AbbVie Inc. (ABBV) Earnings Call Transcript & Summary

Good afternoon, welcome to the UBS Global Healthcare Conference. My name is Navin Jacob, I cover smid-cap biotech and large-cap pharma here at UBS. I'm happy to have with me, for our next session, AbbVie Pharmaceuticals. And from AbbVie, we have Michael Severino, Vice Chairman and President; Rob Michael, SVP and CFO; Jeff Stewart, SVP and Head of Commercial Ops. Thank you, gentlemen, for joining me today. And we also have Liz Shea, Head of Investor Relations as well. So we're -- this is going to be a Q&A fireside chat for the full 45 minutes. We do have an ability for our audience members to ask questions via this webcast, so if you do so, I will see those questions at the bottom of my screen. They are anonymous, so don't worry if you're shy and don't want to necessarily showcase who's coming -- who's asking the questions. Those are anonymous, and I will try and read those -- some of those questions out at the end of this session. Thank you so much to the AbbVie folks for joining us today.

Perhaps, Rob, we can start with you. Just coming out of Q1, a lot of your peers had some issues relative to pandemic still affecting demand, and for the most part, AbbVie was relatively shielded. How do you feel about all your key products? Are they back to pre-pandemic levels in the U.S.? And how do things look ex U.S.?

Hi Navin. It's good to be with you. I think this one, we'll -- both Jeff and I will tag-team it. I think he can give a perspective on what he's seeing across the business. Obviously, as we look at our portfolio, the business, I think, that came back the strongest, and you saw this in the first quarter, was Aesthetics, and we just saw a very strong pent-up demand. I think we've also seen a very nice return on investment from our promotional -- incremental promotional investment in DTC, both for JUVEDERM and BOTOX, as well as our efforts to expand investment in China. So we're seeing very nice growth in Aesthetics. I'd say a portion of that growth, if you just look at the U.S. toxins market, it grew in the high 30% range in the first quarter if you compare that to 2019. It's obviously higher than we would expect on a normal basis. So there was certainly a level of pent-up demand there but Aesthetics has come back very, very strong. I see across the rest of the business, we've seen many of the markets come back to pre-COVID levels. We haven't necessarily seen the warehouse patients come through. But certainly for the most part, with the exception of a few within CLL, we've seen that market is still down versus pre-COVID levels as well as hep C, and I'll let Jeff speak to more details on that.

Yes. Thanks, Rob. And Navin, in terms of our major brands, the way that we think about COVID recovery is as the new patient flow return, so can we see it in our new-to-brand starts? And I would say, as Rob mentioned, that for the big immunology franchise, so that's RINVOQ, SKYRIZI, HUMIRA, we've fully recovered so we're back to where we were, in some cases, bouncing around even above where we were at pre-COVID levels so that's very encouraging for particularly that particular franchise. We also see it in some of the big neuro brands. And so we see, for example, UBRELVY, which is our leading product for acute migraine, it's almost like it was unaffected by COVID. It just kept running -- basically running straight through and we see some very, very nice momentum with UBRELVY. And BOTOX Therapeutics is also fully recovered. And in fact, we're starting to see nice momentum on the new starts, particularly in our migraine, our chronic migraine franchise. Now the other major brands that are not quite back yet, they're close, for example, VRAYLAR. So VRAYLAR, we're just seeing that. We're almost back to where we were in terms of the new-to-brand pre-COVID level. And also one our big GI products, Creon is almost there. And to Rob's point, not quite yet. We see -- and this is a global phenomenon, particularly for hepatitis C. So for MAVERICK, we see across the territories, that still remains below pre-COVID new patient starts levels. And this is a tougher one. We see continued progression not quite back yet as well as CLL. So in oncology for both IMBRUVICA and for VENCLEXTA, we see that, that market has not fully recovered. But so net-net, we're seeing good progress across the board with many of the big brands, as we mentioned, fully recovered. You also highlighted international. Now in international, we don't see the same level of, obviously, vaccinations yet but they're catching up pretty quickly, particularly in Europe. So what do we see? We see strength with HUMIRA. And we see that on 2 fronts. So in some ways, the COVID pandemic has helped, marginally, our HUMIRA performance. We have biosimilar competition as we know. And so in some cases, pricing reviews have been delayed, which is, of course, helpful. And we see many of the larger countries, they're just not switching patients as fast because of all the other things that they have to do around COVID. So Humira's strong. What we see also is that RINVOQ and SKYRIZI momentum is also exceptionally strong, even despite the fact that the vaccinations are not fully in effect in Europe. So just like we've highlighted over the last months in terms of our momentum in the U.S., we're seeing strength to strength for RINVOQ becoming the fastest launch brand in RA in the European markets. And SKYRIZI is performing exceptionally well and is nearing market leadership across the big LBUs. We're also pleased that our new indications, PsA and AS for RINVOQ have launched in the big European markets and the early results are quite strong. So very nice momentum as well in the international markets for AbbVie.

And I would add, just within international for Aesthetics, we've seen this really strong recovery and growth in China and other markets in Asia. And while we saw the impact in Europe have a small impact on the Aesthetics business in the first quarter, many of those markets are seeing recovery now. So overall, I'd say the international picture for Aesthetics is very strong as well.

And so just on Aesthetics, when you say you had a bolus of patients or this pent-up demand, does that mean that there's a little bit of waning in Q2? Or was -- I don't want to say, was there like an inventory build because it's not -- it's clearly demand related, but is there -- does it come back down and then keep growing or how does that dynamic play out for Aesthetics?

I think the best way to think about it is if you just look at the U.S. toxins market, it grew about 37% in the first quarter, something in the mid-20s would probably be a normal underlying demand within this calendar year, a level of market growth that I would expect. So you can break it down that way, that probably had roughly 12 points of additional market growth in the first quarter that was really driven by pent-up demand. But the underlying demand and the market growth is very, very strong, just not -- 37% isn't quite what I would expect in terms of underlying demand.

Fair enough. Mike, a question for you on RINVOQ. Obviously, everyone's now waiting for how the label plays out, whether or not there is an AdCom for JAKs. At this point in time, given that we're just about a month away from the first PDUFA for RINVOQ and then another 1 in July, wouldn't then that, if there was going to be an AdCom and then that have been set at this stage? And then secondly, can you help us think through what the different scenarios might be for what the label could look like, understanding you're perhaps reticent to talk about what exactly the label could look like but perhaps some scenarios around what that might look like?

Well, Navin, I'd be happy to take that question. I think with respect to an AdCom, we do not believe that an AdCom is likely, for exactly the reason that you outlined, which is, if the FDA were intending to have an AdCom, you'd expect them to be well along the way in terms of planning for it, preparing for it, and we have no indication that they are doing that. In fact, they communicate to us at specific points in the review, whether they are intending to have an AdCom. And their answer has been consistent that they don't anticipate an AdCom. Now of course, they have the authority to change that, but I wouldn't expect them to make a last-minute decision to change that. If you look at their practice here, particularly around JAKs, they've shown that they can make this decision on their own within the FDA without the need for an AdCom, and that's what I would expect here. With respect to the label, I think it's early to speculate, we don't know what XELJANZ labeling will look like and that is obviously a key component of the story. But what I would say is, we remain very confident in the data that we've generated for RINVOQ. We have a very large data set, more than 10,000 patient years of follow-up. We have long-term randomized data, and we know that those randomized data, controlled data are the most impactful, with the agency when looking at safety questions like the ones that they're examining, we have 3-year data in RA. We have 1-year data in psoriatic arthritis. We have large safety databases across all of the indications that we are pursuing. And those data have not shown a signal with our agent, with RINVOQ, for the adverse experiences that are being evaluated with XELJANZ and with others. Specifically, we've not seen increased rates of VTE or PE. We've not seen increased rates of cardiovascular events or MACE events, and we've not seen increased risk for malignancy. And if you look at the track record here, we've been very successful in getting our data into the label so they're well understood by prescribing physicians. And if 1 looks at the RA launch, we had our data in the label for RA, both our efficacy and our safety data. I think they well characterize the benefit risk of the molecule in that launch. Performed very well. In fact, it exceeded our expectations, so we feel good about the opportunities that are in front of us for psoriatic arthritis, for atopic dermatitis and ankylosing spondylitis, which are the indications that are under review. And of course, we have more indications that are still in Phase III and we feel confident in those as well.

One of the scenarios that folks have -- investors have asked about is whether or not the 30-milligram dose for RINVOQ, if there's any risk to that getting approved or not? How would you characterize the risk of 30-milligram not getting approved? And if it doesn't get approved, what does that mean for UC and Crohn's, which uses a 45 -- higher dose of 45 milligrams?

Well, we feel confident in the benefit risk of the 30-milligram dose in atopic dermatitis, both with respect to the ease that I mentioned earlier and with respect to overall benefit risk. There's very strong benefit delivered. High levels of response, high levels of skin clearance at the 90% and 100% level, rapid response, prominent impact on itch, and we view the overall benefit risk as favorable. So we view it as a dose that should be approved. Now you asked what if it is not approved? While it's not -- while that isn't what we anticipate, we would be very successful even if it weren't approved. So within atopic derm, the 15-milligram dose also performed very well. It had all of the same attributes that I just described for the 30-milligram dose: high levels of skin clearance, rapid response, prominent impact on itch. So we could be successful with the 15-milligram dose if that scenario were to occur, even though we don't anticipate that scenario. And that, for example, wouldn't change us -- wouldn't lead us to change our long-term guidance that we've put out for RINVOQ. And we feel very confident that we can meet that under any scenario. With respect to IBD, both ulcerative colitis and Crohn's disease, where we're studying a 45-milligram induction dose, I don't think the decision in atopic derm would bear on the decision in IBD. It's a different review division. They're different diseases, obviously, with different dose response. The safety data and the efficacy data from the 45-milligram induction UC were both very strong. Efficacy exceeded our expectations and the safety data were very strong. Rates of serious AEs were actually lower, numerically lower in the RINVOQ group than the comparator, which is placebo. And that's the case because a lot of these AEs are due to the underlying disease. And when we improve the underlying disease, we're actually seeing low rates of these AEs. The other thing to keep in mind is that the induction dose is given for a limited period of time, 8 weeks for RINVOQ. And that further supports benefit risk. So we feel confident across the spectrum of indications that we're pursuing. We feel good about the AD file, and we don't think it bears on our probability of success in IBD.

Jeff, AbbVie is obviously a leader in the immunology space, but ADerm is a new sub area for you within immunology for -- it's a new area for AbbVie. How has your market research suggested the ADerm market will play out from here? Is it as DTC sensitive of a market, as so with the other submarkets that you've been involved with? And what could penetration of biologics or biologic-like products such as RINVOQ get to? And how does it compare now relative to what biologic penetration is in a space like RA?

Yes. Thanks, Navin. I would say that this atopic derm market is arguably the most dynamic market that we will see in immunology. It's very attractive. It's significantly underdeveloped and I'll get into some of the metrics in a moment. In some ways, it's like the psoriasis market was 20 years ago, except the atopic derm market is even bigger, okay? And this is an important factor. Let me give you some flavor. So when we look at Dupixent, which, of course, is a very significant brand at this point, We can see that around 90%, 90% of the big SKYRIZI writers are the same big Dupixent writers. So we know those physicians very, very well. We know their offices very, very well, and we have established relationships with our representatives and our key medical personnel. And so we -- although not in the market yet, we know the space and we have a good touch point with the big prescribers. I think the other thing that we notice is that it is as sensitive of a market for the patient as psoriasis. And we've been in that space for a long time. We think and are planning for a DTC program to continue to activate patients, to let them know about the unique attributes of RINVOQ. And we think that will also play into some of our strengths as an immunology leader. So it's very, very dynamic, very significant. What we see as we look at the markets is that typically, you will see a movement of expansion of frontline opportunity, but you'll also see second- and third-line segments start to develop. And we've seen this across the board, whether you look at rheumatoid arthritis, whether you look at the spa markets, you look at PSA, you look at Crohn's, et cetera, this is just the way that these markets build. And I'll give you some sense of the penetration. So right now, if you look at the atopic derm market, the moderate to severe segment, which is where the indications are, of course, the biologic penetration with one aging is about 4% or 5%. So it's in the mid-single digit. The relevant metric for the psoriasis market or the cousin market, is above 30%, okay? And remember, the prescribers are the same. So we anticipate, again, lots of dynamic growth in the market, very strong positioning of RINVOQ as a new agent into that space and are very much looking forward to the approval so we can enter again, arguably, the most dynamic market in the space.

Got it, perfect. And maybe, Rob, if I could ask a couple of capital allocation questions. You have made a comment of wanting to keep the dividend payout ratio at roughly low to mid-50% or so, I mean, just based on how I'm modeling AbbVie's earnings for the next few years, it would seem that dividend could be hyped around 10% or so next year. Can we -- is it fair to assume that level of double-digit growth of dividend, even going into the 2023 short patent cliff for HUMIRA?

So Navin, given the tremendous amount of cash flow, we're able to do a lot of things with that. I mean, we want to maintain a strong growing dividend. We want to rapidly pay down debt. We've set aside cash for BD of $2 billion per year and more opportunistic, I'd say, really just limiting buybacks to offsetting the impact of equity -- dilutive impact of equity compensation. I wouldn't say that I want a payout ratio of -- in the low to mid-50s. The way to think about it is, I would expect strong dividend growth again in 2022. Upon the entry of biosimilars for HUMIRA in the U.S. in 2023, I'd expect that dividend growth to be lower but still growing. Similarly in '24, again, growth, but lower growth. And then I get back to strong growth in '25 and beyond as we return to very strong revenue growth, we've said high single-digit revenue growth starting in 2025 to the end of the decade, 2029. In terms of payout ratio, we're around in the low 40s today. I expect to be in the low 40s next year. That -- the 50s you're referencing is where we will end up in the '23, '24 time frame, probably, I think, low to mid-50s. And then going forward, more of a steady state, I'd say it's probably more in the mid- to high 40s. So in terms of a payout ratio that I would like to target over the long term, it would be probably more of the mid- to high 40s versus the low 50s. But we're still very committed to that dividend and we delivered strong growth historically. I expect this continue to grow going forward.

And how are you thinking about the share repos you've put a pause on it? And wondering how you're thinking about that relative to dividend or BD?

Sure. I think, look, it for us, the dividend is the primary vehicle to return capital to shareholders. As part of our investment identity, it's very, very important. I view buybacks as more opportunistic. Between now and 2023, it'll be limited again just to offset the dilutive impact of equity compensation. Beyond '23, we'll look at it more opportunistically, but our focus is really on growing that dividend, as well as setting aside capital to access external innovation. That $2 billion per year, I expect, to be in place through 2023. And then when we get to that point, we'll look -- we feel very good about our internal pipeline. Obviously, very good about our growth prospects with high single-digit growth in the second half of this decade. So we feel very good about the assets we have today. But certainly, when we get to the end of '23, we'll take a look. We'll have the flexibility to do more if we need to. But that's the way we're thinking about capital allocation today.

Got it. And then Mike, a few pipeline questions, if I may. At least according to our analysis, it feels like investors may not be giving enough credit to some of AbbVie's pipeline. You do have some catalysts that are playing out this year. Perhaps most near term is ABBV-951 for Parkinson's disease. You have a Phase III readout midyear. Is it fair to assume that this is a relatively derisked asset? And then how are you thinking about the market opportunity relative to your existing Parkinson's franchise of DUOPA?

Well, I think it's very fair to look at 951 as a derisked asset. What 951 is, it's a drug device combination that uses 2 novel pro drugs that allow for the subcutaneous administration of what will become levodopa. The pro drugs are converted essentially to levodopa in circulation. And what that allows us to do is use an insulin pump-like device to deliver subcutaneously an agent that will deliver DUOPA-like efficacy. You can't do that without these pro drugs in a convenient way. And what we know is DUOPA delivers transformational efficacy. But it's difficult to get that efficacy. You have to have a G tube placed surgically, that's threaded into the small bowel, that has to be maintained. There's a very cumbersome drug device combination with that agent. But despite that, because of that efficacy, DUOPA does roughly $0.5 billion a year. And there's more potential than that within the labeled population, but there's only a subset of patients who are either willing or able to, with their caregivers, manage that situation. Now those patients get great results. But with something like 951, we can broaden the population that will be able to use the device and willing to use the device. It doesn't necessarily change the labeled indication, but it broadens the patient set that we'll be able to access that innovation and access what is really, for many patients, life-changing efficacy. And it's highly derisked because we know if you get plasma concentrations of levodopa and carbidopa, we know what that translates into efficacy. And we can see that in the early phase trials. So we have confidence in the efficacy profile. We have confidence in the drug device combination, and we'll be seeing that Phase III data over the summer. So we think it's a very attractive opportunity that could really expand our footprint in the advanced Parkinson's disease arena.

And I have actually a few questions from the audience members, which I will read out towards the end of our session, but one of them is on the pipeline. So since we're discussing the pipeline right now, Mike or Jeff, despite -- this is for you. With regards to some of the duped toxins in development, especially new liquid toxin from Meditox and BOTOX, prefilled syringes that Allergan announced back in 2018. How will these products help or grow the Aesthetics portfolio?

We have a strong position in Aesthetics overall, and a strong position in toxins. Toxins is one of the core pillars of our Aesthetic franchise together with facial fillers and body contouring. So if you look at toxins, we've got a strong leadership position, a strong installed base of customers, the clinics and ultimately, consumers. And we will continue to build that franchise through a number of means. One is innovating with novel delivery platforms and novel toxins. So in our pipeline, we have long-acting toxins that extend the duration of activity. There are other toxins that are pursuing this, but they're principally pursuing it by raising the dose. And we don't think a high-dose toxin is the answer here because there are limitations in how that can be used in terms of the regions of the face. There are limitations in terms of how much can be injected in a single session. So the patients need to come back for a second session, at least in the clinical trials, to treat other regions of the face. That's not necessary with BOTOX. So what we think the ideal answer here is a longer-acting toxin rather than just a higher-dose toxin. We have programs in our pipeline that will address that need. We have faster-acting toxins and shorter-acting toxins that will be important for segments of the population, particularly for patients who are new to toxins and want to see what the result will be before they commit to long-term use. So we have a wide range of programs in our pipeline that will address the needs that you outlined.

Great. And then a few more pipeline questions, if I may. A lot of interest has been created around the antibody drug conjugate for immunologic indications. Very interesting program as a potential for platform value, which a lot of people don't necessarily think about when they're thinking about AbbVie. Remind us again when we're going to get the next -- an update on the second-generation compound. And what are the differences between the second-gen compound and your first-gen, which was ABBV-3373?

Well, the next-generation compound is the compound that we selected for Phase IIb development, that's ABBV-154. And we will be starting a number of Phase IIb studies this year, which will be definitive dose-ranging studies that will be Phase III-enabling. So we're going to start a rheumatoid arthritis study this quarter, so the study started, it's imminent. And that will be in a biological IR population, so a biologic inadequate responder population, because we think those are important data to set up Phase III development. We'll also be starting a Crohn's disease Phase II study that would be Phase III-enabling and a study in an indication that's outside of the HUMIRA footprint, polymyalgia rheumatica, which is a condition for which there are very limited treatments. It causes a lot of suffering for patients who experience it. And the only real effective therapy is steroids. And steroids work, but many patients become steroid dependent. You can't get the steroid dose down low enough without symptoms recurring. So it really is an ideal opportunity for an agent like this that has a very targeted delivery of that steroid effect, and that study is starting this year as well. There are additional Phase II studies that could be started in coming years, but that's the set we've decided on for this first wave. And there's also platform value, as you described, that could take us into other indications by changing the targeting antibody or changing the warhead, that could get us into diseases like lupus, scleroderma and other immunologic diseases that have been very difficult to treat. In terms of the differences between 154 and the first molecule, they primarily relate to the linker technology. So they're very similar from a biology point of view. But there are improvements in the linker technology around 154 that allow us to concentrate it to much higher levels. We can get higher concentration formulations. And they also improve the ease of manufacturability. So those improvements could be very important as we look at higher doses. Certainly, these indications require higher doses like inflammatory bowel diseases. And obviously, the ability to formulate at high concentration and get into a patient-friendly administration platform will be important for Phase III development and commercialization. So it's primarily that linker technology that's different.

Got it. And then maybe we can bring Jeff back in. Jeff, VRAYLAR has been growing well and has done a lot better, I think that people were initially thinking, but you have a very big long-term guidance goal of $4 billion just with the current indications. How do you get from here to there? What do you need to put into place from a marketing and sales effort standpoint to continue to grow that product?

VRAYLAR has been and is performing very, very well. It's a wonderful product. If you think about the feedback that we get from the big prescribers, whether they're the psychiatrists or the big primary care physicians that treat bipolar, bipolar mania, bipolar depression, it's quite easy. So it's once a day, it's easy to titrate, very light gains in terms of metabolic effects or weight gain. And so it's a nice -- a very, very nice profile that fits in. Now overall, it's a relatively modest share. We have about a 2.5% share. And some of that's been suppressed a little bit, as I commented, due to COVID. So really, our ability to double that share is really critical to hit our ambition in the core indication. And we think we can do that. There's things that we're looking at with our sales force designs to provide greater focus over the long-range plan, with dedicated experts in psychiatry and also the big primary care physicians. So that's also underway. We continue to hone our ability to reach out to the consumers that may not understand that they are, in fact, suffering from bipolar depression. They may not have been properly diagnosed. So we have a significant investment strategy underway to help us reach that ambition. And then we also, and it's not been worked into our guidance, we're also anticipating and hopeful that we can enter a market that's roughly the same size. This is this adjunctive MDD and we'll know the readout on that shortly. And again, so the ability, again, to go to the similar physicians, the similar segments with 2 very significant indications, the bipolar depression, constellation of indications and also the adjunctive, more serious major depression gives us the confidence that this could be a very significant driver for us over our long-range plan.

Well, that's a good segue to my next question for Mike, which is just on those MDD trials. First, by shortly -- when Jeff said shortly at the timing, I just want to -- was it -- I thought the timing was year-end '21, year beginning '22. Is that -- I want to confirm on that timing? And then also, just with regards to that MDD, those trials, just at least based on the data that we've seen from prior Phase II and the 1 Phase III, it was somewhat mixed. What is it about these trials that lead you to have confidence in the chance of success?

I'd be happy to take that question, Navin. On the timing, you have the timing, right, we'd expect to get the readouts in the back half of this year towards the end of '21 is our current timing. With respect to the trials, we have 1 positive study in hand, which is a Phase IIb study but it's large enough and was conducted in a way that makes it pivotal. So of the 2 ongoing trials, we need at least 1 of the 2 to be positive, to submit for the indication. We've gone through the old trials and the old data. And we think we have a good understanding of where we've seen an effect and where and why an effect hasn't been noted. First of all, we think there's a strong rationale for the target, for the mechanism in the adjunctive treatment of major depressive disorder, particularly because VRAYLAR is a partial agonist at the D2 and D3 receptor and also at the serotonin receptor. That's an important feature for molecules that have worked in this indication in the past. And clinically, it exhibits a brightening effect, which we think bodes well for the ability to confer benefit on patients who need additional therapy for major depressive disorder. Ultimately, of course, the studies will answer that question. But when we look through the old trials, we think patient selection features are important. Later-line trials, treatment-resistant depression trials have been very challenging for a number of agents. We're focused more on adjunctive treatment, a major depressive disorder. Site selection is very important, making sure you have sites that can rigorously administer the efficacy measures that enroll an appropriate patient population is important, and we feel good about those features in the ongoing trials. We've done a review of the aggregate data. So we can't know who's on what therapy at this point but we can look at the patients who are being enrolled, their baseline characteristics and other features. And we feel like we're enrolling the intended population, the right population to demonstrate an effect if 1 is present. So we're optimistic about the potential for the trials. Now as Jeff said, we have not built that into our baseline thinking. We didn't build it into our deal model. We didn't build it into the guidance that we gave, peak sales approaching $4 billion. That we can achieve with the current indications. But we do think that there is a very attractive potential upside to the adjunctive MDD indication. And we'll have the answer in the time frame that we talked about, towards back end of this year.

Neuroscience is a space that you've expanded on dramatically, not just with Allergan, but some of your internal projects and a space that folks don't necessarily think about as it relates to AbbVie is Alzheimer's. But you do have several programs that you're working on. Notably, a tau antibody, ABBV-8E12, I believe, is the number for that one. Lilly actually has a tau antibody readout at the second half of this year. Remind us where you are in development with 8E1 -- or 8E12 and when you think we could see a potential readout there?

Certainly. Neuroscience is really now a pillar of the company after the integration of Allergan. We have much broader efforts. We have disease-modifying efforts in Alzheimer's disease, Parkinson's disease and other conditions, as you outlined. We talked about VRAYLAR. Migraine is also an important component of that. So it really is an area for us now. We have considerable efforts in Alzheimer's as well as other neurodegenerative diseases. 8E12 is the most advanced of those. It's a pan tau antibody, so it binds to tau and blocks all tau species, there are multiple tau species. It's in Phase II development. And that Phase II study is nearing completion. We would expect to have results that we could communicate over the summer so we're not very far away at all on that. That's our most advanced program. But we have a number of other programs as well. We have other tau-directed programs, because we think Tau is a very important target in the biology of Alzheimer's disease. Those would include antibodies that are specific to what we believe are pathogenic species of tau, so to differentiate from the pan tau antibodies, that are the current generation that are going through the clinic, we have programs that are aimed at knocking down intracellular aggregates or clearing intracellular aggregates of pathological tau, because what tau does is it aggregates within the neuron, we believe it's neurotoxic. So we have mechanisms that are in preclinical development that can actually clear that within the neuron. So we have a whole range of approaches to address tau. And we have other approaches to Alzheimer's disease as well, such as our neuroinflammation programs, which are in Phase II. So it's a broad set of programs directed at Alzheimer's. 8E12 is the lead, the most advanced, and we'll have those clinical data over the course of this summer.

And then 1 program that caught my eye only because a couple of companies now have similar programs is the RORgamma t for immunologic conditions and specifically psoriasis. Why are multiple companies going after this? What are you guys seeing that's interesting about this mechanism? And then how do you think about -- and then as a follow-up question to that is, how do you think about go, no-go decisions, particularly early stage, Mike, just given that you are developing this for psoriasis, obviously. You've been part of the dramatic impact to patients' lives that you're having already with the newer assets such as SKYRIZI. So you've seen Lilly stop development of mirikizumab for psoriasis because they think it's too crowded. So when do you make that decision of, okay, maybe we have -- we've covered psoriasis pretty well. It's starting to get crowded, versus, okay, we have something very interesting here?

Well, we think there's still room for an oral agent in psoriasis, that has higher levels of efficacy. I think from the point of view of a biologic, we are essentially at a ceiling for efficacy and benefit risk. When you have SKYRIZI with the long-term results on endpoints like 90%, 100% skin clearance, that it has demonstrated with a safety profile that it is demonstrated, with a convenient quarterly administration that goes along with SKYRIZI, it's hard to think about how we can improve on that. So we're not pursuing additional biologics in that space, but we do think there is a room for a small molecule, particularly one with higher efficacy. And that is an area that we're still interested in pursuing. RORgamma T is a target that is important in the differentiation of Th17 cells. Th17 cells produce IL-17, which is one of the drivers of psoriasis. And so this is an indirect way to block IL-17 action with an oral because it's not technically feasible to make a small molecule antagonist of IL-17. Small molecule cytokine antagonist have been extremely challenging. No one's been able to do that. So it's a way to get at that axis. We think it's particularly important to have a partial agonist here and our agent is a partial agonist. And the reason for that is that there is basal tone in the system that a partial agonist can block but a pure antagonist can't. So we think the right agent does have potential here. It could get to those biologic-like levels of efficacy with a favorable safety profile. And it's still early with the 157, which is our RORgamma t agent. But we've seen data that indicate they are having an impact on disease. We're going to move to Phase IIb studies that allow us to determine whether it has the profile that I described, the profile we're looking for. And if it does, I do think there's an opportunity for an oral in this space.

I want to read a question from the audience before we run out of time here. A quick question, I think it's fair given that there's been some noise by 1 biosimilar manufacturer, Alvotech, around HUMIRA, they have potential approval in September. How are you guys thinking about that? Is there any chance of Alvotech launching earlier than '23?

Well, we remain very confident in the IP that we have generated around HUMIRA. We think it represents true innovation and many years of investment. This is IP that in many instances has been challenged and upheld multiple times. So we feel very confident in its validity. And that view has not changed, in our view. 2023 is the time period for entry of biosimilars into the U.S. market.

Okay, very good. And then with the last remaining minutes here, Rob, just for you on expenses for the next several years, how we think about them, just given that you do have a lot going on in the pipeline. You are also investing in several launches as we speak. Maybe just on the SG&A line over the next 2 to 3 years, given these launches, should we be expecting growth that is as fast as sales or more along the lines of inflation of maybe 1% or 2%?

I think whenever we talk about any of the P&L profiles, it's always good to start with operating margin first, and then I can help you understand the dynamics between gross margin, R&D and SG&A. If you just look at in 2021, we're at about approximately 50% operating margin. I would expect that to expand in 2022, largely because of synergies. So we said we're going to deliver $1.7 billion of expense synergies this year and greater than $2 billion of synergies in 2022. So you would expect to see operating margin expand just because of synergies alone. We also have historically driven expansion through P&L leverage. And the extent of P&L leverage, it really depends on how many new product indications are you launching? And so you're right. In the next couple of years, given that we have more than a dozen new products and indications, we will be absolutely making sure that we're fully funding those launches. And so the degree of P&L leverage over the next couple of years won't be as great, let's say, as it's been historically. But we will see expansion still because of synergies. And as I think about them going forward, in 2023, we've talked about it, pulling back the operating margin profile, pulling back because of the U.S. HUMIRA LOE, not surprisingly, given the profitability of HUMIRA. That said, we're still going to have a top-tier profile. I've historically said in the 45% range based on our current LRP, it's probably in the 46%, 47% range. So that reduction from 22% to 23%, about half of it probably will come from gross margin, the other half from the expense lines, but we're absolutely committed to growing the business going forward. So we're going to fully invest in R&D, fully invest in SG&A, but still have a top-tier, both gross margin profile and operating margin profile.

Well, with that, we are just about exactly on time, and we want to really sincerely thank the management from AbbVie, Mike Severino, Rob Michael and Jeff Stewart for joining us today. Thank you very much for a very interesting conversation.

Thanks, Navin.

Thank you, Navin.

Thank you, Navin.

Take care.