AbbVie Q1 2022 Earnings Report

AbbVie EPS Results

• Actual EPS: $3.16
• Consensus EPS: $3.15
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $2.95

AbbVie Revenue Results

• Actual Revenue: $13.36 billion
• Expected Revenue: $13.61 billion
• Beat/Miss: Missed by -$254.86 million
• YoY Revenue Growth: +2.70%

AbbVie Announcement Details

• Quarter: Q1 2022
• Date: 4/29/2022
• Time: Before Market Opens
• Conference Call Date: Friday, April 29, 2022
• Conference Call Time: 12:59PM ET

AbbVie (NYSE:ABBV) is a global, research-driven biopharmaceutical company that was created as a spin-off from Abbott Laboratories in 2013 and is headquartered in North Chicago, Illinois. The company focuses on discovering, developing and commercializing therapies for complex and often chronic medical conditions. Its operations span research and development, manufacturing, regulatory affairs and commercialization, with an emphasis on bringing specialty medicines to market across multiple therapeutic areas.

AbbVie's product portfolio and pipeline cover several major therapeutic categories, including immunology, oncology, neuroscience, virology and women’s health. Historically, the company has been best known for Humira (adalimumab), a leading therapy for several autoimmune diseases. AbbVie’s broader commercial and development lineup has included oncology medicines such as Imbruvica and Venclexta, as well as newer immunology treatments and specialty products. The 2020 acquisition of Allergan expanded AbbVie’s offerings into aesthetics and eye care, adding well-known products such as Botox to its portfolio and diversifying its revenue and clinical focus.

AbbVie markets its products globally and maintains research, development and commercial operations in numerous regions around the world. The company invests heavily in clinical development and collaborates with academic institutions, biotechnology companies and other partners to advance its pipeline. AbbVie is led by Chairman and Chief Executive Officer Richard A. Gonzalez, and its strategic priorities emphasize innovation in specialty medicines, lifecycle management of key assets and expansion into adjacent therapeutic and commercial areas through acquisition and partnership.

AbbVie Q1 2022 Earnings Call Transcript

Key Takeaways

• AbbVie beat Q1 expectations with adjusted EPS of $3.16 and net revenues of $13.5 billion, up 5.4% operationally.
• Robust growth in key franchises including SKYRIZI, RINVOQ, neuroscience (Vraylar, Botox Therapeutics, UBRELVI) and Aesthetics delivered double-digit operational revenue gains.
• HUMIRA sales declined 1.8% globally (down 17.9% internationally) due to biosimilar competition, while IMBRUVICA fell 7.4% amid market share erosion and COVID-related delays in new starts.
• Pipeline makes progress with RINVOQ approval in ulcerative colitis, positive Phase 3 data for Crohn’s and eporitamab’s 63% response rate in refractory lymphoma, plus MDD filing for Vraylar.
• 2022 guidance updated to full-year adjusted EPS of $13.92–$14.12 and revenues of ~$59.4 billion, reflecting a $0.08 headwind from acquired IPRD and ~1.4% FX drag.

Presentation

[Operator]

Good morning, and thank you for standing by. Welcome to the AbbVie Q1 2022 Earnings Conference Call. All participants will be able to listen only until the Q&A portion of this call. You may ask a question by pressing star one on your phone. Today's Conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Ms. Liz Shea, Vice President, Head of Investor Relations.

[Liz Shea, VP of Investor Relations at AbbVie]

Good morning, and thanks for joining us. Also in the call with me today are Richard Gonzalez, Chairman of the Board and Chief Executive Officer, Rob Michael, Vice Chairman, Finance and Commercial Operations, and Chief Financial Officer, Jeff Stewart, Executive Vice President, Chief Commercial Officer, and Tom Hudson, Senior Vice President, R&D and Chief Scientific Officer. Joining us for the Q&A portion of the call are Carrie Strom, Senior Vice President and President, Global Allergan Aesthetics, Neil Gallagher, Vice President and Chief Medical Officer, and Roopal Thakkar, Vice President, Global Regulatory Affairs. Before we get started, some statements we make today may be considered forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. 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 the forward-looking statements.

[Liz Shea, VP of Investor Relations at AbbVie]

Additional information about these risks and uncertainties is included in our SEC filings. 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 their website. Following our prepared remarks, we'll take your questions. With that, I'll now turn the call over to Rick.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I'll briefly comment on our overall performance, then Jeff, Tom, and Rob will review our Q1 business highlights, pipeline progress, and financial results in more detail. I'm pleased with the excellent start to 2022. It further reinforces our confidence in the long-term fundamentals of the business. We reported adjusted earnings per share of $3.16, exceeding our expectations. Total net revenue of more than $13.5 billion was up 5.4% on an operational basis, also above our expectations. These results demonstrate strong momentum across several key products and portfolios, including robust double-digit operational revenue growth from SKYRIZI, RINVOQ, neuroscience, and Aesthetics. SKYRIZI is performing exceptionally well. We are achieving impressive market share gains in psoriasis, which remains a significant market opportunity.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

SKYRIZI's recent launch in psoriatic arthritis, as well as the anticipated regulatory approval in Crohn's disease, should also serve as important growth drivers over the long term. RINVOQ is also contributing compelling sales growth. Prescription trends in RA have recently stabilized, as we expected, and we are making excellent progress repositioning the brand as the leading second line agent based on the robust data generated across our broad development programs. The early launch trends for RINVOQ in both atopic dermatitis and psoriatic arthritis are highly encouraging, with commercial access and paid prescriptions expected to ramp significantly over the coming months. We anticipate that these two new indications, along with the recent U.S. approval in ulcerative colitis, should add substantial revenue growth for RINVOQ over the long term. Neuroscience remains an exciting opportunity for our company.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

VRAYLAR continues to have strong momentum across our currently approved indications, and the pending regulatory approval in major depressive disorder represents a significant upside to current projections. In migraine, our portfolio of distinct therapies with UBRELVY, QULIPTA, and BOTOX therapeutic is demonstrating robust double-digit sales growth. With the migraine market anticipated to roughly double in size over the next several years, there is significant headroom for continued revenue growth with these compelling therapies. Aesthetics is once again exceeding expectations. The category continues to grow robust double digits, especially in toxins and fillers, where there is substantial opportunity for further market penetration. Our commercial team is executing at a high level with targeted promotion and enhanced digital services, including our Allē loyalty program, driving strong market share performance across our major brands.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

In summary, this is an exciting time for AbbVie, and I'm extremely pleased with the evolution and momentum of our diverse portfolio. We're making excellent progress with the launches of several new products and indications, which will collectively add meaningful revenue for AbbVie as commercial access ramps for each of these opportunities over the remainder of this year. We're off to another exceptional start, and our long-term growth prospects remain strong. I'd now like to take a brief moment to thank Michael Severino for his contributions to the success of AbbVie over the last eight years. As you know, Mike has decided to leave AbbVie at the end of May to pursue another career opportunity, and we wish him all the best. I'd also like to take this opportunity to formally introduce to you Tom Hudson.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Tom joined AbbVie back in 2016 as the head of discovery and early development. In 2018, Tom undertook responsibilities for AbbVie's entire discovery organization. In 2019, he was promoted to the head of AbbVie R&D and Chief Scientific Officer, where he assumed responsibility for all of AbbVie's R&D. Tom has an impressive background as a clinical scientist. His medical specialty is in clinical immunology and allergy. Tom played a critical role in the Human Genome Project while working at both the Whitehead Institute and MIT, where Tom led the team that mapped the Human Genome. Tom was also instrumental in the International HapMap Project to refine the genetic architecture of the human genome.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Tom went on to further lead the Ontario Institute for Cancer Research, which included discovery and translational cancer research with a clinical network of more than a thousand investigators. Tom will be providing an update on our continued pipeline progress to you later in the call. First, I'll turn the call over to Jeff for additional comments on commercial highlights. Jeff?

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Thank you, Rick. We continue to demonstrate strong commercial execution across our therapeutic portfolio. I'll start with immunology, which delivered global revenues of more than $6.1 billion, reflecting growth of 8.1% on an operational basis. Humira global sales were approximately $4.7 billion, down 1.8% on an operational basis, with low single-digit revenue growth in the U.S. offset by biosimilar competition across international markets, where revenues were down 17.9% operationally. SKYRIZI global revenues were $940 million, reflecting positive momentum in both approved indications. In psoriasis, SKYRIZI is demonstrating impressive market share gains globally. SKYRIZI now accounts for approximately 23% of the total prescription share in the U.S. biologic market.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

SKYRIZI's in-play psoriasis share, which includes both new and switching patients, also remains very, very strong and now reflects roughly 40% patient share in the U.S. and a clear number one leadership position. SKYRIZI is performing exceptionally well internationally, where we have now achieved approximately 10% psoriasis share across our top 12 markets, as well as in-play share leadership in more than 20 key countries. While we are early in our launch in psoriatic arthritis, we are encouraged by the uptake in this indication. In the dermatology segment, SKYRIZI has already achieved in-play patient share of more than 10% in the U.S. Internationally, SKYRIZI PSA is now approved in 45 countries, with reimbursement expected to increase throughout the year. Importantly, we are also preparing for the launch of SKYRIZI in Crohn's disease, which represents another important long-term growth driver with approval decisions anticipated this year.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Turning now to RINVOQ, which delivered global sales of $465 million, demonstrating continued strong growth. As anticipated, we have seen an impact in new patient starts following the label update, and RINVOQ prescriptions have now stabilized in the U.S., with in-label market share currently 12% in RA. We expect growth in the second-line plus RA setting going forward, where our field force is now focused on leveraging compelling data from two important phase III trials. First, SELECT-CHOICE, which demonstrated RINVOQ's superiority versus Orencia across key efficacy parameters, including clinical remission in previously treated RA patients. Second, the open label extension of SELECT-COMPARE, which demonstrated that many RA patients with an inadequate response to Humira are able to achieve remission after switching to RINVOQ. Early feedback suggests this updated RINVOQ RA messaging is resonating very well with healthcare practitioners.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Internationally, RINVOQ share continues to ramp in RA with a total market share of approximately 5.5% across key geographies. We are also making excellent progress with RINVOQ's newly launched indications, including atopic dermatitis, psoriatic arthritis, and ulcerative colitis. Managed care access is expected to ramp strongly for each of these indications over the coming months. As we build access, initial prescriptions are covered by our bridge program, which provides free product or free goods to patients until formulary coverage is established. As a reminder, the volume from our bridge program is not captured in third-party prescription data. I'll start with atopic dermatitis. We are seeing new patient starts accelerating as we build access. When you include prescriptions from our bridge program, RINVOQ's total in-play AD share is already in the mid-teens, so we are pleased with the early adoption and repeating prescribers.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

As an oral option that provides significant skin clearance and itch relief, we believe RINVOQ has a strong differentiated position in this highly under-penetrated AD market. In PSA, we are seeing a nice uptake in RINVOQ's in-play share, especially in the rheum segment, where the severity of joint or skin manifestations of the disease can vary significantly by patient. Importantly, we have also launched SKYRIZI in the rheum PSA segment this quarter, giving us two very compelling therapies to address the wide range of PSA patient types regardless of how their symptoms present. We have also launched our first indication in the IBD segment, RINVOQ for ulcerative colitis, where we are seeing a significant long-term opportunity in the second line plus setting. Nearly 50% of UC patients are currently on or have used TNF therapy, so the addressable patient population is substantial.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Given the strong benefit risk in this indication, we believe RINVOQ will be a welcome therapeutic option for UC patients and physicians. Turning now to hematologic oncology. Global revenues were more than $1.6 billion, down 0.6% on an operational basis. IMBRUVICA global revenues were approximately $1.2 billion, down 7.4%. There are two factors impacting our IMBRUVICA results. First, we are seeing greater market share erosion in new patient starts than originally anticipated from newer therapy, including other BTK inhibitors as well as our own VENCLEXTA. Second, we continue to see higher than expected COVID suppression on new patient starts in CLL, which, as a treat-to-progression therapy, has impacted the total BTK-treated patient market.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Our guidance assumes a market recovery over the course of this year, but it's too early to determine exactly how this may play out given the continued impact from recent COVID variants. Despite these dynamics, IMBRUVICA remains the market-leading therapy for total patients across CLL and several other major blood cancers. Based on the magnitude of clinical data and real-world evidence generated for IMBRUVICA showing sustained disease control as well as overall patient survival, we are confident it will continue to be a meaningful product for AbbVie over the long term. VENCLEXTA, however, is helping to offset some of the headwinds facing IMBRUVICA. Global sales were $473 million, up 21.1% on an operational basis.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

In the U.S., VENCLEXTA is the clear market share leader in frontline AML among patients who are ineligible for intensive induction chemotherapy and recently achieved leading new patient share in second-line plus CLL. We are also seeing robust momentum internationally with strong performance across all approved indications. Additionally, we continue to make excellent progress building out our hem onc portfolio with several compelling late-stage assets, such as Epcoritamab for B-cell malignancies, Navitoclax for myelofibrosis, and ABBV-383 for multiple myeloma, expected to support sustainable long-term growth. Turning now to neuroscience, where revenues were approximately $1.5 billion, up more than 20% on an operational basis, including robust double-digit growth from VRAYLAR, BOTOX therapeutic, and UBRELVY. UBRELVY is performing very well and continues to be the market-leading oral CGRP treatment for acute migraine, with sequential demand growth observed.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

QULIPTA is also demonstrating exceptional uptake in migraine prevention, with recent total prescriptions performing ahead of comparable branded launches. QULIPTA is now capturing nearly 25% of the new-to-brand share in the U.S. preventative CGRP class when we consider both paid and bridge volume. We expect commercial access to continue to ramp strongly over the remainder of the year. QULIPTA has also recently demonstrated positive results from a registration-enabling study for the preventative treatment of chronic migraine, which we plan to submit to the agency for potential expanded use in the U.S., as well as to support regulatory applications across the international markets. This indication, if approved, will provide added differentiation for QULIPTA as the only oral CGRP therapy for the preventative treatment of both episodic and chronic migraine.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

In our other notable therapeutics, eye care revenues of $771 million were down 2.8% on an operational basis, with recent generic competition for RESTASIS unfavorably impacting our results. MAVYRET sales were $380 million, down 4.6% on an operational basis, as treated patient volumes remain suppressed compared to pre-COVID levels. Overall, I'm extremely pleased with our execution across the therapeutic portfolio, including the progress we're making with recent new product launches. We remain on track to deliver strong revenue growth once again in 2022. With that, I'll turn the call over to Tom for additional comments on our R&D program. Tom?

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

Thank you, Jeff. I'll start with immunology. We recently received FDA approval for RINVOQ in ulcerative colitis, a disease where there continues to be a significant unmet need for therapies that can provide high response rate and durable remission. In our UC development program, RINVOQ demonstrated some of the highest rates of remission and endoscopic improvements seen in phase III studies. Importantly, RINVOQ also provided durable responses sustained through one year of treatment. Given its strong benefit risk profile, we believe RINVOQ will be an important new medicine for patients. Our regulatory applications for RINVOQ in UC remain under review in Europe and Japan, with approval decisions expected in the second half of this year. Also in the area of inflammatory bowel disease, we recently reported positive top-line results from the second phase III induction study for RINVOQ in Crohn's disease.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

Similar to results from the first induction trial, in this induction study, RINVOQ demonstrated a very strong impact on the disease, as measured by clinical remission and endoscopic response. We expect to see results from the phase three maintenance study later in the quarter, with our regulatory submissions for RINVOQ in Crohn's disease expected in the Q3 and approval decisions anticipated in 2023. Rounding out RINVOQ's development programs in rheumatology, we also have regulatory applications under review in ankylosing spondylitis and non-radiographic axial SpA. We expect an FDA approval decision in the Q2 for AS and decisions in the Q4 for non-radiographic axial SpA. Moving to SKYRIZI, where in the quarter we announced an update regarding our regulatory application for Crohn's disease in the U.S.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

Following an FDA request for additional information primarily related to the on-body injection device used for maintenance dosing, we provided additional data for the device from an ongoing real-life use study, which showed that patients can safely and effectively use the on-body device to self-administer SKYRIZI. After responding to the agency's request, we received a three-month extension of our SKYRIZI submission in Crohn's disease. We remain confident in a strong benefit risk profile for SKYRIZI in Crohn's disease, and we now expect a decision in June. Moving now to our oncology portfolio, where we continue to make excellent progress across all stages of our heme and solid tumor pipeline. We recently announced positive top-line results from the first expansion cohort of the phase II study evaluating Epcoritamab in patients with aggressive B-cell lymphoma who have received at least two prior lines of therapy.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

Epcoritamab performed extremely well as a monotherapy in these heavily pretreated and high-risk patients, demonstrating an overall response rate of 63% with a median duration of response of 12 months. These results are particularly encouraging given that nearly 40% of patients had failed CAR T therapy. We plan to discuss these results with regulatory agencies about the potential to support a submission for accelerated approval in the second half of this year. We continue to make good progress with the indication expansion programs for VENCLEXTA and remain on track to see results from the phase III CANOVA trial in relapsed refractory multiple myeloma patients with a t(11;14) mutation in the second half of this year. In our VENCLEXTA MDS program, based on feedback from the FDA, we have recently modified our regulatory strategy and now intend to submit data from our ongoing phase III program.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

VENCLEXTA remains under breakthrough therapy designation for MDS, and we continue to have a high degree of enthusiasm for VENCLEXTA in this indication. We expect data readout from the phase III study and our regulatory submission for MDS in 2024. In Neuroscience, the FDA recently accepted our application for VRAYLAR as an adjunctive treatment for major depressive disorder. Based on the strong benefit risk profile demonstrated in our clinical program, we believe VRAYLAR will be an important new therapy in this patient population, and we look forward to bringing this new treatment option to patients suffering from major depressive disorder. In the area of migraine, we recently reported positive top-line results from a phase III study evaluating QULIPTA for the prevention of chronic migraine.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

QULIPTA performed very well in this study, with both doses meeting the primary and all secondary endpoints, demonstrating QULIPTA's ability to significantly reduce migraine days for patients suffering from chronic migraine. This summer, we plan to submit our regulatory application to the FDA for QULIPTA in chronic migraine and also plan to submit data from our phase three studies in both chronic migraine and episodic migraine to support regulatory applications in markets outside the U.S. In our cystic fibrosis program, we recently completed an interim analysis of a phase II proof of concept study evaluating our triple combination therapy. The efficacy results from this interim analysis did not meet our pre-specified criteria for advancing this triple therapy in development.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

The study was designed with a 28-day run-in treatment period with a dual combination therapy containing our CF one corrector and potentiator, followed by a 28-day treatment period with a triple combination, which included the addition of our C2 corrector, ABBV-119. This allowed us to independently assess the therapeutic potential of our C2 corrector. The results showed that the addition of 119 did not provide a meaningful improvement in FEV1 or reduction in sweat chloride concentration over our dual combination therapy. During the run-in treatment period, we were able to again assess the efficacy of our dual therapy, which performed well, providing efficacy consistent with results for the existing dual combination therapy. Based on the performance of our dual therapy, we plan to continue our CF program.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

We have an additional C2 corrector, ABBV-576, in phase I studies that we plan to advance into a new triple therapy with our existing C1 corrector and potentiator. 576 is structurally distinct from our previous C2 corrector 119 and has a better PK profile and provides higher drug exposure, which has the potential to deliver better efficacy. Our plan is to begin a phase II study for this new triple combo by early next year. In aesthetics, we recently began the phase III program for our short-acting toxin in glabellar lines. This novel toxin is designed to provide rapid onset of action and a short duration of effect, which would lower the barrier for adoption for a certain segment of consumers. We expect to see data from this program next year, with regulatory applications also anticipated in 2023.

[Thomas J. Hudson, SVP of Research & Development at AbbVie]

In summary, we've continued to make significant progress with our pipeline to start the year, and we look forward to many more data readouts, regulatory submissions, and approvals throughout the remainder of 2022. With that, I'll turn the call over to Rob for additional comments on our Q1 performance and financial outlook. Rob?

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Thank you, Tom. AbbVie's Q1 results demonstrate the strength of our broad portfolio, including double-digit growth from SKYRIZI, RINVOQ, VENCLEXTA, neuroscience, and aesthetics. We also continue to deliver strong P&L performance with another quarter of robust operating margin expansion while fully funding the business for long-term growth. We reported adjusted earnings per share of $3.16, reflecting growth of 9.3% compared to prior year and $0.04 above our guidance midpoint. This includes an $0.08 unfavorable impact from acquired IPRD expense that was not factored into our original guidance. Total net revenues were more than $13.5 billion, up 5.4% on an operational basis, excluding a 1.3% unfavorable impact from foreign exchange. Net revenues came in above our guidance despite the entry of generic competition for RESTASIS.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

The adjusted operating margin ratio was 51.4% of sales, an improvement of 150 basis points versus the prior year. This includes adjusted gross margin of 84.5% of sales, adjusted R&D investment of 10.9% of sales, acquired IPRD expense of 1.1% of sales, and adjusted SG&A expense of 21.1% of sales. Net interest expense was $539 million, and the adjusted tax rate was 12.1%. Turning to our financial outlook, we are updating our full-year adjusted earnings per share guidance to include the $0.08 for acquired IPRD expense that was incurred during the Q1. As a result, we now expect full-year adjusted earnings per share between $13.92 and $14.12.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

This earnings per share guidance does not include an estimate for acquired IPRD expense that may be incurred beyond the Q1. We now expect net revenues of approximately $59.4 billion. At current rates, we expect foreign exchange to have a 1.4% unfavorable impact on full-year sales growth. This revenue guidance includes updated RESTASIS sales of approximately $400 million. Moving to the P&L, we now expect adjusted gross margin of 84.5% of sales, adjusted SG&A expense of $12.5 billion, and an adjusted operating margin ratio of 51.8% of sales. Turning to the Q2, we anticipate net revenues of approximately $14.6 billion. At current rates, we expect foreign exchange to have a 1.5% unfavorable impact on sales growth.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

We expect adjusted earnings per share between $3.38 and $3.42. This guidance does not include acquired IPRD expense that may be incurred in the quarter. In closing, we are off to an excellent start to the year with strong performance across multiple areas. We are making significant progress with new product launches and the pipeline, underscoring our confidence in AbbVie's long-term growth outlook. With that, I'll turn the call back over to Liz.

[Liz Shea, VP of Investor Relations at AbbVie]

Thanks, Rob. We will now open the call for questions. In the interest of hearing from as many analysts as possible over the remainder of the call, we ask that you please limit your questions to one or two. Operator, we'll take the first question, please.

[Operator]

Thank you. Our first question comes from Mohit Bansal from Wells Fargo. Your line is open.

[Mohit Bansal, Managing Director of Biopharma Equity Research at Wells Fargo Securities]

Great. Thanks for taking my question. Maybe to begin with, on IMBRUVICA. So I mean, the script trends are down. You mentioned that so for new start, you are losing some share to the competition. Can you please characterize how much share you are losing, and do you think it will stabilize over time? When you look at IMBRUVICA and VENCLEXTA combined, do you think the franchise can grow going forward from here? Thank you.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Yeah, thank you for the question. As I mentioned in my comments, we are seeing greater share erosion. Imbruvica continues to be the leading share in the later lines, although we have lost our frontline share position to CALQUENCE. Obviously VENCLEXTA is also moving there. We see a couple things that are taking place, but we have that share erosion that's putting some pressure on the brand, and then clearly we see the continued suppression of the market. It's kinda like a double hit.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

If we think of this over the short, mid, and longer term, what I would say would be this: In the short term, meaning this year, you know, we projected the share decline, and that includes some stabilization, but we still think the brand is under some pressure from other BTKs and VENCLEXTA. Basically, we have flat guidance this year. Some of that includes a recovery of the market back to sort of more normal levels. We'll have to see how that progresses over the year. If I think more about the midterm, I think what's important context there is new patient starts essentially make up roughly 13% to 15% of Imbruvica.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

It's got a very, very large installed base, about 85%, maybe a little bit more in terms of what that's gonna happen. We're not seeing any changes in persistency or items like that, so we think that we have, you know, a very good sense of stability for the brand over time in terms of what this may mean. That's basically how we think about it. To answer your other question, if you look at the combined share, AbbVie has quite a strong position. We have roughly 33% of total share in the front line, and we have between 42% and 46% of second line plus. Clearly VENCLEXTA is able to offset, as I commented in my remarks, some of those pressures. It's very important for AbbVie.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

It's gonna be a very big brand over the long term. In the short term here and midterm, the growth is going to be more challenged moving forward.

[Mohit Bansal, Managing Director of Biopharma Equity Research at Wells Fargo Securities]

Thank you.

[Liz Shea, VP of Investor Relations at AbbVie]

Thanks, Mohit. Operator, next question, please.

[Operator]

Thank you. Our next question comes from Terence Flynn from Morgan Stanley. Your line is open.

[Terence Flynn, Managing Director, U.S. Biopharma Analyst at Morgan Stanley]

Hi, thanks for taking the questions. I was just wondering, obviously you guys have been speaking with payers about the Humira positioning for 2023. Are you willing to give us any update in terms of how you're thinking about that guidance figure that you put out a couple years ago? Any change in thinking there? And then, are you able to disclose the CR rate for the recent Epcoritamab phase II trial? Just wondering how that factors into the decision about whether to seek accelerated approval here. Thank you.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Terence, this is Rick. I'll take the first question for you. I'm probably gonna answer a little broader 'cause I think it is important. I understand the interest in trying to understand how to model 2023. It's obviously important to us to model 2023 as accurately as possible. I think if you step back, obviously contracting is one portion of a variable that will impact the speed at which biosimilars are able to adopt, be adopted in the market. If you step back and look, there's probably four key variables that will impact what that adoption rate looks like. One of them is obviously what will Humira's access be post biosimilars entering the marketplace. This is the period where you would normally be doing the contracting around that.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

I think we'll do well in being able to be co-positioned versus biosimilars in the vast majority of covered lives here in the United States. That process isn't done, and we're not in a position to be able to ultimately give you any further update until we're a little further along in that process. The second variable that will impact what 2023 looks like is how will the biosimilars price. We don't know that. Obviously, we have seen how they price in markets outside the U.S., but there's no market exactly like the U.S. internationally. You know, that's a variable. We're making some projections of what we believe that pricing will look like, but that's ultimately something we're gonna have to see how it plays out. I'd say the third variable is how competitive will these biosimilars be?

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

There's going to be, by the summer of 2023, there's gonna be a lot of biosimilars in the US market, but they're not all the same. How competitive will they be against, you know, what is Humira today and what do the bulk of patients use, as it relates to Humira? What I mean by that is interchangeability and a number of other factors are going to play into the competitiveness of those, biosimilars. I'd say the fourth variable, and it's not something people think about, that much, and that is the ability of a biosimilar to be able to supply the US market. There's no market like the United States for Humira anywhere around the world. The United States is significantly larger than any other market around the world.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

There are certainly biosimilar players that are like an AbbVie, and I would expect them to have manufacturing capacity. There are generic players that could have sufficient manufacturing capacity, and then there are very small companies. I think anybody, any payer that's going to wanna convert in any significant way to a biosimilar, they're gonna want confidence that they can have a reliability of supply of that biosimilar. We've spent years building the network that we have. We have full redundancy of every aspect of the manufacturing process on Humira. We've never had a problem supplying the U.S. market. I think we can be viewed as kind of the gold standard. Those are the variables that are gonna impact what this transition looks like.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

The guidance we've given so far is 45% ± 10%. I think at this point, that's still the best information that we can provide. Later this year, I think some of these variables will be clearer to us, and we may be in a position to be able to provide some more information to investors, and we would do that. Some will not. Pricing will not be clear at that point. We're not gonna know how they're gonna price until they actually get into the marketplace. I think that's the way to think about these variables. Rob, anything you'd add?

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Yeah. This is Rob. I would just add that, you know, we've been trying to give investors some directional guidance on how to think about 2023 beyond just the Humira 45% ±10%. You know, we've talked about aesthetics growing high single digits annually over the next decade. You can get a sense based on, you know, Jeff's response today and a way to think about IMBRUVICA. In terms of operating margin, I've talked about that, you know, pulling back to the 46% to 47% range with no cuts to investment because we're gonna return to growth very quickly, so we're gonna continue to invest in this business.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

As I look at Street consensus, you know, I see modeling of, you know, cuts in SG&A, you know, not necessarily reflecting the appropriate operating margin levels. It's something just, you know, to keep in mind. Then even, you know, we've talked about the tax rate growing, you know, one point per year on average. Obviously, you saw this year it only grow, you know, 0.2 points. Other years it may grow higher. You know, we've tried to give the Street some ideas of the way to think about 2023 model in advance of our formal guidance.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Okay. Number two, Neil.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

Hi. This is Neil Gallagher. I'll take the question regarding Epcoritamab. We recently reported data from the expansion cohort of relapsed refractory DLBCL patients. We reported an overall response rate of 63% with a median duration of response of 12 months. One thing that's really important to bear in mind is that this is a pretty refractory patient population with a median number of prior therapies of 3.5 and a range up to 11 at the upper end. Importantly, just under 40% of these patients have failed prior therapy with the CAR T. Overall, the safety profile remains manageable with the vast majority of cases of CRS, a class effect with these agents, being grade one and two.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

To directly address your question, we are not yet ready to reveal additional detail about the data. They will be revealed at a forthcoming medical meeting. In fact, I was just in contact with the team yesterday, and I know that they're working very diligently to get those data on a podium in a meeting in the very near future.

[Liz Shea, VP of Investor Relations at AbbVie]

Okay. Thank you, Terence. Operator, we'll take the next question, please.

[Operator]

Thank you. Our next question is from Tim Anderson from Wolfe Research. Your line is open.

[Alice Nettleton, VP of Global Biopharma Equity Research at Wolfe Research]

Hello. Thanks for taking our question. This is Alice Nettleton on for Tim Anderson. A question on RINVOQ. Where could in-play market share in atopic eventually get you in your view? And are you seeing any switching away from Dupixent at all? Thank you.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Yeah, thank you. Thank you for the question. I'll give you some context. I mentioned that we see roughly in the mid-teens now after about three months, which we're very pleased in. Some more flavor on that. If you think about the HCPs and the doctors that prescribe in the U.S. now, you've got about 9,000. Those are the dermatologists and some allergists. There's about 3,000 of those physicians that are the big prescribers. They're very productive. Those 3,000 are the ones that are driving SKYRIZI, for example, or other big brands in psoriasis. We see, you know, after just about three months, we see almost 1,000 doctors that have prescribed RINVOQ, and so that's driving that 15%.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Some of it depends in terms of where the in-play share ends up, how many of the competitors come in. We're not really sure that Baricitinib will come into the market. You know, we'll have to see. We haven't seen much Pfizer activity yet. To give you some sort of international perspective, in the Canadian market, we're seeing where there's really just Dupixent and RINVOQ at this point after a couple of quarters. We're seeing a 30% in-play share in Canada. So we are, as I mentioned, very, very encouraged, with the early adoption. In particular, my comment around how fast once you see the first prescription take place with some of those productive doctors, how fast they go to the second or third.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

To give you some flavor of what we see in the U.S., and again, the data's early, we see, as expected, the majority of our use so far in that dynamic market are not switches necessarily. We see about, let's say, a third, believe it or not, that are not even exposed toDupixent. The doctors are saying, "Look, I've already given another oral systemic, for example, but the itch and the skin is so severe that they're gonna go, 'I'm gonna go right and get the relief with RINVOQ.'" Then maybe the other two-thirds, you see Dupixent partial responders, particularly related to the itch just isn't suppressed as much, and they still have some skin involvement.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

There is, as we've highlighted before, a warehouse of Dupixent non-responders that has been built up over the last four years. That's the behavior that we see. Again, I'm very encouraged on the early results, not just in the U.S., but around the world. RINVOQ is gonna be a real player in this underserved market.

[Liz Shea, VP of Investor Relations at AbbVie]

Thank you, Alice. Operator, next question, please.

[Operator]

Thank you. Our next question is from Steve Scala from Cowen. Your line is open.

[Steve Scala, Managing Director and Senior Research Analyst at TD Cowen]

Thank you. Two questions. First, on Epcoritamab, the data looks great. Could this molecule immediately start taking share from CAR T? Or do you think physicians will want to see durability data before selecting a bispecific ahead of a cell therapy? That's the first question. The second question is, I'm trying to sift through the answer to the Humira question just a moment ago. On the one hand, it seems we need to consider that Humira could be more resilient in 2023 than expected. On the other hand, the Street needs to raise spending assumptions. Would you object to either of those conclusions based on what was stated? Thank you.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

Thanks, Steve. This is Neil. I'll take the first question on Epcoritamab. The fact that we saw such remarkable activity in a patient population that had failed CAR T does not imply that the medicine should be positioned after failure of CAR T. I think they're two very different classes of medicines, as you know. CAR T has, you know, significant challenges with respect to, you know, the need for the marrow to be prepped prior to administration. Whereas the safety profile with Epcoritamab is extremely manageable. Again, I don't wanna repeat what I said earlier around CRS.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

Overall, we see a very strong benefit risk profile emerging for the medicine, and therefore, our intention is to move the medicine into earlier lines of therapy, initially gain approval in relapsed refractory DLBCL, and after that, move the medicine into earlier lines of therapy.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Steve, this is Rick. I think Rob and I will handle the second question for you. You know, look, I think it's a great question, and we've gotten that question a lot. You know, what's the LOEs are gonna be in 2023, and is it gonna be lighter in 2023 and therefore spill more into 2024? I think that's a reasonable question to start to think through. I'd say as I step back and look at it, I would tell you this. Look, at the end of the day, it could be lighter in 2023. That would force more of it out into 2024. If I look at the business, that's a good thing. It would give us higher cash flows in 2023 than what we would be projecting now.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Ultimately, I think there will be a settling out between 2023 and 2024, where it'll still get to the levels that we have described or at least that we're modeling. I think the important thing is, look, Humira is gonna play out over these two-year period of time. What's important to AbbVie, though, is what's that underlying growth that's driving the business and is going to sustain the growth on the other side of the LOE. That's the critical aspect of it. The SKYRIZIs, the RINVOQs, our neuroscience pipeline, aesthetics. It's all of those major growth drivers that we have. Because that growth is going to be suppressed in 2023 and somewhat maybe in 2024. As soon as that pressure is off, that's when it will reemerge and be able to deliver growth on the other side of it.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

What we're focused on is obviously we're gonna try to manage the 2023 to 2024 dynamic to the extent that we're able to, but that's not the most critical part for the business. Most critical part is driving these growth brands and delivering on the pipeline.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

This is Rob. What I would add, Steve, just to clarify, I mean, we have a business that can deliver high single-digit growth during 2025. It doesn't make sense to be cutting investment in 2023, and that's what the Street consensus is modeling currently. We expect to invest in this business, invest in R&D, invest in the SG&A to drive that long-term growth. Given how quickly we'll return to that growth, I wouldn't expect us to be cutting investment in 2023.

[Steve Scala, Managing Director and Senior Research Analyst at TD Cowen]

Thank you.

[Liz Shea, VP of Investor Relations at AbbVie]

Thanks, Steve. Operator, next question, please.

[Operator]

Thank you. Our next question comes from Andrew Baum from Citi. Your line is open.

[Andrew Baum, Global Head of Healthcare Research and Managing Director at Citi]

Thank you. Question for Jeff. Perhaps you could comment on the impact of IL-31 inhibitors in atopic dermatitis, where we're expecting additional phase data, which obviously don't have the JAK labeling associated with it, how you think it's gonna impact the market in terms of delaying the onset of JAK therapy. Second for Neil, could you talk to how large has been the commercial potential for VENCLEXTA in t(11;14) myeloma, which is due to report its phase II this year? Many thanks.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Yeah. Thank you, Andrew. Important question. The way that we see the market for the other ILs, I do think that there will be a segment of conservative dermatologists that will attempt to sequence. I think that largely they'll be disappointed because it seems the newer agents, you know, are very difficult to distinguish from Dupixent. I think certainly there could be market access dynamics that start to appear with subsequent ILs. I think that's something that we will watch and you would want to watch.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

I think what's, again, maybe not appreciated as we watch the early quarters of performance in Europe and the Q1 of performance here in the U.S. is that there are significant amount of early adopters and dermatologists that will go right to a JAK inhibitor, as I mentioned. They're not always sequencing through Dupixent. It's because the severity of some of these patients and the level of the clinical involvement is very, very significant. We do see what you would call a significant amount of naive use based on the profile of the JAK inhibitor. Now, these are early adopters. These are people that have already contemplated the risk benefit, and I think that's important.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

The way that we see the market developing is that when physicians would start with Dupixent, which will be in a significant proportion of the patients, it's not clear at all that their next step will be another IL that has been approved or will be approved. In fact, we think it's more likely that they will move towards the best JAK that can get to these high levels of skin clearance, you know, the easy 90+ almost no perceived itch. I think that's the endpoint that this market's gonna move towards, and RINVOQ is the drug that clearly can deliver on that promise. That's how we see the market developing, and that's why we remain encouraged on the early results around the world from what we're seeing with the agent.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

This is Neil. With respect to the question on VENCLEXTA, VENCLEXTA, CANOVA. The CANOVA study is a study of VENCLEXTA in multiple myeloma patients with a particular translocation, the 11:14. We're making extremely good progress with the study, and we fully anticipate having a phase III data from the study during the course of 2022. We know from this particular patient population that were included in earlier studies with VENCLEXTA that they are exquisitely sensitive to treatment with the medicines in various combinations. The prevalence of this population is around 20% of multiple myeloma, and multiple myeloma, as you know, is the commonest hematologic malignancy. This is a very significant proportion of the multiple myeloma population that could gain benefit from VENCLEXTA.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

As mentioned, we're looking forward to being able to communicate the phase 3 data during the course of 2022. Thanks for the question.

[Liz Shea, VP of Investor Relations at AbbVie]

Thank you, Andrew. Operator, next question, please.

[Operator]

Thank you. Our next question comes from Chris Schott from JPMorgan. Your line is open.

[Chris Schott, Managing Director at JPMorgan]

Great. Thanks very much for the questions. First one for me is just can you elaborate a bit more on RINVOQ coverage both in AD and UC? I guess trying to get a sense of where we are today and what's the outlook for the next few quarters. Maybe as part of that, it seems like you're seeing some nice uptake in your bridge programs. Can you just comment when you expect we should start to think about those translating over to third-party Rx's, and that will be maybe more visible to the outside world in terms of how you know that uptake you're seeing? Then my second question was just on Q1 itself. Were there any notable either payer adjustments or gross-to-net issues?

[Steve Scala, Managing Director and Senior Research Analyst at TD Cowen]

I guess Humira, for example, it seems like the low single-digit growth was a departure from recent trends. I'm just trying to understand a little bit better what happened in the quarter. Is there anything we should just be kind of keeping in mind as we consider the Q1 results? Thanks.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Thank you, Chris. It's Jeff. To your first question, we're very confident that we are going to get to high levels of paid access for RINVOQ and SKYRIZI's new indications. Typically, what we'll see based on the approval timeline, you know, we'll be ramping up by the middle of the year up into the high 90s in terms of our access for commercial access. I think that everyone should be confident that that's where you're gonna start to see this bridge program start to fully convert as the months go by into the paid prescription. Typically, that's the timing we're looking at. You're gonna see very strong momentum on paid access towards the end of next quarter is what we've guided towards.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

That's the answer to your first question. I think if you think about maybe just to frame the Humira question, the Humira fundamentals are, and the market fundamentals are quite strong. You see, you know, the markets are performing nicely. Our market share growth trends, we haven't seen any trend shift. They've been largely stable. There's some sequential decline based on the size of the markets and actually our own brand, SKYRIZI and RINVOQ, that are playing very strongly into these markets. What I would say is that in some cases, Q1 can be quite unique over the years. You've got the issue with the plans resetting their deductibles. You've got issues with doctors that have to put in another prior authorization for the year.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

You do see some copay and sort of deductible dynamic. We think that's really a Q1 type of event, and it's largely been very consistent with what we expected. Maybe, I don't know, Rob, if you wanna

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Yes.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Wanna build on that a little bit.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Yes, I would just add that if you look back to our guidance for the quarter, we gave guidance at a therapeutic area level, we pretty much came in line with that guidance. We expected this dynamic, and we're also not changing our full year outlook for U.S. Humira at 8% growth. That again will be driven by market driving volume growth. It's in line with our expectations. I understand Street consensus had a different point of view, but we weren't surprised by that.

[Liz Shea, VP of Investor Relations at AbbVie]

Thanks, Chris. Operator, next question, please.

[Operator]

Thank you. Our next question comes from Chris Shibutani from Goldman Sachs. Your line is open.

[Chris Shibutani, Senior Analyst and Managing Director in Biotechnology Equity Research at Goldman Sachs]

Thank you. Good morning. If I could ask on VRAYLAR, the product, I think you comment expectations for a MDD approval, and yet you'll frame it as potential for upside. Can you help us understand perhaps some of the potential there? Just thinking back to some of the scale of the peak sales opportunity that that drug was characterized previously, MDD certainly seems as if it's a potential significant opportunity. Thanks.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Yeah. Thank you for the question. It is a significant opportunity. We highlighted and Tom highlighted, you know, the NDA has been accepted. And we're confident in the approval. I think what we said in the past is that just with the base indication, so before we get that approval, I mean, the FDA has to still approve it towards the end of the year. We believe that we can ramp towards a, you know, $4 billion opportunity. That would mean our share just in the base indications of a unique profile with the mania, the mixed mania and depression, the bipolar depression. You know, we'd move somewhere up, you know, sort of doubling our share penetration.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

You know, right now we're at about 2.7% TRX share, so we'd really get close to doubling that based on the momentum. Then MDD would build on top of that. It's significant. I mean, the physicians that we've talked to when we show them the profile are very pleased. First, they know VRAYLAR, they like VRAYLAR. They like the strong efficacy. They highlight, you know, it's non-sedating. They highlight at least verbally a brightening effect of the agent, minimal weight gain, metabolic effects. As they think about that, how that would translate to adjunctive MDD, they like that profile. The other piece that we hear is they like the starting dose.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

They like that starting dose of the 1.5 milligram dose, which is what we believe that ultimately will be approved. We'll have to see. Easy to start, easy to take, well tolerated. To your point, we believe that MDD will offer some upside and acceleration to the brand's momentum when we achieve it.

[Liz Shea, VP of Investor Relations at AbbVie]

Thanks, Chris. Operator, next question, please.

[Speaker 3]

Thank you. Our next question comes from Vamil Divan from Mizuho Securities. Your line is open.

[Vamil Divan, Managing Director and Senior Healthcare Analyst at Mizuho Securities USA]

Hi, great. Thanks for taking my question. This may get back to some of what we were just talking about around the pricing in Q1. I had a couple questions regarding the migraine franchise. The UBRELVY scripts, from what we can see, you know, publicly out there with third-party data, it looks like the gross-to-net, you know, sort of net pricing is back to where we were in Q1 2021. Just trying to understand if this is, you know, is this a seasonality thing or a quarter to Q1 dynamic, or maybe there might be something broader, you know, where net pricing for these products is going down. Then tied to that with QULIPTA, as you mentioned, looked at the prescription numbers are pretty good as it builds up here.

[Vamil Divan, Managing Director and Senior Healthcare Analyst at Mizuho Securities USA]

I'm curious, now that you have sort of two products in this market, does that impact how you're thinking about the opportunity, especially from a pricing side or sort of payer negotiation side? Any thoughts on sort of bundling the two together in any way, to put potential to get even better access than what you have right now? Any thoughts you could share there would be helpful as well. Thank you.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Vamil, this is Rob. I'll take your first question. When you look at, you know, there is seasonality in this market in the U.S., and so you do see a shift from Q4 to Q1. If you look at year-over-year, you'd see that in Q4, as you mentioned, Q1 year-over-year is relatively flat. I would think about it that way for the full year as well. You do tend to see a suppression in Q1 because of, you know, plans resetting that dynamic we see in the U.S. market. But then, you know, over the course of the rest of the year, you do see higher pricing. On average, the way to think about it is, you know, price is relatively stable.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

And Vamil, it's Jeff now. I think, look, we are pleased with the UBRELVY momentum. I mean, actually, since we launched QULIPTA, UBRELVY has accelerated. Because we can't see the competitor, because you can see the whole thing. When we factor Nurtec by, you know, eight versus 16 and we try to understand the acute dynamic, we can see that we're clearly the market-leading acute CGRP, and that's nice to see. The physicians really like UBRELVY. The markets are robust. I think what you're seeing is what Rob highlighted in terms of the overall performance. I didn't really fully appreciate your second question in terms of the access. I can give you a broad overview. Obviously, we're seeing great momentum with the brand.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

You know, much of the brand is still because the access is ramping is still rich, just like we discussed there with the immunology agent. We think again, by the middle of the year, we're gonna see commercial access really start to ramp, and you'll see the conversions start to take place. What's nice is that, we're confident in that. We think that, our price points and net price, our negotiations are going well. Because of its unique profile, as an agent, basically the strength of the drug is really significant in terms of its performance against episodic migraine. We feel like we're in good shape, and we're gonna build on top of that basically, 25% in play share, which is right now at the top of the league table.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

That's how we see it. We're confident in the access ramp.

[Vamil Divan, Managing Director and Senior Healthcare Analyst at Mizuho Securities USA]

Maybe just to clarify the second question, and just thank you for all that. Is there any advantages or other strategies you might have now because you have two approved migraine oral therapies or is it pretty much similar to what it would be if you had one or the other?

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Yeah, it's pretty similar based on the way that the pricing and the different dynamics work on the other CGRP. It's just sort of a straight play on the access there.

[Vamil Divan, Managing Director and Senior Healthcare Analyst at Mizuho Securities USA]

Okay. Thank you so much.

[Liz Shea, VP of Investor Relations at AbbVie]

Thank you, Vamil. Thanks, Vamil. Operator, next question, please.

[Operator]

Thank you. Our next question comes from Geoff Meacham from Bank of America. Your line is open.

[Geoff Meacham, Managing Director and Senior Research Analyst, Biotech and Pharma at Bank of America]

Hey, guys. Morning. Thanks for the question. I just had another one on the I&I landscape. You know, Rick, when you look at the market disruption that you'll see in 2023 and 2024, you know, presumably that's gonna have an indirect effect on SKYRIZI and RINVOQ. You know, when you think pricing and share, what would you guys view as a win, you know, over this period from a new start or switch perspective or a growth perspective, is the first question. The second part of it is, you know, what gives you guys confidence. The market really normalizing after a 2024 period. Thank you.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

I think as we look at our long-range plan, we don't see or anticipate a dramatic impact. We've provided that 2025 guidance, and I think it's reflective of significant growth of SKYRIZI and RINVOQ. You know, if you look at those assets and you look at their clinical performance, you know, they really stand out, and that's what's driving the kind of volume and growth that we're seeing. I think you will see obvious price disruption in the Humira market from biosimilars, but I don't anticipate that you're gonna see that bleed over in a significant way to those other assets. Jeff, do you see anything differently?

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Yeah, I don't see, Geoff, much difference. I mean, if you think of it in some ways, even on, let's take RINVOQ, for example. I mean, you could say, wow, you know, in prior viewpoints, maybe everyone will step behind a biosimilar at some point in the future. Well, one, we didn't think that would happen, well, widescale as the market develops anyway. But even if it did, our label is already behind a TNF. So when you look at the level of efficacy that RINVOQ's bringing in those later lines, I mean, it's, we're really quite insulated from that, I would put forth. Second, SKYRIZI is just a phenomenal asset.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

I mean, the level of performance and what it's doing to transform certainly psoriasis, PSA right now, and what we think will happen with Crohn's and ultimately IBD when you look at the level of healing and sort of restating that standard of care, we think the assets themselves are quite well positioned for the middle part of the decade, and that sort of goes to the elements of the planning that Rick talked about.

[Liz Shea, VP of Investor Relations at AbbVie]

Thanks, Geoff.

[Geoff Meacham, Managing Director and Senior Research Analyst, Biotech and Pharma at Bank of America]

Thank you.

[Liz Shea, VP of Investor Relations at AbbVie]

Operator, next question, please.

[Operator]

Thank you. Our next question comes from Gary Nachman from BMO Capital Markets. Your line is open.

[Gary Nachman, Senior Research Analyst at BMO Capital Markets]

Hi. Thanks. First, just following on that last response, just, you know, can you talk more broadly about how you see the expansion of RINVOQ and SKYRIZI into the IBD indications? How is the initial launch for RINVOQ and ulcerative colitis going? I know it's early days, but, you know, what's the outlook there given physician receptivity around the product? Are physicians saying they're excited to have RINVOQ for Crohn's as well? And also how do you see SKYRIZI fitting in with Crohn's versus RINVOQ? And then secondly on aesthetics, it was strong in the Q1, but did you see any impact in the early part of Q1 from Omicron? And what have the trends been more recently in March and April in the aesthetics business? Thanks.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Yeah. Thank you. Thank you for the question. It's Jeff again. So, you know, we are very, very encouraged by the IBD momentum that we can build, and we're right on the cusp of it. To give some sense is basically this market, the market of Crohn's, and you see that it actually has fairly high biologic penetration. When we do our research and our engagement with the physicians, what they typically have done for more than a decade, since the availability of, you know, Remicade and then Humira, they really hang on as much as possible to their first line use. They try to intensify. They do all sorts of things because it's quite scary for the physicians and the patients because no one set a different standard of care.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

When you start to look at the healing rates that we start to see with RINVOQ and UC, the healing of the bowel, the remission rates, the combination of what we can see, this market looks very, very good to have both of those assets come in with higher standards of care. We're very, very encouraged, and we think that the IBD market is probably underappreciated in terms of what that looks like. The patients are so challenged with their disease because it's quite severe with the bowel preparations, the hospitalizations, all of these things. Having two assets is a great thing to bring to the market. Certainly in the U.S., it's likely we see that with UC today that you're gonna have later line use based on the labeling.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

SKYRIZI is not gonna have that limitation. You can imagine that you have an ability to co-position, to sequence appropriately, to think about how you bring that whole portfolio around the world, and that's how we see it. We're quite encouraged that we would have both RINVOQ for Crohn's and SKYRIZI for Crohn's in the market. It's kind of very similar to my comments I made on what's happening with PSA today in rheumatology, where both of those assets, RINVOQ for PSA and SKYRIZI PSA, are in the market together working as a portfolio. To get to your first point, you know, it's been only, you know, a month or so with our UC launch, but the physicians, the gastros are very encouraged with the profile.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

They've not seen the level of remission or the level of healing before in any asset. There's quite a wow reaction to the efficacy profile. They realize that they have to think about, I've got to think through my patients that are not doing well on TNF or have cycled through a TNF and are struggling. I mentioned that's a pretty large addressable population. It's at least 50% of the market today. Early qualitative results are quite strong and the bridge results are also quite strong. We're pleased with the gastro launches thus far.

[Richard A. Gonzalez, Chairman and CEO at AbbVie]

Carrie?

[Liz Shea, VP of Investor Relations at AbbVie]

Hi, Gary. This is Carrie Strom, President of Global Allergan Aesthetics, and I'll take your question about the aesthetics market.

[Carrie Strom, President of Global Allergan Aesthetics at AbbVie]

In Q1, we did see U.S. toxin and filler markets both growing in the mid-20s%, and we expect that sort of growth to continue for the rest of 2022. The way to think about it is similar amount of absolute volume growth as 2021, but of course, off of a larger base. In terms of what's driving that market growth, we're seeing very strong demand trends supported by our increased commercial investments, for example, increased consumer activation for acquisition and retention, field force expansions in key markets. We see these trends also supported just by fundamentals in aesthetics that will continue in the long term. People think about aesthetics more like health and wellness. It's been much more destigmatized, and we see factors like social media and word of mouth continuing to drive aesthetics in the future.

[Carrie Strom, President of Global Allergan Aesthetics at AbbVie]

Your question around the pandemic. I would say that we are seeing an impact right now in China, and we anticipate that this recent surge of COVID cases in China, which has resulted in lockdowns across several major cities, has reduced patient traffic into aesthetic offices in China. China is a top market for aesthetics. We expect this to impact our near-term international performance for both toxins and fillers. I should also mention that Russia is a key market for fillers globally. As the tragic events in the Ukraine have unfolded, we have suspended operations for our aesthetics business in Russia. Although absolute aesthetic sales in Russia are modest, like I said, Russia is among one of the largest filler markets in the world, so we expect to see an impact on our filler performance in coming quarters.

[Carrie Strom, President of Global Allergan Aesthetics at AbbVie]

Despite these dynamics, we do not need to change our total guidance for aesthetics. We see our continued robust toxin performance in the U.S. to offset this anticipated transitory impact in both China and Russia.

[Liz Shea, VP of Investor Relations at AbbVie]

Thanks, Gary.

[Gary Nachman, Senior Research Analyst at BMO Capital Markets]

Great. Thank you.

[Liz Shea, VP of Investor Relations at AbbVie]

Operator, next question, please.

[Operator]

Thank you. Our next question comes from Robyn Karnauskas from Truist Securities. Your line is open.

[Robyn Karnauskas, Managing Director and Senior Biotech Analyst at Truist Securities]

Great. Thanks for taking my question. For Epcoritamab, I just have a question on accelerated approval. Given the recent FDA discussion around the PI3 kinase class and sort of hinting that they want controlled data for accelerated approval, how do you view that in light of that panel, the likelihood of accelerated approval? Then second, just a little bit more questions around the Bridge program. I think you said that you're gonna expect more payments, reimbursement coming online in the middle of the year. Could you talk to me how long people stay in the Bridge program and how you expect that Bridge program to continue and how many people might continue to use it after payers come online? Thanks.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

Hey, Robyn, it's Neil. I'll start off with the question around Epcoritamab, but maybe just a comment, a general comment on accelerated approval overall. I think as we're all aware, it's prompted your question that the agency's in the process of updating its guidance with respect to accelerated approval. We haven't seen the totality of that guidance, but we anticipate hearing more from them during the course of 2022. As I alluded to, and I'm not gonna repeat what I said earlier on about the EPCO data, but we are extremely pleased with how the molecule is performing, and it is our intent to engage with the agency based on the data that we've top-lined recently.

[Neil Gallagher, VP and Chief Medical Officer at AbbVie]

It is our intent to engage with the agency in a conversation to explore a path to accelerated approval. Likewise, with some of our other programs, we recently got a BTD designation for Telisotuzumab vedotin, for example, earlier this year with a 54% response rate in c-Met high non-small cell lung cancer. Again, it is our intent when we have data that are this strong to continue to engage with the agency on those programs to explore potential paths to accelerated approval. Thanks. Thanks for the question.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Okay. Hi, it's Jeff. Just to comment on your Bridge question. Thank you for that. The Bridge transition will be very efficient. What I mean by that is, because of the connections that we have with the payers and our specialty pharmacy network, we're able to once access is achieved, rapidly and appropriately transition patients from the Bridge to basically their paid pharmacy and their prescription. There's not gonna be lingering Bridge effects, particularly in the immunology space. Once it starts to move and that access ramps, the Bridge transition is quite fast. That can be within weeks or a month. We know that that's the case 'cause we have the models from our earlier launches from SKYRIZI and RINVOQ.

[Jeffrey R. Stewart, EVP and Chief Commercial Officer at AbbVie]

Ultimately, once you start to achieve those high levels of access, bridge programs drop very fast and the very vast majority is paid prescription. It's very efficient, and I hope that helps.

[Liz Shea, VP of Investor Relations at AbbVie]

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

[Operator]

Thank you. Our final question comes from Josh Schimmer from Evercore ISI. Your line is open.

[Robyn Karnauskas, Managing Director and Senior Biotech Analyst at Truist Securities]

Great. Thanks for fitting me in, and congrats to both Mike and Tom. For SKYRIZI, did your long-term outlook improve again, or am I misunderstanding the contingent consideration line item? Thanks so much.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

Josh, it's Rob. If you look at the contingent consideration, actually it's a fair value liability. It went down this quarter because of discount rates. We always have to. You have to pay attention to discount rate movement. We saw the average discount rate increase by about 130 basis points. You're seeing, obviously, as rising interest rates are taking hold of the market. That's something we have to take into account because we have to mark this to market every quarter. If you look at our release, we had a similar decrease last year as well. Again, we had discount rates increase in Q1 of last year, albeit to a lesser extent. That's what you're seeing is just really the discount rate movement.

[Robert A. Michael, Vice Chairman of Finance and Commercial Operations at AbbVie]

No other real fundamental changes to the valuation of that liability.

[Josh Schimmer, Senior Managing Director, Biotechnology Equity Research at Evercore ISI]

Got it. Thanks for clearing our time.

[Liz Shea, VP of Investor Relations at AbbVie]

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

[Operator]

Thank you. That concludes today's conference call. Thank you for your participation. You may disconnect at this time.

Participants

Executives

• Carrie Strom, President of Global Allergan Aesthetics
• Jeffrey R. Stewart, EVP and Chief Commercial Officer
• Liz Shea, VP of Investor Relations
• Neil Gallagher, VP and Chief Medical Officer
• Richard A. Gonzalez, Chairman and CEO
• Robert A. Michael, Vice Chairman of Finance and Commercial Operations
• Thomas J. Hudson, SVP of Research & Development

Analysts

• Alice Nettleton, VP of Global Biopharma Equity Research at Wolfe Research
• Andrew Baum, Global Head of Healthcare Research and Managing Director at Citi
• Chris Schott, Managing Director at JPMorgan
• Chris Shibutani, Senior Analyst and Managing Director in Biotechnology Equity Research at Goldman Sachs
• Gary Nachman, Senior Research Analyst at BMO Capital Markets
• Geoff Meacham, Managing Director and Senior Research Analyst, Biotech and Pharma at Bank of America
• Josh Schimmer, Senior Managing Director, Biotechnology Equity Research at Evercore ISI
• Mohit Bansal, Managing Director of Biopharma Equity Research at Wells Fargo Securities
• Robyn Karnauskas, Managing Director and Senior Biotech Analyst at Truist Securities
• Speaker 3
• Steve Scala, Managing Director and Senior Research Analyst at TD Cowen
• Terence Flynn, Managing Director, U.S. Biopharma Analyst at Morgan Stanley
• Vamil Divan, Managing Director and Senior Healthcare Analyst at Mizuho Securities USA