be encouraged with imracludine being a single agent once a day, no food effect. We don't see the extent of GI effects. We don't and we have not observed in the Phase 1b data any bladder issues. And when we had looked at that 1b data, we didn't see any hepatic issues, but we don't anticipate any type of laboratory monitoring.

Speaker 5

Also, we were also thinking about neurodegeneration associated psychosis. And these patients are typically older and likely more sensitive to anticholinergic effects. So we continue to see an opportunity in that patient population as well. So we've stated that the data will read out here in the next couple of months in the quarter. The same team is working on wrapping up these two studies.

Speaker 5

So depending on how far apart the data are, we'll probably determine as you stated, is it 1 or 2 press releases. It's a little early right now for us to tell you is it going to be 1 or 2. But if they're going to be close together, it's potentially going to be 1.

Speaker 1

Thank you, Vamil. Operator, next question please.

Operator

Thank you. Our next question comes from Terence Flynn with Morgan Stanley. You may ask your question.

Speaker 7

Hi, thanks for taking the question. Maybe a 2 part for me. Just wondering if you can, I'm assuming contracting is now wrapped up, if you can comment at all on how to think about SKYRIZI and RINVOC formula positioning and pricing just high level for 2025? Thank you.

Speaker 3

Yes. Hi, it's Jeff. So yes, contracting is very, very close to wrapping up. We have a few more nuances and so typically that may take another month or so. Overall, we're making very good progress on contracting next year.

Speaker 3

So in terms of what we've highlighted in the past is we do not anticipate any material change for SKYRIZI and RINVOC in terms of the access for next year across Medicare or the commercial plans. We have quite high very broad access and we assume that that will continue. In terms of what we've highlighted to anticipate, we've said that we do have over our near term and LRP sort of a negative pricing environment, but it's modest. It's nothing like we saw many quarters ago where we had 7 indications. So we said from a rebate perspective, low single digit changes is a reasonable assumption that we feel confident.

Speaker 3

In despite we're not fully complete, I think that's a fair assessment at this point.

Speaker 1

Thanks, Terrence. Operator, next question please.

Operator

Thank you. Our next question comes from Chris Shibutani with Goldman Sachs. You may ask your question. And Chris Shibutani, your line is open. You may ask your question.

Speaker 9

Apologies, I was on mute. Thank you for the question. All the comments you've made about SKYRIZI or INVOQ and the molecule switching are very helpful. Just curious as we think on the forward about other potential mechanisms and modalities in particular. I think we have competitor oral data that's coming up.

Speaker 9

Interested to hear your thoughts in terms of that modality difference as well as how you might rank your optimism for some of the new mechanisms of action? I believe you have a TL1A as well in your pipeline though earlier stage. Thank you.

Speaker 5

Hi, Chris. It's Rupal. I'll take that one. With respect to the oral, I'll take us back to the SKYRIZI head to head that occurred with a primelast, which is also an oral. The data were substantially higher from an efficacy standpoint for SKYRIZI as was the tolerability along with when we asked patients what did they prefer, they actually preferred quarterly subcutaneous dosing.

Speaker 5

So I would think about it that way as well. Now the question would be, it's a similar mechanism, could the efficacy be better than what has been observed with a permalast in psoriasis? Well, what we saw in the Phase 2 data, my recollection still is that SKYRIZI is a full 50% higher when it comes to full skin clearance at a PASI 100. And that's where the bar is now at PASI90 and PASI100. So we still see an efficacy advantage.

Speaker 5

Also the data I'm sharing are Phase 3 SKYRIZI data. The data that we saw for the oral twenty 3 was from Phase 2. So there is a reasonable potential that the efficacy data tend to settle down when you go to a broader patient population, especially those that have had longer standing disease or have seen other therapies like other biologics. So we continue to feel very good and optimistic about our profile versus any emerging competition. Also, we think about our assets from a global standpoint.

Speaker 5

And when you think about majority of the countries, they are very driven by efficacy to gain access. And in the oral space, we don't really see it across the globe. Maybe there's a couple of countries. I think Jeff has mentioned the U. S.

Speaker 5

But that space may be referred to as a pre biologic space. So maybe more of an influence on the TYK2 or in a premelast is how we see it. In terms of other mechanisms that we like, as I mentioned, we like anti IL-twenty three the way it's delivered with SKYRIZI, the depth of response, the high durability and the convenience with quarterly dosing. If we can couple that with other assets as part of our combination approach, we think that's going to be extremely competitive in the future. Mechanisms like TL1a, we think are going to be important, especially from a combination approach, which we have one internally.

Speaker 5

We think the ulcerative colitis data are encouraging, but from a monotherapy standpoint, not differentiated, especially when you look at the SKYRIZI data that I mentioned earlier and RINVOC. And then in Crohn's, something like TL1a, we think it really does need a combo. So that'll be part of our platform along with our novel alpha-four beta-seven, we think that's also a good combo. And then we've also provided very strong data in hidradnida suppurativa with our IL-one alpha beta ludikizumab. And we've seen some preclinical signals that IL-one beta could be a driver of disease and resistance to other biologics.

Speaker 5

So ludikizumab will also be part of the combo in our IBD platform. So that's just some of the mechanisms that we're excited about. There's several others that are early in the pipeline and we will give you more information about those as the data mature. Thanks, Chris. Thanks for about those as the

Speaker 1

data mature.

Operator

Thanks, Chris.

Speaker 1

Thanks, Chris.

Speaker 2

Operator, next question please. Thank you.

Speaker 1

Our next question comes from Trung

Speaker 10

Nguyen with

Operator

UBS. You may ask your question. Hi, guys.

Speaker 11

Thanks for taking my question. Just on the aesthetics business, in the Q and A, you did mention that you still have a tremendous amount of confidence hitting that longer term guide here. I'm curious on how dependent this is on the economic environment getting better and getting better quickly. So you've moderated your JUVEDERM outlook this year because it's not being good. If next year is another challenging economic year, could we see that $9,000,000,000 in 2029 being moderated or even pulled?

Speaker 11

Just what's giving you confidence? Thank you.

Speaker 2

Thanks for the question. This is Rob. I'll take that one. So as we think about the long term guide, it was just greater than $9,000,000,000 by 2029, you need to believe that you can have essentially a compound growth around 11% to get there. If we look at the historical growth of this market, it's been, let's say, call it low double digits, low teens.

Speaker 2

As we look at it going forward, we think probably a more prudent assumption is when we see the recovery, something more in the high single digits, right? You need something beyond just the market recovery to get there. And when we look at the innovation that we're bringing particularly with the short onset, short acting or fast onset short acting BONTI that we expect to launch in 2026 that could really transform the market because if you think about the number one barrier for patients is fear of an unnatural look That could really unlock a part of the market, that's dormant right now, plus it could also lead to share gains. And so I think we need to see, 1, how the market recovers, I would say, 2025 and 2026 and then ultimately see how the Bon T launch ramps in 2026. At that point, we'll have a better sense of the $9,000,000,000 as we sit here today.

Speaker 2

If you believe that the market will recover to high single digits and we have a lot of confidence in Bon T, we still believe we can get there, which is why we're not updating that guidance. But I would expect us to reflect more on that more likely in the 2026 timeframe than in 2025.

Speaker 1

Thanks, Trung. Operator, next question please.

Operator

Thank you. Our next question comes from Geoff Meacham with Citi. You may ask your question.

Speaker 12

Good morning, everyone. Thanks for the question. Had a bigger picture one for Rob. So when I look at your therapeutic areas, eye care stands out as one that's pretty modest contributor today and also down the road. How would you rank that business strategically?

Speaker 12

And then related when you look at BD going forward, are there other TAs that you're looking at that could be additive, just thinking specifically maybe metabolic or cardio? Thank you.

Speaker 2

Thanks for the question, Jeff. So this is Rob. So yes, I mean, our main focus is our 5 key growth areas, which includes eye care, immunology, oncology, neuroscience, aesthetics and eye care. And we participate in large markets with high unmet need that have great growth potential. And within those 5 verticals, we're building depth across 24 core areas.

Speaker 2

That does include eye care as well. I mean, think about diabetic retinopathy, wet AMD, prescription dry eye medications. And so eye care does play an important role, albeit it's not as high of a growth driver as the other 4 verticals, but it is part of our 5. And that ultimately guides both our internal R and D investments as well as our BD efforts, which as you know continue to be very active. So far this year, we've executed 15 deals along those lines, really focused more on early stage opportunities to drive growth in the next decade.

Speaker 2

So that's our primary focus. Now if we see an opportunity for differentiation in a large market with high unmet need like metabolics, we would consider pursuing it, especially if we can help drive growth in the next decade. But again, it would be more opportunistic. We have to see differentiation and right now it's not our primary focus. But again, we're open to more sources of growth for the next decade if we see differentiation that we can create value.

Speaker 2

And we certainly have the financial wherewithal to pursue those opportunities.

Speaker 1

Thanks, Jeff. Operator, next question please.

Operator

Thank you. Our next question comes from James Hsin with Deutsche Bank. You may ask your question.

Speaker 13

Good morning, guys. Thanks for taking our question. For emiracadine's readout, I think there's a question on how much erosion could be anticipated. I know you mentioned that the team, the same team that was originally working on the Phase 1b is wrapping up studies and so forth. But there's been some other data that has copied some of, Cerebell strategies such as high baseline pans and so forth and placebo effect was still kind of surprisingly higher than it should be.

Speaker 13

Is there any insight on managing this placebo effect? Thank you.

Speaker 5

Thanks, James. It's Rupal. When we did our thorough diligence, that was a major question that we and the broader team had. So you bring up a good point. Some things that we observed in those two studies that will be the pivotal readouts were what Cervel was strategically doing.

Speaker 5

One thing was limiting the number of countries, limiting the number of sites, central review for eligibility criteria, training of raters, certifying those raters, recertifying raters, monitoring blinded data with respect to site activity. So I think those are important factors that could drive placebo in either direction. So what we observed was, we would say a good control or at least the best one could do to manage placebo responses. So it's hard to know what if there's any erosion until we see the data. But the effect size that we did see in the Phase 1b was a little over 12 points.

Speaker 5

So we think that was a strong separation. And even if that were to go down a little bit, we still feel that based on the safety profile and tolerability profile, this could still be very, very competitive even if we saw a droppage in some point on the efficacy side.

Speaker 1

Thanks, James. Operator, next question please.

Operator

Thank you. Our next question comes from Carter Gould with Barclays. Your line is open. You may ask your question.

Speaker 14

Great. Good morning. Thanks for taking the questions. I was hoping to follow-up a little bit on the Aliant acquisition, sort of what differentiation you saw over some of the other enhanced brain delivery kind of approaches there that gave you confidence? And maybe we've seen AbbVie take a number of shots on goal across Alzheimer's here.

Speaker 14

Seems pretty central to your longer term neuroscience portfolio. Can you maybe just again put that in some broader context as you think about the TA strategy longer term? Thank you.

Speaker 5

Sure. It's Rupal. I'll take that. Yes, we've been investing for a number of years in the space. And in addition to the recent deal, we'll have an option readout with Elektor and Trem2 coming up.

Speaker 5

We have SV2A molecule that would look at cognition and other symptoms. Emiraclidine could participate in that space from an Alzheimer's psychosis standpoint. We have other pipeline assets that are looking at tau, intracellular and even an approach looking at extracellular tau. We did have our own A beta monotherapeutic antibody, which we did read out. It did look good, but it wasn't fully differentiated.

Speaker 5

And moving on to the Alietta deal, what we see there is the ability to access the CSF at what we would say at this stage at higher concentrations than maybe other competitors. So we think that's a good thing. The other aspect that we like is an extended half life. So that could lead to convenient dosing. And if this approach plays out, then one could consider having subcutaneous dosing, even getting out to monthly.

Speaker 5

And if the efficacy is high because of deeper brain penetration that could result in lower levels faster and a better able to see cognition benefits in a year or 18 months. So those are some of the benefits that we would see. The other benefit would be getting to the parenchymal tissue more broadly and that could have a reduction in ARIA, which is probably what is disallowing this to really take off. It's very challenging to take an elderly family member to get multiple scans and worry about them having stroke like symptoms. So that would be something else we believe we can address with this asset of having a strong safety profile, tolerability, ease of onboarding and high efficacy and ultimately strong benefits on cognition.

Speaker 2

And this is Rob. I'll just add on here as we think about strategically about the neuroscience franchise. I mean, I think about it as having really 4 main segments. You have psychiatry, migraine, Parkinson's and then neurodegeneration. And if you look at what we've done to build out the long term growth outlook for this franchise, obviously in psychiatry between Cerevel, Gideon Richter, we also had the early stage opportunity with Gilgamesh, really investing in longer term growth in psychiatry.

Speaker 2

We have actually a very strong franchise in migraine with the oral CGRPs as well as BOTOX Therapeutic. In Parkinson's, now with the launch of Violev, which is performing very nicely outside the U. S. And we expect will also perform nicely in the U. S.

Speaker 2

The early Phase 3 data we've seen so far for davapadon, the mitokinin disease modifying approach is early and Parkinson's another investment we've made. And then in Alzheimer's now with Alleada is another I'd say long term investment we're making to grow the neuroscience franchise. There's also adjacencies like ALS, MS that we're interested in that we have some partnerships that we'll continue to pursue. And so we see neuroscience as an important long term growth driver for the company. We're obviously investing heavily across a number of areas.

Speaker 2

But we think about really in those 4 categories. And so it's one that we're obviously very excited about the future prospects for.

Speaker 1

Thanks, Carter. Operator, next question please.

Operator

Thank you. Our next question comes from Steve Scala with Cowen. You may ask your question.

Speaker 5

Thank you so much. I'm a bit surprised that how Cervel was such a focus in the prepared remarks given the pending imraclidine data, which very much will color views of the Ceravell acquisition. Should we conclude you have increased confidence in or insight into the pending data? And related to that, KOLs seem to be looking for an effect size of 0.6, but based on what was just said, that doesn't even seem to be a possibility. So, and any thoughts would be appreciated.

Speaker 5

Thank you.

Speaker 2

This is Rob and Rupal can take the second part. I'll take the first part of the question. So Steve, in the prepared remarks, we were talking about the quarter. We obviously closed the Cereval transaction in the quarter. That's a significant event.

Speaker 2

We also did see, Phase III trial results for tivapadon, so that was important to comment as well. As we've mentioned, we expect the 2 pivotals from araclatine to read out in the Q4. So I wouldn't read too much into it other than it was an important event to highlight in the quarter.

Speaker 5

Yes. And it's Rupal. I agree. We have 2 positive Phase 3 studies with tivapadon. And in the oral space, I don't know if we've seen a new mechanism that could have this type of approach in a very long time.

Speaker 5

So it is important to discuss that because the unmet need continues to be very high and Parkinson's is a place where we believe we can meaningfully participate in. On the effect size question, when we look at the 1b data, it was more than a 12 point differential. So we have observed sometimes a decrement and the question was around if placebo responses move up a little bit. So that being said, we still think we can maintain a very strong effect size coupled with the safety profile. Remember that the issue here in therapy isn't just about efficacy, it's about maintaining these patients on a drug that they can tolerate.

Speaker 5

And the majority of these patients don't last very long and cycle through these assets and even stop these, especially atypicals without even letting their physicians know and then go on to have a flare and end up in the hospital. So we think about this as a benefit, risk and tolerability profile. And from a weight, metabolic, motor symptoms, sedation, these are major problems with atypicals. And with something like imraclidine, we feel that we can still fully differentiate. So I don't know if I'd read into any concerns other than maybe seeing an effect that's slightly different than what we saw in Phase 1b.

Speaker 5

But beyond that, we think this could still be very competitive.

Speaker 1

Thanks, Steve. Operator, we have time for one final question.

Operator

Thank you. Our final question comes from Louisa Hector with Berenberg. You may ask your question.

Speaker 10

Hello. Thanks for taking my question. Just on VRAYLAR, could you expand a little on the comments of the channel mix pressure in Q3 and how that will play out as we move forward? And perhaps just a quick comment on the extension of the collaboration with Gideon Richter and why you went down that route? Thank you.

Speaker 4

Lisa, this is Scott. I'll take the question regarding Vraylar. So it was essentially it was a channel mix change. It was slight. I would tell you that really kind of had accumulated over the course of the year and that's why we made we decided it made sense to make the adjustment.

Speaker 4

So as that channel mix change, we saw a little bit of negative price as a result of that. So we took down the VRAYLAR guidance by $100,000,000 Now I would note in neuroscience in totality that was offset by the raise in BOTOX Therapeutics. So neuroscience in our therapeutic growth area guide is stable. So maybe the second question will go to Rupal.

Speaker 5

Yes. It's Rupal. We expanded further. We've had strong partnership. They're a terrific organization.

Speaker 5

We have a follow on to Vraylar that's more D3 meaning that will start entering the clinic quite soon in Phase 2 looking at bipolar depression and MDD as well as generalized anxiety disorder. As Rob described as part of our neuroscience strategy, psychiatry is a big part of that and having a deeper relationship with Gideon Richter will allow us to have potentially even more assets in depression, in bipolar disorder, in schizophrenia and anxiety and potentially other adjacent indications that we continue to be interested in because the unmet need continues to be very high.

Speaker 1

Well, thank you, and thanks, Shirley. That concludes our conference call today. If you'd like to listen to a replay of the call, please visit our website at investors. Abbey.com. Thanks again for joining us.

Operator

Thank you. And this concludes today's call. We thank you for your participation. And at this time, you may disconnect your lines.

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Earnings Conference Call
AbbVie Q3 2024
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