AbbVie Inc.

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

Good morning and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer, Michael Severino, Vice Chairman and President, Rob Michael, Vice Chairman, Finance and Commercial Operations and Chief Financial Officer, and Jeff Stewart, Executive Vice President, Chief Commercial Officer. Joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman, External Affairs, Chief Legal Officer, and Corporate Secretary. Before we get started, some statements we make today may be considered forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law. On today's conference call, non-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 Abby's revenue recognition accounting policies and exclude the divestitures of ZenPAP and BioCase. References to operational growth further excludes the impact of exchange. Following our prepared remarks, we'll take your questions. So with that, I'll now turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I'll provide perspective on our overall performance and outlook, and then Jeff, Mike, and Rob will review our quarterly business highlights, pipeline progress, financial results, and guidance for 2022 in more detail. Our performance this quarter tops off another excellent year for AbbVie, with results well above our initial expectations. We delivered full year 2021 adjusted earnings per share of $12.70, representing growth of more than 20% versus the prior year. Full year adjusted net revenues were more than $56 billion, up 10.5% on a comparable operational basis. These results demonstrate balanced performance across each of our major growth franchises, including double-digit comparable operational revenue growth from immunology, aesthetics, and neuroscience. I'm extremely pleased with our momentum, and we've entered this year in a strong position, which is reflected in our guidance. We anticipate 2022 adjusted earnings per share of $14 to $14.20. representing growth of 11% at the midpoint. Longer term, we remain well positioned with an impressive set of diversified growth assets. In immunology, SkyRisi and RINFOC are already contributing meaningful revenue, including $4.6 billion in combined sales last year with substantial growth anticipated in 2022 and beyond. Over the next few months, we expect to add several new indications to the list of approved uses for these two assets, at which point Skyrizzy and RINVOQ will be commercialized across all of Humira's major indications plus atopic dermatitis. With the strong performance that we're seeing in their initial indications and the robust data we've demonstrated across our broad development programs, we expect combined peak sales for Skyrizzy and RINVOQ to exceed the peak revenues achieved by Humira. In hematological oncology, we've established a leading position with Imbruvica and Benclexta, which are both expected to remain important revenue contributors through the decade. To support our next wave of growth, we also have an exciting and diverse pipeline of promising new therapies to address critical unmet needs in both blood cancers and solid tumors. Notable opportunities from our mid- to late-stage oncology pipeline include nevitaclax from myelofibrosis, which has the potential to provide disease modification in a market where current treatments only address symptoms, epacritimab, a potentially best-in-class CD3 by CD20 for B-cell malignancies, including DLBCL and follicular lymphoma, ABVV383, are BCMA, CD3 bispecific, which has the potential to become a best-in-class treatment in multiple myeloma, and TelisoV, our promising CMET-ADC being studied for non-squamous, non-small-cell lung cancer, which was recently granted breakthrough therapy designation. In neuroscience, We have a portfolio of compelling and differentiated therapies to support robust long-term growth in migraine, Parkinson's disease, and psychiatric conditions. Ubrelvi and QLIPTA are both demonstrating strong launch trajectories in migraine, with each treatment expected to contribute more than a billion dollars in peak sales. VALAR continues to have a significant opportunity with currently approved indications with peak sales expected to approach $4 billion. An approval in major depressive disorder represents upside to our current projections. In 951, a potentially transformative improvement to our current treatment options for patients with advanced Parkinson's disease with peak sales also anticipated to be more than $1 billion. Our leading aesthetics portfolio represents another extremely attractive growth opportunity. This business is performing well above expectations, delivering full-year 2021 sales of more than $5.2 billion, $700 million higher than our initial guidance. AbbVie's increased promotional investment are driving accelerated category growth, especially in toxins and fillers, where there is substantial room for additional market penetration globally. Dedicated resources are also focused on delivering new product innovation within aesthetics, with several exciting R&D programs internally, including both short-acting and long-acting toxins, as well as novel fillers with biostimulatory or regenerative features. And we remain active with business development to pursue promising external technologies, and complementary opportunities, including the recently closed Soliton acquisition, which further expands our body contouring portfolio. Given this focus and investment, we expect our aesthetics franchise to deliver high single-digit revenue growth through the end of the decade, including sales of more than $9 billion in 2029. Lastly, we've developed a robust pipeline including numerous attractive late-stage programs, novel early-stage therapies, and a growing range of potential platform technologies, which we expect will collectively contribute to our growth through the decade. With the actions that we've taken to diversify our sources of growth, we remain very confident in the long-term outlook for our business. Following the US Humira LOE event in 2023, We expect to quickly return to growth in 2024 and deliver a high single-digit growth from 2025 to the end of the decade. This is a testament to the strength of AbbVie's broad and balanced portfolio. In summary, this is an exciting time for our company. We're demonstrating excellent execution across our portfolio, and our long-term growth prospects remain very strong. With that, I'll turn the call over to Jeff.

Jeff? Thank you, Rick. Looking at our quarterly results, we continue to demonstrate excellent commercial execution across our therapeutic portfolio. I'll start with Immunology, which delivered global revenues of more than $6.7 billion, reflecting growth of 13.3% on an operational basis. Global Humira sales were $5.3 billion, up 3.5%, with 6% revenue growth in the U.S., offset by biosimilar competition across the international markets, where revenues were down 8.8% on an operational basis. Guy Rizzi is performing extremely well. Global sales of nearly $900 million were up 12.4% on a sequential basis, reflecting continued market share gains. Guy Rizzi has now surpassed Humira as the leader for total prescriptions in the U.S. psoriasis biological market with share of approximately 20%. We are also now leading the market in several international geographies, including Japan. Total in-play share, which includes both new and switching patients, remains very strong and now reflects roughly 37% patient share in the U.S., as well as leadership in nearly 20 key countries around the world. Guy Rizzi is also now approved for its second major indication, to treat adults with active psoriatic arthritis, further enhancing its compelling profile in dermatology. Field promotion is now active globally, and early feedback from physicians has been very positive, given Skyrizzy's demonstrated skin clearance and joint efficacy in our PSA clinical program. With nearly 30% of patients visiting dermatologists having both skin and joint involvement, this new approval will sustain Skyrizzy's strong momentum. In addition, we are preparing for the launch of Skyrizzy in Crohn's disease, an indication with very meaningful long-term revenue potential, with regulatory approvals in both the U.S. and Europe anticipated this year. RINVOC also continues to demonstrate robust growth. Global sales of more than $500 million were up 14% on a sequential basis. Prescriptions and RA remain strong, with a total market share of more than 5.5% in the U.S. and nearly 5% across key international markets. We're very pleased with the competitive labels for both PSA and atopic dermatitis, where we are making excellent progress with their launches globally. In atopic dermatitis, dermatologists appreciate key elements of RINVOQ's new label, including the incorporation of stringent skin and itch endpoints, reflective of the performance in our registrational trials, as well as an adolescent indication and dosing flexibility. Managed care access is expected to ramp fairly quickly for both atopic dermatitis and PSA in the U.S. We are also preparing for the launches of RENVOC in ulcerative colitis and axial spa, with regulatory approvals for both indications anticipated this year as well. Overall, we continue to feel very good about the performance and progress we are making with both Renvoke and Skyrizzy, which are expected to contribute more than $15 billion in combined risk-adjusted global sales in 2025. In hematologic oncology, global revenues were nearly $1.9 billion, up 4.7% on an operational basis. Van Clexta once again delivered robust growth, Sales were up 34% on an operational basis with strong share performance across all approved indications. In Brubica, global revenues were down 2.7%, reflecting a slower than anticipated market recovery in CLL and increased share pressure from newer therapies. In neuroscience, revenues were more than $1.6 billion, up 19% on an operational basis. including robust double-digit growth for both Raylar and Botox therapeutic. I'm also very pleased with our performance in migraine, where we have a portfolio of multiple distinct therapies to address the full spectrum of this disease. This includes our two leading oral CGRP therapies, Ubrelvi for acute migraine, which delivered total sales of $183 million, up 13% on a sequential basis, We anticipate robust sales growth again this year based on UBrelvy's competitive profile, continued strong new patient starts, and a rapidly expanding CGRP segment. And we also have QLIPTA, the only oral CGRP treatment specifically developed for the prevention of episodic migraine. The launch is going extremely well. When considering both paid and bridge volume, QLIPTA is already capturing nearly 20% of the new-to-brand share in the preventative CGRP class. Roughly three months post-launch, this is an incredible accomplishment, and it's a testament to QLIPTA's demonstrated efficacy, including rapid and meaningful reduction in migraine days. We expect commercial access for QLIPTA to ramp quickly in the first half of this year. In eye care, revenues of $960 million were up 3.9% on an operational basis, including $364 million in sales from our stasis. Lastly, Maverick sales were $427 million, down 10.1% on an operational basis, as treated patient volumes remain suppressed compared to pre-COVID levels. Overall, I'm very pleased with the performance and the momentum across the therapeutic portfolio. And with that, I'll turn the call over to Mike for additional comments on our R&D programs. Mike?

Thank you, Jeff. We made significant advancement across all stages of our pipeline in 2021, and we expect continued progress again this year. In immunology, we had several recent important regulatory updates. We implemented safety and indication updates to our RA label for RINVOV. and also received FDA approval in psoriatic arthritis and atopic dermatitis, securing strong labels that highlight RINVOQ's favorable benefit-risk profile in both new indications. In atopic dermatitis, we received approval for both the 15 and 30-milligram doses, and based on the impressive levels of skin clearance and itch reduction demonstrated in our development program, We believe RINVOC will be an important new treatment option for adult and adolescent patients with moderate to severe atopic dermatitis who have not responded well to other systemic agents, such as cyclosporine, methotrexate, azathioprine, or biologics. We also have regulatory applications under review for RINVOC in ulcerative colitis, ankylosing spondylitis, and nonradiographic axial spa. We expect an FDA approval decision next month for ulcerative colitis, in the second quarter for ankylosing spondylitis, and in the fourth quarter for non-radiographic axial spa. In Europe, we anticipate approval decisions for ulcerative colitis and non-radiographic axial spa in the second half of the year. We're nearing completion of RINVOC's registrational program in Crohn's disease. which is the last major indication expansion program for RINVOC. We recently announced positive top line results from the first phase three Crohn's induction study, where RINVOC demonstrated a very strong impact on clinical remission and endoscopic response in a difficult to treat refractory patient population. We expect to see results from the second phase three Crohn's induction study and from the maintenance study in the first half of this year. with regulatory submissions anticipated in the second half of 2022. Also in immunology, we recently received FDA approval for Skyrizzy in psoriatic arthritis, an important indication expansion for this asset. Based on the strong joint efficacy and the high level of skin clearance that Skyrizzy provided in our registrational trials, we believe Skyrizzy will be very competitively positioned as an effective new treatment option for psoriatic arthritis patients. We also have regulatory applications under review for Skyrizzy in Crohn's disease with approval decisions expected in the U.S. next month and in Europe later this year. We've seen impressive results in our Crohn's disease program, and we believe Skyrizzy has the potential to become an important new therapy in this market. where there continues to be considerable unmet need. We're making very good progress with our early stage immunology pipeline as well, where we are developing novel agents with the goal of significantly advancing the standard of care across our core areas by providing deeper and more durable responses. Our anti-TNF steroid ADC, ABBV154 is a novel approach for delivering a potent steroid that has the potential to provide durable remission in diseases such as RA, PMR, and Crohn's disease. We expect to see preliminary data from our Phase II dose-ranging study in RA in the fourth quarter of this year. We also expect to see Phase II proof-of-concept data in PMR and Crohn's disease in 2023. In dermatology, our early stage efforts are focused on developing oral agents that can provide clear skin with durable responses. Our ROR gamma T inverse agonist, ABBV157, is designed to more effectively inhibit IL-17 production compared to pure antagonists, which has the potential to result in a greater impact on skin inflammation. We recently began a phase two dose ranging study for 157 in psoriasis. Moving to oncology, where we continue to make good progress across all stages of our pipeline. We recently received an FDA breakthrough therapy designation for TelisoV in second line plus advanced or metastatic non-squamous, non-small cell lung cancer. based on the encouraging results we've seen to date in our clinical program. Treatment options for patients who have exhausted platinum-based chemotherapy, immunotherapy, and targeted therapy are limited to single-agent chemo, which typically provides response rates of only 15 to 20%, with a median overall survival of less than one year. Prognosis for these patients is very poor. While targeted therapies have been approved by the FDA for the 3 to 4% of non-small cell lung cancer patients harboring MET exon 14 skipping mutations, there are currently no therapies approved specifically for the much larger group of patients who exhibit CMET protein overexpression. Patients with overexpressed CMET represent about 25 to 30% of the advanced or metastatic non-squamous, non-small cell lung cancer population with wild type EGFR, which corresponds to an incidence of approximately 35,000 patients each year in the U.S. In stage one of our phase two study, we saw promising efficacy in heavily pretreated patients who received TelisoV including a 54% objective response rate in those with highly expressed CMET. The second stage of the Phase II study is ongoing and has the potential to support an accelerated approval in second-line plus advanced metastatic non-squamous, non-small-cell lung cancer. We expect to see additional data from this study next year. We also recently began the clinical program for our next generation CMET ADC, ABBV400, which utilizes a more potent topoisomerase inhibitor payload to potentially drive deeper tumor responses in patients with both intermediate and high levels of CMET expression. We also expect to see data this year from several important indication expansion programs for Venclexta. including results from the Phase III Canova trial in relapsed refractory multiple myeloma patients with a T11-14 mutation, as well as results from our program for Venclexta in previously untreated higher-risk MDS patients where we received a breakthrough therapy designation. We plan to submit our regulatory applications to the FDA in the first half of this year for an accelerated approval in MDS, and late in 22 or early 23 for multiple myeloma. Both indications represent important expansion opportunities for Van Clexta and will help drive long-term growth for our oncology portfolio. We are also making very good progress with epcaritumab. where we continue to generate strong data in early-stage studies to support our view that epiridamab has the potential to become a differentiated and best-in-class CD3 by CD20 bispecific across several B-cell malignancies, including diffuse B-cell and follicular lymphomas. We'll see monotherapy data in the third quarter from the Phase II expansion cohort in DL-BCL, which has the potential to support a submission for accelerated approval in the second half of this year. We also have a Phase III study ongoing in third-line relapse refractory DLBCL, and we plan to initiate several additional Phase III trials this year, including studies in earlier lines of therapy for diffuse B-cell lymphoma in multiple combinations, as well as in follicular lymphoma in combination with rituximab and Revlimid, This year, we'll also see additional data maturing from our cohort expansion studies for ABBV383, both as a monotherapy and in combinations with standard of care and novel agents in multiple myeloma. We believe our BCMA CD3 bispecific has the potential to be differentiated on efficacy, safety, and dosing interval, and can be best in class across multiple lines of therapy. We plan to initiate Phase III studies later this year in relapsed refractory multiple myeloma. We also continue to make good progress with Novitaclax in myelofibrosis, where we've seen strong mid-stage data supporting our view that Novitaclax has the potential to provide disease modification, which we believe will lead to improved and durable clinical outcomes for patients. We expect a Phase III data readout and regulatory submissions in the first half of next year, with approval anticipated near the end of 2023. Moving to neuroscience, where we expect several important pipeline events in 2022 as well. We recently completed discussions with the FDA and are preparing to submit our application for Vrelar as an adjunctive treatment for major depressive disorder. Based on the totality of the data and the strong benefit-risk profile demonstrated in our clinical program, we believe Raylar has the potential to be competitively positioned as an adjunctive treatment for major depressive disorder. We expect a submission in the first quarter and an approval decision by the end of the year. We've also completed our registration enabling program for ABBV951. our novel subcutaneous levodopa carbidopa delivery system for treatment of advanced Parkinson's disease. In our Phase III studies, 951 proved superior to oral levodopa carbidopa in reducing motor fluctuations in this advanced population, and we believe our innovative new delivery system represents a potentially transformative improvement to current treatment options. We remain on track to submit our regulatory applications in the first half of this year in the US and Europe with both approval decisions anticipated in early 2023. And we expect to see phase three data for QLIPTA in chronic migraine prevention later in the first quarter and plan to submit our regulatory applications in both the US and Europe this summer with approval decisions expected in the first half of 2023. So, in summary, we remain focused on continuing to execute on our pipeline programs and anticipate numerous important regulatory and clinical milestones across all stages of our pipeline in 2022. This includes important indication expansion for on-market drugs and data readouts and regulatory actions for key late-stage assets, as well as proof-of-concept data from several early-stage NME programs. With that, I'll turn the call over to Rob for additional comments on our fourth quarter performance and our 2022 financial outlook.

Rob? Thank you, Mike. AbbVie once again delivered outstanding performance while also advancing our strategic priorities. The strong results across our portfolio continue to support AbbVie's long-term growth outlook. Starting with fourth quarter results, we reported adjusted earnings per share of $3.31. up 13.4% compared to prior year, and 5 cents above our guidance midpoint. Total adjusted net revenues were $14.9 billion, up 7.5% on an operational basis, excluding a 0.1% unfavorable impact from foreign exchange. The adjusted operating margin ratio was 49.3% of sales, an improvement of 240 basis points versus the prior year. This includes adjusted gross margin of 83.6% of sales, adjusted R&D investment of 12.1% of sales, and adjusted SG&A expense of 22.2% of sales. Net interest expense was $571 million, and the adjusted tax rate was 12.5%. Shifting to 2022, our full-year adjusted earnings per share guidance is between $14 and $14.20, reflecting growth of 11% at the midpoint. Excluded from this guidance is $4.74 of known intangible amortization and specified items. We expect adjusted net revenue of approximately $60 billion. At current rates, we expect foreign exchange heavy 0.8% unfavorable impact on full-year sales growth. This revenue forecast comprehends the following approximate assumptions for our key products and therapeutic areas. We expect immunology global sales to grow double digits. including U.S. Humira growth of 8%, international Humira revenue of $2.6 billion at current exchange rates, Sky RISD global sales of $4.4 billion, and RIMBO global sales of $2.7 billion. In hematologic oncology, we expect Van Cleck's global sales of $2.3 billion and Imbruvica global revenue of $5.4 billion. The Imbruvica forecast assumes market recovery in CLL, offset by share erosion from increased competition. For aesthetics, we expect global sales of $5.9 billion, including $2.6 billion from Botox Cosmetic and $1.7 billion from Juvederm. For neuroscience, we expect global revenue of $6.9 billion, including Botox Therapeutic sales of $2.7 billion, Raylar sales of $2.2 billion, Yubrelvy sales of $800 million, and CULIPTA sales of $200 million, with commercial access increasing rapidly in the first half of the year. For ICARE, we expect global sales of $2.9 billion, including $700 million from Restasis, which assumes no generic competition in the first half of 2022. Lastly, we expect Maverick global revenue of $1.7 billion. Looking at the P&L for 2022, We are forecasting full-year adjusted gross margin of approximately 84% of sales, adjusted R&D investment of approximately $6.8 billion, and adjusted SG&A expense of approximately $12.7 billion. This guidance includes approximately $2.5 billion in expense synergies from the Allergan acquisition. We are forecasting the adjusted operating margin ratio to expand by 120 basis points to approximately 51.5% of sales. We expect adjusted net interest expense approaching $2.2 billion, our non-GAAP tax rate to be approximately 12.7%, and our share count to be roughly flat to 2021. During the first quarter, we anticipate net revenue approaching $13.5 billion. At current rates, we expect foreign exchange to have a 1.3% unfavorable impact on sales growth. This revenue forecast comprehends the following approximate assumptions for our key therapeutic areas. Immunology sales of $6.2 billion, EMOC revenue of $1.7 billion, aesthetic sales of $1.3 billion, neuroscience revenue of $1.5 billion, and eye care sales of $900 million. We are forecasting an adjusted operating margin ratio of approximately 51% of sales, and we model a non-GAAP tax rate of 12.4%. We expect adjusted earnings per share between $3.10 and $3.14, excluding approximately $1.22 of known intangible amortization and specified items. Finally, AVI's strong business performance and outlook continues to support our capital allocation priorities. We expect to generate adjusted free cash flow of approximately $24 billion in 2022, which is net of roughly $1 billion in SkyRizzo royalty payments. This cash flow will fully support a strong and growing dividend, which we have increased by more than 250% since inception. Continued debt repayment, where we expect to pay down just above $12 billion of debt in 2022 and estimate a net leverage ratio of 1.8 times by the end of the year. Our strong cash flow also allows for continued business development, with approximately $2 billion allocated annually to augment our pipeline with the most promising external technologies, and innovative therapies. In closing, we are very pleased with AVI's strong results in 2021, and we expect to deliver robust performance in 2022 and over the long term. With that, I'll turn the call back over to Liz.

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

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

Great. Thanks so much for the questions. I just have a couple here digging into RINVOC in a little bit more detail. I guess first in rheumatoid arthritis, can you just, it looks like volumes have plateaued a little bit. It's probably not, you know, hugely surprising given the label revision, but just elaborate a little bit more on the feedback you're getting from physicians there and when you anticipate you'll start to see sequential growth again in that indication? The second question I had on Renvoke was then on Atopic Derm. Just elaborate again a little bit more on the ramp you're expecting here. Is this something that's going to take some time, or do you view that there's some low-hanging fruit maybe with some of the dupy failures? I'm really just trying to get to with all of these is the $2.7 billion guidance. How much of that's RA? How much of it's new indication? Just a little bit more color on that front. Thanks so much.

Yeah, thanks. Hi, it's Jeff. I'll give you some sense on what's happening with RA. So the RA market after the drug safety label is progressing as we anticipated. So I'll give you some sense, and I'll refer to sort of in-play share because you have to be a little bit careful in the December-January timeframe with overall volumes in the market. But right before the drug safety communication, we had about a 16% in-play share in RA, which was just right behind Humira, so very, very strong. If we look at where that's trended over the fourth quarter period, it's dropped about 20%. So it's about 14 reported in October, just over 13 in November, very consistent with what we thought would happen. So about a 20% shift in new-to-brand starts over that time period. And what we see from the market is it's exactly as we would expect, very, very stable, no change really in second-line plus, and doctors start to suppress their starts in first line consistent with the label. So what we're going to see is that as basically the promotion kicks back in here after December in the first quarter, we're gonna see that type of stability, which we can see is very, very clear from our overall share in our weeklies, and start to progress as we shift and pivot towards that second line plus. So the market is responding very similar to our expectations that we've been talking about in terms of overall RA. Obviously, PSA is going to help build upon that RA dynamic, and then ultimately later in the year, the big axial approvals as well. So everything is progressing as we've thought it would progress from a market perspective. In terms of atopic dermatitis, you know, listen, I said in my prepared remarks we're very pleased with the labels. We have those stringent endpoints of the EZ-90, the high skin clearance, very powerful itch reduction are reflected in our label. We obviously have both doses approved. The market, I can tell you, has been very pleasantly surprised about the adolescent indication, which is very important. So that's basically, we're going to start to see that ramp. We don't think it's going to be slow. And to your point in terms of our ability to start to capture patients, It's happening already. We obviously haven't reported any of the TRXs yet, but we can see it in the market. And typically, it's falling into a couple of areas. First, dupey failures, not a surprise. And there's a reasonably significant number of people after four or five years that just have failed and exited the market. They're going to come back in. We have reports from our research and our teams over partial responders to DUPI that just aren't doing well, in particular with the itch. We see some early starts there. And then, of course, challenging patients in general, we are seeing starts there as well with those higher levels of skin involvement. So the market seems to be progressing as we expected. It's not surprising that as we look at the development of the second-line market, we're going to see initially most of the starts in the DUPI partial responders or the non-responders, which is a fairly significant population. Also, as I mentioned, that we will start to see our access ramp fairly quickly here over the first part of the year, so we're encouraged. Maybe I can turn it over to Rob to give a sense over the relative magnitude of the sales.

Thanks, Jeff. Chris, this is Rob. So of the RINVO guidance of $2.7 billion, the AD and SPA indications will each contribute a couple hundred million dollars, while UC will contribute around $100 million. I think to keep in mind in terms of sequential growth, keep in mind in the U.S. you tend to see from Q4 to Q1 a sequential decline. So that's just a seasonal dynamic that we see across the business. So you would see sequential growth resume in Q2 and beyond.

Thanks, Chris. Operator, next question, please. Thank you. Our next question comes from Ronnie Gao from Bernstein. Your line is open.

Good morning, everybody, and thank you for taking my question in the nice quarter. First, questions around Humira. I was wondering if you guys will be in a position to give us some sort of a floor number in 2023 based on payer contracts. Sometimes this year, obviously, the market is looking for that. And then, you know, when I talked to payers, it seemed a lot of the decisions about what product they would use longer term will not happen in 2023. They'll happen in 2024. You kind of talked about a decline and then a quick ramp up. Do you see the floor here in 2023 or do you see it in 2024? And if I could sneak one more, you know, you have one of the largest differences between GAAP and non-GAAP earnings in the industry because of that Allegan acquisition. As you look at the amortization period and so forth, when do you think this thing will begin to narrow in a significant way, just because that's a concern for some investors?

Okay, Ronnie, this is Rick Gonzalez. I'll take the Humira questions. I think if you look at the guidance we've provided thus far, I think that's consistent with how we see the market playing out overall. You know, we've said basically you should be thinking about 45% erosion, plus or minus 10%. That's probably a reasonable range. Nothing has really given us any indication that it should be different than that at this point. I think we will be in a position as we move later on this year to potentially be able to provide some more specificity around that. We should be through all of the contracting at that point. I'm in a better position to be able to understand the ramp and the change that will occur over that period of time, and we certainly want to provide guidance when we have confidence, that we can give you a high degree of specificity of what that guidance looks like. As it relates to your question about will the floor for Jumeirah, I think your question is, will the floor for Jumeirah be in 23 or 24? And I believe you'll see further erosion from 23 to 24 in the Jumeirah business alone. But what we have described is we return to growth on the overall business. So you have to think about it from the perspective of you have this underlying growth engine that gets suppressed in 23 by the significant erosion that you see around Humira, both price and some volume. And then as that continues, it continues at a slower pace when we get into 24, so the overall business has the ability to be able to drive growth for the total company. But, yes, Humira would continue to – to decline in 24? And then, Rob, why don't you cover the third one? Sure, Ryan.

This is Rob. So when you look at our adjustment to specified intangible amortization, I'd say intangible amortization is like 70% of it. This is on the 474 guidance that we've given this year. And that will continue. Obviously, those things fall off over a number of years, but I would say that's probably a level that I would assume would be present for the next several years. Another big component is skyrocketing contingency consideration, given that that's purchase accounting and we record that accretion as such. That will certainly fluctuate over time, but I'd say those are the two biggest components of the guide this year. And certainly integration costs are starting to wind down, so you would expect to see those come down. But it is going down from last year, and so you would expect it to potentially trend down. But overall, I think you can model this level going forward. Thanks.

Thanks, Ronnie. Operator, next question, please. Thank you. Our next question comes from Andrew Baum with Citi. Your line is open.

Thank you. A couple of questions. Firstly, on Imbutaka, as we move into 2022 and the COVID dynamic shakes out, we'll be able to see the impact of competition versus COVID. Assuming that a significant chunk of the U.S. slowing growth rate or decline is due to competition, what can be done to re-gap the momentum against the narrative, particularly of Calquence. And then second, in terms of your aesthetics business, you terminated your contract with Meditox and your liquid formulation. There are competitive products coming to market, as well as increasing price competition. How much of that is a concern, or is your franchise and the breadth of the portfolio enough to minimize any impact of novel formulations? Thank you.

Yeah, Andrew, it's Jeff. So thanks. And you're right that we still have the continuing lingering effect with COVID. And Rob addressed that in his comments. So we still see the market, you know, versus 19 levels down, you know, about 10%, and even marginally down from 2020 in Q4. So we anticipate that that will moderate, go forward, and then we're left to manage the competitive impact. So we are seeing competitive BTKs have some impact on Imbruvica. But we're also seeing the competitive impact from our own Van Clexta. So we have to start to think about looking at the combination of the Abbey position, which is still very, very strong. To give you some sense in second line, you know, we have 45% share of the market, and it's even higher in third line, and it's in the 30s for front line. So we have to continue, which is our strategy, to highlight where we have a lot of distinction, which is the the strength of our data across every comparator in CLL, the overall survival benefit, and then also bring the strength of our overall portfolio. So that's how we plan to mitigate it. As Rob mentioned, we see market recovery offset by some share pressure on Imbruvica mitigated by positive Venn impact. So that's how we see the market develop as we go into 2022. We also are seeing... We also are seeing some pricing pressure in some select segments that are also contributing to the share loss for Imbruvica. And obviously, as much as we can, we keep the pricing discipline in the market moving forward. So I hope that context helps.

Andrew, this is Rick. I'll cover the aesthetics questions for you. Certainly, as you look at Botox, both here in the U.S. and internationally, It competes today against a significant number of competitive alternatives that are available. I think it's a pretty impressive position that Botox has in the market. When you look at the brand equity that it has, when you look at the confidence that injectors have in using the product, they tend to describe it as the most forgiving of all the toxins that they have experience with. And then there's obviously a fairly significant customer loyalty aspect to Botox with the loyalty programs. And Allergan has a very significant loyalty program that offers patients incentives to be able to use the product and to go back and get repeat procedures. Having said all of that, we feel confident in the position that we have competitively against the competitive alternatives that we see out there and those that we see coming. We have a very active R&D effort in the aesthetics R&D group now that's looking at next-generation toxins. Two in particular that we highlighted in the comments earlier are we have a short-acting toxin that's in development that's progressing very nicely, and we have a true long-acting toxin that's in development as well. And we believe that those will help grow the market. But if I look at the market now, obviously we've seen significant acceleration in the market since we've activated many of the strategies that we put in place after acquiring Allergan. But if I look at our overall share, our overall share has stayed very steady. In fact, might have ticked up one point in the latest set of data. So that tells you that we're not only growing the market very rapidly, but we're continuing to compete quite effectively against the alternatives that are out there. So I'm not overly concerned about what I see on the horizon. I think we have the opportunity to build the market even larger with some of the next-generation toxins that we're working on when we bring those to the marketplace. So I feel good about our position in toxins and in fillers as we move forward.

Thank you, Andrew. Operator, next question, please. Thank you. Our next question comes from Vamil Devan from Mizuho Securities. Your line is open.

Great. Thanks so much for taking my question. So a couple always appreciate all the guidance you guys give, both near-term and longer-term. Just a couple questions I have related to more of the longer-term guidance you've given. In the past, you had talked about your Hemonc franchise sort of having peak sales or sales, I guess, in 2025 of around $13 billion. When you updated some of your numbers earlier last month. I don't think you updated that one. So I'm just curious if you still think that that's a reasonable sort of 2025 expectation. And then the other one is around UBROV, where you've sort of stayed with this guidance of sort of more than $1 billion in peak sales, which are already guiding to 800 million of sales just in this current year, pretty early in the launch. So I'm just wondering if you can maybe get a little better sense of how you're viewing sort of the longer term opportunity for UBROV and maybe if you want to mentioned QLIPT, although I know that's early, but at least for you, Relvy, do you think there's significant upside to that $1 billion number you've mentioned before? Thank you.

Hello, this is Rick. So I'll cover the first one, and then I'm going to have Jeff cover the Relvy question that you've asked. So it's a good question. Obviously, the HEMOC market in the areas that we participate in, in particular, I would say CLL has changed over the last several years. I think one of the Certainly one of the things that was not ever anticipated in that guidance was the impact that COVID would have on the market and the reduction that we saw in the number of new patients, which was quite sizable. And that obviously wasn't contemplated in it. And the second thing is we are seeing certainly more competitive pressure, both from price and some volume. than we anticipated in that time frame. Having said all of that, and well, I'd say a third item is, certainly Benclexa is performing well as well. And I'd say it's tended to exceed some of our expectations, at least at this point, within the launch trajectory of the brand. So all of those have factors in what we're describing here. I'd also say we have done a nice job of building out our HEMONC portfolio from an R&D standpoint. When I look at some of those assets that I described in my opening comments, I think they're going to have a very significant opportunity. As an example, one that I didn't mention there would be Meglexin, the T1114 multiple myeloma population. That could be a very significant opportunity. We feel good about that. We should get a readout on that. And we think that could be a significant contributor to both improvement in patient therapy, but also a significant improvement in the overall revenue in the franchise. And then you have things like Novitaclax and Epacritimab and 3A3. Those are all significant opportunities to be able to drive growth. So I still feel confident in the overall ability for us to grow our Hemonc franchises. Having said that, I would say Imbruvica is under more pressure than we anticipated when we put that guidance out. At that point, we didn't even contemplate follow-on BTKs in any meaningful way, but we do see more competitive pressure there. But overall, I'd say I still feel very confident in our ability to be able to grow that, that it will be a growth franchise for the company over the long term.

Yeah, hi, Bommel. It's Jeff. So just to answer your question on Eubrelvy and the overall market, certainly we're very pleased, as I mentioned in my remarks, over the momentum on Eubrelvy. We continue to lead in that acute space, and the early results for QLIPTA are also very strong. Now, a lot of it is going to depend on, you know, how that CGRP market develops. So if you think about it in this way, and this is how we think about it, is is it's about, in terms of new patient capture for the total Ubrella V market, where we also compete with another player from Biohaven, it's about 18 to 19% of the market. And the market is also with the expanded tryptan market, of course. So if you look at that, the payers certainly like you to step through one or more tryptans. When you look at the population that may not be eligible for a tryptan or fails a tryptan, the estimates are typically up to 30% to 35%. And so the market has potential room to sort of double into that epidemiology. So you can kind of run the numbers there. I mean, we often get the question, is it over a billion? Is it closer to a billion? Or is it closer to a higher number? But nonetheless, we're pleased. Certainly, it's exceeded our expectations so far, and QLIFTA has as well. So I think there's more room for the market to run. but we'll have to see. I mean, there are payer pressures in the market, as I mentioned, in terms of the step-through therapy.

Thanks, Babal. Operator, next question, please. Thank you. Our next question comes from Steve Scala from Cowan. Your line is open.

Thank you. I have a couple questions. At a high level, I struggle to understand why 2022 won't be a stronger year than the guide on the earnings line. Scott Rizzi and Botox are doing phenomenally. Renvoke is holding its own. Humira will still be exclusive in the U.S. for the whole year and should be at peak profitability. And the pandemic, less an obstacle. So why won't 2022 look more like or even better than 2021 in terms of earnings power? And secondly, there was no mention of the CF program, even in the upcoming milestones. Any thoughts on the timing of the triplet data? In the past, I would describe ABBYY confidence as being no more than moderate. Has it changed one way or the other? Thank you.

Yes, Steve. This is Rick. Maybe Rob and I will tag team your first question and then Michael will cover your second question. Yeah, I think if I look at 2022 and I look at our overall performance coming off of a strong year in 2021, it's pretty impressive performance when I look at the EPS growth. Certainly, do we have an opportunity to drive it harder? I can tell you every year we endeavor to drive it as hard as we can drive it. And when I look at all of the businesses individually and I look at their ability to be able to perform, I'm extremely confident in the trajectory that we have going forward. You know, specifically, you know, we're assuming as an example in HCV that there's still a COVID impact in HCV. So I wouldn't say the pandemic is completely gone in 2022. But I'd say overall the brands are performing well. we're investing in the business to ensure that we continue to be able to drive long-term performance. And so certainly that obviously drives some expectations around what the EPS growth will be year over year. Rob, anything you'd like to add?

I mean, I think it's a good point in that we are fully investing to support the long-term growth. You think about, you know, we're launching AD. That's a new area for us. We're also going to fully invest there. Aesthetics, we've seen that, you know, the strength of the investment in aesthetics and the way we've been able to grow the market. So that's really important. At the same time, we're expanding operating margin. We're exceeding our expectations for synergies. And so you're seeing us deliver another year of operating margin expansion. So I'd say we're top tier in operating margin, very healthy P&L profile. And then the other thing that you probably have to factor in here is that we've assumed a half-year overstasis as well. We don't really have visibility to the generic, and so we make an assumption every time we update guidance six months out. So that's something that, as you look at year over year, that you should figure into your comparisons. But overall, we're very pleased with delivering double-digit growth in earnings and seeing another year of very strong operating margin expansion while fully investing to support the growth of the business.

And this is Mike. I'll take the question on CF. I think it's important to keep in mind that this is a pre-proof-of-concept program. that doesn't contribute in any meaningful way to our long-term outlook and doesn't factor into our thinking about the long-term potential in the pipeline. And the way we have discussed it is consistent with that view. We've always said that it represents significant upside if it were to hit, but it's an early program. With respect to the timing of the data, We continue to track towards the timing that we've described previously. We would expect to have data from the triple sufficient to enable a go, no-go decision later on this quarter. Thank you.

Thanks, Steve. Operator, next question, please. Thank you. Our next question comes from Tim Anderson with Wolf Research. Your line is open.

Thank you. A couple of questions. I'm guessing that as we move through 2022, investors are going to start to have some concerns about 2023 earnings and what the impact from Humira could be. And you talked about having more visibility on Humira contracting later this year. My question is, is it possible you'll actually give us 2023 earnings guidance sometime this year, like at Q3 results, as an example? And then my second question, just going back to CF data, you said in mid-November that you would actually have that data in-house by the end of the year. So here we are four weeks later. We haven't really seen anything. My question is, do you actually have that data in-house? Did you hit that timeline of end of year? If not, what's going on? What changed in that short window?

Okay, Tim, this is Rick. I'll cover your first question. Mike can address the second one. You know, we certainly aren't in a position now to be able to commit that we would give earnings guidance in the third quarter. I think clearly we'll be able to give a better feel for what that erosion curve looks like, and could that ultimately end up being at least a pretty good perspective for us to be able to build off of? what earnings guidance would look like. It might. I think if we're in a position where we can confidently provide that guidance, we would provide it. But I certainly think we'll be in a position where we have very good visibility as to what that erosion curve will look like. And at that point, we can tighten it a bit and be able to provide a higher level of specificity. We understand it's an important issue for investors. You know, as far as EPS is concerned in 2023, we have said that we expect EPS to decline in 2023. So I don't think any investor is – that would be a surprise to any investor. But obviously it's important for us to be able to frame it as accurately as we can for the investment community and be able to provide direction around that. And at the point at which we think we can do that in a reliable way, we're committed to be able to do that. So let's see how it plays out, and certainly as we get to the third quarter call, that would be the position at the point at which I think we'd be in a position to be able to provide more clarity.

Mike? So on CF, what we said towards the end of last year is that data would begin to come in-house around the end of the year, and we would have sufficient data to make a go-no-go. in the first quarter. And we're still tracking to that overall timeline. You know, there were some challenges toward the end of the year where a number of patients were expected from Australia, for example, and Australia shut down because of COVID and we had to shift that enrollment. So we perhaps have slightly less data than we would have hoped to have had at this point in the year. But again, we're still tracking to be able to make that go, no-go decision by the end of the year, because it's important to keep in mind that these are short studies. And so once you get those patients in, you can turn the data around and make a decision pretty quickly. But the overall timing hasn't changed substantially from what we described at the end of last year.

Thanks, Tim. Operator, next question, please. Thank you. Our next question comes from Mohit Bansal from Wells Fargo. Your line is open.

Great. Thanks for taking my question and congrats on the quarter. Maybe a question on RINVOC and other oral competitions and competitors in IBD. Where do you see RINVOC fitting versus other orals such as SMP inhibitor? I mean, now there are more than, there could be more than one. And are KOLs, I mean, they kind of suggested some kind of induction with one drug and maintenance with other drugs, a kind of treatment paradigm in IBD. Do you think it is even a possibility in IBD diseases? Thank you.

I think if, this is Mike, I'll take that question. If you look at the performance of RINVOC in inflammatory bowel diseases, both in UC where we have the full data set and in Crohn's disease where, we have an important component of the induction data set. The performance across the board is very, very strong, not only in terms of just overall response rates that are measured, but particularly when one looks at deeper measures of response, clinical remission, mucosal healing, major clinical response, which is the combination of remission and endoscopic improvements. And across the board, we're driving very high levels of disease control. And we think that feature of the drug combined with the overall benefit-risk position us to compete very effectively against not only oral competitors, but many competitors, all competitors in the field. When we look at those data, you know, to our eye, given the limitations of cross-study comparisons, we see response rates that just aren't paralleled in the field. And so we think that there is a very real opportunity for RINVOC. And our view of its role in IBD reflects that. With respect to mixed induction and maintenance regimens, it's important to keep in mind that there are no data to support those sorts of regimens. All of the programs look at induction followed by maintenance, which is usually a step down in dose from the induction dose. And that's the data set that physicians will have. Now, it's important to keep in mind that in the long term, patients often lose control, and then they need to be reinduced with a new agent. And one of the very strong features of RINVOC, and quite frankly, Skyrizzy, also shares this characteristic, is it has very durable response. So it does maintain response for a very long period of time in the studies that we have continued to follow, including our long-term extensions from Phase 2 and our Phase 3 program. So we think those are also very strong attributes to the products.

Awesome. Thank you very much.

Thanks, Mohit. Operator, next question, please. Thank you. Our next question comes from Gary Nachman from BMO Capital Markets. Your line is open.

Hi. Good morning. Aesthetics has been a big source of upside in 2021. So I'm curious, do you see any real impact from Omicron in the fourth quarter? Do you see a tailwind maybe from that further recovery this year? Is that baked into the aesthetic guidance of $5.9 billion that you have for 2022? And, you know, you've talked about high single-digit long-term aesthetic guidance, but this year should be double digits. So should we be thinking more along the lines of double-digit growth maybe for the next few years if you're still investing a lot in that space. And then just one other quick one on QLIPTA for the chronic migraine prevention indication. That data is coming soon, sometime this quarter. So just talk about how meaningful you think that indication will be and how that's factored into the peak targets that you've talked about. Thank you.

Gary, it's a good question on Omicron in the aesthetics business. It is something we track very carefully in every major geography around the world as well as by state here in the United States. And I will tell you that at least as far as the U.S. is concerned, there has not been much of an impact on aesthetic volume, unlike what we saw when there was an actual shutdown. And obviously you would think in a shutdown you're going to see the volume go down. But I'd say here we're seeing very little impact on the volume. So we have factored in that we don't expect a major disruption going forward. And I think the data would clearly support that that's a reasonable position to take. As far as the business overall, I mean, I can tell you we're very pleased with how the business is performing. I think that group's executing at a very high level, and certainly the resourcing and the dedicated structure that we put in place I think are helping a lot in major geographies like the U.S. and China. You know, we're obviously comfortable with the guide that we provided. It is an area that we're going to continue to invest in and continue to drive. And I think it's a market that I think is extremely attractive. And it's going to require both us to continue to execute and invest in it appropriately to grow the market, but also to build out more assets that meet patients' needs to be able to expand the market. And so we've almost doubled the R&D investment that we have in aesthetics since we took it over. And we have a number of programs that I think are very exciting programs. Some of the biostimulatory and regenerative fillers that we're working on now I think could be exciting opportunities, like tropolastin, to be able to stimulate tropolastin in patients using fillers is an exciting program that continues to advance. It's going to require both. It's something that we're absolutely committed to continue to drive, and I think this can be, as we indicated in our comments, I think this can be a strong business for AbbVie over the long term. Jeff, you want to cover QLIPTO?

Yeah, thanks, Gary, for your question on QLIPTO. It's an important new indication if we see, when we see the data and it were to be approved, and I'll give you some perspective. Obviously, we've talked about how much we really like our portfolio of migraine. You got Botox on chronic with the injectors. Obviously, you have Q-Lipta right now in episodic, and of course, you Brelvi in acute. So the Q-Lipta chronic gives us quite a bit of flexibility, and it's a nice catalyst. Even though episodic is a bigger market in terms of patients, obviously, chronic patients do consume a lot of medication. Largely, if you think about the market structure, You've got injectors, meaning they inject Botox, or you have non-injectors. So to bring in the first oral, that for people that don't choose to have a Botox injectable practice, that's quite attractive. And we think it builds in our story over the strength of Q-Lipta, first in class, designed specifically for these indications. So it's a very nice catalyst if it were to be approved, and so we're anxiously looking forward to that. The other thing I would note, which is further off, and it's obviously something that would have to play out through the studies in Mike's organization, was chronic migraine is so difficult that the potential for patients to have combination treatment, so in other words, a Botox therapeutic plus a simple oral drug like QLipta, could bring this concept to that segment of the market called migraine freedom, where you're really trying to get the headaches down to as low as possible. And so, again, it's further off, but it shows you the flexibility that we have as we continue to build out QLIPTA across our migraine portfolio. So we're pretty excited about the potential for CM.

Thanks, Gary. Operator, next question, please.

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

Hey, guys. Good morning. Thanks so much for the question. I just had a couple of quick ones for Rick or for Rob. The first one is, when you look at your modified 2025 guidance for SkyRaisy and Renvote, were there any changes to your assumptions on duration of therapy or the pricing environment? I'm just thinking about the payer landscape with many more biosimilars coming up and what impact that could have on switching or price increases. The second question is, on the BD front, we've obviously seen valuations come down quite a bit in Schmidt Cap Biotech in the past six months. I know you've usually talked about $2 billion earmarked for BD, but does the current environment make things like bringing new TAs or newer technologies in-house more attractive? Thanks so much. Bob?

Yeah, Jeff. Obviously, when we go through our long-range plan, we consider the various dynamics of the pricing environment, so we factor that into BD. our 2025 guidance, I would not say that there's really been an assumption change for duration of therapy, but we did, you know, we certainly took into account the impact of the label on RA, AD, and SPA, but then, you know, that was offset by the stronger performance at OUS, as well as the stronger IBD data that we saw for INVOQ, and just the overall performance of sclerosis and psoriasis was all factored into that updated guidance. But we did not make an assumption change for duration of therapy, and we certainly factor in various pricing assumptions as we go through our long-range plan.

And maybe Mike and I will tag team number two. I mean, certainly, you've seen us pay down debt at a very significant pace. We're continuing to commit to pay down significant debt this year. And we'll certainly be in a position where we could do larger opportunities if that was something that we desired and we thought it was the right kind of opportunity as we move forward in 23 and 24. Certainly the $2 billion that we've allocated has been sufficient to be able to cover the things that we're looking for. You know, Mike has responsibility for business development, so I think he's probably a little closer to the valuation question, Mike.

Well, what I would say is that valuations have certainly come down, and that brings opportunities into the focus that might previously have been outside of that range of $2 billion a year that we had contemplated. And as Rick said, as we pay down debt, we have some more flexibility. But we're going to continue to look at BD in the same way that we always have, which is that it is an important component of adding innovation to our pipeline and needs to be coupled with our internal innovation. So we're going to match what's out there. the innovation we see, the therapeutic areas that are most promising with what's going on in our early pipeline, and use that to make sure that overall we have a very strong and very innovative pipeline. And you can see that, for example, in the way that we have built our Hemonc franchise, where we have a nice blend of internally discovered and partnered programs from Then Klexta and Imbruvica, obviously our lead programs to the significant programs behind that, things like Navidoclax, Epcoridamab, 383, and now Tuliso-V demonstrating extremely strong data in non-small cell lung cancer. So that's a blend of internal and external innovation. And we're going to continue to look at areas. in that same way. And it's principally going to be the fit for our overall situation, the strength of the innovation, and that balance between internal and external innovation that we look at.

Thanks, Jeff. Operator, next question, please. Thank you. Our next question comes from Josh Shimmer from Evercore. Your line is open.

Great. Thanks for taking my question. First, I'm a little surprised the contingent consideration adjustment is not higher considering your recently revised scarcity forecast. Am I not understanding that line correctly or should we be expecting a more meaningful revision in the first quarter? And then you mentioned a couple of times the novel biostimulatory dermal fillers you have in the aesthetics pipeline. Can you elaborate on how you expect those to differentiate versus the current offering and whether you expect those to expand the market for fillers? Thanks.

So Josh, this is Rob. I'll take your first question. So we did actually record in Q2 of last year additional accretion for higher sales forecasts for SkyRigi, and that was really tied to both our long-range plan as well as because it's a fair value measure, you have to take external forecasts into account. Obviously, street numbers had moved up as well. We came out publicly with the updated guidance in December, but we already contemplated that in our continued consideration accretion in Q2 of last year, so that's already accounted for.

So on the biostimulatory fillers, I think the way to think about it, there are multiple programs, but I'll talk about two areas specifically. Certainly one of the areas that you want to be able to look at is your ability to be able to stimulate collagen so that your own body can produce collagen to be able to provide support and filling in a specific area that you desire. And there are some products on the market today that provide that. One of the negatives of those products is you don't get the immediate filling effect that you normally get with a filler where you get physical filling immediately upon the procedure. You get a little bit of swelling that occurs. So for a very short period of time, you will get what looks to be filling, but then that swelling goes down. And then for a period of time, the patient has to wait. in order for them to get the collagen impact, and that takes a significant period of time. So we have a technology in-house that we acquired and we're further developing that combines both physical filling and collagen stimulation in one product. So you get the immediate filling effect of a normal filler, and then as that starts to resolve over time, you get the collagen impact that's building over that same period of time to provide long-term filling. So I would say that most of these technologies that we're working on are market expansion opportunities. So that's one example. The second example would be one of the areas that is important for patients is what we describe as skin quality, the smoothness of your skin, essentially. and one of the things that provides smoothness of your skin is the elasticity of the skin. So, trocolastin is an example of a product that we have in development that will allow the body to be able to produce more elastin. So, you can inject this product and it will provide, we believe, we have to prove this in the clinical studies, it would provide not only some level, not a dramatic level of filling, but an ability to be able to provide elastin formation along those areas and be able to smooth the skin out. That would clearly be a market expansion opportunity today. There really aren't fillers that do that. They can stretch the skin with the physical filling, but they don't really provide smoothing of the skin. And so those are two examples of what we're working on.

Thanks, Josh.

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

Hey, thanks. Just two questions. First, on the migraine franchise, notice that you have a phase three trial looking at Q-Liptop and Botox in a combo therapy. for chronic migraine prevention. You know, our doc checks indicate, you know, actually growing interest. Docs sort of highlight that as, you know, proactively as something they're interested in. I guess, was this trial in response to that feedback? Or maybe just talk about the rationale and, you know, how you're looking at combo in this space. And then, just a question on a drug that doesn't come up but you just launched, you know, Vuity. Presbyopia represents a huge TAM. Maybe just talk about initial uptake trends and, you know, what is it about this market, I guess, that you're seeing that you're not making a bigger deal out of this launch? Thanks.

So this is Mike. I'll start with the question on QLIPTA and Botox combo use, and then Jeff may want to add and take the second question. With respect to that combination, it really goes back to what Jeff said before, this concept of migraine freedom. If you think about chronic migraine, these are patients who have 15 or more migraine days a month. That's a migraine every other day, and these are debilitating attacks. So a substantial reduction in that is great. but what patients and physicians are really seeking is an elimination of the migraine so that they can be free to go across their daily lives, to go about their daily lives. And given the options that are out there today to really get to that level in those most severely affected patients, combination therapy is an obvious place to go, particularly when it's complementary approaches that work through completely different mechanisms. And so you would expect their effects to be independent and additive. And where you have a treatment like Botox that has a long track record is infrequently administered and has a long duration. So it's that thinking that led to that combination trial. And I do think we would also agree that there is significant interest in treating physicians around these approaches.

Yeah, just to add to that, that's exactly right. It's so logical, and there's so much unmet need, to Mike's point, in chronic migraine with, you know, half a month. Sometimes these migraines last for days, and so there's a lot of desperation. And when the thought leaders and the headache specialists see the impact of Botox and how simple Q-Lipta is and how strong that is, they go right there. So I think we are encouraged to as Mike mentioned, to sort of see the outcome of those studies for migraine freedom. It would, if it works, it would be a real advance for patients.

And so on Duity, you're right, we didn't comment on this. We typically wouldn't comment on a product that's of this size. And, I mean, it's a very interesting product. I think it clearly has a unique fit in the market. I'll have Jeff talk a little bit about the total available market, what we see as far as the size of that market going forward. But the reason we didn't highlight it is, like I said, if we look at what we think peak sales will be here, it's not a product of the magnitude that we would typically highlight.

Yeah, and what we see is that there is excitement about Vuity. I mean, it's different than the – obviously the market is – basically over-the-counter prescription eyeglasses or readers, right? So this is the first ever product that basically is a drop or a reading drop, right? So when we start to break down the data and you take a really, really big market, you know, tens and tens of millions of patients with presbyopia But we also largely see from the clinical study it really works the best for moderate to severe, younger people, not older people. So as we basically make the cuts, it's still a substantial market size, but it's not as large as you might think if you just look at all the presbyopes that are in the United States. But nonetheless, it's early days where we have a sales force that's calling on our optometrists, also ophthalmologists, What we see from the early results is significant interest. We haven't started our big consumer push, which will come later, later in this quarter. It is an older glaucoma product that's been reformulated. So there's a little bit of learning from the ophthalmologists who really understand glaucoma products. But overall, the early results are it works as anticipated. It works quickly within 15 minutes. It lasts for six to eight hours. And so, again, when we look at the price point, it's not a reimbursed product. It's a cash pay product. We have, to Rick's point, fairly modest expectations, and we'll continue to watch the trajectory here over the next quarter or so.

I think the big assumption that you have to look at here is what is the utilization per month a patient would actually use it for? I mean, as an example, I keep bugging the guys that I have to go get a prescription for it. Now, what do I want it for? When I go to a restaurant, I have trouble reading in low light, so I'll use it for that purpose. And so it's very difficult to come up with the frequency at which it'll be used. If it's used at a high frequency, it'll obviously be a bigger product. If it's used at a relatively low frequency, it'll be a smaller product. So we'll have to see how it plays out.

Thanks, Chris.

Operator, we have time for one final question. Thank you. Our final question comes from Matthew Harrison from Morgan Stanley. Your line is open.

Great. Good morning. Thanks for fitting me in. I guess two for me, if I may. So first on EPCo, could you just comment around your confidence around accelerated approval here in DLBCL and how you're thinking about that opportunity in the near term? And then on Vilar, maybe just comment on what FDA conversations are ongoing there and how you're thinking about the potential for an adcom or not. Thanks.

So on EFCO, we have a high degree of confidence in EFCO overall. It continues to deliver very strong results, high overall response rates, very deep responses, good complete response rates across a number of indications, DLBCL and follicular lymphoma both. With respect to the confidence in accelerated approval for diffuse large B-cell lymphoma, When we look at the data, we think it clearly exceeds the benchmarks of available therapies in highly pretreated refractory patients. So we would think that accelerated approval should be supported by those data. We'll allow the data to continue to mature from the expansion cohorts and have our final regulatory discussions later on this year. to set up that accelerated approval submission. So it certainly is in our planning, and we think it's very supportable based on the data. With respect to confidence in BRAILAR and MDD, we're confident in that. We've been confident. We were confident when we saw the data and looked at the strength of those data and looked at the relevant precedents. for molecules that have achieved indications not only in depression, broadly speaking, but in adjunctive treatment of major depressive disorder. We've completed all of the regulatory discussions that we need to have for the submission, and we're planning the submission shortly, as we described in my prepared remarks. In terms of potential for an adcom, It's really too early to comment on that. We typically start to have those conversations with the agency a few months into the review process. But based on the data and based on the precedents, it's not something that we would anticipate. However, if the agency were to have one, it wouldn't concern us either. We think the data package is very strong and would hold its own.

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

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