AbbVie Inc. (ABBV) J.P. Morgan 42nd Annual Healthcare Conference

AbbVie Inc. (NYSE:ABBV) J.P. Morgan 42nd Annual Healthcare Conference January 10, 2024 11:15 AM ET

Company Participants

Rob Michael – President and Chief Operating Officer

Jeff Stewart – Chief Commercial Officer

Roopal Thakkar – Chief Medical Officer

Conference Call Participants

Chris Schott – J.P.Morgan

Chris Schott

Good morning, everybody. I’m Chris Schott at J.P.Morgan, and it’s my pleasure to be hosting a fireside chat today with AbbVie. From the company, we have Rob Michael, President and Chief Operating Officer, Jeff Stewart, Chief Commercial Officer, Scott Reents, CFO, and Roopal Thakkar, Chief Medical Officer. So thanks everyone for joining us today.

Rob Michael

Thanks for having us, Chris.

Question-and-Answer Session

Q – Chris Schott

Yes, Rob. So Rob, maybe just to kick off, looking at 2024 can you just walk through some of your top priorities? And there’s been a lot of activity with the company? So how have those changed over the course of the last year or so?

Rob Michael

The focus for the company is clearly on trying to return to growth in ‘25, like strong growth in ‘25. So it’s really about the growth platform. I’m going to have Jeff cover some of the details, but if you think about it, it’s really the five key therapeutic brands, Skyrizi, Rinvoq, Ubrelvy, Vraylar, QULIPTA, as well as the aesthetics portfolio. So maybe Jeff can talk about some of the progress we’re making on those three brands and I’ll come back on the pipeline.

Jeff Stewart

Yes, I mean these big brands, you know, as Rob described the growth platform, we have very, very strong momentum. So if you think about Skyrizi and Rinvoq, we anticipate continued very, very strong share gains over the year. That’s driven by sort of fundamental sort of commercial execution, and I think also several catalysts that we’ll see over the year. Some of those are R&D catalysts that have already taken place. We often describe for Skyrizi and Rinvoq really an unprecedented position with nine head-to-head trials across all of those big indications against really leading players and so a full-year impact of having those big head-to-head trials is going to be very, very important going forward.

And then we have additional indications so for example our performance has been very strong in IBD, for both Skyrizi and Rinvoq and we’ll have the fourth indication approved really in the middle of the year. So Skyrizi and Rinvoq are our powerhouses.

Rob Michael

Really what we’re seeing now is essentially we’re seeing nice share capture in psoriasis, ROOM, AED for the brands. But really, it’s IBD that’s really taken off. I mean, for Crohn’s right now, for in-play patients, we’re capturing one out of three between Skyrizi and Rinvoq. And then for Rinvoq, as Jeff mentioned, we have the UC approval on Rinvoq, we’re capturing one out of five. So there’s really tremendous share ramp that we’re seeing for IBD.

Jeff Stewart

So if we move to another big platform, which is our neuroscience platform, it’s also very encouraging. So with significant growth with the approval of Adjunctive Major Depressive Disorder for Vraylar. That brand is growing very, very nicely. And then we have really what we think of sort of our triple play in migraine. So we have Botox therapeutic, strong growth across the globe. We see that continuing in ‘24. And then our oral products, both Ubrelvy and QULIPTA. So in ‘24, we’re going to see the expansion of QULIPTA into the international markets, which is very, very strong, and just continued momentum up into sort of the leading share position there for those oral CGRP, so this is attractive.

Rob Michael

If neuroscience probably isn’t appreciated as much as we would like it to be. I mean it’s our second largest therapeutic area. It’s going to grow by over a $1 billion in 2023. We talk about Vraylar with the adjunctive MDD approval about a year ago. We’ve seen a tremendous ramp. We’re going to grow about 35% in ‘23. And then you look at the oral CGRP portfolio with Ubrelvy and QULIPTA, those on a combined basis will approach 50% growth. So we’re seeing really nice momentum on a neuroscience portfolio, really driven by psychiatry with Vraylar and then migraine portfolio, inclusive of Botox therapeutic about 40% of Botox therapeutic is for chronic migraine.

Jeff Stewart

And if we move on to another large platform, which of course is aesthetics, so we are seeing some nice recovery in those markets. I’ll describe that briefly, so for example, Botox, typically what happens after you’ve had like some economic disruption in this case, the hyper inflationary approach. Botox comes back first, that sort of the lead there and we see that, we see return to market growth in the third quarter, we’re going to continue to see momentum in the fourth quarter, and our share position despite the launch of other products, you know, so-called long acting products has not moved at all. So we’ve been incredibly efficient at maintaining our leading share position of about 68%.

Now the fillers are also recovering that market is recovering as well. Typically it’s on a couple quarter lag from the toxin market. And what’s also encouraging we’re seeing that, that’s recovering and our share position is even stronger than it was before, so we’re actually seeing share gains, mostly being driven by some of our new product launches, our new toxins such as VOLUX and SkinVive. So that’s also very attractive in terms of our overall momentum as we come into ’24.

Chris Schott

There’s been questions on the aesthetics business, but we’re seeing a trend very nicely. We expect it to return to growth in ‘24. As Jeff mentioned, toxins are clearly on that trend. We’ve now seen two quarters of very nice growth. Fillers are getting there, but we’re most encouraged by the share performance. Despite Daxxify coming in the market, we’ve held our share for Botox. And then to see Juvederm gaining share with the new launches of VOLUX and SkinVive is very encouraging?

Rob Michael

Great.

Jeff Stewart

And we continue on with, of course, eye care. In eye care is, right now, it’s a very stable business, but we’re anticipating a big transformation in the pipeline with REGENXBIO. So fundamentally our strategy there is in interventional retina and interventional glaucoma and you know we continue to build out that business. It’s a very, very attractive business. Commercially it’s very easy to get to the top physicians in a very efficient sort of SG&A-driven manner, and we look forward to continuing to see that data set on the gene therapy with REGENXBIO, because it’s really potentially highly transformative in both wet AMD. Roopal can talk about this a little bit later if we need to, and also diabetic retinopathy. So that’s a significant opportunity for us.

Rob Michael

And maybe to round out the ‘24 priorities. If you think of the pipeline milestones, Jeff mentioned the UC approval and Skyrizi is an important milestone for us this year. As well as 951 approval in the U.S. We just announced the EU approval. We’ve been approved in Japan, so it will now have essentially by the middle of the year the global launch of 951 that’s important. Potential submission of Teliso-V, our ADC targeting c-Met, as well as Phase 3 starts for lutikizumab and immunology, as well as 383, our BCMA bispecific and oncology. So some important pipeline milestones as well.

Chris Schott

Excellent.

Jeff Stewart

And I would say just lastly before we move on is the to Rob’s point obviously we had two of these very important deals for the company, which were designed really to provide the growth in the next decade, because we’re in very strong position here for this decade, given the momentum that we described. But certainly, it’ll be a big focus of the management team to be able to close those deals, integrate properly, and really begin what will be traditionally in our company very strong execution on integration.

Rob Michael

We’re obviously very excited about both deals. And of course managing the U.S. biosimilar erosion, which has gone exceptionally well, but I’d say it’s really about the growth platform advancing the pipeline and then closing and integrating these deals.

Chris Schott

Excellent. Maybe on the BD front, you took some dilution with the transactions. Think about $0.32 you announced. You reiterated, though, the $11 trough earnings level. So can you speak to what gave you confidence to be able to restate that commitment despite some of the dilution that become?

Rob Michael

Yes, so if you recall, originally the floor was at $10.70. We took it up to $11 on the Q3 call, really because of the momentum of the growth platform. It was greater than $1.4 billion above our original guidance, so we flowed that through on the third quarter call. Fast forward then to December, when we’re announcing these deals, we essentially at that point had a good sense of where Humira contracting was landing, and essentially we are going to have more parity access than we initially anticipated. So it was really that level of I’d say volume that we expect to still capture in ‘24 for Humira that we initially did not anticipate we would, that allowed us to essentially absorb that dilution.

Chris Schott

Okay. And I guess, just mentioned — greater visibility, we’ve got Humira in the nearer-term, or it was Skyrizi, Rinvoq trends are going in a nice direction? Did that factor into your willingness to look to do deals that maybe weren’t near-term accretive and you could kind of maybe more dilution than planned across?

Rob Michael

I’d say it’s the overall growth platform performance.

Chris Schott

Okay.

Rob Michael

When you look at just the momentum we’re building, we expect to return to strong growth in ’25. When you look at the trajectory, and we’ve committed to high single-digit CAGR for the company from ’24 to ’29 on the top line and operating margin expansion, which should mean that the earnings would grow faster than sales. So there is plenty of capacity. By the time we get to 2028, these two deals essentially offset each other. So there is some near-term dilution that we can easily absorb given the rate of growth from the growth platform.

Chris Schott

Great. On the margin profile, I know, as you kind of touched on there, 2024 is expected to come in this kind of 46 range, 47 range. Can you just remind us underlying assumptions there, did that change at all with the recent transactions? And then just, how do we think about margin progression, as we look out to ’25 and beyond?

Rob Michael

I think there is enough room in that range, we look at the additional R&D that we’re going to be investing for these two transactions, that we can still operate within that range. And so we’ll give you guidance on the Q4 call, but expect it to be within that 46% to 47% range. And then we do expect to return to operating margin expansion, starting in ’25, given the amount of growth on the topline. We have a long history of, you know, leverage the P&L. We’ll fully invest in the business now, that will essentially be the gating item for how rapidly we expand operating margin will be. We will make sure that we’re investing in R&D and SG&A to drive long-term growth. But we do expect operating margin to begin expanding again in ’25 and beyond.

Chris Schott

Okay, great. And then you talked about the company’s ability to delever back down to two times by 2026. Just can we talk about — think about AbbVie mostly focused on maybe smaller earlier-stage deals post these transactions. Just how do I think about the balance of leverage versus the one…

Rob Michael

Sure. I think we have more balance sheet capacity, it’s really not about balance sheet capacity, it’s really more about organizational focus. We had — we want to make sure that we close and integrate these two companies well. We’ve really liked the portfolio we have. We look across the growth platform, plus these two assets that are set up to help drive growth in the next decade. We’re very satisfied with the position we’re in. We will continue to look for early stage opportunities will be smaller in size, because it’s the focus for BD throughout ’23 was looking for assets that can drive long-term growth.

Really I think in the next decade, we have a clear line-of-sight for this decade with our current portfolio. We didn’t need to go outside to supplement that. So even though these two deals will add some level of revenue this decade, it wasn’t really about that, it was more about the next decade. So our BD focus doesn’t change. We continue to look for assets that can drive growth in the next decade. But there will be more early stage smaller-sized deals for the foreseeable future.

Chris Schott

Okay. That’s helpful. Maybe moving over to Humira, talked a little bit about expectations for 2024, just thinking about access and pricing. I think maybe on the second quarter call, you talked about it, I think at the time was a $7 billion U.S. consensus number you thought was a reasonable target. Is that still the case and just any further details you may want to share?

Rob Michael

Sure. Well clearly, since we — I provided that on the both the Q2 call and the Q3 call, I mentioned that the analysts’ sell-side average of $7 billion was a reasonable expectation, we’ll clearly since then things transpire more positively. I mean, we — at that point we weren’t anticipating level of parity access, we will used to have a parity access for the vast majority of lives. It will step down year-over-year, but we will still have — I think a very good position. And so it is reasonable to assume will be better than that. We’ll obviously give you more details on the call. I have said, and this will still hold true that expect the majority of the erosion in ‘24, it’s really come from price.

Chris Schott

Okay.

Rob Michael

And that’s for two reasons. One, if you recall in the middle of the year, we increased our rebates, we knew we had at that point seven and nine biosimilars coming in the middle of the year. We felt it was important to make sure that we maintain parity access to make sure that our patients have that continuity of access. So we did offer additional rebates in the second-half of the year. So you will see an annualization impact from that, plus we did offer additional rebates for ‘24 to maintain that level of parity access. And so it will be predominantly price. There will be some volume, as I mentioned, we’re not going to be quite at the level of parity access as we had in ‘23, but still the vast majority of lives will be covered.

Chris Schott

Okay, and then just maybe, I know there’s an announcement with CVS last week, just for some perspective, how to think about that relative to those comments you made?

Jeff Stewart

Yes. So, I think if you listened to what Rob just highlighted, the vast majority of our lives will still be at parity, right? So if you take the CVS announcement in particular, they have a couple of big segments of business. They have template lives, which are typically smaller employers, unions, et cetera, and they’ve got custom wise, which are big health plans like Anthem, for example. So some of their formularies on the template side, so let’s say, half of their business are going to disadvantage Humira in favor of low list price biosimilars. And that’s very consistent with what we said over time. As time goes by, you’ll see more adoption, particularly with certain clients that want to assess those lower list price products. So no surprises there.

Again, still the majority of even CBS will be at parity. So when you also take a look at another component of the announcement, this was for agreement on a co-branded Humira, which is essentially just the same Humira slightly different packaging because it’s got a small little Cordavis logo, that’s their distribution company. And that will be available for the lives that want to continue to think about Humira’s parity. So it’s really nothing beyond that. So very consistent with what we planned for. We obviously knew that this was going to take place and also very consistent with what Rob has just highlighted.

Chris Schott

The success you’ve had the last — this year — or last year and this year on Humira, does that change at all how you think about the tail of the product? And maybe just share your thoughts of as we look out the next few years, what should we think about from here?

Rob Michael

We’re having a lot of internal conversations right now what the tail looks like. Obviously, this is an unprecedented situation in the industry. And so we’ve learned a lot over the course of last year. I think there’s still more learning as we go through ‘24. So I wouldn’t expect us to give any more additional color on the tail in ‘24. But I think certainly, as it settles out in ‘25, ‘26, sometime in the ‘25 time frame, could we come out and give a little bit more guidance on what the tail could look like. I think that would be an appropriate time. But I think we need to see — if you think about it’s going to be the first full-year with biosimilars this year. We have to look at what does interchangeability mean. There’s enough I think, moves in the market that could take place that I think it’s prudent to see how ‘24 plays out before we start to opine on the tail.

We’re clearly very, very pleased with the way it’s transpired and the way the team has managed it. But certainly, I don’t think it’s a bit premature to be giving a lot more color on the tail in ’24. But I think in ’25, we can be in that position.

Chris Schott

Okay, okay. Excellent. Maybe staying on immunology and shifting over to Skyrizi, Rinvoq, we’re coming off a very strong 2023 trends for both assets. Just high level, talk about — as you think about how large these products could become. Just any perspective you can share?

Rob Michael

Yes. I think probably the best proxy is looking at the relationship between in-place shares. So that’s the dynamic share capture new patients switching patients and TRx share to get a sense of like how much headroom for growth is there, right? And TRx share doesn’t always get to in-play share, but it’s a good — it will continue to pull up if in-play share is high. So if you think about — let’s go through it RA for Rinvoq. Our in-place share is in the low teens, right? I think our TRx share right now is just under 7%. So that tells you there’s certainly more room for growth there.

Atopic dermatitis, in-place shares in the high teens, and then our TRx share is high-single-digits. So a lot of room for growth there. What really — and then in Skyrizi with psoriasis, we’re capturing one out of two patients so 50% employee share and the TRx share is in the mid- to high-30s. So there’s still a lot of room in those indications where I think we’d see the most rapid growth from where we are today, though, is IBD.

So IBD, we mentioned earlier that between Skyrizi and Crohn’s, we’re capturing about 33% in-place share. So if — and I think our share is in the mid-single-digits — our TRx share in the mid-single-digits. So a tremendous growth potential. And then in UC, it’s in the high-teens, almost 20% for Rinvoq. We’ll have Skyrizi as well. And that one is also in the, I think, in the mid-single-digits TRx share.

So there’s plenty of room for growth in those indications, plus we’re going to have new indications for Rinvoq, alopecia, vitiligo, lupus, GCA that will come online later in this decade. And so that will be another inflection of growth. So when you think about that, you size, and these are markets that are growing, right? So you add market growth, you think about the share growth potential, the new indications, they could become quite significant.

Chris Schott

Yes. And you expect that with those new indications coming on over time, that this should be a growth franchise the foreseeable future?

Rob Michael

It should be a strong growth franchise. I mean right now, we’ve said at least until 2033. And that’s why when I look at — I get the question a lot on the difference between our outlook and sell-side consensus, the biggest disconnect is Skyrizi and Rinvoq and you just don’t see the type of growth. You see, I think it’s somewhat like low-single-digit growth from ’27 on. It will continue — both brands will continue to grow robustly. And so we would expect that robust growth through the early part of the next decade.

Chris Schott

Excellent. Pricing, I think, debate in immunology. I know there was some noise with Q1 last year quite down a little bit. Just share your perspective as maybe Humira prices come lower, biosimilar prices come down. Does that impact at all your payer discussions or how you think about price for your branded assets?

Jeff Stewart

The payers are always looking for discounts. They’ll basically try to do different levers in terms of their formularies. That’s just normal negotiation. But if you really take a step back, one of the biggest fundamental aspects is how distinctive Skyrizi and Rinvoq are. So again, I highlighted in the opening remarks, we have nine head-to-head trials. The last one, the ninth that we just looked at was an IBD versus the market-leading Stelara. And it was a huge difference in terms of overall healing on endoscopy, which is now the number one driver of basically markets share preferred.

So the ability for us to physicians and also to payers and the medical officers of the payers to sort of highlight that distinction helps give us some significant protection in terms of the biosimilars that have started to appear. So in the last two years, we’ve seen no material pressure on the price. Now, it is going to continue to grow over time, and we’ll have to continue to defend the value, but we’re really prepared to do that.

I think the second key point that I’ll make, which is sometimes not very apparent is if you recall, a couple of years ago, which you will remember that Rinvoq in the United States is actually stepped behind TNF based on the XELJANZ Oral Surveillance Study that came out in RA. So in some ways, it’s already basically step behind, if you want to call it a biosimilar or whatever is a lower-priced option for a huge piece of the business. So in some ways, there’s this moat around that drug in terms of basically it’s feeding into growing markets in the second, third and fourth line, and you’re still achieving that level of growth. So when we look at it, we think that the level of distinction, the market structure is going to allow us to navigate pricing very well.

Chris Schott

So, I guess in that context, just thinking about something like a low-single-digit price erosion. Is that sort of a reasonable way to envision what price could look like here?

Rob Michael

I think it’s a reasonable assumption. We’ll obviously be more specific when we give the guidance on Q4 calls where we’ve landed for ‘24. But I think for modeling purposes, I think that’s a very fair approach.

Jeff Stewart

But to your point that last year, when we saw the higher price erosion, that was a unique time point with seven indications that all came in one year, which was really, again unprecedented. And we were able to — with those concessions at that moment in time, basically achieve paid access within 60-days. So it was a huge lever to basically drive the type of volume and overall value that we’ve created in 2023 as we go into ‘24.

Rob Michael

I mean, it is appropriate trade-off when you consider that these two brands will grow over 50% in ‘23. And so — and that’s with high single-digit price concessions that will not continue.

Chris Schott

Yes. Excellent. I guess just on Rinvoq. I was hoping to get a little bit more color on the IBD opportunity there. I think that’s been one that Skyrizi has been a great drug. I think there’s was a little more controversy around Rinvoq after the label change. So can you just talk about the launches you’ve seen there? How those are trending versus your expectations? And I know you shared some of those in-place share numbers. But where do you think share can go for that product?

Jeff Stewart

Maybe I’ll ask Roopal to talk about, because I think it’s really critical over a drug like Rinvoq and IBD just doesn’t move that way based on commercial execution. It’s a very, very special product in IBD and then maybe I’ll address your share question.

Roopal Thakkar

Yes. Thanks, Jeff. A couple of things. So in ulcerative colitis, we’ve seen the highest level of efficacy noted, even with Phase 2 readouts for other mechanism, the Phase 3 data from Rinvoq for UC in particular, is still unmatched. And there’s a couple of drivers that clinicians and patients really like and one is just the rapid onset of being an oral who works very fast.

The second piece is you’re able to not only improve symptoms to very high levels. But as Jeff was referencing heal the gut, which is very important for clinicians as they see that as a marker for continued improvement and lack of other sequela that the patients going to have. So you combine that with the ability to remove steroids, it sets up a very, very nice profile as an oral.

And then what we thought going into Rinvoq development many, many years ago, that likely the JAK inhibitor path may not work in Crohn’s disease. And I think we’ve seen that played out with other JAK inhibitors, which are not likely going to ever get to market. But Rinvoq was a standout Crohn’s disease. So we see that as very differentiated, even within the class, the mechanism for Rinvoq is very unique. And with that one, all the observed benefits that we saw in ulcerative colitis, we also saw the ability to take people off of their steroids during induction, which is extremely unique. We haven’t even seen that with biologics. So that sets up a very impressive profile.

And as Jeff was saying, the so-called moat in a way, a majority of the patients that are going to be taking these drugs, 60%, 70%-plus have already seen an anti-TNF, so it’s not like they have to wait to step through. Many of them can access it immediately and get that relief.

Jeff Stewart

So if you think about the size there, we were always a little bit surprised many years ago on how fast IBD grew even in the Humira days. And there’s not a lot of medications. There’s more in UC, which is the smaller of the two indications. There’s not a lot of medications in Crohn’s. So to Rob’s point, when you look at — we just recently launched Rinvoq and Skyrizi hasn’t been out very long. And the world hasn’t fully seen the impact of the head-to-head versus Stelara. And so today, we’re capturing one out of three patients and the TRx shares in the mid-single-digits. So you have significant headroom for basically the wheel to turn and to create a lot of value.

So in some ways, if you look at one angle on the market, which is bio penetration. So what percent of the moderate-to-severe population is exposed to a biologic. IBD is the highest. But on the other way to look at it is you haven’t seen basically really the lines of therapy start to develop like you have in the other area. So in our view, it’s actually an immature market where there’s still probably the most unmet needs in all of biologic immunology area, and we’ve got two really nice horses to play there for a long time.

Chris Schott

Yes, yes. It should be — nice growth driver going forward. Pivoting over to aesthetics, it sounds like some encouraging trends you’re seeing. Just elaborate a little bit more in terms of — have we seen a bottom for this business? Can we really be comfortable that we’re getting back to growth in 2024?

Rob Michael

We’re certainly seeing very nice trends and we anticipated this. I mean when we look at historically, this market in the U.S. grew in the mid-teens, and when we studied whenever there’s been an economic headwind, it’s rebounded very robustly coming out of that, right? And we’re starting to see — and not surprisingly, given the price points, you tend to see toxins recover before fillers, so we’re very encouraged.

As we mentioned, we saw a return to growth in the third quarter. We’ve seen an acceleration in the fourth quarter. We expect that to continue for toxins, and fillers are right behind it. So all the metrics we’re tracking are very encouraging in terms of the market is recovering, and we’re starting to see an acceleration in the overall market growth.

Chris Schott

And in terms of your longer-term expectations, has anything changed in terms of?

Rob Michael

No, it’s been somewhat controversial. I’ve seen some reports on questioning our ability to hit the $9 billion by 2029, greater than $9 billion by 2029. And you think about it from ‘23 and ’29 to deliver that, you need high-single-digit growth. I mentioned the market historically is growing in the mid-teens, right? So it’s a market — the penetration rates are very low. We’re very good at driving that growth. And so clearly, by market growth by itself should help you get there, but we’re not counting on market growth alone. We have an very interesting pipeline. Jeff can talk about how BoNTE, our short-acting toxin fits into the overall portfolio. We’re very excited about that as a trial toxin for those consumers who are on the sidelines because they’re fearful of an unnatural look. It’s a great way to try it. We can talk a bit more on the details of how that would work.

But ultimately, that could be an inflection in the market growth and certainly also drive more share capture for Botox. If it works, and short-acting the consumer comes back, they’re most likely going to want to have Botox going forward. So that’s certainly something we’re very excited about. Think about the masseter and platysma indications for Botox, those will each add a couple of hundred million dollars in revenue. And then we have the regenerative fillers that also will drive the growth in the filler space. So we look at the combination of the market growth potential, given the penetration rates and history, as well as the pipeline, we feel very confident in delivering on that greater than $9 billion by 2029.

Chris Schott

Great. Great. Continuing along, CNS, I know, this is an important area for the company, maybe one that doesn’t get as much attention as some others. Maybe just bigger picture question, like why is this the right market for AbbVie. I mean it seems like you had some real success with these assets. Can you just talk a little bit about your kind of broader organizational interest in the space?

Jeff Stewart

Yes. I think that one aspect is that we always had some significant interest in neuroscience, but we didn’t have a lot of significant on-market brands. We essentially had DUOPA. There was a long history with Abbott many years ago, but that was the time has passed. And we had this very significant neuroscience discovery with Alzheimer’s, degenerative issues like Advanced Parkinson’s, et cetera. So the Allergan acquisition for us was transformative, because we were able to have some very nice on-market brands that came super-fast with Ubrelvy, QULIPTA, I mentioned therapeutic Botox and then certainly Vraylar, which was a really special product that then got super boosted by this recent approval.

So suddenly, when you have that on market, you start to say, okay, how can I build this out over time? How can I anticipate my advanced pipeline. And we just think it’s very, very special. We think that there’s very good pricing. We have fantastic commercial infrastructure. Our sales reps and medical experts, in some cases, have decades of relationships with psychiatrists, and they know these markets very, very well. So it’s a nice fit.

I mean, as we look at our growth rates. I mean, neuroscience is right up there with immunology in terms of the growth that we see. And it was through that lens that we basically look to see — because we knew when Vraylar, which is a big driver would go LOE. This was a piece of our consideration set for the recent acquisition with Cerevel. And so fantastic market, commercial expertise, very strong personnel and then back integrated into rubles area in discovery, which is powerful.

Roopal Thakkar

Well, maybe just to add, Jeff, the other thing that’s attractive is the headroom for efficacy outcomes. So if you look at migraine, unipolar depression, depression, schizophrenia, anxiety, all these other states that we’d be interested in there. There’s still a tremendous amount of room to gain efficacy to get to cure-like level. It’s reminiscent of IBD a little bit, where efficacy still has a ways to go to serve. So a huge unmet need still exists.

Rob Michael

We’re very excited about Cerevel, because it really gives us with emraclidine a clear growth driver in psychiatry beyond Vraylar, very attractive. And then we have a very compelling core antagonist in their pipeline that fits very nicely within our overall neuroscience franchise. So between our own pipeline, what Cerevel brings to the table, we feel that neurosis will be a strong growth driver for a long time.

Chris Schott

Can I just on the Cerevel transaction, just your willingness to take kind of — or comfort of taking clinical development risk here? I mean, certainly, a very exciting class. It seems like the Phase 1 data was obviously very positive. But just talk about when you thought about committing the capital there, the diligence you did and the comfort you have in the asset?

Roopal Thakkar

Yes, it starts out with a large Phase 1b study, about 80 patients, so larger than a typical 1b, I would say that’s outside oncology. And then we saw the pattern with two doses achieving benefits and positive symptoms and negative symptoms. So you look at that together, and then you continue to see the profile, which is a singular molecular energy, once a day dosing with a good half-life, no need for titration, no food effect that sets up a very strong profile. So that starts at all.

And then when we look at the design of what’s called a Phase 2, we see them more as pivotal based on their size of two studies, over 370 patients, powered to achieve their endpoints adequately as you would do in a Phase 3, a very robust statistical analysis plan that contemplates adjustments from multiple testing, all the things you would want to see to make it robust from a regulatory standpoint. So those are the two ends of it.

And in the middle, we’re able to see aggregated blinded data as the trials continue. And if you compare that data to what we see in Ib, again, aggregate, it looks similar. And that’s from an efficacy standpoint and from a safety standpoint. So it sets up a very strong profile and some elements of derisking before we get to the data. And the other thing is when you take a profile like that, that has a very strong safety profile, very different from the atypicals. We don’t see the sedation, the metabolic effects, the weight gains, the movement disorders, nor do we see anticholinergic effects, again, being a singular molecular entity onboarding could be simple for a patient population in schizophrenia that adherence can be very challenging if they can’t take their meds.

So being once a day helps there and then not having the adverse events as they onboard really helps keep them on, especially outside of a clinical trial setting. A lot of things you do in a clinical trial don’t always translate to the real world. So if you can have an enhanced profile that’s going to help us in the real world.

And the other big swing factor is that when you have that profile I just described, it allows you to transition to a long-acting injectable, potentially much more smoothly from an R&D standpoint, CMC standpoint. And also if you can stabilize the patient quickly and see that they’re tolerating, then you’re not worried about taking a risk for a depot injection once a month or even further stretched out, because if they’re not stable and they’re not tolerating then you don’t want to give them a long-term, because it’s hard to reverse once it’s in. So taken all together, I think that led us, along with the high unmet need in the large market, if you will, that exists even if there’s multiple assets, I’m seeing us with that profile being able to be very competitive.

Chris Schott

Yes. It seems like a nice market opportunity when I was starting to cover the group, these were some of like the biggest products across the industry. And I know it’s been a while since spread a lot of innovation, but it seems like that’s kind of exciting [Multiple Speakers]. Just pivoting over to your other acquisition here with ImmunoGen — just talk a little bit about what attracted you to this asset and how you’re kind of fitting into the broader oncology portfolio?

Rob Michael

Yes, I think with LA here essentially being on market, gives us an early entry into the solid tumors. We obviously have pipeline in ADCs with [Indiscernible] 400. So there was a nice fit there. There was an area, obviously, we’ve done a lot of research in ADCs. We saw the opportunity to get an early start on solid tumors, but also we’re excited about their pipeline as well, 151, their next generation ADC targeting FR alpha is very compelling. And then PVEC in blood cancers, obviously, as you know, we have a presence in hematology. So we saw a very nice fit there as well. And we put it all together, we thought about our main objective being driving growth into the next decade, it meant all that criteria.

Chris Schott

Okay. Can you talk a little bit about another maybe clinical development risk question, like how you think about the product moving upstream. Where are you most confident where you’re going to see the day we’ve seen so far translate? what’s the riskier piece of this?

Rob Michael

So right now, we see a really terrific data in the platinum-resistant where it’s a very high unmet need. There is accelerated approval, strong uptake, then a pivotal study, confirmatory study, reading out and under review right now that showed an overall survival benefit, which that has not been observed in extended duration of additional four months at the median. So that right there is very impressive.

And in the resistant population, that’s roughly half — the other half is the sensitive population. So there’s no mechanistic reason why it wouldn’t work insensitive. It has to deal with progress before six months or after six months that defines it. So again, nothing mechanistic or nothing driving that. And there’s also data insensitive that’s being generated now that looks very similar to resistance. So that, in effect, doubles the population, so you can take the programs that you’re running and run them in sensitive as well and also an opportunity that is combinable with platinum in a safe way at full dose. So we’ve seen evidence of that. So that allows you to move further upstream.

Also, we’ve seen evidence of efficacy in the medium expressors. If around — the 35% is around the high expressors, 30% is the median. So in effect, another doubling potentially and then we’re able to do that in combination with bevacizumab or a platinum and then move even earlier right after induction, where some patients qualify for PARP inhibition, we have an opportunity to combine their or move on to bevacizumab for maintenance. We’ve already seen data that can combine there.

So it can start checking all the different categories, and we can start rapidly moving into studies that will start reading out later in the — well, very late in this decade, but mostly into the 2030 and beyond, as Rob was describing. And with 151, that’s a biparatopic, that binds to two different epitopes may have a greater internalization, more stable linker, better half-life that we can look at everything we just saw potentially endometrial, triple-negative breast, lung can also play there. But with that enhanced potency potentially even low FRA alpha expressors. So that’s how we would think about it. So I think there’s quite a bit of development work that we can do and still very high unmet need.

Chris Schott

Maybe last question here in the last minute or two. The Street assigned still pretty fairly limited value, I’d say, for AbbVie’s internal pipeline. What are you most excited about? Is there kind of like a two or three assets you’d point us to pay attention?

Jeff Stewart

Yes, a couple of 3. I mean Rob alluded to a couple of them. So 383, I’ll talk about, that’s our BCMA CD3 bispecific high affinity bivalent interaction with BCMA, UniValent low interaction to CD3. It seems to create a very nice balance and a nice half-life. So what does that mean high efficacy, strong safety, mostly what we’ve observed now that we showed at ASH was CRS is in the grade one range and single-digit grade two, nothing three or beyond, that enables potentially outpatient dosing rather than the need for multiple hospitalizations and the potential for no need for a step-up dosing, which that means you can start treating these patients very quickly and get them controlled because patients with myeloma can progress like that. So you want to get a handle on it. So that creates a very nice profile that our experts are very excited about.

So outpatient dosing once a month is a very nice profile potentially best-in-class. We’ll be moving rapidly into Phase 3 monotherapy this year and multiple other dose optimization combinations with other lines of therapy to getting into earlier lines, second line, et cetera. So that’s a very nice one. Rob also mentioned 400 as part of our c-Met franchise, I will say, Teliso-V, we’ll talk to regulators this year, 400 has a higher DAR has more warhead, it has Topoisomerases. That lets us look at the same disease states like lung, but in particular, colorectal, which we see high unmet need. We’ve seen very strong data there in late lines, and we’ll rapidly start developing that into earlier lines. So there are some couple of big ones that I’d like to mention. Thank you.

Chris Schott

Great. Well, I appreciate the time, and thanks for joining us today.

Rob Michael

Thank you very much.

Jeff Stewart

Thanks so much.

Chris Schott

Thanks so much. Great seeing you.