Q3 2019 Earnings Call

[laughter].

Good morning, and thank you for standing by welcome to the Abbvie third quarter 2018 earnings Conference call. All participants will be able to listen only until the question and answer portion and you may ask a question by pressing star one on your touched on.

Operator: Good morning, and thank you for standing by. Welcome to the AbbVie third quarter 2019 earnings conference call. All participants will be able to listen only to the question and answer portion, and you may ask a question by pressing star one on your touchtone phone.

Oh, no I would now like to introduce misled shade, Vice president of Investor Relations.

Operator: I would now like to introduce Miss Liz Shea, Vice President of Investor Relations. Good morning, and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Michael Severino, Vice Chairman and President; and Rob Michael, Executive Vice President and Chief Financial Officer. Joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman, External Affairs; Chief Legal Officer; and Corporate Secretary. Before we get started, I remind you that some statements we make today may be considered forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements.

Good morning, and thanks for joining US also on the call with me today are reckons, Alice Chairman of the Board and Chief Executive Officer, Michael Severino, Vice Chairman and President and Rob Michael Executive Vice President and Chief Financial Officer, joining us pretty Q and a portion of the call. Its Laura Schumacher Vice Chairman external affairs, Chief legal officer in corporate Secretary.

Right.

We get started I remind you that some statements we make today maybe considered forward looking statements for purposes of the private Securities Litigation Reform Act of 1995.

He cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results could differ materially from those indicated in the forward looking statements.

Additional information about these risks and uncertainties <unk> is included in our 2018 annual report report on Form 10-K , and there are other FCC filing.

Operator: Additional information about these risks and uncertainties is included in our 2018 Annual Report on Form 10-K and in our other SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand AbbVie's ongoing business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures and are earnings relief and regulatory filings from today, which can be found on our website. Following our prepared remarks, we'll take your questions. So with that, I'll now turn the call over to Rick.

At the undertakes no obligation to update these forward looking statements, except as required by law on today's conference call as in the past non-GAAP financial measures will be used to help investors understand abbvies ongoing business performance. These non-GAAP financial measures are reconciled the comparable GAAP financial measures in our earnings release and regulatory filings from today.

Can be found on our website following our prepared remarks, we'll take your questions. So with that I'll now turn the call over to record.

Thank you Liz good morning, everyone and thank you for joining us today I'll discuss our third quarter performance highlights as well as our full year guidance, which we are raising again this quarter.

Rick Gonzalez: Thank you, Liz. Good morning, everyone. And thank you for joining us today. I'll discuss our third quarter performance and highlights, as well as our full year guidance, which we are raising again this quarter. Mike will then provide an update on recent progress across the R&D programs, and Rob will discuss the quarter in more detail. Following our remarks, we'll take your questions. AbbVie delivered another outstanding quarter with adjusted earnings per share of $2.33, representing growth of nearly 9% versus last year and exceeding the midpoint of our guidance by 4 cents.

[noise], Mike will then provide an update on recent advancements across R&D programs and Rob will discuss the quarter in more detail. Following our remarks, we'll take your questions.

I'd be delivered another outstanding quarter with adjusted earnings per share of $2.33 representing growth of nearly 9% versus last year and exceeding the midpoint of our guidance by four cents.

Unknown Executive: Ahem.

Total revenue of $8.4 billion was also ahead of our expectations for the quarter.

Rick Gonzalez: Total revenue of $8.4 billion was also ahead of our expectations for the quarter, driven by continued strong performance in hematological oncology and immunology. I'll start with our HEMOG business, which delivered operational sales growth of 38.5% in the quarter.

Driven by continued strong performance in Hematological oncology and immunology.

I'll start with our keen on business, which delivered operational sales growth of 38.5% in the quarter.

Imbruvica continues to perform exceptionally well with global revenue more than $1.2 billion in the quarter, an increase of nearly 30% versus last year Imbruvica has a strong position across multiple indications and remains the clear market share leader across all lines of therapy.

Rick Gonzalez: Imbruvica continues to perform exceptionally well, with global revenue of more than $1.2 billion in the quarter, an increase of nearly 30% versus last year. It has a strong position across multiple indications and remains the clear market share leader across all lines of therapy in CLL. We're especially pleased with the recent inflection in the frontline setting, driven by Imbruvica's growing body of clinical evidence, label augmentation, and update to treatment guidelines. We're also seeing a substantial contribution from VenClexta, with total revenue of more than $200 million in the quarter.

In CLL, we're especially pleased with the recent inflection in the frontline setting driven by him group Imbruvica is growing body of clinical evidence label augmentation and update the treatment guidelines.

We're also seeing a substantial contribution from Venclexta would total revenue of more than $200 million in the quarter and collect it continues to expand new patients here and abroad relapse refractory CLL segment, and we're making very good progress with our recent approvals the frontline CLL.

Rick Gonzalez: VenClexta continues to expand new patient share in the broad relapsed refractory CLL segment, and we're making very good progress with our recent approvals for frontline CLL and AML. Now turning to immunology, where we've strengthened our leadership position with the introduction of two new best-in-class therapies, SkyRISI and RIMVOC, creating a broad portfolio of therapies well-positioned to further improve patient care. We continue to see excellent performance from Sky RISD with total revenue of approximately $90 million in the quarter. The launch is going extremely well, with prescription trends that continue to remain well above recent launch analogs in the psoriasis category. Through the first six months on the market, we already have approximately 3,500 prescribing physicians and more than 9,000 patients treated with Skyrizzy, including those in our bridge access program. And in this short time frame, Sky RISD has already established its position as the leader for in-play psoriasis patient share. This includes both new patients and switching patients.

And A.M.L.

Now turning to immunology, where we strengthened our leadership position with the introduction of two new best in class therapies Sky regime, and remote creating a broad portfolio therapies, well position to further improve patient care.

We continue to see excellent performance from Sky regime, with total revenue of approximately $90 million in the quarter.

The launch is going extremely well with prescription trends they continue to remain well above recent launch analogs in psoriasis category.

Through the first six months on the market, we already have approximately 3500 prescribing physicians and more than 9000 patients treated with sky rosy, including those in our bridge access program.

And in this short timeframe Sky Rizzi has already established its position as the leader for in play psoriasis patients here. This includes both new patients and switching.

In addition, commercial access for Sky Rizzi is now more than 80% a testament to its best in class product profile. We continue to expect Sky rizzi to drive significant growth over our long range plan.

Rick Gonzalez: In addition, commercial access for Sky RISD is now at more than 80%, a testament to its best-in-class product profile. We continue to expect Sky RISD to drive significant growth over our long-range plan. In the quarter, we also announced the approval of upatacitinib, known as Renvoke in the U.S., for the treatment of adult patients with moderate to severe rheumatoid arthritis. This approval marks yet another major milestone for AbbVie, the 14th new product or major indication approval in the last five years, and continues to demonstrate our commitment and our leadership in immunology. With the strong benefit-risk profile demonstrated across our registrational trials, RINVOKE offers meaningful advantages over products on the market today or in development for rheumatoid arthritis. Feedback from prescribing physicians has been very positive, and we have a highly experienced immunology commercial organization to support a strong launch trajectory. The early trends for RINVOKE are highly encouraging, and performance has been tracking ahead of comparable analogs within the RA segment. I'll highlight a few recent data points for you.

[noise] in the Gorder, we also announced the approval of the patents. It now known as the wind vote in the U.S. for the treatment of adult patients with moderate to severe rheumatoid arthritis.

This approval marks yet another major milestone gravity 14, new product or major indication approval in the last five years and continues to demonstrate our commitment and our leadership in immunology.

With the strong benefit risk profile demonstrators across our Registrational trials were invoke offer is meaningful advantages over products on the market today or in development for rheumatoid arthritis.

Feedback from prescribing physicians has been very positive and we have a highly experienced immunology commercial organization to support a strong launch trajectory.

The early trends for when volumes were invoke are highly encouraging and performance has been tracking ahead of comparable analogs within the already segment.

I'll highlight a few recent data points for you.

In the month of October the second full month when vocal is on the market.

Rick Gonzalez: In the month of October, the second full month RINVOC was on the market, we estimate more than 1,400 prescriptions were filled, including both paid prescriptions and those who received RINVOC in our Bridge Access Program. Based on this level of prescription volume, RINVOC is currently capturing approximately 6% of in-play RA patients. After less than 90 days on the market, Renvo's in-play patient share has surpassed Remicade and several other established products and is rapidly approaching the in-play share for EMBL. We're also seeing very little cannibalization of Chimero market share thus far. Commercial access is ramping strongly and in line with our expectations. By early January, we expect RuneVote to have commercial access above 75%, and we expect paid prescription volume to increase significantly as this access expands over the next several months.

We estimate more the 1400 prescriptions were filled including both paid prescriptions and those who received rent though in our bridge access program [laughter] based on this level of prescription volume Rins Oak is currently capturing approximately 6% of in play our eight patients.

There are less than 90 days on the market rent bumps in play patient share has surpassed remicade and several other established products and is rapidly approaching the in place your bramble.

We're also seeing very little cannibalization of humor or market share thus far.

Commercial access is ramping strongly and inline with our expectations by early January we expect Rainbow to have commercial access above 75% and we expect pay prescription volume to increase significantly as this access expands over the next several months.

So while we're still early in the launch we're certainly pleased by the feedback we received from the field from positions and the robust demand trends that we're seeing.

Rick Gonzalez: So while we're still early in the launch, we're certainly pleased by the feedback we've received from the field, from physicians, and the robust demand trends that we are seeing. Now, turning to Humira. Humira grew 9.5% in the U.S. this quarter, driven by continued strong volume growth across all three segments, room, therm, and gas. However, international Humira sales were down approximately 32% on an operational basis, reflecting the impact of direct biosimilar competition in Europe and other international markets.

Now turning to Humira [laughter] whomever grew 9.5% in the U.S. This quarter driven by continued strong volume growth across all three segments room, derm and gastro.

International Humira sales were down approximately 32% on an operational basis, reflecting the impact of direct biosimilar competition in Europe , and other international markets. The international bio similar trends in dynamics remain consistent with our expectations.

Rick Gonzalez: The International Biosimilar Trends and Dynamics remain consistent with our expectations. Based on the continued strong momentum of our business in the quarter and the progress year-to-date, we are once again raising our full year 2019 EPS Guide. We now expect adjusted earnings per share of $8.90 to $8.92, reflecting growth of 12.6% of the midpoint, which remains at the top tier of our peer view. I'm extremely pleased with the underlying performance of our business. Additionally, with the planned acquisition of Allergan, we will be adding highly valuable on-market assets with leadership positions across additional attractive growth sectors, including significant new growth platforms in medical aesthetics and CNS. The proposed acquisition is proceeding as expected. With the recent successful completion of the Allergan shareholder vote to approve the transaction and advancing regulatory reviews around the globe, integration planning is also well underway, and we have made substantial progress. We remain on track for closing in the first quarter of 2020.

Based on the continued strong momentum of our business in the quarter and the progress year to date, we will once again raising our full year 2019, yes guidance. We now expect adjusted earnings per share of $8, a 90 cents $8 a 92 cents.

Collecting growth of 12.6% at the midpoint, which remains at the top tier of our peer group.

I'm extremely pleased with the underlying performance of our business. Additionally, with the planned acquisition of Allergan, we will be adding highly valuable on market assets with leadership positions across additional attractive growth segments.

Adding significant new growth platforms in medical aesthetics and CNS.

The proposed acquisition is proceeding as expected with the recent successful completion of the Allergan shareholder vote to approve the transaction and advancing regulatory reviews around the globe.

Integration planning is also well underway and we have made substantial progress we remain on track for closing in the first quarter of 20 Twond.

Yeah again transaction.

Rick Gonzalez: The Allergan transaction has significant strategic merit, and the new AbbVie is poised to deliver top-tier financial performance. Combined, we will generate significant earnings and cash flow to enhance our innovative R&D platform. Support a Strong and Growing Dividend and Rapidly Pay Down Debt. As noted in our press release today, we're announcing a 10.3% increase in our quarterly cash dividend from $1.07 per share to $1.18 per share, beginning with the dividend payable in February 2020. Since our inception, we have grown our quarterly dividend by 195%. So, in summary, we continue to demonstrate strong momentum, and I'm extremely pleased with our execution across the portfolio, including the progress that we're making with the recent new product launches and our pipeline advance. We have assembled an impressive set of growth assets, and the outlook for our business remains strong. The Allergan transaction will make us even stronger and more diversified. We remain focused on achieving our long-term strategic vision for the company, delivering industry-leading performance and outstanding shareholder value while improving patients' lives. With that, I'll turn the call over to Mike for additional comments on our R&D programs. Mike?

As significant strategic merit and the new Abbvie is poised to deliver top tier financial performance combined we will generate significant earnings and cash flow to enhance our innovative R&D platform.

Support a strong and growing dividend and rapidly pay down debt.

As noted in our press release today, we're announcing a 10.3% increase quarterly cash dividends from a dollar and seven cents per share to $1.18 cents per share beginning with the dividend payable in February 20 point.

Since our inception, we've grown our quarterly dividend by 195%.

So in summary, we continue to demonstrate strong momentum and I'm extremely pleased with our execution across the portfolio, including the progress that we're making with the recent new product launches and our pipeline advancement. We have been settled an impressive set of growth assets and the outlook for our business.

This remains strong yeah, hologram transaction will make us even stronger and more diversified we remain focused on achieving our long term strategic vision for the company delivering industry, leading performance and outstanding shareholder value, while improving patients' lives with that I'll draw.

On the call over to Mike for additional comments R&D programs Mike.

Thank you Rick.

Mike: Thank you, Rick. We continue to make great progress across all stages of our pipeline, with several significant pipeline milestones since our last earnings call, as well as notable data presentations at a number of medical meetings. In immunology, we achieved another major milestone and continued to expand our portfolio with the U.S. approval of RINVOC and its initial indication of rheumatoid arthritis. We're very pleased with the label, which reflects the strong benefit-risk profile demonstrated across our large and comprehensive registrational program. RINVOKE, which was internally discovered and developed at AbbVie, represents an important advancement in the treatment of RA, providing physicians with a new, highly differentiated therapeutic option for their patients. The launch is underway in the U.S., and feedback from the medical community has been very positive. We also recently received a CHMP positive opinion for Rinn-Polk, with an approval decision in Europe expected in the next few months. In addition, we expect approval in Japan in the first quarter.

We continue to make great progress across all stages of our pipeline with several significant pipeline milestone since our last earnings call as well as notable data presentations at a number of medical meetings.

In immunology, we achieved another major milestone and continued to expand our portfolio with a U.S. So proposal of Rins oak and its initial indications of rheumatoid arthritis.

We're very pleased with the label, which reflects a strong benefit risk profile demonstrated across our large and comprehensive Registrational program.

[noise] Rainbow, which was internally discovered and developed at Abbey represents an important advancements in the treatment of already providing physicians they knew highly differentiated therapeutic option for their patients.

The launch is underway in the U.S. and feedback from the medical community has been very positive.

We also recently received a C. H M P positive opinion for invoke within approval decision in Europe affected in the next few months.

In addition, we expect approval in Japan in the first quarter.

We're making good progress with the development programs for written poke in other immune mediated conditions as well.

Mike: We are making good progress with the development programs for RINVOC in other immune-mediated conditions as well. For example, we recently announced results from the first of our registrational trials in psoriatic arthritis, the SELECT PSA2 study. In this study, which evaluated RINVOC compared to placebo in psoriatic arthritis patients who had an inadequate response to one or more biologic DMARDs, both doses of RINVOC met all primary and key secondary endpoints. We're very encouraged by the strong levels of response on both joint and skin endpoints, including ACR responses and POSI measurements, as well as minimal disease activity scores in this heavily pre-treated population.

We recently announced results from the first of our Registrational trials in Psoriatic arthritis, a select PS eight to study.

In this study, which evaluated renvela compared to placebo and so it didn't psoriatic arthritis patients who had an inadequate response to one or more biologic demarche both doses of rent bulk met all primary and key secondary endpoints.

We're very encouraged by the strong levels of response on both joint and scan endpoints, including HCR responses and pozzi measurements as well as minimal disease activity scores in this heavily pretreated biologic refractory population.

Mike: Treated Biologic Refractory Population. We look forward to presenting detailed results at a medical meeting next year. We expect to see data from our second registrational trial, Select PSA 1, in the first half of next year, with our regulatory submissions expected in mid-2020 and commercialization anticipated in 2021. At the ACR meeting later this month, we'll be presenting 26 abstracts for RINPOC and rheumatic diseases, including results from a Phase II study in ankylosing spondylitis. In this study, RINVOC met the primary and key secondary endpoints, demonstrating significantly greater improvements in signs and symptoms, as well as physical function and imaging endpoints compared to placebo.

We look forward to presenting detailed results at a medical meeting next year.

We expect to see data from our second Registrational trial select P.S. say one in the first half of next year with our regulatory submissions expected in mid 2020 and commercialization anticipated in 2021.

At the HCR meeting later this month, we'll be presenting 26 abstracts for rentals and rheumatic diseases, including results from on Phase two study and ankylosing spondylitis.

In this study written bulk met the primary and key secondary endpoints, demonstrating significantly greater improvements in signs and symptoms as well as physical function and imaging endpoints compared to placebo.

We plan to begin a phase three study in axiall spinal arthritis in the coming months, an indication expansion that will further strengthen RIN books position within rheumatology.

Mike: We plan to begin a Phase III study in axial spondyloarthritis in the coming months, an indication expansion that will further strengthen Rinvoke's position within rheumatology. Both psoriatic arthritis and axial spondyloarthritis are large and important markets in the rheumatology segment and are key areas of focus for AbbVie's immunology portfolio. In the dermatology segment, we expect to see results from the first of RINBOK's registrational trials in atopic dermatitis in the first half of 2020. We continue to make great progress with SkyRizzy as well. Skyrizzy was approved in its first indication, psoriasis, in the second quarter, and the launch is going extremely well, with its differentiated profile and quarterly administration responding with both physicians and patients. One important feature of Sky RISD's profile is its strong durability of response.

Both psoriatic arthritis, and Axiall spindle arthritis, our large in important markets in the rheumatology segment and our key areas of focus for Abbvies immunology portfolio.

In the dermatology segment, we expect to see results from the first of rent bumps Registrational trials and atopic dermatitis in the first half of 2020.

We continue to make great progress with Sky Rizzi as well.

Got it really was approved in its first indication psoriasis in the second quarter and the launch is going extremely well with its differentiated profile and quarterly administration is resonating with both physicians and patients.

[noise] one important feature of Sky reduce profile is its strong durability of response.

We recently presented as long term data at the A.D.V. Congress showing that after two and a half years on treatment Skyros. He continues to provide high levels of advocacy as demonstrated by 61% of patients achieving pasi 100 or complete skin Clarence.

Mike: We recently presented long-term data at the EADV Congress showing that after two and a half years on treatment, Sky RISD continues to provide high levels of efficacy, as demonstrated by 61% of patients achieving Posse 100 or complete skin clearance. Similar to RINVOKES, CHIRIZI is being developed in several additional indications. The gastro segment, in particular, represents a significant opportunity for SCIRIS-E, and the registrational programs for both Crohn's disease and ulcerative colitis are progressing very well.

Similar to renew Cogs guidance he is being developed in several additional indications.

The gastro segment in particular represents a significant opportunity for sky resi and the Registrational programs in both Crohns disease, and ulcerative colitis are progressing very well.

Mike: We expect to see data from a Phase 2B study in ulcerative colitis next year, and data from the Phase 3 studies in Crohn's disease are expected in 2021. Moving now to hematologic oncology, where we continue to make good progress advancing our programs and expanding the breadth of data for Imbruvica and Venclexta. We've made significant progress this year with Imbruvica in the frontline CLL setting. We received a label update to include data from the Illuminate study, which evaluated Imbruvica in combination with Gaziva in frontline CLL. In addition, the NCCN guidelines were updated to include data from three important studies in our Frontline CLL program.

We expect to see data from a phase Twob study in ulcerative colitis next year and data from the phase three studies in Crohns disease are expected in 2021.

Moving now to hematologic oncology, where we continue to make good progress advancing our programs and expanding the breadth of data for Imbruvica and Venclexta.

[noise], we've made significant progress this year with imbruvica in the frontline CLL setting.

We received a label update to include data from the illuminates study, which evaluated imbruvica in combination with because IPA and frontline CLL.

In addition, the NCCN guidelines were updated to include data from three important studies and our frontline CLL program.

We also reported positive phase three data in the watch and wait population.

Mike: We also reported positive phase 3 data in the watch and wait population, and later this year, we plan to submit data for regulatory approval from the Phase 3 ECOG study in young and fit first-line patients. An important element of our HEMONC strategy is our ongoing clinical program evaluating the combination use of Imbruvica and Venclexa. In the area of non-Hodgkin's lymphoma, we expect to see results from the Phase 3 SIMPATICO study next year, a trial evaluating Imbruvica in combination with Venclexta in relapsed refractory mantle cell lymphoma. We're also making good progress with the combination program in CLL.

And later this year, we plan to submit data for regulatory approval from the phase three E Cogs study and young and fit first line patients.

An important element of our Hmong strategy as our ongoing clinical program evaluating combination use of Imbruvica and venclexta.

[noise] in the area of non Hodgkin's lymphoma, we expect to see results from the phase three Simpatico study next year, a trial evaluating imbruvica in combination with Venclexta in relapsed refractory mantle cell lymphoma.

We're also making good progress with a combination program in CLL.

We expect to present data from a phase two study in frontline CLL at the upcoming Ash meeting and additional data from the phase three program are expected in the next 12 to 18 months.

Mike: We expect to present data from a Phase 2 study in Frontline CLL at the upcoming ASH meeting, and additional data from the Phase 3 program are expected in the next 12 to 18 months. We continue to advance other programs in our HEMONC portfolio. We'll see data next year from two confirmatory Phase III studies evaluating BenClexta in frontline AML. And at the upcoming ASH meeting, we'll be presenting data from several early-stage programs, including results from a Phase II study evaluating nividoclax and myelofibrosis, where we're seeing very encouraging data in patients who have failed. High-risk myelofibrosis is a serious hematologic disease in which bone marrow is replaced by fibrotic tissue, interfering with bone marrow function. Current therapies attenuate signaling through the JAK-STAT pathway to address symptoms but are not disease-modifying.

We continue to advance other programs in our hemlock portfolio.

We'll see data next year from two confirmatory phase three studies evaluating venclexta in frontline AML.

And at the upcoming Ash meeting will be presenting data from several early stage programs, including results from a phase two study evaluating the better clocks in myelofibrosis.

Where we're seeing very encouraging data in patients who have failed shakopee [noise].

Hi, risk myelofibrosis is a serious hematologic disease in which bone marrow is replaced byproduct tissue interfering with bone marrow function.

Current therapies attenuate signaling through the Jackstadt pathway to address symptoms, but are not disease modifying.

What's needed a KLAX, we're targeting the mutated calling themselves, causing myelofibrosis for apoptosis through the Bcl XL and Bcl two pathways.

Mike: With Nevidoclax, we're targeting the mutated clonal cells causing myelofibrosis for apoptosis through the BCL-X cell and BCL-2 pathway. This is a unique approach offering the potential to modify the course of disease, reverse fibrosis, and restore hematopoiesis. Nevidoclax may also act to re-sensitize cells that have developed resistance to GACCP, thus representing a potentially important treatment option for myelofibrosis patients.

A unique approach offering the potential to modify the course of disease reverse fibrosis and restore him out of the weakness.

And then it KLAX May also act to re sensitized cells that have developed resistance to shakopee, thus, representing a potentially important treatment option for myelofibrosis patients.

Also in the quarter, we submitted our regulatory application for Elagolix in uterine fibroids within approval decision expected in the second quarter of next year.

Mike: Also in the quarter, we submitted our regulatory application for elegolics in uterine fibroids, with an approval decision expected in the second quarter of next year. And in neuroscience, we recently presented data for ABBV951, demonstrating its potential as a new treatment option for patients with advanced Parkinson's disease. ABBV 951 is a subcutaneous delivery system for our levodopa-carbidopa prodrugs. An Innovative Approach to Treating Motor Fluctuations in Parkinson's Disease with the Potential to Provide Duopa-Like Efficacy with a Less Invasive, Non-Surgical Delivery Method.

[noise] and in Neuro Science, we recently presented data for ABVD 951, demonstrating its potential as a new treatment option for patients with advanced Parkinson's disease.

A BBB 951 is a subcutaneous delivery system for our leave it to about Carbidopa pro drugs.

And innovative approach to treating motor fluctuations in Parkinson's disease with the potential to provide to open like efficacy with a less invasive nonsurgical delivery method.

If successful Abbvie 951 would represent a transformational improvement to current treatments with a potential to significantly broaden the addressable patient population beyond those treated with do up by today.

Mike: If successful, ABBV 951 would represent a transformational improvement to current treatments, with the potential to significantly broaden the addressable patient population beyond those treated with DUOPA today. The Phase 3 program for ABBV 951 is underway, and we look forward to updating you as the program progresses. So, in summary, we've continued to make very good progress advancing and accelerating our programs this year, and we look forward to many more important pipeline milestones in the coming months and through 2020. With that, I'll turn the call over to Rob for additional comments on our third quarter performance. Rob?

The phase three program for a BBB 951 is underway and we look forward to updating you as the program progresses.

So in summary, we've continued to make very good progress advancing and accelerating our programs. This year and we look forward to many more important pipeline milestones in the coming months and through 2020.

With that I'll turn the call over to Rob for additional comments on our third quarter performance Rob.

Thank you Mike we had another quarter of strong performance reported adjusted earnings per share of $2.33, reflecting growth of 8.9% compared to prior year and four cents above our guidance midpoint.

Rob: Thank you, Mike. We had another quarter of strong performance. We reported adjusted earnings per share of $2.33, reflecting growth of 8.9% compared to the prior year and $0.04 above our guidance midpoint. Net revenues were up 3.5% on an operational basis, excluding a 0.5% unfavorable impact from foreign exchange. Strong growth from several key products and newly launched assets offset the impact of international biosimilar competition. U.S. Jumeirah sales were $3.9 billion, up 9.6% compared to the prior year, with volume growth of 8.6% and a favorable price impact of 1%. Wholesaler inventory levels remain below half a month in the quarter.

Net revenues were up 3.5% on operational basis, excluding a 0.5% unfavorable impact from foreign exchange.

Strong growth from several key products and newly launched assets offset the impact of international Biosimilar competition.

You bet Chimera sales were $3.9 billion up 9.6% compared to prior year with volume growth of 8.6% and a favorable price impact of 1%.

Wholesaler inventory levels remain below half a month in the quarter.

International Humira sales were approximately $1 billion down, 32% operationally, reflecting biosimilar competition across Europe , and other international markets and in line with our expectations.

Rob: International Humira sales were approximately $1 billion, down 32% operationally, reflecting biosimilar competition across Europe and other international markets and in line with our expectations. Skyrizzy continues to demonstrate strong uptake, with sales of $91 million in the first full quarter following the launch in April. As Rick mentioned, we are pleased with the launch and early transfer info. Sales in the partial quarter were $14 million. Hematologic Oncology Global Sales were nearly $1.5 billion, up 38.5% on an operational basis, driven by the continued strong growth of both Imbruvica and Benclexta, and Bruvica Global Net Revenues were more than $1.2 billion, driven by strong shares in all lines of therapy in CLL. Bank Clexa revenues were $221 million, driven by continued share gains across all approved indications.

Got it as he continues to demonstrate strong uptake with sales of $91 million in the first full quarter. Following the launch in April .

As Rick mentioned, we are pleased with the launch and early as rental.

Sales in the partial quarter were $14 million.

[noise] hematology oncology global sales were nearly $1.5 billion up 38.5, 38.5% on operational basis, driven by the continued strong growth of both Imbruvica and Venclexta.

Imbruvica global net revenues were more than $1.2 billion, driven by strong share and all lines of therapy in CLL.

Venclexta revenues were $221 million driven by continued share gains across all approved indications.

Global HCV revenues were approximately $700 million down roughly 19% on operational basis, driven by lower treated patient volumes and select international markets and increased competition within the U.S. managed Medicaid segment.

Rob: Global HCV revenues were approximately $700 million, down roughly 19% on an operational basis, driven by lower treated patient volumes in select international markets and increased competition within the U.S. managed Medicaid segment. Despite the dynamics impacting performance this year, Maverick remains the global leader in HCV therapy, and we expect it to generate durable cashflow for AbbVie well into the next decade. We also saw continued strong operational sales growth for Creon and Duodopa. Turning now to the P&L profile for the third quarter, adjusted gross margin was 82% of sales, up 30 basis points compared to the prior year, including a 140 basis point benefit related to the expiration of Humira royalties, partially offset by the impact of partnership accounting. Adjusted R&D investment was 14.5% of sales, supporting our pipeline programs in oncology, immunology, and other areas.

Despite the dynamics impacting performance this year Maverick remains the global leader in HCV therapy, and we expect it to generate durable cash flow for abbvie well into the next decade.

We also saw continued strong operational sales growth for creon and Duodopa [noise].

Turning now to the piano profile for the third quarter. Adjusted gross margin was 82% of sales up 30 basis points compared to the prior year, including a 140 basis point benefit related to the expiration acumera royalties, partially offset by the impact of partnership accounting.

Adjusted R&D investment was 14.5% of sales supporting our pipeline programs on oncology immunology and other areas.

Adjusted SJ expense was 19.1% of sales, reflecting continued investment in our on market products and newly launched assets.

Rob: Adjusted SG&A expense was 19.1% of sales, reflecting continued investment in our on-market products and newly launched assets. The adjusted operating margin ratio was 48.4% of sales, an improvement of 120 basis points versus the prior year. Adjusted net interest expense was $288 million, and the adjusted tax rate was 8.8%. In the quarter, we recorded a net charge of $0.56 per share related to the impairment of intangible assets acquired as part of the STEM-Centrix acquisition. The net after-tax impact of this impairment and the related adjustment to contingent consideration liabilities was $823 million.

The adjusted operating margin ratio was 48.4% of sales and improvement of 120 basis points versus the prior year.

Adjusted net interest expense was $288 million any adjusted tax rate was 8.8%.

In the quarter, we recorded a net charge at 56 cents per share relates the impairment of intangible assets acquired as part of the Stemcentrx acquisition.

The net after tax impact of this impairment and the related adjustment to contingent consideration liabilities was $823 million. This net charge has been excluded from our adjusted EPS results.

Rob: This net charge has been excluded from our adjusted EPS result. Based on our continued strong performance year-to-date, we are raising our full-year adjusted earnings per share guidance to between $8.90 and $8.92, reflecting growth of 12.6% at the midpoint. Also excluded from this guidance is $3.82 of known intangible amortization and specified items.

Based on our continued strong performance year to date, we are raising our full year adjusted earnings per share guidance to between $8, a 90 cents to $8 in 92 cents, reflecting growth of 12.6% at the midpoint.

Excluded from this guidance is $3.82 of known intangible amortization and specified items.

We're also increasing our revenue guidance for the full year now expect growth of approximately 2.5% on an operational basis at current rates, we seem to expect foreign exchange to have approximately 1% unfavorable impact on full year reported sales growth.

Rob: We are also increasing our revenue guidance for the full year and now expect growth of approximately 2.5% on an operational basis. At current rates, we continue to expect foreign exchange to have approximately 1% unfavorable impact on full year reported sales growth. This forecast comprises the following updated for your assumption. We now expect US Humira sales growth of approximately 8.5%. We continue to see robust volume growth and maintain a strong leadership position across all segments. For International Humira, at current exchange rates, we now expect sales to approach $4.3 billion, representing an operational decline of approximately 28%. We now expect Skyrizzy global revenues of approximately $275 million, reflecting continued launch momentum.

This forecast comprehends the following updated full year assumptions, we now expect U.S. humira sales growth of approximately 8.5%.

We continue to see robust volume growth and maintain a strong leadership position across all segments.

Or internationally Humira at current exchange rates, we now expect sales, who approached $4.3 billion, representing an operational decline of approximately 28%.

We now expect Sky Rizzi global revenues of approximately $275 million, reflecting continued launch momentum.

For our hemlock franchise, we now expect Imbruvica global revenues approaching $4.7 billion with U.S. sales growth of approximately 28% ever Venclexta, we now expect sales of approximately $775 million.

Rob: For our HEMOG franchise, we now expect Imbruvica global revenues approaching $4.7 billion with U.S. sales growth of approximately 28%. And for Venclexta, we now expect sales of approximately $775 million. We are now forecasting global HCV sales approaching $3 billion.

We're not forecasting global HCV sales approaching $3 billion.

And on the piano, we now forecast adjusted gross margin of approximately 82.5% of sales and adjusted operating margins remain just above 47% of sales.

Rob: And on the P&L, we now forecast adjusted gross margin of approximately 82.5% of sales and adjusted operating margin to remain just above 47% of sales. Finally, we now expect a non-gap tax rate just below our full-year rate in 2018. All other Full Year 2019 Guidance Assumptions remain unchanged. For the fourth quarter, we expect adjusted earnings per share between $2.17 and $2.19, excluding approximately $0.49 of non-cash amortization and other specified items. We anticipate fourth-quarter operational sales growth approaching 5%. At current rates, we expect a modest, unfavorable foreign exchange impact.

Finally, we now expect a non-GAAP tax rate just below our full year rate in 2018.

All other full year 2019 guidance assumptions remain unchanged.

For the fourth quarter, we expect adjusted earnings per share between $2 in 17 cents and $2.19, excluding approximately 49 cents of noncash amortization and other specified items.

We anticipate fourth quarter operational sales growth approaching 5%.

At current rates, we expect a modest unfavorable foreign exchange impacts.

As Rick mentioned earlier today, we announced a 10.3% increase in our quarterly cash dividend beginning with the dividend payable in February 2020.

Rob: As Rick mentioned earlier, today we announced a 10.3% increase in our quarterly cash dividend, beginning with a dividend payable in February 2020. The significant earnings and cash flows that the combination of AbbVie and Allergan will generate will allow us to support a strong and growing dividend and rapidly reduce debt. We continue to expect the combined company to achieve a net debt to EBITDA ratio of 2.5 times by the end of 2021, and we will further deleveraging through 2023.

The significant earnings and cash flows that the combination of Aveed Allergan will generate allow to support a strong and growing dividend and rapidly to reduce debt.

We do expect the combined company to achieve a net debt to EBITDA ratio of 2.5 times by the end of 2021, we're further deleveraging through 2023.

In closing Abbvie has once again delivered outstanding performance with our strong track record combined with the momentum of our business, we remain well positioned to deliver top tier financial performance in 2019 and beyond.

Rob: In closing, AbbVie has once again delivered outstanding performance, and with our strong track record, combined with the momentum of our business, we remain well-positioned to deliver top-tier financial performance in 2019 and beyond. With that, I'll turn the call back over to Liz. Thanks, Rob. We'll now open the call for questions. Operator, first question, please. Thank you. And as a reminder, if you would like to ask a question, please press star 1. And our first question today is from Navin Jacob from UBS. Good morning. Thanks for taking the time to answer the question. A couple, please.

With that I'll turn the call back over to lists thanks, Rob will now open the call for questions.

Operator first question please.

Thank you and as a reminder, if you would like to ask a question. Please press star one and our first question today is from David Jacob from you'd be yes.

Good morning, Thanks for taking the question a couple please number one just wanted to understand how we should think about the cirrhotic arthritis market for.

Operator: Number one, just want to understand how we should think about the psoriatic arthritis market for RINVOC relative to RA, same, I guess, for SCIRESI, and on a relative basis, how big those opportunities could be. And then, finally, on the Allergan transaction, do you have an update on – or when should we hear an update about the divestment of some of your assets? There are some questions around SCIRESI versus Brazicumab, so any clarification would be helpful. Thank you.

RIN voake relative to our a same I guess for Ah for scar Rese.

And on a relative basis, how big those opportunities could be and then or a with regards to imbruvica. There's been some questions around astrazenecas.

Oh consequence, they're gonna be reporting some updated data.

At Ash wondering how you're thinking about the competitive landscape and then finally just on the Oregon transaction that do you have an update on.

Or when should we hear an updated about the divestment of.

Rick Gonzalez: Okay, hi, this is Rick. I think I'll have Mike walk you through PSA, and then I'll cover the CalQuents question, and I'm gonna have Laura talk a little bit about the status of the regulatory reviews for Allergan's products.

Some of your assets, there's some questions around scar receive versus.

Thank you Rob so any clarity would be helpful. Thank you.

Okay.

Hi. This is a this is rick.

Walk you through as a and then I'll cover.

The Cal Glenn's question and I'm going to have Laura talk a little bit about the status of the.

Of the regulatory reviews for allergens products.

Hi, Mike. Okay. This is Mike I'll take the PSC question. The PS say segment is an important part of the overall them segments I quite as large as already but it makes a meaningful contribution that and toggle arthritis axiall spots, it's often referred to those two components provide meaningful revenue.

Mike: Okay, this is Mike. I'll take the PSA question. The PSA segment is an important part of the overall room segment. It's not quite as large as SRA, but it makes a meaningful contribution. That and spondyloarthritis, axial spas, as it's often referred to, those two components provide meaningful revenue in that area. And as we announced earlier this week in the psoriatic arthritis study, we delivered very strong results that were completely in line with our expectations. We had a very strong impact on both joint measures, on the ACR measures, on the skin measures, and on composite measures of minimal disease activity, which look across both joint and skin and show that we're getting a substantial proportion of patients with a very high level of control.

In that area and as as we announced earlier this week in the story attic arthritis study.

We delivered very strong results, which were completely aligned with our expectations. We had a very strong impact on both the joint measures you see our measures on the skin measures and on composite measures a minute of minimal disease activity, which which look across both joint 10 skin and and.

And show that we're getting a substantial proportionate patients very high level of control. So we think it's a very very substantial opportunity for medical in the long term, we haven't put a dollar on on that market yet, but we do think it's going to be very important very important contributor.

Mike: So we think it's a very, very substantial opportunity for RINFOC in the long term. We haven't put a dollar on that market yet, but we do think it's going to be a very important contributor to the overall RINFOC profile. Scott Rizzi is doing very well in his initial indication of psoriasis. We have a psoriatic arthritis program underway. We think it's important to show the benefit of Scott Rizzi in a psoriatic arthritis setting because that's not as advanced. We don't have those data readouts yet, but we would expect it to perform well in that setting as well, based on phase two. So we think between the two, we'll really have a very strong portfolio in that important segment of the market.

To the overall a renewal.

Profile, Scott Rizzi is doing very well and its initial indication of psoriasis, we have a psoriatic arthritis program underway. We think it's important to show the benefit of Sky busy in a soriana cards right setting that's not as advance we don't have those data read outs, yet, but we would expect it to perform well in that.

Selling as well based on phase two so we think between the two will really have a very strong portfolio in that important segment the market.

Okay. So let me talk a little bit about the I'm going to talk about maybe a little more broadly the competitive environment around imbruvica and venclexta or in the CLL setting.

Rick Gonzalez: Okay, so let me talk a little bit about the, and I'm going to talk about it maybe a little more broadly, the competitive environment around Imbruvica and then Klextor in the CLL setting. You know, I think certainly as we look at CalQuints being a BTK, we would certainly expect that it would have positive data. In fact, we'd be frankly surprised if it didn't have positive data in the first line.

I think certainly as we looked at Cal Quinn's being a b T.K., we would certainly expected. It will have positive impact would be frankly surprised if it did that wasn't data in first line I mean, obviously imbruvica has very impressive data and a large and comprehensive set of data and that will certainly play into the competitive dynamics I.

Rick Gonzalez: I mean, obviously, Imbruvica has very impressive data and a large and comprehensive set of data, and that will certainly play into the competitive dynamics. I think if you think about the competitive dynamics in this field, you need to think about them sort of from two perspectives. What does the competition look like today, and what's the experience been against that competition? And then what would it look like going forward for a competitor to be able to compete in this market in an effective way? And I'm specifically talking CLL now. So CalQuints has been on the market now for, I think about, two years. It really has not been able to get a label that has any real differentiation.

I think if you think about the competitive dynamics in this field you need to think about them sort of from two perspectives. What are the competition. It looks like today, what's the experience been against that competition and then what would it look like going forward for a competitor or be able to compete in this market in an effective way I'm, specifically talking CLL now so California.

She has been on the market now for I think about two years. It really has not been able to get a label that has any real differentiation. It has today and is approved indication of Mcl second line plus about 14, Bruce own a share.

Rick Gonzalez: It has today in its approved indication of MCL the second line plus about 14% share. It's had between 10% and 14% share for quite some time, so it's kind of vacillated in that area for quite some time. Its current use in CLL is about 1%, despite being on treatment guidelines I think since about 2018. And almost all of that 1% is in third line plus, which gives you an idea of how physicians view it behind Imbruvica and then CLEPSTA. If and when they get approval in the first line, I think the thing that's important to remember, or anybody that competes in this marketplace, is how the market operates today.

Had between 10 and 14% year for quite some time. So it's it's kind of vacillated in that area for quite some time.

Yeah. Its current use in CLL is about 1% despite being on treatment guidelines I think since about 2018 and almost all of that 1% is in the third line plus which gives you an idea of how physicians view would behind Imbruvica and Venclexta.

If and when they get approval in first line I think when it's important to remember or anybody to compete in this marketplace is how the market operates today. If you look at imbruvica share of treated patients and what I mean by that is patients who are currently under active treatment today.

Rick Gonzalez: If you look at Imbruvica's share of treated patients, and what I mean by that is patients who are currently under active treatment today, Imbruvica's first line share of treated patients is 51%, so roughly half the patients that are under treatment today are using Imbruvica. Second line plus is about 75%, so three quarters of the patients who are under treatment right now are using Imbruvica. Imbruvica's treatment to progression therapy. I don't see physicians taking well-maintained patients off of Imbruvica and switching them to Galquin or anything else. And if we were seeing that, the duration of therapy, which is something we track, would be going down, but it's not. It's stable or slightly increasing.

Well because first line share of treated patients is 51% so roughly half the patients that are under treatment today are utilizing imbruvica second line plus is about 75%. So three quarters of the patients who were under treatment right now are using imbruvica and wouldn't goes treat to progression therapy I don't.

Positions, taking well maintain patients off of Imbruvica and switching them to gallup ones or anything else and if we were assuming that the duration of therapy, which is something we track we'd be going down, but indeed, it's not it's stable to slightly increasing so anyone that comes in in this market will have.

Rick Gonzalez: So anyone that comes into this market will have to compete for share and will be limited to competing for share by only competing in the areas where you have new patients or you have failure patients. And in the case of new patients or failure patients, they're also going to have to compete against BenClexta in this market. And as you know, BenClexta has recently been approved for first line treatment. We're about three months post that approval. If you look at BenClexta's new patient capture share, in the first line, it's 5% already. In the second line, it's 10%. And in the third line, it's 21%. So I think the reality is we fundamentally believe, and I think many physicians believe, that we have the two best assets for being able to treat CLL patients and provide them with long durations of disease-free intervals between Venclexta and Imbruvica. So if CalQuintz gets a first-line approval in CLL, they'll certainly get some share, but I would tell you that I feel highly confident in our position in this marketplace based on our performance and on the assets that we have. Laura

To compete for share and will be limited to compete for share my only competing in the areas, where you have new patients where you have failure patients and in the case of new patients or failure patients are also going to have to compete against Venclexta in this market and as you know Venclexta has recently been approved in first line.

Fine were about three months post that approval. If you look at things flex to his new patient capture share in first line. It's 5% are ready in second line, it's 10% and then third line is 21%.

So I think the reality is we fundamentally believe I think many physicians believe we have the two best assets were being able to treat CLL patients and provide them with long durations of disease free intervals between Venclexta and Imbruvica. So Intel Glens gets a personal line approval in CLL those.

Certainly get some share, but I would tell you that I feel highly confident position in this marketplace based on our performance and based on the assets that we have.

So.

Laura Okay with respect to their regulatory process the regulatory process overall.

Laura: Okay, with respect to the regulatory process. The regulatory process overall is proceeding well. We've filed for approval in all major jurisdictions.

Is proceeding well we've filed for approval and all major jurisdictions with respect specifically to the FTC. We received a second request for information at the end of September which was not unexpected and we're working through it always request with the FTC.

Laura: With respect specifically to the FTC, we received a second request for information at the end of September, which was not unexpected, and we're working through those requests with the FTC. We've also notified them of our intent to divest two assets, one, Brazikizumab, which is in Aisle 23, and the other, ZENPAP. We have a robust divestiture process ongoing right now with several interested parties, and I think, as Rick said earlier, we remain optimistic of a first quarter 2020 closing. Thanks, Naveen. Operator, next question, please.

We've also notified them of our intent to divest two assets wine brands. The kids, a map, which has an IL 23 and the other Zen path.

We have a robust divestiture process ongoing right now with several interested parties and I think as Rick said earlier, we remain optimistic of first quarter 2020 closing.

Thanks movie Operator next question please.

Thank you. Our next question is from Terence Flynn from Goldman Sachs.

Operator: Thank you. Our next question is from Terrence Flynn from Goldman Sachs. Hi, good morning.

Hi, good morning, Thanks for taking the question congrats on all the launch progress.

Operator: Thanks for taking the question. Congratulations on all the launch progress. Maybe just two for me.

Maybe just a two for me was wondering.

Rick Gonzalez: I was wondering, with respect to the ex-US Skyrizzy, looks like it is off to a strong start there. Wondering if you can give us any more color you can give us in terms of where sales are coming from and anything similar or different versus the US launch. And then, Rick, how should we think about US Humira pricing next year? You know, Amgen had some comments earlier this week, but I would be curious to hear your thoughts as well. Thank you.

With respect to X U.S. Sky rizzi looks to be off to a strong start there wondering anymore color you can give us in terms of where sales are coming from and anything similar or different versus the U.S. launch and then Rick how should we think about a U.S. humira pricing next year.

You know Ams and had some comments earlier this week, but would be curious to hear your thoughts as well. Thank you.

[noise] I think on an international and Sky Rosy.

Rick Gonzalez: Thank you very much as well. I think on international skyrizzy, you have to remember, we're really only have reimbursement in a relatively small number of countries today. But that reimbursement process, that pricing, and reimbursement process, is ongoing. So you can expect it to do extremely well in the markets that it's in. But that's going to expand significantly over the course of the next 12 months as we get pricing and reimbursement. And in additional countries, I would expect Skyrizzy to perform reasonably consistently with what we're seeing in the US and certainly in Western European markets. So I think there's a good opportunity there, and we're excited about that opportunity. Certainly, as it relates to Jumeirah pricing, we're obviously in the process of going through all of our managed care. And I'd say, you know, we're far into that pricing for that contracting process. For 2020, I don't see any significant change in the dynamics around Jumeirah pricing. In 2020, it will be significantly different from what we've seen in 2019.

Yes. It remember, we're really only have reimbursement in a relatively small number of countries today, but that reimbursement processes that pricing removes reimbursement process is ongoing. So you can expect is doing extremely well in the mark incidence and but that's going to span signal.

Importantly over the course of the next 12 months as we get pricing and reimbursement.

And and additional countries I would expect sky rizzi to perform reasonably consistently with what we're seeing in the U.S. in certainly in the Western European markets.

So I think there was a good opportunity there and we're excited about that opportunity.

Certainly as it relates to Jumeirah pricing Oh, we're obviously in the process of going through all of our managed care and I'd say you know, we're we're far into that pricing for or that contracting process or 2020, I don't view any significant change in the dynamics.

Around humira pricing.

In 2020, there would be significantly different from what we've seen in 2019.

Thanks, Karen Operator next question please.

Operator: Thanks, Terence. Operator, next question, please. Thank you. Our next question is from Steve Scala from Cowan. Thank you. Congratulations on a very well-executed quarter. Despite all the investor apprehension, Humira Foreign has beaten three quarters in a row. How is that success split between regions where there are biosimilars, and AbbVie is just delivering despite the pressure, and regions where patents are still in force? So that's the first question.

Thank you. Our next question is from Steve Scala from Cowen.

Thank you congratulations on a very well executed quarter. Despite all the investor apprehension Humira four in has beaten three quarters in a row. How is that success split between regions, where there are bio similars in Abbvie is just delivering despite the pressure.

And regions, where patents are still in force. So that's the first question and then second it seems like the L. again closing might be earlier than generally thought.

Rick Gonzalez: And then second, it seems like the

Rick Gonzalez: Again, closing might be earlier than generally thought, as the company had been saying.

The company had been saying Q1, but in the release. It says early 2020, which kind of implies January so what what key steps have been achieved earlier than expected to allow for that earlier closing. Thank you.

Rick Gonzalez: [inaudible]

Rick Gonzalez: of implies January. So what key steps have been achieved earlier than expected?

Rick Gonzalez: Thank you.

Rick Gonzalez: So if you look at, you are correct, Steve, this is Rick, on OUS Humira, I think if you go back to our guidance in the fourth quarter of last year, we guided for overall erosion at about 30%, as Rob said in his comments, our forecast now is that that erosion will come in at about 28%, so, you know, slightly lower than what we expected, and you've seen that in each of the quarters, as you I would say the bulk of that is slightly better performance in areas where biosimilars are impacting the market. There is a portion of it that's a little better performance in the other markets as well, but the majority of it is driven by stabilization of pricing in those markets at a level that came earlier than we would have expected. As far as the closing is concerned, I don't think we were trying to telegraph an earlier date if that's how the market interpreted it. We are making good progress on the Allergan closing. The integration activities are going extremely well.

Yeah.

So if you look if you are correct Steve This is Rick.

On Oh, you as humor I think if you go back to our guidance.

The fourth quarter of last year, we guided to overall erosion.

And about 30%.

As Rob said in his comments.

Our forecast now is that that erosion will come in at about 28%, so slightly lower than what we expected you've seen that in each of the quarters as you indicated we've over achieve.

I would say the bulk of that is slightly better performance in the areas, where bio similars are impacting the market.

There is a portion of that there's a little better performance in other and the other market as well, but the majority of it is driven by stabilization of pricing.

In those markets at a level that came earlier than we would have expected.

As far as the closing instance, soon I don't think really trying to telegraph an earlier date, if that's a if that's how the market interpreted it we are making good progress on the Allegan closing integration activities are going.

Certainly well, we're obviously managing that are very tightly.

Rick Gonzalez: You know, we're obviously managing that very tightly. As Laura indicated a few minutes ago, the regulatory processes are advancing. But we'd like to stay with the current guidance that we've had, and that is a first quarter close. Obviously, we'd like to close it as rapidly as we can, and we're pursuing that activity to get that done. But at this point, I wouldn't want to change what the original guidance was. So if that's how it was interpreted, that was not our intent.

As Laura indicated a few minutes ago, the regulatory processes are advancing but we'd like to stay with the current guidance that we've had and that is a first quarter close obviously, we'd like to close it as rapidly as we can't and where we're pursuing that activity to get that done but at this point I wouldn't want to change.

And with the original guidance was so that's how it was interpreted that was not our intent.

Thanks, Steve Operator next question please.

Rick Gonzalez: and Ted.

Operator: Thanks Steve. Operator, next question, please.

Thank you. Our next question is from Andrew Baum from Citi.

Operator: Thank you. Our next question is from Andrew Baum from Citi.

Thank you couple of questions. Please I'm focused on Washington, I'm, obviously very dynamic, but the Senate Finance Committee proposal, probably has more like the most within that that is a proposal to fund the cap of out of pocket spend through funding of the catastrophic conference periods.

Rick Gonzalez: A couple of questions, please. First, on Washington. Obviously, it's very dynamic, but the Senate Finance Committee proposal probably has more legs than most. Within that, there is a proposal to fund a cap on out-of-pocket spend through funding of the catastrophic coverage period from both pharma as well as the planned sponsors. Thinking about Imbruvica, how do you balance the impact of that? I'm thinking on the positive side of increased volumes due to compliance adherence versus the negative of both the direct hits in net revenues but also the indirect hit from pairs playing you off against competitors, including CalQuint, in order to claw back economics. The second question is about cirrhotic arthritis. So both Novartis and Lilly have failed to show ACR 20 improvements in the frontline setting versus QMira.

<unk> as well as the plan sponsors thinking about imbruvica, how cheap balance the impact of that I'm thinking on the positive signs of increased volumes due to compliance inherits versus a negative direct hits net revenues, but also being direct hit from past playing you off against competitors increasing.

Calculated it will settle back economics.

The second question is cirrhotic arthritis, so both Novartis Lilly have failed to show a CR 20 improvements in frontline setting versus humira.

Given youre waiting data next year field trial are you confident that removal will enable you to do that I know, it's dangerous, making cross trial composites. The second line from what you will present today doesn't matter Saturday provides significant issuance, but I'm interested in that and then finally could you comment on the infection.

Rick Gonzalez: Given you are awaiting data next year for your trial, are you confident that RIMVOC will enable you to do that? I know it's dangerous. Making cross-trial comparisons in the second line from what you've presented today doesn't necessarily provide significant reassurance, but I'm interested in that. And then, finally, could you comment on the infection rate that you saw with RIMVOC in the 30-milligram arm of the cirrhotic arthritis trial versus placebo? Many thanks.

But you still would result in the stats you medical them.

Of the Cirrhotic arthritis trial this is tresiba manufacturer.

Hi, This is Rick I'll cover the first one I'll have Mike covered the other two.

Mike: All right, Andrew, this is Rick. I'll cover the first one. I'll have Mike cover the other two. You know, certainly, as you indicated, the situation is still pretty dynamic, although I'd say it's been a little quieter over the last month or two than it had been across the summer. But I still think there's a lot of interest and a lot of activity that's still going to continue to look at ways to try to open up access and affordability, particularly for the Medicare population. And I think that's appropriate. I will tell you, we as a company support that. We do believe we need to make medicines more affordable for Part D patients. The Senate Finance Bill goes in a direction that I think is helpful. It takes those out-of-pocket costs down from where they are today. On a therapy like Imbruvica or even a therapy like Humira, as an example, it takes them down fairly significantly to an out-of-pocket cost of about $3,000 or $3,100.

You know certainly as you indicated the situation is still pretty dynamic, although I'd say, it's a little of wire.

Over the last month or two.

There had been across the summer, but I still think there there's a lot of interest and a lot of activity. That's still going to continue to look at ways to try to open up access and affordability, particularly in them and the Medicare population and I think thats appropriate I would tell you we as a as a company support.

We do believe.

We need to make medicines more affordable to part D patients. The Senate finance build goes a in a direction I think is helpful.

It takes those out of pocket costs down from where they are today, a therapy like imbruvica or even a therapy like humira as an example, it takes them down fairly significantly due.

Went out of pocket cost, it's about 3000 or $3100, a I would say, we still fundamentally believe that's too high for most Medicare patients average Medicare patient as an income of $26000. We think it needs to be more in the neighborhood of you know something below $2000.

Rick Gonzalez: I would say we still fundamentally believe that it's too high for most Medicare patients. The average Medicare patient has an income of $26,000. We think it needs to be more in the neighborhood of, you know, something below $2,000. And, you know, our government, various people are working to try to articulate that position. The other issue with it is that it's still front-end loaded throughout the year.

And.

Our government affairs people are working to drive to articulate that position. The other issue with it is there's still front end loaded in the year. So from a cash flow standpoint, the patient has to come up with that $3100. In the first two months typically are the first three months and most of these individuals don't have that kind of cash flow. So.

Rick Gonzalez: So, from a cash flow standpoint, the patient has to come up with that $3,100 in the first two months, typically, or the first three months. And most of these individuals don't have that kind of cash flow. So, coming up with a structure that would allow it to be spread across the full year would be, certainly, a more reasonable approach to allow those patients affordability. As it relates to funding in the catastrophic area, certainly, if you look at trying to make these drugs more affordable to patients and have broader access, someone has to pay for that. And, certainly, I can't speak for the entire industry, but I can speak for AbbVie. You know, we have said, and when I testified before the Senate Finance Committee, I said, we are willing to step up and cover more of that cost.

I was coming up with a structure that were allowed to be spread across the full year or would be certainly a more reasonable approach to allow those patients affordability as it relates to to the funding in the catastrophic area.

Certainly if you look at trying to make a these drugs more affordable to patients and have broader access someone has to pay for that and certainly a I can't speak for the entire industry, but I can speak for as you know, we have said and and lag testified at the Senate Finance Committee.

I said, we are willing to step up and cover more that costs, you know healthcare plans have to pay more other costs and obviously the government needs to pay a piece of that as well it moves in that direction, although I will say.

Rick Gonzalez: You know, healthcare plans have to pay more of the cost, and, obviously, the government needs to pay a piece of that as well. It moves in that direction, although I will say that the way they've structured it so far, it is more punitive or more costly to companies that have more innovative therapies, and it actually gives a benefit to certain companies who have drugs where the total cost would be below $6,000 per year. I don't think that was the intent.

The way they've structure. The so far it is more punitive or more costly to companies that have more innovative therapies and it actually gives a benefit to certain companies who have drugs, where the total costs would be below $6000 per year I don't think that was the intent I doubt seriously.

They were trying to give a benefit to to any specific company. So really looking at where that threshold is and the overall percentage in the catastrophic phase is something that would be an important important aspect of a month modification to this bill, but I'd say it.

Rick Gonzalez: I doubt, seriously, they were trying to give a benefit to any specific company. So, re-looking at where that threshold is and the overall percentage in the catastrophic phase is something that would be an important aspect of modification to this bill, but I'd say it moves in the right direction. Specifically to answer your question about volume, we have looked carefully, not just at Imbruvia, but across our entire portfolio. We do believe there will be some volume increase. Net-net, I can tell you the volume isn't enough to offset the overall cost, but I think in the grand scheme of where we want to go with this, I think this is a reasonable approach and, with some modifications, I think it could have a meaningful impact on the issue and potentially put the debate to rest. So it's something that, with some modifications, I'm supportive of.

Moves in the right direction, specifically to answer your question about volume we have looked terribly not just did imbruvica, but across our entire portfolio. We do believe there will be some volume increase net net I can tell you the volume isn't enough to offset the overall cost, but I think in the Grand scheme of where we want to go.

With this I think this is a reasonable approach in with some modest with some modifications I think he could having meaningful impact on the on the issue and and potentially put the debate to rest so it's something that with modifications.

Or the above it.

Mike This is Mike I'll take that question on Psoriatic arthritis, one thing that's important to keep in mind is that the study that we just released is in a bio IR population and in fact, it was in a pretty heavily pretreated bio IR population, where a number of patients had failed two or three prior biologic demarche and despite that we drove.

Mike: This is Mike. I'll take the question on psoriatic arthritis. One thing that's important to keep in mind is that the study that we just released is in a bio-IR population, and in fact, it was in a pretty heavily pretreated bio-IR population where a number of patients had failed two or three prior biologic DMARDs. And despite that, we drove very high levels of response at the ACR20 level and higher levels on the joint endpoints.

Very high levels of response at the as you are 20 level and at higher levels on on the joint endpoints and if you look at the placebo subtracted differences there entirely in line with our expectations. So you know these data would increase our confidence in the overall program and our and our ability to hit.

Mike: And if you look at the placebo-subtracted differences, they're entirely in line with our expectations. So these data would increase our confidence in the overall program and our ability to hit our marks in the second study, which includes not only the head-to-head comparison but also the structural endpoint. The second thing that I would add is that that second study is a very large and robust study because it has those structural endpoints, so it's very well-powered to show the effects that we would expect to see. So we remain confident in the head-to-head and in our overall psoriatic arthritis program. And then on the third part of your question with respect to infection rates, in the data that we just released in psoriatic arthritis, we did see numerically higher rates of infections and serious infections at the 30 milligram dose.

Marks in the the second study, which includes not only the head to head comparison, but also the structural endpoint. The second thing that I would add is that that second study is a very large and robust study because it has a structural endpoints. So it's very well powered to show the effects that we would expect to see so.

We remain confident in the head to head in our and in our overall ceramic arthritis program.

And then on the third part of your question with respect to infection rates in the data that we just released in Psoriatic arthritis, we did see numerically higher rates of infections and serious infections in the 30 milligram dose thats not uncommon in a therapeutic Immunomodulator class is our first study we're gonna have to see how that second study plays out.

Not only with respect.

To the safety parameters, but also with respect to that dose response that we see or do not see across doses on on the joints and other endpoints and we'll make a determination of the most appropriate dose to carry forward based on that complete dataset as we did an all right.

Thanks, Andrew Operator next question please.

Mike: That's not uncommon in a therapeutic immunomodulator class, but this is our first study. We're going to have to see how that second study plays out, not only with respect to the safety parameters but also with respect to the dose response that we see or do not see across doses on the joints and other endpoints, and we'll make a determination of the most appropriate dose to carry forward based on that complete data set, as we did in RA.

Thank you. Our next question is from Geoffrey Porges from STB Leerink.

Thank you very much and I appreciate the questions congratulations on the strong results.

Two questions for most first cluster imbruvica.

Could you give us a sense so whether you really think a significant.

Well, you know CLL patients could really be treated with a million chemo.

On Cdtwenty regimen, and how are you thinking about the duration of pledged so in that setting because it could be potentially transformational.

Operator: Thanks, Andrew. Operator, next question, please. Thank you. Our next question is from Jeffrey Porges from SVB Larynx.

And then we could you just talk a little bit about capital allocation I'm sure. There's some related to up to that the dividend went up.

Operator: Thank you very much, and I appreciate the questions. Congratulations on the strong results. Two questions from me. First, on VanCleister and Bruvica.

Even close to closing the transaction could you talk about how confident you feel about the outlook for the dividends and your ability to continue the long record of dividend increases. Thanks.

Mike: Give us a sense of whether you really think a significant volume of CLL patients could really be treated.

Mike: [inaudible]

Mike: This is Mike. I'll take the first part of your question on VenClexta and Imbruvica combination use in CLL. I mean, we do think there's a very meaningful opportunity there. When you look at the CLL population, it's a heterogeneous group that ranges from patients who develop CLL later in life and have a number of comorbidities. Those patients today tend to receive creature progression therapy with Imbruvica. We're seeing that shift very strongly as we've released those Imbruvica data.

[noise]. This is Mike I'll take the first part of your question on Venclexta and Imbruvica combination use in CLL, we do think Theres, a very meaningful opportunity. There. When you look at the CLL population, it's a heterogeneous group.

That ranges from patients who develop see out later in life and have a number of co morbidities those patients today tend to receive three to progression therapy with Imbruvica, we're seeing that shift very strongly as we've released those imbruvica data, but there are other patients patients who develops hill earlier in life.

Mike: But there are other patients, patients who develop CLL earlier in life, patients who have less comorbid illness, who are interested in treatment intensification and getting very, very deep responses. And for those patients, in particular, the VenClexta and Imbruvica combination, I think, is very compelling based on the data that we've generated to date. We see very deep responses.

Patients have less come more but illness, who are interested in treatment intensification and getting very very deep responses and for those patients in particular, the venclexta Imbruvica combination I think is is very compelling based on the data we generated to date, we see very deep responses, we'd expect that to to translate into.

Mike: We'd expect that to translate into long disease-free intervals, and we think it's a therapy that will be an important treatment option. With respect to the specific duration, that's going to be tailored based on the data to individual settings, but those combination regimens do tend to have fixed-duration therapy.

Long disease free intervals.

And we think it's a it's a therapy that will be an important treatment option with respect to this specific duration, that's going to be tailored based on the data to individual settings, but.

But those combination regimens do tend to have fixed duration therapy.

Okay.

Mike: Okay. Hi, this is Rick.

Hi, This is Rick I'll take the capital allocation was and let me, let me start maybe with more broadly about capital allocation.

Rick Gonzalez: I'll take the capital allocation question. Let me start maybe with a more broad view of capital allocation. You know, we have basically three priorities when we look at capital allocation. We want to invest in the business, we want to continue to drive a strong and growing dividend, and we want to pay down debt. And those are our priorities for us.

Yeah, basically three priorities when we look at capital allocation, we want to invest in the business. We want to continue to drive a strong and growing dividend and we want to pay down debt and those are the priorities for us we haven't debt pay down plan that we have put in place that's consistent with the objectives.

Rick Gonzalez: We have a debt paydown plan that we have put in place that's consistent with the objectives that Rob indicated in his formal comments, and that will be something that we will absolutely drive towards. Now, we're fortunate that we're in a business that generates a tremendous amount of cash flow, and the combination of Allergan and AbbVie together will generate very, very significant cash flow. And so we have the luxury that we're able to do both, and we certainly would not have increased our dividend double-digitally now if we had any concerns about that going forward. So I can tell you we are committed to a strong and growing dividend, and we're committed to paying down debt, and we have the ability to be able to do both. And I think the dividend increase that we're announcing today is a reflection of our confidence in that cash flow generation. Thank you.

That Rob indicated in his in his formal comments.

And that will be something we will absolutely drive towards now we're fortunate that we're in a business that generates a tremendous amount of cash flow and the combination of Allergan and abbvie together will generate very very significant cash flow and so we have the luxury that we're able to do both and we certainly would not have increased.

Our dividend double digit now if we had any concerns about that going forward. So I can tell you. We are committed to a strong and growing dividend and we're committed to paying down debt and we had the ability to be able to do both and I think the dividend increase that were that we're announcing today is a reflection of our comp.

But it's a in that cash flow generation.

Thank you.

Operator: Thanks Jeffrey. Operator, next question, please.

Thanks, Jeffrey Operator next question please.

Thank you next question is from Tim Anderson from Wolfe Research.

Operator: Thank you. Our next question is from Tim Anderson from Wolf Research.

Thank you.

Mike: Going back to ASTRO's CalQuint, if that product is able to show differentiation either on side-by-side analysis to your product or in the head-to-head that reports out next year, where does that come from, in what form does that come? Is that likely to be efficacy or safety? And I understand the commercial dynamics might still keep them on the sidelines, but in terms of what the clinical data shows with these next-gen products like CalQuints, if it were to be better, where would that be?

Going back to Astros Cal Quince.

Yes that.

It is able to show differentiation either on side by side analysis to your product or in the head to head. The reports out next year, where does that come in what form does that come is that likely to be ethic of C.

Or on safety and I understand the commercial dynamics still might keep them.

On the sidelines, but in terms of what the clinical data shows with these next gen products like how clients.

If it were to be better where would that be and then second question on on allergy on obviously a lead asset is botox wondering if you can give us some indication of your view of the products.

Rick Gonzalez: And then a second question on Allergan. Obviously, a lead asset is Botox. I'm wondering if you can give us some indication of your view of the product's durability over an extended period of time in your long-range planning assumptions. [inaudible] Okay.

Durability over an extended period of time in your long range planning assumptions.

And it off competition, while in the past, there's obviously certain new threats are on market now what is your long range planning assume that continued positive growth through the next decade at about the same rate for example.

Mike: So this is Mike. I'll take the first part on CalQuints. We really wouldn't expect to see differentiation on efficacy or safety, you know, based on our look at the data. We understand the positioning that some of the follow-on BTK inhibitors have put forward, but when we look at the data, they look like Me Too's, as Rick has said. If you look at like-for-like data in second-line CLL, for example, which is the only indication where they have publicly available Phase III data, and you line that up against our Phase III data, if you look at response measures, they look very, very similar, and that's despite the fact that in the SIRDA study, they had a median number of prior therapies of one prior therapy, and we had a median number of three prior It's a BTK inhibitor. And when you look at safety, that story has evolved as well. It started off with no bleeding and no AFib.

[laughter].

Okay. Mike. So this is Mike I'll take the first part on counts.

We really wouldn't expect to see differentiation on efficacy or safety you know based on our look at the data we understand the positioning that some of the follow on BTK inhibitors.

You know have have.

Put forward, but when we look at the data they look like me twos as Rick has set.

If you look at like for like data in second line CLL for example.

Which is the only indication where they have filed publicly available phase three data and and you line that up against our phase three data if.

If you look at response measures. They look very very similar and that's despite the fact that in the sort of study. They had a median number of prior therapies of one prior therapy and we had immediate number of threed. Prior therapies. So much more heavily treated patient population and yet the same efficacy results so thats not indicative.

Of of likely differentiation in our mind and you wouldn't expect that based on an action. It's a BTK inhibitor and when you look at safety that story has evolved as well.

It started off is no bleeding in no way fit now we see both of those in their label and those events are showing up in their larger scale clinical trials as well and it.

Mike: Now we see both of those in their label, and those events are showing up in their larger-scale clinical trials as well. And if you go back to that same study comparison that I talked about, you see rates of AFib that actually look pretty similar if you look at corresponding time points. So we don't really see differentiation there either, either, and it's important to keep in mind that labels evolve over time. If you look at how our label has evolved, as we have unblinded multiple large Phase III trials and also accumulated extensive post-marketing experience, things get added to your label, and that's the natural course of a product's life cycle over time. If you look at their label today compared to Imbuvica's label at a corresponding time point, they look pretty similar. So to our eye, these look like MeToos, and we wouldn't expect to see that differentiation.

Go back to that same study comparison that I talked about you see rates if they fit that actually look pretty similar if you look at a corresponding time points. So we don't really see differentiation there either it's important to keep in mind that labels evolve overtime. If you look at how our label has evolved.

As we have unblinded.

Multiple large phase three trial and also accumulated extensive post marketing experience things get added to your label and that's the natural course of products lifecycle overtime. If you look at their label today compared to them. We look is label.

At a corresponding time point, they look pretty similar so it's all right. These these looked like me.

Susan we wouldn't expect to see that differentiation.

Okay. This is Rick I'll answer your second question about both Doug I'm going to answer it in the backdrop of the work that we did a as it relates to the acquisition market research that we did leading up to the acquisition. So we look carefully at botox and the durability of both dogs, it's an important.

Rick Gonzalez: Okay, this is Rick. I'll answer your second question about Botox, and I'm going to answer it in the backdrop of the work that we did as it relates to the acquisition, the market research that we did leading up to the acquisition. So we looked carefully at Botox and its durability. It's an important product for Allergan, and I would tell you the Allergan organization, I think, has done an outstanding job with Botox. But if you look at competition, it comes in two forms, or it can potentially come in two forms.

For Allergan and I would tell you the Allergan organization I think has done an outstanding job with botox.

But if you look at competition. He comes in two forms or potentially can come into forms one other branded toxins, which is what they've experienced thus far and we expect to see more other branded dioxins.

Rick Gonzalez: One, other branded toxins, which is what they've experienced thus far, and we expect to see more other branded toxins. And I would tell you that what the market research clearly told us is that the brand equity of Botox in the channels that they operate is so strong that it is extremely difficult for those practices to operate without offering Botox because many patients, when they walk in the door, ask for it by name. And because of that, they have a bundling program that has been extremely effective at being able to manage the competitive dynamics around this asset quite well. And in fact, I would say, as we built our model for the Allergan transaction, we built, and we've said this a number of times, we built a fairly conservative model, and we did that across virtually every single product. And so our model is more conservative than what Allergan's current performance is, and it's certainly more conservative than their longer-range forecast.

And I would tell you that what the market research clearly told US is that the the brand equity of botox in the channels that they operate is so strong that it is extremely difficult for those practices to operate without offering botox because many patients when they walk in the door asked for it.

My name and.

And so because of that they have a.

They bundling program that has been extremely effective at being able to manage the competitive dynamics around this asset.

Quite well and in fact, you know I would say as we build our model for the Allegan.

Action.

We have built and we've said this a number of time, we've built a fairly conservative model and we did that across virtually every single product.

And so our model is more conservative than what the Allergan current performance as and it.

Certainly more conservative than than their longer range forecasts.

But it's still does project wrote for Botox going forward.

Rick Gonzalez: But it still does project growth for Botox going forward. I would say we watched their quarterly performance last quarter, and Botox, despite the fact that there was a lot of speculation that competition was going to have a big impact, performed very, very well. We'll see their performance here soon, but I would expect that Botox will continue to perform very well. And so I think that organization deserves a lot of credit for the way they've handled competition and the way they've continued to grow this brand quite well. The second aspect that you have to look at as it relates to Botox is whether or not you're going to see any biosimilars for Botox, and we've talked to investors in quite a bit of detail around here, but the short answer is, based on the uniqueness of this particular molecule, we have come to the conclusion that it would be extremely difficult to create a biosimilar version of Botox.

I would say we've watched a quarterly performance last quarter and botox. Despite the fact that are there was a lot of speculation in the competition was going to have a big impact.

Botox performed very very well, we'll see their performance here soon.

But but I wouldn't expect that botox will continue to perform very well and so I think that organization deserves a lot of credit for the when Theyve handling competition and the way they continue to grow this brand.

Quite well.

The second aspect is you have to look out as it relates to botox is whether or not you're going to see.

Bio similars.

For Botox, and we've talked to investors and quite a bit detail around here, but the short answer is.

Based on the uniqueness of this Bluetooth used or molecule.

We have come to the conclusion that it would be extremely difficult to create a.

Hey, Biosimilar version of both.

I've said I would tell you we we looked at this very extensively with a lot of outside expertise and we feel.

Rick Gonzalez: And I would tell you that we looked at this very extensively with a lot of outside expertise, and we feel very confident that that's the case. So, that was a long answer to basically say to you, we feel good about Botox, we feel good about our ability to continue to grow Botox, both in the aesthetics area and in the therapeutic area, and I think all of the data thus far only further supports our confidence.

We feel very confident that that's the case so that was a long answer to basically say to you. We feel good about botox, we feel good about our ability to be able to continue to grow botox both in the.

I think its area as well as the therapeutic area and.

I think all the data thus far only further supports our confidence.

Rick Gonzalez: Thank you. Thanks, Tim. Operator, next question, please. Thank you. And our next question is from Dave Risinger from Morgan Stanley.

Thanks, Dan Operator next question please.

Thank you and our next question is from Dave racing or from Morgan Stanley .

[noise].

Operator: Thank you.

Thank you very much.

Operator: Thank you very much. Obviously, the results were quite amazing.

So obviously the results were quite impressive I just had a question on the gross margin. So that was down slightly sequentially to 82.0% could you just comment on that and the outlook.

Operator: I just had a question on the gross margin. So that was down slightly sequentially to 82.0%. Could you just comment on that?

Rob: and the Outlook for AbbVie's Gross Margin.

For Abbvies.

Gross margin.

Rick Gonzalez: Second, with respect to a comment you made earlier, Rick, you said that Renvoke is capturing six percent.

Second with respect to comment you made earlier, Rick you said that written vocus, capturing 6% of in play our eight patients.

Rick Gonzalez: 6% of in-play patients are a patient. I was wondering if you have the SkyRISI in play, the psoriasis patient percentage as well. And then finally, with respect to Imbruvica, there was a recent blood article on the product's link with hypertension. Could you just comment on that and talk a little bit about how you are managing that? Thank you. David, this is Rob. I'll take your first question.

I was wondering if you have the sky receipt in play psoriasis patients percentages.

Well.

And then finally with respect to Imbruvica there was a recent blood.

Article on the products link with hypertension could you just a comment on that and.

Talk a little bit about how you are managing that thank you.

David This is.

Rob I'll take your first question. So if you look at our year to date gross margin profile or 82.7%.

Rob: So if you look at our year-to-date gross margin profile, we're at 82.7 percent. I've given guidance of approximately 82.5 percent for the year. The key thing to keep in mind is that within a particular quarter, you'll have sales mix, and it can be more pronounced, have a more pronounced impact on growth margin for a while. In Q3, we saw stronger sales from partner products like Imbruvica and VanClexta, as well as a seasonal impact from Synergist. But keep in mind that we also share expenses with our partners for Imbruvica and VanClexta, so that gross margin impact is offset in our expense profiles. So as a result, you can see that we've exceeded our guidance on the operating margin profile this quarter. We just achieved an all-time high of 48.4 percent. So it's really important when you think about those partner products to be really focused on operating margin as opposed to just gross margin.

I've given guidance of approximately 82 and half percent for the year. The key thing keep in mind within a particular quarter you off sales mix. It can be more pronounced have more pounds impact on gross margin profile Q3, we saw stronger sales from parter products like Imbruvica and Venclexta as well to.

Seasonal impact the synagis, but keep in mind that we also share expenses with our partners for Imbruvica and Venclexta. So that gross margin impact was offset our expense profiles. So as a result, you can see that we've exceeded our guidance on the operating margin profile. This quarter. We just achieved an all time high at 40.4%. So it's really important do you think about those partner products, we've really focused on operating margin as opposed to.

Gross margin.

Rick Gonzalez: And then David, this is Rick on Skyrizzy. The in-play psoriasis share for Skyrizzy is over 20% right now and growing pretty rapidly.

And then David this is work on Sky Rizzi, the in place psoriasis share from Sky reviews over 20% right now and growing pretty rapidly.

And this is Mike I'll take the a imbruvica question regarding hypertension.

Mike: And this is Mike. I'll take the Imbruvica question regarding hypertension. Hypertension has been seen with the clinical use of Imbruvica and other BTK inhibitors. And, you know, obviously, we believe that it's important to pay close attention to patient safety and that it needs to be managed effectively. And we think it is managed very effectively, both in clinical practice and in our clinical trial programs. If you look at the overall benefit-risk profile, it's very strong. We have released data from a number of Phase III studies across a wide range of settings, and that benefit-risk profile comes, I think, very clearly in all of our data. So we're very confident in the overall profile of the molecule, and we're managing hypertension, I think, quite effectively. Great, thank you.

So hypertension.

She has been seen with clinical use imbruvica and other BTK inhibitors, and obviously, we believe that it's important to pay close attention to patient safety and that it needs to be managed effectively and we think it is managed very effectively.

Both in clinical practice and in our clinical trial programs. If you look at the overall benefit.

If it risk profile is very strong we have for at least data from a number of phase three studies across a wide range of settings and that benefit risk profile comes or I think very clearly and all of our data. So we're very confident a in the overall profile of the molecule and we're managing a hypertension I think quite effectively.

Great. Thank you.

Mike: All right, thank you.

Operator: Thanks, David. Operator, we have time for one final question.

Thanks, David Operator, we have time for one final question.

And I am showing no further questions at this time.

Operator: And I am showing no further questions at this time.

Okay. Thanks, a lot that concludes today's conference call, if you'd like to listen to a replay of the call. Please visit our website at investors happy Dot com. Thanks again for joining us.

Operator: Okay, thanks a lot. That concludes today's conference call. If you'd like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us. Thank you, and this does conclude today's conference. You may disconnect at this time.

Thank you and this does conclude today's conference you may disconnect at this time.