Q2 2022 Abbvie Inc Earnings Call

Good morning, and thank you for standing by.

Good morning, and thank you for standing by welcome to the Abbvie second quarter 2022 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.

Welcome to the AbbVie second quarter 2022 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'd now like to introduce Ms. Liz Shea, Vice President, Head of Investor Relations.

Head of Investor Relations.

Good morning, and thanks for joining us.

Good morning, and thank you for joining us.

Also on the call with me today are Rick Gonzalez Chairman of the Board and Chief Executive Officer, Rob, Michael Vice Chairman and President, Jeff Stuart Executive Vice President Chief Commercial Officer, and Tom Hudson Senior Vice President R&D and Chief Scientific Officer.

Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer, Rob Michaels, Vice Chairman and President, Jeff Stewart, Executive Vice President, Chief Commercial Officer, and Tom Hudson, Senior Vice, President, R&D and Chief Scientific Officer.

Joining us for the Q&A portion of the call are Laura Schumacher, Vice Chairman external Affairs, Chief Legal officer, and corporate Secretary, Carrie Strom Senior Vice President and President of Global Allergan Anesthetics Scott.

Joining us for the Q&A portion of the call are Laura Schumacher, Vice Chairman, External Affairs, Chief Legal Officer and Corporate Secretary, Carrie Strom, Senior Vice President and President of Global Allergan Aesthetics, Scott Reents, Senior Vice President and Chief Financial Officer, Neil Gallagher, Vice President, Development and, Chief Medical Officer, and Rupal Thakkar, Vice President, Global Regulatory Affairs.

Scott <unk> Senior Vice President and Chief Financial Officer, Neil Gallagher, Vice President development, and Chief Medical Officer, and ruble Soccer, Vice President Global regulatory Affairs.

Before we get started, I'll note that some statements we make today may be considered, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties, that may cause actual results to differ materially from those indicated in the forward-looking statement.

Before we get started I will note that some statements. We make today may be considered forward looking statements for purposes of the private Securities Litigation Reform Act of 1095 Abbvie.

Additional information about these risks and uncertainties is included in our FCC filings.

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.

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.

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 AbbVie's business performance.

On today's conference call non-GAAP financial measures will be used to help investors understand the abbvie 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. Following our prepared remarks, we'll take your questions. So with that I'll now turn the call over to Rick.

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.

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

So, with that, I'll now turn the call over to Rick.

RICK MACLENNAN.

Thank you Liz good morning, everyone and thank you for joining US today I'll briefly comment on our overall performance then Jeff Tom and Rob will review, our second quarter business highlights pipeline progress and financial results in more detail.

Thank you, Liz.

Good morning, everyone, and thank you for joining us today.

I'll briefly comment on our overall performance, then Jeff, Tom, and Rob will view our second quarter business highlights, pipeline progress, and financial results in more detail.

Abbvie delivered another strong quarter with adjusted earnings per share of $3 37 exceeding our expectations.

AbbVie delivered another strong quarter with adjusted earnings per share of $3.37, exceeding our expectations. Total net revenues of approximately, $14.6 billion was up 6.1 percent on an operational basis, in line with our expectations.

Total net revenues of approximately $14 $6 billion was up six 1% on an operational basis in line with our expectations.

This performance reflects robust double-digit operational sales growth from immunology, where Skyrizzy is exceeding our expectations with impressive market share gains in both psoriasis and PSA.

This performance reflects robust double digit operational sales growth from immunology, where sky Ritchie is exceeding our expectations with impressive market share gains in both psoriasis and <unk>.

Skyrizzy's recent U.S. approval in Crohn's disease will add yet another source of long-term growth. As a result of the strong performance we've seen in the first half of the year, we are raising our full-year guidance for Skyrizzy.

Okay.

<unk> recent U S approval and growing disease.

Ed yet another source of long term growth as a result of the strong performance we've seen in the first half of the year, we are raising our full year guidance for <unk>.

Renvoke is also demonstrating strong growth.

Greenberg is also demonstrating strong growth <unk> continues to perform in line with our expectations. Following the label update and we're making very good progress with all of the newly launched indications including PSA.

RA continues to perform in line with our expectations following the label update, and we're making very good progress with all of the newly launched indications, including PSA, AS, atopic dermatitis, and ulcerative colitis, which collectively represent, a significant long-term growth opportunity.

Atopic dermatitis, and ulcerative colitis, which collectively represent a significant long term growth opportunity.

Neuroscience is another area with outstanding performance.

Neuroscience is another area with outstanding performance very large botox therapeutics <unk> <unk>.

Valar, Botox Therapeutics, Ubrelvi, and Qlipta each demonstrated double-digit sequential sales growth.

Each demonstrated double digit sequential sales growth.

Pending regulatory approvals for VALAR and major depressive disorder, QLIPTA in chronic, migraine, and 951 for the treatment of advanced Parkinson's disease represent additional near-term growth opportunities for our neuroscience portfolio.

Pending regulatory approvals for <unk> in major depressive disorder to lipton in chronic migraine and 95, one for the treatment of advanced Parkinson's disease represent additional near term growth opportunities for our neuroscience portfolio.

Turning now to aesthetics Botox cosmetics, once again performed very well with sales up more than 20% on an operational basis demand for toxins remains strong with high teens growth in the U S. Despite inflation dynamics.

Turning now to aesthetics, Botox Cosmetics once again performed very well, with sales, up more than 20% on an operational basis.

Demand for toxins remained strong, with high teens growth in the U.S., despite inflation, dynamics.

As expected, Juvenile performance was negatively impacted by COVID-related lockdowns in China, as well as the suspension of our operations in Russia.

As expected <unk> performance was negatively impacted by Covid related lockdowns in China as well as the suspension of our operations in Russia.

Additionally, in the U.S., we had a difficult prior year comparison with a promotional event, that we ran last year.

Additionally, in the U S. We had a difficult prior year comparison with a promotional event that we ran last year.

We also saw a modest impact in the quarter due to economic pressures.

We also saw a modest impact in the quarter due to economic pressures. We continue to expect positive full year growth for <unk> driven by the lessening COVID-19 impact in China, and two new filler launches in the U S, which will benefit growth in the second half of the year.

We continue to expect positive full-year growth for Juvenome, driven by the lessening COVID, impact in China, and two new filler launches in the U.S., which will benefit growth in the second half of the year.

In Hematological oncology and <unk> continues to be unfavorably impacted by the delayed market recovery for new patients starting therapy in CLO and increasing competition.

In hematological oncology, Imbruviga continues to be unfavorably impacted by a delayed market, recovery for new patients starting therapy in CLL and increasing competition. These ongoing dynamics will have an impact on Imbruviga's projected 2022 revenues. As a result, we will be adjusting our full-year guidance to reflect these impacts.

These ongoing dynamics will have an impact on <unk> projected 2022 revenues as a result, we will be adjusting our full year guidance to reflect these impacts.

Benclexta continues to demonstrate robust share performance in both CLL and AML, with, sales up double digits on an operational basis.

<unk> continues to demonstrate robust share performance in both <unk> and AML with sales up double digits on an operational basis.

Benclexta also has registrational studies ongoing and additional attractive indications, such as multiple myeloma in the T11-14 patient population with Phase III data forthcoming, as well as high-risk MDS.

I think flex to also has Registrational studies ongoing in addition, additional attractive indications such as multiple myeloma and T 11, and 14 patient population with phase III data forthcoming as well as high risk Mds Adil.

Additionally, we have an exciting and diverse pipeline of promising new therapies to address, critical unmet needs in both blood cancers and solid tumors, which are expected to support the next wave of AbbVie's growth in oncology.

Additionally, we have an exciting and diverse pipeline of promising new therapies to address critical unmet needs in both blood cancers, and solid tumors, which are expected to support the next wave of <unk> growth in <unk>.

Apologies.

In summary, the diversity of our portfolio once again allowed us to deliver another strong performance. Despite the challenges we see in the CLO market and increasing improve a good competition sky.

In summary, the diversity of our portfolio once again allowed us to deliver another strong, performance, despite the challenges we see in the CLL market and increasing Imbruviga competition.

Skyrizzy and Renvo are performing exceptionally well and are on pace to deliver approximately, $7.5 billion in combined sales this year.

<unk> and <unk> are performing exceptionally well and are on pace to deliver approximately seven $5 billion in combined sales this year.

Neuroscience demonstrated balanced double digit growth driven by migraine and Baylor and continued robust botox cosmetic growth offset some of the U S inflationary impact to our filler and body contour portfolios. As a result, we are confirming our full year 2022 adjusted earnings per share.

This demonstrated balanced double-digit growth driven by migraine and BALAR, and continued, robust Botox cosmetic growth offsets some of the U.S. inflationary impact to our filler and body contouring portfolios.

As a result, we are confirming our full-year 2022 adjusted earnings per share guidance, of $13.78 to $13.98, representing growth of more than 17 percent at the midpoint.

Guidance of $13 78.

The $13 98.

Representing growth of more than 17% at the midpoint with that I'll turn the call over to Jeff for additional comments on our commercial highlights Jeff.

With that, I'll turn the call over to Jeff for additional comments or commercial highlights.

Jeff?

Thank you, Rick.

Thank you Rick I am very pleased with the momentum across our therapeutic portfolio, including the continued progress, we're making with new product in recent indication launches.

I'm very pleased with the momentum across our therapeutic portfolio, including the continued, progress we're making with new product and recent indication launches.

I'll start with our immunology portfolio, which delivered total revenues of $7.2 billion, reflecting growth of 19.2% on an operational basis. Global Humira sales were approximately $5.4 billion, up 6.8% on an operational basis, with 9.6% growth in the U.S., partially offset by international performance, where revenues were down 7.3% operationally due to biosimilar competition.

I'll start with our immunology portfolio, which delivered total revenues of $7 2 billion, reflecting growth of 19, 2% on an operational basis.

Global Humira sales were approximately $5 4 billion up six 8% on an operational basis with nine 6% growth in the U S. Partially offset by international performance, where revenues were down seven 3% operationally due to biosimilar competition.

<unk> is performing extremely well well ahead of our expectations global revenues were more than $1 2 billion up 33% on a sequential basis.

SkyRIZI is performing extremely well, well ahead of our expectations. Global revenues were more than $1.2 billion, up 33% on a sequential basis. We continue to advance our leadership position in psoriasis, where SkyRIZI's total prescription, share of the U.S. biological market has increased to approximately 26%, driven by an in-play share of new and switching patients that is now approaching 50%. We have also achieved in-play market share leadership in 23 key international markets, including Japan, Germany, France, Canada, and Australia.

We continue to advance our leadership position in psoriasis, where sky <unk> total prescription share of the U S. Biological market has increased to approximately 26% driven.

Driven by an in play share of new and switching patients that is now approaching 50%.

We have also achieved in play market share leadership in 'twenty, three key international markets, including Japan, Germany, France, Canada and Australia.

Psoriatic arthritis is also adding significantly to sky <unk> momentum, where we are now approved in 54 countries and the U S. Dermatology segment were approximately 30% of patients exhibit both skin and joint involvement Sky Ritchie is already achieving an in play patient share of nearly 20%.

Psychiatric arthritis is also adding significantly to SkyRIZI's momentum, where we are now approved, in 54 countries.

In the U.S. dermatology segment, where approximately 30% of patients exhibit both skin and joint, involvement, SkyRIZI is already achieving an in-play patient share of nearly 20%.

We have also launched SkyRIZI for PSA in rheumatology, where we're seeing strong utilization, which, is driving accelerated share growth.

We have also launched Sky reserve for PSA in Rheumatology, where we're seeing strong utilization, which is driving accelerated share growth.

Our recent launch of <unk> for Crohn's disease in the U S represents the first new biologic approval in six years for an area, where there continues to be considerable unmet need.

Our recent launch of SkyRIZI for Crohn's disease in the U.S. represents the first new biologic, approval in six years for an area where there continues to be considerable unmet need. We believe SkyRIZI represents a highly effective and differentiated treatment option for Crohn's, patients, including the potential to provide meaningful levels of endoscopic improvement with novel and infrequent dosing.

We believe <unk> represents a highly effective and differentiated treatment option for crohn's patients, including the potential to provide meaningful levels of endoscopic improvement with novel and infrequent dosing managed care access is expected to ramp strongly for this indication in the coming months.

Managed care access is expected to ramp strongly for this indication in the coming months.

Turning now to <unk>, where we're seeing good momentum across each of the approved indications global sales of $592 million were up more than 27% on a sequential basis prescriptions.

Turning now to RINVOC, where we're seeing good momentum across each of the approved, indications. Global sales of $592 million were up more than 27% on a sequential basis.

Prescriptions in <unk> remains strong with a total market share of five 8% in the U S and approximately 6% across key international markets, where invoke is now achieving an in play or a share of approximately 13% in the U S.

Prescriptions in RA remain strong, with a total market share of 5.8% in the U.S. and, approximately 6% across key international markets.

RINVOC is now achieving an in-play RA share of approximately 13% in the U.S.

And PSA <unk> continues to see nice uptake, especially in the room segment with commercial access now equal to <unk>.

In PSA, RINVOC continues to see nice uptake, especially in the room segment, with commercial, access now equal to RA.

We also recently received FDA approval for ankylosing spondylitis and European approval, for non-radiographic axial spa, further expanding RINVOC's potential across rheumatology.

We also recently received FDA approval for ankylosing spondylitis and European approval for non radiographic axial spa further expanding <unk> potential across rheumatology.

In atopic dermatitis, new patient starts are tracking in line with our expectations with <unk> in play patient share in the mid teens strong commercial access and <unk>, which is also now equal to <unk> and PSA is expected to considerably increase paid prescription volume in this highly underpenetrated.

In atopic dermatitis, new patient starts are tracking in line with our expectations, with, RINVOC's in-play patient share in the mid-teens.

Strong commercial access in AD, which is also now equal to RA and PSA, is expected to considerably, increase paid prescription volume in this highly underpenetrated market over the remainder Lastly, our recent launch of RINVOC for ulcerative colitis in the U.S. is progressing well, and, we recently just received European approval for the same indication.

Over the remainder of the year.

Lastly, our recent launch of <unk> for ulcerative colitis in the U S is progressing well and we recently just received European approval for the same indication.

Commercial access in the U S is ramping strongly and we are seeing encouraging new patient starts.

Commercial access in the U.S. is ramping strongly, and we are seeing encouraging new patient starts. Physician feedback regarding RINVOC's approved profile in UC has been favorable, especially, given the very high rates of remission and endoscopic improvement demonstrated across our UC development program.

Physician feedback regarding <unk> approved profile in UC has been favorable, especially given the very high rates of remission and endoscopic improvement demonstrated across our UC development program the.

The addressable patient population for RINVOC in UC is substantial, with nearly 50 percent of patients currently on or having used TNF therapy.

The addressable patient population for invoking UC is substantial.

With nearly 50% of patients currently on are having used TNF therapy.

Turning now to hematologic oncology, where total revenues were $1 65 billion down seven 9% on an operational basis.

Turning now to hematologic oncology, where total revenues were $1.65 billion, down 7.9, percent on an operational basis.

Imbruvica global revenues were approximately $1.1 billion, down 17.1 percent, and below our expectations.

<unk> Global revenues were approximately $1 1 billion down 17, 1% and below our expectations.

The CLL market continues to remain challenging in the U.S., with new patient starts down double digits relative to pre-pandemic levels. Now as you may recall, our initial 2022 Imbruvica sales guidance contemplated a partial market, recovery, which unfortunately we have not yet observed. In fact, the latest data reflects new patient starts in the U.S. were actually down high single digits versus last year. So based on recent trends, we no longer believe it's prudent to anticipate a meaningful market, recovery in CLL over the second half of this year.

That market continues to remain challenging in the U S with new patient starts down double digits relative to pre pandemic levels.

Now as you may recall, our initial 2020 to improve our sales guidance contemplated a partial market recovery, which unfortunately, we have not yet observed in fact, the latest data reflects new patient starts in the U S. We're actually down high single digits versus last year.

So based on recent trends, we no longer believe it's prudent to anticipate a meaningful market recovery in CLO over the second half of this year. Therefore, we will be removing this assumption from our 2022 guidance in.

Therefore, we will be removing this assumption from our 2022 guidance. In addition, increasing competition from newer therapies, including other BTK inhibitors, as well as our own Venclexta, also continue to lower Imbruvica's share of new patient starts, especially in frontline CLL. Despite this increasing competitive pressure, Imbruvica continues to be the total market share leaders across all lines of therapy in CLL.

In addition, increasing competition from newer therapies, including other <unk> inhibitors as well as our own Ven cluster also continue to lower in <unk> share of new patient starts, especially in frontline CLO.

Despite this increasing competitive pressure in <unk> continues to be the total market share leaders across all lines of therapy and CLO.

I think flex the global sales were $505 million up 21, 2% on an operational basis and CLO, we continue to see share gains in the U S and across all major international markets. We're also seeing continued strong performance in AML and.

Venclexta global sales were $505 million, up 21.2 percent on an operational basis.

In, CLL, we continue to see share gains in the U.S. and across all major international markets.

We're also seeing continued strong performance in AML. Venclexta is now approved in 80 countries, and in many markets is already considered the new standard of care for frontline AML patients who are ineligible for intensive chemotherapy. As a result, we are seeing ramping market share throughout the countries where we have launched.

<unk> is now approved in 80 countries and in many markets is already considered the new standard of care for frontline AML patients who are ineligible for intensive chemotherapy.

As a result, we are seeing ramping market share throughout the countries, where we have launched.

In neuroscience revenues were more than $1 6 billion up 15, 2% on an operational basis <unk>. Once again delivered strong growth sales of $492 million were up 13, 9% on an operational basis, reflecting continued share gains in the U S atypical.

In neuroscience, revenues were more than $1.6 billion, up 15.2 percent on an operational, basis.

VRELAR once again delivered strong growth. Sales of $492 million were up 13.9 percent on an operational basis, reflecting continued share gains in the U.S. atypical antipsychotic market.

Our launch preparations remain well underway in anticipation of our MDD approval in the fourth quarter.

Antipsychotic market.

Our launch preparations remain well underway in anticipation of our NDA approval in the fourth quarter. This is a potentially large indication that would represent incremental upside to our current projections for <unk>.

This is a potentially large indication that would, represent incremental upside to our current projections for VRELAR.

Within migraine, Ubrelvi remains the market-leading oral CGRP treatment for acute migraine, with, revenue of $185 million, up 34 percent on a sequential basis.

Within migraine you broadly remains the market, leading oral <unk> treatment for acute migraine with revenue of $185 million up 34% on a sequential basis.

We are also pursuing the commercial approval for QLIPTA as a preventative treatment in patients, with chronic migraine in the U.S., as well as a new therapy for Europe, potentially further strengthening our competitive product profile and long-term growth opportunity.

<unk> continues to increase its leading new to brand share in the U S. Preventative <unk> class when we consider both paid Enbridge volume, we continue to make good progress with expanded commercial access which will support strong <unk> sales growth over the remainder of this year.

We are also pursuing the commercial approval for key lift as a preventative treatment in patients with chronic migraine in the U S as well as a new therapy for Europe , potentially further strengthening our competitive product profile and long term growth opportunity.

Botox therapeutic is also performing well in chronic migraine as well as its other indications with total sales of $678 million up.

Botox Therapeutic is also performing well in chronic migraine, as well as its other indications, with total sales of $678 million, up 14.5% on an operational basis. So, overall, I'm pleased with the commercial execution across the therapeutic business.

Up 14, 5% on an operational basis.

So overall I'm pleased with the commercial execution across the therapeutic business, our broad portfolio of differentiated therapies and new launches is demonstrating strong revenue growth.

Our broad portfolio of differentiated therapies and new launches is demonstrating strong revenue growth.

And with that, I'll turn the call over to Tom for additional comments on our R&D programs.

And with that I'll turn the call over to Tom for additional comments on our R&D programs Tom.

Tom?

Thank you, Jeff.

Thank you Jeff.

I'll start with immunology, where we had several notable pipeline updates in our inflammatory bowel disease programs for both <unk> and RIN book.

I'll start with immunology, where we had several notable pipeline updates, in our inflammatory bowel disease programs for both SCIRIZE and RINVOLC.

We recently received FDA approval for <unk> in Crohn's disease, and we're very pleased with the label, which reflects the strong benefit risk profile that sky Ritchie demonstrated as an induction and maintenance treatment for this condition.

We recently received FDA approval for SCIRIZE in Crohn's disease, and we're very pleased with the label, which reflects the strong benefit-risk profile that SCIRIZE demonstrated as an induction and maintenance treatment for this condition. Based on its profile, we believe SCIRIZE will be a highly effective and differentiated treatment option for patients with Crohn's disease.

Based on this profile, we believe <unk> will be a highly effective and differentiated treatment option for patients with <unk> disease.

Our regulatory application for SCIRIZE in Crohn's disease remains under review in Europe, with an approval decision expected near the end of this year.

Our regulatory applications for <unk> in Crohn's disease remains under review in Europe with an approval decision expected near the end of this year.

Also, in the area of inflammatory bowel disease, we recently received European approval for, RINVOLC in ulcerative colitis, and we're excited to bring this new, highly efficacious oral option to patients suffering from this often debilitating disease.

Also in the area of inflammatory bowel disease.

Recently received European approval for <unk> in ulcerative colitis, and we're excited to bring this new highly efficacious oil option to patients suffering from this often debilitating disease.

In the quarter.

In the quarter, we also completed a registrational program for RINVOLC in Crohn's disease, reporting, positive top-line results from our Phase III maintenance study. We recently submitted our regulatory applications for RINVOLC in this indication and expect approval decisions next year. Once approved for Crohn's disease, RINVOLC will have completed development programs for all the major rheum and gastroindications covered by Humira plus atopic dermatitis.

We also completed the Registrational program for <unk> in Crohn's disease reporting positive topline results from our phase III maintenance study.

We recently submitted our regulatory applications for <unk> in this indication and expect approval decisions next year.

Once approved for Crohn's disease, <unk> will have completed development programs for <unk>.

All the major room, and gastro indications covered by Humira, plus atopic dermatitis, the strengths of the data generated in our clinical programs should position <unk> as a highly differentiated treatment across this broad indication set and enable invoke to deliver significant value.

The strength of the data generated in our clinical programs should position RINVOLC, as a highly differentiated treatment across this broad indication set and enable RINVOLC to deliver significant value to Advi over the long term.

And just this morning, we announced that we received European approval for RINVOLC in non-radiographic axial spa, which rounds out RINVOLC's label in rheumatology.

Abbvie over the long term.

And just this morning, we announced that we received European approval for <unk> bulk.

Non radiographic axial spa, which rounds out <unk> label in rheumatology.

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

Moving now to our oncology portfolio, where we continue to make excellent progress across, all stages of our pipeline. At the recent EHA meeting, we presented results from the large B-cell lymphoma expansion cohort, in the Phase II study evaluating efcoritamab in patients who have received at least two prior lines of therapy. In this study, efcoritamab was well-tolerated and drove very deep and durable responses, in challenging to treat highly refractory patients with large B-cell lymphoma.

At the recent DHA meeting, we presented results from the large b cell lymphoma expansion cohort in the phase II study evaluating <unk> in patients who have received at least two prior lines of therapy.

In this study <unk> was well tolerated and drove very deep and durable responses and challenging to treat highly refractory patients with large b cell lymphoma.

We recently discussed these results with regulatory agencies and based on the strength of the data we intend to submit regulatory applications. Later this year for accelerated approval of <unk> in patients with relapsed refractory large b cell lymphoma.

We recently discussed these results with regulatory agencies, and based on the strength of the, data, we intend to submit regulatory applications later this year for accelerated approval of efcoritamab in patients with relapsed refractory large B-cell lymphoma.

We expect approval decisions in 2023.

We expect approval decisions in 2023.

We continue to make good progress with the indication expansion programs for <unk> and we remain on track to see results from the phase III Canova trial in relapsed refractory multiple myeloma patients with a $211 14 mutation.

We continue to make good progress with the indication expansion programs for Venclexta, and remain on track to see results from the Phase III Canova trial in relapsed refractory multiple myeloma patients with a T1114 mutation in the second half of this year. As a reminder, we've seen very promising results in this population in prior clinical studies, with Venclexta showing high overall response rates and meaningful trends towards prolonged progression-free survival. The level of efficacy we've seen suggests that T1114 patients may be particularly responsive, to Venclexta, and this agent has the potential to become an important biomarker-driven treatment option in the multiple myeloma market.

In the second half of this year.

As a reminder, we've seen very promising results in this population.

<unk> clinical studies with <unk>, showing high overall response rates and meaningful trends towards prolonged progression free survival.

The level of efficacy we've seen success at 11 14 patients may be particularly response responsive to than collector and this agent has the potential to become an important biomarker driven treatment option in the multiple myeloma market.

In neuroscience following successful completion of our phase III chronic migraine prevention study.

In neuroscience, following successful completion of our Phase III chronic migraine prevention, study, we submitted our regulatory application to the FDA for QLIPTA in chronic migraine. Chronic migraine is defined as 15 or more headache days per month with at least eight, of those days associated with migraines. This is a debilitating disease that affects nearly 10 percent of people suffering from, migraines, significantly impacting their quality of life.

We submitted our regulatory application to the FDA for <unk> in chronic migraine.

Chronic migraine is defined at 15 or more headache days per month with at least eight of those days associated with migraines.

This is a debilitating disease that affects nearly 10% of people suffering from migraines significantly impacting their quality of life.

If approved, this would be another differentiating feature for QLIPTA, as it would be the only, oral CGRP approved for prevention in patients with chronic migraine.

If approved this would be another differentiating feature procure lifter.

It would be the only oral <unk> approved for prevention in patients with chronic migraine.

We also submitted data from our phase III prevention studies in both chronic and episodic migraine to support regulatory applications in markets outside the U S.

We also submitted data from our Phase III prevention studies in both chronic and episodic, migraine to support regulatory applications in markets outside the U.S.

We expect approval decisions in the U.S. and in Europe in 2023. In the quarter, we submitted our regulatory application in the U.S. for ABVV951, our novel, subcutaneous levodopa-carbidopa delivery system for treatment of advanced Parkinson's disease. This innovative delivery system has the potential to become a transformative treatment option, for patients with advanced Parkinson's disease by providing duopa-like efficacy. We also expect to submit our regulatory application in Europe later this year with approval decisions, anticipated in both the U.S. and Europe in 2023.

We expect approval decisions in the U S and in Europe in 2023.

In the quarter, we submitted our regulatory application in the U S. For ABP 951, our novel subcutaneous level Dopo kv dopa delivery system for treatment of advanced Parkinson's disease.

This innovative delivery system has the potential to become a transformative treatment option for patients with <unk> with advanced Parkinson's disease by providing duopoly like efficacy.

With less invasive non surgical administration.

We also expect to submit our regulatory application in Europe later this year with approval decisions anticipated in both the U S and Europe in 2023.

Now I'd like to provide a few updates on some earlier stage programs, where we have new data and are advancing programs in development.

Now I'd like to provide a few updates on some earlier stage programs where we have new data, and are advancing programs in development. In immunology, we recently obtained encouraging data in a Phase II study evaluating RIN-VoC, in systemic lupus, an autoimmune multisystem disease. In our study, RIN-VoC demonstrated greater response rates as well as a reduction in flares, compared with placebo.

In immunology, we recently obtained encouraging data in our phase II study evaluating <unk> in systemic lupus.

An audio mewling multi system disease.

In our study <unk> demonstrated greater response rates as well as the reduction of players compared with placebo.

We'll see longer-term data in the coming months, which will allow us to make a decision on, moving RIN-VoC into Phase III for lupus.

We will see longer term data in the coming months, which will allow us to make a decision on moving <unk> into phase III for lupus.

In oncology, where we have a pipeline of promising early stage programs aimed at solid tumors. We are beginning to see very exciting data from several programs.

In oncology, where we have a pipeline of promising early-stage programs aimed at solid tumors, we are beginning to see very exciting data from several programs. Our anti-GARP antibody, ABBV151, is designed to block the immunosuppressive activity of, regulatory T-cells, which leads to increased T-cell effective functions in the tumor microenvironment. This reactivates the immune system against tumors, enhancing the anti-tumor immune response, triggered by a PD-1 inhibitor. In our Phase I program, we're combining 151 with a PD-1 checkpoint inhibitor in cancer, patients who are refractory to or relapsed after a PD-1, as well as evaluating this combination in PD-1 non-responsive tumors. Based on the preliminary efficacy we've seen in the dose expansion cohorts for multiple, solid tumors, including a deepening of responses over time and prolonged durability, we recently declared proof of concept for 151.

Our anti <unk> antibody ABV 151 is designed to block the immuno suppressive activity of regulatory T cells, which leads to increased T cell effector functions in the tumor microenvironment. This re activate immune system against tumors enhancing the antitumor immune.

Response triggered by a PD one inhibitor.

In our phase one program, we're combining <unk> with a PD one checkpoint inhibitor in cancer patients, who are refractory to or relapsed after a PD one as well as evaluating this combination in PD, one nonresponsive tumors.

Based on the preliminary efficacy we have seen in a dose expansion cohorts for multiple solid tumors.

Including a deepening of responses over time and prolonged durability.

We recently declared proof of concept for 151.

We plan to advance to phase II in several solid tumors, starting with <unk> Youll cancer.

We plan to advance to Phase II in several solid tumors, starting with urethelial cancer. We're also expecting additional data readouts later this year in other solid tumor indications, including colorectal cancer, which may enable further expansion studies in this hard-to-treat cancer type.

We're also expecting additional data Readouts later this year in other solid tumor indications, including colorectal cancer.

Which may enable further expansion studies in this hard to treat cancer type.

We will also begin new studies to explore a broader set of solid tumors, where GARP is implicated as a critical immunosuppressive pathway based on tissue or tumor tissue analysis.

We will also begin new studies to explore a broader set of solid tumors where GARP is, implicated as a critical immunosuppressive pathway based on tumor tissue analyses.

We're also making excellent progress with our next generation <unk> ADC.

We're also making excellent progress with our next generation C-MET ADC, ABBV400, where, the emerging clinical data is very promising in several solid tumors.

ABV 400, where the emerging clinical data is very promising in several solid tumors.

This asset is similar to TelisoV, a C-MET ADC that uses a microtubulin inhibitor payload. TelisoV received breakthrough therapy designation for the treatment of patients with a subtype, of lung cancer with high levels of C-MET overexpression.

This asset is similar to <unk> assume that ADC that uses a microtubule inhibitor payload.

This will be received breakthrough therapy designation for the treatment of patients with a subtype of lung cancer with high levels of C met overexpression.

The <unk> warhead for 400 users a more potent <unk> inhibitor payload.

The toxin warhead for 400 uses a more potent topoisomerase inhibitor payload.

Gould, which is similar to Irinotecan, a chemotherapy that is used in the treatment of colorectal, cancer.

Which is similar to a renewed T can a chemotherapy that is used in the treatment of colorectal cancer.

By targeting <unk> positive tumors with adcs bearing different warheads. We believe we can broaden the range of solid tumors, where C met therapies can be used.

By targeting C-met positive tumors with ADCs bearing different warheads, we believe we, can broaden the range of solid tumors where C-met therapies can be used.

In our Phase I program, we are seeing good responses in patients with advanced colorectal, cancer and remain encouraged by these early efficacy signals.

Our phase one program, we are seeing good responses in patients with advanced colorectal cancer and remain encouraged by these early efficacy signals.

So, in summary, we've seen tremendous progress across all stages of our pipeline in the first, half of the year, and we remain on track for further advancements in the remainder of 2022.

So in summary, we've seen tremendous progress across all stages of our pipeline in the first half of the year and we remain on track for further advancements in the remainder of 2022.

So, with that, I'll turn the call over to Rob for additional comments on our second, quarter performance and financial outlook.

So with that I'll turn the call over to Rob for additional comments on our second quarter performance and financial outlook, Rob. Thank you Tom Abbvie second quarter results demonstrate the strength of our diversified portfolio momentum from new products and recently launched indications allows us to maintain our earnings outlook. Despite <unk>.

Rob?

Thank you, Tom.

AbbVie's second quarter results demonstrate the strength of our diversified portfolio. Momentum from new products and recently launched indications allows us to maintain our earnings, outlook despite market dynamics for Imbruvica, higher inflation, and the stronger U.S. dollar. We reported adjusted earnings per share of $3.37, reflecting growth of 11.2 percent compared, to prior year and 11 cents above our guidance midpoint. These results include a 14-cent unfavorable impact from acquired IPRD expense. Total net revenues were $14.6 billion, up 6.1 percent on an operational basis, excluding, a 1.6 percent unfavorable impact from foreign exchange.

Market dynamics for <unk> higher inflation and the stronger U S dollar.

We reported adjusted earnings per share of $3 37.

Reflecting growth of 11, 2% compared to prior year, and 11 cents above our guidance midpoint.

These results include a 14% unfavorable impact from acquired IP R&D expense.

Total net revenues were $14 6 billion.

Up six 1% on operational basis, excluding a one 6% unfavorable impact from foreign exchange.

The adjusted operating margin ratio was 51% of sales an improvement of 220 basis points versus the prior year. This.

The adjusted operating margin ratio was 51 percent of sales, an improvement of 220 basis, points versus the prior year. This includes adjusted gross margin of 84.7 percent of sales, adjusted R&D investment, of 11 percent of sales, acquired IPRD expense of 1.8 percent of sales, and adjusted SG&A expense of 20.8 percent of sales.

This includes adjusted gross margin of 84, 7% of sales adjusted R&D investment of 11% of sales acquired IP R&D expense of one 8% of sales and adjusted SG&A expense of 28% of sales.

Net interest expense was $532 million, and the adjusted tax rate was 13.4 percent.

Net interest expense was $532 million and the adjusted tax rate was 13, 4%.

Turning to our financial outlook, we are confirming our full year adjusted earnings per share guidance between $13 78, and $13 98.

According to our financial outlook, we are confirming our full year adjusted earnings, per share guidance between $13.78 and $13.98. This earnings per share guidance does not include an estimate for acquired IPRD expense, that may be incurred beyond the second quarter.

This earnings per share guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the second quarter.

We now expect net revenues of approximately $58.9 billion, reflecting growth of 6.5 percent, on an operational basis. At current rates, we expect foreign exchange to have a 1.7 percent unfavorable impact on, full year sales growth. Included in this guidance are the following updated assumptions.

We now expect net revenues of approximately $58 $9 billion, reflecting.

Reflecting growth of six 5% on an operational basis.

At current rates, we expect foreign exchange to have a one 7% unfavorable impact on full year sales growth.

Included in this guidance are the following updated assumptions.

We now expect Skyrizzy global sales of approximately $4.8 billion, an increase of $400 million, due to strong market share performance.

We now expect Sky <unk> global sales of approximately $4 8 billion, an increase of $400 million due to strong market share performance.

For <unk>, we now expect global revenue of approximately $4 $7 billion, given a lack of recovery in the CLO market and increasing competition.

We now expect global revenue of approximately $4.7 billion, given a lack of recovery in, the CLL market and increasing competition.

Moving to the P&L, we now expect adjusted gross margin of 84, 7% of sales and continue to forecast an adjusted operating margin ratio of 51, 8% of sales.

Moving to the P&L, we now expect adjusted gross margin of 84.7 percent of sales, and, continue to forecast an adjusted operating margin ratio of 51.8 percent of sales, referring to the US.

Turning to the third quarter, we anticipate net revenues of approximately $14 $8 billion.

We anticipate net revenues of approximately $14.8 billion. At current rates, we expect foreign exchange, to have a 2.1% unfavorable impact on sales growth. We expect adjusted earnings per share between $3.55, and $3.59.

At current rates, we expect foreign exchange to have a two 1% unfavorable impact on sales growth.

We expect adjusted earnings per share between $3 55.

And $3 59.

This guidance does not include acquired IPRD expense, that may be incurred in the quarter.

This guidance does not include acquired IP R&D expense that may be incurred in the quarter.

In closing, we delivered strong performance, again this quarter, including meaningful contributions from new products and recently launched indications.

In closing, we delivered strong performance again, this quarter, including meaningful contributions from new products and recently launched indications give.

Given the momentum of our business, as well as our pipeline advancements, we are well positioned for the long term.

Given the momentum of our business as well as our pipeline advancements we are well positioned for the long term.

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

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.

Thanks, Rob.

We will now open the call for questions.

In 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.

Operator, we'll take the first question.

Thank you.

Thank you our first question Andrew Baum Citi. Your line is open.

Our first question is Andrew Baum, Citi.

Yes. Thank you first question is on <unk>.

Your line's open.

Yeah, thank you.

The guidance range, we've given for anticipated trajectory of Humira in the U S. Presumably you're finishing contracting boats with Medicaid commercial could you provide any guidance on 2003, and even 24 months show of essence via contracts.

First question is on the guidance range you've given, for anticipated trajectory of Humira in the U.S.

Presumably, you're finishing contracting, both with Medicare and commercial.

Could you provide any guidance further on 23 and even 24, given I'm sure there are some two-year contracts?

And then second, a pipeline question, in relation to your anti-gut monoclonal, which you've taken a long time to optimize and move forward.

And then second.

<unk> question in relation to your anti <unk> monoclonal, which you've taken out.

A lot of time to optimize will move forward.

I'm just curious whether you're using any molecular markers, in order to minimize risk, given the failures of other TGF-beta-targeted agents, particularly in colorectal, using CMS-IV or a subgroup of the total population, or are you putting it in all comers?

I'm, just curious whether you're using any molecular markets.

To minimize risks given those caveats, if other TGF beta targeted agents, particularly in kind of rack full using CMS for a subgroup of the total population or you put in a new promise as a suggestion in watsonville Cabos always this again for Bob.

There's a suggestion it works in all comers, but I'm not sure what this, again, informed by markers.

Biomarkers. Thank you.

Thank you.

Okay. Andrew This is Rick Thank you for the questions I'll cover the first one and Tom.

Okay, Andrew, this is Rick.

Thank you for the questions.

I'll cover the first one, then Tom can cover the second one.

You can cover the second one.

So we are in the process now, as we've indicated before, negotiating with the managed care organizations and the PBMs to establish our contract position for Humira in 2023.

So we are in the process now as we've indicated before.

<unk> with the managed care organizations and the Pbms to establish our contract position for Humira.

In 2023. This has been a normal time that you would go through that.

This is the normal time that you would go through that. It is progressing as we would expect.

It is progressing as we would expect.

I would say we're midway through that process right now.

I would say were.

Midway through that process right now.

I would expect it to conclude near the end, of the third quarter, early of the fourth quarter.

I would expect it to conclude near the end of the third quarter early in the fourth quarter at that point, that's an important part of refining our model through 2023 in particular.

At that point, that's an important part, of refining our model for 2023 in particular, and what that will tell us is that, you know, the positions that we have formulary status for 2023 for Humira, and that will help us define clearly the volume aspect of it.

And what that will tell us is that.

Physicians that we have formulary status from 2023.

<unk>.

For Humira and that will help us define clearly the volume aspect of it.

And so, you know, that's going well, and that's going to be an important part of us being able to refine that model.

And so you know that.

It's going well and that's that's going to be an important part of us being able to refine that model and so as we get further along in that process that will give us the ability to be able to potentially.

And so as we get further along in that process, that will give us the ability to be able to potentially refine the model that we have.

We'll find the model that we have now.

Now, one thing that's important to remember in all of this, is price is the other key aspect.

But one thing is important to remember in all of this is prices. The other key aspect here and there we won't no real pricing until the actual event starts to occur. So we will make assumptions around what that price looks like and I think those will be informed assumptions, but they are just out there.

, .

Thanks, Andrew.

Aubrey, we'll take the next question, please.

Our next question is Terence Flynn with Morgan Stanley.

Thank you.

Hi.

Thanks for taking the questions.

So, Terence, I'll take both of those questions, and then Rob can certainly jump, in here if he has something he wants to add.

Maybe two for me.

We are maintaining the aesthetics guidance as we've indicated.

Just wanted to make sure that, you were maintaining your 2022 aesthetics guidance of $5.9 billion.

Certainly, we have seen, you know, good, strong performance on the toxin side of the business, and we would expect it to continue.

Rob, I didn't hear you call that out, so I'm assuming that was a reiteration, just given what you're seeing with Juvederm in the U.S. And then the second question I had relates more of a, I guess, strategic one, Rick.

I know you're still going through the conversations with 2023 for Humira, but as you think about providing an update to guidance, whether that happens with the three-key results or with the four-key results, do you think you'll be able to provide some outlook on 2024?

As we look at the filler side of the business, as you've noted, it was lighter this quarter than we've seen historically. And I'd say that was driven by a couple of issues.

Because I think something investors are discussing now is just if the possibility of, you know, the impact is more in 2024, how we should think about, you know, revenue margins in 2024 versus 2023.

It was certainly driven by the China-Russia issue, outside the U.S.

So just wondering strategically how you're thinking about that at this point, not asking for guidance, more just thought process.

In the U.S., we did have a very successful promotional program that we ran last year, so it was a tough comparison versus last year.

But I think as we look at the business overall, we're comfortable maintaining the guidance now.

Thank you.

But I'd also say we have seen some glimpses of what could be inflationary pressure, on that business, or it could be pent-up demand for vacations.

We believe that Botox will continue to perform very well, and obviously we're doing more things to be able to drive the toxin side of the business.

Okay.

And Kerry can certainly go through in more detail if there's follow-up questions.

It's at a price point where it should be less sensitive to inflationary pressures.

And when we've gotten to a point that certainly by the fourth quarter call, we're going to, provide you guidance on what we think will happen in 2023, but if we can provide something on the third quarter call, I wouldn't be looking for guidance.

You know, the price point for toxins is about $500, I think, right, Kerry?

I think that's not a good expectation, but certainly potentially a little more clarification, on what our contracting status looks like at that point and how that will translate into what we think.

And where fillers are almost twice that or maybe even a little more than twice that.

And if we can refine the model to a greater degree, we would certainly provide that.

As it relates to 2024, you know, certainly I'm not going to, we're not in a position, where we're going to talk about 2024 right now, and I think that would be a little bit unlikely because not all these contracts will be two-year contracts.

So clearly, from a disposable income standpoint, fillers are more challenging for people than toxins are.

And so you really won't know what your volume position is at that point.

Sure.

And so that's the rationale behind it.

And as I said, you won't know what the pricing is going to be, particularly midway through, the year.

I'd say overall, we feel good about the contracting position that we're in.

And so that's the one piece that will still be somewhat of an unknown until we see.

And certainly as we look at the overall performance of the AbbVie business, we had plenty of opportunity with the diversity of our portfolio to cover any potential shortfall if we ended up having any shortfall.

And so I think those will be important things to be able to dial in to where the forecast, is going.

And then I'd say the other thing is, and I know investors really want to try to model, this between 2023 and 2024.

So that's why we're comfortable maintaining the guidance.

I understand why you want to do that.

Next question is Gary Nachman with BMO Capital Markets.

And I think we need to see more time play out here to see exactly where we are from a U.S, inflationary impact.

Certainly we obviously would like to do that to the greatest degree possible.

Hi, thanks.

On the second question, as it relates to an update on 23 and potentially something, I think the way you've described it is accurate.

But when you step back and you actually look at the performance of AbbVie and how you will, value AbbVie and what AbbVie means going forward, it has relatively little to do with QMero.

Good morning.

When we have more information, we'll try to provide that.

And that shape of that curve between 2023 and 2024.

So Skyrizzy was very strong in the second quarter and you raised that nicely.

And certainly by the end of 2024, we should reach a point where we've achieved some level, of stability on the tail of QMero.

How much of a benefit are you getting from the psoriatic arthritis indication thus far and what are you expecting Crohn's to contribute this year? How much are those playing into the raised guidance and are you revisiting the long-term guidance on Skyrizzy at this point given the strong performance?

And maybe you could talk about the near-term opportunities you see for products like at Coritamab and the Vitaclax, how much those could contribute and potentially offset some of the pressure you've been seeing from Imbruvica.

The landscape start to play out in 2023 and.

What AbbVie is all about is these other products like Skyrizzy and Rinvoke and Velar and Ubrelli, the aesthetics business, Qletta.

And then just on the Hemang franchise, are you keeping the infrastructure intact, preparing for new products to contribute?

Thanks.

Those are going to be the things that drive it.

Yeah, thank you.

And obviously you saw very, very large sequential moves.

So if you want to focus on something, and it's what we focus on internally, is that, underlying growth engine that will emerge on the other side of whatever erosion QMero ends up suffering before it hits some level of stability in a tail is those assets and then what comes out of the pipeline.

It's Jeff.

And let me give you some sense of what we're looking at.

Those are the key things that are going to create that growth between 2025 and 2030.

Thanks for the question.

So we're seeing that we're putting more and more basically headroom into the overall share, position first in psoriatic disease. So that's psoriasis plus PSA.

And that's the part that we, I would say, we're obviously managing QMero to the greatest, extent we can.

So your instinct and observation is right.

But that's the part that we as a team are focusing on.

The big dynamic change for Skyrizzy here, largely what you're seeing is from the psoriatic arthritis indication.

So we're at 26% in terms of total TRX share and moving very, very nicely up. So that's being driven by this PSA acceleration.

Particularly in the mid way through 2023, when more biosimilars enter the market.

And I think that's the most important part, because that is the AbbVie going forward.

So first remember that the PSA indication, we were really the last large product that, didn't have that indication.

Thanks, Terrence.

So first what happens is it starts to interact very positively in the dermatology segment.

Operator, let's take the next question, please.

So as I mentioned, about 30% of patients both have skin and joint involvement.

Thank you.

And so we actually had a lower, despite the fact that we had the leading psoriasis share, we had a lower psoriasis share because we weren't covered with the joints with that indication.

So we see an immediate, very rapid acceleration of our overall DERM business that I highlighted.

Our next question is Mohit Banzel with Wells Fargo.

Secondly, strategically important to the performance is that we're able to launch the PSA indication, for SCI-RIS-E in rheumatology.

So as we get more information, we can provide more clarity, we'll certainly try to do that.

Great.

So it starts to work together with the RINVO PSA indication and the ROOM segment is three, times as large as the DERM segment.

So it's a very, very good dynamic in terms of our momentum in two large segments even, before we get to Crohn's.

Thanks for taking my question.

Maybe dwelling a little bit more on the Humira question for Rick and Jeff.

Now I would say that as we've talked about before, I mean, SCI-RIS-E is a very special, product. You know, very unique dosing, very stable, incredible efficacy.

So you said that pricing from the competition would be key and known for next year.

So as you get into contracts this year for the next year, how rigid or flexible these, contracts are from the pricing point of view when PBMs realize that the buyer similar is giving an X or Y pricing?

And so we are encouraged on the early results of Crohn's.

But I think that's where we are right now.

Or would that be more of a 2024 issue rather than 2023?

It's too early to start to see numbers or et cetera.

Thank you.

But all of that is playing into, you know, the rays that Rob talked about.

And Gary, this is Rob.

Well, let's go ahead with the coverage for about half a minute.

Just on the guidance, so if you recall earlier in the year when we got asked the question, I said PSA for SCI-RIS-E was going to contribute about $200 million this year. It's probably closer to $400 million now with the guidance range given the very nice uptake, we've seen in PSA.

Todd.

All right.

But part of that guidance raise is also the strong share performance in psoriasis. So it includes both.

We've set approximately $100 million this year as we ramp access for Crohn's. But obviously the long-term potential for it is tremendous, and we're very excited about, that.

Andrew I'll try to break down the question in different parts. Because you are right. There are many TGF beta assets. This one's unique GARP most of the TGF beta assets work either antibodies against the receptor. So the active form of TGF beta or TGF beta itself.

Well, I don't have anything else to say here either.

In terms of Crohn's, that hasn't changed.

And maybe I can also then chime in on the second question.

I can't.

Certainly that is a – the new assets are a very important part of our growth story, for HEMONC.

Let me take a shot at that and certainly Jeff is closer to it so Jeff if you want to add anything in feel free to jump in and add.

Certainly, as I mentioned, we're still continuing to ramp around the world with CLL.

Typically when you contract for an asset like Humira you're contracting for a formulary position and there aren't volume requirements or other kinds of requirements.

We have, you know, more and more impressive data, particularly in the unfit frontline, population.

I think it's also it would be prudent to assume that biosimilars will be on these contracts and whether it's one or more than one that will coexist with Humira.

We have five years of data in the fit population for frontline for Venclexta.

And we've said all along the strategy that we'll have in the U.S. is similar to the strategy that we had internationally and that is maintain as much volume as we can at the highest level of profit that we can maintain it at. And that is the logic that we will employ. But that doesn't mean we won't have to be somewhat responsive to prices in the marketplace on Humira.

We're encouraged with the myeloma data, which is very unique in terms of a biomarker-driven, approach for the 11-14.

Nevitoclax would be really one of the first new entrants for myelofibrosis, where there's, really only been RUCs in terms of that market.

Jeff, anything you'd add?

No, I think that's Rick, that's a very reasonable way to look at it in terms of how these negotiations are going and how we see 23 playing out.

Increasingly encouraging data in terms of the simple sub-Q, very rapid ways to get this, medication in later lines, and then building into frontline.

The real big ones in terms of how we look at it is the two big scenarios are you are likely coexisting with one or more biosimilars or if the negotiations don't go the way that we anticipate that we're excluded in favor of biosimilars.

And that's basically where price and volume in terms of refining our model for 23, that's the work that we're doing over the summer and then into the fall.

So we are very, very encouraged.

Helpful.

Thank you.

While we see some pressure on Imbruvica, the new indications in base for Venclexta helps, to offset that.

Thank you.

And then we start to build with those near-term HEM assets and super encouraged in terms, of what we're seeing in terms of the probability that we're going to see.

Thanks, Mohit.

Thanks Gary.

Our next question is from Chris, Schott, J.P. Morgan.

Operator, next question, please.

Operator, next question please.

Great.

Thank you.

Thank you.

Thanks so much for the questions.

And I guess in that same context, are you seeing any signs of weakness in the European business?

First one, I just wanted to come back to dynamics on the U.S. dermal filler market.

I'm just trying to get our hands around what type of magnitude of, impact you're talking about here in terms of either if it's inflation or economic sensitivity to that business.

I guess specifically, can you just quantify how much of the weakness we saw this or the decline year over year was due to the promotion events last year versus the impact from the economic pressures that you're seeing?

My second question was just thinking about Rinvoke and SkyRizzy formulary and pricing dynamics going forward as biosimilar Humira enters the market.

And as Rick said, there was a one-time promotional event that we ran in the U.S. for Juvederm in Q2 of last year. And it was highly successful.

And.

I guess you expect or are you hearing through discussions any major shifts in the way payers are thinking about those products as we think about pricing coming down and obviously the largest kind of product in the space there?

And it, you know, increased sales in the sales space, which created this challenging prior year comparison.

Thanks so much.

So that was the key driver.

And so, you know, those are some of the factors we're thinking about when we think about the deceleration of the filler market in Q2.

Circulation ourselves but.

Hi, this is Carrie.

But as you noted, there was also this impact, economic impact that is suggestive of some early changes in consumer behavior.

I'll take your first question around Juvederm.

And that really isn't surprising in light of the inflationary pressures that we're seeing on discretionary income.

But while, you know, the market has slowed and despite the performance in Q2, we do continue to expect a positive second half growth for U.S. Juvederm.

And as Rick said, the filler market is likely more sensitive to that than toxins for a few reasons.

<unk> blocks the inactive for a TGF beta before it's released from TGF beta and we believe that actually has a differentiated mechanism also allows that specificity to whats happening TGF beta in that tumor as opposed to other systems in the body.

We mentioned the price point.

Really waited more in the fourth quarter as we're going to launch two new fillers in the fourth quarter. And those two new fillers will get us into incremental categories for HA fillers, including jawline and skin quality, which will help to drive some incremental demand at the end of the year.

So a price point of closer to $1,000 versus $500 for toxins.

And in terms of your question around economic impact outside of the U.S., we are watching that very closely and we really have not.

Also the nature of the filler business is different than toxins from a patient dynamic and treatment dynamic in that there are more there's a longer interval between treatments for fillers versus toxins, which is sort of like a more regular treatment paradigm a few times a year.

Also the patient bases are different.

When you think about the toxin patient base and Botox Cosmetics, the majority of the patient base is continuing patients versus more of a reliance on new patient acquisition.

At the beginning of this we thought we had already had people at published that.

Very good teacher TGF beta signatures that exist that can tell you the GARP signature.

All of those tracks with TGF beta signatures and that's often seen in all solid tumors as a subset of tumors that express. These pathway. It's it is a very common immune suppressive mechanism. That's why people are interested in it.

We alert initially.

From data, we kind of suspected that people, who actually had a nice hot tumors, but were not responding to.

Two PD ones.

Often had at least from <unk>.

This work.

I actually had a higher TGF beta signature. So we thought that was the reason for the mechanism why these patients what's hot tumors were not responding and a lot of our initial clinical strategy. There was actually to go after or hot tumors, where PD ones that would be the last one.

Refractory and we thought we could augment.

The PD one checkpoint response by buying doing this combination we did not see monotherapy activity, but in combination we did and Thats why our first data's datasets and expansions like I've, just discussed and <unk> cancer. These projects started earlier, we're seeing data that's suggesting that this is correct that you need to affect both the pathway.

If TGF beta and <unk> PD, one to get a response and those again in multiple tumor types, we're seeing responses and we're moving forward at the same time, because its bringing it to colon.

We could also see the same signatures of TGF beta on GARP.

And cold tumors, but we weren't sure that since theyre not I always sponsored whether we'd get a response.

Would get a clinical response, but we did start some investigations and yes, we did see some responses in cold tumors.

They happen over time in automotive there sometimes appears peoples. The tours are stable for three months, maybe six months and then you see these responses appear very durable one year to year.

Very unusual these are patients with advanced disease that have very poor prognosis in phase one studies. So we saw some some I would say, we sometimes say.

Academia column exceptional responders.

And so we decided to expense those datasets are newer are happening right now I, probably will have the data at the end of this year, but yes, we've seen that we've.

We've seen our responses to this combination.

And to answer your questions. So the signatures were looking at are not the CMS or kind of histology based signatures on the tumor it's more signatures of the inflammatory response that we can measure in the tumor and it has to do with both.

Inflammatory T cells, which are therefore, the killing but also the inhibitory TGF beta.

Signatures and of course, we're going to continue to investigate this I don't have all the answers for you today, but it certainly has been exciting to see how this evolves programs evolve.

In terms of your second question, again, it's Jeff, thanks for that.

Thanks, Andrew.

The next question. Please. Thank you. Our next question is Terence Flynn with Morgan Stanley .

You know, we're, we don't see some significant pressures on Skyrizzy and Renvogue.

Now, we always have discussions with the payer as we look at our contracting strategy, but, I think we fall back on our clinical evidence that we have on these two major assets.

Hi, Thanks for taking the questions maybe two for me just wanted to make sure that you are maintaining your 2022 aesthetics guidance.

I mean, we have, we have four head-to-head trials against other major competitors with, Skyrizzy where we have, you know, just really gross superiority versus whether it's an IL-17, whether it's, you know, Humira, which one day will be biosimilar, Stellara, et cetera.

A $5 9 billion, Robert and hear you call that out so I'm, assuming that was a reiteration just given what youre seeing with <unk> in the U S. And then the second question I had relates more of.

So just the pure performance there and the momentum, it's clearly a distinguished asset.

Strategic one Rick.

You know, we're going to be first in terms of Crohn's to start to establish that new, area and build the, and build the, build the market there.

And I think on Renvogue, to some degree, there's only one other jack inhibitor that is not, going to have the scope of indications, and it's Zeljanz.

I know you are still going through the conversations with 2023 for Humira, but as you think about <unk>.

Providing an update to guidance.

Whether that happens with the <unk> results or with the <unk> results do you think youll be able to provide some outlook on 2024, because I think something investors are discussing now is just if the possibility of.

The impact is more than 24, how we should think about revenue margins in 24 versus 23. So just wondering strategically how youre thinking about that at this point not asking for guidance more just thought process. Thank you.

So Terence I'll take both of those questions and Rob can certainly jump in here if he has something.

He wants to add.

Maintaining the steady guidance.

As we've indicated certainly we have seen good strong performance on the <unk> side of the business and we would expect to.

As we look at the film side of the business as you've noted.

It was lighter this quarter than we've seen historically and I would say that was driven by a couple of issues certainly driven by the China, Russia issue outside the U S. In the U S. We did have a very successful promotional.

Program that we ran last year. So it was a tough comparison versus last year.

Also say we have seen some glimpses of.

What could be inflationary pressure.

On that business.

Or it could be pent up demand for vacations and carrier can certainly go through it in more detail if there's follow up questions.

But I think as we look at the business overall, we're comfortable maintaining the guidance now we believe that botox will continue to perform very well, obviously, we're doing more things to be able to drive the toxin side of the business. It's at a price point, where it should be less sensitive.

Inflationary pressures.

For <unk> about $500 I think right Gary.

We're fillers are almost twice that or maybe even a little more than twice that so clearly from a from a disposable income standpoint fillers are more challenging for people that toxins are and so that's the rationale behind it and certainly as we look at the overall performance of the Abbvie business, we have plenty of opportunities.

The diversity of our portfolio to cover any potential shortfall. If we ended up having any shortfall. So that's why we're comfortable maintaining the guidance I don't think we need to see more time play out here.

To see exactly where we are from a U S inflationary impact.

The second question as it relates to an update on 'twenty, three and potentially something on <unk> four.

And Zeljanz has been, you know, significantly wounded based on the oral surveillance data.

I think the way you've described it is accurate when we have more information.

We will try to provide that.

And when we've gotten to a point.

By the fourth quarter call, we are going to provide guidance.

What we think will happen in 2023, but if we can provide something on the third quarter call I wouldn't be looking for guidance I think that's that's not a good expectation, but certainly.

Potentially a little more clarification on what our contracting status looks like at that point and how that role.

Translate into what we think and if we can refine the model.

To a greater degree would certainly provide that as it relates to 2024.

Certainly I'm not going to we're not in a position where we're going to talk about 2024, right now and I think that would be a little bit unlikely because not all of these contracts will be.

Two year contracts and so you really wont know which volume position is.

At that point and as I said, you won't know what the pricing is going to be particularly midway through the year.

So I think those will be important.

The important.

Things to be able to dial in.

To where the forecast, it's going I'd say overall, we feel good about the contracting.

The position that we're in.

And then I'd say the other thing is and I know investors really wanted to try to model. This between 23 and 24 I understand why you wanted to do that certainly we would like to do that to the greatest degree possible, but when you step back and you actually look at the performance of Abbvie and how you will value add.

Going forward.

It has relatively little to do with Humira.

And that shape of that curve between 'twenty, three and 'twenty four.

And certainly by the end of 'twenty four we should reach a point, where we've achieved some level of stability on the tail of humira.

So in terms of our ability to, you know, build and protect and, and, and grow Skyrizzy and, Renvogue into the next stage of development, we're, we're quite confident that we have the assets to be able to do that.

What <unk> is all about.

Other products like <unk> and Roomba.

<unk>.

<unk>.

Fedex business to let those are going to be the things that drive it. So you want to focus on something.

And it's what we focus on internally is that underlying growth.

It will emerge on the other side of wherever erosion humira ends up suffering before it is some level of stability and a tale is those assets and then what comes out of the pipeline.

Those are the key things that are going to create that growth between 25 30 and.

That's the part that we I would say, we're obviously managing humira to the greatest extent, we can but that's the part that we as a team are focusing on and I think that's the most important part because that is the abbvie going forward.

Thanks, Chris.

Thanks, Taryn operator, let's take the next question please.

Operator, next question, please.

And thank you.

Thank you our next question is.

Our next question is from Steve Scala, Collin.

Bonnie <unk> with Wells Fargo.

Your line's open.

Great. Thanks for taking my question.

Thank you very much.

Maybe dwelling little bit more on the on the on the Humira question for Rick and Jeff.

Two questions.

So you said that pricing from the competition would be key are known for next year. So as you get into contracts. This year for the next year, how rigid or flexible. These contracts are from the pricing point of view by the Pbms realize that the biosimilar is giving an X or y pricing.

First, Rick, in the past, you have laid out four factors that will dictate Humira's trajectory, in 2023. The first two were Humira access and biosimilar price, and it's clear it's too early for any, news on either of those points.

But the second two were competitiveness of biosimilars, which you said in part was interchangeability, and also the biosimilar ability to supply the market.

So those two factors, three and four, are things that won't fluctuate, and presumably, you have some visibility on that now.

That would be a more of a <unk> 2040 shoot out that 2020. Thank you.

So I'm just wondering if there's anything unusual occurring there, and in discussions, how important is interchangeability with payers?

Well.

Let me take a shot at it then.

Certainly Jeff is key.

Closer to it so Jeff do you want to add anything feel free to jump in.

Typically when a new contract for an asset like Humira, you're contracting for a formulary position.

And.

And there are <unk>.

Volume requirements.

Or other kinds of requirements I think it's also.

It would be prudent to assume that biosimilars will be on these contracts.

And.

Whether it's one or more than one that will coexist with humira.

So price plays an important role in that because they will coexist and so.

<unk>.

So I would say and as that becomes fluid you would have to make decisions around how you tried to deal with that.

To maintain the kinds of volumes that you want to maintain and we've said all along the strategy that will have in the U S and similar to the strategy that we had internationally and that is maintain as much volume as we can at the highest level of profit that we can maintain it at that.

Is the logic that we will we will employ but that doesn't mean, we won't have to be somewhat responsive to prices in the marketplace.

On Humira.

Jeff anything you'd add.

I think that's that's Rick that's a very.

Very reasonable way to look at it in terms of how these negotiations are going and how we see 23 playing out.

The real big ones in terms of how we look at it is the two big the two big scenarios our U R.

Likely coexisting with one or more biosimilars or if the negotiations don't go the way that we anticipate that were excluded in favor of Biosimilars, and Thats, basically where price and volume.

In terms of refining our model for 'twenty three that's the work that we're doing over the summer and then into the fall.

Helpful. Thank you thank.

Thank you.

The second question is, and I apologize if I missed it, but are there any updates on, the TNF steroid conjugate, and is Phase II RA data still expected this year?

Operator next question please.

Thank you.

Thank you. Our next question is Gary Nachman with BMO capital markets.

Hi, Thanks. Good morning, So <unk> was very strong in the second quarter and you raised guidance nicely how much of a benefit are you getting from the psoriatic arthritis indication, thus far and what are you expecting crohn's to contribute this year.

Are those playing into the raised guidance and are you revisiting the long term guidance on <unk> at this point given the strong performance.

And then just on the Hema franchise.

Are you keeping the infrastructure intact preparing for new products to contribute and maybe you could talk about the near term opportunities you see for products like at <unk>, how much of those could contribute.

Potentially offset some of the pressure that you've been seeing from <unk>.

All right.

Yes. Thank you it's Geoff thanks for the question so.

Your instinct and observation is right the big the big dynamic change for Sky risky here largely what you're seeing is from the psoriatic arthritis indication.

Obviously, you saw very very large sequential moves and let me give you some sense of what we're looking at so we're seeing that we're putting more and more based.

Thanks, Steve.

Basically headroom into the overall share position first and Psoriatic disease, So thats psoriasis plus Psa.

We're at 26% in terms of total Trs share and moving very very nicely up.

So that's being driven by this PSA acceleration. So first remember that the PSA indication we were the really the last large product that didn't have that indication. So first what happens is it starts to interact very positively in the dermatology segment. So as I mentioned about 30% of patients.

Both have skin and joint involvement and so we actually had a lower despite the fact that we are the leading suraj to share we had a lower <unk> share because we werent covered with the joints with that indication. So you see an immediate very rapid acceleration of our overall derm business that I highlighted.

Lee strategically important to the performance is that we're able to launch the PSA indication for <unk> in rheumatology. So it starts to work together with the RIN vote, PSA indication and the room segment is three times as large as the derm segment. So it's a very very good dynamic in terms of.

Our momentum in two large segments, even before we get to Crohn's.

This is Rick.

I would say that as we've talked about before I mean, <unk> is a very special product very unique dosing very stable incredible efficacy.

I'll cover the first one, and Rupo can cover the second one.

So we are encouraged on the early results of Crohn's, it's too early to start to see numbers are et cetera.

But all of that is playing into.

The raise that Rob talked about and Gary This is Rob.

So you are correct.

That is what I described a meeting or two ago as the four variables.

I would say when you think about interchangeability, I think you have to think about it in the, backdrop of not just interchangeability, but also what is the profile that is the closest to Shumera today.

On the guidance. So if you recall earlier in the year. We got asked the question I said PSA for Sky was going to country about $200 million. This year, its probably closer to $400 million now with the guidance range given the very nice uptick we've seen in PSA, but part of that guidance raise is also the strong share performance in psoriasis. So it includes.

And we can look at all the biosimilars and have a, you know, we have pretty good visibility, as to what that profile looks like.

And what I would say is to get a profile that is interchangeable and is consistent with, the current Shumera that's predominantly in the marketplace today.

That's probably going to occur in the summer of 2023.

There should be one or two biosimilars that have a profile that looks like that.

And that would make it somewhat easier for an organization to make a switch.

So I think that will play an important variable.

Both in terms of Crohn's that Hasnt change, we've set approximately 100 million this year as we ramp.

Nothing has changed in the last few months in what that profile looks like.

And then obviously supply is an important aspect that certainly anyone that we're looking, at making a significant change in their position with Qumera, is going to make sure that they're going with a company that has the ability to be able to produce at volume, at significant volumes, Qumera, and they can do it sustainably.

Rupal?

So there are certain players that I would say clearly have that ability to be able to, do it similar to us.

Or anywhere close to the scale of us.

But there are also a lot of small players that I think supply is going to be an important, aspect and going to somewhat limit the ability to be able to have broad market impact.

And so those are going to be important dynamics as we negotiate with the various managed care, organizations.

Access for Crohn's, but obviously the long term potential for it is tremendous and we're very excited about that.

I can tell you that we're talking through those kinds of things with them.

Yeah, thanks.

Yeah, so 154 is our anti-TNF conjugated steroid, as you mentioned, and it's enabled to target, delivery steroid directly to the inflammatory cells.

So we do have that phase two running several hundred patients, and we still anticipate, getting a read later this year, and then further data to follow next year.

Thank you.

And maybe I can also then chime in on the second question.

Certainly that is a.

The new assets are very important part of our growth story for for Haemonchus, certainly as I mentioned, we're still continuing to ramp around the world with CLO, we have more and more impressive data, particularly in the unfit frontline population. We have five years of data in the fit population for frontline for <unk>.

We're encouraged with the myeloma data, which is very unique in terms of a biomarker driven approach for the $11 14, <unk> would be really one of the first new entrants for myelofibrosis, where theres really only been rocks in terms of that market.

<unk> Mab increasingly encouraging data in terms of the simple sub Q very rapid ways to get this medication in later lines and then building into frontline. So we are very very encouraged while we see some pressure on <unk>, the new indications and base for bank <unk> helps to offset that and then we start to be.

<unk> with those near term heme assets and.

Super encouraged in terms of what we're seeing in terms of the probability that we can get there.

Thanks, Steve.

Thanks, Gary Operator next question please.

Thank you. Our next question is from Chris Schott Jpmorgan.

Operator, next question, please.

Great. Thanks, so much for the questions.

First one I just wanted to come back to dynamics on the U S. Dermal filler market I guess, specifically can you just quantify how much of the weakness we saw this or the decline year over year was due to the promotion events last year versus the impact from the economic pressures that youre seeing.

Thank you.

And I guess in that same context are you seeing any signs of weakness in the European business.

I was trying to get hands around what type of magnitude of impact you are talking about here in terms of either if it's inflation or economic sensitivity to that business.

My second question was just thinking about <unk> and Sky, Rajiv formulary and pricing dynamics going forward is biosimilar humira interest the market I guess, you expecting or hearing through discussions any major shifts in the way payers are thinking about those products, how should we think about pricing coming down and obviously the largest kind of product.

Our next question is Chris Raymond, Piper Sadler.

Your line's open.

And the space there. Thanks, so much.

Hi, This is Gary I'll take your first question around <unk>.

And as Rick said, there was any one time promotional event that we ran in the U S for Jupiter in Q2 of last year and it was highly successful.

Yes.

Increased sales in the sale.

Which created the challenging prior year comparison.

So that was the key driver, but as you noted there is also there.

Economic impact that is suggestive some early changes in consumer behavior and that really isn't surprising in light of the inflationary pressures that we're seeing on discretionary income and as Rick said.

The filler market is slightly more sensitive to that and toxins for a period.

The price point.

Price point of closer to $1000 versus $500 for toxin also the nature of the seller business is different than Thomson from that patient dynamic and treatment dynamic in that.

There are more there is a longer interval between treatments for hilarious versus toxin, which is sort of like a more regular treatment paradigm a few times a year.

Also the patient thesis are different when you think about the top 10 patient base and botox cosmetic the majority of the patient base is continuing patients versus more of a reliance on new patient acquisition.

And so those are some of the factors we're thinking about when we think about the deceleration of the solar market in Q2.

Now the.

Market has slowed and despite the performance in Q2, we do continue to expect a positive second half growth.

Sure you asked Juvederm really weighted more in the fourth quarter as we're going to launch two new fillers in the fourth quarter and the two new fillers will get us into incremental categories for AJ sellers, including jaw line and skin quality, which will help to drive some incremental demand at the end of the year.

And in terms of your question around economic impact outside of the U S.

We are watching that very closely and we really have not seen that yet outside of Atlanta.

Thanks, guys.

In terms of your second question again, it's Jeff Thanks for that.

Yeah, two questions.

We're we don't see some significant pressures on Sky <unk> and RIN book now we always have.

Maybe one that's more broad policy, and then another one that's maybe a little bit more, detailed.

Discussions with the payers, we look at our contracting strategy, but I think we fall back on our clinical evidence that we have on these two major assets. I mean, we have we have four head to head trials against other major competitors with with Sky <unk>, where we have just really grow superiority versus whether it's an IL 17.

So maybe first for Rick.

Whether it's <unk>.

Humira, which one day will be Biosimilar still.

Laura et cetera, So just the pure performance there and the momentum it's clearly a distinguished asset we're going to be first in terms of crohn's to start to establish that new area and build it and build the build the market there and I think on RIN book to some degree there is only one other JAK inhibitor that is not going to have the scope of indications.

I know you guys keep pretty close tabs on health care policy.

It's sell Champs and Xeljanz has been.

Significantly wounded based on the oral surveillance data so in terms of our ability to build and protect and grow sky resumed <unk> into.

Into the next stage of development, we're quite confident that we have the assets to be able to do that.

Thanks, Chris Operator next question. Please and thank you. Our next question is from Steve Scala Cowen Your line is open.

Thank you very much two questions first Rick in the past you have laid out four factors that will dictate humira trajectory in 2023.

First to where humira access and Biosimilar price and its clear it's too early for any news on either of those points, but the second two where competitiveness Biosimilars, which you said in part was interchange ability and also the biosimilar of ability to supply the market. So those two <unk>.

<unk> three and four are things that won't fluctuate and presumably you have some visibility on that now so I'm just wondering if theres anything unusual occurring there and in.

Discussions how important is interchange ability with Payors and the second question is and I apologize if I missed it but are there any updates on the TNF steroid conjugate.

And as phase two <unk> data still expected this year. Thank you.

Alright. Thanks.

Thanks, Steve This is Rick I'll cover the first one.

And.

Grupo can cover the second one.

So you are correct that is what I described a meeting or two ago.

For variables.

I would say.

When you think about interchange ability I think you have to think about it in the backdrop of not just interchange ability, but also what is the profile that is the closes to humira today.

And we can look at all the Biosimilars and have we had.

Pretty good visibility as to what that profile looks like and what I would say is to get a profile that is interchangeable and is consistent with.

With.

Humira that's predominantly in the marketplace today, that's probably going to occur in the summer of 2023, and it should be one or two biosimilars that have a profile that looks like that and that would make it somewhat easier.

For an organization to make a switch.

So I think that will play an important variable and nothing has changed in the last few months.

What that profile looks like and then obviously supply is.

As an important aspect that certainly anyone that we're looking at making a significant change in their position with humira.

He's going to want to make sure that theyre going with a company that has the ability to be able to produce at volume at significant volumes.

Humira and they can do it sustained.

Sustainably.

So.

There are certain players that I would say.

Clearly have that ability to be able to do it similar to US certainly no one does it the scale of us.

Or anywhere close to the scale of us.

But there are also a lot of small players that I think supply is going to be an important aspect and going to somewhat limit the ability to be able to have broad market impacts and.

So those are going to be important dynamics as we negotiate with the various managed care organizations I can I can tell you that we're talking through those kinds of things.

Yes. Thanks.

Yes, So 154 is our anti TNF conjugated steroid as you mentioned.

<unk> enabled.

To target deliveries steroid directly to the inflammatory cells.

We do have that phase II running several hundred patients bill.

Still anticipate getting completed.

Later this year then further data to follow next year.

Thank you.

Thanks, Steve Operator next question please.

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

Okay. Thanks, guys.

Yes, two questions maybe one.

More broad policy and then another one that's maybe a little bit more detailed so maybe first for Rick I know you guys keep pretty close tabs on healthcare policy.

Just on the most recent Senate Democrat drug pricing language in the reconciliation bill, the provisions on the face of it seem pretty manageable in terms of direct impact from pricing controls, but there's been some concern around this being just the start of something larger in terms of price controls.

Just on the most recent Senate Democrat.

Drug pricing language in the REIT conciliation Phil.

The provisions on the face of it seemed pretty manageable in terms of direct impact.

From a pricing controls, but there's been some concern around this being just the start of something larger in terms of price controls.

Any thoughts from you guys on this would be appreciated.

Any thoughts from you guys on this would be appreciated.

And then maybe a more detailed question on ABVD951.

And then maybe a more detailed question on ABVD 95, one I know you guys haven't provided specific guidance on this around do a dopa, but there seems to be a lot of recognition.

I know you guys haven't provided specific guidance on this or on Duodopa, but there, seems to be a lot of recognition of 951 among movement disorder KOLs as a real improvement in terms of overcoming reticence around Duodopa.

951, among movement disorder Kols.

A real improvement in terms of an.

Overcoming reticence around do a dopa, just how should we be thinking about $95, one vis vis to adobe.

Just how should we be thinking about 951 vis-a-vis Duodopa if approved?

If approved.

Thanks.

Okay.

Okay.

So I'll take the first question.

So I'll take the first question I mean, I think if you look at the.

I mean, I think if you look at the drug pricing proposal that's out there, it's certainly, an important issue for us, and I think it's an important issue for patients.

Drug pricing proposal that's out there.

It's certainly an important issue for us and I think.

It's an important issue for patients.

I think if I look at that bill, I'm assuming that if there were something that were to, pass, it would be somewhat consistent with what was in Build Back Better or the Senate finance text.

If I look at that Bill and I am assuming that if there were something that were to pass it would be somewhat consistent with what was in build back better or the Senate finance tax and so far it looks like that but obviously evolving a bit here as we go along.

And so far, it looks like that, but it's obviously evolving a bit here as we go along.

And if I look at it in total, what I'd say is there's a couple of positive things in, there. Certainly, most notably, the $2,000 cap on out-of-pocket costs for patients and the ability, to be able to smooth.

And if I look at it in total what I'd say is there's a couple of positive things in there.

Certainly most notably the 2000 dollar cap out of pocket costs for patients and the ability to be able to smooth I think that's an important step.

I think that's an important step.

Increasing affordability, especially for patients in Medicare Part D. And so that's something we've, been supportive of.

Producing affordability, especially for patients in Medicare part D and so that's something we've been supported above we've been vocal that we think that's an important step forward.

We've been vocal that we think that's an important step forward.

But I'd say on balance, this is a bill that has far more negatives than it has positives.

I'd say on balance this is a bill that has far more negatives that hedge part.

And I think, frankly, although it may not be short term, that challenging from a financial, standpoint, I think the long term implications of this bill are pretty significant.

And I think frankly, although it may not be short term.

That challenging from a financial standpoint, I think the long term implications of this bill are pretty significant and they really are.

And they really hinge around this so-called negotiation clause that's in there and how that's being implemented, particularly for small molecules. And if you're familiar with it, essentially what it says is that CMS, or we're assuming it will be CMS, has the ability at a certain point in time to be able to negotiate a price on a set of drugs.

And around the so called negotiation.

That's in there and how that's being implemented particularly for small molecules.

And if you're familiar with it essentially what it says is that CMS over assuming the CMS has the ability at a certain point in time.

And by the time you get there, it will be a big set of drugs that they'll have the ability to be able to negotiate on.

We're able to negotiate.

Price on.

On a set of drugs and by the time you get there it will be a big set of drugs.

They'll have the ability to be able to negotiate on.

And the key issue is this.

And the key issue is this.

Essentially they have full latitude to basically decide whatever price they want the drug debate.

Essentially, they have full latitude to basically decide whatever, price they want the drug to be.

And I wouldn't necessarily call it a negotiation because the only alternative that the manufacturer has to accept a 95% penalty on their revenues.

And I wouldn't necessarily call it a negotiation, because the only alternative that the manufacturer has is to accept a 95% penalty on their revenues, or in essence, take a 95% discount.

So it's not negotiation.

In essence take a 95% discount so is that is that negotiation, we should just call. It what it is.

We should just call it what it is.

It's price controls is what they're basically putting in place, if the language stays the same.

Price controls is what they are basically put in place if the language stays the same.

And ultimately, I think the real challenge is how we invest in this as an industry in innovation.

And ultimately I think the real challenge is how we invest in this and as an industry and innovation.

If you take small molecules as an example, I'll walk you through an example that illustrates, the point I'm going to raise here.

It is a small molecule and as an example, I'll walk you through an example that illustrates the point I'm gonna raise here if you take a small molecule. It says at year nine after the first approval CMS has the right to be able to negotiate the price on that drug.

If you take a small molecule, it says at year nine after the first approval, CMS has the right to be able to negotiate the price on that drug.

So if you take an oncology drug as an example, how do we develop oncology drugs in this industry?

So if you take it oncology drug as an example, how do we develop oncology drugs in this industry and where the regulatory authorities typically require us to do to be able to develop oncology drug well. They typically require you to do and what we typically do as we go into patients who have failed on all of the existing therapies fourth line patients fifth line patients.

And what do the regulatory authorities typically require us to do to be able to develop an oncology drug?

Well, they typically require you to do, and what we typically do is we go into patients who have failed on all the existing therapies, fourth-line patients, fifth-line patients, and we take whatever drug we have, and we determine do we have a positive benefit risk in that patient population.

And we take whatever drug we have and we determine do we have a positive benefit risk in that patient population. If we find that we do then seek approval for that drug in that patient population. So that those patients will get the benefit of that drug and then we start to work our way up towards front line.

If we find that we do, then we seek approval for that drug in that patient population, so that those patients will get the benefit of that drug.

And then we start to work our way up towards front lines.

Those refractory patients are typically very small populations of patients, right?

Those refractory patients are typically very small populations of patients right and you could never get a return on a drug just on that patient population.

And you can never get a return on a drug just on that patient population. And then you work your way up to front line or second line or wherever you end up.

That process, typically takes seven to nine years because of the length of the trials.

And then you work your way up to frontline.

Our second line, but wherever you end up at tip that process typically takes seven to nine years because of the length of the trials.

So essentially with this, by the time you got to the larger populations, you'd be within a year or two of when CMS could change the price.

Essentially with this by the time, we got to the larger populations you'd be within a year or two of when CMS to change the price, but one it's impossible to figure out what the return is going to be so how do you invest too it really puts negative pressure on you not to continue to develop new indications.

But one, it's impossible to figure out what the return's going to be, so how do you invest?

Two, it really puts negative pressure on you not to continue to develop new indications.

But the most detrimental part of it is to patients who need these drugs, że Myrie has online TJ Caterpillar.

But the most detrimental part of it is to patients who need these drugs.

Transmission of radio is in compliance with the verification requirements for Snapchat's communications.

For small indications or in later stage because you are faced with the dilemma and this is a horrible dilemma right as a company and for patients essentially the dilemma do I choose not to seek approval in those late stage patients. So I don't start the clock and wait until closer to frontline before I start the clock.

Thank you very much, everybody, for listening to us.

We have NHS 2021 news time from January 27th this year, with Sunny Todolaro sending live, RFAs to nurses in Ocapuco.

Prabena, flick of the SNAP can you just start the timer?

That is not the right policy.

I think the real question is, does the government have the right policy?

I would say, on balance, this bill will have a couple of things that are good for patients, and I'm fully supportive of, but unless Congress wants to harm patients and harm innovation in this industry, they need to change that part of it.

I would say.

On balance.

This bill will have a couple of things that are good for patients and I'm fully supportive of.

Unless congress wants to harm patients.

Harm innovation in this industry they need to change that part of it it doesn't make sense, it's short sighted.

It doesn't make sense, it's short-sighted.

Now they can change it in a couple of different ways.

They can change in a couple of different ways. They can determine what is a floor price for a maximum discount by year and then you can calculate the return on investment that youre going to have on the drug.

They can determine, okay, what is a floor price, or a maximum discount by year, and, then you can calculate the return on investment that you're going to have on the drug, or they can at least make it consistent with biologics throughout 13 years.

<unk>.

<unk> make it consistent with biologics throughout 13 years, otherwise the investment in small molecule oncology drugs.

Otherwise, the investment in small molecule oncology drugs or neuroscience drugs, which, Medicare patient populations are highly dependent on new innovative drugs in those areas because they're elderly patients, are going to suffer.

Science drugs, which Medicare patient populations are highly dependent upon new innovative drugs in those areas because they are elderly patients are going to suffer and the CBO report that was published back in April of last year, clearly pointed that out. So this isn't something I'm, just saying our industries to say and in fact if anything.

And the CBO report that was published back in April of last year clearly pointed that, out.

So this isn't something I'm just saying, or industry is just saying, and in fact, if anything, I'd say they probably under-call the magnitude of the impact.

I'd say, they probably under call the magnitude of the impact. So this is an important issue.

So this is an important issue.

We all know that affordability and access for Medicare patients is important, but you, don't need to destroy the innovation model in the process in order to provide that.

We all know that affordability and access for Medicare patients is important.

Don't need to destroy the innovation model in our process.

In order to provide that and so.

And so I'm hopeful that we'll see some movement here and some rationality will play out.

I'm hopeful that we'll see some movement here and some rationality will play out.

Okay.

Okay and to address your 95, one hi, it's Jeff Thanks for thanks for the question so.

And to address your 951, hi, it's Jeff.

Thanks for the question.

So I think some perspective is, you know, globally, Duope is about a half a billion, dollar brand, and certainly we've said that we believe that 951 could certainly double that up or more. I'll give you the perspective of why we think that way.

So I think some perspective is globally due up as about a half a billion dollars.

Brand and certainly we've said that we believe that $95, one could certainly double that up or more I'll give you. The perspective of why we think that way. So if you look at the advanced Parkinson's patients.

So if you look at the advanced Parkinson's patients, about 85 percent sort of cycle and, they stay on these generic orals that become less and less and less effective.

About 85% sort of cycle when they stay on these generic oral has that become less and less and less effective and the only thing. They can really do and that's about 15% of the market. The advanced Parkinson market is they can move to.

And the only thing they can really do, and that's about 15 percent of the market, the, advanced Parkinson's market, is they can move to either deep brain stimulation or Duopa, but you've got to go through a surgical barrier.

<unk>, either deep brain stimulation or duopoly, but you've got to go through a surgical barrier. So the families and the patients are forced to think if if if I need to get improvement in my symptoms and my quality of life I'm forced to basically think about do I get a hole in my head or a hole in my stomach with a gastric surgery. This is going to be a sub Q.

So the families and the patients are forced to think, if I need to get improvement in, my symptoms and my quality of life, I'm forced to basically think about, do I get a hole in my head or a hole in my stomach with a gastric surgery?

This is going to be a sub-Q.

And so we see in our market research that at least 40% to 60% of people never want to move towards DBS or <unk>. So we think this is a way where we can start to expand and create a new market segment in essence, a subcutaneous segment, where you don't have to take that risk on the surgery.

And so we see in our market research that at least 40 to, 60 percent of people never want to move towards DBS or Duopa.

So we think this is a way where we can start to expand and create a new market segment, in essence, a subcutaneous segment, where you don't have to take that risk on the surgery.

And like you mentioned, in the movement disorder centers, there's a significant amount of experts, that are excited about this new option, and we believe that it's going to be a real innovation for patients.

Like you've mentioned in the movement disorder centers, there's a significant amount of experts that are excited about this new option and we believe that it's going to be a real innovation for patients.

Chris, this is Rob.

Without having the surgery so.

And Chris This is Rob as Jeff said, I mean, we expect it to be market expanding at the Jpmorgan Conference earlier. This year, we did give peak revenue guidance from 95, one greater than $1 billion, obviously to us.

<unk> 5 billion now.

Our modeling and obviously there'll be some level of cannibalization I say minor level of cannibalization undo adult, but but when you think about the combination between nine five people and do a deal, but obviously it is going to grow the revenue for the company and expand the market.

As Jeff said, I mean, we expect this to be market-expanding.

At the, J.P. Morgan conference earlier this year, we did give peak revenue guidance for 951 greater than a billion dollars.

Thanks, Chris Operator next question please.

Obviously, Duopa is half a billion now.

Tim Anderson with Wolfe research.

Hi.

Can you just go back to the whole 23 versus 24 things.

I thought that in the past you guys have.

Earnings would trough in 2023, and then returned to growth in 2024.

Is that still the case or is that off the table.

And then second question goes back to the one 504 compound your antibody drug conjugate.

We understand that the timing is still on track, but it feels like to me, there's a distinct lack of enthusiasm towards this program.

I think I mentioned that much or at all really fight us novelty.

Part of being in your most critical franchises immunology. So it hasnt been enthusiastic waned over let's say the last couple of years.

If you're modeling it, obviously, there'll be some level of cannibalization, I'd say minor level of cannibalization on Duodopa.

So Tim this is Rob on your first question, what we've said we've talked about this 45%.

But when you think about the combination between 951 and Duodopa, obviously, it's going to grow the revenue for the company and expand the market.

Thanks, Chris.

So with a range around that plus or minus 10% and using the obviously the Europe analog as an example in that case with the steep erosion year. One in 'twenty. Three you would expect then the trough to be in 'twenty three returned to growth in 'twenty four.

As this plays out we'll see how that shakes that shakes out ultimately if more of that happens in 'twenty. Four you obviously have another year of growth for all your growth brands and so.

A different floor in that scenario, but most importantly, it's what happens in 'twenty five and beyond when you look at this company with the growth drivers, we have we'll be delivering high single digit growth in 'twenty, five and beyond which is industry, leading we will have the lowest low exposure in the industry in the second half of this decade, and so we're focused on the long term and we feel very good.

The prospects for this business, but as it stands now the most recent direction. We've given is expect that first year.

Erosion, so that 45% plus or minus 10%, which then play out a return to growth in 'twenty four we'll obviously update the market as we see it play out next year.

Yeah.

Well, maybe I'll take this one.

As Tom Hudson, IMAX clinical immunologist, and I know, how we've been using steroids. They can give very profound and deep immuno suppression decreased inflammation and that's often used in severe cases when patients shows up so we know that that the.

The response is very strong, but there was a lot of side effects.

As always leaning the steroids out in the clinic.

So here again, the combination of immuno modulator like TNF and.

And as steroids that potential of giving us a deep deep response to very quickly to reboot.

A question and based on the data we've seen pre clinically in our phase one studies were not seeing those biomarkers of side effects and the bone of brain of cortisol or others. So we've already demonstrated that we had a nice data.

So thats my enthusiasm, we expect to see deep responses durable responses without much better tolerated than steroids.

Our program and we've shown this also is that we've actually believe in the platform and we're developing steroid ADC for other targets to target other immune systems.

Immune cells more specifically around some T cells or some details or some fiberglass. These programs are coming forward. We think this is a profound platform in immunology to go after a different biology in very targeted stewards suppression of different specific immune cell types and that's going to play.

<unk> out over the next couple of years. So based on the data we saw we expand the platform to other biomarkers.

Getting into other specific immune cell types.

If we're quiet because we need to see the data all of that study has been.

Fully recruited.

She moved faster than we expected and the data was randomized we just going to see the data in the fall because it's a blinded study, but the enthusiasm is there and we are.

Also of course seeing that data and then we have <unk> because we also started.

Operator, next question, please.

But is there an cause disease, we will see that data later, but the more data we have the more likely we're going to expand this program to other indications, where we believe that.

There was some pressure with TNF.

She brings new solutions for patients.

Thank you.

Thanks, Tim Operator next question please.

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

Thank you.

Great. Thank you so much for the question.

It's Tim Anderson with Wharf Research.

Not to belabor the point on comparable but I wanted to ask you is the long term.

Hi.

Meaning the four year kind of trend that we saw this quarter for Humira in Europe , but that's still a good proxy for how you guys are thinking about the tail for humira.

If I could just go back to the whole 23 versus 24 thing.

Just given we're coming up on four years in Europe , and we're talking about high single digit erosion still so I wanted to kind of ask you about the.

Tell piece of what you expect in the U S SEC.

Question.

Just on Rainbow I wanted to ask also on the since the FDA.

Labeling change yet you've just seen any any changes with regard to <unk>.

Persistent rates or.

Or new starts just on your feedback from the field and how doctors view the safety of the JAK class. Thank you.

I thought that in the past, you, guys have said earnings would drop in 2023 and then return to growth in 2024.

So Jeff this is Rob I'll take your first question. So the way we've talked about Humira erosion related to play out in Europe , as we saw that steep erosion year, one more moderate erosion years beyond.

Is that still the case or is that off the table?

And our modeling now thats, probably the best way to think about it as steep erosion year, one more moderate youll have an annual <unk> impact in year, two but more moderate beyond that and specifically within the wave one countries. When you look at Europe .

The level of revenue we have this year relative to pre low we saw about 30% of the revenue footprint. So it gives you a sense of where Europe is after four years, obviously as we model the us out and it will be more specific in the future, but right now we're using Europe as an analog.

And regarding <unk> in terms of <unk>.

Perceptions from the field or what we're seeing it's largely developing as we as we predicted so we do see segments of physicians that are more.

Wary of the jacks after after the label change. However, we anticipated that so we are starting to see.

A recovery in second line plus in <unk>, as we anticipated and the new indications because really will be the only JAK inhibitor with the four big indications of PSA.

And then non radiographic ultimately in the fall that just builds upon the confidence level of the physician. So that's what we're feeling from the from the field I'll mention maybe some color on ulcerative colitis I mentioned that we're encouraged on the ulcerative colitis start so we saw in the quarter because we launched in early April .

We saw 600 unique gastroenterologists start to write prescriptions, which is quite interesting and good at positive and about half of those customers had never written a JAK inhibitor. So xeljanz was approved and so we're seeing obviously.

The ability of these customers to understand the overall risk benefit of <unk> relative to let's say another JAK inhibitor. So I feel that our communication is on track and we're seeing positive feedback as we build the indications that we've highlighted in the call.

And then second question goes back to the 154 compound, your antibody drug conjugate.

Thanks, Geoff Operator next question. Please thank.

Thank you our next question Colin Bristow with UBS. Your line is open.

We understand that the timing is still on track, but it feels like to me there's a distinct lack of enthusiasm towards this program.

Hey, good morning, and thanks for taking the questions.

You don't seem to mention it much or at all, really, despite its novelty and despite it being in your most critical franchise of immunology.

Another one on the 'twenty three Humira guidance could you just walk us through.

At the point at the end of <unk>, what percentage of contracts, where volume will you have confirmed that point.

And then it sounds like the bi.

Bye bye.

By the time you have the full year results.

And anticipating that that could be a meaningful change could you just confirm that.

Characterization and then.

Be well.

Sure.

What are you hoping to see what the phase two data that we'll get there.

Yes.

What's the threshold you need to support to move forward.

Yes, so if we look at the.

The discussions that we've highlighted and Rick highlighted I think they're progressing as we would expect so typically they start in the late spring and look these are complex negotiations that go on for many many months.

In many years, we would have completed the at least the large pbms negotiations, which is the vast majority of the volume.

That October timeframe in some cases as you probably know the payers would publish this information.

But very often not always the immunology and.

In inflammatory <unk>.

Segment those those negotiations can go on longer.

And they are very often published as a TBD and what used to be called the exclusionary formulary. So we would as Rick mentioned, we would have visibility to sort of the status on the volume in that October timeframe that that's a reasonable assumption again.

Don't know for sure given the complexity of <unk>.

<unk> similar negotiation, which is never taken place before.

But that's a reasonable way to think about when we would start to have the visibility to the volume component as Rick highlighted.

And its ruble on the $105 four question.

Dovetailing on what Tom just walked through.

Things that we wanted to see are consistent with.

How we developed in immunology.

Certainly raising the standard of care.

So the way. This was designed was to have that anti TNF and then that direct delivery.

To avoid systemic side effects of steroids that you would see sort of that one two punch of.

Tom was describing.

That depth of response.

So once we see that type of information along with.

How it looks from a steroid standpoint metabolic effects bone effects taken together will give us a great sense of where it could fit.

Before anti TNF.

Even after we're studying patients that have failed anti TNF in this phase II study.

So taken together that will give us a really good sense of where to go and then remember we're also going to get data and partly my algebra medica.

It's not an uncommon disease and these patients are many of them are steroid dependent 50% or so.

Three years and going and they can withdraw from steroids and maybe a third MB five plus six years. They are stuck on steroid, but we'll see that data, where we're able to prevent them from flaring and to be able to reduce their.

Systemic steroid dose so there's multiple facets to this and potentially a number of opportunities and then later on in Crohn's disease as well.

Thanks, Colin Operator next question please.

So has the enthusiasm waned over, let's say, the last couple of years?

Thank you. Our next question is from Chris Shiva Nanny.

With Goldman Sachs.

So, Tim, this is Rob.

Thank you good morning, two questions if I could for Sky recently.

If I could just return to the question is how you are thinking about the long term guidance.

Carey can recalling that you said seven 5 billion consisting of about six from the <unk> complex.

And yet youre almost already approaching something close to $5 billion or can you tell us how youre thinking about how that could factor in any long term thinking and then for <unk> positioning of that treatment in the overall treatment paradigm how.

Are you thinking about that in relation to the car.

Car T therapy treatment options before.

Thank you.

So Chris this is Rob I'll take that question. So look we're very encouraged by carriers as continued strong performance, we remain confident our ability to achieve or exceed that 20 2025 guidance now keep in mind I mean, the street also reflect that to the street is about 400 million higher than the $7 5 billion that said, we don't intend on frequently updating that guidance, obviously, we'll we'll provide that.

Guidance update every few years or if there is an event or if theres a major disconnect. So obviously, if the street was way off.

We wanted we wanted to point that out but overall, we're very encouraged about the uptake for sky results clearly demonstrating its ability to drive long term growth for Abbvie and will provide an update long term guidance at the appropriate time.

Thanks Leland.

On the upgrade amount question, so I'm not going to go through all of the data points again, we've described several times.

I would like to make.

What I would remind you of is that you know.

Observe extremely robust efficacy in a heavily pretreated population, it's true to say that 40% of those patients had failed car T, but 60% of those patients didn't silicon.

Therefore.

Our expectation or intension, rather and as we mentioned earlier on in Tom's prepared remarks.

We are anticipating filing for accelerated approval.

During the second half of this year.

And I think that what you can expect is that we believe that the total the total population.

Total relapsed refractory population, whether or not the sale of car Ts should have access to adequate amount because of the strength of the data overall in terms of future positioning. We've also discussed in the past our intention of initiating multiple phase additional phase III confirmatory study for the DLP Seattle applications, what would be the confirm.

We study the phase III studies ongoing that's in the relapsed refractory setting and our anticipation is that we will initiate multiple additional phase III, both in <unk> and other indications over the coming 12 to 18 month may.

Maybe I could just build on that Chris It's Jeff So we've started to.

Talk to.

Different types of physicians, whether they're in the car T centers or certainly the community centers, where increasingly believing that.

This lymphoma is treated in the community centers and so what we here at least at a high level from a research. So far is while that efficacy is incredibly impressive even after car T, but where they go is this simple sub Q of <unk>, maybe the fastest way to deliver T cells to my patients some day.

So to build on Neal's point.

That data doesn't look like it's niches the drug in fact, it looks like it's sort of contributing to the idea of like this is a democratized type of medication for the lymphoma. So it's very encouraging from.

From our initial work that we're doing with physicians.

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

And that question comes from David Risinger with.

SBB Securities.

Yes, thanks, very much and thanks for all the details today.

Todays call Rick I was hoping that you could.

Help us to understand the current M&A landscape, how would you characterize it broadly and then if.

If you could also comment more specifically on Abbvie.

With respect to the transaction opportunity set.

For Abbvie, thanks very much.

I think if you look at the M&A environment.

I think many players are.

Or trying to add to their portfolios.

Yeah.

I think there's less of an appetite for larger transactions right now in.

In general across the industry.

Some of Thats, probably predicated on the fact that the FTC has been pretty tough in their language around larger transactions and your ability to be able to get those through.

And.

I think as it relates to us I mean, we are continuing to execute the strategy that we.

We put in place after the Allergan transaction Allergan, obviously brought us a tremendous amount of diversity.

That transaction has been highly successful and has really changed.

The look and the shape of Abbvie and has clearly enhanced our performance.

Quite well our focus is.

Continuing to look for opportunities to be able to fill out our portfolio in areas that we believe there are opportunities to bring in strategic assets.

We're probably working more on earlier stage assets add to our R&D pipeline.

<unk> is a good example of the types of things that were out looking for and finding.

To supplement the overall pipeline and I think that strategy has worked well and it's a strategy that will continue to do.

Forward.

Thank you.

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

And thank you. This does conclude the call you may disconnect your lines and thank you for your participation.

[music].

[music].

On your first question, what we've said, we've talked about this 45% with a, range around that, plus or minus 10%.

Good morning, and thank you for standing by welcome to the Abbvie second quarter 2022 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'd now like to introduce.

And using, obviously, the Europe analog as an example.

Miss Liz Shea Vice President head of Investor Relations.

Good morning, and thank you for joining us.

Also on the call with me today are Rick Gonzalez Chairman of the Board and Chief Executive Officer, Rob, Michael Vice Chairman and President, Jeff Stuart Executive Vice President Chief Commercial Officer, and Tom Hudson Senior Vice President R&D and Chief Scientific Officer.

Joining us for the Q&A portion of the call are Laura Schumacher, Vice Chairman external Affairs, Chief Legal officer, and corporate Secretary, Carrie Strom Senior Vice President and President of Global Allergan aesthetics Scott.

Scott runs senior Vice President and Chief Financial Officer, Neil Gallagher, Vice President development, and Chief Medical Officer, and ruble Soccer, Vice President Global regulatory Affairs.

Before we get started I will note that some statements. We make today may be considered forward looking statements for purposes of the private Securities Litigation Reform Act of 1995.

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

And in that case, with the steep erosion year one in 23, you would expect then the trough to be in 23 and you return to growth in 24.

Thank you Liz good morning, everyone and thank you for joining US today I'll briefly comment on our overall performance then Jeff Tom and Rob will review, our second quarter business highlights pipeline progress and financial results in more detail.

As this plays out, we'll see how that shakes out.

Ultimately, if more of it happens in 24, you obviously have another year of growth for all your growth brands.

And so you have a different floor in that scenario.

Abbvie delivered another strong quarter with adjusted earnings per share of $3 37.

But most importantly, it's what happens in 25 and beyond.

<unk> our expectations totaling.

When you look at this company with the growth drivers we have, we'll be delivering high single digit growth in 25 and beyond, which is industry leading.

Total net revenues of approximately $14 $6 billion was up six 1% on an operational basis in line with our expectations.

We'll have the lowest LOE exposure in the industry in the second half of this decade.

And so, you know, we're focused on the long term and we feel very good about the prospects for this business. But as it stands now, the most recent direction we've given is expect that first year erosion, so that 45% plus or minus 10%, which then play out to, you know, return to growth in 24.

We'll obviously update the market as we see it play out next year.

Maybe I'll take this one.

This is Tom Hudson.

I'm a clinical immunologist and I know how we've been, using steroids. They can give very profound and deep immunosuppression, decreased inflammation, and that's often used in severe cases, when a patient shows up.

This performance reflects robust double digit operational sales growth from immunology, where sky Ritchie is exceeding our expectations with impressive market share gains in both psoriasis and Psa.

<unk> recent U S approval and growing disease.

So we know that the response is very strong, but there are a lot of side effects.

And yet another source of long term growth as a result of the strong performance. We've seen in the first half of the year, we are raising our full year guidance for <unk>.

And when our problem is always weaning the steroids out in the clinic.

So here, again, the combination of an immunomodulator like TNF and a steroid have that potential of giving us that deep, deep response very quickly to remove the immunosuppression.

And based on the data we've seen preclinically in our phase one studies, we're not seeing those biomarkers or side effects in the bone or brain or cortisol or others.

So we've already demonstrated that and we had nice data.

The other, so that's my enthusiasm.

Operator, next question please.

We expect to see deep responses, durable responses with a much better tolerance than steroids.

Our program, and we've shown this also, is that we've actually believe in a platform and we're developing steroid ADCs for other targets to target other immune systems, other immune cells, more specifically around some T-cells or some B-cells or some fibroblasts.

These programs are coming forward.

Thank you.

We think this is a profound platform in immunology to go after different biologies in a very targeted steroid suppression of different specific immune cell types.

And that's going to play out over the next couple of years.

So based on the data we saw, we expand the platform to other biomarkers, getting into other specific immune cell types.

Greenville is also demonstrating strong growth <unk> continues to perform in line with our expectations. Following the label update and we're making very good progress with all of the newly launched indications including PSA.

Of course, if we're quiet because we need to see the data, all the studies have been fully recruited, actually moved faster than we expected and the data was randomized.

We're just going to see the data in the fall because it's a blinded study, but the enthusiasm, is there.

And we also, of course, seeing that data and then we have PMR because we also started Thanks Tim.

Our next question is Geoff Meacham, at Bank of America.

Your line is open.

Great.

As atopic dermatitis, and ulcerative colitis, which collectively represent a significant long term growth opportunity.

Neuroscience is another area with outstanding performance very large botox therapeutics, <unk> and tulip each demonstrated double digit sequential sales growth pending.

Pending regulatory approvals for <unk> in major depressive disorder <unk>.

Lip data in chronic migraine and 95, one for the treatment of advanced Parkinson's disease represent additional near term growth opportunities for our neuroscience portfolio.

Turning now to aesthetics.

Thank you so much for the question.

<unk> cosmetics once again performed very well with sales up more than 20% on an operational basis demand for toxins remains strong with high teens growth in the U S. Despite inflation dynamics.

As expected <unk> performance was negatively impacted by Covid related lockdowns in China as well as the suspension of our operations in Russia.

Additionally, in the U S. We had a difficult prior year comparison with a promotional event that we ran last year.

We also saw a modest impact in the quarter due to economic pressures. We continue to expect positive full year growth for <unk> driven by the lessening COVID-19 impact in China, and two new filler launches in the U S, which will benefit growth in the second half of the year.

And even geological oncology and <unk> continues to be unfavorably impacted by the delayed market recovery for new patients starting therapy in CLO and increasing competition.

These ongoing dynamics will have an impact on <unk> projected 2022 revenues as a result, we will be adjusting our full year guidance to reflect these impacts.

<unk> continues to demonstrate robust share performance in both <unk> and AML with sales up double digits on an operational basis.

I think flex to also has Registrational studies ongoing in addition, additional attractive indications such as multiple myeloma and T. $11 14 patient population with phase III data forthcoming as well as high risk Mds. Additionally.

Additionally, we have an exciting and diverse pipeline of promising new therapies to address critical unmet needs in both blood cancers, and solid tumors, which are expected to support the next wave of Abbvie as growth in <unk>.

Collagen.

In summary, the diversity of our portfolio once again allowed us to deliver another strong performance. Despite the challenges we see in the CLO market and increasing improve a good competition sky.

Sky Regina and Windows are performing exceptionally well and are on pace to deliver approximately seven $5 billion in combined sales this year.

Neuroscience demonstrated balanced double digit growth driven by migraine and Baylor and continued robust botox cosmetic growth offset some of the U S inflationary impact to our filler and body contour portfolios. As a result, we are confirming our full year 2022 adjusted earnings per share.

Guidance of $13 78.

The $13 98.

Representing growth of more than 17% at the midpoint with that I will turn the call over to Jeff for additional comments on our commercial highlights.

Thank you Rick I am very pleased with the momentum across our therapeutic portfolio, including the continued progress, we're making with new product in recent indication launches.

Not to belabor the point on Humira, but I wanted to ask you, is the long-term, meaning the four-year kind of trend that we saw this quarter for Humira in Europe, that's still a good proxy for how you guys are thinking about the tail for Humira, just given we're coming up on four years in Europe and we're talking about high single-digit erosion still.

I'll start with our immunology portfolio, which delivered total revenues of $7 2 billion, reflecting growth of 19, 2% on an operational basis.

Global Humira sales were approximately $5 4 billion up six 8% on an operational basis with nine 6% growth in the U S. Partially offset by international performance, where revenues were down seven 3% operationally due to biosimilar competition.

<unk> is performing extremely well well ahead of our expectations global revenues were more than $1 2 billion up 33% on a sequential basis.

We continue to advance our leadership position in psoriasis, where sky received total prescription share of the U S. Biological market has increased to approximately 26% driven.

Driven by an in play share of new and switching patients that is now approaching 50%.

We have also achieved in play market share leadership in 'twenty, three key international markets, including Japan, Germany, France, Canada and Australia.

Psoriatic arthritis is also adding significantly to sky <unk> momentum, where we are now approved in 54 countries and the U S. Dermatology segment were approximately 30% of patients exhibit both skin and joint involvement Sky Ritchie is already achieving an in play patient share of nearly 20%.

We have also launched Sky reserve for PSA in Rheumatology, where we're seeing strong utilization, which is driving accelerated share growth.

Our recent launch of <unk> for Crohn's disease in the U S represents the first new biologic approval in six years for an area, where there continues to be considerable unmet need.

We believe <unk> represents a highly effective and differentiated treatment option for crohn's patients, including the potential to provide meaningful levels of endoscopic improvement with novel and infrequent dosing managed care access is expected to ramp strongly for this indication in the coming months.

Turning now to <unk>, where we're seeing good momentum across each of the approved indications global sales of $592 million were up more than 27% on a sequential basis prescriptions.

So I wanted to kind of ask you about the tailpiece of what you expect in the U.S. And the second question, just on Renvo, I wanted to ask you also on the, since the FDA, labeling change, if you've just seen any changes with regard to persistent rates or new starts, just on your feedback from the field and how docs view the safety of the JAG class.

Thank you.

Prescriptions in <unk> remains strong with a total market share of five 8% in the U S and approximately 6% across key international markets, where <unk> is now achieving an in play or a share of approximately 13% in the U S.

So, Geoff, this is Rob.

I'll take your first question.

So, you know, the way we've talked, about Humira erosion, the way it's played out in Europe is we saw that steep erosion year one, more moderate erosion years beyond. You know, in our modeling now, that's probably the best way to think about it is, you know, steep erosion year one, more moderate.

You know, you'll have an annualization impact in year two, but more moderate beyond that.

And specifically within the wave one countries, when we look at Europe and the level of revenue we have this year relative to pre-LOE, we saw about 30% of the revenue footprint.

So it gives you a sense of where Europe is after four years.

Obviously, you know, as we model the U.S. out and it will, be more specific in the future, but, you know, right now we're using Europe as an analog.

And regarding Renvo, in terms of perceptions from the field or what we're seeing, it's largely, developing as we predicted.

So, you know, we do see segments of physicians that are more wary of the JAKs after the label change.

And PSA RIN bulk continues to see nice uptake, especially in the room segment with commercial access now equal to <unk>.

However, you know, we anticipated that.

We also recently received FDA approval for ankylosing spondylitis and European approval for non radiographic axial spa further expanding <unk> potential across rheumatology.

So we are starting to see a recovery in second line plus in RA as we anticipated.

And the new indications, because really we'll be the only JAK inhibitor with the four big indications of RA, PSA, AS, and then non-radiographic ultimately in the fall, that just builds upon the confidence level, of the physician.

In atopic dermatitis, new patient starts are tracking in line with our expectations with <unk> in play patient share in the mid teens strong commercial access and <unk>, which is also now equal to or a NPSA is expected to considerably increase paid prescription volume in this highly underpenetrated.

So that's what we're feeling from the field.

Over the remainder of the year.

I'll mention maybe some color on ulcerative colitis.

Lastly, our recent launch of <unk> for ulcerative colitis in the U S is progressing well and we recently just received European approval for the same indication.

I mentioned that we're encouraged on the ulcerative colitis start.

Commercial access in the U S is ramping strongly and we are seeing encouraging new patient starts.

So we saw in the quarter, because we launched in early April, you know, we saw 600 unique, gastroenterologists start to write prescriptions, which is quite interesting and good, positive. And about half of those customers had never written a JAK inhibitor.

Physician feedback regarding <unk> approved profile in UC has been favorable, especially given the very high rates of remission and endoscopic improvement demonstrated across our UC development program the.

So Zeljance was approved.

The addressable patient population for invoke in UC is substantial.

With nearly 50% of patients currently on are having used TNF therapy.

Turning now to hematologic oncology, where total revenues were $1 $65 billion down seven 9% on an operational basis.

<unk> Global revenues were approximately $1 1 billion down 17, 1% and below our expectations.

That market continues to remain challenging in the U S with new patient starts down double digits relative to pre pandemic levels.

Now as you may recall, our initial 2020 to improve our sales guidance contemplated a partial market recovery, which unfortunately, we have not yet observed in fact, the latest data reflects new patient starts in the U S. We're actually down high single digits versus last year.

So based on recent trends, we no longer believe it is prudent to anticipate a meaningful market recovery in CLO over the second half of this year. Therefore, we will be removing this assumption from our 2022 guidance in.

In addition, increasing competition from newer therapies, including other <unk> inhibitors as well as our own Ven cluster also continue to lower in <unk> share of new patient starts, especially in frontline CLO.

Despite this increasing competitive pressure in <unk> continues to be the total market share leaders across all lines of therapy and CLO.

I think flex the global sales were $505 million up 21, 2% on an operational basis and CLO, we continue to see share gains in the U S and across all major international markets. We're also seeing continued strong performance in AML and.

<unk> is now approved in 80 countries and in many markets is already considered the new standard of care for frontline AML patients who are ineligible for intensive chemotherapy.

As a result, we are seeing ramping market share throughout the countries, where we have launched.

In neuroscience revenues were more than $1 6 billion up 15, 2% on an operational basis <unk>. Once again delivered strong growth sales of $492 million were up 13, 9% on an operational basis, reflecting continued share gains in the U S atypical.

Antipsychotic market.

Our launch preparations remain well underway in anticipation of our NDA approval in the fourth quarter. This is a potentially large indication that would represent incremental upside to our current projections for railcar.

Within migraine <unk> remains the market, leading oral <unk> treatment for acute migraine with revenue of $185 million up 34% on a sequential basis.

<unk> continues to increase its leading new to brand share in the U S. Preventative <unk> class when we consider both paid Enbridge volume, we continue to make good progress with expanded commercial access which will support strong <unk> sales growth over the remainder of this year.

We are also pursuing the commercial approval for key lift as a preventative treatment in patients with chronic migraine in the U S as well as a new therapy for Europe , potentially further strengthening our competitive product profile and long term growth opportunity.

Botox therapeutic is also performing well in chronic migraine as well as its other indications with total sales of $678 million up 14, 5% on an operational basis.

So overall I am pleased with the commercial execution across the therapeutic business, our broad portfolio of differentiated therapies and new launches is demonstrating strong revenue growth.

And with that I'll turn the call over to Tom for additional comments on our R&D programs Tom.

Thank you Jeff.

And so we're seeing, obviously, the ability of these customers to understand the overall risk, benefit of RINVOC relative to, let's say, another JAK inhibitor.

I'll start with immunology, where we had several notable pipeline updates in our inflammatory bowel disease programs for both <unk> and <unk> book.

So I feel that, you know, our communication is on track and we're seeing positive feedback as we build the indications that we've highlighted in the fall.

Thanks Geoff.

Operator, next question please.

We recently received FDA approval for <unk> in Crohn's disease, and we're very pleased with the label, which reflects the strong benefit risk profile that sky Ritchie demonstrated as an induction and maintenance treatment for.

Thank you.

Our next question is Colin Bristow, with UBS.

For this condition.

Your line is open.

On this profile, we believe <unk> will be a highly effective and differentiated treatment option for patients with <unk> disease.

Hey, good morning and thanks for taking the questions.

Another one on the 23 Humira guidance.

Our regulatory application for <unk> in Crohn's disease remains under review in Europe with an approval decision expected near the end of this year.

Also in the area of inflammatory bowel disease.

We received European approval for <unk> in ulcerative colitis, and we're excited to bring this new highly efficacious oral option to patients suffering from this often debilitating disease.

In the quarter.

We also completed the Registrational program for <unk> in Crohn's disease reporting positive topline results from our phase III maintenance study.

We recently submitted our regulatory applications for <unk> in this indication and expect approval decisions next year.

Once approved for Crohn's disease, <unk> will have completed development programs for <unk>.

All the major room, and gastro indications covered by Humira plus atopic dermatitis.

The strength of the data generated in our clinical programs should position <unk> as a highly differentiated treatment across this broad indication set and enable invoke to deliver significant value to abbvie over the long term.

And just this morning, we announced that we received European approval for <unk> bulk.

Non radiographic axial spa, which rounds out <unk> label in rheumatology.

Could you just walk us through, you know, at the point at the end of 3Q, what percentage of contracts or volume will you have confirmed at that point?

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

At the recent DHA meeting, we presented results from the large b cell lymphoma expansion cohort in the phase II study evaluating <unk> in patients who have received at least two prior lines of therapy.

In this study <unk> was well tolerated and drove very deep and durable responses and challenging to treat highly refractory patients with large b cell lymphoma.

We recently discussed these results with regulatory agencies and based on the strength of the data we intend to submit regulatory applications. Later this year for accelerated approval of <unk> in patients with relapsed refractory large b cell lymphoma.

We expect approval decisions in 2023.

We continue to make good progress with the indication expansion programs for <unk> and remain on track to see results from the phase III Canova trial in relapsed refractory multiple myeloma patients with a $211 14 mutation.

In the second half of this year.

As a reminder, we've seen very promising results in this population and prior clinical studies with <unk> showing high overall response rates and meaningful trends towards prolonged progression free survival.

The level of efficacy we've seen success at $11 14 patients may be particularly responsive responsive to than collector and this agent has the potential to become an important biomarker driven treatment option in the multiple myeloma market.

In neuroscience following successful completion of our phase III chronic migraine prevention study.

We submitted our regulatory application to the FDA for Q lifter and chronic migraine.

Chronic migraine is defined as 15 or more headache days per month with at least eight of those days associated with migraines.

This is a debilitating disease that is <unk>.

Next nearly 10% of people suffering from migraines significantly impacting their quality of life.

If approved this would be another differentiating feature procure lifter.

As it would be the only oral <unk> approved for prevention in patients with chronic migraine.

We also submitted data from our phase III prevention studies in both chronic and episodic migraine to support regulatory applications in markets outside the U S. We.

We expect approval decisions in the U S and in Europe in 2023.

In the quarter, we submitted our regulatory application in the U S for ABP 951, our novel subcutaneous level Dopa kv dopa delivery system for <unk>.

Treatment of advanced Parkinson's disease.

This innovative delivery system has the potential to become a transformative treatment option for patients with <unk> with advanced Parkinson's disease by providing duopoly like efficacy with.

With less invasive non surgical administration.

We also expect to submit our regulatory application in Europe later this year with approval decisions anticipated in both the U S and Europe in 2023.

Now I'd like to provide a few updates on some earlier stage programs, where we have new data and are advancing programs in development.

And immunology, we recently obtained encouraging data in our phase II study evaluating <unk> in systemic lupus.

An audio mewling multi system disease.

In our study <unk> demonstrated greater response rates as well as the reduction of players compared with placebo.

We will see longer term data in the coming months, which will allow us to make a decision on moving <unk> into phase III for lupus.

In oncology, where we have a pipeline of promising early stage programs aimed at solid tumors. We are beginning to see very exciting data from several programs.

Our anti <unk> antibody ABV 151 is designed to block the immuno suppressive activity of regulatory T cells, which leads to increased T cell effector functions in the tumor microenvironment. This re activate immune system against tumors enhancing the antitumor immune.

Response triggered by a PD one inhibitor.

In our phase one program, we're combining <unk> with a PD one checkpoint inhibitor in cancer patients, who are refractory to or relapsed after a PD one as well as evaluating this combination and PD one nonresponsive tumors.

Based on the preliminary efficacy we have seen in a dose expansion cohorts for multiple solid tumors.

Including a deepening of responses over time and prolonged durability.

We recently declared proof of concept or 151.

We plan to advance to phase II in several solid tumors, starting with <unk> cancer.

We're also expecting additional data Readouts later this year in other solid tumor indications, including colorectal cancer.

Which may enable further expansion studies in this hard to treat cancer type.

We will also begin new studies to explore a broader set of solid tumors, where GARP is implicated as a critical immunosuppressive pathway based on tissue or tumor tissue analysis.

We're also making excellent progress with our next generation C met ADC.

ABVD 400, where the emerging clinical data is very promising in several solid tumors.

This asset is similar to <unk> assume that ADC that uses a microtubule inhibitor payload.

At least will be received breakthrough therapy designation for the treatment of patients with a subtype of lung cancer with high levels of <unk> overexpression.

The toxin warhead for 400 users a more potent topoisomerase inhibitor payload.

<unk> is similar to a renewed T can a chemotherapy that is used in the treatment of colorectal cancer.

By targeting <unk> positive tumors with adcs bearing different warheads. We believe we can broaden the range of solid tumors, where C met therapies can be used.

In our phase one program, we are seeing good responses in patients with advanced colorectal cancer and remain encouraged by these early efficacy signals.

And then, you know, it sounds like that by the time you have the full year results, you're still anticipating that there could be a meaningful change.

So in summary, we've seen tremendous progress across all stages of our pipeline in the first half of the year.

We remain on track for further advancements in.

The remainder of 2022.

Could you just confirm that's a fair characterization?

So with that I will turn the call over to Rob for additional comments on our second quarter performance and financial outlook, Rob. Thank you Tom <unk> second quarter results demonstrate the strength of our diversified portfolio momentum from new products and recently launched indications allows us to maintain our earnings outlook. Despite <unk>.

And then just on AbbVie 1.4, what are you hoping to see with the Phase 2 data that we're going to get at year end?

And what's the threshold here that you need, to surpass to move forward?

Thanks.

The dynamics for <unk> higher inflation and the stronger U S dollar.

Yeah, so if we look at the discussions that we've highlighted and Rick highlighted, I think they're progressing as we would expect.

We reported adjusted earnings per share of $3 37.

So typically, they start in the late spring.

Reflecting growth of 11, 2% compared to prior year, and 11 and above our guidance midpoint.

These results include a 14th unfavorable impact from acquired IP R&D expense.

Total net revenues were $14 6 billion.

Up six 1% on operational basis, excluding a one 6% unfavorable impact from foreign exchange.

The adjusted operating margin ratio was 51% of sales an improvement of 220 basis points versus the prior year.

This includes adjusted gross margin of 84, 7% of sales adjusted R&D investment of 11% of sales acquired IP R&D expense of one 8% of sales and adjusted SG&A expense of 28% of sales.

Net interest expense was $532 million and the adjusted tax rate was 13, 4%.

Turning to our financial outlook, we are confirming our full year adjusted earnings per share guidance between $13 78, and $13 98.

This earnings per share guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the second quarter.

We now expect net revenues of approximately $58 9 billion, reflecting growth of six 5% on an operational basis.

At current rates, we expect foreign exchange to have a one 7% unfavorable impact on full year sales growth <unk>.

Included in this guidance are the following updated assumptions.

We now expect Sky <unk> global sales of approximately $4 8 billion, an increase of $400 million due to strong market share performance.

For <unk>, we now expect global revenue of approximately $4 $7 billion, given the lack of recovery in the CLO market and increasing competition.

Moving to the P&L, we now expect adjusted gross margin of 84, 7% of sales and continue to forecast an adjusted operating margin ratio of 51, 8% of sales.

Turning to the third quarter, we anticipate net revenues of approximately $14 8 billion at current rates, we expect foreign exchange to have a two 1% unfavorable impact on sales growth.

And look, these are complex negotiations.

They go on for many, many months.

We expect adjusted earnings per share between $3 55.

And $3 59.

This guidance does not include acquired IP R&D expense that may be incurred in the quarter.

In closing we delivered strong performance again this quarter.

Including meaningful contributions from new products and recently launched indications.

Given the momentum of our business as well as our pipeline advancements we are well positioned for 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 will take the first question.

Thank you. Our first question is Andrew Baum Citi. Your line is open.

Yes. Thank you first question is.

The guidance range, you've given for <unk> anticipates, a trajectory of Humira in the U S. Presumably you're finishing contracting both with Medicare and commercial but could you provide any guidance further on 'twenty three 'twenty four Gabe <unk> contracts.

And then second.

<unk> question in relation to your anti <unk> monoclonal, which should take that.

A lot of time to optimize when we move forward.

I'm, just curious whether you're using any molecular markers.

Wanted to minimize risks given <unk> other <unk> targeted agents, particularly in kind of rack full using CMS for a subgroup of the total population or you put it in a real promise is the suggestion that whats no comment as always this again for Bob.

Biomarkers. Thank you.

Okay. Andrew This is Rick Thank you for the questions I'll cover the first one and Tom.

You can cover the second one.

In many years, we would have completed at least the large PBM negotiations, which is the vast majority, the volume, you know, by that October timeframe.

So we are in the process now as we've indicated before.

<unk> with the managed care organizations and the Pbms to establish our contract position for Humira.

In some cases, as you probably know, the payers would publish this information.

2023 isn't the normal time that you would go through that.

It is progressing as we would expect.

I would say were.

Mid way through that process right now.

I would expected to conclude near the end of the third quarter early in the fourth quarter at that point, that's an important part of refining our model for 2023 in particular.

And what that will tell us is that.

Physicians that we have formulary status from 2023.

<unk>.

For Humira and that will help us define clearly the volume aspect of it.

And so you know that.

It's going well and that's that's going to be an important part of us being able to refine that model and so as we get further along in that process that will give us the ability to be able to potentially.

We'll find the model that we have now.

But one thing is important to remember in all of this is prices. The other key aspect here and there we won't no real pricing until the actual event starts to occur. So we will make assumptions around what that price looks like and I think those will be informed assumptions, but they are just out there.

Sure.

And so that's the one piece that will still be somewhat of an unknown until we see.

The landscape is starting to play out in 2023 and.

Particularly in the midway through 2023, when more biosimilars enter the market.

So as we get more information, we can provide more clarity, we'll certainly try to do that.

But I think that's where we are right now.

Todd.

Andrew I'll try to break down the question in different parts, because youre right. There are many TGF beta assets. This one's unique GARP most of the TGF beta assets work either antibodies against the receptor. So the active form of TGF beta or TGF beta itself.

And.

Circulation ourselves but.

<unk> blocks the inactive for a TGF beta before it's released from TGF beta and we believe that actually has a differentiated mechanism also allows that specificity to whats happening TGF beta in that tumor as opposed to other systems in the body.

At the beginning of this we thought we had already had people at published that there.

But very often, not always.

The immunology and inflammatory segment, those negotiations can go on longer.

And they're very, often published as a TBD in what used to be called the exclusionary formulary.

So we would, as Rick mentioned, we would have visibility to sort of the status on the volume in that October timeframe.

But that's a reasonable way to think about when we'd start to have the visibility to the volume component, as Rick highlighted.

That's a reasonable assumption.

Very good teacher, TGF beta signatures that exists and I can tell you that GARP signature.

Again, I don't know for sure, given the complexity of a biosimilar negotiation, which has never taken place before.

Yeah, and it's Rupal on the 154 question.

All of those tracks with TGF beta signatures and that's often seen in all solid tumors as a subset of tumors that express. These pathways. It's a very common immunosuppressive mechanism. That's why people are interested in it.

We alert initially.

You know, dovetailing on what Tom just walked through, things that we want to see are consistent with how we develop an immunology.

You know, certainly raising standard of care.

So the way this was designed was to have that, anti-TNF and then that direct delivery to avoid systemic side effects of the steroids.

From data, we kind of suspected that in people, who actually had a nice hot tumors, but were not responding to.

Two PD ones.

Often had at least from <unk>.

This work.

I actually had a higher TGF beta signature. So we thought that was a resistance mechanism why these patients what's hot tumors were not responding and a lot of our initial clinical strategy. There was actually to go after or hot tumors, where PD ones had relapsed refractory and we thought we could augment.

So you'd see sort of that one-two punch, as Tom was describing, and see that depth of response.

So once we see that type of information along with how it looks from a steroid standpoint, metabolic effects, bone effects, taken together will give us a great sense of where it could fit.

You know, before anti-TNFs, even after we're studying patients that have failed anti-TNFs, in this phase two study.

So taken together, that will give us a really good sense of where to go.

And then remember, we're also going to get data in polymyalgia rheumatica.

It's not an uncommon, disease, and these patients are, many of them are steroid dependent, 50% or so, three years and going.

Thanks Colin.

Operator, next question please.

Thank you.

<unk> PD one checkpoint response by buying doing this combination we did not see monotherapy activity, but in combination that we did and Thats why our first data datasets and expansions like I've, just discussed and <unk> cancer. These projects started earlier, we're seeing data, suggesting that this is correct that you need to affect both the pathway.

If TGF beta and <unk> and PD, one to get a response and those again in multiple tumor types, we're seeing responses and we're moving forward at the same time just to bring it to colon.

We could also see the same signatures of TGF beta on GARP in.

And cold tumors, but we weren't sure that since theyre not I always sponsored whether we'd get a response.

Get a clinical response, but we did start some investigations in and yes, we did see some responses in cold tumors.

They happen over time in automotive, sometimes they appear the.

Tours are stable for three months, maybe six months and then you see these responses appear very durable one year two year very.

Very unusual these are patients with advanced disease that have very poor prognosis in phase one studies. So we saw some some I would say, we sometimes say.

Academia column exceptional responders.

And so we decided to expense those datasets are newer are happening right now I, probably will have the data at the end of this year, but yes, we've seen the we've seen our responses to this combination.

And to answer your question. So the signatures were looking at are not the CMS or kind of histology based signatures on the tumor it's more signatures of the inflammatory response that we can measure in the tumor and it has to do with both.

Inflammatory T cells, which are therefore, the killing but also the inhibitory TGF beta.

And of course, we're going to continue to investigate this I don't have all the answers for you today, but it certainly has been exciting to see how this evolves program has evolved.

Our next question is from Chris Shibutani with Goldman Sachs.

Thanks, Andrew we'll take the next question please.

Thank you. Our next question is Terence Flynn with Morgan Stanley .

Thank you.

Hi, Thanks for taking the questions.

Maybe two for me just wanted to make sure that you are maintaining your 2022 aesthetics guidance.

A $5 9 billion, Rob I didn't hear you call that out so I'm, assuming that was a reiteration.

Just given what youre seeing with <unk> in the U S. And then the second question I had relates more of.

Strategic one Rick.

I know you are still going through the conversations with 2023 for Humira, but as you think about providing an update to guidance.

Whether that happens with the <unk> results or with the <unk> results do you think youll be able to provide some outlook on 2024, because I think something investors are discussing now is just if the possibility of the.

The impact is more than 24, how we should think about revenue margins in 24 versus 23. So just wondering strategically how youre thinking about that at this point not asking for guidance more just thought process. Thank you.

Good morning.

Two questions if I could.

For Sky Risi, if I could just return to this question of how you're thinking about the long-term guidance.

So Terence I'll take both of those questions and Rob can certainly jump in here if he has something.

Wants to add.

We are maintaining the steady guidance.

As.

We've indicated.

Certainly we have seen.

Good strong performance on the toxin side of the business and we would expect it to continue as we look at the film side of the business as you've noted.

It was lighter this quarter than we've seen historically and I would say that was driven by a couple of issues certainly driven by the China, Russia issue outside the U S. In the U S. We did have a very successful promotional.

Program that we ran last year. So it was a tough comparison versus last year.

So I'd say, we have seen some glimpses of.

What could be inflationary pressure on that business.

Or it could be pent up demand for vacations and Kerry can certainly go through in more detail if there's follow up questions.

But I think as we look at the business overall, we're comfortable maintaining the guidance now we believe that botox will continue to perform very well, obviously, we're doing more things to be able to drive the <unk> side of the business. It's at a price point, where it should be less sensitive to inflationary pressures.

Clarksons is about $500 I think bright Gary.

And we're pillars are almost twice that or maybe even a little more than twice that so clearly from.

Disposable income standpoint pillars are more challenging for people that toxins are and so that's the rationale behind it and certainly as we look at the overall performance of the Abbvie business, we had plenty of opportunities.

The city of our portfolio to cover any potential shortfall, if we ended up adding any shortfall.

So that's why we're comfortable maintaining the guidance and I think we need to see more time play out here.

To see exactly where we are from a U S inflationary impact.

On the second question as it relates to an update on 'twenty, three and potentially something on 24.

I think the way you've described it is accurate when we have more information.

We will try to provide that.

And when we've gotten to a point that certainly by the fourth quarter call. We are going to provide you guidance.

On what we think will happen in 2023, but if we can provide something on the third quarter call.

Shouldn't be looking for guidance I think that's a that's not a good expectation, but certainly potentially.

Potentially a little more clarification on what our contracting status looks like at that point and how that role.

Translate into what we think and if we can we'll find the model.

To a greater degree we would certainly provide that as it relates to 2024.

Certainly I'm not going to we're not in a position where we're going to talk about 2024, right now and I think that would be a little bit unlikely because not all of these contracts will be.

Two year contracts and so you really wont know which volume position is.

At that point and as I said, you won't know what the pricing is going to be particularly midway through the year.

So I think those will be important.

The important.

Things to be able to dial in.

To where the forecast, it's going I'd say overall, we feel good about the contracting.

Position that we're in.

And then I'd say the other thing is that I know investors really wanted to try to model. This between 23 and 24 I understand why you wanted to do that certainly we obviously, we'd like to do that to the greatest degree possible, but when you step back and you actually look at the performance of Abbvie and how you will value add.

Going forward.

It has relatively little to do with tomorrow.

And that shape of that curve between 'twenty, three and 'twenty four.

And certainly by the end of 'twenty four we should reach a point, where we've achieved some level of stability on the tail of humira.

What <unk> is all about.

Other products like <unk> and <unk>.

Vale are relevant.

Steady business to let those are going to be the things that drive it. So if you want to focus on something.

And it's what we focus on internally is that underlying growth engine that.

It will emerge on the other side of wherever erosion humira ends up suffering before at some level of stability and a tale is those assets and then what comes out of the pipeline.

Those are the key things that are going to create that growth between 25 and 30 and.

That's the part that we I would say, we're obviously managing humira to the greatest extent, we can but that's the part that we as a team are focusing on and I think thats. The most important part because that is the abbvie going forward.

Thanks, Taryn operator, let's take the next question please.

Thank you our next question is.

Mohit Bansal with Wells Fargo.

Great. Thanks for taking my question.

Maybe dwell in little bit more on the on the on the Humira question for Rick and Jeff.

You said that pricing from the competition would be key are known for next year. So as you get into contract. This year for the next year, how rigid or flexible. These contracts are from the pricing point of view by Pbms realize that the biosimilar is giving an X or y pricing.

That would be a more of a 2000 2040 shoot out there 2020. Thank you.

Well.

Let me take a shot at it then.

Certainly Jeff is key.

Closer to it so Jeff do you want to add.

We feel free to jump in.

Typically when a new contract.

For an asset like Humira, you're contracting for a formulary position.

And.

And there are volume requirements.

Or other kinds of requirements I think it's also.

It would be prudent to assume that biosimilars will be on these contracts.

And.

Whether it's one or more than one that will coexist with humira.

So price plays an important role in that because they will coexist and so.

<unk>.

So I would say and as that becomes fluid you would have to make decisions around how you tried to deal with that.

To maintain the kinds of volumes that you want to maintain and we've said all along the strategy that will have in the U S and similar to the strategy that we had internationally and that is maintain as much volume as we can at the highest level of profit that we can maintain it at that.

That is the logic that we will we will employ but that doesn't mean, we won't have to be somewhat responsive to prices in the marketplace.

Humira alright.

Alright, Jeff anything you'd add.

I think Thats Thats, Rick that's a very.

Very reasonable way to look at it in terms of how these negotiations are going and how we see 23 playing out.

The real big ones in terms of how we look at it is the two big the two big scenarios our U R.

Likely coexisting with one or more biosimilars or if the negotiations don't go the way that we anticipate that were excluded in favor of Biosimilars, and Thats, basically where price and volume.

In terms of refining our model for 'twenty three that's the work that we're doing over the summer and then into the fall.

Helpful. Thank you thank.

Thank you operator next question please.

Thank you. Your next question is Gary Nachman with BMO capital markets.

Hi, Thanks. Good morning, So <unk> was very strong in the second quarter and you raised guidance nicely how much of a benefit are you getting from the psoriatic arthritis indication, thus far and what are you expecting crohn's to contribute this year, how much are those playing into the raised guidance.

And are you revisiting the long term guidance on <unk> at this point given the strong performance.

And then just on the Haemonchus franchise.

Are you keeping the infrastructure intact preparing for new products to contribute and maybe you could talk about the near term opportunities you see for products like at <unk> and <unk>, how much of those could contribute.

And potentially offset some of the pressure you've been seeing.

Okay. Thanks.

Yes. Thank you it's Geoff thanks for the question so.

Your instinct and observation is right the big the big dynamic change for Sky risky here largely what you're seeing is from the Psoriatic arthritis indication and obviously you saw very very large sequential moves and let me give you some sense of what we're looking at so we're seeing that we're putting more and more.

I think about Sky Risi recalling that you said $7.5 billion, consisting of about six from the psoriatic complex.

And yet you're almost already approaching something close to $5 billion.

So can you tell us how you're thinking about how that could factor in any long-term thinking?

And then for f-carotamide, positioning of that treatment in the overall treatment paradigm, how are you thinking about that in relation to, for instance, CAR-T therapy treatment options before, after?

Thank you.

Basically headroom into the overall share position first and Psoriatic disease, So thats psoriasis plus PSA. So we're at 26% in terms of total Trs share and moving very very nicely up.

So obviously, if the street was way off, we want to point that out.

That's being driven by this PSA acceleration. So first remember that the PSA indication we were the really the last large product that didn't have that indication.

But overall, we're very encouraged about the uptake for Sky Risi.

So first what happens is it starts to interact very positively in the dermatology segment. So as I mentioned about 30% of patients both have skin and joint involvement and so we actually had a lower despite the fact that we have the leading suraj to share we had a lower psoriasis share because we werent covered with the joints with that indication so.

It's clearly demonstrating its ability to drive long-term growth for AbbVie.

You see an immediate very rapid acceleration of our overall derm business that I highlighted secondly.

Strategically important to the performance is that we're able to launch the PSA indication for Sky Rizzi in rheumatology. So it starts to work together with the RIN vote, PSA indication and the room segment is three times as large as the dorm segment. So it's a very very good dynamic in terms of our Mo.

Mentum in two large segments, even before we get to Crohns now I would say that as we've talked about before I mean, <unk> is a very special product very unique dosing very stable incredible efficacy.

So we are encouraged on the early results of Crohn's, it's too early to start to see numbers are et cetera.

But all of that is playing into.

The raise that Rob talked about and Gary. This is Rob just on the guidance. So if you recall earlier in the year. We got asked the question I said PSA for Sky was going to country about $200 million. This year, its probably closer to $400 million out with the guidance range given the very nice uptick we've seen in PSA, but part of that guidance raises.

And we'll provide an update to long-term guidance at the appropriate time.

Thanks.

And to Neil, on the f-carotamide question, so I'm not going to go through all of the data points again.

We've described them several times in the public domain.

What I would remind you of is that, you know, we've observed extremely robust efficacy in a heavily pretreated population.

Now, it's true to say that 40% of those patients had failed CAR-T, but 60% of those patients didn't fail CAR-T.

Therefore, you know, our expectation, our intention, rather, and as we've mentioned earlier on in Tom's prepared remarks, we are anticipating filing for accelerated approval during the second half of this year.

In terms of future positioning, we've also discussed in the past our intention of initiating multiple phase, additional phase threes.

And I think that what you can expect is that we believe that the total population, the total relapsed refractory population, whether or not they failed CAR-T, should have access to f-carotamide because it would strengthen the data overall.

The confirmatory study for the DLBCL application, what would be the confirmatory study, the phase three study is ongoing.

That's in the relapsed refractory setting.

And our anticipation is that we will initiate multiple additional phase threes, both in DLBCL and other indications over the coming 12 to 18 months.

Also the strong share performance in psoriasis. So it includes both in terms of Crohn's that Hasnt change, we've set approximately $100 million this year as we ramp.

Access for Crohn's, but obviously the long term potential for it is tremendous and we're very excited about that.

And maybe I can also then chime in on the second question certainly that is a.

The new assets are very important part of our growth story for for Haemonchus, certainly as I mentioned, we're still continuing to ramp around the world with CLO we have.

More and more impressive data, particularly in the unfit frontline population, we have five years of data in the fit population for frontline for <unk>.

We're encouraged with the myeloma data, which is very unique in terms of a biomarker driven approach for the $11 14, Nevada class would be really one of the first new entrants for myelofibrosis, where theres really only been rux in terms of that market <unk> increasingly.

Encouraging data in terms of the simple sub Q very rapid ways to get this medication in later lines and then building into frontline. So we are very very encouraged while we see some pressure on <unk>, the new indications and base for van <unk> helps to offset that and then we start to build with those near term.

Heme assets and <unk>.

Super encouraged in terms of what we're seeing in terms of the probability that we can get there.

Maybe I could just build on that, Chris.

Thanks, Gary Operator next question please.

Thank you. Our next question is from Chris Schott Jpmorgan.

It's Jeff.

Great. Thanks, so much for the questions.

First one I just wanted to come back to dynamics on the U S. Dermal filler market I guess, specifically can you just quantify how much of the weakness we saw this or the decline year over year was due to the promotion events last year versus the impact from the economic pressures that youre seeing I guess in that same context are you.

Seeing any signs of weakness in the European business, and we're all trying to get our hands around what type of magnitude of impact you are talking about here in terms of either if it's inflation or economic sensitivity to that business.

My second question was just thinking about <unk> and Sky, Rajiv formulary and pricing dynamics going forward is biosimilar humira interest the market I guess, you expecting or hearing is through discussions any major shifts in the way payers are thinking about those products, how should we think about pricing coming down and obviously the largest kind of product.

So we've started to, you know, talk to different types of physicians, whether they're, you know, in the CAR-T centers or certainly the community centers.

We're increasingly believing that, you know, this lymphoma is treated in the community centers.

And the space there. Thanks, so much.

And so what we hear, at least at a high level from our research so far, is, wow, that efficacy is incredibly impressive, even after CAR-T.

Hi, This is Gary I'll take your first question around <unk>.

And as Rick said, there was any one time promotional event that we ran in the U S for Jupiter in Q2 of last year and it was highly successful and.

Sales in the sale.

Which created the challenging prior year comparison.

So that was the key driver, but as you noted there is also there.

Comic impact that is suggestive some early changes in consumer behavior and that really isn't surprising in light of the inflationary pressures that we're seeing on discretionary income and as Rick said.

The filler market is slightly more sensitive to that and toxins for a period.

The price point.

Price plans closer to $1000 versus $500 for toxin also the nature of the solar business is different than toxin found that patient dynamic and treatment dynamic in that.

There are more there is a longer interval between treatments are hilarious versus toxin, which is sort of like a more regular treatment paradigm a few times a year.

Also the patient bases are different when you think about the top 10 patient days and botox cosmetic the majority of the patient base is continuing patient versus more of a reliance on new patient acquisition.

And so those are some of the factors we're thinking about when we think about the deceleration filler market in Q2.

Now the market has slowed and despite the performance in Q2, we do continue to expect a positive second half growth.

Sure you asked Juvederm really weighted more in the fourth quarter as we're going to launch two new fillers in the fourth quarter and the two new fillers will get us into incremental categories for sellers, including jaw line and skin quality, which will help to drive some incremental demand at the end of the year.

And in terms of your question around economic impact outside of the U S.

We are watching that very closely and we really have not seen that yet outside of the U S.

In terms of your second question again, it's Jeff Thanks for that.

We're we don't see some significant pressures on Sky resilient Rins book now we always have.

Discussions with the payers, we look at our contracting strategy, but I think we fall back on our clinical evidence that we have on these two major assets. I mean, we have we have four head to head trials against other major competitors with with Sky <unk>, where we have just really growth superiority versus whether it's an IL 17.

Whether it's <unk>.

Humira, which one day will be biosimilar.

So Laura et cetera, So just the pure performance there and the momentum it's clearly a distinguish asset.

We're going to be first in terms of crohn's to start to establish that new area and build it and build the build the market there and I think on <unk> to some degree there is only one other JAK inhibitor that is not going to have the scope of indications and its sell Champs and xeljanz has been <unk>.

Significantly wounded based on the oil surveillance data so in terms of our ability to build and protect and grow sky resumed <unk>.

Into the next stage of development, we're quite confident that we have the assets to be able to do that.

Thanks Chris.

Yeah.

Operator, we have time for one final question.

Thanks, Chris Operator next question please.

And thank you. Our next question is from Steve Scala Cowen Your line is open.

And that question comes from David Risinger with SBB Securities.

Yes, thanks very much.

Thank you very much two questions first Rick in the past you have laid out four factors that will dictate humira trajectory in 2023.

And thanks for all the details on today's call.

First to where humira access and Biosimilar price and its clear it's too early for any news on either of those points, but the second two where competitiveness Biosimilars, which you said in part with interchange ability and also the biosimilar of ability to supply the market. So those two <unk>.

<unk> three and four are things that won't fluctuate and presumably you have some visibility on that now so I'm just wondering if theres anything unusual occurring there and.

And discussions how important is interchange ability with payors.

Good question is and I apologize if I missed it but are there any updates on the TNF steroid conjugate.

And as phase two <unk> data still expected this year. Thank you.

Alright.

Rick, I was hoping, that you could help us to understand the current M&A landscape.

Steve This is Rick I'll cover the first one.

How would you characterize it broadly?

And.

Grupo can cover the second one.

So you are correct that is what I described a meeting or two ago as the four variables I.

I would say.

When you think about interchange ability I think you have to think about it in the backdrop of matches interchange ability, but also what is the profile that is the closes.

To humira today.

And we can look at all of the Biosimilars and have we have pretty good visibility.

<unk> ability as to what that profile looks like.

What I would say is to get a profile that is interchangeable and is consistent with.

With the current Humira, that's predominantly in the marketplace today, that's probably going to occur in the summer of 2023, there should be one or two biosimilars. They have a profile that looks like that and that would make it somewhat easier.

For an organization to make a switch.

So I think that will play an important variable and nothing has changed in the last few months and what that profile looks like and then obviously supply is.

As an important aspect.

Certainly anyone that we're looking at making a significant change in their position with humira.

He's going to want to make sure that theyre going with a company that has the ability to be able to produce at volume at significant volumes.

Humira and they can do it sustained.

Sustainably.

So.

There are certain players that I would say.

Clearly have that ability to be able to do it similar to US certainly no one does it at the scale of us.

Or anywhere close to the scale of us.

But there are also a lot of small players that I think supply is going to be an important aspect and going to somewhat limit the ability to be able to have broad market impact and.

So those are going to be important dynamics as we negotiate with the various managed care organizations I can I can tell you that we're talking to those kinds of things.

Yes. Thanks.

So <unk> four is our anti TNF conjugated steroid as you mentioned.

<unk> enabled.

To target deliveries steroid directly to the inflammatory cells.

So we do have that phase II running several hundred patients and we still anticipate getting a week.

Later this year and further data to follow next year.

Thank you.

Thanks, Steve Operator next question. Please thank.

Thank you. Our next question is Chris Raymond Piper.

Your line is open.

Alright, thanks, guys.

Yes, two questions maybe one.

More broad policy and then another one that's maybe even a little bit more detailed so maybe first for Rick I know you guys keep pretty close tabs on healthcare policy.

Just on the most recent Senate Democrat.

Drug pricing language in the REIT conciliation Phil.

The provisions on the face of it seem pretty manageable in terms of the direct impact.

From pricing controls, but there's been some concern around this being just the start of something larger in terms of price controls.

Any thoughts from you guys on this would be appreciated.

And then maybe a more detailed question on ABVD 95, one I know you guys haven't provided specific guidance on this around do a dopa, but there seems to be a lot of recognition.

951, among movement disorder Kols.

A real improvement in terms of.

Overcoming reticence around do a dopa, just how should we be thinking about $95, one vis vis to adobe.

If approved.

Okay.

So I'll take the first question I mean, I think if you look at the.

Drug pricing proposal that's out there.

It's certainly an important issue for us and I think.

It's an important issue for patients.

I think as I look at that Bill and I am assuming that if there were something that were to pass it would be somewhat consistent with what was in build back better or the Senate finance tax and so far it looks like that but obviously evolving a bit here as we go along.

And if I look at it in total what I'd say is there's a couple of positive things in there.

Certainly most notably the 2000 dollar cap out of pocket costs for patients and the ability to be able to smooth and I think that's an important step.

Creasing affordability, especially for patients in Medicare part D and so that's something we've been supported above we've been vocal that we think thats an important step forward.

I'd say on balance this is a bill that has far more negatives than positives.

Think frankly, although it may not be short term.

That challenging from a financial standpoint, I think the long term implications of this bill are pretty significant and they really are.

Hinge around this so called negotiation.

In there and how that's being implemented particularly for small molecules.

And if you're familiar with it essentially what it says is that CMS over assuming the CMS has the ability at a certain point in time.

We're able to negotiate.

Price.

On a set of drugs and by the time you get there it will be a big set of drugs.

They'll have the ability to be able to negotiate on.

The key issue is this.

Essentially they have full latitude to basically decide whatever price they want the drug debate.

And I wouldn't necessarily call it a negotiation because the only alternative that the manufacturer has is to accept a 95% penalty on their revenues.

In essence take a 95% discount so is that is that negotiation, we should just call. It what it is.

Price controls is what they are basically put in place if the language stays the same.

And ultimately I think the real challenge is how we invest in this and as an industry and innovation it is a.

Small molecules and as an example, I'll walk you through an example that illustrates the point that I'm going to raise here. If you take a small molecule. It says at year nine after the first approval CMS has the right to be able to negotiate the price on that drug.

So if you take it oncology drug as an example, how do we develop oncology drugs in this industry and where the regulatory authorities typically require us to do to be able to develop oncology well. They typically require you to do and what we typically do as we go into patients who have failed on all of the existing therapies fourth line patients fifth line patients.

Take whatever drug we have and we determine do we have a positive benefit risk in that patient population. If we find that we do then we seek approval for that drug in that patient population. So that those patients will get the benefit of that drug and then we start to work our way up towards frontline those.

Refractory patients are typically very small populations of patients right and you could never get a return on a drug just on that patient population.

And then you work your way up to frontline.

Our second line, but wherever you end up at tip that process typically takes seven to nine years because of the length of the trials.

Essentially with this by the time, we got to the larger populations you'd be within a year or two of when CMS to change the price, but one it's impossible to figure out what the return is going to be so how do you invest too it really puts negative pressure on you not to continue to develop new indications.

But the most detrimental part of it is to patients who need these drugs.

Or small indications or in later stage, because you're faced with the dilemma and this is a horrible dilemma right as a company and for patients and thanks for the dilemma do I choose not to seek approval in those late stage patients. So I don't start the clock and wait until closer to frontline before I start the clock.

That is not the right policy.

I would say.

On balance.

This bill will have a couple of things that are good for patients and I'm fully supportive of.

Unless congress wants to harm patients.

Harm innovation in this industry.

Need to change that part of it it doesn't make sense, it's short sighted.

They can change in a couple of different ways. They can determine what is a floor price or a maximum discount by year and then you can calculate the return on investment that youre going to have on the drug.

<unk>.

<unk> make it consistent with biologics throughout 13 years, otherwise the investment in small molecule oncology drugs or neuroscience drugs, which Medicare patient populations are highly dependent upon new innovative drugs in those areas because they are elderly patients are going to suffer and the CBO report that was put.

Back in April of last year, clearly pointed that out. So this isn't something I'm, just saying our industries to say and in fact, if anything I'd say, they probably under call the magnitude of the impact. So this is an important issue.

We all know that affordability and access for Medicare patients is important but you don't need to destroy the innovation model in our process.

In order to provide that and so.

I am hopeful that we will see some movement here and some rationality will play out.

And then if you could also comment more specifically on AbbVie with respect to the transaction opportunity set for AbbVie.

Okay and to address your 950, <unk> Hi, it's Jeff. Thanks for thanks for the question so.

Thanks very much.

I think if you look at the M&A environment, you know, I think many players are trying, to add to their portfolios.

I think there's less of an appetite for larger transactions right now in general across the industry.

Some of that's probably predicated on the fact that, you know, the FTC has been pretty tough in their language around larger kinds of transactions and your ability to be able to get those through.

So I think some perspective is globally <unk> is about a half a billion dollars.

Brand and certainly we've said that we believe that 95, one could certainly double that up or more I'll give you. The perspective of why we think that way. So if you look at the advanced Parkinson's patients.

And I think as it relates to us, I mean, we have continued to execute the strategy that we put in place after the, Allergan transaction.

Allergan obviously brought us a tremendous amount of diversity.

About 85% sort of cycle when they stay on these generic oral that become less and less and less effective and the only thing. They can really do and that's about 15% of the market. The advanced Parkinson market is they can move to.

To either deep brain stimulation or duopoly, but you got to go through a surgical barrier. So the families and the patients are forced to think if I need to get improvement in my symptoms and my quality of life I'm forced to basically think about do I get a hole in my head or a hole in my stomach with a gastric surgery. This is going to be a sub Q.

And so we see in our market research that at least 40% to 60% of people never want to move towards DBS or duopoly. So we think this is a way where we can start to expand and create a new market segment in essence, a subcutaneous segment, where you don't have to take that risk on the surgery and.

Like you just mentioned and the movement disorder centers, there's a significant amount of experts that are excited about this new option and we believe that it's going to be a real innovation for patients.

That transaction has been highly successful and has really changed the look and the shape, of AbbVie and has clearly enhanced our performance and we've done quite well.

Our focus is continuing to look for opportunities to be able to fill out our portfolio in areas that we believe there are opportunities to bring in strategic assets.

Without having the surgery so.

We're probably working more on earlier stage assets to add to our R&D pipeline.

Everclear Mab is a good example of the kinds of things that we're out looking for and finding to supplement the overall pipeline.

And Chris This is Rob as Jeff said, I mean, we expect it to be market expanding at the Jpmorgan Conference earlier. This year, we did get peak revenue guidance from 95, one greater than $1 billion, obviously to opera is a.

<unk> 5 billion now.

Our modeling and obviously there'll be some level of cannibalization I say minor level of cannibalization on undue adult, but but when you think about the combination between 9% and do a deal, but obviously it is going to grow the revenue for the company and expand the market.

I think that strategy has worked well and it's a strategy that we'll continue to do going forward.

Thanks, Chris Operator next question please.

Thank you.

Tim Anderson with Wolfe research.

Hi.

Could you just go back to the whole 23 versus 24 thing.

I thought that in the past you guys have.

Earnings would trough in 2023, and then returned to growth in 2024.

Is that still the case or is that off the table.

And then second question goes back to the one 504 compound your antibody drug conjugate.

We understand that the timing is still on track, but it feels like to me, there's a distinct lack of enthusiasm towards this program.

I think I mentioned that much or at all really despite its novelty.

Part of being in your most critical franchises immunology. So it hasnt been enthusiastic waned over let's say the last couple of years.

Thanks, David.

So Tim this is Rob on your first question, what we've said we've talked about this 45%.

So with a range around that plus or minus 10% and using the obviously the Europe analog as an example in that case with steep erosion year 123, you would expect then the trough to be in 'twenty, three and we returned to growth in 'twenty four.

As this plays out we'll see how that shakes that shakes out ultimately if more of that happens in 'twenty. Four you obviously have another year of growth for all your growth brands and so.

A different floor in that scenario, but most importantly, it's what happens in 'twenty five and beyond when you look at this company with the growth drivers, we have we'll be delivering high single digit growth in 'twenty, five and beyond which is industry, leading we will have the lowest low exposure in the industry in the second half of this decade, and so we're focused on the long term and we feel very good.

The prospects for this business, but as it stands now the most recent direction. We've given is expect that first year.

Erosion, so that 45% plus or minus 10%, which then play out a return to growth in 'twenty four we'll obviously update the market as we see it play out next year.

Yeah.

Well, maybe I'll take this one.

As Tom Hudson, IMAX clinical immunologist, and I know, how we've been using steroids. They can give very profound and deep immuno suppression decreased inflammation and that is often used in severe cases when patient shows up so we know that that the.

The response is very strong, but there was a lot of side effects.

As always leaning the steroids out in the clinic.

So here again, the combination of immuno modulator like TNF and.

And as steroids that.

<unk>, giving us a deep deep response very quickly to reboot.

Depression and based on the data we've seen pre clinically in our phase one studies were not seeing those biomarkers of side effects and the bone of rain, a cortisol or others. So we've already demonstrated that we had a nice data.

The other so that's my enthusiasm, we expect to see deep responses durable responses without much better tolerated than steroids or.

Our program and we've shown this also is that we've actually believe in the platform and we're developing steroid ADC for other targets to target other immune systems.

Yourselves more specifically around some T cells or some details or some fiberglass. These programs are coming forward. We think this is a profound platform in immunology to go after different biology's about in very targeted steroids suppression of different specific immune cell types and that's going to play.

Out over the next couple of years, so based on the data we saw we expand the platform to other biomarkers.

Adding into other specific immune cell types.

If we're quiet because we need to see the data all of that study had been.

Fully recruited.

<unk> moved faster than we expected and the data was randomized we just going to see the data in the fall because it's a blinded study, but the enthusiasm is there.

Also of course seeing that data and then we have <unk> because we also started.

That concludes today's conference call.

But is there an cause disease, we'll see that data later, but the more data we have the more likely we are going to expand this program to other indications, where we believe that.

There was some pressure with TNF my.

She brings new solutions for patients.

Okay. Thanks.

Thanks, Tim Operator next question please.

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

Great.

So much for the question.

Not to belabor the point on <unk>, but I wanted to ask you is the long term.

Meeting the four year kind of trend that we saw in this quarter for Humira in Europe , but that's still a good proxy for how you guys are thinking about the tail for humira.

Given we're coming up on four years in Europe , and we're talking about high single digit erosion still but I wanted to kind of ask you about the.

Tell piece of what you expect in the U S.

And the second question.

On Rainbow I wanted to ask also on the since the FDA.

Labeling change yet you've just seen any any changes with regard to.

Persistent rates or.

Or new starts just on your feedback from the field and how doctors view the safety of the JAK class. Thank you.

So Jeff this is Rob I'll take your first question. So the way we've talked about the Humira erosion. It relates playing out in Europe as we saw that steep erosion year, one more moderate erosion years beyond.

And our modeling now thats, probably the best way to think about it as deep erosion year, one more moderate youll have an <unk> impact in year, two but more moderate beyond that and specifically within the wave one countries. When you look at Europe .

And the level of revenue we have this year relative to pre low we saw about 30% of the revenue footprint. So it gives you a sense of where Europe is after four years, obviously as we model the us out and it will be more specific in the future, but right now we're using Europe as an analog.

And regarding <unk> in terms of <unk>.

Perceptions from the field or what we're seeing it's largely developing as we as we predicted so we do see segments of physicians that are more.

Wary of the jacks after after the label change. However, we anticipated that so we are starting to see.

A recovery in second line plus in <unk> as we anticipated.

And the new indications because really will be the only JAK inhibitor with the four big indications of PSA.

And then non radiographic ultimately in the fall that just builds upon the confidence level of the physician. So that's what we're feeling from the from the field I'll mention maybe some color on ulcerative colitis I mentioned that we're encouraged on the ulcerative colitis start so we saw in the quarter because we launched in early April .

We saw 600 unique gastroenterologists start to write prescriptions, which is quite interesting and good at positive and about half of those customers had never written a JAK inhibitor. So xeljanz was approved and so we're seeing obviously.

The ability of these customers to understand the overall risk benefit of <unk> relative to let's say another JAK inhibitor. So I feel that our communication is on track and we're seeing positive feedback as we build the indications that we've highlighted in the call.

If you'd like to listen to a replay, of the call, please visit our website at investors.abbvie.com.

Thanks, Geoff Operator next question. Please thank.

Thank you our next question Colin Bristow with UBS. Your line is open.

Thanks again for joining us.

And thank you.

Hey, good morning, and thanks for taking the questions.

This does conclude the call.

Another one on the 'twenty three Humira guidance could you just walk us through.

At the point at the end of <unk>, what percentage of contracts, where volume will you have confirmed that point.

You may disconnect your line and thank you, for your participation.

, Good morning and thank you for standing by.

Welcome to the AbbVie second quarter 2022 earnings conference call.

All participants will be able to listen only until the question and answer portion of this call.

And then it sounds like by the by the time you have the full year results.

Youre still anticipating that that could be a meaningful change could you just confirm that.

Characterization and then just on the Abbvie will imply four what are you hoping to see with the phase two data that we'll get there.

And what's the threshold here do you need to cut path to move forward.

Yes, so if we look at the.

The discussions that we've highlighted and Rick highlighted I think they're progressing as we would expect so typically they start in the late spring and look these are complex negotiations that go on for many many months.

In many years, we would have completed the at least the large pbms negotiations, which is the vast majority of the volume.

By that October timeframe in some cases as you probably know the payers would publish this information.

But very often not always the immunology and.

In inflammatory <unk>.

Segment those those negotiations can go on longer.

And they are very often published as a TBD in what used to be called the exclusionary formularies. So we would as Rick mentioned, we would have visibility to sort of the status on the volume in that October timeframe that that's a reasonable assumption again.

Don't know for sure given the complexity of <unk>.

<unk> similar negotiation, which is never taken place before.

But that's a reasonable way to think about when wed start to have the visibility to the volume component as Rick highlighted.

Yeah, and its ruble on the $105 four question.

Dovetailing on what Tom just walked through.

Things that we wanted to see are consistent with.

Have we developed in immunology.

Certainly raising the standard of care.

So the way. This was designed was to have that anti TNF amendment direct delivery.

To avoid systemic side effects of steroids.

You would see sort of that one two punch of.

Tom was describing.

That depth of response.

So once we see that type of information along with.

How it looks from a steroid standpoint metabolic effects bone effects taken together will give us a great sense of where it could fit.

Before anti TNF.

Even after we're studying patients that have failed anti TNF in this phase II study.

So taken together that will give us a really good sense of where to go and then remember we're also going to get data and partly my algebra medica.

It's not an uncommon disease and these patients are many of them are steroid dependent 50% or so.

Three years and going and they can withdraw from steroids and maybe a third MB five plus six years. They are stuck on steroid, but we'll see that data, where we're able to prevent them from flaring and to be able to reduce their.

Systemic steroid dose so there's multiple facets to this and potentially a number of opportunities and then later on in Crohn's disease as well.

Thanks, Colin Operator next question please.

Thank you. Our next question is from Chris Shiva Nanny.

With Goldman Sachs.

Thank you good morning, two questions if I could for everything.

See if I could just return to the question is how youre thinking about the long term guidance I think that's correct in recalling that you said seven 5 billion consisting of about six from the Psoriatic complex.

And what Youre almost already approaching something close to $5 billion or can you tell us how you're thinking about how that could factor into any long term thinking and then for <unk> positioning of that treatment in the overall treatment paradigm.

Are you thinking about that in relation to that.

Car T therapy treatment options before thank you.

So Chris this is Rob I'll take that question. So look we're very encouraged by <unk> beverages continued strong performance, we remain confident of our ability to achieve or exceed that 20 2025 guidance now keep in mind I mean, the street also reflect that to the street is about 400 million higher than the $7 5 billion that said, we don't intend on frequently updating that guidance, obviously, we'll we'll provide that.

Guidance update every few years or if there is an event or if theres a major disconnect. So obviously, if the street was way off.

We want to we want to point that out but overall, we're very encouraged about the uptake for sky results clearly demonstrating the ability to drive long term growth for Abbvie and will provide an update long term guidance at the appropriate time.

Thanks.

On the upgrade amount question, so I'm not going to go through all of the data points again, we've described it several times.

What.

What I would remind you of is that you know.

There are extremely robust efficacy in a heavily pretreated population, it's true to say that 40% of the patients had failed car T, but 60% of those patients didn't feel.

Therefore.

Our expectation or intension rather.

And as we mentioned earlier on in Tom's prepared remarks.

We are anticipating filing for accelerated approval.

During the second half of this year.

I think that what you can expect is that we believe that the total of the total population.

The total relapsed refractory population, whether or not the sale car Ts should have access to adequate amount because of the strength of the data overall in terms of future positioning. We've also discussed in the past our intention of initiating multiple phase additional phase III confirmatory study for the <unk> application what would be the.

Our confirmatory study the phase III studies ongoing that's in the relapsed refractory setting and our anticipation is that we will initiate multiple additional phase III, both in <unk> and other indications over the coming 12 to 18 months maybe.

And maybe I could just build on that Chris It's Jeff So we've started to.

Talk to.

Different types of physicians, whether they are in the car T centers are certainly to community centers, where increasingly believing that.

This lymphoma is treated in the community centers and so what we here at least at a high level from a research. So far is while that efficacy is incredibly impressive even after car T, but where they go is this simple sub Q of <unk>, maybe the fastest way to deliver T cells to my patients on <unk>.

You may ask a question by pressing star one on your phone.

I'd now like to introduce Ms. Liz Shea, Vice President, Head of Investor Relations.

So to build on Neal's point.

That data doesn't look like it's niches the drug in fact, it looks like it's sort of contributing to the idea of like this is a democratized type of medication for the lymphoma. So it's very encouraging from.

Our initial work that we're doing with physicians.

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

And that question comes from David Risinger with.

BB Securities.

Good morning and thanks for joining us.

Yes, thanks, very much and thanks for all the details today.

Todays call Rick I was hoping that you could.

Also on the call with me today are Rick, Gonzalez, Chairman of the Board and Chief Executive Officer, Rob Michaels, Vice Chairman and President, Geoff Stewart, Executive Vice President, Chief, Commercial Officer, and Tom Hudson, Senior Vice President, R&D and Chief Scientific Officer.

Joining us for the Q&A portion of the call are Laura Schumacher, Vice, Chairman, External Affairs, Chief Legal Officer and Corporate Secretary, Carrie Strom, Senior Vice President and President of Global Allerganesthetics, Scott Reents, Senior Vice President and Chief Financial Officer, Neil Gallagher, Vice President, Development and Chief Medical Officer, and Rupal Thakkar, Vice, President, Global Regulatory Affairs.

Help us to understand the current M&A landscape, how would you characterize it broadly and then if.

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

If you could also comment more specifically on Abbvie.

With respect to the transaction opportunity set.

For Abbvie, thanks very much.

I think if you look at the M&A environment.

I think many players are.

Or trying to add to their portfolios.

Yeah.

I think there's less of an appetite for larger transactions right now in.

In general across the industry.

Some of Thats, probably predicated on the fact that the FTC has been pretty tough in their language around larger kinds of transactions and your ability to be able to get those through.

And.

I think as it relates to us I mean, we've continued to execute the strategy that we.

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 statement.

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 AbbVie's 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.

Following our prepared remarks we'll take your questions.

We put in place after the Allergan transaction Allergan, obviously brought us a tremendous amount of diversity.

So with that I'll now turn the call over to Rick.

That transaction has been highly successful and has really changed.

But look in the shape of Abbvie and has clearly enhanced our performance.

Quite well our focus is.

Continuing to look for opportunities to be able to fill out our portfolio in areas that we believe there are opportunities to bring in strategic assets.

We're probably working more on earlier stage assets added to our R&D pipeline.

<unk> is a good example of the kinds of things that were out looking for and finding.

To supplement the overall pipeline and I think that strategy has worked well and it's a strategy that will continue to do so.

Forward.

Thank you.

Thank you Liz.

Good morning everyone and thank you for joining us today.

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

I'll briefly comment on our overall performance then Jeff, Tom, and Rob will view our second quarter business highlights, pipeline progress, and financial results in more detail.

AbbVie delivered another strong quarter with adjusted earnings per share of three dollars and thirty seven cents exceeding our expectations. Total net revenues of approximately fourteen point six billion dollars was up six point one percent on an operational basis in line with our expectations.

This performance reflects robust double-digit operational sales growth from immunology where Sky Rizzi is exceeding our expectations with impressive market share gains in both, psoriasis and PSA.

Sky Rizzi's recent U.S. approval in Crohn's disease will add yet another source of long-term growth.

As a result of the strong performance we've seen in the first half of the year we are raising our full year guidance for Sky Rizzi.

Renvoke is also demonstrating strong growth.

RA continues to perform in line with our expectations following the label update and we're making very good progress with all of the newly launched indications including PSA, AS, atopic dermatitis, and ulcerative colitis which collectively represent a, significant long-term growth opportunity.

Neuroscience is another area with outstanding performance.

VALAR, Botox Therapeutics, Ubrelvi, and QLIPTA each demonstrated double-digit sequential sales, growth.

Could you just walk us through, you know, at the point at the end of 3Q, what percentage of contracts or volume will you have confirmed at that point?

Pending regulatory approvals for VALAR in major depressive disorder, QLIPTA in chronic, migraine, and 951 for the treatment of advanced Parkinson's disease represent additional near-term growth opportunities for our neuroscience portfolio.

And thank you. This does conclude the call you may disconnect your lines and thank you for your participation.

And then, you know, it sounds like that by the time you have the 4-year results, you're still anticipating that there could be a meaningful change.

Turning now to aesthetics, Botox Cosmetics once again performed very well, with sales, up more than 20 percent on an operational basis.

Could you just confirm that's a fair characterization?

Demand for toxins remained strong with high teens' growth in the U.S. despite inflation, dynamics.

And then just on AbbVie 1.4, what are you hoping to see with the Phase 2 data that we're going to get at year end?

As expected, Juvenome's performance was negatively impacted by COVID-related lockdowns in China, as well as the suspension of our operations in Russia.

And what's the threshold ahead you need to surpass to move forward?

Additionally, in the U.S., we had a difficult prior year comparison with a promotional event, that we ran last year.

Thanks.

We also saw a modest impact in the quarter due to economic pressures.

Yeah, so if we look at the discussions that we've highlighted and Rick highlighted, I think they're progressing as we would expect.

We continue to expect positive full-year growth for Juvenome, driven by the lessening COVID, impact in China, and two new filler launches in the U.S., which will benefit growth in the second half of the year.

So typically they start in the late spring.

In hematological oncology, Imbruviga continues to be unfavorably impacted by a delayed market, recovery for new patients starting therapy in CLL and increasing competition. These ongoing dynamics will have an impact on Imbruviga's projected 2022 revenues. As a result, we will be adjusting our full-year guidance to reflect these impacts.

And look, these are complex negotiations.

BenClexta continues to demonstrate robust share performance in both CLL and AML, with, sales up double digits on an operational basis.

They go on for many, many months.

BenClexta also has registrational studies ongoing and additional attractive indications, such as multiple myeloma in the T1114 patient population with Phase III data forthcoming, as well as high-risk MDS.

In many years, we would have completed at least the, large PBM negotiations, which is the vast majority of the volume, you know, by that, October timeframe.

Additionally, we have an exciting and diverse pipeline of promising new therapies to address, critical unmet needs in both blood cancers and solid tumors, which are expected to support the next wave of AbbVie's growth in oncology.

In some cases, as you probably know, the payers would publish this information.

In summary, the diversity of our portfolio once again allowed us to deliver another strong, performance, despite the challenges we see in the CLL market and increasing Imbruviga competition.

But very often not always.

Skyrizzy and Renvoke are performing exceptionally well and are on pace to deliver approximately, $7.5 billion in combined sales this year.

The immunology and inflammatory segment, those negotiations, can go on longer.

Neuroscience demonstrated balanced double-digit growth driven by migraine and BALAR, and continued, robust Botox cosmetic growth offsets some of the U.S. inflationary impact to our filler and body contouring portfolios.

And they're very often published as a TBD in what used to be called the exclusionary formulary.

As a result, we are confirming our full-year 2022 adjusted earnings per share guidance, of $13.78 to $13.98, representing growth of more than 17 percent at the midpoint.

So we would, as Rick mentioned, we would have visibility to sort of the status on the volume in that October timeframe.

With that, I'll turn the call over to Jeff for additional comments or commercial highlights.

That's a reasonable assumption.

Jeff?

Again, I don't know for sure, given the complexity of biosimilar negotiation, which has never taken place before.

Thank you, Rick.

But that's a reasonable way to think about when we'd start to have the visibility to, the volume component, as Rick highlighted.

I'm very pleased with the momentum across our therapeutic portfolio, including the continued, progress we're making with new product and recent indication launches.

Yeah, and it's Rupal on the 154 question.

I'll start with our immunology portfolio, which delivered total revenues of $7.2 billion, reflecting growth of 19.2% on an operational basis. Global Humira sales were approximately $5.4 billion, up 6.8% on an operational basis, with 9.6% growth in the U.S., partially offset by international performance, where revenues were down 7.3% operationally due to biosimilar competition.

You know, dovetailing on what Tom just walked, through, things that we want to see are consistent with how we develop in immunology.

Gyrussi is performing extremely well, well ahead of our expectations. Total revenues were more than $1.2 billion, up 33% on a sequential basis.

You know, certainly raising standard of care.

We continue to advance our leadership position in psoriasis, where Skyrizzi's total prescription, share of the U.S. biological market has increased to approximately 26%, driven by an in-play share of new and switching patients that is now approaching 50%.

So the way this was designed was to have that anti-TNF and then that direct delivery to avoid systemic side effects of the steroids.

We have also achieved in-play market share leadership in 23 key international markets, including Japan, Germany, France, Canada, and Australia.

So you'd see sort of that one-two punch, as Tom was describing, and see that depth of response.

Psoriatic arthritis is also adding significantly to Skyrizzi's momentum, where we are now approved, in 54 countries. In the U.S. dermatology segment, where approximately 30% of patients exhibit both skin and joint, involvement, Skyrizzi is already achieving an in-play patient share of nearly 20%.

So once we see that type of information, along with how it looks from a steroid standpoint, metabolic effects, bone effects, taken together will give us a great sense of where it could fit.

We have also launched Skyrizzi for PSA in rheumatology, where we're seeing strong utilization, which is driving accelerated share growth.

You know, before anti-TNFs, even after we're studying patients that have failed anti-TNFs, in this phase two study.

Our recent launch of Skyrizzi for Crohn's disease in the U.S. represents the first new, biologic approval in six years for an area where there continues to be considerable unmet need. We believe Skyrizzi represents a highly effective and differentiated treatment option for Crohn's, patients, including the potential to provide meaningful levels of endoscopic improvement with novel and infrequent dosing.

So taken together, that will give us a really good sense of where to go.

Managed care access is expected to ramp strongly for this indication in the coming months.

And then remember, we're also going to get data in polymyalgia rheumatica.

Turning now to RINVOC, where we're seeing good momentum across each of the approved, indications. Total sales of $592 million were up more than 27% on a sequential basis.

It's not an uncommon disease, and these patients are, many of them are steroid dependent.

Prescriptions and RA remain strong, with a total market share of 5.8% in the U.S. and, approximately 6% across key international markets.

Fifty percent or so, three years and going.

RINVOC is now achieving an in-play RA share of approximately 13% in the U.S.

Unknown Executive, Perry Siatis, Geoff Stewart, Marcela Pinilla, Jeffrey Stewart, Marcela Pinilla, Jeffrey Stewart, Marcela Pinilla, Jeffrey Stewart, Jeffrey Stewart, [inaudible] Thanks Chris.

In PSA, RINVOC continues to see nice uptake, especially in the room segment, with commercial, access now equal to RA.

Operator, we have time for one final question.

We also recently received FDA approval for ankylosing spondylitis and European approval, for non-radiographic axial spa, further expanding RINVOC's potential across rheumatology.

And that question comes from David Risinger with SBB Securities.

In atopic dermatitis, new patient starts are tracking in line with our expectations, with, RINVOC's in-play patient share in the mid-teens.

Yes, thanks very much.

Strong commercial access in AD, which is also now equal to RA and PSA, is expected to considerably, increase paid prescription volume in this highly underpenetrated market over the remainder of the year.

And thanks for all the details on today's call.

Lastly, our recent launch of RINVOC for ulcerative colitis in the US is progressing well, and we recently just received European approval for the same indication. Commercial access in the US is ramping strongly, and we are seeing encouraging new patient starts. Physician feedback regarding RINVOC's approved profile in UC has been favorable, especially, given the very high rates of remission and endoscopic improvement demonstrated across our UC development program. The addressable patient population for RINVOC in UC is substantial, with nearly 50 percent of patients currently on or having used TNF therapy.

Rick, I was hoping, that you could help us to understand the current M&A landscape.

Turning now to hematologic oncology, where total revenues were $1.65 billion, down 7.9 percent on, an operational basis. Imbruvica global revenues were approximately $1.1 billion, down 17.1 percent, and below our expectations.

How would you characterize it broadly?

The CLL market continues to remain challenging in the US, with new patient starts down double digits relative to pre-pandemic levels. Now, as you may recall, our initial 2022 Imbruvica sales guidance contemplated a partial, market recovery, which, unfortunately, we have not yet observed. In fact, the latest data reflects new patient starts in the US were actually down high single digits versus last year. So, based on recent trends, we no longer believe it's prudent to anticipate a meaningful market, recovery in CLL over the second half of this year. Therefore, we will be removing this assumption from our 2022 guidance.

And then if you could also comment more specifically on AbbVie with respect to the transaction opportunity set for AbbVie.

In addition, increasing competition from newer therapies, including other BTK inhibitors, as well as our own Venclexta, also continue to lower Imbruvica's share of, new patient starts, especially in frontline CLL.

Thanks very much.

Despite this increasing competitive pressure, Imbruvica continues to be the total market share leaders across all lines of therapy in CLL.

I think if you look at the M&A environment, you know, I think many players are trying, to add to their portfolios.

Venclexta global sales were $505 million, up 21.2% on an operational basis.

I think there's less of an appetite for larger transactions right now in general across the industry.

In CLL, we continue to, see share gains in the US and across all major international markets.

Some of that's probably predicated on the fact that, you know, the FTC has been pretty tough in their language around larger kinds of transactions and your ability to be able to get those through.

We're also seeing continued strong performance in AML. Venclexta is now approved in 80 countries, and in many markets is already considered the new standard of care for frontline AML patients who are ineligible for intensive chemotherapy. As a result, we are seeing ramping market share throughout the countries where we have launched.

And I think as it relates to us, I mean, we have continued to execute the strategy that we put in place after the, Allergan transaction.

In neuroscience, revenues were more than $1.6 billion, up 15.2% on an operational basis.

Allergan obviously brought us a tremendous amount of diversity.

Raylar once again delivered strong growth. Sales of $492 million were up 13.9% on an operational basis, reflecting continued share gains in the US atypical antipsychotic market.

That transaction has been highly successful and has really changed the look and the shape, of AbbVie and has clearly enhanced our performance and we've done quite well.

Our launch preparations remain well underway in anticipation of our MDD approval in the fourth quarter. This is a potentially large indication that would represent incremental upside to our current projections for Raylar.

Our focus is continuing to look for opportunities to be able to fill out our portfolio in areas that we believe there are opportunities to bring in strategic assets.

Within Migraine, Ubrelvi remains the market-leading oral CGRP treatment for acute migraine, with, revenue of $185 million, up 34% on a sequential basis.

We're probably working more on earlier stage assets to add to our R&D pipeline.

Q-Lypta continues to increase its leading new-to-brand share in the U.S. preventative, CGRP class when we consider both paid and bridge volume.

Epicurean Mab is a good example of the kinds of things that we're out looking for and finding to supplement the overall pipeline.

We continue to make good progress with expanded commercial access, which will support strong, Q-Lypta sales growth over the remainder of this year.

And I think that strategy has worked well and it's a strategy that we'll continue to do going forward.

We are also pursuing the commercial approval for Q-Lypta as a preventative treatment in, patients with chronic migraine in the U.S., as well as a new therapy for Europe, potentially further strengthening our competitive product profile and long-term growth opportunity.

Thank you.

Botox Therapeutic is also performing well in chronic migraine, as well as its other, indications, with total sales of $678 million, up 14.5% on an operational basis.

Thanks, David.

So overall, I'm pleased with the commercial execution across the therapeutic business.

That concludes today's conference call.

Our broad portfolio of differentiated therapies and new launches is demonstrating strong revenue, growth.

If you'd like to listen to a recording, or replay of the call, please visit our website at investors.abbvie.com.

And with that, I'll turn the call over to Tom for additional comments on our R&D programs.

Thanks again for joining us.

Tom?

And thank you.

Thank you, Jeff.

This does conclude the call.

I'll start with immunology, where we had several notable pipeline updates in our inflammatory, bowel disease programs for both SCI-RIS-E and RINVOLC.

You may disconnect your line and thank you, for your participation.

We recently received FDA approval for SCI-RIS-E in Crohn's disease, and we're very pleased, with the label, which reflects the strong benefit-risk profile that SCI-RIS-E demonstrated as an induction and maintenance treatment for this condition. Based on this profile, we believe SCI-RIS-E will be a highly effective and differentiated, treatment option for patients with Crohn's disease.

Our regulatory application for SCI-RIS-E in Crohn's disease remains under review in Europe, with an approval decision expected near the end of this year.

Also, in the area of inflammatory bowel disease, we recently received European approval for, RINVOLC in ulcerative colitis, and we're excited to bring this new, highly efficacious oral option to patients suffering from this often debilitating disease.

In the quarter, we also completed a registrational program for RINVOLC in Crohn's disease, reporting, positive top-line results from our Phase III maintenance study. We recently submitted our regulatory applications for RINVOLC in this indication, and expect, approval decisions next year. Once approved for Crohn's disease, RINVOLC will have completed development programs for, all the major rheum and gastroindications covered by Humira, plus atopic dermatitis.

The strength of the data generated in our clinical programs should position RINVOLC, as a highly differentiated treatment across this broad indication set, and enable RINVOLC to deliver significant value to Advi over the long term.

And just this morning, we announced that we received European approval for RINVOLC in, non-radiographic axial spa, which rounds out RINVOLC's label in rheumatology.

Moving now to our oncology portfolio where we continue to make excellent progress across, all stages of our pipeline. At the recent EHA meeting, we presented results from the large B-cell lymphoma expansion cohort, in the Phase 2 study evaluating efcoritamab in patients who have received at least two prior lines of therapy. In this study, efcoritamab was well-tolerated and drove very deep and durable responses, in challenging to treat highly refractory patients with large B-cell lymphoma.

We recently discussed these results with regulatory agencies, and based on the strength of the, data, we intend to submit regulatory applications later this year for accelerated approval of efcoritamab in patients with relapsed refractory large B-cell lymphoma.

We expect approval decisions in 2023.

We continue to make good progress with the indication expansion programs for venclexta, and remain on track to see results from the Phase 3 canova trial in relapsed refractory multiple myeloma patients with a T11-14 mutation in the second half of this year. As a reminder, we've seen very promising results in this population in prior clinical studies, with venclexta showing high overall response rates and meaningful trends towards prolonged progression-free survival. The level of efficacy we've seen suggests that T11-14 patients may be particularly responsive, to venclexta, and this agent has the potential to become an important biomarker-driven treatment option in the multiple myeloma market.

In neuroscience, following successful completion of our Phase 3 chronic migraine prevention, study, we submitted our regulatory application to the FDA for QLIPTA in chronic migraine. Chronic migraine is defined as 15 or more headache days per month with at least eight, of those days associated with migraines. This is a debilitating disease that affects nearly 10 percent of people suffering from, migraines, significantly impacting their quality of life.

If approved, this would be another differentiating feature for QLIPTA, as it would be the only, oral CGRP approved for prevention in patients with chronic migraine.

We also submitted data from our Phase 3 prevention studies in both chronic and episodic migraine, to support regulatory applications in markets outside the U.S.

We expect approval decisions in the U.S. and in Europe in 2023. In the quarter, we submitted our regulatory application in the U.S. for ABBV951, our, novel subcutaneous levodopa-carbidopa delivery system for treatment of advanced Parkinson's disease. This innovative delivery system has the potential to become a transformative treatment option, for patients with advanced Parkinson's disease by providing duopa-like efficacy. We also expect to submit our regulatory application in Europe later this year with approval decisions, anticipated in both the U.S. and Europe in 2023.

Now I'd like to provide a few updates on some earlier stage programs where we have new data, and are advancing programs in development. In immunology, we recently obtained encouraging data in a Phase II study evaluating RIN-VOC, in systemic lupus, an autoimmune multisystem disease. In our study, RIN-VOC demonstrated greater response rates as well as a reduction in flares, compared with placebo.

We'll see longer-term data in the coming months, which will allow us to make a decision on, moving RIN-VOC into Phase III for lupus.

In oncology, where we have a pipeline of promising early-stage programs aimed at solid tumors, we are beginning to see very exciting data from several programs. Our anti-GARP antibody, ABBV151, is designed to block the immunosuppressive activity of, regulatory T-cells, which leads to increased T-cell effective functions in the tumor microenvironment. This reactivates the immune system against tumors, enhancing the anti-tumor immune response, triggered by a PD-1 inhibitor. In our Phase I program, we're combining 151 with a PD-1 checkpoint inhibitor in cancer, patients who are refractory to or relapsed after a PD-1, as well as evaluating this combination in PD-1 non-responsive tumors. Based on the preliminary efficacy we've seen in the dose expansion cohorts for multiple, solid tumors, including a deepening of responses over time and prolonged durability, we recently declared proof of concept for 151.

We plan to advance to Phase II in several solid tumors, starting with urethelial cancer. We're also expecting additional data readouts later this year in other solid tumor indications, including colorectal cancer, which may enable further expansion studies in this hard-to-treat cancer type.

We will also begin new studies to explore a broader set of solid tumors where GARP is, implicated as a critical immunosuppressive pathway based on tumor tissue analyses.

We're also making excellent progress with our next generation C-MET ADC, ABBV400, where, the emerging clinical data is very promising in several solid tumors.

This asset is similar to TelisoV, a C-MET ADC that uses a microtubulin inhibitor payload. TelisoV received breakthrough therapy designation for the treatment of patients with a subtype, of lung cancer with high levels of C-MET overexpression.

The toxin warhead for 400 uses a more potent topoisomerase inhibitor payload.

Rasini.

People can always go back on again, and if they don't understand what Handel has done, for the last hundred and fifty years to sort of to help chefs change X Vatican and make you a better chef it is up to you.

And now I will give you the I play next we have something he's really, but sometimes, In summary, we've seen tremendous progress across all stages of our pipeline in the first half of the year.

And we remain on track for further advancements in the remainder of twenty twenty two.

So with that, I'll turn the call over to Rob for additional comments on our second quarter, performance and financial outlook.

Thank you Tom.

AVI second quarter results demonstrate the strength of our diversified portfolio. Momentum from new products and recently launched indications allows us to maintain our earnings, outlook despite market dynamics for Imbruvica, higher inflation and the stronger U.S. dollar. We reported adjusted earnings per share of three dollars and thirty seven cents, reflecting, growth of eleven point two percent compared to prior year and eleven cents above our guidance midpoint. These results include a fourteen cent unfavorable impact from acquired IPRD expense. Total net revenues were fourteen point six billion dollars, up six point one percent, on an operational basis, excluding a one point six percent unfavorable impact from foreign exchange.

The adjusted operating margin ratio was fifty one percent of sales, an improvement of two, hundred twenty basis points versus the prior year. This includes adjusted gross margin of eighty four point seven percent of sales, adjusted, R&D investment of eleven percent of sales, acquired IPRD expense of one point eight percent of sales and adjusted SG&A expense of twenty point eight percent of sales.

Net interest expense was five hundred thirty two million dollars and the adjusted tax rate, was thirteen point four percent.

According to our financial outlook, we are confirming our full year adjusted earnings, per share guidance between thirteen dollars and seventy eight cents and thirteen dollars and ninety eight cents. This earnings per share guidance does not include an estimate for acquired IPRD expense, that may be incurred beyond the second quarter.

We now expect net revenues of approximately fifty eight point nine billion dollars, reflecting, growth of six point five percent on an operational basis. At current rates, we expect foreign exchange to have a one point seven percent unfavorable, impact on full year sales growth. Included in this guidance are the following updated assumptions. We now expect Skyrizzy global sales of approximately four point eight billion dollars, an increase, of four hundred million due to strong market share performance.

We now expect global revenue of approximately four point seven billion dollars, given a, lack of recovery in the CLL market and increasing competition.

Moving to the P&L, we now expect adjusted gross margin of eighty four point seven percent, of sales and continue to forecast and adjust the operating margin ratio of fifty one point eight percent of sales.

Nash, Benidge Ventures, Civics International, Nic Cort, Ken Wright, Sam Zosa, Nick Fields, TCA, Jen Thompson, Tucker Campbell, Jinand Khashoon, Margaret Anderson, Alejandro, Vasquez, Bernadette Baeza, Patr分鐘, Odinga Marques, Senator Levenson, Chad Ray.

So thank you all for joining us again for theincluded budget.

We hope to see you again next week on the Website Quest where we discuss illustrations, that may be incurred in the quarter.

In closing, we delivered strong performance again this quarter, including meaningful contributions, from new products and recently launched indications.

Given the momentum of our business, as well as our pipeline advancements, we are well, positioned for the long term.

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

Thanks, Rob.

We will now open the call for questions.

In 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 is Andrew Baum, Citi.

Your line is open.

Thank you.

First question is on the guidance range you've given for anticipated trajectory of Humira, in the U.S.

You're finishing contracting both with Medicare and commercial.

Can you provide any guidance further on 23 and even 24?

I'm sure there are some two-year contracts.

And then second, a pipeline question in relation to your anti-GARP monoclonal, which you've, taken a long time to optimize and move forward.

I'm just curious whether you're using any molecular markers in order to minimize risk, and the failures of other TGF-beta-targeted agents, particularly colorectal, using CMS score or a subgroup of the total population, or are you putting it in all commas?

There's a suggestion it works in all commas, or is this, again, informed by biomarkers?

Thank you.

Okay, Andrew, this is Rick.

Thank you for the questions.

I'll cover the first one, and then Tom can cover the second one.

So we are in the process now, as we've indicated before, of negotiating with the managed care, organizations and the PBMs to establish our contract position for Humira in 2023.

This is the normal time that you would go through that. It is progressing as we would expect.

I would say we're midway through that process right now.

I would expect it to conclude near the end of the third quarter, early of the fourth, quarter.

At that point, that's an important part of refining our model for 2023 in particular, and what that will tell us is the positions that we have formulary status for 2023 for, Humira, and that will help us define clearly the volume aspect of it.

That's going well, and that's going to be an important part of us being able to refine, that model.

So as we get further along in that process, that will give us the ability to be able to, potentially refine the model that we have.

Now, one thing that's important to remember in all of this is price is the other key aspect.

And there, we won't know real pricing until the actual event starts to occur, so we will, make assumptions around what that price looks like, and I think those will be informed assumptions, but they are just that, they're assumptions.

And so that's the one piece that will still be somewhat of an unknown until we see the, landscape start to play out in 2023, and particularly in midway through 2023 when more biosimilars enter the market.

So as we get more information and we can provide more clarity, we'll certainly try to do that, but I think that's where we are right now.

Tom?

Thank you.

Andrew, I'll try to break down the question in different parts, because you're right, there are many TGF beta assets.

This one's unique, GARP.

Most of the TGF beta assets work either antibodies against receptors through the active form, of TGF beta or TGF beta itself that's in circulation or in cells, but GARP blocks the inactive form of TGF beta before it's released from TGF beta, and we believe that actually is a differential mechanism, also allows that specificity to what's happening in TGF beta in the tumor as opposed to other systems in the body.

At the beginning of this, we thought, we had already had people that published that there, are very good TGF beta signatures that exist, and I can tell you that GARP signature follows tracks with TGF beta signatures, and that's often seen in all solid tumors or susceptive tumors that express these pathways.

It's a very common immunosuppressive mechanism.

That's why people and us are interested in it.

We learned initially, from data, we kind of suspected that people who actually had a nice, hot tumors but were not responding to PD-1s often had, at least from published work, actually had a higher TGF beta signature, so we thought that was a reason for the mechanism, why these patients with hot tumors were not responding.

And a lot of our initial clinical strategy there was actually to go after hot tumors, where PD-1s had to be elapsed or refractory, and we thought we could augment the PD-1 checkpoint response by doing this combination.

We did not see monotherapy activity, but in combination we did, and that's why our first, data sets and expansions, like I've just discussed in urothelial cancer, this project started earlier, and we're seeing data that's suggesting that this is correct, that you need to reflect both the pathway of TGF beta and PD-1 to get a response, and those, again, in multiple tumor types, we're seeing these responses, and we're moving forward.

At the same time, to bring it to colon, we could also see these same signatures of TGF, beta and GARP in cold tumors, but we weren't sure that, since they're not io-responsive, whether we'd get a response. We would get a clinical response, but we did start some investigations, and yes, we did, see some responses in cold tumors.

They happen over time, not in multiple, sometimes they appear, the tumors are stable for three, months, maybe six months, and then you see these responses appear.

They're very durable, one year, two year, very unusual.

These are patients with advanced disease that have very poor prognosis in phase one studies, so we saw some, I would say, we sometimes say in academia, call them exceptional responders, and so we decided to expand.

So those data sets are newer, are happening right now, I probably will have the data at, the end of this year, but yes, we've seen responses to this combination, and to answer your question, so the signatures we're looking at are not the CMS or kind of histology-based signatures on the tumor, it's more signatures of the inflammatory response that we can measure in the tumor, and it has to do with both inflammatory T cells, which are there for the killing, but also the inhibitory TGF beta signatures.

And of course, we're going to continue to investigate this, I don't have all the answers, for you today, but it certainly has been exciting to see how this program has evolved.

Thanks Andrew.

Aubrey, we'll take the next question please.

Thank you.

Our next question, is Terence Flynn with Morgan Stanley.

Hi, thanks for taking the questions.

Maybe two for me.

Just wanted to make sure that you are maintaining your 2022 aesthetics guidance of $5.9 billion.

Robert, I didn't hear you call that out, so I'm assuming that was a reiteration just given what you're seeing with Juvederm in the US.

And then the second question I had relates more of a, I guess, strategic one.

Rick, I know you're still going through the conversations with 2023 for Humira, but as you think about providing an update to guidance, whether that happens with the 3Q results or with the 4Q results, do you think you'll be able to provide some outlook on 2024?

Because I think something investors are discussing now is just if the possibility of the impact is more in 2024, how we should think about revenue margins in 2024 versus 2023.

So just wondering strategically how you're thinking about that at this point, not asking for guidance, more just thought process.

Thank you.

Okay.

So Terence, I'll take both of those questions and then Rob can certainly jump in here if he has something he wants to add.

We are maintaining the aesthetics guidance as we've indicated.

Certainly we have seen good, strong performance on the toxin side of the business and we would expect it to continue.

As we look at the filler side of the business, as you've noted, it was lighter this quarter than we've seen historically. And I'd say that was driven by a couple of issues.

It was certainly driven by the China-Russia, issue outside the US.

In the US, we did have a very successful promotional program that we ran last year. So it was a tough comparison versus last year. But I'd also say we have seen some glimpses of what could be inflationary pressure on that business, or it could be pent up demand for vacations.

And Kerry can certainly go through it in more detail if there's a follow-up question.

But I think as we look at the business overall, we're comfortable maintaining the guidance now.

We believe that Botox will continue to perform very well.

And obviously, we're doing more things to be able to drive the toxin side of the business.

It's at a price point where it should be less sensitive to inflationary pressures.

The price point for toxins is about $500, I think, right, Kerry?

And where fillers are almost twice that or maybe even a little more than twice that.

So clearly, from a disposable income standpoint, fillers are more challenging for people than toxins are.

And so that's the rationale behind it.

And certainly, as we look at the overall performance of the AbbVie business, we have plenty of opportunity with the diversity of our portfolio to cover, any potential shortfall if we ended up having any shortfall.

So that's why we're comfortable maintaining the guidance.

And I think we need to see more time play out here to see exactly where we are from a U.S. inflationary impact.

On the second question, as it relates to an, I think the way you've described it is accurate.

When we have more information, we'll try to provide that.

And when we've gotten to a point that certainly by the fourth order call, we're going to provide, you guidance on what we think will happen in 2023, but if we can provide something on the third order call, I wouldn't be looking for guidance.

I think that's not a good expectation, but certainly potentially a little more clarification, on what our contracting status looks like at that point and how that will translate into what we think.

And if we can refine the model to a greater degree, we would certainly provide that.

As it relates to 2024, you know, certainly I'm not going to, we're not in a position, where we're going to talk about 2024 right now, and I think that would be a little bit unlikely because not all these contracts will be two-year contracts, and so you really won't know what your volume position is at that point, and as I said, you won't know what the pricing is going to be, particularly midway through the year.

And so I think those will be important things to be able to dial in to where the forecast, is going.

I'd say overall we feel good about the contracting position that we're in.

And then I'd say the other thing is, and I know investors really want to try to model, this between 2023 and 2024.

I understand why you want to do that.

Certainly we obviously would like to do that to the greatest degree possible.

But when you step back and you actually look at the performance of AbbVie and how you will, value AbbVie and what AbbVie means going forward, it has relatively little to do with QMero, and that shape of that curve between 2023 and 2024.

And certainly by the end of 2024, we should reach a point where we've achieved some level, of stability on the tail of QMero.

What AbbVie's all about is these other products like Skyrizzy and Rinvoke and Velar and Ubrelli, the aesthetics business, Qletta.

Those are going to be the things that drive it.

So if you want to focus on something, and it's what we focus on internally, is that, underlying growth engine that will emerge on the other side of whatever erosion QMero ends up suffering before it hits some level of stability in a tail, is those assets and then what comes out of the pipeline.

Those are the key things that are going to create that growth between 2025 and 2030.

And that's the part that we, I would say, we're obviously managing QMero to the greatest, extent we can, but that's the part that we as a team are focusing on.

And I think that's the most important part, because that is the AbbVie going forward.

Thanks, Terrence.

Operator, let's take the next question, please.

Thank you.

Our next question is Mohit Banzel with Wells Fargo.

Great.

Thanks for taking my question.

Maybe dwelling a little bit more on the Humira question for Rick and Jeff.

So you said that pricing from the competition would be key and known for next year.

So as you get into contracts this year for the next year, how rigid or flexible these, contracts are from the pricing point of view when PBMs realize that the buyer similar is giving an X or Y pricing, or would that be more of a 2024 issue rather than 2023?

Thank you.

Well...

Let me take a shot at that and certainly Jeff is closer to it so Jeff if you want to add anything in, feel free to jump in and add.

Typically when you contract for an asset like Humira, you're contracting for a formulary position and there aren't volume requirements or other kinds of requirements.

And we've said all along the strategy that we'll have in the U.S. is similar to the strategy that we had internationally and that is maintain as much volume as we can at the highest level of profit that we can maintain it at. And that is the logic that we will employ. But that doesn't mean we won't have to be somewhat responsive to prices in the marketplace on Humira.

Jeff, anything you'd add?

No, I think that's, Rick, that's a very reasonable way to look at it in terms of how these negotiations are going and how we see 23 playing out.

I mean the real big ones in terms of how we look at it is the two big scenarios are you are likely coexisting with one or more biosimilars or if the negotiations don't go the way that we anticipate that we're excluded in favor of biosimilars.

And that's basically where price and volume in terms of refining our model for 23, that's the work that we're doing over the summer and then into the fall.

Helpful.

Thank you.

Thank you.

Thanks, Mohit.

Operator, next question, please.

Thank you.

Next question is Gary Nachman with BMO Capital Markets.

And then just on the Hemang franchise, are you keeping the infrastructure intact, preparing for new products to contribute?

And maybe you could talk about the near-term opportunities you see for products like at Coritamab and the Vitaclax, how much those could contribute and potentially offset some of the pressure you've been seeing from Imbruvica.

Thanks.

Yeah, thank you.

It's Jeff.

Thanks for the question.

So, your instinct and observation is right.

The big dynamic change for Skyrizzy here, largely what you're seeing is from the psoriatic arthritis indication.

And obviously you saw very, very large sequential moves.

And let me give you some sense of what we're looking at.

So we're seeing that we're putting more and more basically headroom into the overall share, position first in psoriatic disease. So that's psoriasis plus PSA.

So we're at 26% in terms of total TRX share and moving very, very nicely up. So that's being driven by this PSA acceleration.

So first remember that the PSA indication, we were really the last large product that, didn't have that indication.

So first what happens is it starts to interact very positively in the dermatology segment.

So as I mentioned, about 30% of patients both have skin and joint involvement.

And so we actually had a lower, despite the fact that we had the leading psoriasis share, we had a lower psoriasis share because we weren't covered with the joints with that indication.

So we see an immediate, very rapid acceleration of our overall DERM business that I highlighted.

Secondly, strategically important to the performance is that we're able to launch the PSA indication, for SCI-RIS-E in rheumatology.

So it starts to work together with the RINVO PSA indication and the room segment is three, times as large as the DERM segment.

So it's a very, very good dynamic in terms of our momentum in two large segments even, before we get to Crohn's.

Now I would say that as we've talked about before, I mean, SCI-RIS-E is a very special, product. You know, very unique dosing, very stable, incredible efficacy.

And so we are encouraged on the early results of Crohn's.

It's too early to start to see numbers or et cetera.

But all of that is playing into, you know, the rays that Rob talked about.

Hi, Gary.

This is Rob.

Just on the guidance.

So if you recall earlier in the year we got asked the question, I said PSA for SCI-RIS-E, was going to contribute about $200 million this year. It's probably closer to $400 million now with the guidance range given the very nice uptake, we've seen in PSA.

But part of that guidance raises also the strong share performance in psoriasis.

So it includes both.

In terms of Crohn's, that hasn't changed.

We've set approximately $100 million this year as we ramp access for Crohn's. But obviously the long-term potential for it is tremendous, and we're very excited about, that.

And maybe I can also then chime in on the second question.

Certainly that is a – the new assets are a very important part of our growth story, for HEMONC.

Certainly, as I mentioned, we're still continuing to ramp around the world with CLL.

We have, you know, more and more impressive data, particularly in the unfit frontline, population.

We have five years of data in the fit population for frontline for Venclexta.

We're encouraged with the myeloma data, which is very unique in terms of a biomarker-driven, approach for the 11-14.

Nevitoclax would be really one of the first new entrants for myelofibrosis, where there's, really only been RUCs in terms of that market.

Increasingly encouraging data in terms of the simple sub-Q, very rapid ways to get this, medication in later lines, and then building into frontline.

So we are very, very encouraged while we see some pressure on Imbruvica.

The new indications in base for Venclexta helps to offset that, and then we start to, build with those near-term HEM assets, and super-encouraged in terms of what we're seeing in terms of the probability that we're going to get it.

Thanks Gary.

Operator, next question please.

Thank you.

Our next question is from Chris, Schott, JP Morgan.

Great.

Thanks so much for the questions.

First one, I just wanted to come back to dynamics on the U.S. dermal filler market.

I guess specifically, can you just quantify how much of the weakness we saw this or the decline year over year was due to the promotion events last year versus the impact from the economic pressures that you're seeing?

And I guess in that same context, are you seeing any signs of weakness in the European, business?

I'm just trying to get our hands around what type of magnitude of impact you're talking about here in terms of either if it's inflation or economic sensitivity to that business.

My second question was just thinking about Rinvoke and SkyRizzy formulary and pricing dynamics going forward as biosimilar Humira enters the market.

I guess you were expecting or are you hearing through discussions any major shifts in the way payers are thinking about those products as we think about pricing coming down and obviously the largest kind of product in the space there?

Thanks so much.

Hi, this is Carrie.

I'll take your first question around Juvederm.

And as Rick said, there was a one-time promotional event that we ran in the U.S. for Juvederm in Q2 of last year. And it was highly successful. And it increased sales in the sales space, which created this challenging prior year comparison.

So that was the key driver.

But as you noted, there was also this economic impact that is suggestive of some early changes in consumer behavior.

And that really isn't surprising in light of the inflationary pressures that we're seeing on discretionary income.

And as Rick said, the filler market is likely more sensitive to that than toxins for a few reasons.

We mentioned the price point.

So a price point of closer to $1,000 versus $500 for toxins.

Also the nature of the filler business is different than toxin from a patient dynamic, and treatment dynamic in that there are more there's a longer interval between treatments for fillers versus toxins, which is sort of like a more regular treatment paradigm a few times a year.

Also the patient bases are different.

When you think about the toxin patient base and Botox Cosmetics, the majority of the patient base is continuing patients versus more of a reliance on new patient acquisition.

And so, you know, those are some of the factors we're thinking about when we think about the deceleration of the filler market in Q2.

But while, you know, the market has slowed and despite the performance in Q2, we do continue, to expect a positive second half growth for U.S. Juvederm.

Really waited more in the fourth quarter as we're going to launch two new fillers in the fourth quarter. And those two new fillers will get us into incremental categories for HA fillers, including jawline and skin quality, which will help to drive some incremental demand at the end of the year.

And in terms of your question around economic impact outside of the U.S., we are watching that very closely and we really have not.

In terms of your second question, again, it's Jeff, thanks for that.

You know, we're, we don't see some significant pressures on Skyrizzy and Renvogue.

Now, we always have discussions with the payer as we look at our contracting strategy, but, I think we fall back on our clinical evidence that we have on these two major assets.

I mean, we have, we have four head-to-head trials against other major competitors with, Skyrizzy where we have, you know, just really gross superiority versus whether it's an IL-17, whether it's, you know, Humira, which one day will be biosimilar, Stellara, et cetera.

So just the pure performance there and the momentum, it's clearly a distinguished asset.

You know, we're going to be first in terms of Crohn's to start to establish that new, area and build the, and build the, build the market there.

And I think on Renvogue, to some degree, there's only one other jack inhibitor that is not, going to have the scope of indications, and it's Zeljance.

And Zeljance has been, you know, significantly wounded based on the oral surveillance data.

So in terms of our ability to, you know, build and protect and, and, and grow Skyrizzy and, Renvogue into the next stage of development, we're, we're quite confident that we have the assets to be able to do that.

Thanks, Chris.

Operator, next question, please.

And thank you.

Our next question is from Steve Scala, Collin.

Your line's open.

Thank you very much.

Two questions.

First, Rick, in the past, you have laid out four factors that will dictate Humira's trajectory, in 2023. The first two were Humira access and biosimilar price, and it's clear it's too early for any, news on either of those points.

But the second two were competitiveness of biosimilars, which you said in part was interchangeability, and also the biosimilar ability to supply the market.

So those two factors, three and four, are things that won't fluctuate, and presumably, you have some visibility on that now.

So I'm just wondering if there's anything unusual occurring there, and in discussions, how important is interchangeability with payers?

The second question is, and I apologize if I missed it, but are there any updates on, the TNF steroid conjugate, and is Phase II RA data still expected this year?

Thank you.

All right.

Thanks, Steve.

This is Rick.

I'll cover the first one, and Rupa can cover the second one.

So you are correct.

That is what I described a meeting or two ago as the four variables.

I would say, when you think about interchangeability, I think you have to think about it in the, backdrop of not just interchangeability, but also what is the profile that is the closest to Shumera today.

And we can look at all the biosimilars and have a, you know, we have pretty good visibility, as to what that profile looks like.

And what I would say is, to get a profile that is interchangeable and is consistent, with the current Shumera that's predominantly in the marketplace today, that's probably going to occur in the summer of 2023.

There should be one or two biosimilars that have a profile that looks like that.

And that would make it somewhat easier for an organization to make a switch.

So I think that will play an important variable.

, Liza Henderson , Aaron Newsom with Larry, Kochatowsky, .

Increasing affordability, especially for patients in Medicare Part D. And so that's something we've, been supportive of.

We've been vocal that we think that's an important step forward.

But I'd say on balance, this is a bill that has far more negatives than it has positives.

And I think, frankly, although it may not be short term, that challenging from a financial, standpoint, I think the long term implications of this bill are pretty significant.

And they really hinge around this so-called negotiation clause that's in there and how that's being implemented, particularly for small molecules. And if you're familiar with it, essentially what it says is that CMS, or we're assuming it will be CMS, has the ability at a certain point in time to be able to negotiate a price on a set of drugs.

And by the time you get there, it will be a big set of drugs that they'll have the ability to be able to negotiate on.

And the key issue is this.

Essentially, they have full latitude to basically decide whatever, price they want the drug to be.

And I wouldn't necessarily call it a negotiation, because the only alternative that the manufacturer has is to accept a 95% penalty on their revenues, or in essence, take a 95% discount.

So it's not negotiation.

We should just call it what it is.

It's price controls, is what they're basically putting in place, if the language stays the same.

And ultimately, I think the real challenge is how we invest as an industry in innovation.

If you take small molecules as an example, I'll walk you through an example that illustrates the, point I'm going to raise here.

If you take a small molecule, it says at year nine after the first approval, CMS has the right to be able to negotiate the price on that drug.

So if you take an oncology drug as an example, how do we develop oncology drugs in this industry?

And what do the regulatory authorities typically require us to do to be able to develop an oncology drug?

Well, they typically require you to do, and what we typically do is we go into patients who have failed on all the existing therapies, fourth-line patients, fifth-line patients, and we take whatever drug we have, and we determine do we have a positive benefit risk in that patient population.

If we find that we do, then we seek approval for that drug in that patient population so that those patients will get the benefit of that drug.

And then we start to work our way up towards front lines.

Those refractory patients are typically very small populations of patients, right?

And you can never get a return on a drug just on that patient population. And then you work your way up to front line or second line or wherever you end up.

That process typically takes seven to nine years because of the length of the trials.

So essentially with this, by the time you got to the larger populations, you'd be within a year or two of when CMS could change the price.

But one, it's impossible to figure out what the return is going to be, so how do you invest?

Two, it really puts negative pressure on you not to continue to develop new indications.

But the most detrimental part of it is to patients who need these drugs.

Any questions or small indications or in later stage?

Because you're faced with the dilemma, and this is a horrible dilemma, right, as a company, and for patients.

You're faced with the dilemma of, do I choose not to seek approval in those late stage patients, so I don't start the clock and wait until I'm closer to front line before I start the clock?

That is not the right policy.

And I would say, on balance, this bill will have a couple of things that are good for, patients that I'm fully supportive of.

But unless Congress wants to harm patients and harm innovation in this industry, they, need to change that part of it.

It doesn't make sense.

It's short-sighted.

Now, they can change it in a couple of different ways. They can determine, OK, what is a floor price or a maximum discount by year?

And then you can calculate the return on investment that you're going to have on the drug.

Or they can at least make it consistent with biologics throughout 13 years.

Otherwise, the investment in small molecule oncology drugs or neuroscience drugs, which, Medicare patient populations are highly dependent on new innovative drugs in those areas, because they're elderly patients, are going to suffer.

And the CBO report that was published back in April of last year clearly pointed that, out.

This isn't something I'm just saying or industry is just saying.

And in fact, if anything, I'd say they probably under-call the magnitude of the impact.

So this is an important issue.

We all know that affordability and access for Medicare patients is important.

But you don't need to destroy the innovation model in the process in order to provide that.

And so I am hopeful that we'll see some movement here and some rationality will play out.

OK.

And to address your 951, hi, it's Jeff.

Thanks for the question.

So I think some perspective is, you know, globally, Duopa is about a half a billion, dollar brand.

And certainly, we've said that we believe that 951 could certainly double that up or, more.

I'll give you the perspective of why we think that way.

So if you look at the advanced Parkinson's patients, about 85 percent sort of cycle and, they stay on these generic orals that become less and less and less effective.

And the only thing they can really do, and that's about 15 percent of the market, the, advanced Parkinson's market, is they can move to either deep brain stimulation or Duopa.

But you've got to go through a surgical barrier.

So the families and the patients are forced to think, if I need to get improvement in, my symptoms and my quality of life, I'm forced to basically think about, do I get a hole in my head or a hole in my stomach with a gastric surgery?

This is going to be a subcue.

And so we see in our market research that at least 40 to 60 percent of people never, want to move towards DBS or Duopa.

So we think this is a way where we can start to expand and create a new market segment, in essence, a subcutaneous segment where you don't have to take that risk on the surgery And like you mentioned, in the movement disorder centers, there's a significant amount of experts, that are excited about this new option.

And we believe that it's going to be a real innovation for patients.

Chris, this is Rob.

As Jeff said, I mean, we expect this to be market-expanding.

At the, J.P. Morgan conference earlier this year, we did give peak revenue guidance for 951 greater than a billion dollars.

Obviously, Duopa is half a billion now.

If you're modeling it, obviously, there'll be some level of cannibalization.

I'd say minor level of cannibalization on Duodopa.

But when you think about the combination between 951 and Duodopa, obviously, it's going to, grow the revenue for the company and expand the market.

Thanks, Chris.

Operator, next question, please.

Thank you.

It's Tim Anderson with Wharf Research.

Hi.

If I could just go back to the whole 23 versus 24 thing.

I thought that in the past, you guys have said earnings would drop in 2023 and then return to growth in 2024.

Is that still the case, or is that off the table?

And then second question goes back to the 154, compound, your antibody drug conjugate.

We understand that the timing is still on track, but it feels like to me there's a distinct lack of enthusiasm towards this program.

You don't seem to mention it much or at all, really, despite its novelty and despite it being, in your most critical franchise of immunology.

So has the enthusiasm waned over, let's say, the last couple of years?

So, Tim, this is Rob.

On your first question, what we've said, we've talked about this, you know, 45 percent with a range around that, plus or minus 10 percent, and using, obviously, the Europe analog as an example.

And in that case, with the steep erosion year one in 2023, you would expect, then, the trough to be in 2023 and you return to growth in 2024.

You know, as this plays out, we'll see how that shakes out.

Ultimately, if more of it happens in 2024, you obviously have another year of growth for all your growth brands.

And so, you know, you have a different floor in that scenario.

But most importantly, it's what happens in 2025 and beyond.

When you look at this company with the growth drivers we have, we'll be delivering high single-digit growth in 2025 and beyond, which is industry leading.

We'll have the lowest LOE exposure in the industry in the second half of this decade.

And so, you know, we're focused on the long term, and we feel very good about the prospects, for this business. But as it stands now, the most recent direction we've given is expect that first year erosion, so that 45 percent plus or minus 10 percent, which then play out to, you know, return to growth in 2024.

We'll obviously update the market as we see it play out next year.

Well, maybe I'll take this one.

This is Tom Hudson.

I'm a clinical immunologist, and I know, how we've been using steroids. They can give very profound and deep immunosuppression, decreased inflammation, and that's often used in severe cases when a patient shows up.

So, we know that the response is very strong, but there are a lot of side effects, and our problem is always weaning the steroids out in the clinic.

So, here, again, the combination of an immunomodulator like TNF and a steroid have that potential of giving us that deep, deep response very quickly to remove the immunosuppression.

And based on the data we've seen preclinically in our phase one studies, we're not seeing those biomarkers or side effects in the bone or brain or cortisol or others.

So, we've already demonstrated that, and we had nice data.

So, that's my enthusiasm.

We expect to see deep responses, durable responses with much better tolerated steroids.

Our program, and we've shown this also, is that we actually believe in a platform, and we're developing steroid ADCs for other targets to target other immune cells, more specifically around some T cells or some B cells or some fibroblasts.

These programs are coming forward.

We think this is a profound platform in immunology to go after different biologies in very targeted steroid suppression of different specific immune cell types, and that's going to play out over the next couple of years.

So, based on the data we saw, we expand the platform to other biomarkers, getting into other specific immune cell types.

Of course, if we're quiet because we need to see the data, all the studies have been, fully recruited, actually moved faster than we expected, and the data was randomized.

We're just going to see the data in the fall because it's a blinded study, but the enthusiasm is there.

And we also, of course, seeing that data, and then we have PMR because we also started...

Thanks Tim.

Operator, next question please.

Thank you.

Our next question is Geoff Meacham, Bank of America.

Your line is open.

Great.

Thank you so much for the question.

Not to belabor the point on Humira, but I wanted to ask you, is the long-term, meaning the four-year kind of trend that we saw this quarter for Humira in Europe, is that still a good proxy for how you guys are thinking about the tail for Humira, just given we're coming up on four years in Europe and we're talking about, you know, high single-digit erosion still.

So I wanted to kind of ask you about the, you know, the tail piece of what you expect in the U.S. And the second question, just on Renvo, you know, I wanted to ask you also on the, since the FDA, you know, labeling change, if you've just seen any changes with regard to, you know, persistent rates or, you know, or new starts, just on your feedback from the field and how docs view the safety of the JET class.

Thank you.

Jeff, this is Rob.

I'll take your first question. So, you know, the way we've talked about Humira erosion, the way it's played out in Europe is we saw that steep erosion year one, more moderate erosion years beyond. You know, in our modeling now, that's probably the best way to think about it is, you know, steep erosion year one, more moderate.

You know, you'll have an annualization impact in year two, but more moderate beyond that.

So we are starting to see a recovery in second line plus in RA as we anticipated.

And the new indications, because really we'll be the only JAK inhibitor with the four big indications of RA, PSA, AS, and then non-radiographic ultimately in the fall, that just builds upon the confidence level of the physician.

So that's what we're feeling from the field.

I'll mention maybe some color on ulcerative colitis.

I mentioned that we're encouraged on the ulcerative colitis start.

So we saw in the quarter, because we launched in early April, you know, we saw 600 unique gastroenterologists start to write prescriptions, which is quite interesting and good.

It's positive.

And about half of those customers had never written a JAK inhibitor. So Xeljanz was approved.

And so we're seeing, obviously, the ability of these customers to understand the overall risk benefit of RINVOC relative to, let's say, another JAK inhibitor.

So I feel that, you know, our communication is on track, and we're seeing positive feedback as we build the indications that we've highlighted in the fall.

Thanks Geoff.

Operator, next question please.

Thank you.

Our next question is Colin Bristow, with UBS.

Your line is open.

Hey, good morning and thanks for taking the questions.

Another one on the 23 Humira guidance.