Q4 2021 Abbvie Inc Earnings Call

February 2, 2022

Good morning, and thank you for standing by. Welcome to the Abbvie fourth quarter 2021 earnings conference call. All participants will be able to listen only until the question and answer portion of this call. You may ask a question by pressing star one on your phone I would now like to introduce MS. Liz Shea, Vice President.

Head of Investor Relations.

Good morning, and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer, Michael Severino, Vice Chairman and President, Rob Michael, Vice Chairman financing commercial operations, and Chief Financial Officer, and Jeff Stuart, Executive Vice President Chief Commercial Officer.

Joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman of external affairs, Chief legal officer and corporate Secretary.

Before we get started, some statements we make today may be considered forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.

Abbvie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements additional information about these risks and uncertainties is included in our SEC filings Abbvie undertakes no obligation to update these forward-looking statements except as required by law.

On today's conference call, non-GAAP financial measures will be used to help investors understand how these 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 basis, which includes full current year and historical results for Allergan for this comparison of underlying performance. All historically reported Allergan revenues have been recast to conform to Abbvie revenue recognition accounting policies and exclude the divestitures of [inaudible] and bio case references to operational growth.

Further excludes the impact of exchange. Following our prepared remarks, we'll take your questions. So with that, I'll now turn the call over to Rick. Thank you, Liz, good morning, everyone and thank you for joining us today.

My perspective on our overall performance and outlook and then Jeff Mike and Rob will review, our quarterly business highlights pipeline progress financial results and guidance for 2022 in more detail.

Our performance this quarter tops off another excellent year for Abbvie with results well above our initial expectations. We delivered full-year 2021 adjusted earnings per share of $12.70.

Representing growth of more than 20% versus the prior year.

Full-year adjusted net revenues were more than $56 billion up 10.5% on a comparable operational basis.

These results demonstrate balanced performance across each of our major growth franchises, including double-digit comparable operational revenue growth from immunology aesthetics and neuroscience.

I'm extremely pleased with our momentum and we've entered this year in a strong position, which is reflected in our guidance. We anticipate 2022 adjusted earnings per share of $14 to $14.20.

Representing growth of 11% at the midpoint.

Longer term, we remain well positioned with an impressive set of diversified growth assets.

In immunology, [inaudible] are already contributing meaningful revenue, including $4.6 billion in combined sales last year with substantial growth anticipated in 2022.

Over the next few months, we expect to add several new indications to the list of approved uses for these two assets. At which point, SKYRIZI and Rinvoq will be commercialized across all of Humira's major indications plus atopic dermatitis.

With the strong performance that we're seeing in their initial indications and the robust data we've demonstrated across our broad development programs. We expect combined peak sales for Skyrizi and Rinvoq to exceed the peak revenues achieved by Humira.

In Hematological oncology, we have established a leading position with imbruvica and venclexta, which are both expected to remain important revenue contributors through the decade.

To support our next wave of growth. We also have an exciting and diverse pipeline of promising new therapies to address critical unmet needs in both blood cancers and solid tumors.

Notable opportunities from our mid to late-stage oncology pipeline include [inaudible] for myelofibrosis, which has the potential to provide disease modification in a market where current treatments only address symptoms. And [inaudible], a potentially best in class CD 3 by CD 20 for B cell malignancies, including DLBCL and follicular lymphoma. A BBB 383, our BCMA.

<unk> for B cell malignancies, including <unk> and Follicular lymphoma.

A BBB 383, our bcm.

CD three by specific which has the potential to become a best in class treatment in multiple myeloma and [inaudible] are promising C met ADC being studied for non-squamous non-small cell lung cancer, which was recently granted breakthrough therapy designation.

In neuroscience, we have a portfolio of compelling and differentiated therapies to support robust long term growth in migraine, Parkinson's disease and psychiatric conditions.

[inaudible] and QULIPTA are both demonstrating strong launch trajectories in migraine with each treatment expected to contribute more than $1 billion in peak sales.

[inaudible] continues to have a significant opportunity with currently approved indications with peak sales expected to approach $4 billion.

An approval in major depressive disorder represents upside to our current projections. And 951, a potentially transformative improvement to our current treatment options for patients with advanced Parkinson's disease with peak sales also anticipated to be more than $1 billion.

Our leading a steadying portfolio represents another extremely attractive growth opportunity.

This business is performing well above expectations delivering full year of 2021 sales of more than $5.2 billion.

$700 million higher than our initial guidance.

Add these increased promotional investments are driving accelerated category growth, especially in toxins and fillers, where there is substantial room for additional market penetration globally.

Dedicated resources are also focused on delivering new product innovation within our statics with several exciting R&D programs internally, including both short-acting and long-acting toxins as well as novel fillers with bio stimulatory, where regenerative features.

And we remain active with business development to pursue promising external technologies and complementary opportunities, including the recently closed Solodyn acquisition, which further expands our body contouring portfolio.

Given this focus and investment, we expect our aesthetics franchise to deliver high single-digit revenue growth through the end of the decade, including sales of more than $9 billion in 2029.

Lastly, we've developed a robust pipeline, including numerous attractive late-stage programs.

We've developed a robust pipeline, including numerous attractive late stage programs.

Novel early stage therapies, and a growing range of potential platform technologies, which we expect will collectively contribute to our growth through the decade.

With the actions that we've taken to diversify our sources of growth, we remain very confident in the long term outlook for our business.

Following the US Humira LOE event in 2023, we expect to quickly return to growth in 2024 and deliver a high single-digit growth from 2025 to the end of the decade. This is a testament to the strength of Abbvie broad and balanced portfolio.

In summary. This is an exciting time for our company, we're demonstrating excellent execution across our portfolio and our long term growth prospects remain very strong. With that, I'll turn the call over to Jeff. Jeff.

This is an exciting time for our company, we're demonstrating excellent execution across our portfolio and our long term growth prospects remain very strong with that I'll turn the call over to Jeff Jeff.

Thank you, Rick. Looking at our quarterly results, we continue to demonstrate excellent commercial execution across our therapeutic portfolio.

I'll start with immunology, which delivered global revenues of more than $6.7 billion, reflecting growth of 13.3% on an operational basis.

Global Humira sales were $5.3 billion up 3.5% with 6% revenue growth in the US offset by Biosimilar competition across the international markets, where revenues were down 8.8% on an operational basis.

Skyrizi is performing extremely well.

Global sales of nearly $900 million were up 12.4% on a sequential basis, reflecting continued market share gains.

Skyrizi has now surpassed Humira as the leader for total prescriptions in the US psoriasis biological market.

With share of approximately 20%.

We are also now leading the market in several international geographies, including Japan.

Total in play share, which includes both new and switching patients remains very strong and now reflects roughly 37% patient share in the US as well as leadership in nearly 20 key countries around the world.

Skyrizi is also now approved for its second major indication to treat adults with active psoriatic arthritis further enhancing its compelling profile in dermatology.

Fuel promotion is now active globally and early feedback from physicians has been very positive.

Given Skyrizi demonstrated skin clearance and joint efficacy and our PSA clinical program.

With nearly 30% of patients visiting dermatologists, having both skin and joint involvement this new approval will sustain Skyrizi's strong momentum.

In addition, we are preparing for the launch of Skyrizi in Crohn's disease indication with very meaningful long term revenue potential with regulatory approvals in both the US and Europe anticipated this year.

We are preparing for the launch of <unk> in Crohn's disease indication with very meaningful long term revenue potential with regulatory approvals in both the U S and Europe anticipated this year.

Rinvoq also continues to demonstrate robust growth global sales of more than $500 million were up 14% on a sequential basis.

Prescriptions in [RA] remained strong with a total market share of more than 5.5% in the US and nearly 5% across key international markets.

We're very pleased with the competitive labels for both PSA and atopic dermatitis, where we are making excellent progress with their launches globally.

In atopic dermatitis, dermatologists appreciate key elements of Rinvoq's new label, including the incorporation of stringent skin and each endpoints reflective of the performance in our registrational trials as well as an adolescent indication and dosing flexibility.

Managed care access is expected to ramp fairly quickly for both atopic dermatitis and PSA in the US.

We are also preparing for the launches of Rinvoq in ulcerative colitis, and axial spa with regulatory approvals for both indications anticipated this year as well.

Overall, we continue to feel very good about the performance and progress, we're making with both Rinvoq and Skyrizi, which are expected to contribute more than $15 billion in combined risk-adjusted global sales in 2025.

In hematologic oncology global revenues were nearly $1.9 billion up 4.7% on an operational basis.

[Venclexta] once again delivered robust growth. Sales were up 34% on an operational basis with strong share performance across all approved indications.

Imbruvica global revenues were down 2.7%, reflecting a slower than anticipated market recovery in CLO and increase share pressure from newer therapies.

In neuroscience, revenues were more than $1.6 billion up 19% on an operational basis, including robust double-digit growth for both [inaudible] and botox therapeutic.

I'm also very pleased with our performance in migraine, where we have a portfolio of multiple distinct therapies to address the full spectrum of this disease.

This includes our two leading oral CGRP therapies. [Ubrelvy] for acute migraine with which delivered total sales of $183 million.

<unk> for acute migraine with which delivered total sales of $183 million.

Up 13% on a sequential basis.

We anticipate robust sales growth again this year based on [Ubrelvy] competitive profile continued strong new patient starts and a rapidly expanding CGRP segment.

And we also have Qulipta, the only oral CGRP treatment specifically developed for the prevention of episodic migraine. The launch is going extremely well. When considering both paid and bridge volume Qulipta is already capturing nearly 20% of the new to brand share in the preventative CGRP class.

<unk> class.

Roughly three months post-launch, this is an incredible accomplishment and it's a testament to Qulipta's demonstrated efficacy.

Including rapid and meaningful reduction in migraine days.

We expect commercial access for Qulipta to ramp quickly in the first half of this year.

In Eye Care, revenues of $960 million were up 3.9% on an operational basis, including $364 million in sales from Restasis.

Lastly, Maverick sales were $427 million down 10.1% on an operational basis as treated patient volumes remain suppressed compared to pre-COVID-19 levels.

Overall, I'm very pleased with the performance and the momentum across the therapeutic portfolio. And with that, I'll turn the call over to Mike for additional comments on our R&D programs. Mike.

Thank you, Jeff.

We made significant advancement across all stages of our pipeline in 2021, and we expect continued progress again this year.

In immunology, we had several recent important regulatory updates.

We implemented safety and indication updates to our RNA label for [Rinvoq] and also received FDA approval in psoriatic arthritis, and atopic dermatitis, securing strong labels that highlight Rinvoq's favorable benefit risk profile in both new indications.

In atopic dermatitis, we received approval for both the 15 and 30-milligram doses.

And based on the impressive levels of skin clearance in each reduction demonstrated in our development program. We believe Rinvoq will be an important new treatment option for adult and adolescent patients with moderate to severe atopic dermatitis, who have not responded well to other systemic agents such as cyclosporin.

Methotrexate azathioprine or biologics.

We also have regulatory applications under review for Rinvoq in ulcerative colitis, ankylosing spondylitis and non-radiographic axial spa.

We expect an FDA approval decision next month for ulcerative colitis. In the second quarter for ankylosing spondylitis and in the fourth quarter for non-radiographic axial spa.

In Europe, we anticipate approval decisions for ulcerative colitis and non-radiographic axial spa in the second half of the year.

We're nearing completion of Rinvoq's registrational program in Crohn's disease, which is the last major indication expansion program for Rinvoq.

We recently announced positive top-line results from the first phase III Crohn's induction study, where Rinvoq demonstrated a very strong impact on clinical remission and endoscopic response in a difficult to treat refractory patient population.

We expect to see results from the second phase III Crohn's induction study and from the maintenance study in the first half of this year with regulatory submissions anticipated in the second half of 2022.

Also in immunology, we recently received FDA approval for Skyrizi in psoriatic arthritis, and important indication expansion for this asset.

Based on our strong joint efficacy and the high level of skin clearance that Skyrizi provided in our registrational trials, we believe Skyrizi will be very competitively positioned as an effective new treatment option for psoriatic arthritis patients.

We also have regulatory applications under review for Skyrizi in Crohn's disease with approval decisions expected in the US next month and in Europe later this year.

We've seen impressive results and our Crohn's disease program, and we believe Skyrizi has the potential to become an important new therapy in this market, where there continues to be considerable unmet need.

We're making very good progress with our early-stage immunology pipeline as well, where we are developing novel agents with the goal of significantly advancing the standard of care across our core areas by providing deeper and more durable responses.

Our anti-TNF steroid ADC ABBV 154 is a novel approach for delivering a potent steroid that has the potential to provide durable remission and diseases, such as RA, PMR and Crohn's disease.

We expect to see preliminary data from our phase two dose-ranging study NRA in the fourth quarter of this year.

We also expect to see phase II proof of concept data in PMR and Crohns disease in 2023.

In dermatology, our early-stage efforts are focused on developing oral agents that can provide clear skin with durable responses.

Our ROR Gamma T inverse agonist ABNV 157 is designed to more effectively inhibit IL 17 production compared to pure antagonist.

Which has the potential to result in a greater impact on skin inflammation.

We recently began a phase II dose ranging study for 157 in psoriasis.

Moving to oncology, where we continue to make good progress across all stages of our pipeline.

We recently received an FDA breakthrough therapy designation for [inaudible] in second line plus advanced or metastatic non-squamous non-small cell lung cancer based on the encouraging results we've seen to date in our clinical program.

Treatment options for patients who have exhausted platinum-based chemotherapy immunotherapy and targeted therapy are limited to single-agent chemo.

Which typically provides response rates of only 15% to 20% with a median overall survival of less than one year.

Prognosis for these patients is very poor.

While targeted therapies have been approved by the FDA for the 3% to 4% of non-small cell lung cancer patients harboring met exon 14 skipping mutations there are currently no therapies approved specifically for the much larger group of patients who exhibit C met protein overexpression.

Patients with over express C met represent about 25% to 30% of the advanced or metastatic non-squamous non-small cell lung cancer population with wild type EGFR, which corresponds to an incidence of approximately 35,000 patients each year.

In the US.

In stage one of our phase II study, we saw promising efficacy in heavily pretreated patients who received [inaudible], including a 54% objective response rate in those with highly expressed cMet.

The second stage of the Phase III study is ongoing and has the potential to support an accelerated approval in second-line plus advanced metastatic.

Non squamous non small cell lung cancer.

We expect to see additional data from this study next year.

We also recently began the clinical program for our next generation [cMet] ADC, ABBV 400, which utilizes a more potent topoisomerase inhibitor payload.

To potentially drive deeper tumor responses in patients with both intermediate and high levels of cMet expression.

We also expect to see data this year from several important indication expansion programs for Venclexta, including results from the phase III can Nova trial in relapsed refractory multiple myeloma patients with a T 1114 mutation.

As well as results from our program for Venclexta in previously untreated higher-risk MDS patients, where we received a breakthrough therapy designation.

We plan to submit our regulatory applications to the FDA in the first half of this year for an accelerated approval in MDS and late in '22 or early '23 for multiple myeloma.

Both indications represent important expansion opportunities for Venclexta and will help drive long term growth for our oncology portfolio.

We are also making very good progress with [inaudible], where we continue to generate strong data in early stage studies to support our view that [inaudible] has the potential to become a differentiated and best in class CD three by CD 20 by specific across several b cell malignancies, including.

Diffuse b cell and follicular lymphomas.

We will see monotherapy data in the third quarter from the phase II expansion cohort in DLBCL, which has the potential to support a submission for accelerated approval in the second half of this year.

We also have a phase III study ongoing in third line relapse refractory DLBCL and we plan to initiate several additional phase III trials this year, including studies in earlier lines of therapy for diffuse b cell lymphoma and multiple combinations.

As well as in follicular lymphoma in combination with Rituximab in Revlimid.

This year, we'll also see additional data maturing from our cohort expansion studies for ABBV 383, both as a monotherapy and in combinations with standard of care and novel agents in multiple myeloma.

We believe our BCMA CD3 by specific has the potential to be differentiated on efficacy safety and dosing interval and can be best in class across multiple lines of therapy.

We plan to initiate phase III studies later this year in relapsed refractory multiple myeloma.

We also continue to make good progress with Navitoclax in myelofibrosis, where we've seen strong mid-stage data supporting our view that Navitoclax has the potential to provide disease modification, which we believe will lead to improved and durable clinical outcomes for patients.

We expect the phase III data readout and regulatory submissions in the first half of next year with approval anticipated near the end of 2023.

Moving to neuroscience, where we expect several important pipeline events in 2022 as well.

We recently completed discussions with the FDA and are preparing to submit our application for [inaudible] as an adjunctive treatment for major depressive disorder.

Based on the totality of the data and the strong benefit-risk profile demonstrated in our clinical program. We believe Vraylar has the potential to be competitively positioned as an adjunct treatment for major depressive disorder.

We expect a submission in the first quarter and an approval decision by the end of the year.

We've also completed our registration enabling program for ABBV 951, our novel subcutaneous levodopa carbon dopa delivery system for treatment of advanced Parkinson's disease.

In our phase III studies, 951 proved superior to oral levodopa carbidopa in reducing motor fluctuations in this advanced population and we believe our innovative new delivery system represents a potentially transformative improvement to current treatment options.

We remain on track to submit our regulatory applications in the first half of this year in the US and Europe with both approval decisions anticipated in early 2023.

And we expect to see phase III data for Qulipta in chronic migraine prevention later in the first quarter and plan to submit our regulatory applications in both the US and Europe this summer with approval decisions expected in the first half of 2023.

So in summary, we remain focused on continuing to execute on our pipeline programs and anticipate numerous important regulatory and clinical milestones across all stages of our pipeline in 2022.

This includes important indication expansion for on-market drugs and data Readouts and regulatory actions for key late-stage assets as well as proof of concept data from several early-stage NME programs.

With that, I'll turn the call over to Rob for additional comments on our fourth-quarter performance and our 2022 financial outlook, Rob. Thank you, Mike Abbvie once again delivered outstanding performance, while also advancing our strategic priorities. The strong result across our portfolio continue to support Abbvie's long term growth outlook.

Look.

Starting with fourth-quarter results, we reported adjusted earnings per share of $3.31.

Up 13.4% compared to prior year, and 5 cents above our guidance midpoint.

Total adjusted net revenues were $14.9 billion.

Up 7.5% on operational basis, excluding a 0.1% unfavorable impact from foreign exchange.

The adjusted operating margin ratio was 49.3% of sales an improvement of 240 basis points versus the prior year. This includes adjusted gross margin of 83.6% of sales.

Adjusted R&D investment of 12.1% of sales and adjusted SG&A expense of 22.2% of sales.

Net interest expense was $571 million and the adjusted tax rate was 12.5%.

Shifting to 2022, our full-year adjusted earnings per share guidance is between $14 and $14.20.

Reflecting growth of 11% at the midpoint.

Excluded from this guidance is $4.70 per cent of known intangible amortization and specified items.

We expect adjusted net revenue of approximately $60 billion.

At current rates, we expect foreign exchange, having 0.8% unfavorable impact on full-year sales growth.

This revenue forecast comprehensive following approximate assumptions for our key products and therapeutic areas.

We expect immunology global sales to grow double digits, including US Humira growth of 8%.

Internationally Humira revenue of $2.6 billion at current exchange rates.

Skyrizi global sales of $4.4 billion and Rinvoq global sales of $2.7 billion.

In hematologic oncology, we expect [inaudible] global sales up $2.3 billion and [Imbruvica] global revenue of $5.4 billion.

The Imbruvica forecast assumes market recovery in CLO offset by share erosion from increased competition.

For aesthetics, we expect global sales of $5.9 billion.

Including $2.6 billion for Botox cosmetic and $1.7 billion from [inaudible].

For neuroscience, we expect global revenue of $6.9 billion, including Botox therapeutic sales of $2.7 billion.

[inaudible] sales of $2.2 billion.

Ubrelvy sales of $800 million and Qulipta sales up $200 million.

With commercial access increasing rapidly in the first half of the year.

For Eye Care, we expect global sales of $2.9 billion.

Including $700 million from Restasis, which assumes no generic competition in the first half of 2022.

Lastly, we expect Maverick global revenue of $1.7 billion.

Looking at the P&L for 2022, we are forecasting full-year adjusted gross margin of approximately 84% of sales adjusted R&D investment of approximately $6.8 billion.

And adjusted SG&A expense of approximately $12.7 billion.

This guidance includes approximately $2.5 billion in expense synergies from the Allergan acquisition.

We are forecasting the adjusted operating margin ratio to expand by 120 basis points to approximately 51.5% of sales.

We expect adjusted net interest expense approaching $2.2 billion, our non-GAAP tax rate to be approximately 12.7% and our share count to be roughly flat to 2021.

Turning to the first quarter, we anticipate net revenue approaching $13.5 billion at current rates, we expect foreign exchange had a 1.3% unfavorable impact on sales growth.

This revenue forecast comprehensive following approximate assumptions for our key therapeutic areas.

Immunology sales of $6.2 billion.

[inaudible] revenue of $1.7 billion.

Aesthetic sales of $1.3 billion.

Neuroscience revenue of $1.5 billion.

In Eye Care sales of $900 million.

We are forecasting an adjusted operating margin ratio of approximately 51% of sales and we model a non-GAAP tax rate of 12.4%.

We expect adjusted earnings per share between $3.10, and $3.14.

Excluding approximately $1.22.

Of known intangible amortization and specified items.

Finally, Abbvie strong business performance and outlook continues to support our capital allocation priorities. We expect to generate adjusted free cash flow of approximately $24 billion in 2022, which is net of roughly $1 billion in sky receive royalty payments.

This cash flow will fully support a strong and growing dividend, which we've increased by more than 250% since inception.

Continued debt repayment, where you expect to pay down just above $12 billion of debt in 2022 and estimate a net leverage ratio of one eight times by the end of the year.

Our strong cash flow also allows for continued business development with approximately $2 billion allocated annually to augment our pipeline with the most promising external technologies and innovative therapies.

In closing, we are very pleased with Abbvie's strong results in 2021, and we expect to deliver robust performance in 2022 and over the long term.

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

Thanks, Rob. We will now open the call for questions and the interest of hearing from as many analysts as possible over the remainder of the call, we ask that you please limit your questions to one or two. Operator, we'll take the first question.

Thank you. Our first question comes from Chris Schott with JPMorgan. Your line is open.

Great. Thanks so much for the questions. I just had a couple here digging into Rinvoq in a little bit more detail.

I guess first in rheumatoid arthritis. Can you just it looks like volumes have plateaued a little bit is probably not hugely surprising given the label revision, but just elaborate a little bit more on the feedback you're getting from physicians there and when you anticipate you'll start to see sequential growth again in that indication?

The second question I had to Rinvoq was then on atopic derm.

Just elaborate again a little bit more on the ramp you're expecting here. Is this something that's going to take some time? Or do you view that there is some low hanging fruit maybe with some of the [inaudible] failures? And I'm really just trying to get to with all of these is the I guess the $2.7 billion guidance, how much of that is RA? How much of its new indication? Just a little bit more color on that front. Thanks so much.

Yeah. Thanks. Hi, it's Jeff. I'll give you some sense on what's happening with RA.

The RA market after the drug safety and label is progressing as we anticipated. So I'll give you some sense and I'll refer to as sort of in play share because you have to be a little bit careful in the December January timeframe with overall volumes in the market, but right before the right before the drug safety communication, we had about a 16%.

In play share in RA, which was just right behind Humira. So very very strong. If we look at where that's trended over the fourth quarter. It's dropped about 20%. Okay. So it's about 14 reported in October.

October.

Just over 13 in November. Very consistent with what we thought would happen. So about a 20% shift in new to brand starts over that time period, and what we see from the market is it's exactly as we would expect. Very, very stable, no change really in second-line plus and doctors start to suppress their starts in first-line consistent with the label.

Consistent with what we thought would happen so about a 20% shift in new to brand starts over that time period, and what we see from the market is it's exactly as we would expect very very stable no change really in second line plus and doctors start to suppress their starts in first line consistent with the.

So what we're going to see is that as basically, the promotion kicks back in here after December in the first quarter, we're going to see that type of stability, which we can see is very very clear from our overall share in our weeklies and start to progress as we shift and pivot towards that second line plus so.

The market is responding very similar to our expectations that we've been talking about in terms of overall RA, obviously, PSA is going to help build upon that RA dynamic.

And then ultimately later in the year, the big axial approvals as well so everything is progressing as we've thought it would progress from a market perspective.

In terms of atopic dermatitis.

Listen, I said in my prepared remarks, we're very pleased with the label. We have those stringent endpoints of the easy 90, the high skin clearance very powerful itch reduction are reflected in our label. We obviously have both doses approved the market. I can tell you is been very pleasantly surprised.

About the adolescent indication, which is very important. So that's basically we're going to start to see that ramp. It won't, we don't think it's going to be slow and to your point in terms of our ability to start to capture patients. It is happening already we honestly haven't reported any of the TRXs yet, but we can see it in the market.

And typically it's falling into a couple of areas first [dupee] failures, not a surprise.

And there's a reasonably significant number of people after four or five years that just have failed and exited the market. They're going to come back in. We have reports from our research and our teams over partial responders to [inaudible] that just arent doing well in particular with the edge. We see some early starts there and then of course challenging patients in general.

<unk>.

We are seeing starts there as well with those higher levels of skin involvement. So the market seems to be progressing as we expected. It's not surprising that as we look at the development of the second line market, we're going to see initially most of the most of the starts in the [Doobie] partial responders or.

the non responders, which is a fairly significant population. Also, as I mentioned that we will start to see.

Our access ramp fairly quickly here over the first part of the year. So we're encouraged. Maybe I can turn it over to Rob to get a sense over the relative magnitude of the sales. Thanks, Chris. This is Rob. So of the Rinvoq guidance of $2.7 billion. The ADL spy indications will each contribute a couple of hundred million dollars, while you see will contribute around 100 million.

Fairly quickly here over the first part of the of the year. So we're encouraged maybe I can turn it over to Rob to get a sense over the relative magnitude of the sales. Thanks, Chris. This is Rob so of the Rainbow guidance of $2 7 billion. The ADL spy indications will each contribute a couple of hundred million dollars, while you see will contribute around 100.

The thing to keep in mind in terms of sequential growth keep in mind in the US. You tend to see from Q4 to Q1 sequential decline. So that's just a seasonal dynamic that we see across the business. So you would see sequential growth resume in Q2 and beyond.

Thanks, Chris. Operator next question, please.

Thank you. Our next question comes from Ronny Gal from Bernstein. Your line is open.

Ronny Gal from Bernstein. Your line is open.

Good morning, everybody and thank you for taking my questions and nice quarter.

First question is around Humira.

I was wondering if you guys will be in a position to give us some sort of a floor number in 2023 based on payer contracts sometimes this year. Obviously, the market is looking for that and then.

When I talked to payers it seem a lot of the decisions about what product they would use longer term will not happen in 2023. That will happen in 2024. You kind of talked about a kind of a decline and then and then a quick ramp-up. Do you see the floor here in 2023 or do you see it in 2024? And then if I can sneak one more. You have one of the largest.

One of the largest.

Differences between GAAP and non-GAAP earnings of the industry because of the Allergan acquisition. As you look at the amortization period and so forth. When do you think this thing will begin to narrow in a significant way just because that's a concern for some for some investors.

Okay. Ronny, this is reconciled, I'll take those.

The Humira questions.

<unk>.

I think if you look at the guidance, we provided thus far I mean, I think that's consistent with how we see the market playing out overall.

We've said basically you should be thinking about 45% erosion plus or minus 10%, that's probably a reasonable range nothing has really given us any indication.

But it should be different than that at this point. I think we will be in a position as we move later on this year.

To potentially be able to provide some more specificity around that.

We should be through all of the contracting at that point.

In a better position to be able to understand.

The ramp and the change that will occur over that period of time, and we certainly want to provide guidance. When we have confidence that we can give you a high degree of specificity of what that guidance looks like.

As it relates to your question about.

We have a floor for Humira. I think your question is more of a floor for Humira in '23 or '24.

And I believe we will see further erosion from '23 through '24 in the Humira business alone, but what we have described as we returned to growth on the overall business. So you have to think about it from the perspective of this underlying growth engine that gets suppressed in 23 by the significant erosion that you see

Around Humira, both price and some volume. And then as that.

As that continues it continues at a slower pace when we get into '24, so the overall business has the ability to be able to drive growth for the total company, but yes, Humira will continue to.

To decline in '24, and then Rob, why don't you cover the third one? Sure Ryan. This is Rob. So when you look at our adjustments.

Adjustments, especially as intangible amortization intangible amortization like 70% of it.

This is on the 474 guidance that we've given this year and that will continue obviously those things fall off or over a number of years, but I would say, that's probably a level that.

Assume would be present for the next several years.

Another big components kind of as a contingent consideration given that where that is purchase accounting.

<unk> and we record that accretion as such.

That will certainly fluctuate over time, but I'd say those are the two biggest components of the guide this year and certainly integration costs are starting to wind down. So you would expect to see those those come down but.

It is going down from last year, and so you would expect it potentially trend down but overall I think you can you can model this level going forward.

Sure.

Thanks, Ronny operator next question please.

Thank you. Our next question comes from Andrew Baum with Citi. Your line is open.

Thank you a couple of questions.

Firstly on <unk>.

As we move into 2022, and the Covid dynamic shakes out we'll be able to see the impact of competition versus COVID-19 , achieving a significant chunk of the U S slowing growth rates will decline with huge competition, what can be done to recap the momentum again to match it.

<unk> and then second in terms of your aesthetics business.

You haven't entered your contract with <unk> liquid formulation, there are competitive products coming to market as well as increasing price competition, how much of that is concerned what's your franchise and the breadth portfolio enough to minimize any impact of novel formulations. Thank you.

Yeah, Hi, Andrew it's Jeff So thanks, and Youre right that we still have the continuing lingering effect with Covid and Rob addressed that in his comments. So we still see the market.

<unk> 19 levels down about 10% and even marginally down from 2020 in Q4.

We anticipate that that will moderate go forward and then we're left to to.

To manage the competitive impact. So we are seeing competitive <unk> have some impact on <unk>.

But we're also seeing the competitive impact from from our own <unk>. So we have to start to think about.

Looking at the combination of the Abbvie position, which is still very very strong to give you. Some sense in in second line, we have 45% share of the market and it's even higher in third line and its in the 34 for frontline. So we have to continue which is our strategy to to highlight where we have.

A lot of distinction which is the.

The strength of our data across every comparator in.

The overall survival benefit and then also bring the strength of our overall portfolio. So that's how we plan to mitigate it as Rob mentioned, we see market recovery offset by some share pressure on <unk>.

Mitigated by positive then impact so that's how we see the market develop as we go into into 2022. We also are seeing.

We also are seeing some pricing pressure in some select segments that are also contributing to the share loss for <unk> and obviously, we as much as we can we keep the pricing discipline in the market moving forward. So I hope that context helps.

Andrew This is Rick I'll cover the aesthetics questions for you.

Certainly as you look at Botox, both here in the U S and internationally.

<unk> today against.

A significant number of competitive alternatives that are available I think.

It's a pretty.

Impressive position that Botox has in the market. When you look at the brand equity that it has when you look at the confidence that injectors have in using the product.

Tend to describe it as the most forgiving of all the toxins that they have experience with and then there is obviously a fairly significant customer loyalty aspect to botox with the loyalty programs and Allergan.

Very significant loyalty program that offers patients.

<unk> to be able to use the product.

And to go back and get repeat procedures, having said all of that we feel confident in the position that we have competitively against the competitive alternatives that we see out there and those that we see coming.

We have a very active R&D effort in.

<unk> R&D group now looking at next generation toxins.

Two in particular that we highlighted in the comments earlier are we have a short acting toxins thats in development, that's progressing very nicely and we have a truly long acting toxin that's in development as well.

And.

And we believe that those will help grow the market, but if I look at the market now obviously, we've seen significant acceleration in the market.

Since we activated many of the strategies that we put in place after acquiring allergan, but if I look at our overall share overall shares stayed very steady impact might have ticked up one point and the latest set of data. So that tells you that we're not only growing the growing the market very rapidly, but we're continuing to compete quite effectively.

Against the alternatives that are out there so.

Not overly concerned about what I see on the horizon I think we have the opportunity to build the market even larger with some of the.

The next generation toxins that we're working on when we bring those to the marketplace. So I feel good about our position and box and Vantiv pillars as we move forward.

Thank you Andrew Operator next question please.

Thank you. Our next question comes from Bob <unk> Divan from Mizuho Securities. Your line is open.

Great. Thanks, so much for taking my questions. So a couple always.

All the guidance you guys gave both near term and longer term.

Just a couple of questions I have related to more of a longer term guidance you've given.

In the past you talked about Youre Haemonchus franchise.

Peak sales are still I guess in 2025 of around $13 billion. When you update your some of your numbers earlier last month I don't think you updated that one I'm. Just curious if you still think that thats, a reasonable sort of 2025 expectation and then the other one is around <unk>.

What are your sort of state with this guidance of sort of more than $1 billion in peak sales.

You're already guiding to $800 million of sales just.

In this current year pretty early in the launch so I'm just wondering if you could maybe get a little better sense of how you're viewing sort of a longer term opportunity.

So as you probably and maybe if you Wanna mention kill a total I know that's early but at least relative you think there is significant upside to that 1 billion number you've mentioned before thank you.

<unk>. This is Rick so I'll cover the first one and then I'm going to add Jeff.

The question that you've asked.

So it's a good question, obviously, the hemo market in the areas that we participate in in particular I would say <unk> has changed over the last several years I think one of the certainly one of the things that was not ever anticipated in that guidance was the impact that.

The Covid would have on the market and the reduction that we saw in the number of new patients which was quite sizable.

And obviously wasn't contemplated in the second thing is we are seeing certainly more competitive pressure both from price and some volume than we anticipated in that timeframe, having said all of that and well I'd say a third item is certainly been flex that is performing well as well.

And I'd say, it's it's tended to exceed some of our expectations at least at this point within the launch trajectory of.

The brand so all of those have factors in what we're describing here I'd also say we have done a nice job.

Building out our homeowners' portfolio from an R&D standpoint, when I look at some of those assets that I described in my opening comments I think theyre going to have a very significant opportunity. As an example, one that I didn't mention there would be <unk> $11 14, multiple myeloma population that could be a very significant opportunity.

And we feel good about that we should get a readout on that and we think that could be a significant contributor to both.

Improvement in <unk>.

In patient therapy, but also a significant improvement in the overall revenue in the franchise and then you have things like <unk> and <unk>.

Three eight.

They are all significant opportunities to be able to drive growth. So I still feel confident in the overall ability for us to grow our <unk> franchise, having said that I would say in Peru, because under more pressure than we anticipated when we put that guidance out.

At that point, we didn't even contemplate follow on <unk> in any meaningful way, but we do see more competitive pressure there, but overall I would say I still feel very confident in our ability to be able to grow that there will be a growth franchise for the company over the long term.

Yeah, Hi, bondholders, Jeff So just to answer your question on <unk> and the overall market.

Certainly we're very pleased as I mentioned in my remarks over the momentum on <unk>, we continue to lead in that acute space.

And the early results for key lift are also.

But also very strong now a lot of it is going to depend on how that <unk> market develops. So if you think about it in this way and this is how we think about it is is it's about in terms of new patient capture for the total <unk> market, where we also compete with another player.

From Bio Haven.

About 18% to 19% of the market and the market is also with the expanded triptan market of course. So if you look at that the payers certainly like you step through one or more tripped and when you look at the population that may not be eligible for a triptan or fails a triptan. The estimates are.

Typically.

Up to 30% to 35% and so the market has potential room to sort of double into that epidemiology. So you can kind of run the numbers. There I mean, we often get the question is is the over $1 billion is it closer to $1 billion or is it closer to a higher number but nonetheless, we're pleased certainly.

It's exceeded our expectations so far.

Q lift it has as well so I think there's more room for the market to run.

But we'll have to see I mean, there are payer pressures in the market as I mentioned in terms of the step through therapy.

Thanks, Pavel Operator next question please.

Thank you. Our next question comes from Steve Scala from Cowen Your line is open.

Thank you a couple of questions at a high level I struggled to understand why 2022 won't be.

A stronger year than the guide on the earnings line, Scott <unk> and Botox are doing phenomenally <unk> is holding its own humira will still be exclusive in the U S for the whole year and should be at peak profitability and the pandemic Les and obstacles. So why well in 2020 to look more like.

Or even better than 2021 in terms of our earnings power.

And secondly, there was no mention of the CF program, even in the upcoming milestones any thoughts on the timing of the triplet data in the past I would describe abbvie confidence as being no more than moderate hasnt changed one way or the other thank you.

As Steve This is Rick maybe Rob and I will tag team. Your first question and then Michael will probably your second question.

I think if I look at 2022, and I look at our overall performance coming off of a strong year in 2021, it's pretty impressive performance when I look at the EPS growth.

Certainly do we have an opportunity to drive it harder I can tell you every year.

We endeavor to drive it as hard as we can drive it and when I look at all of the businesses.

Individually and I look at their ability to be able to perform I'm extremely confident in the trajectory that we have going forward.

Specifically.

We're assuming as an example in HCV that Theres still a COVID-19 impact in HCV. So I wouldn't say the pandemic has completely.

Gone in 2022.

And.

But I'd say overall the brands are performing well.

We're investing in the business to ensure that we continue to be able to drive long term performance and so certainly that that obviously drive some expectations around what would be EPS growth will be year over here.

Rob anything you'd like to add I mean, I think it's a good point and that we are fully investing to support the long term growth you think about where we are launching a D. That's a new area for us Q lifts and beauty. We're also going to fully invest their aesthetics, we've seen that the strength of the investment in aesthetics away with valent grow the market. So that's really important at the same time, we're expanding operating.

<unk>.

Exceeding our expectations for synergies and so youre seeing us deliver another year of operating margin expansion. So I'd say, we're top tier in operating margin very healthy P&L profile and then the other thing that you probably have to factor in here is that we've assumed a half year of restasis as well.

Don't really have visibility to.

The generic and so we've made an assumption every time, we update guidance six months out. So that's something that as you look at year over year that you should.

Figure into your comparisons, but overall, we're very pleased with delivering double digit growth in earnings and another year of very strong operating margin expansion, while and fully investing to support the growth of the business.

And this is Mike I'll take the question on CF.

I think it's important to keep in mind that this is a pre proof of concept program.

That doesn't contribute in any meaningful way to our long term outlook and doesn't factor into our thinking about the long term potential in the pipeline and the way we have discussed it as consistent with that view, we have always said that it represents significant upside if it were to hit but it's an early program with <unk>.

Respect to the timing of the data.

We continue to track towards the timing that we've described previously we would expect to have data from the triple sufficient to enable a go no go decision later on this quarter.

Thanks, Steve Operator next question please.

Thank you. Our next question comes from Tim Anderson with Wolfe Research. Your line is open.

Thank you a couple of questions.

I'm guessing that as we move through 2022 investments are going to start to have some concerns about 2023 earnings and what the impact from Humira could be you talked about having more visibility on humira contracting later this year. My question is it possible youll actually.

Give us 2023 earnings guidance sometime this year <unk> Q3 results. So as an example.

And then my second question, just going back to yes.

You said in mid November that you would actually have that data in house.

End of the year.

So here we are four weeks later, we haven't really seen anything.

Question is do you actually have that data in house could you hit that timeline of end of year.

If not what's going on and what changed in that short window.

Okay. Tim. This is this is Rick I'll cover your first question, Mike can address the second one.

We certainly are in a position now to be able to commit that we would give earnings guidance in the third quarter.

I think clearly we will be able to give a better feel for whether that erosion curve looks like.

And could that ultimately ended up being at least a pretty good.

Perspective for us to be able to build off of what earnings guidance would look like it might I think if we were in a position where we can confidently provide that guidance we would provide it.

But I certainly think we'll be in a position where we have.

We have very good visibility as to what that erosion curve will look like and at that point, we can tighten that a bit and be able to provide a higher level of specificity. We understand it's an important issue for investors as.

As far as EPS is concerned in 2023, we have said that we expect EPS to decline in 2023.

I don't think any investor is that would be a surprise to any investor, but obviously, it's important for us to be able to frame. It as accurately as we can for the investment community and be able to provide direction around that and at the point at which we think we can do that in a reliable way.

We're committed to be able to do that so let's see how it plays out and certainly as we get to the third quarter call that would be the position at the point at which I think we'd be in a position to be able to provide more clarity.

Mike So on CF.

What we said towards the end of last year is that data would begin to come in house around the end of the year and we would have sufficient data to make a go no go in the first quarter and we're still tracking to that to that overall timeline. There were some challenges towards the end of the year, where a number of patients were expected.

In Australia for example, in Australia shut down because of Covid, and we had to shift that enrollment.

So we perhaps have slightly less data than we would've hoped to have had at this point in the year, but again, we're still tracking to be able to make that go no go decision by the end of the year because it's important to keep in mind that these are short studies and so once you get those patients in you can turn the data around and make.

A decision pretty quickly, but the overall timing hasnt changed substantially from what we what.

What we described at the end of last year.

Thanks, Tim Operator next question please.

Thank you. Our next question comes from Mohit Bansal from Wells Fargo. Your line is open.

Great. Thanks for taking my question and congrats on the quarter.

Maybe a question on Vulcan other oil competitions competition competitors in IBD.

Do you see is invoked treating versus other world.

B inhibitor.

More than that could be more than one and the kind of suggested kind of induction.

One drug and maintain that.

Our cognitive treatment paradigm in IBD do you think it is even a possibility in the future.

Thank you.

I think this is Mike I'll take that question. If you look at the performance of Rins book in inflammatory bowel diseases, both and you see where we have the full data set and in Crohn's disease, where we have.

An important component of the induction data set the performance across the board is very very strong.

Not only in terms of.

Overall response rates that are measured, but particularly when one looks at deeper measures of response clinical remission and mucosal healing major clinical response, which is the.

The combination of remission and endoscopic improvement.

And across the board, we're driving very high levels of disease control and we think that feature of the drug.

Combined with the overall benefit risk position us to compete very effectively against not only oral competitors, but many competitors all competitors in the field. When we look at those data to IRI given the limitations of cross study comparisons we see response rates that just arent paralleled in the field.

And so we think that there is a very real opportunity for.

<unk>.

And our view of its role in IBD reflects that with respect to mixed induction and maintenance regimen. It's important to keep in mind that there are no data to support those sorts of regiments all of the programs look at induction followed by maintenance, which is usually a step down in dose from the induction dose and that's the data set that possess.

<unk> will have and what's important to keep in mind that in the long term patients often lose control and then they need to be re induced with a new agent and one of the very strong features of Rainbow and quite frankly Sky Rizzi also shares. This characteristic as it is very durable response. So it does maintain response for a very long period.

At a time in the studies that we.

We have continued to follow including our long term extensions from phase II and our phase III program. So we think those are also very strong attributes of the products.

Okay. Thank you very much thanks.

Thanks Mohit.

Next question please.

Thank you. Our next question comes from Gary Nachman from BMO capital markets. Your line is open.

Hi, good morning.

<unk> has been a big source of upside in 2021, So I'm curious if you see any real impact from <unk> in the fourth quarter do you see a tailwind maybe from that further recovery this year.

Is that baked into the aesthetic guidance of $5 9 billion.

For 2022.

And you talked about high single digit long term aesthetic guidance, but this year should that should be double digits. So should we be thinking more along the lines of double digit growth maybe for the next few years, if youre still investing a lot in that space.

And then just one other quick one on <unk>.

So the chronic migraine prevention indication that data is coming soon sometime this quarter. So just talk about how.

Meaning you think that indication will be and how that's factored into the peak target that you've talked about thank you.

Hey, Gary It's a good question on Omicron in these studies it is something we track.

<unk> carefully.

In every major geography around the world as well as by state here in the United States.

And I will tell you that.

At least as far as the U S is concerned there has not been much of an impact on aesthetic volume.

Yes.

Unlike what we saw when there was an actual shutdown and obviously you would think shutdown youre going to see the volume go down, but I'd say, we're seeing very little impact on the volume so.

We have factored in.

That we don't expect a major disruption going forward and I think the data we clearly support that.

That's a reasonable position to take.

And.

As far as the as the business overall I mean I can tell you. We're very pleased with how the business is performing I think that groups are executing at a very high level and certainly the resourcing and the dedicated structure that we put in place I think are helping a lot in major geographies like the U S and China.

We are obviously comfortable with the guide that we provided.

It is an area that we're going to continue to invest in and continue to drive and I think it is.

Market that I think is extremely attractive.

And it's going to require both us to continue to execute and invest in it appropriately to grow the market, but also to build out more assets that meet patients needs to be able to expand the market and so we've almost doubled the R&D investment that we have and instead it since we took it over.

We have a number of programs that I think are very exciting programs some of the.

Some of the bio stimulatory and regenerative pillars that we're working on now I think could be exciting opportunities.

Like <unk> to be able to stimulate <unk> in patients.

Using fillers.

It's an exciting program that continues to advance and so it's going to require both it's something that we're absolutely committed to continue to drive and I think this can be as we indicated in our comments I think this can be a strong business for abbvie over the long term.

Jeff you want to cover Q look yes, thanks, Gary for your question on <unk>, It's an important.

New indication if we see when when we see the data and it were to be approved and I'll give you. Some perspective, obviously, we've talked about how much we really like our portfolio of migraine, you've got botox on chronic with the injectors. Obviously you have to lift a right now in episodic and of course, <unk> and acute so the key lift of chronic gives us.

Quite a bit of flexibility and it's a nice catalyst, even though episodic is a bigger market in terms of patients obviously chronic patients do do do consume a lot of medication.

Largely if you think about the market structure, you've got injectors, meaning they inject botox or you have non injectors so to bring in the first oral that for people that don't choose to have a botox injectable practice, that's quite attractive and we think it builds in our story over the strength of cue lips.

First in class designed specifically for these indications so it's a very nice catalyst if it were to be approved and so we're anxiously looking forward to that the other thing I would note, which is further off and it's obviously something that would have to play out through the studies in Mike's organization was chronic migraine is so difficult.

That the potential for patients to have combination treatment. So in other words, a botox therapeutic plus a simple oral drug like <unk>.

Could bring this concept to that segment of the market called migraine freedom, where you're really trying to get the headaches down to as low as possible and so again, it's further off but it shows you the flexibility that we have as we continue to build out Q lifted across our our migraine portfolio. So we're pretty excited about the potential for <unk>.

Yep.

Thanks, Gary Operator next question please.

Thank you. Our next question is from Geoff Meacham from Bank of America. Your line is open.

Hey, guys. Good morning. Thanks, so much for the question just had a couple of quick ones for Rick or for Rob.

The first one is when you look at your modified 2000 22025 guidance for Sky racing and rent book.

Are there any changes to your assumptions on duration of therapy or the pricing environment I am just thinking about the payer landscape with many more biosimilars coming up and what impact that could have on switching or price increases.

And then the second question is on the BD front, and we've obviously seen valuations come down quite a bit.

And smid cap biotech on the past six months.

I know, you've usually had talked about $2 billion earmarked for BD, but does the current environment.

To make things like bringing new tas or newer technologies in house more attractive. Thanks, so much.

Bob.

Yes, Jeff So obviously when we go through our long range plan, we consider the various dynamics with the pricing environment. So we factor that into our 2025 guidance I would not say that there has really been an assumption change for duration of therapy.

But we did we certainly took into account the.

Impact of label on raw and Spa, but then that was offset by the stronger performance.

As well as the stronger IBD data that we saw for invoke and just the overall performance of salaries in psoriasis was all factored into that updated guidance, but we did not make any assumption change for duration of therapy, and we certainly factor in various pricing assumptions as we go through our long range plan.

And maybe Mike and I will tag team number two I mean, certainly.

As we you've seen us pay down debt at a very significant pace.

We're continuing to commit to pay down significant debt. This year and we will certainly be in a position where we could do larger opportunities. If that was something that we desired and we thought it was the right kind of opportunity as we move forward in 'twenty three 'twenty four.

The $2 billion that we've allocated has been sufficient to be able to cover the things that we're looking for.

Mike.

<unk> has responsibility for business development. So I think it's probably a little closer to the valuation question Mike.

Well, what I would say is that valuations have certainly come down and that brings.

Opportunities into the focus that might previously.

Outside of that range of $2 billion, a year that we had contemplated and as Rick said as we pay down debt, we have some more flexibility, but we're going to continue to look at BD in the same way that we always have which is that it is an important component of adding innovation to our pipeline and needs to be coupled with our internal innovation. So we're going to match what's out there.

The innovation, we see the therapeutic areas that are most promising with what's going on in our early pipeline and use that to make sure that overall, we have a very strong and very innovative pipeline and you can see that for example.

In the way that we had built our hemo <unk> franchise, where.

Where we have a nice blended internally discovered and partnered programs from.

Then Clark Sterne improvement, obviously, our lead programs to the significant programs behind that things like <unk> at <unk>, three three and now to SUV demonstrating extremely strong data.

In non small cell lung cancer. So that's a blend of internal and external innovation and we're going to continue to look at areas.

In that same way and it's principally going to be.

For our overall situation the strength of the innovation and that balance between internal and external innovation that we look at.

Thanks, Jeff. Thanks, Operator next question please.

Thank you. Our next question comes from Josh Shimmer from Evercore. Your line is open.

Great. Thanks for taking my question first a little surprised the contingent consideration adjustment is not higher considering your recently revised forecast am I not understanding that one correctly or should we be expecting a more meaningful revision in the first quarter and then you mentioned a couple of times the novel Bio stimulant Tori.

<unk> fillers do you have any aesthetics pipeline can you elaborate on how you expect those to differentiate versus the current offering and whether you.

Do you expect those to expand the market for fillers. Thanks John .

Josh This is Rob I'll take your first question. So we did actually a record in Q2 of last year.

Additional accretion for higher sales forecast for Sky Ridge that was really tied to both.

Our long range plan as well as because it's a fair value measure you have to take external forecast into account, obviously street numbers had moved up as well we came out with publicly with the updated guidance in December but we already contemplated that in our contingent contingent consideration accretion in Q2 of last year. So that's already accounted for.

So on the Biosimilar story pillars, I think the way to think about it there are multiple programs, but I'll talk about two areas specifically.

One of the areas that you want to be able to look at is your ability to be able to stimulate collagen. So your own body can believes collagen to be able to provide.

Support and filling in a specific area that you desire.

And there are some products on the market today that provide that.

One of the negatives of those products is you don't get the immediate filling effect that you normally get with a filler where physical filling immediately upon the procedure you get a little bit of swelling headquarters. So for a very short period of time, you will get what looks to be selling but then that swelling goes down and then for a period of time.

The patient has to wait.

In order for them to get the college and impact.

That takes.

A significant period of time, so we have a technology.

In house that we acquired and further developing that combines both physical filling and college and stimulation in one product. So you get the immediate filling effect of a normal pillar.

Then as that starts to resolve over time, you get to college and impact that's building over that same period.

A period of time to provide long term filling.

So I would say that most of these technologies that we're working on our market expansion opportunities. So that's one example, the second example would be one of the areas that is important for patients is what we describe as skin quality the smoothness of your skin essentially.

And one of the things that provides smoothness of your skin is the elasticity of the skin. So total last and as an example of a product that we have in development that will allow the body to be able to produce more elastic. So you can you can inject this product and it will provide we believe we have to prove this in the clinical studies.

We will provide.

Some level not a dramatic level of filling but.

<unk> ability to be able to provide a last information along those areas and be able to smooth the skin out that would clearly be a market expansion opportunity today, there really arent pillars that do that they can stretch the skin with the physical filling but they don't really provide.

Smoothing of the skin and so those are two examples of what we're working on.

Thanks, Josh so much operator next question please.

Thank you. Our next question comes from Chris Raymond with Piper Sandler Your line is open.

Hey, Thanks, just two questions first on the migraine franchise.

Noticed that.

You have a phase III trial, looking at <unk>, and Botox and a combo therapy.

For migraine chronic migraine prevention.

Our Doc checks indicate.

Growing interest docs sort of highlight that as you know.

Proactively is something they're interested in.

I guess was this trial in response to that feedback and or maybe just talk about the rationale and.

How you are looking at combo in the space.

And then just a question on a drug that doesn't come up that you just launched viewing.

Presbyopia represents a huge tam.

Maybe just talk about initial uptake trends in.

What is it about this this market I guess that youre seeing that youre, not making a bigger deal out of out of this launch.

So this is Mike I'll start with the question on cue lips, and Botox combo use and then Jeff May one may want to add and take the second question.

With respect to that combination it really really goes back to what Jeff said before this concept of migraine freedom. If you think about chronic migraine. These are patients who have 15 or more migraine days a month. That's a migraine every other day and these are debilitating attacks. So a substantial reduction in that.

<unk> is great.

But what patients and physicians are really seeking is an elimination of the migraines. So that they can be free to go across.

They're in their daily lives to go about their daily lives and.

Given the options that are out there today to really get to that level in those most severely affected patients combination therapy is an obvious place to go, particularly when it's complementary approaches that work through completely different mechanisms and so you would expect there are effects to be independent and additive.

And where you have a treatment like botox. It has a long track record is infrequently administered and has a long duration. So has that thinking that led to that combination trial and I do think we will.

Would also agree that there is significant interest in treating physicians around these approaches yes, just to add to that that's exactly right is the it is so logical and there's so much unmet need to mikes point in chronic migraine with half a month.

Sometimes these migraines last for days and so there's a lot of desperation and win the thought leaders in the headache specialists see the impact of Botox and how simple Q lift is and how strong that is they go right. There. So I think we are encouraged as Mike mentioned to sort of see the outcome of those studies for migraine freedom It would if it.

It works it would be a real advance for patients.

So on beauty.

We Didnt commented on this meeting we typically wouldn't comment on a product.

This of this size.

And I mean, it's a very interesting product I think it clearly has a unique fit in the market.

I'll have.

Jeff talked a little bit about the total available market, what we see as far as the size of that market going forward.

But the reason we didnt highlight it is like I said.

We look at what we think peak sales will be here it's not.

A product of the magnitude that we would typically to highlight.

Yes, what we see is that there is there is excitement about viewing I mean, it's different than the obviously the market is is basically over the counter or prescription eyeglasses or readers right. So this is the first first ever product that basically is a drop or a reading drop right. So when we start to break.

Down the data and <unk>.

You take a really really big market.

Tens and tens of millions of <unk> patients with presbyopia, but we also largely see from the clinical study. It really works the best for moderate to severe younger people not older people. So as we basically make the cuts it's still a substantial market size, but it's not as large as you might think if you just look at all the presbyopia that or.

That are that are in the United States, but nonetheless, it's early days, where we have a sales force that's calling on our optometrist also ophthalmologists.

What we see from the early results is significant interest we haven't started our big consumer push which will come later.

Later in this quarter.

It is an older glaucoma product thats been re formulated so theres a little bit of learning from the ophthalmologists, who really understand glaucoma products, but overall the early results are it works. It works as anticipated. It works quickly within 15 minutes. It last for six to eight hours and so again when we look at the <unk>.

Price point, it's not a reimbursed product, it's a cash pay product.

We have to Rick's point fairly modest expectations, and we'll continue to watch the trajectory here over the next quarter or so I think the big assumption that you have to look at here is what is the utilization per month, the patient would actually use it for.

As an example, I keep bugging you guys that I have to go get a prescription for it and where do I want when I go to a restaurant I have trouble reading and low light so I'll use it for that purpose.

And so it's very difficult to come up with the frequency at which will be used to use the high frequency low obviously you'd be a bigger product.

And at a relatively low frequency it'll be smaller products. So we'll have to see how it plays out.

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

Thank you. Our final question comes from Matthew Harrison from Morgan Stanley . Your line is now open.

Great. Good morning, Thanks for fitting me in I guess two for me if I may so first on <unk>.

Could you just comment around your confidence.

Around accelerated approval here in <unk>.

How youre thinking about that opportunity in the near term and then on <unk>, maybe just comment on what FDA conversations are ongoing there and how youre thinking about the potential for an outcome or not thanks.

So on <unk>, we have a high degree of confidence.

And for all it continues to deliver.

Very strong results high overall response rates vary.

Deep responses good complete response rates across a number of indications <unk> and Follicular lymphoma, both with respect to the confidence.

An accelerated approval for diffuse large b cell lymphoma, when we look at the data we think it clearly exceeds the benchmarks are available therapies.

<unk>.

Hi, Lee.

Pretreated refractory patients.

So we would think that accelerated approval.

Should be supported by those data will allow the data to continue to mature from the expansion cohorts.

And have our final regulatory discussions later on this year to.

To set up.

That at.

Accelerated approval submission. So it certainly is in our planning and we think it's very supportable based on the data.

With respect to confidence in <unk>, we're confident that we've been confident we were confident when we saw the data and looked at the strength of those data.

And looked at the relevant precedents for molecules that have achieved indications not only in depression broadly speaking, but an adjunct treatment of major depressive disorder. We've completed all of the regulatory discussions that we need to have for the submission and we're planning.

The submission shortly as we described in.

In my prepared remarks in terms of potential for an ad com.

It's really too early.

Two to comment on that typically start to have those conversations with the agency a few months into the review process, but based on the data and based on the precedent. It's not something that we would anticipate however, if the agency were to have one it wouldnt concern us either we think the data package is very strong.

And would hold its own.

Thanks, Matthew 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 Dot com. Thanks again for joining us.

Thank you that concludes today's conference call. Thank you for your participation you may disconnect at this time.

[music].

Good morning, and thank you for standing by welcome to the Abbvie fourth quarter 2021 earnings Conference call. All participants will be able to listen only until the question and answer portion of this call. You may ask a question by pressing star one on your phone I would now like to introduce MS. Liz Shea Vice President.

Head of Investor Relations.

Good morning, and thanks for joining US also on the call with me today are Rick Gonzalez Chairman of the Board and Chief Executive Officer, Michael Severino, Vice Chairman and President, Rob, Michael Vice Chairman financing commercial operations, and Chief Financial Officer, and Jeff Stuart Executive Vice President Chief Commercial officer joining.

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 some statements we make today may be considered forward looking statements for purposes of the private Securities Litigation Reform Act of 1995.

Abbvie cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward looking statements additional information about these risks and uncertainties is included in our SEC filings Abbvie undertakes no obligation to update these forward looking statements except as required by law on today's conference call non.

Financial measures will be used to help investors understand how these 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 basis, which includes full current year and historical results for Allergan for this comparison of underlying performance. All historically reported allergan revenues have been recast to conform to <unk> revenue recognition accounting policies and exclude the divestitures of <unk> and bio case references to operational growth.

Further excludes the impact of exchange following our prepared remarks, we'll take your questions. So with that I'll now turn the call over to Rick. Thank you Liz good morning, everyone and thank you for joining us today.

Our performance this quarter tops off another excellent year for Abbvie with results well above our initial expectations. We delivered full year 2021 adjusted earnings per share of $12 70.

Representing growth of more than 20% versus the prior year.

Full year adjusted net revenues were more than $56 billion up 10, 5% on a comparable operational basis.

These results demonstrate balanced performance across each of our major growth franchises, including double digit comparable operational revenue growth from immunology aesthetics and neuroscience.

Im extremely pleased with our momentum and we've entered this year in a strong position, which is reflected in our guidance. We anticipate 2022 adjusted earnings per share of $14 to $14 20 Rep.

Representing growth of 11% at the midpoint.

Longer term, we remain well positioned with an impressive set of diversified growth assets.

In immunology Sky, Regina and <unk> are already contributing meaningful revenue, including $4 $6 billion in combined sales last year with substantial growth anticipated in 2022 and got.

Over the next few months, we expect to add several new indications to the list of approved uses for these two assets at which point <unk> will be commercialized across all of Humira as major indications plus atopic dermatitis.

With the strong performance that we're seeing in their initial indications and the robust data we've demonstrated across our broad development programs. We expect combined peak sales for Sky Regina RIN Vogue to exceed the peak revenues achieved by Humira.

In Hematological oncology, we have established a leading position within <unk> and <unk>, which are both expected to remain important revenue contributors through the decade.

To support our next wave of growth. We also have an exciting and diverse pipeline of promising new therapies to address critical unmet needs in both blood cancers and solid tumors.

Notable opportunities from our mid to late stage oncology pipeline include <unk> for myelofibrosis, which has the potential to provide disease modification in a market where current treatments only address symptoms and procrit amass a potentially best in class CD three by CD <unk>.

<unk> for B cell malignancies, including <unk> and Follicular lymphoma.

ABV 383, our Bcf.

CMA CD three by specific which has the potential to become a best in class treatment in multiple myeloma and <unk> are promising C met ADC being studied for non squamous non small cell lung cancer, which was recently granted breakthrough therapy designation.

In neuroscience, we have a portfolio of compelling and differentiated therapies to support robust long term growth in migraine, Parkinson's disease and psychiatric conditions.

You will be in Q lebda are both demonstrating strong launch trajectories in migraine with each treatment expected to contribute more than $1 billion in peak sales.

<unk> continues to have a significant opportunity with currently approved indications with peak sales expected to approach $4 billion and approval in major depressive disorder represents upside to our current projections and 90 501, a potentially transformative improvement to our current treat.

Options for patients with advanced Parkinson's disease with peak sales also anticipated to be more than $1 billion.

Our leading a steadying portfolio represents another extremely attractive growth opportunity.

Business is performing well above expectations.

<unk> full year 2021 sales of more than $5 2 billion.

$700 million higher than our initial guidance.

Add these increased promotional investments are driving accelerated category growth, especially in toxins and fillers, where there is substantial room for additional market penetration globally.

Dedicated resources are also focused on delivering new product innovation within our statics with several exciting R&D programs internally, including both short acting and long acting toxins as well as novel fillers with bio stimulatory, where regenerative features.

Given this focus and investment we expect our aesthetics franchise to deliver high single digit revenue growth through the end of the decade, including sales of more than $9 billion in 2029.

Lastly.

We've developed a robust pipeline, including numerous attractive late stage programs.

<unk> early stage therapies, and a growing range of potential platform technologies, which we expect will collectively contribute to our growth through the decade.

With the actions that we've taken to diversify our sources of growth we remain very confident in the long term outlook for our business.

Following the U S. Humira LOE event in 2023, we expect to quickly returned to growth in 2024 and deliver a high single digit growth from 2025 to the end of the decade. This is Ted.

Estimate to the strength of <unk> broad and balanced portfolio.

In summary.

Thank you Rick looking at our quarterly results, we continue to demonstrate excellent commercial execution across our therapeutic portfolio.

I'll start with immunology, which delivered global revenues of more than $6 7 billion.

Reflecting growth of 13, 3% on an operational basis.

Global Humira sales were $5 3 billion up three 5% with 6% revenue growth in the U S offset by Biosimilar competition across the international markets, where revenues were down eight 8% on an operational basis.

<unk> is performing extremely well globally.

Global sales of nearly $900 million were up 12, 4% on a sequential basis, reflecting continued market share gains.

<unk> has now surpassed humira as the leader for total prescriptions in the U S psoriasis biological market.

<unk> share of approximately 20%.

We are also now leading the market in several international geographies, including Japan.

Total in play share, which includes both new and switching patients remains very strong and now reflects roughly 37% patient share in the U S as well as leadership in nearly 20 key countries around the world.

<unk> is also now approved <unk> second major indication to treat adults with active psoriatic arthritis further enhancing its compelling profile in dermatology.

Field promotion is now active globally and early feedback from physicians has been very positive.

<unk> demonstrated skin clearance and joint efficacy and our PSA clinical program.

With nearly 30% of patients visiting dermatologists, having both skin and joint involvement this new approval will sustain <unk> strong momentum.

In addition.

We are preparing for the launch of <unk> in Crohn's disease indication with very meaningful long term revenue potential with regulatory approvals in both the U S and Europe anticipated this year.

<unk> also continues to demonstrate robust growth global sales of more than $500 million were up 14% on a sequential basis.

Prescriptions and <unk> remained strong with a total market share of more than five 5% in the U S and nearly 5% across key international markets.

We're very pleased with the competitive labels for both PSA and atopic dermatitis, where we are making excellent progress with their launches globally.

In atopic dermatitis dermatologists appreciate key elements of <unk>, new label, including the incorporation of stringent skin and each endpoints reflective of the performance in our Registrational trials as well as an adolescent indication and dosing flexibility.

Managed care access is expected to ramp fairly quickly for both atopic dermatitis and PSA in the U S.

We are also preparing for the launches of <unk> in ulcerative colitis, and axial spa with regulatory approvals for both indications anticipated this year as well.

Overall, we continue to feel very good about the performance and progress, we're making with both <unk> and <unk>, which are expected to contribute more than $15 billion in combined risk adjusted global sales in 2025.

In hematologic oncology global revenues were nearly $1 9 billion up four 7% on an operational basis Ben.

<unk> once again delivered robust growth sales were up 34% on an operational basis with strong share performance across all approved indications.

<unk> global revenues were down two 7%, reflecting a slower than anticipated market recovery in CLO and increase share pressure from newer therapies.

In neuroscience revenues were more than $1 6 billion up 19% on an operational basis, including robust double digit growth for both <unk> and botox therapeutic.

I'm also very pleased with our performance in migraine, where we have a portfolio of multiple distinct therapies to address the full spectrum of this disease.

This includes our two leading oral <unk> therapies.

<unk> for acute migraine with which delivered total sales of $183 million up 13% on a sequential basis, we anticipate.

<unk> robust sales growth again this year based on your <unk> competitive profile continued strong new patient starts and a rapidly expanding <unk> segment.

And we also have to lift up the only oral <unk> treatment specifically developed for the prevention of episodic migraine. The launch is going extremely well.

When considering both paid and bridge volume to lift it is already capturing nearly 20% of the new to brand share in the preventative <unk> class.

<unk> three months post launch this is an incredible accomplishment and it's a testament to <unk> liptak demonstrated efficacy, including rapid and meaningful reduction in migraine days.

We expect commercial access for <unk> to ramp quickly in the first half of this year.

And I care revenues of $960 million were up three 9% on an operational basis, including $364 million in sales from Restasis.

Lastly, Maverick sales were $427 million.

Down 10, 1% on an operational basis as treated patient volumes remain suppressed compared to pre COVID-19 levels.

Overall, I'm very pleased with the performance and the momentum across the therapeutic portfolio and with that I'll turn the call over to Mike for additional comments on our R&D programs Mike.

Thank you Jeff.

We made significant advancement across all stages of our pipeline in 2021, and we expect continued progress again this year.

In immunology, we had several recent important regulatory updates we.

We implemented safety and indication updates to our RNA label for invoke and also received FDA approval in Psoriatic arthritis, and atopic dermatitis, securing strong labels that highlight <unk> favorable benefit risk profile in both new indications.

In atopic dermatitis, we received approval for both the 15 and 30 milligram doses.

And based on the impressive levels of skin clearance in each reduction demonstrated in our development program. We believe <unk> will be an important new treatment option for adult and adolescent patients with moderate to severe atopic dermatitis, who have not responded well to other systemic agents such as cyclosporin.

Methotrexate azathioprine or biologics.

We also have regulatory applications under review for <unk> in ulcerative colitis, ankylosing spondylitis and non radiographic axial spa.

We expect an FDA approval decision next month for ulcerative colitis in the second quarter for ankylosing spondylitis and in the fourth quarter for non radiographic axial spa.

In Europe , we anticipate approval decisions for ulcerative colitis, and non radiographic axial spa in the second half of the year.

We're nearing completion of RIN votes, Registrational program in Crohn's disease, which is the last major indication expansion program for Rainbow.

We recently announced positive top line results from the first phase III Crohn's induction study, where invoke demonstrated a very strong impact on clinical remission and endoscopic response in a difficult to treat refractory patient population.

Also in immunology, we recently received FDA approval for <unk> in Psoriatic arthritis, and important indication expansion for this asset.

Based on our strong joint efficacy and the high level of skin clearance that sky resi provided in our Registrational trials, we believe <unk> will be very competitively positioned as an effective new treatment option for psoriatic arthritis patients.

We also have regulatory applications under review for <unk> in Crohn's disease with approval decisions expected in the U S next month and in Europe later this year.

We have seen impressive results and our Crohn's disease program and we believe Sky Ritchie has the potential to become an important new therapy in this market, where there continues to be considerable unmet need.

We're making very good progress with our early stage immunology pipeline as well, where we are developing novel agents with the goal of significantly advancing the standard of care across our core areas by providing deeper and more durable responses.

Our anti TNF steroid ADC.

<unk> 154 is a novel approach for delivering a potent steroid that has the potential to provide durable remission and diseases, such as <unk> PMI and Crohn's disease.

We expect to see preliminary data from our phase two dose ranging study in RA in the fourth quarter of this year.

We also expect to see phase II proof of concept data in <unk> and Crohn's disease in 2023.

In dermatology or early stage efforts are focused on developing oral agents that can provides clear skin with durable responses.

Our ror Gamma T inverse agonist ABV 157 is designed to more effectively inhibit IL 17 production compared to pure antagonist.

Which has the potential to result in a greater impact on skin inflammation.

We recently began a phase II dose ranging study for 157% in psoriasis.

Moving to oncology, where we continue to make good progress across all stages of our pipeline.

We recently received an FDA breakthrough therapy designation for <unk> in second line, plus advanced or metastatic non squamous non small cell lung cancer based on the encouraging results we've seen to date in our clinical program.

Treatment options for patients, who have exhausted platinum based chemotherapy immunotherapy and targeted therapy or eliminate two single agent chemo.

Which typically provides response rates of only 15% to 20% with a median overall survival of less than one year.

Gnosis for these patients is very poor.

While targeted therapies have been approved by the FDA for the 3% to 4% of non small cell lung cancer patients harboring met exon 14 skipping mutations there are currently no therapies approved specifically for the much larger group of patients who exhibit C met protein over expression.

Patients with over express <unk> represent about 25% to 30% of the advanced or metastatic non squamous non small cell lung cancer population with wild type Egfr, which corresponds to an incidence of approximately 35000 patients each year.

In the U S.

In stage one of our phase III study, we saw promising efficacy in heavily pretreated patients who received <unk>, including a 54% objective response rate and those with highly expressed T map.

The second stage of the Phase III study is ongoing and has the potential to support an accelerated approval in second line plus advanced metastatic.

Non squamous non small cell lung cancer.

We expect to see additional data from this study next year.

We also recently began the clinical program for our next generation <unk>, ADC, ABV 400, which utilizes a more potent topoisomerase inhibitor payload.

To potentially drive deeper tumor responses in patients with both intermediate and high levels of <unk> expression.

We also expect to see data this year from several important indication expansion programs for <unk>, including results from the phase III can Nova trial in relapsed refractory multiple myeloma patients with a $11 14 mutation as.

As well as results from our program for <unk> in previously untreated higher risk Mds patients, where we received a breakthrough therapy designation.

We plan to submit our regulatory applications to the FDA in the first half of this year for an accelerated approval in Mds and late in 'twenty, two or early 'twenty three for multiple myeloma.

Both indications represent important expansion opportunities for <unk> and will help drive long term growth for our oncology portfolio.

We are also making very good progress with <unk>, where we continue to generate strong data in early stage studies to support our view that <unk> has the potential to become a differentiated and best in class <unk> III by CD 20 by specific across several b cell malignancies, including.

Diffuse b cell and Follicular lymphomas.

We will see monotherapy data in the third quarter from the phase two expansion cohort in <unk>, which has the potential to support a submission for accelerated approval in the second half of this year.

We also have a phase III study ongoing in third line relapse refractory <unk> and we plan to initiate several additional phase III trials this year, including studies in earlier lines of therapy for diffuse b cell lymphoma in multiple combinations.

As well as in Follicular lymphoma in combination with Rituximab in Revlimid.

This year, we'll also see additional data maturing from our cohort expansion studies for ABV 383, both as a monotherapy and in combinations with standard of care and novel agents in multiple myeloma.

We believe our <unk> CD three by specific has the potential to be differentiated on efficacy safety and dosing interval and can be best in class across multiple lines of therapy.

We plan to initiate phase III studies later this year in relapsed refractory multiple myeloma.

We also continue to make good progress with <unk> in myelofibrosis, where we've seen strong mid stage data supporting our view that <unk> has the potential to provide disease modification, which we believe will lead to improved and durable clinical outcomes for patients.

We expect the phase III data readout and regulatory submissions in the first half of next year with approval anticipated near the end of 2023.

Moving to neuroscience, where we expect several important pipeline events in 2022 as well.

We recently completed discussions with the FDA and are preparing to submit our application for <unk> as an adjunctive treatment for major depressive disorder.

Based on the totality of the data and the strong benefit risk profile demonstrated in our clinical program. We believe <unk> has the potential to be competitively positioned as an adjunct treatment for major depressive disorder.

We expect a submission in the first quarter and an approval decision by the end of the year.

We've also completed our registration enabling program for ABV 95, one our novel subcutaneous levodopa carbon dopa delivery system for treatment of advanced Parkinson's disease.

In our phase III studies 95, one proved superior to oral levodopa carve it up in reducing motor fluctuations in this advanced population and we believe our innovative new delivery system represents a potentially transformative improvement to current treatment options.

We remain on track to submit our regulatory applications in the first half of this year in the U S and Europe with both approval decisions anticipated in early 2023.

And we expect to see phase III data for <unk> in chronic migraine prevention later in the first quarter and plan to submit our regulatory applications in both the U S and Europe . This summer with approval decisions expected in the first half of 2023.

So in summary, we remain focused on continuing to execute on our pipeline programs and anticipate numerous important regulatory and clinical milestones across all stages of our pipeline in 2022.

This includes important indication expansion for on market drugs and data Readouts and regulatory actions for key late stage assets as well as proof of concept data from several early stage NME programs.

With that I'll turn the call over to Rob for additional comments on our fourth quarter performance and our 2022 financial outlook, Rob. Thank you Mike Abbvie. Once again delivered outstanding performance, while also advancing our strategic priorities. The strong result across our portfolio continue to support <unk> long term growth.

Look.

Starting with fourth quarter results, we reported adjusted earnings per share of $3 31.

Up 13, 4% compared to prior year, and <unk> <unk> above our guidance midpoint.

Total adjusted net revenues were $14 9 billion.

Seven 5% on operational basis, excluding a 0.1% unfavorable impact from foreign exchange.

The adjusted operating margin ratio was 49, 3% of sales an improvement of 240 basis points versus the prior year. This.

This includes adjusted gross margin of 83, 6% of sales.

R&D investment up 12, 1% of sales and adjusted SG&A expense of 22, 2% of sales.

Net interest expense was $571 million and the adjusted tax rate was 12, 5%.

Shifting to 2022, our full year adjusted earnings per share guidance is between $14 and $14 20.

Afflicting growth of 11% at the midpoint.

From this guidance is $4 74 of known intangible amortization and specified items.

We expect adjusted net revenue of approximately $60 billion at current rates, we expect foreign exchange had a 0.8% unfavorable impact on full year sales growth.

This revenue forecast comprehensive following approximate assumptions for our key products and therapeutic areas.

We expect immunology global sales to grow double digits, including U S humira growth of 8%.

Internationally Humira revenue of $2 6 billion at current exchange rates Sky.

Sky Resi global sales of $4 $4 billion and Rainbow global sales of $2 7 billion.

In hematologic oncology, we expect then collect the global sales of $2 $3 billion and improve our global revenue of $5 4 billion.

The improved forecast assumes market recovery in CLO offset by share erosion from increased competition.

For aesthetics, we expect global sales of $5 $9 billion, including $2 $6 billion from Botox cosmetic and $1 $7 billion from Juvederm.

For neuroscience, we expect global revenue of $6 9 billion, including Botox therapeutic sales of $2 7 billion.

<unk> sales of $2 2 billion.

<unk> sales of $800 million and <unk> sales up $200 million.

With commercial access increasing rapidly in the first half of the year.

For Eyecare, we expect global sales of $2 9 billion.

Including $700 million from Restasis, which assumes no generic competition in the first half of 2020 to.

Lastly, we expect Maverick global revenue of $1 7 billion.

Looking at the P&L for 2022, we are forecasting full year adjusted gross margin of approximately 84% of sales adjusted R&D investment of approximately $6 8 billion.

And adjusted SG&A expense of approximately $12 7 billion.

This guidance includes approximately $2 $5 billion in expense synergies from the Allergan acquisition.

We are forecasting the adjusted operating margin ratio to expand by 120 basis points to approximately 51, 5% of sales.

We expect adjusted net interest expense approaching $2 2 billion, our non-GAAP tax rate to be approximately 12, 7% and our share count to be roughly flat to 2021.

Turning to the first quarter, we anticipate net revenue approaching $13 5 billion at current rates, we expect foreign exchange had a one 3% unfavorable impact on sales growth.

This revenue forecast comprehensive following approximate assumptions for our key therapeutic areas.

Immunology sales of $6 2 billion.

<unk> revenue of $1 7 billion.

Aesthetic sales of $1 3 billion.

Neuroscience revenue of $1 $5 billion in eye care sales of $900 million.

We are forecasting an adjusted operating margin ratio of approximately 51% of sales and we model a non-GAAP tax rate of 12, 4%.

We expect adjusted earnings per share between $3 10, and $3 14.

Excluding approximately $1 22.

Of known intangible amortization and specified items.

Finally, <unk> strong business performance and outlook continues to support our capital allocation priorities, we expect to generate adjusted free cash flow of approximately $24 billion in 2022, which is net of roughly $1 billion in sky receive royalty payments.

This cash flow will fully support a strong and growing dividend, which we've increased by more than 250% since inception.

Continued debt repayment for you.

<unk> pay down just above $12 billion of debt in 2022 and estimate a net leverage ratio of one eight times by the end of the year.

In closing we are very pleased with <unk> strong results in 2021, and we expect to deliver robust performance in 2022 and over the long term.

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

Thanks, Rob we will now open the call for questions and the interest of hearing from as many analysts as possible over the remainder of the call. Please limit your questions to one or two operator, we'll take the first question.

Thank you. Our first question comes from Chris Schott with Jpmorgan. Your line is now open great. Thanks, So much for the questions I just had a couple here digging into renzo could a little bit more detail I.

I guess first in rheumatoid arthritis can you just it looks like volumes have plateaued, a little bit it's probably not hugely surprising given the label revision, but just elaborate a little bit more on the feedback youre getting from physicians there and when do you anticipate youll start to see sequential growth again in that indication.

The second question I had to invoke was then on atopic derm.

Just elaborating a little bit more on the ramp youre expecting here is it something thats going to take some time.

There's some low hanging fruit, maybe with some of the doobie failures and I'm really just trying to get to with all of these is that I guess, the $2 $7 billion guidance, how much of that is already how much of its new indication just a little bit more color on that front. Thanks, so much.

Yeah. Thanks, Hi, it's Jeff I'll give you some sense on what's happening with <unk>.

DRA market after the drug safety and label is progressing as we anticipated. So I'll give you some sense and I'll refer to as sort of in play share because you have to be a little bit careful in the December January timeframe with overall volumes in the market, but right before the right before the drug safety communication, we had about a 16%.

In play share in RA, which was just right behind Humira. So very very strong if we look at where that's trended over the fourth quarter. It's dropped about 20%. Okay. So it's about <unk> 14 reported in October .

October .

Just over 13 in November very consistent with what we thought would happen so about a 20% shift in new to brand starts over that time period, and what we see from the market is it's exactly as we would expect very very stable no change really in second line plus and doctors.

To suppress their starts in first line consistent with the label. So what we're going to see is that as basically the promotion kicks back in here. After December in the first quarter, we're going to see that type of stability, which we can see is very very clear from our overall share in our weekly and start to progress.

As we shift and pivot towards that second line plus so the market is responding.

Very similar to our expectations that we've been talking about in terms of overall raw, obviously PSA is going to help build upon that.

Dynamic and then ultimately later in the year, the big axial approvals as well so everything is progressing as we've as we've as we thought it would progress from a market perspective.

In terms of atopic dermatitis.

Listen I said in my prepared remarks, we're very pleased with the label we have those stringent endpoints of the easy 90 high skin clearance very powerful itch reduction are reflected in our label. We obviously have both doses approved the market I can tell you is been very pleasantly surprised.

Surprised about the adolescent indication, which is very important so.

That's basically we are going to start to see that ramp. It wont. We don't think its going to be slow and to your point in terms of our ability to start to capture patients. It is happening already we honestly haven't reported any of the Trs is yet, but we can see it in the market and typically it's falling into a couple of areas first dupee failures.

Not a surprise and theirs.

Reasonably significant number of people after four or five years that just have failed and exited the market theyre going to come back in.

We have reports from our research and our teams over partial responders to <unk> that just arent doing well in particular with the edge. We see some early starts there and then of course challenging patients in general.

We are seeing starts there as well with those higher levels of skin involvement. So the market seems to be progressing as we expected it's not surprising that as we look at the development of the second line market, we're going to see initially most of the most of the starts in the <unk> partial responders or the <unk>.

Non responders, which is a fairly significant population also as I mentioned that we will start to see.

Our access ramp.

Fairly quickly here over the first part of the of the year. So we're encouraged maybe I can turn it over to Rob to give a sense over the relative magnitude of the sales. Thanks, Chris. This is Rob so of the Rainbow guidance of $2 7 billion. The AVN spine indications will each contribute a couple of hundred million dollars, while you see will contribute around 100.

I think to keep in mind in terms of sequential growth keep in mind in the U S. You tend to see from Q4 to Q1 sequential decline so that's <unk>.

The seasonal dynamic that we see across the business. So you would see sequential growth resume in Q2 and beyond.

Thanks, Chris Operator next question please.

Thank you our next question comes from.

Ronny Gal from Bernstein. Your line is open.

Good morning, everybody and thank you for taking my questions and nice quarter.

First question is around Humira.

I was wondering if you guys will be in a position to give us some sort of a floor number in 2023 based on payer contracts. Sometimes this year. Obviously the market is looking for that and then.

I talked to payers it seemed a lot of the decisions about what product they would use longer term will not happen in 2023 that will happen in 2024, you kind of talked about.

A decline and then and then a quick ramp up do you see the floor here in 2023 or do you see it in 2024, and then if I can sneak one more.

One of the largest differences between GAAP and non-GAAP earnings of the industry because of that Allergan acquisition as you look at the amortization period and so forth. When do you think this thing will begin to narrow in a significant way just because that's a concern for summit for some investors.

Okay. Ronny this is reconciled ill take those the humira questions.

<unk>.

I think if you look at the guidance, we provided thus far I mean, I think thats consistent with how we see the market playing out overall.

We've said basically you should be thinking about 45% erosion plus or minus 10%, that's probably a reasonable range nothing has really given us any indication.

But it should be different than that at this point I think we will be in a position as we move later on this year.

Potentially be able to provide some more specificity around that.

We should be through all of the contracting at that point in a better position to be able to understand.

As it relates to your question about.

We have a floor for Humira I think your question is more of a floor for humira in 'twenty three or 'twenty four.

And I believe you will see further erosion from 23 to 24 on the Humira business alone, but what we have described as we returned to growth on the overall business. So you have to think about it from the perspective of <unk>.

This underlying growth engine that gets suppressed in 23 by the significant erosion that you see around Humira, both price and some volume and then as that continues it continues at a slower pace when we get into 'twenty. Four so the overall business has the ability to be able to drive growth for the total company, but yes.

Humira will continue to.

To decline in 2004, and then Rob why don't you cover the third one sure Ryan. This is Rob So when you look at our our adjustments.

Adjustments, especially as intangible amortization intangible amortization like 70% of it.

This is on the 474 guidance that we've given this year and that will continue obviously those things fall off or over a number of years, but I would say, that's probably a level that.

Assume would be present for the next several years.

Another big component, Scott really contingent consideration given that where that is purchase accounting.

Accounting and we record that accretion as such.

It is going down from last year, and so you would expect it potentially trend down but overall I think you can you can model this level going forward.

Yes.

Thanks, Ronny operator next question please.

Thank you. Our next question comes from Andrew Baum with Citi. Your line is open.

Thank you a couple of questions.

Firstly on <unk>.

If we move into 2022 and the Covid dynamic shakes out we will be able to see the impact of competition versus COVID-19 , achieving a significant chunk of the U S slowing growth rates will decline with huge competition, what can be done to recap the momentum again to match it.

<unk> and then second intensive.

Business.

Carbonite because your contract with <unk> liquid formulation.

There are competitive products coming to market as well as increasing price competition, how much of that is concerned what's your franchise and the breadth of portfolio to minimize any impact of novel formulations. Thank you.

Yeah, Hi, Andrew it's Jeff So thanks, and Youre right that we still have the continuing lingering effect with Covid and Rob addressed that in his comments. So we still see the market.

<unk> <unk> 19 levels down about 10% and even marginally down from 2020 in Q4. So we anticipate that that will moderate go forward and then we're left to to manage the competitive impacts. So we are seeing competitive <unk> have some impact on <unk>.

But we're also seeing the competitive impacts from from our own <unk>. So we have to start to think about.

A lot of distinction which is the.

The strength of our data across every comparator in.

The overall survival benefit.

And then also bring the strength of our overall portfolio. So that's how we plan to mitigate it as Rob mentioned, we see market recovery offset by some share pressure on unimproved Mitch.

Mitigated by positive then impact so that's how we see the market develop as we go into into 2022. We also are seeing.

We also are seeing some pricing pressure in some select segments that are also contributing to the share loss for <unk> and obviously, we as much as we can we can keep the pricing discipline in the market moves.

Moving forward, so hope that context helps.

Andrew This is Rick I'll cover the <unk> questions for you and certainly as you look at Botox, both here in the U S and internationally and compete today against.

A significant number of competitive alternatives that are available I think it's a P.

Pretty.

President position that Botox has in the market. When you look at the brand equity that it has when you look at the confidence that injectors.

And using the product and they tend to describe it as the most forgiving of all the toxins that they have experience with and then there is obviously a fairly significant customer loyalty aspect to botox with our loyalty programs and Allergan has a very significant loyalty program that offers.

<unk> and <unk>.

<unk> to be able to use the product and to go back and get repeat procedures, having said all of that we feel confident in the position that we have competitively against the competitive alternatives that we see out there and those that we see coming.

We have a very active R&D effort in the aesthetics R&D group now that's looking at next generation toxins.

Two in particular that we highlighted in the comments earlier are we have a short acting toxin. That's in development, that's progressing very nicely and we have a truly long acting toxin that's in development as well.

And.

And we believe that those will help grow the market, but if I look at the market now obviously, we've seen significant acceleration in the market.

Since we activated many of the strategies that we put in place after acquiring allergan, but if I look at our overall share of overall share stayed very steady impact might have ticked up one point and the latest set of data. So that tells you that we're not only growing the growing the market very rapidly, but we're continuing to compete quite effectively.

<unk> against the alternatives that are out there so.

Not overly concerned about what I see on the horizon I think we have the opportunity to build the market even larger with some of the.

The next generation toxins that we're working on when we bring those to the marketplace. So I feel good about our position and toxins and pillars as we move forward.

Thank you Andrew Operator next question please.

Thank you. Our next question comes from <unk> Divan from Mizuho Securities. Your line is open.

Great. Thanks, so much for taking my question so.

We will always appreciate all the guidance you guys gave both near term and longer term.

Just a couple of questions I have related to more of a longer term guidance you've given.

In the past you talked about Youre Haemonchus franchise.

Peak sales are still I guess in 2025 of around $13 billion. When you update your some of your numbers earlier last month I don't think you up to that one so I'm. Just curious if you still think that thats, a reasonable sort of 2025 expectation and then the other one is around <unk>.

Where you have sort of stayed with this guidance of sort of more than $1 billion in peak sales.

You're already guiding to $800 million of sales just.

In this current year pretty early in the launch so I'm just wondering if you could maybe get a little better sense of how you're viewing sort of a longer term opportunity.

So as you probably and maybe if you Wanna mention kill a total I know that certainly but at least for part of your Bill. If you think there is significant upside to that 1 billion number you have mentioned before thank you.

<unk>. This is Rick so I'll cover the first one and then we're going to have Jeff.

Cover the relevant question that you've asked.

So it's a good question, obviously, the hema market in the areas that we participate in in particular I would say <unk> has changed over the last several years I think one of the certainly one of the things that was not ever anticipated in that guidance was the impact that they have.

Covid would have on the market and the reduction that we saw in the number of new patients which was quite sizable.

And that obviously wasn't contemplated in the second thing is we are seeing certainly more competitive pressure both from price and some volume than we anticipated in that timeframe, having said all of that and well I'd say a third item is certainly been collection is performing well as well.

And I'd say, it's it's tended to exceed some of our expectations at least at this point within the launch trajectory.

The brand so all of those have factors in what we're describing here I'd also say we have done a nice job of builds.

Building out our houma portfolio from an R&D standpoint.

Look at some of those assets that I described by opening comments I think theyre going to have a very significant opportunity. As an example, one that I didn't mention there would be big flex than the $211 14, multiple myeloma population that could be a very significant opportunity. We feel good about that we should get a readout on that.

And we think that could be a significant contributor to both.

<unk> and <unk>.

In patient therapy, but also a significant improvement in the overall revenue in the franchise and then you have things like <unk> and <unk>.

Three eight <unk> those are all significant opportunities to be able to drive growth. So I still feel confident in the overall ability for us to grow our <unk> franchise, having said that I would say in Peru, because under more pressure than we anticipated when we put that guidance out.

At that point, we didnt, even contemplate a follow on <unk> in any meaningful way, but we do see more competitive pressure there, but overall I would say I still feel very confident in our ability to be able to grow that there will be a growth franchise for the company over the long term.

Yes, Hi, bondholders, Jeff So just to answer your question on <unk> and the overall market <unk>.

Certainly we're very pleased as I mentioned in my remarks over the momentum on <unk>, we continue to lead in that acute space.

And the early results for key lift are also.

<unk> also a very strong now a lot of it is going to depend on how that <unk> market develops. So if you think about it in this way and this is how we think about it is is it's about in terms of new patient capture for the total <unk> market, where we also compete with another player.

From Bio Haven, it's about 18% to 19% of the market and the market is also with the expanded triptan market of course. So if you look at that the payers certainly like you to step through one or more tripped and when you look at the population that may not be eligible for a triptan or fails and <unk>.

And the estimates are typically.

Up to 30% to 35% and so the market has potential room to sort of double into that epidemiology. So you can kind of run the numbers. There I mean, we often get the question is is that over $1 billion is it closer to $1 billion of closer to a higher number but nonetheless, we're pleased certainly.

It's exceeded our expectation so far.

Q lift it has as well so I think there's more room for the market to run.

But we will have to see I mean, there are payer pressures in the market as I mentioned in terms of the step through therapy.

Thanks, Pavel Operator next question please.

Thank you. Our next question comes from Steve Scala from Cowen Your line is open.

Thank you a couple of questions at a high level I struggle to understand why 2022 won't be.

A stronger year than the guide on the earnings line, Scott <unk> and Botox are doing phenomenally, where invoke is holding its own humira will still be exclusive in the us for the whole year and should be at peak profitability and the pandemic Les and obstacles. So why well in 2020 to look more like.

Or even better than 2021 in terms of our earnings power.

As Steve This is Rick maybe Rob and I will tag team. Your first question and then Michael will cover your second question.

I think if I look at 2022, and I look at our overall performance coming off of a strong year in 2021, it's pretty impressive performance when I look at the EPS growth.

Certainly do we have an opportunity to drive it harder I can tell you every year.

We endeavor to drive it as hard as we can drive it and when I look at all of the businesses.

Individually and I look at their ability to be able to perform I'm extremely confident in the trajectory that we have going forward.

Specifically.

We're assuming as an example in HCV that Theres still a COVID-19 impact in HCV. So I wouldn't say the pandemic has completely.

Gone in 2022.

And.

But I'd say overall the brands are performing well.

We're investing in the business to ensure that we continue to be able to drive long term performance and so certainly.

That obviously drives some expectations around what would be EPS growth will be year over here.

Rob anything you'd like to add I mean, I think it's a good point and that we are fully investing to support the long term growth you think about where we are launching a D. That's a new area for us Q lifts and beauty. We're also going to fully invest their aesthetics, we've seen that the strength of the investment in aesthetics. The way we've been able to grow the market. So that's really important at the same time, we're expanding operating margin.

We are exceeding our expectations for synergies and so youre seeing us deliver another year of operating margin expansion. So I'd say, we're top tier in operating margin very healthy P&L profile and then the other thing that you probably have to factor in here is that we've assumed a half year of restasis as well.

We don't really have visibility to that.

The generic and so we've made an assumption every time, we update guidance six months out so thats something that as you look at year over year that you should.

Bigger into your comparisons, but overall, we're very pleased with delivering double digit growth in earnings and another year of very strong operating margin expansion, while fully investing to support the growth of the business.

And this is Mike I'll take the question on CF.

It is important to keep in mind that this is a pre proof of concept program.

That doesn't contribute in any meaningful way to our long term outlook and doesn't factor into our thinking about the long term potential in the pipeline and the way we have discussed it as consistent with that view, we've always said that it represents significant upside if it were to hit but but it's an early program with the.

Respect to the timing of the data.

We continue to track towards the timing that we've described previously we would expect to have data from the triple sufficient to enable a go no go decision later on this quarter.

Thanks, Steve Operator next question please.

Thank you. Our next question comes from Tim Anderson with Wolfe Research. Your line is open.

Thank you a couple of questions.

I'm guessing that as we move through 2022 investments are going to start to have some concerns about 2023 earnings and what the impact from Humira could be and you talked about having more visibility on humira contracting later this year. My question is it possible youll actually.

Give us 2023 earnings guidance sometime this year, Mike had Q3 results as an example.

And then my second question, just coming back to CMS.

Data you said in mid November that you would actually have that data in house by the end.

End of the year.

So here we are four weeks later, we haven't really seen anything.

Question is do you actually have that data in house could you hit that timeline of end of year.

If not what's going on and what changed in that short window.

Tim. This is this is Rick I'll cover your first question, Mike can address the second one.

We certainly are in a position now to be able to commit that we would give earnings guidance in the third quarter.

I think clearly we will be able to give a better feel for whether that erosion curve looks like.

And could that ultimately end up being at least a pretty good.

Perspective for us to be able to build off of what earnings guidance would look like it might I think if we were in a position where we can confidently provide that guidance we would provide it.

But I certainly think we'll be in a position where we have.

As far as EPS is concerned in 2023, we have said that we expect EPS to decline in 2023, So I don't think any investor.

Is that would be a surprise to any investor, but obviously, it's important for us to be able to frame it as accurately as we can for the investment community.

And be able to provide direction around that and at the point at which we think we can do that in a reliable way.

Committed to be able to do that so let's see how it plays out and certainly as we get to the third quarter call that would be the positioning at the point at which I think we'd be in a position to be able to provide more clarity.

Mike.

So on CF.

We said towards the end of last year is that data would begin to come in house around the end of the year and we would have sufficient data to make a go no go in the first quarter and we're still tracking to that to that overall timeline.

There were some challenges towards the end of the year, where a number of patients were expected from Australia. For example, in Australia shut down because of Covid and we had to shift that enrollment.

<unk> pretty quickly, but the overall timing hasnt changed substantially from what we what we described at the end of last year.

Thanks, Tim Operator next question please.

Thank you. Our next question comes from Mohit Bansal from Wells Fargo. Your line is open.

Great. Thanks for taking my question and congrats on the quarter.

Maybe a question on the Vulcan other oil competitions competition competitors.

Do you see is invoked treating.

Other world.

B inhibitor.

More than that could be more than one and the.

If you kind of suggested kind of induction.

One drug and maintain that said the other drug.

Treatment paradigm in IBD do you think it is even a possibility.

Thank you.

Yes.

I think this is Mike I'll take that question. If you look at the performance of <unk> book in inflammatory bowel diseases, both and you see where we have the full data set and in Crohn's disease, where.

We have.

An important component of the induction data set the performance across the board is very very strong.

Not only in terms of.

Overall response rates that are measured, but particularly when one looks at deeper measures of response clinical remission and mucosal healing major clinical response, which is the.

The combination of remission and endoscopic improvement.

And across the board, we're driving very high levels of disease control and we think that feature of the drug.

And so we think that there is a very real opportunity for.

For Rainbow.

Time in the studies that we.

We have continued to follow including our long term extensions from phase II and our phase III program. So we think those are also very strong attributes of the products.

So thank you very much.

Operator next question please.

Thank you. Our next question comes from Gary Nachman from BMO capital markets. Your line is open.

Hi, Good morning aesthetics has been a big source of upside in 2021. So I'm curious did you see any real impact from <unk> in the fourth quarter do you see a tailwind maybe from that further recovery. This year is that baked into the aesthetic guidance of $5 9 billion.

For 2022.

And you've talked about high single digit long term aesthetic guidance, but this year should it should be double digits. So should we be thinking more along the lines of double digit growth maybe for the next few years, if youre still investing a lot in that space.

And then just one other quick one on <unk>.

So the chronic migraine prevention indication that data is coming soon sometime this quarter. So just talk about how.

<unk> do you think that indication will be and how that's factored into the peak targets that you've talked about thank you.

Hey, Gary It's a good question on <unk> and <unk> studies it is something we track.

Carefully.

In every major geography around the world as well as by state here in the United States.

And I will tell you that.

At least as far as the U S is concerned there has not been much of an impact on aesthetic volume.

Unlike what we saw when there was an actual shutdown and obviously you would think shutdown youre going to see the volume go down, but I'd say, we're seeing very little impact on the volume so.

We have factored in.

That we don't expect a major disruption going forward and I think the data we clearly support that.

That's a reasonable position to take.

And.

As far as the as the business overall I mean I can tell you. We're very pleased with how the business is performing.

Groups executing at a very high level and certainly the resourcing and the dedicated structure that we put in place I think are helping a lot in major geographies like the U S and China.

We're obviously comfortable with the guide that we provided.

It is it is an area that we're going to continue to invest in and continue to drive and I think it's a market that I think is extremely attractive.

<unk>.

We have a number of programs that I think are very exciting programs some of the.

Some of the bio stimulatory and regenerative pillars that we're working on now I think could be exciting opportunities.

<unk> to be able to stimulate <unk> in patients.

Using fillers is an exciting program that continues to advance and so it's going to require both it's something that we're absolutely committed to continue to drive and I think this can be as we indicated in our in our comments I think this can be a strong business for abbvie over the long term.

Jeff you want to cover Q, yes, Thanks, Gary for your question on <unk>, It's an important.

New indication if we see when we see the data and it were to be approved and I'll give you. Some perspective, obviously, we've talked about how much we really like our portfolio. A migraine you got botox on chronic with the injectors. Obviously you have to lift a right now in episodic and of course <unk> in acute so the key lift of chronic gives us.

Quite a bit of flexibility and it's a nice catalyst, even though episodic is a bigger market in terms of patients obviously chronic patients do do do consume a lot of medication.

Chronic migraine is so difficult that.

That the potential for patients to have combination treatment. So in other words, a botox therapeutic plus a simple oral drug like <unk>.

Thanks, Gary Operator next question please.

Thank you. Our next question is from Geoff Meacham from Bank of America. Your line is open.

Hey, guys. Good morning. Thanks, so much for the question I just had a couple of quick ones for Rick or for Rob.

First one is when you look at your modified 2025 guidance for Sky Racing and Red book and were there any changes to your assumptions on duration of therapy or the pricing environment I am just thinking about the payer landscape with many more biosimilars coming up and what impact that could have on switching or price increases.

And then the second question is on the BD front, we've obviously seen valuations come down quite a bit.

And smid cap biotech on the past six months.

I know, you've usually talked about $2 billion earmark for BD, but does the current environment.

To make things like bringing new tas or newer technologies in house more attractive. Thanks, so much.

Bob.

Yes, Jeff So obviously when we go through our long range plan, we consider the various dynamics of the pricing environment. So we factor that into our 2025 guidance I would not say that there's really been an assumption change for duration of therapy.

But we did we certainly took into account the impact of the label on horror and Spa, but then that was offset by the stronger performance.

Yes.

As well as the stronger IBD data that we saw for invoke and just the overall performance of salaries in psoriasis was all factor into that updated guidance, but we did not make any assumption change for duration of therapy, and we certainly factor in various pricing assumptions as we go through our long range plan.

And maybe Mike and I will tag team number two I mean, certainly.

You've seen us pay down debt at a very significant pace.

The $2 billion that we've allocated has been sufficient to be able to cover the things that we're looking for.

Mike.

He has responsibility for business development. So I think it's probably a little closer to the valuation question Mike.

Well, what I would say is that valuations have certainly come down and that brings.

Opportunities into the focus that might previously.

In the way that we had built our hemo franchise, where.

Where we have a nice blended internally discovered and partnered programs from.

<unk>, obviously, our lead programs to the significant programs behind that things like <unk> at <unk> 383, and now <unk> demonstrating extremely strong data.

In non small cell lung cancer. So that's a blend of internal and external innovation and we're going to continue to look at areas.

In that same way and it's principally going to be.

For our overall situation the strength of the innovation and that balance between internal and external innovation that we look at.

Thanks, Jeff. Thanks, Operator next question please.

Thank you. Our next question comes from Josh Shimmer from Evercore. Your line is open.

Great. Thanks for taking my question first I'm, a little surprised the contingent consideration adjustment is not higher considering your recently revised Scott received forecast am I not understanding that one correctly or should we be expecting a more meaningful revision in the first quarter and then you mentioned a couple of times the novel Bio stimulant Tori.

Thermal sellers do you have any aesthetics pipeline can you elaborate on how you expect those to differentiate versus the current offering and whether you expect those to expand the market for fillers. Thanks, Josh.

Josh This is Rob I'll take your first question. So we did actually a record in Q2 of last year.

Additional accretion for higher sales forecast for <unk> that was really tied to both.

So on the Biosimilar story pillars, I think the way to think about it there are multiple programs, but ill talk about two areas specifically.

One of the areas that you want to be able to look at is your ability to be able to stimulate collagen. So your own body can produce collagen to be able to provide.

Port and filling in a specific area that you desire.

And there are some products on the market today that provide that.

One of the negatives of those products is you don't get the immediate filling effect that you normally get with a filler where you get physical filling immediately upon the procedure you get a little bit of swelling headquarters. So for a very short period of time, you will get what looks to be selling but then that swelling goes down and then for a period of time.

The patient has to wait.

In order for them to get the collagen impact and that takes.

A significant period of time, so we have a technology.

In house that we acquired and we're further developing that combines both physical filling and college and stimulation in one product. So you get the immediate filling effect of a normal pillar.

Then as that starts to resolve over time, you get to college and impact that's building over that same period.

Period of time to provide long term filling.

We will provide.

Some level not a dramatic level of filling but.

<unk> ability to be able to provide a last information along those areas and be able to smooth the skin out that would clearly be a market expansion opportunity today, there really arent fillers that do that they can stretch the skin with the physical filling but they don't really provide.

Smoothing of the skin and so those are two examples of what we're working on.

Thanks, Josh so much operator next question please.

Thank you. Our next question comes from Chris Raymond with Piper Sandler Your line is open.

Hey, Thanks, just two questions first on the migraine franchise.

Noticed that.

You have a phase III trial, looking at <unk>, and Botox and a combo therapy.

For migraine chronic migraine prevention.

Our Doc checks indicate.

Actually growing interest docs sort of highlight that.

Proactively is something they're interested in.

Was this trial in response to that feedback or maybe just talk about the rationale and.

How you are looking at combo in this space.

And then just.

A question on a drug that doesn't come up that you just launched viewing <unk>.

Presbyopia represents a huge tam.

Maybe just talk about initial uptake trends.

What is it about this this market I guess that youre seeing that youre, not making a bigger deal out of out of this launch.

So this is Mike I'll start with the question on cue lips, and Botox combo use and then Jeff may want to May want to add and take the second question.

Is great.

But what patients and physicians are really seeking is an elimination of the migraines. So that they can be free to go across.

They're in their daily lives to go about their daily lives and.

Given the options that are out there today to really get to that level in those most severely affected patients combination therapy is an obvious place to go particularly when it's complementary approaches that worked through completely different mechanisms and so you would expect there.

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