Welcome to the BofA Healthcare Conference. My name's Geoff Meacham. I'm a senior biopharma analyst here at BofA, and we're happy to kick it off with AbbVie today. With me on stage, we have Rob Michael, Vice Chairman and President, Scott Reents, EVP, CFO, Jeff Stewart, EVP, CCO, and Roopal Thakkar, who is SVP, Development, Regulatory Affairs, and CMO. Guys, thanks for coming. Thanks for having us. Always a big crew. Right. Rob, I'll kick it off to you. When we talk about the cadence of this year, you guys have given, you know, pretty good specifics on, you know, on the flow of earnings trough. Mm-hmm. Yeah. ... respect to the, you know, the Humira erosion. As you have moved through the year so far, you know, what would you say is kind of, you know, better or worse than you thought initially? You know, what are, you know, the higher level dynamics? Look, we feel good about the first quarter we printed. We beat our top line and our bottom line, passed that through, we raised the full year outlook. When you look across the board, I mean, clearly, you know, we beat in every therapeutic area versus our guidance. I know that there are some issues with Street modeling for the quarter, versus our guidance, we certainly exceeded expectations. When you look at, you know, Aesthetics as an example, we saw a faster recovery in China. We had assumed mid-year recovery. That happened sooner. We're seeing stability in the U.S. market. We beat on Aesthetics, and we raised the guidance there. We feel very good about the performance in Immunology. We beat Immunology by $100 million, even though the Street had different expectations. We beat our guidance by $100 million. $30 million of that was U.S. Humira. We came in a little bit lower. We had 27% erosion in our guidance. We came in at 26.1. The other $70 million is Skyrizi and Rinvoq. We saw some nice performance there. We'll talk about the disconnect versus Street models. I'd say, IMBRUVICA, Venclexta, you know, slightly ahead of our expectations. You know, I'd say, you know, fairly in line, but the one that really stood out for us was VRAYLAR. VRAYLAR, we've seen very rapid uptake with the new indication aMDD. We took up our guidance by $200 million for the full year. We, you know, substantially beat. We're seeing nice, strong growth in migraines. As we look across the portfolio, we feel very good about the performance. I'd say we have assumptions around Humira. We've given now second quarter guidance for US Humira of 27% erosion. That essentially gives you a sense of what we expect for the second half of the year, right? We said 37% for the full year. The first half is 26%-27%. You just do the math, and you're at basically the mid-40s. We've assumed some additional price erosion because we know the rebates we've negotiated with the payers to give us that level of access, which is greater than 90% of covered lives, and we've assumed with 7-9 biosimilars coming in the middle of the year, that we would see some volume erosion. That's really mainly coming from the WAC-sensitive accounts. We've assumed, in the second half of the year, that mid-40s of erosion. If we do better, you know, that can certainly, you know, drive overperformance this year. We could talk about what that means for trough. I'd say the other area that we're very closely monitoring is in Aesthetics. We've assumed the U.S. market will not recover really until next year. Right now we're seeing stability, but if we see that recovery happen sooner, that potentially would drive overperformance this year, which would have, you know, implications on which year is the trough, 2023 or 2024. I've always said that regardless of what year the trough is, you shouldn't expect earnings to fall below the $10.70 EPS ex IPR&D. It's the best way to think about it. As we sit here today, we feel very good about the performance of the business. To start the year, it sounds like, you know, it's not just about the I&I portfolio. When you look at trough, there are other businesses that I think you could outperform on and maybe even, you know, beat the trough number for next year. Yeah, I think, really, I think the two major variables are gonna be U.S. Humira and Aesthetics. Okay We, you know, we're seeing nice momentum. I mean, if you look at Skyrizi and Rinvoq, they grew $3 billion combined last year. We're expecting to grow $3.5 billion this year. Really tremendous growth. They're on the path that we assumed, and we gave that, you know, 2023 guidance and as we thought about what it means for 2024. Those are performing exceptionally well. VRAYLAR is definitely performing slightly ahead, so that could be an area of upside. Migraine looks good. I'd say overall that the two things I would monitor most closely would be U.S. Humira and Aesthetic as it relates to trying to figure out which year is the trough. Gotcha. How do you think about the in the I&I space when you have Stelara coming off patent? How much does that inform, you know, the view of the pace of Humira potential erosion and also the effect maybe on Skyrizi and Rinvoq? You wanna- Yeah, I think, you know, we see it as, independent of Humira. Humira's gonna happen with those nine biosimilars. Yeah. You know, it's gonna be a paced out curve on the price and volume. As we sort of highlighted that, you know, by the time we get to probably 2025, maybe 2026, we'll start to see that tail emerge. We don't know how large that tail will be. We continue to study it. It's gonna really depend on the dynamics in the back half of 2024 probably. But when we think about Stelara overall, I mean, Stelara competes in two areas, in really the psoriasis market, where Skyrizi is a real juggernaut, frankly. It has, you know, 50% in-play share and 30% overall share. Stelara is actually a smaller and smaller player there, based on the other IL-23s and the IL-17s, for example. I think it's important to note that we have head-to-head superiority versus Stelara in psoriasis. If you look at Crohn's, Stelara is a leader in Crohn's in both UC, and Crohn's in terms of that space. We also have planned for thatAnd I think importantly, we're gonna see another head-to-head trial, in Crohn's that's gonna come out towards the end of the year. We think on the very challenging endpoint, at the right doses of Stelara, we're gonna see growth superiority on that endoscopic improvement, which really drives the market in that space. We've planned for that event, and we've got a pretty solid clinical position, to be able to manage it. Perfect. One of the underlying drivers, if you look at, you know, Skyrizi and Rinvoq, was duration of therapy. That has a pretty big compounding effect. I wanted to ask you guys, how has that kind of improved over time and does that give you confidence in more upside in what you guys have provided in terms of the peak guidance? You know, I can speak to what we see from duration. It's really too early to comment on what we're seeing in the IBD space. Good. In general, I would say when you look at the psoriatic space, which is right now driving a huge amount of the momentum, we can see market-leading, let's say, adherence and persistency with Skyrizi. That's sort of embedded within our guidance. We can see the actuals, we can see those patient persistency curves. Mm. That are developing over time. I think because you have such convenient dosing, with Skyrizi, and you have such high clearance rates, you know... Yeah. With the total skin clearance of you know, 60%, that actually seems to grow a little bit over time, you actually see very strong adherence. That's built into our guidance. We're gonna have to see how the more difficult disease plays out with, let's say, Crohn's or ulcerative colitis. We're certainly feel like we're gonna be at the top or market leading based on the profile of the medicine. I mean, one benefit we see clinically that might be leading towards the commercial aspects, when you look at a drug like Skyrizi, and compare them to, maybe other medicines or previous anti-TNFs, there's a low amount of immunogenicity. You have high efficacy that leads to adherence in our clinical trials and open label extensions and very low immunogenicity, so lack of a loss of response. With something like Rinvoq, it's an oral, so you have high efficacy, no immunogenicity. In clinical trials, we do see very strong adherence. Let's go down that path a little bit. Across the, your I&I portfolio with Skyrizi and Rinvoq, are there any indications within I&I that you're particularly excited about, sort of intermediate to longer term? When you look at some of these markets, we've gotten into more nichier, you know, indications like eosinophilic diseases. Mm-hmm. The like, that how much of those more, you know, rare but high impact, you know, factors into kind of your thinking on these products? We have, if you think about our, the guidance we've given for 2025 and for 2027, that's really driven by, largely by the core Humira indications plus atopic dermatitis. That's. Now, we do have the next wave, I said, like we call the next wave of derm indications for Rinvoq, which we can certainly talk about that over time, you know, those will start to kick in sort of towards, you know, the 2027 timeframe and deliver, you know, think of it as peak, combined peak revenue potential of $2 billion. That should be another driver of growth for Rinvoq at, sort of in the second half, you know, late in the decade, early in the next decade. I would say overall, one thing that may, you know, not be fully appreciated as I look at consensus estimates is the growth for Skyrizi and Rinvoq, we expect to be very robust heading into, you know, early part of the next decade. One of the contributors will be these four indications we've talked about. Roopal, certainly you can go into more detail if you'd like. Yeah. If you think about in the rheumatologic space, we have giant cell arteritis underway for phase three, and we're gonna initiate lupus this year. That fits nicely with those prescribers. As Rob mentioned, in dermatology, we're also gonna be starting hidradenitis suppurativa, alopecia areata, phase threes, and we'll get a phase two readout this year for vitiligo and potentially move into phase three there in the derm space, where we already have atopic dermatitis, it fits nicely with those prescriber bases. Gotcha. Perfect. Well, let's switch gears to the neuroscience portfolio. You know, migraine's been a pretty rapidly growing category. Just give us a sense for, you know, how you think that could play out over the course of the year and into next. Talk a little bit about, you know, your pipeline with respect to newer, you know, newer assets in neuro. You guys have talked about ALS. Sure. In the past, you know, you guys have developed, you know, tau. There's a lot going on in that, in that category. You know, migraine's a very attractive space for us, we think of it as basically the intersections of our big three assets. We, we cover the full spectrum of migraine, from acute migraine all the way to through the most serious forms, such as chronic migraine. On the back end, we've historically had, obviously, BOTOX therapeutics, which right now is the leading drug in terms of in-play capture for the most severe form of migraine, where you have 15 or more migraine days a month. That's the chronic migraine. Then for episodic migraine, we've had QULIPTA sort of in the middle, and we've also had UBRELVY, which is the leading oral CGRP on the front end. What we're gonna see over time is all those markets are going to continue to develop. It's pretty exciting. QULIPTA recently has achieved the chronic migraine approval, so we'll have two assets with that approval, and it will be the only oral CGRP in that space to have that approval. That's a big catalyst that's happening right now in the marketplace. Our representatives and our medical experts are launching that indication there as well. Ultimately, we see that BOTOX and QULIPTA will positively interact. Because there's still a lot of burden, even with one of those assets. We have ongoing trials that Roopal can talk about where you're using them in combination to get to this concept of total migraine freedom. It's very exciting. As I mentioned on the front end, UBRELVY is a very significant drug in terms of patients who can't tolerate or just want better care than the older triptan generic marketplace. We're in a good spot there overall in terms of, you know, our full spectrum of migraine support. Roopal can talk about what's further back in the pipeline. One interesting thing is we're also looking at BOTOX in episodic- Yeah ... for those who find success in injections. That way, you can get it if you have less than the 15 that Jeff mentioned for chronic. That's gonna read out in the next couple years. As Jeff mentioned, we are looking at combinations with BOTOX with the anti-CGRPs to see if you can get to migraine freedom, and even looking at combinations with both orals to see if UBRELVY can play on top of QULIPTA in case there's breakthrough. Yeah. There's a variety of ways to continue to cover the full spectrum. From a commercial perspective, you know, are you starting to see some leverage from the success in migraine and looking to the VRAYLAR, you know, MDD and, you know, that, you know, that portfolio? There's a lot of, you know, clear synergy, but wasn't sure if you guys are starting to see some momentum spill over into VRAYLAR. Well, you know, it's important that we actually have done the opposite. We think it's strategically important. After the integration with Allergan, there was, you know, one sort of, you know, mono approach with both migraine, which was just launching, and VRAYLAR. Right. When we looked at the pure potential of this migraine space and the pure potential for the bipolar plus the adjunctive MDD space, we separated those. We have dedicated sales teams on both migraine and VRAYLAR. It's a nice investment, and we see the immediate return in terms of our leadership potential. As Rob noted, we are very impressed and pleased with the initial results of this big new indication, and we think a big piece of that is dedicated representatives, dedicated medical experts in the field that talk to both psychiatrists and big primary care writers that can own that VRAYLAR message. Right ... in largely a generic space. It's working very well in terms of how we've gone to the market. We just launched DTC recently for VRAYLAR as well, additional DTC, so we're seeing a nice response. I would say across the Allergan portfolio, what we saw after we combined the companies was there was opportunity to invest and drive strong returns. We saw that in aesthetics, in migraine, in antipsychotics. Those investments are certainly paying off. Right. That makes sense. In the neuroscience portfolio, so in neurodegeneration, talk a little bit about, you know, Historically, you guys have gone after a number of, you know, indications such as, you know, Alzheimer's and a lot of, obviously, buzz from, you know, from the Lilly data last week. Give us, you know, your, kind of your priorities right now in that, you know, in that part of the portfolio. We have an amyloid beta program as well with a monoclonal antibody, and we've seen that play out, a couple of interesting assets. Our focus here is on the monoclonal itself. I think the two that are being most discussed have half-lives around 6-10 days, I would say. Ours, we're looking at maybe 30 days, so longer half-life, potentially higher potency, and the ability to bind amyloid beta outside of the vasculature that potentially may reduce rates of ARIA, potentially a lower immunogenicity rate. That may also play. We may have an opportunity to do exactly what's needed. That's drive down amyloid beta to low levels and do it fast, and potentially do it in a very patient-friendly way if we can get to, you know, every month dosing and even subcutaneous. That's the focus. That's in the clinic now, inpatient. We should see the proof of concept readout in about a year and a half to two years. Okay. Perfect. Just to wrap up on the neuro, you know, Rob, you mentioned the, you know, the growth expectations. Mm-hmm ... you know, for, you know, for VRAYLAR and for, you know, for the migraine portfolio. How is the cadence of that different outside the U.S.? Are there certain markets that you would say are bigger drivers? Yeah More near term and versus some, you know, looking out to, say, 25+? Yeah, that's a, it's a great question, and one of our strategies that we've worked on since, again, the integration is to really globalize the migraine franchise. Yeah. I would say that what we're seeing is the first phase of that globalization is really coming this year. We're seeing the launch of QULIPTA for episodic migraine in some of the big territories. Canada, we've seen it start to launch and get ready for the gear up in Europe, ultimately we'll be expanding as well to Asia, both China and Japan. That's paced further out over our long-range plan, but it's a big piece of the global strategy. Essentially, many of the international countries are sort of behind the adoption of the CGRPs. They're just becoming available now, but it's a big piece, sort of the, to the middle and latter part of our long-range plan. I would say the Asia markets are significant in terms of that planning, particularly Japan, which, as you know, really still values a lot of innovation. These medications work very well, and they're extremely safe. That type of profile is very sharp and nice for those areas. Gotcha. Let's switch gears to HemOnc. Is there, you know, kind of a status update or your thinking on that? Is there investments to be made to, you know, to maybe help slow the deceleration? Is it, you know, AbbVie strategically is thinking more along the lines of investing in, you know, Venclexta and broadening indications, and then, you have navitoclax as well. Yeah. I would say it's the latter. Yeah. It's really looking at, driving the growth for Venclexta both in its current indication as well as indication expansion opportunities. Yeah. Which we can certainly talk about both in myeloma t(11;14) population, as well as high risk MDS would be the expansion opportunities there. Obviously epcoritamab, navitoclax, those are the I'd say the things I would point to as key drivers in HemOnc. We also have opportunities in solid tumor, which we can talk about. What we're seeing with IMBRUVICA, and it was baked into our guidance, was, you know, we saw that the market sit down and it hasn't recovered, and we have not assumed it will recover. It's still about, I'd say, 20% below pre-pandemic levels, and it's stabilized now, but it's not we're not seeing recovery. That flow-through of essentially the lower patients in the market was a contributor to the decline this year, as well as we did anticipate, we saw the share impact of Calquence last year. We're assuming similar impact from BRUKINSA this year, and so that is baked into our modeling. We came in slightly ahead of our guidance for IMBRUVICA in the quarter, but I'd say it's playing out as we expected. Strategically, we're really focused on driving growth for Venclexta, and then, you know, launching epcoritamab and navitoclax. Those are the key drivers for the HemOnc, and that's what will ultimately drive us to return to growth. Yeah. We've tried to level set expectations based on what we've seen from IMBRUVICA. Let's talk about those indications for Venclexta. You mentioned a few. You know, give us a sense for your, you know, the potential- Mm-hmm. Impact from these indications, which is, you know, on the back of a pretty strong. Yeah. Product to begin with. Yeah. I'll start off. In multiple myeloma, we're studying Venclexta in a subpopulation t(11;14) mutation. That's about 20% of the population in the area that we're looking, and we saw really nice sensitivity to BCL-2 blockade. That data, phase 3, will read out mid-year or so. For MDS, we also have an opportunity to get an interim readout later this year, which will also expand further. There's also a post-transplant AML population that we're looking at with Venclexta. On the myelofibrosis side, navitoclax, that's our BCL-XL, leans more towards XL than BCL-2. That data will also read out around middle of this year, hoping to see an add-on to JAK2 inhibition in naive populations to be better than just JAK2 inhibition in terms of spleen volume symptoms and particularly potentially reduction in myelofibrosis. Gotcha. That's helpful. Epcoritamab was mentioned. Yeah. Mm-hmm. Mm-hmm. That DLBCL will come out. We're starting to hopefully start seeing approvals here starting this month and then beyond, which will be a subcutaneous offering, which is very strong data. A little bit in the pipeline on the heme side, we do have a BCL-2 more potent than Venclexta called ABBV-453 that we'd be looking at in the same indications as Venclexta, potentially even expanding in multiple myeloma further than t(11;14). It's more potent. Even a little bit deeper, we have a very potent BTK degrader called ABBV-101 that could be a potential IMBRUVICA follow line, even more specific. Okay. That's helpful. If you look across the, you know, the HemOnc portfolio, there's been, you know, a lot of innovation for different, you know, utilizing different gene and cell therapy technologies using ADCs. Is there something that looks to AbbVie to be attractive that maybe you don't have in-house that you could add to your sort of toolkit in your HemOnc business? As we think about, you know, potential BD activity, and we're in a very good position today with the balance sheet as we look across the therapeutic areas. In oncology, the way I think about it is we have a very substantial U.S. infrastructure in hematology, and so if there is a late stage opportunity, we'd certainly be interested. As we look at solid tumor and we think about augmenting our pipeline with, you know, next gen ADCs, immuno-onc agents, we certainly should, you know, at some point talk about ABBV-400 because we're very excited about that. Yeah. Within our own pipeline. That's how we're thinking about BD opportunities, if there's a way to leverage our infrastructure in heme, and then look for next gen opportunities in solid. Would you say that in across the board for, you know, for BD and future M&A, is HemOnc, you know, the a priority area? How do you guys rank the therapeutic categories that you have expertise in? Yeah. I'd say we look at all of them. We've got the five therapeutic areas that can drive long-term growth, and that's where our BD efforts are focused. Yeah. The needs are different, or the opportunities are different. If I look at immunology, I mentioned earlier Skyrizi and Rinvoq are going to drive, you know, substantial robust growth through the early part of the next decade. There, it's really about looking for new agents that elevate standard of care and can drive long-term growth into the next decade. It's more think, you know, early to mid-stage opportunities, not so much late stage. I talked about oncology. There's an opportunity for late stage to leverage infrastructure, but there's also in early- and mid-stage, I'd say particularly in solids and maybe in heme as well. Mm-hmm. When I look at aesthetics as another example, what we've done there is really look for ways to expand the portfolio to drive new patients into our providers' practices. We think about Luminera with thermal fillers, Soliton with cellulite. Those would be the types of opportunities we're looking at. I'd say our BD group is really focused on the five key therapeutic areas that will drive growth. Gotcha. Rob, just at a high level, you know, remind us just so you updated your, you know, your targets for, you know, kind of the upper end of BD, you know, post Allergan, and that you paid down some debt. Mm-hmm. You know, remind us of that and is there. Yeah. You know, you know, what are the sort of the bookends of the. Yeah Of deals that you could go after? Look, I think the way we think about it is having a net leverage of 2x sustainably, right? Yep. As long as there's a very clear path back to net leverage of 2 times, say, in 2-3 years, that's the way we think about our capacity. We've done a tremendous job of paying down. Essentially, by the end of this year, we'll have paid off all the incremental financing from Allergan. It'll be $34 billion of cumulative debt paydown. The balance sheet's in good shape, but the way we think about debt capacity is really looking at net leverage, and as long as there's a clear path back, we feel comfortable to manage that. The upper limit used to be $2 billion, now it's. Well, there's no- What's it now? Yeah. The $2 billion was in place 'cause we wanted to rapidly pay down the debt. Yeah ... in advance of the 2023 event. Think of it as we're using the Humira cash flows to essentially pay for the Allergan transaction. Yeah. We were very focused on getting our balance sheet down to that level. We don't have that $2 billion. We wanna make clear there's not this $2 billion cap because we've accomplished our debt reduction objectives. You know, it's always difficult to give you a number because it depends on the EBIT of the target. Right. The best way to model it is look at it from a net leverage. As long as we can get to 2 times net leverage within 2 to 3 years, that's the way to think about the size of the possibilities. Look, we like the portfolio we have today. We're not sitting here saying we need to do something. We feel like with the portfolio we have today, we can deliver on the long-term growth objectives of high single digits in the second half of this decade. We're turning to robust growth in 25. Right ... it's not out of need, but we have the flexibility, and if we see something that strategically fits. Yeah ... a strong return, we have the financial wherewithal to pursue it. Perfect. When you think of the bigger picture, we haven't talked about the aesthetics business. I mean, you mentioned it upfront, but, you know, what are the puts and takes of, you know, what could be the catalyst? Obviously, it's economic and macro-driven, but are there things you can do that's AbbVie-specific to try to, you know, restore growth in that business back to what it's seen previously? Yeah. Look, we've seen when it has come back, it's come back very robustly. If you go back to 2008, 2009, even more recently with the pandemic, just tremendous rebound in growth. The penetration rates are pretty low in that business. Yeah. There's tremendous headroom for market growth, that's ultimately what we're investing, what we're driving. As we think about future opportunities, look, we've got a long-acting toxin in the pipeline. We have a short-acting 'cause that might be a nice trial toxin. Yeah ... generate some of that market growth we've talked about. Regenerative fillers are another area of focus. We have obviously, you know, the cellulite opportunity with Soliton. That's market expanding. As we think about, you know, we're leaders in this market. We expect to be leaders for a very long period of time. We know this market and this business very well. Those would be the areas that we're focused on to drive that long-term growth for aesthetics. Gotcha. At a high level, when you think about, you know, some of the industry-specific risks like the IRA, and over the course of this year, you know, there's been some permutations of that. Yeah. Is there anything that you're looking out on the policy front that you think could, you know, in the next, say, 12 months or so, kind of inform your view about the, you know, the intermediate to long term? Well, look, we did our best to model the impact, we've come out and said like we still expect to deliver high single-digit growth even with IRA. Yep. There's, you know, some parts of it are easier to model than others, right? I mean, inflation penalties, Part D benefit redesign, we can get. You know, that's easy to get your arms around. The question is how's negotiation gonna work, and there's guidelines that are out now, and we're trying to understand those and how they apply to the spirit of the law. I mean, there's a lot that we're evaluating. We did make assumptions around based on the time on market, the size of the drug, and the Medicare population. We made some assumptions. The thing to keep in mind though, relative to our peers, I mean, our Medicare exposure is lower than many. If you think about, I know Enbrel has gotten some attention. We've already talked about Enbrel. Humira is declining. By the time you get to 2026, you have to think about what's the size of Humira, even if it is subject to negotiation. Those are the things that we've been modeling. We feel very confident, even with that modeling in mind, that we can deliver on the long-term commitments we've made. It's something we continue to evaluate. Right. Well, with that, we're out of time. Guys, thank you so much. Okay. You know, appreciate it. Thank you. Thanks.