AbbVie Inc.

Thank you for standing by and welcome to the AbbVie Second Quarter 2021 Earnings Conference Call. All participants will be able to listen only until the question and answer portion of this call. You may ask a question by pressing star 1 on your phone. I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations. Ma'am, you may proceed.

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 Jeff Stewart, Executive Vice President, Commercial Operations. 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. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law. On today's conference call, non-GAAP financial measures will be used to help investors understand AbbVie's business performance These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Unless otherwise noted, our commentary on sales growth is on a comparable basis, which includes full current year and historical results for Allergan. For this comparison of underlying performance, all historically reported Allergan revenues have been recast to conform to ABBYY's revenue recognition accounting policies and exclude the divestitures of ZENPAP and BioCase. References to operational growth further exclude the impact of exchange. Following our prepared remarks, we'll take your questions. So with that, I'll now turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I'll discuss our second quarter performance and outlook, and then Jeff, Mike, and Rob will review our business highlights, pipeline progress, and financial results in more detail. AbbVie delivered another excellent quarter with adjusted earnings per share of $3.11, exceeding the midpoint of our guidance by 4 cents. Total adjusted net revenues of nearly $14 billion were up 19.3 percent on a comparable operational basis, approximately $375 million ahead of our expectations. These results demonstrate our strong and balanced performance across each of our major growth franchises, including double-digit comparable operational revenue growth from Immunology, Hemonc, Neuroscience, and Aesthetics. Looking at the most recent trends, the vast majority of our portfolio is well into the recovery phase from the pandemic. In Immunology, we continue to see strong recovery across the room, derm, and gastro segments, with positive trends across all key indicators, including new patient starts. Skyrizzy and Renvo continue to ramp nicely in their initial indications, with both products demonstrating robust double-digit sequential revenue growth. In neuroscience, Baylor is demonstrating strong new prescription volume in the atypical antipsychotic market And the launch of Ubrelvi, the leading oral CGRP for acute migraine, continues to exceed our expectations. Aesthetics continues to perform well above pre-COVID levels, exceeding our internal expectations. We're pleased with the rapid market growth in both toxins and fillers, driven by our increased promotional resources globally, brand strength, and COVID-related pent-up demand. Rapid global market demand is expected to remain well above historical levels in the near to medium term, and we are raising our full-year guidance once again for aesthetics. While the recovery across the AbbVie portfolio is going very well in aggregate, in certain disease areas like CLL and HCV, we continue to see a residual impact from the pandemic. We expect these specialty areas to further recover as the year progresses. One of AbbVie's greatest strengths is the dedication and engagement of our people. Across AbbVie, the majority of our employees have safely returned to the workplace, and our field teams are now predominantly conducting live engagements with physicians and customers where protocols and guidelines permit. I'm extremely proud of the teamwork and collaboration our people have demonstrated throughout this pandemic to bring our medicines to patients and keep our business performing at a strong level. As an organization, we have also made a tremendous amount of progress with the Allergan transaction and integration. We just recently completed our first full year as a combined company, which I'd say has gone exceptionally well. We're tracking well against the operational and financial commitments we outlined at the time of the transaction, with accretion performing above average. our original projections. But I'm particularly pleased with the robust revenue performance that we've been able to drive since acquiring Allergan, with 2021 sales tracking to grow significantly faster than legacy Allergan's historical performance. Our results continue to show that we have created a stronger and much more diverse company, with numerous products within our newly combined portfolio delivering robust growth. Based on the continued strong momentum of our business in the quarter and our progress year to date, we are once again raising our full year 2021 EPS guidance. We now expect adjusted earnings per share of $12.52 to $12.62, reflecting growth of 19% at the midpoint. Our strong performance allows us to continue to fully invest in the business for long-term growth. As you'll hear from Mike momentarily, we continue to make excellent progress across all stages of our research and development programs. In closing, I'm extremely pleased with our performance in the quarter and with our continued strong momentum of the business, which has positioned us well for the remainder of 2021 and many years to come. With that, I'll turn the call over to Jeff for additional comments on commercial highlights. Jeff?

Thank you, Rick. I'll start with Immunology, which delivered global revenues of more than $6.1 billion, reflecting growth of 13.8% on an operational basis. Guy Rizzi and Renvo continue to have significant impact on AbbVie's growth and performance, contributing more than $1 billion in combined sales this quarter. With Guy Rizzi, global revenues were up 17.4% on a sequential basis, reflecting increasing market share globally. In the U.S., Skyrizzy continues to perform well and has maintained its leading in-play psoriasis patient share, which includes both new and switching patients, at approximately 34%. Skyrizzy's total prescription share capture is now approaching 20%, second only to Humira. Internationally, Skyrizzy has achieved in-play patient share leadership in 13 markets, including Canada, France, and Japan. RINVOC is also demonstrating robust growth, with global sales up nearly 25% on a sequential basis. We continue to see in-play patient share of approximately 15% in the USRA market, where physician and patient feedback remain very positive on RINVOC's strong benefit risk profile. Internationally, RINVOC access and share continue to ramp nicely in RA, with in-play market leadership now in half a dozen key countries. We are also making excellent progress with the regulatory approval and commercial launch of PSA and AS across several OUS countries. And we look forward to the approval and commercialization of RENVOC and atopic dermatitis later this year following the recent CHMP positive opinion for both the 15 and 30 milligram doses. Humira global sales were approximately $5.1 billion, up 3.6% on an operational basis. with continued high single-digit revenue growth in the U.S., offset by biosimilar competition across the international markets, where revenues were down 12.6% on an operational basis. In hematologic oncology, sales were approximately $1.8 billion, up 13.2% on an operational basis. AbbVie maintains a strong leadership position in CLL with a combined portfolio, including both in Bruvica and Van Clexta, new patient share of approximately 42%, and total patient share of approximately 72% across all lines of therapy. In Bruvica, global revenues were approximately $1.4 billion, up 7.2%. In the U.S., performance continues to be impacted by lower new patient starts in CLL, which remain below pre-COVID levels, as well as increasing competitive dynamics from newer therapies, including Venclexta, and other BTK inhibitors. Manclecta sales increased 38.3% on an operational basis with strong demand across all approved indications. We're particularly pleased with the performance in AML with robust share in the U.S. and increasing momentum internationally following recent approvals in the EU and Asia. In neuroscience, Revenues were more than $1.4 billion, up 29.6% on a comparable operational basis. We continue to see strong momentum with Raylar, which recently achieved multiple all-time highs in weekly prescriptions and market share. Raylar revenues of $432 million were up more than 25% on a comparable operational basis. And UBrelvy once again delivered robust results, Sales of our leading acute migraine treatment were $126 million, exceeding our expectations. Feedback from physicians remains very positive, highlighting UBrelvy's rapid and sustained pain relief, safety, convenient and flexible dosing profile, and overall commercial access. UBrelvy is now capturing roughly 9% of new prescriptions in the large acute migraine market, with more than 1 million cumulative total prescriptions since the launch. We continue to believe there is substantial room for long-term growth in this rapidly expanding acute market based on unmet need and strong patient demand. In migraine prevention, we've also been planning and preparing for the forthcoming regulatory approval and commercial launch of Atojapan, our oral CGRP for episodic migraine. We're very encouraged with the efficacy profile of Atojapan, including reduction in migraine days versus placebo, as well as the overall percentage of responder rates in patients. Now the launch of Atojapan will be supported by our existing migraine sales force with commercial access expected to ramp strongly. We remain on track for a U.S. regulatory decision in September. Botox Therapeutics continues to perform well across nearly a dozen medical indications. with a total sales of $603 million, up more than 38% on an operational basis. In chronic migraine, Botox Therapeutic remains a foundational prevention treatment and the clear branded leader in new patient starts. Lastly, in our other therapeutic areas, we saw significant contribution from eye care, which had revenues of $919 million, up 24.1% on a comparable operational basis. Maverick sales were $442 million, up 13.9% on an operational basis, although treated patient volumes remain suppressed versus pre-COVID levels. And we also saw double-digit comparable operational revenue growth for both Creon and Linzess. So overall, I'm pleased with the momentum of our therapeutic portfolio, which is demonstrating a strong recovery, as well as our progress with new recent product launches. And with that, I'll turn the call over to Mike for additional comments on our R&D programs. Mike?

Thank you, Jeff. I'll start with immunology, where we had several notable pipeline events in the quarter. In the area of inflammatory bowel disease, we reported positive top-line results from the Phase III maintenance studies for Rhinvox in ulcerative colitis and Skyrizzy in Crohn's disease. In the Rhinvox UC maintenance study, Both the 15 and 30 milligram doses met the primary and all secondary endpoints at week 52. In the induction portion of the program, RINVOC demonstrated a very strong impact on the disease. And the results from this maintenance study demonstrate that patients continuing treatment with RINVOC maintain high levels of clinical remission, clinical response, and endoscopic improvement at the one year mark. In fact, Maintenance treatment with either dose of RINVOC resulted in some of the highest rates of remission and endoscopic improvements seen in UC clinical studies. With the 30 milligram RINVOC dose, 52% of patients achieved clinical remission. 62% achieved endoscopic improvement. 49% achieved histologic endoscopic mucosal improvement. and 68% achieved steroid-free remission. We are very pleased with how RINVOC performed from a safety perspective as well. In this maintenance study, the exposure-adjusted event rates for overall adverse events, including serious and severe events, were higher in the placebo group than in either RINVOC dose group. Additionally, the exposure-adjusted rates for MACE, VTE, and malignancies, excluding non-melanoma skin cancer, were comparable between RINVOC groups and placebo. These results provide further evidence that RINVOC has the potential to become a highly effective therapy for patients with moderate to severe ulcerative colitis. We're also nearing completion of the Crohn's disease program for RINVOC and expect to see data from the first Phase III induction study later this year. Results from the second induction study and the maintenance study are expected in the first half of next year, with regulatory submissions also anticipated in 2022. We also saw very impressive results from SkyRizzi in the maintenance phase of our Crohn's disease program, particularly with the 360-milligram maintenance dose, which met the co-primary endpoints of clinical remission and endoscopic response versus the withdrawal arm at Week 52. Importantly, when we look at the most stringent endpoints, we see strong separation between SCI-RISI 360 mg and control, with the response rates of 39% for endoscopic remission and 29% for deep remission, compared to 13% and 10% for the withdrawal group at Week 52. We remain on track to submit our regulatory applications for RINVOC and UC and Skyrizzy in Crohn's in the coming months. In the quarter, we also announced updates regarding our regulatory applications for RINVOC in atopic dermatitis, psoriatic arthritis, and ankylosing spondylitis. In June, RINVOC received a positive CHMP opinion in Europe, recommending both the 15 milligram and 30 milligram doses in moderate to severe atopic dermatitis. This CHMP opinion puts us on track for European approval in August. When approved, atopic dermatitis will be the fourth indication for RINVOC in Europe. Regarding our supplemental NDAs in the U.S., we recently announced that we were notified by the FDA that they would not meet our PDUFA action dates for RINVOC in psoriatic arthritis, ankylosing spondylitis, and atopic dermatitis. which were in late June for psoriatic arthritis, NAS, and mid-July for atopic dermatitis. The agency cited their ongoing review of the topacitinib oral surveillance study, indicating that they needed more time to complete their reviews of the data. The FDA has not requested any additional safety analyses for RINVO since the PDUFA dates were missed. While there are no new action dates, Based on our discussions with the agency, we expect decisions on our regulatory applications in the next few months, following completion of the agency's review of the tofacitinib oral surveillance data. We remain confident in the benefit-risk profile for RINVOC across all indications and will continue to work with the FDA to bring RINVOC to market in these new disease areas. In our early-stage immunology pipeline, We recently began two new trials for ABBV154, our TNF steroid conjugate. We initiated a definitive dose ranging study in patients with RA and also started our phase two study in polymyalgia rheumatica. Later this year, we expect to begin the phase two study for 154 in Crohn's disease. Also in the quarter, we completed the induction stage of a phase two proof of concept study evaluating Ravagalimab in ulcerative colitis patients. While this CD40 antagonist demonstrated greater efficacy compared to historical control, the efficacy results did not meet our pre-specified criteria. As a result, we will not be advancing Ravagalimab in ulcerative colitis. In oncology, we continue to make good progress across all stages of our pipeline. At the recent ASCO and EHA meetings, data were presented from the GLOVE and CAPTIVATE studies evaluating a fixed duration Imbruvica and Venclexa regimen in CLL patients. Results from these two studies demonstrated that the all-oral fixed duration Imbruvica plus Venclexa regimen has the potential to provide deeper and more durable remission and extend progression-free survival. as a frontline treatment across the spectrum of age and fitness status for CLL patients. We plan to submit these data to regulatory agencies and look forward to bringing this new fixed-duration treatment option to CLL patients once approved. Earlier this month, we received a breakthrough therapy designation for Venclexta in combination with azacitidine for previously untreated higher-risk MDS patients based on the strong data demonstrated thus far in our ongoing Phase 1b study. We expect to see final results from this study in the coming months and plan to discuss the data with regulators regarding the potential to support an accelerated approval for Benclexta in MDS. Also in the quarter, we saw interim results from a Phase 1 study evaluating the BCMA CD3 bispecific antibody TNB, 383B, in multiple myeloma patients who have received at least three prior lines of therapy. 383 performed very well as a monotherapy in these heavily pretreated patients, demonstrating an objective response rate of nearly 80%, and a very good partial response or better rate of 63%, and a complete response rate of nearly 30% at doses greater than 40 milligrams, in the dose escalation cohort. Based on these promising results, we exercised our right to acquire TNB383B from Tenayo Bio. We expect the transaction to close in the coming months, and we'll provide more information on our development plan for 383 in multiple myeloma later this year. This is a highly competitive area, but based on the data to date, We believe this BCMA CD3 bispecific has the potential to be differentiated on efficacy, safety, and dosing interval, and could be best in class as both a monotherapy and combination therapy across lines of treatment in multiple myeloma. We continue to make good progress with the Navidoclax program in myelofibrosis, which consists of randomized Phase III trials in both the frontline and relapsed refractory setting, as well as a single-arm Phase II study. Based on feedback from the FDA, we intend to submit our regulatory application with randomized Phase III data together with the Phase II trial results. We expect the Phase III data readout and regulatory submissions in the second half of 2022, with Noviticox approval in myelofibrosis anticipated in 2023. In neuroscience, we recently completed the Phase II proof-of-concept studies for two assets, elizaniumab in multiple sclerosis and ABBV8E12 in Alzheimer's disease. In their respective studies, neither asset met the efficacy endpoints of the trial, and we will be discontinuing the development of elizaniumab in MS and 8E12 in Alzheimer's disease. Given the enormous unmet need in Alzheimer's disease, we remain committed to finding disease-modifying therapies, and we continue to pursue a range of approaches. We have several additional programs that are either in the clinic today or are in preclinical development. These include programs that modulate the neuroinflammatory response in Alzheimer's disease, such as our TREM2 and CD33 programs that are both in clinical development, and programs that target pathologic tau through novel mechanisms such as approaches that target intracellular aggregates for clearance that are in preclinical development. Following the accelerated approval of Atacanemab in the U.S., there has been an increased focus on A-beta directed programs. We have monitored this area closely over the last several years, and based on all of the available data, we believe there is a continued opportunity for an A-beta directed monoclonal antibody that clears plaque more rapidly than existing agents with a reduced risk of amyloid-related imaging abnormalities or area. We have profiled a number of A-beta antibodies preclinically, and we have a candidate with the potential to meet these requirements. We expect to introduce this candidate into the clinic by the end of this year or early next year. Also in neuroscience, We're nearing completion of our registrational program for ABBV951 in advanced Parkinson's disease. We recently completed an interim analysis in the first of two Phase III studies where our subcutaneous levodopa-carbidopa delivery system demonstrated safety and efficacy comparable to duopa after six months of treatment. The primary objective of this trial was safety, but efficacy was also evaluated as secondary endpoints. In this analysis, 951 performed very well, demonstrating a 52% reduction in normalized off time and a 41% increase in normalized on time without troublesome dyskinesia. Patients also benefited from 951's 24-hour continuous levodopa-carbidopa infusion, with patients experiencing substantial benefits in sleep and reduction in morning off time. Full data from this six-month interim analysis will be presented at a medical meeting later this year. Data from a second Phase III study are expected in the fourth quarter, with our regulatory submissions anticipated later this year or early next year. And lastly, in eye care, at the recent meeting for the American Society for Cataract and Refractive Surgery, We presented results from the Phase III GEMINI-1 study evaluating our topical eyedrop AGN190584 for the treatment of symptoms associated with presbyopia. In this study, 584 demonstrated improved near vision without impacting distance vision with a rapid onset of action within 15 minutes and sustained vision improvements for up to six hours. 584 has the potential to be a convenient, on-demand solution for patients with mild to moderate presbyopia, and we look forward to an approval decision later this year. So, in summary, we've made great progress with our pipeline in the first half of this year, and we look forward to several additional data readouts, regulatory submissions, and approvals throughout the remainder of 2021. I'll turn the call over to Rob for additional comments on our second quarter performance and financial outlook. Rob?

Thank you, Mike. Starting with second quarter results, we reported adjusted earnings per share of $3.11, up 32.9 percent compared to prior year, and above our guidance midpoint. Total adjusted net revenues were nearly $14 billion, up 19.3 percent on a comparable operational basis, excluding a 1.6 percent favorable impact from foreign exchange. The adjusted operating margin ratio was 49.7 percent of sales, an improvement of 260 basis points versus the prior year. This includes adjusted gross margin of 82.2 percent of sales, adjusted R&D investment of 11.3 percent of sales, and adjusted SG&A expense of 21.2 percent of sales. Net interest expense was $606 million, and the adjusted tax rate was 12.6 percent. As Rick previously mentioned, we are raising our full year adjusted earnings per share guidance to between $12.52 and $12.62, reflecting growth of 19% at the midpoint. Excluded from this guidance is $6.48 of known intangible amortization and specified items. This guidance now contemplates full year revenue growth of 10.7% on a comparable operational basis. At current rates, We now expect foreign exchange to have a 0.9 percent favorable impact on full-year comparable sales growth. This implies a full-year revenue forecast of approximately $56.3 billion. Included in this guidance are the following updated full-year assumptions. We now expect aesthetics global revenue of approximately $4.9 billion, including approximately $2 billion from Botox Cosmetic and approximately $1.4 billion from Juvederm. we now expect Restasis sales of approximately $1.1 billion and assume no generic competition in 2021. For Ybrelvi, we now expect sales of approximately $500 million. For Women's Health, we now expect global revenue of approximately $900 million. And for Maveret, we now expect global sales of approximately $1.9 billion. Looking at the P&L for 2021, we are now forecasting adjusted R&D investment of approximately $6.7 billion and adjusted SG&A expense of approximately $11.9 billion. All other full-year assumptions remain unchanged. As we look ahead to the third quarter, we anticipate net revenue of approximately $14.3 billion. At current rates, we expect foreign exchange to have a 0.5% favorable impact on comparable sales growth. We expect adjusted earnings per share between $3.18 and $3.22, excluding approximately $1.64 of known intangible amortization and specified items. Finally, we continue to make great progress on our Allergan transaction commitments. We are exceeding our revenue expectations in several areas, including Botox, Raylar, Ubrelvi, and iCare. We have also delivered expense synergies of almost $800 million during the first half of this year and are on track to deliver synergies of approximately $1.7 billion in 2021 and greater than $2 billion in 2022. And we have already paid down $12 billion of combined company debt. We expect to achieve $17 billion of cumulative debt pay down by the end of this year with further deleveraging through 2023. This will bring our net leverage ratio to 2.4 times by the end of 2021 and approximately two times by the end of 2022. In closing, AVI has once again delivered outstanding performance, and we are very pleased with the strong momentum of the business heading into the second half of the year. With that, I'll turn the call back over to Liz.

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

Thank you, Ms. Shea. Our first question is from Vamil Devon with Mizuho Securities. Your line is open, sir.

Great. Thank you very much for taking my questions. So maybe two, if I could. So one, Rick, you mentioned several of the Allegan products. maybe doing better than your expectations. Can you maybe, I mean, I know you don't want to share your secret sauce, but in terms of what is it that you've noticed that has helped to drive those products, because it seems like it's pretty much across the board from aesthetics to Raylar, Urelvi. So is it around promotion efforts? Is it around sort of payer dynamics? Anything you could share would be helpful there. And then the second one on Imbruvica, I just want to confirm, I think you guys said that the new patient share across all indications now is 42%. So I just want to see if you guys are in line with what you expect at this point. Obviously, there's been questions around some of the competitors that have entered the market. And maybe you can just talk about the patients who are not starting on the Brubica. So what are you seeing as the reasons why they might be choosing a competitor? Thank you.

Yeah, Vamo, this is Rick. I'll cover certainly part of the first question. Maybe I'll ask Jeff to jump in and cover any additional thoughts that he might have. I think as you look at this business, one of the things that I think AbbVie is sort of known for is that we tend to operate in a very focused and disciplined way, especially across what we consider to be growth franchises. We expect every one of our major businesses to develop plans to be able to maximize the value of their assets, both from a strategic, a long-term basis, but also from a short-term perspective. tactical basis, and I'll use aesthetics as the example. Early on, we made the decision that we were going to fully integrate the aesthetics business to make sure that it had the focus and attention that it needed because we believed this business had a significant opportunity to be able to grow. We did that globally. So if you look at Allergan in the past internationally, those people representing those products also had to represent eye care and other therapeutic products. So we moved those out. into the therapeutic areas of AbbVie internationally and solely dedicated the aesthetics group internationally to just their products. And then in the U.S., we operate with a similar structure and a fully integrated R&D organization that's totally committed to just developing aesthetics products and reports directly to Mike and then the head of the business for aesthetics reports directly to me. And we had them develop a plan that they are now executing against to be able to deliver against that. So I think it's really three aspects of it from my perspective. It's one, the structure we put in place. And that was a thoughtful, planned out structure. Two, it's the discipline processes that we use to be able to execute across all of our businesses. And the third, I'd say we have consistently invested, and we do invest in businesses, that we think have the opportunity to be able to drive long-term growth and performance in a way that we can drive that at maximum speed. And certainly, as you look at aesthetics, we've increased the investment in SG&A, and we've increased the investment in R&D. Jeff, anything you'd add?

I think, Rick, I would agree. I think big piece VOML is the level of the investment. So as we looked at particularly the neuroscience compounds, Braylar and Ubrelvi, we were able to structure the sales forces a little differently, which was important from commercial execution, and also really upgrade and drive some of the investment around patient activation. So I think that All of these brands are spectacular brands, leadership position, and when we got that investment profile right, we've seen the response, so nothing to add beyond that. Going back to your question on the hematology share, the 42% that I referred to was the combined AbbVie share, so that's Imbruvica plus Benclexta across all lines of CLL. So if you take a look, if I give you a little bit more color on the The latest data that we have, for example, in frontline, we have 35% total AbbVie share, which is made up around 24% for Imbruvica and 11% for Van Clexta. For second-line share, for example, we have a 48% total AbbVie position, which is approximately 33% for Imbruvica and 15% for Van Clexta. Both of these brands are now operating at a very significant share level across CLL. I'll give you some more thoughts as you ask for in terms of color in the market. Beyond that leadership level that we have across the CLL indication, we do see that the CLL market is still suppressed. So, for example, patient starts year to date are down in the high single digits and even within the quarter. they were down in the low single digits. We see that improving, and so that outlook looks to improve over the second part of the year. In terms of overall share dynamics, you know, over the last several quarters, we have lost a few share points to Calquence, you know, within the range of our expectations as they've ramped with their CLL ramp. But also interesting, we've seen that there's been some share increases in monotherapy CD20s. which we think is also a COVID type of effect that will ultimately revert back to normality as we go along through the pandemic. So overall, the franchise is performing very, very well. And as you heard from Mike, we're tremendously excited about the future of the Hemonc franchises to move forward.

And Vamal, this is Rob. I'm going to come back to your first question. Just one more thing we should mention is we've been able to really leverage our international infrastructure. And so we set up this business we have the aesthetics franchise focused fully internationally on that business, whereas Allergan had it combined with Therapeutics. So we've been able to bring that focus in, that level of investment. I think we've also been able to leverage our market access prowess. So we're very strong across the globe. And so, you know, when you think about the opportunities for us going forward, I think international certainly plays a big role as we leverage the Allergan business.

Thanks, Vamo. Operator, next question, please. Thank you for your question. Our next question is from Chris Schott with JP Morgan. You may ask your question.

Great. Thanks so much. Just another one on this FedEx. Obviously, some incredibly strong numbers here. Can you just elaborate a little bit more on sustainability of this growth? So I guess I'm trying to get a better sense of how much of what we're seeing right now is catch up as we exit lockdowns versus a more sustained step up in sales going forward. Just any color on that would be appreciated. My second question was RINVOC in UC. Can you put some of this data into context as you think about the competitive landscape and particularly relative to what you had anticipated in your long-term guidance for this indication? I think you had about a billion dollars in IBD sales by 2025. And if not, we've seen more of this data set. Just how comfortable are you feeling with that target and ultimately the role RINVOC is going to play in this space? Thanks so much.

Hey, Chris, this is Rick. I'll take the aesthetics question, and then Mike can maybe cover the second question if you have. So it's a great question, and it's one that we have been looking at very carefully. I mean, if you just step back and you look at the performance of the business, we've done a number of things to try to drive the business. We believe this business is significantly underpenetrated. When you look at the available patient population here, and your ability to drive long-term penetration. It's tremendous. That's why we've done the things that we've done to try to drive that demand. Globally, the aesthetic sales were up 31%. If you look at the US toxin and filler business, the market's up about 40% versus 2019. But it's hard to evaluate. I can tell you the vast majority of it is driven by fundamental demand. And we can see that through the funnel that we see patients coming in and how many of them are activated to go get procedures. But we just conducted a fairly robust market research study to try to understand how much of it was COVID related. And, you know, we looked at things like how many of those patients got stimulus checks, how many of them were affected from an employment standpoint and are now back at work. I'd say that study, if you looked at the data in that study, the conclusion that you would draw from that is very little of it is COVID-related. Now, I think the flaw is this. You know, most patients are not going to say they use stimulus money for these kinds of procedures or other kinds of things. So I think to the best of our ability, what I would tell you is about two-thirds of the performance I think is fundamental demand, and maybe one-third of it is pent-up demand. We're going to need a couple more quarters, I think, to see how that plays out, but I'd say that's our best assessment right now. So very robust growth either way, and it could sustain a little bit better than that. But I think you can pretty well count on two-thirds of it being fundamental demand that's sustainable longer term.

Mike? I'll take the question on RINVOQ-UC. What I would say is the data that we have seen from RINVOQ-UC has exceeded our expectations from an efficacy perspective, and the results there are very strong. UC has been very difficult to treat pharmacologically, and getting high rates of permission and deep response has been challenging, and RINVOQ has delivered well. those results now across a number of studies. And I think from a safety perspective, it's also performed very well. I commented in my prepared remarks on the fact that overall rates of AEs, serious AEs, are actually lower than renal heart. Now, the reason for that is that many of these AEs are driven by the disease itself, and with improvement in the disease, you do see them improve as well. And with respect to events of interest, the safety profile has looked very, very strong as well, with respect to AC and other offensive interest rates have been comparable to the controls. And so overall, we feel very confident in the long-term guidance that we've put out. One thing that's important to keep in mind is that long-term guidance is 2025 guidance, and our IBD assets will be in relatively early stages of launch by 2025. But the profiles that I've talked about, not only for Renvote, but also for SkyRisky, Bodewell, not only for that 2025 guidance, but for the long-term growth of the DAC, significant opportunities there as well.

Thanks, Chris. Operator, next question, please.

Thank you. Our next question will be from Ronnie Gall with Bernstein. You may ask your question, sir.

Good morning, and thank you for taking the questions. First one is on FV951. You've mentioned the efficacy rates. I was wondering if you can talk a little bit about the skin safety profile as compared to the Neoderm product or the apomorphin IV from Europe, especially when it comes to some more severe effects like abscess and octa. The second question is staying with the pipeline. It's a little bit about your A-beta. It didn't take long for you guys to walk into that. I was kind of wondering if you can talk a little bit about the signs that you're discovering Is the right approach to get to the best effect with minimal side effects to try to remove as much plaque as possible in a very targeted manner? Or should the approach be to go after soluble aggregates and approach the removal of plaque indirectly?

Okay, so this is Mike. I'll take both of those questions. With respect to 951, we'll publish full data from the Phase III study that I described. at a medical meeting, and then ultimately in peer-reviewed journals as well. But what I can say is the skin safety has looked good to our eye and is within our expectations, well, within our expectations. As one would expect with a cutaneous device, there are some local reactions, but those have generally been mild and resolved with continuing treatment. We've not seen significant issues with more severe types of skin, feel good about the safety profile. And we think the patient-friendly aspects of subcutaneous delivery that has some parallels to an insulin pump-like device will be a real advantage here because it'll allow patients to get that duopa-like efficacy that's transformative without the need for placement of a gastric tube that's unthreaded in the small bowel and very, very difficult to manage. And so we feel very good about the potential for 951. With respect to A-beta, I think if one looks at all of the data, it's quite clear that if you can remove plaque rapidly, then there will be a benefit. And the key parameter that we would need to see is deep reductions in level of plaque and rapid reductions in the level of plaque. Because you won't start to see a cognitive benefit, we believe, until you get to that amyloid negativity level by PET, which is 20 centiloids, until you reduce patients to that level. So the goal would be to get them there as rapidly as possible. and to do that while minimizing the impact of area, and we think that that can be done through epitope selection. There are slight differences in the amyloid forms that are present in vessel wall compared to plaque, and with appropriate epitope selection, we believe, and our preclinical data would support that you can do that with reduced risk of area, and of course, we now need to see whether the clinical data support that as well. But those are the basic principles that we're following. We've obviously had these candidates before they had a candidate map approval because, as I said, we've been monitoring this area quite closely. But we think this is a good time to advance those candidates and to determine whether the science I described plays out in the clinic. But our approaches with respect to A-beta are based on plaque, not soluble forms of A-beta.

Thank you. Thanks, Ronnie. Operator, next question, please.

Thank you. Our next question is from Andrew Baum with Citi. You may ask your question.

Many thanks. A couple of questions for Jeff. Firstly, on the outlook for rebating and oncology, this is somewhat of a novelty, at least historically. I note that ESI excluded CalQuint from their formulary. There's obviously increased therapeutic competition in the space. How should we be thinking about the rebating outlook in oncology going forward more broadly? On the U.S. pair mix through COVID and now in the recovery stage, could you outline the magnitude of which you've had to increase and then decrease the Medicaid components in the patient assistance programs or whether you're seeing that improvement? So some sense of scale and direction there. Many thanks.

Yeah, thank you, Andrew. And to start with oncology, I mean, largely, as you know, the rebating has been done through the sort of the GPO channel. And particularly with the physician, you know, the physician in office dynamics that are in that sector. We don't see significant rebating happening at the PBM level. And if it is, it's quite modest. I think certainly from the ESI standpoint that you highlighted, That was an ESI decision. That was not certainly something that AbbVie approached that particular payer with any sort of deal. Our philosophy is that these drugs are very important for oncologists to have basically open access for all of these agents. So I think it is something that we've seen some of these lights that have started to turn on, but they've been quite modest, and I don't think that they're going to be – super accelerant that we should be, you know, overly worried about. That's my position on that. I think the second approach in terms of, sorry, that was the question on the magnitude of the Medicaid. Yeah, you know, this has been quite interesting. We've seen certainly on all of the data the fact that the enrollment in Medicaid has gone up When we look across our businesses at, let's say, acute channel shifts in terms of the utilization, they're relatively modest. They're there, so we don't see massive movements around our channel shifting that link to the magnitude of what you might see in terms of the enrollments. So it's relatively modest, certainly manageable, and I think certainly as we see you know, the jobs positions come back, and that could be quite strong, I think we'll see any modest movement will be corrected over the next several quarters. And this is Rick.

The only thing I'd add to the second question is, so we have a very extensive and I would say generous PAP program in place that's really designed to ensure that patients who can't afford our medicines have the ability to be able to access those medicines free of charge in many cases. As an example, 99% of the applications we get for uninsured patients we approve. We actually just increased the program to 600% of the federal poverty level across all of our brands. It's a program that I think is designed to fulfill the mission that I just described, and that is that Patients who need our medicines can get them from us if they can't afford to pay for them through whatever system that they operate in. But we have not seen, and much to our surprise, we have not seen that program increase dramatically, even through COVID. And we advertise directly to patients that if they lost their job during COVID, that we would provide our medicines to them. But I wouldn't say... As I said, much to our surprise, we didn't see the volume go up dramatically.

Thank you, Andrew. Next question, please. Thank you. Our next question is from Jeffrey Porges with LeRinc. Your line is open, sir.

Thank you very much. Lots of questions, but I'll focus first on RINVOC. Rick, you've given the long-term guidance of, I recall, $7 billion in revenue by 2025. I think And by all means, correct me if I don't recall correctly, but if you only get the 15 milligram dose approved, if that's the outcome of the deliberations of the FDA, but you get the approvals in Europe, can you achieve that revenue guidance? Are you confident enough in the 15 milligram program? And then secondly, for Mike, your CF development program seems to have been sort of reactivated And could you talk a little bit about your conviction, a little bit more detail on 119? We don't know much about that. Are you confident that it can be an active C2 corrector that matches up to your competition? Because clearly that's a big revenue opportunity that we have infected in. Thanks.

Jeffrey, this is Rick. On your first question, yes, the guidance for RENVOC is $8 billion, and I would say we're confident that even with the 15 milligram, we will sustain that guidance. If you look at the performance of the 15 milligram, it's quite remarkable, and so we feel good about the performance of RENVOC. We continue to see strong uptake of RENVOC and the physician interest is consistent with what we would expect. So I think we're fine there.

So this is Mike. I'll take the question on the CF program. When we restructured the collaboration with Galapagos a few years ago to take direct operational control of that program, we had a couple of goals. One is we wanted to make sure that we're optimizing the potentiator and C1 components of the regimen. We felt we had a best-in-class C1 in 2.2.2.2. But we believed we needed to make a switch in the potentiator to one that we already had in hand, and we've done that. We also believed that we needed a C2 corrector that in that time period a few years ago did not exist. So we needed a C2 corrector that had the potential to be best in class. And so what we did is we put a significant internal chemistry effort to come up with a number of compounds. 119 is the most advanced and a very promising one that we believe fit that bill. And based on all the preclinical profiling, we think 119 can be a best-in-class T2 corrector. And with the other components of our triple, we think we can deliver best-in-class efficacy with appropriate pharmacological properties, dosing, low DDIs, et cetera. And so we are now in a proof of concept phase two study in the clinic to determine whether those preclinical data will in fact bear out. What I would say here is the preclinical assays are good. They're much more predictive than they are in other areas because we fundamentally know what the defect is in CF and we can study it in appropriate tissues and human tissues in vitro. But ultimately we're gonna need to see the clinical data. By right around the end of the year we'll see internally proof of concept results for that triple. We'll probably be in a position to announce them externally early next year. Those will be data that will include impact on FEV1 with the triple. And so that will tell us whether we can be best in class. And I agree, if we are best in class, I think it's a very significant opportunity and we would progress it rapidly. Now it's a proof of concept study, so if it's successful, we'd have some additional dose ranging to do. We're studying the highest dose of 119 to determine whether it can have that effect. We'd have to do some additional dose ranging to determine the optimal dose of 119, but that can be done rapidly, and then we would, if successful, move into phase three development.

Great, thanks. Thanks, Mark. Thanks, Jeff. Operator, next question, please.

Thank you. Our next question is from Jeff Meacham with Bank of America. Your line is open, sir.

Morning, everyone. Thanks for the question. Just had a few quick ones. You know, another one on JAK safety. And Mike, you mentioned you expect regulatory action in the next few months. Maybe just give us some perspective on that. Is there any data that you're still waiting on to submit? And is there still the potential for an advisory panel? And then the second one is on UBrelvy. Maybe just give us some color on the new start dynamic. You know, what are the patients you're capturing? you know, what share are you getting from and maybe just help us with, you know, kind of the, you know, what other wins do you have to make with respect to formulary access and share? Thank you.

I'll take the first question and then Jeff will take the second question on UBrelvy. So with respect to JAG safety, we have indicated that You know, we believe that an action is possible in the next few months that's based on our discussions with the agency and what timing we think is reasonable. It's not a specific action date like the PDUFA dates that had been set in the past, so we will continue to monitor it as the process continues to move along. But the rate-limiting factor, as we understand it, is the agency's review of the tofacitinib oral surveillance data. And I think once that is completed, we would be able to move forward with good speed with our review. But there are no additional data from a safety perspective or no other substantial analyses that the agency is waiting on. For us, we provided our updated benefit risk quite some time ago, as we announced publicly, and the agency has not requested any additional data. So it's really that review of the tofacitinib oral surveillance that's gaining as we understand it. With respect to an advisory panel, the agency always has the authority to call one if they desire to have one. But what I would say is if they were planning on having an advisory committee, I would expect them to already be preparing for that and already have that process in motion, and we would know that. And there's no indication that that is underway at this time.

Great, and I'll take a Ubrelvi question. As I mentioned, we're very, very pleased with Ubrelvi and really our overall migraine portfolio that we're rapidly developing here. To give you some sense, it's quite remarkable. I mean, if you look at the total acute oral CGRP category, so that's us and the competitor, you know, it's about 18% of all new prescriptions, and it continues to grow very, very quickly. So, again, it shows you how hard patients and physicians are are looking for the adoption of these particular agents, even though you have to step through a triptan, in some cases two triptans. So the market demand is very, very substantial. When we look to the overall performance, we can see that roughly the two agents are sort of splitting the acute indication. Some of the more weaklies are now being a little confounded by the new preventative episodic approval from NERTEC. But nonetheless, I think that's a small piece of the story. When we sort of peel out some of their preventative, new preventative scripts, we still have the leadership position for the acute market. But I really think the bigger picture is how fast that segment will expand over time, and we anticipate that we'll continue to lead that based on UBRLV's overall profile. Overall, access dynamics are quite good. So we really have roughly a 90% access. Again, some of that access demands a step through a triptan. But overall, when you look at how fast that category is going, we don't really anticipate that there's major new plans that we need to achieve any sort of incremental access position. And so basically our commercial strategy continues to be How hard can we drive this acute segment and lead that acute segment? And as I mentioned in my prepared remark, anticipating the arrival in the late third quarter for a Tojapan, which has just a spectacular profile for episodic migraine. So thank you.

Thanks, Jeff.

Thank you.

Operator, next question, please. Our next question is from Tim Anderson with Wolf Research. You may ask your question.

Thank you. It's well known that AbbVie rebates heavily on Humira in the U.S. So when Biosimilar is launched, won't you potentially have room to pull back on those rebates, which could basically be a meaningful offset to lost Humira volumes? It seems like it could end up being in the billions of dollars that you could pull back in-house. And I realize there's a RINVOC and SkyRizzy dynamic to consider. And related to that line of questioning, how does the prospect of interchangeability biosimilars impact your thinking on this front? If interchangeable generics are allowed or not allowed, how does that impact what you might do with those rebate dollars? And then second question, a quick one, just the range of outcomes for when Imbruvica might face generics in the U.S. Is it in the realm of possibilities that add the interest into settlement agreements with legal challengers? that could push out generic timing?

Hi, Tim. It's Rick. So I'll cover the first two questions that you have there. You know, I would say, let me start with interchangeability. We've outlined now over the last year or two, I think pretty specifically, what we view the biosimilar impact in the U.S. to be, and we are assuming that there will be two interchangeable biosimilars And that's in the thought process of the erosion models that we have described many, many times now. So we are assuming there will be interchangeability. We're certainly not in a position where we're gonna talk about what we're going to do from the standpoint of rebates. We've always competed very effectively in these markets. Certainly the focus for us going forward is the next generation assets. We've got RISI and RINVOC, and you can see those two assets this year will do $4.6 billion, so call it $5 billion. They're rapidly growing, and they're doing exactly what we had hoped they would do. They have higher levels of efficacy, and they are ramping dramatically. and they will buffer the impact of biosimilar impact in the U.S. And so what I'd say is the strategy is going exactly the way we had hoped it would go. We'll fill out the range of indications on Skyrizzy and Renvote and continue to drive those assets into the marketplace effectively. On Imbluvica. Yeah.

Hi. This is Laura Schumacher. Our Imbruvica composition of matter patent expires in May of 2028, assuming that we get the pediatric extension. We do have later expiring IP covering methods of use, formulations, crystal forms, and the like. Our long-range plan currently assumes the loss of exclusivity in the U.S. in May of 2028 when the composition of matter patent expires. There is litigation ongoing with one remaining and a filer, and we're awaiting a decision on that.

Thank you.

Thank you.

Thank you, Tim. Operator, next question, please.

Thank you. Our next question is from Matthew Harrison with Morgan Stanley. You may ask your question.

Great. Good morning. Thanks for taking the question. Just a follow-up question on CF for you. I guess first, two parts here. First, are you confident that you have a potentiator that's active and improved versus the Galapagos compound? Because I think we've seen a lot of issues with people trying to develop potentiators that are as good as Kalydeco. And then second... I know you talked about FEV1. Have you looked at sweat chloride at all? Obviously, you need a larger patient sample size to get a good directional view on FEV1. I'm wondering if you've looked at smaller patient numbers on sweat chloride. Thanks.

So, this is Mike. I'll take that. With respect to the potentiator, we are convinced that we have a potentiator that has activity, and we've changed the potentiator from some of those prior combinations that were pursued earlier on in the Galapagos collaboration. We think that that potentiator, it has clear signs of activity. We think the C1 corrector is very good and probably best in class based on the data that we have seen that were generated earlier in the collaboration. We thought that the principal piece that was missing was that C2, and we think we have a good one. With respect to the endpoints, while it does take a larger sample size to look at FEV1, we feel like FEV1 is what really matters here. that's what's going to translate into clinical benefit for patients. And so our proof of concept study will show us FEV1, and that's the primary measure that we are going to use to determine whether to advance the triple or not.

Thank you. Matthew, operator, next question, please.

Thank you. Our next question is from Steve Scala with Cowan. Your line is open, sir.

Thank you. A couple questions. Many of the questions so far suggest concerns around Renvoke. I'm wondering if this could all turn into be a positive. So to what extent do you believe Renvoke prescribing might be being held back by competitor product concerns? So once those concerns are resolved and or Renvoke emerges unscathed, if it does, Renvoke could even do better and we could be looking at a sharp acceleration in share gains and prescription trends in Q4. So that's the first question. And secondly, on Humira contract renewals that will be signed in coming months for 2022, what is the typical duration of those contracts? Are they typically 12 months, 24 months, 36 months? If you can give us an idea of that, that would be helpful. Thank you.

Yeah, it's a very good question, and it's a question we've thought a lot about. Let me give you some perspective on Renvoke. So if you look at our Let's say our demand performance, and I think I mentioned my prepared remark, we've been very consistent about 15% in-place share in the large RA market, which is just under Humira, which has grown a little bit over the COVID times and since January to about 18%. So we're very, very stable, and I do believe that there is some overhang on certain segments of prescribers that have, let's say, gone back a little bit to the TNFs, really our own product, Humira. So it's not outside of the realm of possibility as this resolves, and really largely, as you've probably heard or seen, Zelljans has lost in-place share over that period. So I do believe there's a little overhang in certain, probably significant segments of rheumatology. So we are anxiously awaiting the resolution here of oral surveillance, which obviously has delayed our regulatory submissions, but it's not outside of the realm of possibility given the very significant differentiated data that we have in our packages that we could see an acceleration as things resolve. So we're gonna anxiously be monitoring and certainly be prepared to anticipate any outcome there.

And Steve, this is Rick. On the contracting question, I'll handle that one. It varies quite a bit based on product and by managed care organization, but I'd say some of them can be as short as 12 months. It's probably more common to be in the 24-month range from a contracting standpoint. Thank you.

Thanks, Steve. Operator, next question, please.

Thank you. Our next question is from Chris Raymond with Piper Sandler. Please ask your question.

Thanks. Just on the A-beta program, I know you answered a few questions, but I think I heard you describe the product that you're targeting the plaques and not the soluble forms of A-beta. Just kind of maybe wondering if you can give a little bit more color on the driver of going forward with that. Does your science sort of tell you that amyloid beta oligomers, for example... are not a driver of the disease, or is this more of a decision that's driven by the regulatory precedence of approving, targeting the A-beta plaques? And then maybe also, if you can give a little more detail on this molecule, is it likely an IV or possibly sub-Q delivered antibody? Thanks.

So this is Mike. I'll take that. With respect to the focus on plaque, I think When one looks at all of the data, you can conclude that if you can reduce plaque rapidly, from that point forward, you can see a benefit. So in other words, getting the majority of patients to a level where they are amyloid negative by PET, so below 20 centiloids, and doing that rapidly is what's required to see a benefit emerge over time. And part of the importance of speed is that you're not going to see that benefit until you get to that level. So if you spend the entire period of a trial getting to that level, you don't then have an opportunity within that trial to see an improvement in cognition. And of course for patients, if you don't get to that level fast enough, they're not gonna drive benefit for a period of sometimes too many years, and they need relief faster than that. So that's our focus on plaque. With respect to different components and the role of oligomers, I think it's hard to tease that apart right now. What we know from the data is what I said, that getting patients to amyloid negativity, the reducing plaque, is what seems to drive a clinical benefit. Whether there are upstream steps that one could try to impact to achieve the same result I think is an open question, and we're going where the science tells us to go today. With respect to IV or sub-Q, I think it's early to answer that question. It's going to relate to ultimately the delivered dose and then dose forms that can be delivered. So, for example, there are on-body injectors and other things that can deliver more than the traditional one or two mLs of a solution containing a monoclonal antibody. So there are approaches that could be IV or sub-Q, but I think it's a little bit early to make predictions on how that will all play out.

Thank you.

Thanks, Chris. Operator, next question, please.

Thank you. It comes from Louisa Hector with Berenberg. Your line is open.

Hello. Thank you for taking my question. Sorry, going back to RIMVOC again, but I just wanted to check that the approval of the pending indications isn't a particular gating item for your filing in UC. And then I see that you haven't changed your guidance for RIMBOK for this year. And I know previously you've stated that AD would only ever be a small contribution this year. But rather than sales, I just wonder whether there's any particular savings on your launch costs this year due to the delay. And then maybe on TMB 383, Again, I think I've understood this is now 100% belonging to you, so just to check no impact from the Amgen acquisition. And then when might we see a Phase II start? Looks like you have a dose, data all very compelling, so how soon could we be looking out for that trial start and data? Thank you.

Okay, this is Mike. I'll start with the RINVO question, then pass it to Rob, and then I'll come back for the 383 question. With respect to the UC filing, the UC filing is not dependent on the approvals in the other indications. And obviously, the timing of review of the UC filing would carry it out to a point where those matters would, I think, based on any reasonable expectation, be resolved.

Yeah, and on your question regarding the guidance for invokes, you're right. We did give guidance to $1.7 billion early this year, assuming we would have the new indications approved. We said that would be a minor contribution. Think of it in the a couple hundred million dollar range, but given the strong performance out of the RA indication, we've maintained that guidance despite the fact that those approvals are delayed. There is some level of savings in terms of SG&A related to the approvals being delayed, but at the same time, we're investing in the business. You look at what we're doing in aesthetics. Obviously, in other parts of the Allergan business, there's opportunity to invest more broadly. So overall, SG&A is up because we are investing for long-term growth, but there is some level of savings associated with the RINVOC delays.

With respect to 383, the BCMA CD3b specific, you're correct, there is no impact of the Amgen acquisition of Tuneo Bio on that. The asset would be ours and it would be unencumbered by anything related to the Amgen acquisition. In terms of phase two timing, we plan to move forward very rapidly, not only with phase two, but with phase three studies with this asset. We think the data that have been generated are very strong. very high levels of response, good levels at the BGPR or better threshold with a very good safety profile as well and a profile that would fit well with combination therapy and move to earlier lines of therapy. So we'll advance the program aggressively and we'll update on the specifics a little bit later on in the year.

Thanks, Louisa. Operator, next question, please.

Our next question will come from Daniel Busby with RBC Capital Markets. You may proceed with your question.

Good morning. I've got two questions. First, a bigger picture question on Skyrizzy and RENVOQ. You've guided the peak sales for both products in the early 2030s. There's been a lot of focus on near-term regulatory hurdles, particularly for RENVOQ, but there's also a lot that could happen competitively between now and then. So with that said, what do you view as the biggest potential longer-term competitive threats for both of those drugs, particularly given the ongoing emergence and maturation of new drug modalities? And second, can you talk a little bit about the assumptions you've built into overall guidance relating to the Delta variant and whether that's changed at all the way you think about the second half recovery? Thank you.

We go through a fairly rigorous, in fact I'd say a very rigorous long-range planning process where we evaluate what we think the competitive alternatives might be and the profile of our assets versus other assets. And I would say as we look at RIMBOK and SCIRISI and the clinical data that has been generated, it's certainly achieving or exceeding the expectations that we had for those assets. I don't see anything on the horizon that would make it in a timeframe that would have a material impact on those assets based on, you know, the guidance that we provided or even longer-term guidance out to typically do a 10-year long-range planning. process. So, yes, there are certainly many, many modalities that are available today across many of these therapeutic areas. It's having the right kind of asset, it has the right kind of clinical performance, and then everything else that wraps around that market access and all the other things you have to be effective at in order to achieve the level of performance that these assets are achieving. And so the bottom line is I think we feel very confident in our assumptions here. As it relates to the Delta variant, you know, I think as we look at the guidance that we are providing in the second half, it certainly is reflective of what we assume. We don't assume dramatic changes in the U.S. or other major markets around the world from where we are today. We're not assuming major levels of recovery in certain markets either that are currently in lockdowns, like Australia, as an example, or in many of the Asian markets outside of China and Singapore. So I think we've properly represented it. I think the health care system in the U.S. in particular I think is the experience that we had last year, I think tells us that the healthcare system can much better treat these patients. And we're not assuming that we see anything that would be significant in a shift in the US from a lockdown standpoint.

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

It will come from Gary Nachman with BMO Capital Markets. Your line is open, sir.

Hi, good morning, and thanks for squeezing me in. Sorry, but one more on RINVOG first. I'm curious why you think Europe doesn't seem as concerned with the JAK class the way the FDA has been, since you got the positive opinion on a topic for both doses there, and how you see uptake in Europe versus the U.S. overall today. Is there a difference in perception, you think, in those regions with the class? And then regarding Raylar for MDD, how have the phase three studies gone overall? Did you change anything with respect to enrollment numbers or sites during the course of the pandemic since these phase three data are coming soon? And have you done any more work sizing up the potential market opportunity, where you think it would be used most for MDD, what types of patients? Thank you.

So this is Mike. I'll start and then I'll pass it over to Jeff for some additional comments. With respect to RINVOC and the regulatory environment and the prescriber perception, prescriber environment between Europe and the US, we do see differences. And the European authorities and the European prescribing base seems to place less emphasis on these signals and view them more specifically to the molecules that generated the data than the U has. Why that is, I can't give you a single reason, other than these are both very large, competent jurisdictions that have come to their own impressions of the data, and those impressions have differed somewhat. As you've said, for atopic germ, we got the positive opinion from the CHMP for both the 15 and 30 milligram doses. We think the data are very supportive of that decision, and we look forward to launching that indication in Europe, and we think it's going to be an important additional indication, as it will be in the U.S. when we do get to approval. With respect to uptake in Europe, Jeff, I don't know if you want to comment on that.

Yeah, as I mentioned in my remarks, the uptake on RINVOC in many major markets is very, very strong. Now, as you know, You know, waiting for reimbursement takes a little bit more time than the U.S., but as I highlighted, you know, we have in-play leadership, and this is including the TNF, the biosimilars in Germany, France, Canada, for example. So it's quite strong. I think another point that I'd like to make, and we certainly see it in some of the early launch countries with PSA and AS, there appears to be a synergistic effect, which makes some sense from a commercial standpoint. As countries like Germany start to introduce PSA and AS, the entire RINVOQ molecule starts to accelerate and move faster. Again, given the last question I answered, we're anxiously awaiting the approval of those extra room indications there. It's quite strong. As I highlighted again and Mike mentioned, our our label here in atopic derm is going to look quite strong in the European markets. Mike, maybe you can hit on MDD, and then I'll address the market structure there.

With respect to Vrela and MDD, we did a deep dive on the Phase III studies shortly after closing the acquisition of Allergan. And what I would say is we found that the studies were very well designed. We were comfortable with important considerations like patient selection, selection of sites that we believed would give quality data. We looked at the blinded aggregate characteristics of the population enrolled, so you look at the baseline characteristics and you don't know who's on active or placebo, but you can just see if you're enrolling the right patient population, and we believed we were. All of the measures are designed and seem to be behaving appropriately. And so we feel good about the design characteristics of that study, and we did not feel that it was necessary to make any changes. But we did do that deep dive to be sure of that. As I said, what we found was, in fact, reassuring. With respect to the market opportunity, I'll just make a couple comments, and I'll hand it off to Jeff for some more detail. But what I would say is depression obviously is a substantial indication, and it's one that is very difficult to treat with existing agents. About 50% of patients don't achieve adequate control with monotherapy with frontline agents like SSRIs or SNRIs, and so there is an important opportunity for adjunctive therapy, and obviously this is an adjunctive MDD indication, so that would be the population that we would be looking at. Jeff, do you want to comment in more detail on that?

Yeah, I mean, if we look at the market structure, obviously you have schizophrenia, which is a relatively modest market, and we have a good growing position there with our existing indication. And then you have the prescriptions and really the different bipolar segments. And what I would say about not the big depression market, but the adjunctive MDD market that Mike spoke about, it's about the same size in terms of a prescription value to the bipolar segment. So, you know, adjunctive MDD, if the studies were to progress as we see, really gives us a chance to access a market that's equally sized to the one that we're competing in today. So it's quite attractive as we continue to look for the final readout of those trials.

Thanks, Gary. Thank you. Thanks, Gary. That concludes today's conference call. If you'd like to listen to a replay of the call, please visit our website at investors.abv.com. Thanks again for joining us.

That does conclude today's conference call. We thank you all for participating. You may now disconnect and have a great rest of your day.