AbbVie Q3 2024 Earnings Report

AbbVie EPS Results

• Actual EPS: $3.00
• Consensus EPS: $2.92
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: $2.95

AbbVie Revenue Results

• Actual Revenue: $14.46 billion
• Expected Revenue: $14.28 billion
• Beat/Miss: Beat by +$177.67 million
• YoY Revenue Growth: +3.80%

AbbVie Announcement Details

• Quarter: Q3 2024
• Date: 10/30/2024
• Time: Before Market Opens
• Conference Call Date: Wednesday, October 30, 2024
• Conference Call Time: 9:00AM 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 Q3 2024 Earnings Call Transcript

Key Takeaways

• Q3 revenues exceeded expectations by $260 million, driven by mid-single-digit operational growth and nearly 18% sales growth from the ex-HUMIRA platform.
• AbbVie raised full-year guidance for revenue by $500 million (total increase of $1.8 billion since February) and boosted adjusted EPS guidance by $0.15 to $10.90–$10.94.
• HUMIRA sales fell 36.5% on biosimilar competition, with more volume shifting to newer mechanisms than anticipated, partly weighing on near-term brand sales.
• Closed and integrated the Cerevel Therapeutics acquisition, strengthening neuroscience with positive Phase 3 tivapadon Parkinson’s data and imracludine schizophrenia readouts due in Q4.
• Global aesthetics sales grew just 1.8%, as weaker filler volumes in the U.S. and China led to a moderated Juvederm outlook amid consumer spending headwinds.

Presentation

[Operator]

Good morning, and thank you for standing by. Welcome to the AbbVie Third Quarter 2024 earnings conference call. All participants will be able to listen only until the question-and-answer portion of this call. You may ask a question by pressing star one on your phone. Today's call is being recorded. I would now like to introduce Ms. Liz Shea, Senior Vice President, Investor Relations.

[Liz Shea, SVP of Investor Relations at AbbVie]

Good morning, and thanks for joining us. Also on the call with me today are Rob Michael, Chief Executive Officer, Geoff Stewart, Executive Vice President, Chief Commercial Officer, Roopal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer, Scott Reents, Executive Vice President, Chief Financial Officer, and Carrie Strom, Senior Vice President, AbbVie and President, Global Allergan Aesthetics. Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in our forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law.

[Liz Shea, SVP of Investor Relations at AbbVie]

On today's conference call, non-GAAP financial measures will be used to help investors understand AbbVie's business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Following our prepared remarks, we'll take your questions. So with that, I'll turn the call over to Rob.

[Rob Michael, CEO at AbbVie]

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie is performing exceptionally well, and I'm extremely pleased with the execution against our strategic priorities, including continued double-digit sales growth from our ex-Humira platform, the closing and integration of Cerevel Therapeutics, and the progress we are making to build and advance a compelling pipeline of innovative medicines. Turning to our results, AbbVie's diversified portfolio delivered sales that were $260 million above our expectations and reflect robust mid-single-digit operational sales growth. Our ex-Humira platform drove this overachievement, including growth of nearly 18%. The momentum of Skyrizi and Rinvoq is especially impressive, with combined sales expected to exceed $17 billion this year, which is $1.3 billion above our initial expectations, and we see substantial opportunity for continued strong growth well into the next decade. Several other key products also delivered double-digit sales growth, including Venclexta, Vraylar, Ubrelvy, and Qulipta.

[Rob Michael, CEO at AbbVie]

This broad-based performance further demonstrates the strength of our commercial portfolio. For the third time this year, we are raising our full-year revenue and adjusted EPS guidance. We are increasing our full-year revenue guidance by $500 million and have now raised total revenue by $1.8 billion since our initial guidance in February. We are also raising our full-year adjusted earnings per share guidance by $0.15 and now expect adjusted EPS between $10.90-$10.94. In addition to achieving strong quarterly results, we have been very focused on investing in the business to generate sustainable long-term performance in the 2030s and beyond. During the quarter, we successfully completed the acquisition of Cerevel Therapeutics, strengthening our neuroscience pipeline. Cerevel enhances our ability to help patients suffering from devastating conditions such as Parkinson's and schizophrenia.

[Rob Michael, CEO at AbbVie]

The integration has been seamless, and we are excited to have the talented Cerevel team join our organization. Within the Cerevel pipeline, we are very pleased with the positive phase three results and emerging profile of tavapadon in Parkinson's, and we remain on track to read out both pivotal studies for emraclidine in schizophrenia in the fourth quarter. More broadly on the pipeline, we have been advancing key R&D programs across all stages of development. Some notable highlights include the U.S. approvals of Vyalev for advanced Parkinson's and Botox for platysma bands, the U.S. regulatory submission of Teliso-V for non-squamous non-small cell lung cancer, and the start of our phase two Crohn's platform study, which is evaluating Skyrizzi in combination with several novel biologics. In summary, AbbVie continues to demonstrate strong commercial, operational, and R&D execution.

[Rob Michael, CEO at AbbVie]

The robust performance of our growth platform once again exceeded our expectations, and we see numerous opportunities to drive long-term growth. Further underscoring our confidence in that growth, today we announced a 5.8% increase in our quarterly cash dividend, beginning with a dividend payable in February 2025. Since inception, we have increased our quarterly dividend by more than 300%. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

Thank you, Rob. I'm extremely pleased with the continued strong momentum across the therapeutic portfolio. I'll start with the quarterly results for immunology, which delivered total revenues of more than $7 billion, up 4.8% on an operational basis. Skyrizzi global sales were $3.2 billion, up 51.5% on an operational basis, exceeding our expectations. We are seeing robust prescription growth across psoriatic disease, with Skyrizzi achieving in-play biologic share leadership in approximately now 30 key countries. In the U.S., we continue to capture nearly one out of every two in-play psoriatic disease patients on biologic therapy, and we see substantial room for further total share growth. We believe that Skyrizzi's best-in-class profile, with nearly complete skin clearance, high durability of response, easy onboarding, and quarterly dosing for maintenance therapy, sets a very high bar relative to other therapies on market or in development.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

Skyrizzi has also demonstrated a compelling clinical profile in IBD, including strong endoscopic data paired with convenient dosing. This differentiated profile, as well as our compelling head-to-head sequence data versus Stelara, is supporting very rapid uptake in Crohn's disease, where Skyrizzi continues to gain market share globally, achieving in-play patient leadership across all lines of therapy in the U.S., Japan, and Canada. Skyrizzi's U.S. in-play patient share is now approximately 32%, more than double the share of the second biologic treatment, and with Skyrizzi's total prescription share of approximately 8%, we see significant opportunity for revenue inflection in Crohn's going forward. While we are still very early in our launch in the U.S. and Europe, we also anticipate robust uptake for Skyrizzi in ulcerative colitis, the new indication. Initial prescription trends, as well as feedback from gastroenterologists, have been overwhelmingly positive.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

Physicians are particularly impressed with the data that has been demonstrated for naive UC patients who have not been exposed yet to biologics, where Skyrizzi achieved very high results for clinical remission and endoscopic response. We have now secured broad formulary access for Skyrizzi in UC, with sales in this indication expected to ramp meaningfully over the next several quarters, so given the momentum we are seeing across all of these indications, we will be raising our full-year sales guidance once again for Skyrizzi. Turning now to Rinvoq, which is also demonstrating robust growth. Global sales were $1.6 billion, up 47.4% on an operational basis. We continue to see strong prescription growth across all seven of Rinvoq's approved indications. I'm especially pleased with our performance in IBD, where Rinvoq's uptake is exceeding our expectations. Rinvoq is now capturing double-digit in-play patient share in the U.S.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

for ulcerative colitis as well as Crohn's disease. Both indications are now available in more than 75 countries, with reimbursement and share continuing to increase. I also wanted to highlight our recent performance in atopic dermatitis, where Rinvoq is seeing an acceleration of in-play share following recent positive data from our second head-to-head study versus Dupixent. As an oral option that provides rapid skin clearance and itch relief, we believe Rinvoq's strong differentiated profile will continue to compete well in this highly underpenetrated AD market. As a result of this continued strong performance, we will also be increasing the full-year sales guidance once again for Rinvoq. Looking forward, we see substantial momentum for both Skyrizzi and Rinvoq, including continued share gains across existing indications on top of the typical underlying market growth across rheum, derm, and gastro.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

Additionally, we are making excellent progress with several new indications for Rinvoq across sizable markets that will have the potential to provide another significant revenue inflection in the second half of this decade and into the 2030s. From a competitive perspective, a key element of Skyrizzi and Rinvoq's success has been their strong differentiation with compelling head-to-head data against several novel therapies. This includes Skyrizzi superiority versus Humira, Cosentyx, Otezla, and Stelara in psoriasis, as well as Stelara in Crohn's disease, and Rinvoq superiority versus Humira and Orencia in rheumatoid arthritis, as well as Dupixent in atopic dermatitis. To further support our differentiation, we have another head-to-head study ongoing for Skyrizzi versus Sotyktu in psoriasis, with plans also underway now for a study comparing Skyrizzi versus Entyvio in ulcerative colitis. So given all of these factors, we feel very confident about the long-term growth prospects for both Skyrizzi and Rinvoq.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

Turning now to Humira, which delivered global sales of $2.2 billion, down 36.5% on an operational basis due to biosimilar competition. While Humira share erosion to biosimilars in the U.S. is largely in line with our expectations, we are now seeing more Humira molecule volume moving to other novel mechanisms than previously anticipated. So while this has an unfavorable impact to Humira sales, we are seeing a benefit to Skyrizzi and Rinvoq, which is a very favorable dynamic for our immunology portfolio now and certainly over the long term. Moving now to oncology, where total revenues were approximately $1.7 billion. Imbruvica global revenues were $828 million, down 8.8%, reflecting continued competitive dynamics in CLL, partially offset by higher persistency rates for existing patients. Venclexta is performing extremely well. Global sales were $677 million, up 18.2% on an operational basis.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

This reflects strong momentum in CLL, especially in Europe, where recent guideline changes recommend combination use of Venclexta plus BTK inhibitors as a preferred fixed-duration treatment versus continuous BTK treatment alone. Growth is also supported by our very strong share position in frontline AML, where Venclexta is the leading treatment for patients who are ineligible for intensive induction chemotherapy. We are also seeing nice sequential revenue growth from Elahere and Epkinly, which are both demonstrating strong launch trajectories. Turning now to neuroscience, where total revenues were more than $2.3 billion, up 16% on an operational basis. Vraylar is demonstrating robust performance. Sales were $875 million, up 16.6% on an operational basis, reflecting continued new prescription growth in both bipolar disorder and adjunctive MDD.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

Within migraine, our leading oral CGRP therapies contributed $445 million in combined revenue this quarter, reflecting growth of approximately 22% as we continue to see increasing prescription demand for both Ubrelvy and Qulipta. Global Botox therapeutic sales were $848 million, reflecting strong performance in chronic migraine as well as the other approved indications. Finally, we are very excited for the recent U.S. approval of Vyalev, a transformative therapy for patients with advanced Parkinson's disease who are uncontrolled on oral therapy alone. As a less invasive non-surgical delivery system that can provide meaningful improvements in on-time and off-time, we believe Vyalev has the potential to significantly expand use beyond current device-aided therapies. Sales in the U.S. for Vyalev are expected to ramp gradually over the next several quarters as we work to establish the appropriate Medicare coverage and benefit determination.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

At the same time, we are very encouraged by the interest in uptake internationally, where we have approval now in 35 countries with several thousand patients already on treatment. Longer term, we anticipate peak sales of Vyalev to exceed $1 billion. So overall, I'm very pleased with the continued commercial execution and performance across the therapeutic portfolio. And with that, I'll turn the call over to Carrie for additional comments on aesthetics. Carrie.

[Carrie Strom, SVP & President, Global Allergan Aesthetics at AbbVie]

Thank you, Jeff. Third quarter global aesthetic sales were more than $1.2 billion, representing growth of 1.8% on an operational basis. In the U.S., aesthetic sales of $791 million increased by 3.9%, driven by growth from Botox Cosmetic as well as other brands across our broad portfolio. U.S. Botox Cosmetic sales were $414 million, an increase of 6.5% versus the prior year. Favorable pricing dynamics and facial toxin market growth more than offset modest share erosion. Botox Cosmetic remains the clear market leader. U.S. Juvederm sales were $105 million. Juvederm's market-leading share was consistent with last year, and the overall filler market was roughly flat to the prior year. While the U.S. facial injectable market remains largely stable, growth is below historical rates. As a result, there is a reluctance from customers to maintain traditional toxin and filler inventory levels.

[Carrie Strom, SVP & President, Global Allergan Aesthetics at AbbVie]

Based upon the relatively higher price point of filler procedures in a still challenging U.S. economic environment, Juvederm is more impacted by this dynamic, which can be seen in third quarter results. Internationally, aesthetic sales were $448 million, reflecting a decline of 1.6% on an operational basis. Within China, the economic dynamics that weighed on our results during the first half of the year have continued to impact consumer spending. This has created challenging aesthetic market conditions that have been particularly impactful to Juvederm's performance. Primarily due to this circumstance, we are moderating our Juvederm sales outlook for the year. We are encouraged by the recently announced government stimulus in China. We will continue to monitor for any further developments and how it could positively impact consumer discretionary spending and aesthetic market growth.

[Carrie Strom, SVP & President, Global Allergan Aesthetics at AbbVie]

Although the current dynamics in China are challenging, its potential remains attractive, and we are committed to bringing innovation to this market that will drive long-term growth. Along those lines, in China, we recently received approval for the Botox Cosmetic indication in masseter muscle prominence, marking the first toxin in the world to have this indication. This approval enables us to market and train to this important treatment option that addresses a top aesthetic concern among many Asian patients. In the U.S., we are pleased that we received FDA approval for the use of Botox Cosmetic to treat platysma bands. This approval positions Botox as the only cosmetic toxin with four distinct indications and enables us to market and train beyond the face for the improvement of neck and jawline appearance. We also remain excited about the opportunity for BoNT/E.

[Carrie Strom, SVP & President, Global Allergan Aesthetics at AbbVie]

Based upon its rapid onset and short-acting profile, BoNT/E has the potential to activate new patients that are hesitant to try facial toxins, driving long-term market expansion. Looking to the future, we continue to see significant growth potential for our aesthetics portfolio based upon low market penetration rates, our commitment to introduce novel treatments, our strong customer relationships, and our position as the global aesthetics leader. With that, I'll turn the call over to Roopal.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Thank you, Carrie. Starting with immunology, where we recently began our phase two Crohn's disease platform study, which will evaluate Skyrizi in combination with several other novel biologics. This study will initially look at combinations of Skyrizi with our anti-IL-1 alpha beta bispecific Lutikizumab and our novel anti-alpha 4 beta 7 antibody ABBV-382. We are planning to include additional novel biologics in the future. Our approach in immunology has been to pursue therapies that are well differentiated and have the potential to elevate standard of care. We have clearly achieved this with Rinvoq and Skyrizi across multiple indications, including Crohn's disease and ulcerative colitis. As we think about how the IBD market will evolve, we view dual mechanism approaches as having the greatest potential to achieve levels of efficacy that are above current standard of care.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

We are very excited about the potential for these combination therapies in IBD, and we look forward to sharing updates as the data mature. In oncology, we continue to make very good progress across all stages of our heme and solid tumor pipeline. In the area of solid tumors, we recently submitted our application to the FDA for accelerated approval of Teliso-V as a monotherapy in patients with previously treated c-Met overexpressing EGFR wild type non-squamous non-small cell lung cancer. Once approved, Teliso-V will become the first c-Met-targeted ADC to enter non-small cell lung cancer, a segment with limited options and where patients tend to have a very poor prognosis, especially if their tumors express c-Met. We anticipate an approval decision in the first half of 2025.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

In the quarter, we also received a positive CHMP opinion recommending Elahere for the treatment of platinum-resistant ovarian cancer in patients with high expression of FR alpha and treated with up to three prior therapies. This decision was based on the positive phase 3 Mirasol trial, where Elahere demonstrated an overall survival benefit and significantly reduced the risk of cancer progression. We anticipate an approval decision in Europe in the fourth quarter. At the recent ESMO Congress, we presented new phase 1 data for ABBV-400 in advanced non-small cell lung cancer and gastroesophageal cancer. Early efficacy data from the lung cohort are promising, with an objective response rate of 48% across all patients in the study and response rates ranging from 60%-78% in patients with overexpressed c-Met.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

We are very pleased with the level of activity we're seeing from our next generation c-Met ADC, which compares favorably to Teliso-V, where we've seen objective response rates ranging from 23% in medium c-Met expressors to 35% in patients with high c-Met expression. 400 has the potential to expand our c-Met portfolio into earlier lines of therapy and lower levels of c-Met expression in lung cancer. Similarly, in patients with advanced gastroesophageal cancer, 400 demonstrated promising activity with an objective response rate of 29% across all patients. This compares well against combination and single-agent chemotherapy, which are the standards of care for patients in second line and third line of therapy, respectively. Based on these encouraging preliminary data, we plan to begin phase two studies for 400 in both non-small cell lung cancer and gastroesophageal cancer.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Recall, we've also advanced 400 in late line colorectal cancer, and we remain on track to begin a phase 3 study later this year. In the area of hematologic oncology, we received approval in Europe for Tepkinly as a monotherapy treatment for patients with relapsed refractory follicular lymphoma after two or more lines of therapy. Epcoritamab is now the only T-cell engaging bispecific approved in the U.S. and Europe to treat both follicular lymphoma and diffuse large B-cell lymphoma. Moving to neuroscience, we recently received FDA approval for Vyalev as the first subcutaneous 24-hour infusion of levodopa-based therapy for the treatment of motor fluctuations in adults with advanced Parkinson's disease. Our novel subcutaneous levodopa-carbidopa delivery system offers meaningful benefits over current treatment options and others that are in development. Vyalev delivers significant improvements in on-time and off-time with a non-surgical 24-hour delivery system.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

It can deliver high levodopa doses similar to the amount provided by Duopa, and it doesn't require combination with oral drugs to achieve efficacy. We're extremely excited to bring this transformative therapeutic option to patients in the U.S. We also recently announced positive top-line results from the phase three TEMPO-1 trial, which evaluated fixed doses of monotherapy tavapadon in early Parkinson's disease. In the study, both doses of tavapadon met the primary endpoint, demonstrating a significant reduction in the severity of Parkinson's disease symptoms compared with placebo at week 26, as measured by decreases in the combined scores for parts two and three of the Unified Parkinson's Disease Rating Scale. Key secondary endpoints were also met in this study.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

We are very pleased with the emerging profile for tavapadon, which shows it is generally safe and well tolerated, and it can drive strong efficacy as a monotherapy in early Parkinson's and as an adjunctive treatment in patients with more advanced disease. Results from the two phase 3 studies thus far look favorable compared to other dopamine agonists on the market, and we believe tavapadon has the potential to become an important new treatment option as a monotherapy for Parkinson's patients, as well as an adjunct to oral levodopa/carbidopa. We expect to see results from TEMPO-2 later this year, which is our phase 3 monotherapy study evaluating a flexible dose of tavapadon. Results from our long-term safety study, TEMPO-4, are expected next year. As Rob mentioned, we remain on track to share data from the two Emraclidine pivotal studies in the fourth quarter.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

We also continue to invest in external innovation to strengthen our neuroscience pipeline. We recently announced two deals in this area, including an expanded collaboration with Gedeon Richter to develop novel targets for neuropsychiatric conditions and the acquisition of Aliada Therapeutics, an anti-pyroglutamate A beta antibody, which uses a unique blood-brain barrier crossing and amyloid aggregate clearing technology. Aliada's lead antibody has been able to achieve encouraging levels in cerebrospinal fluid with an extended half-life and the potential to be delivered subcutaneously. This molecule could become a best-in-class treatment for Alzheimer's disease. Aliada's novel technologies for enabling therapeutics to access the central nervous system also have the potential to be used with other programs across our neuroscience pipeline. In aesthetics, we recently received approval for Botox in the U.S. for moderate to severe platysma bands, marking the first global approval in this indication for any neurotoxin.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

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

[Scott Reents, EVP & CFO at AbbVie]

Thank you, Roopal. Starting with our third quarter results, we reported adjusted earnings per share of $3, which is $0.10 above our guidance midpoint. These results include a $0.04 unfavorable impact from acquired IPR&D expense. Total net revenues were nearly $14.5 billion, reflecting robust growth of 4.9% on an operational basis, excluding a 1.1% unfavorable impact from foreign exchange. Our ex-Humira Growth Platform, which covers more than 80% of AbbVie's total sales, delivered reported growth of nearly 18%, once again exceeding our expectations. The adjusted operating margin ratio was 46.7% of sales. This includes adjusted gross margin of 84.4%, adjusted R&D expense of 14.2%, acquired IPR&D expense of 0.6%, and adjusted SG&A expense of 23%. Net interest expense was $591 million. The adjusted tax rate was 16.2%.

[Scott Reents, EVP & CFO at AbbVie]

Turning to our financial outlook, we are raising the midpoint of our full-year adjusted earnings per share guidance by $0.15 and now expect adjusted earnings per share between $10.90 and $10.94. Please note that this guidance does not include an estimate for acquired IPR&D expense that may be incurred beyond the third quarter. We now expect total net revenues of approximately $56 billion, an increase of $500 million. At current rates, we expect foreign exchange to have a 0.7% unfavorable impact on full-year sales growth. This revenue forecast includes the following updates to select key products and therapeutic areas. We now approximate Skyrizi global sales of $11.5 billion, an increase of $500 million due to continued strong performance across all approved indications. Rinvoq total revenue of $5.8 billion, an increase of $100 million, reflecting robust uptake in IBD. U.S.

[Scott Reents, EVP & CFO at AbbVie]

Humira total sales of $7.4 billion, a decrease of $400 million, reflecting more Humira molecule volume moving to other novel mechanisms, including Skyrizzi and Rinvoq. Imbruvica total revenue of $3.3 billion, an increase of $200 million, reflecting higher persistency rates for existing patients. Venclexta total sales of $2.6 billion, an increase of $100 million, reflecting momentum in both U.S. and international markets. Aesthetics global revenue of $5.3 billion, a decrease of $200 million, almost entirely due to lower Juvederm volume, which continues to be impacted by challenging economic conditions in key markets. Vraylar total sales of $3.3 billion, a decrease of $100 million, reflecting continued strong prescription demand partially offset by modestly unfavorable channel mix. For Botox, we now expect global revenue in the therapeutic space of $3.3 billion, an increase of $100 million, reflecting robust demand across all indications.

[Scott Reents, EVP & CFO at AbbVie]

Moving to the P&L for 2024, we continue to forecast a full-year adjusted gross margin of approximately 84% of sales, adjusted R&D investment of 14%, adjusted SG&A expense of 23.5%, as well as an adjusted operating margin ratio of roughly 44.5% of sales, which includes a 2.1% unfavorable impact from acquired IPR&D expense. Turning to the fourth quarter, we anticipate net revenues approaching $14.8 billion. At current rates, we expect foreign exchange to have a neutral impact on sales growth. We expect adjusted earnings per share between $2.94 and $2.98. This guidance does not include acquired IPR&D expense that may be incurred in the quarter and excludes any potential impact from the recently announced acquisition of Aliada Therapeutics. Finally, AbbVie's robust business performance continues to support our capital allocation priorities.

[Scott Reents, EVP & CFO at AbbVie]

Our cash balance at the end of September was nearly $7.3 billion, and we generated more than $11 billion of free cash flow, which includes approximately $1.5 billion of Skyrizzi royalty payments in the first nine months of the year. This free cash flow fully supports a strong and growing quarterly dividend, which we are increasing 5.8% to $1.64 per share, beginning with a dividend payable in 2025, as well as debt repayment, where we remain on track to pay down the roughly $7 billion of maturities this year and anticipate achieving a net leverage ratio of two times by the end of 2026. Our strong cash flow also provides capacity for additional business development. We have executed more than a dozen early-stage deals so far this year, and we continue to assess external innovation across all of our key growth areas.

[Scott Reents, EVP & CFO at AbbVie]

In closing, AbbVie has once again delivered strong top and bottom-line results. I'm very pleased with the momentum of our immunology growth platform, including continued robust performance from Skyrizi and Rinvoq, which further supports AbbVie's long-term outlook. With that, I'll turn the call back over to Liz.

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, Scott. We will now open the call for questions. We are aware of a peer earnings call that begins at 9:00 A.M. Central, so we will do our best to wrap up our Q&A right around the top of the hour. In the interest of hearing from as many analysts as possible, please limit yourself to just one question. Operator, first question, please.

[Operator]

Thank you. Our first question comes from Chris Schott with JPMorgan. Let me ask your question.

[Christopher Schott, Managing Director and Senior Equity Research Analyst at JPMorgan.]

Great. Thanks so much for the question, and yeah, congrats on the results. My question was really just centered around 2025 and just some preliminary outlook there. I guess the specific question, you mentioned Humira volumes are maybe shifting over to newer drugs. Could you comment at all about just in terms of where the street sits currently with Humira? I think the consensus number is about $6.8 billion. Is that a reasonable forecast, or is that something that could see higher erosion given what's happening with Humira? And then bigger picture, kind of tied to that, the mid-single-digit top-line growth, it sounds like the trends you're seeing here may be a net positive, where maybe Humira volumes are declining, but that's largely moving over to Skyrizi and Rinvoq.

[Christopher Schott, Managing Director and Senior Equity Research Analyst at JPMorgan.]

I just want to get some context of, is that mid-single-digit target still a reasonable one to think about for AbbVie next year? Thank you.

[Rob Michael, CEO at AbbVie]

Thanks for the question, Chris. This is Rob. I'll start, and then I'll have Jeff supplement. So, yes, we are very confident in that robust mid-single-digit growth, both top line, bottom line for 2025. I think you've interpreted it correctly that the trends we're seeing are net positive and that we're seeing overperformance from Skyrizzi and Rinvoq more than offsetting the dynamics with Humira. And so, as we look at consensus, that's probably not reflected. So I think it's fair to say there's a shift that's required there, but we're very pleased with the strong uptake for Skyrizzi and Rinvoq. As I mentioned in my remarks, we have now delivered guidance increases of $1.3 billion for Skyrizzi and Rinvoq in total. We're seeing tremendous momentum, particularly with the IBD indications across really all indications, but particularly in IBD.

[Rob Michael, CEO at AbbVie]

And we are starting to see this dynamic with the overall Humira molecule, where there is the switching that we're seeing now to other mechanisms, including Skyrizi and Rinvoq, which is a long-term, very positive benefit. So, as we look at the business, we're very well positioned. Essentially, two years after the U.S. Humira LOE, we'll be returning to robust top-line and bottom-line growth and really performance across many parts of the business, not just Skyrizi and Rinvoq. You've seen us perform very nicely in oncology. We've obviously overperformed our expectations in oncology. Very pleased with the early returns on Elahere. Venclexta is performing exceptionally well. The guidelines changes in Europe are positive as we think about the combination opportunities with BTK inhibitors. So Venclexta is going to be strong. Epkinly is performing very nicely as well.

[Rob Michael, CEO at AbbVie]

And then when I look across the neuroscience franchise, Vraylar is a strong grower. We're very pleased with the migraine portfolio. Obviously, very excited about Cerevel and doing a number of deals now on the early pipeline, both with Gedeon Richter and Aliada, that really fortifies the long-term view for neuroscience as well. And then with aesthetics, while it's below our expectations for this year, obviously the economic conditions have dictated that. We still have tremendous confidence in the long-term outlook for that business. But as we look at 2025, we're very confident in our ability to return to that robust mid-single-digit growth. Yeah, thanks, Rob. And I'll just add a little bit more flavor. It's Jeff. So we saw this trend start to emerge in terms of this compression of the, let's say, the ADA molecule or the ADA market, that's Humira plus biosimilars.

[Rob Michael, CEO at AbbVie]

Just prior to the CVS event, and then it accelerated over Q2, and again, we saw it throughout Q3, so that's why we've adapted our approach here. Other than this dynamic, the biosimilar dynamics are playing out really exactly as we anticipated, and you can see this compression in the IQVIA data. So really, the shrinking of the Humira or the U.S. market is something that's quite clear. It's a little difficult to quantify over time with full precision, but we can see that the molecule continues to decline sequentially, and we continue to see strong share gains, as I highlighted for Skyrizi and Rinvoq. So this incremental flow from the molecule compression, it's clearly a contributing factor to some of the overperformance that we saw in Q2 and Q3, but it's really only one of several.

[Rob Michael, CEO at AbbVie]

We've also had significant incremental investments in the consumer space, the Salesforce approaches we've taken, Chris, the integration of the head-to-head data I talked about, and certainly now we're starting to see the impact of the UC launch. So when we put all that together, we think that the dynamics are net-net quite positive overall. And as Rob said, we're still looking good for 2025.

[Liz Shea, SVP of Investor Relations at AbbVie]

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

[Operator]

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

[Operator]

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

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Hey, Mohit, it's Roopal. I'll take that one. So when we look at the data, in particular, I think Jeff highlighted this, in ulcerative colitis with Skyrizzi in this naive patient population, this is a patient population that hasn't seen biologics or other advanced therapies like JAK inhibitors. The endoscopic improvement, and this is in label, was 76% in the maintenance portion of this. So it was quite high, in fact, higher than what we've observed even with Rinvoq. So that gave us a good amount of confidence that we have the potential to differentiate with all other assets. You heard about the Skyrizzi versus ustekinumab head-to-head in Crohn's disease, but this one gives us a unique opportunity there to go head-to-head with Vedolizumab, especially looking at endoscopic improvement.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

So for that particular endpoint you asked about, the type of endpoint, there we would think about superiority because of it being an objective endpoint. Sometimes with symptoms like clinical remission, these could bounce around. That may be one where we consider as non-inferiority, but I would say endoscopic improvements in the field are now believed to be highly predictive of long-term outcomes. So that would be how we're looking at this, Mohit.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Thank you very much. Appreciate it.

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, Mohit. Operator, next question, please.

[Operator]

Thank you. Our next question comes from Vamil Divan with Guggenheim Securities. You may ask your question.

[Vamil Divan, Managing Director and Senior Equity Research Analyst at Guggenheim Securities.]

Great. Thanks for taking the question. So yeah, I'll keep it as one on Emraclidine. Just getting a lot of questions from investors kind of leading up to that data release. So maybe even just for level-set expectations on what you're hoping to see from the data, especially obviously now we have the approvals from Bristol with Cobenfy. Kind of what are you thinking in terms of efficacy, safety profile relative to that competitor? And also on the liver testing requirement that they had at initiation, is that something you'd expect as well based on your data? And then just to tie into that, just in terms of the data releases, will you expect to get one press release, or do you think you'll be combining both studies, or should we still expect the two separate releases? Thank you.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Yeah, Vamil, it's Roopal. I'll take that one. So a couple of things, maybe starting with what we've observed with the approval. So we were encouraged by the lack of a boxed warning, meaning there's a recognition that this is a unique mechanism of action looking specifically at the muscarinic class. So we were pleased to see that. I think what was notable for us was the GI adverse events, including how that would play out in terms of longer-term tolerability. Also, anticholinergic effects, bladder retention, that was something I guess we did not anticipate. You mentioned hepatic monitoring. That was something that we didn't anticipate. The other thing that was notable is, along with the BID dosing, there is a food effect, so you have to wait a certain period amount of time when you eat and after you eat when you can take the pill.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

So when we think about our profile, we continue to be encouraged with Emraclidine being a single agent, well, once a day, no food effect. We don't see the extent of GI effects. We have not observed in the phase 1b data any bladder issues. And when we had looked at that 1b data, we didn't see any hepatic issues, but we don't anticipate any type of laboratory monitoring. Also, we were also thinking about neurodegeneration-associated psychoses. And these patients are typically older and likely more sensitive to anticholinergic effects. So we continue to see an opportunity in that patient population as well. So we've stated that the data will read out here in the next couple of months, in the quarter. The same team is working on wrapping up these two studies.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

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

[Liz Shea, SVP of Investor Relations at AbbVie]

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

[Operator]

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

[Terence Flynn, Managing Director and Senior Equity Research Analyst at Morgan Stanley]

Hi. Thanks for taking the question. Maybe a two-part from you. Just wondering if you can, I'm assuming contracting's now wrapped up, if you can comment at all on how to think about Skyrizzi and Rinvoq, formulary positioning and pricing, just high level for 2025. Thank you.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

Yeah. Hi, it's Jeff. So yeah, contracting is very, very close to wrapping up. We have a few more nuances, and so typically that may take another month or so. Overall, we're making very good progress on contracting next year. So in terms of what we've highlighted in the past, we do not anticipate any material change for Skyrizi and Rinvoq in terms of the access for next year across Medicare or the commercial plans. We have quite high, very broad access, and we assume that that will continue. In terms of what we've highlighted to anticipate, we've said that we do have over our near-term and LRP sort of a negative pricing environment, but it's modest. It's nothing like we saw many quarters ago where we had seven indications. So we said from a rebate perspective, low single-digit changes is a reasonable assumption that we feel confident in.

[Jeff Stewart, EVP & Chief Commercial Officer at AbbVie]

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

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, Terence. Operator, next question, please.

[Operator]

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

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

Apologies. I was on mute. Thank you for the question. All the comments you've made about SKYRIZI or RINVOQ and the molecule switching are very helpful. Just curious, as we think on the forward about other potential mechanisms and modalities in particular, I think we have competitor oral data that's coming up. Interested to hear your thoughts in terms of that modality difference, as well as how you might rank your optimism for some of the new mechanisms of action. I believe you have a TL1A as well in your pipeline, the earlier stage. Thank you.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Hi, Chris. It's Roopal. I'll take that one. With respect to the oral, I'll take us back to the Skyrizi head-to-head that occurred with apremilast, which is also an oral. The data were substantially higher from an efficacy standpoint for Skyrizi, as was the tolerability, along with when we asked patients what did they prefer. They actually preferred quarterly subcutaneous dosing. So I would think about it that way as well. Now, the question would be, it's a similar mechanism. Could the efficacy be better than what has been observed with apremilast in psoriasis? Well, what we saw in the phase two data, my recollection still is that Skyrizi is a full 50% higher when it comes to full skin clearance at a PASI 100. And that's where the bar is now, at PASI 90 and PASI 100. So we still see an efficacy advantage.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Also, the data I'm sharing are phase three Skyrizi data. The data that we saw for the oral IL-23 was from phase two. So there is reasonable potential that the efficacy data tend to settle down when you go to a broader patient population, especially those that have had longer-standing disease or have seen other therapies like other biologics. So we continue to feel very good and optimistic about our profile versus any emerging competition. Also, we think about our assets from a global standpoint, and when you think about the majority of the countries, they are very driven by efficacy to gain access. And in the oral space, we don't really see it across the globe. Maybe there's a couple of countries. I think Jeff has mentioned the U.S., but that space may be referred to as a pre-biologic space.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Maybe more of an influence on the Tyk2 or on apremilast is how we see it. In terms of other mechanisms that we like, as I mentioned, we like anti-IL-23, the way it is delivered with Skyrizi, the depth of response, the high durability, and the convenience with quarterly dosing. If we can couple that with other assets as part of our combination approach, we think that is going to be extremely competitive in the future. Mechanisms like TL1A, we think, are going to be important, especially from a combination approach, which we have one internally. We think the ulcerative colitis data are encouraging, but from a monotherapy standpoint, not differentiated, especially when you look at the Skyrizi data that I mentioned earlier and Rinvoq. In Crohn's, something like TL1A, we think it really does need a combo.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

That'll be part of our platform along with our novel alpha 4 beta 7. We think that's also a good combo. Then we've also provided very strong data in hidradenitis suppurativa with our IL-1 alpha beta lutikizumab. We've seen some preclinical signals that IL-1 beta could be a driver of disease and resistance to other biologics. Lutikizumab will also be part of the combo in our IBD platform. That's just some of the mechanisms that we're excited about. There are several others that are early in the pipeline, and we will give you more information about those as the data mature.

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, Chris.

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks for your help.

[Liz Shea, SVP of Investor Relations at AbbVie]

Operator, next question, please.

[Operator]

Thank you. Our next question comes from Trung Huynh with UBS. You may ask your question.

[Trung Huynh, Senior Equity Research Analyst at UBS Securities]

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

[Rob Michael, CEO at AbbVie]

So thanks for the question. This is Rob. I'll take that one. So as we think about the long-term guide, which is greater than $9 billion by 2029, you need to believe that you can have essentially a compound growth of around 11% to get there. If we look at the historical growth of this market, it's been, let's say, called low double digits, low teens. As we look at it going forward, we think of probably a more prudent assumption is when we see the recovery, something more in the high single digits, right? So you need something beyond just the market recovery to get there.

[Rob Michael, CEO at AbbVie]

And when we look at the innovation that we're bringing, particularly with the short-acting or fast-onset short-acting BoNT/E that we expect to launch in 2026, that could really transform the market because if you think about the number one barrier for patients is fear of an unnatural look, that could really unlock a part of the market that's dormant right now. Plus, it could also lead to share gains. And so I think we need to see, one, how the market recovers. So I would say 2025 and 2026, and then ultimately see how the BoNT/E launch ramps in 2026. At that point, we'll have a better sense of the $9 billion as we sit here today.

[Rob Michael, CEO at AbbVie]

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

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, Trung. Operator, next question, please.

[Operator]

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

[Geoff Meacham, Managing Director and Senior Equity Research Analyst at Citi]

Good morning, everyone. Thanks for the question. I had a bigger picture one for Rob. When I look at your therapeutic areas, Eye Care stands out as one that's pretty modest contributor today and also down the road. How would you rank that business strategically? Related, when you look at BD going forward, are there other TAs that you're looking at that could be additive, just thinking specifically maybe metabolic or cardio? Thank you.

[Rob Michael, CEO at AbbVie]

Thanks for the question, Jeff. So this is Rob. So yeah, I mean, our main focus is our five key growth areas, which includes Eye Care, includes immunology, oncology, neuroscience, aesthetics, and Eye Care. We participate in large markets with high unmet need that have great growth potential. Within those five verticals, we're building depth across 24 core areas. That does include ICARE as well. I mean, think about diabetic retinopathy, wet AMD, prescription dry eye medications. ICARE does play an important role, albeit it's not as high of a growth driver as the other four verticals, but it is part of our five. That ultimately guides both our internal R&D investments as well as our BD efforts, which, as you know, continue to be very active.

[Rob Michael, CEO at AbbVie]

So far this year, we've executed 15 deals along those lines, really focused more on early-stage opportunities to drive growth in the next decade. So that's our primary focus. Now, if we see an opportunity for differentiation in a large market with high unmet need like metabolics, we would consider pursuing it, especially if it can help drive growth in the next decade. But again, it would be more opportunistic. We'd have to see differentiation. And right now, it's not our primary focus. But again, we're open to more sources of growth for the next decade if we see differentiation that we can create value. And we certainly have the financial wherewithal to pursue those opportunities.

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, Jeff. Operator, next question, please.

[Operator]

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

[James Shin, Equity Research Analyst at Deutsche Bank]

Good morning, guys. Thanks for taking our question. For Emraclidine's readout, I think there's a question on how much erosion could be anticipated. And I know you mentioned that the same team that was originally working on the phase 1B is wrapping up studies and so forth, but there's been some other data that has copied some of Cerevel's strategies, such as high baseline PANSS and so forth. And placebo effect was still kind of surprisingly higher than it should be. Is there any insight on managing this placebo effect? Thank you.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Thanks, James. It's Roopal. When we did our thorough diligence, that was a major question that we and the broader team had. So you bring up a good point. Some things that we observed in those two studies that will be the pivotal readouts were what Cerevel was strategically doing. One thing was limiting the number of countries, limiting the number of sites, central review for eligibility criteria, training of raters, certifying those raters, recertifying raters, monitoring blinded data with respect to site activity. So I think those are important factors that could drive placebo in either direction. So what we observed was, we would say, a good control, or at least the best one could do to manage placebo responses.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

So it's hard to know if there's any erosion until we see the data, but the effect size that we did see in the phase one B was a little over 12 points. But we think that was a strong separation. And even if that were to go down a little bit, we still feel that based on the safety profile and tolerability profile, this could still be very, very competitive, even if we saw a droppage in some points on the efficacy side.

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, James. Operator, next question, please.

[Operator]

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

[Carter L. Gould, Senior Biopharma Equity Research Analyst at Barclays]

Great. Good morning. Thanks for taking the questions. I was hoping to follow up a little bit on the Aliada acquisition, sort of what differentiation you saw over some of the other enhanced brain delivery kind of approaches there that gave you confidence. And maybe we've seen AbbVie take a number of shots on goal across Alzheimer's here. It just seems pretty central to your longer-term neuroscience portfolio. Can you maybe just, again, put that in some broader context as you think about the TA strategy longer term? Thank you.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Sure. It's Roopal. I'll take that. Yes, we've been investing for a number of years in the space. In addition to the recent deal, we'll have an option readout with Alector and Trem-2 coming up. We have an SV2A molecule that would look at cognition and other symptoms. Emraclidine could participate in that space from an Alzheimer's psychosis standpoint. We have other pipeline assets that are looking at Tau intracellular and even an approach looking at extracellular Tau. We did have our own A beta monotherapeutic antibody, which we did read out. It did look good, but it wasn't fully differentiated. Moving on to the Aliada deal, what we see there is the ability to access the CSF at what we would say at this stage at higher concentrations than maybe other competitors. So we think that's a good thing.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

The other aspect that we like is an extended half-life. So that could lead to convenient dosing. And if this approach plays out, then one could consider having subcutaneous dosing, even getting out to monthly. And if the efficacy is high because of deeper brain penetration, that could result in lower levels, faster, and a better able to see cognition benefits in a year or 18 months. So those are some of the benefits that we would see. The other benefit would be getting to the parenchymal tissue more broadly, and that could have a reduction in ARIA, which is probably what is disallowing this to really take off. It's very challenging to take an elderly family member to get multiple scans and worry about them having stroke-like symptoms.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

That would be something else we believe we can address with this asset of having a strong safety profile, tolerability, ease of onboarding, and high efficacy, and ultimately strong benefits on cognition.

[Rob Michael, CEO at AbbVie]

This is Rob. I'll just add on here as we think strategically about the neuroscience franchise. I mean, I think about it as having really four main segments. You have psychiatry, migraine, Parkinson's, then neurodegeneration. And if you look at what we've done to build out the long-term growth outlook for this franchise, obviously in psychiatry between Cerevel, Gedeon Richter. We also had the early-stage opportunity with Gilgamesh, really investing in longer-term growth in psychiatry. We have actually a very strong franchise in migraine with the oral CGRPs as well as Botox therapeutic. In Parkinson's, now with the launch of Vyalev, which is performing very nicely outside the US, and we expect will also perform nicely in the US. The early phase three data we've seen so far for Tavapadon, the mitochondrial disease modifying approach, it's early in Parkinson's, another investment we've made.

[Rob Michael, CEO at AbbVie]

And then in Alzheimer's now with Aliada is another, I'd say, long-term investment we're making to grow the neuroscience franchise. There's also adjacencies like ALS, MS that we're interested in that we have some partnerships that we'll continue to pursue. And so we see neuroscience as an important long-term growth driver for the company. We're obviously investing heavily across a number of areas, but we think about it really in those four categories. And so it's one that we're obviously very excited about the future prospects for.

[Liz Shea, SVP of Investor Relations at AbbVie]

Thanks, Carter. Operator, next question, please.

[Operator]

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

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

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

[Rob Michael, CEO at AbbVie]

This is Rob. And Roopal can take the second part of the question. I'll take the first part of the question. So Steve, in the prepared remarks, we were talking about the quarter. We obviously closed the Cerevel transaction in the quarter. That's a significant event. We also did see the phase 3 trial results for tavapadon. So that was important to comment as well. As we've mentioned, we expect the two pivotals for emraclidine to read out in the fourth quarter. So I wouldn't read too much into it other than it was an important event to highlight in the quarter.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Yeah. And it's Roopal. I agree. We have two positive phase three studies with tavapadon. And in the oral space, I don't know if we've seen a new mechanism that could have this type of approach in a very long time. So it is important to discuss that because the unmet need continues to be very, very high. And Parkinson's is a place where we believe we can meaningfully participate in. On the effect size question, when we look at the one B data, it was more than a 12-point differential. So we have observed sometimes the decrement, and the question was around if placebo responses move up a little bit. So that being said, we still think we can maintain a very strong effect size coupled with the safety profile. Remember that the issue here in therapy isn't just about efficacy.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

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

[Liz Shea, SVP of Investor Relations at AbbVie]

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

[Operator]

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

[Luisa Hector, Senior Equity Research Analyst at Berenberg]

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

[Rob Michael, CEO at AbbVie]

Luisa Hector, I'll take the question regarding Vraylar. So it was essentially a channel mix change. It was slight. I would tell you that really kind of had accumulated over the course of the year. And that's why we decided it made sense to make the adjustment. So as that channel mix changed, we saw a little bit of negative price as a result of that. So we took down the Vraylar guidance by $100 million. Now, I would note in neuroscience in totality, that was offset by the raise in Botox therapeutic. So neuroscience in our therapeutic or growth area guide is stable. So maybe the second question will go to Roopal.

[Roopal Thakkar, EVP, R&D & Chief Scientific Officer at AbbVie]

Yeah. It's Roopal. We expanded further. We've had a strong partnership. They're a terrific organization. We have a follow-on to Vraylar that's more D3 leaning that will start entering the clinic quite soon in phase two, looking at bipolar depression and MDD, as well as generalized anxiety disorder. As Rob described, as part of our neuroscience strategy, psychiatry is a big part of that. And having a deeper relationship with Gedeon Richter will allow us to have potentially even more assets in depression, in bipolar disorder, in schizophrenia, and anxiety, and potentially other adjacent indications that we continue to be interested in because the unmet need continues to be very high.

[Liz Shea, SVP of Investor Relations at AbbVie]

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

[Operator]

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

Participants

Executives

• Jeff Stewart, EVP & Chief Commercial Officer
• Liz Shea, SVP of Investor Relations
• Scott Reents, EVP & CFO
• Roopal Thakkar, EVP, R&D & Chief Scientific Officer
• Carrie Strom, SVP & President, Global Allergan Aesthetics
• Rob Michael, CEO

Analysts

• Christopher Schott, Managing Director and Senior Equity Research Analyst at JPMorgan.
• Steve Scala, Managing Director and Senior Equity Research Analyst at TD Cowen
• Luisa Hector, Senior Equity Research Analyst at Berenberg
• Trung Huynh, Senior Equity Research Analyst at UBS Securities
• Carter L. Gould, Senior Biopharma Equity Research Analyst at Barclays
• Analyst 3
• Geoff Meacham, Managing Director and Senior Equity Research Analyst at Citi
• Chris Shibutani, Senior Managing Director and Equity Research Analyst at Goldman Sachs.
• James Shin, Equity Research Analyst at Deutsche Bank
• Vamil Divan, Managing Director and Senior Equity Research Analyst at Guggenheim Securities.
• Terence Flynn, Managing Director and Senior Equity Research Analyst at Morgan Stanley