Q3 2020 Abbvie Inc Earnings Call

October 30, 2020

[music].

Good morning, and thank you for standing by welcome to the Abbvie third quarter 2020 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 phone and I would now like to introduce Ms., Liz Shea Vice President of Investor.

Operator: Good morning, and thank you for standing by. Welcome to the AbbVie 3rd Quarter 2020 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 1 on your phone.

Operator: And I would now like to introduce Ms. 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 Savarino, Vice Chairman and President; Rob Michael, Executive Vice President and Chief Financial Officer; and 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 1996.

Relations.

Good morning, and thanks for joining US also on the call with me today are Rick is Alice Chairman of the Board and Chief Executive Officer, Michael Severino, Vice Chairman and President, Rob Michel Executive Vice President and Chief Financial Officer, and joining us for the Q and 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, including the impact of the COVID-19 pandemic on Abbvies operations results and financial results that may cause actual real.

Liz Shea: AbbVie cautions that these forward-looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on AbbVie's operations, results, and financial results that may cause actual results to differ materially from those indicated in the forum. Additional information about these risks and uncertainties is included in our 2019 Annual Report on Form 10-K and in our other SEC filings. AbbVie undertakes no obligation to On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand AbbVie. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website.

Hello to differ materially from those indicated in the forward looking.

Additional information about these risks and uncertainties is included in our 2019 annual report on form 10-K, and 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 abbvies ongoing business performance.

These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website.

Unless otherwise noted our commentary on sales growth is on a comparable operational basis, which includes full current year and historical results for Allergan and excludes the impact of exchange for this comparison of underlying performance. All historically reported allergy and revenues have been recast to conform to abbvies revenue recognition accounting policies.

Liz Shea: Unless otherwise noted, our commentary on sales growth is on a comparable operational basis, which includes full current year and historical results for Allergan and excludes the impact of exchange. For this comparison of underlying performance, all historically reported Allergan revenues have been recast to conform to AbbVie's Revenue Recognition Accounting Policies and exclude the divestitures of ZENPAP and Viagra. Following our prepared remarks, we'll take your questions. So with that, I'll now turn the call over to you. Thank you, Liz. Good morning, everyone.

And exclude the divestitures of Zenpad and bio case.

Following our prepared remarks, we'll take your questions. So with that I'll now turn the call over to Rick. Thanks.

Thank you Liz good morning, everyone and thank you joining us today.

Rick Gonzalez: 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.

I will discuss our third quarter performance in the high loads as well as our full year guidance, which we are raising again this quarter. Mike will then provide an update on recent advancements across our R&D programs and Rob will discuss the quarter in more detail.

Following our remarks, we'll take your questions.

Rick Gonzalez: Following our remarks, we'll take your questions. We delivered another excellent quarter with adjusted earnings per share of $2.83, exceeding the midpoint of our guidance range by $0.08. When I look at our business and the actions we've taken to position AbbVie for sustainable performance, including the acquisition of Allergan, I feel very good about our long-term outcome. The fundamentals are strong, and there is considerable momentum across our legacy and new portfolios, which are both demonstrating robust growth despite the COVID pandemic and together have the potential for significant long-term value creation. I'd like to specifically highlight our recent progress across several aspects of our business, including the launches of Renvoke and Skyrizzy, which are performing well ahead of all comparable launch analogs in their initial indications and continue to exceed our expectations. Our HEMON franchise also continues to deliver robust performance and is expected to generate more than $6.5 billion in revenue this year, representing strong double-digit growth.

Having delivered another excellent quarter with adjusted earnings per share of $2.83 exceeding the midpoint of our guidance range by eight cents.

When I look at our business and the actions we've taken the position abbvie for sustainable performance, including the acquisition of Allergan.

Very good about our long term outlook. The fundamentals are strong and there is considerable momentum across our legacy and new portfolios, which are both demonstrating robust growth. Despite the covance endemic and together have the potential for significant long term value creation.

I'd like to specifically highlight our recent progress across several aspects of our business, including the launches of RIN Vogan Sky reserves, which are performing well ahead of all comparable launch analogs in their initial indications and continued to exceed our expectations are hanging on for.

And Jives also continues to deliver robust performance and is expected to generate more than $6.5 billion in revenue this year.

Representing strong double digit growth.

New indications and novel combinations, including our recently announced collaboration with Genmab.

Rick Gonzalez: New indications and novel combinations, including our recently announced collaboration with GEMMAB and IMAB, provide opportunities for further revenue expansion. While we're still relatively early in the integration of Allergan, the strategic merits of the combination have never been more evident. We're already demonstrating that we have created a stronger, more diverse company with robust cash flows and multiple new growth vehicles for the long term. We now have the leading aesthetics franchise, which is demonstrating a strong V-shaped recovery, as well as a highly attractive neuroscience portfolio, which delivered double-digit growth on a comparable operational basis this quarter and has significant momentum with VELAR and our expanding migraine franchise, and our pipeline is advancing nicely, with numerous We're on track for the approval of more than a dozen new products or major indications over the next two years, which will collectively add meaningful revenue growth. This includes a total of six additional indications for Renvoke and Skyrizzy.

Hi, Mab provide opportunities for further revenue expansion.

Well, we're still relatively early in the integration of Allergan the strategic merits of the combination have never been more evident world.

We are already demonstrating that we have created a stronger more diverse company with robust cash flows and multiple new growth vehicles for the long term.

We now have the leading a steady expansion size, which is demonstrating a strong V shape recovery as well as a highly attractive neuroscience portfolio, which delivered double digit growth on a comparable operational basis. This quarter and has significant momentum with Baylor and our expanding Mike.

Grain franchise.

And our pipeline is advancing nicely with numerous attractive late stage programs that we believe will allow us to maintain a growing and vibrant business.

We're on track.

For the approval of more than a dozen new products or major indications over the next two years, which will collectively add meaningful revenue growth.

This includes a total of six additional indications for RIN broken skyrocketing expanded indications for Venclexta and several other near term product, a new product approvals, including a total Japan, good Clecs and 951.

Rick Gonzalez: Expanded indications for BenClexta and several other near-term new product approvals, including, Clearly, this is a very exciting time for AbbVie, and I'm pleased with the progress that we're making towards our long-term strategy for sustainable growth. I remain confident that we will continue to execute as we have in the past and deliver outstanding shareholder value going forward. I'd like to look further at our business performance. I'm pleased with the recent trends across our key growth areas. I'll start with immunology, where we've established strong trajectories for Ringo and Skyrizz.

Clearly this is a very exciting time for Abbvie and I'm pleased with the progress that we're making towards our long term strategy for sustainable growth.

I remain confident that we will continue to execute as we have in the past and deliver outstanding shareholder value going forward.

I'd like to look further at our business performance Im pleased with the recent trends across our key.

Key growth areas.

I'll start with immunology, where we have established strong trajectories for Rindo and Sky Rosy.

As I previously noted.

Rick Gonzalez: As I previously noted, both continue to perform well above expectations. In their initial indications, these two brands have clearly demonstrated superior efficacy to Humira, as well as other novel agents on the market or in development, resulting in significant in-play market shares, a leading indicator for long-term commercial performance.

Both continue to perform well above expectations in their initial indications. These two brands have clearly demonstrated superior efficacy to humira as well as other novel agents on the market or in development right.

Resulting in significant in play market shares a leading indicator for long term commercial performance.

The in place share.

We're really focused on re which includes both new and switching patients remained strong at approximately 16% and has now reached parity with our market leading humira and.

Rick Gonzalez: The RINVOC and RA, which includes both new and switching patients, remains strong at approximately 16% and has now reached parity with our market-leading Humira. And for psoriasis, Sky Rizzi has already achieved the leading in-play market share at 33%. This level of share capture at this stage of the launch is unprecedented.

In psoriasis Sky Rizzi has already achieved the leading in play market share at 33%.

This level of share capture at this stage of the launch is unprecedented.

And if sustained will ultimately lead to total market share well in excess of what was contemplated when we communicated our expectations through 2025 sales.

Rick Gonzalez: And, if sustained, will ultimately lead to total market share well in excess of what was contemplated when we communicated our expectations for 2025 sales. This strong performance and trajectory, despite the impact of the COVID-19 pandemic, is a testament to our differentiated product profile and our commercial execution. Our focus since the pandemic has been on driving accelerated patient activation, and we remain encouraged by our current prescription trend. Our recent performance continues to give us confidence in the near and long-term potential for both Renvoke and SkyRISI, which we now expect will deliver $2.2 billion in combined revenue for full year 2020, well exceeding our original projections for this year.

The strong performance in trajectory despite the impact of the COVID-19 pandemic.

There is a testament to our differentiated product profile and our commercial execution.

Our focus since the pandemic has been on driving accelerated patient activation.

And we remain encouraged by our current prescription trends.

Our recent performance continues to give us confidence in the near and long term potential for both RIN vote and Sky reserves.

Which we now expect will deliver $2.2 billion in combined revenue for full year 2020, well.

Well exceeding our original projections for this year.

In addition through outstanding commercial momentum, we're also making excellent progress with bring Goeken Sky Rizzi in new indications, which we expect will further strengthen our leadership position.

Rick Gonzalez: In addition to outstanding commercial momentum, we're also making excellent progress with Ringgold and Skyrizzy in new indications, which we expect will further strengthen our leadership position. We have already started planning and preparing for the forthcoming approval of three additional RINVOC indications next year, including psoriatic arthritis and ankylosing spondylitis, giving us complete coverage across the more than $40 billion rheumatology segment. We also expect approval in atopic dermatitis, another large and growing market that has the potential to be a multi-billion dollar peak revenue. [inaudible] In the coming year, we also intend to submit regulatory applications for SCIRIS-E in psoriatic arthritis and both agents in the area of inflammatory bowel disease.

We have already started planning and preparing for the forthcoming approval of three additional remote indications next year, including cirrhotic arthritis, and ankylosing spondylitis.

Giving us complete coverage across the more than $40 billion Rheumatology segment.

We also expect approval in any topic dermatitis, another large and growing market that has the potential to be multibillion dollar peak revenues for rindo.

In the coming year, we also intend to submit regulatory applications for Sky Rizzi in Psoriatic arthritis, and both agents in the area of inflammatory bowel disease for more than $20 billion market today with high unmet need overall.

Rick Gonzalez: A more than $20 billion market today with high unmet needs. Overall, I'm extremely pleased with the progress we're making on both Renvoke and SkyRisen. I'd also like to take this opportunity to announce that we will be hosting an immunology-focused Investor Day in December, where we intend to further discuss our strategy, progress, and expectations for this important growth area. Additional details will be forthcoming. Turning now to HEMA, which delivered robust double-digit growth again this quarter and remains an important therapeutic area for AbbVie's long-term performance. Imbruvica has a strong position across multiple indications, including CLL, where it remains the clear market share leader across all lines of therapy. Rubica sales increased 9% on an operational basis this quarter despite lower new patient starts within CLL where the market remains below pre-COVID levels. Then Clexta sales increased nearly 60% on an operational basis this quarter. The penetration across our approved indications remains strong, especially in AML, given the potential aggressive disease progression of that cancer. In the quarter,

Overall I'm extremely pleased with the progress we're making on both RIN, both and Sky Reserve.

I'd also like to take this opportunity to announce that we will be hosting an immuno immunology focused investor day in December where we intend to further discuss our strategy progress and expectations for this important growth area additional details will be forthcoming.

Turning now to human.

Which delivered robust double digit growth again, this quarter and remains an important therapeutic area. Brad These long term performance in.

Imbruvica has a strong position across multiple indications, including CLL, where it remains the clear market share leader across all lines of therapy.

Imbruvica sales increased 9% on an operational basis this quarter, despite lower new patient starts within CLL, where the market remains below pre govan levels Venclexta sales increased nearly 60% on an operational basis this quarter.

The penetration across to our approved indications remain strong, especially in AML, given the potential aggressive disease progression of that cancer.

In the quarter.

We also announced a strategic collaboration with Imap.

Rick Gonzalez: We also announced a strategic collaboration with IMAP, further expanding our oncology portfolio with an anti-CD47 monoclonal antibody that has potential across a wide range of blood cancers. The IMAB opportunity adds to our already attractive GenMabs CD3xCD20, Expanded Indications for VanClexta, and several promising early-stage programs. We also now have another high-performing franchise in neuroscience, which further diversifies Ab VALAR sales increased strongly double digits again this quarter on a comparable operational basis with annualized revenues of more than $1.4 billion.

Further expanding our oncology portfolio with the anti CD 47, monoclonal antibody, which has potential across a wide range of blood cancers.

The imap opportunity adds to our already attractive oncology pipeline, which includes new better KLAX Genmab cdthree by CD 20 expanded indications for band collects data and several promising early stage programs.

We also now have another high performing franchise in neuro science, which further diversifies abbvie sources of long term growth.

Well, our sales increased strong double digits again this quarter on a comp comparable operational bases with annualized revenues of more than $1.4 billion, yes.

Given bail ours benefit risk profile relative to other atypical antipsychotics.

Rick Gonzalez: Given Baylor's benefit-risk profile relative to other atypical antipsychotics, we remain confident in its long-term growth potential, which we believe is multibillion dollars across the currently approved indications of bipolar disorder and schizophrenia. Botox Therapeutics, which has nearly a dozen medical treatment indications, including chronic migraine, is also performing very well. Revenues were up nearly $100 million sequentially on a comparable operational basis, demonstrating a rapid COVID recovery. The launch of Ubrelvi, our leading oral CGRP for acute migraine, is exceeding our expectations.

We remain confident in its long term growth potential, which we believe is multi billion dollars across the currently approved indications of bipolar disorder and schizophrenia.

Botox Therapeutics, which has nearly a dozen medical treatment indications, including chronic migraine is also performing very well.

Revenues were up nearly $100 million sequentially on a comparable operational basis, demonstrating our rapid cobot recovery.

The launch of new Belviq, our leading or CRP for acute migraine is exceeding our expectations commercial access is ramping strongly and increasing DTC investments have resulted in encouraging new patient starts and market expansion.

Rick Gonzalez: Commercial access is ramping strong, and increasing DTC investments have resulted in encouraging new patient starts and market expansion. When you consider our overall scale with Botox Therapeutics, Uwell-V's acute treatment profile, and the promising development of Atojapan for the prevention of episodic and chronic migraine, we see substantial room for long-term revenue growth with this best-in-class migraine portfolio. Within aesthetics, our fourth major growth platform, we're seeing robust demand trends and a rapid V-shaped recovery. Total global aesthetic revenues of more than $950 million were up 70% sequentially on a comparable operational basis, illustrating the significant underlying demand for both Botox Cosmetic and Juvedo.

When you consider our overall scale with Botox Therapeutics you grow these acute treatment profile and the promising development of a total Japan for the prevention of episodic and chronic migraine, we see substantial room for long term revenue growth with this best in class migraine port.

Polio.

Within a statics, our fourth major growth platform, we're seeing robust demand trends and a rapid V shape recovery.

Total global as statics revenues of more than $950 million were up 70% sequentially on a comparable operational basis illustrating the significant underlying demand for both botox cosmetic and juvederm.

We remain focused on supporting clinics through to covert pandemic and expect consistent investment in consumer promotion to expand the aesthetics market, which remains underpenetrated globally.

Rick Gonzalez: We remain focused on supporting clinics through the COVID pandemic and expect consistent investment in consumer promotion to expand the aesthetics market, which remains underpenetrated globally. Our dedicated R&D and business development are expected to sustain new innovation and rapidly expand our aesthetics portfolio for long-term growth, including the recently announced acquisition of Luminera, which provides us with a complementary dermal filler portfolio and pipeline. Overall, we're very pleased with the momentum that we're seeing with our aesthetics franchise. AbbVie's business continues to remain resilient and demonstrate strong underlying growth throughout the pandemic. Based on the performance this quarter and our progress year-to-date, we're raising our full-year 2020 EPS guide. We now expect adjusted earnings per share of $10.47 to $10.49, reflecting growth of more than 17% at the midpoint. In addition to the excellent progress we're making across the portfolio, the integration of Allergan continues to go very well. Despite the size of this transaction and the timing of the COVID pandemic, the transition has been seamless. We're performing very well against both our synergy and accretion targets.

Our dedicated R&D and business development are expected to sustain new innovation and rapidly expand our steady portfolio for long term growth.

Including the recently announced acquisition of Lumen era, which provides us with a complimentary dermal filler portfolio and pipeline.

Overall, we're very pleased with the momentum that we're seeing with our steps franchise.

Abbvies business continues to remain resilient and demonstrate strong underlying growth throughout the pandemic.

Based on the performance this quarter and our progress year to date, we are raising our full year 2020 EPS guidance.

We now expect adjusted earnings per share of $10.47 to $10.49, reflecting growth of more than 17% at the midpoint.

In addition to the excellent progress we are making across the portfolio.

The integration of our Gan continues to go very well.

Despite the size of this transaction and the timing of the covert pandemic. The transition has been seamless we're performing very well against both our synergy and accretion targets.

And it has become increasingly clear to us that there are also opportunities for revenue synergies across various aspects of the business.

Rick Gonzalez: And it has become increasingly clear to us that there are also opportunities for revenue synergies across various aspects of the business. We're now six months post-closing, and the strategic merits of the transaction are extremely evident. Allergan is providing additional growth platforms, robust financial benefits, and greater diversity in our business. We remain confident that the newly combined business will generate significant earnings and cash flow to support continued investment in our innovative R&D platform, as well as a strong and growing dividend, while also allowing us to rapidly pay down debt. To that end, as noted in our news release, today we're announcing a 10.2% increase in our quarterly cash dividends, from $1.18 per share to $1.30 per share beginning with the dividend payable on February 21.

We're now six months post close and the strategic merits of the transaction are extremely evident.

Allegations, providing additional growth platforms robust financial benefits and greater diversity of our business.

We remain confident that the newly combined business will generate significant earnings and cash flow to support continued investment in our innovative R&D platform as well as a strong and growing dividend, while also allowing us to rapidly pay down debt.

To that end as noted in our news release today, we are announcing a 10.2% increase in our quarterly cash dividends from.

From a dollar and 18 cents per share to $1.30 cents per share beginning with the dividend payable in February 21.

Since inception, we have grown our quarterly dividend by 225%.

Mike: Since inception, we have grown our quarterly dividend by 225%. So, in summary, we continue to demonstrate strong execution across our portfolio and remain encouraged by the overall recovery trend. We've assembled an impressive set of diversified growth assets with significant growth potential, giving us a high degree of confidence in the long-term outlook for our business. With that, I'll turn the call over to Mike.

So in summary, we continue to demonstrate strong execution across our portfolio and remain encouraged by the overall recovery trends.

We've assembled an impressive set of diversified growth assets with significant growth potential, giving us a high degree of confidence in the long term outlook for our business with that I'll turn the call over to Mike.

Thank you Rick weak.

Mike: Thank you, Rick. We continue to make great progress across all stages of our pipeline, and this morning, I'll highlight key events since our last earnings call. Starting with immunology, where we achieved several major milestones, including submission of our U.S. and European regulatory applications for RINVOC in ankylosing spondylitis and atopic dermatitis. We expect regulatory decisions in the first half of 2021 for both indications, as well as for psoriatic arthritis, which was submitted for regulatory review earlier this year.

We continue to make great progress across all stages of our pipeline and this morning I'll highlight key events since our last earnings call.

Starting with the immunology, where we achieved several major milestones, including submission of our us and European regulatory applications for Rainbow and ankle dosing spondylitis and atopic dermatitis.

We expect to regulatory decisions in the first half of 2021 for both indications as well as for Psoriatic arthritis, which was submitted for regulatory review earlier this year.

Within the Rheumatology segment, both Soriana current readiness and ankylosing spondylitis are large and important markets and represent a significant growth opportunity for rent bulk.

Mike: Within the rheumatology segment, both psoriatic arthritis and ankylosing spondylitis are large and important markets and represent a significant growth opportunity for RINVO. We will highlight the growing body of data from our rheumatology portfolio at the upcoming virtual ACR conference, where we'll present 35 abstracts from multiple assets across our portfolio, including six selected for oral presentation. Atopic dermatitis is a new disease area for AbbVie and also represents an important area of growth for our immunology franchise going forward. Based on the data generated in our registrational program, we remain very confident in the benefit-risk profile for RINVOC and atopic dermatitis and believe it will offer meaningful advantages over products on the market today or in development. Beyond the Phase III studies that support our regulatory submission, we are also evaluating RINVOC in a head-to-head Phase III trial against dupilumab, which, if successful, will help further support RINVOC as a highly differentiated therapeutic option for patients with atopic dermatitis.

We will highlight the growing body of data from our rheumatology portfolio and the up at the upcoming virtual HCR Congress, where we'll present 35 abstracts from multiple assets across our portfolio, including six selected for oral presentation.

A topic dermatitis is a new disease area for Abbvie and also represents an important area of growth for our immunology franchise going forward.

Based on the data generated in our Registrational program, we remain very confident in the benefit risk profile for Invokana atopic dermatitis and believe it will offer meaningful advantages of our products on the market today or in development.

Beyond the phase three studies that support our regulatory submission. We are also evaluating them in bulk in a head to head phase three trial against Dupilumab, which if successful will help further support renewals as a highly differentiated therapeutic option for patients with atopic dermatitis.

We look forward to seeing data from this head to head study later this quarter.

Mike: We look forward to seeing data from this head-to-head study later this quarter. In the area of inflammatory bowel disease... We remain on track to see induction data later this quarter from our Phase 3 program for RINVOC and ulcerative colitis. We'll see data from a second induction study for ulcerative colitis, as well as results from the maintenance portion of these studies next year.

In the area of inflammatory bowel diseases, we remain on track to see induction data later this quarter from our phase three program for renewables in ulcerative colitis.

We'll see data from a second induction study in ulcerative colitis as well as results from the maintenance portion of these studies next year.

We expect to file our regulatory applications in 2021 as well.

Mike: We expect to file our regulatory applications in 2021 as well. We are also making great progress with the development programs for Sky RISD, and later this quarter, we expect data from several new indications across rheumatology and gastroenterology. We'll see data from two phase three studies in psoriatic arthritis and results from the first phase three induction study in Crohn's, supporting regulatory applications for both indications in 2021. Outside of immunology, SkyRISI will also be evaluated as a potential treatment for COVID-19 as part of the NIH ACTIV program, which is a public-private partnership aimed at accelerating potential therapies and vaccines for COVID-19. Guy Rizzi was selected through a prioritization process that evaluated immunomodulators with acceptable safety profiles as potential treatments for COVID-19 complications caused by the cytokine storm observed in some patients

We're also making great progress with the development programs for Sky Rizzi.

And later this quarter, we expect data from several new indications across rheumatology and gastroenterology.

We'll see data from two phase three studies in Psoriatic arthritis and results from the first phase three induction study in Crohns disease supporting.

Supporting regulatory applications for both indications in 2021.

Outside of Immunology Skyros. He will also be evaluated as a potential treatment for COVID-19 as part of the NIH active program, which is a public private partnership aimed at accelerating potential therapies and vaccines for COVID-19.

Got really was selected through a prioritization process that evaluated immunomodulators with acceptable safety profiles as potential treatments for COVID-19 complications caused by the cytokine storm observed in some patients.

Currency will be included in the active five big effect trial, which is a phase two study designed to evaluate a number of drugs that are either approved or in late stage development as potential treatments for COVID-19.

Mike: Guy Rizzi will be included in the ACTIV-5 Big Effect trial, which is a phase two study designed to evaluate a number of drugs that are either approved or in late stage development as potential treatments for COVID-19. In our early-stage immunology pipeline, earlier this year, we top-lined positive results from a proof-of-concept study evaluating our novel TNF steroid conjugate, ABBV3373, in RA We recently completed the Phase 1 PK and safety study for our second TNF steroid conjugate, ABBV154. Based on these data, we have selected ABBV154 to move forward into larger-scale trials. We expect to begin a Phase 2b definitive dose-ranging study for 154 NRA in the first half of 2021. As Rick mentioned, we will be hosting an Immunology Day for investors in December, where we will provide an update on our immunology strategy and long-term outlook for the franchise.

In our early stage immunology pipeline earlier this year, we topline to positive results from a proof of concept study evaluating our novel TNF steroid conjugate AB 3373 in our AG.

We recently completed the phase one PK and safety study for our second TNF steroid conjugate ADB 154.

Based on these data we have selected 154 to move forward into larger scale trials.

We expect to begin a phase to be definitive dose ranging study for 154 and already in the first half of 2021.

As Rick mentioned, we will be hosting an immunology day for investors in December where we will provide an update on our immunology strategy and long term outlook for the franchise.

We look forward to providing additional updates on our immunology pipeline at that time.

In oncology.

We continue to advance our portfolio with several important phase three studies, beginning in the quarter, including Venclexta and high risk Myelodysplastic syndrome, and the bit of KLAX in myelofibrosis.

Mike: We look forward to providing additional updates on our immunology pipeline at that time, and Oncology. We continue to advance our portfolio with several important Phase 3 studies beginning in the quarter, including VanClexta in high-risk myelodysplastic syndrome and Nibidoclax in myelofibrosis. We also recently received full FDA approval of Venclexta in combination with azacitidine, dicitabine, or low-dose citarabine in newly diagnosed AML patients who are ineligible for intensive induction chemotherapy.

We also recently received full FDIC approval of Venclexta in combination with a decitabine decitabine or low dose cytarabine in newly diagnosed AML patients who are ineligible for intensive induction chemotherapy.

This approval is supported by the phase III, the Alley, a and B Ali C studies.

Updated efficacy and safety results from the La were recently published in the New England Journal of Medicine and showed that the combination of Venclexta and Asia Decitabine extended overall survival compared to eight decitabine plus placebo.

Additionally, following the publication of the out of the new reality a results. The NCCN guidelines were updated to recommend the Venclexta and Asia cited in combination as a category one preferred treatment for AML patients who are ineligible for intensive chemotherapy.

Mike: This approval is supported by the Phase III Viale A and Viale C studies. Updated efficacy and safety results from the ALI-A study were recently published in the New England Journal of Medicine and show that the combination of Anclexta and azacitidine extended overall survival compared to azacitidine plus placebo. Additionally, following the publication of the Vialier results, the NCCN guidelines were updated to recommend the VanClexta and azacitidine combination as a Category 1 preferred treatment for AML patients who are ineligible for intensive chemotherapy. Importantly, the Van Klekster combination has the Category 1 designation, irrespective of mutational status.

Importantly, the Venclexta combination has the category one designation irrespective of mutational status.

Also in the quarter, we announced a collaboration with imap to develop and commercialize the anti CD 47 monoclonal antibody Lemzo Parliament.

The emerging data for Relenza Parliament is very encouraging and provides abbvie access to another potentially differentiated asset in the immuno oncology space.

The data generated to date show that Lenzo Parliament effectively blocks tumor specific CD 47 interactions, but with much lower binding to red blood cells, potentially leading to a better safety profile.

Mike: Also in the quarter, we announced a collaboration with IMAB to develop and commercialize the anti-CD47 monoclonal antibody, Lemsoparlimax. The emerging data for Lemzoparlumab is very encouraging and provides AbbVie access to another potentially differentiated asset in immuno-oncology. The data generated to date show that limzoparlimab effectively blocks tumor-specific CD47 interaction but with much lower binding to red blood cells, potentially leading to a better safety profile. Limso Parlimab is being studied in multiple cancers with a focus on hematological malignancies.

Relenza Parliament is being studied in multiple cancers with a focus on the Hematological malignancies.

In neuroscience, we recently presented new data from several clinical programs at the virtual Migraine Trust International Symposium shown.

Showcasing the breadth and strength of our migraine portfolio and demonstrating abbey's commitment to providing multiple treatment options for the acute and preventative treatment of migraine.

In total 15 abstracts were presented for Botox, you Belviq and Ditto Japan.

Included in the MTR last presentation, where the detailed results for toll Japan in the phase three advanced study, which demonstrated a clinically meaningful and statistically significant improvement over placebo with all until Japan doses for the pro.

Mike: In neuroscience, we recently presented new data from several clinical programs at the virtual Migraine Trust International Symposium, showcasing the breadth and strength of our migraine portfolio and demonstrating AbbVie's commitment to providing multiple treatment options for the acute and preventative treatment of migraines. In total, 15 abstracts were presented for Botox, Ubrelvi, and Ito Japan. Included in the MTIS presentation were the detailed results for Itojipan in the Phase 3 Advanced Study, which demonstrated a clinically meaningful and statistically significant improvement over placebo with all Itojipan doses for the primary endpoint of reduction in mean monthly migraine days. Significant improvements were also observed for all secondary endpoints in the 30mg and 60mg dose groups. Treatment with TojaPant resulted in 56 to 61% of subjects achieving at least a 50% reduction in monthly migraine days, compared to 29% for the placebo group.

Memory endpoint of reduction in mean monthly migraine days.

Significant improvements were also observed for all secondary endpoints in the 30 milligram and 60 milligram dose groups.

Treatment with until Japan resulted in 56% to 61% of subjects, achieving at least a 50% reduction in monthly migraine days compared to 29% for the placebo group.

We're very encouraged by the strong benefit risk profile that has been demonstrated for told Japan in migraine prevention and believe that once approved this new oral treatment option will be competitively position in the prevention market.

Together with Botox for chronic migraine prevention, and new Bravia for acute migraine treatment. The addition of a toe Japan creates a market leading portfolio in migraine that represents significant long term value for abbvie.

In this sense, we continue to make good progress with our portfolio of facial toxins and dermal fillers.

We have several ongoing programs for new indications for Botox and for the Juvederm collection as well as our pipeline of innovative toxins and dermal fillers, which we expect to reach the market over the course of the next five years.

Mike: We're very encouraged by the strong benefit-risk profile that has been demonstrated for Tojopan in migraine prevention and believe that, once approved, this new oral treatment option will be competitively positioned in the prevention market. Together with Botox for Chronic Migraine Prevention and Ubrovi for Acute Migraine Treatment, the addition of Tojopant creates a market-leading portfolio in migraine that represents significant long-term value for AbbVie. In aesthetics, we continue to make good progress with our portfolio of facial toxins and dermal fillers. We have several ongoing programs for new indications for Botox and for the Juvederm collection, as well as a pipeline of innovative toxins and dermal fillers, which we expect to reach the market over the course of the next five years. Botox has been the leading neurotoxin for over two decades, with R&D efforts in aesthetics primarily focused on the upper face.

Botox has been the leading neurotoxin for over two decades with R&D efforts in aesthetics, primarily focused on the upper face.

To support expansion to the lower face region, we have several programs ongoing including studies in master and potential prominence.

We recently had a positive data readout for our phase two study for the reduction of master prominence in the lower face.

This study met all primary and secondary endpoints demonstrating that the severity of prominence was reduced following a single treatment of botox.

Based on these results we plan to begin phase three development next year, which will support registration in the us in Europe.

We also recently announced the acquisition of Luminaires dermal fillers portfolio led by harmonica.

Which is an innovative dermal filler developed for facial soft tissue augmentation.

Mike: To support expansion to the lower face region, we have several programs ongoing, including studies in masseter and platysma prominent. We recently had a positive data readout for our Phase 2 study for the reduction of master prominence in the lower phase. This study met all primary and secondary endpoints, demonstrating that the severity of prominence was reduced following a single treatment of Botox.

Luminaires assets are highly complementary to our juvederm filler franchise, and we look forward to expanding their development to markets around the world.

And in Eyecare, we recently announced positive topline results from the phase III Gemini, one and Gemini two studies, which evaluated our topical eye drop Asiana 190, 584 for the treatment of symptoms associated with presbyopia.

In both studies 584 met the primary endpoint and the majority of secondary endpoints with data from both studies demonstrating that treatment with 584 resulted in significant near vision gains in low lighting conditions without a loss of distance vision.

Mike: Based on these results, we plan to begin Phase 3 development next year, which will support registration in the U.S. and Europe. We also recently announced the acquisition of Luminera's Dermal Filler Portfolio, led by Harmonica, which is an innovative dermal filler developed for facial soft tissue augmentation. Luminaire's assets are highly complementary to our Juvederm filler franchise, and we look forward to expanding their development to markets around the world. And in eye care, we recently announced positive top-line results from the Phase 3 Gemini 1 and Gemini 2 studies, which evaluated our topical eyedrop, AGN 190584, for the treatment of symptoms associated with presbyopia. In both studies, 584 met the primary endpoint and the majority of secondary endpoints, with data from both studies demonstrating that treatment with 584 resulted in significant near vision gains in low lighting conditions without a loss of distance vision.

Based on these results we plan to submit our regulatory application to the FDA in the first half of next year.

So in summary, we continue to make significant progress advancing and accelerating our programs this quarter and we look forward to many more important pipeline milestones in the coming months and through 2021.

With that I'll turn the call over to Rob for additional comments on our third quarter performance and financial outlook, Rob. Thank you Mike.

Starting with third quarter results, we delivered strong top and bottom line performance, we reported adjusted earnings per share up $2.83 above our guidance midpoint by eight cents.

Total adjusted net revenues were approximately $12.9 billion up 4.1% on a comparable operational basis and ahead of our expectations.

Immunology global sales were approximately $5.8 billion up 15% on an operational basis, despite the impact of Covance and new patient starts across the immunology market.

Mike: Based on these results, we plan to submit our regulatory application to the FDA in the first half of next year. So, in summary, we've continued to make significant progress advancing and accelerating our programs this quarter, and we look forward to many more important pipeline milestones in the coming months and through 2021. With that, I'll turn the call over to Rob for additional comments on our third-quarter performance and financial outlook.

USA numerous sales were approximately $4.2 billion up 7.7% compared to prior year, reflecting continued demand growth plus price.

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

International Humira sales were $951 million down, 8% operationally, reflecting biosimilar competition across Europe, and other international markets.

Got resi sales were $435 million with leading in place share in the U.S psoriasis market and robust sequential growth internationally.

Rob: Thank you, Mike. Starting with the third quarter results, we delivered strong top and bottom line performance. We reported adjusted earnings per share of $2.83, above our guidance midpoint by $0.08. Total adjusted net revenues were approximately $12.9 billion, up 4.1% on a comparable operational basis and ahead of our expectations. Immunology global sales were approximately $5.8 billion, 15% on an operational basis, despite the impact of COVID on new patient starts across the immunology market. U.S. Humira sales were approximately $4.2 billion, up 7.7% compared to the prior year, reflecting continued demand growth plus price. Full seller inventory levels remain below half a month in the quarter.

Rainbow sales were $215 million with continued strong in place share in the us are a market.

Hematologic oncology delivered another strong quarter with sales of $1.7 billion up 16.4% on an operational basis.

Imbruvica net revenues were approximately $1.4 billion up 9% driven by our leading share in CLL.

Thanks, Alexia revenues were $352 million with strong demand across all approved indications.

Moderate sales were $414 million down 41.1% on an operational basis as treat a patient volumes have remained below pre coded levels.

Aesthetic sales were $967 million with botox cosmetic and juvederm, both experiencing a faster than expected recovery from the covert pandemic.

Neurosensory revenues were more than $1.2 billion led by railcar and our migraine portfolio.

Rail are once again delivered strong growth with revenues of $358 million.

Rob: International Humerus sales were $951 million, down 8% operationally, reflecting biosimilar competition across Europe and other international markets. International sales of Renvoke were $215 million, with continued strong in-place share in the USRA market. Hematologic Oncology delivered another strong quarter, with sales of $1.7 billion, up 16.4% on an operational basis. And Bruvica Net Revenues were approximately $1.4 billion, up 9%, driven by our leading share in CLL. BankClexa revenues were $352 million, with strong demand across all approved indications. Maverick sales were $414 million, down 41.1% on an operational basis, as treated patient volumes have remained below pre-COVID levels.

Botox therapeutic continues to experience a rapid recovery from the cobot pandemic with sales of $523 million in the quarter.

The launch of your valve is also going very well with recent direct to consumer promotion driving new prescription growth.

Sales of your Belviq were $38 million.

We also saw a significant contribution from eyecare, which had sales of $840 million.

Turning now to the PML profile for the third quarter. Adjusted gross margin was 81.7% of sales adjusted R&D investment was 11.7% of sales and adjusted EBITDA expense was 21.1% of sales.

The adjusted operating margin ratio was 48.8% of sales an improvement of 40 basis points versus the prior year.

Net interest expense was $620 million and the adjusted tax rate was 11.7%.

As Rick previously mentioned, we are raising our full year adjusted earnings per share guidance to between $10.47 and $10.49, including accretion from the Allergan transaction up 12% on an annualized basis.

Rob: Aesthetic sales were $967 million, with Botox Cosmetic and Juvederm both experiencing a faster than expected recovery from the COVID pandemic. Neuroscience revenues were more than $1.2 billion, led by Vralar and our Migraine Portfolio. Raylar once again delivered strong growth with revenues of $358 million.

Excluded from this guidance is $6.58 of known intangible amortization and specified items.

This guidance now contemplates 2020, adjusted net revenue of approximately $45.7 billion, representing an increase of $200 million from our previous estimate.

At current rates, we now expect foreign exchange had a modest unfavorable impact on full year reported sales growth.

Rob: Botox Therapeutics continues to experience a rapid recovery from the COVID pandemic with sales of $523 million in the quarter. The launch of Velvie is also going very well, with recent direct-to-consumer promotion driving new prescription growth. Sales of URELV were $38 million.

Included in this guidance are the following updated 2020 assumptions.

We now expect international Humira sales approaching $3.7 billion.

For Sky Rizzi, we now expect revenues of approximately $1.5 billion.

For rent vote, we now expect sales of approximately $700 million.

For a group of ACA, we now expect revenue of approximately $5.3 billion as new patient starts in the CLL market remains below pre covered levels.

For aesthetics, we now expect post close sales of approximately $2.5 billion with botox cosmetic and Juvederm, both demonstrating a fast recovery.

For mass Brett we now expect sales of approximately $1.9 billion as treatments remains below pre covered levels.

We now expect Lupron revenues of approximately $750 million as we work to resolve a near term supply issue, which has impacted availability of certain formulations.

Moving in to PNM, while we continue to forecast full year adjusted gross margin just above 82% of sales and adjusted operating margin of approximately 48% of sales.

This guidance includes approximately $600 million in expense synergies for the partial year in 2020, we remain on track to deliver greater than $2 billion in expense synergies by 2022.

Rob: As Rick previously mentioned, we are raising our full-year adjusted earnings per share guidance to between $10.47 and $10.49, including accretion from the Allergan transaction of 12% on an annualized basis. Also excluded from this guidance is $6.58 of known intangible amortization and specified items. This guidance now contemplates 2020 adjusted net revenue of approximately $45.7 billion, representing an increase of $200 million from our previous estimate. At current rates, we now expect foreign exchange to have a modest, unfavorable impact on fully reported sales growth. Included in this guidance are the following updated 2020 assumptions. For Sky Rizzi, we now expect revenues of approximately $1.5 billion. For Renvo, we now expect sales of approximately $700 million; we now expect revenue of approximately $5.3 billion. For Aesthetics, we now expect post-closed sales of approximately $2.5 billion, with Botox Cosmetic and Juvederm both demonstrating a fast recovery. For Maverette, we now expect sales of approximately $1.9 billion as treatments remain below pre-COVID levels.

As we look ahead to the fourth quarter, we anticipate adjusted net revenue approaching $13.8 billion.

At current rates, we expect foreign exchange to have a modest favorable impact on reported sales growth.

We are forecasting an adjusted operating margin ratio of approximately 46.5% of sales.

We model a non-GAAP tax rate of 11.6% and we expect the average share count to be similar to Q3.

We expect adjusted earnings per share between $2.83 and $2.85, excluding approximately one dollar and 73 cents of known intangible amortization and specified items.

Finally, abbvie strong business performance continues to support our capital allocation priorities.

We generated $12.7 billion of operating cash flow in the first nine months of the year and our cash and investments balance at the end of September was $8 billion.

Underscoring our confidence in Abbvies long term outlook today, we announced a 10.2% increase in our quarterly cash dividend beginning with the dividend payable in February 2021.

We also remain on track to pay down $15 billion to $18 billion of combined company debt by the end of 2021 and expect to achieve a net debt to EBITDA ratio of 2.5 times by the end of next year with further deleveraging through 2023.

With that ill turn the call back over to list.

Thanks, Rob we will now open the call for questions. Operator first question. Please.

Thank you and as a reminder to ask a question. Please press star one and our first question today is from Chris Schott from JP Morgan.

Great. Thanks, so much for the questions and congrats on the results I guess just two from me first 2021, I know you are not giving guidance yet can you talk through some of the pushes and pulls we should keep in mind as we think about next year's numbers, saying it seems like the core business. Obviously is a lot of traction here and just trying to get a sense of kind of freight from your perspective, what are the kind of and.

Rob: We remain on track to deliver greater than $2 billion in expense synergies by 2022. As we look ahead to the fourth quarter, we anticipate adjusted net revenue approaching $13.8 billion. At current rates, we expect foreign exchange to have a modest favorable impact on reported sales growth. We are forecasting an adjusted operating margin ratio of approximately 46.5% of sales. We model a non-gap tax rate of 11.6%, and we expect the average share count to be similar to Q3. We expect adjusted earnings per share between $2.83 and $2.85, excluding approximately $1.73 of known intangible amortization and specified items. Finally, AbbVie's strong business performance continues to support our capital allocation priorities. We generated $12.7 billion of operating cash flow in the first nine months of the year, and our cash and investments balance at the end of September was $8 billion.

Certainty as you think about that that guidance number for next year and my second question was on Renvela and a topic term just elaborate a bit more on how you're thinking about the size of that opportunity I know one of your peers has a single indication Jack and 80. They think it's a $3 billion peak sales opportunity I know, it's well above your risk sharing the adjusted number.

You have a few years ago sounds like now you're talking about potential multibillion dollar opportunity, but just help us flush out a little bit about how how big of an opportunity could this be for the product. Thank you.

Okay. So Chris this is Rick I'll talk a little bit about 21, and then Mike maybe you can talk a little bit about how we view.

Rindo Canadian and Rob.

So when we look at 21, I think you have to step back and say how are we performing this year and obviously, we're performing very well theres still some cobot impact built in it varies a bit by.

By therapeutic area, some areas are impacted more than others.

So as an example, CLL has been impacted more than other areas.

HCV has been impacted more than other areas and usually places where the therapy can be delayed without a significant consequence for the patient is where we're seeing the most significant delays. So as we move through the fourth quarter, we'll see whether or not that with harbors more.

Sure.

And that's that's certainly one a one aspect of it I would say even without much recovery the underlying performance of the business looks good.

Liz Shea: Underscoring our confidence in AbbVie's long-term outlook, today we announced a 10.2% increase in our quarterly cash dividend, beginning with the dividend payable in February 2021. We also remain on track to pay down $15 to $18 billion of combined company debt by the end of 2021 and expect to achieve a net debt to EBITDA ratio of 2.5 times by the end of next year, with further deleveraging through 2023. With that, I'll turn the call back over to Liz.

I think you can look at the dividend increase that we put through and that should give you some flavor for.

For the level of confidence that we have.

Because obviously, we want to tie that to what we assumed.

That we can deliver from a overall performance standpoint, I would also say that as we look to consensus we're comfortable with what we see in consensus in 2021. So we want to see a few other things play out primarily around Covance.

How much improvement we get we have launched a number of programs over the course of the last couple of months to try to activate patients more.

Operator: Thanks, Rob. We will now open the call for questions. Operator, first question, please. Thank you. And as a reminder to ask a question, please press star one.

To go to their physicians and seek treatment out I.

I think I think those programs some of those programs will be successful and we'll see some of those increase particularly in immunology.

Chris Schott: And our first question today is from Chris Schott from J.P. Morgan. Great. Thanks so much for the questions and congratulations on the results. I guess just two for me.

Because dermatology is another one of those areas that.

The new patient starts are still off a little bit now, obviously skyros is performing extremely well and numeric continues to perform well.

So.

I'd say, that's the single biggest issue.

Chris Schott: First, 2021. I know you're not giving guidance yet, but can you just talk through some of the pushes and pulls we should keep in mind as we think about next year's numbers? It seems like the core business of it is getting a lot of traction here, and just trying to get a sense of, you know, kind of from your perspective, what are the kind of uncertainties as you think about that guidance number for next year? And my second question was about RINVOC and Atopic Derm.

Rob might want to talk about remote certainly I'll start and then pass it over to Rob if he wants to add a little bit more detail.

We view a topic dermatitis as as a very attractive in a very substantial opportunity overall, it's an indication that I think for many years was under appreciated by the industry now that's changed recently and you've seen a lot of focus.

In drug development in a topic dermatitis, we feel very good about the profile that we've demonstrated coming out of phase two when we made those statements about the risk adjusted potential any topic dermatitis. We felt good about our data and those data were sufficient to get a breakthrough therapy designation.

Rick Gonzalez: Can you just elaborate a bit more on how you're thinking about the size of that opportunity? I know one of your peers has a single indication, Jack and AD, they think it's a $3 billion peak sales opportunity. I know that's well above your risk adjusted numbers you had a few years ago, but sounds like now you're talking about a potential multi-billion dollar opportunity, but just help us flesh out a little bit about how big of an opportunity this could be for the product. Thank you. Okay, so Chris, this is Rick.

We are in the fortunate and not always that common situation, where our phase two results have actually outperformed our expectations based on phase two and if you look at the phase II results are really strong across the board there strong and total response, they're strong in repeatedly of response.

And there are strong on on components like etch, which is the most troublesome symptom to patients in the majority of cases and so when you couple that with with the safety profile that we've demonstrated which we think is very favorable. We see this is something that has very real potential and when we look.

Rick Gonzalez: I'll talk a little bit about 21, and then Mike can maybe talk a little bit about how we view Linvoke and AD and Rob. So when we look at 21, I think you have to step back and say, "How are we performing this year?" And obviously, we're performing very well; there's still some COVID impact built in, it varies a bit by therapeutic areas; some areas are impacted more than others. So, as an example, CLL has been impacted more than other areas. HCV has been impacted more than other areas. It's usually places where therapy can be delayed without significant consequence for the patient that we're seeing the most significant delay. So as we move through the fourth quarter, we'll see whether or not that recovers more. And that's certainly one aspect of it.

Across studies, we feel very good about our results and of course, we have a head to head study with detailed NAV, which is coming up later on this quarter and so that will be important additional information and we're very optimistic about those results Rob I don't know if you'd like to add anything further Chris. This is Rob. So if you think of atopic dermatitis, its a $3 billion global market with.

Very strong growth potential in our 2025 risk adjusted guidance of greater than 10 billion for RIN broken Sky Reserve. We included a $1 billion of revenue for invoke 84, we feel pretty good that we can achieve that expectation.

As the only other thing I'd add is I think a topic derm is a market very similar to several others. In fact, psoriasis I would say with a similar type of market.

But as you get more competitors in the market driving promotion. It has a very large population of patients. So the question is activating those patients and getting them to go into the physician's offices to seek treatment.

Rick Gonzalez: I would say even without much recovery, the underlying performance of the business looks good. I think you can look at the dividend increase that we put through, and that should give you some flavor for the level of confidence that we have, because obviously, we wanna tie that to what we assumed that we could deliver from an overall performance standpoint. I'd also say that as we've looked at consensus, we're comfortable with what we see in 2021. So we wanna see a few other things just play out, primarily around COVID, and how much improvement we get. We have launched a number of programs over the course of the last couple of months to try to encourage patients more to go to their physicians and seek treatment.

And so.

So obviously when you have one company doing that they have the capacity to drive a certain amount when you have more than one company doubling or tripling the amount of promotion activity.

Particularly here in the U.S.

And that tends to activate more patients to seek treatment.

Think if you looked at the total available market patients who would qualify today, it's a huge market sales north of $5 billion easily. So the question is how fast can reactivate them.

And how how broadly can you activate those patients from our profile standpoint of our drug I think we'll compete quite effectively and I think in particular the performance around and she is going to give us a an advantage. So it's a very attractive market and certainly one that we will focus a lot of attention on.

Rick Gonzalez: I think those programs, some of those programs will be successful, and we'll see some of those numbers increase, particularly in immunology, because dermatology is another one of those areas where the new patient starts are still off a little bit. Now, obviously, Sky Rizzy is performing extremely well, and Numera continues to perform well. So I'd say that's the single biggest issue. Rob and Mike, do you want to talk about the invokes?

The drive.

And Chris This is Robert and just to clarify Im not sure I said exceed or achieve a week. So expect to exceed that billion dollar risk adjusted number for invoke 80 in 2025.

Thanks, Chris Operator next question please.

Thank you and our next question is from Geoffrey Porges from SCB Leerink.

Rick a quick.

With the dividend going up it looks like you've got about a 6% dividend yield the core business is performing well and my question is what are the I knew now 50 to 55 billion topline company.

Rick Gonzalez: Certainly. I'll start and then pass it over to Rob if he wants to add a little bit more detail. You know, we view atopic dermatitis as a very attractive and a very substantial opportunity overall. It's an indication that, I think, for many years was underappreciated by the industry. Now, that's changed recently, and you've seen a lot of focus on drug development for atopic dermatitis. You know, we feel very good about the profile that we've demonstrated. Coming out of phase two, when we made those statements about the risk-adjusted potential in atopic dermatitis, we felt good about our data, and those data were sufficient to get a breakthrough therapy designation. We're in the fortunate and not always that common situation where our phase two results have actually outperformed our expectations based on phase two. And if you look at the phase two results, they're really strong across the board. They're strong in total response.

One of the pipeline assets that can really move the needle I know over new indications existing enemies, but what you and I made it can be really substantial to move the needle on our $55 billion topline because I think that's part of why you product industry high dividend yield.

So Jeff this is Rick.

I think if you look at the business you have to look at it in phases right. So I'd say the phase between now and call. It 2025 2026 that growth is going to be driven by expansion of Rainbow can sky raising a kid.

Continued strong growth in the neuroscience pipeline continued strong growth in the US statics pipeline and continued strong growth in humalog.

Starting at 25 timeframe and beyond that's where the earlier to mid stage pipeline will drive a significant amount of growth now there will be assets lagging a bit attacks like 951.

Atos Japan.

That that will come in prior to that and help boost growth right around 23, and 24, but I can tell you. We're very confident that we have now built a portfolio that can sustain growth and drive growth on the other side of the aisle away in fact, I would tell you that when I look at when both and Scott.

Mike: They're strong in the rapidity of response. And they're strong on components like itch, which is the most troublesome symptom to patients in the majority of cases. And so, when you couple that with the safety profile that we've demonstrated, which we think is very favorable, you know, we see this as something that has very real potential. And when we look, you know, across studies, we feel very good about our results. And, of course, we have a head-to-head study with Dipilumab, which is coming up later this quarter, so that will be important additional information, and we're very Rob, I don't know if you'd like to add anything further. Okay, Chris, this is Rob.

Arisen.

When I look at the in play market shares that we see with those assets today.

When we gave guidance of 2025.

We assume that on average we would achieve high single digit market share across the indications. So as an example, if you look at Sky Rosy right now its coverage is in place shares 33% the market leader by a wide margin. The next closest product is in 16% in place share and.

Its trx share is now at 11 and climbing rapidly. So it's already above what we had assumed.

The people would have been out in 2025% market share standpoint, and if we maintain that 33% by then it will have an overall share of about 33%. So it will be three times, what we had assumed for for psoriasis.

Rob: So if you think about atopic dermatitis, it's a $3 billion global market with very strong growth potential. In our 2025 risk-adjusted guidance of greater than $10 billion for RINVOC and SkyRIZI, we included a billion dollars of revenue for RINVOC-AD, but we feel pretty good that we can achieve that expectation. And the only other thing I add is that I think Atopic Derm is a market very similar to several others. In fact, psoriasis, I would say, was a similar type of market where as you get more competitors in the market driving promotion, it has a very large population of patients. So the question is activating those patients and getting them to go into the physician's office.

So when you look at the at the speed at which we're bringing the new indications when you look at the breadth of those indications across the revenue base that Humira has today, we have covered all of the major indications for Humira plus one more than the Marriott doesn't have which is a topic derm and.

And if we can achieve that kind of market share and in each of these indications then.

We'll obviously double what we assume that 2025 number was and that gets you pretty close to covering all of humira in the U.S. So I'm very encouraged about that and I think that along with the other assets and the four major growth platforms.

Gives us a tremendous amount of confidence that we can drive growth.

Rick Gonzalez: And so obviously, when you have one company doing that, they have the capacity to drive a certain amount. But when you have more than one company, you're doubling or tripling the amount of promotion activity, particularly here in the U.S., and that tends to get more patients to seek treatment. You know, I think if you looked at the total available market of patients who would qualify, it's a huge market. It's north of $5 billion, easily. So the question is, how fast can you activate it? And how broadly can you activate those faces?

On a sustainable basis at a very fair.

Very high level.

Thanks, Jeff Operator next question please.

Thank you and our next question is from pharma to van Summers in House security.

Hi, Thanks, so much for taking my question. So maybe just to sort of following up on that within that.

2020 way home Allison's question can you just talk a little bit on how you're thinking about drug pricing.

Pressure I get us sort of globally just to get his retirement income on our modeling for next year.

Yes, that's helpful and then maybe building on.

Just a question I think one of the other concerns that investors have is around potential tax reform that may come out of DC, depending on the election plays out.

The assets of the TD before the election, but I guess based on what you're seeing from the.

Rick Gonzalez: From a profile standpoint of our drug, I think we'll compete quite effectively. And I think, in particular, the performance around itch is going to give us an advantage. So it's a very attractive market, and it's certainly one that we will focus a lot of attention on with the drive. And Chris, this is Rob again.

Especially given the Biden side I guess abiding plan right now is there anything you can share with investors at this point in terms of how youre sort of tax rate may change going forward I appreciated much during the back end user is identical would be helpful. If anything it is something that investors seem very concerned about at this point. Thank you yes.

Rob: Just to clarify, I'm not sure if I said exceed or achieve, but we expect to exceed that billion-dollar risk-adjusted number for RINVOKE-AD in 2020. Thanks, Chris. Operator, next question, please. Thank you. And our next question is from Jeffrey Porges from SVB Larynx.

Well, obviously, it's it's still unclear as to what the landscape will be on the other side of the election. So we obviously have to let that play out having said that I think we assume that there will be continued pressure on the industry.

As it relates to drug pricing.

As far as what our expectations would be in 2021 of the growth expectations in 2021 from a price standpoint will be similar to what they were in 19 and 20 and that is we weren't reliant on price I mean, Fortunately our business is primarily a volume driven business. It's typically in areas that are very serious diseases in as strong.

Jeffrey Porges: Rick, a question... with the dividend going up, it looks like you've got about a six and a half percent dividend yield. The core business is performing well. And my question is, what are the, I mean, and you're now a 50 to 55 billion top line company. What are the pipeline assets that can really move the needle?

On value propositions, and so that gives me confidence that.

We'll be able to fare reasonably well even.

Even if there are changes I'd say the second thing is it's unlikely that you will get changes that have a significant impact.

Early on in 21, because there is going to be a lot of debate here.

Rick Gonzalez: I know all the new indications for the existing NMEs, but what new NMEs can be really substantial to move the needle on a $55 billion top line? Because I think that's part of why you've got an industry-high dividend. So Geoff, this is Rick.

But what those changes are what I would hope the debate ultimately.

Transitions to his co.

Co pays and out of pocket cost growth for patients because that is the fundamental issue.

And is particularly the issue when you look at part D patients they have to pay far too much of the burden of the cost from an out of pocket cost standpoint, and they are really the only group of patients in the us that have that kind of a.

Rick Gonzalez: I think if you look at the business in phases, you have to look at it in phases, right? So I'd say the phase between now and, call it 2025, 2026, that growth is going to be driven by the expansion of Renvoke and Skyrizzy, continued strong growth in the neuroscience pipeline, continued strong growth in the aesthetics pipeline, and continued strong growth in HEMA. Starting in that 25 time frame and beyond, that's where the earlier to mid-stage pipeline will drive a significant amount of growth. Now, there will be assets like NVIDICLAX, like 951, Atozapan, that will come in prior to that and help boost growth right around 23 and 24. But I can tell you that we're very confident that we have now built a portfolio that can sustain growth and drive growth on the other side of the LOE. In fact, I would tell you that when I look at Winvoke and Skyrizzy, I look at the in-play market shares that we see with those assets today. When we gave guidance for 2025, we assumed that, on average, we would achieve a high single-digit market share across the indications. So, as an example, you look at Skyrizzy right now.

Burden associated with them. If you look at the overall performance from a cost standpoint of Medicare part D.

Performed very well in fact, if you go back to the original.

CEO estimates over the last 10 years, it's come in 45% below.

The original estimates for what we grow and if you look at part D. It's growing at about the rate of other healthcare services inflation, that's again significantly higher and so the affordability problem is really around those copays that we have to drive those copays and that I think.

The other thing that has to be placed in here.

As I would hope as this debate goes on they are going to look very carefully at our industry and the value of our industry. Both from a societal standpoint as well as an economic standpoint, I mean this is tremendously valuable industry just look at what we've done as an industry as it relates to this pandemic, whether you're talking about vaccines.

Are you talking about therapeutics look at what we've done in advancements with cancer and then from an economic standpoint in this industry supports.

Directly or indirectly 4 million jobs in the United States typically high paying jobs and produces a tremendous amount of economic output for the use and so it's an industry that you don't want to damage in the process I think that report.

But the short answer your question is I think you should use we are not assuming we'll get a lot of benefit from price and 21.

We're also not assuming that across that year, we would see a significant change that would have a dramatic impact on that calendar year.

Tax reform has your next question.

Obama trial size based on a very high level information the buying proposal, we would see an increase in our tax rate like most companies, but it's really difficult to provide a rate impact without the details.

That said have you would still have a favorable profile versus our peers and we want to raise our dividend. If we were overly concerned about the implications.

Rick Gonzalez: So when you look at the speed at which we're bringing in new indications, when you look at the breadth of those indications across the revenue base that Humira has today, we have covered all of the major indications for Humira, plus one more that Humira doesn't have, which is atopic derm. And if we can achieve that kind of market share in each of these indications, then we'll obviously double what we assume that 2025 number was, and that gets you pretty close to covering all of Jumeirah in the U.S. So I'm very encouraged by that. And I think that, along with the other assets and the four major growth platforms, gives us a tremendous amount of confidence that we can drive growth on a sustainable basis at a very, very high rate. Thanks, Geoff.

And the only thing I add bottom on that one is we obviously did flex.

What we thought the tax rate could be and we just don't know that much about it. We know what has been said, but we flex did against this dividend increase and make sure. We were absolutely comfortable with payout ratios based on that and we are or we wouldn't move forward with the 10.2% increase.

Thanks, Simon Operator next question please.

Thank you and our next question is from Steve Scala from Cowen.

Thank you so much and congratulations on another impressive quarter I have several questions, but three of them are short can you be more specific on where sky resi patients are coming from I think it's notable that cosentyx was a bit light this quarter and Novartis cited competition.

Secondly, what was the non-GAAP interest expense number in the quarter.

Operator: Operator, next question, please. Thank you. And our next question is from Vamil Divan from Muzuho Securities. Hi, thanks so much for taking my questions. So maybe she's sort of following up on what's been asked.

Third you provided guidance for Humira, Oh, you asked but I don't think U.S. So can you tell us what you think the U.S. guidance would look like and then lastly.

We have tracked clinical trial activity during the pandemic and it shows as the recruiting trials are up 14% year to date.

Vamil Kishore Divan: 2021 Regarding Chris's question, can you just talk a little bit about how you're thinking about drug pricing pressure in the U.S. or globally, just again as we're trying to think about our modeling for next year? I think that would be helpful. And then maybe building on it. Guest Question. I think one of the other concerns that investors have is around potential tax reform that may come out of DC depending on how the election plays out. I know it's tough to ask this just a few days before the election.

It is industry, leading two times greater than the next closest competitor and much better than the average which is down and I'm just curious what accounts for that is.

Is it a deliberate strategy to capture patients when other companies are taking a wait and see approach or is it something else. Thank you.

Yes.

So Steve all hands to your first question, Rob will handle two and three and Mike can handle number four.

So if you look at the in place share about 25% of that in place share is coming on Skouries is coming from Q Merrill.

Rick Gonzalez: But I guess based on what you're seeing, especially on the Biden side, I guess the Biden plan right now, is there anything you can share with investors at this point, in terms of how your sort of tax rate may change going forward? And I appreciate it's probably not much to give, but any sort of insights, I think would be helpful. I think it is something that investors seem very concerned about at this point. Thank you. Well, you know, obviously, it's still unclear as to what the landscape will be on the other side of the election. So we obviously have to let that play out.

The other 75% is coming from competitors.

I'd say, it's primarily the seventeens.

But some coming from the other 12, 20, threes or 20, threes, but I'd say the bulk of it is coming from from the 17.

So that might answer your question about Cosentyx. If you look at the capture of the type of patients that were getting this guy rizzi, it's very balance. It's about 50 50 between first line and then second line.

So thats a nice balance between 90 patients and patients who have failed other therapies. So I think it's.

The asset is performing the way you would expect a high performing high efficacy.

Rick Gonzalez: Having said that, I think we assume that there will be continued pressure on the industry as it relates to drug prices. As far as what our expectations would be in 2021, I think our expectations in 2021 from a price standpoint will be similar to what they were in 19 and 20. And that is, we weren't reliant on price. Unfortunately, our business is primarily a volume-driven business, typically in areas that are very serious diseases and have strong value propositions. And so that gives me confidence that we'll be able to fare reasonably well, even if there are changes. I'd say the second thing is that it's unlikely that you will get changes that have a significant impact early on in 21, because there's gonna be a lot of debate about what those changes are.

Asset to be able to perform it is it has has quickly become a.

The portfolio product by prescribing physicians it as a great profile.

Its course.

Quarterly dosing, it's got great efficacy.

The efficacy improves overtime there are any assets that have that kind of a profile on the market. So I would expect that Scott rizzi.

We will continue to increase its in place share is jumped about three points over the last maybe two.

Two months.

And I would expect that we will continue to increase.

Hey, Steve This is Rob on your question on interest expense for non-GAAP and GAAP. It's the same number at $620 million in third quarter I, we're no longer specifying any interest expenses Weve now closed the transaction so that negative carry on the bonds no longer applicable for the specified. So 620 is the number for both non-GAAP and GAAP on the U.S. Chimera question.

And so we did not change our guidance continues to be a for us umer, 8% growth with a low single digit price contribution.

Rick Gonzalez: What I would hope the debate ultimately transitions to is co-pays and out-of-pocket costs for patients because that is the fundamental issue. And it's particularly an issue when you look at Part D patients. They have to pay far too much of the burden of the cost from their out-of-pocket costs.

So this is Mike I'll take your last question on clinical trial activity. The first thing that I would say is the increase in clinical trial activity reflects whats going on in our pipeline and there's a lot of activity in our pipeline and a large number of molecules that we're advancing and so thats a big part of it. Another part is that we made the conscious decision to.

Rick Gonzalez: And they're really the only group of patients in the US that have that kind of a burden associated with them. But if you look at the overall performance from a cost standpoint of Medicare Part D, it's performed very well. In fact, if you go back to the original CBO estimates over the last 10 years, it's come in 45% below the original estimates for what it would grow. And if you look at Part D, it's grown at about the rate of other healthcare services in place, not significantly higher. And so the affordability problem is really around those co-pays. We have to lower those co-pays.

To leave decisions around enrollment in the hands of investigators rather than making them centrally because they understand the situation in their hospital in their community better than we do.

And there was a small group of studies that we paused at the time of the initial coded impact but the majority.

We allowed to continue that doesn't mean that there weren't disruptions from coded but it but it does mean that investigators decided when it was time deposit enrollment and when it was time to resume enrollment and I think the evidence shows that they made those decisions better than they could have been made centrally.

And that has allowed us to advance our portfolio to advance our clinical trials with minimal disruption and with safe conduct for patients and the staff of the site, which are also critically important considerations and so I'd say, it's a combination of those factors.

Thanks, Steve Operator next question please.

Thank you and our next question is from Navy shake out from here, yes.

Hi, Hi online on for Kevin Jacobs, our tax advantaged, sorry, sorry, just got a few kaufman.

We just had a few questions first regarding the Humira question you asked on the markets in which a biosimilar is out there what percent of the molecule is now brand versus bio Similars. What's now almost two years with now almost two years of Biosimilar experience, how does that affect things.

Rick Gonzalez: It produces a tremendous amount of economic output for the U.S., and so it's an industry that you don't want to damage in the process, and I think that has to be part of it. But the short answer to your question is, I think we are not assuming we'll get a lot of benefit from price in 21. We're also not assuming that during that year, we would see a significant change that would have a dramatic impact on that challenge. Tax reform is your next question. Obama will drop it based on very high-level information in the Biden proposal.

And next first hydrogen written block can you achieve the type uptake that you have been seeing in the U.S. and in the international markets. We'd appreciate any commentary around and play market share achieved in markets you have been approved and and lastly, if we could talk about frailer M.D. timing. Thank you.

Okay. This is Rob just to clarify the first question was on internationally Humira how much of that is now a biosimilar.

Rob: We would see an increase in our tax rate like most U.S. companies, but it's really difficult to provide a rate impact without the details. You know, that said, Abby would still have a favorable profile versus our peers, and we wouldn't have raised our dividend if we were overly concerned about the implication. And the only thing I add, Vamil, on that one is that we obviously did flex what we thought the tax rate could be, and we just don't know that much about it. We know what has been said, but we flexed it against this dividend increase and made sure we were absolutely comfortable with payout ratios based on that, and we are, or we wouldn't have moved forward with a $10. Thanks, Vamil.

Right within the markets, where there is a biosimilar how much of this brand versus Biosimilar on.

To help us visualize that question I think the ones with sub markets of them all of them.

Yeah, we're at about 60% molecules share across the board. So thats of all the international markets on average is about 60% molecule share.

And Scott Rizzi and wind vote.

I don't have the numbers right in front of me.

On each of the markets I would say typically in the international markets is a slightly slower uptake than it is.

In the U.S., but still doing very well.

So maybe the best thing would be get back to you with some more specifics around that but I think you can assume that the in place share there probably averages between 20 and 30%.

Vamil Kishore Divan: Operator, next question, please. Thank you, and our next question is from Steve Scala from Cohen. Thank you so much, and congratulations on another impressive quarter. I have several questions, but three of them are short.

But it depends obviously on the country that you're talking about.

And then Baylor MDD timing Mike.

Yes on rail or MDD, we'd expect to have the studies read out in the second half of next year.

And be prepared for regulatory submissions. Shortly thereafter, so a positive we would have an approval in 22.

Steve Scala: Can you be more specific on where Sky RISD patients are coming from? I think it's notable that Cosentix was a bit light this quarter and Novartis cited competition. Secondly, what was the non-GAAP interest expense number in the quarter? Third, you provided guidance for Humira OUS, but I don't think U.S.

And I think Thats, an important point to make here if we look at Baylor veloz growing very rapidly and as you know.

The atypical anti psychotic market is is very very large I think failures share is something like 3%.

And it's tracking at $1.4 billion at 3%.

So if we look at the current indications as we indicated in the comments of the bipolar and schizophrenia. We think we can drive Baylor alone in those indications to a multibillion dollar product and that is driving that market share penetration up to like 5% or so as.

Steve Scala: So can you tell us what you think the U.S. guidance would look like? And then lastly, we have tracked clinical trial activity during the pandemic, and it shows AbbVie recruiting trials are up 14% year to date. That is industry leading, two times greater than the next closest competitor, and much better than the average, which is down. And I'm just curious, what accounts for this? Is it a deliberate strategy to capture patients when other companies are taking a wait and see approach? Or is it something else?

And I think Thats very doable based on the profile of Baylor available as a very unique profile in that market.

So MDD if we're successful obviously, we'll open up a whole nother channel and allow you to increase that market share even more significantly and so you know typically many of the drugs.

Rick Gonzalez: Thank you. Okay. Um.

And achieved MDD were drugs that had five $6 billion.

Rob: Okay. So Steve, I'll handle your first question, Rob will handle two and three, and Mike can handle number four. So if you look at the in-place share, about 25% of that in-place share is coming from Humira on Sky RISD. The other 75% is coming from competitors. I'd say it's primarily the 17s, but some coming from the other 12s, 23s, or 23s.

Annual revenue.

Well. This is a is a nice opposite without MDD. They are still going to be a very important product and a very significant brown with MDD. It becomes a major product and so we'll see how those those next two studies play out the first study was positive and.

I think we're hopeful that we'll be able to get it.

Thanks, Stricker I think that was you operator next question. Please.

Thank you. Our next question is from Randall Stanicky from RBC capital markets.

Rick Gonzalez: But I'd say the bulk of it is coming from the seven. So, you know, that might answer your question about co-sensitivity. If you look at the capture of the type of patient that we're getting with Sky RISD, it's very balanced. It's about 50-50 between first line and then second line.

Great. Thanks, Rick early in the pandemic, you're one of the few two identifier or building impact for potential headwinds from higher unemployment associated with loss of health.

Coverage what are you currently seeing right now and anything on the patient assistance program numbers does that help you inform on that and then secondly, I just wanted to ask on Botox migraine. This has been historically, a roughly 600 million dollar high margin product for Allergan, we've been watching c. GRP impacted nobody in the market a couple of years.

Rick Gonzalez: So that's a nice balance between naive patients and patients who have failed other therapies. So I think, you know, the asset is performing the way you would expect a high performing, high efficacy asset to be able to perform. It has quickly become the preferred product by prescribing physicians. It has a great profile, it's quarterly dosing, it's got great efficacy, and the efficacy improves over time. There aren't any assets that have that kind of a profile in the market.

Do you see this as a growth product or opportunity for you and what are you seeing overall with respect to botox migraine. Thanks.

[noise] is on the on the unemployment we did identify back.

I guess it was in the first quarter call.

Mike: So I would expect that Sky RISD will continue to increase its in-play share. It's jumped about three points over the last maybe two months, and I would expect it to continue to increase. Okay, Steve, this is Rob.

That we were going to build in a level of risk associated with patients who would have to move to.

Some type of assistance program, because they lost their jobs.

We have not seen that impact play out any significant level, we have not seen it in our patient assistance program and right around the pandemic. We made a decision to proactively go out and advertise our patient assistance program just to make sure that patients knew that if they couldn't afford there.

Steve Scala: On your question on interest expense, for non-GAAP and GAAP, it's the same number; $620 million in the third quarter. We're no longer specifying any interest expense because we've now closed the transaction, so that negative carry on the bond is no longer applicable for the specified, so $620 is the number for both non-GAAP and GAAP. On the US Humira question, so we did not change our guidance; it continues to be for US Humira, 8% growth with a low single-digit price contribution. This is Mike.

The drugs that they could get them from us. So I think we proactively trying to drive it.

In an effort to make sure the pacing patients were not exposed, but we haven't seen very much at all.

We still have some coverage left in the fourth quarter for it.

But I'd say at this point I think we are questioning whether or not we are going to see it.

Now I can't tell you exactly why.

But I can tell you we're monitoring it carefully and it's definitely not happening.

At least in our business.

Rob: I'll take your last question on clinical trial activity. The first thing that I would say is that the increase in clinical trial activity reflects what's going on in our pipeline, and there's a lot of activity in our pipeline and a large number of molecules that we're advancing, and so that's a big part of it. That doesn't mean that there weren't disruptions from COVID, but it does mean that investigators decided when it was time to pause enrollment and when it was time to resume enrollment, and I think the evidence shows that they made those decisions better than they could have been made centrally. And that has allowed us to advance our portfolio, to advance our clinical trials with minimal disruption and with safe conduct for patients and the staff of the site, which are also critically important consideration Thanks, Steve.

Because we would see it in the patient assistance program.

Botox migraine.

You actually look at what has happened with patients on botox migraine when the injectable CDR piece came into the market you did see a tick down in in patients, but then botox recovered and it has roughly the same number of patients that add back that slightly lower.

Add back then so what that CRP is ended up doing was expanding the market to some extent and we're seeing a very similar phenomenon on the acute therapies as well.

If you look at the scripts.

The NVR axes for the acute CDR piece.

You can see that is actually.

Almost doubling every quarter the number of patients.

In the last quarter was about 90 to 100000.

NBR axes. So I think these assets can significantly expand the market I think two thirds of our patients are patients that have switched on the acute have switched from trip to ends to our agent and a one third of them are naive patients that were.

Mike: Operator, next question, please. Thank you. And our next question is from Nathan Jacob from UBS. Hi, this is John Lim on behalf of Naveen Jacob.

During the end of the category and again, that's all about.

Making it visible to patients who have this condition. So that they go to their physician and asked for the therapy. It's all about building markets essentially and so.

Operator: We've had a few questions. First, regarding the humeroclits in the US. Within the markets in which a biosimilar is out there, what percent of the molecule is now brand versus biosimilars? With now almost two years of biosimilar experience, how does that affect things? And next, for Skyrizzy and Rynvok, can you achieve the type of uptake that you have been seeing in the US and in international markets? We'd appreciate any commentary around in-play market share achieved in markets you've been approved for. And lastly, if we could talk about Braille or MDD timing, thank you. Okay, this is Rob.

I think one of the things. These assets will do is they will expand the market now I think as you expand the market, obviously botox therapeutic some of those patients will ultimately.

If they don't get the kind of the belief that they're looking for an injectable TRP or the acute therapy. They will they will eventually probably try injectable botox. So we could see a little bit of growth there, but the biggest part of the growth that we're going to see in this market.

Is from you broke.

And ultimately I told Japan.

It's a big market and I think these agents will allow us to be able to significantly expand the market and I think this is clearly a multibillion dollar market.

Rob: Just to clarify, the first question was on international and Humira, how much of that is now biosimilar? Right within the markets where there's a biosimilar, how much is grand versus biosimilar? Yeah, we're at about 60% molecule share across the board. So that's all the international markets on average are about 60% molecule share. Scott Rizzi, and Wynn Vogt.

Thanks, Randall operator next question please.

Thank you. Our next question, it's from David Risinger from Morgan Stanley.

[noise] [noise], thanks very much.

Excuse me so.

I want to start with a high level question, Rick could you. Please discuss long term immunology.

Net pricing and formulary positioning prospects in the face of increasing competition in coming years.

Rob: I don't have the numbers right in front of me on each of the markets, but I would say, typically, in the international markets, it is a slightly slower uptake than it is in the U.S., but still doing very well. So maybe the best thing would be to get back to you with some more specifics around that, but I think you can assume that the in-place share there probably averages between 20 and 30 percent. But it depends, obviously, on the country that you're talking about.

And then second.

Just had a high level question about cash flow.

I was hoping that you could discuss prospects for operating cash flow Capex and free cash flow. Thank you very much.

Okay. Thanks, David I'll take the first one Rob will answer the second one for you.

So if I look at long term immunology, what's what's critically important is that you have the kinds of assets that allow that managed care organization in PBM to be able to cover the greatest number of patients. This is a category. We're not every drug works on every patient that you have to have multiple options that are available on formulary and that.

Mike: And then on Baylor MDD timing, Mike. Yes, on Braille RMDD, we'd expect to have the studies read out in the second half of next year and be prepared for regulatory submissions shortly thereafter. So if possible, we would have an approval process. I think that's an important point to make here. If we look at Baylor, Baylor is growing very rapidly. And as you know, the atypical antipsychotic market is very, very large. I think Baylor's share is something like 3%.

It shows that shows that that is the appropriate thing to do to make sure. The patients have the have the drugs that they need to be able to be treated I would say, we typically do very well with formulary access.

Thats driven primarily by the fact that.

Our assets tend to be very attractive assets from their clinical profile.

Rick Gonzalez: And it's tracking at $1.4 billion at 3%. So if we look at the current indications, as we indicated in the comments, of bipolar and schizophrenia, we think we can drive VALAR alone in those indications to a multi-billion dollar product. And that's just driving that market share penetration up to like 5%. And I think that's very doable based on the profile of Baylor.

They establish significant market share positions and that's important.

For the managed care organization or the PBM, So I don't see anything significantly impacting that going forward.

I will I would assume we will maintain very high levels of formulary access.

Net pricing.

Theres always some level of impact on.

Rick Gonzalez: Baylor has a very unique profile in that model. So MDD, if we're successful, obviously will open up a whole new channel and allow you to increase that market share even more. And so, you know, typically, many of the drugs that achieved MDD were drugs that had five, six billion dollars of annual revenue. This is a nice opportunity.

On pricing when you renegotiate contracts I don't anticipate that you will see a significant change a.

Going forward, so I think it's.

Moreover, the normal kinds of competitive activities that we see in the marketplace.

And David This is Rob will answer your question on cash flow. So if you look at Aberdeen Eller again in 2019 and on a combined basis generated about $19 billion almost $20 billion of operating cash flow Capex runs close to $1 billion and so if you look at this year. We again, we have a partial year valor again, probably trending towards a $16 billion copper.

Rick Gonzalez: Without MDD, Baylor is still going to be a very important product and a very significant product. With MDD, it becomes a major product, and so we'll see how those next two studies play out. The first study was positive, and I think we're hopeful that we'll be able to get it. Thanks, Shrikar. I think that was you.

And cash flow number with a little bit less than 1 billion of Capex. So you need to annualize that and then also consider the fact that we're going to generate earnings growth going forward, but that should give you a good number to work with.

Thank you.

Thanks, David Operator next question please.

Operator: Operator, next question, please. Thank you. Our next question is from Randall Stanicki from RBC Capital Markets. Great, thanks.

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

Hi, Thanks for taking the questions I was just wondering first maybe on the IBT front I know you have a number of readouts coming up for RIN vote, and Sky Rizzi here, maybe you could just outline what current usage of targeted drugs in IDBD is on a percentage basis, and how that compares to rheumatology and dermatology and what you see.

Geoffrey Christopher Meacham: Rick, early in the pandemic, you were one of the few to identify or build in impact for potential headwinds from higher unemployment associated with loss of health. Coverage, what are you currently seeing right now and anything on the patient assistance program numbers that help you inform on that? And then, secondly, I just wanted to ask about Botox Migraine. This has historically been a roughly $600 million high-margin product for Allergan. We've been watching CGRP impact; they've now been in the market for a couple of years. Do you see this as a growth product or opportunity for you? And what are you seeing overall with respect to Botox and migraines? Thanks.

As a potential here to boost that uptake in IBT further.

And then for your TNF steroid conjugate program or what were the criteria that were key.

To lead to your choice of a 154 as the go forward asset and then lastly on the Allergan integration I know you said everything's on track there, it's going really well.

You talked about some revenue synergy opportunity, Rick and I know youve laid out your expense synergy target of 2 billion. In 2022, maybe you could just talk about some of the puts and takes for 2021 as we think about the allergy and synergies on both sides. Thank you.

Rick Gonzalez: So on unemployment, we did identify back in, I guess it was in the first quarter call, that we were going to build in a level of risk associated with patients who would have to move to some type of assistance program because they lost their job. We have not seen that impact play out to any significant level. We have not seen it in our patient assistance program.

Okay, Great and IBT usage, if you look at the penetration I'd say IBT is an area, where you have reasonable levels of biologic penetration because the disease, particularly groans diseases are pretty severe the challenge in in IB is.

Rick Gonzalez: And right around the time of the pandemic, we made a decision to proactively go out and advertise our patient assistance program just to make sure that patients knew that if they couldn't afford their AbbVie drugs, they could get them from us. So I think we proactively tried to promote it in an effort to make sure that patients were not exposed. But we haven't seen very much at all. We still have some coverage left for it in the fourth quarter.

But with the current therapies are available you still get suboptimal clinical efficacy for these patients and durability of that efficacy.

And so.

And what physicians tend to do.

As they rotate patients through various treatments to try to maintain them in control for a longer period of time. So it is a market that is ripe for higher efficacy agents and a market that is ripe for more agents to be available to allow for better treatment of those patients.

Rick Gonzalez: But I'd say at this point, I think we're questioning whether or not we are. Now, I can't tell you exactly why, but I can tell you we're monitoring it carefully, and it's definitely not happening, because we would see it in the patient assistance program. On Botox migraine, if you actually look at what has happened with patients on Botox migraine when the injectable CGRPs came into the market, you did see a tick down in patients, but then Botox recovered, and it has roughly the same number of patients that it had back then, slightly lower than it had back then. So what the CGRPs ended up doing was expanding the market to some extent, and we're seeing a very similar phenomenon with the acute therapies as well. If you look at the scripts, the NVRXs for the acute CGRPs, you can see that the number of patients is actually almost doubling every quarter. In the last quarter, it was about 90,000 to 100,000 patients.

And that's the key driver in that segment of what gets sick.

Significant uptake so.

Yeah, when we see the data around ibds that will be important for us.

Obviously, the early data looks good.

And ultimately I think these assets along with Humira Wilkins will be able to provide the market with a significant new alternative.

And I think that uptake will be good based on that.

So this is Mike I'll take the question about 154 so.

3373 in 154 represent our TNF steroid conjugate.

Molecules that are in the clinic they are very similar.

Similar to the extent that we view the biology as being translatable between the two but one find for includes some improvements in linker technology that relate to manufacturability.

Rick Gonzalez: So I think these assets can significantly expand the market. I think two-thirds of our patients are patients that have switched on the acute phase, switched from tryptans to our agent. And one-third of them are naive patients that we're bringing into the category. And again, that's all about making it visible to patients who have this condition so that they go to their physicians and ask for the therapy. It's all about building markets, essentially.

And ability to formulate at high concentration ease of formulation.

And so those can be very important advantages for successful molecule. We previously topline.

The positive results from 3373, we wanted to see that 154 gave us the PK performance in the exposure to achieve the Pharmacodynamic coverage. We think we need in the next stage of development and as I said, we view the biology has translated well between the two so once we saw that PK performance.

Rick Gonzalez: And so I think one of the things these assets will do is they will expand the market. Now, I think as you expand the market, obviously Botox therapeutic, some of those patients will ultimately, if they don't get the kind of relief that they're looking for on an injectable TGRP or the acute therapy, they will eventually probably try injectable Botox. So we could see a little bit of growth there, but the biggest part of the growth that we're gonna see in this market is from Ubrelvi and ultimately Atozoplast. You know, it's a big market. And I think these agents will allow us to be able to significantly expand the market. And I think this is clearly a multi-billion dollar market. Thanks, Randall.

And it matched our expectations and showed that 154 would give us the coverage that we were seeking at acceptable doses.

In the clinic, we made the decision to advance that molecule into larger scale trials.

Hey, Terence this is Rob I'll take your question on synergies so while we're not providing guidance for 2020 on today I think a good way to think about the expense synergies is to run rate the $600 million, partially or synergies, which it gets to about $1 billion and then if you think about that ramp to greater than 2 billion by 2022, I think it's reasonable to straight line that.

So you think about what's going to drive the ramp that things like systems integration leveraging procurement spend will result in more synergies over time as well as network optimization in the near term, it's really driven more from immediate redundancies like corporate infrastructure and R&D portfolio optimization.

Operator: Operator, next question, please. Thank you. Our next question is from David Risinger from Morgan Stanley. Thanks very much. Excuse me.

David Risinger: So I want to start with a high-level question, Rick. Could you please discuss long-term immunology, net pricing, and formulary positioning prospects in the face of increasing competition in the coming years? And then, second, I just had a high-level question about cash flow. I was hoping that you could discuss prospects for operating cash flow, CapEx, and free cash flow. Thank you very much. Okay, thanks, David. I'll take the first

As it relates to the revenue synergies as we've now had a few months with the combined company, we see opportunities as we think about investment in aesthetics, where we've really amped up our DTC investment for Juvederm in botox cosmetic and they both have an ability to invest more in aesthetics, similarly invest more nervous.

Science or whether.

Whether thats railcar botox therapeutic and then we look internationally given the infrastructure we have the integrated brand team approach, we think there's opportunity to really leverage our market access capability, our international affiliate structure to really drive that international growth for the company going forward for those just for those Allergan brands as well.

Rick Gonzalez: Rob will answer the second one for you. So, if I look at long-term immunology, what's critically important is that you have the kinds of assets that allow that managed care organization or PBM to be able to cover the greatest number of patients. This is a category where not every drug works for every patient, so you have to have multiple options that are available on the formulary, and that's just the appropriate thing to do to make sure that patients have the drugs that they need to be able to be treated. I would say we typically do very well with formulary access, that's driven primarily by the fact that our assets tend to be very attractive assets from their clinical profile. They establish significant market share positions, and that's important for the managed care organization or the PBM. So I don't see anything significantly impacting that going forward. I would assume we will maintain very high levels of formulary access net pricing. There's always some level of impact on pricing when you renegotiate the contracts.

Turning to the only thing I would add maybe to give you some perspective on the investment side.

Allergan intended to what I would describe as holes invest and particularly DTC.

But even in social media, so they didnt conns and typically what we do with brands when we want to drive maximum speed of market penetration as we invest at a steady state and continue to do that for an extended period of time, so they might have.

Invested heavily in one quarter and then gone dark in the next quarter and then invested again and gone dark again, we don't use that kind of a strategy we tend to invest for the full year and our experience what that does is it gives you. The fact that you have constant coverage gives you.

Rob: I don't anticipate that you will see a significant change going forward. So I think it's more of the normal kinds of competitive activities that we see in the market. And David, this is Rob. I'll answer your question on cash flow. So if you look at AbbVie and Allergan in 2019, on a combined basis, they generated about $19 billion, almost $20 billion of operating cash flow. And CapEx runs close to a billion dollars. And so if you look at this year, again, we have a partial year of Allergan, probably trending towards a $16 billion operating cash flow number with a little bit less than a billion of CapEx. So you need to annualize that.

Maximum speed of penetration. So we clearly think thats going to be an advantage, particularly in areas like a statics and neuro side.

Thanks, Eric Operator next question please.

Thank you. Our next question is from Gregg Gilbert from Cherilyn.

Thank you for getting me good morning, Rick.

Rick It sounds like.

You think the neuroscience franchise might be one of the sleepers as the Allergan deal and you've already frame the potential for Frailer, particularly depression hit but I was curious if its business development in neurosciences, taking on sort of a new sense of urgency given the half that you have known that franchise or whether you think you have enough going on there already and then for Mike I was hoping you.

You could let us know when we'll see phase three data for 951 in Parkinsons and give us a sneak preview of what you're looking for their profile wise and lastly can you frame for botox therapeutic Mike what Youve decided to pursue in terms of indications versus ones that you've taken off the table now that you've had some time to work with that thanks.

David Risinger: And then also consider the fact that we're going to generate earnings growth going forward, but that should give you a good number to work with. Thank you. Thanks, David. Operator, next question, please.

Operator: Thank you. Our next question is from Terence Flynn from Goldman Sachs. Hi, thanks for taking the questions.

Yes, I'd say on neuroscience, the way to think about it is or looses the way we're thinking about it.

Terence Flynn: I was just wondering, first, maybe on the IBD front, I know you have a number of readouts coming up for RINVOC and SkyRISI here. Maybe you could just outline what the current usage of targeted drugs in IBD is on a percentage basis and how that compares to rheumatology and dermatology and what you see as the potential here to boost that uptake in IBD further. And then for your TNF steroid conjugate program, what were the criteria that were key to your choice of 154 as a go-forward asset? And then lastly, on the Allergan integration, I know you said everything's on track there. It's going really well.

Is there is a significant opportunity to drive bail are to be a a very large products I mean doubling.

Or more.

Depending upon the ability to get.

Good MDD and I'd also say in migraine when we get the full portfolio of migrating assets. The migraine market is a big market. If you look at the acute market today, it's probably about $1.5 billion. We believe we can grow to four or $5 billion by 2025 with the right kinds of assets.

And the right kind of promotion and then if you look at the preventative market its about $3 billion and we believe that one and grow high single to low double digits with the right kinds of assets and the right kinds of promotions. So the first phase of Neurosciences is nothing more than taking the assets we have now.

Rick Gonzalez: You talked about some revenue synergies opportunities, Rick, and I know you've laid out your expense synergies target of $2 billion in 2022. Maybe you could just talk about some of the puts and takes for 2021 as we think about the Allergan synergies on both sides. Thank you.

Getting into Japan to the marketplace and then we have a full portfolio of migraine products and then maximizing the market share position of those assets in the market that's sort of phase one, but I would say now that we have infrastructure in place.

Mike: On IBD usage, if you look at the penetration, I'd say IBD is an area where you have reasonable levels of biologic penetration because the disease, particularly Crohn's, is pretty severe. The challenge with IBD is that with the current therapies that are available, you still get suboptimal clinical efficacy for these patients and durability of that efficacy. And so, what physicians tend to do is they rotate patients through various treatments to try to keep them in control for a longer period of time.

Mike's BD team has been now starting to look at assets that we'd be complimentary to that and we didnt in the past because for a single anti psychotic we wouldn't have wanted to build out the infrastructure. It just wouldn't have made sense for us, but now we can we can basically add those kinds of assets of the infrastructure.

We have so it does give us another opportunity from a BD standpoint to be able to build.

The.

Rick Gonzalez: So it is a market that is ripe for higher efficacy agents and a market that is ripe for more agents. And that's the key driver in that segment of what gets significant uptake. So when we see the data around IBD, that will be important for us. Obviously, the early data looks good.

The business longer term.

So I'll take the second question and I.

Grew with everything Rick said, the only thing I'd add on BD in neuroscience is nurse psychiatry is now clearly an area of strength for us and can be an area of interest and that can go beyond the anti psychotics as well.

There is tremendous potential and unmet need in areas like generalized anxiety disorders still in depression. Despite there are many agents on the market many.

Mike: And ultimately, I think these assets, along with Humira, will be able to provide the market with a significant new alternative. And I think that uptake will be good based on... So this is Mike.

Many many patients remain inadequately treated so we would look broadly across that across that space with respect to 951 and data timing, we'd expect to see results from our phase three study in the second half of next year.

Mike: I'll take the question about 1, 5, 4. So 3, 3, 7, 3 and 1, 5, 4 represent our TNF steroid conjugate molecules that are in the clinic. They're very similar, similar to the extent that we view the biology as being translatable between the two. But 1, 5, 4 includes some improvements in linker technology that relate to manufacturability and ability to formulate at high concentrations, and ease of formulation. And so those can be very important advantages for a successful molecule. We previously reported positive results from 3, 3, 7, 3. We wanted to see that 1, 5, 4 gave us the PK performance and the exposure to achieve the pharmacodynamic coverage we think we need in the next stage of development. And as I said, we viewed the biology as translatable between the two. So once we saw that PK performance and it matched our expectations and showed that 1, 5, 4 would give us the coverage that we were seeking at acceptable doses in the clinic, we made the decision to advance that molecule into larger-scale trials. Hey Terence, this is Rob.

And what we're looking for is really do open like efficacy because duodopa is a transformational product, but it's also a product that is challenging to administer and the nature of that product. The fact that it requires the placement of a of a gastric tube that send thread in into the small bowel and has to be maintained.

Limits.

The size of of what's effectively addressable market not the market by the labeled indication, but the proportion of patients within that population that would consider a therapy like that.

And 951 has the potential to substantially expand that it has an insulin pump like device subcutaneous delivery device, we think it will broaden the number of patients.

Within that labeled population, who would consider such a therapy and this is really a very substantial market.

So for example, if you look at two up a despite all these challenges you know it it does about a half a million dollars in sales if you look across similar.

Rob: I'll take your question on synergies. So while we're not providing guidance for 2021 today, I think a good way to think about the expense synergies is to run rate the $600 million and partially fund your synergies, which would get you to about a billion dollars. And then if you think about that ramp to, you know, greater than $2 billion by 2022, I think it's reasonable to straight line that. So if you think about what's going to drive the ramp, things like systems integration, leveraging procurement spend, will result in more synergies over time, as well as network optimization. In the near term, it's really driven more from immediate redundancies like corporate infrastructure and R&D portfolio optimization. As it relates to the revenue synergies, as we've now had a few months with the combined company, you know, we see opportunities as we think about investment in aesthetics, where we've really ampped up our DTC investment for Juvederm and Botox Cosmetic, the ability to invest more in aesthetics. Similarly, invest more in neuroscience, whether that's Raylar or Botox Therapeutics.

Similar therapies for advanced Parkinson's.

Parkinsons disease, the market is probably a billion and a half or more and that probably represents only a small part of the potential because much of it remains on tap. So we think that 951 can address that and we think that the the profile that it will take to address that is to open like efficacy with a more patient friendly.

Subcutaneous delivery device.

With respect to botox indications.

There are a number of indications both for botox.

And for other toxins for novel toxins that were considering in the therapeutic space I think theres theres more work that we can do in the migraine space, although that has been.

An area of strength episodic migraine.

Has patients that may benefit from a therapy like botox and there's still much more to do on the neurology side with respect to spasticity.

Disorders.

That might be secondary to stroke or other conditions, where there is still room to expand those indications. When we look more broadly there are a number of potential interesting indications for neurotoxins they might not be.

Rick Gonzalez: And then we look internationally; given the infrastructure we have, the integrated brand team approach, we think there are opportunities to really leverage our market access capability, our international affiliate structure to really drive that international growth for the company going forward for those Allergan brands as well. The only thing I would add, maybe to give you some perspective on the investment side, Allergan tended to invest in what I would describe as pulse investments, particularly DTC, but even in social media. So they didn't, and typically, what we do with brands when we wanna drive maximum speed of market penetration is we invest at a steady state and continue to do that for an extended period of time. So they might have invested heavily in one quarter and then gone dark in the next quarter, and then invested again and gone dark again. We don't use that kind of a strategy. We tend to invest for the full year, and in our experience, what that does is gives you, the fact that you have constant coverage gives you maximum speed of penetration. So we clearly think that's gonna be an advantage. Particularly in areas like aesthetics and neuroscience.

Botox in May be novel toxins as can be things like prevention of a fib for example, and we're continuing to explore indications beyond that.

Thanks, Craig Operator next question please.

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

Thank you hi.

High level question for Rick.

Despite our again being a very reasonable solution to.

Upcoming U.S. Acumera ILUVIEN 2023, the multiple on Abbvie is lower than it's ever been.

The entire drug group is out of favor your multiple is about half of the peer group average.

Can you what that multiple says is that investors remain worried about what have you. It looks like past 2023. So two questions related to this the first is why not give updated granular extended guidance that goes beyond 2023, yeah.

Given long term guidance in the past some times and that's resonated well with the market. So can we expect you might do this at some point soon and second question why not go do more M&A in the near term. We just saw Bristol do a 13 billion dollar deal.

Not far after closing Celgene and layering more product into your pipeline would help give investors assurances that there is life beyond 2023.

Terence Flynn: Thanks, Terence. Operator, next question, please. Thank you. Our next question is from Greg Gilbert from Truist. Thank you for getting me in.

By virtue of how you answered an earlier question you yourself basically said theres not much new enemies slow until 2025 and beyond thank you.

Greg Gilbert: Good morning Rick, it sounds like you think the neuroscience franchise might be one of the sleepers of the Allergan deal, and you've already discussed the potential for VrayLAR, particularly if depression hits. But I was curious if business development in neuroscience has taken on sort of a new sense of urgency, given the heft that you have now in that franchise, or whether you think you have enough going on there already. And then, for Mike, I was hoping you could let us know when we'll see phase three data for 9.5.1 in Parkinson's. Unknown Executive, Mohit Bansal, Carson Wong, Perry Siatis, Marcella Pinella, AbbVie, Now that you've had some time to work with that, thanks. I'd say neuroscience, the way to think about it is, or at least the way we're thinking about it, is there's a significant opportunity to drive Baylor to be a very large product. I mean, you know, doubling or more, depending upon the ability to get MD.

Yeah, I think if you look at Tim. This is Rick if you look at the P E and ER of the whole sector. Obviously the sector is under pressure from from the political environment and the concerns about the political environment and you are correct. We're at the lower end of that of that PE and I think that is.

Driven by uncertainty about what the growth rate will be on the other side of the Ela.

What I would tell you is obviously, we have a 10 year LLP. So we know what we think that growth rate is on the other.

Inside of the elderly and I can tell you that more I look at that growth rate it's robust.

Now the market has to come around to that point of view I'd say, we haven't always been right, but in total.

Revenue, we've always been in.

Back Weve always beat for the most part what our expectations were.

And so we obviously challenge it pretty hard and ER, we have knowledge of what we believe the erosion curve will look like we have knowledge of what we think our pipeline will deliver and what the additional indications will deliver and look I remember there was a tremendous amount of skepticism about when we gave it would be to try.

Rick Gonzalez: And I'd also say in migraine, when we get the full portfolio of migraine assets, the migraine market is a big market. If you look at the acute market today, it's probably about $1.5 billion. We believe it can grow to $4 or $5 billion by 2025 with the right kinds of assets and the right kind of promotion. And then, if you look at the preventative market, it's about $3 billion, and we believe that it can grow high single-digit to low double digits with the right kinds of assets and the right kinds of promotion. So the first phase of neuroscience is nothing more than taking the assets we have now, getting Atojapan to the marketplace, and then we have a full portfolio of migraine products, and then maximizing the market share position of those assets in the market. That's sort of phase one.

Another $11 billion of risk adjusted.

Revenues for remote and Sky Rizzi back a year or two ago, something like that there was a tremendous amount of skepticism.

That's that's impossible I don't hear very much of that now that these two assets or $2 billion and growing like rockets.

So I'd say our ability to assess what we can do with our assets is pretty high now.

That doesn't mean, you shouldn't go out and get more things and we constantly look and where we find opportunities. We will clearly go pursue those you have to be opportunities that make sense and fit into our portfolio.

You've seen us do transactions to continue to build the long term future.

Of our hemo business with Genmab, an imam and those two assets combined with what Venclexta and Imbruvica can continue to do our guys are going to give us a very robust long term performance in that franchise.

Mike: But I would say now that we have the infrastructure in place, Mike's BD team has been starting to look at assets that would be complementary to that. And we did it in the past because for a single antipsychotic, we wouldn't have wanted to build out the infrastructure. It just wouldn't have made sense for us.

I think in immunology, we're in pretty good shape between our internal pipeline.

Both the additional indications unscarred resuming remote and then what we have earlier on that we think will play out in a positive way.

Mike: But now we can basically add those kinds of assets to the infrastructure we have. So it does give us another opportunity from a business development standpoint to be able to build the business longer term. I'll take the second question and agree with everything Rick said.

When we look at no science, we just talked about that we have the ability to be able to grow that certainly we're going to invest heavily in a statics, we have a tremendous amount of assets new toxins that we're working on and we're going to accelerate many of those new fillers and other times of UBS.

Mike: The only thing I'd add on BD and neuroscience is neuropsychiatry is now, you know, clearly an area of strength for us and can be an area of interest, and that can go beyond the antipsychotics as well. There's tremendous potential and unmet need in areas like generalized anxiety disorders, still depression, despite there being many agents on the market, many, many patients remain inadequately treated. So we would look broadly across that space.

Opportunities that will build that aesthetics business.

To be able to grow rapidly and so.

I feel pretty good about where we are but I'd say I feel very good about where we are six months into the Allergan transaction, certainly allergan has given us more growth as.

As we mentioned a moment ago, when we look at neuroscience neuroscience has clearly been.

I think a nice positive upside for us and one that I think we can execute very well.

As far as guidance is concerned.

Mike: With respect to 951 and data timing, we'd expect to see results from our Phase III study in the second half of next year. And what we're looking for is really DUOPA-like efficacy because DUOPA is a transformational product, but it's also a product that is challenging to administer, and the nature of that product, the fact that it requires the placement of a gastric tube that's then threaded into the small bowel and has to be maintained, limits the size of what's effectively an addressable market, not the market by the And 951 has the potential to substantially expand that. It has an insulin pump-like device, a subcutaneous delivery device.

I'm not saying, we will never give guidance, but we want to give guidance when we're able to do it with a high degree of certainty.

Because the last thing you want to do is provide a level of guidance that.

You don't have high degree of certainty and you know it's going to.

It has some variability to it.

You, probably remember we did that on the international bio Similars and we were off by not that much but by some and the market didn't like the fact that we Ross. So you need to be awfully careful about how you provide that guidance in a way to make sure that you are that you meet or exceed.

The guidance and at the point at which we have that level of confidence we may go out with longer term guidance.

Thank you.

Thanks Sam.

Operator next question, we have we have time for one final question.

Thank you and our final question today is from Josh Schimmer from Evercore.

The last question. Thanks for squeezing me in just a couple of quick ones can you provide any color on the sky receive royalty owed and can you comment on what you see is the incremental markets for the lower face talks and the new dermal filler and presbyopia. If you view any of those material. Thank you.

Mike: We think it'll broaden the number of patients, you know, within that labeled population who would consider such a therapy, and this is really a very substantial market. For example, if you look at DUOPA, despite all of its challenges, it makes about half a billion dollars in sales. If you look across similar therapies for advanced Parkinson's disease, the market is probably a billion and a half or more, and that probably represents only a small part of the potential because much of it remains untapped. With respect to Botox indications, there are a number of indications, both for Botox and for other toxins, for novel toxins that we're considering in the therapeutic space. I think there's more work that we can do in the migraine space, although that has been an area of strength.

Hi, Josh so on on the Sky Rizzi royalty will keep in mind that we account for this as a business combination. So come through continued consideration. So you don't see it on a non-GAAP you now.

We don't disclose a royalty rates, but a good way to think about it is reasonable royalty you pay for a late stage asset is probably a good way to think about what the royalty burden would be on onto the cash royalty burn will be on Scott rosy.

So I'd say, the lower face toxins and the lower face sellers that were working on probably the best way rather than trying to characterize individual indications or toxins are pillars is we're trying to build a portfolio.

Mike: Episodic migraine has patients that may benefit from a therapy like Botox, and there's still much more to do on the neurology side with respect to spasticity, disorders that might be secondary to stroke or other conditions where there is still room to expand those indications. When we look more broadly, there are a number of potential interesting indications for neurotoxins. But they might not be Botox.

And a and a or a market activation strategy that will allow us to grow via statics business added and a consistent double digit rate and it is both that internal pipeline and activating more patients and some BD.

Mike: They may be novel toxins. Those could be things like prevention of AFib, for example, and we're continuing to explore indications beyond that. Thanks, Greg. Operator, next question, please.

The effort that will give us that so certainly those lower face toxins and pillars are designed to be able to support that growth going forward.

The eye care product I'm told that product a sort of a modest products I don't remember the specifics you Rob.

Operator: Thank you. And our next question is from Tim Anderson from Wolf Research. Despite Allergan being a very... Multiple on AbbVie is lower than it's ever been. Unknown Speaker Your multiple is about half what that multiple says. First, why not give up data?

Yeah.

I I'd call it sort of a modest sized product.

Okay. Thank you.

Thanks, Josh that concludes today's conference call, if you'd like to listen to a replay of the call. Please visit our website at investors dot at the dotcom. Thanks again for joining us.

Timothy Minton Anderson: Second question, why not do more M&A in the near term? We just saw. [inaudible] You know, I think if you look at Kim, this is Rick, if you look at the PE and the whole sector, obviously, the sector is under pressure from the political environment and the concerns about the political environment. And you are correct. We're at the lower end of that PE.

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

Rick Gonzalez: And I think that is driven by uncertainty about what the growth rate will be on the other side of the LOE. What I would tell you is, obviously, we have a 10-year LRP, so we know what we think that growth rate is on the other side of the LOE. And I can tell you that when I look at that growth rate, it's robust. Now, the market has to come around to that point of view. I'd say we haven't always been right, but in total... revenue. We always have.

[music].

Rick Gonzalez: We challenge it pretty hard, and we have knowledge of what we believe the erosion curve will look like. We have knowledge of what we think our pipeline will deliver and what the additional indications will deliver. Look, I remember there was a tremendous amount of skepticism when we gave 10 or $11 billion of risk-adjusted revenues for Renvoke and Skyrizzy back a year or two ago, something like that. That's, that's impossible. I don't hear very much of that now that these two assets are $2 billion and growing like rockets. So I'd say our ability to assess what we can do with our assets is pretty high. Now that doesn't mean you shouldn't go out and get more things, and we constantly look, and where we find opportunities, we will clearly pursue those.

Rick Gonzalez: They have to be opportunities that make sense and fit into our portfolio. You've seen us do transactions to continue to build the long-term future of our HEMOC business with GenMab and iMab, and those two assets, combined with what Van Klecksten and Brubeck can continue to do, are going to give us a very robust long-term performance in that franchise. I think in immunology, we're in pretty good shape between our internal pipeline, both the additional indications for Skyrizzi and Limbogue, and then what we have earlier on that we think will play out in a positive way. When we look at neuroscience, we just talked about that.

Rick Gonzalez: We have the ability to be able to grow that. Certainly, we're going to invest heavily in aesthetics. We have a tremendous amount of assets, new toxins that we're working on, and we're going to accelerate many of those new fillers and other kinds of opportunities that will build that aesthetics business to be able to grow rapidly. I feel pretty good about where we are.

Rick Gonzalez: In fact, I'd say I feel very good about where we are six months into the Allergan transaction. Certainly, Allergan has given us more growth as, as we mentioned a moment ago, when we look at neuroscience, neuroscience has clearly been, I think, a nice positive upside for us and one that I think we can do very well. As far as guidance is concerned, I'm not saying we will never give guidance, but we want to give guidance when we're able to do so with a high degree of certainty. Because the last thing you want to do is provide a level of guidance that you don't have a high degree of certainty about, and you know it's going to have some variability to it. I probably remember we did that on international biosimilars, and we were off by not that much, but we were off by some, and the market didn't like the fact that we were off.

Rick Gonzalez: So you need to be awfully careful about how you provide that guidance in a way to make sure that you meet or exceed the guidance. And at the point at which we have that level of confidence, we may go out with longer terms. Thanks, Sam. Operator, we have time for one final question. Thank you. And our final question today is from Josh Schimmer from Evercore. Last question, thanks for squeezing me in. Just a couple of quick ones. Can you provide any color on this?

Operator: Oat, and can you comment on what you see as the incremental market? Lower Face Toxins, the New Dermal Filler, and Presbyopia, if you view any of those as material. Thank you.

Josh Schimmer: Josh, so on the Sky RISD royalty, keep in mind that we account for this as a business combination, so it comes through contingent consideration, so you don't see it on our non-GAAP P&L. We don't disclose our royalty rates, but a good way to think about it is, you know, the reasonable royalty you pay for a late-stage asset is probably a good way to think about what the royalty burden would be on, the cash royalty burden would be on. So when I say the lower face toxins and the lower face fillers that we're working on, probably the best way rather than trying to characterize individual indications or toxins or fillers is that we're trying to build a portfolio and a market activation strategy that will allow us to grow the aesthetics business at a consistent double-digit rate. And it is both that internal pipeline and activating more patients and some BD effort that will give us that. So certainly those lower face toxins and fillers are designed to be able to support that growth going forward. The iCare product; I would call that product sort of a modest product. I don't remember the specifics. Do you agree, Rob?

Rob: But I'd call it sort of a modest sized product. Yeah, thank you. Thanks, Josh. 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. This does conclude today's conference. You may disconnect at this time. ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? , , , , , , , , , , , , , , , ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, and thank you for standing by.

Rick Gonzalez: Welcome to the AbbVie third quarter 2020 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 phone. And 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 Savarino, Vice Chairman and President; and Rob Michael, Executive Vice President and Chief Financial Officer. And 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 1994, cautioning that these forward-looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on AbbVie's operating results and financial results, which may cause actual results to differ materially from those indicated in the forward-looking statements.

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Rick Gonzalez: Additional information about these risks and uncertainties is included in our 2019 Annual Report on Form 10-K and in our other SEC filings. The company 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. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website.

Rob: Unless otherwise noted, our commentary on sales growth is on a comparable operational basis, which includes full current year and historical results for Allergan and excludes the impact of exchange. For this comparison of underlying performance, all historically reported Allergan revenues have been recast to conform to AbbVie's Revenue Recognition Accounting Policy and excluded the divestitures of ZANPAP and VIAW. Following our prepared remarks, we'll take your questions. So with that, I'll now turn the call over to you. Thank you, Liz. Good morning, everyone.

Mike: 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.

Mike: Following our remarks, we'll take your questions. We delivered another excellent quarter with adjusted earnings per share of $2.83, exceeding the midpoint of our guidance range by $0.08. When I look at our business and the actions we've taken to position AbbVie for sustainable performance, including the acquisition of Allergan, I feel very good about our long-term outlook. The fundamentals are strong, and there is considerable momentum across our legacy and new portfolios, which are both demonstrating robust growth despite the COVID pandemic and together have the potential for significant long-term value creation. I'd like to specifically highlight our recent progress across several aspects of our business, including the launches of Renvoke and Skyrizzy, which are performing well ahead of all comparable launch analogs in their initial indications and continue to exceed our expectations. Our HEMON franchise also continues to deliver robust performance and is expected to generate more than $6.5 billion in revenue this year, representing strong double-digit growth.

[music].

Mike: New indications and novel combinations, including our recently announced collaboration with GEMMAB and IMAB, provide opportunities for further revenue expansion. While we're still relatively early in the integration of Allergan, the strategic merits of the combination have never been more evident. We're already demonstrating that we have created a stronger, more diverse company with robust cash flows and multiple new growth vehicles for the long term. We now have the leading aesthetics franchise, which is demonstrating a strong V-shaped recovery, as well as a highly attractive neuroscience portfolio, which delivered double-digit growth on a comparable operational basis this quarter and has significant momentum with VELAR and our expanding migraine franchise, and our pipeline is advancing nicely, with numerous We're on track for the approval of more than a dozen new products or major indications over the next two years, which will collectively add meaningful revenue growth. This includes a total of six additional indications for Renvoke and Skyrizzy.

Good morning, and thanks for joining US also on the call with me today are reconciling chairman of the board and Chief Executive Officer, Michael Severino, Vice Chairman and President, Rob Michel Executive Vice President and Chief Financial Officer, and joining us for the Q and a portion of the call is Laura Schumacher, Vice Chairman external affairs, Chief legal officer and core.

But 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.

I'd be cautions that these forward looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on Abbvies operations results and financial results that may cause actual results to differ materially from those indicated in the forward looking.

Mike: Expanded indications for BenClexta and several other near-term new product approvals, including Antojapan, Novitaclax, and 951. Clearly, this is a very exciting time for AbbVie, and I'm pleased with the progress that we're making towards our long-term strategy for sustainable growth. I remain confident that we will continue to execute as we have in the past and deliver outstanding shareholder value going forward. Now, I'd like to look further at our business performance. I'm pleased with the recent trends across our key growth areas. I'll start with immunology, where we have established strong trajectories for Ringo and Skyrizz.

Additional information about these risks and uncertainties is included in our 2019 annual report on form 10-K, and our other SEC filings.

I'd be undertakes no obligation to update these forward looking statements, except as required by law on todays conference call as in the past non-GAAP financial measures will be used to help investors understand abbvies ongoing business.

These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website.

Mike: As I previously noted, both continue to perform well above expectations. In their initial indications, these two brands have clearly demonstrated superior efficacy to Humira, as well as other novel agents on the market or in development, resulting in significant in-play market shares, a leading indicator for long-term commercial performance.

Unless otherwise noted our commentary on sales growth is on a comparable operational basis, which includes all current year and historical results for Allergan and excludes the impact of exchange for this comparison of underlying performance. All historically reported dollar again revenues have been recast to conform to Abbvies revenue recognition accounting policies.

And excluding the divestitures of desktop and by Okay.

Mike: The RINVOC and RA, which includes both new and switching patients, remain strong at approximately 16% and have now reached parity with our market-leading Humira. In psoriasis, Sky Rizzi has already achieved the leading market share at 33%. This level of share capture at this stage of the launch is unprecedented.

Following our prepared remarks, we'll take your questions so with that.

I'll now turn the call over to Rick Thank.

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 we should advancements across the R&D programs and Rob will discuss the quarter in more detail.

Mike: And, if sustained, will ultimately lead to total market share well in excess of what was contemplated when we communicated our expectations for 2025 sales. This strong performance and trajectory, despite the impact of the COVID-19 pandemic, is a testament to our differentiated product profile and our commercial execution. Our focus since the pandemic has been on driving accelerated patient activation, and we remain encouraged by our current prescription trend. Our recent performance continues to give us confidence in the near and long-term potential for both Renvoke and Skyrizzy, which we now expect will deliver $2.2 billion in combined revenue for full year 2020, well exceeding our original projections for this year.

Following their remarks, we'll take your questions.

We have been delivered another excellent quarter with adjusted earnings per share of $2.83 exceeding the midpoint of our guidance range by eight cents.

When I look at our business and the actions we've taken the position add deeper sustainable performance, including the acquisition of Allergan.

Very good about our long term outlook. The fundamentals are strong and there is considerable momentum across our legacy and new portfolios, which are both demonstrating robust growth. Despite the gold is endemic and together have the potential for significant long term value creation.

I'd like to specifically highlight our recent progress across several aspects of our business, including the launches of rent Vulcan's Guy Ritchie, which are performing well ahead of all comparable launch analogs in their initial indications and continued to exceed our expectations are hanging on for.

Mike: In addition to outstanding commercial momentum, we're also making excellent progress with Ringgold and Skyrizzy in new indications, which we expect will further strengthen our leadership position. We have already started planning and preparing for the forthcoming approval of three additional RINVOC indications next year, including psoriatic arthritis and ankylosing spondylitis, giving us complete coverage across the more than $40 billion rheumatology segment. We also expect approval in atopic dermatitis, another large and growing market that has the potential to be a multi-billion dollar peak revenue. [inaudible] In the coming year, we also intend to submit regulatory applications for SCIRIS-E in psoriatic arthritis and both agents in the area of inflammatory bowel disease.

In China. It's also continues to deliver robust performance and is expected to generate more than six and a half a billion dollars in revenue this year.

Representing strong double digit growth.

New indications and novel combinations, including our recently announced collaboration with Genmab.

Hi, Matt.

By opportunities for further revenue expansion.

Well, we're still relatively early in the integration of Allergan the strategic merits of the combination have never been more evident.

We are already demonstrating that we have created a stronger more diverse company with robust cash flows and multiple new growth vehicles for the long term.

Mike: A more than $20 billion market today with high unmet needs. Overall, I'm extremely pleased with the progress we're making on both Renvoke and SkyRisen. I'd also like to take this opportunity to announce that we will be hosting an immunology-focused Investor Day in December, where we intend to further discuss our strategy, progress, and expectations for this important growth area. Additional details will be forthcoming. Turning now to HEMA, which delivered robust double-digit growth again this quarter and remains an important therapeutic area for AbbVie's long-term performance. Imbruvica has a strong position across multiple indications, including CLL, where it remains the clear market share leader across all lines of therapy, and Rubica. Sales increased 9% on an operational basis this quarter, despite lower new patient starts within CLL, where the market remains below pre-COVID levels. Ben Klecks, sales increased nearly 60% on an operational basis this quarter. The penetration across our approved indications remains strong, especially in AML, given the potential aggressive disease progression of that cancer. In the quarter,

We now have the leading statics franchise, which is demonstrating a strong V shape recovery as well as a highly attractive no science portfolio, which delivered double digit growth on a comparable operational basis. This quarter and has significant momentum with Baylor and our expanding Mike.

Grain franchise.

And our pipeline is advancing nicely with numerous attractive late stage programs that we believe will allow us to maintain a growing and vibrant business.

We're on track.

With the approval of more than a dozen new products or major indications over the next two years, which will collectively add meaningful revenue growth.

This includes a total of six additional indications for rent broken Scott Rizzi expanded indications for Ben collect stuff and several other near term product, a new product approvals, including our toes, Japan, I'm going to Clecs and 951.

Clearly this is a very exciting time for Abby and.

Please with the progress that we're making towards our long term strategy for sustainable growth I.

I remain confident that we will continue to execute as we have in the past and deliver outstanding shareholder value going forward.

Mike: We also announced a strategic collaboration with IMAP, further expanding our oncology portfolio with an anti-CD47 monoclonal antibody that has potential across a wide range of blood cancers. The IMAB opportunity adds to our already attractive GenMabs CD3xCD20, Expanded Indications for VanClexta, and several promising early-stage programs. We also now have another high-performing franchise in neuroscience, which further diversifies Ab VALAR sales increased strongly double digits again this quarter on a comparable operational basis with annualized revenues of more than $1.4 billion.

I'd like to look further at our business performance I'm pleased with the recent trends across start.

Our key growth areas.

Ill start with immunology, where we have established strong trajectories for Rindo and Scott raising.

As I previously noted.

Both continue to perform well above expectations.

In their initial indications. These two brands have clearly demonstrated superior efficacy to humira as well as other novel agents on the market or in development risk.

Resulted in significant in play market shares a leading indicator for long term commercial performance.

Mike: Given Baylor's benefit-risk profile relative to other atypical antipsychotics, we remain confident in its long-term growth potential, which we believe is multi-billion dollars across the currently approved indications of bipolar disorder and schizophrenia. Botox Therapeutics, which has nearly a dozen medical treatment indications, including chronic migraine, is also performing very well. Revenues were up nearly $100 million sequentially on a comparable operational basis, demonstrating a rapid COVID recovery. The launch of Ubrelvi, our leading oral CGRP for acute migraine, is exceeding our expectations.

In place share.

Well when broken already which includes both new and switching patients remained strong at approximately 16% and has now reached parity with our market leading humira and.

In psoriasis Sky Rizzi has already achieved the leading in play market share at 33%.

This level of share capture at this stage of the launch is unprecedented.

And if sustained will ultimately lead to total market share well in excess of what was contemplated when we communicated our expectations were 2025 sales.

This strong performance in trajectory despite the impact of the COVID-19 pandemic.

Mike: Commercial access is ramping strongly, and increasing DTC investments have resulted in encouraging new patient starts and market expansion. When you consider our overall scale with Botox Therapeutics, Wellbe's acute treatment profile, and the promising development of Atojapan for the prevention of episodic and chronic migraine, we see substantial room for long-term revenue growth with this best-in-class migraine portfolio. Within aesthetics, our fourth major growth platform, we're seeing robust demand trends and a rapid V-shaped recovery. Total global aesthetic revenues of more than $950 million were up 70% sequentially on a comparable operational basis, illustrating the significant underlying demand for both Botox Cosmetic and Juvedo.

He is a testament to our differentiated product profile.

Commercial execution.

Our focus since the pandemic has been on driving accelerated patient activation.

And we remain encouraged by our current prescription trends.

Our recent performance continues to give us confidence in the near and long term potential for both RIN vote and Scott Reserve.

Which we now expect will deliver $2.2 billion in combined revenue for full year 2020, well.

Well exceeding our original projections for this year.

In addition through outstanding commercial momentum, we're also making excellent progress with Britain Goeken, Scott Rizzi in new indications, which we expect will further strengthen our leadership position.

We have already started planning and preparing for the forthcoming approval of three additional wind OIC indications next year, including cirrhotic arthritis, and ankylosing spondylitis.

Mike: We remain focused on supporting clinics through the COVID pandemic and expect consistent investment in consumer promotion to expand the aesthetics market, which remains underpenetrated globally. Our dedicated R&D and business development are expected to sustain new innovation and rapidly expand our aesthetics portfolio for long-term growth, including the recently announced acquisition of Luminera, which provides us with a complementary dermal filler portfolio and pipeline. Overall, we're very pleased with the momentum that we're seeing with our aesthetics franchise. AbbVie's business continues to remain resilient and demonstrate strong underlying growth throughout the pandemic. Based on the performance this quarter and our progress year-to-date, we're raising our full-year 2020 EPS guide. We now expect adjusted earnings per share of $10.47 to $10.49, reflecting growth of more than 17% at the midpoint. In addition to the excellent progress we're making across the portfolio, the integration of Allergan continues to go very well. Despite the size of this transaction and the timing of the COVID pandemic, the transition has been seamless.

Giving us complete coverage across the more than $40 billion Rheumatology segment.

We also expect approval in a topic dermatitis, another large and growing market that has the potential to be multibillion dollar peak revenues for rindo.

In the coming year, we also intend to submit regulatory applications for Sky Rizzi in Psoriatic arthritis.

Both agents in the area of inflammatory bowel disease, a more than $20 billion market today with high unmet need.

Overall I'm extremely pleased with the progress, we're making on the RIN vote and Scott resin.

I'd also like to take this opportunity to announce that we will be hosting an immuno <unk> immunology focused investor day in December where we intend to further discuss our strategy progress and expectations for this important growth area additional details will be forthcoming.

Turning now to humans.

Which delivered robust double digit growth again, this quarter and remains an important therapeutic area. Brad These long term performance.

Imbruvica has a strong position across multiple indications, including CLL, where it remains the clear market share leader across all lines of therapy.

Well because sales increased 9% on an operational basis this quarter, despite lower new patient starts within CLL, where the market remains below pre govan levels. Thanks.

Venclexta sales increased nearly 60% on an operational basis this quarter.

Penetration across to our approved indications remain strong, especially in a ml given the potential aggressive disease progression of that cancer.

Rick Gonzalez: We're performing very well against both our synergy and accretion targets, and it has become increasingly clear to us that there are also opportunities for revenue synergies across various aspects of the business. We're now six months post-close, and the strategic merits of the transaction are extremely evident. Allergan is providing additional growth platforms, robust financial benefits, and greater diversity of our business. We remain confident that the newly combined business will generate significant earnings and cash flow to support continued investment in our innovative R&D platform, as well as a strong and growing dividend, while also allowing us to rapidly pay down debt. To that end, as noted in our news release, today we're announcing a 10.2% increase in our quarterly cash dividends. From $1.18 per share to $1.30 per share, beginning with the dividend payable on February 21.

In the quarter.

We also announced a strategic collaboration with Imap.

Further expanding our oncology portfolio with the anti CD 47 monoclonal antibody.

Which has potential across a wide range of blood cancers.

Hi, Mab opportunity adds to our already attractive oncology pipeline.

This includes embedded KLAX genmab cdthree by CD 20 expanded indications for bank collect stuff and several promising early stage programs.

We also now have another high performing franchise in neuroscience, which further diversifies abbvie sources of long term growth.

Baylor sales increased strong double digits again, this quarter on a comp comparable operational basis with annualized revenues of more than $1.4 billion, yes.

Given bail ours benefit risk profile relative to other atypical anti psychotics.

We remain confident in its long term growth potential, which we believe is multi billion dollars across the currently approved indications of bipolar disorder and schizophrenia.

Botox Therapeutics, which has nearly a dozen medical treatment indications, including chronic migraine is also performing very well.

Revenues were up nearly $100 million sequentially on a comparable operational basis, demonstrating a rapid cobot recovery.

The launch of the broker, our leading or see GRP for acute migraine is exceeding our expectations.

Commercial access is ramping strongly.

And increasing DTC investments have resulted in encouraging new patient starts and market expansion.

When you consider our overall scale with Botox therapeutics, you've well these acute treatment profile and the promising development overtones, Japan for the prevention of episodic and chronic migraine, we see substantial room for long term revenue growth with this best in class migraine for.

Mike: Within the rheumatology segment, both psoriatic arthritis and ankylosing spondylitis are large and important markets and represent a significant growth opportunity for RINVO. We will highlight the growing body of data from our rheumatology portfolio at the upcoming virtual ACR conference. Where we'll present 35 abstracts from multiple assets across our portfolio, including six selected for oral presentation. Atopic Dermatitis is a new disease area for AbbVie and also represents an important area of growth for our immunology franchise going forward. Based on the data generated in our registrational program, we remain very confident in the benefit-risk profile of RINVOC and atopic dermatitis and believe it will offer meaningful advantages over products on the market today or in development. Beyond the Phase III studies that support our regulatory submission, we are also evaluating RINVOC in a head-to-head Phase III trial against dupilumab, which, if successful, will help further support We look forward to seeing data from this head-to-head study later this quarter, in the area of inflammatory boundaries.

Folio.

Within a steady our fourth major growth platform, we're seeing robust demand trends and a rapid V shape recovery.

Total global Statics revenues of more than $950 million were up 70% sequentially on a comparable operational basis illustrating the significant underlying demand for both botox cosmetic and Jupiter.

We remain focused on supporting clinics through the covert pandemic and expect consistent investment in consumer promotion to expand the aesthetic market, which remains underpenetrated globally.

Our dedicated R&D and business development are expected to sustain new innovation and rapidly expand our steady portfolio for long term growth.

Including the recently announced acquisition of Luminaire up which provides us with a complimentary dermal filler portfolio and pipeline.

Overall, we're very pleased with the momentum that we're seeing with our aesthetics franchise.

Avon's business continues to remain resilient and demonstrate strong underlying growth throughout the pandemic.

Based on the performance this quarter and our.

Our progress year to date, we're raising our full year 2020 EPS guidance.

We now expect adjusted earnings per share of $10.47 to $10.49, reflecting growth of more than 17% at the midpoint.

Mike: We remain on track to see induction data later this quarter from our Phase 3 program for RINVOC and ulcerative colitis. We'll see data from a second induction study for ulcerative colitis, as well as results from the maintenance portion of these studies next year. We expect to file our regulatory applications in 2021 as well. We are also making great progress with the development programs for Sky RISD. And later this quarter, we expect data from several new indications across rheumatology and gastroenterology. We'll see data from two Phase III studies in psoriatic arthritis and results from the first Phase III induction study in Crohn's disease. Supporting regulatory applications for both indications in 2021. Outside of immunology, Skyrizzy will also be evaluated as a potential treatment for COVID-19 as part of the NIH ACTIV program, which is a public-private partnership aimed at accelerating potential therapies and vaccines for COVID-19. Guy Rizzi was selected through a prioritization process that evaluated immunomodulators with acceptable safety profiles as potential treatments for COVID-19 complications caused by the cytokine storm observed in some patients.

In addition to the excellent progress, we're making across the portfolio.

The integration of Allergan continues to go very well.

Despite the size of this transaction and the timing of the covert pandemic. The transition has been seamless we're performing very well against both our synergy and accretion targets.

And it has become increasingly clear to us, but there are also opportunities for revenue synergies across various aspects of the business.

We are now six months post close and the strategic merits of the transaction are extremely evident.

Allergan is providing additional growth platforms robust financial benefits and greater diversity of our business.

To that end as noted in our news release today, we are announcing a 10.2% increase in our quarterly cash dividends.

Dollar and 18 cents per share grew dollar 30 cents per share beginning with the dividend payable in February 21.

Since inception, we have grown our quarterly dividend by 225%.

Mike: Guy Rizzi will be included in the ACTIV-5 Big Effect trial, which is a phase two study designed to evaluate a number of drugs that are either approved or in late stage development as potential treatments for COVID-19. In our early-stage immunology pipeline, earlier this year, we top-lined positive results from a proof-of-concept study evaluating our novel TNF steroid conjugate, ABBV3373, in RA We recently completed the Phase 1 PK and safety study for our second TNF steroid conjugate, ABBV154. Based on these data, we have selected ABBV154 to move forward into larger-scale trials. We expect to begin a Phase 2b definitive dose ranging study for 154-NRA in the first half of 2021. As Rick mentioned, we will be hosting an Immunology Day for investors in December, where we will provide an update on our immunology strategy and long-term outlook for the franchise. We look forward to providing additional updates on our immunology pipeline at that time.

So in summary, we.

We continue to demonstrate strong execution across our portfolio and remain encouraged by the overall recovery trends.

Thank you Rick we.

We continue to make great progress across all stages of our pipeline and this morning I'll highlight key events since our last earnings call.

Starting with immunology, where we achieved several major milestones, including submission of our us and European regulatory applications for invoke an anchor closings spondylitis and atopic dermatitis.

We expect to regulatory decisions in the first half of 2021 for both indications as well as for Soriana card right US, which was submitted for regulatory review earlier this year.

Within the Rheumatology segment, both Soriana current right. It's an ankle assessing spondylitis are large and important markets and represent a significant growth opportunity for rent bulk.

Mike: We continue to advance our portfolio with several important Phase 3 studies beginning in the quarter, including VanClexta in high-risk myelodysplastic syndrome and Nibidoclax in myelofibrosis. We also recently received full FDA approval of Venclexta in combination with azacitidine, dicitabine, or low-dose citeridine in newly diagnosed AML patients who are ineligible for intensive induction chemotherapy. This approval is supported by the Phase 3 VLE-A and VLE-C studies. Updated efficacy and safety results from VIALE-A were recently published in the New England Journal of Medicine and show that the combination of Anquexta and azacitidine extended overall survival compared to azacitidine plus placebo. Additionally, following the publication of the Vialier results, the NCCN guidelines were updated to recommend the VanClexta and azacitidine combination as a Category 1 preferred treatment for AML patients who are ineligible for intensive chemotherapy. Importantly, the van Cleckster combination has the Category 1 designation, irrespective of mutational status.

A topic dermatitis is a new disease area for Abbvie and also represents an important area of growth for our immunology franchise going forward.

Beyond the phase III studies that support our regulatory submission. We are also evaluating them in bulk in a head to head phase three trial against to fill in that which if successful will help further support rent bulk as a highly differentiated therapeutic option for patients with atopic dermatitis.

We look forward to seeing data from this head to head study later this quarter.

In the area of inflammatory bowel diseases.

We remain on track to see induction data later this quarter from our phase three program for invoke and alternative collide us.

We'll see data from a second induction study in ulcerative colitis as well as results from the maintenance portion of these studies next year.

Mike: Also in the quarter, we announced a collaboration with IMAB to develop and commercialize the anti-CD47 monoclonal antibody Lemzoparlimax. The emerging data for Lemzoparlumab is very encouraging and provides AbbVie access to another potentially differentiated asset in immuno-oncology. The data generated to date show that Lemzoparlimab effectively blocks tumor-specific CD47 interaction, but with Limso Parlimab is being studied in multiple cancers with a focus on hematological malignancies.

We expect to file our regulatory applications in 2021 as well.

We're also making great progress with the development programs for Sky Rizzi.

And later this quarter, we expect data from several new indications across rheumatology and gastroenterology.

We'll see data from two phase three studies in Psoriatic arthritis and results from the first phase three induction study in Crohns disease supporting.

Supporting regulatory applications for both indications in 2021.

Outside of Immunology Sky Resi will also be evaluated as a potential treatment for COVID-19, as part of the NIH active program, which is a public private partnership aimed at accelerating potential therapies and vaccines for COVID-19.

Mike: In neuroscience, we recently presented new data from several clinical programs at the virtual Migraine Trust International Symposium, showcasing the breadth and strength of our migraine portfolio and demonstrating AbbVie's commitment to providing multiple treatment options for the acute and preventative treatment of migraine. In total, 15 abstracts were presented for Botox, Ubrelvi, and Ito Japan. Included in the MTIS presentation were the detailed results for Itojipan in the Phase 3 Advanced Study, which demonstrated a clinically meaningful and statistically significant improvement over placebo with all Itojipan doses for the primary endpoint of reduction in mean monthly migraine days. Significant improvements were also observed for all secondary endpoints in the 30mg and 60mg dose groups. Treatment with Etojapant resulted in 56-61% of subjects achieving at least a 50% reduction in monthly migraine days, compared to 29% for the placebo group.

Guidance. He will be included in the active five big effect trial, which is a phase two study designed to evaluate a number of drugs that are either approved or in late stage development as potential treatments for COVID-19.

In our early stage immunology pipeline earlier this year, we topline to positive results from a proof of concept study evaluating our novel TNF Steri conjugate HBV 3373 in our AG.

We recently completed the phase one PK and safety study for our second TNF steroid conjugate ADB 154.

Based on these data we have selected 154 to move forward into larger scale trials.

Mike: We're very encouraged by the strong benefit-risk profile that has been demonstrated for Tojopan in migraine prevention and believe that, once approved, this new oral treatment option will be competitively positioned in the prevention market. Together with Botox® for chronic migraine prevention and Ubrovi® for acute migraine treatment, the addition of Tojopant creates a market-leading portfolio in migraine that represents significant long-term value for AbbVie. In aesthetics, we continue to make good progress with our portfolio of facial toxins and dermal fillers. We have several ongoing programs for new indications for Botox and for the Juvederm collection, as well as a pipeline of innovative toxins and dermal fillers, which we expect to reach the market over the course of the next five years. Botox has been the leading neurotoxin for over two decades, with R&D efforts in aesthetics primarily focused on the upper face.

We expect to begin a phase to be definitive dose ranging study for 154 in R&D in the first half of 2021.

As Rick mentioned, we will be hosting an immunology day for investors in December where we will provide an update on our immunology strategy and long term outlook for the franchise.

We look forward to providing additional updates on our immunology pipeline at that time.

In oncology.

We also recently received full FDIC approval of Venclexta in combination with decitabine, decitabine or low dose cytarabine in newly diagnosed AML patients who are ineligible for intensive induction chemotherapy.

Mike: To support expansion to the lower face region, we have several programs ongoing, including studies in masseter and platysma prominent. We recently had a positive data readout for our Phase 2 study for the reduction of master prominence in the lower phase. This study met all primary and secondary inputs, demonstrating that the severity of prominence was reduced following a single treatment of Botox.

This approval is supported by the phase III, the Alley, a and B Alley C studies.

Updated efficacy and safety results from the L.A. were recently published in the New England Journal of Medicine and showed that the combination of Venclexta and Asia Decitabine extended overall survival compared to eight decitabine plus placebo.

Additionally, following the publication of the out of that of the alleyway results. The NCCN guidelines were updated to recommend the Venclexta and Asia cited in combination as a category one preferred treatment for AML patients who are ineligible for intensive chemotherapy.

Importantly, the Venclexta combination has the category one designation irrespective of mutational status.

Also in the quarter, we announced a collaboration with imap to develop and commercialize the anti CD 47 monoclonal antibody Lenzo Parliament.

The emerging data for Linzess Harlem App is very encouraging and provides abbvie access to another potentially differentiated asset in the immuno oncology space.

The data generated to date show that Lonza Parliament effectively blocks tumor specific CD 47 interactions, but with much lower binding to red blood cells, potentially leading to a better safety profile.

Lenzo Parliament is being studied in multiple cancers with a focus on the Hematological malignancies.

In neuroscience, we recently presented new data from several clinical programs at the virtual Migraine Trust International Symposium.

Showcasing the breadth and strength of our migraine portfolio and demonstrating abbey's commitment to providing multiple treatment options for the acute and preventative treatment of migraine.

In total 15 abstracts were presented for Botox, you broadly and Ditto Japan.

Included in the empty I asked presentation, where the detailed results for toll Japan in the phase three advanced study, which demonstrated a clinically meaningful and statistically significant improvement over placebo with all until Japan doses for the.

Primary endpoint of reduction in mean monthly migraine days.

Significant improvements were also observed for all secondary endpoints in the 30 milligram and 60 milligram dose groups.

Rob: Thank you, Mike. Starting with the third quarter results, we delivered strong top and bottom line performance. We reported adjusted earnings per share of $2.83, above our guidance midpoint by $0.08. Total adjusted net revenues were approximately $12.9 billion, up 4.1% on a comparable operational basis and ahead of our expectations. Immunology global sales were approximately $5.8 billion, a 15% increase on an operational basis, despite the impact of COVID on new patient starts across the immunology market. U.S. Humira sales were approximately $4.2 billion, up 7.7% compared to the prior year, reflecting continued demand growth plus price. Full seller inventory levels remain below half a month in the quarter.

Treatment with a touch of that resulted in 56% to 61% of subjects achieving at least a 50% reduction in monthly migraine days compared to 29% for the placebo group.

We're very encouraged by the strong benefit risk profile that has been demonstrated for tow Japan in migraine prevention and believe that once approved this new oral treatment option will be competitively position in the prevention market.

Together with Botox for chronic migraine prevention and you broadly for acute migraine treatment. The addition of a toe Japan creates a market leading portfolio in migraine that represents significant long term value for abbvie.

In aesthetics, we continue to make good progress with our portfolio, a facial toxins and dermal fillers.

Rob: International Humerus sales were $951 million, down 8% operationally, reflecting biosimilar competition across Europe and other international markets. Guy Rizzi's sales were $435 million, with a leading in-place share in the U.S. seriousis market and robust sequential growth internationally. Renvoke sales were $215 million, with continued strong in-place share in the USRA market. Hematologic Oncology delivered another strong quarter, with sales of $1.7 billion, up 16.4% on an operational basis.

Botox has been the leading neurotoxin for over two decades with R&D efforts in aesthetics, primarily focused on the upper face.

To support expansion to the lower face region, we have several programs ongoing including studies in master and putting PSMA prominence.

We recently had a positive data read out for our phase two study for the reduction of master prominence in the lower face.

This study met all primary and secondary endpoints demonstrating that the severity of prominence was reduced following a single treatment of botox.

Rob: And Bruvica net revenues were approximately $1.4 billion, up 9%, driven by our leading share in CLL. BankClexa revenues were $352 million with strong demand across all approved indications. Maverick sales were $414 million, down 41.1% on an operational basis, as treated patient volumes have remained below pre-COVID levels.

Based on these results we plan to begin phase three development next year, which will support registration in the us and Europe.

We also recently announced the acquisition of Luminaire as dermal fillers portfolio led by harmonica.

Which is an innovative dermal filler developed for facial soft tissue augmentation.

Luminaries assets are highly complementary to our juvederm filler franchise, and we look forward to expanding their development to markets around the world.

And in eye care, we recently announced positive topline results from the phase III Gemini, one and Gemini two studies, which evaluated our topical eye drop AIG in one nine O 584 for the treatment of symptoms associated with presbyopia.

Rob: Botox Therapeutics continues to experience a rapid recovery from the COVID pandemic with sales of $523 million in the quarter. The launch of Yourvelvie is also going very well, with recent direct-to-consumer promotion driving new prescription growth. Sales of URELV were $38 million.

Based on these results we plan to submit our regulatory application to the FDA in the first half of next year.

With that I'll turn the call over to Rob for additional comments on our third quarter performance and financial outlook, Rob. Thank you Mike.

Rob: We also saw a significant contribution from iCare, which had sales of $840 million. Turning now to the P&L profile for the third quarter, adjusted gross margin was 81.7% of sales, adjusted R&D investment was 11.7% of sales, and adjusted SG&A expense was 21.1% of sales. The Adjusted Operating Margin Ratio was 48.8% of sales, an improvement of 40 basis points versus the prior year. Net interest expense was $620 million, and the adjusted tax rate was 11.7%. As Rick previously mentioned, we are raising our full-year adjusted earnings per share guidance to between $10.47 and $10.49, including accretion from the Allergan transaction of 12% on an annualized basis. Also excluded from this guidance is $6.58 of known intangible amortization and specified items.

Starting with third quarter results, we delivered strong top and bottom line performance, we reported adjusted earnings per share up $2.83 above our guidance midpoint by eight cents.

Total adjusted net revenues were approximately $12.9 billion up 4.1% on a comparable operational basis and ahead of our expectations.

Immunology global sales were approximately $5.8 billion up 15% on an operational basis. Despite the impact of co bid on new patient starts across the immunology market.

U.S. Humira sales were approximately $4.2 billion up 7.7% compared to prior year, reflecting continued demand growth plus price.

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

Internationally, Humira sales were $951 million down, 8% operationally, reflecting biosimilar competition across Europe, and other international markets.

Got resi sales were $435 million with leading in place share in the U.S. psoriasis market and robust sequential growth internationally.

Rainbow sales were $215 million with continued strong in place share in the U.S.R.A. market.

Hematologic oncology delivered another strong quarter with sales of $1.7 billion up 16.4% on an operational basis.

Rob: This guidance now contemplates 2020 adjusted net revenue of approximately $45.7 billion, representing an increase of $200 million from our previous estimate. At current rates, we now expect foreign exchange to have a modest, unfavorable impact on fully reported sales growth. Included in this guidance are the following updated 2020 assumptions. We now expect international Humira sales approaching $3.7 billion; for Sky Rizzi, we now expect revenues of approximately $1.5 billion; for Renvo, we now expect sales of approximately $700 million; we now expect revenue of approximately $5.3 billion. For Aesthetics, we now expect post-closed sales of approximately $2.5 billion, with Botox Cosmetic and Juvederm both demonstrating a For Maverette, we now expect sales of approximately $1.9 billion as treatment remains below pre-COVID levels.

Imbruvica net revenues were approximately $1.4 billion up 9% driven by our leading share in CLL.

Thanks, Alexia revenues were $352 million with strong demand across all approved indications.

Moderate sales were $414 million down 41.1% on an operational basis as treat a patient volumes have remained below pre kogut levels.

Aesthetic sales were $967 million with botox cosmetic and juvederm, both experiencing a faster than expected recovery from the covert pandemic.

Neuro science revenues were more than $1.2 billion led by rail our and our migraine portfolio.

Railcar once again delivered strong growth with revenues of $358 million.

Botox therapeutic continues to experience a rapid recovery from the cobot pandemic with sales of $523 million in the quarter.

The launch of your Belvieu is also going very well with the recent direct to consumer promotion driving new prescription growth.

Sales of your Belviq were $38 million.

We also saw a significant contribution from eyecare, which had sales of $840 million.

Rob: We now expect Lupron revenues of approximately $750 million as we work to resolve a near-term supply issue which has impacted availability of certain formulations. Moving to the P&L, we continue to forecast full year adjusted gross margin just above 82% of sales and adjusted operating margin of approximately 48% of sales. This guidance includes approximately $600 million in expense synergies for the partial year in 2020. We remain on track to deliver greater than $2 billion in expense synergies by 2022. As we look ahead to the fourth quarter, we anticipate adjusted net revenue approaching $13.8 billion. Additionally, at current rates, we expect foreign exchange to have a modest favorable impact on reported sales growth. We are forecasting an adjusted operating margin ratio of approximately 46.5% of sales.

Turning now to the PML profile for the third quarter.

Adjusted gross margin was 81.7% of sales adjusted R&D investment was 11.7% of sales and adjusted EBITDA expense was 21.1% of sales.

The adjusted operating margin ratio was 48.8% of sales an improvement of 40 basis points versus the prior year.

Net interest expense was $620 million and the adjusted tax rate was 11.7%.

No and intangible amortization and specified items.

This guidance now contemplates 2020, adjusted net revenue of approximately $45.7 billion, representing an increase of $200 million from our previous estimate.

At current rates, we now expect foreign exchange had a modest unfavorable impact on full year reported sales growth.

Rob: We model a non-gap tax rate of 11.6%, and we expect the average share count to be similar to Q3. We expect adjusted earnings per share between $2.83 and $2.85, excluding approximately $1.73 of known intangible amortization and specified items. Finally, AbbVie's strong business performance continues to support our capital allocation priorities. We generated $12.7 billion of operating cash flow in the first nine months of the year, and our cash and investments balance at the end of September was $8 billion.

Included in this guidance are the following updated 2020 assumptions.

We now expect international Humira sales approaching $3.7 billion.

For Sky Rizzi, we now expect revenues of approximately $1.5 billion.

For rent vote, we now expect sales of approximately $700 million.

For our group, we now expect revenue of approximately $5.3 billion as new patient starts in the CLL market remains below pre covered levels.

For aesthetics, we now expect post close sales of approximately $2.5 billion with botox cosmetic and Juvederm, both demonstrating a fast recovery.

For mass Brett we now expect sales were approximately $1.9 billion as treatments remains below pre covered levels.

Rob: Underscoring our confidence in AbbVie's long-term outlook, today we announced a 10.2% increase in our quarterly cash dividend, beginning with the dividend payable in February 2021. We also remain on track to pay down $15 to $18 billion of combined company debt by the end of 2021 and expect to achieve a net debt to EBITDA ratio of 2.5 times by the end of next year, with further deleveraging through 2023. With that, I'll turn the call back over to Liz. Thanks, Rob. We will now open the call for questions. Operator, first question, please. Thank you. And as a reminder to ask a question, please press star one.

We now expect Lupron revenues of approximately $750 million as we work to resolve a near term supply issue, which has impacted availability of certain formulations.

Moving in to PNM, while we continue to forecast full year adjusted gross margin just above 82% of sales and adjusted operating margin of approximately 48% of sales.

This guidance includes approximately $600 million in expense synergies for the partial year in 2020, we remain on track to deliver greater than $2 billion in expense synergies by 2022.

As we look ahead to the fourth quarter, we anticipate adjusted net revenue approaching $13.8 billion at current rates, we expect foreign exchange to have a modest favorable impact on reported sales growth.

We're forecasting an adjusted operating margin ratio of approximately 46.5% of sales.

Chris Schott: And our first question today is from Chris Schott from J.P. Morgan. Great. Thanks so much for the questions and congratulations on the results. I guess just two for me.

We model a non-GAAP tax rate of 11.6% and we expect the average share count to be similar to Q3.

We expect adjusted earnings per share between $2.83 and $2.85, excluding approximately one dollar and 73 cents of known intangible amortization and specified items.

Chris Schott: First, 2021. I know you're not giving guidance yet. But can you just talk through some of the pushes and pulls we should keep in mind as we think about next year's numbers? It seems like the core business of it is getting a lot of traction here, and just trying to get a sense of, you know, kind of from your perspective, what are the kind of uncertainties you think about that guidance number for next year? And my second question was about RINVOC and Atopic Derm.

Finally, abbvie strong business performance continues to support our capital allocation priorities.

We generated $12.7 billion of operating cash flow in the first nine months of the year and our cash and investments balance at the end of September was $8 billion.

Underscoring our confidence in Abbvies long term outlook today, we announced a 10.2% increase in our quarterly cash dividend beginning with the dividend payable in February 2021.

With that I'll turn the call back over to list.

Thanks, Rob we will now open the call for questions.

Operator first question please.

Rick Gonzalez: Sounds like now you're talking about a potential multi-billion dollar opportunity. But just help us flesh out a little bit about how big of an opportunity this could be for the product. Thank you. Okay, so Chris, this is Rick.

Thank you and as a reminder to ask a question. Please press star one and our first question today is from Chris Schott from JP Morgan.

Great. Thanks, so much for the questions and congrats on the results I guess just two from me first 2021, I know you are not giving guidance yet can you just talk through some of the pushes and pulls we should keep in mind as we think about next year's numbers, saying it seems like the core business. Obviously is a lot of traction here I'm, just trying to get a sense of kind of for it from your perspective, what are the kind of answer.

Rick Gonzalez: I'll talk a little bit about 21, and then Mike can maybe talk a little bit about how we view Linvoke and AD and Rob. So when we look at 2021, I think you have to step back and say, how are we performing this year? And obviously, we're performing very well. But there's still some COVID impact built in. It varies a bit by therapeutic areas. Some areas are impacted more than others. So, as an example, CLL has been impacted more than other areas. HCV has also been impacted more than other areas. It's usually places where the therapy can be delayed without significant consequence for the patient that we're seeing the most significant delay. So as we move through the fourth quarter, we'll see whether or not that improves.

And Keith do you think about that that guidance number for next year and my second question was on Renvela and a topic term just elaborate a bit more on how you're thinking about the size of that opportunity I know one of your peers has a single indication Jack and 80. They think it's a $3 billion peak sales opportunity I know, it's well above your risk sharing the adjusted numbers.

I have a few years ago sounds like now you're talking about potential multibillion dollar opportunity, but just help us flush out a little bit about how how big of an opportunity could this be for the product. Thank you.

Okay. So Chris this is Rick I'll talk a little bit about 21, and then Mike maybe you can talk a little bit about how we view.

When we spoke in AG and Rob.

So when we look at 21, I think you have to step back and say how are we performing this year and obviously, we're performing very well theres still some co that impact built in it varies a bit by.

Rick Gonzalez: And that's certainly one aspect of it. I would say, even without much recovery, the underlying performance of the business looks good. I think you can look at the dividend increase that we put through, and that should give you some flavor for the level of confidence that we have, because obviously, we would want to tie that to what we assumed that we could deliver from an overall performance standpoint. I'd also say that as we've looked at consensus, we're comfortable with what we see in consensus in 2021. So we wanna see a few other things just play out, primarily around COVID, how much improvement we get. We have launched a number of programs over the course of the last couple of months to try to get patients more to go to their physicians and seek treatment.

By therapeutic area, some areas are impacted more than others.

So as an example, CLL has been impacted more than other areas.

She has been impacted more than other areas, it's usually places where the therapy can be delayed without.

Significant consequence for the patient is where we're seeing the most significant delays. So as we moved through the fourth quarter, we'll see whether or not that with problems more.

And that's that's certainly one a one aspect of it I would say even without much recovery the underlying performance of the business looks good.

I think you can look at the.

The dividend increase that we put through and that should give you some flavor for.

Rick Gonzalez: I think those programs, some of those programs will be successful, and we'll see some of those numbers increase, particularly in immunology, because dermatology is another one of those areas where the new patient starts are still off a little bit. Now, obviously, Sky Rizzi is performing extremely well, and eMERA continues to perform well. So I'd say that's the single biggest issue. Rob and Mike, do you want to talk about windows? Certainly, I'll start and then pass it over to Rob if he wants to add a little bit more detail.

For the level of confidence that we have.

Because obviously, we want to tie that to what we assumed.

That we can deliver from a overall performance standpoint, I'd also say that as we look to consensus we're comfortable with what we see and consensus in 2021. So we want to see a few other things just play out primarily around covance.

How much improvement we've yet we've launched a number of programs over the course of the last couple of months to try to activate patients more.

To go to their physicians and seek treatment out.

Rick Gonzalez: You know, we view atopic dermatitis as a very attractive and a very substantial opportunity overall. It's an indication that, I think, for many years was underappreciated by the industry. Now that's changed recently, and you've seen a lot of focus on drug development for atopic dermatitis. We feel very good about the profile that we have demonstrated. Coming out of phase two, when we made those statements about the risk-adjusted potential in atopic dermatitis, we felt good about our data, and those data were sufficient to get a breakthrough therapy designation. We're in the fortunate and not always that common situation where our phase two results have actually outperformed our expectations based on phase two. And if you look at the phase two results, they're really strong across the board. They're strong in total response, they're strong in rapidity of response, and they're strong on components like itch, which is the most troublesome symptom for patients in the majority of cases.

I think I think those programs some of those programs will be successful and we will see some of those increase particularly in immunology.

Because dermatology is another one of those areas that.

The new patient starts are still off a little bit now, obviously skyros is performing extremely well and numeric continues to perform well.

So.

I'd say, that's the single biggest issue.

Rob might want to talk about revoked certainly I'll start and then pass it over to Rob if he wants to add a little bit more detail.

In drug development and atopic dermatitis, we feel very good about the profile that we've demonstrated coming out of phase two when we made those statements about the risk adjusted potential and atopic dermatitis. We felt good about our data and those data were sufficient to get a breakthrough therapy designation.

Rick Gonzalez: And so when you couple that with the safety profile that we've demonstrated, which we think is very favorable, you know, we see this as something that has very real potential. And when we look, you know, across studies, we feel very good about our results. And, of course, we have a head-to-head study with Dipilumab, which is coming up later this quarter. And so that will be important additional information, and we're very optimistic about those results. Rob, I don't know if you'd like to add anything further. Okay, Chris, this is Rob.

We are in the fortunate and not always that common situation, where our phase two results have actually outperformed our expectations based on phase two and if you look at the phase II results are really strong across the board they're strong in total response, they're strong in repeatedly of response.

And their strong on on components like itch, which is the most troublesome symptom to patients in the majority of cases and so when you couple that with with the safety profile that we've demonstrated which we think is very favorable. We see this is something that has very real potential and when we look.

Across studies, we feel very good about our results and of course, we have a head to head study with Dupilumab, which is coming up later on this quarter and so that will be important additional information then we're very optimistic about those results Rob I don't know if you'd like to add anything further Chris. This is Rob. So if you think of atopic dermatitis, its a $3 billion global market with.

Rick Gonzalez: So, if you think about atopic dermatitis, it's a $3 billion global market with very strong growth potential. In our 2025 risk-adjusted guidance of greater than $10 billion for RINVOC and SkyRIZI, we included a billion dollars of revenue for RINVOC-AD, but we feel pretty good that we can achieve that expectation. And the only other thing I add is that I think Atopic Derm is a market very similar to several others.

Very strong growth potential in our 2025 risk adjusted guidance of greater than 10 billion for when broken Sky Reserve. We included a $1 billion of revenue for invoke a d., but we feel pretty good that we can achieve that expectation.

And the only other thing I'd add is I think a topic derm is a market very similar to several others. In fact psoriasis I would say was a similar type of market.

Rick Gonzalez: In fact, psoriasis, I would say, was a similar type of market where as you get more competitors in the market driving promotion, it has a very large population of patients. So the question is activating those patients and getting them to go into the physician's office, and so obviously, when you have one company doing that, they have the capacity to drive a certain amount. When you have more than one company, you're doubling or tripling the amount of promotion activity, particularly here in the U.S., and that tends to get more patients to seek treatment. You know, I think if you looked at the total available market of patients who would qualify, it's a huge market; it's north of five billion dollars each. So the question is, how fast can you activate them?

But as you get more competitors in the market driving promotions. It has a very large population of patients. So the question is activating those patients and getting them to go into the physician's offices to seek treatment.

And so.

So obviously when you have one company doing that they have the capacity to drive a certain amount when you have more than one company doubling or tripling the amount of promotion activity.

Particularly here in the U.S.

And that tends to activate more patients to seek treatment I think if you looked at the total available market patients who would qualify okay. It's a huge market has north of $5 billion easily. So the question is how fast can reactivate them.

Rick Gonzalez: And how broadly can you activate those patients? From a profile standpoint of our drug, I think we'll compete quite effectively. And I think, in particular, the performance around itch is going to give us an advantage. So it's a very attractive market, and it's certainly one that we will focus a lot of attention on. And Chris, this is Robin.

And how how broad region you activate those patients from a profile standpoint of our drug I think we'll compete quite effectively and I think in particular the performance around it's just going to give us a.

In it so it's a very attractive market and serve.

And the one that we will focus a lot of attention on the driver.

And Chris This is Robert and just to clarify.

Rob: And just to clarify, I'm not sure if I said exceed or achieve, but we expect to exceed that billion-dollar risk-adjusted number for RINVOC-AD in 2020. Thanks, Chris. Operator, next question, please. Thank you. And our next question is from Jeffrey Porges from SBB Lyrics.

Not sure I said exceed or achieve a week, so expect to exceed that billion dollar risk adjusted number for invoke 80 in 2025.

Thanks, Chris Operator next question please.

Thank you and our next question is from Geoffrey Porges from SCB Leerink.

Jeffrey Porges: Thanks. Rick, a question... with the dividend going up, it looks like you've got about a six and a half percent dividend yield, the core business is performing well. And my question is, what are the, I mean, and you're now a 50 to 55 billion top line company. What are the pipeline assets that can really move the needle?

Thanks.

A quick.

With the dividend going up it looks like you've got about a 6% dividend yield the coal business is performing well and my question is what are the I mean, you are now 50 to 55 billion topline company well.

One of the pipeline assets that can really move the needle I know when you indications the existing enemies, but what you and I made it can be really substantial to move the needle on a $55 billion topline because I think that's part of why you've got an industry high dividend yield.

So Jeff this is Rick.

I think if you look at the business you have to look at it in phases right. So I'd say the phase between now and call. It 2025 2026 that growth is going to be driven by expansion of Ryan Bogan Sky reserving.

Continued strong growth in the neuro science pipeline continued strong growth in the statics pipeline and continued strong growth and humalog.

Rick Gonzalez: Starting in that 25 timeframe and beyond, that's where the earlier to mid-stage pipeline will drive a significant amount of growth. Now, there will be assets like Novitaclax, like 951, and Otozepam that will come in prior to that and help boost growth right around 23 and 24. But I can tell you that we're very confident that we have now built a portfolio that can sustain growth and drive growth on the other side of the LOA. In fact, I would tell you that when I look at Winvoke and Skyriz, I look at the in-play market shares that we see with those assets today. When we gave guidance for 2025, we assumed that, on average, we would achieve high single-digit market shares across the indicators. So, as an example, you look at Skyrizzy right now.

Starting in that 25 timeframe and beyond that's where the earlier to mid stage pipeline will drive a significant amount of growth now there will be assets like the biddix wax like 951.

Atos Japan.

That that will come in prior to that and help boost growth right around 23, and 24, but I can tell you. We're very confident that we have now built a portfolio that can sustain growth and drive growth on the other side of the Isle away. In fact, I would tell you that when I look at Windows and Scott.

Yes.

I look at the in play market shares that we see with those assets today.

When we gave guidance of 2025.

We assume that on average we would achieve high single digit market share across the indications. So as an example, if you look at Sky Rosy right now Scott reserves in place shares 33% the market leader by a wide margin. The next closest product isn't 16% in place share and.

Rick Gonzalez: Skyrizzy's in-place share is 33%. It is the market leader by a wide margin; the next closest product is at 16% in-place share. And its TRX share is now at 11 and climbing rapidly. So it's already above what we had assumed the peak would have been out in 2025 from a market. And if we maintain that 33%, by then, it will have an overall share of about 33%. So it'll be three times what we had assumed for survival. So when you look at the speed at which we're bringing in the new indications, when you look at the breadth of those indications across the revenue base that Humira has today, we have covered all of the major indications for Humira, plus one more that Humira doesn't have, which is atopic derm.

Its trx share is now at 11 and climbing rapidly. So it's already above what we had assumed.

So when you look at the at the speed at which we're bringing the new indications when you look at the breadth of those indications.

Across the revenue base that Humira has today, we have covered all of the major indications for Humira plus one more the comerica doesn't have which is a topic derm.

Rick Gonzalez: And if we can achieve that kind of market share in each of these indications, then we'll obviously double what we assume that 2025 number was, and that gets you pretty close to covering all of Jumeirah in the U.S. So I'm very encouraged about that. And I think that, along with the other assets and the four major growth platforms, gives us a tremendous amount of confidence that we can drive growth on a sustainable basis at a very, very high level. Thanks, Geoff.

And if we can achieve that kind of market share and.

In each of these indications then.

Well, obviously double what we assume that 2025 number was.

And that gets you pretty close to covering all of Humira in the U.S. So I'm very encouraged about that and I think that along with the other assets and the four major growth platforms gives us a tremendous amount of confidence that we can drive growth.

On a sustainable basis at a very.

Very high level.

Thanks, Jeff Operator next question please.

Operator: Operator, next question, please. Thank you. And our next question is from Vamil Divan from Muzuho Securities. Hi, thanks so much for taking my question. So maybe she's still following up on the announcement.

Thank you and our next question is from pharma to Van Somebody's House security.

Hi, Thanks, so much for taking my question. So maybe just to sort of following up on that within that.

Vamil Kishore Divan: 2021 on Chris's question. Can you just talk a little bit about how you're thinking about drug pricing pressure in the US or globally, just again, as we're trying to think about our modeling for next year? I think that would be helpful.

2020 way home offices question can you just talk a little bit on how you're thinking about drug pricing.

Yes, sure I get us or globally. Just again is restrained think about our modeling for next year.

It may be helpful.

Rick Gonzalez: And maybe building on that, I think one of the other concerns that investors have is around potential tax reform that may come out of D.C., depending on how the election plays out. I know it's tough to ask this just a few days before the election, but I guess based on what you're seeing from the, especially from the Biden side, I guess the Biden plan right now, is there anything you can share with investors at this point in terms of how your sort of tax rate may change going forward? I appreciate that you probably haven't got much detail you can give, but any other insights I think would be helpful. I think it is something that investors seem very concerned about at this point. Thank you.

Then maybe building on.

First question I think one of the other concerns that investors have is around potential tax reform that may come out of DC, depending on the election plays out.

The assets are the two days before the election, but I guess based on what you're seeing from the.

Given the Biden side I guess, the Biden plan right now is there anything you can share with investors at this point in terms of how youre sort of tax rate may.

Change going forward.

I appreciate it's pretty much stayed inhibitor and is there is I think it would be helpful. If anything it is something that investors.

Turned it off at this point thank you yes.

Rick Gonzalez: Well, you know, obviously, it's still unclear as to what the landscape will be on the other side of the election. So we obviously have to let that play out. Having said that, I think we assume that there will be continued pressure on the industry as it relates to drug prices. As far as what our expectations would be in 2021, I think our expectations in 2021 from a price standpoint will be similar to what they were in 19 and 20. And that is, we weren't reliant on price. Unfortunately, our business is primarily a volume-driven business, typically in areas that are very serious diseases and have strong value propositions. And so that gives me confidence that we'll be able to fare reasonably well, even if there are changes. I'd say the second thing is that it's unlikely that you will get changes that have a significant impact early on in 21, because there's gonna be a lot of debate here about what those changes are. What I would hope...

Well.

As it relates to drug pricing.

As far as what our expectations would be in 2021 of the growth expectations in 2021 from a price standpoint will be similar to what they were in 19 and 20 and that is we were reliant on price I mean, Fortunately our business is primarily a volume driven business. It's typically in areas that are very serious diseases and have strong.

And value propositions, and so that gives me confidence that.

We'll be able to fare reasonably well even.

Even if there are changes I'd say the second thing is it's unlikely that you will get changes that have a significant impact.

Early on in 20 long because there is going to be a lot of debate here.

But what those changes are what I would hope.

The debate ultimately.

Transitions to his.

Rick Gonzalez: The debate ultimately transitions to co-pays and out-of-pocket costs for patients because that is the fundamental issue. And it's particularly an issue when you look at Part D patients. They have to pay far too much of the burden of the cost from out-of-pocket costs. And they're really the only group of patients in the US that have that kind of a burden associated with them. If you look at the overall performance from a cost standpoint of Medicare Part D, it's performing very well.

Co pays and out of pocket cost for patients because that is the fundamental issue.

As particularly the issue when you look at part D patients they have to pay far too much of the portion of the cost from a pocket cost standpoint, and they are really the only group of patients in the us that have that kind of.

Burden associated with them. If you look at the overall performance from a cost standpoint of Medicare part D.

It's performed very well in fact, if you go back to the original CEO estimates over the last 10 years, it's come in 45% below.

Rick Gonzalez: In fact, if you go back to the original CBO estimates over the last 10 years, it's come in 45% below the original estimates for what it would grow. And if you look at Part D, it's grown at about the rate of other healthcare services in place. Not significantly higher. And so the affordability problem is really around those co-pays. We have to drive those co-pays.

The original estimates for what we grow and.

If you look at part D. It's grown at about the rate of other healthcare services inflation, that's again significantly higher and so the affordability problem is really around those copays that we have to drive those copays and that I think the other thing that has to be placed in here.

Rick Gonzalez: And then I think the other thing that has to be played for here is, I would hope as this debate goes on, they're going to look very carefully at our industry and the value of our industry, both from a societal standpoint as well as an economic standpoint. I mean, this is a tremendously valuable industry. Just look at what we've done as an industry as it relates to this pandemic, whether you're talking about vaccines or you're talking about therapeutics, look at what we've done in terms of advancements with cancer. And then from an economic standpoint, this industry supports. Directly and indirectly, 4 million jobs in the United States, typically high-paying jobs, produce a tremendous amount of economic output for the US. And so it's an industry that you don't want to damage in the process, and I think that has to be part of it. But the short answer to your question is, I think we are not assuming we'll get a lot of benefit from price in 21. We're also not assuming that across that year, we would see a significant change that would have a dramatic impact on that challenge. Tax reform is your next question. Vamil, it's Rob.

As I would hope as this debate goes on they are going to look very carefully at our industry and the value of our industry. Both from a societal standpoint as well as an economic standpoint, I mean is tremendously valuable industry just look at what we've done as an industry as it relates to this pandemic, whether you're talking about vaccine.

So you're talking about therapeutics look at what we've done in advancements with cancer and then from an economic standpoint in this industry supports.

But the short answer to your question is I think you should you should we are not assuming we'll get a lot of benefit from price and pointing warm.

We're also not assuming that across that year, we would see a significant change that we'd have a dramatic impact on that calendar year.

Tax reform has your next question.

Obama will drop size based on a very high level information in the buying proposal, we would see an increase in our tax rate like most us companies, but it's really difficult to provide a rate impact without the details that said have you would still have a favorable profile versus our peers and we wouldn't have raised our dividend. If we were overly concerned about the implications.

Rob: Based on the very high-level information in the Biden proposal, we would see an increase in our tax rate like most U.S. companies, but it's really difficult to provide a rate impact without the details. But that said, AbbVie would still have a favorable profile versus our peers, and we wouldn't have raised our dividend if we were overly concerned about the implications.

Q3 2020 Abbvie Inc Earnings Call

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