The operator introduces the AbbVie Second Quarter 2024 Earnings Conference Call and the participants. Liz Shea, Senior Vice President, Investor Relations, introduces the speakers and mentions that some statements may be considered forward-looking. AbbVie cautions that these statements are subject to risks and uncertainties. Non-GAAP financial measures will be used, which will be reconciled with GAAP measures. After prepared remarks, there will be a question-and-answer session. AbbVie's new CEO, Rob Michael, thanks everyone for joining.

AbbVie is performing well in all aspects of their business, with a rapid return to revenue growth and strong performance in their ex-Humira growth platform. They are expecting top-tier high single-digit compound growth through the end of the decade and are making progress with late-stage development in additional indications. In immunology, their leading portfolio is exceeding expectations, and they have several promising pipeline programs in oncology.

AbbVie's therapies for migraine and mood disorders are gaining market share and the pending acquisition of Cerevel will further enhance their neuroscience pipeline. They have also been actively pursuing business development opportunities in immunology, oncology, and neuroscience. The company's results have exceeded expectations and they are raising guidance for the second time this year. The immunology portfolio, including Skyrizi and Rinvoq, has performed well with strong sales and clear differentiation from other therapies.

AbbVie's Skyrizi and Rinvoq are experiencing strong growth in the psoriasis market, with Skyrizi leading in total prescription share. In the dermatology segment, Skyrizi has achieved a 15% share in the U.S. biologic market. In the rheumatology market, Rinvoq is gaining share in various indications, including atopic dermatitis. In the gastroenterology market, both Skyrizi and Rinvoq are expected to double their sales in IBD this year and have achieved a combined in-place share of over 40% in Crohn's disease. Skyrizi is also gaining in-place share leadership in Crohn's, with a 13-point lead over Stelara. The brand's high efficacy and positive trial data have contributed to this success. Skyrizi is now being commercialized for ulcerative colitis in the U.S. and has received positive feedback from gastroenterologists. Rinvoq is also seeing strong adoption in UC, with approval in 75 countries and gaining momentum in reimbursement and share.

The company's commitment to transforming treatment for IBD is demonstrated by their two novel therapies, with differentiated levels of efficacy. Humira's global sales were down due to biosimilar competition, but the company expects it to maintain parity access for most patients this year. Oncology revenues were over $1.6 billion, with strong performance from Imbruvica and Venclexta. Epkinly is also performing well and has received approval for a second indication. Neuroscience revenues were up 15.2%, driven by double-digit growth of Vraylar, Ubrelvy, and Qulipta, as well as strong performance from Botox Therapeutic.

The total global sales for the company were $814 million, showing a 9.6% increase. The company is pleased with the launch of 951 in Japan and Europe and looks forward to bringing it to the U.S. The aesthetic division had sales of $1.4 billion, with growth of 2.8% on an operational basis. In the U.S., sales increased by 4.4%, driven by Botox Cosmetic and Juvederm. The international market saw flat sales, with declines in China and growth in other markets. Economic challenges have impacted Juvederm sales more than other areas of the portfolio.

The company expects its aesthetics portfolio to continue performing well globally, but has moderated its outlook for the remainder of the year due to lower market growth trends. However, they remain confident in the long-term growth potential and have plans to launch new treatments in key markets such as China and the U.S. In terms of their pipeline, they have received FDA approval for Skyrizi in ulcerative colitis, making it the only IL-23 specific inhibitor approved for both ulcerative colitis and Crohn's disease.

In this paragraph, it is mentioned that Skyrizi has been approved for the treatment of moderate to severe inflammatory bowel disease, strengthening AbbVie's position in the market. The drug has also received a positive opinion for the treatment of ulcerative colitis in Europe, with a decision expected soon. The company has also submitted regulatory applications for Rinvoq and giant cell arteritis, with approval decisions expected next year. A Phase 3 study has been initiated for lutikizumab, a potential treatment for hidradenitis suppurativa, and the company has announced two additional immunology transactions. These include the acquisition of Celsius Therapeutics and a license agreement with FutureGen to develop a next-generation treatment for IBD.

The company has made four immunology deals this year and is making progress in their heme and solid tumor pipeline. They recently announced positive results for their Phase 2 study of Elahere in ovarian cancer and will be submitting for accelerated approval for Teliso-V in non-small-cell lung cancer. The company expects a decision on the submission in 2025 and is currently conducting a Phase 3 study for potential accelerated approval.

The company is seeing positive results for ABBV-400, a next generation c-Met ADC, in late-line colorectal cancer and plans to begin a Phase 3 study later this year. There are also promising signals of activity in non-small-cell lung cancer and a Phase 2 program is planned for lung cancer. The company has received accelerated approval for Epkinly as a monotherapy for relapsed refractory follicular lymphoma and plans to begin a Phase 3 study for ABBV-383 in third-line multiple myeloma. ABBV-383 has the potential to become a best-in-class BCMA CD3 bispecific with deep, durable responses and low incidence of adverse events.

The company has an ongoing Phase 1 study for multiple myeloma and will begin Phase 2 combination studies next year. They received a complete response letter for their 951 regulatory application in the U.S. due to issues at a third-party manufacturing site, but there were no issues with the drug itself. They have discontinued development of ABBV-916 as a standalone antibody for Alzheimer's disease due to competition. They are on track to close the Cerevel transaction and have updates on emraclidine and davapidon studies coming later this year.

The company has received approval for Botox in China for masseter muscle prominence, making it the first global approval for any neurotoxin in this indication. This will help to build their portfolio in the face-shaping segment and they anticipate high demand in China. They also have a regulatory application under review in the US for another novel indication and expect an FDA approval decision later this year. They are also on track to submit a regulatory application for BoNT/E by the end of the year, which would offer a differentiated clinical profile compared to currently available toxins. In the second quarter, the company reported adjusted earnings per share of $2.65, which was $0.10 above their guidance midpoint. Total net revenues were $14.5 billion, reflecting strong growth from their ex-Humira growth platform. Adjusted gross margin was 85.2% of sales, while adjusted R&D and SG&A expenses were 13.3% and 22.9% of sales, respectively.

The company's adjusted operating margin ratio was 42.6%, with a negative impact from acquired IPR&D expense. Net interest expense was $506 million and the adjusted tax rate was 18.8%. The company is raising their full year adjusted earnings per share guidance by $0.10 and expects total net revenues of approximately $55.5 billion. The increase in revenue is mainly driven by the company's ex-Humira growth platform, with strong performance in Skyrizi, Rinvoq, Venclexta, and aesthetics. However, sales for Botox and Juvederm are expected to be lower due to slower market growth. The company forecasts a gross margin of 84%, R&D investment of 14%, and SG&A expense of 23.5% for 2024.

The company anticipates an adjusted operating margin ratio and non-GAAP tax rate in line with previous expectations, with an estimated impact of acquired IPR&D expenses. They also forecast net revenues and adjusted earnings per share for the third quarter, but do not include potential acquired IPR&D expenses. The company is pleased with their performance and momentum heading into the second half of the year. The analyst asks for an update on the company's outlook for 2025, but the company has not yet provided guidance.

The company is expecting to see robust revenue growth in the future despite challenges from Medicare Part D redesign and continued erosion of Humira. They are anticipating $6 billion in growth from their growth platform in 2024, with $5 billion coming from Skyrizi and Rinvoq. The neuros franchise is also expected to grow by over $1 billion and the aesthetics sector is recovering from economic headwinds. In 2025, they anticipate further growth from Skyrizi UC and 951. However, the erosion of Humira will still be a factor, with an expected $4.5 billion decline in 2025. The company is confident in their ability to overcome these challenges and return to robust growth. As for EPS, it is expected to grow in line with the revenue growth, with operating margin expansion on the SG&A line.

The speaker discusses the growth and financial outlook for the company in 2025, mentioning the impact of interest expenses from financing for two new acquisitions. The next question is about the performance of two drugs, Rinvoq and Skyrizi, in the quarter and their price versus volume dynamics. The speaker notes that the results were stronger than expected due to consumer investments, sales force adjustments, and an increase in share of voice. The speaker also mentions the impact of Humira switching on Rinvoq and Skyrizi, with about 20% of patients moving to other medications. The second question is about the company's immunology portfolio and the potential impact of biosimilar Humira on Rinvoq and Skyrizi.

The company is seeing strong volume and share capture for two of their agents, and negotiations for contracts for 2025 are well underway. They already have some multiyear contracts in place and expect to maintain parity access for Humira next year, although it will be lower than this year due to the adoption of biosimilars. They are aware of the trend of switching to new mechanisms and have factored in the impact of CVS, but are also monitoring for potential impact beyond CVS.

The company is expecting a downside for Humira and an upside for Skyrizi and Rinvoq, which is a positive tradeoff. They anticipate strong access for both brands and stable pricing. The company also expects earnings growth to be in line with revenue growth due to efficiencies in SG&A. There may be divestments or concessions related to the Cerevel deal.

The company expects an expansion in operating margin, which will drive earnings growth in line with revenue growth. However, the recent bond offering for Cerevel and ImmunoGen will offset this expansion. The company is making progress with the FTC for the Cerevel acquisition and expects it to close soon. The company's business development priorities are focused on balancing long-term investments with near-term earnings growth.

Rob Michael, the company's executive, responds to a question about their priorities and balancing short-term and long-term investments. He mentions that the company is currently positioned for robust growth and is delivering strong revenue growth. They are focused on early-stage assets and have completed several deals this year to drive growth in the next decade. They also plan to add depth to their pipeline in core areas to ensure strong growth in the future. The company has a clear line of sight for top-tier growth this decade and wants to position themselves for strong growth in the next decade as well.

Chris Shibutani asks about procedure volumes and pricing in the aesthetics business. Carrie Strom responds by discussing the market dynamics for facial injectables, including a recovery in market growth and a price action taken at the beginning of the year. She also mentions upcoming strategic shifts in pricing promotions for the second half of the year and stability in market share.

The speaker discusses the shift in promotional activity and the reversal of inventory destocking in the second quarter. They also mention upcoming promotional activities for Botox and Juvederm. The next question is about the company's pipeline in the inflammatory bowel disease (IBD) space, specifically regarding oral drugs and potential combinations. The speaker mentions a recent deal with Landos and an anticipated readout for their NX-13 asset.

The company is seeing good outcomes in ulcerative colitis with their asset that works through NF-kappa-beta and has shown reductions in various inflammatory markers. While it may not have a boxed warning, there are still opportunities for combinations with other drugs like Rinvoq. The company sees potential in the second and third line segments of IBD and plans to conduct a platform study to test various combinations, including their own internal alpha-4 beta-7, to improve efficacy. The unmet need in IBD is high and the company is confident in the potential of their asset.

The analyst asks for more information about the trend of patients switching to newer biologics after discontinuing Humira. The presenters explain that this phenomenon is happening in multiple therapeutic areas and has been accelerated by the availability of biosimilars. They also note that there has been a significant compression of the overall adalimumab market since the exclusion of Humira by CVS. This trend is being closely monitored.

The speaker discusses the growing use of biosimilars and how it affects the sales of their products. They mention that physicians may be hesitant to switch patients to biosimilars, leading to continued use of their products. The speaker also mentions that this trend is seen across all indications, particularly in rheumatology and dermatology. However, they will continue to monitor the situation and adjust their strategies accordingly. The speaker then addresses a question about how they are managing the growth of their products in the inflammatory bowel disease market, specifically in regards to potential cannibalization and synergies between their products Skyrizi and Rinvoq.

The speaker discusses the company's approach to promoting their two drugs in different indications, highlighting the advantages of each and monitoring cannibalization. They are pleased with their execution and results. The next question asks about the 2024 sales guidance, which suggests similar growth in the second half of the year.

The company has raised its revenue guidance by $500 million, with strong momentum in the business and operational growth of 4% in the first half of the year. The second half is expected to have slightly higher growth, driven by the ex-Humira growth platform. The company also has strong parity access in all channels for biosimilars.

The speaker discusses the company's outlook for the year and mentions that the three-quarter approach is reasonable. They also note that the growth rate may be lower next year and will likely be around 0.5 point. The speaker then takes a question from a participant and talks about the potential for growth in the aesthetics market, stating that the long-term guidance of $9 billion in 2029 remains unchanged. They also mention the potential of multispecifics in immunology and the company's strong bispecific platform.

The speaker discusses the low penetration in global markets and the potential for growth due to new innovations in the space. They also mention the potential for market growth with the introduction of new indications for Botox and a quick-acting toxin. The next speaker talks about their excitement for bispecifics, specifically lutikizumab, which targets multiple cytokines and has shown strong efficacy in a severe population. They also mention the potential for bispecifics through combination therapies and multispecific approaches.

The speaker is discussing the company's approach in immunology and oncology, as well as their partnership with Tentarix. They then take a question about the expected growth for Vraylar, a medication for bipolar disorder and major depressive disorder. The speaker mentions that Vraylar is performing well and is the most preferred agent for bipolar disease. They also mention their focus on maintaining growth and navigating competition in the market. Another speaker adds that they are tracking above 20% in terms of demand and are comfortable with their ability to continue growing their share.

The speaker discusses the competition in the market for Vraylar, a medication used for bipolar disorder. They highlight the benefits of Vraylar, such as its full spectrum coverage and limited impact on fatigue and sedation. They also mention the advantage of flexible dosing. In response to a question about Humira contracts, the speaker clarifies that they have secured multiyear contracts for their portfolio, providing visibility for 2025, and that the introduction of co-branded Humira and PBMs has not changed the negotiation dynamics. They also mention a volume-related deal with CVS for Cordavis that was announced a year ago.

The company believes its aesthetics business is a valuable asset and has seen strong performance since the acquisition. They have not lost any market share despite the entry of a new competitor and have confidence in the potential for growth in this area. The business is set up as a standalone unit and has a good fit within the company.

The speaker discusses how the company's recent acquisition fits their goals for profitability and growth. They also mention the potential impact of the upcoming election, expressing hope that the new administration will reconsider certain provisions that could harm the industry's innovation. They believe addressing patient out-of-pocket costs is good policy, but taking away incentives for innovation is not. The call concludes with information on how to access a replay of the call.

This summary was generated with AI and may contain some inaccuracies.