AbbVie Inc. (ABBV) Earnings Call Transcript & Summary

Great. Good morning, everybody. I'm Terence Flynn, the U.S. biopharma analyst. Very pleased to welcome AbbVie. Joining us today from the company, we have Michael Severino, Vice Chairman and President; Rob Michael, Executive Vice President and CFO; and Jeff Stewart, Executive Vice President, Commercial Operations. Thanks so much, gentlemen, for joining us today. Really appreciate the time.

It's a pleasure to be here.

Well, maybe we'll jump right into it. Obviously, the COVID recovery is front and center for a number of folks. Maybe you could update us on the trends you're seeing across your various end markets, both in the U.S., Europe and Asia. And then how are you seeing those trends stack up in May versus what you saw back in April?

Well, the business is performing very well, and we're off to a very strong start in 2021. In fact, we're one of the very few members of our peer group who raised guidance -- full year guidance for both revenue and EPS based on our first quarter performance. And so the recovery is going well from that perspective. We continue to see rates of COVID infection decrease in the majority of the jurisdictions where we operate, and vaccine rollout is increasing. And so those are all positive signs. And I would say the majority of our businesses are very well into the recovery phase. I think the aesthetics business was the most rapid to snap back. We saw that even last summer, and now the aesthetics business is performing above pre-COVID levels, but all our businesses are performing very well. The immunology business continues to do well. The launches of RINVOQ and SKYRIZI have been very successful. The trajectory of those molecules remain strong. The neuroscience business is returning to levels that are approximating pre-COVID levels. And in aggregate, the recovery is going very well for us. There are a few areas that still seem to be impacted a bit more. CLL as a tumor type, that does not have quite the same urgency to initiate treatment as AML, for example, is still showing some COVID effects, and HCV is still showing fairly substantial COVID effects. And I think that's because in hep C, again, treatment can be deferred for a period of time without necessarily impacting the patient. But across the board, the recovery is going very well.

Great. And how about anything on the geographies that's notable or different? I know, obviously, the pace of vaccinations has been different across some of the countries that you guys operate in, but maybe just give us a sense for what you're seeing at a geographic level.

Yes. I'll take that one. It's Jeff. So in the U.S., it's very consistent to what Mike just highlighted. So we look at the recovery in terms of how rapidly and what the momentum is on the sort of the new prescriptions or the NBRx recovery. And the vast majority of our brands are back to that pre-COVID level in the U.S. or very, very close; in some cases, above. For example, our oral migraine product, UBRELVY, it's almost like there was no impact of COVID in terms of the momentum of that brand through the launch here. So the U.S. overall is pretty positive and quite stable. I think the other thing that we monitor, very importantly, is what are the dynamics in our infield teams that are happening. So in the U.S., we are close to being back. If you count live engagements with physicians across our major areas plus some remote, most of it is back to live engagement. So it's a very positive dynamic. It is different across the globe. In particular, it's more concerning in Latin America where there's more lockdowns, there's more problems. Having said that, if you actually just look at the business trends, they're fairly stable. So nothing that would make us too worried in terms of what the momentum there in Latin America. So as vaccines hit in those areas, we actually think we might probably get some lift or increased momentum versus what we see in the trends. In Europe, to Mike's point, the vaccinations are moving very, very quickly now. In some cases, they're moving ahead now in Canada and Western Europe, ahead of the United States. So really, over the next several months, we're going to see Europe open up, and live calls come back. And that, combined with remotes, we continue to feel that our business momentum is pretty solid. So that gives a flavor of the differences across the globe.

And within aesthetics, we saw China quick recovery there. Obviously, you've seen the U.S.. Western Europe was a little bit slower in the first quarter, but we're now seeing those markets open up in the U.K. in particular, most recently for the aesthetics market, has opened up. So we are starting to see a nice recovery within Europe As also I look at the globe from an aesthetics perspective, obviously, there are some markets like Brazil. They're still impacted, but the large markets for aesthetics are essentially recovered.

Yes. Great, great. Well, that's great to hear. Maybe just one more follow-up on this topic is -- and Jeff, you touched on this a little bit. But in terms of, I guess, the marketing structure, R&D structure post the pandemic, any changes that you guys are making at the organization to kind of as a result of the pandemic on either the SG&A side or the R&D side that you see as kind of more longer-term in nature?

I can touch on the commercial piece. And I think the short answer is no. Again, we're seeing a fairly significant return to live engagements, particularly in the U.S., and we anticipate the same in Europe and the other territories. So we're not contemplating sort of significant changes to our infield team structure or major changes to our commercial operations. I would say that the COVID time in the pandemic has given us some thoughts over how we actually can enhance the impact of our field-based teams. And so we've worked very, very hard to make sure that we can basically digitally enable and empower our infield teams, whether they're account managers or frontline representatives or MSLs, to basically operate in a hybrid environment to have the best impact with normal live discussions, but also then use all the new technologies actually to sort of even boost the level of engagement that we can have with our teams in the commercial affiliates. So to put a fine point on it, no major change, but also using the COVID pandemic as a way to actually increase our effectiveness in the field. Mike?

And similar to what Jeff said, I don't see any significant change in the structure or our approach to R&D based on COVID. Obviously, laboratory-based activities need to occur in person, and we have been able to do that for quite some time under the guidelines that have been placed and been in place where the majority of our labs are principally in Massachusetts, here in Illinois and in California and the U.S. With respect to clinical trials activity, we've been very effective at continuing to enroll our clinical trials, and I don't see us changing our model or our approach. We had already, long before COVID, moved to remote data monitoring for much of our activity because it's actually more effective and it's more efficient, and that is something that's independent of COVID, but that will continue. But across the board, I think the structure and the approach to R&D will remain the same. The obvious difference is we haven't been going to scientific meetings. They've all been virtual, just as this meeting is virtual. And we look forward to a day when that can return to some in-place scientific exchange. But beyond that, R&D has progressed as it always has.

Okay. Great. Well, we'll appreciate those insights. Maybe one other higher level one just before we dig into some of the product side is just you guys have -- are targeting 2.4x leverage by the end of this year, 2x by the end of '22. And so as you think about achieving those targets and your debt levels coming down, how is your capital allocation strategy going to evolve at all? Will you look more opportunistically at M&A and business development here once those leverage targets return to those levels? Or are you -- is it pretty much status quo as you think about capital allocation?

I think the way to think about capital allocation, one, I mean, we do generate a tremendous amount of cash. And so it's allowing us to grow the dividend very nicely. We increased by 10% again in January. I would expect to see us continue to grow the dividend, strong growth again in '22, probably lower growth in '23 and '24 as we work through the U.S. Humira LOE, but still delivering growth and then back to strong growth in '25 and beyond. So I'd say, dividend, we're very committed to a strong and growing dividend. We're going to continue to pay down debt very rapidly, as you mentioned, Terence, getting to 2.4x leverage by the end of this year, 2x at the end of next year. The target is to try to get all the Allergan incremental financing paid off in the -- by the '23 time frame. And so between now and '23, we've set aside $2 billion for BD, and we've done some very nice things with that. When we get to the end of '23, given where our balance sheet will be, we feel very good about our business, about the internal pipeline, the external assets we've brought in. So we'll have some flexibility. And so we can either continue paying down debt beyond '23, but we'll certainly have the flexibility to do more if we need to. But given where we sit today, we've given guidance of high single-digit growth from '25 to the end of the decade, 2029, with the assets we have today plus what we've brought in. So we feel very good about the portfolio we've developed. We've got 5 therapeutic areas that can -- have diversified the company, can drive long-term growth. And certainly, with the amount of cash we generate, we have a lot of flexibility.

Okay. Great. And then maybe just one follow-up. You guys have talked a lot about long-term margins and kind of targets there. But as you think about that R&D line, one of the things you guys have highlighted is you have these 30 Phase I/II assets that are going to be reading out here. I think it's over a 18-month time frame. Does that imply that, again, assuming success for some of these, there's going to be some upward pressure on R&D as a percentage of revenue? Or do you feel like your current kind of level can kind of incorporate that mid-stage pipeline that you guys have right now?

We feel like our current level can incorporate that. And obviously, we plan for that future when we make our long-range plan and when we think about our long-term guidance. The absolute amount of commitment to R&D is quite substantial. We spend about $6.5 billion a year on R&D. So we don't necessarily think of it as a percent of sales, although we know many people look at it that way, because there are different features that are more or less R&D efficient or R&D intensive of an organization. For example, aesthetics, which provides a significant portion of that revenue, is very efficient from an R&D perspective in that there are lower cost per program, higher probabilities of success for programs in that area compared to other areas. And so when we look at the whole picture, we think that $6.5 billion is very adequate. And we'll cover a wide range of options, including significant success from the early pipeline, which we obviously feel good about our early pipeline. I think it's also important to look at the types of programs we run. We don't develop drugs that require large outcome studies for registration. We run pretty efficient programs. Many of our cancer programs can be registered from Phase II, for example. So again, it's another feature that makes us confident that the amount that we've committed to R&D is appropriate.

And while we -- we have top-tier gross margin -- operating margins, we expect to maintain that even through the LOE event. We don't do it by sacrificing investment, right? We are fully committed. We've got more than a dozen new products indications for launch over the next 2 years. We're fully committed to fully funding the SG&A that's needed to launch this successfully. We're going to put the funding that we need for long-term growth in the pipeline. And so we feel very good about the profitability of the company, and that will continue, but isn't by sacrificing the investment needed to drive long-term growth.

Okay. Understood. Maybe we'll move on to some of the products now. RINVOQ, obviously, has had tremendous commercial success here, still in the early days of launch. It seems to me that pandemic maybe has helped in terms of some of the oral drugs over injectables or deal in RA, just given this virtual prescribing environment. So if -- do you guys agree with that? And then if so, how can you kind of continue to capitalize on that momentum here coming out the other side of the pandemic?

I think the principal reason for the momentum that RINVOQ has developed and the trajectory that it's on is the overall profile. So if you look at the overall profile, it's very strong from an efficacy perspective. We're the only JAK that showed superiority to Humira and RA at the approved dose. We have very, very strong responses across the board. We have a very well described safety profile, which I think is very important in that class. We run large long-term studies that have characterized that safety profile. And those data are in our label in a way that they can inform physicians and be an important part of the conversation around benefit risk. And I think that really is the principal driver for performance. I mean it is true that with an oral, you don't have to have injection training and that it may be easier to start during a pandemic, but I don't think that is the primary reason for the performance that we've seen. So I think we would expect to see that performance continue as markets open up as the pandemic continues to improve.

Okay. Great. And another one on RINVOQ is just, any early insights into the PSA and AS launches in Europe that you can share?

Well, we feel good about the profile in those indications as well. And so those are under review in the U.S. In Europe, we don't have specific thoughts on launches that we can give you today, but what I would say is we've demonstrated a strong profile. We've demonstrated high rates of efficacy in PSA on the joint components. We've also demonstrated, I think, much stronger performance on the skin component, and some patients do have mixed disease than people would have anticipated for a JAK in this area. And I think that is an important part of the profile. And I think in AS, we've also demonstrated strong results across the board, so would feel good about those indications globally.

Yes. And just to add on to what Mike is highlighting, basically, we had the approval in Europe, and we're going through the reimbursement dynamics. So really, the only qualitative feedback is from Germany, and it's very positive. Germany can move pretty quickly relative to the other European markets. And some of the feedback that we get from the German rheumatologists from the affiliate, again, are positive in this sense. You have up to, really, 40% of the room patients are AS or PSA. And so what it's done is very, very quickly sort of round out the overall profile of RINVOQ. So not only do you have this very strong RA data that Mike highlighted, the AS and the PSA data is also very strong. So suddenly, when you can cover that triad of diseases for the room, the feedback is very strong that now RINVOQ is rounded out and can really start to run for full impact across that therapeutic area. So again, we're going to start to see some of the actual in-market data soon. The qualitative data is very strong.

Okay. Great. The other topic that's top of mind is just the regulatory environment for the JAK class here in the U.S. Obviously, we're still waiting on the action from the FDA in July through August for a number of indications for RINVOQ. So as you think about some of the potential class label changes the FDA might be considering, can you kind of help us think about what are some of the potential outcomes there at the class level? And then, again, I think there is some debate about how generalizable the XELJANZ data is to other JAK. So would love your perspective on that question.

Well, we certainly have seen differences in JAKs with respect to performance and with respect to a number of safety issues, if you look across the class. And while people talk about the JAK class in aggregate, there are very significant differences in specificity for JAK type, and those can drive real differences in performance, both from a safety and an efficacy perspective. And we've consistently had very strong data in both perspectives. Obviously, most of the attention now comes after the results of the XELJANZ oral surveillance study and the results that were demonstrated there on MACE and malignancy. So failing to clear their safety boundary for those 2 events in a study that was a post-marketing requirement, going way back to their original approval. What I would say there is we've looked for those events very carefully within our program. We have a large database. We have more than 10,000-patient years' experience in our clinical trials database that we have examined for these events. We adjudicate these events. We have very rigorous methods to try to make sure that we are capturing all events that are occurring. And those databases have not shown a signal for increased risk. And that's true whether you look compared to baseline rates or within the controlled portions of those programs where you have long-term control data against Humira, principally, and other agents as well. We've not shown evidence of increased risk for MACE, for malignancy, for DVT and PE. So we feel confident in the profile that we've described. And I think it's challenging to predict how they will come down on labeling across each member of the class. But what I would say is we have been successful in making sure that our data are reflected in our label, and that's been well understood by prescribing physicians. And if you go back, as an analogy, if you will, to the RA approval, which occurred right around the time that the DVT and PE issue was the focus for baricitinib, we had data in our label that described our experience. Those data were well understood by physicians, and the uptake has been very robust in that indication. And so I think we're in a very similar position here.

Okay. Okay. Great. We'll stay tuned. The other one is, obviously, atopic dermatitis is another key indication for the drug here. Maybe, again, would welcome your perspective on kind of commercial positioning here in the market under 2 scenarios: one, where you get both doses on the label; or the other scenario where maybe you only have the low dose on the label. And then also remind us of when we might expect to hear from the CHMP on the atopic dermatitis side.

So atopic dermatitis is a very attractive market for RINVOQ, and it's a market that's very underdeveloped. It had largely been ignored by the industry until very recently. Dupilumab has been the first agent there. It's done a good job in opening up that market. Today, that market is $3 billion, $3.5 billion, and that's in low single-digit percentage bio penetration. So compare that to psoriasis where bio penetration or TIM penetration, therapeutic immuno-modular penetration, is in the teens, and RA and IBD, were in the 30% to 40% range. So there's a lot of room for growth. We think this market can triple by 2025. And so overall, it's a very attractive market. We think we bring a very competitive offering to the table with strong efficacy, high levels of response, high levels of response at the 90% and 100% clearance levels, very rapid response, very prominent impact on itch and superiority to dupi in our head-to-head study. And so we think we have a very compelling profile. I think initially in this space, what one typically sees is one will start with inadequate responder populations. Most physicians will start there. They'll gain experience, and then they'll move an agent forward in lines of therapy as they gain experience with the efficacy and safety profile. And I think you can expect to see that here. There's a large group of patients who are essentially warehoused here, patients who've either receive dupi and come off therapy or are receiving substantial supplementary treatment with topical steroids, which might indicate that they are not getting the response that they would have hoped for and would be, I think, well positioned for a high efficacy agent like RINVOQ. With respect to Europe, it -- the CHMP process is a little bit harder to predict in terms of exact timing as compared to the U.S. process. But in the U.S., we -- we're on track towards a decision in July. And I think probably the best characterization of the CHMP process is we'd expect to get an opinion from the CHMP in a similar time frame.

Okay. And maybe just one follow-up. As you walked through some of the penetration rates in atopic derm, and if you look at psoriasis or IBD, you're in kind of teens to 30% penetration rates, which would suggest that this is potentially a $20 billion market, I guess, at kind of -- those levels of penetration. Are there any other hurdles that you guys are thinking about to get to those kind of levels? Or any differences between psoriasis and IBD that would prevent this from becoming a $20 billion market?

Well, I think the atopic dermatitis market looks very much like the psoriasis market did 10 or 15 years ago in terms of it being underdeveloped. And I think that it is poised for significant growth. There's a lot of overlap between the biologics prescribers for atopic derm and for psoriasis. There's roughly 90% overlap between high prescribers for biologics and psoriasis and the doctors that are prescribing therapeutic immunomodulators for atopic dermatitis. So they understand biologics now much more than they did 10 or 15 years ago, and I think that growth can happen more rapidly than it happened with psoriasis. I think the best thing to point to is a view that we think this market could easily triple by 2025, and there's growth beyond that. So over time, it could approach those numbers, but we're more focused on the period to 2025 because we think that's more predictable. And there, we would say that it is likely to triple. So that makes it roughly a $10 billion market. Our $2 billion guidance doesn't reflect heroic share when one considers the size of the market and the performance that I've demonstrated. So it's guidance that we have a lot of confidence in. And it's guidance we believe we can achieve with either dose, the 15- or the 30-milligram dose. We obviously feel that the 30-milligram dose has a favorable benefit risk and should be approvable. But even under the scenario, which we don't necessarily think is likely, but even under the scenario, we're only the 15-milligram doses achieved. We think that profile can meet that guidance, and we wouldn't change that guidance in any way.

Okay. Understood. Maybe just the last one. Immunology is -- obviously, IBD, you guys already have a very strong presence here with Humira. I think, over 30% in Crohn's, just under 30% in ulcerative colitis. And so as you think about SKYRIZI and RINVOQ and positioning in this marketplace, what's the optimal situation here for where these drugs will be used relative to kind of the existing options and then maybe vis-à-vis each other?

Well, unfortunately, patients with IBD can tend to develop disease early in life and be very difficult to control long term. So it argues for the need for new mechanisms that can provide durable control and fortunately, we have 2 of those. I think both agents have delivered strong results in their initial IBD indications. So SKYRIZI is more advanced in the Crohn's program where we have data that has already read out. There's a UC program underway, but that has not yet read out. RINVOQ is more advanced than UC where we've also seen very strong induction data. The maintenance data are coming, and there's also a Crohn's component to that program, which is not quite as far advanced, but it's really moving very rapidly and moving ahead of schedule from our perspective. So it's catching up with the UC opportunity as well. I think across those 2 mechanisms, we will have very complementary profiles with SKYRIZI. You have an infrequently administered biologic that drives good response, particularly a very, very good response on stringent measures of efficacy, endoscopic remission, deep remission, which is the combination of clinical remission and endoscopic remission in the same patient at the same time. Very strong numbers there with once quarterly dosing by the time you get to maintenance. With RINVOQ, we obviously have an oral where we have data for induction in UC, and we've demonstrated very high levels of response, levels of response that, given cross-study comparisons, look best in category and certainly exceed our expectations. And so we think those 2 profiles will be very complementary to each other.

And just to add to that, as you mentioned, how do we come to the market. And right now, today, we have a sales force that primarily focuses on Humira for Crohn's, and then we have a parallel sales force, which leads with UC, because there's different populations, different complexities around those diseases. The target physicians, the gastros, are largely the same. And so to Mike's point, what's very exciting about the opportunity with both assets, as you can imagine, a sort of a core sales force that leads with RINVOQ for UC, while the other sleeve leads with SKYRIZI for Crohn's, and that's the initial push into this marketplace, which is very efficient, very simple, and then we'll build from there because there is so much unmet need across the mechanisms in this particular disease, IBD.

Yes. Great. And have you guys projected at all in terms of where that total share for targeted therapies can go in IBD? I mean could it reach on par with rheumatology over time? Again, I know you and others are working on newer targeted agents here. And again, it just seems like that maybe there's some potential there to boost that targeted share over time.

So do you mean the overall penetration rate for advanced therapies?

Yes. Correct.

Yes. I think from that standpoint, actually, Crohn's, in particular -- UC is a little further behind. Crohn's and rheum are in the high 30s or mid-30s in terms of overall, let's say, biologic or advanced penetration, and we've seen that increase basically every year. It just continues to increase. We haven't seen that cap out. So it is a fairly significant penetration rate, and we don't anticipate that, that's really going to slow down because there is, as Mike said, tremendous unmet need. I mean there's probably less ability to control these conditions than the relevant conditions, let's say, in rheumatoid arthritis or psoriasis. So we still believe that there's significant unmet need and runway for assets that are raising that standard of care like SKYRIZI and RINVOQ.

Okay. Okay. Great. Maybe we'll dive into a couple of pipeline programs here, just in the interest of time. Vraylar, obviously, there's some data coming up back half of this year in MDD. So maybe just remind us of your development program there. And again, I know it wasn't included in your initial deal assumptions when you acquired Allergan, but how are you thinking about that market opportunity as we think about MDD relative to schizophrenia, bipolar where you are right now?

Well, it's a very attractive opportunity. With respect to the development program, we already have one pivotal study that's positive in hand. That was a IIb study, but it was conducted in a way that it can be pivotal for registration. So based on that study, 2 additional studies were started going back a few years, and those studies will read out in the back half of this year. They're duplicate studies. They're very well designed. They have incorporated the lessons that we've learned with respect to making sure we have appropriate site selection to minimize variability and make sure that the efficacy measures are applied in the most appropriate way to select the patient population that one will want to have for a trial in adjunct to major depressive disorder, because patient selection features are very, very important. And we think that they are studies that will be very able to pick up an effect if a treatment effect is present. And based on the studies that we have completed in the past, we think there's a very good opportunity to have such a treatment effect. If at least one of those 2 studies -- obviously, both of those studies would work as well, if at least one is positive, that would be enough to seek the indication. And it's a very attractive upside. There's not a lot of good therapies for patients who don't get adequate benefit from frontline therapy, which is either SSRIs or SNRIs. And so it could be quite meaningful. We think the pharmacology for Vraylar is a good fit for adjunctive treatment of MDD. So we're optimistic about the program, even though we didn't bake it into our guidance just because of the challenges of working in MDD. And so we think it represents a very meaningful upside. It's a pretty sizable market. About half of the patients who are treated for major depressive disorder don't get adequate benefit from a single agent and go on to polypharmacy, so some form of adjunctive therapy. And so that's quite a substantial market. That market is about as large as the bipolar depression market. So it's a meaningful opportunity and it's one where we can do a lot of good for patients if the studies turn out positive.

Great. And could you use that data also to file,, ex U.S., the upcoming data as well?

There are trials that are run in a way that could be globally applicable.

Okay. Okay. Great. One other area, which is top of mind is Alzheimer's disease given the Biogen approval yesterday for aducanumab. You guys have been working in the area for a while. You have an anti-tau antibody, where we're going to have some Phase II data this summer, I believe. So maybe just help us think through maybe some of the features of your program there and what the endpoint is, how to think about likelihood of success.

Well, we have a range of efforts in Alzheimer's disease. And obviously, Alzheimer's disease is in the news with the aducanumab approval, but we still think there's significant unmet medical need. And aducanumab alone will not solve the problem. So there is a need for additional therapies. Our tau antibody is the most advanced of those, but we have a number of other programs, some that are also directed at tau through novel mechanisms like programs that can clear intracellular tau aggregates and programs that go beyond the tau hypothesis like programs that target the neuroinflammatory response, and targets that modify the neuroinflammatory response are the strongest genetic hits in GWAS studies -- in genetic association studies for risk of Alzheimer's. And so we have a number of very strong bets that the tau antibody is the most advanced. That study will give data this summer. So we're not far away from that. The primary endpoint there are the cognition measures, the CDR sum of boxes, and other cognition measures that are standard cognition measures. There are also biomarker components to those program -- to that program, but we'll make the principal decisions on those cognition measures.

Okay. Great. We'll look forward to that data. Maybe just one for Rob here. That -- there's been some focus on tax structure, just broadly for the industry given some of the potential proposed changes to GILTI and then this global minimum tax. So how are you guys thinking about that on the forward here? I know there's a lot of moving pieces, but maybe, just, you could help frame for us some of those potential changes.

Yes. I mean there's certainly a lot of uncertainty. Obviously, we need to see the details. But we did last fall -- as we contemplated the dividend increase announcement, we did run some scenarios using what President Biden discussed on a campaign trail. So we modeled assuming a 28% overall rate and a 21% GILTI, because those were the rates that were thrown out there. At a high level, what I will tell you is it gives us a lot of confidence to still come out with a 10% dividend increase. We looked at our payout ratio over the long term. So feel very comfortable with that. We looked at our ability to achieve the leverage targets we've talked about. I'm not concerned about achieving a 2.4x by the end of this year or the 2x net leverage by the end of next year. Over the long term, obviously, with higher taxes, it could affect the pace of deleveraging over the long term. But overall, from a capital allocation perspective, I still feel good. Obviously, what we're hoping for is with any tax proposal that we maintain the competitiveness of the U.S. industry, I think we've seen a lot of good come out of that. But we also recognize that with stimulus, there's -- you have to pay for it somehow. So there'll be likely some tax increases. That said, the rhetoric right now, there's been debate over whether the overall rate will be 28% or 25%, we'll have to see where GILTI lands, but we did our own modeling and felt good about at least capital allocation commitments we've made in terms of growing the dividend and paying out down debt even with that scenario.

Okay. Okay. Got it. Maybe just one last one on the pipeline, maybe a more below-the-radar program. I know you guys have been working on CF combos for a while now here. And again, I think you acquired some more rights from Galapagos a couple of years ago, and you have a pretty broad early-stage development program, but maybe just give us a mark-to-market and kind of where we stand right now with that program. What are the next milestones that we should look at -- look for here? And again, similar to Vraylar, kind of where is the confidence level in achieving kind of the target profile that you're aiming for?

Well, we think there is an opportunity to improve on the existing offerings and offerings that will be available in the near future in the CF space with respect to improvement in FEV1. There is a ceiling on the ability to improve FEV1, but we don't think we're there yet. And we think there's an opportunity to deliver a handful maybe between, say, 3 and 5 extra -- absolute FEV1 percentage point improvement to these patients. And that does -- might not sound like a large number, but that amount of improvement has been shown to translate into clinical benefit. And at that point, you would essentially be phenocopying carriers of the disease who don't have symptoms. And so one would expect that you could deliver very significant benefit. What our older program lacked was an appropriate C2 correctors. So I think the field generally accepts now that it'll take triple therapy to hit that ceiling, a potentiator. We had a very good potentiator. We have more than one potentiator that's good. We had a C1 corrector that we believe is best-in-class, but we didn't have an appropriate C2 corrector to get us there. That's why we restructured the partnership with Galapagos. We took direct control of the program, and we put a significant chemistry effort to come up with C2 correctors that we thought would give an opportunity for best in category efficacy. We've identified molecules, more than one, but one that's in the clinic now moving forward, that we think has the potential to be that best in category C2 corrector. That's working its way through early development, and we have a proof-of-concept study of the triple that will read out around the end of this year, at least internally. It may be into next year before we can communicate the results broadly. That will tell us whether we can deliver that best in category efficacy. If we can, then we would advance that program into late-stage development. There would be some additional dose ranging that's required because this proof-of-concept study is at the highest dose, and you'd need to dose range to see if you can drop the dose and maintain efficacy, but that can be done rapidly. And then we would move into Phase III development after that. So in terms of level of confidence, preclinically, these are very strong assets. Clinically, we know that 2 of the assets are strong. So we have to see whether the third is strong. It's an early program, so it's very difficult to predict. I -- comparing it to Vraylar MDD, in Vraylar MDD, we already have a positive pivotal study in hand. So that's a different situation. But for an early program, we feel good about it, and we'll have clinical data to tell us whether we have that potential to be best in category around the end of the year.

Great. Well, I think we're up on time. But thank you so much, Mike, Rob and Jeff. Really appreciate the insights today. Best of luck for the rest of the year. And stay safe, everyone.

Thank you.

Thank you very much.

Thanks, Terence.

Thank you.