艾伯維 (ABBV) 2015 Q4 法說會逐字稿

Good morning and thank you for standing by.

Welcome to the AbbVie fourth-quarter 2015 earnings conference call.

(Operator Instructions)

This call is being recorded.

If you have any objections you may disconnect at this point.

I would now like to introduce Mr. Larry Peepo, Vice President of Investor Relations.

Good morning and thanks for joining us today.

Also on the call with me are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Michael Severino, Executive Vice President of Research & Development and Chief Scientific Officer; and Bill Chase, Executive Vice President of Finance and Chief Financial Officer.

Before we get started I remind you that some statements we make today may be considered forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995.

AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements.

Additional information about the factors that may affect AbbVie's operations is included in our 2014 annual report on Form 10-K and in our other SEC filings.

AbbVie undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments except as required by law.

On today's conference call as in the past non-GAAP financial measures will be used to help investors understand AbbVie's ongoing 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 will take your questions.

So with that I will now turn the call over to Rick.

Thank you, Larry.

Good morning everyone and thank you for joining us today.

This morning I will briefly discuss our fourth-quarter performance and our 2015 operational highlights.

Mike will then provide updates on recent advancements across our R&D programs and Bill will discuss the quarter and our 2016 guidance in more detail.

As always, following our remarks we will take your questions.

We delivered another strong performance in the fourth quarter with results ahead of expectations including adjusted earnings per share of $1.13, representing growth of 27% versus the fourth quarter of 2014.

Our fourth-quarter performance caps off a very strong year for AbbVie with sales and earnings well above our original projections for the year.

We delivered 22% global operational sales growth in 2015 and we increased ongoing earnings per share by more than 29%.

We've driven strong commercial, operational and R&D execution, resulting in industry-leading performance with both strong revenue growth and improvement in our operating margin profile.

AbbVie's EPS growth for 2015 ranks us among the top growth companies in our industry.

Clearly, 2015 was a year of excellent performance.

We delivered outstanding results from our current portfolio with strong growth from HUMIRA which drove 19% global operational growth in 2015 including US growth of nearly 29% and international operational growth of 8.6%.

We saw continued strong momentum from IMBRUVICA with full-year 2015 sales in excess of $1 billion.

Global VIEKIRA performance, although below our original expectations, generated more than $1.6 billion in its first year on the market.

And we had strong performance from other products in our portfolio including Creon, Lupron and Duodopa.

Over the past year we've seen significant pipeline advancement and achieved a number of important development and regulatory milestones.

We secured approvals for several assets including HUMIRA as a treatment for HS, our once daily HCV combination in Japan and our partner received approval for elotuzumab for relapsed refractory multiple myeloma.

We successfully completed registrational studies and submitted regulatory applications for a number of programs including venetoclax for relapsed/refractory CLL, IMBRUVICA for first-line CLL, Zinbryta for multiple sclerosis and HUMIRA for uveitis.

We successfully completed mid-stage clinical trials and transitioned into the registration enabling phase of development for several key programs including our selective JAK1 inhibitor AVG-494 in RA, our pan-genotypic next-generation HCB combination elagolix for uterine fibroids and ABT-414, our antibody drug conjugate for glioblastoma multiforme.

We also reported compelling data from several development programs including elagolix pivotal data in endometriosis, the HELIOS and RESONATE-2 IMBRUVICA data which we anticipate will be reflected in the product label this year and venetoclax data in several cancer types including robust results in CLL and AML.

In fact, the data we presented on venetoclax this year has resulted in three breakthrough therapy designations, a status granted by the FDA when clinical evidence indicates that a medicine may demonstrate a substantial improvement over existing therapies.

We believe venetoclax has significant potential across a wide range of blood cancers with the first of potentially numerous indications coming in the first half of this year.

The progress we've made with our pipeline including the impressive data we've shared over the past year has further increased our level of confidence and derisked many of our key R&D programs.

Numerous assets in our late-stage pipeline have the opportunity to generate multibillion-dollar peak year sales and represent an opportunity for meaningful revenue growth in the years to come.

2016 promises to be another milestone filled year with significant activity across our pipeline which Mike will discuss in more detail here in just a few moments.

In 2015 we also augmented our portfolio and our pipeline through strategic licensing and acquisition activity.

The acquisition of Pharmacyclics provided a major new growth platform in a key strategic area: hematological oncology.

IMBRUVICA, which is now a blockbuster therapy, offers significant growth potential through its existing and expanding list of indications and lines of therapy.

We remain excited about the potential for IMBRUVICA and we are pleased that our thesis is playing out as we expected.

Within the hematological oncology segment, we have invested strategically to build a portfolio of medicines with the potential to transform the care of a large range of malignancies.

Our portfolio includes three novel mechanisms of action: BTK inhibition, BCL-2 inhibition, PI3 kinase dual inhibition.

These mechanisms are either on-market, under regulatory review or in registration enabling trials.

We're well-positioned to build upon our leadership in this category with unique combinations of these and other agents.

Over the past year we've delivered a strong return of capital to our investors, including a rapidly growing dividend which has grown 42% since our inception as well as share repurchase.

We remain committed to a balanced capital allocation strategy, returning cash to shareholders while continuing to add strategically to our pipeline.

Following our acquisition of Pharmacyclics last year our focus in the near-term is on continuing to augment our therapeutic areas of focus, especially oncology and immunology.

We evaluate opportunities that fit our strategic criteria and can deliver strong returns.

In 2015 we also drove improved efficiency across our operations, delivering significant operating margin expansion while continuing to invest in R&D and SG&A to drive future growth.

We have delivered a significant level of margin expansion to date and we remain committed to doing more to improve our operating margin profile going forward.

Our focus on operating efficiencies will drive our adjusted operating margin profile to greater than 50% by 2020.

We've entered 2016 with strong momentum which we intend to build upon to drive a high level of performance across our operations and strong growth.

Our full-year 2016 EPS guidance of $4.90 to $5.10 represents growth of 16.5% at the midpoint, positioning AbbVie to be among the industry leaders for EPS growth once again this year.

On our third-quarter conference call we outlined our long-term guidance for a number of key metrics including our expectations for top- and bottom-line growth and margin expansion over our five-year plan.

We remain committed to delivering on these long-term objectives which will generate double-digit EPS growth on average through 2020.

So in summary, we're pleased with our strong execution and the significant advancements we made in 2015.

Over the past year we've demonstrated a strong track record of success with positive clinical data and regulatory outcomes and we look forward to numerous important pipeline milestones in the year ahead.

We've consistently delivered on our commitments and are positioned for another year of strong growth.

We've built a strong foundation and we're focused on generating top-tier financial performance in the years to come.

With that I will turn the call over to Mike for additional comments on our R&D program.

Mike?

Thank you, Rick.

In 2015 we significantly advanced and derisked our pipeline and achieved a number of important regulatory milestones.

And we expect 2016 to be a very productive year as well with potential for several regulatory submissions and approvals, key data readouts and phase transitions.

We have a broad pipeline that includes more than 50 active clinical development programs including more than 20 new products or indications in late-stage development around a regulatory review.

Today I'll highlight recent updates and discuss some of the milestones we anticipate in the year to come.

I'll start with hematologic oncology, an area where we have invested heavily and are uniquely positioned.

As Rick mentioned, we have built a strategic portfolio of assets including multiple mechanisms of action that have significant potential alone and in combination.

The development programs for our flagship oncology product IMBRUVICA continues to progress nicely.

Our next opportunity for label expansion is in the first-line CLL setting.

Data from the RESONATE-2 trial in treatment-naive CLL patients recently published in The New England Journal of Medicine showed treatment with IMBRUVICA resulted in an 84% reduction in the risk of disease progression versus chlorambucil with 87% of patients remaining on single agent IMBRUVICA treatment at 18 months.

Additionally, treatment with IMBRUVICA showed an 84% reduction in overall mortality.

We believe RESONATE-2 represents a practice changing study that will set a new treatment standard for many treatment-naive patients.

We submitted a supplemental new drug application to the FDA which is currently under priority review and we anticipate approval in the first half of 2016.

IMBRUVICA is also being evaluated in mid to late-stage trials in follicular lymphoma, marginal zone lymphoma, diffuse large B-cell lymphoma, multiple myeloma, graft versus host disease and pancreatic cancer.

At the recent ASH meeting, 65 IMBRUVICA-related abstracts were presented including data from several studies and potential new indications.

And there is potential for data flow and possible regulatory submissions this year for several indications including treatment-naive mantle-cell lymphoma, relapsed/refractory follicular lymphoma and treatment-naive diffuse large B-cell lymphoma with timing dependent on event-driven analyses of ongoing studies.

In the area of immuno-oncology ongoing trials evaluating IMBRUVICA in combination with checkpoint inhibitors are progressing well with the potential to see proof-of-concept data in solid tumors over the course of the year.

Another important strategic asset in our oncology portfolio is venetoclax, our novel BcL-2 inhibitor, which has demonstrated strong efficacy, achieving deep levels of response and durable disease control both as monotherapy and in combination with rituxan in patients with relapsed refractory CLL.

Venetoclax is currently under priority review for relapsed/refractory CLL including patients whose tumors harbor the 17p deletion mutation and we expect FDA action in the first half of 2016.

At ASH we presented data in the relapsed/refractory CLL patients in combination with Rituxan, showing an overall response rate of 86% and a complete response rate of 47%.

Additionally, minimal residual disease negativity in the bone marrow was observed in 55% of all patients treated with the combination.

We're very encouraged by the depth of the responses driven by combination therapy in this patient population.

Based on these data, earlier this month the FDA granted breakthrough therapy designation for venetoclax when used in combination with Rituxan.

We also believe BcL-2 will be effective in other hematologic malignancies.

We recently presented encouraging venetoclax data in treatment-naive AML patients over 65 years of age who are ineligible for intensive induction chemotherapy.

The early data showed combination treatment with venetoclax and hypomethylating agents resulted in complete response rates of approximately 71% which is roughly double the response rate that would be expected with the current standard of care.

And based on these promising results earlier this week the FDA granted the third venetoclax breakthrough therapy designation.

We are moving expeditiously in the registrational trials for this indication.

In addition to IMBRUVICA and venetoclax we are developing a dual PI3 kinase inhibitor duvelisib currently in late-stage development.

In collaboration with our partner Infinity we'll see data on duvelisib in relapsed/refractory NHL and CLL in the second half of the year with potential regulatory submissions to follow.

We are well-positioned to continue to evolve the treatment landscape in CLL and other blood cancers by exploring novel combinations including the programs in our pipeline and other mechanisms With a goal to achieve deep durable disease control and/or remissions while reducing or eliminating the use of toxic chemotherapy.

To that end we have numerous combination trials underway or starting in 2016.

This includes our Phase 3 study of a chemotherapy-free combination of venetoclax and Gazyva in first-line unfit CLL patients.

This study is underway and enrolling well.

A large Phase 3 study is being initiated in collaboration with the German CLL working group to evaluate treatment with venetoclax in combination with a variety of therapies including Gazyva and IMBRUVICA in previously untreated fit CLL patients.

This study, which we expect to initiate midyear, will assess the ability of venetoclax-based combinations to drive achievement of minimal residual disease, which has been associated with improved survival in CLL patients.

To augment ongoing investigator sponsored and collaborative group studies evaluating venetoclax and ibrutinib combinations we are designing company-sponsored studies to evaluate the combination in first-line CLL patients.

In addition, AbbVie and Genentech are finalizing plans to pursue registration will studies evaluating combinations of venetoclax with proteasome inhibitors in multiple myeloma and as I mentioned previously in combination with hypomethylating agents in AML.

Finally, we are preparing to initiate a dose finding study evaluating venetoclax and duvelisib in patients with a variety of hematologic malignancies.

In addition to our work in hematologic oncology, we have also been investing in a number of programs for the treatment of solid tumors including our PARP inhibitor veliparib with five Phase 3 studies underway in lung, breast and ovarian cancer and ABT-414 which is in development for glioblastoma multiforme or GBM.

GBM is the most common and most aggressive type of malignant primary brain tumor.

Previously reported interim results from a Phase 1 clinical trial of ABT-414 showed that roughly 25% of patients with EGFR amplification or the B3 variant treated with ABT-414 in addition to standard of care achieved an objective response.

These results illustrate a level of efficacy not typically seen in this difficult-to-treat cancer where historic data of response rates in our refractory population have been less than 10%.

Later this year we'll see additional data for ABT-414 in second-line GBM.

If the data are consistent with earlier studies, these trials could represent a path to a regulatory submission in the second half of 2016.

In parallel, larger randomized comparative registrational trials are ongoing in first- and second-line GBM.

We also have an active program focused on driving the next wave of immuno-oncology development beyond checkpoint inhibitors.

We recently entered into a collaboration with M.D. Anderson Cancer Center focused on the discovery and development of new immuno-oncology therapies.

Through this agreement we're pairing M.D. Anderson's cutting edge preclinical, translational and clinical capabilities with our strength in biology, protein engineering and chemistry with a goal to accelerate the development of new medicines.

We anticipate a number of immuno-oncology assets moving into the clinic this year and we look forward to sharing more details on our strategy in this area at our R&D day in June.

Moving on to immunology, our strategy is centered upon identifying treatments that offer differentiated profiles relative to currently available therapies with a goal of continuing to raise the standard of care.

We have multiple mid and late-stage pipeline assets with best-in-class potential.

In late 2015 we initiated a Phase 3 program in rheumatoid arthritis for our selective JAK1 inhibitor ABT-494 following positive results from our mid-stage clinical trials.

We are particularly excited about the results of ABT-494 in a difficult-to-treat population: anti-TNF inadequate responders, a growing segment of the RE market.

Results from the BALANCE-I trial in this patient population recently presented at ACR illustrate the agent's potential to be a best-in-class therapy with ACR20 responses up to 73% and ACR50 responses up to 44%.

Additional data from our Phase 2 program will be presented over the course of 2016 and we expect to commercialize ABT-494 in 2019.

We also have additional immunology candidates in development and will see mid-stage data from multiple programs in 2016.

Finally, in immunology we continue to innovate with HUMIRA.

Last year we received EU and US approval for a new formulation of HUMIRA.

Additionally, we have submitted regulatory applications for an improved HUMIRA pen device and our US and European regulatory applications for uveitis are currently under review with decisions expected in the second half of this year.

Moving now to virology where our goal is to develop a next-generation asset that offers high cure rates in a ribavirin and ritonavir-free regimen.

Mid-stage data indicate that our new pan-genotypic combination can deliver cure rates approaching 100% and we believe the majority of patients will be well served with an eight-week treatment option.

Late last year we initiated a comprehensive registrational program including six global Phase 3 studies.

We will start to see data from our registrational trials later this year and this combination is poised for commercial entry next year.

In neurology we're focused on therapies for the treatment of conditions like Alzheimer's disease, Parkinson's, MS and other neurodegenerative conditions.

Zinbryta is our first-in-class investigational biologic for relapse remitting multiple sclerosis which is currently under regulatory review in the US and Europe with regulatory decisions expected in the first half of 2016.

The filings are based upon strong pivotal trial results which demonstrated patients treated with Zinbryta had a statistically significant 45% reduction in annualized relapse rates versus Avonex, an established standard of care.

Given the product profile, novel mechanism of action and its once-monthly subcutaneous administration we believe Zinbryta has the potential to be an important therapeutic option.

Last year we entered into a collaboration with C2N Diagnostics to develop and commercialize a portfolio of anti-tau antibodies for the treatment of serious neurodegenerative disorders.

Last year we initiated a Phase 1 program in patients with progressive super nuclear palsy and we remain on track to start clinical development with C2N in Alzheimer's disease in 2016.

Finally, elagolix is our compound in Phase 3 development for endometriosis and uterine fibroids.

Our goal with elagolix and endometriosis is to bring to market an oral therapy that provides a high level of efficacy with minimal menopausal side effects such as hot flash while preserving bone health.

We reported positive results from our first pivotal trial in endometriosis last year and plan to report top-line results from the second pivotal study in the first quarter of 2016.

We also plan to present more detailed findings from both registrational trials at the ASRN meeting in October.

We also recently initiated a Phase 3 program investigating the effect of elagolix on bleeding related to uterine fibroids.

So in summary, we continue to make significant progress with our pipeline and are on track to advance several programs in 2016.

We've built a promising late-stage pipeline comprised of potentially transformational medicines which will fuel our future growth.

We look forward to covering our full pipeline in more detail at an R&D pipeline review to be held in Chicago during the 2016 ASCO meeting in June.

We hope you will join us.

With that I will turn the call over to Bill for additional comments on the quarter and our 2016 guidance.

Thank you, Mike.

This morning I'll share with you the highlights of our full-year 2015 performance, provide an overview of our fourth-quarter results and then walk through our outlook for 2016.

We had a strong performance in 2015, allowing us to raise our full-year EPS guidance range twice during the year and ultimately deliver sales, margin expansion and earnings projections that exceeded our original expectations.

For the full-year 2015, adjusted net revenues were $22.8 billion, up 22% on an operational basis.

We expanded our adjusted operating margin profile to 42.3% in 2015, up 610 basis points for the year.

And as Rick mentioned we reported adjusted earnings per share results of $4.29, up more than 29% for the year.

Turning to the fourth quarter, total adjusted sales were $6.4 billion, up more than 24% on an operational basis.

Unfavorable impacts from foreign exchange rate fluctuations reduced sales growth in the quarter by 6%.

HUMIRA delivered global sales of $3.8 billion in the quarter, up 16% operationally excluding the impact of foreign exchange.

In the US, HUMIRA sales were more than $2.3 billion, increasing nearly 21% reflecting exceptional growth across all three major categories: rheumatology, gastro and dermatology.

Internationally, HUMIRA sales were nearly $1.4 billion in the quarter, up a strong 9.7% on an operational basis excluding an unfavorable impact from exchange.

Global HUMIRA sales for the full-year 2015 were $14 billion, up 19.1% operationally versus the prior year.

International HUMIRA sales in 2015 increased 8.6% on an operational basis.

Global IMBRUVICA net revenues were $343 million in the quarter.

US sales were $295 million and our international profit-sharing was $48 million.

Since the closing of the Pharmacyclics acquisition on May 26, IMBRUVICA has driven $754 million of new revenue for AbbVie and we are pleased with its progress.

A significant portion of our valuation for Pharmacyclics is attributed to advancing into first-line therapy in treatment-naive CLL patients and the submission of the strong RESONATE-2 data to the FDA this quarter bodes well for this assumption.

Global VIEKIRA sales in the fourth quarter were $554 million.

The international launch has exceeded our planning expectations, resulting in a higher mix of international sales again this quarter.

As expected, VIEKIRAX, our two-drug once-daily ribavirin-free combination for the treatment of genotype 1B in Japan launched late in the fourth quarter.

Global sales of Duodopa, our therapy for advanced Parkinson's disease, grew 24.4% on an operational basis in the quarter.

We saw continued double-digit growth internationally for Duodopa with a modest level of US sales as expected.

Global Duodopa sales for the full-year 2015 were $231 million, up 23.5% operationally versus the prior year.

Global Creon sales were $185 million, up 22.8%.

Full-year sales of Creon were $632 million, up 22.5% versus 2014.

Creon maintains its leadership position in the pancreatic enzyme market with roughly 70% share.

Global Lupron sales were $235 million in the fourth quarter, up 15.6% on an operational basis.

For the full year, global Lupron sales were $826 million, up 9.3% exceeding our expectations.

Lupron continues to hold a leadership position and maintains significant share of the market.

Turning to the P&L profile for the fourth quarter, the adjusted gross margin ratio was 80.5% excluding amortization and other specified items.

Excluding the impact of Pharmacyclics, we saw a nearly 100 basis improvement year over year.

In the fourth quarter adjusted R&D was 15.9% of sales and adjusted SG&A was 23.9% of sales, contributing to continued improvement in our operating margin profile.

Operating margin in the quarter was 40.1% of sales compared to 35.8% in the fourth quarter of 2014.

Adjusting for the negative impacts of foreign exchange and the acquisition of Pharmacyclics operating margin increased by 540 basis points.

As a reminder, the fourth-quarter margin profile is generally the lowest of any quarter during the year.

This reflects seasonal product mix impacts from higher sales of products like Synagis, a lower margin partnered product.

Net interest expense was $199 million and the adjusted tax rate was 21.6% in the fourth quarter.

Fourth-quarter adjusted EPS was $1.13 excluding non-cash amortization expense and specified items.

On a GAAP basis we posted EPS of $0.92.

As we look ahead to 2016, we are confirming our previously issued full-year adjusted EPS guidance range of $4.90 to $5.10.

This guidance excludes $0.42 per share of non-cash amortization and non-cash Pharmacyclics acquisition impacts as well as $0.03 per share of other specifieds.

On the top line, we expect mid-teens revenue growth on an operational basis excluding roughly 2% negative impact from exchange.

Included in our top-line guidance are assumptions for our key products as follows.

HUMIRA has averaged well over $1 billion of annual growth for a number of years.

In 2016 we expect HUMIRA to once again be an important contributor to our performance with high teens growth expected in the US.

Internationally, we are forecasting mid-single-digit operational growth, reflecting the latest market dynamics including the launch of a biosimilar for Enbrel.

For IMBRUVICA we expect revenues to AbbVie of at least $1.8 million.

We anticipate global VIEKIRA sales of approximately $2 billion for the year.

This level of sales include significant international growth with a full year of sales in Japan.

We expect continued double-digit growth for Duodopa, including an increased US sales contribution.

As mentioned on previous calls we anticipate a gradual ramp for product sales in the US as physicians continue to get more familiar with the product.

For Synagis, we expect mid-single-digit operational growth in 2016.

Regarding AndroGel we're forecasting 2016 sales of roughly $500 million.

For Creon we expect high single-digit sales growth.

For Lupron and Synthroid, we expect sales to be roughly flat year over year and we expect declines in several products with continued lipid franchise erosion as well as negative market trends in HIV and other mature products.

Turning back to the P&L for 2016, we are forecasting an adjusted gross margin ratio approaching 82%.

We are forecasting R&D expense above 15% of sales and we expect to see sales leverage with SG&A levels at approximately 23% of sales, well below the 24.6% booked in 2015.

As a result, in 2016 we are forecasting an increase in our operating margin profile of 100 basis points, reflecting ongoing initiatives and sales leverage.

Excluding year-over-year impacts of foreign exchange in Pharmacyclics this operating margin improvement would exceed 300 basis points.

We are forecasting net interest expense of about $800 million for the full year and we expect an adjusted tax rate of approximately 21% to 22% in 2016.

Regarding our first-quarter outlook, we expect adjusted earnings per share in the quarter of $1.13 to $1.15.

This guidance reflects growth of approximately 21% at the midpoint.

Our first-quarter adjusted EPS guidance excludes roughly $0.11 of non-cash amortization and specified items.

We are forecasting revenue growth in the first quarter just above 20% excluding roughly 4% negative exchange.

While our full-year outlook for international HUMIRA growth is mid single digits in the first quarter we anticipate an operational international growth rate of 3%.

This is the direct result of a difficult comparison to the prior-year quarter where we posted a 15% increase for the brand due to shipment timing.

So as we look back we're very pleased with AbbVie's performance in our first three years as an independent Company.

In 2015 we delivered sales, margin expansion and earnings well above our original outlook and we expect to build on that momentum in 2016 with industry-leading growth and an exciting pipeline.

With that I will turn it back over to Larry.

Thanks, Bill.

We will now open the call for questions.

Cheryl, we'll take our first question please.

(Operator Instructions) Chris Schott, JPMorgan.

Great, thanks very much and thanks for the questions.

First ones here, just any perspective on the recent Amgen IPRD decision on your formulation patent and what that means for HUMIRA?

And maybe while we're talking about IP, maybe any thoughts as well on the Coherus and BI filings on your dosing patents?

That would be my first question.

The second one, the mid-single-digit growth for international HUMIRA, could you elaborate a little bit more on the drivers and assumptions there?

I guess specifically what are you anticipating in terms of pricing or volume competition when we think about biosimilar REMICADE and Enbrel?

Thanks so much.

Hi, Chris, it's Rick.

So I'll cover those two.

Let me do the HUMIRA one first.

So as we mentioned in our previous call, we are anticipating that we will see indirect biosimilar competition outside the US, meaning Enbrel biosimilars outside the US this year.

So if you think about our growth rate we finished this year internationally at about 8.6% and we're guiding for next year at about mid single digits.

You can break it up into sort of two components.

One would be obviously as the brand gets a little bit bigger the growth rate as a percentage is slowing down a bit.

And then we have built in what are a set of assumptions of what kind of price impact we might see from Enbrel in certain markets, particularly in Europe I would say and that represents about 2% of our growth.

So you can of it coming down about 2% based on that.

So that's the HUMIRA piece.

On the Amgen IPR and the other IPRs, and I think in general across all of the litigation aspects of HUMIRA, I think it's important to recognize that we have now entered a new phase of our biosimilar strategy.

In our third-quarter call we laid out a detailed explanation of our patent estate in an effort to really provide the investment community with a comprehensive set of information around the IP and what we thought the litigation timelines would look like going forward.

What I can tell you is nothing has changed from that assessment.

We still believe in everything that we've described to you as part of that.

But now we're in the active litigation process with other players, whether that be IPR litigation or other kind of litigation that will start to play out.

It's just not prudent for us to lay out for the world a play-by-play analysis of our positions around this.

That's just not the smart thing to do from a litigation standpoint.

So what I'd tell you is I'd reiterate the points that we made before.

We have a large robust portfolio of IP.

We have done significant work from an innovation standpoint in this area and we have prosecuted all this IP based on the work that we've done, the investment that we've made and we feel good about the IP in our portfolio and as we've said before we intend to vigorously defend our IP.

This is going to need to play out over time.

We are certainly pleased with the decision of the patent office.

But we're not going basically do a play-by-play on this because that potentially could jeopardize our position.

All right.

Thanks very much.

Jami Rubin, Goldman Sachs.

Thank you.

I just want to talk about US HUMIRA sales this past quarter I guess 20%, or 21% was a bit below consensus expectations.

If you look at volume growth and price contribution that should have led to slightly higher growth.

I'm wondering if you can talk about what is happening to net price increases, are they sticking?

And with respect to your high teens guidance for US HUMIRA sales in 2016, what again are your assumptions for price?

Thanks very much.

Hi, Jami, it's Bill.

Look, I think we've seen spectacular growth numbers out of HUMIRA in the US all year long and certainly Q4 21% isn't a bad number.

If you look at the market TRx growth right now on the quarter it was about 13%.

From an inventory standpoint, sequentially quarter versus quarter it stayed roughly flat at a little less than half a month.

But one thing that is impacting this number is we had slightly higher inventory numbers in the channel in Q4 2014 and if you adjust that out it pretty much gets you back to where guidance had us.

So we haven't seen anything on this brand that would lead us to pause and restate our expectations.

As I said on the call and in my comments we're expecting high teens growth.

So it's going very well.

From a price perspective it's normal for these sorts of products to take price increases towards the end of the year or the beginning of the year.

We certainly have done that at the beginning of the year.

So there is going to be a price dynamic on HUMIRA in 2016 and we'll have to see how things pan out as the year progresses above and beyond that.

And Jami, this is Rick.

The only thing I would add is much like the discussion we had last quarter about international third quarter if you look at our ordering or if you look at our growth rate patterns over the last several years, what you'll see is typically fourth quarter is a little bit lower from a growth standpoint.

But I think what you're asking is are we seeing any kind of a slowdown in the US?

We're not.

The US is performing very robustly.

We guided I think at the beginning of this year to about the same number, high teens and obviously overachieved that.

And so we feel very good about the performance going forward with HUMIRA.

Marc Goodman, UBS.

Yes, good morning.

You mentioned the HUMIRA price increase which was like 10%-ish.

How much of that is actually flowing through to the bottom line this year that you project and how has that changed as far as the gross to net over the past couple of years?

And then second, if you could talk about hepatitis C a little bit.

Obviously the US there's one dynamic and obviously with Merck coming in they got approved, they set their pricing last night, if you could comment on that.

Then secondly if you could talk about Japan, where we are and how it's doing.

I know you didn't have a lot of Japan in the quarter but now it's been a good month and a half later so maybe you can just give us a sense for how Japan is doing and the ramp and how much Japan is going to be a piece of that O-US this year?

Okay.

So let me take the HUMIRA price piece.

I understand all of the focus on price.

I think all of us in this industry recognize all of the headlines we'd seen around price and I think an important perspective to step back and think about for our business, this is not a business that is highly dependent upon price, our business I'm talking about.

So as you look at our operational growth in 2015 at 22%, only 2% of that was price across the business.

If you look at HUMIRA roughly around 25% of the overall growth is driven by price.

Now, you do have certain managed-care contracts that have some level of price protection so all the price doesn't fall through at 100%.

And depending upon where the price increases are and the magnitude of those price increases less of it will fall through in a later price increase as an example.

But overall the vast majority of our growth whether it be HUMIRA or other assets in our pipeline is driven by volume growth.

And I think that's an important perspective for the investor community to understand.

As far as HCV is concerned, as we planned out for 2016, I'd say the Merck label came in pretty much spot on what we had expected.

So I think it's within our expectations.

We have built into our assumptions for HCV a level of competition and some level of price competition.

We're going to have to see how that plays out.

It's not -- we don't believe we have any exposure there at all, so we're not concerned about that.

But we have built in what we believe is an appropriate level of both price and volume competition that we can see in the marketplace in 2016.

Japan to your point, we launched very late in the fourth quarter.

And so far, and I had an update just a week or so ago from the team, Japan is going well.

It's tracking on our expectations.

Mark Schoenebaum, Evercore ISI.

Hey guys, thanks.

Wondering if I could take a left turn here away from hep C and drug pricing and talk a little bit about your pipeline which is arguably not discussed a lot on the street.

So number one, I'd love to -- and also competition.

So first of all, I'd love to get your thoughts on, there's been a lot of news in the JAK space, I'd love to get your thoughts comparing baricitinib to 494.

I'd also love to get an update on how you're thinking about ABT-122 and ALX-0061, what's the next step when we make a next step?

And if possible throw in a comment about ACP-196 versus IMBRUVICA.

This molecule has obviously come into the headlines after AZN paid I think $7 billion for it.

Thank you very much.

Sure Mark, this is Mike.

I will take those questions.

Your first question was about our JAK franchise and competition.

I think that if we look at JAK inhibitors there had been a fair amount of enthusiasm several years ago that actual results didn't live up to expectations for the first generation of those molecules such as tofacitinib.

But the current generation I think have very nice profiles.

And I think baricitinib has generated a nice profile based on the data that we seen today.

We'll see more as they proceed through the regulatory review.

And I think the class is going to get use over time.

What we see with this class is it tends to start slow and build over time and work from more resistant patients up to early other lines of therapy.

And we see that with therapies in RA and immunology in general.

So when I compare the two I feel very encouraged by the results that we've seen with ABT-494.

We've seen very strong efficacy, not just at the ACR20 level but at much higher levels of response: ACR50, ACR70 DAS remission, etc.

And we've seen that across two large Phase 2b studies including a TNF inadequate responder.

Those are the results that I mentioned in our opening comments.

And there we see a level of response in TNF inadequate responders that we believe has the potential to be best-in-class.

So if you link that up with what I said about how RA dynamics play out those data are going to be very important and we believe that that is a big opportunity for this molecule.

We do believe over time that 494 will certainly have use in earlier lines of therapy but when we look at the balanced profile of 494 we feel very good about it.

So moving on to ABT-122 in Ablynx, those are in mid-stage trials and we will see data from ABT-122 midyear and from Ablynx towards the back end of the year.

And once we have those data, then that will be the time to make decisions about next steps and we'll be sharing those data as soon as it's reasonable to do so after we get them.

What are the hurdles for success in those trials?

Well our general approach has been that we believe we need to raise the standard of care.

So what we're going to want to see is something that is over and above the level of efficacy that can be achieved with comparable agents if you will.

So ABT-122 combines 17 in TNFs so you're going to want to see something in the disease populations we've studied in RA and in psoriatic arthritis that's better than one can get with those mechanisms alone.

And Ablynx is another approach at IL-6 you want to see something that's better than the existing therapies that are out there.

Now obviously these aren't comparative studies but we'll have the data we believe to make those assessments and to determine whether we will advance those programs this year as I said.

So with there certainly has been a lot of talk about Acerta given its relatively early stage of development.

What I would say first and foremost is we've set a very high bar with IMBRUVICA.

We've set a very high bar with efficacy and also with safety.

I quoted some of the numbers from RESONATE-2.

We don't believe we've left any room on the table for there to be a story of improved efficacy and we feel very good about the safety profile of IMBRUVICA.

With Acerta we're looking at much earlier data.

We're looking at Phase 1b/2a studies.

I think the study that has garnered the most attention is about a 61 patient dose rising study with an expansion.

And it's really just not possible to compare those very early trials to a molecule like IMBRUVICA which has multiple Phase 3 readouts and has been on the market now for a considerable period of time.

So we'll see as their program continues to progress what they're able to demonstrate.

They have comparative studies that will read out in a couple of years time.

And I think that's really the first time we will be able to make any sort of comparative assessment.

Those are open label studies so that's a limitation of them.

And I will also add that Acerta's comparative studies are in relapsed refractory patients and IMBRUVICA is moving to the front line over time and that momentum is going to keep up.

So we feel very confident in our position with IMBRUVICA.

The only other thing I'd add -- this is Rick.

When we did the acquisition of Pharmacyclics, we did it with the knowledge of Acerta.

So we thoroughly reviewed based on the information that we had at that time the compound and evaluating whether or not we thought it was a risk.

And I think one of the things to keep in mind is a follower strategy in oncology at least historically has not worked very well.

And the reason it doesn't work very well is if the innovator keeps advancing the bar the regulatory environment changes on the follower and what they need to do to be able to get their approvals.

And it's more difficult, it takes more time, it's more expensive because they can't do single arm studies to get approval.

The second thing I'd say is there seems to be two theses out there.

One would be improved efficacy, one would be improved safety profile particularly around bleeding and a-fib.

I wouldn't say that those are issues that are inhibiting our ability to be able to advance the brand and the standard of care today.

But what I would also say as we have evaluated it we believe that the vast majority of the data would support that those are on-mechanism side effects.

And so we'll have to see what their data proves out and we'll have to see what their inclusion and exclusion criteria is on the trials that they run to make sure it's a balanced view to be able to demonstrate what the bleeding a-fib rate would be.

And remember we didn't see a-fib in IMBRUVICA until we got to something like 1,500 patients or so.

And I think we saw bleeding at about 500, 600, something like that, right?

So we have to see a lot more data to see a real signal and it has to be in a population that's consistent with the population that's being treated and we'll see what the data looks like.

But I think the evidence today would suggest that those are on-mechanism.

And so we'll have to see how it plays out but I would tell you that we're confident in our position with IMBRUVICA.

David Risinger, Morgan Stanley.

Thanks very much.

So I wanted to go back to the positive IPR decisions.

Could you please characterize the breadth of those two patents, the 157 and 158 patents which were surprisingly upheld?

Specifically you must have an opinion on the likelihood that other biosimilar manufacturers beyond Amgen will infringe these patents because it's challenging to make a stable monoclonal antibody without infringing.

And then second I'm interested in your perspective on duration of therapy for IMBRUVICA currently and how you expect that to evolve with new indications.

And then also if you could share any thoughts on venetoclax on that front with respect to expected duration of therapy as well, that would be very helpful.

Thank you.

David, this is Rick.

On the IPR part, you know I guess what I'd say is it wasn't surprising to us.

We obviously have a pretty high level of confidence in the IP.

You know as far as others that would infringe, we're certainly not in a position to be able to answer that question because we don't know what their formulations are.

I guess the best place to get that answer would be to ask them.

But as I said we're not going to talk a lot about how we're positioning things and how we plan on running the IPR process going forward.

The most important thing here is that we prevail.

And I realize that probably doesn't give you great comfort but you have to recognize our responsibility is to make sure that we put the best position forward and that we don't tip off -- we don't tip off our opponents in this process as to what our strategy is.

So I apologize for that part of it but that's the trade-off we have to make here.

And you're going to see more of this play out over time and I think you'll get a feel for it.

And you can get other people to evaluate what you think that will look like from an IP standpoint, although I'd say much like this particular patent some people opine that they didn't think it was very strong and you saw how the patent office made their decision.

So I think that's about all we can talk about as it relates to the litigation.

The second would be on duration of therapy on IMBRUVICA.

If you look at the duration of therapy today I'd say it's tracking on what we expected as part of the original deal model that we put together.

To give you some flavor for that I'd say it's about 75% of the clinical trial duration.

It has been increasing over time.

There are a number of elements that basically we have analyzed and have programs in place.

Some of those are payer related and some are other kinds of things that we have to continue to work through.

I think one of the things that will be extremely helpful is the RESONATE-2 data here.

Because now you have absolute data that supports that if you keep these patients on therapy for a longer period of time then you get very good outcomes.

So I think not only from the standpoint of allowing us to be able to move into frontline but as another piece of strong, credible evidence that maintaining therapy over a longer period of time gives patients the benefit that we're looking for.

One of the things that we did see is in certain physician populations from a duration standpoint when blood counts improved some physicians would take patients off of therapy and obviously that's not something that we would want.

So I think RESONATE-2 is a strong supporting set of data that will help give physicians the knowledge and information they need to be convinced that they should keep them on therapy even though the blood counts have improved.

And then on venetoclax, I don't know, Mike, can you talk at all about that?

It's a little hard to tell at this point.

This is Mike.

With respect to duration of therapy with venetoclax I think it's early to make a statement because we're treating many different populations now in clinical trials.

We have a large number of patients continuing on therapy, so those mean durations of therapy are increasing as the data set matures.

So I think we can't give a specific number.

I think what we can say is that the responses we're seeing are very good.

We're keeping patients on therapy.

There is good durability of those responses.

And as the data set matures and as we move to a label I think we can update you on that.

Vamil Divan, Credit Suisse.

Thanks so much.

A couple of questions.

One, just in terms of hep C I appreciate the comments you made for next year and how you're looking into that.

Can you give us a sense if you've seen any impact on prescription trends from the label change that you had to make back near the start of the fourth quarter and if that's impacted things at all?

And then maybe on the pipeline, again I appreciate all the comments that were made earlier and also in response to Mark's questions, maybe if you just streamline things a little bit and just flag if you could the two or three most important data releases that you think investors should be focused on for AbbVie between now and your June R&D day.

Thanks so much.

This is Rick.

I will take the HCV one.

We have seen an impact.

Maybe the best way to describe it would be this.

You saw what our revenues were in the fourth quarter.

We had flagged that the $3 billion running rate in the fourth quarter that we thought, I flagged, that we might miss it but we would be relatively close and that is what we had been tracking against for the fourth quarter.

I'd say in the fourth quarter there were two impacts and one of them is going to be the label change.

That's why I'm going through this explanation for you.

So one was the VA volumes stayed very low through the fourth quarter because of the funding issue in the VA.

So that was one of the impacts.

But then the second was what we saw from collateral impact on the label and I'd say we lost about one share point.

So there was some bleed over impact to other segments because the Child-Pugh B isn't worth one share point.

It has stabilized now at that level.

And so I think the impact has flowed through and we would assume that in what we've built for 2016.

But that's been the overall impact.

And in terms of data releases to keep an eye on, as we said in our remarks we're going to see results from the elagolix endometriosis second pivotal study in the first quarter.

We'll top line that, so that will obviously be something to keep an I out for.

At EASL we'll present a large amount of data on our next-generation hep C program including eight-week and 12 week components of our Phase 2 program.

So that will be something to keep an eye on.

And at ASCO I would look to our data in CLL in venetoclax and also AML in venetoclax as updates that we can keep an eye out for.

Alex Arfaei, BMO Capital Markets.

Good morning folks and thanks for taking the questions.

Obviously there is quite a bit of skepticism about your 2020 HUMIRA guidance.

And given what you said today about Europe and the fact that biosimilar competition will only increase there, can you help us understand how you get there, basically help us bridge the difference between where consensus is right now to your expectation for greater than $18 billion by 2020 for HUMIRA?

And then I'm curious about what are some of the things that you will be looking for during the upcoming REMICADE biosimilar SBA panel?

Thank you.

So Alex, this is Rick.

You know if you think about what we described for you on the 2020 HUMIRA guidance ex-US we basically said that we would see direct biosimilar competition in the fourth quarter of 2018.

We have some impact from indirect biosimilar starting in 2016.

I described earlier in the call what that impact assumption is for 2016.

It will obviously have a flow-through impact into 2017 as that expands and basically flows through.

But then if you think about the erosion curve that I described on the third-quarter call, so what we said was internationally the brand will peak at 2018 and then it will gently start to decline and if you get to the end of 2020 it's down about 15% or so.

That's a combination of volume and price.

Now I'd also tell you because of the category is still growing obviously then the growth would have been there and some of that growth went to a biosimilar player.

So it basically says that about 30% of the total opportunity would have gone over that period of time.

And that's a point at which we see some level of stabilization going forward.

So I think that's the way you would characterize it.

And although we don't have direct knowledge of how each analyst builds consensus around their international and US sets of assumptions, what I would say is the biggest difference between consensus and our forecast is that some people are still forecasting that HUMIRA sees biosimilar competition in the United States.

The number is too big to be anything other than that, the change.

So after our guidance what we did see is we saw HUMIRA move up pretty significantly but not all the way out to our 2020 forecast.

So there are still some individuals who we're assuming that they see biosimilar competition probably now in that 2019 timeframe it's pretty much slid out to.

So it is the difference between that and ultimately our assumption that we will get through 2020 to 2022 and I think that's the biggest single impact.

As far as the [Rem C] panel I think as we talked about internationally we've been watching this play out in the international markets and studying it carefully.

And as we've indicated to the marketplace many, many times before we're not seeing a direct impact on HUMIRA.

And obviously if you look at our growth rates in 2015 and you look at our growth rate in fourth quarter, I think that's indicative of the fact that we're not seeing any substantial impact as well.

And so we wouldn't assume that there would be an impact in the United States either, that really fits in a different category.

I think the one thing that will be interesting to look at in the panel is we have assumed in our planning assumptions that biosimilar players get extrapolation.

We don't agree with that.

We think it's important for any drug to be tested in the indication that it's going to be used in and generate some clinical data.

But I'd say we plan from a conservative standpoint that we will see extrapolation in all the major markets around the world.

I think as we go forward here if somehow we got an indication that that were not going to be the case in the United States that would be a positive to us.

So that's one of the things that we'll be looking at.

Steve Scala, Cowen.

Thank you.

You mentioned the $2 billion in VIEKIRA sales in 2016.

That is less than annualizing Q4 2015 sales which were already a bit held back as you described a couple of minutes ago.

So it seems as these expectations or you're expecting a slowdown quarter over quarter in 2016 despite the launch in Japan.

So where are you expecting to see the pressure?

Secondly, where specifically in Merck's hep C labeled as AbbVie see competitive advantages for VIEKIRA if any?

And then lastly, what has been the uptake of the new formulation of HUMIRA in the EU?

Thank you very much.

Steve, this is Rick.

I will take the first one.

So you are correct that if you look at what we're guiding going forward it is less than our fourth-quarter annualized and that is our intent.

There's two factors there.

Let's be honest, we've had trouble predicting this number, so we wanted to go into 2016 with a number that we had a very high level of confidence that we could hit.

So that is certainly a component of it.

The second component is we are assuming some level of competition from Merck.

So we'll have to see how it plays out but I would say we're going to set this one at a number that we have a high level of confidence that we think we can deliver.

And I'd much rather surprise you on the positive than sit here and apologize on the miss.

And Mike, why don't you cover the label.

Well, so recognizing that the Merck label has just come out what I would say is we would look particularly at the impact of RAVs on response.

And this is something we've been saying since the Phase 3 data were presented.

The US label recommends RAV testing for Merck and guides both regimen and treatment duration based on that.

And with VIEKIRA, that's not the case.

And also when we look at our next-generation regiment and we look at activity in a number of preclinical systems, in viruses that carry those resistance mutations, we see very high levels of activity for our agent.

So we think that that's going to be a strength for our programs going forward.

And then on your last question, we have not launched the new HUMIRA formulation internationally or in the US.

We need a new pen device for this formulation and so we have submitted the pen in both jurisdictions.

We'll have to wait for that to get approved and once that's approved then we'll make our decisions on launching those.

John Boris, SunTrust.

Thanks for taking the questions and congratulations on the results.

First question has to do with the Japanese markets.

Are you anticipating any impact to your franchises from price decreases in Japan in April?

Second question, what percent of HUMIRA revenues in US and ex-US come from rheumatoid arthritis?

And can you give some color on timing around when the pen might see or secure approval?

And then last question just has to do with ABT-494, it seems that competitively baricitinib and the developers there have latched onto an important area of diabetic nephropathy that appears to have an effect that would be a very large untapped market.

I'm sure you'll talk about this in June but any thoughts around further broadening the development outside of RA for ABT-494?

Thanks.

So John, this is Rick.

I'll take the first one.

So the Japanese market price adjustments, we are aware of it.

It has been communicated to us.

So it's built into our 2016 guidance.

I don't think it's something we can tell you because really the Japanese authorities need to release that, not us.

But I'd say it was in the range slightly lower than we would have expected.

So I think it's fine and as I said it's in the guidance already.

But we are aware of what the number is.

The HUMIRA indication mix, it was RA you said?

Yes, RA, John, right now is just a bit under 35% of global sales.

And then the pen devices they were submitted recently, so we're thinking second half of 2016.

And then ABT-494, Mike?

Sure.

This is Mike.

So with respect to broadening out ABT-494 development, we obviously believe that ABT-494 has broad potential in RA.

In other immunologically-mediated conditions we have programs underway in inflammatory bowel disease and I think the data support that we're likely to see a good effect there.

With respect to diabetic nephropathy, it's an intriguing idea.

It's certainly something we'd consider and perhaps that is a good topic for our R&D day in June.

Colin Bristow, Bank of America.

Good morning and thanks for taking the question and all the useful color.

So first on HUMIRA, just in the 4Q can you comment specifically or at least qualitatively on the level of rebating in the quarter and how it compares year over year and sequentially?

Second on hep C, can you give us some idea of the number of contracts perhaps as a proportion of 2015 which you secured with exclusivity for 2016?

And then thirdly, and sorry if I missed this but on the HUMIRA ex-US front, can you give us an update on the impact you're think from biosimilar REMICADE?

I think previously you said around 3% share.

And then just following on from that theme, how do you anticipate the threat from the biosimilar Enbrel given it's an injectable versus an infusion?

Thanks.

So call on, it's Bill Chase.

On the rebating around HUMIRA obviously we don't go to any great lengths explaining the levels of rebating.

What you need to think about with our pricing dynamic on HUMIRA is price increases in the later half of the year tend to have less of a fallthrough that's related to basically pricing caps in certain programs.

So to the extent that we take price later in the year, our rebate goes up for those particular programs.

But I don't want to get into any specific numbers around that at this point in time.

On the HCV contracting when we originally launched, and the exclusive contracts that we had were multiyear contracts with the exception of the Medicaid contracts which many of those are annual contracts.

They get bid out on a yearly basis so I'd say certainly the majority of our business is under a multiyear contracting strategy.

On HUMIRA Rem C, I may not have heard the question correctly but we haven't communicated that it's had a 3% impact but had virtually no impact on our business.

Overall if you look at their overall biologic share is somewhere around 3% but the vast majority of that has come from REMICADE.

And then Enbrel is what I described earlier that we are anticipating about a 2% impact from a growth rate standpoint.

The majority of that, the vast majority of that is price.

There are certain markets where there will be a price impact.

Operator, we have time for one more question, please.

Andrew Baum, Citi.

Thank you, three questions please.

Firstly, you've expressed previously your confidence in the robustness of the 135 patent within the US and I know it's had a very lengthy prosecution history to attain inclusion in the US PTO.

Could you contrast that with the withdrawal of the similar patents from Europe?

What underpins the confidence in the US building on the lengthy patent prosecution if you'd like to comment?

Second, perhaps you could go into a little bit more detail in terms of the reference pricing for anti-TNF agents within Europe.

Obviously thinking of the impact of Enbrel and dragging down the prices of the category.

And finally, just on Acerta's BTK inhibitor do you believe that they infringed AbbVie's intellectual-property?

Thank you.

Thanks, Andrew.

On the 135 patent, as I said before we're not going to go through a lot of detail back and forth.

But the one thing I do want to clarify is remember IP in Europe is different than IP in the United States in how it is ultimately prosecuted.

The second thing is it's important to remember that although we withdrew the parent patent we did it because there was one particular assay that we had a second patent that didn't have that question.

And therefore we pulled that patent in order to basically just focus on this other patent.

So it's not like we withdrew it because we were concerned about it.

And so ultimately -- but that is not an issue from a US standpoint.

I think that's probably as much as we're going to talk about it.

Reference pricing, obviously part of what I indicated earlier is reference price but I'd say also there are some markets where there could be some hospital negotiations also that could have an impact here.

And so we factored in what we think is certainly a conservative number, but I think it's an appropriate number to be able to ultimately plan for 2016.

And then on Acerta BTK, the IP, again we have significant IP in this area.

And if we believe Acerta infringes that IP we'll enforce the IP.

Thanks, Andrew.

And that concludes today's conference call.

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