AbbVie Inc.

Good morning and thank you for standing by. Welcome to the AbbVie first quarter 2026 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. Liz Shea, Senior Vice President, Investor Relations.

Good morning and thanks for joining us. Also on the call with me today are Rob Michael, Chairman and Chief Executive Officer, Jeff Stewart, Executive Vice President, Chief Commercial Officer, Rupal Thakkar, Executive Vice President, Research and Development and Chief Financial 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 our 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 off to an excellent start to the year, with first quarter results exceeding our expectations across our diverse portfolio. We are delivering top-tier growth, and continue to strengthen our long-term outlook with pipeline advancements and strategic transactions. Turning to our first quarter performance, we achieved adjusted earnings per share of $2.65, which is 7 cents above our guidance midpoint. Total net revenues were $15 billion, beating our expectations by $300 million and reflecting robust sales growth of 12.4%. I'm especially pleased with the momentum in immunology and neuroscience, which are both delivering share gains in growing markets. Based on this strong performance, we are raising our full year adjusted earnings per share guidance by 12 cents, and now expect adjusted EPS between $14.08 and $14.28. Turning now to R&D, we are making meaningful progress advancing programs across all stages of development. Recent highlights include the U.S. regulatory submissions of RENVOC for alopecia areata, giving us a potential new source of growth in dermatology, and SCI-RISI sub-Q induction in Crohn's, with an approval decision expected later this year. We also saw promising interim data from our Crohn's platform study combining Skyrizzy and our own Alpha-4-Beta-7, which has potential to deliver transformational efficacy. In obesity, we announced early-stage data for our amylin analog 295, with very encouraging weight loss results. In oncology, we are now expecting the regulatory submission for etentamig by the end of this year, which is earlier than our previous expectations. We also expanded our emerging oncology pipeline by closing the Remagen agreement, giving us a novel PD-1 VEGF bispecific antibody. We will continue to augment our portfolio with business development to access external innovation. And given our strong growth outlook, we have significant financial capacity to pursue both early and late stage opportunities. Lastly, As part of AbbVie's $100 billion commitment to US R&D and capital investments over the next decade, we recently announced construction of several new manufacturing sites. This includes a $1.4 billion investment to build a pharmaceutical manufacturing campus in North Carolina and a $380 million investment for two new plants in North Chicago. These strategic investments will strengthen AbbVie's ability to produce medical breakthroughs in immunology, neuroscience, oncology, and obesity. In summary, the fundamentals of our business are strong, and we are well-positioned to deliver top-tier growth for the long term. 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 $7.3 billion. reflecting impressive sales growth of a billion dollars. Skyrizzy total sales were $4.5 billion, up 29.2% on an operational basis, exceeding our expectations. We continue to demonstrate exceptional performance across psoriatic disease, where we are gaining share and have clear leadership over all biologics and orals by a very wide margin. The psoriatic market is growing robustly, and we feel extremely confident in Skyrizzy's best-in-class profile, including high and durable efficacy on both skin and joints, as well as simple quarterly dosing, which collectively gives us a distinct advantage relative to all the existing and emerging therapies in this area. And we continue to generate compelling evidence to support Skyrizzy as the preferred treatment option for psoriatic disease. At the recent AAD meeting, we presented new data highlighting Skyrizzy's strong efficacy in genital and scalp psoriasis, which are very difficult to treat areas, often leading to significant social and emotional burden to patients. The FDA has recently approved adding the new study results in these high-impact area to the Skyrizzy label. We also now have long-term efficacy in radiographic data in psoriatic arthritis, demonstrating Skyrizzy's durable efficacy. with nearly 90% of patients showing no radiographic progression through five years of treatment. This data will enhance our existing leadership in the important PSA segment, where Skyrizzy is the frontline in-play patient share leader in both the derm and room segments. Performance also remains very robust in IBD, where Skyrizzy is on track to deliver more than 30% global sales growth across Crohn's disease and ulcerative colitis this year. Competitive dynamics within IBD are playing out in line with our expectations, with SkyRizzi continuing to capture a leading share of total new patient starts in the U.S. in the quarter, including very significant in-play leadership in the frontline setting, which is the strongest signal of overall physician preference for SkyRizzi. I'm also pleased with the compelling results from our recent subcutaneous induction study for Crohn's, with data, particularly in the bio-naive population, that we believe compares very favorably versus the competition. And we look forward to providing an additional dosing option for physicians and IBD patients later this year. Turning now to Renvoke, which is also performing above our expectations. Global sales were $2.1 billion, up 20.2% on an operational basis. Demand remains strong across all of RENVOC's indications. We are now achieving high teens in-play patient share in RA and are seeing a nice inflection in prescriptions across gastro, especially in UC, following the recent expanded label supporting access to RENVOC earlier in the treatment paradigm for IBD patients. We are also planning for the potential near-term commercialization of two additional indications, vitiligo and alopecia areata. which will meaningful expand Renvoke's dermatology label, and where we have also recently expanded our field force to support these emerging opportunities. Lastly, in immunology, Humira global sales were $688 million, down 40.3% on an operational basis, reflecting biosimilar competition and in line with our expectations. Moving to neuroscience, where we continue to outperform our expectations as well. Total revenues were nearly $2.9 billion, up 24.3% on an operational basis. In migraine, our leading portfolio continues to gain market share, with Ubrelvi, Q-Lipta, and Botox Therapeutic each delivering robust double-digit sales growth. In psychiatry, Vrelar global sales were $905 million, up 18.4%, reflecting strong prescription growth in both bipolar disorder and adjunctive MDD. Braylar has significant leadership, with new prescription share roughly double the next close to branded competitor. And we expect continued momentum following the introduction of new lower doses, allowing prescribing flexibility as well as pediatric usage. Moving to Parkinson's disease, we continue to see encouraging uptake for Vylev, which is on track to achieve blockbuster revenue this year. Total sales were $201 million, up approximately 10% on a sequential basis. We are also preparing for the potential approval and launch of Tavapidon in the U.S. later this year, an exciting new oral treatment for patients with Parkinson's and a very complementary addition to our growing Parkinson's portfolio with Vialev and Duodopa. Tavapidon has demonstrated strong efficacy as both a monotherapy as well as an add-on to the standard of care. And we believe it will be a sizable commercial opportunity. Moving now to oncology, where total revenues were more than $1.6 billion, down 3% on an operational basis. Then Kleksta continues to perform very well, especially in CLL as combination use with BTK inhibitors are emerging as a preferred fixed treatment duration globally. We've recently received full approvals in the U.S. and the U.K., as well as positive CHMP opinion for Venclexta's use with BTKs for that fixed treatment course. Total Venclexta sales were $770 million, up 9.7% on an operational basis. Continued sales growth from Elahir, Epkinley, and Amrelis also helped to partially offset the expected sales decline for Imbruvica, which was down 24.7%, due to IRA pricing and competitive share pressure. Turning now to aesthetics, which delivered global sales of nearly $1.2 billion, up 5.1% on an operational basis. Botox Cosmetic total revenues were $668 million, up 17%, reflecting a favorable price comparison in the US, as well as modest market growth globally. Juvederm global sales were $232 million, down 2.9%, reflecting continued headwinds in key dermal filler markets. While economic headwinds have continued to impact market conditions globally, the long-term prospects for the category remain attractive, given high consumer interest and low penetration rates. As the industry leader, we are investing in promotion and innovation to support patient activation. I'm particularly excited about the potential for Trenabot E., our fast-acting, short-duration toxin, which, once approved, we expect will be market-expanding and complements our toxin portfolio very nicely. While Trenabati is delayed in the U.S., we continue to anticipate approval and launches this year in key international markets, including Europe, Canada, and Japan. So, overall, I'm extremely pleased with the execution and continued strong performance across our commercial portfolio. And with that, I'll turn the call over to Rupal for comments on our R&D highlights. Rupal.

Thank you, Jeff. We continue to make good progress across our pipeline. I'll start with dermatology programs in immunology. As Jeff just mentioned, new data was presented at the recent AAD meeting highlighting SkyRizzi's strong efficacy in genital and scalp psoriasis and long-term efficacy including radiographic data in psoriatic arthritis. These recent presentations add to the growing body of evidence supporting SkyRizzi's best-in-class profile in psoriatic diseases. Its strong, durable efficacy on both skin and joint measures, favorable safety and tolerability profile, and convenient quarterly maintenance dosing give us confidence that Skyrizzy will continue to be the preferred first-line treatment option for patients with psoriatic disease. Additionally, discussions are ongoing with the FDA regarding revised label language related to tuberculosis evaluation for Skyrizzy. While TB monitoring has become fairly routine prior to initiating treatment with biologics, updated language would allow healthcare providers to use their clinical judgments. Moving to RENVOC, the regulatory application for alopecia areata was recently submitted to the FDA. Approval decisions are anticipated later this year in Europe and Japan and in early 2027 in the U.S. In hydradenitis supertiva, phase three studies for both RENVOC and ludicizumab are progressing well and remain on track for 16-week top-line results in the second half of this year. Turning to gastroenterology, all co-primary and key secondary endpoints were met in the Phase III affirmed study, with SCI-RISI subcutaneous induction in Crohn's disease demonstrating very high levels of endoscopic response and clinical remission. While not a direct head-to-head comparison, when matching these data against results from the SCI-RISI IV induction program, The sub-Q induction achieved numerically higher results across key endpoints. We are extremely pleased with the strong performance demonstrated by subcutaneous induction, especially considering that this study enrolled a very difficult-to-treat patient population. Two-thirds of the patients received prior advanced therapy, with half-failing two or more therapies and a third-failing ustekinumab or a JAK inhibitor. Data in those who had not previously experienced advanced therapy were particularly noteworthy, where 61% of Skyrizzy patients achieved endoscopic response and 73% achieved clinical remission at week 12. This is 45 points higher than placebo on both measures. These are very impressive results, which will continue to support first-line use. These data reinforce SkyRizzi's best-in-class profile and provide an additional induction dosing option for patients with Crohn's disease. Our U.S. regulatory application was recently submitted with an approval decision anticipated later this year. Sub-Q induction for ulcerative colitis is also being assessed, and we will be discussing options with health authorities. Next, on to other gastro programs. An interim analysis was recently completed on our Crohn's disease platform study. In the cohort evaluating Skyrizzy plus our novel anti-alpha-4-beta-7 antibody, ABBV3A2, the combination resulted in a higher rate of endoscopic remission at week 12 and at week 24. The rate was double that of either monotherapy arm. Endoscopic remission was achieved by approximately 42% of patients receiving the combination at week 24. These results were observed in a broad population that had severe and refractory disease, which included 82% advanced treatment failures and 53% of patients failing two or more advanced treatments. Of the patients that previously received advanced therapies, 63% failed an agent with an overlapping mechanism with the combination, and 20% failed a JAK inhibitor. At baseline, patients had a mean Crohn's disease activity index of 325 and a simple endoscopic score of 14, which represents a very treatment refractory patient population. Achieving this level of endoscopic remission in this setting is a particularly meaningful achievement, as this endpoint is an objective measure of mucosal healing and is associated with long-term benefits, including reduced rates of hospitalization, surgery, and disease progression. Safety of the combination was consistent with the profiles of the monotherapies. No new signals were observed. These results demonstrate the potentially transformative level of efficacy that our novel combination can achieve. The study is expected to complete in the third quarter with presentation at a medical meeting anticipated by early next year. A phase 2B study is planned to begin this summer in patients with Crohn's disease and ulcerative colitis to evaluate Skyrizzy in combination with both 3A2 and with our extended half-life TL1A antibody. In parallel, we will be evaluating phase three acceleration options for Skyrizzy plus 3A2 in Crohn's disease. In the Skyrizzy plus ludicizumab cohort, the combination did not sufficiently differentiate from monotherapy Skyrizzy and will not be moving forward. In the early stage immunology pipeline, we are nearing completion of a phase one study for an IRAC4 inhibitor, ABBV848. and plan to begin a Phase II study in rheumatoid arthritis later this year. This potent inhibitor has the potential to provide biologic-like efficacy, a favorable safety profile with no box warnings, and convenient once-daily oral dosing. I will now discuss neuroscience. Top-line analysis was recently completed on our Phase II trial evaluating ABBV932 in bipolar depression. In the study, the overall difference observed between the drug-treated and placebo groups was not statistically significant. However, in a pre-specified subgroup analysis of bipolar I patients, an efficacy signal was observed. The safety profile of 932 was generally similar to placebo, including rates of extrapyramidal events, demonstrating the potential for a more favorable tolerability profile compared to Vrelar. we are evaluating next steps to continue 9-3-2 development in bipolar I patients. Dose escalation work continues for emraclidine in both schizophrenia and elderly patients. In schizophrenia, we have cleared the 100-milligram dose and will begin evaluating 150 milligrams. Phase II studies in monotherapy and adjunctive schizophrenia, as well as psychosis related to Alzheimer's, Parkinson's, and Lewy body dementia are planned to begin in the fourth quarter. Moving to our psychedelic asset, bradycylicin. Additional data from an ongoing Phase II study in major depressive disorder will be available this year. Several studies are planned to begin in 2026, including a Phase III trial for single-course acute treatment in MDD, a Phase IIb evaluating repeat dosing for chronic use in MDD, and a proof of concept phase two in post-traumatic stress disorder. And in Parkinson's disease, we remain on track for an approval decision for Tavapidon in the third quarter. Turning to our solid tumors program in oncology, TMAB-A is progressing well across a broad range of tumor types. At the upcoming ASCO meeting, early stage safety and efficacy results for TMAB-A in head and neck and ovarian cancers will be presented. Based on these results, we are engaging with regulators regarding ways to accelerate programs for TMAB-A plus pembrolizumab in frontline head and neck cancer and TMAB-A plus bevacizumab in frontline ovarian cancer. In colorectal cancer, we have made a decision to update our strategy in the third line plus setting and will now focus the pivotal program on TMAB-A in combination with Bevacizumab in an all-comers population, as opposed to pursuing monotherapy in CMET-selected patients. Targeting all-comers will allow TMAB-A to reach a substantially broader population. TMAB-A plus Bevacizumab demonstrated improved response rates and disease control versus current standard of care, regardless of CMET expression levels. Treatment with TMAB-A at 2.4 milligrams per kilogram plus BEV achieved an objective response rate of 30% and a confirmed disease control rate of 97% compared to rates of 0% and 70%, respectively, for Lonsurf plus BEV. Given the expanded patient population for the Allcomers Phase III trial, we anticipate faster enrollment compared to the study in CMET-selected patients. Initial data readout is expected in the second half of next year. In lung cancer, TMAP-A received its first breakthrough therapy designation as a monotherapy in second-line plus, EGFR wild-type, non-squamous, non-small-cell lung cancer. We are in the process of planning a Phase III trial in this setting. In small cell lung cancer, a Phase III trial for monotherapy ABBV706 recently began in relapsed refractory patients. Two Phase II studies evaluating 706 triplet combinations in frontline patients are also planned to initiate this year. These trials will evaluate 706 in combination with atezolizumab plus DLL3 T-cell engagers. Moving to ABV969, dose escalation data in late-line metastatic castration-resistant prostate cancer will be presented at ASCO. Based on these results, we are in the process of discussing acceleration options with regulators in order to advance into Phase III trials as quickly as possible. We also continue to augment our solid tumor pipeline through investments in external innovation. including one with Kestrel Therapeutics, who recently began a phase one study to evaluate a pan KRAS inhibitor in advanced solid tumors harboring KRAS mutations. This next generation inhibitor has the potential to provide an improved efficacy and safety profile based on increased potency and specificity against the most relevant KRAS mutations. while sparing H and NRAS isoforms. Our strategy is to combine this pan-KRAS inhibitor with TMAB-A in pancreatic, lung, and colorectal cancers. In hematologic oncology, our Phase III trial evaluating monotherapy in Tentameg and third-line plus multiple myeloma is tracking ahead of schedule. We anticipate a response rate readout in the third quarter, with potential to also see an interim analysis on progression-free survival. If this interim analysis is positive, regulatory submissions would occur later this year. Progress continues in earlier lines of therapy as well. The increasing use of anti-CD38 antibodies in earlier treatment settings is driving a need for CD38-free BCMA combinations. particularly those that can provide the convenience of monthly BCMA dosing combined with an oral agent. Plans are underway for a Phase III study evaluating Intentimig in combination with pomalidomide in second-line plus patients, including those that were exposed or refractory to a CD38 antibody or who lost response to a BCMA CAR-T or ADC. Moving to other areas of our pipeline. In aesthetics, the FDA issued a complete response letter for our Trinibot E application related to manufacturing questions. The CRL did not identify any issues related to safety, efficacy, or labeling of Trinibot E, nor has the FDA requested any additional clinical trials be conducted. We will be working closely with the FDA to address their feedback and determine next steps for resubmission. In obesity, positive top-line results were announced from a multiple ascending dose study evaluating our long-acting amylin analog, ABBV295. In the study, 295 demonstrated clinically meaningful weight loss of nearly 10% after only 12 weeks of treatment, despite enrolling a predominantly male, non-obese population. 295 was well tolerated with mostly mild and transient GI-related adverse events. No cases of severe nausea, vomiting, or diarrhea were reported. These early results are encouraging and reinforce our view that our long-acting amylin analog has the potential to provide strong weight loss with favorable tolerability. In the next phases of development, higher doses of 295 will be tested in patients with obesity, including every other week and monthly regimens. Interim data from our Phase I study in obese patients are anticipated later this year. Our Phase II program is now expected to begin in the third quarter. To summarize, significant progress continues with our pipelines. And we look forward to additional important data readouts, regulatory submissions, and approvals throughout 2026. With that, I'll turn the call over to Scott.

Thank you, Rupal. Starting with our first quarter results, we reported adjusted earnings per share of $2.65, which is 7 cents above our guidance midpoints. These results include a $0.41 unfavorable impact from acquired IP R&D expense. Total net revenues were $15 billion. This reflects top-tier growth of 12.4%, including a 2.1% favorable impact from foreign exchange. Adjusted gross margin was 83.6% of sales. Adjusted R&D expense was 15.1% of sales. And adjusted SG&A expense was 22.7 percent of sales. The adjusted operating margin ratio was 40.8 percent of sales, which includes a 5 percent unfavorable impact from acquired IPR&D expense. Net interest expense was $645 million. The adjusted tax rate was 15.4 percent. Turning to our financial outlook, We are raising our full-year adjusted earnings per share guidance to between $14.08 and $14.28. Please note that this guidance does not include an estimate for acquired IPR&D expense that may be incurred beyond the first quarter. We now expect total net revenues of approximately $67.3 billion, an increase of $300 million. The impact from foreign exchange on full-year sales growth remains roughly in line with our prior expectations. This upgraded revenue forecast includes the following approximate assumptions for several of our key products and therapeutic areas. We now expect SCIRISI global revenues of $21.6 billion, an increase of $100 million, reflecting demand growth in psoriatic and IBD indications. Renvote global sales of $10.2 billion, an increase of $100 million, reflecting strong performance in the room and gas row indications. Total neuroscience revenues of $12.6 billion, an increase of $100 million, reflecting momentum across the portfolio. Moving to the P&L for 2026, we continue to forecast full-year adjusted gross margin above 84% of sales. adjusted R&D expense of approximately $9.7 billion, and adjusted SG&A expense of approximately $14.2 billion. We now anticipate an adjusted operating margin ratio of approximately 47.5% of sales in line with our previous expectations after including the roughly 1% unfavorable impact of acquired IPR&D expense incurred through the first quarter. We also now expect adjusted net interest expense of approximately $2.7 billion, a reduction of $100 million, primarily related to favorable rates on our debt issuance. Turning to the second quarter, we anticipate net revenues of approximately This includes an estimated 0.6% favorable impact from foreign exchange. We are forecasting an adjusted operating margin ratio of approximately 50%. We expect adjusted earnings per share between $3.74 and $3.78. This guidance does not include acquired IPR&D expense that may be incurred in the quarter. In closing, AbbVie continues to deliver outstanding results and our financial health remains very strong. Our capital allocation priorities remain focused on the future as we are investing in the business at record levels, have financial flexibility to pursue compelling business development, and are returning capital to shareholders through our strong and growing dividend. 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. Operator, first question, please.

Our first question comes from David Amselin from Piper Sandler. Please go ahead.

Thanks. So, appreciate all the metrics you have on SkyRaisy, but I wanted to get your thoughts on the competitive landscape, particularly with the rollout of of Icotide, how you're thinking about its impact on SkyRisi going forward, if any, and give us some color on your counter-detailing messages to practitioners regarding the product as you enter this period with more intensified competition. Thank you.

Yeah, thank you, David. It's Jeff. I'll give you some flavor on that. As I mentioned, SkyRisk is just such an exceptional product. We see in our audits and our trackers that over the last couple quarters, despite incredibly high share, really over four times basically the in-play share and total share versus the next leading competitor, our MBRX has accelerated and continued to hit all-time highs. And that's because of a few key items, right? The superiority data that we have on skin clearance is just exceptional. So we have head-to-head trials against five mechanisms in psoriasis, including the two oral agents, the TIK2 and Otezla. We can show category-leading durability in the real world. It's just exceptional adherence given the dosing cycle and the ability to keep the disease controlled. We have that leading PSA indication with that new five-year joint stability data that Rupal and I highlighted. And then this new data on hard-to-treat areas like the scalp, the genitals, the hands and feet, you know, head to toe for Skyrizzy, so to speak. So those are just really, really powerful messages to the physicians who write this medication. I would say there's other things around maybe the new oral competitors you highlighted. Look, the launch is quite early. The way that we look at this is certainly we're able to communicate that it's not an oral Skyrizzy. The efficacy parameters are quite a bit lower when you match all the controls, you understand the populations, which our medical teams and our commercial teams are able to highlight. Certainly, PSA is a huge market value driver, and there's not a lot of evidence there. There's also some complexities really just even around an oral and the adherence there. And we have some data and evidence on the orals in the category as well. So we're well prepared for this dynamic. So we think that we can navigate this competitor quite well. And we may see, in fact, we saw it with Otesla over a decade ago, that there's going to be some market expansion as well. So, again, the teams are prepared. We're very confident, and hopefully that gives you a little bit of flavor of the dynamics in the market.

And, David, this is Rob. What I would add is, I mean, we obviously contemplate competition when we provide guidance. We've obviously now, once again, taken up the guidance for SkyRizzy, continue to see upside to consensus forecast for SkyRizzy going out every year and growing each year. And so we have a tremendous amount of confidence there. We are well aware of the competition that's coming in. We factored that in, and you can see the asset continues to perform exceptionally well.

Thanks, David. Operator, next question, please. Next, we'll go to Chris Schott from J.P. Morgan. Please go ahead.

Great. Thanks so much for the question. The first one for me is on the Skyrizzy Alpha-4 Beta-7 program. Can you just comment a little bit on what dosing looks like for this combo? and where you see this fitting into competitive landscape. So is this kind of a second line drug post Skyrizzy or something that could eventually actually get to frontline? And the second question is maybe building on that and looking at kind of the broader I&I competitive landscape. It does seem like there's significant development across the space and the streets increasingly concerned about this means relative to your portfolio. So can you just kind of address your ability, like how you think about sustaining the competitive position you have in I&I, how important the Skyrizzy combo is, your ability, again, freedom to operate with BD and INI. Just help us a little bit in terms of how you're envisioning that playing out over time. Thank you.

Yeah, thanks, Chris. It's Rupal. I'll start. The dosing, I would say, you know, SkyRizzy, you know the dose. It's already in label. So the other assets, 382, the alpha-4, beta-7, and the TL1A, the goal there is to optimize those. So in fact, while we start gearing up for a phase three study, we have a phase two B plan. We had preplanned that ahead of time. And in this quick interim look that we have had, we've already observed a non-flat slope, so meaning an exposure correlation with 3A2, meaning Patients with higher exposures did better. So what we'll do in the Phase IIb is, in fact, study a higher dose of 3A2 in combination with Skyrizzy. So there's a potential that the efficacy could go even higher. The goal with this one will be likely monthly dosing. Co-formulation work is ongoing. And while we're finishing that work, we'll also be speaking with regulators, and there's a potential to further accelerate. I don't think we need to wait for the phase 2B to be totally finished. If we see something while we're conducting the trial, we can pivot relatively quickly. We would anticipate starting, I would say, roughly where we sit today in about two years in the phase three or even sooner. And the team will be looking ways to accelerate. And as I stated, the TL1A will be added into this platform as well. And we'll be studying ulcerative colitis along with Crohn's. So as you think about IBD and competitive dynamics, what you see coming from AbbVie is next-generational therapies and really raising the bar on efficacy as we stated on the endpoint in my opening remarks, we doubled the endoscopic data and that's really what's most critical. It's the most objective and that's what clinicians are looking for. So as we look to the future, you see that what we're doing, we see other competitors coming, entering, but we see these as monotherapies And even the phase two data observed to date, regardless of mechanism, the data do not differentiate from where we sit today with RINVOC and SkyRISI. So the goal here for the whole portfolio that we've spoken about is to raise that standard of care meaningfully higher. And again, RINVOC and SkyRISI do that very well today, even against emerging competition. And the data that I speak about are battle-tested phase three data and very difficult to treat populations. That's going to hold for the near term, and we have not seen a competitor that can beat that other than us with our own combinations. And we have more to come. So that's, I think, the way to think about how we think about immunology.

And Chris, this is Rob. I'll just add to Rupal's comments. The way we've been thinking about business development over the last couple of years is to support that strategy. So you've seen us add, through business development, new mechanisms, TL1A, IRAC4, TREM1, as we think about this combination approach. We acquired Nimble to give us the oral peptides capability, so that obviously plays an important role in the future of immunology. And then I'd say the one that doesn't get enough attention is the capstan acquisition with the B-cell depletion approach with the in vivo CAR-T platform. As we think about the future of immunology, now we're thinking about growth beyond Skyrizzy and Renvoq, we certainly see a trend there. And so we've been very active with business development over the last couple of years to add depth to our immunology pipeline so that we can continue to remain ahead of the competition. And we have tremendous amount of confidence given our long-term experience here. We obviously have our commercial powerhouse, but I'd say our R&D organization understands this space very well. And I think we position ourselves for long-term growth.

Thanks, Chris. Operator, next question, please. Next, we'll go to Mohit Bansal from Wells Fargo. Please go ahead.

Great. Thank you very much for taking my question. Just want to double-click on the IRAC4 that you are developing in RA. So, you would try to see the space where, you know, after Humira, there's not a lot of options which are safe as well. So, like, what gives you excitement about IRAC4 compared to what is out there in the world in terms of, in terms of therapies which are being tested in rheumatoid arthritis. But everyone is trying to become a ring work without the box warning here. Thank you.

Thanks, Mohit. It's Rupal. We have very early data. This is a partnership with Kreaturna. And we saw some data, clinical data, in China in a small study. And what we observed there was biologic-like efficacy. So something like existing therapies, including the anti-TNF class. And what we saw preliminarily in that data, similar to our combo data in IBD, a relationship with PK and response rates. So we have the opportunity here to do this Phase IIb study to see if we can push efficacy even higher. And what we like about that is it's another oral. And potentially, the safety profile, as it's played out to date, we don't anticipate a boxed warning. So that would be a differentiator versus the anti-TNF class and the JAK inhibitor class. So that's what gets us excited about this particular molecule, Mohit. Thank you.

Thanks, Mohit.

Operator, next question, please.

Next, we'll go to Louise Chin from Scotiabank. Please go ahead.

Hi, congratulations, McWhorter, and thanks for taking my questions here. I wanted to ask you first if you could provide more color on your opportunities for an extended half-life IL-23 and also your oral peptide IL-23, and do you still plan to enter the clinic with those this year? And then just on your combos, just curious if you plan to look at those for first-line or save those for more refractory patients. Thank you.

Hi, thanks. It's Rupal. So yes, we do have, it's called ABB547, which you'll hear more about. And that is our asset based on all of our experience with Skyrizzy and IL-23 inhibition. And this is what we'd like to advance. And this would be a longer acting version. And to your point, the dosing has already initiated. Along those lines, we also anticipate dosing our long-acting IL-23 TL1A bispecific antibody and the nimble anti-IL-23 assay. Both of those will be first in human this year. The goal for those are to, at least for the long-acting, is to be slightly longer-acting than Skyrizzy, but not too much longer. longer acting. And the reason for that is, I should state, is that when we take all these factors, given that SkyRIZI is already available as quarterly, and that is very, very convenient, and the data are all very compelling when you look to the maintenance data. I know we've seen some short-term data, but when you look at SkyRIZI, and this extends well beyond Week 16, We've demonstrated PASI 100 responses of approximately 60%, PASI 90 responses exceeding 80%, and that's already happening with quarterly dosing. And what I would say there is similar to what Jeff had stated, we also are focused on all of our assets on difficult-to-treat manifestations. That includes palmar plantar, genital, scalp, psoriasis that Jeff has mentioned. Now, the other important fact here and why I said the long-term duration is important is that 30% or so of patients with psoriasis will go on to develop psoriatic arthritis. And again, that's why durability and long-term data are very important. Now, the reason I made the comment on the half-life of where we want it to be, we want to offer choices in the future. And that will matter, I would say, to most of our clinicians who want to individualize the therapy, for example, on this longer half-life. If an infection, for example, were to occur or there's a tolerability issue and you have a very, very long half-life biologic, the prolonged pharmacologic persistence could limit the ability to rapidly discontinue a therapy. And also, you could have clinical scenarios that may necessitate switching therapies prior to a full washout. And if you have overlapping mechanisms of actions, that could pose challenges. So we are targeting two or two and a half times of where SkyRizzy is today, and that would create another option. And that would be, along with the oral that I said, would also be focused on a slightly longer half-life on that one than what we see today for orals. because what we know, and Jeff pointed this out, the adherence matters with orals. We see it with RENVOTE, but we have very potent efficacy. For the oral from NIMBL, we would like to see higher potency and a longer half-life in case someone slips up and misses a dose. So that's how these are being developed, and as you stated, they're both in the clinic this year, so we anticipate data hopefully by next year, if not sooner. And then, I apologize, I think I had the combo question on how we're positioning this. Well, the data that we have today, we're in an all-comers population, and you see particularly refractory. And when we've seen that with Skyrizzy and Rindvoke, and you pivot to a naive population, the efficacy getting higher. So we are not going to restrict at all how we would study patients because it's important to clear second line and third line and even come after Skyrizzy. In fact, we had Skyrizzy patients in the study. We had Vetalizumab patients in the study. We had Renvoke patients in the study. That's an important market because second and third line continue to evolve and grow. But in IBD, the front line is also important. Many of our clinicians want to tackle the inflammation right away in the best possible way they can. Because with gut inflammation, you can run into problems that results in hospitalizations, stricturing, and irreversible damage that can result in surgeries. So nobody wants that. So if you have the best therapy, we believe there's many clinicians that will want to use that early on in the course and not hold out So we're very excited about the data that we've observed because we see that high level of efficacy in this interim analysis across different lines of therapy in IBD.

Thanks, Louise. Operator, next question, please. Next, we'll go to Terrence Flynn from Morgan Stanley. Please go ahead.

Great. Thanks so much for the question. Rob, I was just hoping you could elaborate on your thoughts on M&A. Obviously, it's been a very active year so far across the space, seeing companies lean in really at that kind of $5 to $10 billion deal size. You mentioned comments on immunology and some of the work you guys have done. on the early stage side, but do you see a need here to maybe be more aggressive and also push into other areas quicker than what you're currently doing? We just love your broad high-level thoughts there. Thank you.

All right. Thanks, Terrence. This is Rob. So I'll take that question. So, yes, we have been and continue to be very open to acquiring external innovation, really with a major focus for us in immunology neuroscience oncology and obesity and to the extent we see a differentiated asset in any of these areas whether early stage late stage or even on market we are very willing to pursue it I mean today we have an on-market portfolio and an emerging pipeline that gives us a clear line of sight to very strong growth into 2030 so we are operating from a position of strength and we have ample financial capacities if you think about the last two years We have added significant depth to our pipeline, including deals with Capstan, as I mentioned earlier, Gilgamesh, IGI, Remagen, 8RX, and Goobra, to name a few. I see each of these opportunities as an opportunity to really drive growth in the next decade and beyond. But that said, while we don't need BD to deliver top-tier growth this decade, we're not opposed to near-term revenue drivers that are differentiated in our core areas of focus.

Thanks, Terrence. Operator, next question please. Next we'll go to Truong Nguyen from RBC Capital Markets. Please go ahead.

Hi guys. Thanks for taking my questions. Just two on Sky RISI please. So first one is when I look at the 1Q Sky RISI sales, you look at it versus the IQVIA scripts. It looks like net pricing is flat, so slightly better than that low single digit erosion you guided. I guess first, can you clarify if there were any one-off items in one queue for SkyRizzy, or is that discrepancy from IVD and IV induction? And then how should we think about that pricing step down through the year if you are on track for low single-digit decline? And then just following on Rynvoke's successful exclusivity extension to 2037, what's your confidence in extending SkyRizzy's NOE? Is there any timelines you have there or any timelines you have for potential buyers in the settlements?

Thank you. I'll take your first question regarding Sky RISD pricing. You were correct. In the first quarter, Sky RISD pricing was relatively flat. That was really just a comparison issue on a year-over-year basis in the quarter, a gating, if you will. On a full-year basis, we continued Thank you.

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