AbbVie Inc.

Good morning and thank you for standing by. Welcome to the AbbVie Third Quarter 2020 Earnings Conference Call. All participants will be able to listen only until the question and answer portion, and you may ask a question by pressing star 1 on your phone. And I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations.

Good morning and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer, Michael Severino, Vice Chairman and President, Rob Michael, Executive Vice President and Chief Financial Officer. And joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman, External Affairs, Chief Legal Officer, and Corporate Secretary. Before we get started, I remind you that some statements we make today may be considered forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. ABBYY cautions that these forward-looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on ABBYY's operations results and financial results that may cause actual results to differ materially from those indicated in the forward-looking statements. Additional information about these risks and uncertainties is included in our 2019 Annual Report on Form 10-K and in our other SEC filings. ABBYY undertakes no obligation to update these forward-looking statements except as required by law. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand AbbVie's ongoing business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Unless otherwise noted, our commentary on sales growth is on a comparable operational basis, which includes full current year and historical results for Allergan and excludes the impact of exchange. For this comparison of Underlying performance, all historically reported Allergan revenues have been recast to conform to ABBYY's revenue recognition accounting policies and excluded the divestitures of ZENPAP and BioCase. Following our prepared remarks, we'll take your questions. So with that, I'll now turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I'll discuss our third quarter performance and highlights, as well as our full year guidance, which we are raising again this quarter. Mike will then provide an update on recent advancements across the R&D programs, and Rob will discuss the quarter in more detail. Following our remarks, we'll take your questions. AbbVie delivered another excellent quarter with adjusted earnings per share of $2.83, exceeding the midpoint of our guidance range by 8 cents. When I look at our business and the actions we've taken to position AbbVie for sustainable performance, including the acquisition of Allergan, I feel very good about our long-term outlook. The fundamentals are strong and there is considerable momentum across our legacy and new portfolios, which are both demonstrating robust growth despite the COVID pandemic and together have the potential for significant long-term value creation. I'd like to specifically highlight our recent progress across several aspects of our business, including the launches of Renvoke and SkyRisi, which are performing well ahead of all comparable launch analogs in their initial indications and continue to exceed our expectations. Our Hemon franchise also continues to deliver robust performance and is expected to generate more than $6.5 billion in revenue this year representing strong double-digit growth. New indications and novel combinations, including our recently announced collaboration with GEMMAB and IMAB, provide opportunities for further revenue expansion. While we're still relatively early in the integration of Allergan, the strategic merits of the combination have never been more evident. We're already demonstrating that we have created a stronger, more diverse company. with robust cash flows and multiple new growth vehicles for the long term. We now have the leading aesthetics franchise which is demonstrating a strong V-shaped recovery as well as a highly attractive neuroscience portfolio which delivered double-digit growth on a comparable operational basis this quarter and has significant momentum with Velar and our expanding migraine franchise. And our pipeline is advancing nicely with numerous attractive late-stage programs that we believe will allow us to maintain a growing and vibrant business. We're on track for the approval of more than a dozen new products or major indications over the next two years, which will collectively add meaningful revenue growth. This includes a total of six additional indications for Renvoq and SkyRisi, expanded indications for Van Clexta, and several other near-term new product approvals, including Atozapan, Novitaclax, and 951. Clearly, this is a very exciting time for AbbVie, and I'm pleased with the progress that we're making towards our long-term strategy for sustainable growth. I remain confident that we will continue to execute, as we have in the past, and deliver outstanding shareholder value going forward. I'd like to look further at our business performance. I'm pleased with the recent trends across our key growth areas. I'll start with Immunology where we've established strong trajectories for RINVOC and SCIRISI. As I previously noted, both continue to perform well above expectations in their initial indications these two brands have clearly demonstrated superior efficacy to Humira, as well as other novel agents on the market or in development, resulting in significant in-play market shares, a leading indicator for long-term commercial performance. The in-play share for RhinVocin RA, which includes both new and switching patients, remains strong at approximately 16% and has now reached parity with our market-leading Humira. In psoriasis, Skyrizzy has already achieved the leading in-play market share at 33 percent. This level of share capture at this stage of the launch is unprecedented, and if sustained, will ultimately lead to total market share well in excess of what was contemplated when we communicated our expectations for 2025 sales. This strong performance and trajectory despite the impact of the COVID-19 pandemic, is a testament to our differentiated product profile and our commercial execution. Our focus since the pandemic has been on driving accelerated patient activation, and we remain encouraged by our current prescription trends. Our recent performance continues to give us confidence in the near and long-term potential for both RINVOC and SCIRISI. which we now expect will deliver $2.2 billion in combined revenue for full year 2020, well exceeding our original projections for this year. In addition to outstanding commercial momentum, we're also making excellent progress with Ringo and Skyrizzy in new indications, which we expect will further strengthen our leadership position. We have already started planning and preparing for the forthcoming approval of three additional RINVOC indications next year, including psoriatic arthritis and ankylosing spondylitis, giving us complete coverage across the more than $40 billion rheumatology segment. We also expect approval in atopic dermatitis, another large and growing market that has the potential to be multibillion-dollar peak revenues for RINVOC. In the coming year, We also intend to submit regulatory applications for Skyrizzy in psoriatic arthritis and both agents in the area of inflammatory bowel disease, a more than $20 billion market today with high unmet need. Overall, I'm extremely pleased with the progress we're making on both RINVOC and Skyrizzy. I'd also like to take this opportunity to announce that we will be hosting an immunology-focused investor day in December, where we intend to further discuss our strategy, progress, and expectations for this important growth area. Additional details will be forthcoming. Turning now to HEMOC, which delivered robust double-digit growth again this quarter and remains an important therapeutic area for AbbVie's long-term performance. has a strong position across multiple indications, including CLL, where it remains the clear market share leader across all lines of therapy. ImpluVica sales increased 9% on an operational basis this quarter, despite lower new patient starts within CLL, where the market remains below pre-COVID levels. Benclexta sales increased nearly 60% on an operational basis this quarter. The penetration across our approved indications remains strong, especially in AML, given the potential aggressive disease progression of that cancer. In the quarter, we also announced a strategic collaboration with IMAP, further expanding our oncology portfolio with an anti-CD47 monoclonal antibody, which has potential across a wide range of blood cancers. The IMAP opportunity adds to our already attractive oncology pipeline, which includes Novitaclax, GenMAP CD3 by CD20, expanded indications for Van Clexta, and several promising early-stage programs. We also now have another high-performing franchise in neuroscience, which further diversifies at these sources of long-term growth. Baylor sales increased strong double digits again this quarter on a comparable operational basis with annualized revenues of more than $1.4 billion. Given Baylor's benefit-risk profile relative to other atypical antipsychotics, we remain confident in its long-term growth potential, which we believe is multibillion dollars across the currently approved indications of bipolar disorder and schizophrenia. Botox Therapeutics, which has nearly a dozen medical treatment indications, including chronic migraine, is also performing very well. Revenues were up nearly $100 million sequentially on a comparable operational basis, demonstrating a rapid COVID recovery. The launch of Ubrelvi, our leading oral CGRP for acute migraine, is exceeding our expectations. commercial access is ramping strongly, and increasing DTC investments have resulted in encouraging new patient starts and market expansion. When you consider our overall scale with Botox Therapeutics, with Wellvee's acute treatment profile, and the promising development of Atojapan for the prevention of episodic and chronic migraine, we see substantial room for long-term revenue growth with this best-in-class migraine portfolio. Within aesthetics, our fourth major growth platform, we're seeing robust demand trends and a rapid V-shaped recovery. Total global aesthetics revenues of more than $950 million were up 70% sequentially on a comparable operational basis, illustrating the significant underlying demand for both Botox cosmetic and Juvederm. We remain focused on supporting clinics through the COVID pandemic and expect consistent investment in consumer promotion to expand the aesthetics market, which remains underpenetrated globally. Our dedicated R&D and business development are expected to sustain new innovation and rapidly expand our aesthetics portfolio for long-term growth. including the recently announced acquisition of Luminera, which provides us with a complimentary dermal filler portfolio and pipeline. Overall, we're very pleased with the momentum that we're seeing with our aesthetics franchise. Abbey's business continues to remain resilient and demonstrate strong underlying growth throughout the pandemic. Based on the performance this quarter and our progress year to date, we're raising our full year 2020 EPS guidance. We now expect adjusted earnings per share of $10.47 to $10.49, reflecting growth of more than 17% at the midpoint. In addition to the excellent progress we're making across the portfolio, the integration of Allergan continues to go very well. Despite the size of this transaction, and the timing of the COVID pandemic, the transition has been seamless. We're performing very well against both our synergy and accretion targets and it has become increasingly clear to us that there are also opportunities for revenue synergies across various aspects of the business. We're now six months post-close and the strategic merits of the transaction are extremely evident. Allergan is providing additional growth platforms, robust financial benefits and greater diversity of our business. We remain confident that the newly combined business will generate significant earnings and cash flow to support continued investment in our innovative R&D platform as well as a strong and growing dividend while also allowing us to rapidly pay down debt. To that end, as noted in our news release, Today we're announcing a 10.2% increase in our quarterly cash dividend from $1.18 per share to $1.30 per share beginning with the dividend payable in February 21. Since inception, we have grown our quarterly dividend by 225%. So in summary, we continue to demonstrate strong execution across our portfolio and remain encouraged by the overall recovery trends. We assembled an impressive set of diversified growth assets with significant growth potential, giving us a high degree of confidence in the long-term outlook for our business. With that, I'll turn the call over to Mike. Thank you, Rick.