AbbVie - Q4 2022

Transcript

Operator (participant)

Morning. Thank you for standing by. Welcome to the AbbVie Fourth Quarter 2022 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. I would now like to introduce the call to Ms. Liz Shea, Senior Vice President of Investor Relations. You may proceed.

Liz Shea (SVP of Investor Relations)

Good morning, thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Rob Michael, Vice Chairman and President; Jeff Stewart, Executive Vice President, Chief Commercial Officer; Carrie Strom, Senior Vice President and President, Allergan Aesthetics; and Tom Hudson, Senior Vice President, R&D and Chief Scientific Officer. Joining us for the Q&A portion of the call are Scott Reents, Senior Vice President and Chief Financial Officer, and Roopal Thakkar, Vice President, Global Regulatory Affairs. 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 the 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. 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 the 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. With that, I'll now turn the call over to Rick.

Rick Gonzalez (Chairman of the Board and CEO)

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I'll provide perspective on our overall performance and outlook, then Jeff, Carrie Strom, Tom, and Rob will review our business highlights, pipeline progress, financial results, and 2023 guidance in more detail. Today, we reported another strong quarter and a highly productive year for AbbVie. We delivered full-year 2022 adjusted earnings per share of $13.77, reflecting double-digit growth. Total net revenues of more than $58 billion were up 5.1% on an operational basis, driven by impressive growth from SKYRIZI and RINVOQ, which generated nearly $7.7 billion of combined sales in 2022. As I reflect on our 10 years as an independent company, we have made excellent progress evolving AbbVie into a leading biopharmaceutical company.

We have successfully created a well-diversified portfolio with multiple growth platforms in attractive and sustainable markets. This includes the rapid development and launch of SKYRIZI and RINVOQ across all of HUMIRA's major indications, plus a distinct new indication, atopic dermatitis. We anticipate these two products will collectively exceed the peak revenues achieved by HUMIRA by 2027, with significant growth expected through the end of the decade. We are also building a substantial portfolio of novel heme and solid tumor assets for oncology. The anticipated launches and indication ramp of several new products, like venetoclax in multiple myeloma and MDS, epcoritamab across B-cell malignancies, and Teliso-V, a new treatment option in non-small cell lung cancer, will collectively support growth in the middle of the decade.

We expect continued robust performance in neuroscience with our leading on-market portfolio to address migraine and psychiatric conditions, as well as a promising pipeline for neurodegenerative diseases. We see significant long-term growth potential for aesthetics, an extremely attractive market which is under-penetrated, where we have the leading position in toxins with BOTOX Cosmetic and fillers with JUVÉDERM. Second, we've established a productive, innovations-driven R&D organization with a robust pipeline. Our R&D engine has discovered and developed five major billion-dollar-plus medicines over the past decade. We are committed to pursuing new ways to address patients' most serious health issues and have more than doubled our annual R&D investment since our inception. The breadth and the depth of our pipeline, which now includes more than 80 programs across all development stages, further supports our long-term growth outlook.

Lastly, we have maintained a strong financial position to fully invest in innovative science and commercial initiatives across our therapeutic categories to drive long-term growth. We've also used that financial position to support a robust and growing dividend, which we have increased by 270% since our inception. We have also used it as capacity to pursue value-enhancing business development to augment our existing portfolio and pipeline. With these strong operating characteristics, we remain well positioned to absorb the impact from the HUMIRA LOE and quickly return to robust sales growth in 2025. As it pertains to AbbVie's near-term outlook, we anticipate 2023 adjusted earnings per share of $10.70-$11.10.

This guidance range contemplates the expected headwind from direct biosimilar competition with U.S. HUMIRA sales down approximately 37%. Which is at the lower end of our previous erosion projection of 35%-55%. Robust performance from SKYRIZI and RINVOQ, which we expect will collectively generate $11.1 billion of revenue, reflecting year-over-year growth of nearly 45%. Revenue pressure in hematologic oncology, with recent challenging market and share dynamics impacting IMBRUVICA, partially offset by strong sales growth of venetoclax. Double-digit revenue growth of Neuroscience, including accelerating sales of VRAYLAR with our recent MDD approval. Our guidance also contemplates the transient economic impact, primarily in the U.S., on aesthetic procedure growth, affecting near-term performance for toxins, fillers, and body contouring. Given that it's difficult to predict the duration of economic and inflationary pressures, we have not assumed a recovery in 2023.

Finally, this guidance reflects increasing investments in both R&D and SG&A to support our long-term growth opportunities. It's also important to note that while it is possible 2023 could outperform our guidance, depending upon the shape of the HUMIRA erosion curve, we don't anticipate that 2024 earnings will be lower than the $10.70 floor of the 2023 adjusted earnings per share guidance, which we are issuing today. In summary, we are executing well across our business and see numerous opportunities for our diverse portfolio to drive long-term growth. With that, I'll turn the call over to Jeff. Jeff?

Jeff Stewart (EVP and Chief Commercial Officer)

Thank you, Rick. I'll start with the quarterly results for Immunology, which delivered total revenues of more than $7.9 billion, up 19.5% on an operational basis. SKYRIZI and RINVOQ are performing exceptionally well, contributing more than $2.3 billion in combined sales this quarter, reflecting operational growth of 70%. SKYRIZI continues to exceed our expectations, outperforming our initial full year guidance by more than $750 million. Global revenues this quarter were nearly $1.6 billion, up 12.8% on a sequential basis. SKYRIZI is achieving strong market share momentum globally with in-play psoriatic disease leadership in 24 countries and total market share leadership in more than a dozen key markets. In psoriasis, SKYRIZI's total prescription share of the U.S. biologic psoriasis market has increased to more than 28%.

There is substantial room for continued growth in psoriasis based on SKYRIZI's leading in-play share of new and switching patients, which remains at nearly 50%. Psoriatic arthritis is also providing a nice inflection to SKYRIZI sales, especially in the U.S. dermatology segment, where we have achieved approximately 10% share of the total biologic market. We are also seeing encouraging SKYRIZI new patient starts in the U.S. rheum segment as well, which accounts for more than 80% of all PSA treatments. SKYRIZI is being co-positioned with RINVOQ to rheumatologists, where these two products combined have already achieved a leading in-play PSA rheum share of approximately 16%. In Crohn's disease, we are making excellent progress with the U.S. launch. Feedback from gastroenterologists has been very positive, especially as it relates to SKYRIZI's novel dosing and overall clinical profile.

We recently started DTC promotion for this indication and are already achieving a total in-play patient share of more than 15%. Turning now to RINVOQ, which delivered global sales of $770 million, representing double-digit sequential growth. In rheumatology, global prescriptions are ramping nicely across RINVOQ's four approved indications: RA, PSA, ankylosing spondylitis, and non-radiographic axial SpA. We continue to see positive market share momentum in both the U.S. and across key international geographies. In atopic dermatitis, RINVOQ is demonstrating strong uptake in both treatment naive and second-line patients globally. Feedback from the global derm community supports the importance of RINVOQ as a long-term chronic therapy to control atopic dermatitis, especially as it relates to skin clearance and rapid itch relief.

RINVOQ A.D. prescriptions are trending up globally with 20%-35% in-play shares across our major international markets and a mid-teens in-play share in the U.S., which are both tracking in line with our expectations. In gastroenterology, the launch trends for RINVOQ in ulcerative colitis are very strong. Physicians have been pleased with RINVOQ's high rates of endoscopic healing, as well as the speed of onset, which has quickly resulted in RINVOQ achieving approximately 20% in-play share in the U.S. second-line plus setting. Internationally, RINVOQ U.C. is now approved in 50 countries with reimbursement discussions progressing in line with our expectations. This strong adoption in U.C. amongst gastroenterologists is very encouraging for RINVOQ's potential in Crohn's disease as well.

We are on track for U.S. and EMA regulatory decisions in the second quarter and are preparing for the commercial launch. Global HUMIRA sales were approximately $5.6 billion, up 6% on an operational basis, with 9.9% growth in the U.S., partially offset by international, where revenues were down 16.9% operationally due to biosimilar competition. In the U.S., we have secured broad formulary access for HUMIRA, encompassing more than 90% of all covered lives, which enables us to compete for patient volume at parity to biosimilars. Turning now to hematologic oncology, where total revenues were $1.6 billion, down 11.2% on an operational basis. IMBRUVICA global revenues were approximately $1.1 billion, down 19.5%.

The U.S. performance continues to be impacted by challenging market and share dynamics attributed to the pace of COVID recovery as well as increasing competition. VENCLEXTA global sales were $560 million, up 12.2% on an operational basis, with continued strong demand in both AML and CLL. We are particularly pleased with the international performance driven by robust share gains in the EU and across Asia. In neuroscience, revenues were $1.7 billion, up 5.1% on an operational basis. VRAYLAR continues to demonstrate robust growth. Sales of $565 million were up 15.5% on an operational basis, reflecting increasing market share, primarily in bipolar 1 disorder. VRAYLAR was also recently approved as an adjunctive treatment for Major Depressive Disorder, marking its fourth approved indication and adding a new substantial opportunity for long-term growth.

We are very pleased with the MDD label, which confirms VRAYLAR's strong benefit risk profile, dosing flexibility with positive efficacy results for both the 1.5 and 3 milligram dose, and the ability to reduce depressive symptoms as an add-on for the partial responders who present, and this is important, with or without symptoms of anxiety. The MDD launch is off to a strong start, and we are already seeing a nice inflection in total new prescriptions in the marketplace. Within migraine, our leading oral CGRP portfolio contributed $249 million in combined sales this quarter, reflecting growth of nearly 30% as we continue to see strong prescription demand for both UBRELVY and QULIPTA.

We are also pursuing in the U.S. commercial approval for QULIPTA as a preventative treatment for patients with chronic migraine, which would further strengthen our competitive profile and uniquely position QULIPTA as the only oral CGRP available as a preventative treatment for patients with both chronic and episodic migraine. Rounding out the migraine portfolio is BOTOX Therapeutic, a unique treatment with a dozen approved therapeutic indications and the clear branded leader in chronic migraine prevention. Total BOTOX Therapeutic sales were $728 million, up 10.7% on an operational basis. Last, we continue to prepare for the launch of ABBV-951 in both the U.S., Europe and Japan later this year. 951 represents a potentially transformative next generation therapy for advanced Parkinson's disease and a billion-dollar-plus peak sales opportunity.

Overall, I'm pleased with the performance and the momentum across the therapeutic portfolio. With that, I'll turn the call over to Carrie for additional comments on aesthetics. Carrie?

Carrie Strom (SVP and President of Global Allergan Aesthetics)

Thank you, Jeff. Full year 2022 global aesthetic sales were approximately $6.3 billion, reflecting growth of 5% on an operational basis. Global BOTOX Cosmetic sales were approximately $2.6 billion, up nearly 21% operationally. Global JUVÉDERM sales were approximately $1.4 billion, down roughly 2% operationally. Our global aesthetics portfolio grew in 2022 despite several headwinds, most notably inflationary dynamics in the U.S., COVID-related lockdowns in China, and suspension of our operations in Russia. In the U.S., we began to see a slowdown in aesthetic procedures in the second quarter of last year, which coincided with a softening in economic metrics. These trends continued through the end of the year with the most significant impact on higher-priced, more deferrable procedures, including fillers and body contouring.

Despite these economic pressures, U.S. BOTOX Cosmetic sales grew approximately 16% in 2022, driven by strong first half sales, with growth moderating over the remainder of the year. Similarly, U.S. JUVÉDERM saw strong growth in the first quarter of the year, but filler market declines throughout the second half of the year resulted in full year sales being down approximately 17% versus a robust 2021. We continue to track a number of key external economic metrics, including real personal consumption and the U.S. Consumer Confidence Index. While we have not seen major improvements in these metrics, data over the course of the last several months has shown stabilization. It remains difficult to predict the duration of these economic headwinds, but as Rick noted, we have modeled them to persist through the end of 2023.

Our international aesthetics portfolio continued to demonstrate robust growth with the strong performance in most major markets offsetting impacts from China and Russia. International BOTOX Cosmetic sales of nearly $1 billion were up approximately 29% operationally, and international JUVÉDERM sales grew approximately 9% on an operational basis. We delivered this performance despite the significant headwinds we faced last year in our two largest international filler markets, China and Russia. While our aesthetics portfolio in China continues to be impacted by COVID-related headwinds, the current wave appears to have peaked. We expect the situation to improve through the first half of 2023, with full recovery in China beginning in the third quarter. Despite the transitory challenges we're facing, we remain confident in the long-term outlook for our aesthetics portfolio. Consumers continue to be very interested in the aesthetics category and in our brands.

We see substantial room for further market penetration across each of our aesthetics categories and are continuing to invest to support long-term growth. Our promotional efforts are focused on driving more consumers into our customers' offices while increasing retention and productivity of existing patients. We have built a best-in-class commercial technology team known for developing our consumer loyalty program, Allē. We have over 5 million consumers who use Allē in more than 20,000 of our customers' offices. We have a series of new technology products launching this year to drive growth in the aesthetics market and support our customers and consumers. Internationally, we are focused on markets with significant growth potential.

We have increased investments in injector training and expanded our field force in China, which is our second-largest market, Latin America, which is very aesthetically oriented, and Japan, which is growing rapidly and is expected to be one of our fastest-growing markets in 2023. Additionally, we are focused on delivering new product innovation. This year, we're launching two new fillers in the US, Volux for improvement of jawline, which was approved late last year, and Skinvive for enhanced skin quality attributes, including hydration, which is expected to be approved in the first half of 2023. We're also continuing to launch HArmonyCa, our hybrid biostimulatory HA filler in several international markets. The investments we're making to support long-term growth for our aesthetics portfolio, along with a stabilizing economic outlook and improving COVID dynamics in China, leave us well-positioned for future growth.

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

Tom Hudson (SVP, R&D, and Chief Scientific Officer)

Thank you, Carrie. We expect significant program advancement across all stages of our pipeline this year. In immunology, we continue to make very good progress with programs in our core diseases as well as in adjacent areas of rheumatology and dermatology, where we are expanding our portfolio. We're nearing completion of SKYRIZI's registrational program in ulcerative colitis, which is the last major indication expansion program for SKYRIZI. In the first half of this year, we'll see data from the phase III induction and maintenance studies for SKYRIZI in ulcerative colitis, with our regulatory submissions anticipated later this year. We'll also see data this year from our head-to-head comparison studies evaluating SKYRIZI versus other commonly used agents, which we expect will further distinguish its profile from competitive offerings.

These studies include our phase III trial in Crohn's disease versus STELARA and our phase III trial in psoriasis versus Otezla. Results from these studies will add to the body of evidence supporting SKYRIZI as a best-in-category agent in these indications. We're also nearing completion of the core indication expansion programs for RINVOQ. Our regulatory applications for RINVOQ in Crohn's disease are under review. We anticipate approval decisions in the second quarter. RINVOQ demonstrated very strong rates of remission and endoscopic improvement in our phase III induction and maintenance studies. We believe RINVOQ will be an important new treatment option once approved in Crohn's disease. This is a market where approximately 80% of bio experienced patients have used a TNF inhibitor. There remains considerable unmet need for therapies that can deliver high rates of response and long-term remission.

Beyond our core immunology indications, we're developing RINVOQ in several diseases where we've seen strong evidence that our JAK inhibitor has the potential to become a highly effective therapy. Our phase III program is already underway in one of these indications, giant cell arteritis. Later this year, we plan to begin phase III studies for four additional diseases, systemic lupus, hidradenitis suppurativa, vitiligo, and alopecia areata. Moving now to our oncology portfolio, where we expect several important regulatory and clinical milestones this year. In the area of hematology oncology, we'll see data from several phase III studies, including results from VENCLEXTA's event-driven CANOVA trial in relapsed refractory multiple myeloma patients with a t(11;14) mutation and navitoclax's TRANSFORM-1 trial in front-line myelofibrosis. Results from these studies are expected to support regulatory submissions in the second half of the year for VENCLEXTA and navitoclax in their respective indications.

We also anticipate regulatory approval this year for epcoritamab in relapsed-refractory large B-cell lymphoma in several major geographies, including the U.S. in the second quarter and in Europe and Japan in the second half of the year. Based on the very deep and durable responses demonstrated thus far in our clinical program, we believe that epcoritamab has the potential to significantly improve upon treatment options for these patients. We believe that epcoritamab has the potential to become a core therapy for B-cell malignancies, and we continue to make very good progress expanding our development programs for epcoritamab across several indications. Over the course of 2023, we expect to begin several new studies, including a phase III study in frontline DLBCL in combination with our CHOP, and multiple phase II studies in CLL and MCL.

We remain very excited about epcoritamab's potential to become a best-in-class therapy across multiple B-cell malignancies and look forward to providing updates on these programs as the data mature. Moving to our solid tumor pipeline. We remain on track to see data later this year from our phase II study evaluating Teliso-V in second-line plus advanced non-squamous, non-small cell lung cancer. As a reminder, we received a breakthrough therapy designation for Teliso-V, our c-Met ADC, based on the encouraging results from Stage 1 of this phase II study. The data we'll see later this year has the potential to support an accelerated approval. Our phase III confirmatory study in patients with overexpressed c-Met is also ongoing. Treatment options for these cancer patients who have exhausted platinum-based chemotherapy, immunotherapy, and targeted therapy are very limited. Prognosis for these patients is extremely poor.

As a targeted therapy for patients with overexpressed c-Met, which represents approximately 25% of the non-squamous non-small cell lung cancer population, we believe Teliso-V has the potential to become an important new treatment option for these patients. We're also making good progress with our next generation c-Met ADC, ABBV-400, which utilizes a more potent topoisomerase inhibitor payload to potentially drive deeper tumor responses, as well as broaden the range of solid tumors where c-Met therapies can be used, such as gastroesophageal and colorectal tumors. We expect to see early data from our phase I program in 2024. Elsewhere in the solid tumor pipeline, we have begun to see very encouraging data from several programs, which we plan to advance into phase II studies this year. Our anti-GARP antibody, ABBV-151, is showing strong signals of activity, including deep responses with prolonged durability.

Based on this preliminary efficacy, we plan to initiate phase II studies in several tumor types. We also plan to advance ABBV-647 into phase II dose-optimizing studies this year based on the promising results from our early-stage program. This ADC targets PTK7, which is a subset of non-squamous, non-small cell lung cancer and represents approximately 25% of patients and has little overlap with c-Met. Our c-Met ADCs and PTK7 ADC combined will target approximately 45% of non-squamous, non-small cell lung cancer patients. Now moving to neuroscience, where we recently received FDA approval for VRAYLAR as an adjunctive treatment for Major Depressive Disorder, which marks its fourth indication approval. We're very excited by this approval and pleased with the label, which highlights VRAYLAR's strong benefit risk profile in this indication.

VRAYLAR is an important new treatment option for patients who are currently taking an antidepressant but continue to have unresolved depression symptoms. We also recently received approval in Japan for ABBV-951, our novel subcutaneous levodopa/carbidopa delivery system for treatment of advanced Parkinson's disease. This innovative approach to delivering DUOPA-like efficacy through a subcutaneous delivery system represents a potentially transformative improvement to current treatment options. With a less invasive, nonsurgical delivery system, it also has the potential to significantly expand the patient population currently addressed by DUOPA or other more invasive therapies for advanced PD patients such as deep brain stimulation. We remain on track for approval decisions this year in both the U.S. and Europe. In the U.S., we anticipate approval in the first half of the year, with product launch expected in the second half after we've secured reimbursement.

In Europe, we anticipate approval in the fourth quarter of this year. In the area of migraine, we remain on track for an FDA approval decision in the second quarter of this year for QULIPTA as a preventive treatment for patients with chronic migraine. In Europe, we anticipate an approval decision in the third quarter for atogepant as a preventive treatment for patients with both chronic and episodic migraine. If approved, this would be another differentiating feature for QULIPTA, as it would be the only oral CGRP approved for prevention in patients with chronic migraine. This is a common and debilitating disease that significantly impacts quality of life, and we look forward to make this new oral treatment option available to patients once approved.

In our Aesthetics pipeline, we expect to see results this year from several toxin programs, including data from our phase III study for BOTOX in platysma prominence, with regulatory submission in the US expected near the end of 2023. As well as data from our phase III study for BOTOX in masseter muscle prominence, where we expect to submit regulatory applications in certain international markets in the second half of the year, including China and Canada. These two novel indications for prominent neck and jaw muscles will help to further build our portfolio in the lower face segment. We'll also see data from our phase III trial for BoNT/E, our short-acting toxin in glabellar lines near the end of this year, with regulatory applications planned for 2024.

In summary, we continue to demonstrate significant progress across all stages of our pipeline and anticipate numerous important regulatory and clinical milestones again in 2023. With that, I'll turn the call over to Rob for additional comments on our fourth quarter performance and our 2023 financial outlook. Rob?

Rob Michael (Vice Chairman and President)

Thank you, Tom. AbbVie's performance and financial foundation remain strong. With our leadership positions across a diverse portfolio, we are well-positioned to return to robust growth by 2025. Starting with fourth quarter results, we reported adjusted earnings per share of $3.60, which is $0.07 above our guidance midpoint. These results include a $0.13 unfavorable impact from acquired IPR&D expense. Total net revenues were $15.1 billion, up 3.8% on an operational basis, excluding a 2.2% unfavorable impact from foreign exchange. The adjusted operating margin ratio was 52.1% of sales. This includes adjusted gross margin of 86% of sales, adjusted R&D investment of 11.5% of sales, acquired IPR&D expense of 1.6% of sales, and adjusted SG&A expense of 20.8% of sales.

Net interest expense was $476 million. The adjusted tax rate was 13.4%. Turning to our financial outlook for 2023, our full year adjusted earnings per share guidance is between $10.70 and $11.10. This earnings per share guidance does not include an estimate for acquired IPR&D expense that may be incurred throughout the year. We expect net revenues of approximately $52 billion. At current rates, we expect foreign exchange to have a neutral impact on full year sales growth. This revenue forecast comprehends the following approximate assumptions for our key products and therapeutic areas. We expect immunology sales of $24.8 billion, including SKYRIZI sales of $7.4 billion, reflecting growth of more than $2.2 billion due to strong market share performance across all approved indications.

RINVOQ revenue of $3.7 billion, reflecting growth of more than 45% with continued indication expansion. HUMIRA sales of $13.7 billion, including US erosion of 37% following the loss of exclusivity in late January. With one biosimilar currently in the market and potentially nine more biosimilars available in the middle of the year, we anticipate that sales erosion will be more heavily weighted towards the second half of 2023. In hematologic oncology, we expect VENCLEXTA sales of $2.2 billion and IMBRUVICA revenue of $3.5 billion. For aesthetics, we expect sales of $5.2 billion, including $2.5 billion from BOTOX Cosmetic and $1.4 billion from JUVÉDERM, with growth rates expected to improve when we lap the market slowdown in the middle of the year.

For neuroscience, we expect revenue of $7.2 billion, representing growth of more than 10%, including BOTOX Therapeutic sales of $2.8 billion, VRAYLAR sales of $2.5 billion, and total oral CGRP revenue of $1.1 billion, including UBRELVY growth of approximately 17.5%. For eye care, we expect sales of $2.2 billion, and we expect MAVYRET revenue of $1.4 billion. Moving into P&L for 2023, we are forecasting full year adjusted gross margin of 84% of sales, adjusted R&D investment of $6.8 billion, and adjusted SG&A expense of $12.4 billion. We forecast an adjusted operating margin ratio of 47% of sales.

This profile includes a 70 basis point benefit that is fully offset in tax expense, given the transition of Puerto Rico's excise tax to an income tax effective at the beginning of this year. We expect adjusted net interest expense of $1.8 billion. We forecast our non-GAAP tax rate to be 15.3%, including an impact of 1.3 points from the Puerto Rico tax transition. Finally, we expect our share count to be roughly flat to 2022. Turning to the first quarter, we anticipate net revenues of $11.8 billion. At current rates, we expect foreign exchange to have a 1% unfavorable impact on sales growth. This revenue forecast comprehends the following approximate assumptions for our key therapeutic areas.

Rick Gonzalez (Chairman of the Board and CEO)

Immunology sales of $5.5 billion, which includes U.S. HUMIRA erosion of 27%. Oncology revenue of $1.4 billion. Aesthetic sales approaching $1.2 billion. Neuroscience revenue of $1.5 billion, and eye care sales approaching $600 million. We are forecasting an adjusted operating margin ratio of 46% of sales, and we model a non-GAAP tax rate of 13.3%. We expect adjusted earnings per share between $2.39 and $2.49. This guidance does not include acquired IPR&D expense that may be incurred in the quarter. AbbVie's strong business performance and outlook continues to support our capital allocation priorities. We expect to generate adjusted free cash flow of nearly $19 billion in 2023, which is net of $1.4 billion in SKYRIZI royalty payments.

This cash flow will fully support a strong and growing dividend, which we have increased by 270% since inception. Continued debt repayment, where we expect to pay down $4 billion in maturities this year, bringing our cumulative debt reduction to $34 billion. Our strong cash flow also provides capacity for continued business development to further augment our portfolio. In closing, we are very pleased with AbbVie's strong results in 2022. With our diverse portfolio, we continue to be well-positioned to deliver long-term growth. With that, I'll turn the call back over to Liz.

Liz Shea (SVP of Investor Relations)

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, first question, please.

Operator (participant)

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

Mohit Bansal (Managing Director, Co-Head of Therapeutics Research, and Biotech and Pharma Analyst)

Great. Thank you very much for taking my question. Maybe a question, a bigger question, for Rick. AbbVie, when we talk to investors, AbbVie has always been one of those, you know, the R&D as percent of sales has always been low. Right now, even it is still less than 15%. That's the pushback we get that the company cannot grow organically. In some ways, you have always been playing defensive given that since inception, HUMIRA has always been an issue. Now that you are beginning to get past that, do you think something you'll want to change fundamentally with the company and the way you allocate internal versus external R&D spend?

That would be very helpful. Thank you.

Rick Gonzalez (Chairman of the Board and CEO)

Well, this is Rick. It's a good question. We've obviously heard that question. I think there's a number of dynamics that play into it when you look at our R&D expense as a profile. One is, obviously, we have a large volume of HUMIRA revenue that requires relatively little R&D support. That obviously dilutes out the profile of the business. As we see biosimilar impact, obviously, there will be some impact on that as HUMIRA revenues were to go down. The second thing is the aesthetics business, we are funding it aggressively to grow it, but by definition, it's not that expensive to be able to fund many of those programs, so it has a much lower profile. Some of it's mix when you think about it.

The second thing I'd say is, we obviously fund R&D at a level that we believe we can drive productivity. I think if you look at our productivity over the last 10 years, the data I've seen suggests we are one of the most productive R&D engines in the industry. Certainly when you look at products like SKYRIZI and RINVOQ, the return on those assets is tremendous. The third thing I'd say is, look, what drives R&D expense to the greatest extent is when you have large volumes of phase III programs. We're coming into a phase, as we move forward over the next 3 or 4 years, where we have a number of programs that if they are successful, they will create a scenario where we will increase R&D.

An example of that would be our GARP program. We've seen some incredibly encouraging data out of that program thus far. It's a next generation immuno-oncology program that combines with checkpoint inhibitors. If that program continues to advance the way we see it now, we would want to expand our phase II and then phase III trials in that program significantly across a relatively broad range of solid tumors. That will require a significant increase in investment to be able to do that. We tend to drive R&D based on programs that we have a high level of confidence can be productive and can be successful. We don't constrain R&D in any way from that perspective. Another program will be our Aβ program.

If that program proves to deliver high rates of amyloid reduction and low ARIA, that will be another program that we wanna rapidly move into phase III. I can tell you, I'm very comfortable with the productivity we're getting out of R&D. Certainly we will want to continue to increase that, and that's one of our objectives. We always look at programs on the outside to bring them in. In fact, I'd say over the last couple of years, we've brought in a number of programs that are earlier-stage programs. We're fortunate from the standpoint that we have the ability to drive very strong growth, as we've indicated to investors, between now and the end of this decade. We can drive high single-digit growth. We're gonna return to robust growth in 2025.

We're looking mostly for assets that will allow us to drive growth in that late 20s and early 30s timeframe. Again, as those mature and they're successful and they go into later-stage development programs, they will drive further need for investment.

Rob Michael (Vice Chairman and President)

Mohit, this is Rob. I'll just add that if you look at this year's guide, it's a great example of our willingness to increase R&D investment where it's needed. If you look at, you know, we're increasing it from $6.4 billion to $6.8 billion. Those increases are focused on epcoritamab as well as mid-stage assets such as GARP and PTK7. We also have several new phase III studies for additional RINVOQ indications, which could contribute several billion dollars of revenue in the latter half of the decade. Even in the year where we're seeing a decline in the top line, we're increasing R&D investments. We're very committed to increasing innovation investment, whether it's internal or external.

Mohit Bansal (Managing Director, Co-Head of Therapeutics Research, and Biotech and Pharma Analyst)

Super helpful. Thank you.

Liz Shea (SVP of Investor Relations)

Thanks, Mohit. Operator, next question, please.

Operator (participant)

Thank you for your question. Our next question is from Terrence Flynn with Morgan Stanley. Your line is open, sir.

Terrence Flynn (Managing Director, Equity Research Analyst - Pharma and Biotech)

Great. Thanks so much for taking the questions, and thanks for all the color on the guidance. I guess, I just wondered high level if there was anything different, Rick or Rob, about your approach to guidance on the revenue side this year versus last year. I think last year, you know, performance was choppy across a number of different franchises. As you thought about the guidance this year, anything different as you approached it? My second question is, any other details you can provide on how you're, how you're thinking about HUMIRA in 2024. Obviously appreciate the color this year, but how should we think about 2024 dynamics in the U.S.? Thank you.

Rick Gonzalez (Chairman of the Board and CEO)

Okay. Maybe I'll start, then Rob can fill in anything that I might miss. You know, I think whenever we look at guidance, we look at it, and I think this has been our historical practice, we obviously look at guidance as something that we have a very high level that we can execute against that guidance. I would say this year you've seen that the range is a little bit wider than what we normally project. We did that based on the fact that, you know, as HUMIRA goes biosimilar, obviously very small changes in the assumptions we're making on erosion for HUMIRA can have a fairly significant impact. We widened the range by about $0.10, and that's reflected in this guidance.

I would say that as we have been historically, we have a high level of confidence we're gonna deliver on this guidance. As it relates to 2024, you know, we have provided, as part of this guidance, what we are projecting to be a floor because we've gotten a lot of requests from investors about when will we hit the trough, and will it be 23 or will it be 24. Maybe to give you a little color around how we think about that. 1, the $10.70 is a floor. That doesn't mean that we will go down to $10.70, but it means that we would say to the investors that that's what you should assume is the absolute floor. When will that floor, if it were to occur, when would it occur?

Will we see the trough in 2023, or will we see the trough in 2024? I would tell you that our expectations would be, based on this plan, the trough should occur in 2023. What I would tell you is if we significantly overachieve this plan in 2023, then there's obviously somewhat greater risk that it could move into '24. The reason why it is in '23 versus '24 based on our current planning assumptions, is because the strength of the growth platform has the ability between where it will grow in '23 and where it will grow in '24 to offset what will obviously be further erosion of HUMIRA in 2024. 2024, you will basically have 2 impacts on HUMIRA.

You will have the annualization of this year. As Rob said in his remarks, we expect more of an impact in the second half of 2023. When you annualize that, you're gonna have an impact that flows through to 2024. Then we would expect further erosion of HUMIRA, both price and probably to a greater extent, volume in 2024. The growth platform has the ability to grow through that, based on those assumptions. That's the philosophy that we operate with on the guidance. Rob, anything you'd add?

Rob Michael (Vice Chairman and President)

I think if you reflect back on, you know, the history of AbbVie, we've had a long track record at, you know, delivering, exceeding our guidance. I think 2022 is an exception. If you look at on the top line. Now, we did make earnings, so that's important to highlight. If you look at the top line, the two biggest factors that drove the miss versus original guidance in 2022 were with ENBREL, VIEKIRA and VENCLEXTA. The CLL market, we did not anticipate that market would actually not recover. I mean, that's actually, it's down 20% versus pre-pandemic levels. Then we did see some additional share impact on ENBREL. Then aesthetics, we saw obviously in the month of May, we started to see a slowdown in the economy.

We had a very strong first quarter. Both those things really are what drove the top line miss. We made earnings. Now we have factored both those things into the 2023 guidance to give investors confidence that we've set it appropriately. You know, we always look to set the most responsible guidance we can, and we feel good about where we've set 2023.

Carrie Strom (SVP and President of Global Allergan Aesthetics)

Thanks, Terrence. Operator, next question, please.

Operator (participant)

Thank you for your question. Our next question comes from Chris Schott with JPMorgan. Your line is open, sir.

Chris Schott (Senior Analyst - US Diversified Biopharma)

Great. Thanks so much. Just two for me. Maybe just following up on the 2023 guidance being a trough number. It seems like you're still gonna have about a $12 billion U.S. HUMIRA franchise here. Can you just provide maybe a little bit more color of what you're envisioning 2024 to look like for HUMIRA? Is it reasonable to think about a net other than down 35%-40% year as we look out to 2024? I think we're just trying to get our hands around just how much growth in that core platform, you know, and how much of a headwind I guess HUMIRA is gonna be facing at the same time. My second question was just on aesthetics trends, as we move through this year.

I think you've talked about some signs of at least sequential stability the last few quarters. You're talking about stepping up investments. You've got a couple new products launching. I guess, why shouldn't we think about some recovery in this business as we look out to the second half of the year? Thanks so much.

Rick Gonzalez (Chairman of the Board and CEO)

Okay. Chris, this is Rick. Let me talk a little bit about HUMIRA and the trough. You know, we're two weeks into the biosimilar activity, so it's a little difficult to give you precise predictions for 2024. I think the way to think about HUMIRA going forward is what we would expect is the most significant impact on HUMIRA is going to be price. Obviously we're trying to predict going forward what that price will look like. Certainly, as we look at this year, the most significant impact is clearly price. That's more predictable, because we obviously know what the pricing is in the contracts that we've put together. I think that's something that we have a high level of confidence.

There'll be further pressure on price as we move into 2024, and there'll probably be further pressure on volume in 2024. I would say at the end of 2024, I would expect HUMIRA to start to develop a more stable tail of revenue. It will still have some pressure as we move into 2025, but 2025 and 2026 is where we should see that more stable tail for HUMIRA emerge. That's one of the things that allows us to be able to see the underlying growth from the growth platform. A number of things happen between 2023 and 2024 and then 2025 as we move forward. As you mentioned in your second comment, we would certainly expect that the U.S. economy will start to recover in 2024.

It may recover earlier than that, and if it does, that would be great. We didn't wanna put a plan together to assume that because obviously that's difficult for us to predict. I think we would all expect that 2024 will see a recovery in the U.S. economy, and we would fully expect for the Aesthetics business to return back to historical growth rates very quickly when that happens. That will be another opportunity for that business to be able to grow. I would say IMBRUVICA is the other key issue for us as we move forward. We would expect the majority of the erosion that we see on IMBRUVICA will occur this year, and there will be less downward pressure as we move to 2024. That's what allows the growth to be able to come up.

What I would tell you, even though I don't wanna make a prediction in 2024 of what HUMIRA will look like, I think we have a high level of confidence that we have the ability, if the erosion curve looks like how we've modeled it now between 2023 and 2024, that we have the ability to be able to have the growth platform grow through that, so we can absorb that impact. So far, like I said, it's early on, but I'd say so far we're comfortable with how things are playing out. Rob, anything you wanna add on the first question? Carrie, maybe you can give a little more color.

Rob Michael (Vice Chairman and President)

I think you characterized it well, Rick. I mean, the thing to highlight for this year, for 2023, the way to think about HUMIRA, really, you know, in the first half of the year, the vast majority of that erosion will be price. In the second half, you'll see, 'cause you know, we've contracted rebates, you'll see a step up in the price erosion, although you also will see more volume with 9 biosimilars coming to the market in the middle of the year, we would expect more volume erosion. I think as we think about 2024, we would expect, you know, based on the contract to see a step-up in price, but albeit not the same level as we see in 2023, but 2024 would be more volume. It's probably the best way to think about right now.

We're not giving guidance, as you think about how to model HUMIRA, '23 and '24, that's the way to think through it.

Rick Gonzalez (Chairman of the Board and CEO)

Okay. Carrie, anything you wanna add on aesthetics?

Carrie Strom (SVP and President of Global Allergan Aesthetics)

Yes. Hi, this is Carrie. In terms of the aesthetics market and how we're thinking about it for 2023, I mean, first I'd say, yes, this is still a very strong, fundamental market with consumers that are very interested in entering the category. You know, that remains a strong opportunity for aesthetics now and in the future. What we saw as we exited 2022 is as these economic metrics were softening, we also saw that reflected in demand for aesthetic procedures. In our conversations with customers, we saw that reflect in their practices, market research with consumers, where they said, "Yes, we're interested in the category, but we wanna see what's going on with the economy," perhaps before a new patient might want to enter the category.

Based on that, we are modeling for those trends to continue in 2023. What that means for US toxin market is the market growth would be around a mid-single digit decline. For US filler market, around a 10% decline. Like we said, those growth rates would be different by quarter as we lap a strong first part of the year.

Of course, if there is a scenario like a deep recession where unemployment skyrockets, that is not something that we've contemplated. Or on the other hand, if the macroeconomic environment stabilizes or improves, that would represent favorability to our plan.

Liz Shea (SVP of Investor Relations)

Thanks, Chris. Operator, next question, please.

Operator (participant)

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

Gary Nachman (Managing Director, Equity Research - BioPharma)

Hi. Good morning. First question is on neuro in the quarter. It's actually weaker than we thought. Was there any additional pressure on gross to nets, maybe for the oral CGRPs? You know, what sort of inflection are you expecting for VRAYLAR and MDD? How rapid do you think that adoption might be this year? Rick, you recently said that you would be, you know, in an article that you would be lifting the self-imposed $2 billion annual cap on business development, that you have more capacity to do deals. How much capacity do you guys have? What areas are you looking to be most aggressive, how important is it to add sizable marketed products into the mix, or would it be mostly focused on pipeline? Thanks.

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah. Hi, I'll take the first one. It's Jeff. Thanks for the question. No, we did not see, you know, material incremental pressure on the gross to net. We did see a little softening versus our expectation on the overall preventative marketplace, but it was quite modest. No, fairly consistent trending. I mean, if you look at our new prescription capture in the oral market, it's basically a 50/50 shared capture rate between ourselves and the major competitor. In terms of the VRAYLAR adoption trend, you know, we had discussed previously because we really have very, very strong access for VRAYLAR, that we would anticipate a pretty rapid inflection in adoption for the depression indication, the adjunctive depression indication.

As I mentioned in my remarks, that's what we've seen. We're quite encouraged. I mean, we can see a significant trend break on the new prescription adoption versus what was already a very nice growth rate for the bipolar one indication. I think the early dynamics, and again, it's only really been a month here in January where our sales force has been out promoting the new indication. We're quite encouraged in terms of the market response, both from the metrics in terms of the IQVIA, the scripts we see, but also the qualitative feedback from the customers.

Rick Gonzalez (Chairman of the Board and CEO)

On deal capacity, you know, we obviously look at business development based on what we believe are, we're trying to accomplish strategically in each of the therapeutic areas that we're operating in. We identify areas that we think would be good opportunities for us, and then we look to see if we can find those kinds of assets. As I mentioned before, I think we're in the fortunate position that we can drive very strong growth with the assets that we have on the market today, as well as what's coming out of our pipeline, over the next three or four years. That gives us the ability to be able to return to growth and then drive that high single digit growth through the end of the decade.

We're also fortunate that after HUMIRA, we have a, you know, relative to our, to our peers, we have a very low LOE exposure, so we don't have a lot of downward pressure on the business. Now, having said that, we've done an excellent job of paying down the incremental debt from the Allergan transaction. We put that $2 billion cap in place when we did the Allergan acquisition. That allowed us to focus again on some earlier stage assets. I'd remind everyone that was about 4x where our historical practice had been for those kinds of assets. It was plenty of capacity to do that. We're certainly in a position now that if the right thing were to come along, we could do a transaction that would be much larger.

We certainly have the financial wherewithal to be able to do that. We've certainly shown that we're able to do that and create value in the assets that we bring in. The areas that we typically look in are aligned with our therapeutic growth areas. Immunology, oncology, certain areas of neuroscience and eye care, I would say are the predominant areas, as well as aesthetics. We obviously continue to look for opportunities in aesthetics. They tend to be smaller acquisitions, though. At the end of the day, I feel good about where we are, and we've been quite active. We have a very active business development group, and we'll continue to look at those.

Like I said, if we find something that's of interest and it could really help us round out a category that we're in, then you should expect us to act on that.

Liz Shea (SVP of Investor Relations)

Thanks, Gary. Operator, next question, please.

Operator (participant)

Thank you for your question. It comes from Carter Gould with Barclays. Your line is open.

Carter Gould (Senior Equity Research Analyst - US Biopharma)

Great. Thank you. thanks for taking the question. maybe to come back to aesthetics, it does sound like you built in, you know, conservatism on a number of fronts. wanted to also, but you didn't touch as much around sort of China reopening and how you expect that sort of business to, as it comes back, if you expect it to sort of return to how it was or if that will evolve differently?

You know, I guess as we think then around the guidance for 2023 and the link you've drawn to 2024, as you sort of maybe, as the guidance potentially evolves over 2023, should we think about that link remaining intact, or is that sort of a near-term phenomenon and that will sort of, I guess, disappear going forward? Thank you.

Rick Gonzalez (Chairman of the Board and CEO)

Carrie, why don't you touch on the aesthetics question?

Carrie Strom (SVP and President of Global Allergan Aesthetics)

Yes. Your question around China, and I'd say, you know, China is our second-largest global business. It has demonstrated significant growth in the past few years and proven to be very responsive to the increased promotion that we're putting into that market. Of course, in 2022, COVID-related issues did impact the aesthetics market, especially in the second and fourth quarters. Now as we look at the year beginning in China, and as everyone's returning from the Chinese New Year, it does look like the current wave has peaked and that the situation is beginning to improve and will continue to improve through the first half of 2023, and we're expecting a full recovery in the market in Q3 and for the last of the second half of the year.

You know, despite those challenges in 2022, China still posted positive growth, and we will definitely be continuing our investments in China in 2023 and beyond.

Rob Michael (Vice Chairman and President)

Carter, this is Rob. I'll try to answer your second question. I think the way to think about 2024 is, you know, clearly as we go through the year, we always look at the trends and contemplate what that could mean for flows are in 2024. The reason we gave you that guidance range, we mentioned that, you know, the $10.70 being the way to think about it as a, you know, floor for 2024 is because of the dynamics around the HUMIRA erosion. If we, if we do better in 2023 and more of it happens in 2024, then you can at least anchor back to, we're not gonna fall below that $10.70 EPS floor in our guidance range. You know, we always would factor in trends, but that's the way to think about it.

If it's just the erosion on HUMIRA is better this year than we have in this guidance, we wanna make sure you understood that, you know, what it means potentially for 2024. That's, you know. Again, always factor in trends, but as you sit here today, that's the best way to think about it.

Rick Gonzalez (Chairman of the Board and CEO)

Maybe just let me add one thing that might help clarify it. I think you should think about HUMIRA in 2024, that we believe we're going to get to a certain level of price and volume in 2024, almost regardless of what happens in 2023 because of the competitive dynamics. When we talk about the shift, what we're really talking about is inflating 2023. If you anchor 2024 as a solid point that we have a high level of confidence of where HUMIRA's tail will be in 2024, the only thing that happens to shift it between 2023 and 2024 is if we do much better in 2023 than we expected, right? That inflates 2023, but it still anchors against the 2024 point. That's the way to think about this.

Liz Shea (SVP of Investor Relations)

Thanks, Carter. Operator, next question, please.

Operator (participant)

Thank you for your question. It comes from Steve Scala with Cowen. Your line is open.

Steve Scala (Pharmaceutical Analyst)

Thank you so much. The low end of 2023 guidance implies 22% EPS erosion. The high end of Q1 guidance assumes 21% EPS erosion. How is it possible that Q1 could be in line with the full year and not appreciably better? It seems as though the Q1 guide is low, or is that because AbbVie believes the floor on HUMIRA price is already reached? Maybe another way to restate the question, what should be our anticipation for the quarterly cadence of EPS as we go through the year? Thank you.

Rob Michael (Vice Chairman and President)

Steve, I think the best way is to, one, anchor on the guidance we gave you on U.S. HUMIRA today. We said for the first quarter, we said it would be 27% erosion. That's gonna, you know, the vast majority of that will be price. We said, because there'll be nine biosimilars coming to market in the middle of the year, we would expect more of the erosion to come in the second half of the year. You have to factor that dynamic into the way you look at the quarters, that there'll be more erosion in the second half of the year for HUMIRA versus the first half of the year.

You also have to factor in that you've got things like in aesthetics, we haven't quite lapped the economic impact yet, right? In the first quarter, you have a dynamic where you will see aesthetics still down, right? When we get into the middle of the year when we lap it, that also affects your year-over-year growth rates. You know, the underlying performance of the growth platform as we, you know, continue to drive those brands, you'll see those growth rates accelerate. Those are all the things I would factor in as you look at, you know, the quarterly. Really, we've given you Q1 and then, you know, full year. We haven't given you Q2, three and four, but those are the variables I would look at.

There's not really a whole lot in terms of if you look at investment, for example, that you have to you know, flex. You know, we do tend to see some higher levels typically in the fourth quarter. You can look at historically our investment patterns and use that as a proxy. Those are the variables to consider as you think about the first quarter versus the rest of the year.

Steve Scala (Pharmaceutical Analyst)

Thank you.

Liz Shea (SVP of Investor Relations)

Thanks, Steve. Operator, next question, please.

Operator (participant)

Thank you for your question. It will come from Tim Anderson with Wolfe Research. Your line is open.

Tim Anderson (Managing Director, Senior Equity Research Analyst - Pharmaceuticals and Biotechnology)

Thank you. I'm gonna torch you with a couple more questions on the same subject as others. The U.S. HUMIRA erosion guidance of -37% in 2023, how much of that is price versus volume? If I look at what your Q1 U.S. HUMIRA erosion is, so the guidance is -27%. Given that volumes for HUMIRA are, call it 5% positive, that would suggest the price cut's maybe in the 30%-35% range.

Can we triangulate off of the Q1 guidance to understand what percent of that -37% comes from price? The second question, again, goes back to 2024. I know there's lots of uncertainty on the exact rate of erosion for Humira in 2023, but if you hit that -37% right on the nose, would 2024 erosion likely be slower or faster than that -37%?

Rob Michael (Vice Chairman and President)

Tim, on your question related to price and volume, the way to think about it is in the first half of the year, the 27% the first quarter, it's, the vast majority of that is price, right? The, you know, there is some volume impact, but not very much. It's in the second half. What you'll see is in the second half, the overall erosion will step up, and think of it as, you know, equivalent between price and volume because you're gonna have a, you know, we know we'll have rebate rates, in some cases, increasing, as well as the 9 biosimilars coming to market, we would expect to see more volume erosion. As you think about, as you're trying to triangulate the price volume with the guidance we've given, 27%, vast majority is price.

Second half of the year, you'll have some more volume kicking in. That's the, I think, the best way to think about the price-volume split. Your question on 2024. Is your question in terms of the % or the absolute?

Tim Anderson (Managing Director, Senior Equity Research Analyst - Pharmaceuticals and Biotechnology)

Percentage. If you hit the -37% this year, which is your guidance for U.S. HUMIRA, would the rate of erosion in 2024 be greater or less than that 37%?

Rob Michael (Vice Chairman and President)

We're not gonna give you a 2024 guidance, Tim. I think the way to think about 2024 is we would expect to see additional price, but albeit not the same level as 2023, and more volume coming through because you're gonna have up to 10 biosimilars in the market for the full year. We would expect to see more of a volume impact in 2024 than we would expect to see in 2023.

Tim Anderson (Managing Director, Senior Equity Research Analyst - Pharmaceuticals and Biotechnology)

Okay. Thank you.

Liz Shea (SVP of Investor Relations)

Thanks, Tim. Operator, next question, please.

Operator (participant)

Thank you for your question. It comes from Chris Shibutani with Goldman Sachs. Your line is open.

Chris Shibutani (Managing Director, Senior Equity Research Analyst - Biotechnology)

Thank you very much. You previously commented about the operating margin trajectory of 23 into 24, I believe, characterizing them as basically flattish. Is that still the case? Across the immunology category broadly, we're seeing some lot of cross currents mix dynamics clearly with your portfolio being part of that. What is your expectation about the potential for some of the newer mechanisms that are merging with clinical data? Are you keen to figure out whether you want to invoke those as part of your portfolio? What do you see the outlook for novel mechanisms given that we're gonna have some biosimilars to some of the most standard of care approaches, TNF, IL-23. Thank you.

Rob Michael (Vice Chairman and President)

Chris, this is Rob. I'll take your first question. I think for modeling purposes, I would expect operating margins stay roughly at this level in 2024 and then begin expanding again in 2025 with our return to robust sales growth. I think the pace of that expansion will depend on investment needs as we will always prioritize R&D and SGA investment to drive long-term growth, that's the best way to think through 2024 and then what the operating margin will look like in 2025 and beyond.

Jeff Stewart (EVP and Chief Commercial Officer)

Chris, it's Jeff. I'll maybe kick off on your immunology question, then ask Tom to comment on some dynamics as well. It is very, very clear that certainly in the midterm the most excitement across these immunology categories are for SKYRIZI and RINVOQ. It's quite striking. I think Tom mentioned there's still incredible interest in a next wave of dermatologic indications that follow on for atopic dermatitis that he highlighted. Really, as I noted in my remarks, I mean, the amount of excitement around the IL-23, and particularly our IL-23 across these indications is really profound. Having said that, we are watching the competitive landscape for some, you know, maybe potentially some novel orals. We don't see them as major players.

As we look deeper in the pipeline, we can see that there's the possibility for combination use of novel biologics or biomarker-driven approaches, particularly in IBD. We monitor those very carefully as we look at our long-range plan. Tom, I don't know if you wanna address some of the things that are back in our pipeline in terms of immunology.

Tom Hudson (SVP, R&D, and Chief Scientific Officer)

Sure. I mean, I think the just wanna start saying that with SKYRIZI and RINVOQ really raised the bar in terms of efficacy. You see, you know, with mucosal healing, for example. The bar is getting higher and we will continue to do that. Even to show that we're raising the bar, we're also gonna read out head-to-head studies this year with STELARA and Otezla. It's another way to kind of show that what we have is really a very profound in terms of responses we're seeing with patients. Then we continue, I mean, obviously, we look at the field, we look at competitors.

We're hearing data of S1P1 inhibitors, the data appears to be less effective based on number of patients which are discontinuing treatment and the signals that we see, cardiovascular and others that are similar to what we've seen with previous ones. I mean, again, without having seen the data, it's all difficult to kind of predict how they'll be able to do, except that our data with RINVOQ and SKYRIZI are very strong, durable, and again, very strong at the level of endoscopy also. We think we have already a competitive edge. We continue. We'll see PMR data later this year.

We have talked about our RIPK1 inhibitor, again, for mucosal healing, that's in the clinic right now. We're looking at additional indications. Over time, obviously, we're gonna look at additional mechanisms, but not necessarily just pushing down on the same cytokines as JAKs. Looking at other orthogonal pathways of things that happen in the skin or in GI, again, mucosal healing being an orthogonal pathway. This is where we think a combination of our immunomodulators like RINVOQ and SKYRIZI with other mechanisms will combine well to give even more profound responses.

Chris Shibutani (Managing Director, Senior Equity Research Analyst - Biotechnology)

Great. Thank you.

Liz Shea (SVP of Investor Relations)

Operator, next question, please.

Operator (participant)

Thank you for your question. It comes from Colin Bristow with UBS. Your line is open.

Colin Bristow (Managing Director - Biotechnology)

Hey, good morning, and thanks for taking the questions and for all the helpful color so far. Maybe a broader question just with regards to HUMIRA biosimilars. I'm curious, like what is the broader impact you anticipate on the I&I market just in terms of net price? This has been sort of a question we've been getting a lot of, and people are trying to wrap their heads around. Then maybe just one on your CF triplet. I know the trial's ongoing. Can you give us an update here? How's the progress? Should we still expect data later this year? Thank you.

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah, I'll take the one on the immunology marketplace. I think that, you know, the impact overall on the category for net price would be modest. I think a lot of it has to do what Tom and I have discussed before, which is the just the pure profile of some of these agents, particularly SKYRIZI and RINVOQ and either others in the pipeline that are coming. I mean, they really are setting different standards of care versus what they've seen in the past, and certainly the physicians and the payers are recognizing this. I'll give a really quick example on one of our major products, which is RINVOQ. I mean, RINVOQ, based on the label changes that have taken place, is already a post-TNF type of dynamic.

You know, the pricing is gonna be the pricing. There's no incremental ability to step it, for example. The other thing I would note is on SKYRIZI, you know, we have four head-to-head trials against all the major competitors, and another one coming with Otezla, as Tom noted. You start to see that level of performance, whether it's against ELARA, multiple TNFs, Otezla, as I said, that's pending here, and it just becomes very clear that you're just gonna achieve much higher levels of clearance and relief. We feel pretty confident that the pricing impact over time, particularly in the U.S. market, will be very modest. Certainly we can navigate that based on the power of the performance of the portfolio.

Tom Hudson (SVP, R&D, and Chief Scientific Officer)

Hey, this is Tom. I'll just answer about cystic fibrosis program. This program continues. Just to remind you, we're working on a triplet, and where we believe that two of the three components of for this drug, this triplet, we have best-in-class assets. We were looking for another part of the triplet called a C2 corrector, where last year, the previous ones basically didn't give the meaningful improvement we were expecting in FEV1 or sweat chloride. We've actually in our discovery groups, continued to develop new ones. In the last year, we've moved our ABBV-576 forward in sad phase I studies.

We continue to see these, again, safety, high exposures, good PK, things that with, if you combine with our preclinical data, makes us think it will, it has the potential to be best in class. And this triplet again would first of all, currently being tested. We'll have data this year to actually show how they behave together. And later this part of the year, I'll be able to give an update.

Liz Shea (SVP of Investor Relations)

Okay. Thanks, Colin. Operator, next question, please.

Operator (participant)

Thank you. Our next question's from Trung Huynh with Credit Suisse. Your line is open.

Trung Huynh (Director, Equity Research - US Large Cap Pharma and Biotech Analyst)

Hi, guys. Trung Huynh from Credit Suisse. Thanks for taking my questions. Two, if I may. I was just wondering on your thoughts more broadly on the pricing dynamics in the EU and US. In the EU, you recently exited the UK pricing agreement. In Europe, it does feel like it's just becoming an increasingly complicated pricing environment. There are a number of reforms being proposed in Europe. I guess my first question is, do you see these changes being material or any headwinds to you in your growth ex-US? Secondly, can you just perhaps talk about your reasons you decided not to renew your membership for PhRMA and BIO? How are you going to remain engaged in D.C. and have a voice when it comes to things like IRA and pricing controls? Thank you.

Jeff Stewart (EVP and Chief Commercial Officer)

Yeah. Thanks for the question. I'll take the first one there in terms of the EU. You know, we do see some movement there, particularly in the, let's say, industry tax. I'll comment on the so-called VPAS in the UK. In some ways, whether or not we were in that voluntary program or outside of the voluntary program, the impact is about the same. Frankly, it was a policy decision because we really think that the UK government needs to reform that VPAS. They didn't plan properly for how things might dynamically evolve in the UK, it's a very substantial part of the revenue now that is causing problems, I think, across all of the companies. It was a policy position, net neutral.

It didn't matter, frankly, whether we were in or not. The UK is a relatively modest business for us. We are seeing, perhaps more importantly, you know, some changes in the German law, as you're probably aware of. That is, I think, a modest, you know, net pressure that will come in Europe or in Germany in particular, because there's the move, as you may know, from 1 year of free pricing to 6 months. There's a modest increase in rebates, for example. We do see some austerity impact, but on the bigger scheme, it's, I wouldn't say it's material to our, our growth platform that we've been discussing.

Rob Michael (Vice Chairman and President)

Trung, this is Rob. In terms of international price, I mean, typically we see year-over-year decline of low to mid-single digits, that's the way we're modeling it for 2023 as well.

Rick Gonzalez (Chairman of the Board and CEO)

On pharma, this is Rick. You know, obviously, every year we evaluate any kind of significant investment that we're going to make, and we make a decision as to whether or not we believe that investment is appropriate and is going to have the right level of return at that point in time. Ultimately, we made the decision around pharma based on that. We have a very significant government affairs group that's been active and been in place ever since we came into existence back in 2013. We've grown that organization. We did grow it somewhat this year as well in anticipation of not being part of pharma. We plan on being active, as we have been in the past, to try to appropriately advocate for things that we think are appropriate for patients.

I think that group's quite capable of being able to do that. I would tell you that at a point in the future, we might decide to go back into pharma. At this point, we've made the decision that we think that investment could be used, elsewhere to be more effective. It's as simple as that.

Liz Shea (SVP of Investor Relations)

Thanks. Operator, next question, please.

Rob Michael (Vice Chairman and President)

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

Geoff Meacham (Managing Director, Senior Analyst - Biotech and Pharma)

Morning, guys. Thanks so much for the question. I appreciate all the perspectives on guidance. I just had a follow-up on it. You know, Rick, on your comments on the HUMIRA tail for, you know, starting next year in the U.S., I think when you look at other geographies, international revenues, which are still seeing, you know, double-digit declines after 4 years or so, maybe just give us some context for, you know, what you're seeing there broadly versus what we could expect for the, you know, for the U.S. Just to, just to be clear, when you see next year the impact from all the HUMIRA biosimilars, how much do you think that biosimilar STELARA may play a role here when you look at your assumptions for, you know, HUMIRA erosion?

Second question, just on the BD front, you guys talked about some of the therapeutic categories that you're interested in, but what's the appetite to expand the menu here into, say, more orphan indications? I think that across the landscape, some companies in the I&I space are getting into more niche-y indications. I wasn't sure if that was something that you guys would consider. Thank you.

Rick Gonzalez (Chairman of the Board and CEO)

I think on the HUMIRA tail, just to maybe clarify what I said is I would expect that as we move through 2024, that in 2025 and 2026, we would start to see a more stable tail for HUMIRA. In other words, we're gonna see erosion in 2024. I wanna make sure I didn't somehow, you know, communicate that that wasn't the case. If you look at OUS, I think what's probably deceiving to you is, you know, you had different countries going biosimilar at different periods in time. You can't necessarily look at that as an analog because it's so heterogeneous in the year that those countries went biosimilar. You are correct.

Yes, it is still experiencing double-digit decline, but it's being driven by the fact that those countries have not some of those countries haven't reached stability yet. Typically, and the U.S. market's a little different because you have a large number of you have a small number of large payers who drive the bulk of the activity in this market. So it's more like some of the countries that did other kinds of, you know, government-wide activity, like a Germany as an example. There we do see, after a couple of years, we've seen stability. I think what's misleading you is you're looking at the overall number, but you're not factoring into that, the fact that these countries went biosimilar across a number of years.

Rob Michael (Vice Chairman and President)

Jeff Stewart, this is Rob Michael, just to add to that. If you just look at this year, about half of the erosion's gonna come from newer markets like Puerto Rico, Canada, and Mexico. That, as Rick Gonzalez mentioned, we have different waves, and so you're still seeing some of those waves come through. You also have some volume going to new agents like SKYRIZI and RINVOQ, right? That's something to keep in mind that, you know, that's a dynamic that's also playing out for HUMIRA in those markets. Then you typically see, you know, negative price trends in international markets, again, low to mid-single digits. You're gonna see some level of pressure there. Those are all factoring into the year-over-year on international HUMIRA, something to make sure you're keeping in mind.

Jeff Stewart (EVP and Chief Commercial Officer)

If you look at the STELARA dynamic with the biosimilar, I think there's a couple of dynamics that we're watching, and it does go back to my prior comments over the clinical differentiation. The first is that there will be less biosimilar competitive intensity against STELARA. Certainly, you know, we've not seen anything like the 9 or 10 that we're gonna see on HUMIRA. That price point is quite high actually if you look at where STELARA is now with the branded program. I think maybe more importantly, as we've highlighted before, we've anticipated that entry. Certainly in Crohn's, we have an ongoing head-to-head trial against STELARA that will read out towards the end of the year.

We plan on putting that into promotion if, and we believe it will be positive, particularly what we're studying, which is that endoscopic endpoint, which is really becoming the standard in the gastroenterology space. We think we can parry quite well with the ultimate arrival of that IL, the 12/23 versus our pure 23. Hope that helps.

Rick Gonzalez (Chairman of the Board and CEO)

I think on your third question, again, what tends to drive our BD strategy is the long-term strategic roadmap that we put in place across the franchise. If you think about it, you mentioned immunology as an example. I would say in immunology, we have two fundamental objectives that we're trying to drive. There are still areas within immunology where we believe we can significantly raise the effectiveness of the therapies that are used on patients to drive higher levels of remission or higher levels of endoscopic healing, in other words, better clinical outcomes within the areas that we're in. We have a tremendous amount of effort in those areas to bring next generation assets, or as Tom mentioned in his comments, there are opportunities to potentially combine two mechanisms together to achieve that level of therapeutic benefit.

We look outside those areas at the adjacencies. We look for where are there opportunities for us to be able to bring in either an existing mechanism or something we can either develop within our own discovery group or something that we can acquire on the outside as a mechanism that we don't currently have. We tend to look for where there are areas of large unmet need and relatively significant patient populations. I use 2 examples to illustrate the point. Vitiligo. Vitiligo is a disease that's pretty prevalent. There aren't good therapeutic options in it today at all. We do believe there are mechanisms that will allow you to effectively treat vitiligo. If those are effective, that could be a very significant opportunity over time. Alopecia is another good example of that.

That's how we focus BD in these areas. That's not to say we would never look at a more niche opportunity or an orphan opportunity. I wouldn't say orphan is something that is core to our strategy.

Geoff Meacham (Managing Director, Senior Analyst - Biotech and Pharma)

Great. Thank you.

Liz Shea (SVP of Investor Relations)

Thanks, Geoff. Operator, next question, please.

Operator (participant)

Thank you for your question. It comes from Robyn Karnauskas with Truist. Your line is open.

Robyn Karnauskas (Managing Director and Senior Equity Research Analyst - Biotechnology and Pharmaceutical)

Hi, thank you very much. It was great with all the color you've given. I want to follow up on, you mentioned vitiligo. With the competition with topical ROCK, you know, which might have a first mover advantage, and then they have an oral as well in Pfizer, how do you see the opportunities for you in vitiligo for RINVOQ? Can it compete? My second question is, you know, the last few earnings calls, you would highlight your GARP TGF-β, so that's 151. I know there's been a lot of cardio talks in the space. What gives you some confidence, what features and what indications, like how do you focus on this, and how do you view the competition profile? Thanks.

Rick Gonzalez (Chairman of the Board and CEO)

On vitiligo, maybe Jeff and I will tag team on it. I would certainly say a topical has a place, but it is difficult for people that have large areas of their body that are impacted by something like vitiligo for a topical to be a manageable therapy for those patients. An oral for those patients that have more severe disease typically has greater benefit, and frankly, better compliance among those patients, which ultimately gives you better clinical outcomes. I think RINVOQ will stack up against whoever the competitive alternatives are based on the data. Based on how we've seen RINVOQ perform in other areas, I think we feel pretty good about what the potential is, but the data will speak for itself. We'll have to see what the data looks like.

Jeff and Tom, would you add anything?

Jeff Stewart (EVP and Chief Commercial Officer)

I just to build on that, when we look at the valuation of, for example, that indication or HS or alopecia, which again are those derm-oriented indications that will follow on pretty quickly in the middle of the decade on top of the atopic dermatitis, we do exactly what Rick highlighted, is we will segment the patients based on the body surface area. We know that the topicals will be important for a certain percentage of population, for example, if it's maybe highly located to the face, that might be more appropriate, at least as a first course of action. But we do believe that, in almost all indications that we've looked at for RINVOK, it just performs exceptionally well in the clinic. And we would anticipate that as well above a base case scenario.

Perfect example is Crohn's disease. You know, there will not be another JAK inhibitor in Crohn's disease for the U.S. just 'cause they just don't work. Yet you have spectacular results with the selective JAK with RINVOQ. We take that all into that competitive context all into our calculations as we look for the return for those future derm indications.

Tom Hudson (SVP, R&D, and Chief Scientific Officer)

I can just continue vitiligo. I mean, we will have readouts for our phase II study this year, we've mostly been looking at those cases where there's more extensive body coverage disease or the face. I think it would be a different. It's much better to take an oral than a cream when you actually have significant body coverage. Again, we'll see the data. We will report on another quarter call. Thank you, Robyn, for the second question. Yes, TGF-β is a known tumor suppressive pathway, people have tried to drug it to increase the response to immunotherapies.

The first generation TGF-β, because the target is found in so many parts of the body, you actually have effects, the cardiovascular effects having related to the TGF-β active in some of the endothelial cells in the bowels and so on of the heart. Here, we're using GARP as our target. GARP is actually a receptor for TGF-β that's called latent inactive. GARP is found only on Treg cells, a little bit on some fibrous, some stromal cells, but it's not found in the heart or other tissues. That's what gives us our safety profile, ability to cause immunosuppression on Treg cells found on tumor cells as opposed to other places in the body.

That we felt from the beginning was an attribute we needed to go to target this pathway would be something that would be tumor selective, and that's what we've been able to see so far.

Rob Michael (Vice Chairman and President)

She asked about what tumors potentially.

Tom Hudson (SVP, R&D, and Chief Scientific Officer)

What tumors. Initially, we focused on tumors. This pathway is found on almost every solid tumor has some subset of tumors which express a lot of TGF-β and GARP. We started off thinking that we'd you know, do a Phase I Stage II study, which we did well, that we would expand. We had picked liver and bladder because we saw a lot of TGF-β pathway in those indications. Although we knew there was some in CRC, we saw in patients in our phase I study which were unselected in terms of tumor type, we saw responses. We've actually continued expanding studying CRC. We did see responses in liver cancer where we expected to see it based on expression of TGF-β.

We did see it in bladder cancer. We're expanding in those indications at this point. Given the fact that I said earlier that we see TGF-β in all types of tumors, both tumors called hot or cold, we're actually expanding in other tumors to get signals right now. Again, we'll have baskets to actually continue to explore its indication space. Right now we're expanding when we're going to phase II, those remaining studies. It's indications where we've actually seen data in our phase I study.

Liz Shea (SVP of Investor Relations)

Okay. Thanks, Robyn. Next question, please.

Operator (participant)

Thank you for your question. It comes from Simon Baker with Redburn. Your line is open.

Simon Baker (Partner and Head of Global Biopharma Research)

Thank you very much for taking my questions. Two, if I may, please. Just going back to U.S. HUMIRA, giving us the expected erosion is extremely helpful. It's also extremely impressive that you feel confident enough to give a point estimate for the percentage erosion in 2023. Notwithstanding that, I wonder if you could give us what the likely pushes and pulls are. Is this something where we should be thinking more about the being upside risk due to inability of those additional generics, biosimilars to supply the market? Any kind of pushes and pulls there, and also into 2024, and your confidence around the erosion curve in 2024. Then a question on tax.

One topic that's been raised by some of your peers has been an impact from the OECD minimum global tax rate initiatives in 2023. Your guidance would suggest that isn't a factor for you. I just wonder if you could give us any color on when and if you expect those initiatives to impact your tax rate. Thanks so much.

Rob Michael (Vice Chairman and President)

Simon, this is Rob. I'll take your first question. When we give guidance, we typically give approximate assumptions, and we do use point estimates. We don't typically give product level ranges. It has been our practice. We said, you know, approximately 37% erosion for U.S. HUMIRA. We have confidence in that number, obviously. I think in terms of the pushes and pulls, it's really gonna be about volume erosion, right? I think that's, if you think over the course of the year, it's we made assumptions around volume erosion. We have good visibility of the price. Now it's a question of what will the volume erosion look like? Obviously, as we go through the year, we'll update you on that.

Scott Reents (SVP and CFO)

Hi, this is Scott. I'll give you some thoughts on the OECD question that you asked regarding tax. You're right. For 2023, we do not see any impact from this. In our view, there's a lot of things to be worked out with respect to the global minimum tax OECD mentioned. We have in the U.S., as you know, a minimum tax. We see ultimately this OECD tax being a top up on that if that does occur. There's a lot of details to be worked out, and we wouldn't anticipate any impact there until 2025 if there is an impact.

Simon Baker (Partner and Head of Global Biopharma Research)

Thanks so much.

Liz Shea (SVP of Investor Relations)

Thanks, Simon. Operator, next question, please.

Operator (participant)

Thank you for your question. It comes from Navann Ty with BNP Paribas. Your line is open.

Navann Ty (Lead Analyst for Healthcare)

Hi. Good morning. Thanks for taking my questions. I have three quick follow-ups, please. The first one on aesthetics. In addition to the macro impact, are you seeing or do you expect increasing competition from your smaller competitors, DTC campaigns, and new products? The second question is on HUMIRA. Was AMGEVITA pricing in line with your expectation? The third follow-up is on capital allocation. Can we think of 2x as a soft net leverage target, which is relevant for AbbVie to consider material business development? Thank you.

Rob Michael (Vice Chairman and President)

Carrie?

Carrie Strom (SVP and President of Global Allergan Aesthetics)

Hi, I'll take that first question on aesthetic competition. In terms of U.S. BOTOX Cosmetic, this is a product that's been around for 20 years and has faced increased competition and still commands market leading market share in the high sixties. We know, though, that the competitive market will expand as new entrants are coming and have entered in terms of Revance's toxin at the end of last year. What we've seen in the aesthetics market is that, of course, customers are gonna try these new products. It's highly kind of newness driven, and there's a novelty factor, and trial and competitive trial is to be expected. What we see is that these products and past aesthetic launches that we've watched. The share ramps for the first 12 to 18 months and then tends to stabilize.

Of course, we don't underestimate any of our competitors. In 2023, we are modeling what we think is a competitive amount of share erosion in terms of our BOTOX business. We'd expect that in 2023 and beyond, that U.S. BOTOX Cosmetic will continue to be the clear number 1 market leader. The new toxins that enter the market will be competing for their position as number 2, 3, or 4 in our customers' offices.

Jeff Stewart (EVP and Chief Commercial Officer)

Hi, it's Jeff. On your comment on AMGEVITA, no, the range of pricings that were released were not really a surprise. There's been some external thoughts that this is of interest where there were two different AMGEVITAs, one high WAC and one low WAC. Again, we've seen this across very different categories and studied it very carefully, as you would expect. We've seen variably priced WAC products in our own HCV market with the authorized generics from competitors. We've seen it in the diabetes space across multiple competitors, including biosimilar competitors. Certainly with the with Amgen and in other segments of their own business, they were often moving around the list prices as well.

All in all, you know, within the range that we would expect from AMGEVITA.

Rob Michael (Vice Chairman and President)

This is Rob Michael. The 2x is, you know, think about it as our sustainable target. As long as there's a path back to net leverage of 2x, you know, could take us, you know, in some cases it could take 2-3 years to get back to that. As long as there's a path, a very clear path to get back to net leverage of 2x, that's the best way to think about how we would evaluate it.

Carrie Strom (SVP and President of Global Allergan Aesthetics)

Okay. Thank you. Operator, we have time for one final question.

Operator (participant)

Thank you. Our final question will come from Gavin Clark-Gartner with Evercore ISI. Your line is open.

Gavin Clark-Gartner (Managing Director and Biotechnology Equity Research Analyst)

Hey, thanks for squeezing me in. Wanted to confirm if you were planning to submit the IMBRUVICA plus VENCLEXTA frontline CLL combination to the FDA following the ASH this year. On ABBV-951 in Parkinson's, we saw top-line data from competitors from last month. I don't have the full data yet, but one thing that sticks out is that they have lower discontinuation rates. Just wondering if there's any insight on devices or trial design that may explain this. Thank you.

Roopal Thakkar (VP, Global Regulatory Affairs)

Hi, it's Roopal. I'll take those. For the I+V that you referenced, we have that in Europe, and I think you're talking about the ASH data overall survival there as it clears a couple years is 0.5 or less, and the PFS still stays low. At this time, we're not submitting here at the FDA. They would like to see a little more prospective data in another trial setting. That's the I+V. On ABBV-951, you know, this is interesting on the competitor as you bring up. When you run these patients in, you could have discontinuation rates, and if you include them or not include them, it's gonna impact what happens post run-in.

For example, when you see our data set, we count the run-in discontinuation and post run-in as you get into the main part of the trial. You see that in the, you know, the 20% range or so. And that's fairly consistent with what you would see with a subcutaneous 24-hour infusion. It's not clear to us how that data, as you're speaking about is reported. Also, we don't know if that's more than 1 injection. Is it 2 injections, and is it rotated daily? I can tell you about ABBV-951, we have a dosing exposure that gets up to DUOPA. Unique from DUOPA, it's 24 hours, it's a single injection, and you can leave it in for 72 hours.

Liz Shea (SVP of Investor Relations)

Thanks, Gavin.

Gavin Clark-Gartner (Managing Director and Biotechnology Equity Research Analyst)

Great. Thank you.

Liz Shea (SVP of Investor Relations)

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 (participant)

This does conclude today's conference call. We thank you all for participating. You may now disconnect and have a great day.