Q4 2023 AbbVie Inc Earnings Call

Good morning, and thank you for standing by welcome to the Abbvie fourth quarter 2023 earnings Conference call. All participants will be able to listen only until the question and ask a portion of this call. You may ask a question by pressing star one on your phone today's call is also being recorded if you have any objections you may disconnect at this time.

I'd like to introduce MS. Liz Shea Senior Vice President Investor Relations. Thank you you may begin.

Liz Shea: Good morning, and thanks for joining US also on the call with me today are reconciled as chairman of the Board and Chief Executive Officer, Rob, Michael President and Chief Operating Officer, Jeff Stuart Executive Vice President Chief Commercial Officer, Scott <unk> Executive Vice President and Chief Financial Officer, Carrie Strom Senior Vice President Abby and President Global allergy anesthetics.

Liz Shea: And ruble Tucker senior Vice President and Chief Medical Officer Global Therapeutics, joining us for the Q&A portion of the call is Tom Hudson Senior Vice President and Chief Scientific Officer Global Research before we get started I will note that some statements. We make today may be considered forward looking statements based on our current expectations Abbvie cautions that these forward looking statements are subject to.

Liz Shea: Risks and uncertainties that may cause actual results to differ materially from those indicated in our forward looking statements.

Liz Shea: 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.

Speaker Change: On today's conference call non-GAAP financial measures will be used to help investors understand abbott'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. In addition to the news release issued this morning, we have also posted slides on our website at investors at Abbvie.

Speaker Change: Calm that supplement some of the content, we'll be covering this morning. Following our prepared remarks, we will take your questions. So with that I'll turn the call over to Rick.

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

Our performance this quarter tops off another excellent year for Abbvie with.

Rick: With results well above our initial expectations.

Rick: I'm, particularly pleased with the performance of our growth platform the base business, excluding humira, which delivered full year sales growth.

Rick: More than 8% with revenue growth accelerating to more than 15%.

Rick: Fourth quarter.

Rick: The strength of our diversified growth platform has not only enabled us to successfully absorb the largest loss of exclusivity event to date across our industry, but it is also supported continued investment.

Rick: Our business for long term growth.

Rick: These investments include higher adjusted R&D expense.

Rick: It was increased by nearly $600 million in 2023 and will be range substantially again in 2024 to support several promising pipeline programs like 383, and multiple myeloma 400, our next generation ADC for several solid tumor types and Luna.

Rick: For Hs as well as inflammatory bowel disease, the proposed acquisition of immunogen and their portfolio of Adcs accelerating our entry into the solid tumor space.

Rick: And strengthening our oncology pipeline as well as the proposed acquisition of <unk>, a unique opportunity to augment our presence in neuroscience with a pipeline of differentiated assets.

We also increased our quarterly dividend, which we announced in October since our inception, we have grown our dividend by more than 285%.

Rick: In summary, our operational execution has been outstanding and we have considerable momentum heading into 2024 included unexpected return to operational sales growth just one year following the U S. Humira loss of exclusivity driven by our <unk>.

Rick: <unk> platform, we remain confident in our long term outlook, including a return to robust growth in 2025 with a high single digit CAGR through the end of the decade with that I'll turn the call over to Rob for additional comments on our business performance Rob. Thank you Rick today, we reported another strong quarter.

And highly productive year for Abbvie, we delivered full year adjusted earnings per share of $11 11.

Rob: Which is 63 above our initial guidance mid point, excluding the impact of IP R&D expense.

Rob: Total net revenues were $54 3 billion rub.

Rob: Roughly $2 3 billion ahead of our initial guidance. Most importantly, each of our five key growth areas outperformed our initial expectations.

Rob: As it pertains to add these near term outlook. We are focused on three key priorities first driving strong performance of our ex humira growth platform.

Rob: This platform is a critical driver of our return to robust growth in 2025 and beyond.

Rob: And our therapeutic portfolio, we have several key brands, including <unk>, <unk>, <unk>, <unk> and <unk>, which are each expected to contribute double digit sales growth in 2024.

We also expect a meaningful growth for aesthetics. This year, driven by improving market trends in the U S and continued execution across our international business.

Rob: We are well positioned to drive strong long term growth in this highly underpenetrated market.

Rob: Second we are focused on prioritizing investment in our pipeline, which encompasses numerous opportunities to elevate the standard of care for patients.

We anticipate updates this year from several important R&D programs, including approvals for <unk> in UC 95, one in the U S and potentially accelerated approval for <unk> in third line plus Follicular lymphoma, we also anticipate regulatory submissions for <unk>.

Rob: <unk>, our novel short acting toxin and potentially <unk> in advanced non squamous non small cell lung cancer.

Rob: Yeah.

Rob: And third we are focused on closing and integrating immunogen and cerebral these two exciting opportunities represent substantial sources of revenue growth well into the next decade, we remain on track with the anticipated closing of both deals in the middle of the year.

Rob: Today, we are also reaffirming our long term sales outlook, which includes a return to robust revenue growth in 2025 with a high single digit CAGR through the end of the decade.

Rob: Included in this outlook is an updated forecast for sky <unk> and <unk>.

Rob: On the impressive growth of both therapies, which we expect will collectively generate approximately $16 billion of revenue in 2024, we now anticipate sky resilient Ren bulk or collectively exceed more than $27 billion in sales by 2027 with a robust growth.

Rob: Continuing into the next decade.

Rob: This updated forecast reflects an increase of more than $6 billion in revenue compare to our prior 2027 guidance.

Rob: We expect global sales for <unk> to reach more than $17 billion in 2027, reflecting continued share capture in psoriasis, where we are the clear market leader as well as strong uptake in IBD.

Rob: And we expect <unk> to achieve more than $10 billion of global sales in 2027, reflecting continued market growth and share momentum across each of <unk> approved indications, including four in rheumatology two in IBD and atopic dermatitis.

Rob: This forecast comprehensive modest contributions from several new disease areas for <unk>, which we anticipate will be launching in the second half of the decade. These new indications have a collective peak sales potential of several billion dollars.

Rob: Our updated forecast also includes higher estimates for <unk>. We now expect total oral <unk> peak revenue of more than $3 billion.

Rob: Reflecting an increase of more than $1 billion.

Rob: Our previously issued long term forecast for aesthetics, <unk> and 95, 1% remained unchanged.

Rob: In summary, this is an exciting time for Abbvie, we are demonstrating outstanding execution across our portfolio and our long term outlook remains very strong.

Rob: With that I'll turn the call over to Jeff for additional comments on our commercial highlights Jeff. Thank you, Rob I'll start with the quarterly results for immunology, which delivered total revenues of more than $6 9 billion exceeding.

Jeff: Exceeding our expectations Scott.

Jeff: <unk> total sales were approximately $2 $4 billion, reflecting operational growth of 51, 6%.

Jeff: <unk> total sales were more than $1 2 billion, reflecting operational growth of 62, 8%.

On a full year basis sky risky and <unk> delivered more than $11 7 billion in total combined revenue unimpressive increase of $4 billion year over year.

Jeff: And as Rob just described we see substantial room for continued growth across each of their currently approved indications.

Jeff: You can get a good sense for this momentum by looking at the relationship between the current in play share, which includes new and switching patients and the total prescription share just today.

For example, our performance in IBD has been very strong for both Scott <unk>.

Jeff: In Crohn's disease. These two treatments together are already capturing roughly one out of every three in play patients across all lines of therapy in the United States, while their combined total prescription share is only in the mid single digits.

Jeff: You see a similar trend happening in ulcerative colitis for <unk>, and we anticipate launching <unk> for this indication later this year so significant opportunity remains for revenue inflection in IBD, especially given their respective efficacy safety and dosing profiles.

Across some of the other notable indications Scott <unk> is capturing roughly half of the in play psoriasis patients in the U S biologic market relative to a total prescription share which is in the mid 30%.

Jeff: <unk> capturing high teens in play share in the atopic dermatitis market, while told a share is in the high single digits.

Jeff: Similarly in rheumatoid arthritis, <unk>, capturing mid teens in play share while total share is roughly 7%. So again, we see substantial headroom for share gains. In addition to the typical robust market growth across rheum derm and gastro.

Jeff: Plus we are planning to have up to five additional indications for <unk> across several sizeable markets that will potentially provide another significant revenue inflection in the second half of this decade and into the 2030.

Jeff: Yes.

Turning now to Humira.

Jeff: Which delivered global sales of $3 3 billion down 48% due to Biosimilar competition the.

Jeff: The erosion impact in the U S played out largely in line with our expectations this quarter, while performance across our international markets continues to trend better than expected.

Jeff: In the U S. We have once again secured broad formulary access for Humira in 2024.

Jeff: While there will be some step down in coverage year over year, we will still have parity access to biosimilars for the vast majority of U S patient lives.

Jeff: Turning now to oncology, where total revenues were $1 5 billion.

Jeff: And <unk> global revenues were $903 million down, 19%, reflecting continued pressure in new patient starts.

Jeff: Then collects the global sales were $589 million up 13, 7% on an operational basis with strong demand for both <unk> and AML across our key countries.

Jeff: The early prescription trends for a keenly in third line plus <unk> have been encouraging.

Jeff: With commercialization now underway in the U S Europe and Japan.

Jeff: We also anticipate the potential label expansion for Follicular lymphoma later this year.

Jeff: Lastly, we have two new and exciting opportunities in oncology pending.

Jeff: Pending completion of the transaction, we will add <unk> to our portfolio.

Jeff: <unk> is a first in class ADC therapy approved for ovarian cancer, which is already demonstrating impressive uptake in the U S market I look forward to welcoming the immunogen commercial team to Abbvie.

Jeff: And police Avi another novel, ADC, which has demonstrated very promising data in lung cancer to Lisa <unk> would further expand our scale and growth potential in solid tumors.

Jeff: In neuroscience, our second largest therapeutic area total full year revenues were more than $7 7 billion.

Jeff: Reflecting impressive absolute sales growth of nearly $1 2 billion.

Jeff: In the quarter total revenues were approximately $2 1 billion up 22, 4% on an operational basis.

Jeff: <unk> continues to demonstrate robust growth global sales of $789 million were up nearly 40%. We continue to see significant momentum in new prescriptions across all indications following the approval as an adjunctive treatment for major depressive disorder, just over a year ago.

Jeff: And our leading oral <unk> portfolio for migraine contribute contributed $348 million in.

Jeff: And combined sales this quarter, reflecting growth of approximately 40%. We anticipate continued robust demand for both <unk> and <unk> of this year, including the expansion of equipped up the only once daily oral <unk> for prevention of both episodic and chronic migraine into the international <unk>.

<unk>.

Jeff: Based on the strong momentum we have raised the outlook for our <unk> portfolio and now expect total peak sales from <unk> and <unk> combined to exceed $3 billion.

Total botox therapeutic global sales were $776 million up six 7% on an operational basis, reflecting momentum in chronic migraine as well as other approved indications.

Jeff: And lastly, we recently launched 95, one in both Japan, and Europe, and we are pursuing commercial approval in the U S. Later this year.

Jeff: This treatment represents a potentially transformative next generation therapy for advanced Parkinson's disease, and a billion dollar plus peak sales opportunity.

Jeff: Yeah.

Jeff: So overall I'm extremely pleased with the commercial execution across our diversified portfolio, especially the growth platform, which is demonstrating very strong momentum as we head into 2024.

Jeff: And with that I'll turn the call over to Kerry for additional comments on aesthetics Eric.

Thank you, Jeff fourth quarter Global <unk> sales of approximately $1 4 billion in operational increase of six 9%.

Kerry: In the U S aesthetic sales of $884 million increased five 7% mark by accelerating market growth and strong key product performance.

Kerry: Fourth quarter U S. Botox cosmetic sales were $453 million, an increase of seven 3%. We continue to see sustained momentum in the recovery of the U S facial toxin market, which was the primary driver of growth in the fourth quarter.

Kerry: Botox cosmetic remains the clear market leader with strong and stable share despite new competitive entrants.

Kerry: USG <unk> sales were $156 million in the fourth quarter, an increase of more than 20% versus the prior year.

Kerry: This robust growth was driven by the strong launches of <unk>, and <unk>, which continue to drive new consumers and greater penetration in the turmoil seller category.

Kerry: Consistent with our expectations the U S solar market recovery trials out of toxins, but is continuing to show improvement as year over year growth was roughly flat in the fourth quarter.

Kerry: As we look to 2024, we are pleased with the momentum of our U S. Aesthetics portfolio, we expect full year sales growth as our market leadership positions us very well from a competitive perspective, and we anticipate continued recovery endotoxin and <unk> markets.

Kerry: Internationally fourth quarter aesthetic sales were $487 million representing.

Kerry: <unk> <unk> operational increase of 9%.

Kerry: We experienced strong performance in most regions and growth benefited from the impact of China's Covid Lockdowns in late 2022.

Kerry: Within China, the softening economic conditions that emerged in the third quarter continued to impact results.

Kerry: Consistent with what we experienced in the U S. The economic slowdown has impacted sellers more than toxin based upon their relatively higher price.

Kerry: We anticipate economic headwinds will continue in China over the near term.

Kerry: Against our expectations for continued strong performance in other international regions.

Kerry: Looking to the long term aesthetic aesthetics remains an area with very low market penetration and we have demonstrated our ability to drive growth through investments in our customers consumers and innovation.

Kerry: As such we anticipate that Fedex will be a strong growth portfolio for years to come and remain confident in our ability to deliver more than $9 billion of sales by the end of the decade.

Speaker Change: That I will turn the call over to everyone.

Speaker Change: Thank you Carrie and 2023, we saw a significant evolution of our pipeline with multiple data readouts regulatory submissions and approvals.

Speaker Change: As well as expansion of our R&D efforts with the announced immunogen and <unk> transactions.

Speaker Change: We expect to continue this progress with numerous important clinical and regulatory milestones anticipated this year.

Speaker Change: In immunology, we recently announced positive topline results for <unk>, our anti IL, one alpha beta by specific being evaluated in hidradenitis suppurativa.

Speaker Change: In the Phase II study <unk> demonstrated higher high score of 50 and high scores 75 measures as well as improvement in skin pain compared to placebo.

These are very impressive results considering all patients were inadequate responders to anti TNF therapy, and 70% of the patients were early stage III, which is the most advanced stage of the disease based on these results. We plan to begin a phase III program NHS later this year.

Speaker Change: We also plan to evaluate <unk> in ulcerative colitis, and Crohn's given the role that IL one likely plays in these diseases.

Speaker Change: Patients with UC, who have an IL one beta signature have shown resistance to anti TNF and other biologics providing strong rationale for a potential biomarker approach. Additionally, we believe <unk> has the potential to be used in combination to provide transformational levels of <unk>.

Speaker Change: Efficacy in IBD.

Speaker Change: We plan to evaluate combo approaches with <unk> and <unk> as well as with other pipeline assets in Crohns.

Speaker Change: Our phase III studies in IBD are expected to begin later this year.

Speaker Change: Our regulatory applications are under review for <unk> in ulcerative colitis with approval decisions expected in the U S and Europe later this year.

<unk> is approved in UC, along with rent book, we will have two assets with different mechanisms of action in IBD, both offering very high levels of efficacy.

Speaker Change: Abbvie will be very well positioned with an industry, leading suite of treatment options for patients suffering from moderate to severe ulcerative colitis and crohn's disease.

We continue to make very good progress with the second wave of development programs for <unk> with Phase III studies underway in five new indications giant cell arteritis lupus.

Speaker Change: Yes, alopecia Areata and vitiligo, we anticipate data readouts for these programs over the next three years, beginning with data from our <unk> study this year.

Speaker Change: Moving to oncology, where we continue to make very good progress across our heme and solid tumor programs in.

Speaker Change: In the area of hematologic oncology, we'll see data in the second half of this year from the <unk> phase III Verona trial in treatment naive higher risk Mds patients with regulatory submissions and approvals anticipated in 2025 for.

Speaker Change: Kinley, we anticipate regulatory approvals in third line or greater Follicular lymphoma. Later this year in both the U S and Europe. We also expect to begin several new phase III studies in 2024, including studies in second line <unk> and frontline Follicular lymphoma.

Speaker Change: At the recent Ash meeting, we presented new data for our beef CMA CD three by specific <unk> three and multiple myeloma 303 is engineered for high affinity binding to be CMA on malignant cells and low affinity binding to a unique CD three epic.

Speaker Change: On T cells, which has the potential to mitigate some of the adverse events associated with other T cell engaging <unk> based therapies, while preserving high levels of efficacy.

Speaker Change: We're very encouraged by the data emerging from our phase <unk> study, which showed treatment with 303 is yielding deep and durable responses with a lower incidence and severity of Crs.

Speaker Change: With this profile, we believe three three can be a highly effective and tolerable treatment for multiple myeloma, while potentially allowing for outpatient administration limited or no step up dosing and monthly administration from the beginning of treatment all attributes, which would make it very appealing to <unk>.

Speaker Change: Both patients and physicians we.

Speaker Change: We remain on track to begin a phase III monotherapy study in third line multiple myeloma. This year and we plan to begin combination trials in earlier lines of therapy in 2025.

Speaker Change: In the area of solid tumors, we recently announced positive topline results from the <unk> phase III luminosity study in previously treated non small cell lung cancer to Liza <unk> demonstrated strong clinical benefits across key end points, including overall response rate duration of response.

Speaker Change: And overall survival with a tolerable safety profile.

We believe these results have the potential to support accelerated approval and we plan to discuss the data with regulators in the coming months pending.

Speaker Change: Pending alignment with the FDA our submission is planned for the second half of this year.

Speaker Change: We're also making good progress with our next generation C met ADC.

Speaker Change: <unk> 400, which utilizes the same C met blocking antibody as <unk>, but has a proprietary total one warhead to afford deeper and more durable responses with an improved therapeutic index. We remain on track to see data this year from the non small cell lung cancer and guests.

Speaker Change: Drosophila genome cohorts from our phase one study and.

Speaker Change: And based on the progress we're making in our colorectal program. We plan to begin a phase III study later this year and third line CRC.

Speaker Change: We also continue to make very good progress with our anti <unk> antibody ABV 151.

Speaker Change: Our phase II study in second line <unk> cellular carcinoma is underway and we plan to begin several additional phase II studies this year.

Speaker Change: <unk> frontline HCC front.

Speaker Change: Frontline lung cancer and metastatic <unk> cancer, we look forward to providing updates on these programs as the data mature.

Speaker Change: Now moving to neuroscience, where we recently announced the European launch of <unk> 95, one for patients with advanced Parkinson's disease.

Speaker Change: We also recently provided our complete response submission to the FDA for 90 501 with an approval decision anticipated in the second quarter.

Our novel Subcutaneous levodopa <unk> delivery system has the potential to offer meaningful benefits over current treatment options and others that are in development.

Speaker Change: 951 delivered significant improvements in off time and on time with a less invasive non surgical system. It can deliver high levodopa doses similar to the amount provided baidu open up and it doesn't require combination with oral drugs to achieve high.

Speaker Change: Efficacy.

Speaker Change: <unk> also provides a full 24 hour benefit which should result in less morning akinesia.

Speaker Change: We're extremely excited to bring this transformative therapeutic option to patients in Europe, and the U S. Once approved.

Speaker Change: And our aesthetics pipeline, we recently submitted our regulatory application in the U S for Botox and platysma prominence we anticipate an approval decision in the second half of this year.

Speaker Change: And we remain on track to complete the remaining CMC work this year for bond T. A rapid onset short acting novel toxin.

Speaker Change: Following completion of the remaining work we plan to submit our regulatory application in the second half of the year with approval anticipated near the end of 2025.

Speaker Change: So in summary, we continue to demonstrate significant progress across all stages of our pipeline and anticipate numerous regulatory and clinical milestones again in 2024 I also look forward to integrating the immunogen and service teams and pipeline assets into our R&D organization.

Speaker Change: Once those transactions transactions closed this year.

Speaker Change: These two transactions significantly strengthened our oncology and neuroscience pipeline with the addition of several novel assets.

Speaker Change: That have the potential to become innovative new therapies for many patients.

Speaker Change: With that I'll turn the call over to Scott.

Scott: Thank you ruble.

Scott: I'm very pleased with Abbvie strong performance in 2023.

Scott: We have substantial momentum across the portfolio to support our long term growth outlook.

Scott: Starting with our fourth quarter results, we reported adjusted earnings per share of $2 79.

Scott: Which is <unk> <unk> above our guidance midpoint.

Scott: These results include a <unk> 15 unfavorable impact from acquired IP R&D expense.

Scott: Total net revenues were $14 $3.300 billion ahead of our guidance and down five 4%.

Scott: Notably these results reflect 15, 3% sales growth from our ex Humira growth platform.

Scott: The adjusted operating margin ratio was 43, 8% of sales.

Scott: This includes adjusted gross margin of 83, 9% of sales <unk>.

Scott: Adjusted R&D expense of 13, 4% of sales.

Wired IP R&D expense of 2% of sales.

Scott: And adjusted SG&A expense of 24, 7% of sales.

Scott: Adjusted net interest expense was $363 million.

The adjusted tax rate was 17, 2%.

Turning to our financial outlook for 2024, our full year adjusted earnings per share guidance is between $11 and <unk>.

Scott: And $11 25.

Scott: This earnings per share guidance includes dilution related to the immunogen and several acquisitions of 32.

Scott: Which assumes closing in the middle of the year.

Scott: Please note that this guidance does not include an estimate for acquired IP R&D expense that may be incurred throughout the year.

Scott: We expect total net revenues of approximately $54 2 billion.

Scott: Reflecting a return to modest operational growth.

Scott: At current rates, we expect foreign exchange to have a 0.5% unfavorable impact on full year sales growth.

Scott: This revenue forecast contemplates the following approximate assumptions for our key products and therapeutic areas.

Scott: We expect global immunology sales of $25 6 billion.

Scott: Including.

Humira sales of $9 6 billion.

Scott: Including U S erosion of roughly 36%.

Scott: Sky <unk> revenue of $10 5 billion.

Scott: Reflecting growth of more than $2 7 billion due to strong market share performance in psoriasis as well as robust uptake in IBD.

Scott: And <unk> sales of $5 5 billion.

Scott: Reflecting growth of nearly 40% with continued market growth and share momentum across all approved indications.

Scott: On a full year basis, we anticipate that our strong volume growth for Skype <unk> and revoke will be modestly offset by low single digit negative net price.

Scott: In oncology, we expect sales of $5 7 billion.

Scott: Including <unk> revenue of $2 9 billion and then collects the sales of $2 4 billion.

As well as contributions from <unk> and partial year sales from Ella here.

Scott: For aesthetics, we expect sales of $5 7 billion.

Scott: Including $2 9 billion from Botox cosmetic and mid single digit revenue growth from Jupiter.

Scott: For neuroscience, we expect revenue of $8 9 billion.

Scott: Representing growth of more than 15%.

Including <unk> sales of $3 4 billion.

Botox therapeutic sales of $3 $2 billion.

Scott: And total oral CG RP revenue of $1 6 billion.

Scott: For <unk>, we expect sales of $2 2 billion.

Scott: Moving to the P&L for 2024.

Scott: We are forecasting full year adjusted gross margin of 84% of sales.

Scott: Adjusted R&D investment of 14% of sales.

Scott: Adjusted SG&A expense of 23, 5% of sales.

Scott: And adjusted operated Marsha margin ratio of roughly 46, 5% of sales.

Scott: We expect adjusted net interest expense of $2 1 billion.

Scott: Which includes the partial year cost in 2024 to finance, the immunogen and serve all transactions.

Scott: We forecast our non-GAAP tax rate to be approximately 15, 7%.

Scott: Finally, we expect share count to be roughly flat to 2023.

Scott: Turning to the first quarter, we anticipate net revenues of approximately $11 9 billion.

Scott: At current rates, we expect foreign exchange to have a 0.5% unfavorable impact on sales growth.

Scott: This revenue forecast comprehends the following approximate assumptions for our key therapeutic areas.

Immunology sales of $5 1 billion.

Scott: Including <unk> sales of $1 9 billion.

Scott: And revoke revenue of $1 billion.

These estimates reflect typical first quarter seasonality.

Scott: As well as low single digit unfavorable net price.

Scott: We expect Humira global revenue of $2 2 billion include.

Scott: Including the U S sales of $1 7 billion.

Scott: We also anticipate.

Scott: <unk> revenue just above $1 3 billion.

Scott: A steady sales of $1 $3 billion.

Scott: Neuroscience revenue of $1 $9 billion and eye care sales of $600 million.

Scott: We are forecasting an adjusted gross margin of approximately 83, 5% of sales.

Scott: And an adjusted operating margin ratio of roughly 44, 5% of sales.

Scott: We also model a non-GAAP tax rate of 14, 8%.

Scott: We expect adjusted earnings per share between $2 30.

Scott: And $2 34.

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

Scott: Finally, abbvie strong business performance and outlook continues to support our capital allocation priorities.

Scott: Our cash balance at the end of December was $12 8 billion.

Scott: And we expect to generate free cash flow of approximately $18 billion in 2024, which includes roughly $1 9 billion in.

Scott: And Sky <unk> royalty payments.

Scott: The strong free cash flow will fully support.

Scott: Our strong and growing dividend and.

Scott: Which we have increased by more than 285% since inception.

Scott: Continued debt repayment.

Where we expect to pay down the approximately $7 billion of maturities this year.

Scott: And also provides capacity for continued business development to further augment our portfolio.

Scott: In closing Abbvie has once again delivered outstanding results and our financial outlook remains very strong.

Scott: We'll turn the call back over to Liz.

Scott: Scott We will now open the call for questions and the interest.

Scott: 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 first question. Please.

Scott: Yes. The first question comes from Chris Schott with Jpmorgan. Your line is open.

Great. Thanks, so much for the questions.

Chris Schott: Just I was looking for a little bit more color on the longer term immunology outlook youre targeting $27 billion, plus by 2027 and highlighting growth from there I guess my question was just can you elaborate on how mature the existing indications for these products are going to be by 2027, and what type of growth can we anticipate longer.

Chris Schott: Term and maybe as part of that it seems like some of the comments that the growth beyond 'twenty seven is more skewed towards revoked given the new indications for a sense of like is it balanced revoke and Scott Z or has it become more of a RIN broke driven franchise in terms of the growth drivers over time. Thanks, so much.

Chris Schott: Yes.

Chris Schott: Yeah, Hi, Chris It's Jeff maybe I'll walk through a little bit of the process there and answer your questions. So we can see.

Historically, actuals and sort of fast forward in terms of the first thing. We look at is the bio penetration of these big indications and there still remains significant significant headroom in terms of the ability for moderate to severe patients with these diseases to continue too.

Chris Schott: Be exposed to these biologics and these advanced oral <unk> absolutely.

Chris Schott: And we can see for sure that psoriasis still and even in the U S is about 15%, it's relatively modest atopic dermatitis. The penetration rate is only about 7% and then you have higher penetrated markets like IBD and I'll talk about what's interesting about IBD, that's somewhere in the 40 or 50.

Chris Schott: Percent range across those.

Chris Schott: And then we can see clearly as these markets developed and I've highlighted this before that you see line of therapy expansion. So first line becomes less and less important as you move towards second and third line over time and right now IBD is a big story about that that we calculate into our long term estimates because it's still <unk>.

Largely despite the severity a frontline oriented market because physicians just kind of hang on to their frontline agents, that's going to change quite dramatically believe over this mid term and even in the long term perspective, we.

Chris Schott: Have a good peg on the market growth rates. Many of these market growth rates are are very significant very stable and we will have good growth rates going into the next decade because of these dynamics around bio penetration in line of therapy expansion.

Chris Schott: I highlighted in my remarks around share share.

Speaker Change: Sure. We we have a very good competitive position very high capture rates and we're really in the sort of the low end of the range in terms of the total prescription share that will feed up and catch up to that.

Speaker Change: Pricing I think we talked a little about we're not going to give detailed pricing, but certainly you can see based on Scott's comments that the idea of a high CAGR on high high single digit pricing is not something we had contemplated. So we believe that there is significant room for growth even past 2007.

Speaker Change: Especially as we will have more RIN voake indications coming that we've talked through so we think that we're going to see robust growth based on our share capture and also how dynamic these markets are into the next decade.

Speaker Change: Chris This is Rob I'll, just add if you think about the markets the room market is growing low single digits.

Rob: Dermatitis is growing mid teens in IBD is growing high single digits. So they're very strong markets. They will continue to be strong markets for us and we're also seeing as Jeff mentioned, there's a lot of headroom in terms of share capture so we do expect that robust growth to continue beyond 2007 into.

Rob: Early part of the next decade I think your observation is correct given that we would expect up to five new indications for <unk>. If you look at the rate of growth Rembold versus Sky Rosy I think it's reasonable to assume that RIN book would have a higher rate of growth given the new indications, but both will grow very nicely. So I would certainly encourage you to look at more of a.

Rob: <unk> expectations for both.

Rob: Both therapies with wind look a little bit higher because of the new indications.

Speaker Change: Thanks, Chris Operator next question please.

Speaker Change: Our next question comes from Terence Flynn with Morgan Stanley. Your line is open.

Terence Flynn: Great. Thanks, so much for taking the questions maybe two for me.

Terence Flynn: Rick I was just wondering if you could give us an update on succession planning and timing we've been fielding that question from a number of investors recently, given youre now past the Humira LOE.

Terence Flynn: <unk> positioned the company very well here given <unk> commercial success and also some of the recent pipeline build out and then the second question is on our pipeline on <unk> Mab.

Terence Flynn: You guys have highlighted this is not a lot of focus from the investor side, yet maybe you could just talk about the size of the commercial opportunity in Hs and then why you're confident that that phase II data.

Terence Flynn: We will translate into success in the IBD side. Thank you.

Terence Flynn: Alright.

Terence Flynn: This is Rick so I'll cover the first one I guess, what I would say is I have nothing new to report today, but.

Rick: We're at indicators.

Rick: We've talked about the criteria that we're going to use to make the decision where we are going to make this transition that criteria is the same.

Speaker Change: We believe that we are comfortable we've navigated the low.

Speaker Change: And the rest of the business is performing at a high level. That's the point at which we want to make the transition because we think that's the best time to be able to transition the CEO position.

Speaker Change: So I understand there is a lot of interest from investors here, that's that's logical and clear maybe what I can do is give you a little better.

Speaker Change: Prospective on the process that we're going to use.

Speaker Change: In order to make the decision.

Speaker Change: With the board.

Speaker Change: And I would say the board has been actively involved for the last four or five years with a lot of emphasis around ensuring that our internal candidate would get the experiences that we thought were needed prior to making the transition I can tell you from my perspective, that's gone extremely well.

Speaker Change: We have regularly scheduled board meeting several times, a year, where we specifically talk about succession and the progress that we're making.

Speaker Change: At the point at which the business has achieved that criteria that I described before and the next regularly scheduled board meeting that I would make a recommendation to the board that this is the proper time to be able to make.

Speaker Change: The transition the board will vote on that recommendation.

At the end of that vote, we would send out an announcement to investors and what you can expect when you get that announcement is that we would make an announcement that we were willing to make the transition out at some point in the future in all likelihood four to six months in the future and the purpose of that.

Speaker Change: That is to make the final transition between myself and that person.

Speaker Change: That will take four to five months in order to be able to do that.

Speaker Change: I would say, it's also very likely at that time based on the discussions I've been having with the board.

Speaker Change: I will be named the executive chair for a period of time and the purpose of that will be to make the transition of the pull position over a period of time. So I think it's a very well thought out.

Speaker Change: I think very well managed process.

Speaker Change: And I think that's what you can expect going forward.

Speaker Change: And Terence this is Jeff I'll start off and have Roop will address the second part of your second question. So we established.

Speaker Change: Many years ago now this hs market with the approval of Humira.

Jeff: And we thought it was a relatively small market and it turned out to be quite a surprise, there's a significant amount of patients around the world that suffer from Hs, it's already a multibillion dollar category and we think it's going to continue to expand and I say that because we can see that like like IBD.

Jeff: Just some new approvals just coming so everyone sort of holds on Humira as long as they can if they were exposed to a biologic and so we see the same dynamic as you start to see IL seventeens coming into this space and certainly we're very excited about <unk> because of the profile that we're seeing emerge.

Jeff: In the in the clinic, so it's a significant commercial opportunity.

Jeff: And I would say that when we look back over all the humira indications over the last decade or more.

<unk> was one of the most rapid indications that move to a $1 billion plus.

Jeff: Business. So it's an exciting opportunity both commercially and certainly for patients in ruble can address your comment on IBD.

Jeff: Parents.

Jeff: Part of it starts I would say almost 15 years ago with our insights in Crohn's disease with Humira as Jeff was discussing where we started to see efficacy in patients that had Hs, which we saw a good amount of overlap between crohn's.

Jeff: So thats part of it now that doesn't really pan out for IL 17.

What we've observed with IL one beta in particular is that our internal data and external data do show elevated expression of.

Jeff: Signals with one data. So we think we have that opportunity with <unk> because it also covers one beta and we have two shots at this right. One is to go specifically and look at a biomarker driven targeted profile, where we would be able to distinguish.

Jeff: <unk>, which patients actually have that higher expression and the other approach, which we maybe weren't talking about years ago, because we didn't have a product like sky Rizzi, which has high efficacy and very strong safety profile in crohns. While we have now is the opportunity to also look at in combination.

Jeff: So a biomarker approach and a combo approach our insights from Humira and.

Jeff: Preclinical or.

Jeff: Biopsy based insights that we have externally and internally.

Speaker Change: Thanks, Taryn operator next question please.

Speaker Change: Yes. Our next question comes from Andrew Baum with Citi. Your line is open.

Andrew S. Baum: Hi, many thanks couple of questions one.

Andrew S. Baum: Given the strength in market access in managed markets.

Andrew S. Baum: Curious.

Extensive future contagion from RMA IRS deviated price costs on the Medicare book spending over onto the.

Andrew S. Baum: The commercial book of business, how much of a concern do you think this is gil.

Andrew S. Baum: Given that has basically the same and then.

Andrew S. Baum: Second question on the map, if I remember from mechanical to map trials.

Andrew S. Baum: Secondary some neutropenia, if there was an increase in face of infections. This year land on top of another immunosuppressive. How are you thinking about the safety concerns in these <unk> patients.

Andrew S. Baum: Yes, Hi, Andrew Thanks for your question, it's Jeff.

Jeff: We think that the particularly the negotiation aspects of the IRA will be very key.

Jeff: Contained on the Medicare side.

Speaker Change: And as you can imagine with government programs over the years.

Speaker Change: When we have discussion with payers.

Speaker Change: Often say things over while we know what the FSS prices for the VA or the.

Speaker Change: The mandated discounts.

Speaker Change: And supplemental discounts in the Medicaid channel, but we think those are really government actions in government rules and so we see that.

Speaker Change: The market, we believe will play out largely like it has with with the other government channels that it's a unique dynamic in terms of essentially a forced negotiation that we think will be contained largely in the Medicare space. So that's how we view the world.

Speaker Change: Hi, It's Rupal I'll talk about <unk> and your question around neutrophils, Yes, we do see an impact on neutrophils its dose driven.

However, I think we think about inflammatory bowel disease.

Rupal: Probably lupus others to have a different tolerance for benefit risk because today in those disease states. Despite the success that we've seen with Sky <unk> and <unk> there is still substantial headroom.

To to lead to more transformational efficacy not every patient is getting into remission, though high levels not every not every patient so.

Rupal: We still believe that a combo can get to that and break that efficacy threshold. The other opportunity. There is what we'll do with the combination is obviously optimize the dose to assure safety and thus far in the Hs trial, even at the highest dose we saw very little.

Rupal: Infections.

Speaker Change: Thanks, Andrew Operator next question please.

Speaker Change: Our next question comes from Mohit Bansal with Wells Fargo. Your line is open.

Mohit Bansal: Great. Thank you very much for taking my question Congrats on all the progress.

I just wanted to go back to.

Mohit Bansal: The <unk> acquisition and the comments you made before.

Mohit Bansal: Can you talk a little bit about the plans to move.

Mohit Bansal: The drug into earlier lines of ovarian cancer, you talked about maintenance setting but.

Speaker Change: Bolivia is eating it.

Mohit Bansal: First line maintenance.

Mohit Bansal: PFS and newest tends to be really long. So could you talk a little bit about the strategy there and how do you overcome.

Mohit Bansal: The existing <unk> benefit that these structural lag.

Mohit Bansal: Okay.

Speaker Change: Thank you.

Speaker Change: Hi, Mohit, it's rupal I'll take that so.

Rupal: I think as you've seen in resistance, we've seen that overall survival benefit a very substantial one unprecedented thus far.

And to your point the plan is to move into earlier lines of therapy.

Rupal: Secondly, it's also.

Rupal: Part of the strategy to move into sensitive populations, which is around 55% of the population resistance is around 45% and then the third aspect is we've seen encouraging data in medium expresses of fr Alpha.

Rupal: And those are approximately 30% of the patients high is around 35. So those are the three strategies to go forward now how do we get into earlier lines of therapy, well a couple of things insights that we've seen one is we've seen <unk> been able to combine that full dose with carbo platinum so thats encouraging.

Rupal: That gives you an opportunity to upfront combined.

Rupal: And then as you stated and maintain.

Rupal: On Ela here.

Rupal: Or with early here plus Bev.

Rupal: The other approaches that we would do getting the earlier line of maintenance is have that upfront therapy and then we see patients that go onto Bev, we can combined with bev at that time point.

Rupal: And we will be looking at combinations with PARP inhibitors, which is about the other half of the patient populations, which are HRD deficient. So taken altogether, we see there is an opportunity now.

PFS is going to be a little bit longer along with <unk>. So that is something that were planning for will start. These studies as soon as possible, but they will read out in the later part of the decade and into 2030.

Speaker Change: Thanks, Mohit operator next question please.

Speaker Change: Our next question comes from <unk> <unk> with Guggenheim Securities. Your line is open.

Speaker Change: Hi, This is Jen Zhang on for <unk>. Thanks for taking my question. So my question is on Humira.

Jen Zhang: I was curious given the recent performance company.

Jen Zhang: <unk> with the erosion on the introduction of Biosimilars.

Jen Zhang: I was wondering if you could now provide maybe a better sense.

Jen Zhang: Around the company's expectations on Humira is longer term.

Jen Zhang: Revenues in both the U S and ex U S markets. Thank.

Thank you.

Jen Zhang: Hi, it's Rob I'll take that question. So we do expect that in the U S. The tail will start to emerge in the 25 or 26 timeframe.

Rob: Keep in mind 24 is the first full year for U S. Biosimilars will have to see what happens with volume uptake. This year and also where interchange ability lands and ultimately what those contracts look like next year. So I wouldn't expect us to quantify the tail this year, but its certainly possible something we would do either in 25% or 26 as it relates to.

Rob: Two international Youre.

Rob: I think this year, it's a step down of about $400 million.

Half of that is really the last wave of markets like Canada, Puerto Rico overseeing.

Rob: Hey, some incremental erosion, we would expect this year and then the other half would be your typical international price erosion, you see across therapeutic areas. So not really specific to Biosimilars and then.

The other quarter of it would be what we're seeing is just.

Rob: The strength of Sky <unk> and <unk> as these newer agents.

Rob: Elevate standard of care you see some share go to those newer agents and so probably the best way to think about international would be if you want to adjust for half of the erosion. This year as being more of the final waves and then you get a sense of what could potentially be the ongoing beyond that but we'll be more specific I think we need to.

Rob: See really how the U S plays out with this being the first full year for Biosimilars before we can really give you more color, but we're very very pleased with the progress we've made so far.

Speaker Change: Thanks, Dan Operator next question please.

Our next question comes from Carnival with Barclays. Your line is open.

Carnival: Great. Good morning, Thanks for taking the questions two on the neuroscience portfolio I guess first on a 95, one how should we think about that is that more sort of a on growing the overall pie of device therapies versus taking share from April morphine and gels and then.

Carnival: Maybe looking a little bit longer term abbvie has sort of three phase II. Alzheimer's studies that are going to read out later this year or by early next year fully acknowledging the commercial challenges by the players in the market today and that some of these targets are now validated how should investors think about the.

Carnival: These assets either individually or collectively in your level of excitement.

Carnival: Yes, Hi, it's Jeff I'll take the first question so what.

What we look at when we see this market at a macro at a macro level you have.

Jeff: A significant number of patients called 85% of patients are just on these all medications so oral sentiment okay.

Jeff: And they essentially need to consume more and more and more oral and sometimes at the end of it they are taken.

Jeff: 12 pills, a day very very difficult to manage but then they are faced with a very difficult decision, which we kind of call like a surgical barrier and that surgical barrier is to get any sort of more advanced relief you either have to think about deep brain stimulation, which is a brain surgery or.

Jeff: Our own duopoly, which is a gi surgery. So the way we see this market developing is we see that 95, one starts to establish a very nice transition zone. Because you don't have to sub Q. So a new market segment that starts to emerge before.

Jeff: Bigger interventions like DBS or duopoly and obviously the ability to basically move quicker to more relief from these chronic oral basically over treatment. So that's how we see it and as as ruble highlighted we're seeing some very nice uptake in Japan, where we launched late.

Jeff: Late last year and also in Germany, and some of the first European launches. So that's how the market is exactly playing out we're establishing essentially a a new.

Jeff: Hi, efficacy category here with 24 hours of ongoing relief you can do super specific dosing titration and the pump is much smaller and again, it's a sub Q injection that you move around every three days. So it's a nice it's a nice opportunity for the company.

Jeff: And maybe I'll talk about the other assets that you mentioned in Alzheimer's first nine months six sets are a beta.

Jeff: The antibody.

Jeff: What we like about that one thus far that the profile, we've seen as a long half life, which would be good.

Jeff: Space out dosing potentially.

Potentially higher potency if that holds and we see robust reductions in beta amyloid that could.

Jeff: Allow for subcutaneous dosing that spaced apart.

And the other thing we're looking at is potentially lower ARIA. So if we see those three things over the course I would say end of this year early next year I think that that would be quite exciting because it would be a differentiated profile again better convenience.

Jeff: <unk> and potentially better benefit risk profile. So that's nine months six.

Jeff: 505 to as our <unk>.

Jeff: Our our oral medication in cognition. That's currently in phase two.

Jeff: And we anticipate readout at the end of this year early next year now that one is being studied in a setting where patients can be on a therapy already like in aricept or nothing and we would use the typical adas cog assessments, along with a variety of others, including other neuro.

Jeff: Psychiatric symptoms like depression, so thats another nice one that could combine with a variety of different assets in all timers.

Jeff: Third one I'll mention is around <unk>.

Jeff: It comes from Sarah <unk>. They are at early stages right now.

Jeff: In elderly patients and the goal there would be an all timers disease psychosis of the $6 million or so diagnoses I would say around 40% of these patients present with symptoms of psychosis, so with all of the therapies.

Jeff: That are in the clinic, we think we have a very nice complementary suite of options that could address numerous symptoms of alzheimers because it won't be just one therapy, that's going to solve this but more to come.

Jeff: End of this year and into next year.

Speaker Change: Thanks Carter operator next question please.

Speaker Change: Our next question comes from Trump.

Trump: Your line is open.

Trump: Thanks for the question.

Trump: Just on the reaffirmed long time guide can I clarify if the cerebellum deals.

Trump: Deals are in this 2019 guide given you included them in the 'twenty four glide and up <unk> 6 billion migraine by $1 billion. If these are the pushes and pulls and reaffirming that long term value.

So this is Rob I'll take that question. Yes. We did include immunogenic cerebral and our long term guide thing to keep in mind is high single digits. When you think about the range that could represent that's around $10 billion between the low end of the high single digits in the high end of the high single digits and so there.

Trump: There aren't any polls, what we've updated as we walked you through it as we've increased the oral <unk>.

Trump: Peak revenue, we've increased <unk> Rainbow, we've reaffirmed the others. So there's nothing that we took down but just keep in mind that you have got a pretty pretty wide range. If you look at street consensus. We're encouraged that it continues to move up it has moved up over the course of the last quarter.

Trump: About $3 billion in 2029, it's nice to see that upward movement, but it's still below what we expect if you think that that growth rate for the street is just under 5%, we expect high single digits and so.

Even with this update as well as immunogen and cerebral were still high single digits, but keep in mind, its a pretty wide range and it would be regardless industry, leading growth and we're set up very well to continue delivering a very strong growth and we're setting ourselves very well to grow very nicely in the next decade as well.

Speaker Change: Thanks, John Operator next question please.

Speaker Change: Thank you and our next question comes from Gary Nachman with Raymond James Your line is open.

Gary Nachman: Thanks, and good morning, Firstly anaesthetics could you talk a bit more why youre confident in what seems to be a pretty decent return to growth in 2024, so how much of a headwind could china be offsetting the U S growth.

Gary Nachman: Our other regions you would be getting some somewhat of a lift this year and just talk about the dynamics on that front.

Gary Nachman: And then secondly, just.

Gary Nachman: As you return to more robust revenue growth in 2025, what are reasonable expectations.

Gary Nachman: For operating margins Directionally in 2025 cannot expand at all or.

Gary Nachman: Is it more likely to be depressed from the immunogen and servile deals just give us some directional way to think about that for next year. Thank you.

Karri: Hi, This is karri I'll take your first question on aesthetics, and the aesthetics market recovery.

Karri: So I'll start with the U S and <unk>.

Karri: <unk> started to see the U S toxin market recover at the end of 2023, we expect that recovery to continue and for the market growth for toxins to continue to improve in 2024.

Karri: For sellers in the U S.

Karri: Q4, after multiple quarters of decline.

Karri: Our market in the U S was somewhat flat and so that dynamic of the seller market recovery lagging the toxin market recovery is playing out and we do expect that recovery on fillers to also continue at to a lesser degree than toxin, it's more of a modest growth positive growth for 2000.

Karri: 24, and as we look at the beginning of the year here in 2024, and we are seeing our patient demand metrics and Google metrics really supporting our expectations here.

Karri: In terms of China, we do.

Karri: We expect the economic headwinds that we saw beginning mid year 2023 to continue in the near term with China, and we expect the China Fedex market to be flat overall in 2024 that would look like negative market in the first half of the year until the China market starts to recover.

Karri: In the second half of 2024.

Karri: And we expect that China performance to be balanced against expectations for strong performance in other international regions, including Japan, which has become an important market for aesthetics and areas of Latin America, like Brazil, which is a highly aesthetically oriented market.

Karri: It's also important to know in terms of Q1 of 2024.

Karri: In terms of our guidance there that the growth in the U S will be offset by that international decline specifically in China, So not only the China economic headwinds, but also a difficult year over year comp in Q1, because recall in Q1 of 2023, there was the post pandemic reopening in China.

So that's really how we see the market growth factors in U S. China and other parts of the world playing out in 2024 and Gary This is Rob to build on the aesthetic story I said in the past to get to our guidance of greater than $9 billion, we need to deliver annual growth of high single digits on average and as Kerry just walked you.

Rob: Through we haven't quite seen the recovery for the fillers market yet this year and we will.

Rob: It's not going to be a normal year, we will see a ramping and we also had a slowdown in China, but despite that we're still delivering high single digit growth and given how under penetrated. These markets are we can drive that market growth that's required to achieve our long term guidance and then on top of that we have several innovations that will further support that growth I've said this before but the mass at <unk> and <unk>.

Indications for Botox will add a few hundred million dollars. Each are novel short acting toxin body has the potential to activate new patients who have not started toxin due to fear of an unnatural look so that could drive an inflection in market growth and market share and in our region. Our fillers pipeline is really aimed at providing both short and long term treatment benefits for <unk>.

Rob: Consumers. So we have several avenues to get to or greater than $9 billion Guy to have seen consensus estimates at eight for 2029, but we're very confident in our guidance of greater than nine by that period.

Gary This is Scott I'll take your question regarding operating margin expansion. So for 24 as I mentioned my remarks, we've guided to 46, 5% when we do return to robust growth in 2025, we do see that operating margin will expand.

Scott: Could you expand as we grow through the decade, I think that when we think about the pace of that expansion it will be relatively steady over several years.

Though if youre modeling that I would kind of peaked out at around 50% I think that's where we'll hit a peak at the operating margin, but we do see expansion. Both in <unk> 25 on that return to robust growth, including the impact of the two transactions immunogen serve all which should presumably be a full year at that point in time, but on a full year impact we see that expansion I do.

Scott: It's worth noting even at our current levels, we have industry, leading operating margin and certainly with the future expansion will continue to have that and only grow that position.

Speaker Change: Thanks, Gary Operator next question please.

Speaker Change: Yes. Our next question comes from Steve Scala with TD Cowen Your line is open.

Steve Scala: Thank you very much two questions is the current tax rate fully reflecting likely tech tax changes in the U S and outside the U S. So it represents a high water mark for the foreseeable future previously the company spoke to a 16% tax rate and we're pretty much there. So I'm wondering if.

The increases are kind of behind us and then Rick slightly different kind of question, but there are clear obvious reasons, such as the success of sky risky and <unk>.

Steve Scala: But.

Steve Scala: I'm curious if you would share with us a few of the externally less visible factors that are leading to abbvie success traversing the humira patent expiration that your pharma peers missed when dealing with their own pressures I would assume contracting formulary management allocation of overhead are all part of it.

Speaker Change: But what would you be willing to share with us. Thank you.

Speaker Change: Steve This is Scott I'll start with your tax rate question. So with respect to the tax rate, we were essentially flat between this year and last year at 15, 7%, we do see that tax rate over the three year period, including this year, increasing about 1% on average now.

Speaker Change: That's not going to be.

Speaker Change: 1% per year, which youll see is a step up in a couple of years when the U S tax rates do increase the guilty right in particular will increase so we see that over a three year period about 1% per year on average that does include all of the impacts of a number of things going on globally with the OECD in some of these.

Speaker Change: OECD minimum taxes and other things I would say the one thing that does not include you saw just this week the house passed.

Speaker Change: <unk> Bill that includes a provision regarding the R&D expensing.

Speaker Change: So if that if that bill were to pass as it's written which would see a slight step down in our tax rate about 80 basis points from the impact of that on an ongoing basis.

Rick: Steve This is Rick.

Rick: I think if you step back and you look over the last I'd say 10 years.

Rick: We're trying to develop a strategy that we fundamentally believe.

Rick: Would allow us to be able to offset that.

Rick: Mirror low and continue to deliver top tier financial performance as we have for the past 10 years that was the whole objective and we knew we had to build a very diversified.

Growth platform in order to be able to do that to be able to absorb that impact.

Rick: Return to growth as rapidly as possible and so we as executive team focused a lot of energy around how do we do that how do we build how do we do it in the right markets.

Rick: I think abbvie.

I'm, obviously biased I guess, but I would say our commercial execution has always been exceptional in my opinion, we understand the markets. We're in extremely well we understand the competitive environment that we compete in those markets extremely well we understand.

Rick: The patient journey and how that patient journey is affected by.

Rick: By access to medicines to ensure that patients can get their medicines.

Rick: <unk> be able to get the benefit of those medicines. It takes all of those things I think to end up with kind of success that we see with assets like Sky resumed rainbow.

Rick: But it also takes I think a company that is very good at what I describe as read and react.

Rick: Always challenges and businesses as big and as complex as this and I think the difference between you guys.

Companies that can continue to perform at the top tier.

Rick: We're in and year out is they're good at seeing issues and then quickly reacting.

Rick: Theyre going to either offset those or deal with those we had many of those examples I would say the label change of Limbach was a great example, but look at where Rainbow is growing now and despite that label change menu would not have predicted that.

Rick: Migraine was a very challenging market for a period of time, we'll look at how we've operated with you probably in Q lift up and.

Rick: And the kind of success, we have seen against the competitors in those markets.

Rick: Neuroscience very different kind of market with very large that's all about trying to grow market share and expand your position there with a very good asset and so we're good at that and I think that is a real differentiator. The other thing I'd say is I think we have been very efficient.

At.

Rick: Our R&D investment.

Rick: We obviously don't have the largest R&D investment in the industry.

Rick: Produced a tremendous amount of return against that R&D investment now having said that as we go forward. We know we need to increase R&D as I said in my comments, we did a fairly significant increase last year, despite dealing with it.

Hello.

Rick: And we're going to another fairly significant increase this year, because we have some assets that.

Rick: <unk> had very very significant opportunities like 383 in like 400 and several others.

Rick: We are going to require a large phase III multiple large phase III studies to be able to get the guy in the label that we need and that's another thing I would say we're good at understanding how you have a competitive label and building your.

Rick: Clinical programs to get that so I think it requires all of those things I don't think Theres one magic formula.

Rick: I think those are the kinds of things that we have.

Speaker Change: Have homed here at Abbvie as an executive team.

Speaker Change: And we execute very well against those.

Speaker Change: Thanks, Steve Operator next question please.

Speaker Change: So next question comes from Evan <unk> with BMO capital markets. Your line is open.

Hi, guys, Marc Maun for Evan.

Marc Maun: Thinking about the upcoming approval for <unk> you see how is management thinking about how that may or may not impact your invoke sales obviously combined b offers.

Marc Maun: We are in the preliminary assets.

Marc Maun: What is your expectation of cannibalism across these assets potentially.

Yeah, Hi, it's Jeff I'll take that one we've learned a lot from watching <unk> and <unk> in Crohn's and to Rick's points look we're very careful about how we position these assets how we <unk>.

Jeff: Basically represent them with our medical teams and our commercial teams and so what we see certainly.

Jeff: In our biggest markets, we see that they're actually complementary positioning so Rick highlighted the label change right, So <unk> and.

Jeff: In the U S is.

Jeff: Is basically indicated for use after a TNF. So it's basically a later line therapy.

<unk> if you look at the Sky Richie you see results. It's very very impressive we studied some very very tough patients there the bio naive patients the <unk>.

Jeff: Efficacy is just outstanding I would say it's best in class. So we can see that based on the profile of the agents.

Jeff: For many of our representatives were able to talk to physicians about the consideration for Sky Ritchie frontline and then in later lines, where invoke so the cannibalization of the overlap is very manageable and minimal and what happens is you start to see this this very significant build for total abbvie share because of that complementary.

Jeff: Positioning so we're quite confident that we'll be able to navigate this very well just as we see in the larger crohn's market.

Speaker Change: Thanks for the question operator next.

Speaker Change: Next question please.

Speaker Change: Yes. Our next question comes from Tim Anderson with Wolfe Research. Your line is open.

Speaker Change: Sure.

Tim Anderson: Hi, I have a question on obesity drug impact on Abbvie is the aesthetics business. So the uptake of these new drugs could.

Tim Anderson: Could be a headwind or a tailwind.

Tim Anderson: Potential headwind of patients only have so many dollars to spend on aesthetics and they reallocate their out of pocket spending away from dermal filler and toxin is towards obesity drugs.

Tim Anderson: Or it's a tailwind of patients using <unk>.

Tim Anderson: Drugs get things like the so called dumping case, and they end up using more toxins and color. So what's been the experience thus far and what do you expect going forward over the next.

Tim Anderson: Handful of years. Thank you.

Carey: Hi, This is carey.

Carey: The short answer is we have not seen an impact on our aesthetics business positive or negative.

Carey: So far that said, absolutely our customers and our consumers are participating in this market. We are seeing is integrated into some of these aesthetic practices and to your point there are instances, where a patient will make a trade off in terms of her share of wallet.

Carey: But that said, we do see it as a long term tailwind anytime people are getting more engaged in their appearance. That's a positive thing for aesthetics and as we ask our consumers and our customers about it really that <unk> learned is that it does reinforce the bonds term tailwind because the.

Carey: R&D at people, who engage in these medical weight loss products are more interested in aesthetics. Afterwards, then they werent before.

Carey: That's really how we see it in terms of that dynamic impacting a fedex.

Speaker Change: Thanks, Tim Operator next question please.

Speaker Change: Yes. Our next question comes from Tim Lugo with William Blair. Your line is open.

Timothy Francis Lugo: Thanks for taking the question after the two announced acquisitions in December what are the teams thoughts on M&A in 2020 for some of your peers have given guidance on expected deal size is that something you can provide the street or at least talk about your capacity at this point.

Timothy Francis Lugo: Hi, Tim It's Rob I'll take that question. So our BD efforts continue to be focused on identifying assets really that can drive growth in the next decade across immunology oncology neuroscience aesthetics and eye care, but we have what we need in our current portfolio to deliver on growth expectations. In this decade. So our external efforts are really aimed at <unk>.

Early stage opportunities, which are typically smaller size deals as we look across the growth areas. So just think about immunology sky resumed rune bulk will drive robust growth into the next decade. So our focus in immunology in terms of BD is really looking for new mechanisms of action that can elevate standard of care, whether monotherapy or in combination I would say, there's a lot of interest in.

Timothy Francis Lugo: <unk> and oncology immunogen really nicely complements our efforts with adcs. It gives us a head start by an early entry into solid tumor space that we're not in today, but in addition to Adcs, we're focus on bi specifics multi specifics immuno <unk> agents. We also recently announced a collaboration with the <unk> studying in say two car T therapy.

Timothy Francis Lugo: A lot of focus in oncology, but these again would be earlier stage smaller sized deals in neuroscience several adds depth to our neuroscience pipeline, but we also have a focus on migraine and merged to generation.

Timothy Francis Lugo: And I care, we're extremely excited about the <unk> program in wet AMD and diabetic retinopathy, but we continue to look for innovation in glaucoma and retinal disease. So we certainly have an interest there and then in aesthetics. It's always about looking for innovation that can drive new consumers into our providers practices. So our BD BD group is still very active.

Timothy Francis Lugo: Certainly have the financial wherewithal to pursue those opportunities to further bolster our pipeline, but those are the areas that we're most interested in.

Speaker Change: Thanks, Tim Operator next question please.

Speaker Change: Yes. Our next question comes from James Sheehan with Deutsche Bank. Your line is open.

James Sheehan: Good morning.

James Sheehan: Last question on <unk>.

Thanks, Good morning.

And in what categories.

James Sheehan: How do you feel.

James Sheehan: Okay.

James Sheehan: Yes.

James Sheehan: And how do you feel that market going forward.

Speaker Change: Unfortunately, your line is not very clear.

Speaker Change: Can you maybe try to repeat the question one time.

Speaker Change: Yeah.

Speaker Change: Sorry about that.

Speaker Change: Got it now.

Speaker Change: It's still a little echo eight that's.

Speaker Change: A little bit better but go ahead.

Speaker Change: Okay.

Okay.

Speaker Change: This dynamic okay.

Speaker Change: Okay.

Speaker Change: Yes. Unfortunately, it's just not coming clear coming through clearly happy to address the questions. Following the call.

Speaker Change: <unk> for that operator.

Speaker Change: Next question please.

Speaker Change: Yes. Our next question comes from David <unk> with Leerink Partners. Your line is open.

David: Yes, thanks, very much and congrats on the long term updates.

David: So with respect to.

David: The Alzheimers commentary.

David: Our product was left out of the Trump 202, which has an estimated primary completion in September if you could comment on that as well.

David: That would be helpful and then.

David: With respect to.

David: The guilty tax change that's coming.

David: Please provide some more color on that and including the timing and the potential impact thanks very much.

David: Hi, This is Tom Hudson I will answer the question. The first question, Yes, we do have a partnered program with <unk>.

On the trend.

David: Target <unk> two was identified in Alzheimer's disease <unk>.

Tom Hudson: Kinetic studies several years ago very strong link.

Tom Hudson: We have a program with Trump to modulate that neuro inflammatory response in <unk>.

Tom Hudson: All patients are enrolled in the phase II, we won't have data later this year. So it's again, it's an early clinical.

Tom Hudson: Development, but we will expect.

Tom Hudson: Key data later.

Tom Hudson: Sure. This is Scott regarding the guilty tax. So this is the U S tax the foreign minimum tax on foreign earnings at the U S supplies that tax rate today is a turn and a half it's going to move up to 13.

Scott: One a little bit more than that that will occur. The implementation date is a little bit mix because it depends on fiscal year ends of legal entities, but let's call. It 2026 is when we can look at that and only part of our income is subject to that rate. So I would say thats approximately a one 5% impact to our tax rate that you would see and thats baked into my.

Scott: 1% on average over the next three years.

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

Speaker Change: Okay and final question is Luisa Hector with bearing Baird. Your line is open.

Speaker Change: Yeah.

Luisa Hector: Thank you for taking my question.

I wanted to touch on the part D. Chairman IRI. So you have a number of trucks that are likely to be impacted by this and obviously you talked about.

Luisa Hector: You're a strong rebound in 2025, so I'd just love to hear your thoughts on how that restructure will impact.

Luisa Hector: Impact.

Luisa Hector: To what extent that is already baked into your expectations just a rebound.

Luisa Hector: And maybe just to check have you now receive.

Luisa Hector: The initial offer.

From CMS on <unk>.

Speaker Change: Thank you.

Speaker Change: Yes, Thank you Luis it's Jeff.

Jeff: We have we had contemplated in our our planning and long term guidance, both the part D redesign and of course, the IRA impacts based on our projections over when some of our our drugs might be negotiated to give you. Some color on the part D. Redesign we have clearly a very good.

Jeff: Visibility over the pricing dynamics that will take place as you say many of our brands basically will be.

Jeff: Under the catastrophic redesigned component now we've also understood based on one of the policy items, which is the cap and smooth.

Jeff: We've also countered some of that price with volume offsets based on.

Rob: Patients, having the ability to acquire these now that volume does not fully offset the pricing impact, but suffice it to say that thats been <unk> been very much contemplated into that I'll, let rob comment over how that sort of feeds into the growth rates. So we see you asked a very good question. This is rob.

Rob: Clearly and we have contemplated that in the high single digit CAGR the impacts of IRR, but as you think about the annual progression. It is important to note that part D benefit redesign starts in 'twenty five so that is certainly something you should consider modeling of annual sales I mean that impact by itself on net basis could be worth a few points of growth as Jeff mentioned.

Rob: The higher cost share.

Rob: With an offset in volume we have studied.

Rob: The improvement in abandonment rates as we look at.

Rob: The low income subsidy part of part D, which doesn't have the out of pocket burden that the standard benefit does and when we compare the abandonment rates and as you address this issue of out of pocket burden, we would expect the abandonment rates to improve across Medicare part D, but not enough to fully offset the higher cost share that was something we certainly contemplated but as you.

Rob: Think about the progression of growth the rate of growth will accelerate.

Rob: Starting next year of $3 29, so we will deliver a high single digit CAGR, but it's important to note that in 25, you do have that debt beginning a parkey benefit redesign, which adds I'd say a couple of points of growth headwind that will still allow us to deliver robust growth, but you shouldnt think about the same amount of growth every year, it's going to accelerate or.

Rob: Over the long range plan.

Rob: This is Rick on the <unk>.

Rick: Have a good price yes, we have received the initial offer O&M move ago recently.

Rick: You know there is a process that CMS is going through here to set pricing.

Rick: And because none of us have any experience with is we don't know exactly how that process will proceed there will be some back and forth between the manufacturer and CMS.

Rick: <unk> has indicated that they will have the final price by September one.

Rick: It's certainly premature for us to talk about the price now because it's not the final price I don't know that we'll know the final price until very close to the point at which they are prepared to.

Rick: To publish that price.

Rick: Experience here, so I wouldn't anticipate any updates until that date or very close to that date.

Thanks, Louisa and 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.

Speaker Change: Thank you and that concludes today's.

Speaker Change: [music].

[music].

Speaker Change: Good morning, and thank you for standing by and welcome to the Abbvie fourth quarter 2023 earnings Conference call.

Speaker Change: Participants will be able to listen only until the question and ask a portion of this call you may ask a question by pressing star one on your phone.

Speaker Change: Today's call is also being recorded if you have any objections you may disconnect. At this time I would now like to introduce MS. Liz Shea Senior Vice President Investor Relations. Thank you you may begin.

Liz Shea: Good morning, and thanks for joining US also on the call with me today are reconciled as chairman of the Board and Chief Executive Officer, Rob, Michael President and Chief Operating Officer, Jeff Stuart Executive Vice President Chief Commercial Officer, Scott <unk> Executive Vice President and Chief Financial Officer, Carrie Strom Senior Vice President Abby and President Global Allergan aesthetic.

Liz Shea: And ruble Tucker Senior Vice President Chief Medical Officer Global Therapeutics, joining us for the Q&A portion of the call is Tom Hudson Senior Vice President and Chief Scientific Officer Global Research.

Liz Shea: Before we get started I will note that some statements. We make today may be considered forward looking statements based on our current expectations 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 our forward looking statements additional information.

Formation 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.

Liz Shea: On today's conference call non-GAAP financial measures will be used to help investors understand abbott'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. In addition to the news release issued this morning. We have also posted slides on our website at investors that abbvie.

Liz Shea: Calm that supplement some of the content, we'll be covering this morning. Following our prepared remarks, we'll take your questions. So with that I'll turn the call over to Rick.

Rick: Good morning, everyone and thank you for joining us today, our performance this quarter tops off another excellent year for Abbvie with results well above our initial expectations.

Rick: I'm, particularly pleased with the performance of our growth platform the base business, excluding humira, which delivered full year sales growth of more than 8% with revenue growth accelerating to more than 15% in the fourth quarter.

Rick: The strength of our diversified growth platform has not only enabled us to successfully absorb the largest loss of exclusivity event to date across our industry, but it is also supported continued investment in our business for long term growth.

Rick: These investments include higher adjusted R&D expense.

It was increased by nearly $600 million in 2023 and will be range substantially again in 2024 to support several promising pipeline programs like 383, and multiple myeloma 400, our next generation ADC for several solid tumor types and Luna.

For Hs as well as inflammatory bowel disease and proposed acquisition of immunogen and their portfolio of Adcs accelerating our entry into the solid tumor space.

Rick: And strengthening our oncology pipeline as well as the proposed acquisition of <unk>, a unique opportunity to augment our presence in neuroscience with a pipeline of differentiated assets.

Rick: We also increased our quarterly dividend, which we announced in October since our inception, we have grown our dividend by more than 285%.

Rick: In summary, our operational execution has been outstanding and we have considerable momentum heading into 2024 included unexpected return to operational sales growth just one year following the U S. Humira loss of exclusivity driven by our <unk>.

Rick: <unk> platform, we remain confident in our long term outlook, including a return to robust growth in 2025 with a high single digit CAGR through the end of the decade with that I'll turn the call over to Rob for additional comments on our business performance Rob. Thank you Rick today, we reported another strong quarter.

Rob: And highly productive year for Abbvie, we delivered full year adjusted earnings per share of $11 11.

Rob: Which is 63 above our initial guidance midpoint, excluding the impact of IP R&D expense.

Rob: Total net revenues were $54 3 billion rub.

Rob: Roughly $2 3 billion ahead of our initial guidance. Most importantly, each of our five key growth areas outperformed our initial expectations.

Rob: As it.

Rob: <unk> to add these near term outlook. We are focused on three key priorities first driving strong performance of our ex humira growth platform.

Rob: This platform is the critical driver of our return to robust growth in 2025 and beyond.

Rob: And our therapeutic portfolio, we have several key brands, including <unk>, <unk>, <unk>, <unk> and <unk>, which are each expected to contribute double digit sales growth in 2024.

Rob: We also expect a meaningful growth for aesthetics. This year, driven by improving market trends in the U S and continued execution across our international business.

Rob: We are well positioned to drive strong long term growth in this highly underpenetrated market.

Rob: Second we are focused on prioritizing investment in our pipeline, which encompasses numerous opportunities to elevate the standard of care for patients.

Rob: We anticipate updates this year from several important R&D programs, including approvals for <unk> in UC 95, one in the U S and potentially accelerated approval for <unk> in third line plus Follicular lymphoma, we also anticipate regulatory submissions for <unk>.

Rob: <unk>, our novel short acting toxin and potentially <unk> in advanced non squamous non small cell lung cancer.

Rob: Yeah.

Rob: And third we are focused on closing and integrating immunogen and cerebral these two exciting opportunities represent substantial sources of revenue growth well into the next decade, we remain on track with the anticipated closing of both deals in the middle of the year.

Today, we are also reaffirming our long term sales outlook, which includes a return to robust revenue growth in 2025 with a high single digit CAGR through the end of the decade.

Rob: Included in this outlook is an updated forecast for sky <unk> and <unk>.

Rob: On the impressive growth of both therapies, which we expect will collectively generate approximately $16 billion of revenue in 2024, we now anticipate sky resilient Ren bulk or collectively exceed more than $27 billion in sales by 2027 with a robust growth.

Rob: Continuing into the next decade.

Rob: This updated forecast reflects an increase of more than $6 billion in revenue compared to our prior 2027 guidance.

We expect global sales for <unk> to reach more than $17 billion in 2027, reflecting continued share capture in psoriasis, where we are the clear market leader as well as strong uptake in IBD.

And we expect <unk> to achieve more than $10 billion of global sales in 2027, reflecting continued market growth and share momentum across each of <unk> approved indications, including four in rheumatology two in IBD and atopic dermatitis.

Rob: This forecast comprehensive modest contributions from several new disease areas for <unk>, which we anticipate will be launching in the second half of the decade. These new indications have a collective peak sales potential of several billion dollars.

Rob: Our updated forecast also includes higher estimates for <unk>. We now expect total oral <unk> peak revenue of more than $3 billion.

Rob: Reflecting an increase of more than $1 billion.

Rob: Our previously issued long term forecast for aesthetics, <unk> and 95, 1% remained unchanged.

Rob: In summary, this is an exciting time for Abbvie, we are demonstrating outstanding execution across our portfolio and our long term outlook remains very strong.

Rob: With that I'll turn the call over to Jeff for additional comments on our commercial highlights Jeff. Thank you, Rob I'll start with the quarterly results for immunology, which delivered total revenues of more than $6 9 billion.

Jeff: Exceeding our expectations Scott.

Jeff: <unk> total sales were approximately $2 $4 billion, reflecting operational growth of 51, 6%.

Jeff: <unk> total sales were more than $1 2 billion, reflecting operational growth of 62, 8%.

Jeff: On a full year basis sky risky and revoke delivered more than $11 7 billion in total combined revenue unimpressive increase of $4 billion year over year.

Jeff: And as Rob just described we see substantial room for continued growth across each of their currently approved indications.

You can get a good sense for this momentum by looking at the relationship between the current in place share, which includes new and switching patients and the total prescription share just today.

For example, our performance in IBD has been very strong for both Scott <unk>.

Jeff: In Crohn's disease. These two treatments together are already capturing roughly one out of every three in play patients across all lines of therapy in the United States, while their combined total prescription share is only in the mid single digits.

You see a similar trend happening in ulcerative colitis for <unk>, and we anticipate launching <unk> for this indication later this year so significant opportunity remains for revenue inflection in IBD, especially given their respective efficacy safety and dosing profiles.

Jeff: Across some of the other notable indications Scott <unk> is capturing roughly half of the in play psoriasis patients in the U S biologic market relative to a total prescription share which is in the mid 30%.

Jeff: <unk> capturing high teens in play share in the atopic dermatitis market, while told a share is in the high single digits.

Jeff: Similarly in rheumatoid arthritis, <unk>, capturing mid teens in play share while total share is roughly 7%. So again, we see substantial headroom for share gains. In addition to the typical robust market growth across rheum derm and gastro.

Jeff: Plus we are planning to have up to five additional indications for <unk> across several sizeable markets that will potentially provide another significant revenue inflection in the second half of this decade and into the 2030.

Jeff: Yes.

Jeff: Turning now to Humira.

Jeff: Which delivered global sales of $3 3 billion down 48% due to Biosimilar competition the <unk>.

Erosion impact in the U S played out largely in line with our expectations this quarter, while performance across our international markets continues to trend better than expected.

Jeff: In the U S. We have once again secured broad formulary access for Humira in 2024.

While there will be some step down in coverage year over year, we will still have parity access to biosimilars for the vast majority of U S patient lives.

Jeff: Turning now to oncology, where total revenues were $1 5 billion.

Jeff: <unk> global revenues were $903 million down, 19%, reflecting continued pressure in new patient starts.

Then collects the global sales were $589 million up 13, 7% on an operational basis with strong demand for both <unk> and AML across our key countries.

Jeff: The early prescription trends for <unk> keenly in third line plus <unk> have been encouraging with commercialization now underway in the U S Europe and Japan.

Jeff: We also anticipate the potential label expansion for Follicular lymphoma later this year.

Jeff: Lastly, we have two new and exciting opportunities in oncology.

Pending completion of the transaction, we will add <unk> to our portfolio.

Jeff: <unk> is a first in class ADC therapy approved for ovarian cancer, which is already demonstrating impressive uptake in the U S market I look forward to welcoming the immunogen commercial team to Abbvie and.

Jeff: And to lease Avi another novel, ADC, which has demonstrated very promising data in lung cancer to Lisa <unk> would further expand our scale and growth potential in solid tumors.

Jeff: In neuroscience, our second largest therapeutic area total full year revenues were more than $7 7 billion.

Jeff: <unk> impressive absolute sales growth of nearly $1 2 billion.

Jeff: In the quarter total revenues were approximately $2 1 billion up 22, 4% on an operational basis.

Jeff: <unk> continues to demonstrate robust growth global sales of $789 million were up nearly 40%. We continue to see significant momentum in new prescriptions across all indications following the approval as an adjunctive treatment for major depressive disorder, just over a year ago.

Jeff: And our leading oral <unk> portfolio for migraine contribute contributed $348 million in combined sales this quarter, reflecting growth of approximately 40%.

Jeff: We anticipate continued robust demand for both <unk> and Q lifted this year, including the expansion of equipped up the only once daily oral <unk> for prevention of both episodic and chronic migraine into the international markets.

Jeff: Based on the strong momentum we have raised the outlook for our <unk> portfolio and now expect total peak sales from <unk> and <unk> combined to exceed $3 billion.

Total botox therapeutic global sales were $776 million up six 7% on an operational basis, reflecting momentum in chronic migraine as well as other approved indications.

Jeff: And lastly, we recently launched 95, one in both Japan, and Europe, and we are pursuing commercial approval in the U S. Later this year.

Jeff: This treatment represents a potentially transformative next generation therapy for advanced Parkinson's disease, and a billion dollar plus peak sales opportunity.

Jeff: Okay.

Jeff: So overall I'm extremely pleased with the commercial execution across our diversified portfolio, especially the growth platform, which is demonstrating very strong momentum as we head into 2024.

Jeff: And with that I'll turn the call over to Kerry for additional comments on aesthetics Eric.

Kerry: Thank you, Jeff fourth quarter Global <unk> sales of approximately $1 4 billion in operational increase of six 9%.

In the U S aesthetic sales of $884 million increased five 7% mark by accelerating market growth and strong key product performance.

Kerry: Fourth quarter U S. Botox cosmetic sales were $463 million, an increase of seven 3% we.

Kerry: We continue to see sustained momentum in the recovery of the U S facial toxin market, which was the primary driver of growth in the fourth quarter.

Kerry: Botox cosmetic remains the clear market leader with strong and stable share despite new competitive entrants.

Kerry: USG <unk> sales were $156 million in the fourth quarter, an increase of more than 20% versus the prior year.

Kerry: This robust growth was driven by the strong launches of <unk>, and <unk>, which continue to drive new consumers and greater penetration in the turmoil stellar category.

Kerry: With our expectations the U S solar market recovery trials out of toxins.

Kerry: Continuing to show improvement as the year.

Kerry: The aircraft was roughly flat in the fourth quarter.

As we look to 2024, we are pleased with the momentum of our U S. Aesthetics portfolio, we expect full year sales growth as our market leadership positions us very well from a competitive perspective, and we anticipate continued recovery endotoxin and <unk> markets.

Kerry: Internationally fourth quarter aesthetic sales were $487 million.

Kerry: Representing an operational increase of 9%.

Kerry: We experienced strong performance in most regions and growth benefited from the impact of China's Covid Lockdowns in late 2022.

Within China, the softening economic conditions that emerged in the third quarter continued to impact results.

Kerry: <unk> with what we experienced in the U S. The economic slowdown has impacted sellers more than toxin.

Kerry: Upon their relatively higher price.

Kerry: We anticipate economic headwinds will continue in China over the near term balanced against our expectations for continued strong performance in other international regions.

Kerry: Looking to the long term aesthetic aesthetics remains an area with very low market penetration and we have demonstrated our ability to drive growth through investments in our customers consumers and innovation.

Kerry: We anticipate that Fedex will be a strong growth portfolio for years to come.

I'm confident in our ability to deliver more than $9 billion of sales by the end of the decade.

Speaker Change: With that I'll turn the call over to everyone.

Thank you Carrie and 2023, we saw a significant evolution of our pipeline with multiple data readouts regulatory submissions and approvals as well as expansion of our R&D efforts with the announced immunogen and <unk> transactions.

Speaker Change: We expect to continue this progress with numerous important clinical and regulatory milestones anticipated this year.

Speaker Change: In immunology, we recently announced positive top line results for <unk>, our anti IL, one alpha beta by specific being evaluated in hidradenitis suppurativa.

Speaker Change: In the Phase II study <unk> demonstrated higher high score 50, and high scores 75 measures as well as improvement in skin pain compared to placebo.

A very impressive results considering all patients who are inadequate responders to anti TNF therapy.

Speaker Change: 70% of the patients were early stage, three which is the most advanced stage of the disease.

Speaker Change: On these results we plan to begin a phase III program NHS later this year.

Speaker Change: We also plan to evaluate <unk> in ulcerative colitis, and Crohn's given the role that IL one likely plays in these diseases.

Speaker Change: Patients with UC, who have an IL one beta signature have shown resistance to anti TNF and other biologics providing strong rationale for a potential biomarker approach. Additionally, we believe <unk> has the potential to be used in combination to provide transformational levels of <unk>.

Because <unk> and IBD.

Speaker Change: We plan to evaluate combo approaches with <unk> and <unk> as well as with other pipeline assets in Crohns.

Speaker Change: Our phase II studies in IBD are expected to begin later this year.

Speaker Change: Our regulatory applications are under review for <unk> in ulcerative colitis with approval decisions expected in the U S and Europe later this year.

Speaker Change: <unk> is approved in UC, along with rent book, we will have two assets with different mechanisms of action in IBD, both offering very high levels of efficacy.

Abbvie will be very well positioned with an industry, leading suite of treatment options for patients suffering from moderate to severe ulcerative colitis and crohn's disease.

Speaker Change: We continue to make very good progress with the second wave of development programs for <unk> with Phase III studies underway in five new indications giant cell arteritis lupus.

Speaker Change: Yes, alopecia Areata and vitiligo, we anticipate data readouts for these programs over the next three years, beginning with data from our <unk> study this year.

Speaker Change: Moving to oncology, where we continue to make very good progress across our heme and solid tumor programs in the area of hematologic oncology, we'll see data in the second half of this year from the <unk> phase III Verona trial in treatment nave higher risk Mds patients with <unk>.

Regulatory submissions and approvals anticipated in 2025.

Kinley, we anticipated regulatory approvals and third line or greater Follicular lymphoma. Later this year in both the U S and Europe. We also expect to begin several new phase III studies in 2024, including studies in second line <unk> and frontline Follicular lymphoma.

Speaker Change: At the recent Ash meeting, we presented new data for our <unk> CD three by specific a BBB 383 and multiple myeloma.

Speaker Change: <unk> III is engineered for high affinity binding to be CMA on malignant cells and low affinity binding to a unique CD three epitope on T cells, which has the potential to mitigate some of the adverse events associated with other T cell engaging <unk> based therapies, while preserving high levels.

Speaker Change: Of efficacy.

Speaker Change: We're very encouraged by the data emerging from our phase <unk> study, which showed treatment with 303 is yielding deep and durable responses with a lower incidence and severity of Crs.

Speaker Change: With this profile, we believe three three can be a highly effective and tolerable treatment for multiple myeloma, while potentially allowing for outpatient administration limited or no step up dosing and monthly administration from the beginning of treatment all attributes, which would make it very appealing to <unk>.

Speaker Change: Patients and physicians.

Speaker Change: We remain on track to begin a phase III monotherapy study in third line multiple myeloma. This year and we plan to begin combination trials in earlier lines of therapy in 2025.

Speaker Change: In the area of solid tumors, we recently announced positive top line results from the lease of the phase III luminosity study in previously treated non small cell lung cancer to Lisa <unk> demonstrated strong clinical benefits across key end points, including overall response rate duration of response.

Speaker Change: And overall survival.

Speaker Change: With a tolerable safety profile.

Speaker Change: We believe these results have the potential to support accelerated approval and we plan to discuss the data with regulators in the coming months pending.

Speaker Change: Pending alignment with the FDA our submission is planned for the second half of this year.

Speaker Change: We're also making good progress with our next generation <unk> ADC, a BBB 400, which utilizes the same C met blocking antibody is to lease ov, but has a proprietary total one warhead to afford deeper and more durable responses with an improved therapeutic index.

Speaker Change: We remain on track to see data this year from the non small cell lung cancer and gastroesophageal cohorts from our phase one study and.

Speaker Change: And based on the progress we're making in our colorectal program. We plan to begin a phase III study later this year and third line CRC.

Speaker Change: We also continue to make very good progress with our anti <unk> antibody ABV 151, our phase II study in second line <unk> cellular carcinoma is underway and we plan to begin several additional phase II studies this year.

Speaker Change: <unk> frontline HCC frontline lung cancer, and metastatic <unk> cancer, we look forward to providing updates on these programs as the data mature.

Speaker Change: Now moving to neuroscience, where we recently announced the European launch of <unk> 95, one for patients with advanced Parkinson's disease.

Speaker Change: We also recently provided our complete response submission to the FDA for 90 501 with an approval decision anticipated in the second quarter.

Our novel Subcutaneous levodopa <unk> delivery system has the potential to offer meaningful benefits over current treatment options and others that are in development.

Speaker Change: 905, one delivers significant improvements in off time and on time with a less invasive non surgical system. It can deliver high levodopa doses similar to the amount provided baidu op and it doesn't require combination with oral drugs to achieve high efficacy.

Speaker Change: 95, one also provides a full 24 hour benefit which should result in less morning akinesia.

Speaker Change: We're extremely excited to bring this transformative therapeutic option to patients in Europe, and the U S. Once approved.

Speaker Change: And our aesthetics pipeline, we recently submitted our regulatory application in the U S for Botox and platysma prominence we anticipate an approval decision in the second half of this year.

Speaker Change: And we remain on track to complete the remaining CMC work this year for bonds.

Speaker Change: Our rapid onset short acting novel toxin.

Speaker Change: Following completion of the remaining work we plan to submit our regulatory application in the second half of the year with approval anticipated near the end of 2025.

Speaker Change: So in summary, we continue to demonstrate significant progress across all stages of our pipeline and anticipate numerous regulatory and clinical milestones again in 2024 I also look forward to integrating the immunogen and service teams and pipeline assets into our R&D organization.

Speaker Change: Once those transactions transactions closed this year.

Speaker Change: These two transactions significantly strengthened our oncology and neuroscience pipeline with the addition of several novel assets.

That have the potential to become innovative new therapies for many patients.

Speaker Change: With that I'll turn the call over to Scott.

Thank you ruble.

I'm very pleased with Abbvie strong performance in 2023.

Scott: We have substantial momentum across the portfolio to support our long term growth outlook.

Starting with our fourth quarter results, we reported adjusted earnings per share of $2 79.

Scott: Which is <unk> <unk> above our guidance midpoint.

Scott: These results include a <unk> 15 unfavorable impact from acquired IP R&D expense.

Scott: Total net revenues were $14 3 billion.

Scott: $300 million ahead of our guidance and down five 4%.

Most notably these results reflect 15, 3% sales growth from our ex Humira growth platform.

The adjusted operating margin ratio was 43, 8% of sales.

Scott: This includes adjusted gross margin of 83, 9% of sales.

Scott: Adjusted R&D expense of 13, 4% of sales.

Scott: Acquired IP R&D expense of 2% of sales.

Scott: And adjusted SG&A expense of 24, 7% of sales.

Scott: Adjusted net interest expense was $363 million.

Scott: The adjusted tax rate was 17, 2%.

Scott: Turning to our financial outlook for 2024, our full year adjusted earnings per share guidance is between $11 and <unk>.

Scott: And $11 25.

Scott: This earnings per share guidance includes dilution related to the immunogen and several acquisitions of 32.

Scott: Which assumes closing in the middle of the year.

Scott: Please note. This guidance does not include an estimate for acquired IP R&D expense that may be incurred throughout the year.

Scott: We expect total net revenues of approximately $54 2 billion.

Scott: Reflecting a return to modest operational growth.

Scott: At current rates, we expect foreign exchange to have a 0.5% unfavorable impact on full year sales growth.

Scott: This revenue forecast contemplates the following approximate assumptions for our key products and therapeutic areas.

Scott: We expect global immunology sales of $25 6 billion.

Including.

Scott: Humira sales of $9 6 billion.

Scott: Including U S erosion of roughly 36%.

Scott: Sky <unk> revenue of $10 5 billion.

Scott: Reflecting growth of more than $2 7 billion due to strong market share performance in psoriasis as well as robust uptake in IBD.

Scott: And <unk> sales of $5 5 billion.

Scott: Reflecting growth of nearly 40% with continued market growth and share momentum across all approved indications.

Scott: On a full year basis, we anticipate that our strong volume growth for Skype <unk> and revoke will be modestly offset by low single digit negative net price.

Scott: In oncology, we expect sales of $5 7 billion.

Scott: Including <unk> revenue of $2 9 billion and then collects the sales of $2 4 billion.

Scott: As well as contributions from <unk> and partial year sales from Ella here.

Scott: For aesthetics, we expect sales of $5 7 billion.

Scott: Including $2 9 billion from Botox cosmetic and mid single digit revenue growth from Jupiter.

Scott: For neuroscience, we expect revenue of $8 9 billion.

Scott: Representing growth of more than 15%.

Scott: Including <unk> sales of $3 4 billion.

Scott: Botox therapeutic sales of $3 $2 billion.

Scott: And total oral CG RP revenue of $1 6 billion.

Scott: For <unk>, we expect sales of $2 2 billion.

Scott: Moving to the P&L for 2024.

Scott: We are forecasting full year adjusted gross margin of 84% of sales.

Scott: Adjusted R&D investment of 14% of sales.

Scott: Adjusted SG&A expense of 23, 5% of sales.

Scott: And adjusted operating Marsha margin ratio of roughly 46, 5% of sales.

Scott: We expect adjusted net interest expense of $2 1 billion.

Which includes the partial year cost in 2024 to finance, the immunogen and serve all transactions.

Scott: We forecast our non-GAAP tax rate to be approximately 15, 7%.

Scott: Finally, we expect share count to be roughly flat to 2023.

Scott: Turning to the first quarter, we anticipate net revenues of approximately $11 9 billion.

Scott: At current rates, we expect foreign exchange to have a 0.5% unfavorable impact on sales growth.

Scott: This revenue forecast comprehends the following approximate assumptions for our key therapeutic areas.

Scott: Immunology sales of $5 1 billion.

Scott: Including <unk> sales of $1 9 billion.

Scott: And revoke revenue of $1 billion.

Scott: These estimates reflect typical first quarter seasonality.

Scott: As well as low single digit unfavorable net price.

Scott: We expect Humira global revenue of $2 2 billion include.

Scott: Including the U S sales of $1 7 billion.

Scott: We also anticipate.

<unk> revenue just above $1 3 billion.

Scott: A steady sales of $1 $3 billion.

Scott: Neuroscience revenue of $1 9 billion and eye care sales of $600 million.

We are forecasting an adjusted gross margin of approximately 83, 5% of sales.

Scott: And an adjusted operating margin ratio of roughly 44, 5% of sales.

Scott: We also model a non-GAAP tax rate of 14, 8%.

We expect adjusted earnings per share between $2 30.

And $2 34.

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

Scott: Finally, abbvie strong business performance and outlook continues to support our capital allocation priorities.

Scott: Our cash balance at the end of December was $12 8 billion.

Scott: And we expect to generate free cash flow of approximately $18 billion in 2024, which includes roughly $1 9 billion in.

<unk> royalty payments.

Scott: The strong free cash flow will fully support.

Scott: Our strong and growing dividend.

Scott: Which we have increased by more than 285% since inception.

Continued debt repayment.

Scott: Where we expect to pay down to approximately 7 billion of maturities this year.

Scott: And also provides capacity for continued business development to further augment our portfolio.

Scott: In closing Abbvie has once again delivered outstanding results and our financial outlook remains very strong.

Scott: We'll turn the call back over to Liz.

Scott: Scott We will now open the call for questions and the interest.

Scott: 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 first question. Please.

Scott: Yes. The first question comes from Chris Schott with Jpmorgan. Your line is open.

Chris Schott: Great. Thanks, so much for the questions.

Just I was looking for a little bit more color on the longer term immunology outlook youre targeting $27 billion, plus by 2027 and highlighting growth from there I guess my question was just can you elaborate on how mature the existing indications for these products are going to be by 2027, and what type of growth can we anticipate longer.

Chris Schott: Term and maybe as part of that it seems like some of the comments that the growth beyond 'twenty seven is more skewed towards revoked given the new indications for a sense of like is it balanced revoke and sky as the Euro has it become more of a written broke driven franchise in terms of the growth drivers over time. Thanks, so much.

Chris Schott: Yes.

Chris Schott: Yeah, Hi, Chris It's Jeff maybe I'll walk through a little bit of the process there and answer your questions. So we can see.

Jeff: Historically, actuals and sort of fast forward in terms of the first thing. We look at is the bio penetration of these big indications and there still remains significant significant headroom in terms of the ability for moderate to severe patients with these diseases to continue too.

Jeff:

Jeff: Be exposed to these biologics and these advanced oral <unk> absolutely.

Jeff: And we can see for sure that psoriasis still and even in the U S is about 15%, it's relatively modest atopic dermatitis. The penetration rate is only about 7% and then you have higher penetrated markets like IBD and I'll talk about what's interesting about IBD, that's somewhere in the 40 or 50.

Jeff: Percent range across those.

Jeff: And then we can see clearly as these markets developed and I've highlighted this before that you see line of therapy expansion. So first line becomes less and less important as you move towards second and third line over time and right now IBD is a big story about that that we calculate into our long term estimates because it is still <unk>.

Jeff: Largely despite the severity a frontline oriented market because physicians just kind of hang on to their frontline agent that's going to change quite dramatically believe over this mid term and even in the long term perspective.

Jeff: Have a good peg on the market growth rates. Many of these market growth rates are are very significant very stable and.

Jeff: And we will have good growth rates going into the next decade because of these dynamics around bio penetration in line of therapy expansion I.

I highlighted in my remarks around share share.

Speaker Change: Sure. We we have a very good competitive position very high capture rates and we're really in the sort of the low end of the range in terms of the total prescription share that will feed up and catch up to that.

Pricing I think we talked a little about we're not going to give detailed pricing, but certainly you can see based on Scott's comments that the idea of a high CAGR on high high single digit pricing is not something we had contemplated. So we believe that there is significant room for growth even past 2007.

Speaker Change: Especially as we will have more RIN voake indications coming that we've talked through so we think that we're going to see robust growth based on our share capture and also how dynamic these markets are into the next decade.

Speaker Change: Chris This is Rob I'll, just add if you think about the markets. The room market is growing low single digits atopic dermatitis is growing mid teens in IBD is growing high single digits. So they're very strong markets. They will continue to be strong markets for us and we're also seeing as Jeff mentioned, there's a lot of headroom in terms of share capture so we do.

Spect that robust growth to continue beyond 2017 into.

Rob: Early part of the next decade I think your observation is correct given that we would expect up to five new indications for <unk>. If you look at the rate of growth Renzo versus Sky Rosy I think it's reasonable to assume that rainbow could have a higher rate of growth given the new indications, but both will grow very nicely. So I would certainly encourage you to look at more real.

Rob: <unk> expectations for both.

Rob: <unk> therapies with when we talk a little bit higher because of the new indications.

Speaker Change: Thanks, Chris Operator next question please.

Our next question comes from Terence Flynn with Morgan Stanley. Your line is open.

Terence Flynn: Great. Thanks, so much for taking the questions maybe two for me.

Terence Flynn: Rick I was just wondering if you could give us an update on succession planning and timing we've been fielding that question from a number of investors recently, given youre now past the Humira LOE and positioned the company very well here given <unk> commercial success and also some of the recent pipeline build out and then the second question I have is on <unk>.

Terence Flynn: Pipeline on <unk> Mab.

Terence Flynn: You guys have highlighted this not a lot of focus from the investor side, yet maybe you could just talk about the size of the commercial opportunity in Hs and then why youre confident that that phase III data.

Terence Flynn: Will translate into success in the IBD side. Thank you.

Terence Flynn: Alright.

Terence Flynn: This is Rick so I'll cover the first one I guess, what I would say is I have nothing new to report today, but.

Rick: Well it indicators.

Rick: We've talked about the criteria that we're going to use to make the decision. When we are going to make this transition that criteria is the same.

Rick: And we believe that we are comfortable we've navigated the low.

Rick: And the rest of the business is performing at a high level.

Rick: <unk>, which we will make the transition because we think that's the best time to be able to transition the CEO position.

Speaker Change: So I understand there is a lot of interest from investors here, that's logical and clear maybe what I can do is give you a little better.

Speaker Change: Prospective on the process that we're going to use.

Speaker Change: In order to make the decision.

Speaker Change: With the board.

And I would say the board has been actively involved for the last four or five years with a lot of emphasis around ensuring that our internal candidate would get the experiences that we thought were needed prior to making the transition I can tell you from my perspective, that's gone extremely well.

Speaker Change: We have regularly scheduled board meeting several times, a year, where we specifically talk about succession and the progress that we're making.

Speaker Change: At the point at which the business has achieved that criteria that I described before and the next regularly scheduled board meeting that I would make a recommendation to the board that this is the proper time to be able to make.

Speaker Change: The transition the board will vote on that recommendation.

At the end of that vote.

Speaker Change: Good.

Speaker Change: In an announcement to investors and what you can expect when you get that announcement is that we would make an announcement that we were willing to make the transition out at some point in the future in all likelihood four to six months in the future and the purpose of that is to make the final transition.

Speaker Change: Between myself and that person.

Speaker Change: And that'll take four to five months in order to be able to do that.

Speaker Change: I would say, it's also very likely at that time based on the discussions I've been having with the board is that I will be named the executive chair for a period of time and the purpose of that will be to make the transition of the pull position over a period of time. So I think it's a very well thought.

It out I think very well managed process.

Speaker Change: And I think that's what you can expect going forward.

Speaker Change: And Terence this is Jeff I'll start off and have group will address the second part of your second question. So.

Jeff: We established.

Jeff: Many years ago now this hs market with the approval of Humira.

Jeff: And we thought it was a relatively small market and it turned out to be quite a surprise theres a significant amount of patients around the world that suffer from Hs, It's already a multibillion dollar category and we think it's going to continue to expand and I say that because we can see that like like IBD.

Jeff: Just some new approvals just coming so everyone sort of holds on Humira as long as they can if they are exposed to a biologic and so we see the same dynamic as you start to see IL seventeens coming into this space and certainly we're very excited about <unk> because of the profile that we're seeing emerge.

Jeff: In the in the clinic, so it's a significant commercial opportunity.

Jeff: And I would say that when we look back over all of the Humira indications over the last decade or more.

Jeff: <unk> was one of the most rapid indications that move to $1 billion plus.

Jeff: Business. So it's an exciting opportunity both commercially and certainly for patients and Roop will can address your comment on IBD.

Jeff: Aaron's.

Part of it starts I would say almost 15 years ago with our insight in Crohn's disease with Humira as Jeff was discussing where we started to see efficacy in patients that had Hs was we saw a good amount of overlap between crohn's.

Jeff: So thats part of it now that doesn't really pan out for IL 17.

Jeff: What we've observed with IL one beta in particular is that our internal data and external data do show elevated expression of.

Jeff: Signals with one data. So we think we have that opportunity with <unk> because it also covers one beta and we have two shots at this right. One is to go specifically and look at a biomarker driven targeted profile, where we would be able to distinguish.

Jeff: <unk>, which patients actually have that higher expression and the other approach, which we maybe weren't talking about years ago, because we didn't have a product like sky Rizzi, which has high efficacy and very strong safety profile in crohns. While we have now is the opportunity to also look at in combination.

Jeff: So a biomarker approach and a combo approach our insights from Humira and.

Jeff: Preclinical or.

Jeff: Biopsy based insights that we have externally and internally.

Speaker Change: Thanks, Taryn operator next question please.

Jeff: Yes. Our next question comes from Andrew Baum with Citi. Your line is open.

Andrew S. Baum: Hi, many thanks couple of questions one.

Andrew S. Baum: Given the strength in market access in managed markets I'd be curious the extensive future contagion from RNA <unk> price costs on the Medicare book spilling over onto the.

Andrew S. Baum: The commercial book of business, how much of a concern do you think this is gil.

Andrew S. Baum: Given that has basically the same and then.

Andrew S. Baum: Second question on the map, if I remember from mechanical to map trials.

Andrew S. Baum: Secondary for Neutropenia that was an increase in the face of infections. This you land on top of another even this impressive how are you thinking about safety concerns in these <unk> patients.

Andrew S. Baum: Yes, Hi, Andrew Thanks for your question, it's Jeff.

Jeff: We think that the particularly the negotiation aspects of the <unk> will be very key.

Speaker Change: Contained on the Medicare side, and as you can imagine with government programs over the years.

Speaker Change: When we have discussion with payers.

Speaker Change: Often say things over while we know what the FSS prices for the VA or the.

Speaker Change: The mandated discounts.

Speaker Change: And supplemental discounts in the Medicaid channel, but we think those are really government actions in government rules and so we see that.

Speaker Change: The market, we believe will play out largely like it has with with the other government channels that it's a unique dynamic in terms of essentially a forced negotiation that we think will be contained largely in the Medicare space. So that's how we view the world.

Speaker Change: Hi, It's Rupal I'll talk about alluded in your question around neutrophils, Yes, we do see an impact on neutrophils its dose driven.

Rupal: However, I think we think about inflammatory bowel disease.

Rupal: Probably lupus others to have a different tolerance for benefit risk because today in those disease states. Despite the success that we've seen with Sky <unk> and <unk> there is still substantial headroom.

Rupal: To to lead to more transformational efficacy not every patient is getting into remission, though high levels not every not every patient.

Rupal: So we still believe that a combo can get to that and break that efficacy threshold. The other opportunity. There is what we'll do with the combination is obviously optimize the dose to assure safety and thus far in the Hs trial, even at the highest dose we saw very little.

Rupal: Infections.

Speaker Change: Thanks, Andrew Operator next question please.

Speaker Change: So next question comes from Mohit Bansal with Wells Fargo. Your line is open.

Mohit Bansal: Great. Thank you very much for taking my question and congrats on all the progress.

Mohit Bansal: I just wanted to go back to.

Mohit Bansal: The <unk> acquisition and the comments you made before.

Mohit Bansal: Can you talk a little bit about the plan to move.

The drug into earlier lines of ovarian cancer, you talked about maintenance setting but.

Mohit Bansal: Bolivia is eating it.

Mohit Bansal: First line maintenance.

Mohit Bansal: PFS and newest tends to be really long. So could you talk a little bit about the strategy there and how do you overcome.

Mohit Bansal: The existing <unk> benefit that these structural lag.

Mohit Bansal: Okay.

Speaker Change: Thank you.

Speaker Change: Hi, Mohit, it's rupal I'll take that so.

Rupal: I think as you've seen in resistance, we've seen that overall survival benefit a very substantial one unprecedented thus far.

Rupal: And to your point the plan is to move.

Rupal: Into earlier lines of therapy.

Rupal: Secondly, it's also.

Rupal: Part of the strategy to move into sensitive populations, which is around 55% of the population.

Rupal: <unk> is around 45% and then the third aspect is we've seen encouraging data in medium expresses of fr Alpha and those are approximately 30% of the patients high is around 35%. So those are the three strategies to go forward now how do we get into earlier lines of therapy.

Rupal: Well a couple of things insights that we've seen one is we've seen <unk> been able to combine at full dose with carbo platinum. So thats encouraging that gives you an opportunity to upfront.

Rupal: Combined.

Rupal: And then as you stated and maintain.

Rupal: On la here or with early here plus Bev.

Rupal: Other approaches that we would do getting the earlier line of maintenance is have that upfront therapy and then we see patients that go onto Bev, we can combine with bev at that time point and we will be looking at combinations with PARP inhibitors, which is about the other half of the patient populations, which are HRD.

Rupal: <unk> deficient so taken altogether, we see there's an opportunity now.

Rupal: <unk> is going to be a little bit longer along with <unk>. So that is something that were planning for will start. These studies as soon as possible, but they will read out in the later part of the decade and into 2030.

Speaker Change: Thanks, Mohit operator next question please.

Our next question comes from Pablo <unk> with Guggenheim Securities. Your line is open.

Speaker Change: Hi, This is Dan for today.

Pablo: Sure <unk>. Thanks for taking my question. So my question is on Humira.

Dan: I was curious given the recent performance the company has had with <unk>.

Dan: The erosion in conjunction of Biosimilars.

Dan: I was wondering if you can now provide maybe a better sense.

Dan: Around the company's expectations on Humira as longer term tail revenues in both the U S and ex U S markets. Thank.

Speaker Change: Thank you.

Speaker Change: Hi, it's Rob I'll take that question. So we do expect that in the U S. The tail will start to emerge in the 25 or 26 timeframe.

Rob: Keep in mind 24 is the first full year for U S. Biosimilars will have to see what happens with volume uptake. This year and also where interchange ability lands and ultimately what those contracts look like next year. So I wouldn't expect us to quantify the tail this year, but its certainly possible something we would do either in 25% or 26 as it relates to.

Rob: <unk> International.

I think this year, it's a step down of about 400 million.

Rob: Half of that is really the last wave of markets like Canada, Puerto Rico overseeing.

Rob: Hey, some incremental erosion, we would expect this year and then the other half would be your typical international price erosion, you see across therapeutic areas. So not really specific to Biosimilars and then.

Rob: The other quarter of it would be what we're seeing is just the strength of <unk> and <unk> as these newer agents and.

And elevate standard of care you see some share go to those newer agents and so probably the best way to think about international would be.

Rob: If you want to adjust for half of the erosion this year as being more of the final waves and then you get a sense of what to.

Rob: Potentially be the ongoing beyond that but we'll be more specific I think we need to see really how the U S plays out with this being the first full year for Biosimilars before we can really give you more color, but we're very very pleased with the progress we've made so far.

Speaker Change: Thanks, Dan Operator next question please.

Carnival: Our next question comes from Carnival with Barclays. Your line is open.

Great. Good morning, Thanks for taking the questions two on the neuroscience portfolio I guess first one on 95, one how should we think about that is that more sort of a on growing the overall pie of device stated therapies versus taking share from April morphine and gels and then.

Carnival: Maybe looking a little bit longer term abbvie has sort of three phase II. Alzheimer's studies that are going to read out later this year or by early next year fully acknowledging the commercial challenges by the players in the market today and that some of these targets are now validated how should investors think about the.

Carnival: These assets either individually or collectively in your level of excitement.

Carnival: Yeah, Hi, it's Jeff I'll take the first question. So what we look at when we see this market at a macro at a macro level you have.

Jeff: A significant number of patients called 85% of patients are just on these all medications, so oral sentiment, okay, and they essentially need to consume more and more and more oral and some times at the end of it they are taken.

<unk> pills, a day very very difficult to manage but then they are faced with a very difficult decision, which we kind of call like a surgical barrier and that surgical barrier is to get any sort of more advanced relief you either have to think about deep brain stimulation, which is a brain surgery or <unk>.

Jeff: Our own duopoly, which is a gi surgery. So the way we see this market developing is we see that 95, one starts to establish a very nice transition zone. Because you don't have to sub Q. So a new market segment that starts to emerge before <unk>.

Jeff: Bigger interventions like DBS or duopoly and obviously the ability to basically move quicker to more relief from these chronic oral basically over treatment. So that's how we see it and as.

Jeff: As <unk> highlighted we're seeing some very nice uptake in Japan, where we launched late late last year and also in Germany, and some of the first European launches. So that's how the market is exactly playing out we're establishing essentially a a new.

Jeff: Hi, efficacy category here with 24 hours of ongoing relief you can do super specific dosing titration and the pump is much smaller and again, it's a sub Q injection that you move around every three days. So it's a nice it's a nice opportunity for the company.

Jeff: And maybe I'll talk about the other assets that you mentioned in Alzheimer's first nine months six sets are a beta.

Jeff: Antibody, what we like about that one thus far that the profile, we've seen as a long half life, which would be good to space out dosing.

Jeff: Potentially higher potency if that holds and we see robust reductions in beta amyloid that could allow for subcutaneous dosing that spaced apart.

Jeff: And the other thing we're looking at is potentially lower ARIA. So if we see those three things over the course I would say end of this year early next year I think that that would be quite exciting because it would be a differentiated profile again better.

Jeff: Better convenience and potentially better benefit risk profile. So that's 906.

Jeff: <unk> two is our <unk>.

Jeff: Our our oral medication in cognition, that's currently in phase III.

Jeff: And we anticipate readout at the end of this year early next year now that one is being studied in a setting where patients can be on a therapy already like in aricept or nothing and we would use the typical adas cog assessments, along with a variety of others, including other.

Jeff: Psychiatric symptoms like depression, so thats another nice one that could combine with a variety of different assets and all timers.

Jeff: Third one I'll mention is around <unk>.

Jeff: It comes from Sarah <unk>. They are at early stages right now.

Jeff: In elderly patients and the goal there would be an all timers disease psychosis of the $6 million or so diagnoses I would say around 40% of these patients present with symptoms of psychosis, so with all of the therapies.

Jeff: That are in the clinic, we think we have a very nice complementary suite of options that could address numerous symptoms of Alzheimer's because it won't be just one therapy, that's going to solve this but more to come.

Jeff: End of this year and into next year.

Speaker Change: Thanks Carter operator next question please.

China: Our next question comes from China.

China: Your line is open.

Speaker Change: Thanks for the question just on the reaffirmed longtime guidance can I clarify if the <unk> deals.

Deals are in this 2009 guidance given you included them in the 'twenty four glide Angie up <unk> 6 billion migraine by $1 billion. If these are the pushes and.

Speaker Change: Polls and reaffirming that long term value.

Speaker Change: So this is Rob I'll take that question. Yes. We did include immunogenic terrible and our long term guide thing to keep in mind is high single digits. When you think about the range that could represent that's around $10 billion between the low end of the high single digits in the high end of the high single digits and so there.

Speaker Change: There arent any polls what we've updated as you walked you through it as we've increased the oral <unk>.

Speaker Change: Peak revenue, we've increased <unk> Rainbow, we've reaffirmed the others. So there is nothing that we took down but just keep in mind that you've got a pretty pretty wide range. If you look at street consensus. We're encouraged that it continues to move up it has moved up over the course of the last quarter.

Speaker Change: About $3 billion in 2029, it's nice to see that upward movement, but it's still below what we expect if you think that that growth rate for the street is just under 5%, we expect high single digits and so.

Speaker Change: Even with this update as well as immunogen and cerebral were still high single digits, but keep in mind, its a pretty wide range and it would be regardless of industry, leading growth and we're set up very well to continue delivering very strong growth and we're setting ourselves very well to grow very nicely in the next decade as well.

Thanks, John Operator next question please.

Speaker Change: Thank you and our next question comes from Gary Nachman with Raymond James Your line is open.

Gary Nachman: Thanks, and good morning, Firstly anaesthetics could you talk a bit more why you're confident in what seems to be a pretty decent return to growth in 2024, so how much of a headwind could china be offsetting the U S growth.

Gary Nachman: Our other regions will you be getting some somewhat of a lift this year just talk about the dynamics on that front.

Gary Nachman: And then secondly, just.

Gary Nachman: As you return to more robust revenue growth in 2025, what are reasonable expectations.

Gary Nachman: For operating margins Directionally in 2025 cannot expand at all or.

Is it more likely to be depressed from the immunogen and servile deals just give us some directional way to think about that for next year. Thank you.

Karri: Hi, This is karri I'll take your first question on aesthetics, and the aesthetics market recovery.

Karri: So I'll start with the U S and <unk>.

Karri: <unk> started to see the U S toxin market recover at the end of 2023, we expect that recovery to continue and for the market growth for toxins to continue to improve in 2024.

Karri: For sellers in the U S.

Q4, after multiple quarters of decline.

Karri: Our market in the U S was somewhat flat and so that dynamic of the seller market recovery lagging the toxin market recovery is playing out and we do expect that recovery on fillers to also continue at to a lesser degree than toxin, it's more of a modest growth positive growth for 2000.

Karri: 24, and as we look at the beginning of the year here in 2024, we are seeing our patient demand metrics and Google metrics really supporting our expectations here.

Karri: In terms of China, we do.

Karri: Expect the economic headwinds that we saw beginning midyear 2023 to continue in the near term with China, and we expect that China's <unk> market to be flat overall in 2024 that would look like negative market in the first half of the year until the China market starts to recover.

Karri: In the second half of 2024.

Karri: And we expect that China performance to be balanced against expectations for strong performance in other international regions, including Japan, which has become an important market for aesthetics and areas of Latin America, like Brazil, which is a highly aesthetically oriented market.

Karri: It's also important to know in terms of Q1 of 2024.

In terms of our guidance there that the growth in the U S will be offset by that international decline specifically in China, So not only the China economic headwind, but also a difficult year over year comp in Q1, because recall in Q1 of 2023, there was to post pandemic reopening in China.

Karri: So that's really how we see the market growth factors in U S. China and other parts of the world playing out in 2024 and Gary This is Rob to build on the aesthetic story.

Rob: I said in the past to get to our guidance of greater than $9 billion, we need to deliver annual growth of high single digits on average and as Kerry just walked you through we haven't quite seen the recovery for the fillers market yet this year and we will but it's not going be a normal year, we will see a ramping and we also had a slowdown in China, but despite that we're still delivering high single.

Rob: Digit growth and given how under penetrated. These markets are we can drive that market growth that's required to achieve our long term guidance and then on top of that we have several innovations that will further support that growth I've said this before but the masseter and platysma indications for Botox will add a few hundred million dollars. Each are novel short acting toxin bondy.

Has the potential to activate new patients who have not started toxin due to fear of an unnatural look so that could drive an inflection in market growth and market share and in our regional fillers pipeline is really aimed at providing both short and long term treatment benefits for consumers. So we have several avenues to get to or greater than $9 billion guy to have seen consensus estimates it.

Rob: <unk> for 2029, but we're very confident in our guidance of greater than nine by that period.

Rob: Yeah.

Rob: Gary This is Scott I'll take your question regarding operating margin expansion. So for 24 as I mentioned my remarks, we've guided to 46, 5% when we do return to robust growth in 2025, we do see that operating margin will expand and will continue to expand as we grow through the decade, I think that when we think about the pace of that.

Scott: Fashion it'll be relatively steady over several years I would though if youre modeling that I would kind of peaked out at around 50% I think that's where we'll hit a peak at the operating margin, but we do see expansion. Both in 25 on that returned to robust growth, including the impact of the two transactions immunogen, servile, which should presumably be a full.

Scott: Year at that point in time, but on a full year impact we see that expansion I do think it's worth noting even at our current levels, we have industry, leading operating margin and certainly with the future expansion will continue to have that and only grow that position.

Speaker Change: Thanks, Gary Operator next question please.

Speaker Change: Yes. Our next question comes from Steve Scala with TD Cowen Your line is open.

Steve Scala: Thank you very much two questions is the current tax rate fully reflecting likely tech tax changes in the U S and outside the U S. So it represents a high water mark for the foreseeable future previously the company spoke to a 16% tax rate and we're pretty much there. So I'm wondering if.

The increases are kind of behind Us and then Rick slide.

Steve Scala: Different kind of question, but there are clear obvious reasons, such as the success of Sky Brinci and <unk>.

Steve Scala: But.

Steve Scala: I'm curious if you would share with us a few of the externally less visible factors that are leading to abbvie success traversing the humira patent expiration that your pharma peers missed when dealing with their own pressures I would assume contracting formulary management allocation of overhead are all part of it.

Speaker Change: But what would you be willing to share with us. Thank you.

Speaker Change: Steve This is Scott I'll start with your tax rate question. So with respect to the tax rate, we were essentially flat between this year and last year at 15, 7%, we do see that tax rate over the three year period, including this year, increasing about 1% on average now.

Speaker Change: Now that's not going to be.

Speaker Change: At 1% per year, which Youll see is a step up in a couple of years when the U S tax rates do increase the guilty rate in particular will increase so we see that over a three year period about 1% per year on average that does include all of the impacts of a number of things going on globally with the OECD in some of these.

Speaker Change: OECD minimum taxes and other things I would say the one thing that does not include you saw just this week the house passed.

<unk> Bill that includes a provision regarding the R&D expensing.

Speaker Change: So if that if that bill were to pass as it's written which would see a slight step down in our tax rate about 80 basis points from the impact of that on an ongoing basis.

Rick: Steve This is Rick.

Rick: I think if you step back and you look over the last I'd say 10 years.

We're trying to develop a strategy that we fundamentally believe.

Rick: It will allow us to be able to offset that.

Rick: A mirror low and continue to deliver top tier financial performance as we have for the past 10 years that was the whole objective and we knew we had to build a very diversified.

Rick: Growth platform in order to be able to do that to be able to absorb that impact.

Rick: Return to growth as rapidly as possible and so we as a executive team focused a lot of energy around how do we do that how do we build how do we do it in the right markets.

Rick: I think abbvie.

Rick: I'm, obviously biased I guess, but I would say our commercial execution has always been exceptional in my opinion.

Rick: Understand the markets, we're in extremely well, we understand the competitive environment that we compete in those markets extremely well we understand.

The patient journey and how that patient journey is affected by.

Rick: By access to medicines to ensure that patients can get their medicines routinely and be able to get the benefit of those medicines. It takes all of those things I think to end up with kind of success that we see with assets like Sky Regina.

Rick: But it also takes I think a company that is very good at what I describe as read and react there are always challenges in businesses as big and as complex as this and I think the difference between.

Rick: Companies that can continue to perform at the top tier.

We're in and year out is they're good at seeing issues and then quickly reacting.

Rick: Theyre going to either offset those or deal with those and we had many of those examples I would say the label change of Limbach was a great example, but look at where <unk> is growing now and despite that label change menu would not have predicted that.

Rick: Migraine was a very challenging market for a period of time, we'll look at how we've operated with you probably in Q lift up and.

Rick: And the kind of success, we've seen against the competitors in those markets.

Rick: Neuroscience very different kind of market with very large that's all about trying to grow market share and expand your position there with a very good asset and so we're good at that and I think that is a real differentiator and the other thing I'd say is I think we have been very efficient.

Rick: At.

Rick: Our R&D investment.

Rick: We obviously don't have the largest R&D investment in the industry.

<unk> a tremendous amount of return against that R&D investment now having said that as we go forward. We know we need to increase R&D as I said in my comments, we did a fairly significant increase last year, despite dealing with it.

Rick: Hello.

Rick: And we're going to a level fairly significant increase this year, because we have some assets that.

Rick: Had very very significant opportunities like 383 in like 400 and several others.

Rick: We are going to require a large phase III.