AbbVie Inc.

Good morning and thank you for standing by. Welcome to the ABBE third quarter 2024 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. Today's call is being recorded. I would now like to introduce Ms. Liz Shea, Senior Vice President, Investor Relations.

Good morning and thanks for joining us. Also on the call with me today are Rob Michael, Chief Executive Officer, Jeff Stewart, Executive Vice President, Chief Commercial Officer, Rupal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer, Scott Renz, Executive Vice President, Chief Financial Officer, and Kerry Strom, Senior Vice President, APPE, and President, Global Allergan Aesthetics. Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. Abby cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in our forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. Abby 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 Abby's business performance These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Following our prepared remarks, we'll take your questions. So with that, I'll turn the call over to Rob.

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie is performing exceptionally well, and I'm extremely pleased with the execution against our strategic priorities, including... continued double-digit sales growth from our ex-Humera platform, the closing and integration of Cereval Therapeutics, and the progress we are making to build and advance a compelling pipeline of innovative medicines. Turning to our results, AVI's diversified portfolio delivered sales that were $260 million above our expectations and reflect robust mid-single-digit operational sales growth. Our Exumair platform drove this overachievement, including growth of nearly 18%. The momentum of Skyrizzy and Renvoke is especially impressive, with combined sales expected to exceed $17 billion this year, which is $1.3 billion above our initial expectations. And we see substantial opportunity for continued strong growth well into the next decade. Several other key products also delivered double-digit sales growth, including Benklexta, Vralar, Ubrelvi, and Qlypta. This broad-based performance further demonstrates the strength of our commercial portfolio. For the third time this year, we are raising our full-year revenue and adjusted EPS guidance. We are increasing our full-year revenue guidance by $500 million. and have now raised total revenue by $1.8 billion since our initial guidance in February. We are also raising our full-year adjusted earnings per share guidance by $0.15 and now expect adjusted EPS between $10.90 and $10.94. In addition to achieving strong quarterly results, we have been very focused on investing in the business to generate sustainable long-term performance in the 2030s and beyond. During the quarter, we successfully completed the acquisition of Cereval Therapeutics, strengthening our neuroscience pipeline. Cereval enhances our ability to help patients suffering from devastating conditions, such as Parkinson's and schizophrenia. The integration has been seamless, and we are excited to have the talented Cereval team join our organization. Within the Cereval pipeline, we are very pleased with the positive phase three results and emerging profile of Tevapidon in Parkinson's, and we remain on track to read out both pivotal studies for Imraclidine and schizophrenia in the fourth quarter. More broadly on the pipeline, we have been advancing key R&D programs across all stages of development. Some notable highlights include the U.S. approvals of Violev for advanced Parkinson's and Botox for platysma bands, the U.S. regulatory submission of Teliso-V for non-squamous, non-small cell lung cancer, and the start of our Phase II Crohn's platform study. which is evaluating Sky RISI in combination with several novel biologics. In summary, AVI continues to demonstrate strong commercial, operational, and R&D execution. The robust performance of our growth platform once again exceeded our expectations, and we see numerous opportunities to drive long-term growth. Further underscoring our confidence in that growth Today we announced a 5.8% increase in our quarterly cash dividend, beginning with the dividend payable in February 2025. Since inception, we have increased our quarterly dividend by more than 300%. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff?

Thank you, Rob. I'm extremely pleased with the continued strong momentum across the therapeutic portfolio. I'll start with the quarterly results for Immunology, which delivered total revenues of more than $7 billion, up 4.8% on an operational basis. Skyrizzy global sales were $3.2 billion, up 51.5% on an operational basis, exceeding our expectations. We are seeing robust prescription growth across psoriatic disease, with Skyrizzy achieving in-play biologic share leadership in approximately now 30 key countries. In the U.S., we continue to capture nearly one out of every two in-play psoriatic disease patients on biologic therapy, and we see substantial room for further total share growth. We believe that Skyrizzy's best-in-class profile with nearly complete skin clearance, high durability of response, easy onboarding, and quarterly dosing for maintenance therapy sets a very high bar relative to other therapies on market or in development. Skyrizzy has also demonstrated a compelling clinical profile in IBD, including strong endoscopic data paired with convenient dosing. This differentiated profile, as well as our compelling head-to-head sequence data versus Stelara, is supporting very rapid uptake in Crohn's disease, where Skyrizzy continues to gain market share globally, achieving in-play patient leadership across all lines of therapy in the U.S., Japan, and Canada. Skyrizzy's U.S. in-play patient share is now approximately 32%, more than double the share of the second biologic treatment. And with Skyrizzy's total prescription share of approximately 8%, we see significant opportunity for revenue inflection in Crohn's going forward. While we are still very early in our launch in the U.S. and Europe, we also anticipate robust uptake for Skyrizzy in ulcerative colitis, the new indication. Initial prescription trends, as well as feedback from gastroenterologists, have been overwhelmingly positive. Physicians are particularly impressed with the data that has been demonstrated for naive UC patients who have not been exposed yet to biologics, where Skyrizzy achieved very high results for clinical remission and endoscopic response. We have now secured broad formulary access for Skyrizzy in UC, with sales in this indication expected to ramp meaningfully over the next several quarters. So given the momentum we are seeing across all of these indications, we will be raising our full-year sales guidance once again for SkyRizzi. Turning now to Renvoke, which is also demonstrating robust growth. Global sales were $1.6 billion, up 47.4% on an operational basis. We continue to see strong prescription growth across all seven of Renvoke's approved indications. I'm especially pleased with our performance in IBD. where RINVOC's uptake is exceeding our expectations. RINVOC is now capturing double-digit in-play patient share in the U.S. for ulcerative colitis as well as Crohn's disease. Both indications are now available in more than 75 countries, with reimbursement and share continuing to increase. I also wanted to highlight our recent performance in atopic dermatitis, where RINVOC is seeing an acceleration of in-play share following recent positive data from our second head-to-head study versus Dupixent. As an oral option that provides rapid skin clearance and itch relief, we believe RINVOC's strong differentiated profile will continue to compete well in this highly under-penetrated AD market. As a result of this continued strong performance, we will also be increasing the full-year sales guidance once again for RINVOC. Looking forward, we see substantial momentum for both Skyrizzy and RINVOC, including continued share gains across existing indications on top of the typical underlying market growth across room, derm, and gastro. Additionally, we are making excellent progress with several new indications for RINVOC across sizable markets that will have the potential to provide another significant revenue inflection in the second half of this decade and into the 2030s. From a competitive perspective, a key element of SkyRizzi and RINVOC's success has been their strong differentiation with compelling head-to-head data against several novel therapies. This includes Skyrizzy superiority versus Humira, Cosentix, Otezla, and Stelara in psoriasis, as well as Stelara in Crohn's disease, and Renvoke superiority versus Humira and Orencia in rheumatoid arthritis, as well as Dupixent in atopic dermatitis. To further support our differentiation, we have another head-to-head study ongoing for Skyrizzy versus Sotictu in psoriasis, with plans also underway now for a study comparing scirrhizae versus intivio in ulcerative colitis. So given all of these factors, we feel very confident about the long-term growth prospects for both scirrhizae and RENVOC. Turning now to Humira, which delivered global sales of $2.2 billion, down 36.5% on an operational basis due to biosimilar competition. While Humira share erosion to biosimilars in the U.S. is largely in line with our expectations, we are now seeing more Humira molecule volume moving to other novel mechanisms than previously anticipated. So while this has an unfavorable impact to Humira sales, we are seeing a benefit to Skyrizzy and RINVO, which is a very favorable dynamic or immunology portfolio now and certainly over the long term. Moving now to oncology, where total revenues were approximately $1.7 billion. In Bruvica, global revenues were $828 million, down 8.8%, reflecting continued competitive dynamics in CLL, partially offset by higher persistency rates for existing patients. Venclexta is performing extremely well. Global sales were $677 million, up 18.2% on an operational basis. This reflects strong momentum in CLL, especially in Europe, where recent guideline changes recommend combination use of Venclexta plus BTK inhibitors as a preferred fixed duration treatment versus continuous BTK treatment alone. Growth is also supported by our very strong share position in frontline AML, where Venclexta is the leading treatment for patients who are ineligible for intensive induction chemotherapy. We are also seeing nice sequential revenue growth from Elihir and Epkinley, which are both demonstrating strong launch trajectories. Turning now to neuroscience, where total revenues were more than $2.3 billion, up 16% on an operational basis. Raylar is demonstrating robust performance. Sales were $875 million, up 16.6% on an operational basis. reflecting continued new prescription growth in both bipolar disorder and adjunctive MDD. Within migraine, our leading oral CGRP therapies contribute $445 million in combined revenue this quarter, reflecting growth of approximately 22% as we continue to see increasing prescription demand for both Eubrelvy and QLIPTA. Global Botox therapeutic sales were $848 million, reflecting strong performance in chronic migraine and as well as the other approved indications. Finally, we are very excited for the recent U.S. approval of VIALEV, a transformative therapy for patients with advanced Parkinson's disease who are uncontrolled on oral therapy alone. As a less invasive, non-surgical delivery system that can provide meaningful improvements in on-time and off-time, we believe Vylev has the potential to significantly expand use beyond current device-aided therapies. Sales in the U.S. for Vylev are expected to ramp gradually over the next several quarters as we work to establish the appropriate Medicare coverage and benefit determination. At the same time, we are very encouraged by the interest in uptake internationally, where we have approval now in 35 countries with several thousand patients already on treatment. Longer term, we anticipate peak sales of VioLev to exceed $1 billion. So overall, I'm very pleased with the continued commercial execution and performance across the therapeutic portfolio. And with that, I'll turn the call over to Carrie for additional comments on aesthetics. Carrie?

Thank you, Jeff. Third quarter global aesthetic sales were more than $1.2 billion, representing growth of 1.8% on an operational basis. In the US, aesthetic sales of $791 million increased by 3.9%, driven by growth from Botox Cosmetic, as well as other brands across our broad portfolio. US Botox Cosmetic sales were $414 million, an increase of 6.5% versus the prior year. Favorable pricing dynamics and facial toxin market growth more than offset modest share erosion. Botox Cosmetic remains the clear market leader. U.S. Juvederm sales were $105 million. Juvederm's market-leading share was consistent with last year, and the overall filler market was roughly flat to the prior year. While the U.S. facial injectable market remains largely stable, growth is below historical rates. As a result, there is a reluctance from customers to maintain traditional toxin and filler inventory levels. Based upon the relatively higher price point of filler procedures in a still challenging U.S. economic environment, Juvederm is more impacted by this dynamic, which can be seen in third quarter results. Internationally, aesthetic sales were $448 million, reflecting a decline of 1.6% on an operational basis. Within China, the economic dynamics that weighed on our results during the first half of the year have continued to impact consumer spending. This has created challenging aesthetic market conditions that have been particularly impactful to Juvederm's performance. Primarily due to this circumstance, we are moderating our Juvederm sales outlook for the year. We are encouraged by the recently announced government stimulus in China. We will continue to monitor for any further developments and how it could positively impact consumer discretionary spending and aesthetic market growth. Although the current dynamics in China are challenging, its potential remains attractive, and we are committed to bring innovation to this market that will drive long-term growth. Along those lines, in China, we recently received approval for the Botox cosmetic indication in master muscle prominence, marking the first toxin in the world to have this indication. This approval enables us to market and train to this important treatment option that addresses a top aesthetic concern among many Asian patients. In the U.S., we are pleased that we received FDA approval for the use of Botox cosmetic to treat platysma bands. This approval positions Botox as the only cosmetic toxin with four distinct indications and enables us to market and train beyond the face for the improvement of neck and jawline appearance. We also remain excited about the opportunity for Bonti. Based upon its rapid onset and short-acting profile, FontE has the potential to activate new patients that are hesitant to try facial toxins, driving long-term market expansion. Looking to the future, we continue to see significant growth potential for our aesthetics portfolio based upon low market penetration rates, our commitment to introduce novel treatments, our strong customer relationships, and our position as the global aesthetics leader. With that, I'll turn the call over to Rupal.

Thank you, Carrie. Starting with immunology, where we recently began our Phase II Crohn's disease platform study, which will evaluate Skyrizzy in combination with several other novel biologics. This study will initially look at combinations of Skyrizzy with our anti-IL-1 alpha-beta bispecific ludicizumab. and our novel anti-alpha-4-beta-7 antibody, ABBV382. We are planning to include additional novel biologics in the future. Our approach in immunology has been to pursue therapies that are well-differentiated and have the potential to elevate standard of care. We have clearly achieved this with RINVOC and Skyrizzy across multiple indications, including Crohn's disease, and ulcerative colitis. As we think about how the IBD market will evolve, we view dual mechanism approaches as having the greatest potential to achieve levels of efficacy that are above current standard of care. We are very excited about the potential for these combination therapies in IBD, and we look forward to sharing updates as the data mature. In oncology, we continue to make very good progress across all stages of our heme and solid tumor pipeline. In the area of solid tumors, we recently submitted our application to the FDA for accelerated approval of Teliso-V as a monotherapy in patients with previously treated CMET overexpressing EGFR wild type, non-squamous, non-small cell lung cancer. Once approved, Teliso-V will become the first CMET-targeted ADC to enter non-small cell lung cancer, a segment with limited options and where patients tend to have a very poor prognosis, especially if their tumors express CMET. We anticipate an approval decision in the first half of 2025. In the quarter, we also received a positive CHMP opinion recommending Elihir for the treatment of platinum-resistant ovarian cancer in patients with high expression of FR-alpha and treated with up to three prior therapies. This decision was based on the positive Phase III Mirasol trial, where Elihir demonstrated an overall survival benefit and significantly reduced the risk of cancer progression. We anticipate an approval decision in Europe in the fourth quarter. At the recent ESMO Congress, we presented new phase one data for ABBV400 in advanced non-small cell lung cancer and gastroesophageal cancer. Early efficacy data from the lung cohort are promising with an objective response rate of 48% across all patients in the study and response rates ranging from 60 to 78% in patients with overexpressed CMET. We are very pleased with the level of activity we're seeing from our next generation CMAT ADC, which compares favorably to Teliso V, where we've seen objective response rates ranging from 23% in medium CMAT expressors to 35% in patients with high CMAT expression. 400 has the potential to expand our CMAT portfolio into earlier lines of therapy and lower levels of CMET expression in lung cancer. Similarly, in patients with advanced gastroesophageal cancer, 400 demonstrated promising activity with an objective response rate of 29% across all patients. This compares well against combination and single-agent chemotherapy, which are the standards of care for patients in second line and third line of therapy, respectively. Based on these encouraging preliminary data, we plan to begin phase two studies for 400 in both non-small cell lung cancer and gastroesophageal cancer. Recall, we've also advanced 400 in late-line colorectal cancer, and we remain on track to begin a phase three study later this year. In the area of hematologic oncology, we received approval in Europe for Tepkinli as a monotherapy treatment for patients with relapsed refractory follicular lymphoma after two or more lines of therapy. Epcoridamab is now the only T-cell engaging bispecific approved in the U.S. and Europe to treat both follicular lymphoma and diffuse large B-cell lymphoma. Moving to neuroscience, we recently received FDA approval for Violev, as the first subcutaneous 24-hour infusion of levodopa-based therapy for the treatment of motor fluctuations in adults with advanced Parkinson's disease. Our novel subcutaneous levodopa-carbidopa delivery system offers meaningful benefits over current treatment options and others that are in development. VioLev delivers significant improvements in on-time and off-time with a non-surgical 24-hour delivery system. It can deliver high levodopa doses, similar to the amount provided by Duopa, and it doesn't require a combination with oral drugs to achieve efficacy. We're extremely excited to bring this transformative therapeutic option to patients in the U.S. We also recently announced positive top-line results from the Phase III TEMPO-1 trial, which evaluated fixed doses of monotherapy Tevapidon in early Parkinson's disease. In the study, both doses of Tevapidon met the primary endpoint, demonstrating a significant reduction in the severity of Parkinson's disease symptoms compared with placebo at week 26, as measured by decreases in the combined scores for parts two and three of the unified Parkinson's disease rating scale. Key secondary endpoints were also met in this study. We are very pleased with the emerging profile for Tavapidon, which shows it is generally safe and well-tolerated, and it can drive strong efficacy as a monotherapy in early Parkinson's and as an adjunctive treatment in patients with more advanced disease. Results from the two phase three studies thus far look favorable compared to other dopamine agonists on the market. And we believe Tavapadon has the potential to become an important new treatment option as a monotherapy for Parkinson's patients, as well as an adjunct to oral levocarbidopa. We expect to see results from TEMPO2 later this year, which is our phase three monotherapy study evaluating a flexible dose of Tibapidon. Results from our long-term safety study, TEMPO4, are expected next year. As Rob mentioned, we remain on track to share data from the two emiraclidine pivotal studies in the fourth quarter. We also continue to invest in external innovation to strengthen our neuroscience pipeline. We recently announced two deals in this area, including an expanded collaboration with Gideon Richter to develop novel targets for neuropsychiatric conditions. And the acquisition of Aliata brings an anti-pyroglutamate A-beta antibody, which uses a unique blood-brain barrier crossing and amyloid aggregate clearing technology. Aliata's lead antibody has been able to achieve encouraging levels in cerebrospinal fluid with an extended half-life and the potential to be delivered subcutaneously. This molecule could become a best-in-class treatment for Alzheimer's disease. Aliata's novel technologies for enabling therapeutics to access the central nervous system also have the potential to be used with other programs across our neuroscience pipeline. In aesthetics, we recently received approval for Botox in the U.S. for moderate to severe platysma bands. marking the first global approval in this indication for any neurotoxin. There is currently a lack of non-surgical treatments available to improve the appearance of prominent platysma bands, and we believe Botox will represent an important new treatment option for patients who are looking to reduce the appearance of vertical neck bands and improve jawline definition. In our novel toxin portfolio, we remain on track to submit a regulatory application for Bonte around the end of this year. Our rapid-onset, short-acting toxin has a highly differentiated clinical profile and, once approved, will offer patients a novel option compared to currently available neurotoxins. So, in summary, this has been a very productive year thus far for our R&D organization. and we are pleased with the progress we've made advancing our broad pipeline. With that, I'll turn the call over to Scott.

Thank you, Rupal. Starting with our third quarter results, we reported adjusted earnings per share of $3, which is 10 cents above our guidance midpoint. These results include a 4-cent unfavorable impact from acquired IPR&D expense. Total net revenues were nearly $14.5 billion, reflecting robust growth of 4.9% on an operational basis, excluding a 1.1% unfavorable impact from foreign exchange. Our Exumera growth platform, which covers more than 80% of AbbVie's total sales, delivered reported growth of nearly 18%, once again exceeding our expectations. The adjusted operating margin ratio was 46.7% of sales, This includes adjusted gross margin of 84.4%, adjusted R&D expense of 14.2%, acquired IP R&D expense of 0.6%, and adjusted SG&A expense of 23%. Net interest expense was $591 million. The adjusted tax rate was 16.2%. Turning to our financial outlook. we are raising the midpoint of our full year adjusted earnings per share guidance by 15 cents and now expect adjusted earnings per share between $10.90 and $10.94. Please note that this guidance does not include an estimate for acquired IPR&D expense that may be incurred beyond the third quarter. We now expect total net revenues of approximately $56 billion an increase of $500 million. At current rates, we expect foreign exchange to have a 0.7% unfavorable impact on full-year sales growth. This revenue forecast includes the following updates to select key products and therapeutic areas. We now approximate SkyRizzy global sales of $11.5 billion, an increase of $500 million, due to continued strong performance across all approved indications. RENVOC total revenue of $5.8 billion, an increase of $100 million, reflecting robust uptake in IBD. U.S. Humira total sales of $7.4 billion, a decrease of $400 million, reflecting more Humira molecule volume moving to other novel mechanisms, including Skyrizzy and RENVOC. Imbruvica total revenue of $3.3 billion, an increase of $200 million, reflecting higher persistency rates for existing patients. Benclexa total sales of $2.6 billion, an increase of $100 million, reflecting momentum in both U.S. and international markets. Aesthetics global revenue of $5.3 billion, a decrease of $200 million, almost entirely due to lower Juvederm volume, which continues to be impacted by challenging economic conditions in key markets. Vralar total sales of $3.3 billion, a decrease of $100 million, reflecting continued strong prescription demand partially offset by modestly unfavorable channel mix. And for Botox, we now expect global revenue in the therapeutic space of $3.3 billion, an increase of $100 million, reflecting robust demand across all indications. Moving to the P&L for 2024, we continue to forecast a full-year adjusted gross margin of approximately 84% of sales, adjusted R&D investment of 14%, adjusted SG&A expense of 23.5%, as well as an adjusted operating margin ratio of roughly 44.5% of sales, which includes a 2.1% unfavorable impact from acquired IPR&D expense. Turning to the fourth quarter, we anticipate net revenues approaching $14.8 billion. At current rates, we expect foreign exchange to have a neutral impact on sales growth. We expect adjusted earnings per share between $2.94 and $2.98. This guidance does not include acquired IPR&D expense that may be incurred in the quarter and excludes any potential impact from the recently announced acquisition of Aliata Therapeutics. Finally, Abby's robust business performance continues to support our capital allocation priorities. Our cash balance at the end of September was nearly $7.3 billion, and we generated more than $11 billion of free cash flow, which includes approximately $1.5 billion of Sky RISD royalty payments in the first nine months of the year. This free cash flow fully supports a strong and growing quarterly dividend, which we are increasing 5.8% to $1.64 per share, beginning with the dividend payable in 2025. as well as debt repayment, where we remain on track to pay down the roughly $7 billion of maturities this year and anticipate achieving a net leverage ratio of two times by the end of 2026. Our strong cash flow also provides capacity for additional business development. We have executed more than a dozen early stage deals so far this year, and we continue to assess external innovation across all of our key growth areas. In closing, Abby has once again delivered strong top and bottom line results. I'm very pleased with the momentum of our Exumera growth platform, including continued robust performance from Skyrizzy and Renvoke, which further supports Abby's long-term outlook. With that, I'll turn the call back over to Liz.

Thanks, Scott. We will now open the call for questions. We are aware of a peer earnings call that begins at 9 a.m. Central, so we will do our best to wrap up our Q&A right around the top of the hour, so In the interest of hearing from as many analysts as possible, please limit yourself to just one question. Operator, first question, please.

Thank you. Our first question comes from Chris Schott with J.P. Morgan. Let me ask your question.

Great. Thanks so much for the question, and congrats on the results. My question was really just centered around 2025 and just some preliminary outlook there. I guess the specific question, you mentioned Humira volumes are maybe shifting over to newer drugs. You commented all about just in terms of where the street sits currently with Humira. I think the consensus number is about 6.8 billion. Is that a reasonable forecast, or is that something you could see higher erosion given what's happening with Humira? And a bigger picture kind of tied to that, the mid-single-digit top-line growth, it sounds like the trends you're seeing here may be a net positive, where maybe Humira volumes are declining, but that's largely moving over to SkyRizzy and Renvo, because when get some context of, is that mid-single-digit target still a reasonable one to think about for AbbVie next year? Thank you.

Thanks for the question, Chris. This is Rob. I'll start, and then I'll have Jeff supplement. So, yes, we are very confident in that robust mid-single-digit growth, both top-line, bottom-line, for 2025. I think you've interpreted correctly that the trends we're seeing are net positive, and that we're seeing overperformance from SkyRizzi and Renvoke, more than offsetting the dynamics with Humira. And so... As we look at consensus, that's probably not reflected, so I think it's fair to say there's a shift that's required there, but we're very pleased with the strong uptake for SkyRizzi and RINVOC. As I mentioned in my remarks, we have now delivered guidance increases of $1.3 billion for SkyRizzi and RINVOC in total. We're seeing tremendous momentum, particularly with the IBD indications across really all indications, but particularly in IBD, and we are starting to see this dynamic with the overall Humira molecule, where there is the switching that we're seeing now to other mechanisms, including Sky Rosine Runbook, which is a long-term, very positive benefit. So as we look at the business, we're very well positioned. Essentially two years after the U.S. Humira LOE, we'll be returning to robust top-line and bottom-line growth, and really performance across many parts of the business, not just Sky Rosine Runbook. You're seeing us perform very nicely in In oncology, we've obviously overperformed our expectations in oncology. Very pleased with the earlier turns on Eli here. VanClexta is performing exceptionally well. The guidelines changes in Europe are positive as we think about the combination opportunities with BTK inhibitors. So VanClexta is going to be strong. Epkinley is performing very nicely as well. And then when I look across the neuroscience franchise, you know, Vralar is a strong grower. We're very pleased with the migraine portfolio. Obviously very excited about Cereval. and doing a number of deals now on the early pipeline, both with Gideon Richter and Aliada, that really fortifies the long-term view for neuroscience as well. And then with aesthetics, while it's below our expectations for this year, obviously the economic conditions have dictated that. We still have tremendous confidence in the long-term outlook for that business. But as we look at 2025, we're very confident in our ability to return to that robust mid-single-digit growth.

Yeah, thanks, Rob. And I'll just add a little bit more flavor. It's Jeff. So we saw this trend start to emerge in terms of this compression of the, let's say, the atom molecule or the atom market, the Chimera Plus biosimilars, just prior to the CVS event. And then it accelerated over Q2. And again, we saw it throughout Q3. So that's why we've adapted our approach here. Other than this dynamic, the biosimilar dynamics are playing out really exactly as we anticipated. And you can see this compression in the Acuvia data. So really, the shrinking of the Humira or the Atom market is something that's quite clear. It's a little difficult to quantify over time with full precision, but we can see that the molecule continues to decline sequentially, and we continue to see strong share gains, as I highlighted for Skyrizzy and Rynvoke. This incremental flow from the molecule compression is clearly a contributing factor to some of the overperformance that we saw in Q2 and Q3, but it's really only one of several. We've also had significant incremental investments in the consumer space, the Salesforce approaches we've taken, Chris, the integration of the head-to-head data I talked about, and certainly now we're starting to see the impact of the UC launch. So when we put all that together, we think that the dynamics are net-net quite positive overall. And as Rob said, we're still looking good for 25.

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

Thank you. And the next question comes from Mohit Bensal. Your line is open. You may ask your question.

Awesome. Thank you very much for taking that question. I just wanted to touch upon the trial you are running head-to-head against NTVO. Could you help us understand, based on preclinical or early data, what gives you confidence there? And are you looking at non-inferiority or potential superiority over interior there? Thank you.

Hey, Mohat, it's Rupal. I'll take that one. So when we look at the data, in particular, I think Jeff highlighted this, in ulcerative colitis with Skyrizzy in this naive patient population. This is a patient population that hasn't seen biologics or other advanced therapies like JAK inhibitors. The endoscopic improvement, and this is in label, was 76% in the maintenance portion of this. So it was quite high. In fact, higher than what we've observed even with RENVOQ. So that gave us a good amount of confidence that we have the potential to differentiate with all other assets. You heard about the Skyrizzy versus ustekinumab head-to-head in Crohn's disease, but this one gives us a unique opportunity there to go head-to-head with vetalizumab, especially looking at endoscopic improvement. So for that particular endpoint you asked about, the type of endpoint, there we would think about superiority because of it being an objective endpoint. Sometimes with symptoms like clinical remission, these could bounce around. That may be one where we consider as non-inferiority. But I would say endoscopic improvements in the field are now believed to be highly predictive of long-term outcomes. So that would be how we're looking at this, Mohit.

Thank you very much. Appreciate it.

Thanks Mohit. Operator, next question please.

Thank you. And this question comes from , with Guggenheim Securities. You may ask your question.

Great. Thanks for taking the question. So I'll give you just one on . Just getting a lot of questions from investors kind of leading up to that data release. So maybe you can just level that expectation on what you're hoping to see from the data, especially obviously now we have the approval from Bristol with . And what are you thinking in terms of efficacy, safety, profile, relative to that competitor? And also on the liver testing requirements that they had at initiation, is that something you'd expect as well, based on your data? And then just tying to that, just in terms of the data releases, do you expect to get one press release? Or do you think you're combining both studies? Or should we still expect the two separate releases? Thank you.

If I'm a little terrible, I'll take that one. So a couple of things, maybe starting with what we've observed with the approval. So we were encouraged by the lack of a boxed warning, meaning there's a recognition that this is a unique mechanism of action, looking specifically at the muscarinic class. So we were pleased to see that. I think what was notable for us was the GI adverse events, including how that would play out in terms of longer-term tolerability. Also, anticholinergic effects, bladder retention, that was something I guess we did not anticipate. You mentioned hepatic monitoring. That was something that we didn't anticipate. The other thing that was notable is along with the BID dosing, there is a food effect, so you have to wait a certain period amount of time when you eat and after you eat when you can take the pill. So when we think about our profile, we continue to be encouraged with Imraclidine being a single agent, once a day, no food effect. We don't see the extent of GI effects. We have not observed in the Phase 1b data any bladder issues. And when we had looked at that 1B data, we didn't see any hepatic issues, but we don't anticipate any type of laboratory monitoring. Also, we were also thinking about neurodegeneration-associated psychoses. And these patients are typically older and likely more sensitive to anticholinergic effects. So we continue to see an opportunity in that patient population as well. So we've stated that the data will read out here in the next couple months in the quarter. You know, the same team is working on wrapping up these two studies. So depending on how far apart the data are will probably determine, as you stated, is it one or two press releases. It's a little early right now for us to tell you is it going to be one or two. But if they're going to be close together, it's potentially going to be one.

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

Thank you. Our next question comes from Terrance Flynn with Morgan Stanley. You may ask your question.

Hi. Thanks for taking the question. Maybe a two-part for me is just wondering if you can, I'm assuming contracting is now wrapped up, if you can comment at all on how to think about SkyRisi and RINVOC.

uh formula positioning and pricing just high level for 2025. thank you yeah hi it's jeff so yeah contracting is is very very close to wrapping up we have we have a few more uh nuances and so typically that may take another month or so uh overall we're making very good progress on contracting next year so in terms of of what we've highlighted um in the past is we We do not anticipate any material change for SkyRizzy and Renvoke in terms of the access for next year across Medicare or the commercial plans. We have quite high, very broad access, and we assume that that will continue. In terms of what we've highlighted to anticipate, you know, we've said that we do have over our near term in LRP sort of a negative pricing environment, but it's modest. It's nothing like we saw last you know, many quarters ago where we had seven indications. So we said from a rebate perspective, you know, low single-digit changes is a reasonable assumption that we feel confident. And despite we're not fully complete, I think that's a fair assessment at this point.

Okay. Thanks, Terrence. Operator, next question, please.

Thank you. And this question comes from Chris Chubutani with Goldman Sachs. You may ask your question. And Chris Chibutani, your line is open. You may ask your question.

Apologies. I was on mute. Thank you for the question. All the comments you've made about Skyrese or Invoke and the molecule switching are very helpful. Just curious as we think on the forward about other potential mechanisms and modalities in particular. I think we have competitor oral data that's coming up. Interested to hear your thoughts in terms of that modality difference. as well as how you might rank your optimism for some of the new mechanisms of action. I believe you have a TL1A as well in your pipeline, the earlier stage. Thank you.

Hi, Chris. It's Rupal. I'll take that one. With respect to the oral, I'll take us back to the Skyrizzy head-to-head that occurred with the primalast, which is also an oral. the data were substantially higher from an efficacy standpoint for Skyrizzy, as was the tolerability, along with when we asked patients what did they prefer, they actually preferred quarterly subcutaneous dosing. So I would think about it that way as well. Now, the question would be, it's a similar mechanism. Could the efficacy be better than what has been observed with apremilast in psoriasis? Well, what we saw in the phase two data, my recollection still is that Skyrizzy is a full 50% higher when it comes to full skin clearance at a PASI 100. And that's where the bar is now, at PASI 90 and PASI 100. So we still see an efficacy advantage. Also, the data I'm sharing are phase three Skyrizzy data The data that we saw for the oral 23 was from phase two. So there is reasonable potential that the efficacy data tend to settle down when you go to a broader patient population, especially those that have had longer standing disease or have seen other therapies like other biologics. So we continue to feel very good and optimistic about our profile versus any emerging competition. Also, we think about our assets from a global standpoint. And when you think about majority of the countries, they are very driven by efficacy to gain access. And in the oral space, we don't really see it across the globe. Maybe there's a couple countries. I think Jeff has mentioned the U.S. But that space may be referred to as a pre-biologic space, so maybe more of an influence on the on the TIK2 or an apremilast is how we see it. In terms of other mechanisms that we like, as I mentioned, we like anti-IL-23 the way it's delivered with Skyrizi. The depth of response, the high durability, and the convenience with quarterly dosing, if we can couple that with other assets as part of our combination approach, we think that's going to be extremely competitive in the future. Mechanisms like TL1A we think are going to be important, especially from a combination approach, which we have one internally. We think the ulcerative colitis data are encouraging, but from a monotherapy standpoint, not differentiated, especially when you look at the SCIRISI data that I mentioned earlier and RINVOC. And then in Crohn's, something like TL1A, we think it really does need a combo. So that'll be part of our platform along with our novel alpha-4, beta-7. We think that's also a good combo. And then we've also provided very strong data in hydradenitis suprativa with our IL-1 alpha-beta ludicizumab. And we've seen some preclinical signals that IL-1 beta could be a driver of disease and resistance to other biologics. So ludicizumab will also be part of the combo in our IBD platform. So that's just some of the mechanisms that we're excited about. There's several others that are early in the pipeline, and we will give you more information about those as the data mature.

Thanks, Chris. Next question, please. Thank you. Our next question comes from Trinh Nguyen with UBS. You may ask your question.

Hi, guys. Thanks for taking my question. Just on the aesthetics business, in the Q&A, you did mention that you still have a tremendous amount of confidence hitting that longer term guide here. I'm curious on how dependent this is on the economic environments getting better and getting better quickly. So you've moderated your Juvederm outlook this year because it's not been good. If next year is another challenging economic year, Could we see that $9 billion in 2029 being moderated or even pulled? Just what's giving you confidence? Thank you.

Thanks for the question. This is Rob. I'll take that one. So as we think about the long-term guide, which is greater than $9 billion by 2029, you need to believe that you can have essentially a compound growth around 11% to get there. If we look at the historical growth of this market, it's been, let's say, called low double digits, low teens. As we look at it going forward, we think probably a more prudent assumption is when we see the recovery, something more in the high single digits, right? So you need something beyond just the market recovery to get there. And when we look at the innovation that we're bringing, particularly with the short-onset, short-acting, or fast-onset, short-acting bondee that we expect to launch in 26th, That could really transform the market because if you think about the number one barrier for patients is fear of unnatural look. That could really unlock a part of the market that's dormant right now. Plus, it could also lead to share gains. And so I think we need to see, one, how the market recovers, I would say, 25 and 26, and then ultimately see how the bond T launch ramps in 26. At that point, we'll have a better sense of, you know, the $9 billion as we sit here today. If you believe that the market will recover to high single digits and we have a lot of confidence in Bonte, we still believe we can get there, which is why we're not updating that guidance. But I would expect us to reflect more on that, more likely in the 26 timeframe than in 25.

Thanks, Tron. Operator, next question, please.

Thank you. Our next question comes from Jeff Meacham with Citi. You may ask your questions.

Good morning, everyone. Thanks for the question. I had a bigger picture one for Rob. So when I look at your therapeutic areas, you know, ICARE stands out as one that's pretty modest contributed today and also down the road. You know, how would you rank that business strategically? And then related, when you look at BD going forward, are there other TAs that you're looking at that could be additive, just thinking specifically maybe metabolic or cardio? Thank you.

Thanks for the question, Jeff. So this is Rob. So yeah, I mean, our main focus is our five key growth areas, which includes eye care. It includes immunology, oncology, neuroscience, aesthetics, and eye care. And we participate in large markets with high unmet need that have great growth potential. And within those five verticals, you know, we're building depth across 24 core areas. That does include eye care as well. We think about diabetic retinopathy, wet AMD, prescription dry eye medications. And so eye care does play an important role, albeit it's not as high of a growth driver as the other four verticals, but it is part of our five. And that ultimately guides both our internal R&D investments as well as our BD efforts, which, as you know, continue to be very active. So far this year, we've executed 15 deals along those lines, really focused more on early-stage opportunities to drive growth in the next decade. So that's our primary focus. Now, if we see an opportunity for differentiation in a large market with high-end need like metabolics, we would consider pursuing it. especially if it can help drive growth in the next decade. But again, it would be more opportunistic. We'd have to see differentiation, and right now it's not our primary focus. But again, we're open to more sources of growth for the next decade if we see differentiation that we can create value. And we certainly have the financial wherewithal to pursue those opportunities.

Thanks, Jeff. Operator, next question, please.

Thank you. Our next question comes from James Shin with Deutsche Bank. You may ask your question.

Good morning, guys. Thanks for taking our question. For Amaracandine's readout, I think there's a question on how much erosion could be anticipated, and I know you mentioned that the team, the same team that was originally working on the Phase 1B's wrapping of studies and so forth, but, you know, there's been some other data that has copied some of Cerebell's strategies, such as high baseline PANS and so forth, and placebo effect was still kind of surprisingly higher than it should be. Is there any insight on managing this placebo effect? Thank you.

Thanks, James. It's Rupal. You know, when we did our thorough diligence, that was a major question that we and the broader team had. So you bring up a good point. Some things that we observed in those two studies that will be the pivotal readouts were what Cerevel was strategically doing. One thing was limiting the number of countries, limiting the number of sites, central review for eligibility criteria, training of raters, certifying those raters, recertifying raters, monitoring blinded data with respect to site activity. So I think those are important factors that could drive placebo in either direction. So what we observed was, we would say, a good control, or at least the best one could do to manage placebo responses. So, you know, it's hard to know if there's any erosion until we see the data, but the effect size that we did see in the Phase 1b was a little over 12 points, but we think that was a strong separation. And even if that were to go down a little bit, we still feel that based on the safety profile and tolerability profile, this could still be very, very competitive, even if we saw a droppage in some points on the efficacy side.

Thanks, James. Operator, next question, please.

Thank you. Our next question comes from Carter Gold with Barclays. Your line is open. You may ask your question.

Great. Good morning. Thanks for taking the questions. I was hoping to, you know, follow up a little bit on the Aliotta acquisition, sort of, you know, what differentiation you saw over some of the other enhanced brain delivery kind of approaches there that gave you confidence. And maybe, you know, we've seen AbbVie take a number of shots on goal across Alzheimer's here just seems pretty central to your longer-term neuroscience portfolio. Can you maybe just, again, put that in some broader context as you think about the TA strategy longer-term? Thank you.

Sure, it's Rupal. I'll take that. Yes, we've been investing for a number of years in this space. And in addition to the recent deal, we'll have an option readout with Elector and TREM2 coming up. We have a SV2A molecule that would look at cognition and other symptoms. Imraclidine could participate in that space from an Alzheimer's psychosis standpoint. We have other pipeline assets that are looking at tau intracellular and even an approach looking at extracellular tau. We did have our own A-beta. monotherapeutic antibody, which we did read out. It did look good, but it wasn't fully differentiated. And moving on to the Aliata deal, what we see there is the ability to access the CSF at what we would say at this stage at higher concentrations than maybe other competitors. So we think that's a good thing. The other aspect that we like is an extended half-life, so that could lead to convenient dosing. And if this approach plays out, then one could consider having subcutaneous dosing, even getting out to monthly. And if the efficacy is high because of deeper brain penetration, that could result in lower levels faster and a better able to see cognition benefits in a year or 18 months. So those are some of the benefits that we would see. The other benefit would be getting to the parenchymal tissue more broadly, and that could have a reduction in ARIA, which is probably what is disallowing this to really take off. It's very challenging to take an elderly family member to get multiple scans and worry about them having stroke-like symptoms. So that would be something else we believe we can address with this asset of having a strong safety profile, tolerability, ease of onboarding, and high efficacy and ultimately strong benefits on cognition. And this is Rob. I'll just add on here as we think about strategically about the neuroscience franchise. I mean, I think about it as having really four main segments. You have psychiatry, migraine, Parkinson's, then neurodegeneration. And if you look at what we've done to build out the long-term growth outlook for this franchise, obviously the psychiatry between Sarah Volk, Gideon Richter. We also had the early stage opportunity with Gilgamesh. We're really investing in longer-term growth in psychiatry. We have actually a very strong franchise in migraine with the oral CGRPs as well as Botox therapeutic. In Parkinson's, now with the launch of VioLev, which is performing very nicely outside the U.S. and we expect will also perform nicely in the U.S., the early Phase III data we've seen so far for Devapidon, the mitokinin disease modifying approach that's early in Parkinson's, another investment we've made. And then Alzheimer's now with Aliada is another, I'd say, long-term investment we're making to grow the neuroscience franchise. There's also adjacencies like ALS, MS that we're interested in that we have some partnerships that we'll continue to pursue. And so we see neuroscience as an important long-term growth driver for the company. We're obviously investing heavily across a number of areas, but we think about it really in those four categories. And so it's one that we're obviously very excited about the future prospects for.

Thanks, Carter. Operator, next question, please.

Thank you. And this question comes from Steve Scala with Cowan. You may ask your question.

Thank you so much. I'm a bit surprised at how Cerevel was such a focus in the prepared remarks given the pending Imraqladine data, which very much will color views of the Cerevel acquisition. Should we conclude you have increased confidence or insight into the pending data? And related to that, KOLs seem to be looking for an effect size of 0.6, but based on what was just said, that doesn't even seem to be a possibility. So any thoughts would be appreciated. Thank you.

This is Rob, and Rupal can take the second part. I'll take the first part of the question. So, Steve, in the prepared remarks, we were talking about the quarter. We obviously closed the Cerebral Transaction in the quarter. That's a significant event. We also did see phase three trial results for tevapidon, so that was important to comment as well. As we've mentioned, we expect the two pivotals for miraclidine to read out in the fourth quarter, so I wouldn't read too much into it other than it was an important event to highlight in the quarter. Yeah, and it's Rupal. I agree. We have two positive phase three studies with tevapidon. And in the oral space, I don't know if we've seen a new mechanism that could have this type of approach in a very long time. So it is important to discuss that because the unmet need continues to be very, very high, and Parkinson's is a place where we believe we can meaningfully participate in. On the effect size question, you know, when we look at the 1B data, it was more than a 12-point differential. So we have observed sometimes a decrement, and the question was around if placebo responses move up a little bit. So that being said, we still think we can maintain a very strong effect size coupled with the safety profile. Remember, the issue here in therapy isn't just about efficacy. It's about maintaining these patients on a drug that they can tolerate. And the majority of these patients don't last very long and cycle through these assets and even stop these, especially atypicals, without even letting their physicians know and then go on to have a flare and end up in the hospital. So we think about this as a benefit, risk, and tolerability profile. And from a weight, metabolic, motor symptoms, sedation, these are major problems with atypicals. And with something like Imraclidine, we feel that we can still fully differentiate. So I don't know if I'd read into any concerns other than maybe seeing an effect that's slightly different than what we saw in Phase 1B. But beyond that, we think this could still be very competitive.

Thanks, Steve. Aparita, we have time for one final question.

Thank you. Our final question comes from Louisa Hector with Berenberg. You may ask your question.

Hello. Thanks for taking my question. Just on Vrela, could you expand a little on the comments of the channel mix pressure in Q3 and how that will play out as we move forward? And perhaps just a quick comment on the extension of the collaboration with Gideon Richter and why you went down that route. Thank you.

Lisa, this is Scott. I'll take the question regarding Braylar. So it was, essentially, it was a channel mix change. It was slight. I would tell you that really kind of had accumulated over the course of the year, and that's why we made, we decided it made sense to make the adjustment. So as that channel mix changed, we saw a little bit of negative price as a result of that, so we took down the VRAILR guidance by $100 million. Now, I would note, in neuroscience in totality, that was offset by the RAISE and Botox therapeutic, so neuroscience and our therapeutic or growth area guide is stable. So maybe the second question will go to Rupal.

Yeah, it's Rupal. We expanded further. We've had strong partnership. They're a terrific organization. We have a follow-on to VRAILR that's more D3-leaning, that will start entering the clinic quite soon in phase two, looking at bipolar depression and MDD, as well as generalized anxiety disorder. As Rob described as part of our neuroscience strategy, psychiatry is a big part of that. And having a deeper relationship with Gideon Richter will allow us to have potentially even more assets in depression, in bipolar disorder, in schizophrenia and anxiety, and potentially other adjacent indications that we continue to be interested in because the unmet need continues to be very high.

Well, thank you, and thanks, Shirley. That concludes our conference call today. If you'd like to listen to a replay of the call, please visit our website at investors.abbey.com. Thanks again for joining us.

Thank you, and this concludes today's call. We thank you for your participation, and at this time you may disconnect your lines.