艾伯維 (ABBV) 2021 Q3 法說會逐字稿

Good morning.

Thank you for standing by.

Welcome to the AbbVie Third Quarter 2021 Earnings Conference Call.

(Operator Instructions) I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations.

Ma'am, you may proceed.

Good morning, and thanks for joining us.

Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Michael Severino, Vice Chairman and President; Rob Michael, Executive Vice President and Chief Financial Officer; and Jeff Stewart, Executive Vice President, Commercial Operations.

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

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

Additional information about these risks and uncertainties is included in our SEC filings.

AbbVie undertakes no obligation to update these forward-looking statements, except as required by law.

On today's conference call, non-GAAP financial measures will be used to help investors understand AbbVie's business performance.

These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website.

Unless otherwise noted, our commentary on sales growth is on a comparable basis, which includes full current year and historical results for Allergan.

For this comparison of underlying performance, all historically reported Allergan revenues have been recast to conform to AbbVie's revenue recognition accounting policies and exclude the divestitures of ZENPEP and VIOKACE.

References to operational growth further exclude the impact of exchange.

Following our prepared remarks, we'll take your questions.

So with that, I'll now turn the call over to Rick.

Thank you, Liz.

Good morning, everyone, and thank you for joining us today.

I'll discuss our third quarter performance and outlook, and then Jeff, Mike and Rob will review our business highlights, pipeline progress and financial results in more detail.

AbbVie continues to perform very well.

We once again delivered an outstanding quarter with adjusted earnings per share of $3.33, exceeding the midpoint of our guidance by $0.13.

Total adjusted net revenues of more than $14.3 billion was up 10.8% on an operational basis, with balanced growth across each of the major growth platforms.

We continue to see double-digit revenue growth in immunology, where SKYRIZI and RINVOQ have established very strong launch trajectories.

These 2 assets are either approved, under regulatory review or in late-stage development across all of Humira's major indications, and we remain confident that they will both be significant contributors to AbbVie's long-term growth.

Aesthetics is also demonstrating impressive double-digit operational sales growth.

Our dedicated global Aesthetics structure and increased investment are driving accelerated category growth across both toxins and fillers, where there is substantial room for additional market penetration.

Our strategic investments and targeted field force expansions have improved overall customer retention rates and significantly increased the number of first-time patients to our leading brands.

We are once again raising our full year guidance for Aesthetics this quarter, and we view this portfolio as an extremely attractive growth opportunity over the long term with high single-digit compounded annual growth rates expected through the end of the decade.

Our Neuroscience business drove robust double-digit revenue performance again this quarter, and we added a compelling new product to our migraine portfolio with the approval of QULIPTA, a once-daily oral medication for the preventative treatment of episodic migraine.

Our hematological oncology portfolio delivered operational sales growth of approximately 8% this quarter despite a protracted market recovery in CLL, which remains below pre-COVID levels.

Beyond the significant contributions of IMBRUVICA and Venclexta, we have an exciting oncology pipeline with several promising programs in development for blood cancers and solid tumors, to support sustainable long-term growth.

These include navitoclax for myelofibrosis, epcoritamab for B-cell malignancies, [ABBV-383] for multiple myeloma, lemzoparlimab for AML and MDS, as well as Teliso-V for non-squamous non-small cell lung cancer.

Lastly, we continue to make excellent progress with the integration of Allergan.

Our financial results show that we have created a stronger and much more diverse company with numerous products across our newly combined portfolio, delivering robust growth.

Overall, I'm extremely pleased with our momentum, and we are once again raising our full year 2021 EPS guidance.

We now expect adjusted earnings per share of $12.63 to $12.67, reflecting growth of nearly 20% at the midpoint.

Additionally, as noted in our news release, today, we're announcing an 8.5% increase in our quarterly cash dividend from $1.30 per share to $1.41 per share, beginning with the dividend payable in February 2022.

Since our inception, we've grown our quarterly dividend by more than 250%.

In summary, we're demonstrating strong execution across our portfolio.

We've assembled an impressive set of diversified assets with significant growth potential, giving us a high degree of confidence in the long-term outlook for our business.

With that, I'll turn the call over to Jeff.

Jeff?

Thank you, Rick.

We continue to demonstrate strong and balanced growth across our therapeutic portfolio.

I'll start with immunology, where we remain well positioned for sustained leadership with a portfolio of best-in-class medicines.

Total immunology revenues were approximately $6.7 billion, up 14.9% on an operational basis.

Global Humira sales were more than $5.4 billion, up 5.2% on an operational basis, with 10.1% revenue growth in the U.S., offset by biosimilar competition across the international markets, where revenues were down 16.7% on an operational basis.

SKYRIZI is performing extremely well.

Global sales of nearly $800 million were up 18.1% on a sequential basis, reflecting continued market share gains.

In the U.S., SKYRIZI's leading in-play psoriasis patient share, which includes both new and switching patients, is now roughly 36%, more than double the share capture of the next nearest biologic competitor.

SKYRIZI total prescription share in the U.S. psoriasis biologic market is now nearly 20%, second only to Humira.

Internationally, SKYRIZI continues to ramp nicely, having also achieved in-play patient share leadership in more than a dozen key markets.

This compelling share performance will be further supported by 2 important near-term enhancements: the availability of more simple delivery forms for SKYRIZI as well as the potential indication expansion in psoriatic arthritis.

First, we recently launched the new and convenient SKYRIZI single-dose 150-milligram self-injectable pen and syringe in major territories around the world.

The market response has been very favorable, and the approval now makes SKYRIZI the only quarterly dose brand that is available in a single self-injectable pen for patients.

Second, we are preparing for the global launch of SKYRIZI in psoriatic arthritis as we near approval decisions in both the U.S. and Europe.

We received a CHMP positive opinion earlier this month with anticipated approval in Europe by year-end, and we continue to expect FDA approval early next year.

The addition of this indication, once approved, will round out SKYRIZI's dermatology label and give patients with PsA access to a new compelling therapeutic option.

We are also making excellent progress with SKYRIZI's development in Crohn's disease, which was recently submitted for U.S. regulatory review with commercialization expected next year.

RINVOQ also continues to demonstrate robust growth.

Global sales of more than $450 million were up nearly 20% on a sequential basis.

Total in-play RA share remains strong and now reflects approximately 17% patient share in the U.S. as well as leadership in a half a dozen key countries around the world.

Internationally, RINVOQ share continues to ramp in RA, and we are making excellent progress with the recent commercial launches of PsA, AS and atopic dermatitis, where we have secured strong labels for each of these indications.

As many of you are aware, the FDA issued a safety communication regarding new and updated warnings for JAK inhibitors, including RINVOQ,, in early September.

While we do not yet have an updated label, we are closely monitoring prescription trends and feedback from the field, and we have not observed a significant impact to RINVOQ's utilization at this time.

That said, should the updated label restrict use to TNF-inadequate responders, we would certainly expect a near-term impact to new patient starts in RA.

Based on the robust data we have generated across our development program against multiple biologics and later lines of RA therapy, we do expect that RINVOQ will ultimately obtain higher share growth in the second-line-plus setting as most patients ultimately fail TNF therapies over time.

Overall, we continue to feel very good about the performance and profile of RINVOQ and remain confident this asset will be a major contributor to AbbVie's long-term growth.

In hematologic oncology, global revenues were nearly $1.9 billion, up 8.1% on an operational basis.

IMBRUVICA and Venclexta have a strong position across multiple heme indications, including CLL, where AbbVie's combined portfolio remains the clear market share leader across all lines of therapy.

Global IMBRUVICA revenues were approximately $1.4 billion, up 0.3%.

In the U.S., performance continues to be primarily impacted by a slower-than-expected market recovery in CLL as well as some modest share erosion from newer therapies, including Venclexta and other BTK inhibitors.

New patient starts in CLL remain below pre-COVID levels, and it is difficult to predict when this dynamic may fully recover.

Venclexta sales were up 38.7% on an operational basis with increasing momentum across all indications, including a strong AML launch trajectory in the international markets.

In neuroscience, revenues were nearly $1.6 billion, up 25% on an operational basis.

I'm particularly pleased with the results and outlook for our emerging migraine portfolio, where we are now the only company to have a portfolio of distinctive therapies to address the spectrum of this common complex and debilitating disease, including BOTOX Therapeutic, a unique foundational treatment for the prevention of chronic migraine, which is performing very well.

Total sales of $645 million for all the therapeutic BOTOX uses were up 22.5% on an operational basis.

UBRELVY, our leading oral CGRP treatment for acute migraine is also demonstrating rapid growth.

Total sales of $162 million were up nearly 30% on a sequential basis.

Based on UBRELVY's competitive profile, continued strong new patient starts and a rapidly expanding market, we remain confident that UBRELVY represents a $1 billion-plus peak sales opportunity.

And now we are just launching QULIPTA, the only oral CGRP specifically developed for the preventative treatment of migraine, which is already off to an excellent start.

Early feedback from our physicians has been very positive, given QULIPTA's strong efficacy, safety and convenient dosing profile relative to the current standards of care.

The QULIPTA launch is being supported by our existing migraine sales force with commercial access expected to ramp strongly through the first half of 2022 QULIPTA also represents a $1 billion-plus peak sales opportunity.

Now we believe having 3 distinct and competitively positioned therapies across the spectrum of migraine conditions with BOTOX Therapeutic, UBRELVY and QULIPTA, which each have been optimized for a specific migraine indication, enables physicians to tailor treatment for the broadest range of patients.

Our portfolio of migraine therapy puts us in a very strong position that capture growth in this dynamic market.

Turning to psychiatry.

We also see robust performance with VRAYLAR, which remains the fastest-growing atypical antipsychotic.

Total revenues of $461 million were up 29% on an operational basis, with continued strong demand across schizophrenia, bipolar I disorder and bipolar depression.

Lastly, in our other key therapeutic areas, we saw a significant contribution from Eye Care, which had revenues of $871 million, up 2.9% on an operational basis.

MAVYRET sales were $426 million, up 2.9% on an operational basis as treated patient volumes still remain suppressed compared to pre-COVID levels.

And we saw double-digit growth operationally for both Creon and Lupron.

So overall, I'm pleased with our continued execution across the therapeutic portfolio, which is demonstrating strong revenue growth.

And with that, I'll turn the call over to Mike for additional comments on our R&D programs.

Mike?

Thank you, Jeff.

I'll start with immunology, where we had several regulatory updates and data readouts for both RINVOQ and SKYRIZI across therapeutic areas.

Following successful completion of the registrational programs for RINVOQ in ulcerative colitis and SKYRIZI in Crohn's disease, we submitted our regulatory applications for each asset in their respective indications.

We saw very strong data for both RINVOQ and SKYRIZI as induction and maintenance treatments in UC and Crohn's, respectively.

And based on these results, we believe both drugs have the potential to become a highly effective, differentiated therapies in these indications.

We anticipate approval decisions for both in 2022.

Earlier this month, we announced positive top line results from our Phase III SELECT-AXIS 2 program for RINVOQ and axial SpA, which included data from 2 stand-alone studies.

One for ankylosing spondylitis patients who had an inadequate response to biologics and another for patients with non-radiographic axial SpA.

In the ankylosing spondylitis biorefractory study, RINVOQ performed very well, demonstrating significantly greater improvements in signs and symptoms, as well as physical function and imaging endpoints compared to placebo.

We saw levels of efficacy in this difficult-to-treat refractory population similar to those more typically observed in bio-naive patients.

These results will be added to our submission package for RINVOQ and AS, which is currently under review by the FDA.

In the non-radiographic axial SpA study, RINVOQ also performed very well, meeting the primary and key secondary endpoints.

We plan to submit our regulatory applications in this indication later this quarter as well.

RINVOQ's safety profile in these axial SpA trials was consistent with previous studies, and there was no evidence for increased risk of DVT, PE, MACE events or malignancies in either study.

Based on the data generated in the SELECT-AXIS program, we believe RINVOQ has the potential to improve care for patients suffering from axial spondyloarthritis by providing sustained disease control and rapid and durable pain reduction as well as improving function.

As you're likely aware, in September, the FDA communicated that they will require new warnings for JAK inhibitors, including RINVOQ, and their use will be limited to certain patients who have not responded to or cannot tolerate anti-TNFs.

We continue to work with the FDA regarding updated labeling language for the RA indication while simultaneously engaging with the agency on our files for atopic dermatitis, psoriatic arthritis and ankylosing spondylitis.

We remain confident in our submission packages for these 3 new indications and continue to expect approvals following completion of the RA label update.

In the area of oncology, we continue to make good progress, advancing all stages of our pipeline.

We're nearing completion of several indication expansion programs for Venclexta.

In our study in previously untreated higher-risk MDS patients, which recently received a breakthrough therapy designation, we expect to make a data cut early next year to include 6-month follow-up data for duration of response.

Based on this data cut, we plan to submit our regulatory application to the FDA in the first half of 2022 for an accelerated approval.

We continue to make good progress with Venclexta in the CANOVA trial, which is evaluating Venclexta in relapsed/refractory multiple myeloma patients with a t(11 14) mutation.

Venclexta has shown strong anti-myeloma activity in this biomarker-defined population and, if successful, has an opportunity to play an important role in the treatment paradigm for multiple myeloma.

We expect the data readout from this event-driven trial next year.

In our early- to mid-stage hem/onc pipeline, we continue to expand the cohorts in the epcoritamab Phase I/II studies in diffuse large B-cell lymphoma and follicular lymphoma.

And we're evaluating epcoritamab as both a monotherapy and in combinations.

We expect to see data from both the monotherapy and combo studies next year, and we will discuss the monotherapy data with regulators regarding a file for accelerated approval.

We also recently began the dose escalation stage of the Phase Ib studies for lemzoparlimab in AML, MDS and multiple myeloma.

And [ABBV-383], our BCMA CD3 bispecific antibody, is currently in the expansion stage of its Phase I study in multiple myeloma patients, and we expect to begin registrational Phase III studies next year.

Moving to neuroscience, where we had several notable pipeline events since our last earnings call.

In September, we received FDA approval for QULIPTA, the only oral CGRP specifically designed as a preventative treatment for migraine.

We're very pleased with the label, which reflects QULIPTA's strong benefit risk profile and is supported by a robust clinical development program.

In our registrational program, which evaluated QULIPTA in nearly 2,000 patients suffering from episodic migraine, treatment with QULIPTA resulted in a significant reduction in mean monthly migraine days compared to placebo.

And approximately 60% of patients achieved at least a 50% reduction in mean migraine days.

We think these data compare favorably to other preventative migraine treatments on the market and believe our new oral treatment option will be competitively positioned in the prevention market.

Our migraine portfolio now includes UBRELVY for acute treatment of migraine, QULIPTA for preventative treatment of episodic migraine and BOTOX for preventative treatment of chronic migraine.

With this distinct portfolio, AbbVie is uniquely positioned to address the full spectrum of this complex and debilitating disease.

This morning, we announced top line results from 2 Phase III studies evaluating VRAYLAR as an adjunctive treatment in major depressive disorder.

In the 301 study, the 1.5-milligram VRAYLAR dose met the primary endpoint, demonstrating a clinically meaningful improvement in total MADRS score compared to placebo at week 6 with a highly statistically significant p-value of 0.005.

In this study, the 3-milligram VRAYLAR dose did not reach statistical significance, but it did show a clear trend toward improvement with a nominal p-value of approximately 0.073 at week 6.

In the second Phase III trial, the 302 study, neither VRAYLAR dose met the primary endpoint of changing total MADRS score at week 6, but both the 1.5 and 3-milligram doses demonstrated clear trends toward a clinically meaningful benefit at weeks 2 and 4, with nominal p-values less than 0.05 for a number of comparisons.

Additionally, as a reminder, we had 1 prior positive registrational Phase IIb study, where VRAYLAR demonstrated efficacy in MDD when added to ongoing antidepressant treatments.

Based on precedent in the field and the totality of the data, we believe we have a viable regulatory pathway for VRAYLAR as an adjunctive treatment in major depressive disorder.

We plan to engage with regulatory agencies to discuss these results and expect to submit our regulatory application to the FDA in the first half of next year.

We also recently announced positive top line results from a Phase III study comparing our novel subcutaneous levodopa/carbidopa delivery system, ABBV-951 to oral levodopa/carbidopa in patients with advanced Parkinson's disease.

In this pivotal study, treatment with 951 resulted in clinically meaningful improvement in on-time without troublesome dyskinesia as well as similar improvements in normalized off time compared to oral levodopa/carbidopa.

We're very pleased with these results, which we believe support our view that 951 has the potential to become a transformative improvement to current treatment options for patients with advanced Parkinson's disease.

We plan to submit our regulatory application next year with approval decisions anticipated in the U.S. and Europe in early 2023.

And in Eye Care, we announced a partnership with REGENXBIO to develop and commercialize RGX-314, a potential gene therapy for the treatment of wet AMD, diabetic retinopathy and other chronic retinal diseases.

RGX-314 is a very attractive addition to our pipeline and complements our Eye Care portfolio with a potential flagship product in retinal disease.

REGENXBIO recently presented initial data from 2 Phase II studies evaluating RGX-314 in wet AMD and diabetic retinopathy using in-office suprachoroidal delivery.

While early, these results are encouraging, with RGX-314 demonstrating efficacy at the lowest dose and the study showing that the drug and delivery method both appear to be well tolerated.

Also in Eye Care, we continue to expect approval for [Veuty] shortly, formerly known as AGN-190584, for the treatment of symptoms associated with presbyopia.

This once-daily eye drop was developed to help address the presbyopia that is often corrected through reading glasses and, once approved, would be a convenient on-demand solution for patients with mild to moderate presbyopia, who may not want to wear reading glasses.

This has been a very productive year thus far for our R&D organization, and we anticipate several additional milestones in the coming months.

We expect this momentum to continue into next year, which is looking to be a milestone-filled year for AbbVie as well.

With that, I'll turn the call over to Rob for additional comments on our third quarter performance and financial outlook.

Rob?

Thank you, Mike.

As you have heard from Rick, Jeff and Mike, we once again delivered outstanding performance this quarter, while also advancing our strategic priorities.

Our results demonstrate the strong momentum of the business and support AbbVie's long-term financial outlook.

Turning to third quarter results.

We reported adjusted earnings per share of $3.33, up 17.7% compared to prior year and $0.13 above our guidance midpoint.

This includes $0.05 from accelerated synergies and $0.03 from mark-to-market equity gains.

Total adjusted net revenues were $14.3 billion, up 10.8% on an operational basis, excluding a 0.5% favorable impact from foreign exchange.

The adjusted operating margin ratio was 51.1% of sales, an improvement of 230 basis points versus the prior year.

This includes adjusted gross margin of 83.2% of sales, adjusted R&D investment of 11.4% of sales and adjusted SG&A expense up 20.6% of sales.

Net interest expense was $585 million, and the adjusted tax rate was 12.6%.

As Rick previously mentioned, we are raising our full year adjusted earnings per share guidance to between $12.63 and $12.67, reflecting growth of 19.8% at the midpoint.

Excluded from this guidance is $6.34 of known intangible amortization and specified items.

This guidance continues to contemplate full year revenue growth of 10.7% on a comparable operational basis.

At current rates, we now expect foreign exchange to have a 0.7% favorable impact on full year comparable sales growth.

This implies a full year revenue forecast of approximately $56.2 billion.

Included in this guidance are the following updated full year assumptions.

We now expect Aesthetics' global revenue of approximately $5.1 billion.

We now expect international Humira sales of approximately $3.3 billion.

For IMBRUVICA, we now expect global revenue of approximately $5.5 billion, reflecting slower recovery of the CLL market.

For MAVYRET, we now expect global sales of approximately $1.7 billion, and we now expect Allergan expense synergies of approximately $1.8 billion.

As we look ahead to the fourth quarter, we anticipate net revenue approaching $15 billion.

At current rates, we expect foreign exchange to have a modest unfavorable impact on sales growth.

We expect adjusted earnings per share between $3.24 and $3.28, excluding approximately $1.14 of known intangible amortization and specified items.

Finally, AbbVie's strong business performance continues to support our capital allocation priorities.

We generated $17 billion of free cash flow in the first 9 months of the year, and our cash balance at the end of September was $12 billion, underscoring our confidence in AbbVie's long-term outlook.

Today, we announced an 8.5% increase in our quarterly cash dividend, beginning with the dividend payable in February 2022.

And we remain on track to achieve $17 billion of cumulative debt paydown by the end of this year with further deleveraging through 2023.

This will bring our net leverage ratio to 2.3x by the end of 2021 and approximately 2x by the end of 2022.

In closing, AbbVie has once again delivered outstanding results, and our financial outlook remains very strong.

With that, I'll turn the call back over to Liz.

Thanks, Rob.

We will now open the call for questions.

(Operator Instructions) Operator, we'll take the first question.

Our first question comes from Geoffrey Porges with Leerink.

Rick, I guess I'll jump in with the big one that I think is still the overhang for the stock, which is the RINVOQ outlook.

You have $15 billion out there for 2025 in combined SKYRIZI, RINVOQ forecast guidance.

And I'm just wondering if you could give us a sense of the puts and takes.

SKYRIZI doing really well, but some overhangs for RINVOQ.

Is that $15 billion still achievable?

Do you think you're trending above that?

Or do you have to make up a shortfall?

Yes.

I mean, Geoffrey, this is Rick.

It's a great question.

What I'd say is the following.

If I look at SKYRIZI, I would tell you that SKYRIZI's performance is very, very impressive.

Jeff outlined what the in-play share is and what the total TRxs are, and it's very close to passing Humira now, which, in this short period of time is, frankly, a surprise, how quickly it has ran.

So I think that's a very positive case.

If I look at RINVOQ, actually, the in-play share looks very good.

Now we would expect if the label gets changed and restricts the label to do behind TNFs that, that will have some impact on the frontline patients the naive patients that we're capturing now.

And so we will see that impact.

Having said that, I would say that when I look at RINVOQ's performance overall and how durable it's been throughout this situation, we'll obviously shift more towards second-line patients and beyond, which was originally in the plan, but the emphasis would have occurred a year or two later than this, where we would have driven that.

We have very good data to be able to support that.

The other thing I'd say is if you look at the indications that we have coming out for these 2 assets, we have AD, which is a very significant opportunity for us, we have PsA and -- is a very significant opportunity.

But next year, we have the IBD indications that are coming out.

And I'd say there, when we gave the $15 million forecast, the performance that was in our TPP, or our target product profile, that we had assumed, we have outperformed that in the clinical trials that we've submitted.

And so I think that's a very significant opportunity for us and a significant opportunity for us to outperform.

Having said all of that, we don't want to reconfirm the guidance yet.

We want to see what the final label looks like from the agency.

And then we'll be in a position, I think, to come out and tell the investor community exactly what we think.

The only other thing I'd say is -- I think if you go back 5, 6 years ago, what we were trying to accomplish with the company, we're basically trying to accomplish with the company, build a set of assets that could ultimately significantly replace Humira in the marketplace and be superior to Humira.

These 2 assets already are at $5 billion and growing very rapidly.

So I think everything I know about these 2 assets, they'll be able to do exactly what we expected of them, even in the most negative outcome from a label standpoint that we would expect.

Second thing is we built a significant hem/onc portfolio that when I look at the pipeline behind IMBRUVICA and Venclexta, I think there's a significant opportunity to drive significant growth in that portfolio.

And then with the Allergan acquisition, I couldn't be more pleased.

And Aesthetics franchise is performing at an outstanding level, the neuroscience franchise is performing at an outstanding level.

I think the migraine is a very significant opportunity for us to be able to drive and Eye Care is another one.

And so we now have multiple assets and multiple portfolios to be able to drive the growth.

And our goal is still what we described to the analysts early on.

We expect to see the impact of the LoE on Humira in '23 and immediately be able to grow beyond that, starting in '24, return to growth, sales growth at that point.

And regardless of what happens with RINVOQ's label, I have a high level of confidence we can continue to do that.

Rob, anything you'd add?

I would just add that, obviously, with the confidence we have in the dividend increase we announced today, we feel very strong about the long-term outlook.

We haven't backed off on the high single-digit growth in '25 and beyond.

When you look at the portfolio we've assembled, if you look at the assets we have, today, you look at our pipeline, you look at the BD work we've been doing over the last couple of years with some nice licensing deals, and we still feel very confident in the outlook for this business.

Thanks, Geoffrey.

Our next question is from Andrew Baum with Citi.

Could you flip back to the other side of RINVOQ, SKYRIZI and just talk to Humira.

Could you talk to your comfort level with where consensus currently has Humira pegged and the anticipated scale and scope of the erosion?

And then second, in relation to your ongoing Alvotech pending court case, could you just confirm whether if they prevail, that would effectively invalidate the signed settlements with the other biosimilar players, meaning that you would have a number of players cutting that much quicker onto the market with anticipated price and volume impact.

Okay.

Andrew, this is Rick.

So I'll cover the second one, the Alvotech one.

I'm going to have Rob cover the first one.

Yes, we've seen movement in terms of consensus numbers since we've given just some direction on how to model it.

I think right now, consensus in '23 sell-side consensus has about 41% erosion in the U.S. in '23.

And we've said -- think about it in terms of 45% based on what we saw in Europe in year 1, plus or minus 10%, given the differences in the payer landscape in the U.S. versus other markets.

So we have seen the Humira consensus move.

Today, it's at 41%.

So it's a lot closer than it was a year ago.

Okay.

Andrew, this is Rick.

I'll cover the Alvotech situation.

So as you know, we're in litigation with Alvotech.

I think it's important to understand the nuances behind that litigation.

So in this first set of litigation, this first wave of litigation, we are basically applying 10 patents in Humira.

And as you know, we have a very robust patent portfolio around Humira.

But these 10 patents are both formulation patents and indication patents.

Many of these patents were challenged through the IPR process and upheld by the patent office.

So it gives you some idea of the strength of these patents.

So the first thing I'd say to you is we have a high level of confidence that we will prevail in this litigation.

There will be a second wave of litigation that occurs after that, which will bring into the portfolio the rest of the patents that we think Alvotech infringes.

So there could be another phase of litigation that occurs after this one.

But I can tell you, we're highly confident that we will prevail in this first set of litigation based on the strength of those patents.

To specifically answer your question, if they were to prevail, which I don't believe they will, then it would accelerate the other patent settlements, yes, that is correct.

Thank you, Andrew.

It comes from Chris Schott with JPMorgan.

Just one quick follow-up on RINVOQ and the upcoming indications.

I guess, do you see a scenario where you are unable to get the drug approved in these pending indications, particularly AD over the next few months?

Or is your view based on all the interactions, et cetera, that this is largely, I guess, a label and maybe line of therapy kind of discussion and decision with the agency?

And then my second question was on BOTOX Aesthetics, very healthy growth you're seeing here.

We're now coming up against even some more normalized comps and you're still seeing the growth rate very, very healthy.

Just, are we still seeing catch-up usage in this?

Or is this just really underlying demand at this point?

And just a little bit more color about just how you're thinking about kind of the near-term growth trajectory?

I know you talked about high single digits over time.

But just as we may look out to '22, '23, could this remain kind of a mid-teens type of growth rate product over that window?

Mike?

Okay.

Thanks, Chris.

This is Mike.

I'll take the first one, and then Rick will take the second part of your question.

With respect to RINVOQ and the 3 new indications, so psoriatic arthritis, atopic dermatitis and ankylosing spondylitis, we remain very confident in those files, and we remain very confident in approval decisions.

The gating factor here is really getting to the specifics of the language around RA, which is a process that is well underway.

And we would expect to be in a position to gain approvals after that is completed.

And again, we hope that's completed in the near future, certainly this year.

The psoriatic arthritis and atopic dermatitis filings, we would expect to follow fairly closely on the heels of that RA decision for ankylosing spondylitis.

As I mentioned in my prepared remarks, we've rolled in a new study, which is a positive study and a very strong study in ankylosing spondylitis into that submission.

And so that one might be on a slightly different time frame, but we remain very confident in that approval as well.

Chris, this is Rick.

On BOTOX, I think one of the things when we first went through the integration process that was compelling to us was the amount of penetration in these markets and Allergan's ability to be able to reach out and touch consumers and activate those consumers.

And that's part of what drove our decision globally to go with this fully integrated, totally dedicated Aesthetics organization, because in many other markets around the world, although the data is not quite as good as it is here in the U.S., but in China as an example, you see very similar kinds of dynamics.

And so focusing that team purely on Aesthetics was part of the effort here to be able to drive accelerated growth.

The second was -- when we looked at the ability to be able to use various methods to be able to activate consumers, we believed that the business was being underfunded in a way, both in the way it was being funded and the total amount that was being funded.

And so we did some early work to determine whether or not that funding could drive incremental market growth, and it showed a positive result.

And then when we saw that, we applied significantly greater funding to it.

And what you're actually seeing now, I think, is we are driving the market.

We're bringing more patients into the category and obviously because we have the leadership position from a market share standpoint.

We get the vast majority of those patients.

Is there still some pent-up demand?

I would tell you, it's hard to believe at this point that there can be a lot of it, but there has to be some of it, right?

Because remember, those practices reopened in the U.S. in the summer of 2020.

So that's a long time to have pent-up demand.

But it's impossible to tell one way or another.

So I would say the majority of it is certainly being driven by us activating patients and retaining more patients.

One of the other things we saw was the retention rate was relatively low once you activated a patient.

And so we spent some time working with the team to figure out how could you retain those patients at a higher rate, meaning they repeat their procedures.

They don't just do it once and then disappear, but they come back for a second procedure or, plus, go into fillers as an example.

So the data is very clear.

If you look at the U.S. as an example, toxins and fillers are growing high 30% of market.

We're growing at about the same rate, maybe a little bit lower on fillers, but about that rate on toxins.

When we look at globally, the overall brands are growing at about that rate.

And so I think this is a business that is sustainable over the long term.

When we say across the decade high single digits, obviously, if we keep this growth rate, the business is getting bigger and bigger.

So therefore, the percentage will come down a bit.

But I'll tell you, I'm very optimistic about this in this market and our ability to be able to bring new assets into this market that can change the standard of care going forward and us being able to drive market growth at the same time.

It's a very good business.

Thank you, Chris.

That comes from Tim Anderson with Wolfe Research.

I wanted to ask a question on Humira in 2023 and just really trying to nail down what's in that erosion guidance of 45%, plus or minus 10%.

That's sales erosion, not volume, correct?

I'm trying to think through what happens to the U.S. rebate stream in 2023, which is likely in the billions of dollars.

Do you think you'll retain favorable formulary positioning even with biosimilars, in which case you keep paying that rebate, but you also would have less volume loss?

Or do you think it becomes disadvantaged on formulary, in which case you pull back those billions of dollars in rebates and that flows through to the bottom line?

To me, I just wonder if your guidance on erosion is frankly too conservative or, I should say, too aggressive because those rebate dynamics in the U.S. may make this a more durable market than ex U.S., where those rebate dynamics don't exist.

Yes.

So Tim, this is Rick.

Maybe Rob and I will tag-team this one.

I'll start.

I think the guidance we laid out of 45% or 48% whichever is the latest number, plus or minus 10%, it's still a guidance that we feel pretty comfortable with.

To your point about, is the bulk of it priced?

It is.

Even if you look at the international markets, it's about 1/3, 2/3 and maybe slightly higher than that, meaning 2/3 of it is price, 1/3 of it is volume.

And I would expect that we will maintain a significant part of the volume.

Obviously, we don't talk publicly about what our managed care strategy is, but what I would tell you is we're close enough now to that '23 time frame that you would expect us to be starting the work to ensure formulary access on all of our products, and certainly Humira is one of those, for 2023.

And I think it is logical to assume that we will want to maintain that formulary position.

And we've been pretty effective at doing that historically.

So I believe we'll be pretty effective at doing it again.

Rob, anything you want to add?

Just as a reminder, I mean, so we gave that -- we were using Europe as an analog, but keep in mind that the U.S. system is very, very different.

It's why we gave you a range.

And so as we get closer to '23, obviously, we'll give more specific guidance on the U.S. But we were communicating with more directional information based on the experience we saw with Europe.

Keep in mind there were 4 biosimilars that came in the market at that time, there'll be more biosimilars coming in the U.S. markets.

There's a different level of competitive intensity, but also it's a very different payer landscape.

So it's something to keep in mind.

Thank you, Tim.

It comes from Gary Nachman with BMO Capital Markets.

A couple on neuro that had some recent wins.

So first on VRAYLAR and the Phase III studies in MDD.

In one study, you hit on the 1.5-milligram dose, but not the 3-milligram dose.

It was close, but not statistically significant.

So will that matter to the FDA?

Maybe you could remind us what doses hit in the previous Phase III.

And now that you have the full data set, how do you think VRAYLAR will stack up competitively in the MDD space?

And then just quickly, on migraine, a little bit more how the initial launch has gone for QULIPTA?

And how has that been rolled into the BOTOX and UBRELVY offering?

And just your confidence about the reimbursement you said going into the first half of next year.

Okay.

This is Mike.

I'll take the first part of your question and then Jeff will take the second part of your question.

With respect to VRAYLAR MDD in the study that you described, the 1.5-milligram dose [MADRS] point and met it with a highly statistically significant p-value of 0.005, so 0-0-5.

And that's important in terms of strength of evidence overall and weight of evidence overall.

And then as you point out, in the 3-milligram arm in that same study, we didn't hit significance, but we had a p-value that was very small.

The nominal p-value was 0.073 if we round.

So when you look at that overall study, to our eye it clearly shows an effect in MDD.

Now the second Phase III study that we just read out did not reach statistical significance for either dose group, but there were favorable trends.

And across a number of comparisons, there were nominal p-values that were quite small, and many of them were lower than 0.05.

And I'll just remind the listeners that it's very common in depression studies.

Even with the classes of medicines that have firmly established efficacy to have some studies that read out positive and some studies that are negative.

And so we think that overall package that we announced today is very strong.

And it's also important to keep in mind that we did have a prior study that was conducted several years ago.

That was also positive that demonstrated a statistically significant effect.

Now that study looked at slightly different dosing, there were dose ranges that were studied in that trial with titration.

It was the upper 2 of the dose ranges that was significant, but it did show both a clinically meaningful and significant benefit.

So we had 2 positive studies, and that's important.

Because the way these studies are typically looked at is an overall weight of evidence, do you have a convincingly positive Phase III study and is there other evidence within the overall data package that is supportive.

And we feel comfortable that, that is the case here.

And lastly, what I'd say is if you look at the precedent and you look at other approvals, findings like the ones that we described are not at all uncommon.

In fact, I think they're very common amongst approved agents in this space, including some of the more recent approvals in adjunctive MDD like Rexulti.

So overall, we think it is a strong package that has a viable regulatory pathway and will stack up very nicely to competitors, and we're going to begin those regulatory discussions shortly.

So with that, I'll turn it over to Jeff.

Yes.

Thank you, Mike.

Look, it's a meaningful opportunity for sure.

When we look at the market sizes, about 60 million total prescriptions for the adjunctive MDD market.

And that's very similar to the bipolar market that we operate in now.

So it's a very meaningful opportunity for us.

If you think about the -- what Mike was saying in terms of the competitive profile, I think we have to remember that while it's got a fairly low share, the VRAYLAR is very attractive, which is why it's the fastest growing agent.

So the efficacy is viewed very, very nicely overall.

And I think that if approved, this also has competitive efficacy, a very gentle metabolic profile, minimal weight gain, very tolerable and also very simple dosing for the psychiatrists and the primary care doctors that look at this.

So when you start to see the potential for an agent like VRAYLAR that's got the full spectrum across bipolar disease in terms of mania, mixed episodes and depression, and then the adjunctive depression indication.

If approved, it will be very attractive.

So we anticipate a nice catalyst here and certainly a nice add to VRAYLAR's overall profile.

Jeff, do you want to cover the second question?

Yes, perfect.

The second question you had was QULIPTA.

And QULIPTA, it's very early.

We just introduced the product with our full commercial promotion.

As I mentioned in my prepared remarks, we have now, as of this quarter, a dedicated migraine sales force, which shows you how important we think that this franchise is and what we can do with this franchise.

So we have an entire sales team out there that is launching QULIPTA and now also focused on UBRELVY.

And the early feedback has been very strong.

What we hear qualitatively from our field and certainly from our research in the first few weeks of launch is, first, the simplicity and strength of QULIPTA for prevention.

We see very, very nice response to our efficacy data, which, as Mike has said before and I've said before, is on the very high end of preventative performance.

So 60% of patients in our trials achieved a greater than 50% reduction in migraine days, which is viewed as very significant, and almost 30% have a complete control, 100% decrease in their migraine days.

So that's very compelling in terms of this QULIPTA power.

Also, physicians like the simple everyday dosing once a day.

And so things are quite strong in terms of our early qualitative feedback.

So we do obviously anticipate that the majority of our prescriptions will be bridge prescriptions until our -- we get the full ramp of our market access, which as I mentioned, we're quite confident by the first half of the year.

We should ramp similar to UBRELVY, where ultimately, as you remember, we achieved about a 90% access in the U.S. So quite good early feedback on the launch.

And again, we think that the 3 assets together are our unique competitive positioning for AbbVie.

Thank you, Gary.

Our next question is from Matthew Harrison with Morgan Stanley.

I guess two for me.

So one, if I could just follow up on CGRP.

I'm curious -- obviously, you have a different strategy than your competitor when it comes to the prophylactic market.

I'm just wondering how you think where your sources of patients are going to come from?

Are you expecting more transitions from injectables?

Or do you think there are going to be more de novo patients?

If you could just talk about that a little bit.

And then secondly, on [Regenexx], could you just talk about your confidence in the data there?

Obviously, there was some inflammation there, though it did seem self-limiting.

I'm just curious how you think about that and how you think about that impacting the profile because, obviously, in other gene therapy products in the eye inflammation has sometimes proven to be pretty significant as a long-term sequelae.

Jeff, why don't you...

Yes, I'll take the first one.

Thanks.

So in terms of the source of business, we think that QULIPTA is going to source business from 2 primary areas.

First is the big headache specialists, the big neurologists, we think, absolutely from our research and feedback that you'll start to see an early trade-off of the injectable mAbs in favor of the orals and certainly in favor of QULIPTA.

I think that this is viewed as very attractive.

In many cases, some people have spontaneously highlighted -- wow, it looks like a very strong mAb in a single oral pill.

So that's a source of business in terms of market share trade-off.

I think the other insight that we have from the market is that we are going to a -- calling on a substantial amount of high-prescribing primary care physicians who don't write a lot of mAbs, but they certainly write a lot of generic topiramate and some other older agents.

And so we also see that we have a unique opportunity in a wider audience to source from physicians that really don't lean towards the mAbs because of the injectable nature of those, et cetera.

So think we're going to have a good balance between those 2 sources of business, and that's quite attractive for us right now.

So this is Mike.

I'll take the question regarding [Regenexx].

We're very encouraged by the recent data.

If we take a step back and look at the program overall, they have very strong efficacy data already demonstrated with subretinal delivery.

Now that's an [OR] procedure, but it gives clear proof-of-concept for the approach and shows that we can get durable control and that component of the program is already in Phase III.

And then the more recent data that were presented just about a month ago, several weeks ago, looked at suprachoroidal delivery.

So that is a delivery method that can be done in-office.

It's a specialized form of injection, but it is a form of injection.

And that is also showing very good promise.

We're already seeing signs of efficacy in the first cohort, which is the lowest dose cohort, which, quite frankly, is sooner than we expected to see them before that study had started to deliver results.

And the tolerability is very good.

If one looks at the inflammation that is reported in the Regenexx trials, it's very different in its nature and its severity than that has been seen with other agents.

It's principally anterior chamber or exclusively anterior chamber.

There's no vasculitis, no more significant inflammation.

It is readily treated with topical steroids and generally resolves without any difficulty and, in fact, quite rapidly.

And it's also important to remember that there's no prophylactic steroids being used here.

Other approaches have required that.

So these are patients who have no prophylaxis upfront and are responding to what's often a brief course of topical steroids.

And the reason why there's no prophylactic steroids given is they're just not felt to be needed, given the very mild nature of the inflammation that's being observed.

So we're very confident with it.

And again, we feel it's qualitatively very different than what has been seen in other agents.

And we've obviously talked to retinal specialists as well who are quite familiar with the program.

And the views we've heard from them are supportive of what I just described.

Thank you, Matthew.

Our next question is from Steve Scala with Cowen.

I have a few questions, a couple are follow-ups.

But how would you describe the nature and the tone of conversations with FDA regarding RINVOQ's new label in RA?

Would you say you're pleased with how things are going?

Is the outcome unclear to AbbVie at this juncture?

Or is the outcome obvious and in line with what the FDA had in its statement in September?

So that's the first question.

Second question, to my knowledge, VRAYLAR has shown superiority to placebo but not generics in MDD.

So how would AbbVie establish it as a leading MDD agent given the presence of lower-cost alternatives.

And then lastly, any thoughts on the Soliton acquisition relative to its closing.

Okay.

This is Mike.

I'll start, and then Rick will take the question regarding Soliton.

With respect to the tone of conversations with the FDA for RINVOQ, I would describe them as productive.

With respect to your question specifically about the RA label, those discussions are productive as well.

I would assume the base case is what they announced conceptually back in early September, but we are working through the specifics of how that translates into labeling language.

And I would characterize the discussions around the other indications as being very productive and very positive as well.

And so as I mentioned earlier in this call, we remain very confident in the files for those new indications for all 3 of them.

With respect to VRAYLAR, head-to-head superiority studies are not typically done in the space.

They're very challenging.

It is challenging to show an impact even with established classes period in major depressive disorder and particularly in this space because this is the adjunctive treatment of major depressive disorder.

So these are patients who aren't responding to the current therapies and require an add-on and atypical antipsychotics with pharmacology similar to VRAYLAR, our one of the most commonly used agents in this space.

So we think the very strong data that we have from the study that we described and the fact that we have prior supportive evidence as well from the earlier study will position it very well to be competitive in that marketplace.

And Steve, it's Jeff.

Just to build on Mike's point.

I mean, if you think about the size of VRAYLAR now, approaching $1.8 billion, it has a 2.5 share in terms of the antipsychotic market.

So it's a low share, high value in growth areas.

So when you think about most of our business is already stepped through, in some cases 1 or 2 of the generics.

The problem is that these patients are so fragile.

They just don't respond well.

So we would still anticipate that with the approval, a new approval for MDD.

You're still going to have step therapy and other approaches in the marketplace, but that -- there's still a very, very nice commercial opportunity.

That's just the way the markets work today.

All right.

Thanks.

So this is Rick, Steve.

On Soliton, as you know, we obviously announced the -- our intention to acquire the company and submitted it for approval.

We did receive a second request, maybe just to frame a bit why we're interested in this area.

We tend to look at this market where the third major leg of the stool in Aesthetics is body contouring.

And this is a good fit with CoolSculpting and CoolTone.

Obviously, CoolSculpting is focused more on reduction of fat in targeted areas and CoolTone's more focused on the area of enhancing muscle tone in specific areas.

This particular asset is designed to reduce cellulite.

We don't have a position in cellulite now.

So there's not any kind of competitive overlap in that area.

Having said that, we are responding to the FTC's inquiry.

We believe that's going reasonably well.

So we would expect this to be resolved at some point near in the future.

I can't tell you a specific date, but I would expect it to have a positive outcome over a period of time here.

Thank you, Steve.

Our next question is from Vamil Divan with Mizuho Securities.

So just maybe one more just on VRAYLAR following up on the other comments.

I think before, you talked about this being as maybe a sort of multibillion-dollar type opportunity in MDD.

Is that still sort of the lines you're thinking now that you've seen the data that you disclosed today?

And then the second one, just going back to RINVOQ.

It obviously sounds like you're still pretty confident on that product's outlook, but I'm just curious if that's changed any of your sort of priorities as you think about business development, specifically in immunology, sort of the need for maybe look at other oral agents that might be in development there, just how you're thinking about the broader BD landscape there.

Jeff?

Yes.

I think if you look at the -- as I highlighted that the market sizes are roughly the same.

However, the competitive context is quite a bit different and the competitive set is a little bit different.

So we view it again as an important incremental opportunity that even with low incremental share that we can drive VRAYLAR to that multibillion dollar guidance that we look at.

We do think it's an incremental catalyst and an exciting approach if it were to be approved.

So this is Mike.

I'll take the RINVOQ question.

So as you point out, yes, we are very confident in RINVOQ as a molecule overall.

We've talked about the progress on the RA indication and our confidence in the new indications, both those that are under review, and indications where we have data but have not yet submitted like the IBD indications.

And so we feel that it's going to be an important part of our portfolio and the treatment armamentarium going forward.

So having said that, immunology is always an area where we are scouring the landscape to look for the best opportunities.

So I wouldn't say it's changed our focus in any way or changed our approach, but we will continue to look for novel therapies that can raise the bar on the standard of care across a number of areas, the current indications where we are already playing and new indications that have fewer treatment options, areas like lupus and scleroderma.

So the RINVOQ situation has not changed that strategy in any way.

Thanks, Vamil.

It's from Ronny Gal with Bernstein.

I got a clarification and then a couple of questions.

First, Rick, you kind of mentioned regarding Alvotech about the acceleration clauses.

And I just want to clarify if this is on district court decision or appeal.

Given the timing, it actually makes quite a bit of difference.

Then the two questions I have first are interchangeability for Humira.

Do you think this will matter in the marketplace?

We are hearing different things from the large payers.

What is your take here and what is kind of AbbVie's position about this?

And the second question is the last address we've seen from D.C. regarding the infrastructure bill does not include a reduction of out-of-pocket costs in Medicare.

We're still hearing from context, this still might be the case, that it is still included.

If you can comment on this issue, do you expect it to be included and the impact it might have on AbbVie's business.

So Ronny, this is Rick.

On Alvotech, obviously, these agreements that we have with the other biosimilar players are confidential.

So I'm not going to delve into some of the specifics around those.

What I would tell you is what I've said before.

I mean, we are highly confident in our position with this IP.

This IP has been challenged multiple times.

And we have a high degree of confidence that we will prevail.

So I think it's obviously a hypothetical scenario, but I don't -- I wouldn't give it a lot of merit.

Second, on interchangeable Humira.

As we discussed previously, when we built the erosion model that we described a couple of years ago, certainly 1.5 years or so ago, we did assume at that point that there were going to be 2 interchangeable biosimilars.

It does matter from a pricing standpoint to some extent.

So I think it will have an impact, but it's consistent with what we had assumed.

And so we've essentially taken that into consideration in the forecast that we provided you and the estimates that we provided you.

On drug pricing in the U.S. Look, I would say it's a very fluid situation.

It's a little difficult to truly understand exactly where we are.

You are correct.

If you look at the framework that came out yesterday, it essentially talked about repeal of the rebate rule being eliminated and he didn't talk about much else.

So look, the things that we're focused on and things that we think would make a difference are our out-of-pocket costs for patients and making them lower for Medicare patients, making them something that they can spread over a period of time, a 12-month period of time to make the cash flow easier to deal with.

And as we've said before, we think industry could play a role in that as one of the participants.

And we would hope that we will get back to that because I think we think that is the most fundamental issue, it is reducing the out-of-pocket cost for these patients.

Thank you, Ronny.

Our next question is from Geoff Meacham with Bank of America.

I just have two quick ones and probably for Mike.

To follow up on RINVOQ, I know it's been asked a lot, but you have a number of labeling scenarios that could play out just with respect to dose or TNF requirement or language on black box or any maybe any limit on duration.

Is there one of those items that has more of an impact than the others?

I'm just trying to think about what informs your assumptions.

And the second question on cystic fibrosis.

When you look to the upcoming proof-of-concept data readout, is there a minimal effect size or sort of profile that you're looking for that would justify moving to a larger-scale Phase III?

So I'll take the RINVOQ question first and then make some comments on CF.

What I would say about RINVOQ is our assumptions around the labeling at a base case are based on what the agency announced in their safety communication in September.

So that's principally updates to the black box warnings that all of these agents have.

And in fact, all agents in immunology have some degree of this that treat similar conditions to RINVOQ.

For example, the TNFs have some of the same, but not all of the same warnings.

So updating that section of the label is part of our base case.

And then the restriction that the agency described for certain patients around TNF-inadequate response forms our base case.

And those are the 2 factors that we're considering.

We would not anticipate any limit in duration of therapy, for example.

And the question dose principally applies to the atopic dermatitis file because we have just a single dose in the other files and the files that are in the rheumatology space.

And we feel confident about both doses in terms of the benefit risk that we've demonstrated in that atopic dermatitis program.

So it's really those 2 dimensions and how those translate into specific language in RA.

And then, of course, how they translate to the other indications, because TNFs are not the standard of care in all indications.

They are not used in atopic dermatitis.

So then it's how do those concepts get translated into the label in other indications.

Those are the principal dimensions that we're looking at when we think about those programs.

And again, we feel very confident in the files that we put forward and feel very good about how discussions have gone to date.

With respect to CF and what we're looking for, we're looking for something that has demonstrated benefit compared to what's already out there or what will be out there at the time our agents come to market.

Obviously, the principal competitor, the only group with a marketed product right now in this space, is VERTEX, and so that's what we would be benchmarking ourselves against.

I would say, at an absolute minimum, you'd have to have efficacy that was just as good with other meaningful advantages.

But what we're striving for is something that has an efficacy advantage of a small number of absolute FEV1 points.

A small number of absolute FEV1 points might not sound like much, but it can translate into real benefit for patients in this disease.

Thank you, Geoff.

Our next question is from Luisa Hector with Berenberg.

Sorry, I still have a couple more on RINVOQ.

I just wanted to understand whether the label updates in RA and then the approvals in the new indications can essentially all happen on the same day?

Or is the gating [right] in the RA update?

And then there's still a bit more work to be done for the new indications.

And then looking on to the UC filing, is the acceptance of that filing in any way dependent on the RA label being resolved first?

Or that's free to be accepted as a filing while the label update is still outstanding?

This is Mike.

I'll take those 2 questions.

So with respect to the ongoing reviews, what I would say is the discussions around the RA label update and the new indications that are under review are going on simultaneously.

And there is some level of interdependence.

In other words, we need to understand where the RA label will land because some of those elements, like the warnings and precautions, will translate over to the other indications, because in the U.S., you get one label for the molecule that applies across all of the indications.

So there's some interdependency.

That's why getting the RA label update resolved is a gating factor.

Whether it could happen on the same day or in close succession, I think it's too early to call with that fine level of detail, but we would expect the psoriatic arthritis and atopic dermatitis filings to follow in a very reasonable time frame after that label update.

As I mentioned, we are adding new data to the ankylosing spondylitis submission, which is smallest of the 3 indications.

And so that one might be on a slightly different time frame as the agency reviews those new data.

With respect to the UC filing, the RA label update is not on critical path to file acceptance.

What the agency looks at when they look at file acceptances, have you provided sufficient data for them to evaluate the file?

Is it in an appropriate format that they can review?

Are there any significant deficiencies?

And of course, we're very confident in the file that we've submitted.

So we would not, in any way, anticipate any challenges there.

And the RA safety label update is not a gating factor for that file acceptance.

Thank you, Luisa.

Our next question is from Chris Raymond with Piper Sandler.

This is Ally Bratzel on for Chris.

So on ABBV-951 in Parkinson's, we're just hoping you could put some of the safety findings from the Phase III trial in context, particularly the imbalance in hallucination psychosis and the 22%, I think, treatment discontinuation rates.

Basically, just how did that safety profile stack up against your expectations?

And how could this translate into real-world use of 951?

So this is Mike.

I'll take that question.

With respect to the data for 951, we're very pleased with the data.

There's very strong efficacy.

And the safety is within our expectations.

It matches our expectations across essentially all important areas.

What's important to keep in mind is this agent delivers transformative benefit to patients who have extremely difficult to control Parkinson's disease through other measures and who have a very, very difficult time controlling their disease, for example, with orals or with other approaches.

And so the overall picture has to be looked at in that context.

With respect to treatment discontinuations, what I would say is the treatment discontinuations -- the rate of that overall is very similar to what you see with similar devices with insulin pump-like devices used across a range of conditions.

Most of these were driven by either local tolerability issues like injection-site reactions, which were principally erythema or technical usability issues because these are older patient populations with limited mobility and dexterity in many cases.

And there's always a subset of patients who find that they have difficulty using any device under those circumstances.

But again, those rates of discontinuation are very similar to what you see with similar insulin pump-like devices.

And keep in mind, this is a very, very large population, this advanced Parkinson's population, only a very small proportion of which currently get advanced treatments because it's so limited in how they can be delivered.

We think there's a big opportunity here and that treatment discontinuation rate doesn't change that and is in line with our expectations.

With respect to hallucinations, we know that, that is on mechanism for levodopa and carbidopa, and it's essentially evidence that we are delivering levodopa and carbidopa in a way that's more effective than can be done through other methods.

And it's something that can be titrated and something that can be managed.

And what I would point to is in the other direction, the oral group, the control group that got oral levodopa and carbidopa, had more falls.

And that, to our eye, shows a lower degree of control, which matches the clinical efficacy data because we know falls are common in Parkinson's disease patients.

So we need to keep that in mind, and with the efficacy that we've delivered, we think these are all very attractive profiles and ones that will translate into significant real-world use.

When we look at how this will impact our oral use, again, keep in mind that it's a very broad population, only a very small segment of which can access the kind of therapies that they need to control their disease.

Therapies like DUOPA, which is transformative but takes a surgical gastric tube.

It's actually threaded into the small bowel to get deep brain stimulation and other types of measures.

So this is a much less invasive approach that delivers very strong efficacy, and we think that will translate very, very effectively into the real world.

Thanks, Ally.

Operator, we have time for one final question.

That will come from Josh Schimmer with Evercore ISI.

Can you talk about the current contracting season with payers for Humira and whether think you'll be able to lock in multiyear contracts either now to extend to 2023 or next year to extend to 2024?

And then I'm surprised you're not more bullish with your guidance for the migraine franchise, given the strong trajectory it's on already.

Any reason to think there's going to be a significant plateau in the years ahead?

Yes.

It's Jeff.

So typically, when we -- we start to negotiate with the payers in the spring of the year for the following year.

And typically, those contracts can be multiyear contracts, maybe 2-year contracts.

So really, that's sort of the season where we'll have, as Rob and Rick said, probably some more guidance over how things are shaping up for '23 and possibly '24, depending on the posture of the payers and how those things work out.

So we're not quite there yet.

I think that what I can say is we're quite confident based on the timing that I described in terms of general cycles, in terms of where we're going to be for our portfolio, certainly in '22.

In terms of QULIPTA, look, we are off to a very good start.

I can tell you that UBRELVY continues to run a pace that total oral CGRP market is upwards of maybe 18% of new prescriptions and it's still early, and that would be us and Nurtec in the acute segment.

And at a theoretical peak level, you could see maybe 30% or 40% based on cardiovascular issues with triptans or some other issues.

So we still have clearly some runway to go.

It's probably a little early to sort of determine how that preventative segment will really grow because you've only seen really the mAbs so far.

They certainly tripled the market size, how will both of these orals and particularly an oral like QULIPTA in terms of the market development run a pace.

It's encouraging for sure, particularly if you have all 3 of these agents in the market and the investment behind it.

Right now, though, we feel quite comfortable with the $1 billion opportunity for both of the orals.

Thanks, Josh.

And that concludes today's conference call.

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This does conclude today's conference call.

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