AbbVie Inc.

Good morning, and thank you for standing by. Welcome to the AbbVie Third Quarter 2025 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 also being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Ms. Le Shea, Senior Vice President, Investor Relations. Thank you. You may begin.

Good morning, and thanks for joining us. Also on the call with me today are Rob Michaels, Chairman and Chief Executive Officer, Jeff Stewart, Executive Vice President, Chief Commercial Officer, Rupal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer, and Scott Rents, Executive Vice President, Chief Financial Officer. 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. Abby's business continues to perform above our expectations. We delivered another excellent quarter, including strong financial results, pipeline advancement across all stages of development, and strategic investments to drive sustainable long-term growth. Given our positive momentum, we are raising our 2025 outlook for the third time this year. Starting with our third quarter performance, we delivered adjusted earnings per share of $1.86, which is 10 cents above our guidance midpoint. Total net revenues were nearly $15.8 billion, reflecting high single-digit sales growth and beating our expectations by approximately $300 million. I'm especially pleased with the execution of our growth platform, including combined sales growth of more than 40% from SkyRizzi and Renvoke, our leading immunology medicines, as well as double-digit revenue growth from Neuroscience, our second largest and fastest growing therapeutic area. With no significant LOE events in the near term, our growth platform provides a clear line of sight to growth into the next decade. This puts AbbVie in a strong position to fully invest for the 2030s and beyond. Since our inception in 2013, we have invested more than $84 billion to research, discover, and develop new medicines and solutions for patients. We anticipate $9 billion of adjusted R&D expense in 2025, a substantial increase from the prior year. This supports numerous pipeline opportunities across our core areas, immunology, oncology, neuroscience, and aesthetics, as well as new sources of growth like obesity. More broadly, I'm very pleased with the breadth and depth of our robust pipeline, with approximately 90 programs across all stages of development. We are making excellent progress and expect several important milestones over the next two years, including new product approvals for Tevapidon and PVEC, expanded indications for RENVOC, Epkinley, QLIPTA, and Urelvi, and pivotal data for ludicizumab, TMAP-A, and eTentimig. These pipeline programs have the potential to drive growth for AbbVie later this decade. We also continue to invest in external innovation, adding novel mechanisms and platform technologies to further augment our pipeline to drive growth in the 2030s and beyond. Our recent deal activity includes announcing the acquisition of Gilgamesh's Bredesilicin, expanding our psychiatry pipeline with a next-generation psychedelic currently in Phase II development for NDD, and closing the acquisition of capstan therapeutics, further strengthening our immunology pipeline with an in vivo CAR-T platform. Our consistently strong performance as well as the progress we are making to build and advance a robust pipeline fully supports our capital allocation priorities. This includes investing at least $10 billion of capital in the U.S. over the next 10 years. Construction is already underway for a new API manufacturing site in North Chicago, as well as expansion of biologics manufacturing and RD capacity at our existing site in Worcester. We are also committed to delivering a healthy, sustainable dividend that grows every year. Today, we announced a 5.5% increase in our quarterly cash dividend, beginning with the dividend payable in February 2026. Since inception, we have grown our quarterly dividend by more than 330%. In summary, this is an exciting time for AbbVie. We are demonstrating outstanding execution across our portfolio, and our long-term outlook remains very strong. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff. Thank you, Rob.

I'll start with the quarterly results for Immunology, which delivered total revenues of approximately $7.9 billion, up 11.2% on an operational basis. Skyrizi and RINVO continue to exceed our expectations, once again demonstrating robust growth across a broad set of indications. Skyrizzy global sales were $4.7 billion, reflecting operational growth of 46%. Rinpo global revenues were nearly $2.2 billion, up 34.1% on an operational basis. I'm especially pleased with our portfolio performance in gastroenterology, where these two medicines are on pace to nearly double their combined sales in IBD this year. Our uptake in Crohn's disease remains impressive, with Skyrizzy and Rynvoke together achieving in-play share leadership in a dozen countries. This includes capturing roughly 50% of newer switching Crohn's patients across all lines of therapy in the U.S. We see similar momentum in ulcerative colitis as well, with Skyrizzy and Rynvoke collectively holding in-play share leadership in more than 10 key markets. and capturing nearly one out of every three new or switching UC patients across all mechanisms in the US. IBD continues to be an area of high unmet need, with substantial headroom for biologic penetration, as well as expanding lines of therapy. Given the compelling efficacy, safety, and dosing profiles for both assets, Skyrizzy, with less frequent dosing favored by patients and clinicians, especially for the maintenance treatment relative to the most effective dose for other IL-23s. And RENVOC, often preferred for difficult-to-treat IBD cases, having demonstrated the strongest response rates in UC studies, as well as very strong efficacy in CD as well. Along with RENVOC's recently expanded label in IBD, which is a great outcome for patients who will now have access to RENVOC earlier in the treatment paradigm when anti-TNF treatment is clinically inadvisable. So we remain very competitively positioned for continued strong growth across gastroenterology. Moving to the rest of our core immunology indications, SkyRisi continues to perform exceptionally well in psoriasis, gaining share across our key markets. This includes an impressive 50% in-play patient share for biologics in the U.S. RINVOC is also delivering strong prescription growth in rheumatology, In RA, RINVOC continues to achieve the leading in-play patient share across lines of therapy. We now have three head-to-head studies demonstrating RINVOC's superiority to other biologics in RA, including recent positive data from our Select Switch trial, which clearly supports the clinical benefits of switching to RINVOC after a first TNF failure. Lastly, we are seeing a very nice ramp in GCA, where RINVOC now has full formulary coverage, I'm very pleased with the progress and look forward to the commercialization of additional sizable indications like alopecia areata and vitiligo. Turning now to Humira, which delivered global sales of $993 million, down 55.7% on an operational basis, reflecting biosimilar competition. We continue to anticipate Humira access in the U.S. will decrease throughout the remainder of this year and into 2026, as more plans select exclusionary contracts for existing patients. This step-up in volume erosion is expected to be partially offset by a price benefit also associated with these contract changes, which is included in our fourth quarter outlook. Moving to oncology, which delivered total revenues of nearly $1.7 billion, relatively flat versus prior year. Momentum from Venclexta, as well as newer products, Elihir, Atkinley, and Emrelis, helped to offset the expected sales decline from Imbruvica, which continues to be impacted by competitive dynamics in CLL. Overall, I'm very pleased with the progress we are making to expand our commercial capabilities in both heme and solid tumors with our existing portfolio. These efforts will ultimately support our emerging oncology pipeline, which includes several promising programs to improve patient outcomes in many difficult-to-treat cancers. Turning now to aesthetics, which delivered global sales of approximately $1.2 billion, down 4.2% on an operational basis. Botox Cosmetic global revenues were $637 million, and Juvederm global sales were $253 million, with growth rates for both products down on an operational basis. While our portfolio is performing well from a competitive perspective, we continue to face challenging market conditions in several key markets, which are impacting our results. With overall consumer sentiment remaining quite low, especially in the U.S., as concerns about the economy and inflation weigh on discretionary spending, we now see category growth tracking below our previous assumptions globally. However, this near-term macro pressure does not dampen our excitement for the long-term potential of our leading aesthetics portfolio. We are investing to support patient activation with robust promotion and product innovation. We recently launched new consumer campaigns for Botox, as well as fillers, to further stimulate category growth, which remains highly underpenetrated and where we stand to disproportionately benefit upon market recovery, giving our leading product shares. Innovation from our pipeline, including novel toxins like Trenabot E, a fast-acting, short-duration toxin, as well as several next-generation fillers, will also provide growth in the coming years. Moving now to neuroscience, which is demonstrating exceptional performance. Total revenues were more than $2.8 billion, up 19.6% on an operational basis. I'm very pleased with our leading migraine portfolio, with Ubrelvi, Q-Lipta, and Botox Therapeutic all delivering robust double-digit growth. Q-Lipta is now the number one CGRP treatment for migraine prevention, with a total prescription share of approximately 7.5%. Vralar is also performing well in both bipolar and AMDD, with total sales of $934 million, up 6.7%. Physicians continue to report positive feedback on Vralar's strong benefit-risk profile, including dosing flexibility, low sedation, and the ability to address anhedonia and anxiety symptoms often associated with depression. Lastly, in Parkinson's disease, Vialev's launch trajectory has been very impressive. Total sales were $138 million, up 40% on a sequential basis. The uptake across international markets continues to exceed our expectations, with physicians and patient communities highlighting meaningful improvements in on-time and off-time from the 24-hour delivery and the control of symptoms throughout the morning, day, and night. Biolib is the only Parkinson's treatment that often replaces the need for add-on oral therapies to manage motor fluctuations, reducing the daily pill burden for these patients. We anticipate expanded coverage of Vylev in the U.S. soon, which we expect will provide further revenue inflection next year. I'm also excited about Tavapidon, where we are pursuing approval for use as a monotherapy for early Parkinson's disease, as well as an adjunct to optimize oral therapy for more advanced patients. This will be a very complementary offering for both Vylev and Duopa. Given the significant commercial opportunity with our emerging Parkinson's portfolio, we are now actively expanding our field sales team to support higher anticipated demand next year. Overall, again, we are demonstrating strong revenue growth and our commercial execution has been outstanding. And with that, I'll turn the call to Rupal for comments on our R&D highlights.

Rupal? Thank you, Jeff. Starting with immunology, we announced positive top line results from the second phase three RINVOQ alopecia areata trial, reinforcing the potential for RINVOQ to significantly improve hair regrowth for patients suffering from severe forms of this condition. Data were consistent with the results from the first trial, with RINVOQ demonstrating meaningful improvement in hair regrowth across both doses compared to placebo. We remain on track to begin submitting regulatory applications later this year. We also recently announced positive top-line results from two Phase III RINVOC vitiligo trials. In both studies, RINVOC met the co-primary and key secondary endpoints at week 48, demonstrating improvements in both total body and facial vitiligo scoring compared to placebo. We are very pleased with these results, which illustrate RINVOQ's potential to provide significant skin repigmentation to patients suffering from non-segmental vitiligo. The daily challenges of living with this condition can often lead to depression and anxiety. With no approved systemic treatments, there is very high unmet need for these patients. Once approved, RENVOC could potentially be the first systemic therapy available for vitiligo. Regulatory submissions are planned for early next year. Positive top-line results were also announced from the SELECT switch trial, which compared RENVOC to Humira in RA patients who had an inadequate response or intolerance to their first TNF inhibitor. This is the first head-to-head study comparing anti-TNF cycling versus switching to RINVOQ. In the study, RINVOQ demonstrated superiority in Humira for efficacy measures with nearly twice as many patients achieving low disease activity and remission. For RA patients who did not respond well to their first TNF inhibitor, these results clearly show the benefit of switching to RINVOQ rather than cycling to another anti-TNF. In IBD, RINVOC recently received a label update in Crohn's disease and ulcerative colitis, allowing its use prior to anti-TNFs in patients who have received at least one approved systemic therapy when TNF inhibitors are clinically inadvisable. The treatment paradigm has evolved in IBD with increasing utilization of newer, higher efficacy agents like Skyrizzy. There are certain clinical scenarios when an anti-TNF may not be the most appropriate next treatment option for a patient. This label update provides physicians with the flexibility to use Renvoke prior to anti-TNFs for certain patients after they have tried another approved systemic therapy. Moving to oncology, the regulatory application was submitted to the FDA for PIVAC. in Blastic Plasma Cytoid Dendritic Cell Neoplasm. This rare, aggressive blood cancer primarily affects an older population who is at high risk for complications with traditional chemotherapy or precluded from stem cell transplantation. As a new treatment providing durable responses with a manageable safety profile, our novel ADC has the potential to become an important new therapeutic option for these patients. At the recent ESMO meeting, we presented three orals for TMAD-A, highlighting this novel ADC's potential both as a monotherapy and in combination across advanced, difficult-to-treat solid tumors. In CRC patients who received two or more prior lines of therapy, and regardless of CMED expression levels, TMAB-A in combination with Bevacizumab demonstrated manageable safety and better responses and disease control compared to current standard of care. Treatment with TMAB-A at 2.4 milligrams per kilogram plus Bevacizumab achieved an objective response rate of 30% and a confirmed disease control rate of 97% compared to rates of 0% and 70% respectively for Lonserf plus Bevacizumab. Based on these results, we plan to begin a Phase III study for this combination in late-line all-comers CRC. In a proof-of-concept study in pancreatic cancer, monotherapy TMAB-A demonstrated an objective response rate of 24% in the overall population and 40% in patients who received first-line gemcitabine plus abraxane. A phase two study in pancreatic cancer is expected to begin next year. And in an exploratory study in met amplified solid tumors after progression following standard of care, monotherapy with TMAB-A resulted in an objective response rate of 47% and median duration of response of 12 and a half months for the 2.4 milligram per kilogram dose. Higher responses were observed in patients with non-small cell lung cancer with a rate of 69% and gastroesophageal cancer with a rate of 71%. A phase two study in met amplified solid tumors is expected to begin later this year. We are making significant progress with TMAB-A across a broad range of tumors and there is an increasing body of evidence demonstrating durable efficacy and a manageable safety profile in these difficult-to-treat cancers. We look forward to providing additional updates on TMAP-A programs as data mature. In neuroscience, the regulatory application for tavabidon in Parkinson's disease was recently submitted to the FDA. For many patients with Parkinson's, existing oral therapies aren't sufficient to manage symptoms. Our selective D1-D5 receptor partial agonist demonstrated robust efficacy as a monotherapy in early Parkinson's disease and as an adjunct to levocarbidopa oral therapy in patients still experiencing motor fluctuations. Once approved, we believe Tevapidon will be an important new treatment option. Results from a Phase II study evaluating Botox and upper limb essential tremor were recently presented at the MDS Congress. In the study, Botox met the primary and all secondary endpoints, demonstrating significant improvements in all assessment measures compared to placebo. With a global patient population of about 25 million, essential tremor is the most common movement disorder. this progressive neurological condition can substantially hinder patients' physical activities and diminish their quality of life. Current treatment options are limited in terms of both efficacy and tolerability, leaving considerable need for new therapies. Based on these results, we plan to advance a new toxin for upper limb essential tremor. Gemibod A is a novel toxin that has demonstrated different pharmacologic properties pre-clinically compared to Botox, such as less diffusion to neighboring muscles. Phase II studies for GemiBOD-A in essential tremor and ventral hernia repair will begin next year. To further expand our neuropsychiatry pipeline, we acquired Brettosilicin from Gilgamesh. Gratacilicin is a novel 5-HT2A receptor agonist and 5-HT releaser with a short duration of hallucination that has demonstrated robust efficacy in a phase two proof of concept study in major depressive disorder. Rapid efficacy was achieved after the initial dose with response and remission maintained through day 74 without additional intervention. This novel psychedelic has the potential to provide significant benefit to patients by offering rapid, robust, and durable antidepressant effects following a short in-clinic treatment session. Additional Phase II studies in depression are expected to begin next year. To summarize, we continue to make good progress across all stages and therapeutic areas of our pipelines. and look forward to many important pipeline milestones in the remainder of this year and into 2026. 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 $1.86, which is 10 cents above our guidance midpoints. These results include a $1.50 unfavorable impact from an acquired IPR&D expense, primarily reflecting upfront charges for the acquisition of Capstan Therapeutics and our license agreement with IGI. Total net revenues were nearly $15.8 billion, reflecting growth of 8.4% on an operational basis, excluding a modestly favorable impact from foreign exchange. Importantly, our Exumera growth platform delivered reported sales growth of more than 20%, once again, exceeding our expectations. Adjusted gross margin was 83.9% of sales, adjusted R&D expense was 14.3% of sales, and adjusted SG&A expense was 21.6% of sales. The adjusted operating margin ratio was 30.9% of sales, which includes a 17% unfavorable impact from acquired IPR&D expense. Net interest expense was $667 million. The adjusted tax rate was 24.5%, reflecting the low deductibility of acquired IPR&D expense this quarter. Turning to our financial outlook, we are raising our full-year adjusted earnings per share guidance to between $10.61 and $10.65. Please note that this guidance does not include an estimate for acquired IPR&V expense that may be incurred beyond the third quarter. We now expect total net revenues of approximately $60.9 billion, an increase of $400 million. This updated forecast primarily reflects Sky RISI global sales of $17.3 billion, an increase of $200 million with continued share gains in psoriasis and IBD. Neuroscience global revenues of $10.7 billion, an increase of $200 million, reflecting continued strength across Raylar, Botox Therapeutic, Vylev, and the total oral CGRP portfolios. Aesthetics total sales of $4.9 billion, a decrease of $200 million, reflecting greater-than-expected market softness globally, with the remaining $200 million increase reflecting the collective momentum from Renvoke and several other products across our diverse portfolio. And we also continue to assume a relatively neutral impact from foreign exchange on four-year sales growth. Moving to the P&L for full year 2025, we continue to expect adjusted gross margin of 84% of sales, adjusted R&D expense of $9 billion, and adjusted SG&A expense of $13.5 billion. We now anticipate an adjusted operating margin ratio of approximately 41% of sales in line with our previous expectations after including the roughly 6% unfavorable impact of acquired IPR&D expense incurred through the third quarter. And we now forecast our non-GAAP tax rate to be approximately 17.3%, also reflecting the impact of acquired IPR&D. Turning to the fourth quarter, we anticipate net revenues of more than $16.3 billion. This reflects an estimated 1% favorable impact from foreign exchange on sales growth. We expect adjusted earnings per share between $3.32 and $3.36. This guidance does not include acquired IPRD expense that may be incurred in the quarter. Finally, AbbVie's robust business performance continues to support our capital allocation priorities. Our cash balance at the end of September was more than $5.6 billion, and we generated approximately $13 billion of free cash flow in the first nine months of the year, which includes nearly $2.2 billion of Sky RISD royalty payments. This free cash flow fully supports a strong and growing quarterly dividend, which we are increasing 5.5% to $1.73 per share, beginning with the dividend payable in February 2026. As well as capacity for continued business development, we have executed approximately 30 deals since the beginning of 2024, and we continue to assess external innovation across all of our key growth areas. We also remain on track to achieve a net leverage ratio of two times by the end of 2026. In closing, Abby once again delivered outstanding results, and our financial outlook remains very strong. With that, I'll turn the call back over to Liz.

Thanks, Scott. 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. Cedric, we'll take the first question, please.

Yes, and our first question comes from Terrence Flynn with Morgan Stanley. Your line is open.

Great. Thanks so much. Congrats on the quarter. Two for me. I guess the first is just, Rob, would love your perspective on the potential implications for your business of the new PBM model that Cigna discussed on their earnings call yesterday, I believe. And then IRA price negotiations recently concluded. And just wondering if you're able to comment at all on how those went for Vrelar and Linzess. Thank you.

Thanks, Terrence. So this is Rob. I'll start with your first question. I'm going to have actually Jeff supplement as well. But I think one thing that's important to think about as it relates to whether it's, you know, PBM reform, questions we've got on DTC, ultimately what drives AVI's performance is our differentiated medicines, you know, along with our execution track record and strong culture. And that's why, you know, we deliver similar strong performance in markets outside the U.S. where PBMs and DTC do not play a role. So, Now, given our ability to execute, you know, we are very good at utilizing the tools that are available to us. If there are changes to the PBM model, we will certainly be able to adapt effectively. I mean, I think for us, as we think about it, the key is to continue developing differentiated medicines as that is what delivers real value and can drive growth in any environment. And I'll let Jeff speak more specifically to how we see the PBM model playing out.

Yeah, thanks, Rob. Just to sort of reiterate this approach, I mean, if you think about some of these announcements over the years, whether it's rebate pass-through or there's existing models like this that work today, and we think there's a lot of merit to that, like the ability for patients to share in lowering their out-of-pocket costs at the counter is a good approach. There's been a lot of structural barriers to that, of course, over the years. Sometimes it's the clients don't really have the incentive to go in based on how they're using those rebates. maybe to lower premiums. We all know those stories. I think the key point is Rob's point that, you know, across, you know, my global footprint, we're used to dealing with any type of approach, whether it's a net price market, it's a rebate driven market or a hybrid market that's net price and rebate like Germany or HTA markets. So we're very, very adaptable to sort of any sort of structure because we rely on the distinctiveness of our brands. And when we position those in the right way, which we always do, we perform exceptionally well from a market share and a competitive perspective. So, you know, we'll continue. We don't know a lot of the details, but, you know, we talk to Cigna all the time. Our account teams talk. We talk, you know, at the executive level. So we'll continue to study it, but we're very confident in terms of, you know, if there were to be changes in the PBM model, we would adapt very well.

And Terrence, this is Rob again. On your question regarding IRA, the prices are obviously not yet public. But I would say that the administration's focus on achieving greater reductions in this year's round was very clear. That said, the outcomes for Braylor and Linzess will not impact our long-term guidance.

Thanks, Terrence. Operator, next question, please.

Yes, our next question comes from Chris Schott with J.P. Morgan. Your line is open.

Great. Thanks so much. Just would love a little bit more of a discussion on the IL-23 market. Obviously, Sky Rizzi doing really well here, but just with the Tramfaya sub-Q induction dosing kind of rolling out, what are you seeing in terms of competitive dynamics and positioning, and how do you see kind of the dynamics between you and your nearest competitor kind of evolving over time? And then my second question is just any initial look on 2026 as you think about the various pushes and pulls in the business and anything in particular you think the street isn't properly accounting for as we think about the outlook for next year? Thank you.

Yeah, hi, Chris. It's Jeff. I'll take your first question. So, yes, we are very pleased with SkyRise's growth, you know, overall and in the quarter. I mean, 46% year over year is quite strong. So, and we see that momentum. It's share gains. It's market growth. And we retain a very, very strong in-play share position in IBD. It's really a leadership position. What we do see is, you know, we know that Tramfai is going to gain some market share and in-play share. But what's actually happening is the category or the class of IL-23s is expanding incredibly rapidly. And we view this as a positive. We said before, this is not a zero-sum game. We're very confident in our competitive position. I'll give you a little bit of some numbers, some more recent numbers to see how dramatic this is. So just over a year ago, when the IL-23 were entering, the MBRX share for UC, this is ulcerative colitis, which is the smaller of the two, was around 5%. That was the penetration rate. Now it's approaching, in this latest quarter, close to 40. So this is a dramatic change in the adoption of the IL-23s. Skyrizzy continues to grow. FIA will grow. Yes, there are subtle differences, but we're super confident in where this product will go. So SkyRizzy is performing very, very well and will continue to do so. And don't forget, it's just not a SkyRizzy story. You know, AbbVie has uniquely sort of a one-two punch in this market. We've got SkyRizzy and Renvoq. And as I mentioned in my prepared remark, our position with Renvoke just got significantly stronger for gastroenterologists and patients with that enhanced indication. So what that allows to do is that physicians, if they choose, if someone is not eligible or it's inadvisable clinically for a TNF, you can go right to Renvoke. So it's a really, really powerful position and setup for AbbVie right now and over time. So that's basically what we're observing in the marketplace.

And Chris, it's Rupal. For subcutaneous, for Skyrizzy, we'll see data next year for our own induction. And then that plus IV still leads to every eight-week dosing, which continues to be a major advantage.

And Chris, this is Rob regarding your question on 2026. Look, our business continues to perform exceptionally well. We've raised our revenue forecast this year by nearly $2 billion this since our initial guidance in February. And that's not just coming from Skyrizzy and Rynvoke. We're seeing overperformance across the entire neuroscience portfolio and oncology is ahead of our original guidance as well. That momentum should allow us to deliver strong growth next year despite headwinds from continued Humira erosion and Imbruvica IRA pricing. Recall that Imbruvica was negotiated and that pricing will kick in next year. And Humira erosion will continue, albeit not at the same absolute level as we saw in 2025. When I think about just the growth platform in particular, you know, obviously a lot of attention is placed on SkyRisi and Renvoke appropriately, but in neuroscience, when you think about the performance of Raylar, our migraine franchise, inclusive of Botox Therapeutic, which, you know, a little bit over 40% of that business is for chronic migraine, and then VioLev, we're just seeing tremendous ramps And we're also starting to now see, as Jeff mentioned, we expect in the inflection, particularly with the U.S., we've seen some nice progress there. But I would say that will be a very nice growth driver for us in 2026. And so we're very pleased with the performance. Obviously, clearly the momentum is there. We've now beaten and raised it every quarter of 25. And, of course, it will provide specific guidance for 26 on the fourth quarter call.

Thanks, Chris. Operator, next question, please.

Yes, our next question comes from Vamo Devon with Guggenheim Security. Your line is open.

Great. Thank you for taking my question. So I have two, if I could. So one, just around, thanks for the comment, 2025 and now 2026. My question is actually around the 2027 guidance you're giving for discoveries in RIMBO before you clearly contract to exceed that. I'm curious your thoughts around updating the screen on your longer-term outlook for discoveries in RIMBO. And then the other question on the aesthetic side, can you just, comment on the latest market stress that you'd have to both go talk and do again in the U.S.? Thank you.

So, Vamil, this is Rob. I'll take your first question. So, as you recall, we updated the 2027 guidance for SkyRise and Renvoke during the Q4 call earlier this year. And since then, we have raised their combined guidance for 2025 by over $1.7 billion. So, it's reasonable to assume that that we will exceed that long-term guidance. And I think that will be very clear when we provide 2026 guidance on the upcoming Q4 call. Now we have provided long-term guidance in the past really to help investors understand what the company will look like on the other side of the Humira LOE event. We said we would rapidly return a robust growth and deliver high single digit compound revenue growth from 24 to 29. And we gave product specifics to support that high single digit growth outlook. I mean, sitting here today, we have clearly demonstrated the rapid return to growth. Our 2025 sales outlook exceeds our previous peak by almost $3 billion, and that's within two years of the LOE event. And the street now reflects our high single-digit growth outlook for this decade. I'd say there appears to be good recognition of our momentum with SkyRizzy and Renvoke, though they do continue to perform above our own expectations. And there's recognition that our diversified growth platform can drive top-tier performance. That said, there are a few things that remain underappreciated. I think one is our strategy to continue innovating in immunology and drive growth beyond SkyRizzi and RENVOC, both in terms of combination approaches with SkyRizzi or RENVOC as a backbone, and through new platforms such as oral peptides and B-cell depletion approaches. We also have ludicizumab in our pipeline. We have a TL1A. We have a TRM1 antibody. So I think there's You know, quite a bit of depth here in the immunology pipeline that can set us up to grow beyond SkyRise and RINVO, and I don't think that's always appreciated. We also do not see enough investor focus on our neuroscience franchise. It's increased, but it's still not at the level that I think it should be given. It's our second largest therapeutic area and the fastest growing in our portfolio. We have very strong positions in psych and migraine and an emerging leadership position in Parkinson's with Vilev and Tavapidon. We also have an opportunity to transform care for essential tremor. The Aliata platform also gives us the potential to advance Alzheimer's treatment. And our Gilgamesh and Gideon Richter deals give us more depth in mood disorders. At the same time, we are starting to see more attention on our oncology pipeline, including TMAB-A and several solid tumors, and Tansomig and multiple myeloma, 706 and small cell lung cancer, as well as the recent BD transactions for tri-specific antibodies from CYMSIR and IGI. And given our clear runway to growth into the next decade, we are in a very strong position to continue increasing our R&D investment and acquiring more external innovation that can help drive long-term growth. So to me, it's more important that investors appreciate the depth of our pipeline that can drive growth in the next decade versus updating financial guidance again for this decade.

And Vamil, it's Jeff. I'll just give you some of the sense you asked about the dynamics in the U.S. with aesthetics. So really, just to start with the market, if you look at the U.S. toxin market, it's really in a flattish position in the U.S. The filler market has been problematic. It's been down double digits. When you look at our share, what we can see is that year over year we are lower than we were last year because of the alley reimagined, but sequentially we're growing. So we sit in the low 60s in terms of Botox share, and that's a clear leadership position by a large margin in the U.S. When you look at the HA filler, generally that's in the mid-40s, call it 45%, and that's largely been very stable. So that gives you some sense of the dynamics. The big thing is, as the leader, we have to invest, and we are investing in the market, as I mentioned in my remarks. We have a significant Botox consumer campaign that's in the market. We're starting to see some nice pickup there, so we're encouraged. We have a HA filler sentiment campaign to make sure that we're working with all of our clinics to make sure we can revitalize and get that market stabilized and more robust. because you really do need HA fillers to really get the aesthetics outcome. So we believe we can rehabilitate that segment. And we also have opened three very significant training and sort of practice growth centers around the country to continue to lead that marketplace. So that gives you a sense of the metrics that you were asking for.

Thanks, Vamo. Operator, next question, please.

Yes, our next question comes from Matt Phipps with William Blair. Your line is open.

All right, thanks for taking my question. Congrats on another great quarter. Now that the Gilgamesh exercise is closed, I wonder if you could give us any details on how you might design future studies, especially around the use of a low-dose active control. Maybe how do you see this fitting into the overall NDD treatment paradigm given the in-clinic administration?

Thanks. Yeah, thanks, Matt. It's Rupal. We're very excited about this approach. With other psychedelics, they tend to have a very long tail, especially around hallucination. And this one has a very short duration. So when it's in clinic, it will be a short duration. And a lot of clinicians are prepared to do this already. So we're not worried about having that being a barrier for uptake. There's so much... depression and unmet need, we think that patients and caregivers would really like more options like this one. The other benefit that we saw is a longer duration after just one or two doses. And that maybe speaks to this potential concept of rewiring. So we're very excited about that. So the key for us is in depression, looking at different doses and looking at different duration paradigms, and we're going to do that in Phase 2 and ultimately move into Phase 3. There is this regulatory need for a low-dose comparator, and that's because of the potential unblinding. And the Phase 2 study that Gilgamesh has already posted was against a low-dose comparator, and you saw those very large deltas. So that's what we're excited about, and we think there's opportunities in different lines of depression and potentially other mood disorders that we're going to investigate to go beyond just major depression.

Thanks, Matt. Operator, next question, please.

Our next question comes from David Asselin with Piper Sandler. Your line is open.

Thanks. So I wanted to drill down on your Parkinson's franchise. Can you talk to uptake of the Alev and specifically what you're seeing regarding competitive dynamics given the availability of Anapgo? So that's number one. And then on Tavapidon, which you've talked about increasingly, you've got adjunctive therapy and also monotherapy here, so pretty versatile, but also bearing in mind that with oral therapies, it's highly genericized. So how are you thinking about sales potential there and ultimately where you see a role in practice for Tevapidone. Thank you.

Yeah, thanks for the question. I'll start off and then turn it over to Rupal. So as Rob and I mentioned, we're very, very pleased with VioLev around the world with sales ramping very, very nicely. And, you know, it's levodopa carbidopa, so it's the gold standard. It's just the ability to get that in the sub-Q version, you know, causes incredible disease stability and recovery. So we do see a lot of distinction versus, let's say, the competitors. And we've dealt with the competitors around the world. It's relatively new in the U.S. So in terms of what we see on the market perspective, the in-play capture right now is roughly 80%, 85% in favor of Vylev. And that's because of the 24-hour coverage. You have far less supplemental orals. the levels of control are great, particularly when you wake up and you're through the night. The other metric that we look at is, in some cases, we've launched VioLev after sub-Q apomorphine has been available in the international countries, and essentially the shares invert very, very rapidly. So we're quite confident in the short and long-term position for a product like VioLev. It really is an exceptional medication. So I'll turn it over to Rupal to talk about the Tevapidon development, and then ultimately he and I can talk about where the positioning might be.

Yeah, thanks, Jeff. Hi, it's Rupal. Let me start on the Vylev side briefly, dovetailing on what Jeff just went through. So on the R&D side, we've received very favorable feedback thus far from caregivers and patients. And I would say the word transformative is the common theme. And the benefit of VIALEV is a full 24-hour opportunity for state of control. And that facilitates the ability to sleep and the ability to wake up on, ready to go and face the day. The competitor that you mentioned is a 16-hour profile, so may not afford that same 24-hour control. Also, as Jeff had mentioned, VIALEV delivers a meaningful dose of levocarbidopa. So what that means is patients, many patients, no longer require their oral therapy. So that means a monotherapy simplified approach is possible. The competitor is provided as an adjunct. So you won't be able to get off of your oral therapies. Also with Violev, when you look at the maintenance phase, dyskinesia rates are very low. And with the competitor you mentioned, they're roughly 15% up to 30%. The other benefit of Vylev from a competitive standpoint is we see less than a 5% rate of sedation. And with the apomorphine, it's around 20%. And also Vylev, we have limited headaches. And this is in the teens with apomorphine. Also, another benefit of Vylev is no warnings for orthostatic hypotension or falls that can't be said about the competitor. And also, we have very low rates and no need for treatment for nausea. And with apomorphine initiation, you need an antiemetic, and often that's need to be taken three times a day. So as Jeff stated, I think we're very well positioned from a competitive standpoint to with VIALEV for all the reasons I just mentioned. And then I think it's very important that we mention Tevapidon. I spoke about just it's being submitted. And this will be a very nice complement to VIALEV as a monotherapy and as an adjunct. It's a once-a-day profile. It has a long half-life. And it's going to allow patients to optimize their regimen before the need to moving to advanced therapies. And where our clinicians are excited about differentiation from existing oral generics is the efficacy which approaches levocarbidopa and the safety profile. That could be a key differentiator, and that's what our experts are telling us about. Specifically, impulse control disorders, just around 1%. We've seen others reach as high as 30% or 40%. people fall asleep with this one. Sedation is less than 5%. Dyskinesia, around 2%. And peripheral edema, which can be quite a nuisance with the generic molecules and very difficult to treat, even if you use potent diuretics. We don't see that as a problem, 1% or less with Tavapidon. So we think for efficacy, safety, tolerability reasons, it has a chance to differentiate and, again, a very nice compliment to Violet.

Thanks, David. Operator, next question, please.

Our next question comes from Dave Reisinger with Lyric Partners. Your line is open.

Yes, thanks very much. So I have two questions. The first is Could you please discuss the outlook for accelerating growth as Humira's absolute dollar declines diminish in coming years? And then second, could you, Rupal, just comment on the top few pipeline candidate readouts that we should focus on over the next six months? I'm assuming Amelin is one of them, but What are the biggest cards that are turning over in the next six months or so? Thanks so much.

David, this is Scott. Some thoughts on your question about accelerating growth. So, you know, you're right. Humira continues to erode and step down this year with our guidance. It's going to step down just over in the U.S., just over $4 billion. Certainly that step down in absolute dollars will diminish growth. and will diminish next year as well, of course, given the math. We will see, certainly, though, significant percentage erosion from this year to next year as well. That will continue to erode as the tail starts to form in 26. So when you look at the business, I mean, the business has a number of strong drivers. You've seen the growth of the business today. I think that one thing that we've spoken about several times is our long-term guidance for high single-digit growth through the decade. That will be from – From the growth that we have this year, we've talked about that accelerating as we hit that, and we still remain extremely confident in our ability to achieve that high single-digit growth through the decade. On the top line, the bottom line will continue to expand. This year, our EPS is roughly in line, a little bit ahead of the earnings growth, but we're going to have operating margin expansion driven by leverage and efficiencies in the SG&A line. So you will see earnings growth expand a little bit faster than before. the revenue growth through the decade with that long-term guidance.

And, Dave, it's Rupal. I'll talk about some of the readouts we're excited about moving into 2026. In immunology, our IBD platform will start rating out data next year. This is in combination with SkyRizzy, looking at those combos versus monotherapy, SkyRizzy. Ludicizumab is one of those, and the other is our own alpha-4, beta-7, 3A2. So we'll start seeing that data next year. Also, in combination with ludicizumab plus Rava in rheumatoid arthritis, that'll be something else to look for. And then maybe turning to oncology for a moment, for TMAB-A, I went through a variety of different positive readouts. Also, next year, expect a readout in head and neck cancer and even ovarian cancer, which many of these patients have high C-Met expression, along with tantamig in a variety of different combinations in multiple myeloma. And then our next-gen coming after Elihir, our biperitopic FR-alpha antibody 151, we'll start seeing readouts there in platinum-resistant ovarian cancer. And then also next year, we're excited about using our bispecific technology that we spoke about in immunology, along with our Linker and Warhead technology from oncology. Putting those together, we have a bispecific ADC that binds to PSMA and STEEP for prostate cancer. And that's another one I would say to look for next year. And then in neuroscience, we have our follow-on to FRALAR 932, We'll start seeing data in bipolar depression, probably moving into 27, looking for generalized anxiety disorder. And then we'll also be able to give an update on imraclidine. We're currently conducting a multi-ascending dose trial to see if we can move the dose above 30 milligrams, and that has already initiated. and we'll be able to give an update on where the dose lands and once it does we can start moving into phase two programs there and schizophrenia as an adjunct and potentially as a monotherapy along with psychosis associated with neurodegeneration. And then on the obesity front, the phase one study will get data in the first half of next year from healthy volunteers looking at different starting doses and different titration schemes. However, these patients will have normal BMI, and we've already seen reasonable weight loss there at six weeks, so we'll also have 12-week data. The other thing, Dave, I'll mention is we're starting a Phase 1B program late this year, maybe into January when we get everything started. But that will also look at our 295 amylin asset, but the difference will be different titrations and in patients that have obesity. And that data will also likely read out probably in Q4 of next year. So I would say a very robust number of events that we should keep our eyes on.

Thanks, David. Operator, next question, please.

Yes, the next question comes from Steve Scala with TDTown. Your line is open.

Thank you. Two questions. Rob, it sounds like IRA discounts are deeper this year than last year. You said it will not impact the long-term outlook, but will it impact the outlook in 2026, which you have yet to share externally? But will it impact the numbers that you otherwise would have shared externally? Secondly, why was Renvoke's Phase 3 NHS updated to complete in 2028 from 2026 previously? Was it an issue with endpoint, enrollment, or something else? Thank you.

Steve, this is Rob. I'll take your first question, then Rupa will take your second question. So as it relates to the Vrelar and Linzess negotiations, keep in mind those prices will not take effect until 2027. Again, as I mentioned before, we have visibility to where it's landing. It's obviously not public yet, but we're not concerned about it impacting our long-term guidance. But there's no impact on 26 because those prices do not take effect in 26.

And, Steve, it's Rupal. We still anticipate our double-blinded Week 16 data at the end of next year in HS. We'll get other double-blinded cuts, and then there's open-label extension. So sometimes that changes on duration on how long we follow patients could result in some updates to CT.gov.

Thanks, Steve. Operator, next question, please.

Yes, our question comes from Simon Baker with Rothschild and Redburn. Your line is open.

Thank you for taking my questions. Two, if I may, please. Firstly, on RIMVOC in non-segmental vitiligo. In some markets, that's up to 2% of the population. So I just wonder if you could give us an idea on your thoughts of the size of that opportunity. And then secondly, on Ella here, I noticed in the press release that you are launching it in the UK at a list price equal to the US. Now, on the basis that people in the US don't generally pay the list price, should one assume the same situation in the UK and going forward in the UK and Europe? Do you envisage moving more to a US style gross to net type market from the more net market that we see at the moment? Thanks so much.

Yeah, so hi, it's Jeff. I mentioned that as we look at what we call the next wave of innovation around RINVOC, and we've seen some of those readouts, which are really, really encouraging, GCA, which is the smallest of the next set of indications, is performing really well and overall helping great momentum in rheumatology. So then when we look at basically the, let's say the next big four, okay, so you have alopecia areata, vitiligo, as you highlighted, HS, as Steve highlighted, and then lupus, we've looked and sized those that that revenue potential is at least $2 billion at peak. So we continue to work through, given as we look at the data, we watch the market develop, like how they will sort of adapt and change over time. I can say that the alopecia data was quite striking. I mean, it's quite striking relative to the standard of care, other jacks that are out there. So we're going through the sizing issue. We certainly see that there are different segments of vitiligo, like the high body surface area is more amenable to, let's say, a JAK inhibitor like RINVOC, which will be the first systemic. Is it active or is it stable? So net-net, I mean, you could say that all of these together would be greater than $2 billion, and we're going to continue to hone that. those forecasts as we go towards launches over the next year or so.

Thanks, Simon. Oh, sorry, one more.

There's one more question on Ella here. You're right, the price in the UK, the list price is similar to the US. One of the aspects that we are looking at is how basically, because of the most favored nation and other global pricing dynamics, how that may or may not change our approaches around the world. Certainly we would like to see reforms in many of the European countries, whether they're clawback systems or even the way that the HTAs work, because we do think that these medicines should be more highly valued. So exactly how that will ultimately play out, certainly some of the early discussions with the administration are around basically more stable and equitable pricing around G7, inclusive of Switzerland and Denmark. So all of that strategies are basically in place. Ultimately, how that will play out, you know, we're going to continue to see. Certainly in the UK, as you know, you can have list prices, but ultimately it's an HTA market, and we'll have to go through the NICE evaluation to see where that net price ultimately would land.

Thanks, Simon. Operator, next question, please.

If our next question comes from Louisa Hector with Berenberg, your line is open.

Thank you. I'd like to ask in immunology, just if you could outline your next steps with your CAR T and your oral peptide platforms. And then just a sort of longer-term question, but what level of market penetration do you think is ultimately achievable for the advanced therapies in the more mature communities? sorry, in the more mature indications, where could we actually get to and would that require success from the combinations to raise efficacy ceiling or some of these new platform technologies? Thank you.

Hi, Louise. That's Rupal. I'll start with the in situ CAR T from Capstan. What maybe some benefits and then we can talk about our plans We have an opportunity to optimize that dose. It's also an off-the-shelf therapy. We also see rapid expression and also transient expression. So over time, that could have some safety advantages, especially if you can deplete the pathogenic B cells, and then the naive B cell population repopulates, and you don't have the car on board any longer, and that's the advantage. of the mRNA therapy. In the early phase one, we have observed B-cell depletion. And the other benefit is no need for lymphodepletion. So taken together, this could be a very exciting opportunity for patients. So next steps is to continue dosing in the first in human studies. And then I would say next year, once we have a handle on dosing, we'll start looking at patients starting on the rheumatology side of things like RA and lupus. And if it works similar to ex vivo CAR T, we think patients can have very deep and durable remissions, which could be very, very important and certainly raises the bar and breaks through existing efficacy ceilings. So that's, I would say, on Capstan. On the oral side, the nimble acquisition, these are macrocyclic molecules, the ones that we're focusing on. The attempt there is to make them as potent as possible and to extend the half-life. I think the current issue we see with certain oral platforms is that the half-life is very limited. We think a benefit would be to extend that half-life. So those are the two things that are going on. The lead candidates right now are an oral IL-23 and a TL1A. And when it comes to our IBD platform, with the combination, the higher the efficacy, the better, obviously. But many of these patients that we'll see will be second line and potentially even third line because lines of treatment are continuing to expand. We have many patients that have already received anti-TNFs in IBD. and you see medicines like Skyrizzy also starting to penetrate into that front line. And if that's not working, then you have JAK inhibitors like RINVOC. So we'd be studying a relatively refractory population. So if you can get 10 plus points better, the higher the better, I think that would be a huge benefit because breaking through where current efficacy stands today is really been the challenge, and I would say some of the best assets we have are currently Renvoke and SkyRizzy.

And then the idea of the market structure that you highlighted in your second question, to Rupal's point, I mean, these immunology markets are quite amazing because you essentially have a biopenetration, which varies by major indication, and then you also have line of therapy expansion. So they are very, very buoyant because there's significant headroom and unmet need. You know, to give you the bookend, You know, when you look at biopenetration, I'm going to give you the U.S. biopenetration rates roughly, and the European and Asia are lower generally based on the way those markets are developing. You know, the highest biopenetration rates are in Crohn's disease, which is, you know, above 50%. So you still have quite a few patients in a very severe disease that have not been exposed to a biologic. And these are in the moderate to severe segmentation. On the very low end, you have a super dynamic market, which is atopic dermatitis, incredible high unmet need that just basically with the availability of drugs like Dupixent and Rinvox, you know, that may be in the high single-digit biopenetration for moderate to severe. So, you know, new technologies are going to help. Communications are going to help. Line of therapy is going to help. And that's why, to Rupal's point, we're very excited about certainly the baseline adoption of these technologies, but transformative future technologies as well.

Thanks, Louisa. Operator, next question, please.

Yes, our next question comes from Mohed Bonzo with Wells Fargo. Your line is open.

Great. Thank you very much for taking my question. I have a couple of them. So one is on oral IL-23, the competitors one. So, Rupal, you mentioned some limitations there. Can you talk a little bit about how you think about this competition over time versus sky-risky or rain-woke. And then a portfolio question. So you do have Amlin in this space now with Gubra. How much do you think a portfolio of these assets, a GLP or other assets, is important to fight and win in this particular segment given that the competitors or incumbents have a portfolio of multiple assets out there? Thank you.

Thanks, Mohit. It's Rupal, so I'll start. I think when we look at Skyrizzy, first of all, the psoriasis data are very strong. Just to think about some of the numbers that we have, you know, by week 16, if you're looking at clear or almost clear, you're approaching 90%. If you're looking at week 52, PASI 90, that's at 80%. And if you're at PASI 100, That's at 60%. So these are very, very high efficacy. And you also see over time, if you're an early passive responder, the majority of these folks are going to maintain over the course of the year and beyond. And even if there is treatment withdrawal, and that's one thing I was getting at with why we like nimble potential half-life extension is is that if you take oral, some people may miss some doses. And if you have a very short half-life, your treatment withdrawal data will sink very quickly. And if you miss many doses, you will lose effect. And with Skyrizzy, and actually this is even in our label, if you stop dosing for one year, you still have 60% of patients that are clear or almost clear. Now, if you keep dosing, obviously you'll get to that 80% to 90% range. So I think it's important just to set up where is Skyrizzy today, and you have this opportunity to have quarterly dosing so the patients have a chance to forget that they have psoriasis, and they don't have to worry about when they eat their meals or how long they need to be fasting. The other benefit is Skyrizzy has what I would like to say is head-to-toe and these are all statistically significant readouts. What do I mean by that? That means palmar plantar. That means scalp and genital across the board. The other insight about psoriasis is about 30% or so will have psoriatic arthritis, so they'll have joint disease. And now with SkyRisi, we have five years of data where 88, approaching 90% of patients do not have x-ray progression. And I would say taking in totality, that gives us a benefit to continue to be very competitive, whether you're talking about another injectable or even an oral. And the oral, as Jeff has stated, will have uptake, like many of these assets, because psoriasis, unlike IBD, is still... quite under-penetrated, and it's a growing market. And maybe, Jeff, if you want to make a comment as well.

No, I think it's very clear, Rupal. We're very confident in our competitive position. We've seen other orals enter the market. We have multiple head-to-head trials in terms of where those orals will compete and what the differences are. And so I think Rupal phrased it very, very nicely with his summary.

And then on the amylin, yes, we think it would be of a benefit and we do continue to look with partnered programs and external opportunities where you could potentially combine with the amylin and the focus there is tolerability and durability. We continue to see only about 30% of patients with obesity continuing their incretins after one year. So these beneficial gains are not going to result in long-term favorable outcomes if patients can't stay on these. So our focus is on the amylin, but we continue to look for combination agents and also other orthogonal approaches if you have the opportunity to maintain bone and