AbbVie Inc. (ABBV) Earnings Call Transcript & Summary

Yes. And you expect that with those new indications coming over time, this should be a growth franchise for the foreseeable future?

It should be a strong growth franchise. I mean right now, we've said at least until 2033. And that's why when I look at -- I get the question a lot on the difference between our outlook and sell-side consensus, the biggest disconnect in Skyrizi and Rinvoq, you just don't see the type of growth. You see, I think it's somewhat like low single-digit growth from '27 on. It will continue -- both brands will continue to grow robustly. And so we would expect that robust growth through the early part of the next decade.

Excellent. Pricing, I think, debate in immunology. I know there was some noise with Q1 last year quite down a little bit. Just share your perspective as maybe Humira prices come lower, biosimilar prices come down. Does that impact at all your payer discussions or how you think about price for your branded assets?

The payers are always looking for discounts. They'll basically try to do different levers in terms of their formularies. That's just normal negotiation. But if you really take a step back, one of the biggest fundamental aspects is how distinctive Skyrizi and Rinvoq are. So again, I highlighted in the opening remarks, we have 9 head-to-head trials. The last one, the ninth that we just looked at was an IBD versus the market-leading STELARA. And it was a huge difference in terms of overall healing on endoscopy, which is now the #1 driver of basically markets sharing preference. So the ability for us to physicians and also to payers and the medical officers of the payers to sort of highlight that distinction helps give us some significant protection in terms of the biosimilars that have started to appear. So in the last 2 years, we've seen no material pressure on the price. Now, it is going to continue to grow over time, and we'll have to continue to defend the value, but we're really prepared to do that. I think the second key point that I'll make, which is sometimes not very apparent is if you recall, a couple of years ago, which you will remember that Rinvoq in the United States is actually stepped behind TNF based on the Xeljanz oral surveillance study that came out in RA. So in some ways, it's already basically step behind, if you want to call it a biosimilar or whatever is a lower-priced option for a huge piece of the business. So in some ways, there's this moat around that drug in terms of basically it's feeding into growing markets in the second, third and fourth line, and you're still achieving that level of growth. So when we look at it, we think that the level of distinction, the market structure is going to allow us to navigate pricing very well.

So, I guess in that context, just thinking about something like a low single-digit price erosion. Is that sort of a reasonable way to envision what price could look like here?

I think it's a reasonable assumption. We'll obviously be more specific when we give the guidance on Q4 calls where we've landed for '24. But I think for modeling purposes, I think that's a very fair approach.

But to your point that last year, when we saw the higher price erosion, that was a unique time point with 7 indications that all came in 1 year, which was really again unprecedented. And we were able to, with those concessions at that moment in time, basically achieve paid access within 60 days. So it was a huge lever to basically drive the type of volume and overall value that we've created in 2023 as we go into '24.

I mean, it is appropriate trade-off when you consider that these 2 brands will grow over 50% in '23. And so -- and that's with high single-digit price concessions that will not continue.

Yes. Excellent. I guess just on Rinvoq. I was hoping to get a little bit more color on the IBD opportunity there. I think that's been one that Skyrizi has been a great drug and was a little more controversy around Rinvoq after the label change. So can you just talk about the launches you've seen there? How those are trending versus your expectations? And I know you shared some of those in-place share numbers. But where do you think share can go for that product?

Maybe I'll ask Roopal to talk about because I think it's really critical over a drug like Rinvoq and IBD just doesn't move that way based on commercial execution. It's a very, very special product in IBD and then maybe I'll address your share question.

Yes. Thanks, Jeff. A couple of things. So in ulcerative colitis, we've seen the highest level of efficacy noted, even with Phase II readouts for other mechanism, the Phase III data from Rinvoq for UC in particular, is still unmatched. And there's a couple of drivers that clinicians and patients really like and one is just the rapid onset of being an oral works very fast. The second piece is you're able to not only improve symptoms to very high levels. But as Jeff was referencing heal the gut which is very important for clinicians as they see that as a marker for continued improvement and lack of other sequela that the patients going to have. So you combine that with the ability to remove steroids, it sets up a very, very nice profile as an oral. And then what we thought going into Rinvoq development many, many years ago, that likely the JAK inhibitor path may not work in Crohn's disease. And I think we've seen that played out with other JAK inhibitors, which are not likely going to ever get to market. But Rinvoq was a standout Crohn's disease. So we see that as very differentiated, even within the class, the mechanism for Rinvoq is very unique. And with that one, all the observed benefits that we saw in ulcerative colitis, we also saw the ability to take people off of their steroids during induction, which is extremely unique. We haven't even seen that with biologics. So that sets up a very impressive profile. And as Jeff was saying, the so-called moat in a way, a majority of the patients that are going to be taking these drugs, 60, 70-plus percent have already seen an anti-TNF, so it's not like they have to wait to step through. Many of them can access it immediately and get that relief.

So if you think about the size there, we were always a little bit surprised many years ago that how fast IBD grew even in the Humira days. And there's not a lot of medications. There's more in UC, which is the smaller of the 2 indications. There's not a lot of medications in Crohn's. So to Rob's point, when you look at -- we just recently launched Rinvoq and Skyrizi hasn't been out very long. And the world hasn't fully seen the impact of the head-to-head versus STELARA. And so today, we're capturing 1 out of 3 patients and the TRx shares in the mid-single digits. So you have significant headroom for basically the wheel to turn and to create a lot of value. So in some ways, if you look at one angle on the market, which is bio penetration. So what percent of the moderate-to-severe population is exposed to a biologic. IBD is the highest. But on the other way to look at it is you haven't seen basically really the lines of therapy start to develop like you have in the other areas. So in our view, it's actually an immature market where there's still probably the most unmet needs in all of the biologic immunology area, and we've got 2 really nice horses to play there for a long time.

Yes, it should be -- nice growth driver going forward. Pivoting over to aesthetics, it sounds like some encouraging trends you're seeing. Just elaborate a little bit more in terms of -- have we seen a bottom for this business? Can we really be comfortable that we're getting back to growth in 2024?

We're certainly seeing very nice trends and we anticipated this. I mean when we look at historically, this market in the U.S. grew in the mid-teens, and when we studied whenever there's been an economic headwind, it's rebounded very robustly coming out of that, right? And we're starting to see -- and not surprisingly, given the price points, you tend to see toxins recover before fillers. So we're very encouraged. As we mentioned, we saw a return to growth in the third quarter. We've seen an acceleration in the fourth quarter. We expect that to continue for toxins, and fillers are right behind it. So all the metrics we're tracking are very encouraging in terms of the market is recovering, and we're starting to see an acceleration in the overall market growth.

And in terms of your longer-term expectations, has anything changed in terms of ?

No, it's been somewhat controversial. I've seen some reports on questioning our ability to hit the $9 billion by 2029, greater than $9 billion by 2029 and you think about it from '23 and '29 to deliver that, you need high single-digit growth. I mentioned the market is historically is growing in the mid-teens, right? So it's a market -- the penetration rates are very low. We're very good at driving that growth. And so clearly, by market growth by itself should help you get there, but we're not counting on market growth alone. We have a very interesting pipeline. Jeff can talk about how BoNT/E or short acting toxin fits into overall portfolio. We're very excited about that as a trial toxins for those consumers who are on the sidelines because they're fearful of an unnatural look. It's a great way to try it. . We can talk a bit more on the details of how that would work. But ultimately, that could be an inflection in the market growth and certainly also drive more share capture for Botox. If it works, and short-acting the consumer comes back, they're most likely going to want to have Botox going forward. So that's certainly something we're very excited about. Think about the masseter and platysma indications for Botox, those will each add a couple of hundred million dollars in revenue. And then we have the regenerative fillers that also will drive the growth in the filler space. So we look at the combination of the market growth potential, given the penetration rates and history as well as the pipeline, we feel very confident in delivering on that greater than $9 billion by 2029.

Great. Great. Continuing on CNS. This is an important area for the company, maybe one that doesn't get as much attention as some others. Maybe just bigger picture question, like why is this the right market for AbbVie. I mean it seems like you had some real success with these assets. Can you just talk a little bit about your kind of broader organizational interest in the space?

Yes. I think that one aspect is that we always had some significant interest in neuroscience, but we didn't have a lot of significant on-market brands. We essentially had Duopa. There was a long history with Abbott many years ago, but that was the time has passed. And we had this very significant neuroscience discovery with Alzheimer's, degenerative issues like Advanced Parkinson's, et cetera. So the Allergan acquisition for us was transformative because we were able to have some very nice on-market brands that came super fast with Ubrelvy, Qulipta, I mentioned therapeutic Botox and then certainly Vraylar, which was a really special product that then got super boosted by this recent approval. So suddenly, when you have that on market, you start to say, okay, how can I build this out over time? How can I anticipate my advanced pipeline. And we just think it's very, very special. We think that there's very good pricing. We have fantastic commercial infrastructure. Our sales reps and medical experts, in some cases, have decades of relationships with psychiatrists, and they know these markets very, very well. So it's a nice fit. I mean, as we look at our growth rates. I mean, neuroscience is right up there with immunology in terms of the growth that we see. And it was through that lens that we basically look to see -- because we knew when Vraylar, which is a big driver would go LOE. This was a piece of our consideration set for the recent acquisition with Cerevel. And so fantastic market, commercial expertise, very strong personnel and then back integrated into rubles area in discovery, which is powerful.

Well, maybe just to add, Jeff, the other thing that's attractive is the headroom for efficacy outcomes. So if you look at migraine, unipolar depression, depression, schizophrenia, anxiety, all these other states that we'd be interested in there. There's still a tremendous amount of room to gain efficacy to get to a cure-like level. It's reminiscent of IBD a little bit, where efficacy still has a ways to go to serve. So a huge unmet need still exists.

We're very excited about Cerevel because it really gives us with Emraclidine, a clear growth driver in psychiatry beyond Vraylar, very attractive. And then we have a very compelling core antagonist in their pipeline that fits very nicely within our overall neuroscience franchise. So between our own pipeline with Cerevel brings to the table, we feel that neuroscience will be a strong growth driver for a long time.

Can I just on the Cerevel transaction, just your willingness to take kind of -- or comfort of taking clinical development risk here? I mean, certainly, a very exciting class. It seems like the Phase I data was obviously very positive. But just talk about when you thought about committing the capital there, the diligence you did and the comfort you have in the asset?

Yes, it starts out with a large Phase Ib study, about 80 patients, so larger than a typical 1b, I would say that's outside of oncology. And then we saw the pattern with 2 doses achieving benefits and positive symptoms and negative symptoms. So you look at that together, and then you continue to see the profile, which is a singular molecular energy, once a day dosing with a good half life, no need for titration, no food effect that sets up a very strong profile. So that starts at all. And then when we look at the design of what's called a Phase II, we see them more as pivotal based on their size of 2 studies, over 370 patients, powered to achieve their endpoints adequately as you would do in a Phase III, a very robust statistical analysis plan that contemplates adjustments from multiple testing, all the things you would want to see to make it robust from a regulatory standpoint. So those are the 2 ends of it. And in the middle, we're able to see aggregated blinded data as the trials continue. And if you compare that data to what we see in Ib, again, aggregate, it looks similar. And that's from an efficacy standpoint and from a safety standpoint. So it sets up a very strong profile and some elements of derisking before we get to the data. And the other thing is when you take a profile like that, that has a very strong safety profile, very different from the atypicals. We don't see the sedation, the metabolic effects, the weight gains, the movement disorders, nor do we see anticholinergic effects, again, being a singular molecular entity onboarding could be simple for a patient population in schizophrenia that adherence can be very challenging if they can't take their advance. So being once a day helps there and then not having the adverse events as they onboard really helps keep them on, especially outside of a clinical trial setting. A lot of things you do in a clinical trial don't always translate to the real world. So if you can have an enhanced profile that's going to help us in the real world. And the other big swing factor is that when you have that profile I just described, it allows you to transition to a long-acting injectable, potentially much more smoothly from an R&D standpoint, CMC standpoint. And also if you can stabilize the patient quickly and see that they're tolerating, then you're not worried about taking a risk for a depot injection once a month or even further stretched out because if they're not stable and they're not tolerating then you don't want to give them a long term because it's hard to reverse once it's in. So taken all together, I think that led us, along with the high unmet need in the large market, if you will, that exists even if there's multiple assets, I'm seeing us with that profile being able to be very competitive.

Yes. It seems like a nice market opportunity when I was starting to cover the group, these were some of like the biggest products across the industry. And I know it's been a while since spread a lot of innovation, but it seems like that's kind of exciting [indiscernible]. Just pivoting over to your other acquisition here with ImmunoGen -- just talk a little bit about what attracted you to this asset and how you're kind of fitting into the broader oncology portfolio?

Yes, with [indiscernible] here essentially being on market, gives us an early entry into the solid tumors. We obviously have pipeline in ADCs with Teliso-V 400. So there was a nice fit there. There was an area, obviously, we've done a lot of research in ADCs. We saw the opportunity to get an early start on solid tumors, but also we're excited about their pipeline as well, 151, their next generation ADC targeting FR alpha is very compelling. And then [indiscernible] in blood cancers, obviously, as you know, we have a presence in hematology. So we saw a very nice fit there as well. And we put it all together, we thought about our main objective being driving growth into the next decade, it met all that criteria.

Okay. Can you talk a little bit about another maybe clinical development risk question, like how you think about the product moving upstream. Where are you most confident, where you're going to see the day we've seen so far translate? What's the [indiscernible]?.

So right now, we see a really terrific data in the platinum-resistant where it's a very high unmet need. There is accelerated approval, strong uptake, then a pivotal study, confirmatory study, reading out and under review right now that showed an overall survival benefit, which that has not been observed in extended duration of additional 4 months at the median. So that right there is very impressive. And in the resistant population, that's roughly half -- the other half is the sensitive population. So there's no mechanistic reason why it wouldn't work insensitive. It has to deal with progress before 6 months or after 6 months that defines it. So again, nothing mechanistic or nothing driving that. And there's also data insensitive that's being generated now that looks very similar to resistence. So that, in effect, doubles the population. So you can take the programs that you're running and run them in sensitive as well and also an opportunity that is combinable with platinum in a safe way at full dose. So we've seen evidence of that. So that allows you to move further upstream. Also, we've seen evidence of efficacy in the medium expressors. If around -- the 35% is around the high expressors, 30% is the median. So in effect, another doubling potentially and then we're able to do that in combination with bevacizumab or a platinum and then move even earlier right after induction, where some patients qualify for PARP inhibition, we have an opportunity to combine their or move on to bevacizumab for maintenance. We've already seen data that can combine there. So it can start checking all the different categories, and we can start rapidly moving into studies that will start reading out later in the -- well, very late in this decade, but mostly into the 2030 and beyond, as Rob was describing. And with 151, that's a biparatopic, that binds to 2 different epitopes may have a greater internalization, more stable linker, better half-life that we can look at everything we just saw potentially endometrial, triple-negative breast, lung can also play there. But with that enhanced potency potentially even low FRA alpha expressors. So that's how we would think about it. So I think there's quite a bit of development work that we can do and still very high unmet need.

Maybe last question here in the last minute or 2. The Street assigned still pretty fairly limited value, I'd say, for AbbVie's internal pipeline. What are you most excited about? Is there kind of like a 2 or 3 assets you'd point us to pay attention to that?

Yes, a couple of 3. I mean Rob alluded to a couple of them. So 383, I'll talk about, that's our BCMA CD3 bispecific high affinity bivalent interaction with BCMA, UniValent low interaction to CD3. It seems to create a very nice balance and a nice half-life. So what does that mean high efficacy, strong safety, mostly what we've observed now that we showed at ASH was CRS is in the grade 1 range and single-digit grade 2, nothing 3 or beyond, that enables potentially outpatient dosing rather than the need for multiple hospitalizations and the potential for no need for a step-up dosing, which that means you can start treating these patients very quickly and get them controlled because patients with myeloma can progress like that. So you want to get a handle on it. So that creates a very nice profile that our experts are very excited about. So outpatient dosing once a month is a very nice profile potentially best-in-class. We'll be moving rapidly into Phase III monotherapy this year and multiple other dose optimization combinations with other lines of therapy to getting into earlier lines, second line, et cetera. So that's a very nice one. Rob also mentioned 400 as part of our c-Met franchise, I will say, Teliso-V, we'll talk to regulators this year, 400 has a higher DAA, has more warhead as topoisomerase. That lets us look at the same disease states like lung, but in particular, colorectal which we see high unmet need. We've seen very strong data there in late lines, and we'll rapidly start developing that into earlier lines. So there are some couple of big ones that I'd like to mention. Thank you.

Great. Well, I appreciate the time, and thanks for joining us today.

Thank you very much.

Thanks so much.