AbbVie Aktie

All right. Great. Thanks for joining us, everybody. I'm Terence Flynn, Morgan Stanley's U.S. biopharma analyst. Very pleased to be hosting AbbVie. For important disclosures, please see Morgan Stanley's research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

As I mentioned, very pleased to be hosting AbbVie this morning. We have Rob Michael, the company's Chairman of the Board and CEO. We have Jeff Stewart, the company's EVP, Chief Commercial Officer; and Roopal Thakkar, the company's Head of R&D and Chief Scientific Officer. Thank you both -- thank you all 3 of you for joining me today. Really appreciate it.

Great to be here.

So maybe first, I'll kick it off with a pipeline question. I know you guys have made a lot of progress over the last year or so on this front, and then we'll dive into it. But looking forward to the discussion.

Yes. Thanks, Terence. So I think this one, Roopal and I will tag team, but I'm very excited about the state of the AbbVie pipeline as I sit here today. Now we're a couple of years into our next chapter and you look at the progress we're making across immunology, oncology, neuroscience and now entry into obesity, you're really starting to see the company. And it was really the strategy we had set out for the company as we thought about this next chapter of growth beyond HUMIRA. We've obviously returned to -- rapidly returned to growth. In fact, our guidance this year will actually be almost $10 billion higher than our peak before HUMIRA. And that's with HUMIRA eroding by $18 billion from its peak, right?

So we've had $18 billion of HUMIRA erosion, and we've offset that with $28 billion of ex-HUMIRA growth platform. delivery, particularly in immunology and neuroscience. That's really the areas that have really driven that growth. But as I look at it, whether it's the combination platform in immunology, obviously, we're very excited about Apogee. We look at lutikizumab, the new indications for RINVOQ. I mean I think we have a very robust immunology pipeline that will elevate the standard of care and really drive this company to grow beyond Skyrizi and RINVOQ. We have a very clear line of sight to growth well into the next decade, but that pipeline will then carry us forward beyond that, really similar to what we accomplished by -- with the HUMIRA loss of exclusivity. We followed that with actually having RINVOQ and SKYRIZI, 2 better agents, which allowed us to continue investing in R&D. We increased R&D investment during that period. We rapidly returned to growth.

I see the other area that doesn't get enough appreciation is in oncology. We're very excited about etentamig, the opportunity that as well as the trispecifics we brought in from the outside to really give us a long-term strong position in multiple myeloma, Temab-A across several solid tumors, 969 in prostate cancer, 706 in small cell lung cancer as well as the PD-1 VEGF from RemeGen, which we shared some data last week at the Congress. And so I think a lot of excitement around oncology and neuroscience. When I think about -- we've got 3 franchises that are $5 billion-plus peak franchises. We are now the leaders in neuroscience as you look across the revenue portfolio.

And obviously, we have Vraylar. But beyond that, as we think about our pipeline, bretisilocin and emraclidine, 932, I think a very deep pipeline in psychiatry. Obviously, we're very excited about Viv11 and Parkinson's, but we have tavapadon, which will hopefully be approved soon, which gives us a nice complementary asset in Parkinson's. Migraine, we don't get a lot of questions on migraine, but we are the leaders in migraine as we look at the entire spectrum of disease we've got covered with Botox Therapeutic in chronic migraine and then our oral CGRPs, Ubrelvy and Qulipta. And I'd say that's one where we've said, again, $5 billion-plus peak and at least sell-side consensus has it around $4 billion, so another source of upside for us.

So I think tremendous momentum in the pipeline. And then bringing in the amylin from Gubra gives us an entry into obesity. We're obviously very interested in bringing other mechanisms in. We've been very active on the BD front. We haven't been compelled based on the data we've seen. But to the extent we see a differentiated asset, certainly, we think about half-life matching, the opportunity to combine, there's a great opportunity. But as a growth driver for the company in the next decade and beyond as the way I see obesity. And then I briefly mentioned Apogee when I talk about immunology, but that gives us not only a late-stage asset in Zumi within atopic dermatitis, but we've talked a lot as a management team about entering new areas of growth.

And asthma was one area we identified a couple of years ago. We've been looking for an opportunity. And then I think Zumi combined with the TSLP gives us a real mid-stage asset that can really drive growth in asthma for us as well. So I'm very pleased with the state of the pipeline for AbbVie today. I think we're getting more recognition of it. You're seeing multiple expansion. I think there's obviously more room for multiple expansion as the pipeline matures, but I think we're in a very strong position sitting here today.

Great. Perfect place to start. I know we'll unpack a lot of this. I guess just one other high-level one is just on the policy side. We were talking about this before. The fireside is just a different place from last year for sure, which I think is a good thing. But just anything that's on your radar as we head into midterm that is a focus or you're hearing about in D.C. these days?

Yes. I think from a policy perspective, I mean, we look at it from how do you continue to improve patient access to medicines, affordability for their medicines, but balancing that with supporting a healthy U.S. innovation ecosystem. So the things that we pay a lot of attention to our -- how do we continue to have that edge in the U.S. and innovation. You've seen China make biopharma innovation a national priority. You've seen a lot of innovation come out of China. So how do we ensure that the policies in the U.S., the regulatory framework in the U.S. allows us to keep up and maintain that lead. That's very important. As I look at other areas like a lot of focus on, I'd say, foreign freeloading, and we work very closely with Ambassador Greer, our U.S. Trade Representative. We recently launched a 301 investigation in Germany as a result of some unfair practices.

So we've highlighted to the USTR various examples of unfair practices to try to get, I'd say, more parity in terms of U.S., OUS pricing, get them closer together. I think there's opportunities there, and we continue to work with the administration on that. And then I'd say 340B, I think you're hearing all the CEOs in the industry talk about the abuse. We all support the original intent of the program, but it's clear that the overly broad definition of a patient has led to a level of abuse over the years. You're seeing just really uncontrolled growth in that program that isn't benefiting patients. And frankly, it's taking R&D investment away from the industry. It's going to affect future innovation.

So it's important that as an industry, we continue to work with the administration and Congress on how you solve this problem. I'd say very encouraged by the bipartisan support we're seeing across both the House and Senate on a few proposals that are heading in the right direction. And then I'd say the rebate pilot, we'll have 3 drugs participate in that pilot will also be another opportunity to shed some more light and some more transparency in that program to ensure that ultimately, it is serving its original intent. It's benefiting patients, and it's not stealing investment away from R&D.

Okay. Great. Maybe we'll just start high level on Apogee. This is probably the most notable transaction the company has done since Allergan. So maybe just remind us kind of the strategic drivers here. You mentioned one of them getting into a lateral area in asthma. But what else was interesting about this opportunity? And how do you see this evolving on the forward?

Yes. Look, Apogee fits very nicely with our BD approach. I mean we've talked about with the portfolio we have today, we have a very clear line of sight to very strong growth well into the next decade. And so you've seen us really executing over the last several years, more early-stage deals, but really with the idea of adding depth to our pipeline, we're always looking for ways of elevating the standard of care. So that was the strategy with SKYRIZI and RINVOQ to replace HUMIRA. That is the strategy as we think about across the portfolio of what we're really trying to execute with the pipeline. Obviously, we like a lot of our internal programs, and we're advancing them, but we are, I will say, very interested in what's happening outside of AbbVie, and we brought in quite a few. I want to say it's been maybe close to 40 -- 30 to 40 deals over the last 2.5 years.

And so where I see Apogee is very similar. It just happens to have a late-stage asset. We always said we're not unwilling to pursue a late stage, even an on-market opportunity if it fits -- if it's a differentiated asset that fits in the areas where we're focused, immunology, oncology, neuroscience, aesthetics, and obesity. And so we saw a level of differentiation. We've actually been following them for a couple of years. We saw the data, and we jumped right on it and obviously then announced a transaction at the end of June. It is very complementary to our strategy in immunology. It gives us a great opportunity in an area of high unmet need in atopic dermatitis. And as I mentioned earlier, an opportunity to expand into asthma. We are also looking at opportunities like that across our portfolio. So the lens again is on those key growth drivers, and we have the financial wherewithal. We have plenty of capacity to be able to continue to execute deals, whether that is an early-stage opportunity that's going to drive long-term growth, a late-stage asset or even on market.

Yes. Okay. Great. Maybe to bring Roopal into it, just on the registration program for Zumi, maybe you could just elaborate on kind of -- I know it's still a little bit early, but what is that -- what's the scope of it? What's that going to look like? What's the kind of time frame for that program?

Yes. So very consistent with the data that we just saw, which was the Phase IIb data set that Rob is referencing. We want to replicate that on a larger scale and us, along with the Apogee team, we think we can do that. So opportunities to internalize and move with speed is very important. Maintaining the data that we've observed, we think we're in a good position to do that because the data were in a global setting. Oftentimes, we do see data in immunology move from Phase II to Phase III and potentially have a dip. In fact, we see something different here because they actually globalized and didn't see a dip. In fact, some of the efficacy outcomes were stronger and numerically stronger across what's available.

Even EASI 100, the most stringent endpoint is starting to approach RINVOQ. So that was part of what has us excited. But now as we are able to internalize, globalize, we bring that scale. So we will be moving quickly. We will start enrolling, I would say, this year and then launch in the early part of 2030, and we would do our best to include multiple countries and then age groups getting down to adolescents and potentially expanding further Japan, China, where maybe a small company doesn't have that ability to do that. While we're doing that in parallel, we want to investigate Zumi along with TSLP that Rob referenced that's also half-life extended, and that would be in asthma.

In AD and asthma, from our experience with RINVOQ and with Jeff's team who've been very successful with RINVOQ, we still see an underpenetrated market, advanced therapies reaching less than 10% of individuals. So there's a lot of upside. And both of these markets are growing greater than 15% annually. So that's why I think it was a great fit. We're very excited about the data in front of us and continue to build upon that and expand out indications.

Great. Maybe, Jeff, just from the commercial lens, anything you want to add there? And then I guess the one -- I think majority of investors think great deal, strategic fit all makes sense. The one area we get some pushback is just biosimilar Dupixent and kind of how you navigate that. So maybe you could talk about just commercial profile, Zumi go-to-market strategy and then how you think that plays out longer term because I think that's the one question.

I think it's a great question. Just to reiterate what Roopal said, I mean, the profile is very, very nice. And certainly, the way we look at it, we'll have RINVOQ in AD through 2037. And so when you look at our ability to co-position assets, we've been very successful at that, whether it's been in PsA or IBD. And so it's quite exciting. We're not really too worried about biosimilar Dupixent just because we've seen how these markets evolve. We've seen biosimilar HUMIRA. We've seen biosimilar STELARA. And sort of when you reset the standard of care and you're able to bring basically the AbbVie capability, we've shown we can navigate that exceptionally well.

I would like to reiterate a key point that Roopal made. I mean if you look at the bio penetration rate of atopic dermatitis, it's very low. It's by far the lowest of any of the immunological categories. It's about 8% in the U.S., and it's lower than that outside of the U.S. It's probably got 3x the number of moderate-to-severe patients as the psoriatic market that we've seen develop over the last couple of decades. And while we think that, okay, Dupixent has been out there for a while, it's a mega blockbuster. RINVOQ is the second product in that category, a very significant agent. There's a lot of runway to this market over time, and we're well positioned commercially to make sure this Apogee transaction is fully exploited.

Just from a psoriatic market right now, dollar value, what is that roughly like $25 billion?

Yes, it's even higher than that, growing even faster, right?

So you're telling us if it is threefold higher atopic derm could be...

The pure number of patients is 3x, and it's less than 1/3 penetrated at this point. So the way that these markets work is you get line of therapy expansion, you get momentum over time as people live with these conditions for atopic dermatitis, it could be lifelong because you have a significant pediatric population. So it's extremely attractive, and I think the investors have seen that with the...

There's a reason why we use mega blockbuster potential in our announcement.

Great. Okay. So maybe just going -- we'll get to some of the other therapeutic areas, but immunology is still, again, the core of the company and really has been such a success story, key growth driver. Just maybe level set us on kind of how you're thinking about Skyrizi, RINVOQ over the long term, some competitive dynamics at play here, whether it's TREMFYA, Icotyde, but maybe just give us kind of mark-to-market on how you're thinking about the long term. And then kind of the related question is just on the subcu approval, just remind us kind of confidence level there? And then what's in your guidance for this year and next year because I think there's a lot of focus on that, obviously, important upcoming FDA decision.

Yes. So when we look at the immunology markets, as I mentioned before in our last question, they're extremely robust. So the bio penetration rates are quite small. What we see is that these markets are growing very nicely. I mean the most mature markets may grow in the mid-single digits like rheumatoid arthritis. The others in the high single digits and atopic dermatitis and asthma are growing almost 20%, between 15% and 20%. So they're extremely robust. They're characterized by this idea that as patients live for decades with these conditions, line of therapy expands. So we see in many of the segments that second or third line is now larger than frontline. So this basically creates a lot of space for innovation and people moving through their patient journey.

The other dynamic that we see is if we look at our actuals, and we've highlighted this over the years, we look at both in-play share, which is actually your dynamic share. So those are your capture rates of your new patients or switching patients compared to your total prescription share. So we can see that we still have very, very strong capture rates for both Skyrizi and RINVOQ, well ahead of where the prescription shares or the TRxs. And so we know that we're going to have share momentum that is going to continue. And this is despite the fact that competition has increased, but it doesn't lower our confidence level. Then we see multiple catalysts over the near term. Certainly, we can highlight the subcu induction for Skyrizi. And then we have 4 more key indications here for RINVOQ.

And these indications for RINVOQ are right on top of our commercial footprint. So we have GCA and lupus. Those are right on top of our rheumatology community. And the rest, like HS, vitiligo and alopecia, are on that dermatology call point. So we see incremental catalysts coming with what we call the sort of the third wave of RINVOQ indications over time. So that gives us a lot of confidence in the sustainability of the momentum that we have with our big core assets. And you asked about Skyrizi subcu. So we see this as a significant catalyst that we're right on top of. So we expect the approval here in the fourth quarter. It will probably take 60 or 90 days for us, which is typical to get full paid access because we do have to go through sort of a formulary acceptance process, which we think will be quite reasonable.

And then we think we can bring this to the market in Crohn's. And what's remarkable about this new catalyst is the quality of the data. This is our AFFIRM data. And what we saw was whether you look at placebo-controlled endoscopic endpoints in particular, but also clinical remission, we've never seen anything like this level of basically induction quality in the category. So take the IL-23 competitive dynamic out of it across Crohn's disease, this will be an extremely effective and well perceived asset when it comes in the fourth quarter. So very, very positive momentum as we look at the long term for Skyrizi and RINVOQ.

Okay. Maybe, Rob, one area just from a strategic lens is just immunology combos. I know you guys have done a lot of work here. So maybe just give us kind of the strategic view of it. And then do you guys have all the pathways that you need? Because, again, it seems like a puzzle and like which ones are going to work in different indications. So you have everything you need? Or is there opportunity to look for additional targets?

Yes. And that's also informed, as I mentioned earlier, our business development strategy because we obviously -- we brought in the TL1A, we brought in a TREM1. We have our own alpha-4 beta-7. So when we see mechanisms that make sense to combine, if we don't have it internally, we look for it externally, and we've been successful there. And really, the strategy is very similar to what I described earlier about how we approached Skyrizi and RINVOQ about elevating the standard of care. So now it's about how do you raise the bar, and we really see combinations as being that next frontier. Obviously, very excited about the combination data with alpha-4 beta-7. We're going to pursue that approach at TL1A, TREM1.

And so strategically, it's -- as we look at the long-term growth for the company and where we're going to be when you think about well into the next decade, it's how do we bring that innovation forward. And we see, particularly in immunology, combinations playing a very important role. That, coupled with -- in HS between lutikizumab and the initial indication for RINVOQ, having a very strong position there gives us a really nice opportunity. As I mentioned, again, longer term, as you think about Apogee, the role's going to play atopic dermatitis and asthma. So we will continue to look for -- I'd say there's always additional mechanisms. I know that Roopal and the team would love to bring in-house, and that's what our BD group looks for. To the extent they see that differentiation, they'll bring it in. But why don't you take a minute to talk about the approach we're taking in the combination platform because I think it is an innovative approach and we have a clear edge.

Yes. It is quite innovative and ambitious. And I don't think we've ever seen anything like this. So it's a very large program building on the Phase II data -- Phase IIa data that we've already seen, which showed a doubling of endoscopic remission versus Skyrizi, which has already showed a doubling versus a [ IL-23 ] competitor to begin with. So you've already doubled standard of care. And within a few years, we've doubled it again in this Phase IIa data. And actually, maybe there's some efficacy still left, and that's why going into this next Phase IIb, we'll raise the dose of the partner asset, the alpha-4 beta-7 that we've built internally to explore a higher dose.

But what we'll do now is look at those combinations in Crohn's and ulcerative colitis combining with Skyrizi with that alpha-4 beta-7 382 and the TL1A that has a half-life extension. And the way we are thinking about this is similar to what Jeff had outlined and being consistent with lines of therapy expansion. At this stage, we don't know which one will work best where. And then as Rob stated, we also have a TREM1 that potentially could enter. But we think about different lines of therapy, what could work better early, second line, third line dependent on what the patient may have received previously. Thus far, the current combination data that I spoke about that showed a doubling of endoscopic remission showed that in many patients that were post RINVOQ and in fact, post Skyrizi. But we may see other opportunities that may be balanced a little differently. So that's the first step.

The next is to say which one seems to work best in Crohn's, which one seems to work best in ulcerative colitis. And then there are special populations to consider ileal disease, fibrosing disease, fistula in Crohn's. So we'll have an opportunity to see which one is optimal in those subsegments. And then further, we'll use our internal precision medicine expertise to explore will there be a potential for a biomarker approach where we can maximize the benefit risk, and we'll be have an ability to do that. We do that today in oncology quite successfully, but immunology, it's been a little more elusive, but we have the wherewithal to look at all these different populations. So I think that's something unique that no one else is able to do and already looking to drive that standard of care that Rob referenced very soon.

Great. And can you tell us yet if this -- the initial Phase II data is going to be at UEGW or still...

Yes, that's our plan. We spoke externally -- publicly about 2/3 of the data, which was the interim cut. We'll have 80% data now in hand. We'd like to get that to the fall GI meetings, along with the subcu data for Skyrizi that Jeff was referencing, showing 45% deltas for endoscopic response and clinical remission in that treatment-naive population is where Skyrizi is positioned today. We'd like to get that data out as well and then show endoscopic remission, which we haven't shown yet. So we'll save that. And we've -- as Rob referenced earlier, we just got done with 1480, which is our PD-1 VEGF that just got rolled out. And we'll also be busy at the end of September, rolling out etentamig data at the IMS meeting. So in addition to immunology, a lot in solid tumor and quite a bit in heme, including multiple myeloma that's upcoming.

Okay. Great. Maybe just 2 follow-ups. One is just on the subcu, just remind us the strategy here is like confidence that you can get to a co-formulation of these various different antibody drugs. That's question one. And then, I guess, question for Jeff is just as we think about these co-formulation combinations coming to the market, are these market -- more market expansionary? Or is this more about extending the tail of the franchise because you have this co-formulation approach? So maybe talk through just the commercial implications of when these do launch, like what does that do for the market?

So I'll talk about our approach on the formulation side. So as we're generating the data, in parallel, we're also working on co-formulations, and that would include the alpha-4 beta-7, TL1A, any other asset that we have in the pipeline. And so far, I would say, so good. They look good. They behave well together. So we have a reasonable level of confidence that these will be co-formulated and delivered in a single injection, which I think is very important commercially. We do that today in our on-body device with Skyrizi and patients really tell us they like that experience. They don't see a needle. Some will even ask, was there even a needle when they dose the product. So we'll be able to use that type of technology once we hand that to Jeff and his team.

Yes. And I think, Terence, we'll see that the -- that it's both market expanding and also share accrual to AbbVie. I mean these are -- this is exceptional data. I mean, what really drove the IL-23 category led by Skyrizi in Crohn's disease and then UC was this idea of this head-to-head trial sequence where you doubled the effectiveness versus the old standard of care. So when we saw internally that we could double it again, this idea that you can continue to have that level of innovation and the market responded. I mean, it was a significant rapid share gain once the community saw if I can get that level of endoscopic control this is going to drive long-term outcomes. And so to see that again in the early 2030s, which is -- would be our approach is a significant catalyst commercially, more expansion of IBD, bio penetration and share gain.

Okay. Great. Maybe I want to touch on CNS. So maybe, Rob, you mentioned you guys are one of the leader, I guess, now in size in the CNS categories. Parkinson's has been a near-term focus. Obviously, you have the legacy in migraine. But maybe first talk about Parkinson's, what's most exciting? How do you think the tavapadon launch will ramp? And then secondly is Alzheimer's another area you guys have talked about historically. So I guess the question there is just do you think you have everything you need internally to address -- to build out an Alzheimer's leg here in parallel to what's going on in Parkinson's and migraine?

Yes, I'll address the Parkinson's. It's very exciting. I mean, Viv11 has outperformed our expectations. We'll hit blockbuster global status this year and continue to ramp this over our long-range planning cycle. And then at the end of this year, we also have, to your point, tavapadon. So we've guided at peak that, that Parkinson's pillar will be a $5 billion opportunity for us. So it's quite exciting. Tavapadon, we're right on the cusp of this. There's nothing like this in the category. So remember, basically, the standard of care for advanced Parkinson's is first orals. And everyone knows where that ends. It ends with basically freezing, it ends with dyskinesia, multiple oral pills, oral levodopa/carbidopa.

So to bring tavapadon, which is a unique basically agonist, we are seeing that you can use it as a monotherapy or a combination therapy. And essentially, the data that we have is quite striking. We've never seen anything like it. It basically locks in your, basically, control for 85 weeks. You don't have to escalate oral levodopa and carbidopa. So this is very significant. And then like other prior generations of these agents, the safety profile is really significant. So no somnolence of any meaningful approach. You don't get impulse control disorders. Basically, this was a big thing that harmed many of the prior generation of agents, and the dyskinesia control is really exceptional. So we're super excited about it.

Now I have to say that given our timing of the launch, we sort of missed the window for sort of Medicare reimbursement for '27. So we'll have a little bit of a slower burn. But ultimately, this is going to be a significant contributor to that $5 billion target. And certainly, there's nothing that we've ever seen like this in the category so far. And I think Roopal can maybe address Alzheimer's, which is also exciting.

We did a deal with a company called Aliada that gave us an A-beta agent that can cross the blood-brain barrier, and that has now entered into Phase Ib. So we're in patients now. The hope there is greater penetration across the blood-brain barrier, and an extended half-life to improve the patient experience over time. Can you get to subcu? Can you get to monthly dosing? In addition to that, we did a deal with a company called ADARx to look at siRNA. So we're able to potentially target tau. And as we use our blood-brain barrier technology in combination, you don't have to have an intrathecal approach or through a spinal injection, this could be given IV or subcutaneous. So we've created those constructs where we've seen in preclinical data that it can effectively cross into the blood-brain barrier and deliver an siRNA and start to take down tau, for example, that can partner well with an A-beta.

We're also looking to build for alphasyn looking at Parkinson's disease modifications. And in the pipeline, we also are considering neuroimmunology as the third leg of that stool as we consider neurodegeneration. So I think we're very well positioned to go forward in CNS across the board. And then I think what's important to mention that we put out very impressive data in menstrual migraine, which is a very important area. Many individuals that have migraine up to 50% or even more, it's concentrated during menstruation. And those migraines are much more painful, more difficult to treat and can last longer. And with atogepant or Qulipta globally, we've sort of ran the table on all the endpoints and saw very impressive data. There has been data published in the past, but no asset has been able to gain regulatory approval. So we're very hopeful we'll be able to take that forward and even enhance our presence in migraine.

I think the other longer-term opportunity for us is the Capstan platform in vivo CAR-T, which gives us, I think, some very compelling opportunities, both in immunology and neuroscience. We talked about neuroimmunology. We actually have an opportunity there longer term. And so as we think about BD, we're always looking to add more depth to the pipeline. Is there something that's say, more disease modification in Parkinson's. There's always -- I think that the team is looking for that level of innovation, the opportunity to add depth. So I would say even though we're very satisfied with what we've brought in, we're still actively pursuing additional opportunities.

Yes. Great. And I'm going to ask one on AI just because I feel like it's highly topical. It came up in a lot of my sessions, even the breakfast this morning. And so the question is just, Rob, one nonobvious use case because, again, we've seen some of the obvious ones out there talked about. But internally, like what's one nonobvious use?

Yes. I mean we all, I think, spend a lot of time talking about these functional use cases, which are the obvious ones. What I would say was nonobvious and I think a learning for myself and the team is we've spent a lot of time over the course, I'd say, the last year, really making sure our employees are well trained, educated, are proficient. We're adding more, I'd say, tools for them to utilize. So I'd say the nonobvious is the power across the enterprise of just better decision-making. Ultimately, as they think about how do you drive up a higher probability of success? How do you -- across not just we think about R&D, but within operations that can really drive.

We talk a lot internally about golden metrics, what ultimately will drive faster new patient starts, what will drive lower cost of goods, higher probability of success in R&D. And it's really about the nonobvious case to me is how we've armed our employees at the individual level as each of us become more proficient, utilizing as a thought partner. I know personally, it's been very rewarding as I've personally engaged more with AI. So I'd say that's the nonobvious case. It's just the power across the enterprise as we strengthen our employees' capabilities.

Okay. Roopal, just on oncology pipeline. I know that Rob mentioned a lot of assets here, but if you just had to pick one to focus on us in the last minute here, which is the one that you think will have the most important data over the next 6 months or so?

I would say in the next couple of weeks. That's going to look at IMS in Europe. This is a multiple myeloma society meeting. We have very exciting data with etentamig. That's our next-gen BCMA, T-cell engager, which showed a very high efficacy, so high that the data monitoring committee reached out to us and said you should stop the study. So obviously, the efficacy excites us.

But in this market, what's missing is convenience and safety, and we'll bring a once-a-month dosing regimen to a field that currently it's every week, every week for a long time with multiple step-ups, single step up once a month, safety, grade 3 plus infections under 30. The current molecules are 40-plus percent. CRS under 30%, grade 2, single digits, competitors are grade 2 in the teens and total CRS 60% to 70%. We've driven all of that down, and we're very excited to roll out that data later this month and get that submitted this year and get that into Jeff's and his team's hands who knows the heme space very, very well.

So maybe people aren't looking at this one, but I think it's important for investors to keep an eye on this data set, look how it compares and then watch Jeff's team grab the ball and launch it.

And the opportunity in the community setting is tremendous with this asset.

Okay. Great. Well, thank you so much. Really appreciate it.

Awesome. Thank you very much for joining us today. My name is Mohit Bansal. I'm one of the biotech and pharma analysts here at Wells Fargo, and I'm joined by AbbVie management team with us today. So from my left to right, we have Roopal Thakkar. He's the EVP and Head of Research and Chief Scientific Officer at AbbVie. We have Jeff Stewart. He's the EVP and Chief Commercial Officer at AbbVie. And Scott Reents, he's the CFO of the company. Thank you very much, Team AbbVie, for joining us today.

Thanks for having us.

So exciting times at AbbVie, I don't know, like I mean I have leaders from three different sections of AbbVie. So I'll probably have 10,000 questions in 35 minutes. So maybe I'll start with you, Jeff, right? I mean I'm sure there are a lot of questions around immunology. You have done a tremendous job with SKYRIZI and RINVOQ. We don't even talk about HUMIRA anymore. So you have consistently outperformed the consensus expectations for SKYRIZI and RINVOQ. Where you sit today, how much under appreciation for the franchise still is, some of that pipeline as well. So -- and then what cards will turn over in the next 2 to 5 years that will make you expect that...

Yes. Thank you very much. No, we're very, very pleased with the historical performance and the visibility we have going forward. And I think there's multiple factors in there, and I'll run through them. I think the first is, obviously, the markets that we play in are very substantial. And they're marked with very, very nice growth. I mean, we have markets like IBD or atopic dermatitis or PsA. These markets grow anywhere from mid-single digits to high single digits, and atopic dermatitis, which is the -- basically the most underdeveloped market, is growing well into the double digits.

So the markets themselves are very, very nice areas to play in. And what we see that helps drive that market growth, and we've talked about this over time, is as basically innovation comes into these markets, time expands, people live with their conditions, you see line of therapy expansion. So what that does is it sets up basically these categories for multiple assets that can start to play across subsegments, et cetera. So the markets are very, very nice.

The other thing that we look at, and SKYRIZI and RINVOQ now are in their eighth year of growth. We see that we still have significant market share gains that will accrue to the franchise because we watch the distinction between our in-play share and our total market share. And as long as that in-play share and for most of our categories, it's still well above our TRx share, we see forward market share growth in these categories. And then we have several categories of our catalysts before we get to the pipeline. And some of them are -- we're really, really close on an innovative approach for the subcu induction for Crohn's for SKYRIZI, and we're exceptionally excited about the quality of that data, that AFFIRM data. We'll see that later in the quarter.

And we also have the next generation of indications for RINVOQ, which are very, very positive. So we obviously have already launched giant cell arteritis that's helping us drive our business in rheumatology. But in derm, we're going to have vitiligo, alopecia. We'll have readouts that Roopal can talk about for HS on two assets, RINVOQ and lutikizumab. And so when you look at all of those, we're very, very encouraged. I would take note that you may remember on the last earning calls, we've gotten more incrementally excited about the vitiligo and alopecia data, and we upped our long-term guidance to over $3 billion for just those assets themselves.

So we see very, very nice visibility to the momentum. We're in the right markets. And certainly, we know that investors are starting to see a lot more visibility to what comes next. This could be the combination platform. I'm sure we'll talk about SKYRIZI plus the super potent alpha-4 beta-7, the TL1A combinations. And so there's many, many catalysts that will come here for immunology as we move forward.

Got it. So this is very helpful. Before we get there, I think the most talked about aspect of IBD market right now is the competition a little bit here. What are you seeing in the marketplace right now? And like are investors overestimating the competition versus like the growth challenges there, number one. And number two, bringing the subcu Crohn's induction regimen in there, and how does it help?

Sure. And we see that the competition across immunology and would say in IBD has played out largely as we predicted. We had predicted that competitive IL-23s would take some share, but the category itself would grow. And that's actually what we've seen play out. We continue to have an exceptional position right now with IV only in the front line, whereas the competitor is mostly accruing sales in the second line, where we also play with RINVOQ. So we have a very stable and strong position. To your point, we are very, very excited that we will be able to basically bring the subcu for Crohn's in the fourth quarter. That's when we anticipate the approval.

The one thing that surprised us, which I think is very positive for investors, is certainly positive for our commercial and our R&D teams, is the quality of our subcu data. It's very exceptional. In fact, I would say we haven't seen anything like this just in terms of induction whether it was a subcu or an IV, it's exceptional data. This is the AFFIRM data, and there'll be more data releases pending about that data. But we're very, very excited about it. We've released the top line. So we see tremendous endoscopic healing. We haven't seen anything match it. It's better than our own IV. And so this catalyst that you've talked about, certainly, we believe that we have a very strong position in IBD, but this new data will help us accelerate our position over time.

Got it. Very helpful. I want to touch upon the -- like in immunology, I want to touch upon your platform study here as well. So as the first data set from these studies emerge, like what signals are you looking for, we should be looking for from these combinations that will make us comfortable that SKYRIZI has a long tail or SKYRIZI plus has a long tail going forward?

Yes, thanks. I'll build on some of the comments that Jeff has already made. So a few things. One is that endoscopic remission and healing. That is an objective marker, and that's one that we like to look at in Phase II to predict outcomes in the future. And what we saw there in the early data in combination with our proprietary alpha-4 beta-7 is a doubling of what SKYRIZI delivered in the same study. So this is not cross trial comparisons. This is within trial comparisons where we had [ mono-mono ] combo side by side. And what we've provided publicly is about 2/3 of the data of the patient flow. Later this year, we're hoping to get it to the conferences, the GI conferences, and that will be around 80% of the data, and next year will be 100%. But that doubling is very important while we maintain safety and taking the two together, down the road as we get into Phase III and potential for labeling, you could have a very nice asset that doesn't have a boxed warning.

And what we're doing now in parallel as that data flows is generating even a larger platform, which will now enroll SKYRIZI plus our proprietary alpha-4 beta-7 and in combination where our extended duration TL1A, and that will be in Crohn's and ulcerative colitis. So we'll monitor that data over time, having interim looks to see if we can ungate moving into Phase III even faster than waiting for the full data set. But we are very encouraged with what we see today. And one thing that we want to look for with the alpha-4 beta-7 is a little bit higher dose drive even higher efficacy, particularly on the endoscopic side, so that's going to be the most critical things that we'll be looking at.

Got it. So I mean, AbbVie is one company where sales team and R&D team actually work well together, like they all say. But again, you both have input there. So for you, Jeff, what would be the most important aspect for this combinations because you want to move these combinations in first line like get-go, just -- in IBD, you want to treat these patients with the best drug available. What do you want to see as a commercial leader?

Yes. And I think I'll basically build on what Roopal has said. If you think of the transformation that AbbVie's led in IBD with both SKYRIZI and RINVOQ, the first was we anticipated with modern clinical design that the market value driver would move from sort of clinical remission or signs and symptoms like how are you feeling with your gut to objective endpoints, this endoscopic remission. This is the deep remission. And that's exactly what we helped drive with the gastroenterology community, of course. And so if you think back on the history, which wasn't that long ago, we did a definitive trial, and it was SKYRIZI versus STELARA with the primary endpoint of endoscopic remission. This was the SEQUENCE study, and it was a doubling of effect. And the community understood that, look, if I can get that bowel that healing under control, I'm going to get differential outcomes. So that market value drivers shifted very, very fast.

So as we work, to your point, with Roopal's team to design these pivotal trials for the combination platform, we need to see transformational efficacy. And the great news is we've seen it. So we think SKYRIZI doubled the standard of care. And in this combination platform with the super potent alpha-4 beta-7, we've doubled it again. That's a very different dynamic than we've seen in other approaches. We think it's going to be a market-leading approach. So that's critical. So how we design those endpoints, how we can drive that change of standard of care. The second key part is it's got to be convenient, right? We need to be able to not have two different shots or something that's awkward for the community, but something that's simple, a combination asset in a simple delivery, whether that's the on-body device or an injection. We need to make sure it's simple, clean, and we can really drive that change.

I think the second part, which we've been very successful historically is that you don't ride just one asset. Like we've done remarkable things with -- in many different categories like in PsA with SKYRIZI and RINVOQ. We think with HS, it might be luti and RINVOQ, where we can take two assets and co-position them effectively within our sales teams. And so we would like, and we work with Roopal on this to say, it's not the alpha-4 beta-7 combo versus the TL1A. Of course, we always let the science drive it. But we actually think we may be able to co-position them in different segments, one may be better in UC than Crohn's. So how do we bring that to the market? So those are things that Roopal and I and Scott, we talk about every day in terms of how we want that pipeline to develop.

That's a nice segue into a question for Scott, basically. So I mean, obviously, we all have known AbbVie since 2013, that's when it became AbbVie, right? So I think for many years, you had your back against your -- against the wall, trying to replace HUMIRA, and that's why there was a lot of more pressure to do external deals. At this point, when you think about strategically internal versus external, how do you think about the internal pipeline plus external? And how do you allocate capital on the basis of that?

Sure. I think you're exactly right. I think we've spent a lot of time leading into the HUMIRA loss of exclusivity event. Think about what the future looks like immediately after, but also beyond that. So when we look at what we've done over the last couple of years, we've done roughly 30 transactions, spent about $20 billion, and half of that was with respect to the Apogee transaction. That means we've done almost 30 transactions of another $10 billion on smaller earlier-stage things. And so it's that combination of making sure we're bringing external innovation that is well matched. So for instance, the combination studies we're doing with SKYRIZI, that's in combination with the TL1A that we brought in. And we looked at that, and we were very specific what we were looking for, making sure we had something that was well matched for that combination.

So I would say we're looking at the assets. We're making sure we have everything that we need to build us and drive that growth going forward. And at the same time, making sure we're funding it appropriately. From an R&D perspective, since 2022, we've increased our R&D spend by roughly $3.5 billion. And so we're almost at $10 billion this year from the R&D spend. And so making sure we're funding everything that we have internally, and we brought a lot of great things internally, things like lutikizumab, Venclexta, RINVOQ, of course. But also when we're bringing things in, we're also spending a lot of time with them. SKYRIZI is a great example of something that obviously was -- came in, it was a well-formed asset. We knew a lot about it, but the team did a great job of maximizing that, not only from the final development and bringing it to market. But also looking at the head-to-head studies and things of those nature.

So it's going to continue to be that combination. We have a strong backbone. I think we -- something that we're very proud of where we are today with the pipeline. And certainly, that momentum will continue, but we'll continue to augment that with the right areas and just looking at things in our core areas and adjacencies. And we just -- obviously, with Apogee, it's a little bit later. We got late stage, early stages, focusing on the right assets that we could make a meaningful difference with.

So it's very clear that you are not buying revenues. You're basically -- like it's not the Allergan-like deal, you are doing like Phase II-ish deals. So is that the strategy here like Phase I, Phase II, looking at 2035 and beyond? Like how are you thinking about?

Well, I would say that we are fortunate to be in the position we're in. We have a strong balance sheet. We've got the financial capacity to do a number of things. We also have a very strong revenue growth profile. We've talked about our high single-digit CAGR through the decade. We've got growth well into the next decade. Really the first LOE that we face isn't until 2030 with VRAYLAR. So we have a very strong runway. And so we don't need revenue. But certainly, if it's something that we see and something that we're interested in, we have the ability to go after that revenue if it makes sense with our overall strategy. So that's why I would say it's a little bit, as I said, good fortune. We can look late stage. We can look early stage. Revenue is fine, but it's not something that we are desperate to get.

Got it. Completely makes sense. So Roopal, I want to touch upon HS, two readouts coming this year. Talk a little bit about how comfortable do you feel into those readouts, especially lutikizumab data. I mean there have been some placebo responses, which are really high lately. So talk a little bit about that and your comfort level around those Phase III trials?

Yes, a couple of things to mention. So one, as we've talked about a theme here today, it's good to have multiple assets in a disease area that's under penetrating and growing and HS is such an example. So we have lutikizumab as an alpha-1 beta going forward, so strong data in Phase II. Positioning there would likely be in earlier lines, and that's the population that's being enrolled. Those are naive to biologics, but we're also enrolling patients that have already seen and failed biologics like anti-TNFs and 17.

And for RINVOQ, it is a patient population that has already failed the biologic. So similar positioning that we see with SKYRIZI and RINVOQ in IBD and in PsA. And that is a very good, I would say, position if both are successful and R&D, our goal is to do our best to make sure these trials are successful. And placebo is a consideration, particularly in HS in immunology because the disease can relapse and remit and placebo can go up and down. So because we have naive patients coming in the luti trial, we set the endpoint as a more stringent HiSCR 75. Traditionally, HiSCR 50 has been used. We set that precedent years ago with HUMIRA. So that's one aspect.

With a tougher-to-treat patient population, that's in the RINVOQ study, we could anticipate maybe less bouncing up of placebo. So we see a HiSCR 50 there, but that one is because we have 100% treatment failure. So those are two approaches that we're using to do our best to derisk and make sure placebo is tamed. But we agree with you, and that's something that we had to consider early in the days of design. Another important factor is training of the sites and how they identify the lesions and count the lesions over time. So that's been implemented as well, and we'll see data later this year.

Got it. Very helpful. I have so many immunology questions, but I want to go to oncology first before we have -- if you have time, we'll go there, I do want to talk about Apogee though. So with the data for BCMA last week, I mean, can you talk a little bit about that? I mean you are not the first to market there, but at the same time, you have a unique approach and the data look pretty interesting for monotherapy. So talk a little bit about where do you see...

Yes. And that's another one where we had an early look at the molecular design. The strategy there was high affinity for BCMA. And low affinity for CD3. And the thinking was, over time, safety, tolerability, convenience are going to be critical drivers if you're coming later to a market which we still feel from the TCE standpoint, is underpenetrated. And also the observation that the market is largely in the community outside of academic centers, which would have more capabilities to deliver assets that are maybe a little more challenging or labor intensive, including CAR-T. So our focus was how do we think about these community practitioners, and how do we deliver an asset for them to democratize this further, so patients can have better access.

So what we observed was high response rates and in fact, high response rates, strong PFS and even OS trend that the data monitoring community asked us to stop the study. And we stopped it early after only 11 months of median follow-up, which is quite early. And despite that, a strong hazard ratio for PFS and even OS, both are under 0.5. And that's important, but really what's most critical is that this is delivered with a single step-up dose and in total, only 13 injections in a year because you're giving it every month. If you look at competitors, it's double of that in the best case and up to 50 or 54 injections in a year. So it's very labor-intensive for the center. That's why the communities don't use it. community practitioners don't use these very much. And it's very challenging for the patient to keep coming to the hospital.

So that's a very important factor, and this was the regimen that we used was every other month (sic) [ every month, ] full dose out of the gate after a single step-up. CRS rates were under -- were 30% or less in grade 2 single digits. Competitors are up to 60%. CRS and double-digit teens for grade 2, which can be challenging for the community. Serious infections are also problematic and challenge community use, and we see that as grade 3 and above under 30% or so. Competitors are in the 40% range or even higher. So taken all together, even if you're coming in a little bit late, I think this is a very meaningful option for a patient given the profile that we're showing and more to come at the IMS meeting later this year. And Jeff, you may want to comment on the market because I think there is a strong commercial opportunity here.

Yes, I would say to reiterate what Roopal's point is, this is an exceptional product. I mean if one way you look askance and say, AbbVie is late, maybe it's the fourth or fifth entrant, that's not the way we look at it at all. And of course, it is our internal view. When we look at the market, we're like, listen, based on this design, that gentle CD3, this is the first second-generation bispecific BCMA. It clearly is, and the data has shown this. So you get what you expect, which is tremendous efficacy, but then you get this triple play that's very different than the first generation, okay? So lower CRS, lower ICANS, you have lower infection rates.

Okay, this is impressive, and it's very convenient. One step-up dose. When you look at that, we think there's likely -- we don't know for sure, there may be no hospitalization required. So when you look at the market structure, even though it looks like a category that's been there for a while, it's very underpenetrated. And in the community, 75% to 80% where the myeloma is, they don't really have access to these CAR-Ts or these bispecifics. So we think it's an exceptional product, and we think it's the tip of the spear for what we have behind it, which are two tri-specifics.

So Mohit, to your point, we are going to play in myeloma, and we're going to play very, very big. And in [indiscernible] with this unblinding, we're looking at a very rapid filing and entry. And we know hematology, [indiscernible] myeloma, but we played very effectively as the leader with the hematologists around the world. So it's a very underappreciated asset. I think even in your own note, recently you said, this may be a sleeper. I would say that's what we believe. So I think it's an exciting and underappreciated catalyst for the company.

We hope it will wake up quickly. To build on Jeff's point, we will be engaging with regulators about labeling and one discussion -- big discussion topic for us is around the REMS and hospitalization. And to date within the program, including this Phase III readout, we've safely dosed, I think, 100 patients or so as an outpatient, not in the hospital. So that will build on the profile that Jeff was describing.

Hematology has so many examples where not the best drug wins, it is like your drug is very good, but at the same time, convenience and ease of use is also very important. I mean Revlimid versus [indiscernible] for sure. Very helpful. Thank you for that. And then let's just talk a little bit about neuroscience as well, right? I mean psychodelic, so you were -- among the big companies, you were the first mover in there. And now Lilly has bought a company, and there is a lot of excitement around that psychedelic space, regulatory changes as well. Talk a little bit about where you stand with Gilgamesh, and what could we learn here in next 6 to 12 months?

Yes, this is bretisilocin. And similar to other assets, it started with the profile that we saw deep, durable basically remission in major depression in the early study. There will be a couple more or another readout this year. But what we saw already, we liked, and that was a potential go-forward dose for acute treatment along with another active arm. Both arms did well, but the go-forward dose did substantially better. Also, the treatment experience time of around two hours, we saw that very favorably as where -- as well compared to other competitors that may be 6 hours or plus. Also the psychodelic experience was well tolerated by the patients. We didn't see any distress. Some cause a loss of consciousness, that causes distress for the site. So we wanted something friendly for the patient and for the site. So for two hours, deep responses and potential for longer duration beyond, let's say, weekly dosing.

Can you push out to every month or beyond, we see that potential as well. And that's linked to the mechanism where it's a 5-HT2A, not 5-HT2B, where many of the natural or other assets bind to that receptor which is a potential safety issue from a cardiac valve and fibrosis standpoint. We recall years ago, those of you that have been monitoring fen-phen, part of the issue was a 5-HT2B agonism that resulted in those cardiovascular problems. So this asset differentiates in a multifaceted way that has us very excited. And hopefully, we can serve lots and lots of patients, but also a very exciting market that we can enter. We know the VRAYLAR space. We know depression. So we'll see some more data this year. We're currently planning an acute Phase III, Phase II to look at dose and durability and looking to treat patients over time and also Phase II in PTSD as well.

Got it. Very helpful. I want to come back to oncology, solid tumor oncology. So this is where I don't think you get a lot of credit for. But I mean, when you look at the -- if you look past like the first asset, and you look at the second asset, the second-generation ADCs are looking pretty interesting. So can you -- and then SEZ6, so that is pretty interesting. So talk a little bit about like where you are most excited about in your oncology franchise, and again, which one is the sleeper there?

Sure. Maybe they all are. We're talking about it. So Temab-A, of course, is our lead asset of follow-on to EMRELIS, which is currently on market for lung these bind to c-Met. And we think of these ADCs first from the construct, how do we like the warhead. We have a topoisomerase inhibitor as a warhead. We have a very stable linker. We are very good at making antibodies. In the c-Met area, it's a very strongly antagonistic antibody. So it blocks signaling. It blocks growth. So it's important when you pick the marker you go after that blocking it is helpful, and that it's not expressed at high levels on normal tissue. So that is your c-Met story. That's also a SEZ6 story, FR-alpha which we have a novel asset that's entered the clinic to follow ELAHERE, which uses the same linker and warhead strategy as Temab-A, where we're seeing strong data in lung and colon cancer and ovarian cancer. We've repeated that with FR alpha with the topo warhead, that's 901. And then we take our abilities to make bispecifics like we do with lutikizumab, and we've created 969, which is PSMA STEAP, same linker, same topo warhead that's showing very strong data in prostate cancer, which is now moving into Phase III.

And if you have these ADCs that are behaving well, which is what we've observed based on how we've built them and going after tumor targets that are specifically expressed on tumor, then that allows you to have a strong benefit-risk balance. And then you layer on top of that a biomarker approach, so you can have individualized care that opens up a tremendous amount of opportunities and future growth. And then layer on a KRAS molecule that we have, other T cell engagers, DLL3 is one that could work in small cell lung cancer and this recent partnership with RemeGen with the PD-1 VEGF, which we're very excited about that, and that data will be shared, I think, this weekend at World Lung, creates an additional combination approach for all these. So that allows us to have a very differentiated portfolio of assets across a variety of tumor types with high unmet need and really limited innovation to date.

Got it. Very helpful. So Scott, like taking all of this, when you think about 2035 and beyond, the big -- like now between SKYRIZI and RINVOQ, arguably, it will be a $50 billion franchise or whatever. When you think about replacing that, so you have Apogee in there. You have some of the assets that Roopal talked about here, next generation with SKYRIZI plus something. Where you are in terms of thinking through 2040 and beyond? And like where do you think the incremental BD dollar would go in terms of either therapeutic area, or how you're thinking about all that?

Well, I think it starts with what's the assets that are out there. So I think for anything we do from our financial analysis, the strategic fit, it's looking at our core areas, the adjacencies, areas that we see the opportunity and making sure that we understand the asset. So sometimes it's just a matter of the assets emerging in the right place and then getting that conviction. It's also making sure we have everything we need to complement, to replace and to really even improve what we're working on. So I think you have to think about it from an asset perspective, but certainly areas that we are strong in and have a level of expertise. That's where we think about it. And I think looking at where the asset sits in its life cycle, as I said, if it's early stage, later stage, even on market, we will look at that as long as we can find the right profile.

And the last aspect is we have the capacity to do what we need to do and do it appropriately. We'll do it in a measured methodical way. We're not going to chase things that we shouldn't be chasing. But we have a very, I would say, a very diligent, robust process where we have a lot of internal debate even with something like a recent acquisition, that was an asset that we've been looking at for the last couple of years. So it's something -- we follow a lot of things. We're looking for the right fit and that hit the market. So we'll continue to seek where we can find that opportunity. But you're exactly right, looking at the window to the back half of the next decade in 2040, we've spent a lot of time, and we're getting ahead of that by thinking about it now and a number of the things that Roopal spoke about are going to be -- things that are going to be helping us to fill that growth need in the long, long term.

Got it. Helpful. So one last question, whichever order you want to take it. Fast forward one year, I hope, you are sitting here. I hope, I'm sitting here, September 8 to 10, Wells Fargo conference, what would make you look back at the year and say, boy, it was a great year for us?

Well, I think it's the continued execution that Jeff talked about in immunology on market and the strength there. And then with more maturity of the pipeline, and it would be terrific to be able to move the PD-1 VEGF into Phase III. Many of the other ADCs that I mentioned moving into Phase III favorable outcomes in HS for lutikizumab and RINVOQ. I think that would be very exciting and then favorable movement into, I would say, psychiatry with bretisilocin and even emraclidine, we didn't talk about that today, but we are -- we cleared the 100-milligram dose, and now we're at 150 milligrams and recall that was studied originally at 30 milligrams. So there's other spaces. And then I would say, rapid execution of the atopic derm trials with Zumi from Apogee. And then looking at combos with the extended duration TSLP, looking to create a new pillar for us in respiratory with asthma and COPD. I think much of this can happen in several months, and we can look back and say, yes, it was a very strong year for us.

Got it. Anything to add?

I agree with Roopal. Perfect.

So with that high note -- on that high note, thank you very much for joining us.

Good morning, and thank you for standing by. Welcome to the AbbVie Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's call is also being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Ms. Liz Shea, Senior Vice President, Investor Relations.

Good morning, and thanks for joining us. Also on the call with me today are Rob Michael, Chairman and Chief Executive Officer; Jeff Stewart, Executive Vice President, Chief Commercial Officer; Roopal Thakkar; Executive Vice President, Research and Development, Chief Scientific Officer; and Scott Reents, Executive Vice President and Chief Financial Officer.

Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. 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 our 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. Following our prepared remarks, we'll take your questions. So with that, I'll turn the call over to Rob.

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie delivered another excellent quarter with results once again exceeding our expectations. I'm especially pleased with the execution across our business, including double-digit sales growth from our diverse portfolio, the advancement of our compelling pipeline of innovative medicines and our planned acquisition of Apogee Therapeutics, which represents an exciting opportunity to bolster AbbVie's leading immunology portfolio. .

Turning to our second quarter performance. We achieved adjusted earnings per share of $3.65, which is $0.06 above our guidance midpoint. Total net revenues were nearly $17 billion, beating our expectations by $300 million and reflecting robust sales growth of 10.2%. The performance of Skyrizi, Rinvoq and our neuroscience portfolio continues to be very strong, with each delivering growth above 20%. Based on this momentum, we are raising our full year revenue guidance by $300 million and have now raised total revenue by $600 million since the start of the year.

Turning now to R&D. We continue to make excellent progress advancing our pipeline. Recent highlights from our late-stage programs include the U.S. approval of Decupaz, a treatment for a rare form of blood cancer. This represents AbbVie's first marketed ADC in hematology. We also received European approval for Qulipta to treat acute migraine, a Kin leap for second-line follicular lymphoma as well as Boey a first-in-class short-acting toxin in aesthetics. In addition, we received European approvals for Rinvoq in both vitiligo and alopecia areata with U.S. regulatory decisions forthcoming. Based on the compelling data generated for each of these programs, we now anticipate the combined peak sales for these 2 indications alone to approach $2 billion, which is meaningfully above our prior expectations.

During the quarter, we also announced the acquisition of Apogee Therapeutics which will add multiple differentiated assets in dermatology, respiratory and other related inflammatory diseases with significant sales potential. The acquisition will add even more depth to our robust pipeline in immunology, which we expect will be a major growth driver for AbbVie over the long term. This transaction is an excellent fit with our strategy to build and advance a compelling pipeline with new sources of growth to support AbbVie's performance in the 2030s and beyond. We have ample financial capacity for more business development and remain focused on and both early and late-stage opportunities across our core disease areas. In summary, we are delivering outstanding execution across our business, and our long-term outlook remains very strong. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff?

Thank you, Rob. I'll start with the quarterly results for immunology, which delivered total revenues of nearly $8.8 billion, reflecting very strong operational sales growth of 14.6%. And Skyrizi total sales were $5.5 billion, up 24% on an operational basis, once again exceeding our expectations. .

I'm very pleased with our performance in psoriasis, where we continue to capture robust in-place share of new and switching patients at a rate which is impressively 4x higher than any other biologic or oral treatment in the U.S. We have achieved market share leadership now in more than 30 countries and see substantial room for continued growth globally. We do not expect a material impact to our robust outlook in psoriasis from existing or new therapies given Skyrizi's very distinct profile. This includes high and very durable skin clearance from head to toe, widely demonstrated superior efficacy in head-to-head trials versus 5 different mechanisms, including both biologics and oral agents. Simple and convenient quarterly dosing and extremely strong long-term data in psoriatic arthritis, extending now to 5 years which is very important to prescribers as roughly 30% of psoriasis patients ultimately develop PSA as well as now our recent approval for pediatric use with the new weight-based dosing option.

In IBD, Skyrizi's fastest-growing indication, we continue to capture a leading share of total new patient starts in the U.S. in the quarter, including substantial leadership in the frontline setting; the clearest signal of physician preference. Competitive dynamics remain in line with our expectations with the IL-23 category seeing very robust growth in both Crohn's disease and ulcerative colitis. Importantly, we are also preparing for the potential approval of our subcutaneous induction dosing option for Crohn's later this fall, which is supported by very strong data, particularly in the front line where we observed the highest levels of endoscopic response seen in the category.

Turning now to Rinvoq which is also performing above our expectations. Global sales were more than $2.5 billion, up 23.7% on an operational basis. I'm especially pleased with the momentum we see in gastroenterology, where Rinvoq is on pace to deliver 30% global sales growth this year. Rinvoq has set a very high bar for efficacy in both ulcerative colitis and Crohn's disease, demonstrating strong rates of remission and endoscopic improvement. And we continue to see a nice inflection of implantation share following the recently expanded label supporting access to Rinvoq earlier in the treatment paradigm for IBD patients.

More broadly, we continue to see strong demand across all of Rinvoq indications, and we are very excited about the growth potential in dermatology with vitiligo, alopecia areata now approved in Europe, with U.S. approval decisions anticipated over the next few quarters. Rinvoq's profile is competitively positioned for both of these chronic diseases where our recently expanded U.S. derm field force will support both launches.

Lastly, in immunology, Humira global sales were $756 million, down 36.1% and on an operational basis, reflecting biosimilar competition and in line with our expectations. Moving to neuroscience, where we once again outperformed our expectations. Total revenues were more than $3.2 billion, up approximately 20% on an operational basis. All 3 of our leading neuro pillars continue to demonstrate robust sales growth. In psychiatry, Vraylar global sales were nearly $1.1 billion, up approximately 19%, reflecting share gains in both bipolar disorder and adjunctive MDD. In migraine, our leading portfolio continues to deliver outstanding results with Botox Therapeutic, Ubrelvy and Qulipta each delivering double-digit sales growth again this quarter. Qulipta is now approved in Europe for adults as both an acute treatment option for migraine attacks and as a once-daily preventative treatment option for chronic or episodic migraine. The acute indication expansion in international markets for Qulipta further supports our long-term outlook for our oral CGRPs to collectively achieve more than $5 billion of peak sales.

Moving to Parkinson's disease, another substantial long-term growth driver for AbbVie. Total sales for VYALEV were $256 million, up more than 27% on a sequential basis. VYALEV is well on track to achieve blockbuster sales this year. And we expect continued robust momentum in Parkinson's with the anticipated U.S. approval and launch of tavapadon in the third quarter. Feedback from key opinion leaders has been very positive with tavapadon demonstrating strong efficacy as both a monotherapy as well as an add-on to standard of care.

Overall, we believe our Parkinson's portfolio with Violet Tavapadon and Duopa will be a substantial commercial opportunity. We continue to expect collective Parkinson's peak sales of more than $5 billion.

Turning now to oncology, where total revenues were more than $1.6 billion, down 2.4% on an operational basis. Total VENCLEXTA sales were $771 million, up 9.6% on an operational basis. Performance in CLL continues to be strong as VENCLEXTA use in combination with BTK inhibitors and is expanding as a preferred fixed duration treatment globally. Double-digit sales growth from Ellahere, at Kinley, Amarilis also helped to partially offset the sales decline for IMBRUVICA, which was down 29.4% as expected due to IRA pricing and competitive share pressure.

We also launched decnupas, a new therapeutic option for patients living with BPDCN, an ultra-rare form of blood cancer, further expanding AbbVie's emerging ADC portfolio. Moving now to aesthetics, which delivered global sales of nearly $1.3 billion, down 0.9% on an operational basis. Botox Cosmetic total revenues were $728 million, up 3.4% operationally, reflecting modest market growth globally. Juvederm Global sales were $245 million, down 6.6% operationally, reflecting continued headwinds in key dermal filler markets.

As the industry leader, we continue to invest in this highly underpenetrated market to support long-term growth. I'm especially pleased with the recent Europe and Canada approvals of Boey our fast-acting short-duration toxin. -- while we complement our toxin portfolio very nicely and represents a new way for patients to initiate an aesthetic treatment. We expect Boey will meaningfully expand the toxin market and look forward to potentially bringing this exciting innovation to the U.S. Overall, we continue to demonstrate outstanding commercial execution. And with that, I'll turn the call over to Roopal for comments on our R&D highlights. Roopal?

Thank you, Jeff. I'll begin with dermatology programs in immunology. Rinvoq was approved in Europe for the treatment of severe alopecia and nonsegmental vitiligo. Applications are also under review in the U.S. with approval decisions anticipated later this year for vitiligo and early next year for alopecia areata. In hydradenitis suppuritiva, we remain on track for 16-week data later this year from both Rinvoq and luticizumab Phase III trials. In our early-stage dermatology pipeline, 3 programs were recently advanced into the clinic, including and IL-13, IL-31 receptor bispecific antibody for atopic dermatitis, an oral IL-23 receptor inhibitor for psoriasis and a long-acting IL-1 alpha beta bispecific antibody for hidradenitis suppurativa. Turning to gastroenterology. The U.S. application for Skyrizi subcutaneous induction in Crohn's disease is under review with an approval decision expected later this fall. The subcutaneous regimen demonstrated very high levels of endoscopic response and clinical remission with rates on both measures 25 points higher than placebo in the overall population and 45 points higher in patients who had not previously experienced advanced therapy.

To our knowledge, these results in patients naive to advanced therapies are the highest reported for induction therapies in Crohn's disease, comparing very favorably to Skyrizi IV and other approved agents. Full results from the study will be presented this fall, which will include additional important endpoints such as endoscopic remission. Startup activities are underway for our Phase IIb combination trial in IBD. This multi-arm study will evaluate Skyrizi plus a higher dose of our novel anti-alpha4 beta7 antibody and extended half-life TL1A antibody in both Crohn's disease and ulcerative colitis.

Interim results for Skyrizi plus anti-alpha4beta7 in Crohn's disease demonstrated a doubling of endoscopic remission at week 24 and compared to either monotherapy. This study is expected to complete this fall, and final results will be submitted for presentation at a future medical meeting. And lastly, in immunology, we announced the planned acquisition of Apogee Therapeutics, which adds a portfolio of long-acting biologics targeting atopic dermatitis, respiratory conditions and other immune-mediated diseases.

These novel assets are highly complementary to our immunology strategy and further strengthen an already robust pipeline.

Moving to neuroscience. Qulipta was approved in Europe for the acute treatment of migraine, expanding options for patients. In Parkinson's disease, an FDA approval decision is expected in the third quarter for tavapadan. Results from 3 Phase III trials demonstrated that this novel selective D1, D5 dopamine agonist has the potential to be a highly effective treatment for motor symptoms with low rates of dyskinesia, edema, sedation and impulse control disorder. We look forward to bringing this innovation to patients later this year. In our early-stage neuroscience pipeline, multiple new trials were recently initiated, including a Phase II study for a novel toxin Jemmy Made in essential tremor and a Phase Ib study for ABBV-1758, a blood-brain barrier crossing anti-pyroglutamate, A-beta antibody in Alzheimer's disease.

In schizophrenia, the multi-ascending dose study for emraclidine is nearing completion. The 100-milligram dose retained a safe and towable profile, and now 150 milligrams is being evaluated. Dose selection for both schizophrenia and psychosis programs is expected in the coming months, and we remain on track to begin Phase II studies in the fourth quarter.

Moving to solid tumor programs. Progress with T mAb A continues across a broad range of tumor types. In colorectal cancer, breakthrough therapy designation was granted for Tmab-A in combination with bevacizumab in refractory metastatic CRC. This designation supports our Phase III strategy in an all-comer third line plus setting. And the trial is now actively recruiting. In second-line CRC data are expected later this year from a Phase II study evaluating Tmab A combinations versus chemotherapy. These results will help inform the development strategy for Tmab A in first and second line CRC as in irinotecan replacement.

Early stage results in ovarian and head and neck cancers were presented at the recent ASCO meeting, demonstrating TmabA potential in both tumor types. In platinum-resistant ovarian cancer, TmabA showed strong antitumor activity, particularly in cMET selected patients where response rates reached as high as 80%.

The Tmab A also demonstrated a 50% response rate in clear cell carcinoma, a segment with high unmet need that typically does not respond well to cytotoxic therapy. -- plans to advance Tmab A in ovarian cancer will be discussed with regulators over the coming months. In C-MET selected patients with advanced head and neck cancer, Tmab A demonstrated a 31% response rate and a median overall survival of 15.3 months, which compares favorably to standard of care.

A Phase II study evaluating Tmab-A plus pembrolizumab in frontline will start soon. And in pancreatic cancer, a Phase II study evaluating Tmab A with FOLFOX as a frontline combination therapy was recently initiated. Turning to hematologic oncology. Progress continues with atentamig across lines of therapy in multiple myeloma. An interim analysis is planned in the third quarter or progression-free survival from the monotherapy third line plus trial.

If this interim analysis is positive, regulatory submission would occur later this year. A Phase III study evaluating atentamig in combination with pomalidomide in second line plus patients, including those that were exposed or refractory to an anti-CD38 antibody or who lost response to an anti-BCMA CAR-T or AC, will begin by year-end.

Additionally, encouraging early-stage results for atentamig in relapsed/refractory light chain amyloidosis were presented at a recent EHA Congress. At the 40-milligram dose, 100% of patients achieved hematologic complete response with a promising safety profile that included no CRS or ICANS. Based on these results, a Phase III trial in newly diagnosed patients is being planned.

Also in hematology, decnupas received FDA approval for blastic plasmacytoid dendritic cell neoplasm, an ultrarare and aggressive blood cancer as a new treatment alternative providing durable responses with a manageable safety profile and outpatient administration decnupas offers a meaningful benefit to patients with this rare cancer.

Moving to aesthetics. Our rapid onset and short duration toxin Boey was approved in Europe and Canada for the temporary improvement in appearance of glabellar lines. This marks an important milestone in aesthetic medicine. Boey was developed to allow patients to temporarily preview the benefits of cosmetic toxins without worrying about long-lasting results.

Clinicians and patients now have another option to tailor treatment to individual needs and goals. In summary, we are making meaningful progress with our pipeline and look forward to additional important data readouts, regulatory submissions and approvals throughout the remainder of 2026. With that, I'll turn the call over to Scott.

Thank you, Roopal. Starting with our second quarter results. We reported adjusted earnings per share of $3.65, which is $0.06 above our guidance midpoint. These results include a $0.17 unfavorable impact from acquired IP R&D expense. Quarterly net revenues were nearly $17 billion, reflecting robust growth of 10.2%, including a 0.7% favorable impact from foreign exchange.

Adjusted gross margin was 84.7% of sales, adjusted R&D expense was 13.6% of sales and adjusted SG&A expense was 21% of sales. The adjusted operating margin was 48.3% of sales which includes a 1.7% unfavorable impact from acquired IPR&D expense. Net interest expense was $679 million. The adjusted tax rate was 14.7%.

Turning to our financial outlook. We are updating our full year adjusted earnings per share guidance to between $13.87 and $14.07. This update reflects a $0.10 improvement in the outlook of our existing business based on strong second quarter results and continued momentum. It also now includes $0.14 of anticipated dilution related to the planned Apogee acquisition that is more than offsetting our underlying overperformance. We continue to expect that the Apogee transaction will close in the third quarter.

This guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the second quarter. We now expect total net revenues of approximately $67.6 billion, increase of $300 million. This assumes a roughly 0.5% favorable impact from foreign exchange on full year sales growth, reflecting less benefit than our previous expectation.

Our increased revenue forecast includes the following approximate assumptions for several of our key products and therapeutic areas. We now expect Skyrizi global revenues of $21.7 billion, an increase of $100 million based on momentum across psoriatic and IBD indications. Total neuroscience revenues of $12.7 billion, an increase of $100 million, now reflecting Vraylar sales approaching $4.1 billion and Botox Therapeutic sales approaching $4.2 billion. The remaining $100 million increase reflects momentum from Rinvoq and VENCLEXTA. Moving to the P&L for 2026.

We continue to forecast full year adjusted gross margin above 84% of sales. We now expect adjusted R&D expense of approximately $9.8 billion, an increase of $100 million reflecting Apogee related pipeline investments. We expect adjusted SG&A expense of approximately $14.5 billion as we continue to support our significant commercial momentum. We anticipate an adjusted operating margin ratio approaching 47% of sales. We also expect adjusted net interest expense of approximately $2.9 billion, an increase of $200 million, which reflects the partial year financing cost of the planned Apogee transaction.

Finally, we now forecast our non-GAAP tax rate to be approximately 14.5% and which reflects the impact of acquired IPR&D. Turning to the third quarter. We anticipate net revenues of approximately $17.2 billion which includes an estimated 0.4% unfavorable impact from foreign exchange. We also forecast adjusted earnings per share between $3.84 and $3.88. This guidance contemplates a partial quarter of dilution related to the planned Apogee transaction, but does not include acquired IP R&D expense that may be incurred in the quarter.

Finally, AbbVie is financially well positioned to complete the planned Apogee acquisition. We have secured interim financing and expect to issue long-term debt in the coming months. We remain committed to achieving a net leverage ratio of 2x within 2 to 3 years following the deal close. Importantly, based on our strong cash flows, balance sheet and business outlook, we continue to have substantial financial flexibility to pursue additional innovative business development.

In closing, AbbVie continues to deliver outstanding performance, and we are carrying significant momentum into the second half of 2026. With that, I'll turn the call back over to Liz. .

Thanks, Scott. We will now open the call for questions. In the interest of hearing from as many analysts as possible over the remainder of the call, we ask that you please limit your questions to 1 or 2. Operator, we'll take the first question. .

[Operator Instructions] We will go first to Terence Flynn with Morgan Stanley.

Great. Congrats on all the progress. Maybe a 2-part for me on Skyrizi I know you have the FDA action on the subcutaneous formulation for induction coming up this fall. Maybe Roopal, you could just speak through confidence in that approval. There's everything on manufacturing lined up? Just want to make sure there's no issues there. And then on Skyrizi plus alpha 4 beta 7, some very exciting data looking forward to seeing that. Can you confirm yet if that will be at the UEGW conference in the fall?

Thanks, Terence. It's Rule. So on the CD subcutaneous Skyrizi as I highlighted, very strong data. It is with Skyrizi. So it's asset well known to health authorities and manufacturing is very well known to us. So we have a very complete submission that's in front of the agency. And so far, that review is going according to plan. So no concerns at this moment. And then on the alpha 4 beta 7 combo data I didn't specifically call out a meeting because of the timing. What we provided earlier was interim data. So as the rest of it comes in we would obviously try for later this fall. And if we're unable to get into that window, then it would go into next year congresses. So either way, we're very excited to show more of that data. And like I said, could be in the fall and if not possible, we'll see it next year.

Thanks, Terence. .

Yes, ma'am, we'll go next to Carter Gould with Cantor Fitzgerald.

A follow-up for Roopal. The Phase II that you've talked about starting with the alpha4beta7. It's a bit of a beast; 2,000 patients across a number of settings. Can you maybe just set the stage there. In the past, you've talked about speed, not the -- not waiting potentially for the full Phase III data or Phase II data before moving to Phase III. Is that still in the cards? And in that study, it also talks about ABB466 with Skyrizi and trosinilumab, is that a co-formulation or just a co-administration? .

Yes. Thanks for the question. Yes, it's a large study. It's a platform study that -- similar to what we've run before. Skyrizi is the anchor asset will be combining Trou or the alpha 4 beta 7 at even a higher dose than we studied previously. We are in parallel working on co-formulations. So the intent at launch for any of these assets in combination with Skyrizi and IBD would be a co-formulation.

So that data would be collected in Crohn's and ulcerative colitis in combination with Skyrizi. And then also the reasoning for the scale of that study is also the TL1A is in that trial as well, combined with Skyrizi in Crohn's disease and ulcerative colitis. The enrollment should be starting any moment where a patient will be entered. The trial is ready to go. The other question was around when we can start seeing data.

We don't have an intention to wait until the end. If we will take a couple of interim snapshots. And if we see, for example, the higher dose of Tosu or the Alpha-4-beta-7 agent is supporting higher efficacy, then we would start making plans to move into Phase III with that combination. And the same goes to the TL1A, if we start seeing really strong data, we would start moving quickly into Phase III. We would anticipate right now, hopefully, in the first half of 2028 being able to kick off Phase III programs in IBD.

Thanks, Carter. .

We'll go next to Chris Schott with JPMorgan.

Can I just come back to Skyrizi in psoriasis. I know you made some comments in terms of the launch of IoT and the impact or lack of impact that's had there. Just can you elaborate a bit more on just what you're seeing in terms of dynamics in psoriasis? And just how much more growth opportunity there is for Skyrizi in the setting given the higher penetration rates. Just then a quick second question is looking ahead to the upcoming readouts for luti and Rinvoq in HS. Can you just talk about your relative confidence in those 2 assets and the role you see each laying in the market there?

Yes, it's Jeff. I'll take the first question. And as I mentioned, the profile is very, very strong, as you know, the skin clearance, the joint protection, the safety, the convenience, it's a very unique product. And that's why I think we have such a high capture rate. We see a couple of things in the market, and I'll highlight them we've not seen a material change in our momentum since the launch of ICO. So 1 of the things that we look at, I'll give you a couple of data points. We have a fairly detailed Symphony model, which looks at sort of sequential share.

And what we can see since the launch of ICO, the vast majority of ICO share that we see is being sourced from the 2 other orals in the marketplace. And that's pretty similar to what we had expected. I think the other thing, which is even more important, it's sort of a quantum measurement. So just to put a fine point on it. When we can track, we can actually see our raw NBRx data in the derm and psoriasis market. And this, of course, is our new starts as well as our switching starts, classical NBRx.

And when we look at the data from the launch of ICO we've absolutely seen no degradation in any of our NBRx trends. In fact, they've actually grown from the launch of ICO in March.

So that leads to another point that's probably accurate as we continue to monitor is there still significant headroom in the moderate-to-severe psoriatic space. A large percentage of patients in the United States and around the world are still not on an advanced therapy. So we do, of course, factor in competitive dynamics into our competitive set and we'll continue to monitor. But we're quite pleased with the Skyrizi momentum, and we think it will continue given the robustness of this marketplace.

And Chris, this is Rob. I'll just add. I mean, we always view this as a market expanding competitive launch, and that's exactly how we're seeing it. Obviously, we're still investing. I mean, I think you've seen some disease awareness investments that we've made. And so we are seeing very nice momentum continue. And I think Jeff's point that is highlighting here that we're actually seeing an acceleration of NBRx growth for Skyrizi since the launch of ICO just further supports our view that is more of a market-expanding opportunity. .

Chris, it's Roopal regarding the HS questions. We have observed other failures in the space in HS over the years. And we did our best to design 2 very robust studies and enrollment has gone very well. I would say training is very important for the sites. Patient selection is very important to make sure you're picking up moderate and severe disease.

As we look at the distinction between luti and Rinvoq, the lutikizumab studies are enrolling patients that were naive to advanced therapies or biologics, along with those that had failed, for example, let's say, anti-TNFs. And the primary endpoint there is high score 75 sort of more stringent endpoint while including more naive patients. When we look at the Rinvoq design, that is coming post biologics.

So for example, post HUMIRA. And given that, that's 100% after -- that 1 has a high score 50, and we'll have secondary endpoints that will look at High Score 75. So these are things that we are doing to manage the trial outcomes to ensure a high -- as high a probability of success as we can. And how I describe the eligibility criteria for these 2 trials will be our go-to-market strategy, which is very consistent with what we have executed, I would say, very well.

Jeff's team has done a fantastic job in IBD with Skyrizi and Rinvoq and something similar is how we're thinking here where Luti, based on the robust safety profile we observed in Phase II, along with strong efficacy, could allow that to be in earlier lines of patients and Rinvoq as we've seen over the years across multiple indications, works well as a later line after advanced therapy.

So based on those designs, you would see a similar profile in market with those 2 agents just like you've seen very successfully in IBD.

Thanks, Chris.

Yes, we'll go next to Michael Yu with EBS. Maybe just pivoting away from immunology for 1 second. Can you just talk a little bit about your expectations on Tavapadon launch ultimately and how you see this playing out? And what could be a slow start, fast start. Maybe just talk a little bit about how you think about that. And then similarly, in CNS, which you've talked a lot about seeking to grow. You also have a brain shuttle as well. And I just wanted to understand a little bit about how you think that's differentiated as there's obviously a lot of interest here given what's going on in Alzheimer's.

Yes. Thanks for the question. I'm glad you brought up tavapadon because it's a key piece of our overall long-term strategy for growth in Parkinson's, as I highlighted in my remarks. Tvapadon is a very, very unique product. There's nothing else like it in the marketplace. It's the first selective D1/D5 agonist. And obviously, we'll have both a monotherapy indication as well as an add-on to levodopa/carbidopa orals, the standard of care. And it's quite remarkable data that we see. Certainly, one of the most impressive dynamics that the thought leaders are very excited about is after 85 weeks of long-term utilization of tavapadon more than 90-plus percent of patients don't need to basically increase their dose of levodopa/carbidopa. So essentially, it kind of causes the motor dysfunction, which is really, really critical. And there's a belief that, that, of course, will then spare the dyskinesia. That's just the hallmark of what happens over time. So it's very impressive. The other thing that's impressive and very distinctive is low -- very low rates of sedation or so-called sleep attacks, which are very challenging in this population, low rates of edema and really impulse control disorder. So that profile of efficacy and safety and distinctiveness is quite attractive. Now to get to the nub of your question, we do see that the ramp will be modest at first, and I'll tell you why. It's not the profile of the medication. It's largely because based on the timing of the approval, we will not be immediately added into the Medicare formularies. That's going to take some more time based on the way those negotiation works, et cetera. But nonetheless, we believe that this will be a substantial addition to the marketplace and a clear contributor to that greater than $5 billion peak potential. So lots of excitement for tavapadon.

And Michael, it's Roopal regarding the 1758 or the Aliata asset. So that has now entered into Ib setting, so patients who have disease and the molecule was built to have an extended half-life, and we've observed that with the PK data in the first-in-human studies. The other thing we wanted was a better cerebrospinal fluid penetration than we saw with a naked antibody, which, let's say, is around 0.1%, 0.2%. This is over 1%, so several fold higher. So the transport is working. So if we're able to get more into the CSF and an extended half-life and you can take down plaque and specifically, this is targeting Abeta, the pyroglutamate type, which we think is the more toxic species. We think that could set up a potential for a subcutaneous agent that could be dosed monthly. So we're looking for simplicity in the patient experience. So I would say by next year, we should start seeing data in scans to see if we can clear the brain as much as possible. And if we see that, this would rapidly move. And in parallel, we're also working on our anti-tau program utilizing siRNA and the same shuttle technology. What we've observed today is mostly intrathecal approaches. We think that can be challenging. And if we can deliver an siRNA using similar technology with -- from Aata, that could be another benefit. Ultimately, down the road, I think everyone has commented on this to approach Alzheimer's will likely require a combination approach. And I would say AbbVie is well positioned to go after this and hopefully, one day help as many patients as possible.

Yes. We'll go next to Mohit Bansal with Wells Fargo.

So I want to come back to HS. And the biggest debate like when you talk to KOLs is that is this -- is IL-1 is simply another inflammatory mechanism for HS or it could become meaningfully superior to like IL-17 or everything that is out there also on fibrotic and all those components. What evidence do today gives you confidence that lutikizumab could be -- could actually break through the efficacy ceiling there? And then the second part on this one, same one is that how do you -- how are you managing the GLP-1 baseline use in your clinical trials because that could actually contribute to high placebo rates here?

Yes. Thanks, Mohit. It's Roopal. Regarding the efficacy comparisons, I would say benefit-risk comparisons. So one, in the Phase II study with lutekizumab, we saw very strong data, very high deltas that would position it very favorably against anti-TNFs and anti-IL-17s. We don't see fungal infections. We haven't seen flares in IBD. So we think all of that taken together creates a strong benefit/risk balance. And as I stated, you would have potentially strong data from Rinvoq as well. So that way, we would have a dual offering. Now when it comes to the GLP use, the trial is quite large. So if there is GLP-1 use, we would see that occurring in both arms. So if it's happening in placebo and driving up placebo responses, we would anticipate a similar effect in the active treatment arm as well. And then remember, most of these studies started a little bit before the rate of increase, I would say, with GLP-1 usage. But that being said, I think weight loss is a potential important driver of inflammation and pain in the disease and having our 295 asset, our amylin and potentially in combination with luti is another approach that's under consideration. I've already mentioned blocking anti blocking 23 with Skyrizi and the combo with amylin in psoriasis. So I think your observations are spot on, on what's occurring, and we would like to build off of those observations even in our obesity franchise combined in our immunology franchise.

We'll go next to Asad Haider with Goldman Sachs.

Great. Maybe just if we can talk about oncology, Rob, I know you've said in the past that this doesn't get enough attention -- so maybe just a question on the broader oncology strategy and some of your key programs in the context of a rapidly evolving landscape where both ADCs and PD-1 VEGF programs are in high focus. So first, what are we going to learn about TMAP A in the upcoming readouts?

And where do you see this differentiating from others like Merck TacTMT or AstraZeneca's data DXP. And then related -- on the PD-1 VEGF compound that you licensed from Bremgen, I think Roopal, you've said that there will be some data world lung in a couple of months, and you've previously noted that you're considering accelerating that program into Phase III with chemo combos and ADC combos.

So just any preview of what we can expect a World Lung and on your overall development strategy

Thanks, Asad. It's Roopal here. So regarding our ADC portfolio, if you look for a second, and it's happened pretty quickly, we have Elie here, Amarilis and nifenazone market. So there's 3 ADCs already out there. the Amarilis asset is already in Metin second-line lung. So physicians are already getting experience. So in terms of differentiation, it's already starting now with umbrellas because folks are now learning about c-Met testing, and they're seeing, I would say, a really reasonable uptake in amrelis that is exceeding our expectations. So that's the first point.

And as we move on to T mAb A, as I described, we are already well into Phase II in combination with bevacizumab in third-line colon cancer. And Colon, which is not all that different from ovarian, which is going to get crowded. But right now, it's all chemo-based. So it's a very broad market, and we see high rates of c-MET expression in these tumors, especially in later lines. So that's going to be in an all-comer population. And recall in Phase II against standard of care, we saw 0% response rates with a 30% response rate with T MAB-A plus BEV in that third line setting. What I mentioned earlier today was data readouts in second line CRC, a larger population, the therapy in front line and second line is similar.

And if we see strong data there against irinotecan, we're trying to replace irinotecan. If we see higher response rates and deeper response rates, then we are positioned to move TmAb-A into the front and second line setting, which are large markets. Now what we'll be evaluating as you get into earlier lines is how c-MET expression looks we tend to see it quite high in later lines. So what that could allow us then is to have a biomarker directed approach, which, as I stated, the community and academic centers are becoming very familiar with C-met testing, and that could be a strategy in frontline and second line, and that's another layer of differentiation. Physicians want to individualize care and maximize benefit risk.

And how that can occur in oncology with ADCs is first, we optimize the dose, select the right patients and then deliver a biomarker to the field so they can do exactly that as individualized care. So I would say these are distinctions that will further differentiate. Now we're also studying in head and neck, as I described, and ovarian, and we're positioned as those data read out to move into Phase III. I would say, in particular, in ovarian, we know ovarian already in the FR alpha space. And if we do a C-MET directed approach in ovarian, that would be highly distinctive and differentiated from everyone else , let's say, majority pursuing FR alpha, we see little overlap between the 2 biomarker approaches. So another individualized approach.

And if I step back further and look at the work that we're doing in lung with TmAb-A, we're exceeding efficacy levels that we saw with Amarelles. So combinations in the frontline are going to be very very important. And that's where PD-1 VEGF can come in.

And as we're establishing that early on, and you'll see that at World Lung, what you'll see is response rates and PFS in lung. And we anticipate seeing a very competitive profile when it comes to efficacy, tolerability, safety. And we think at this stage, if we have optimized dosing and we get concordance with regulators, we can move into Phase III very rapidly as a chemo combo. And then in parallel, start testing our ADCs in combination with that PD-1 VEGF across tumor types. So that would include lung as we already stated and also potentially ovarian amongst other tumor types.

I don't want to take up too much time, but 706 and SES 6 is our ADC, which has shown very strong data in small cell lung cancer. That's in Phase III now. And I'll highlight our PSMA steep bispecific antibody 969 showed very strong data at ASCO, and that one is now well positioned to start moving into Phase III into prostate cancer and can be very competitive and will not have all the logistical challenges of radioligand therapy.

So that's a snapshot, I would say, much more to come, and we're very excited about this portfolio in oncology.

We'll go next to David Amsellem with Piper Sandler.

So in light of your comments on Rinvoq in AA and Vitiligo, particularly regarding Vitiligo, just how do you square your expectations in terms of peak with an increasingly crowded development landscape, inclusive of other agents like IL-15 and CD122. So that's number one. And then maybe switching gears to betalysin in the psychodelic/neuroplastogens, how are you thinking about positioning of that agent? I know there's a lot of development work ahead, but I wanted to get your thoughts on positioning, particularly in light of the recent MDD data for Definiens form of LSC so, if you could comment on that, that would be helpful.

Yes, I'll take the Vitiligo question. It's Jeff. What we've seen, and I think the whole world has seen this over time is that these immunology markets are amazingly resilient and very expansive once these technologies come in. And I think we've seen that over and over and we've talked about how years ago, you start to establish immunology segment and then you start getting second line, third line, these are lifelong conditions. And I think the first key piece is Vitiligo, obviously there's no systemic treatments approved. We will be the first. So in terms of that dynamic around being particularly effective for the higher body surface areas, which are quite common.

And obviously, the topical is just they don't make sense there, particularly if they're active. It's just very difficult to manage creams. And when you look at the efficacy that we start to see, particularly in the longer-term extensions that just builds over time the ability to really systematically clear the skin is quite striking.

So that gives us a significant amount of confidence. And in terms of how these markets will cascade and our ability to manage it. Plus, we have an extremely strong position I mentioned in my remarks that we've already started to expand our -- essentially our Rinvoq sales force. So our ability to bring multiple indications with long-term safety data across the board, whether it's atopic dermatitis, alopecia, vitiligo, we'll have, I think, an exceptionally strong position to lead this emergence of the vitiligo market.

So that's how we see it. I'll let Roopal handle the Bretasilican dynamic.

David, it's Roopal. And regarding vitiligo and alopecia areata, the head start is very beneficial. And at this stage, we don't know how all the other assets will play out in terms of longer-term safety and efficacy. Rinvoq is very well characterized with well over a decade safety data, and the familiarity already exists in atopic derm and it will build further with alopecia areata and vitiligo. And then we also anticipate improving improvement in efficacy over time.

So that's to add to Jeff's comments. And then on Bretasilisen, several areas of differentiation. One is the short time of the experience. Majority of the patients within 2 hours are ready to leave the clinic. So I think that's 1 advantage. The second advantage, I would say, is the experience itself, where with redilisen is described as visual and a rich experience some of these other assets that are being developed that are being developed can be quite intense. Some have described them as unpleasant and distressing. The clinics with some of these assets will observe loss of consciousness where a patient becomes unresponsive. So that's not something that we have observed with breticitlocen along with that short duration of effect.

The other notable mechanistic quality is the fact that it's antagonistic at 5HD 2B and many of the others are still agonistic at that receptor. And recall, that's the receptor where you see cardiovascular toxicity, specifically with thickening of cardiovascular of the valves and regurgitation. So we don't see that as a problem, which could set up the potential for chronic use. And we are under study with MDD and also considering PTSD and amongst others. So hopefully, that gives you a good sense of why we like this asset and how it can be differentiated once hopefully it gets to market.

Yes, we will go next to Luisa Hector with Berenberg.

I wonder if you can give us any kind of early indication from formulary season, I'm hearing levels of confidence as usual on Skyrizi, Rinvoq just sort of checking around pricing environment and impact their head-to-head studies from competitors? And then just a quick check post the announcement of Apogee. Did you prioritize any of your own pipeline assets in AD around that time in connection with Apogee .

Yes. Thank you for the question. It's Jeff. And I would say that the progression of our discussions with payers, we obviously are in contracting season here. That typically starts in the early spring. It seems like it starts earlier and earlier. But I would say we're -- while these negotiations are always tough negotiations with the payers. I would say they're relatively consistent, very consistent with what we've seen over the years.

As you know, we've highlighted before that particularly in that this is a volume-driven business, and we see sort of low single-digit concessions around rebates and price concessions as the standard, and our position really hasn't changed from that standpoint.

So we are -- continue to be encouraged with how things will play out. We're not done yet, obviously. But we have a very strong capability here and our consistency should be appreciated.

Luisa, it's Roopal -- and also on the head-to-head question, what we've observed over time with these head-to-head against Skyrizi the data gap closes over time. So you see less and less of a separation. And clinicians really like the safety profile in patients like the quarterly dosing. So there's going to be continued strong demand for Skyrizi.

And on the question on our own atopic dermatitis assets, I would say we are running all of them in parallel and as quickly as we can. Obviously, we want to move the anti-IL-13 as quickly as possible and whatever we can do to help that post deal closure, we're going to do that. And we are in the clinic with our 1331 bispecific and should be shortly in the clinic with a 1318 bispecific in atopic dermatitis and then potentially even asthma.

And then there's a 31 monoclonal that's coming with Apogee, and that's something else that we want to test as well. And all of these assets that we've mentioned are going to be long acting. So it will -- if they can deliver the efficacy that we want to see, we will also be able to deliver that convenience to patients as well.

We'll go next to Matt Phipps with William Blair.

Want to ask about 859, the oral IL-23 receptor inhibitor. You talked a little bit about I could tie coming into the market. How do you see the differentiation for 859 and maybe how you'll position it across other indications.

Thanks, Matt. It's Roopal. So what we liked preclinically about this asset was the potency. And if that can play out that may be a way to allow the dose to be a little bit higher and to get much better coverage. Right now, when we see how Skyrizi provides coverage, it's much, much deeper and we see higher responses than the oral and many other assets. And we think that could be potency and how high you can push the dose that's still tolerated by the patient and still needs to make sense from a cost of goods standpoint. That's 1 aspect.

The second aspect is around half-life. Many of our orals will have short half-lives. And if you have a drop what we call Cmin, that's when the concentration reaches a low, you could be losing efficacy. So with this one, we have a design element that allows for an extension of half-life -- and we'll start seeing that data, I would say, next year to see if we do see an extended duration of half-life that could exceed a day or 2 or even further and if you have that, you can have much better coverage, potentially drive higher efficacy where we would like to get it, hopefully, closer and closer to Skyrizi.

And could there be -- the question mark still remains is could there be a question here, you may not require daily dosing if the half has extended long enough, could you run in quickly in a starter pack, and could you even take this once a week. And that's something we've observed preclinically. Now we'll have to see if it plays out in humans and that those studies are kicking off imminently.

We'll go next to Louise Chen with Scotia Bank

I wanted to ask you on Skyrizi subcutaneous. If you get this approved in the fall, do you expect that to drive an acceleration of sales in the second half of the year for Skyrizi? And then on the runway for exclusivity for Skyrizi beyond 2033, any update there?

Yes. Thanks for the question. It's Jeff. Like we do expect a meaningful acceleration for Skyrizi because of this. And if you think about it, right, the #1 market value driver in IBD is efficacy on these stringent endpoints we talked about, like endoscopic response, endoscopic healing. And the whole aspect over the subcu induction, it allows a certain segment of physicians to not have to work across 2 different reimbursement channels like Part B or a medical channel and then a pharmacy channel for the sub. So in that sense, it's convenient.

So when we look at our data that Roopal and I highlighted, if you look at the availability of that induction, you're sort of hitting on all of the market value drivers. So very strong efficacy and the stringent endpoints. More convenience on induction. So certain segments don't have to work across both reimbursement channels. And then lastly, we obviously have a very strong position for our maintenance convenience.

So with that -- with those 3 things, we are planning for an acceleration of our capture rate. Now having said that, it will take a month or 2 or a few months to sort of fully ramp up the availability based on our contracts. So we'll probably start seeing that really early in 2017. But nonetheless, our ability to start to communicate and basically highlight this innovation will come here in the fourth quarter.

And Louise, this is Rob. I'll take your question on the Skyrizi LOE. I mean although Skyrizi's composition matter patent expires in 2033, as you noted, we do have later expiring IP granted and in process that embodies Skyrizi's significant innovation.

And this includes patents expiring in the U.S. in the mid-2030s and later. Now it's important to note, though, that regulatory data protection for Skyrizi does not expire until 2031. So we do not expect to see biosimilar application filings until the end of this decade. Obviously, we have a strong track record of vigorously defending our patents and protecting our innovation, and I would expect that to continue.

Operator, we have time for 1 final question.

Yes, ma'am. We'll go next to Evan Singerman with BMO Capital Markets.

Maatman on for Evan. For emraclidine, I know you had said 100 milligrams is safe and tolerable with further escalation plans -- can you speak to why you may be confident this increased dosing could translate into improved efficacy above what we had previously seen with the asset? Are you looking at receptor occupancy data? Just trying to get a sense of confidence here.

It's Roopal, I'll take that. Yes, 100 milligrams is looking good, and that will be the lowest dose that we would take forward. Next is $150 million and as you stated, receptor occupancy when we noted the previous empower data sets was lower than what we would have wanted. So as we're able to increase the dose, we do anticipate much higher receptor occupancy. The other observation is PK variability even within patients.

So if we can deliver a higher dose, we're going to have a better consistent PK dose to dose and then, over time, improved receptor occupancy. We still like this profile, if we can deliver on that efficacy, we are seeing good safety. It's once a day and we're not having the GI adverse events, I think that can be quite problematic today in schizophrenia. So more to come in Phase 2 is kicking off later this year.

Thanks, Malcolm. That concludes today's conference call. If you'd like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us.

This does conclude today's call. Thank you for your participation. You may now disconnect.

Good day, and thank you for standing by. Welcome to the AbbVie Investor and Analyst Conference call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce Ms. Liz Shea, Senior Vice President, Investor Relations.

Good morning, and thank you for joining us for this special conference call to discuss AbbVie's acquisition of Apogee Therapeutics, which we announced earlier today. Joining me on the call today are Rob Michael, Chairman of the Board and Chief Executive Officer; Roopal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer; and Scott Reents, Executive Vice President, Chief Financial Officer. Joining us for the Q&A portion of the call is Jeff Stewart, Executive Vice President and Chief Commercial Officer. We have posted a set of slides with additional background for your reference, which can be found on the AbbVie investor website.

Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. 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 our 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. Following our prepared remarks, we'll take your questions.

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

Thank you, Liz. Good morning, everyone, and thank you for joining us to discuss the acquisition of Apogee Therapeutics. Apogee will bolster AbbVie's leading immunology portfolio by adding multiple differentiated assets across several large and growing disease areas. The acquisition is expected to create significant shareholder value with mega blockbuster peak sales potential anticipated across Apogee's pipeline of assets. This will be enhanced by AbbVie's regulatory and clinical expertise, exceptional commercial capabilities and broad global infrastructure. This transaction is an excellent fit with our strategy to build and advance a compelling pipeline with new sources of growth to support AbbVie's performance in the 2030s and beyond.

Apogee's pipeline is highly complementary to our development strategy in immunology, where AbbVie is the clear industry leader. For more than 2 decades, we have focused on redefining the standard of care with differentiated therapies across a broad set of diseases. And SKYRIZI and RINVOQ have delivered on that objective with development programs either approved or ongoing across more than a dozen indications. This includes numerous positive head-to-head studies versus other novel orals or biologics. And while both products are expected to grow well into the next decade, our goal is to ultimately launch new medicines that offer higher efficacy, greater convenience or even a functional cure. AbbVie's existing immunology pipeline includes unique combination platforms, long-acting and bispecific antibodies, novel orals and B-cell depletion approaches. These are all strategically being developed to substantially raise the bar for efficacy and convenience to further improve patients' lives.

And Apogee's pipeline further augments our efforts, adding multiple differentiated assets for potential treatments in dermatology, respiratory and other related inflammatory diseases. We are especially excited about zumilokibart, which has a potential for a best-in-category profile with strong efficacy and significantly improved convenience in atopic dermatitis, along with multiple indication expansion opportunities. This adds even more depth to our robust pipeline in immunology, which we expect will be a major growth driver for AbbVie over the long term. In addition to immunology, we expect to drive growth across multiple areas of our diverse portfolio. In neuroscience, we have strong positions in psychiatry, migraine and Parkinson's with each having $5 billion-plus peak sales potential. And with our next-gen assets, bretisilocin, emraclidine and 932, we see meaningful opportunities to further augment our growth in psychiatry well into the next decade.

In oncology, we are making excellent progress across both heme and solid tumors. Our late-stage assets, [indiscernible] and [ TMB A ] each have multibillion-dollar peak sales potential, and we are advancing several other exciting ADCs, including 706 and 969 following encouraging mid-stage data. In obesity, we continue to advance our EMA-led program, which also has the potential to drive strong long-term growth for AbbVie, complemented by our commercial footprint and capabilities within aesthetics. In summary, this transaction represents an extremely compelling opportunity for AbbVie, Apogee and our respective shareholders, and importantly, for patients.

With that, I'll turn the call over to Roopal, who will highlight Apogee's clinical programs in more detail. Roopal?

Thank you, Rob. This transaction adds a portfolio of novel long-acting antibodies that further strengthen our immunology pipeline. AbbVie has more than 2 decades of experience developing differentiated therapies in immunology. Our leadership is a result of our deep scientific expertise and our commitment to deliver innovation that improves patients' lives. We have demonstrated an impressive track record across a broad range of autoimmune diseases that have redefined the standard of care with HUMIRA, SKYRIZI and RINVOQ.

We continue to pursue next-generation therapies that have the potential to set an even higher bar for efficacy safety and convenience. AbbVie's current immunology pipeline is very robust and includes several innovative programs to address unmet needs across various diseases, including combination approaches in IBD evaluating SKYRIZI with our alpha 4 beta 7, TL1A and potentially TREM1 as well as novel combo programs across rheumatology and dermatology, longer-acting antibodies, including a new anti-IL-23 for psoriasis. Several bispecifics, including lutikizumab and an anti-IL-13/31 and IL-13/18. Oral agents, including an anti-IL-23 and in IRAK4 and LPAR1 inhibitor. Also a B-cell depletion program, including our novel in vivo CAR T as well as anti-CD19 antibodies.

Apogee's pipeline is highly complementary to our immunology development strategy and adds a portfolio of long-acting high-efficacy novel biologics targeting dermatology respiratory and other immune-mediated diseases. Apogee's most advanced asset is zumilokibart, an extended half-life anti-IL-13 antibody with a lead indication in atopic dermatitis, where it has demonstrated strong lesion and itch control across a robust 2-part Phase II study. In Part B of the study, zumilokibart demonstrated high response rates across key efficacy endpoints at 16 weeks, including EASI-75, EASI-90 and importantly, improvement in itch, which is particularly bothersome for patients. Results from Part A showed durable maintenance of response for 1 year with sustained efficacy for both every 3-month and 6-month dosing. The extended half-life enables a substantially lower injection burden for patients relative to currently available biologics.

Additionally, zumilokibart was well tolerated across the Phase II program with a favorable safety profile. Phase III studies in AD are expected to begin in the second half of this year. with readouts anticipated in 2028 and regulatory approval in early 2030. Given the potential best-in-category profile, including strong efficacy and convenient dosing, we believe zumilokibart has the potential to become the preferred early line therapy for moderate to severe AD, which would be a highly complementary offering of RINVOQ, a very effective oral option for AD patients not adequately controlled with other systemic drugs, including biologics. In addition, zumilokibart could potentially expand to other indications where IL-13 plays a critical role. We plan to begin development as a monotherapy in prurigo nodularis, chronic pruritus of unknown origin, eosinophilic esophagitis and chronic spontaneous urticaria.

We anticipate a steady cadence of data readouts across these indications over the next several years with potential approvals beginning in the early 2030s. Another exciting asset from Apogee is APG273, a combination of zumilokibart and APG3i and anti-TSLP antibody. This combination has the potential to provide transformational efficacy in type 2-low and high asthma along with an extended dosing interval. We plan to begin clinical studies in asthma soon with potential launch in the mid-2030s. In parallel, we also plan to explore development of 273 in COPD and chronic rhinosinusitis with nasal polyps. In summary, Apogee's differentiated portfolio is a strong strategic fit for AbbVie. These promising new assets span indications across dermatology, respiratory, and other related inflammatory diseases and meaningfully add to our deep immunology pipeline.

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

Thank you, Roopal. This acquisition provides AbbVie with multiple high-value pipeline assets, which further strengthen AbbVie's prospects for long-term growth. Under the terms of the proposed deal, AbbVie has agreed to acquire all outstanding shares of Apogee Therapeutics for $135.11 per share in an all-cash transaction. This reflects a total purchase price of $10.9 billion with an implied transaction value of approximately $10.1 billion, net of estimated cash and marketable securities acquired. We will fund the deal with debt.

We see the potential for significant shareholder value creation with mega blockbuster peak sales potential across Apogee's pipeline. Zumilokibart in atopic dermatitis represents the most substantial component of the deal value given the data generated to date and highly differentiated profile potentially. More modest value has been ascribed to APG273 given the earlier stage of development. This is a financially attractive transaction for AbbVie. We anticipate earnings accretion beginning in 2032 and significantly ramping over the long term. Assuming a deal close in the third quarter of 2026, we anticipate the transaction to be approximately $0.14 dilutive to our adjusted earnings per share in 2026 and approximately $0.46 dilutive to earnings in 2027, reflecting the full year impact of new expenses and deal financing.

Additionally, we intend to exercise the buyback option for change of control under the Apogee revenue share agreement with Blackstone Life Sciences to reduce a significant portion of the expected future royalty obligation for zumilokibart. Lastly, it is important to note that there is no change to our capital allocation priorities. We remain committed to a strong and growing dividend and continue to add the financial flexibility for additional business development. We also do not anticipate a change to AbbVie's credit rating as a result of this transaction as we are committed to achieving a net leverage ratio of 2x within 2 to 3 years following the Apogee deal closing. In summary, this is an exciting day for both AbbVie and Apogee. Together, we are developing a complementary immunology portfolio that has the potential to deliver better outcomes for patients, and significantly bolsters AbbVie's already strong prospects for long-term growth.

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

Thanks, Scott. We will now open the call for questions in the interest of hearing from as many analysts as possible over the remainder of the call. [Operator Instructions]. Operator, first question, please.

Our first question comes from Chris Schott from JPMorgan.

I just wanted to dig a little bit more into how much of this deal is based on this initial AD indication versus the potential broader suite of IL-13 indications you could pursue here? And maybe as an adjacent question to that, do you believe you'll be able to get formulary access and dislodge share just with an AD label? Or do we need to build out a number of these core Dupixent indications before you get meaningful uptick of the drug given the breadth of the DP indications and some of the comorbidities we see with these patients?

Sure. Chris, this is Scott. I'll start with the first question and then maybe turn it over to Jeff on your second question regarding access. So as I said in my remarks, the majority of the value is associated with zumilokibart. And with respect to indication wise, the bulk of that relates to AD as well. So we've not ascribed a certain percentage to it. Obviously, we're going to go through our analysis, and you'll see some disclosures on our opening balance sheet when we issue that and the deal closes. But the bulk of the sales are associated with both zumilokibart and the AD indication.

Chris, it's Jeff Stewart from Commercial. No, we don't believe that we would have to wait until sort of we complete the full construction of, let's say, similar to the Dupi label. We think that we're going to have quite a differentiated product here. We particularly like sort of the idea of the Dup plus efficacy. We think we can reproduce that in Phase III obviously, the best-in-class convenience. And then you have to remember that at least for the payers, we have a large footprint of other immunological agents that we think that we can carve out the right amount of access here to get off to a fast start.

Next, we'll go to Terence Flynn from Morgan Stanley.

Great. Maybe just to follow up on that question. Are you guys considering any head-to-head trials in atopic dermatitis or potentially asthma? And then maybe just on asthma, elaborate on the next steps there and the commercial opportunity, as I know that would be a newer area for you guys. So what would it take from a commercial standpoint?

Terence, it's Roopal. At this stage, we haven't ruled out the need for head-to-head, although it may not be necessary based on the data that we've seen to date, especially given the dosing interval and convenience and potential impact on adherence, particularly in atopic dermatitis.

One consideration is also if you have an installed base of patients that are inadequately controlled, having them switch over to something that's much more convenient, that's an option that could be meaningful and one under consideration. You've seen us conduct such studies with RINVOQ and SKYRIZI, and those have been quite impactful and affect day-to-day practice patterns. So I would say that continues to be an option that we're going to explore. And asthma, as you stated, it's potentially as big or bigger than atopic dermatitis, especially continues to see quite a bit of severe patients. The penetration rates like in atopic dermatitis are under 10%, and you have prevalence in growth rates that are exceeding 15% similar to atopic dermatitis. So the opportunity there is large and these patients are underserved at this stage and having a combination approach may fulfill that unmet need.

Maybe just to add to that, Terence, it's Jeff, is that we had a stated goal during our strategic reviews to enter the asthma in the respiratory market. We have a very, very significant commercial footprint. And to Roopal's point, our ability to think about novel biologics or combination platforms as we look at what we believe is a severely over-indexed market to the inhalers. And look, that makes sense when you don't have maybe the biologic horsepower you have in other areas but we think that, that will come, and we want to be on the front end of that. So that was a very purposeful aspect to enter asthma with this acquisition.

And this is Rob, just to add to Jeff's comments. As I think about the size of the company in the middle part of the next decade, as a management team, we looked at are there new sources of growth in large markets with high unmet need. I've mentioned obesity in the past, and you saw us enter into that with the analog opportunity from [indiscernible]. And with this opportunity now in asthma is another disease area that we evaluate as again, large market, high unmet need that can really drive growth for the company over the long term.

Next, we'll go to Vamil Divan from Guggenheim.

Congratulations on the deal. So maybe 2, if I could. One, just on the atopic derm just maybe you touched on this at the beginning of the call, but just the presence of RINVOQ in that indication, kind of how you think of the overlap between that and now what you're getting from Apogee? Do you have any concerns from an FTC perspective on that overlap there? Maybe you can just remind us how much of it looks feels like to come from [indiscernible] that would be helpful. And then second, just maybe building on those prior comments that was interesting is you just as a new area that you wanted -- that you strategically want to get into. I'm just curious about sort of pulmonary and general and respiratory in general, broader than ASO.

We've seen a lot of interesting development in that space as you sort of build out that vertical now. Is this a new area we should think about where you may be looking for further business development in the future?

Vamil, it's Roopal. With respect to RINVOQ and AD, I mean, first of all, it's a atopic dermatitis is a very large market. And as we stated, it's growing at over 15% per year. If you think about moderate and severe and compare it to psoriasis, it's about 2x, 2.5x larger than psoriasis. And there's many assets and we acknowledge it's quite competitive. However, that being said, we see RINVOQ in second and later lines. And consistent with IBD where you see SKYRIZI, a preferred therapy in earlier lines, you see RINVOQ been able to come in now in second and later lines. So that positioning is also observed in psoriatic arthritis.

It's also a position that we're developing against in hidradenitis suppurativa with lutikizumab and RINVOQ. And consistent with that, zumi here could be in the front line a preferred agent. And for those that are not getting the relief that they need, you have RINVOQ there. And I think that creates a very nice opportunity, and you've seen quite a bit of success from us, and I'll let Jeff comment further on that.

Yes. I think, Vamil, to Roopal's point, we don't see a material impact on RINVOQ. In fact, we think it's going to help because our ability to deliver across other therapy areas like PSA or IBD, sort of this one-two punch where you have a biologic and then you have RINVOQ in the later lines, has been very, very successful. So we don't see significant interactions, if anything, they're positive. And I think it's important to remember, as Roopal intimated, that the label in the United States is that RINVOQ should be used after systemic exposure, including a biologic. And obviously, strategically, we want that biologic to be zumi. So all good from this dynamic of the ability of our commercial teams and our sales teams to appropriately co-position the assets based on their data and their labeling.

And back to the asthma question and respiratory. We also have plans to go into COPD. There's more than 2.5 million patients there. And also the penetration there for advanced therapy is even lower than what we are observing with atopic dermatitis and asthma. So we see opportunities there -- and we continue to see consistent overlap with some of these other indications that I mentioned with asthma as well. As it pertains to going beyond, recall we have LPAR assets biologics and small molecules that just initiated development in idiopathic pulmonary fibrosis. So that is several indications in respiratory and we don't rule out any others because we do agree there continues to be high unmet need in the therapeutic area of respiratory.

Next, we'll go to Mohit Bansal from Wells Fargo.

Congrats on the deal. My question maybe for Roopal here. Just trying to understand like what is in this particular IL-13 biology that you think could actually provide differentiation efficacy or maybe a better efficacy than Dupixent because Dupixent is IL-13 and IL-4. So there is that aspect, which like maybe some KOLs are saying that maybe when you do the Phase III trial, the efficacy could be more similar than different. So in that case, it is a convenience play, but would love to understand how you are thinking about biology and how it could be differentiated in terms of biology that results into better efficacy.

Thanks, Mohit. It's Roopal. Yes, that's a good question and something that we've been considering for some time as we've developed our internal pipeline. However, when we look at the data and the amount of ability of zumi is to saturate IL-13, it takes it down to 99%. And then when you look at the Phase II data, and there's 2 parts of that. So you see a replication. You see quite high efficacy. And in our own internal work, we feel 13 is the critical factor in atopic dermatitis. That's why we have a 13 31 and 13 18. And also, we have optionality with Apogee's pipeline. They, in fact, have an extended duration IL-4 alpha receptor and, in fact, an extended duration IL-31. So that creates a lot of options.

And now the data, I would say, is most critical. We can talk about preclinical hypotheses. But at the end of the day, the data is most important. And the Part B where you saw maybe a little bit better efficacy was in a broader population, a global population one that had failures and approximately 20% of the patients of advanced therapy that would include Dupixent, JAK inhibitors like RINVOQ. So that, we believe, is more consistent with what a Phase III program would look like. We also have the opportunity during diligence to look at the data, to look at PK and exposure data we run models, we use machine learning. And we think there's a very strong probability to replicate and continue to see high efficacy. The other notable item is the EASI-100 response that you see with Zumi, we didn't talk much about that. It's in the package that you'll see posted. But that is actually quite high. And some of that starts to get close to RINVOQ like efficacy for EASI 100.

It's not going to be exactly there if we did a head-to-head apples-to-apples comparison. But it's certainly lifting and it's lifting much higher than what we've observed previously, if you're simply blocking IL-4. Mohit, if you think back years ago, when IL-12/23s were making their way into psoriasis and there was some thought that you had to take out more cytokines. We even had our own program in IL-12/23. And ultimately, we thought taking down maximally IL-23 was going to be the path forward in psoriasis. And I think you've seen that play out with the success of SKYRIZI. So we don't -- we're not concerned, and we're very excited to move this into Phase III.

Next, we'll go to the line of Michael Yee from UBS.

Congrats on the deal. One of the things I know that's been out there in terms of half-life extension programs has been the YTE modifications. Can you remind us and perhaps explain some of the strong diligence you might have done on that? And to what extent you got comfortable with these types of product profiles and the outlook ahead and what your assumptions are around IP?

Michael, it's Roopal, I'll take that one. You're right. Some of the work has to be in molecular design, and we do have a level of comfort. However, you don't always know how the antibody is going to act when in human, in disease. So that's what's most important.

So when we look at zumilokibart, we do see an extended half-life in human disease over 70 days. So that gives us confidence that whatever molecular design there was hasn't impacted any performance that you would see in the clinic. And you couple that with the high efficacy that we discussed, including EASI 100 gives us comfort that we have the option here potentially to go to twice a year and maintain very high levels of efficacy, especially if we match the PK some of the data that you've seen that goes to every 24-week dosing in terms of the maintenance of response that's fairly strong. However, that was not -- the PK wasn't matched. That was at 360. So if we double that dose to match the PK, then we have greater confidence in the ability to get to [indiscernible] 24. So then that further validates that concept of TE. But I believe you have to consider the performance of the whole molecule where it comes to binding of the critical epitopes and take down of the cytokine of interest as well as half-life. And we see both of those playing out when we look at Part A and Part B of the data to date.

And maybe just to supplement that from the diligence perspective on the commercial side, obviously, we have very close connections to the community derms and the thought leaders around the world. And because of the strength of the data, I mean, it's Phase II data, we can see the Part A, we see Part B. We can see the consistency and the durability this opportunity for 3 to 6 months of dosing, it was overwhelmingly viewed as a high, high willingness to prescribe by the community derms.

And I think it makes a lot of sense because when you think of this group of physicians, it's something that they know, they understand and they know an IL-13. It looks quite a bit better in this Phase II work that we believe we can reproduce in Phase III, and it's quite a bit more convenient. So that idea of something I know that's better and more convenient was tied to a very high willingness to prescribe in our commercial diligence.

And Michael, this is Rob. On your question for the outlook for IP on these assets. We see that well into the for zumi, the compound patent, we have expiring in 2044 and then for APG273 compound patent in the U.S. expiring in 2047. So there's quite a bit of runway for both assets.

Next, we'll go to the line of Emily Field from Barclays.

I was just curious how you're expecting the commercial landscape in AD to have evolved by the time we could be launching given that [indiscernible] just had the 8-week maintenance dosing added to the label? And then how you're thinking about the potential entry of Dupixent biosimilars and how that could impact from a formulary perspective?

Yes. Thank you. So thanks for the question. So I think one of the things that Roopal mentioned, I believe we've mentioned over time, is that the penetration rate of this market is incredibly low. I mean, like in some ways, we look at how big Dupi can be global sales and the dynamics around RINVOQ. But this penetration rate is about 8%, which is by far the lowest of any immunological category that we see, and it grows the fastest. So one of the key dynamics is this market is going to continue to progress and develop over time. We've highlighted before that you're going to see line of therapy expansion.

So even if you had biosimilars and they came in and they took a piece of the front line. There's still this expansion dynamic and basically biologic growth dynamic that is going to be very, very sustainable. We also looked at the market in a certain way that some of the, let's say, near-term catalysts have dissipated to some degree, which we think gives more opportunity for a knowable product like zumi. So we think the [ OX40s ], for example, are going to run into a lot more trouble. We've seen that. We've seen the discontinuation rate of an early biologic combination with IL-13/31. So we think the space is really there in this expansive approach.

We also view that we've seen in other biologic markets that the first biosimilar does not necessarily sort of take all the air out of the market, particularly one that is frankly so immature. So net-net, when we view all of the dynamics here in the atopic derm market, this is going to be a market that will continue to evolve over the next decades. And the technologies will continue to improve, and we think we have a good one for that early line, and we have a really great one for later lines like RINVOQ. So that's how we viewed the market dynamics.

And maybe from an innovation standpoint, if you think back on HUMIRA, infliximab, ustekinumab, these have all gone biosimilar over the last several years. And with -- when you bring innovation, you still see expansion. And as Jeff explained, the opportunity is still there. So we think from a development standpoint, because of the low penetration rates and underserved market here, these types of innovations here will be rewarded.

Next, we'll go to the line of Jason Gerberry from Bank of America.

Just wanted to follow up on Emily's question. And so your commentary about being a preferred early line therapy in AD. Just wondering how important is it for you to be commercially available on market either at or even before the availability of biosimilars of Dupixent. And in addition to that, I'm just trying to get a sense of your commercial outlook in being a preferred early line therapy. How critical is it to being differentiated on efficacy versus just differentiating on the convenience attribute?

Yes, thanks. In general, and what we've seen, if you look at analogs and models over time, it is important to basically come out ahead of the emergence of biosimilars. It's just aids in payer negotiations and sort of how they may think about their formulary development. I mean one of the most valuable aspects that we looked at certainly when HUMIRA went in the U.S. is we were able to establish SKYRIZI and RINVOQ several years before the emergence of the HUMIRA biosimilars, and you've sort of seen that story play out. So that is an important consideration.

Also, look, it's always better to have a notable efficacy advantage versus just a convenience advantage. Now if you think about the magnitude of the convenience advantage, it's quite significant because we even see -- even with [indiscernible], a significant amount have to go from 1 month down to every other week. Maybe we'd see 30% to 35%. So this is a substantial change in convenience, but there's no question that a critical part of our Phase III development program will be looking at populations to make sure that the biology around the dose, basically a molecule itself can distinguish itself from the first-generation biologics, like Dupixent or Adbry. So yes, you always want to have a plus on the efficacy side as your clinical trial and your programs are able to elucidate that.

And this is Rob. I'll just add that it does depend on the disease area. So for -- as an example, in the disease area that zumi participate in, convenience is an important factor. So efficacy and convenience. But convenience can play in a very important role. But if you think about in IBD, for example, efficacy is it will rule the day more so than convenience. So you do have to look at the disease area participating in to really answer that question.

And with the IP of 2031 with Dupixent or potentially further out, the way these will be designed is that we'll be launching prior to any of that if we're thinking early 2030.

Next, we'll go to the line of [ Jeff Meacham ] from Citibank.

Congrats on the deal. A lot of my questions have been asked, but I wanted to ask you on the dosing. How much of the value or the positioning do you think could be enhanced by moving to even further dosing, say, 1 year, even beyond the 6 months? And are there indications where that annual dosing makes a little bit more sense and maybe could be a priority as you look to further add new trials to the mix here?

Jeff, it's Roopal. There could be a component of patients and individuals that are willing to look at something that could be dosed once a year potentially in derm, I would say, where there's strong safety established. And if the patient has already experienced strong tolerability. I think out of the gate, it could be challenged because you just don't know how the patient is going to do. If they don't perform well, then the question for dermatologists could be, what do I do next if I have an ultra long half-life.

If you have a strong pharmacodynamic effect that sort of punches above the half-life, that could create some options. But we think at quarterly dosing already that is highly differentiated, and you've seen that performance with SKYRIZI. And going to twice a year is quite meaningful because the physicians are going to want to see the patients a couple of times a year. So I don't think if it doesn't achieve an annual dosing regimen that harms these in any ways. And occasionally, you have to be a little bit careful if you go too long.

Next, we'll go to the line of Evan Seigerman from BMO Capital Markets.

I wanted to touch on your thoughts regarding kind of the evolving competitive landscape, specifically with Regeneron, super Dupi as they've talked about kind of their IL-4, but also their IL-13 IL-4 bispecific. How does this asset play with these potential investigational assets given that Regeneron and Sanofi kind of own this space. I know you want to make inroads. I'd love to hear your thinking as you had evaluated this asset in making the decision to acquire?

Evan, it's Roopal. We think zumi can be quite competitive. And you can see the data already. It's posted. It's very strong, and we think we have a high probability of replicating this in Phase III and expanding out to other indications. And it's very important to look at these convenience profiles of this asset. I think that really sets up a strong competitive play. And then I would say going forward, we're not done.

Remember, there's RINVOQ there as well. And as we've discussed in IBD and even in rheumatology, lines of therapy are going to continue to expand. And the market itself is growing. It's very dynamic. It's growing over 15%, Penetration rates are under 10%. So it's a very large market. So RINVOQ is still there. There's a synergy when you have 2 of these assets. We've seen that play out in psoriatic arthritis. You've seen it play out in IBD. Hopefully, we'll see that play out in HS in the future. And then recall with this acquisition, we also pick up a half-life extended IL-31, also an IL-4 in our own pipeline, 2 bispecifics, 13 31 and 13 18. So there's quite a bit more beyond where we're talking. But obviously, the lead asset is zumi, but I would say quite a bit more behind that, given the scale of this market.

Next, we'll go to the line of David Amsellem from Piper Sandler.

I had a question on TSLP in particular, and sorry I missed this in your prepared comments. But are you thinking about the TSLP only as commercially viable given that there is less dosing frequency than Tezepelumab? Are you -- or are you specifically wedded to the IL-13 TSLP directed therapy combination. And I guess that question applies to both asthma as well as COPD? Just wondering how broadly you're thinking about that as you think about TSLP only versus IL-13 plus TSLP.

David, it's Roopal. So some context for our thinking and I'll refer back to inflammatory bowel disease, where we had a very strong asset with SKYRIZI and we felt combining with that could drive higher levels of efficacy. We've outlined an alpha 4 beta 7, TL1A and potentially TREM1.

Now what we did there was look at the 2 mono therapeutics, along with the combination and look at exposure response. And our goal there is to optimize that therapy. And I would say you can consider that work, and that's what we would apply to IL-13 and TSLP. Both are half-life extended. And going forward, we'd want to look at them in parallel and in combination and see where it takes us. We believe the combo could be the best approach, especially targeting TH2 high and low, driving that convenience. Also from a clinical standpoint, do you have to always check eosinophil levels you may not, if you can get the combo and work in all comers. So that's a layer of convenience in and of itself before we start talking about enhancing adherence going to quarterly dosing or twice a year. So it will be a data-driven approach, very consistent with the pattern that we're following in IBD.

Next, we'll go to David Risinger from Leerink Partners.

Let me add my congrats as well on the transaction. So I just wanted to clarify a few things, please. So first, could you comment again on the anticipated timing of product launches? I think, Roopal, maybe it was you that had mentioned early 2030 for product launches, but just wanted to clarify that. And then separately, regarding the leverage, could you define how you calculate leverage and restate, I think you said you target a net leverage I believe that's how you're talking about it in 2 to 3 years of 2x, but more clarification on that would be great.

Sure. This is Scott. I'll start. And actually, I'll take both of them. So you're correct with respect to the launch of zumilokibart early 2030 is what we anticipate. And then with respect to net leverage, so that's our net leverage, we define it as net debt to EBITDA. And I would note that EBITDA does not include IP R&D charges just for clarity. And so when we talk about we've actually have indicated we'd be below 2x at the end of this year. And we've talked about we will have a path back after the borrowing for this transaction to again below 2x within the 2- to 3-year time period. And I think that's pretty standard with how we've talked about managing our overall leverage and the strength of our balance sheet. So our balance sheet remains very strong even after the borrowing for this transaction.

And David, just a real quick comment. Our target is 2030 early. We'll kick off these Phase IIIs this year. But every opportunity the team can have to pull these in into the earlier part of 2030 or even before, obviously, these are levers that we're all going to pull together.

Next we'll go to the line of Gary Nachman from Canaccord Genuity.

This is [ Dennis Resnick ] on for Gary Nachman. Congrats on a deal. Just as it relates to the Phase III atopic derm trial, so to start in the second half, can you just talk a little bit more about the size and the scope of the trial and what you need to do from a Phase III design standpoint to replicate the Phase II success? And then would you have any ability to influence that trial before it kicks off?

Dennis, it's Roopal. Well, we will partner and influence to the extent that we're allowed. But yes, we have experienced here already with multiple Phase IIIs with RINVOQ which were very successful and not guaranteed, but with RINVOQ, we probably saw better efficacy in Phase III than we did in Phase II. So we have confidence in our abilities and we have confidence in the Apogee team for sure.

And why I say that is because Part B was much more consistent with what a global trial would look like, especially if we're trying to balance the right patients, the right sites, the right countries with speed. And the Part B data are reflective of that and look quite strong. And when we go further, as I stated before, using the exposure response data, machine learning and looking at baseline demographics, I think the predictors that we are seeing are very consistent with what was utilized in Part B. So replicating that, I don't think should be a major problem, but we'll be focused on that and partnering to the extent that is allowable.

Next, we'll go to the line of Louise Chen from Scotiabank.

Congrats on elated to ask you, if you could provide more color behind your 2032 accretion assumption and this mega blockbuster sales potential. Maybe if you could give us a little bit more thoughts on sales, margins, market share penetration.

So you're correct. So we talked about being accretive in 2032. Now recall that as Roopal just indicated earlier and I as well, the sales we anticipate to begin after the approval in at least early 2030. So you're going to see positive operating margin in 2031 and then [ DoD ] actually accretive from an EPS perspective in 2032. We've not sized the sales number other than to say the mega blockbuster status that we spoke about earlier in our prepared remarks. But you can anticipate and there's plenty of analogs out there from even recent launches, a fairly steady and important ramp as we launch the product.

And Louise, this is Rob. Just to add. As we think about this acquisition, we're thinking about long-term growth beyond SKYRIZI and RINVOQ. So we would expect that what Apogee gives us is significant, we say mega blockbuster peak sales potential, these are significant assets that can really help drive growth for the company beyond SKYRIZI and RINVOQ.

Next, we'll go to the line of Steve Scala from TD Cowen.

I have 2 follow-ups, including on the question just asked. So Rob, when you say mega blockbuster, I assume that you're implying something north of $20 billion plus. Is that correct? And then secondly, I'd like to follow up on an earlier question, in addition to new molecules, Sanofi has spoken to high-dose Dupixent and Dupixent combinations. Should we assume that AbbVie has considered these carefully and has concluded that they don't offer much? Is that the conclusion we should derive?

Steve, this is Rob. So our definition of mega blockbuster would be north of $10 billion. Yes. And on the competition, yes, we've looked at existing competition new competition. I wouldn't say they don't offer much. I would say it's a very, very large underpenetrated growing market amongst the largest in the class in immunology. And we feel with this asset, it can be highly competitive. And we also believe with the pipeline that will emerge from Apogee, coupled with AbbVie's pipeline, it allows us to be competitive in this dynamic space for many, many years to come.

And for a final question, we'll go to the line of Matt Phipps from William Blair.

Congrats on the deal. Roopal, you touched on this a little bit, but some physician conversations lately have had concerns about the washout time for these YT antibodies for a patient that does develop a side effect such as perhaps conjunctivitis here. How do you manage that in your development plan? And then do you have any concerns on potentially higher rates of conjunctivitis, given deeper and longer coverage of inhibiting out there?

Thanks, Matt. So in terms of conjunctivitis, that was something that we wanted to look at during diligence as well. And what we observed is rates consistent with other therapies. And remember, these patients have a higher rate at baseline to begin with. And I thought the team at Apogee did a very nice job of characterizing this and really trying to assess it over time and after diagnosis was made. And what we observed there was around a duration of approximately a month or so, and that compares very favorably with other assets in the space where the duration of conjunctivitis last much, much longer.

So given the long half-life and short duration, we think the physicians and us with guidance are very well positioned to manage. Also, the key for adverse events is what results next. And the discontinuation rate is actually very, very low. Overall trials, all under single digits and due to conjunctivitis less than 1%. So even with a 70-plus-day half-life these adverse events resolved and largely resolved with eye drops and moisturizing eye drops. So no concerns there, deep diligence. Apogee has done a good job. We are very familiar with this, along with our eye care team, and we think we'll be able to manage this very well and manage these concerns and still allowing this very nice dosing profile that we see.

Thanks, [indiscernible]. That concludes today's conference call. If you'd like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us.

Thank you all for joining the AbbVie Investor and Analyst conference call. That concludes today's conference. Please disconnect at this time, and we hope you have a wonderful rest of your day.

All right. We're just about at time. So we can kick off our next session with AbbVie. Very excited to have the whole AbbVie management team over here with us. Rob Michael, CEO; Scott Reents, CFO; and Roopal Thakkar, CSO. Thank you all for being with us today.

Great to be with you.

Thank you.

So Rob, maybe starting with you with a big picture question. Just to sort of like, high level, frame for us where AbbVie sits today as we look out to the next 5 to 10 years, how do you expect the complexion of the company to evolve with respect to therapeutic areas, business lines and potential new pillars of growth?

Like I think what you're seeing is a continuation of the strategy where we've talked about a quick return to growth. We exceeded our peak sales last year, just 2 years after the U.S. HUMIRA LOE with, I'd say, like 4 really like strong growth drivers for the company. Immunology, clearly, I mean, SKYRIZI and RINVOQ

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the potential that we

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time, right? And so -- and we see significant runway for that. I'd say in oncology, and I'll actually have Roopal speak to some of the pipeline. I think we should really get into the pipeline. So maybe I'll have you talk a little bit about the pipeline in oncology.

Yes. Just coming out of ASCO is exciting time, a lot of interesting developments, PD-1/VEGF space, KRAS space, and these are both areas that we're participating in, in particular, combination approaches with our ADC portfolio. We saw very nice data with Temab-A, that's our c-Met targeting agent with a topo warhead stable linker. We saw new data in head and neck cancer and ovarian. And both of these areas are places we see we can start moving towards dose optimization and pivotal designs.

In ovarian, we see that complementary to our FR alpha approach with ELAHERE. And in head and neck, that's a unique approach that we see even in the future as a combination with PD-1/VEGF, which is the RemeGen asset that we have now, also can play in ovarian. We also showed very good data with etentamig in multiple myeloma, acknowledging that we're behind in the BCMA space.

However, having a potential outpatient option with a single step-up, getting to maximal dose immediately and having a once-a-month option right away is an exciting time, and we showed very strong data there with a single dose of tocilizumab taking CRS to 0%, which is very unique in the BCMA TCE space. So coming in later with a strong profile could still allow for differentiation. We anticipate Phase III data later this year.

So I mean I think it's really important the reason I want to highlight oncology is, as a company, we don't get enough credit there. And I look at the shape and you asked the question of the shape of the company as I think about in 10 years' time, oncology is going to be a very important player for us. So we will be leaders in immunology for a long time. We have an emerging pipeline in oncology. We're the largest player in neuroscience, really, across, I'd say, 3 pillars today that can each contribute in excess of $5 billion peak.

You think about psych, think about migraine, Parkinson's. We have program in neurodegeneration with Alzheimer's. We have an aesthetics business that we think, strategically, can play an important role with the growth in obesity. And so we see, like, really, 4 areas plus obesity as being the key growth drivers for the company. But I wanted Roopal to talk about the pipeline in oncology because we just had ASCO.

Absolutely.

And we're not getting enough questions on it. It's really important, I think, for investors to get into it for oncology.

We have a lot of questions on ASCO for Roopal, so don't worry. We're going to get there. We're going to get there. But before -- Rob, before we get there, I mean, you're talking about sort of oncology and other areas outside of SKYRIZI and RINVOQ, and the immunology concentration. So maybe that's a good segue in terms of just business development, right?

This is a question, and I'm sorry to ask you, you've been probably asked this multiple times in many different ways, but I'm going to do it again just to get your latest sort of thoughts on that on just, how are you thinking about deploying capital into later stage or even revenue-generating assets. It sounded like on the first quarter call, you opened the aperture a little bit on being more open to those types of deals. So update us on your latest thinking as it relates to the BD lever.

Yes. I would say it's less about opening the aperture. It's more about being, I think, clear in our intentions because I would say there is probably a misconception that we were not open to, I'd say, later stage or on-market opportunities. And look, strategically for the company, we have the growth drivers we need to drive top-tier growth well into the next decade. And so you've seen us over the last 2-plus years execute transactions expending about $8 billion in capital to really [indiscernible] to the pipeline for growth drivers for the company beyond SKYRIZI and RINVOQ. So think next decade and beyond.

And so that's why we've been very active with new mechanisms in immunology, TL1A, TREM1, IRAK4 and then the in vivo CAR-T platform with Capstan that gives us a B-cell depletion approach that could lead to functional cures. We're thinking about the growth in immunology well beyond SKYRIZI and RINVOQ. That's what really motivated the external innovation we brought in immunology. In oncology, there, you've seen us with trispecific TCEs in multiple myeloma, IGI, Simcere, also the PD-1/VEGF with RemeGen, the KRAS inhibitor with Kestrel. I mean those are all transactions, again, as we think about what we have in our pipeline, how do we complement that with external innovation to drive growth in oncology.

In neuroscience, obviously, we had the Cerevel transaction a couple of years ago, but I'm very excited about bretisilocin, the psychoplastogen from Gilgamesh and the transformative potential it has in depression. Obviously, we're excited about emraclidine from Cerevel. We did the Aliada deal a couple of years ago to give us that brain shuttle with the next-generation A-beta antibody in Alzheimer's. And then obviously, the deal we did with Gubra to enter into obesity, and we see that as an area of high unmet need where we can -- we saw an opportunity for differentiation.

We also saw it as an opportunity within aesthetics. And then I also strategically think about it from a -- there's a cost to not participate in this space. And the cross therapeutic benefits as we think about combinations in immunology, migraine, there's a lot of potential with these obesity assets in the therapeutic space beyond just weight loss. And so that's why we pursued those transactions was to add a lot of depth to our pipeline as I think about growth in the next decade and beyond.

That's not to say that if we see something that's compelling within the verticals we participate in, so think immunology, oncology, neuroscience and aesthetics, plus really building out obesity, those are the areas that we're focused on. If there's something that's a near-term revenue driver and we think we can drive value there and it's differentiated, that's really important. It has to be differentiated in our eyes. We've seen a lot of transactions in this space. We've looked at a lot of these opportunities. We didn't see the differentiation that convinced us to pursue them. That said, if we see it, we have plenty of financial wherewithal to execute those transactions.

And so my intent on the call was to be more clear because there was this -- I felt there was this perception that we were not willing to pursue near-term revenue drivers. We are absolutely willing to do it. You can very well see us do that. But there was a reason why we transacted the way we did in the last couple of years was to add depth to the pipeline to drive growth beyond this decade because we have, again, a very clear line of sight to top-tier growth well into the early part of the next decade.

I want to just stick with obesity for a second because that's been a very dynamic area. We've just come off of ADA. There's a lot going on, particularly in the 2028 time frame with the new entrants coming, monthlies, high efficacy agents such as retatrutide. So just maybe double-click a little bit more on the framing you just laid out on the market and where you see the white spaces or the commercial opportunities that still remain untapped. And maybe, Roopal, I can bring you into that as well.

Yes.

Yes, why don't you lead it off?

I can start. So much of what we've seen play out, whether it was near term now or since we did the deal for Gubra is largely what we anticipated. Higher efficacy agents for sure, stretching out durability, duration. And that's something that we think we can continue to differentiate even what we've seen today, meaning even with high efficacy agents that you see in a clinical trial setting, despite that, when you see them on market, they tend not to last very long. So we still anticipate more than 1/3, more than 70% of patients actually, falling off of therapy after a year despite higher efficacy because you still have the adverse event profiles with some of the newer agents, now you're involving skin adverse events. So that's going to continue to put pressure on adherence over long term.

And to realize the full benefits of weight loss, we think duration and durability are key. That's why the amylin class made a lot of sense for us. So as we move this forward, we've seen a 10% delta thus far, and that was in a setting that was a BMI of 29 and mostly men. So not really a setting where one would see an optimization of weight loss. So as we go into Phase Ib and Phase II, we'll see the BMIs in the 35 and up and more women engaged in

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and we actually studied in the Phase I setting

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week and monthly dosing with -- coupled with long -- with a strong adverse event profile or favorable profile, we should be able to drive greater durability in the future. And as Rob said, we're still interested in other external assets if we think they're going to be a good fit. And also what we see playing out from an access and pricing standpoint is largely what we predicted moving into a cash pay segment.

And that is, I would say, a very nice fit with our ongoing strategy and work in aesthetics, where we have very deep and strong relationships with these centers that are talking to many patients on a daily basis and talking about their full aesthetics journey, which includes weight loss, which includes volume loss solutions, toxin wrinkle solutions, skin quality solutions. So for us to be into that market, it's a very strong fit for us to provide that channel of offerings of course the aesthetic -- across the aesthetics journey and obesity is a perfect place for us to be in. And again, fully anticipating the newer entrants along with the pricing dynamics.

And I think in aesthetics, in particular, having that additional element of portfolio always helps, right? I think a lot of our customers are looking for that portfolio offering, so it has a natural fit. I think Gubra, frankly, was interested in partnering with us because of the aesthetics channel. So we can certainly leverage that. But I see it as, again, building around the -- think about combination approach -- there's multiple segments in this category. There's a lot of places you can play. But also as we think about how does it play in other therapeutic areas, as I mentioned, immunology, neuroscience, there's -- as we look at this opportunity, it's more than just about weight loss.

Yes. The compelling fit, again, with the SKYRIZI, let's say, in psoriasis, most of the patients are overweight and hidradenitis suppurativa [indiscernible]. But overwhelming majority of patients that are higher weight. So these are the other combination approaches that we can consider.

I want to get to those combos. But maybe back to you, Rob, one last sort of high-level one. And Scott, you've been waiting patiently. I do have -- I do want to bring you into the conversation. But Rob, for you, just, we're asking all of our companies this just in terms of the external operating environment for the industry broadly. You've got the midterms coming up. You've got some regulatory uncertainty with the FDA vacuum. You've got attempts to codify MFN. These deals are going to expire in a couple of years. Let's see if that happens. So what are you, Rob, paying close attention to in terms of what you're watching? Are there any banana peels out there that we should be aware of in terms of M&A or drug pricing that could -- we could skid around -- that are just around the corner?

So clearly, 2025 was a very active year for the industry in engaging with the White House. And I think we're pleased that we're able to reach an agreement that recognized improving patient access and affordability while also protecting the U.S. innovation ecosystem. And that was an important part of the conversation was we have an industry now that is producing, I think, some very compelling next-generation medicines, and you don't want to disrupt that. So how do you strike that balance?

And so as an industry, I think we landed in a fairly good place. But what needs to continue to happen and what we've been working with the U.S. Trade on is addressing the unfair practices in Europe. I mean the idea of most favored nations, you have to have that complement of, well, you're also addressing the unfair practices outside the U.S. And the companies, by themselves, cannot accomplish that. We need the administration's help. And so we've been actively communicating with U.S. Trade on ways that we can address that. So I'd say that is certainly top of mind and something we're continuing to work on.

Clearly, I think in terms of on the policy front, you've seen a lot of activity around 340B, and we've been very vocal about the abuse that's happening in 340B. I think the entire industry, we're all attacking it a little differently. But again, a high level of engagement. I was encouraged that the administration recognized that the issue there, there was talk of having a pilot. There's obviously, more to do on that front, but I'd say that's another area.

As it relates to codifying MFN, I mean, we're -- clearly across the industry, we will all say that's bad policy. And so there is a level of advocacy work being done to ensure that, that doesn't happen. Again, we don't want to destroy the U.S. innovation ecosystem. So I'd say those are the main things that we're focused on with the primary one being how do we address the unfair practices outside the U.S.

Okay, very clear. Thank you for that. Scott, let's bring you in. Talk to us about business trends, high level. We're sort of deep into the quarter now. Any trends that stand out across the portfolio that you'd like to highlight? Just wanted to...

Look, I think from a trend perspective, if you look at our guidance for the year, if you look at our first quarter results, very strong first quarter, double-digit growth. SKYRIZI and RINVOQ, they're many years into the launch. They're still growing based on our guidance at 23%, both of them are. If you look at the results we had the first quarter, we exceeded by $300 million. We raised guidance on a full year basis, $100 million to SKYRIZI, $100 million to RINVOQ. So that continued momentum that we're seeing and neuroscience continues to grow very well also. It's growing 17% as an area as a whole. It's really broad-based growth that we're seeing there.

And I think when you look at our top line growth, it's actually right at 10% reported. So double-digit reported growth, just over 9% operationally. And so we're seeing very strong momentum across the business. Certainly, there's more competition in certain areas, certain immunology as an area with SKYRIZI that we've seen the competition. We've modeled that competition very carefully, and we feel very comfortable with our guidance that we've had. And I think if you look at from -- another thing that I think we're doing well is growing earnings. We're growing earnings over 14% this year. So we are being efficient with our investment, but we're also investing with an eye to the future.

Yes. I mentioned earlier that we achieved a new peak sales just 2 years after the U.S. HUMIRA LOE last year, but we're out here in the next year, delivering double-digit top line and bottom line growth in the face of competition. I mean when you think about SKYRIZI and RINVOQ growing in excess of 20% in their eighth year on the market despite the entry of more competitors, it just shows the power of that franchise.

And so we're very pleased, but not just with the performance in immunology, but we see, like, in neuroscience, again we'll be the leading neuroscience company this year when you look at the overall portfolio, growing high teens with tremendous growth potential there. And so I think we're very pleased with the -- when I look at the business in the first quarter, every single growth area met or exceeded expectations. And so I think we've had a very nice broad-based strong performance.

And then I guess to that point, Rob, you provided some additional color on the first quarter earnings call on how your internal forecast, specifically for SKYRIZI and RINVOQ compared versus consensus, and that was very well received by investors. I guess any update on potentially providing another midterm guidance in the future? And under what circumstances might that be?

Yes. So we never provided midterm guidance. I'll just clarify, we provided long-term guidance ahead of the U.S. HUMIRA LOE because if you think about the circumstances then, to give investors a picture of what the company will look like on the other side of the industry's largest LOE, it felt appropriate to give fairly granular long-term guidance. It's very unprecedented. Really no one gives that level of detail on long-term numbers, right? But we felt it was important to help investors understand what the company looks like on the other side of, again, an unprecedented loss of exclusivity event.

Now I'd say that the line of sight is very clear. I mean it's a much easier business to model as you think about no significant LOEs this decade, VRAYLAR coming in 2030. But like, yes, I'd say, a clear line of sight to growth well into the next decade. And so now it's really about, as we see, and I did on the first quarter call, we see where the Street consensus is off, that's typically what we see companies do. That seems to fit. I think that going out with very specific long-term guidance under the circumstances doesn't make a lot of sense.

But I will say, as we looked at the models, it was clear to us that we see SKYRIZI and RINVOQ in our estimates exceeding the peak potential that's modeled by the Street. We wanted to point that out. Also neuroscience, and I go -- I've mentioned I've got 3 verticals that you think about them as $5 billion or plus. And each one of them actually was modeled around $4 billion. So like VRAYLAR, we've said approaching $5 billion, the Street said $4 billion. Migraine exceeding $5 billion, the Street said $4 billion. Parkinson's exceeding $5 billion, the Street said $4 billion. So each of them is off by $1 billion. So we felt the need to highlight that.

And then I would also add, and it's why I wanted Roopal to get some words in on oncology, because the Street is not modeling our oncology pipeline appropriately. It's -- we are very excited about both particularly Temab-A, etentamig, not to mention 969 and 706, but those two assets, etentamig and Temab-A, are multibillion-dollar peak potential assets. And right now, sell-side has each of them around $1 billion. And so there are clear upside opportunities. And so expect us to talk in those terms versus going out with a very specific long-term guidance again because the circumstances have changed.

Very clear. All right. Let's start digging into some of the pipeline stuff, Roopal. I will come back to oncology, but we've touched on it already, but maybe just starting with immunology and IBD and some of the competitive readouts that you've had over the past few months that you alluded to with respect to SKYRIZI and RINVOQ markets. You've had the J&J DUET program. You've had -- that was in UC and IBD. You've had Spyre readouts. You have Abivax Phase III UC maintenance data. So I guess, how are you high level viewing these developments with respect to your SKYRIZI -- with respect to SKYRIZI and RINVOQ and your overall development program?

Sure. Maybe starting with IBD and then we can add TL1A into the mix that you brought in. When we step back and look at that emerging landscape, we've yet to really see differentiation from where we're at with SKYRIZI and RINVOQ. And how those are positioned to SKYRIZI is in the front line in ulcerative colitis and Crohn's, and we see very strong data there and very strong share. And then RINVOQ as its label has evolved starting last year, our teams are now getting into the field talking about that independently of SKYRIZI.

And you'll see more of that this year, where physicians now have the flexibility to use RINVOQ, not necessarily always after an anti-TNF, but after a biologic if they feel it's appropriate. So that is a much stronger fit with SKYRIZI in the front line and RINVOQ immediately after that for the patients that it felt to be appropriate, and we're seeing that starting to play out. So that's in ulcerative colitis and Crohn's.

And when I reflect on some of the assets that you talked about in TL1A, they still don't differentiate when I think about our one-two sort of punch in IBD in front line and second line. Now because of that lack of differentiation, the question is, where can one go to break the efficacy ceiling barrier? And our strategy starting a few years ago was to combine with a safe asset that's highly efficacious, which is SKYRIZI as an anti-IL-23, very familiar.

And we -- the first foray into that combination was our unique alpha 4 beta 7. This is not a simple extension of half-life with an existing molecule. It is a molecule, our alpha 4 beta 7 named ABBV-382, has 3 to 4x potency, better binding affinity than an existing alpha 4 beta 7 vedolizumab. And we chose not to silence the Fc tail and left it active. And that's consistent with our anti-TNF that did quite well in IBD, which is HUMIRA, which had a wild-type Fc and not dissimilar to REMICADE.

And what we saw there in the combination was a doubling effect, not in ulcerative colitis, which is where one would think an alpha 4 beta 7 would shine. It's actually in Crohn's disease where we've seen failures in Crohn's. And we saw a doubling effect when you combine 382 and SKYRIZI for endoscopic remission, which is the most important endpoint in predicting long-term outcomes in patients with Crohn's disease. And the other unique finding there beyond the doubling, which the team is very excited about, is a lack of plateauing of effect for 382. So what we will do next based on that finding is test a higher dose of 382 along in combination with SKYRIZI very rapidly here and bringing in our TL1A as part of combinations, not just in Crohn's, but in ulcerative colitis.

So those 4 sets of studies will be kicking off very soon, hopefully, to enable us to move into Phase III very rapidly with optimized dose to maximize efficacy and the safety profile that we have observed have been very favorable. So that's in IBD. And in psoriasis, as we see emerging competition, we have the current profile of SKYRIZI, which is very strong with quarterly dosing, head-to-toe efficacy, scalp, genital, palm or plantar statistical significance across the board, extremely strong data in psoriatic arthritis extending now to 5 years, showing limited x-ray progression and soon pediatric indications as part of that expansion.

We see that already as a very strong continued competitor in the physicians and patients that already know it very well, and that's quarterly is already very convenient. And even with the existing SKYRIZI data, if you take it every 6 months, you still see 60% preservation of efficacy. That being said, we do have a longer-acting agent in the IL-23 class that's entered into the clinic, which we feel can also support extended durability and potentially even higher efficacy if we test a little bit higher dose early on.

And as we round out immunology, we're also very enthusiastic about our B-cell depletion platform, which includes the CD19 depleting antibody drug conjugate with a glucocorticoid receptor modulator, a naked version of that antibody and then the very exciting lipid nanoparticle -- targeted lipid nanoparticle approach, which is from Capstan, which is an mRNA approach, which we can provide without lymphodepletion. Dosing that observing B-cell depletion in healthy is now pivoting that into patients in rheumatology, including rheumatoid arthritis, sclerosis, Sjogren's, lupus.

So that, we'll see some data out of that B-cell platform, hopefully later this year, earlier this year in patients and then rapidly moving into dose optimization and Phase III programs. So we have a very comprehensive, I would say, replacement strategy for RINVOQ and SKYRIZI many, many years before we would see a loss of exclusivity, especially with RINVOQ, which is out to 2037. And obviously, our attorneys and scientists have a patent estate with SKYRIZI and are working to do and evaluate a similar strategy that we saw with RINVOQ.

So -- and I would say it also informs how we're thinking about business development. It was -- when we look at this business, like we did with SKYRIZI and RINVOQ, we elevated the standard of care to replace HUMIRA. That's what we're pursuing here, and we think combination approaches can deliver that higher efficacy to replace SKYRIZI and RINVOQ, which is why we did -- in the case of alpha 4 beta 7, we had our own, but we acquired a TL1A, we acquired a TREM1. That was really the driver of that as we thought about this combination approach, are there mechanisms that we don't have in-house that we need to go bring in, and that's why we executed those deals.

And I guess on the alpha 4 beta 7, that does seem to be an asset that's starting to get more investor mindshare. You guys talked about it with some detail on the first quarter earnings call. Roopal, you're beginning the Phase IIb shortly, and you're talking about evaluating a potential accelerated Phase III. Talk to us about the trial design. What can you tell us in terms of what the Phase III might look like in terms of endpoints and the control arm?

That's right. Well, I think one thing is important to consider is the patient population, which is how we're thinking about it is very broad. And what we saw in the early data was 80% of those patients had a failure of an advanced therapy, including 60% of them, which was on mechanism failure. So we had vedolizumab failures and SKYRIZI failures in the study. In fact, 20% of those failures actually had progressed on RINVOQ.

So you see a very broad population and our observation that lines of therapy will continue to expand in immunology and notably in IBD, where you go from front line, second line, third line and beyond. So we want to be able to cover all of those patients, including the treatment-naive patient population where in IBD, one may consider using high-efficacy agents very early because you do not want ongoing damage, which would include tissue loss and then ulcerative colitis if you don't control inflammation sometimes immediately could result in a colectomy. So that would be the patient population. Key endpoints are endoscopic in nature.

Those are the core market value drivers where we've seen great success. When we talk about RINVOQ and SKYRIZI in the field, that's what's most likely to resonate with prescribers is endoscopic improvement and remission. So that would be a core endpoint. And comparators from a safety standpoint, regulators may require placebo. So you could see some placebo-controlled trials and likely selected head-to-heads. Although we have to be mindful of there really isn't a comparator to this combo because we've been able to treat patients that have failed virtually every other therapy. But that's obviously top of mind as these go forward.

And the goal for us to is accelerate that combination with alpha 4 beta 7 moving into pivotals as quickly as possible. And then looking at the TL1A in combination in SKYRIZI, again, Crohn's and ulcerative colitis, both moving ahead, and we anticipate subcutaneous dosing and monthly or potentially further extensions of that. But the key to this isn't necessarily convenience in IBD. It is efficacy, efficacy, efficacy, and then tolerability and then convenience because we want to preserve tissue.

Okay. Well, maybe let's shift the lens back now to oncology coming off of ASCO. And we've talked about some of this already. This remains another very dynamic area, lots going on in the industry. This year's ASCO was dominated by RAS, PD-1/VEGF, ADCs. You've got a lot of your own earlier-stage assets that you've talked about. I guess, first, maybe just on the PD-1/VEGF. We touched on this RemeGen drug earlier. But just how has your thinking on this class changed at all or in terms of some of the data that you saw at ASCO? The discussion from the HARMONi-6 trial, like some of the cold water that she threw. Maybe just, Roopal, I'd love to hear from you on how you're thinking about sort of putting the totality of that together.

Yes. It's been a difficult challenge to develop in the I-O space and to really firmly displace PD-1 therapies. But we were very encouraged with what we saw. I know there were some discussions in subgroups and different patient populations and how that would match to Western populations. But that's something we believe is very valid at this stage to go on and continue to study. And we, like the RemeGen molecule, very much from a preclinical standpoint, from a binding standpoint on the PD-1 side and the VEGF side, the behavior, CMC characteristics are all very strong. We've seen emerging data in non-small cell lung cancer, in non-squamous and squamous. And we'll be rolling out that data currently anticipated at the World Lung meeting.

And I would say we're already starting to think about potentially even accelerating moving that into Phase III with chemo combinations, in addition to further behind ADC combinations with Temab-A based on the profile that's starting to emerge. Again, more to come at World Lung, but we might be able to enter that much faster than we originally anticipated. So keep an eye out for that.

And then the combinations are very approach across some of these indications, head and neck, ovarian, CRC, could be another area, as well as lung combinations in non-small cell. And then on small cell, departing from Temab-A and c-Met, where we've seen very strong data and movement into Phase III in CRC, we're seeing extremely strong data in small cell lung cancer, what we provided at ASCO in terms of the second-line population there, 82% ORR, median OS of 14 months, largely unprecedented at this stage in Phase III now about to initiate in relapsed/refractory small cell lung cancer. And then combinations with PD-L1 and T-cell engagers and potentially PD-1/VEGF.

So we have large and deep opportunities referencing back to what Rob stated earlier, which is our core strategic focus and gaining depth. And that's in small cell lung cancer because we have our own DLL3 TCE in addition to the PD-1/VEGF. And then you have the KRAS in there with combinations with Temab-A and pancreatic cancer down the road, potentially lung and potentially CRC as well currently in monotherapy today. And the one I know we're running out of time that we should keep everyone, I would say, keep a close eye on is 969, that's our PSMA-STEAP dual-targeting agent in prostate cancer with our stable linker topoisomerase...

That's the KRAS?

This is in prostate cancer. Yes. And that's the one where we showed a 67% PSA50 reduction and 45% ORR and PFS 15 months, and this is in fifth line plus. So this is really even unprecedented when we even look at radioligand therapy, totally different later population. Our goal here is to rapidly move into Phase III and go right directly at chemotherapy in that second and third line, which has not been done yet successfully with radioligand therapy. So that can be a differentiator. And we're going to start combining with androgen receptor pathway right away. So that could be another very large opportunity that we haven't even really spent a lot of time talking about.

That's why I'm so excited about this opportunity.

I can see that. I can certainly see that. Well, that's probably a great place to wrap up since we're a little bit over time. It sounds like, Liz, we should probably do a deep dive on the oncology side and could spend the whole hour on it. But thank you very much, Rob, Roopal and Scott, for being with us. Very helpful update. Really appreciate your participation of this conference.

Thank you, Asad.

Thank you, Asad.

Good day to everyone joining us, and welcome to today's Xtalks webinar. Today's talk is entitled EU clinical trial regulation, latest developments and upcoming opportunities. My name is Sonia Hunte, and it's my pleasure to be your ex-tax moderator for today. Today's webinar will run for approximately 60 minutes. This presentation includes a Q&A session with our speakers.

This webinar is designed to be interactive, and webinars work best when you're involved. So please feel free to submit your questions and comments for our speakers throughout this presentation by using the question chat box, and we'll try to attend to your questions during the Q&A session. Now this chat box is located in the control panel, which is found on the right-hand side of your screen. If you require any assistance, please contact me at any time by sending a message using this chat panel.

I'd also like to welcome our attendees viewing this presentation from our LinkedIn Live event, and I encourage you to submit questions as well via the comments tab. [Operator Instructions] Please note that this event will be recorded and made available for streaming to those who register on xtalkscom. At this point, I'd like to thank TransPerfect Life Sciences who developed the content for this presentation. TransPerfect Life Sciences specializes in supporting global development and commercialization of drugs treatments and devices designed to improve and save lives.

Their comprehensive solutions include eTMF and eClinical technologies, paper, TMF migration, pharmacovigilance and safety solutions, translation and language services and cost center support. With offices in over 100 cities worldwide, TransPerfect is the ideal partner to ensure that your global line makes a global impact. Now it's my pleasure to introduce and welcome our speakers for today's event. And Pierre Omnes is also going to be my co-moderator, so welcome Pierre.

Hi.

He is the Executive Director at TransPerfect Life Sciences, and he has over 23 years of experience in global CROs and pharmaceutical companies. He is a subject matter expert in clinical trial regulatory operations and has been representing industry as an SME in the [indiscernible] initiative to develop the EU portal CTIS.

Next, I'd like to welcome Gaby Di Matteo. Hello there, Gaby.

Hello.

So she is leading the EU level, the advocacy and strategic engagement on EU, CTR and CTS at Pfizer and works closely with regulators. -- industry associations and global teams. She is a part of the CTS subject matter expert and of the combined groups bringing an operational sponsor perspective to regulatory and policy discussions.

And next, I'd like to welcome Scott Feiner. Hello there, Scott.

Hi.

19 years of experience in clinical trial disclosure. Since 2021, Scott has focused on CTS and the ETR and since 2024 has served as 1 of 6 EMA designated industry subject matter experts for CTS.

And next, Andrea Seidel-Glätzer. Hello there, Andrea.

Hello.

She is the Managing Director of the noncommercial German network of coordination centers for clinical trials and KKS network office. She represents academia as a subject matter expert in the ongoing CTIS activities. Now with the introductions out of the way, it is now my pleasure to pass the mic over to my co-moderator Pierre.

So Pierre, when you're ready, you may begin.

And welcome everyone to this [ webinar ]. The topic is your clinical trial regulation. This regulation in Europe followed by a roundtable discussions with my co-panelists who are all members of these CTIS initiative, where industry and academia representative collaborate with EMA in order to support the evolutions of CTIS, the EU portal in the future.

So without further ado, let me start with the introduction section with a little bit of background on what happened in the last few years. So next slide. First, remember that the go-live of the clinical trial regulation took place at the beginning of 2022. And at that time, we had transition period, two transition period, one for submission and one for conductor trial, meaning we could submit under the old or the new system for 1 year, and we could remain under the old system for 3 years from go-live.

And from there, several things happen, meaning that learning from experience, the system was upgraded, more guidance was published and pilots and initiatives were set up making this whole environment quite a dynamic environment, and we'll come back to that during the [ wrong ] table. So among the key milestones or event that took place, one could say that clarifications on what a patient document is and where it should sit in a submission came up in an update of the commission Q&A and impacted the content of Part 1 [ protocol ] section. We had, at the end of 2022, a revision of [ Anex ]6, which is the wealth labeling requirements are detailed. And this was a simplification to avoid concerns with the mandatory result of expiry date on primary packaging, which was quite rate limiting and in certain instances, at the beginning of 2023, we reached the end of the transition period 1, meaning that all submissions at that date had to go via cities, and there was no option to use the old system, you [ track ] anymore.

During 2023, there was also the introduction of a workaround to allow for the submission of the quality documentation only when it's owned by a product owner that is different from the sponsor and there are confidentiality concerns. So that work around continues to this day. And it was also introduced by an update to the commission Q&A. The -- probably one of the main changes that occurred is the publication of the [ transparency ] rules because the [ CTR ] included significant enhancements around transparency. But at the beginning, it meant that all documents except site contract and IMPD were made public upon approval of the trial.

But after the [ relaxation ] of the [ transparency ] this became only a set of documents such as protocol, protocol synopsis, recruitment materials, patient documents being made public instead of everything. So this relaxation of the rule had a very significant impact on all the proceedings and all the bureaucracy administrative work that was required in the background when preparing and submitting clinical high applications.

This implementation of the transparency rules only took place in June 2024 affecting transition trials and things like that. But again, it took place. And now we are under those new rules and it made a significant difference, but we cover that also in the [ round ] table. If we go to the next slide, the updates continued. At the beginning of 2025, we reached the end of the transition period [ to ], meaning that all ongoing trials in EU are now exclusively sitting in cities and any trial that was still ongoing and not in CTIS had to be ended. So that took place. And this whole transition really kept us busy for most of 2024 and 2025 for those of us that had impacted trials.

Then there were also, of course, during all that time, some upgrades to CTIS, some more minor fixing of bugs, et cetera, but more significant. And one [ such ] was the fact that when you were creating a trial at the beginning in CTIS, the creation of the trial includes the designation of a clinical trial sponsor, the main sponsor, and that sponsor could not be changed in CTIS once set up.

In Q1 2025, the functionality to allow for the change of main sponsor was introduced in CTIS, which was quite significant. Again, the change of main sponsor is not a regular issue, but it can happen right often the acquisition or change of legal entities and different things. So that was a really welcome addition. It's a specific type of submission, but still now it's there and it helps. In terms of initiatives that were set up also to test the waters and to explore new avenues, the combined pilot is a good example where it was a test to see whether trials that included both a medicine component [ endoscope ] of CTR, but also some IVD in vitro diagnostic medical devices within the trial.

That documentation could be submitted by CTIS and assess so that the decision could be given via one system instead of multiple ones. So that's somehow a test of something that we'll see is also a plan for the proposed biotech Act. The supportive documents on expanded. The commission Q&A we mentioned earlier was also updated several times. The clinical trial coordination group also issued its all frequently asked questions. So all of those different elements drive information for the sponsors and applicants to help them navigate the environment. And we see now a consolidation of the Q&A resources through three main ones. One with EMA that is more focused on CTIS, one that is more legal and legal interpretation or at least, yes, legal understanding that is the EU commission one and one that is more operational in a way and practical that is the CTIS [ CET1 ].

And again, come from many different Q&A to three main ones in the last few months, which is also a welcome addition. The implementation of an upgrade to the nonsubstantial modification functionality in cities, allowing for most document types, most documents and more structured data field to be updated via [ nonsubcentral ] modification instead of only a few in the past. Was also much welcome because it gives us more flexibility to amend over [ CA ] over time. And of course, at the end of last year, there was a long-awaited propose changed to the EU clinical trial ecosystem in Europe via the EU biotech proposal, which is a new regulation. And it came with other things pertaining to medical devices, in vitro diagnostic medical devices as well as [ genetic ] --

On the manufacturing sectors. Of course, among that, there are some specific elements that pertain to the proceedings of clinical trial management, clinical trial conduct and therefore, there are some impacts on the clinical trial regulation and on CTIS that can be expected. The goal being to make all this process faster, simpler and more predictable. And the predictability is quite an important one.

If I was to summarize the Biotech Act, EU CTR impact in a few bullets, they are listed on the slide here. One of the most expected one is the reduced assessment time lines. The submission of [ all ] but there is a reference to mutually exclusive [ SM ], which will probably put some restrictions to the parallel submission nature that we would all hope for, but there are practical considerations technically that also with some limits to that. So the [ mutual ] it is still better than no parallel submission at all. There is the introduction of a minimal intervention clinical trial in addition to the low intervention clinical-trial status that existed in the original.

Well, we'll see what we can do with that one. More importantly, there is a new concept that has been introduced in this biotech act proposal. It's the IMP [ or dossier ] and the concept of a deposit remember state, meaning that almost like when we commented and discussed with EMA, all industry and stakeholders, we were looking into something that looks like a little what the -- and then you have [ doses ] for each three, and that allows to manage the information and manage the modifications in a more efficient manner. So it's not an IND lag, but still, there are some elements of the IND that could lead to operational benefits on that side.

But again, we'll cover that through the discussions. Expedite processes for public health and agencies. The combined study, INP/IVD is also introduced removal of the optional 5[ 0-dassessment ] extensions for [ ATMs ] reinforcement of the RMS whole possibility to change the RMS, the reporting member states. That coordinates the Part 1 assessment and also enforce collaboration and communication. So it's quite broad, but that is just all of those changes are only one article of the [ Biotech ] Act, Article 58.

And so it means that the biotech app is much broader than that. It includes financial measures, incentives, all the clinical trial infrastructure is affected by that and aims to streamline the process. But today, we'll really focus on the [ C1 ].

And for the last slide, I will just conclude this to say that even since the beginning of the year, there have been further updates, meaning that the commission Q&A has been updated. On the EMS side, they have finally published this consolidated questions pertaining to CTIS into one source instead of multiple ones that we had before. And on the [ CCG ] website, they launched the [ Fast ] procedure, which is a test for the accelerated assessment timeline that are, in fact, also planned by the Biotech Act.

And they also launched a new workaround procedure for [ Asia ] submission under Article 11 that looks promising. So a lot of things happen in that space. And as you can see, the last 4 years have been quite active and active. And so let's now go to the [ home ] table discussions with our panelists to discuss a little bit about the different aspects that of those 4 years and what's coming up.

So thank you all for joining. I would be interested first to get your impressions on those last 4 years. And what did that mean for you on the trial execution standpoint, particularly when the initial launch of CTIS was really a minimal viable product, and it was clearly labeled by EMA. And I don't know, Gaby, do you want to start maybe with how you look back at that last 4 years?

Yes, I can certainly try to bring my point of view. And yes, it was nice for back years, and it was nice to be part of the [ game ] in the beginning, but it came with some challenges. And it was very well welcomed as a new system, but it came with some hurdles as well. The first point we had to put in place was training and change management for the teams. It's not always easy because while we had you [ drag ] and the content of the [ dossier ] can be very much compared to [ our ] drug, but the system, of course, is totally different. So we had to put in place trainings.

We have the trainings that we created by EMA, which were very nice trainings. But as I said, we welcome very much the sponsor handbook, which is grouping everything in one place, which was not the case at that time. And so in Pfizer, for example, we made a choice of creating our own training environment with supporting documents, screen shots, et cetera, to make sure that we didn't have to go in different places for each step of the submissions. And ensuring also that all people are trained in the same way and understand it correctly.

And I won't say, see the limitations because the limitations were changing every day or every other day when submitting. So yes, it was interesting and challenging times at that time, but the result was worth having just one ddossier for all regulatory bodies were something very positive as a minimum. And having one dossier for each member state was also very positive, but we had to adapt to each countries also.

Yes. indeed and even the fact that it's switched naturally to all electronic and no paper submissions anymore was also a kind of secondary benefit.

Scott, on an industry perspective, anything to add based on your organization experience regarding those [ 4 years ] and how you navigated them?

A couple of things. Of course, the change management that Gaby clearly outlined already. But one thing we were doing at the beginning, too, is really adjusting for the original transparency rules, right? At the beginning, we were basically saying, any document, any free tax, just assume it's going to be disclosed because that's the way it was situated. So there was a lot of infrastructure that had to be built to support redactions, quick redactions for RFIs. So that -- yes, yes. And for -- from the [ trialisclosure ] perspective, it was really a huge shift. And of course, this changed on the 18th of June 2024. But that was a big part of our original learning.

And also at the beginning, sometimes the RFIs wouldn't submit somebody is going through it. Like I'm trying to submit my RFI, it's due in 2 hours, right? And you would go and raise a service desk ticket. That pretty much is all behind us. But at the beginning, that was very much something that you had to be on top of. Every time you're doing this mission, you is going to go through, is there an error? What do we do next? And we're way past that now, which is I'm very grateful for.

Thank you for that. Andrea, I'm also interested to get your take on the -- on those last 4 years on an academic standpoint. And I think the -- well, the change management might be slightly different in your case.

Yes, it was probably very different. And I think we had really high expectations on the harmonization and everything, and not everything came out the way we wish for it, because -- it was planned to foster multinational trials for academic sponsors, and I think we are not there yet. So we are still working on it.

But for academic sponsors, the sheer amount of information and things to learn was so big that a lot of people were really afraid to do submissions in the beginning because it was so much, as you said in the introduction, very much information, very much documents, documentation that was new, new portals like the XEVMPD which we have never used before, but now we had -- we were forced to use it, and we have to build -- still have to build some expertise in these fields because we don't have special department for these things, we have to do it all on ourselves.

So that was really a big change and really a hurdle to keep this all in mind to know all the workarounds, to know all the things that we have to do and not do. So that was really change management.

No, [ Remy ]. And I note that none of you mentioned the whole topic of transition trials, but it's done and dusted, all managed. So happy to have that behind us and not have that as an extra concern. If you were to select one or two, what would be really the main cities improvement that you appreciated the more that make the most difference in the last 4 years. Just a quick poll for all of you. Scott, do you want to start? I know where your heart may...

My first one is that revised transparency rules on the 18th of June 2024. It reduced the workload dramatically. And it pushed forward the protocol to being disclosed right away as opposed to the deferral of 5 or 7 years. So that mean -- it was great for all users. And frankly, I think the other thing is the [ Article 81.9 ] that went live on the sixth of November. Being able to provide updated Part 1 documents in 19 is just so helpful, and it's reduced or eliminated, right, some part 1 substantial modifications, where you're not only waiting you're paying fees, right? So that -- both of those are the top of...

Yes. The non substantial modification is what we mean by Article 81.9, but that time was also a really good one. Andrea, on your end, anything in cities that made a significant difference in the last 4 years for academia?

Yes, I can just agree with Scott because the transparency rules, the change really reduced the workload on our side so much. So this was really, really a good thing to do. It's The best experience we had. And yes, we hope -- we are looking forward to the next one, which will hopefully be the e-mail notifications whenever they come. And this might be good improvement with all the limitations that might come with it.

E-mail notifications of the notices [ and ] are generated by cities. But June has a potential date. Gaby, anything to add on those improvements that you really acknowledged in the last 4 years?

I agree with Scott and Andrea, that was very, very important. But I would add also the increased alignment among the member states because in the very beginning, there were very different points of views and many questions which were not aligned to CTR tax and requirements. And it took a bit of time, but I think we have to be very grateful for the creation of [ Medco ] as well who brought the voice of sponsors and who helped us understand or helped us explain and make the ethics committees and member states understand the hurdles from the sponsors and academia, I think.

Yes. And we'll come back to that, but I think that the whole ecosystem of initiatives and forums for sponsors and member state ethics committees and regulatory authorities to exchange and identify issues to find some potential solution is quite significant. We [ can ] act initiative, accelerating clinical trials in Europe. That's the meaning of the acronym. We can talk about combined [ Meditec ] CEO the work that is done by the clinical trial coordination group is quite significant also in terms of streamlining, underlining regulatory authority positions, and they collaborate also with -- so we have a collaboration between [ Etix ] and regulatory, the created assessors on table to build that alignment.

So all of that is quite welcome and will bear fruits. But well, it takes time. That's the one thing that I can say. If we were to focus on the two, three elements that were still your main remaining hurdles, what would be the things that still need to be fixed? And maybe some of them will be fixed by the BTA. Some of them may still require some specific solution. But for you, what are your top 2, 3 hurdles. And Andrea, do you want to start?

Maybe one of the biggest hurdles for academia is still the [ IMPDQ ] application. It needs some improvement, I guess, and I would hope that the Biotech Act with the [ courts ] will change things for us because it needs a lot of coordination and communication between the collaboration partners. And yes, we would really appreciate if this would be a little bit easier because it puts a lot of workload on the academic sponsors, but we need the collaboration with industry and so it's really important for us.

Yes. Scott, on your end?

Certainly, [ Taplast ] is the Part 1, Part 2 alignment or misalignment that we have, where you get these parts on questions request for information, which impact your part 2 documents but you run out of time and you potentially have to submit a substantial modification before you can give recruitment to update those part 2 documents. So I know this is being addressed with the biotech Act. So looking forward to that as being addressed and that will just save a huge amount of time. Otherwise, there's a few other things, but that really stands out to me right now, and I'll let Gaby go.

Yes, Gaby, on your end, what's your take on the hurdles that you still

I would add one or two points to that. One of them is also document management because when it comes to filing in our TMF, it's not very easy to have a comprehensive and easy list of documents. So we manage with work around, but it's a lot of time. So we heard that it will be coming. It will be improved in the future that we -- and we -- we hope it's a near future. It will be very, very welcome. And -- also with that, we spoke about it, and this will be sold by Biotech Act is the sequential submissions. So parallel submissions of substantial modification is also a hurdle. We know it's coming now, but we still need to be patient before it's implemented. But yes, it's still one of the big hurdles that we have at the moment.

Related to that, I think Article 11 helps a little bit in this regard, where right now, we're running into either at a member state or an update Part 1, right? So if we can start leveraging the Article 11 work around, sorry to jump ahead. that helps us, I think, even before the Biotech Act have a little bit more flexibility and get to faster approvals.

Indeed. And of course, we mentioned earlier, the lack of member state harmonization that is still present on a few topics, but that tends to reduce. And I think it's more of -- well, does not impact everyone, but we discussed that also in our preparations. But the operationalization of complex clinical trials in CTIS is quite a challenge because if you have several trials or one master protocol with ancillary one, putting all of that with either the misalignment, the sequential [ mission ], et cetera, it makes complex in [ call ] still quite a beast to manage. But still, guidelines have been published, issues have been identified.

This is on demand. So we will see how it transforms, but we also need to account for this complexification of the clinical trial protocols and how they can be operationalized into an IT system.

Thank you for that. Just one quick question maybe after the -- this background on those 4 years. Maybe one last question on -- I suspect that some of your organizations, I hope I expect, were quite significantly involved in readiness initiatives prior the launch of the CTR. Retrospectively, do you think that your readiness efforts [ both ] fruits? Or were there things that you had to [ course ] correct because it was not as you expected. So how do you look back at the readiness and the situation urine and whether it was indeed relevant to go with such an extensive initiative if it took place in your company. Scott, do you want to start? I see you [ is ] thinking about it.

So one thing I would do differently, but looking back, we were trying to be as specific as possible before CTIS was available, right? So in 2021, right, we're trying to prepare people and trying to be specific. But then when CTIS actually launched, right, there are certain nuanced details that really impacted what we have been providing for training, and we had to adjust them.

So I'm thinking for the biotech act, right? I would be a little bit more high level at the beginning with the expectation that we are going to provide you basically real time or close to real time further details once we see the system in action. So I think that's one thing I would do differently. A little bit less granular detail before the system changes happen and then when the system changes happened, that's when we give you the full details.

Yes. Gabi, on your end?

Well, I thought we were correctly prepared and as opposed to Scott, we try to provide details to the colleagues before the system went live, so that they didn't feel totally lost the first time they would see the system. So we're prepared documents with green chart explanation, step-by-step initiatives and so on. But anyway, when the system goes live and you are facing a technical issue, a technical [ leach ], no can't submit because -- last [ said ], oh, to submit my RFI, but the system is blocked, and I can't go through. That's interesting situation.

But yes, I think on the overall we were not too badly prepared. But when the system goes live, of course, you test it on a different angle.

Yes. Just to clarify, we had those details, and then we had to go back and fix some of them, right? So that's where -- just thinking...

The [ BT ], you're thinking that probably you will not plan and expect everything already and maybe see how the operational implementation looks like before...

Yes, at least say this is what we think it will be, but we will update you once we see the live versions, just so people aren't, "Hey, wait, you gave us this training. Why is it different now? Just to set expectations a little bit.

And there were many updates.

Yes. We could spend an hour on the management approach and how you set yourself up to monitor all those changes, but I think we'll move to other topics. Andrea, on your end, I think that probably on the academia side, the readiness might not have been heavy as large organizations, in particular, but still, what's your take on the readiness versus the operational execution during those last 4 years?

Yes. To be honest, academia hasn't been prepared very good for this, but we tried our best, I think. And like in Germany, I did a lot of work from the CTIS from the group, and I tried to teach. But it is very hard to do it for all academic institutions because there are so many different ones and some are organized, some are not. So this was really hard to get prepared.

And I think, as I said before, a lot of them waited. Just waited what will happen and then started a little bit later, and I think that worked out fine. Although we still suffer from some things like naming convention in the beginning when we did transitions and just named documents, the way we still work with these wrong namings and it's still just causes confusion. So waiting was a good idea. And as the longer you waited, the base you got out of this. So yes. It's okay.

Yes. we all survived.

We never got ahead of the waste. So.

Good. [ To ] the current environment and specifically to the ongoing initiatives. So we are talking about [ CUMed ] which forms for et cetera, but we're also talking about pilots such as combined fast combined for the drug device well, IVD combined submission, fast, which was launched on the beginning of the year to -- which seems to deliver at a small scale, but with a full time lines in the range of 70, 75 days.

So that's still an improvement compared to the 100-plus days that we've been seeing as a median in the past. There are also many workaround procedures. We talked about [ IMPD ], Article 11 partial submission. Those initiatives improvement that are not technically implemented that can be work around, et cetera. How do you perceive those initiatives in light of your daily operational activities, meaning do you make use of them? Do you see them as welcome opportunities, welcome improvement? What's your take on that?

I want to very quickly start with combined because, I mean, both groups as well. And I think it's an important initiative because when -- well, today, when you have to submit both under CTR and the IVD you may have your pharma study approved very quickly, well, in the usual time frame, for IVD or MD submissions, you have to rely on each individual national submissions. And it can be very quick for some member states and very slow for other member states. So combined having one single set of time lines, is going to change the life of these type of submissions, I would say.

Yes. And it's a feature of the Biotech Act proposal. So that's good that it's been tested and that the result seems to be encouraging enough that they really well. kept it and will enforce via a stronger framework and a stronger technical implementation.

Using CTIS for both is also very good.

Yes. Indeed. Andrea, on your end?

Yes. From academia side of you, we welcome all these initiatives and like combined is very important for us, too, because we do these projects. But like Fast EU, which is a very good initiative, I think, for the attractiveness of the EU is not that important for Academia, I would say, because I think, so far, no [ Aconex Ponta ] has applied for fast EU.

And we still have 70% mono national trials in academia. So it is not that important to speed up these time lines, and most countries have already started to announce shorter time lines for the mono national trials. So -- but it might be a good way to foster multinational academic trials to make a little bit quicker.

And Scott, on your end? What's the -- what [indiscernible]

So it's interesting. So for FAST-EU, just the details that were announced have been interesting in preparing, right? We see the shorter RFI time lines. We also see this that the member states and ethic committees are trying to keep all of their tasks on the same day of the week, right? So that kind of early progress. So knowing what we're going to be in for with the biotech Act from the FAST-EUs kind of informing how are we going to provide these redacted documents much faster, right? What's the workload going to be?

But in terms of day-to-day, some applications and such. But again, there's only 15 studies so far that are in FAST-EU. So it's not -- in 2026, this is not something where a sponsor is going to put 5 or 10 studies and have the faster approval. It's more of the lessons learned.

It's one by sponsor, and it's mostly a testing ground for member states to prepare for the BTA time lines. But still, it's an important one. And I think one of the main tasks of the industry at this stage is to scale up the FAST-EU as quickly as possible or to get the biotech act timelines implemented as quickly as possible.

So one other thing that it's related. But the pre-CTA advice has been very helpful for us, especially in complex clinical trials, really understanding what approach are we taking with multiple EUCT numbers? What does that look like because there's a lot that goes into it's almost like two submissions, right? If you have to submit under two UCT numbers, there's a lot more to consider. And the pre-CTA advice, we've leveraged that quite a few times, and it's helped us a bit.

Yes. The pre-CTA is a kind of a technical advice to organize the submission strategy in terms of content, splitting the submissions or not, et cetera, and that's one of the pathways that you can consider before to prepare your submission.

I see time is running, so let's continue. And I remember everyone that if you have questions, please put them in the chat box, and we'll address them in the Q&A session. Let's go a little bit to conclude this from table around the Biotech Act at sales. And I think that the few things that I would like to ask you is this biotech at proposal. And again, it's a proposal, meaning that like any other regulation in Europe, it needs to get alignment between the council, the parliament and the commission and that's a procedure that's going to take time.

What we saw as a proposal may not be the final results, and there will be evolutions. But still, based on that proposal discussed in December, which measures captured your interest and which really you would like to see implemented. Scott, do you want to start?

Okay. I mean the parallel substantial modifications that is very helpful. the shorter time lines, like we discussed, it's really going to be helpful. And the substantial modification time lines are even more compressed. So all of that, I think we're really looking forward to. But in our conversations, right, we're also being mindful of when will we see this change, right? We don't want to overpromise and plan that even in 2027, we're going to see this because we won't with the biotech act. But that -- and the core dossier is very interesting, too, but I'll stop there because I could just go on for a while.

Gaby, on your end, what are the ones that captured your interest and make your dream a hope for the better future?

I think to what Scott is saying my list was the short and time lines. But yes, of course, everything is interesting. Another interesting point and hoping that it will be doable and technically doable is that the fact that Part 2 conclusion will not be submitted before Part 1 conclusion is coming. It will save a lot of time and effort, say, meaning that we will not have to systematically submit a substantial modification to implement the changes from Part 1 when the Part 2 was already locked by the member states. So that's one additional point, which is very important, I think. And also the fact that we want all member states and be better aligned and having a BTA much clearer on what is expected, what is not expected.

Andrea, on your end? How do you see the EBITDA and its impact on your operations?

The quarter might be an evolution of the IMPD Q. I hope for that, that this will help and also what caught our attention is the additional risk category, minimal intervention trials. But so far, causes a little bit more concern than -- because we don't know what's behind this. There's -- it's very so far designed at a case-by-case assessment by the member state and this might open the door for a very different assessments and very different objections.

Yes. It raises a context of harmonization between member states and how they categorize that we know exist already in defining what is observational versus international. And personally, I'm also not sure that adding a category minimal in addition to low is going to improve things. For me, it's complexifying the environment, it would be better to have a minimal that works.

Low intervention clinical trial [ sites ] that is better defined and works well to address the different cases than multiplying the categories. But well, we'll see how this is retained or not and what it will become in the final text. Just on -- to conclude with the final question, we saw from the EUCTR go live that the theory and the reality between the text and the technical implementation, well, might not be fully aligned or may take time to reach alignment I suspect, from what we discussed in the past few minutes that we might have quite a similar concern with the operational implementation of the BTA, its implementation, key how long it's going to take.

The one thing I would like to mention is that interestingly, there is one in the BTA itself, there is mandated action for EMA to provide a plan for implementation of the BTA change 1 month after the vote of the BTA itself which kind of forces for an accelerated implementation. And the other thing that we can comment all SMEs on this call is that the discussions and consultations on how the BTA will be implemented already started. So the plan is really for the time to set up the BTA to be longer.

But maybe one final word from each of you on -- how do you foresee this new period with the new techs coming up and whether or not the technical implementation will be aligned in a timely or functional manner. Gaby, do you want to start?

Well, I would say that if I could, I would compress time lines but we know it takes time to review. But yes, these changes from the BTA have been expected and long awaited. So -- we know it will not be perfect, and we know that the tax will change before it goes live. But in the meantime, we would like it to go live very quickly whenever possible, but we know well. We need to be a little bit patient. But please, member states and parliament, et cetera. If you can go quickly, we will be very happy.

I think that's the goal. And it seemed that the prioritization of the biotech Act impact on the CTR among the first thing in order to sort out the CTR impacts, the impact -- different impact on CTIS in order to accelerate the implementation of that. So the commission is also pushing for that. EMA is already working on it. So we can but [ hope ].

Okay. Thank you all for those thoughts on these different elements. Let's now take some of the questions that we received from the audience, and let's move to the Q&A. [Operator Instructions] And I will start with one question that is around the -- well, at least it's one that I will address already regarding the current foreseen time lines for the Biotech Act implementation.

We don't know. But as I said, there is a negotiation process that is taking place between member states and that will take some time, probably a few months, ideally, it may be completed by the end of the year, but that's an extremely optimistic scenario. More probably, it will be during sometimes during 2027 that we reached that. And then within the Biotech Act itself, there is even after the vote on the publication in the official journal for everything that pertains to CTR, there is an implementation time frame of 6 to 9 months.

So operationally, we won't see the -- all the improvements of the Biotech Act probably until at best second half of 2027, but more probably sometime in 2028, and we will need to monitor very closely the progress of the negotiations to see how this goes. But yes, that is really at the moment, it's mostly guesswork, but we know that all stakeholders on the regulator side and commission, in particular, are really pushing to get through those negotiations as quickly as possible.

But again, EUCTR is but one article of a very long text and there are a lot of other measures that will require alignment before the [ taxes ] can be voted. And there was a question under the Clinical Trial directive, member states had the choice between approving or asking clarification modifications and there's the CTR. It appears that the RFI process has become automatic, even if there are no real objections to studies, adding significant time lines to the approval most approval requires a full 90-day period or even more. Do you agree and what can be done to encourage approvals in absence of field objections? Gaby, do you want to take this one?

Yes, I can. Yes, I can, certainly. First of all, I would add -- I would start by saying that I will not defining what is real objection or not? Because I get that the questions which are raised either by [ Rothwell ] always seem very important to them, and I respect that. I would like to put it in perspective because today, it is true that they take generally the full time line that although I think it improved.

Well, it improved since the beginning. But on the CTD, we had one array, one EC and one local EC. Everyone was approving at its own pathway, I will say, and with their own time lines. And so in the end, from the first country to the last country, approving the study, you could have a very strong time line and much more than the 3 months that we have today, we need to take into consideration that the approval that we have even if it seems to be long and sometimes it is, but when you have your approval, it is valid for all member states at the same time or very few days apart from each other.

Consolidation of those things. Yes, indeed. Thank you. Anything to add from the others? Or do we take the next questions? Let's move to the next then.

Removal of the 50-day ATMP close is nice for sponsors that it makes time lines more predictable and shorter but how our authority is going to be supported in their assessment in those complex modalities. Will there be designated RMS focusing on ATMPs? Scott, do you want to start with that one? And I might talk quite a few things.

And this is my impression, but I think the member states are much more comfortable working in CTIS and assessing. And so they didn't seem to fight this removal of the 50-day cause in the Biotech Act. I noticed at the beginning, sometimes even things that weren't designated ATMP still would get to 50 days. This is early on or 10 days because they can split it. I think the assessors are just more comfortable. They will split things if it's like a chemical or a biologic, right to certain assessors. But I don't really see this as being an issue any longer because if it were, I think the member states would have objected and raised concerns and I haven't heard that. So that's my impression here.

And if we look at the ATMP environment, I think that also the SSRs are much more comfortable now with the ATMP, meaning we are media with gene therapy and other things like that. So what in the past required an external expert involvement, that involvement of experts from the outside is much less required in practice, which means that I don't foresee that there will be designated RMS focusing on ATMP, [ visit ] will probably not be published.

It could be that for certain very innovative products than the scientific capability of the potential RMS will come into play for the selection. But again, it could be better in the future environment, particularly with the Biotech Act, but plans to streamline the RMS selection for those very complex trials, it could also be relevant for the sponsors to pre-identify their RMS before submitting, and that's what the authorities encourage you to do.

Already identify your RMS, if you can, and that will allow them to prepare and really to also be ready for complex assessments, et cetera. So by collaboration with the member states, we can also cope with that. But I think it can naturally this extension of time lines close is not really being used much more at this stage.

Two questions that we could take together, and I will provide a quick answer. Will CTRS ever connect to other systems tubes like [ sarin ] and the other question was when do you think fully automated submission by bots or AI will be supported in the CTIS system?

No clue is the short answer. Let's just say that there is an ongoing discussion since 1917 around the possibility to have sponsor APIs, application programming interfaces that would allow sponsor systems such as [ Viva ] and others to connect with CTIS. The idea at that time was that there would always be a manual intervention, meaning that even if you can automatically populate an application from your system, through CTIS, the act of submitting would still need to be done in cities itself. And so by extension, saying that boards or AI to be to populate CTIS it's not even in the road map.

At the moment, could say that based on what all the road map before the BTA looked like, the sponsor API was a topic that was reintroduced in 2025 with a potential implementation date of '27-'28, but with the whole biotech all the modernization planning is going to be revised and presented to the EMA Management Board in June or well, before summer. And so we will know exactly whether the sponsor API and this modernization can be tackled. At the moment, I don't foresee it in the next 2 years to be wrong, but we can't provide you with a definite date on that.

There was one question on ability to export initial emissions include only new information instead of exporting all documents. Gaby, do you want to take this one?

Yes. I mentioned document management, which is in the future improvements of cities, and it is something which will help tremendously for that. So the information we have so far is that we will be able to export the list of documents that were submitted either in Excel format or even PDF, but we will be able to cherry pick, I will say what we want to defer submission.

The third one, the draught you're working on. So yes, it will make our life much, much easier. We still don't have the official go-live date? That's the other question. But it's coming, and we are all very happy that it's coming.

Maybe one last question, and -- do you expect any significant changes to the CTIS transparency rules, for example, justification for CTIS reduction? And I think this 1 kind of derives from the police [indiscernible] space. Scott, do you want to take that one? I know transparency is close to your heart.

Yes. And then we tie -- but generally, I wouldn't expect this. There's been so much discussion with the new transparency rules and I think this is fairly settled. Where this question, I think, is coming from is [ Policy70 ], the EMA, right, is still requiring you to justify your CCI. But remember, in CTIS, the EMA is not reviewing your redactions. It's the member states. So the member states would need to build a process to be reviewing CCI more closely, and I'm not seeing that. So for now, I don't expect to change, certainly not the next year or two.

Thank you, Scott. And I think we are close to the time. Next changes to be introduced in CTIS this year. Annual safety reporting module in Q3, e-mail notification for the notices on and by June. Those are the two main things that are expected for this year. Sponsored user metric change are probably more for 2027 and not for this year anymore. With that, I think will close the Q&A session and Sonia, back to you.

Well, thank you very much, Pierre, and Andrea and Scott and Gaby. I thank you very much for answering all those questions. Yes, we have concluded the portion of the Q&A portion of the webinar.

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Now please join us in thanking our speakers for their time here today. So thank you very much, Andrea, Scott and Gaby and Pierre for being my co-moderator. We hope you found this webinar informative. It has been my pleasure to be your webinar moderator. On behalf of the team here at Xtalks, we thank you for joining us. Until we see each other again, I am Sonia Hunte. Please take care and bye for now. Bye, everyone. Bye, Pierre. Bye, Andrea. Bye, Scott. Bye, Gaby.

All right. Great. We're going to get going here with our next company presenter at the BofA Global Healthcare Conference here in Nevada or Las Vegas. So thank you.

We've got the AbbVie team and Scott Reents EVP, CFO; and Roopal Thakkar, Research and Development and CSO. My name is Jason Gerberry. I cover pharma and biotech at Bank of America. And so I've got a discussion that I think is a good mix of CFO questions and R&D questions because I know that there's a lot to hit on here.

Maybe my first question for you, Scott, is just thinking about the P&L and you've -- you guys are in a great place in terms of having a long LOE runway. And you're still pretty bullish about the growth that your core engines can provide Skyrizi and Rinvoq. And so I think consensus estimates, an incremental $15 billion of revenue, I think, by 2031 on Skyrizi and Rinvoq. So maybe talk about operating leverage dynamics because you're at such a high watermark from a revenue perspective. And I can't imagine there's a lot of incremental investment to support the brands from here. But maybe I'm wrong. And the reason I ask is, I look at Street op margins kind of topping at 52% and that was kind of where op margins topped the year before HUMIRA went LOE. So I'm just sort of curious, do you think that there is a potential upside to how the Street is modeling the operating leverage in the business?

Sure. Thanks, Jason. We're excited to be here, excited to talk about some of the things that we've done but even more excited to talk about the future. So happy to. And you're right, when we look out and we have mentioned when we look at the consensus numbers and you mentioned '31, there's strong growth and we feel very confident in our ability to exceed those numbers that are out there. Skyrizi and Rinvoq, in particular, you mentioned, we're driving a lot of growth through those through market expansion, share growth and just looking at the dynamic products that we have in the place in those markets. But it's not just an immunology story. where that growth is driven by our neuroscience business, a leading neuroscience business, growing at high teens this year. In fact, we have a great pipeline in oncology, which I'm sure we will get to.

And the aesthetics business will continue to grow over that period as well. So with that growth and then your question on operating margin, when we look at it, we have an industry-leading operating margin today. We've talked about on the R&D line, continuing to invest in R&D. We've increased by over 1/3 since 2022, our R&D spend over $3 billion. This year, we're spending just shy of $10 billion on R&D, a little over 14% of sales from a profile perspective. And we feel very good about the funding and all the activity we have in the pipeline that everything is well funded and we're doing the right things in terms of investment for the long term. So I think you can think about that number being in that 14% to 15% range over time, continuing to grow absolutely but that's the profile. We will, of course, adjust that every year as we go through our planning cycles to make sure that we are funding properly for the future.

And so the operating margin expansion that you mentioned is going to be coming from the SG&A line. Certainly, we're going to get a lot of sales leverage. We expanded operating margin this year to 48.5%, was the initial guidance before we had an IPR&D. We're well on track to accomplish that. And you're going to see us steadily increase our operating margin over time. Now I'd say over the next couple of years, 2, 3 years, you'll see that we'll be up in the 50% range. And we'll continue to do that. I think from a longer-term perspective, that 50% is not the cap but we're not -- we haven't really given guidance. And I think we just need to make that decision to invest in the future and make sure we're doing it.

Certainly, you mentioned the HUMIRA times. I would say that these markets and the landscape and the competitive landscape is much more dynamic than it was even back then. And so we're making sure that we're not shortchanging anything. We're doing the right investments in our DTC side, also making sure we're generating the right amount of evidence and really driving that business going forward in light of the competitive landscape and the strength of the products that we have and the breadth of indications that we have, Skyrizi and Rinvoq certainly offer more indications than HUMIRA did. So we'll continue to drive that. We'll continue to grow operating margin at a steady clip. And then we'll see where it ends up at a high watermark but we're going to hit 50% in the next couple of years.

Okay. Maybe let's talk about M&A. And you guys laid out your core focal therapeutic areas, right, on the most recent earnings call. And I imagine that the gating variables in those TAs differs, right? In neuroscience, maybe you want something with more near-term revenues to replace Vraylar with obesity, maybe you need more assets to round out portfolio. And then in I&I, you can make riskier early-stage bets for something that's going to be transformative. But do I have a general sense of kind of how you're approaching the thought process with M&A in these kind of core TAs where you're looking to add to the business?

Yes. I think it's twofold. One, as you mentioned, we filled out a lot of things. We've done 30 transactions in the last 2 years, invested over $8 billion in external innovation to fill up the pipeline across not just I&I but also in the neuroscience area, oncology. And we're going to continue to do those types of transactions. I would say there -- it's filling it out from a therapeutic area. We have also looked at adjacencies. We added an obesity asset, which we're excited about last year as well. And we're going to continue to invest but it's also -- the second piece of it is, where do we see distinctive assets? Where do we see what we feel are differentiated assets that can raise the standard of care irrespective of the area that it's in and finding those assets is going to be important as well.

So if we're faced with finding an asset that we're excited about, has a compelling opportunity, whichever area that is or if it's in an adjacency, we will move on that asset and try to drive that growth because the growth is certainly what we're looking for, for a long-term basis. And we have the advantage of having a great runway for growth, high single digits through the decade, limited LOE exposure, really very large. The next is the big one in 2030. And so we've got some nice runway. Our key products, we have a nice runway on as well. And so we're just going to continue to focus not only in augmenting the areas, the adjacencies, new areas where appropriate but also making sure we're bringing in the right assets.

Yes. Okay.

And we don't specifically constrain early in one therapeutic area or middle or late. If we see something that's attractive, that's early or middle, mid-stage, the team is free to go look at that. And if there's something late stage or even on market that we think could be a good fit and complement the rest of our portfolio, there's no constraints.

That's exactly right, Roopal. And certainly, the balance sheet capacity and our ability to manage that balance sheet well, that's also not a constraint. So we aren't constrained from that perspective as well.

Yes. Okay. Obesity is an area that I think you guys have been vocal. More to come, I think, in terms of bringing in other assets that could complement your amylin. So I guess my question is twofold, which is, one, how comfortable are you with the assumption that innovation is going to get rewarded in obesity from a pricing standpoint? Because the million-dollar question for most investors on Lilly is pricing around GLP-1? And is that a race to the bottom? And then secondarily, do you wait for more data for ABBV-295before you make decisions on rounding out the portfolio to see what you have as an anchor asset?

Yes. A couple of comments and Scott can weigh in as well. When we started looking at the original deal model and the asset from Gubra, our 295 asset, we did map out what we thought the future would look like. And part of that did include different pricing assumptions that we would anticipate seeing in the future, especially around cash pay. So a lot of that was built in. And the reason that made sense to us was also knowing that we had our aesthetics business, which is all cash pay. And many of these clinics also manage weight loss along with facial aesthetics, let's say, or body contouring. So that was, I would say, built in. So none of this is unexpected and I would say it was well predicted.

That being said, we don't need any particular outcome that we're waiting for to execute other deals, if we wanted to in obesity. We think it's a very large market, continues to be underpenetrated. And we think that new assets are going to be needed because people continue to rotate in and rapidly rotate off. So these don't have the durability for something like, let's say, a Skyrizi, for example. People stay on sometimes only for a few months and they stop. So when we looked at 295, we saw that as an opportunity to enhance tolerability and durability and also assume that many of the patients that we would capture would be those that have already come off of incretin class. So if we see something that, let's say, is in incretin class or a novel class or helps with muscle preservation or bone preservation, oral, extended half-life, all of these parameters is something that our teams would be looking in to bring in.

If there's an opportunity to combine with our existing asset, we would look at that very carefully as well because where we sit today coming out of the early Phase I work in a non-obese population, BMI recall was 29, majority male with a 10% -- almost a 10% delta in a population that really doesn't need to lose weight. So what we're going to look at now is the right population, higher BMIs, greater proportion of women and also looking at a higher dose than we've already studied. So the goal there being continued enhancement of weight loss and assessing tolerability, looking at every other week dosing and even monthly dosing.

Okay. Maybe shifting to I&I. And my first question is just the new competition to Skyrizi in the way of J&J's ICOTYDE. I think many investors that we talk to are now kind of coming to the realization that ICOTYDE is more market expanding than competing with the biologics, particularly in psoriasis. But what I wonder is, Skyrizi, the incremental patient that might go on Skyrizi, are you competing for that incremental patient with ICOTYDE, which I imagine is somebody that is with the community derm that might have gotten a topical or another oral therapy. So do you get a lot of naive to bio therapy as new starts for Skyrizi? And is there a competitive dynamic at some threshold with ICOTYDE?

I think there's a unique profile that we've seen formed with Skyrizi in psoriasis. And I think many of our prescribers recognize that. And our sales team and medical team have been very effective of communicating that. And that is best-in-class efficacy that there's no oral that can match that. Quarterly dosing, which is extremely convenient. And when we've done head-to-head against orals, when we ask the patients, they actually, in our studies, prefer having a quarterly dosing, especially if they have to remember taking a pill every day or worrying about when they're going to eat their meals. It's very simple to take it quarterly and not worry about it. Also, we're able to communicate statistical significance across palmoplantar, genital and scalp, difficult-to-treat areas that people know that they can trust Skyrizi to really drive high levels of efficacy.

We're also able to communicate 5 years of psoriatic arthritis, radiographic prevention. We have long-term data in PsA, which is very important for many prescribers to know as 30% of patients with -- in this category of moderate to severe will go on to develop PsA. So that's another important consideration. So that profile will continue to be very competitive. And if someone is considering an oral I think they already know the profile of the patient that they're considering. So they may have now an extra choice in oral. That being said, we agree and I think the way Scott and the team have modeled it is, anticipating some effect on share. But as the market continues to expand and people continue to recognize the profile we have with Skyrizi, it is very unique. And again, the orals are not oral Skyrizis. They are oral.

Yes. And when we look at the year, Roopal is exactly right. We spent a lot of time when we provided the guidance. We increased our guidance after the first quarter results by $100 million for Skyrizi. So it's still very early days with ICO but we'll see -- we made some very good assumptions, some very prudent assumptions. I think that the guidance contemplates some share uptake by the ICO in general, some market expansion, certainly as the strong share -- leading share position that we have in that space, a little bit of that share is encompassed but it's very modest. And we are -- we feel well on track and remain very confident in our 2026 numbers.

Okay. And now thinking about the Skyrizi Crohn's subcutaneous induction regimen that you'll roll out in 2027, how much of the new patient funnel is IV site constrained? I just want to -- trying to get a sense of how impactful you think the rollout of the subcutaneous induction will be to the business.

Do you want to start with that?

Go ahead, please.

I can start. So maybe I'll make some comments on the data, and then we can talk about the IV subcu dynamic because many of our sites, maybe half or more have access to IV. So we don't see that as a major constraint but we do see an opportunity with subcutaneous. Now the data that we've observed, particularly in treatment-naive or frontline, which is where Skyrizi has been very effectively positioned, the data that we saw, 45-point deltas versus placebo in key endpoints was higher than we had originally anticipated. So this further confirms and supports our frontline positioning, I think, which is very important. And we anticipate having that launch this year now. So in around 6 months. So that's why the team is very excited.

And why the frontline makes sense for our portfolio is that Rinvoq is approved in Crohn's and UC and we had a recent label update last year that allows for utilization post biologic and doesn't necessarily have to fail an anti-TNF. It's up to the clinician to decide. So that means you could have someone frontline Skyrizi. There's going to be a few patients that maybe need more support, aren't doing well, then they can immediately go to Rinvoq. So we have stronger second-line positioning. And when the subcu arrives, then they'll have a clear choice of either IV or a subcu. And if you want convenience after that, you have an oral, which is also best-in-category for a JAK inhibitor.

Yes. I mean we're seeing in the market, the strength continues for Skyrizi and in terms of new patient share, we're getting over 50%, call it, 55% plus or minus depending on the week you're looking at it. Of that -- those new patient starts, that's very strong. I think it's a testament to all the strength of Skyrizi as a whole. And then once we do have the UC -- I'm sorry, the CD subcu induction, that's only going to further strengthen our position, especially given the nice data that we've seen.

Yes. that's right. And behind that, we have a combination with Skyrizi with our own alpha 4 beta 7, very strong data there. So that's coming in even after these 2 assets.

Yes, I'm going to jump to that. I may come back to Skyrizi and Rinvoq but I want to make sure we can get to the combinations just given your interim update, J&J's recent Phase II update as well in IBD. And so very interesting data for your IL-23 integrin combination. And so maybe can you just speak to the additional clinical work that you're going to do, pushing dose? Is there -- I mean, obviously, there's always going to be safety risk dynamics like as you assess, how much incremental benefit might be worth going after. Is there a certain step-up in efficacy threshold in your mind needed to kind of push a dose higher on the -- it's on the integrin side that you'd be pushing this.

That's right. So we have what we believe are 2 safe, well-characterized mechanisms that we've studied. The alpha 4 beta 7 on the integrin side, it's our own unique asset, 3 to 4x more affinity binding than vedolizumab. And we did leave the Fc portion of it as active. And that could explain the strength of the data that we've observed in Crohn's disease because typically, we see alpha 4 beta 7 shine better in ulcerative colitis than we've seen in Crohn's. We've actually seen failed studies in IBD for that class. So you have these 2 unique assets. You know that we know the strength of Skyrizi already in the space and we know the safety profiles. So one thing that we did see in the combination was a very robust favorable safety profile. So no concerns there. And the -- increasing the dose appears based on our exposure response data looking at serum PK that there is continued room to go on the alpha 4 beta 7 and we don't anticipate any safety concerns there.

So the next step is to study the higher dose with Skyrizi to see if we can drive incremental endoscopic remission or mucosal healing. And if we do see that, then we would pivot to the higher dose moving forward into Phase III. We anticipate that by 2028. And recall, the data that we showed was a doubling of effect of Skyrizi, which is already very strong and it was in a very broad treatment population. We didn't have to seek out any particular subgroup for notable efficacy. It was in an all-comers population, which had multiple failures of biologics, including Skyrizi failures and vedolizumab failures and a majority of which would also have already failed anti-TNFs. And we see that in IBD, where a majority of patients have already been through an anti-TNF. So it made sense for us knowing HUMIRA, the -- to combine something not requiring an anti-TNF. And by combining those 2, we saw broad-based efficacy and we anticipate taking that type of population forward to solve the needs of as many patients as possible in the future.

So to confirm, you weren't seeing any additive effects on the frequency of known AEs or the severity of those AEs?

No.

No.

And then how important is it to push efficacy even higher in light of, say, what you've seen with, let's say, the DUET trial that your -- one of your competitors has and there are a lot of other players out there that are actively seeking to push combination approaches. So obviously, you don't know where the bar is at the moment.

Sure. Well, we'd like to -- well, that's why we dose optimize and not just arbitrarily select the dose and move forward. That's why we saw good data. We think we have a Phase III ready to go but we do think it's important for the future, especially if you want to differentiate from Skyrizi and the Rinvoq and provide a safe option that greater differentiation will be important. And that's essentially how we developed Skyrizi and Rinvoq to begin with and both are very successful, especially if you look at head-to-head. So we want to, again, give it some time to see if we can get several more points of efficacy. And if we can, we'll go. Now if there is a safety concern for sure, then we would back down. But we think we can answer these questions relatively soon and be ready for Phase III in 2028.

And I believe on past calls, you've talked about the desire to have co-formulated subcutaneous auto-injector would be the preferred form factor here. Maybe some of your competitors will say maybe there's an ease -- I don't know if it's from a development perspective or a commercial perspective to go after a bispecific versus a co-formulation. And so where are you in terms of more holistically thinking about combinations even beyond IBD, settings where you feel like combinations are plateaus, are an issue. I imagine psoriasis is a setting where clearly, there's not -- you've got such high efficacy that combinations probably don't make sense but there are other settings where it does.

That's right. So IBD is a good place. I think rheumatoid arthritis is a good place. The reason co-formulation makes sense to us because these assets are available to us now. And one advantage of the co-formulation combination approach is that you can optimize the ratio of the assets because with a bispecific, it would be locked in. That being said, we don't think there's anything fundamentally wrong with that. Just for our program, we're ahead on these because we have a ready-to-go alpha 4 beta 7. We have a ready to combine TL1A. And at the end of this year, hopefully, a TREM1 that's ready to go.

That being said, behind that, we do have an IL-12 -- IL-23, TL1A bispecific that we could study. And we'll be able to then compare it with the data that we're deriving from a co-formulation and make that call. I don't think we know which approach would be better. It's simpler and potentially faster to have a bispecific because you are not having to demonstrate contribution of components. And potentially, if it's high concentration, maybe there's less volume. But then the lingering question would be, is that ratio the right ratio? And would you have been better off with a co-formulation? What I would say for AbbVie is, we're doing all of the above. And then we have combinations in rheumatoid arthritis, multiple combinations in Crohn's and ulcerative colitis, where we think it's important. And then on the bispecific side, we are bringing to the clinic this year into Phase I, an [ IL-13/31 ] bispecific with extended half-life and an [ IL-13/18 ] bispecific with an extended half-life if we're talking about atopic dermatitis, which is still an area which is still very underpenetrated.

Yes. And I think you've talked a little bit on the most recent earnings call about maybe what the desired dose frequency would be with some of these combination approaches, whereas with Skyrizi quarterly dosing has been very advantageous. How do you think about the benefit of quarterly versus monthly when you go to the improved efficacy profile that these combinations could offer?

Yes. I think if you're driving high efficacy, monthly is going to be acceptable. But it has to be high efficacy and that's what we're going to deliver. Skyrizi in IBD is every 8 weeks. And as you stated in psoriasis is quarterly. We do have an extended half-life version IL-23, hoping to double or maybe 2.5x, we think is a sweet spot of the half-life of Skyrizi. We are not interested in ultra-long half-life. One thing that we've learned talking to all of our clinicians over the last 20 years, is if something has a very long half-life and you're in a indication where there could be ongoing flare, tolerability concerns or loss of response, that's actually a disadvantage if you wanted to alter therapy or stop therapy. An ultra-long half-life won't let you turn it off or add on, you may have concerns. So that's why we would like to develop for all types of prescribers across indications.

So with the extended half-life 23, if we can get in and stretch it out, that's great. If we combine it with our TL1A if it goes to every 8 weeks or quarterly, going beyond that, we don't think is a good option. In psoriasis, every 6 months makes sense actually with Skyrizi, we already have data in label that if you stop it and wait 6 months, your -- majority of the patients have the efficacy. So tweaking that half-life a little bit can get you to every 6 months and probably to every year. But with a constrained half-life because we have a very long pharmacodynamic effect that's independent of PK with Skyrizi. And we saw that in IBD and we see that in psoriasis. So we think that could be -- that could resonate with a variety of clinicians that may have some nervousness of having a too long of a half-life.

Okay. You guys have been pretty vocal about Capstan and your in vivo CAR-T program and with data later this year. This is an LNP-based product, so not a lentiviral. So maybe just talk about sort of the -- helping investors think through the importance of the update and clinical data later this year. I imagine the safety hurdles lower than, say, a lentiviral-derived product. And any sort of early efficacy signals we could see in either the lupus or RA settings?

Yes. This is an in vivo CD19 CAR-T, no lymphodepletion required, no virus, no integration of genomic DNA. It's mRNA-based. So that means it's transient. So we were thinking about safety when we originally were assessing the landscape for these assets. So the -- in healthies, it's delivered, we see rapid B-cell depletion and then the CAR is only transiently expressed because it's generated by mRNA. So then the CAR goes away, the B cells are depleted and the naive B cells that are nonpathogenic repopulate and hopefully driving remission or cure like. So we've seen that in healthies, the pattern we would like to see. And now as you stated, we're going into patients with lupus and rheumatoid arthritis.

And we should be able to get a small number. But if we're seeing high levels of efficacy by the end of this year and we have a reasonable idea of dose, then that may allow us to pivot much more rapidly into pivotal studies. And you tend to have to study less patients to get -- if you're driving high levels of efficacy against a comparator, you could see that relatively quickly. And I think even in single-arm studies, if you're seeing very high levels, where you traditionally don't see efficacy, that would also give us robust data to allow us to make a very well-informed decision to go into pivotal study. So we expect some patient readout this year and much more into next year. And that's why we like this construct so much.

Okay. Lutekizumab, the update and then the no-go in IBD, how big of a setback is that for the Ludy story? I know there are a lot of focus on this as one of your I&I assets that some look to maybe be a key asset for you. And you still have the HS data coming and any read across the other settings?

That's right. So we saw very strong data in HS in Phase II and that's why we looked at some selected indications and ran Phase IIs there. Now in this setting in IBD, we saw much, much stronger data with alpha 4 beta 7. So it made sense to take that horse forward. But I would see this as independent indications because we already had very strong Phase II data. That's why we made the decision to go to Phase III for Ludy in HS and we'll see that later this year, along with Rinvoq data, which sets up a similar dynamic that we have established now in IBD, where you have a frontline asset, Skyrizi, today in IBD, hopefully, Ludy in HS and then a second-line asset, Rinvoq, where we see that in IBD, potentially also in HS, underpenetrated market, probably in the 20% or so with advanced therapies and a prevalence that's not inconsistent with IBD prevalence.

Okay. Probably have time for one last question. Gilgamesh. So just thinking about the landscape, there's a lot of policy updates regarding development of psychedelics. I imagine the goal here is to make for something that's easier to administer and more durable than SPRAVATO, which is the, I guess, the most advanced, most commercially successful agent in that space. Do these updates from a development standpoint in terms of governmental push to get psychedelics available change the urgency, how quickly you think you can get to market with this approach?

Yes, it could be certainly a tailwind, especially if they're able to review our briefing packages faster, give us rapid advice. Ultimately, if we have strong data, they can review that quickly. Also, if there's openness to more broader patient populations, that could certainly help the field. And what we see with this asset is limited duration of the psychedelic hallucination experience, it's limited. So that way, in the office, patients can be turned over pretty rapidly and go home and not have a flashback. And also in the early data, we saw a durable efficacy, which is very important.

And the other unique aspect of this molecule is that, yes, it's a 5-HT TA agonist, which is where we see the efficacy for some of these classes but it is actually a 5-HT 2B antagonist. And the concern with many of these, if it agonizes that receptor, that's the same one we observed years ago that was responsible probably for the cardiovascular valvular issues we saw with fen-phen. So the other benefit we could have is potential for chronic dosing spaced out and we would like to get away from once a week or twice a week dosing, greater intervals, I think, would be helpful for patients in these clinics that have been set up. So that's why we're excited about this asset. And we see the government mindset as a tailwind for, I think, everyone to develop in the psychedelic space.

Great. Well, we're out of time. So gentlemen, thank you so much for joining us.

Thank you.

Thank you.

Good morning, and thank you for standing by. Welcome to the AbbVie First Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's call is also being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Ms. Liz Shea, Senior Vice President, Investor Relations.

Good morning, and thanks for joining us. Also on the call with me today are Rob Michael, Chairman and Chief Executive Officer; Jeff Stewart, Executive Vice President, Chief Commercial Officer; Roopal Thakkar, Executive Vice President, Research and Development and Chief Financial Officer; and Scott Reents, Executive Vice President and Chief Financial Officer.

Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated in our forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. Abby undertakes no obligation to update these forward-looking statements, except as required by law.

On today's conference call, non-GAAP financial measures will be used to help investors understand 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. Following our prepared remarks, we'll take your questions. So with that, I'll turn the call over to Rob.

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie is off to an excellent start to the year, with first quarter results exceeding our expectations across our diverse portfolio. We are delivering top-tier growth and continue to strengthen our long-term outlook with pipeline advancements and strategic transactions.

Turning to our first quarter performance. We achieved adjusted earnings per share of $2.65, which is $0.07 above our guidance midpoint. Total net revenues were $15 billion beating our expectations by $300 million and reflecting robust sales growth of 12.4%. I'm especially pleased with the momentum in immunology and neuroscience, which are both delivering share gains in growing markets. Based on this strong performance, we are raising our full year adjusted earnings per share guidance by $0.12 and now expect adjusted EPS between $14.08 and $14.28.

Turning now to R&D. We are making meaningful progress advancing programs across all stages of development. Recent highlights include the U.S. regulatory submissions of Rinvoq for Alopecia Areata giving us a potential new source of growth in dermatology and Skyrizi subcu induction in Crohn's with an approval decision expected later this year. We also saw promising interim data from our Crohn's platform study, combining Skyrizi and our own alpha 4 beta 7, which has potential to deliver transformational efficacy.

In obesity, we announced early-stage data for our Amlin Analog 295 with very encouraging weight loss results. In oncology, we are now expecting the regulatory submission for [indiscernible] by the end of this year, which is earlier than our previous expectations. We also expanded our emerging oncology pipeline by closing the Remagen agreement, giving us a novel PD-1 VEGF bispecific antibody. We will continue to augment our portfolio with business development to access external innovation. And given our strong growth outlook, we have significant financial capacity to pursue both early and late-stage opportunities.

Lastly, as part of AbbVie's $100 billion commitment to U.S. R&D and capital investments over the next decade, we recently announced construction of several new manufacturing sites. This includes a $1.4 billion investment to build a pharmaceutical manufacturing campus in North Carolina, and a $380 million investment for 2 new plants in North Chicago. These strategic investments will strengthen AbbVie's ability to produce medical breakthroughs in immunology and neuroscience, oncology and obesity. In summary, the fundamentals of our business are strong, and we are well positioned to deliver top-tier growth for the long term.

With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff?

Thank you, Rob. I'll start with the quarterly results for immunology, which delivered total revenues of $7.3 billion reflecting impressive sales growth of $1 billion. Skyrizi total sales were $4.5 billion, up 29.2% on an operational basis, exceeding our expectations. We continue to demonstrate exceptional performance across psoriatic disease, where we are gaining share and have clear leadership over all biologics and orals by a very wide margin.

The psoriatic market is growing robustly, and we feel extremely confident in Skyrizi's best-in-class profile, including high and durable efficacy on both skin and joints as well as simple quarterly dosing, which collectively gives us a distinct advantage relative to all the existing and emerging therapies in this area and we continue to generate compelling evidence to support Skyrizi as the preferred treatment option for psoriatic disease. At the recent AAD meeting, we presented new data highlighting Skyrizi's strong efficacy in genital and scalp psoriasis, which are very difficult to treat areas, often leading to significant social and emotional burden to patients.

The FDA has recently approved adding the new study results in these high-impact area to the SKYRIZI label. We also now have long-term efficacy and radiographic data in psoriatic arthritis demonstrating Skyrizi's durable efficacy with nearly 90% of patients showing no radiographic progression through 5 years of treatment. This data will enhance our existing leadership in the important PSA segment where Skyrizi's is the frontline in-play patient share leader in both the derm and room segments.

Performance also remains very robust in IBD, where Skyrizi is on track to deliver more than 30% global sales growth across Crohn's disease and ulcerative colitis this year. Competitive dynamics within IBD are playing out in line with our expectations, with Skyrizi continuing to capture a leading share of total new patient starts in the U.S. in the quarter. including very significant in-play leadership in the frontline setting, which is the strongest signal of overall physician preference for Skyrizi I'm also pleased with the compelling results from our recent subcutaneous induction study for Crohn's with data, particularly in the bio-naive population that we believe compares very favorably versus the competition and we look forward to providing an additional dosing option for physicians and IBD patients later this year.

Turning now to Rinvoq, which is also performing above our expectations. Global sales were $2.1 billion, up 20.2% on an operational basis. Demand remains strong across all of Rinvoq's indications. We are now achieving high-teens in-play patient share in and are seeing a nice inflection in prescriptions across gastro, especially in UC, following the recent expanded label supporting access to Rinvoq earlier in the treatment paradigm for IBD patients. We are also planning for the potential near-term commercialization of 2 additional indications, [indiscernible], which will meaningfully expand Rinvoq label and where we have also recently expanded our field force to support these emerging opportunities. Lastly, in immunology, HUMIRA global sales were $688 million, down 40.3% on an operational basis, reflecting biosimilar competition and in line with our expectations.

Moving to neuroscience, where we continue to outperform our expectations as well. Total revenues were nearly $2.9 billion, up 24.3% on an operational basis. In migraine, our leading portfolio continues to gain market share with [indiscernible] and Botox Therapeutic each delivering robust double-digit sales growth. In psychiatry, Vraylar global sales were $905 million, up 18.4%, reflecting strong prescription growth in both bipolar disorder and adjunctive MDD. Vraylar has significant close to branded competitor, and we expect continued momentum following the introduction of new lower doses, allowing prescribing flexibility as well as pediatric usage.

Moving to Parkinson's disease. We continue to see encouraging uptake for VYALEV, which is on track to achieve blockbuster revenue this year. Total sales were $201 million, up approximately 10% on a sequential basis. We are also preparing for the potential approval and launch of Tavapadon in the U.S. later this year. an exciting new oral treatment for patients with Parkinson's and a very complementary addition to our growing Parkinson's portfolio with Biolab and Duopa.

Tavapadon has demonstrated strong efficacy as both a monotherapy as well as an add-on to the standard of care, and we believe it will be a sizable commercial opportunity. Moving now to oncology, where total revenues were more than $1.6 billion, down 3% on an operational basis. Venclexta continues to perform very well. especially in CLL as combination use with BTK inhibitors are emerging as a preferred fixed treatment duration globally. We've recently received full approvals in the U.S. and the U.K. as well as positive CHMP opinion for Venclexta's use with BTKs for that fixed treatment course.

Total Venclexta sales were $770 million, up 9.7% on an operational basis. Continued sales growth from [indiscernible] also helped to partially offset the expected sales decline for IMBRUVICA, which was down 24.7% due to IRA pricing and competitive share pressure.

Moving now to aesthetics, which delivered global sales of nearly $1.2 billion, up 5.1% on an operational basis. Botox cosmetic total revenues were $668 million, up 17%, reflecting a favorable price comparison in the U.S. as well as modest market growth globally. Juvederm Global sales were $232 million, down 2.9%, reflecting continued headwinds in key dermal filler markets. While economic headwinds have continued to impact market conditions globally, the long-term prospects for the category remain attractive given high consumer interest and low penetration rates. As the industry leader, we are investing in promotion and innovation support patient activation.

I'm particularly excited about the potential for [indiscernible], our fast-acting short-duration toxin which, once approved, we expect will be market expanding and complements our toxin portfolio very nicely. While [indiscernible] is delayed in the U.S. we continue to anticipate approval and launches this year in key international markets, including Europe, Canada and Japan. So overall, I'm extremely pleased with the execution and continued strong performance across our commercial portfolio. And with that, I'll turn the call over to Roopal her comments on our R&D highlights. Roopal?

Thank you, Jeff. We continue to make good progress across our pipeline. I'll start with dermatology programs in immunology. As Jeff just mentioned, new data was presented at the recent AAD meeting, highlighting SKYRIZI's strong efficacy in genital and scalp psoriasis and long-term efficacy, including radiographic data in psoriatic arthritis. These recent presentations add to the growing body of evidence supporting Skyrizi's best-in-class profile in psoriatic diseases. Its strong durable efficacy on both skin and joint measures, favorable safety and tolerability profile and convenient quarterly maintenance dosing, give us confidence that Skyrizi will continue to be the preferred first-line treatment option for patients with psoriatic disease.

Additionally, Discussions are ongoing with the FDA regarding revised label language related to tuberculosis evaluation for Skyrizi. While TV monitoring has become fairly routine prior to initiating treatment with biologics, updated language would allow health care providers to use their clinical judgment.

Moving to Rinvoq. The regulatory application for alopecia areata was recently submitted to the FDA approval decisions are anticipated later this year in Europe and Japan and in early 2027 in the U.S. [indiscernible], Phase III studies for both Rinvoq and lutukizumab are progressing well and remain on track for 16-week top line results in the second half of this year.

Turning to gastroenterology. All co-primary and key secondary endpoints were met in the Phase III AFFIRM study with Skyrizi's cutaneous induction in Crohn's disease, demonstrating very high levels of endoscopic response and clinical remission. While not a direct head-to-head comparison, when matching these data against results from the Skyrizi IV induction program, the subcu induction achieved numerically higher results across key end points. We are extremely pleased with the strong performance demonstrated by subcutaneous reduction, especially considering that this study enrolled a very difficult-to-treat patient population. 2/3 of the patients received prior advanced therapy with half failing 2 or more therapies and a third failing [indiscernible] or a JAK inhibitor.

Data in those who had not previously experienced advanced therapy were particularly noteworthy, where 61% of Skyrizi patients achieved endoscopic response and 73% achieved clinical remission at week 12. This is 45 points higher than placebo on both measures. These are very impressive results, which will continue to support first-line use. These data reinforce Skyrizi's best-in-class profile and provide an additional induction dosing option for patients with Crohn's disease. Our U.S. regulatory application was recently submitted with an approval decision anticipated later this year. Subcu induction for ulcerative colitis is also being assessed and we will be discussing options with health authorities.

Next, on to other gastro programs. An interim analysis was recently completed on our Crohn's disease platform study. In the cohort evaluating Skyrizi plus our novel anti alpha-4 beta-7 antibody, ABBV-382, the combination resulted in a higher rate of endoscopic remission at week 12 and at week 24. The rate was double that of either monotherapy arm. Endoscopic remission was achieved by approximately 42% of patients receiving the combination at week 24. These results were absorbed -- observed in a broad population that had severe and refractory disease, which included 82% advanced treatment failures and 53% of patients failing 2 or more advanced treatments, of the patients that previously received advanced therapies, 63% failed an agent with an overlapping mechanism with the combination and 20% failed a JAK inhibitor.

At baseline, patients had a mean Crohn's disease activity index of 325 and a simple endoscopic score of 14, which represents a very treatment refractory patient population. Achieving this level of endoscopic remission in this setting is a particularly meaningful achievement as this endpoint is an objective measure of mucosal healing and is associated with long-term benefits, including reduced rates of hospitalization, surgery and disease progression.

Safety of the combination was consistent with the profiles of the monotherapies no new signals were observed. These results demonstrate the potentially transformative level of efficacy that our novel combination can achieve. The study is expected to complete in the third quarter with presentation at a medical meeting anticipated by early next year. A Phase IIb study is planned to begin this summer in patients with Crohn's disease and ulcerative colitis to evaluate Skyrizi in combination with both 382 and with our extended half-life TL1A antibody. In parallel, we will be evaluating Phase II acceleration options for Skyrizi plus 382 in Crohn's disease.

In the Skyrizi plus lutikizumab cohort, the combination did not sufficiently differentiate from monotherapy Skyrizi and will not be moving forward. In the early-stage immunology pipeline, we are nearing completion of a Phase I study for an [indiscernible] inhibitor, ABBV-848 and and plan to begin a Phase II study in rheumatoid arthritis later this year. This potent inhibitor has the potential to provide biologic-like efficacy, a favorable safety profile with no box warnings and convenient once-daily oral dosing

I will now discuss neuroscience. Top line analysis was recently completed on our Phase II trial evaluating ABBV-932 in bipolar depression. In the study, the overall difference observed between the drug treated and placebo groups was not statistically significant. However, in a prespecified subgroup analysis of bipolar I patients an efficacy signal was observed. The safety profile of 932 was generally similar to placebo, including rates of extrapyramidal events, demonstrating the potential for a more favorable tolerability profile compared to Vraylar. We are evaluating next steps to continue 932 development in bipolar 1 patients. Dose escalation work continues for emraclidine in both schizophrenia and elderly patients.

In schizophrenia, we have cleared the 100-milligram dose and will begin evaluating 150 milligrams. Phase II studies in monotherapy and adjunctive schizophrenia as well as psychosis related to Alzheimer's, Parkinson's and Louis Body Dementia are planned to begin in the fourth quarter. Moving to our psychedelic acid brain.

Additional data from an ongoing Phase II study in major depressive disorder will be available this year. Several studies are planned to begin in 2026, including a Phase III trial for single course acute treatment in MDD, a Phase IIb evaluating repeat dosing for chronic use in MDD and a proof of concept Phase II and post-traumatic stress disorder. And in Parkinson's disease, we remain on track for an approval decision for tavapadon in the third quarter.

Turning to our solid tumors program in oncology. [indiscernible] is progressing well across a broad range of tumor types. At the upcoming ASCO meeting, early-stage safety and efficacy results for Tmab-A in head and neck and ovarian cancers will be presented. Based on these results, we are engaging with regulators regarding ways to accelerate programs for Temab-A plus pembrizumab in frontline head and neck cancer and Temab-A plus bevacizumab in front-line ovarian cancer. In colorectal cancer, we have made a decision to update our strategy in the third line plus setting and will now focus the pivotal program on Temab-A in combination with bevacizumab in an all-comers population as opposed to pursuing monotherapy in cMET selected patients.

Targeting all comers will allow Temab-A to reach a substantially broader population. Temab-A plus bevacizumab demonstrated improved response rates and disease control versus current standard of care regardless of c-MET expression levels. Treatment with Temab-A at 2.4 milligrams per kilogram plus [indiscernible] achieved an objective response rate of 30% and and a confirmed disease control rate of 97% compared to rates of 0% and 70%, respectively, for [indiscernible].

Given the expanded patient population for the all-comers Phase III trial, we anticipate faster enrollment compared to the study in cMET selected patients. Initial data readout is expected in the second half of next year. In lung cancer, Temab-A received its first breakthrough therapy designation as a monotherapy in second-line plus EGFR wild-type non-squamous non-small cell lung cancer. We are in the process of planning a Phase III trial in this setting. SP369624356 In small cell lung cancer, a Phase III trial for monotherapy, ABBV-706 recently began in relapsed refractory patients.

Two Phase II studies evaluating 706 triplet combinations in frontline patients are also planned to initiate this year. These trials will evaluate 706 in combination with atezolizumab plus [indiscernible] cell engagers. Moving to AbbVie 96 dose escalation data in late-line metastatic castration-resistant prostate cancer will be presented at ASCO. Based on these results, we are in the process of discussing acceleration options with regulators in order to advance into Phase III trials as quickly as possible.

We also continue to augment our solid tumor pipeline through investments in external innovation, including one with Castro Therapeutics, we recently began a Phase I study to evaluate a [indiscernible] inhibitor in advanced solid tumors harboring KRAS mutations. This next-generation inhibitor has the potential to provide an improved efficacy and safety profile based on increased potency and specificity against the most relevant KRAS mutations, while sparing H and NRAS [indiscernible].

Our strategy is to combine this pan KRAS inhibitor with Temab-A in pancreatic, lung and colorectal cancers. In hematologic oncology, our Phase III trial evaluating monotherapy [indiscernible] in third-line plus multiple myeloma is tracking ahead of schedule. We anticipate a response rate readout in the third quarter with potential to also see an interim analysis on progression-free survival.

If this interim analysis is positive, regulatory submissions would occur later this year. Progress continues in earlier lines of therapy as well. The increasing use of anti-CD38 antibodies in earlier treatment setting is driving a need for CD38 free BCMA combinations, particularly those that can provide the convenience of monthly BCMA dosing combined with an oral agent. Plans are underway for a Phase III study evaluating [indiscernible] in combination with [indiscernible] in second line plus patients, including those that were exposed or refractory to a CD38 antibody or who lost response to a BCMA, CAR-T or ADC.

Moving to other areas of our pipeline. In aesthetics, the FDA issued a complete response letter for our [indiscernible] application related to manufacturing questions. The CRL did not identify any issues related to safety, efficacy or labeling of [indiscernible] nor has the FDA requested any additional clinical trials be conducted. We will be working closely with the FDA to address their feedback and determine next steps for resubmission. In obesity, positive top line results were announced from a multiple ascending dose study, evaluating our long-acting amylin analog, ABBV-295. In the study, 295 demonstrated clinically meaningful weight loss of nearly 10% and after only 12 weeks of treatment despite enrolling a predominantly male nonobese population, 295 was well tolerated with mostly mild and transient GI-related adverse events no cases of severe nausea, vomiting or diarrhea were reported.

These early results are encouraging and reinforce our view that our long-acting amlin analog has the potential to provide strong weight loss with favorable tolerability. In the next phases of development, higher doses of 295 will be tested in patients with obesity, including every other week and monthly regimen. Interim data from our Phase I study in obese patients are anticipated later this year. Our Phase II program is now expected to begin in the third quarter.

To summarize, significant progress continues with our pipeline, and we look forward to additional important data readouts, regulatory submissions and approvals throughout 2026. With that, I'll turn the call over to Scott.

Thank you, Roopal. Starting with our first quarter results. We reported adjusted earnings per share of $2.65 and which is $0.07 above our guidance midpoint. These results include a $0.41 unfavorable impact from acquired IP R&D expense. Total net revenues were $15 billion, this reflects top tier growth of 12.4%, including a 2.1% favorable impact from foreign exchange. Adjusted gross margin was 83.6% of sales.

Adjusted R&D expense was 15.1% of sales, and adjusted SG&A expense was 22.7% of sales. The adjusted operating margin ratio was 40.8% of sales, which includes a 5% unfavorable impact from acquired IPR&D expense. Net interest expense was $645 million, the adjusted tax rate was 15.4%. Turning to our financial outlook. We are raising our full year adjusted earnings per share guidance to between $14.08 and and $14.28. Please note that this guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the first quarter.

We now expect total net revenues of approximately $67.3 billion, an increase of $300 million. The impact from foreign exchange on full year sales growth remains roughly in line with our prior expectations. This upgraded revenue forecast includes the following approximate assumptions for several of our key products and therapeutic areas. We now expect Skyrizi global revenues of $21.6 billion, an increase of $100 million, reflecting demand growth in psoriatic and IBD indications. Rinvoq global sales of $10.2 billion, an increase of $100 million, reflecting strong performance in the room and gastro indications. Total Neuroscience revenues of $12.6 billion an increase of $100 million, reflecting momentum across the portfolio.

Moving to the P&L for 2026. We continue to forecast full year adjusted gross margin above 84% of sales. Adjusted R&D expense of approximately $9.7 billion and adjusted SG&A expense of approximately $14.2 million. We now anticipate an adjusted operating margin ratio of approximately 47.5% of sales, in line with our previous expectations after including the roughly 1% unfavorable impact of acquired IP R&D expense incurred through the first quarter. We also now expect adjusted net interest expense of approximately $2.7 billion, a reduction of $100 million, primarily related to favorable rates on our debt issuance.

Turning to the second quarter. We anticipate net revenues of approximately $16.7 billion. This includes an estimated 0.6% favorable impact from foreign exchange. We are forecasting an adjusted operating margin ratio of approximately 50%. We -- we expect adjusted earnings per share between $3.74 and $3.78. This guidance does not include acquired IPR&D expense that may be incurred in the quarter. In closing, AbbVie continues to deliver outstanding results and our financial health remains very strong. Our capital allocation priorities remain focused on the future as we are investing in the business at record levels, have financial flexibility to pursue compelling business development and returning capital to shareholders through our strong and growing dividend. With that, I'll turn the call back over to Liz.

Thanks, Scott. We will now open the call for questions. In the interest of hearing from as many analysts as possible over the remainder of the call. We ask that you please limit your questions to 1 or 2. Operator, first questions please.

First question comes from David Amsellem from Piper Sandler.

So appreciate all the metrics you have on Skyrizi, but I wanted to get your thoughts on the competitive landscape, particularly with the rollout of code are you thinking about its impact on [indiscernible] going forward, if any? And give us some color on your counter detailing messages to practitioners regarding the product as you enter this period with more intensive competition.

Yes. Thank you, David. It's Jeff. I'll give you some flavor on that. As I mentioned, it's just such an exceptional product. We see in our audits and our trackers that over the last couple of quarters despite incredibly high share, really over 4x basically the in-play share and total share versus the next leading competitor, our NBRx has accelerated and continued to hit all-time highs. And that's because of a few of the items, right? The superiority data that we have on skin clearance is just exceptional. So we have head-to-head trials in 5 mechanisms in psoriasis, including the 2 oral agents, the [indiscernible] and [indiscernible]. We can show category-leading durability in the real world. It's just exceptional adherence given the dosing cycle and the ability to keep the disease controlled. We have that leading PSA indication with that new 5-year joint stability data that Roopal and I highlighted and then this new data on hard-to-treat areas like the scalp, the genitals, the hands and feet, head to toe for Skyrizi, so to speak. So those are just really, really powerful messages to the physicians who write this medication. I would say there's other things around the -- maybe the oral competitors you highlighted. Look, the launch is quite early. The way that we look at this is, certainly, we're able to communicate that it's not an oral Skyrizi the efficacy parameters are quite a bit lower when you match all the controls. You understand the populations, which our medical teams and our commercial teams are able to highlight Certainly, PSA is a huge market value driver, and there's not a lot of evidence there. There's also some complexities really just even around an oral in the adherence there, and we have some data and evidence on the orals in the category as well. So we're well prepared for this dynamic. So we think that we can navigate this competitor quite well. And we may see, in fact, we saw it with Otezla over a decade ago that there's going to be some market expansion as well. So again, the teams are prepared. We're very confident, and hopefully, that gives you a little bit of flavor of the dynamics in the market.

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

Next, we'll go to Chris Schott from JPMorgan.

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

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

And Chris, this is Rob. I'll just add to Roopal's comments. The way we've been thinking about business development over the last couple of years, is to support that strategy. So you've seen us add through business development, new mechanisms, TL1A, IRAK4 [indiscernible] as we think about this combination approach. We acquired Nimble to give us the oral peptides capability. So that obviously plays an important role in the future of immunology. And then I'd say the one that doesn't get enough attention is the Capstan acquisition with the B-cell depletion approach with the in vivo CAR-T platform. as we think about the future of immunology, now we're thinking about growth beyond Skyrizi and Rinvoq, we certainly see a trend there. And so we've been very active with business development over the last couple of years. to add depth to our immunology pipeline so that we can continue to remain ahead of the competition. And we have tremendous amount of confidence given our long-term experience here. We obviously have -- or commercial powerhouse, but I'd say our R&D organization understands the space very well. And I think we positioned ourselves for long-term growth.

Next, we'll go to Mohit Bansal from Wells Fargo.

Just wanted to double click on the IRAK4 that you are developing in RA. So you try its is a space where after HUMIRA, there's not a lot of options which are safe as well. So like what gives you excitement about IRAK4 compared to what is out there in the world in terms of in terms of therapies which are being tested in imitates because is trying to become a win work without the box warning here.

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

Next, we'll go to Louis Chin from Scotiabank.

Congratulation I wanted to ask you, first, if you could provide more color on your opportunities for an extended half-life IL-23 and also your oral peptide IL-23. And you still plan to enter the clinic with those this year. And then just on your combos, just curious if you plan to look at those for first line or save those for more refractory [indiscernible]

It's Roopal. So yes, we do have it's called ABB-547, which you'll hear more about. And that is our asset based on all of our experience with Skyrizi and IL-23 inhibition and this is what we'd like to advance. And this would be a longer-acting version. And to your point, the dosing has already initiated Along those lines, we also anticipate dosing our long-acting IL-23 TL1A bispecific antibody and the nimble anti-IL-23 asset both of those will be first in human this year. The goal for those are to -- at least for the long-acting is to be slightly longer acting than Skyrizi but not too much longer acting. And the reason for that is, I should state, is that when we take all these factors given that Skyrizi is already available as quarterly, and that is very, very convenient and the data are all very compelling when you look to the maintenance data. I know we've seen some short-term data. But when you look at Skyrizi, and this extends well beyond week 16, we've demonstrated Pass 100 responses of approximately 60%, passing 90 responses, exceeding 80%, and that's already happening with quarterly dosing. And what I would say there is similar to what Jeff had stated, we also are focused on all of our assets on difficult-to-treat manifestations that includes [indiscernible], genital scalp psoriasis that Jeff has mentioned. Now the other important fact here and why I said the long-term duration is important, is that 30% or so of patients with psoriasis will go on to develop psoriatic arthritis. And again, that's why durability and long-term data are very important. Now the reason I made the comment on the half-life of where we want it to be, we want to offer choices in the future. And that will matter, I would say, to the -- most of our clinicians who want to individualize the therapy for example, on this longer half-life. If an infection, for example, were to occur or there's a tolerability issue and you have a very, very long half-life biologic, the prolonged pharmacologic persistence could limit the ability to rapidly discontinue therapy. And also, you could have clinical scenarios that may necessitate switching therapies prior to full washout. And if you have overlapping mechanisms of actions that could pose challenges. So we are targeting 2 or 2.5x of where Skyrizi is today, and that would create another option and that would be along with the oral that I said would also be focused on a slightly longer half-life on that one than what we see today for orals, because what we know and Jeff pointed this out, the adherence matters with orals. We see it with Rinvoq, but we have very potent efficacy. For the oral from Nimble, we would like to see higher potency and a longer half-life in case someone slips up and misses a dose. So that's how these are being developed. And as you stated, they're both in the clinic this year. So we anticipate data hopefully by next year, if not sooner. And then I apologize, I think I had the combo question on how we're positioning this. Well, the data that we have to date, we're in an all-comers population, and you see particularly refractory. And when we've seen that with Skyrizi and Rinvoq and you pivot to a naive population, the efficacy getting in higher. So we are not going to restrict at all how we would study patients because it's important to clear second line and third line and even come after Skyrizi. In fact, we had Skyrizi patients in the study. We had vedolizumab patients in this study. we had Rinvoq patients in the study. That's an important market because second and third line continue to evolve and grow. But in IBD, the front line is also important. Many of our clinicians want to tackle the inflammation right away in the best possible way they can. Because with gut inflammation, you can run into problems, it results in hospitalizations, structuring and irreversible damage that can result in surgeries. So nobody wants that. So if you have the best therapy, we believe there's many clinicians that will want to use that early on in the course and not hold out. So we're very excited about the data that we've observed because we see that high level of efficacy in this interim analysis across different lines of therapy in IBD.

Next, we'll go to Terence Flynn from Morgan Stanley.

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

Terence, it's Rob. So I'll take that question. So yes, we have been and continue to be very open to acquiring external innovation, really with a major focus for us in neuroscience, oncology and obesity. And to the extent we see a differentiated asset in any of these areas, whether early stage, late stage or even on market, we are very willing to pursue it. I mean, today, we have an on-market portfolio and an emerging pipeline that gives us a clear line of sight to very strong growth into 2030. So we are operating from a position of strength and we have ample financial capacity. So if you think about over the last 2 years, we have added significant depth to our pipeline, including deals with [indiscernible], as I mentioned earlier, [indiscernible] and [indiscernible] to name a few. I see each of these opportunities as an opportunity to really drive growth in the next decade and beyond. But that said, while we don't need BD to deliver top-tier growth this decade, we're not opposed to near-term revenue drivers that are differentiated in our core areas of focus.

Next, we'll go to [indiscernible] from RBC Capital Markets.

Just 2 on Skyrizi, please. So first one is when I look at the 1Q Skyrizi sales, you look at it versus the IQVIA scripts, it looks like net pricing is flat. So slightly better than that low single-digit erosion you guided. I guess, first, can you clarify if there were any one-off items in 1Q for Skyrizi? Or is that discrepancy from IBD and IV induction. And then how should we think about that pricing step down through the year, if you are on track for low single-digit decline? And then just following on [indiscernible] successful exclusivity extension to 2037, what's your confidence in extending Skyrizi's LOE? Is there any time lines you have there? Or any signals you have for potential biosimilar settlements.

This is Scott. I'll take your first question regarding Skyrizi pricing. You are correct. And in the first quarter, Skyrizi pricing was relatively flat. That's really just a comparison issue on a year-over-year basis in the quarter, a gating, if you will. On a full year basis, we continue to...

[Technical Difficulty]

Please standby, the conference will begin again shortly. I apologize for technical difficulties. We are experiencing technical difficulties. Again, please stand by. Thank you for standing by. Liz, you may go ahead.

Okay. Sorry. I think we were in the midst of answering the question about sales [indiscernible] Yes, go ahead, Scott, sorry.

Great. Thanks, Liz. I apologize for the technical difficulty there. I'll start from the beginning again with respect to your question on first quarter Skyrizi, you are correct. The price was flat in the quarter, relatively flat. It was just a comparison year-to-year when we look at it from a full year basis, we do continue to expect low digit pricing for the full year. So that means while we've not given specific gating guidance, if you will, you'll see continued low single digits for the remainder of the year. And I think that when you think about that price. That's something we've talked about low single-digit in the immunology franchise across the board from rebates low single digits over time. And so Skyrizi is going to be very consistent with that. There was a slight amount of inventory destock as well. So the total demand number was consistent or right around 30%. I think that's consistent with what you would have seen in IQVIA.

And then [indiscernible], this is Rob. I'll take your question on Skyrizi. Look, although Skyrizi's competition of matter patent expires in 2033. We do have later expiring IP granted and in process that embodies Skyrizi significant innovation. And this includes patents expiring in the U.S. in the mid-2030s and later. Now it's important to note that regulatory data protection for Skyrizi does not expire until 2031. So we do not expect to see biosimilar application filings until the end of this decade. But clearly, we have a strong track record of vigorously defending our patents and protecting our innovation, and I would expect that to continue.

Next, we'll go to James Shin from Deutsche Bank.

I have one for Roopal on [indiscernible] PD-1 VEGF. Given [indiscernible] is relatively behind some of the other PD-1 VEGF we all know. Is there any angle or differentiation to make up for a lost time and then sticking with oncology rule, what should we envision for [indiscernible] Do you see this being a transformational kind of readout is getting a competitive space in frontline [indiscernible]

For the PD-1 VEGF, the key for that and what you've heard previously from us and other dose, the [indiscernible] deal that we just talked about, the DLL3 TCE. The key for these assets are in combination with our emerging ADC portfolio, in particular, Temab-A where I highlighted some readouts to come at ASCO. And that for us is the key looking forward, especially across colorectal cancer lung cancer, I noted combinations in pancreatic cancer today. So this, wherever we see a PD-1 we can utilize that in combination. So that's where the innovation occurs where we're going to use our ADCs wherever we can to replace chemotherapy provide higher efficacy, potentially longer durability because of better tolerability. And if the data point us in this particular direction, you could have a biomarker population. So physicians were able to individualize care and optimize that benefit risk. So you would see an efficacy contribution from ADCs and with an asset like 148. The other place that's under consideration is in the [indiscernible] alpha space in ovarian. There could be potential for 148 there. So you can see how it can be introduced across multiple tumor types. And regarding DLBCL discussions will be ongoing with the current readout where we saw improved PFS and no detriment to OS that discussion is ongoing. And then we still have the potential for second line DLBCL and even front line DLBCL data this year. And that frontline is at [indiscernible] plus R-CHOP. So I would say a very simple and potentially easily adoptable regimen. So again, potential for readouts this year. And if you do see a benefit there, I would say, in front line is the largest opportunity for [indiscernible]

Next, we'll go to [indiscernible] from Canaccord Genuity.

First, for the additional indications for Rinvoq. As they start to come through, Vitiligo and Alopecia areata will be next. Are you still thinking all those indications can be $2 billion in aggregate or are you getting more optimistic on that front? So what's your latest thinking on the contribution from those and additional efforts you're putting in the derm space and then just on tavapadon in Parkinson's, just how you're thinking about that product, how it will fit into the treatment paradigm within Parkinson's mono versus combo and then the overall opportunity for it. And if you'll put more resources within the Parkinson's franchise as well.

Thanks. It's Jeff. And I would say that we have been very, very encouraged over the data that we've seen as these products have read out. And the first of the the third wave of the Rinvoq indications was giant cell arteritis, which was the smallest of the bunch. What we've observed has been quite interesting in the rheumatology community as we've started to highlight the benefits of of Rinvoq for GCA, it actually has what I would call a spillover effect onto RA and PSA. So the rooms get more and more comfortable. So these indications, we believe, will build on top of each other. We still look at that $2 billion as a reasonable base case. But I would say, basically, we're leaning towards more, let's say, bullishness. And one of them has to do with certainly the timing of vitiligo this is the -- will be the first truly systemic drug for vitiligo. And we look at the data, and it seems to continue to build over time. Now this isn't like atopic derm itch. -- where you get like in 1 or 2 days, you get something profound on the symptoms. The patients need to be consistently taking the medication, but it just continues to be this really significant burn in terms of stopping the inflammation. So that's very positive. So the first in vitiligo I would say the other thing that surprised us is there are approved JAKs in alopecia. We can see their revenue level, but the efforts were not very significant and basically, the Rinvoq data, again, cross-study comparison is twice as good. So I would say we're sort of really leaning towards that we can have some upside to that initial approach, I would say, primarily driven by alopecia areata given the profound changes that we're seeing. And I would be remiss if I didn't say that we're also very excited to see how the ultimate readouts are in HS. We built the HS market. And so with HS, with basically [indiscernible] and the readout for Rinvoq, that's also another nice portfolio play for us. So they're meaningful meaningful approaches that we have as we get closer to that.

And then this is Rob. Just to add to [indiscernible], just maybe to zoom out a little bit. I mean obviously, we're very excited about this next wave of indications and the impact they can have on the asset. When we look at overall Rinvoq expectations, at least for what sell side consensus is modeling we still see broadly upside on Rinvoq in each year with that number growing each year. And so this will contribute to that. But I'd say the underlying performance of the approved indications also is very strong.

And to move to tavapadon, again, is the idea of building these deep portfolios. Obviously, we have the small product with [indiscernible], which had the surgery [indiscernible] is continuing to progress towards that blockbuster status. It's progressed much faster than we thought even 18 months ago. And with the approval of tavapadon we can actually play with an innovative molecule and brand in front of Violet. So we're bringing this into the oral market, which is about 85% of the market right now. And as you highlighted, it's attractive in both monotherapy setting as well as an add-on setting to the standard of care levodopa/carbidopa. Our physicians are reacting to the monotherapy side, particularly for patients that are younger okay? And there are significant amount of younger patients where they could be on these oral medications for a decade or more, and they try to want to spare, which we've seen like the emergence of dyskinesia if you're sort of using over time too much levodopa/carbidopa. So that's very important adding on to control the dyskinetic events and sort of spare again, this march towards dyskinesia that you see is also something that is brought up by the thought leaders. I would also say that the adverse event profile is remarkably different than we've seen with, let's say, the older generation of these agents. So you see again, far less dyskinesia, you see less edema, you see amazingly low sedation, which is just a horrific side effect of the older medications as well as basically compulsive disorders. So we're super happy with this. We're looking forward to the launch here, and we've started to build out our team in Parkinson's, like we have for dermatology for those additional indications. So a nice catalyst that's coming here at the end of the year.

This is Rob. I'll just add. [indiscernible] obviously then complements [indiscernible] and giving us a very strong footing in Parkinson's. And we think about neuroscience overall for the company, I've said before that we are now the industry leader, and we expect to be the industry leader in [indiscernible] for a very long time [indiscernible] giving us essentially a business of Parkinson's that we expect to peak above $5 billion. That's 1 of $5 billion-plus franchises between psychiatry, migraine and Parkinson's that we think can really drive AbbVie's leadership in neuroscience is probably another area that doesn't get enough attention.

Next, we'll go to [indiscernible] from Guggenheim Securities.

On the call today, especially on the pipeline. So I have one, maybe following up on the comments you made around HS data coming later this year. So I was just curious if you could maybe just level that sort of expectation of what you're hoping to see from both [indiscernible] from those readouts that we should get soon? And then the other one, tend to make looks like that's moving a little faster than you thought potentially filing this year, obviously, a pretty competitive space. Just curious if you can based on how things are evolving in that market where you see the differentiation for your product would be relative to a competitor?

It's Roopal. On HS, the 16-week data is what we anticipate for Rinvoq and [indiscernible] and the way these are designed, they're slightly different. So lutakizumab will be enrolling patients that have already been on advanced therapies and treatment-naive patients. And if you go back to the Phase II data, that was 100% TNF IR and a very refractory patient population with quite severe HS, and we saw very strong data in that setting, we did conduct some data in naive patients, and that data looks even stronger. The issue in HS for all of us in drug development is control of the placebo rate. So for luticizumab being in naive and failure populations, we will be utilizing a high score 75. And hopefully, that serves to reduce that placebo rate but then if that data looks good and the potential for approval, you would have an agent that could play in both areas of the market. And then secondly, on Rinvoq, that is going to be 100% bio failure population. And because of that, that has the potential ability to control some of the placebo effects and we'll have the standardized high-score 50. So if both look good and are approved, you'll see a dynamic that's not dissimilar to what we have in IBD, where you have a frontline very powerful asset and then one that can come later on in case there's a loss of response like a Rinvoq. And that's consistent with what we see with Crohn's and UC. And I think it will be beneficial to both assets, if approved, if we're able to take them both to market, again, strategically like we've done the setup in IBD and what's driving what we see as being the potential of those assets is best-in-class efficacy and, I would say, ease of use. And I think that segues into the 383 [indiscernible] question, we do see the crowded market, as you've stated, but the opportunity is still tremendous. And that opportunity exists if you have the right asset with the right profile. And what [indiscernible] brings is very high substantial efficacy that we've seen, and that is, we think, associated with the strong binding to BCMA. It has a slightly lower affinity for the T cell side of things and the T-cell engagement. And that has set up what we believe to be a best-in-class safety profile and we have a somewhat extended half-life. So what you could then see happening if we're successful, is a singular priming or step-up dose and immediately going to the full dose, you would see very low CRS. And if that's the case, you have the potential for outside of hospital outpatient like setting where you could give the asset, and it's something consistent with what we've seen very successfully with [indiscernible] particularly in heme cancers 80% of these are treated in the outpatient. So [indiscernible] is designed for that in the community setting. And then after the full dose, after the priming dose or step-up dose, you're immediately able to dose on a monthly basis, which is very convenient for the clinic, you don't take up a chair. And then for the patient who doesn't have to keep coming into the hospital. So that currently, the profile I just described doesn't exist. So entering a little bit later is okay. We believe if you're bringing the right profile. Recall, we've had some success with Skyrizi coming in third as a 23 and Rinvoq as a third JAK inhibitor. But we believe the profile is going to be the key driver of the potential uptake in the future.

Next, we'll go to Asad Haider from Goldman Sachs.

First, Rob, just maybe for you in the context of the statements that you continue to see upside to consensus forecast for both Skyrizi and Wink going out each year and that upside growing each year. Just curious as to how that triangulates with your calculus of no longer updating mid-term guidance for these products? And related, are there still areas of where you see meaningful disconnect versus consensus outside of those 2 products. And then maybe if I could squeeze one in for up. Just on obesity, as you think about doing -- building a broader portfolio around 295, just what might that look like in the context of Rob's earlier comments on obesity as an area of potential PD interest?

Okay. So, it's Rob. I'll take your first question. And recall, our previous long-term guidance really served a very specific purpose ahead of the HUMIRA LOE. But I wouldn't rule out doing it again in the future if it made sense. That said, when I look at the current state of AbbVie's business, the long-term outlook and the pipeline is replacement power, we have never been in a stronger position. I mean we are the clear leader in immunology and neuroscience with a portfolio of assets that are demonstrating very significant growth, in many cases, north of 20%. And both areas have a pipeline that can deliver transformational improvements over existing therapies. When I look at sell-side consensus, I mentioned, we do see upside. We see upside for the total company revenue in every year with that upside growing. I already mentioned that we expect to -- we have upside versus the sell side on Skyrizi and Rinvoq. We expect to exceed the peak consensus that's in those models. I already mentioned in neuroscience that we see upside versus expectations for the migraine in Parkinson's [indiscernible] right now, what we see in consensus is peaking at below $4 billion. We've said several times, we expect them to each peak in excess of 5. And then we look at our oncology pipeline assets. Roopal just highlighted [indiscernible]. We haven't really talked about Temab-A. We believe both of these have significant multibillion-dollar peak potential and both have really not even been described any value by roughly half of the cell site. And so we will continue to highlight this in our commentary when we see the upside Clearly, the previous long-term guidance was very granular more than really anyone in the industry has ever provided but we did it at a time where it was important to help understand what the company will look like on the other side of the HUMIRA LE, we're now in a very strong position. We can deliver top-tier growth for the long term, puts us in a position of strength to continue investing in the business. I already mentioned our commentary around BD. We're very active in the BD area open to areas of differentiation within our -- within each of our core areas. And so we think the setup is very strong. And so I wouldn't rule out giving another long-term update at some point. But clearly, we have a lot of confidence in the outlook, and we'll provide updates as we see Fed.

[indiscernible] as you heard, the initial strategy is to drive as high of efficacy as we can, but clearly balance that with tolerability because that's what's going to drive ultimate durability. We've seen too many people fall off their current [indiscernible] assets because of tolerability. So, so far, we see that shaping up nicely and notable weight loss in a nonobese population. So that opportunity still exists and along with our ability to further increase dose and what we saw in the multi-ascending dose. So that strategy will play out over the course of this year and next year before we start designing Phase IIs. But the key is to optimize that efficacy, tolerability to drive that durability to the patient can experience those benefits long term. That could be in an early patient population naive, but we understand many of those patients will be coming off of their increase. The other opportunities that we would be looking for externally or anything that can augment that weight loss but maintain tolerability. If we see that in a subcu that's combinable, that would be very important and oral would be something that we could be interested in. Also any other assets that would allow the optimization of being able to retain muscle and have a majority of the weight loss come from fat. We still see there's an opportunity there. So there will be some other areas that we would be interested in. Other unique areas are in immunology and potential combinations with our own assets. There's a substantial amount of obesity in psoriasis today, and that's a set up and something that we are exploring now and also even higher rates of obesity in [indiscernible]. So that could be a potential other combination. And recall, with our tremendous amount of experience and presence in the aesthetics channels for any type of asset that comes up, that sets us up very nicely and could have a very good go-to-market synergy because of that aesthetics channel.

Next, we'll go to Dave Risinger from Leerink Partners.

I missed part of the call, so hopefully I'm not repeating something. But with respect to AbbVie 295, the amylin [indiscernible] has stated that the secret sauce and [indiscernible] is that it dialed out the calcitonin. So can you please comment on 29 activation of amylin one relative to calcitonin. And also, if you could discuss its half-life because the press release suggested the potential for monthly dosing and just wanted to get clarity on the half-life and your level of confidence in monthly dosing.

It's Roopal. Again, and I'll talk about. So yes, we have a DACRA molecule it signals through Amylin and calcitonin. And we -- I don't think we know yet where the secret sauce is relative to outcomes. As we stated, the weight loss was substantial in only 12 weeks in a mostly male population that had a BMI of around 29%. We anticipate in later stages of development, BMI is in the range of 36 and 37. And more than 50% of the patient population would be women where most of the weight loss comes. So we still see a tremendous amount of potential there. The safety profile looked very strong. The potential upside is a benefit to bone because of the calcitonin signaling. And as we develop the molecule, we'll be able to obtain, for example, [indiscernible] to monitor bone and to see and compare if there's less loss of bone and preservation of bone, that could be very important for women, especially as they get older. And we know with rapid weight loss, you do see loss of bone density. So at this stage, we see this as a potential advantage because of the efficacy and tolerability that we've seen to date. The half-life is approximately 270 hours. And what we did observe is every other week and the potential for monthly, the pharmacodynamic effect should also be considered along with half-life. We've seen examples of that. Skyrizi is a good example in psoriasis. The half-life is 28 days. If one is considering a dosing interval at around 1 to 2 half lives, you see Skyrizi is a type of molecule that really over delivers beyond its half-life. And so far, the pharmacodynamic effect with 295 does create the potential for once a month dosing, I would say, particularly in the maintenance setting, which would be really important from a tolerability and convenience standpoint.

Operator, we have time for one final question.

For a final question, we'll go to Steve Scala from TD Cowen.

Rob, just to be clear, cars consensus is $33 billion in 2031. So are you saying there's upside to that? And Rinvoq is $16 billion in 2031. Are you saying there's upside to that? And would you care to add whether or not you think it's just marginally low or whether there is significant upside. And then secondly, during periods of past economic uncertainty, I think AbbVie has observed and stated that aesthetics businesses were fairly resilient. But this time, it seems to be different. So is my recollection correct? And if so, why is it different this time?

Steve, I'll take the first question, Jeff will take the second question. So the numbers that you're quoting from are consistent with what we've -- what we're seeing in terms of sell-side consensus. And yes, -- we do expect the peak potential for both Skyrizi and Rinvoq to exceed those estimates. Obviously, the sell side doesn't go out much further than that. and we think they obviously have more runway. And so we do think there's a significant runway and upside opportunity for both assets.

Yes. And Steve, you remember correct on we -- several years ago, we referred to some recessionary type dynamics around the Great Recession, for example, we had a [indiscernible] has the legacy business where we saw sort of compression and then a more rapid response to robust growth. But in this case, we've seen this more lingering inflationary dynamic that we haven't seen for 40 years. I think we're seeing relative stability in the markets now. I mean, low single low single-digit growth for toxins still decline for fillers. I do think it's a different cycle of pressure on the consumer -- but you're correct in terms of what we had said previously with different types of recessionary issues.

All right. Thanks, Steve, and that concludes today's conference call. If you'd like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us.

Thank you all for joining the AbbVie First Quarter 2026 Earnings Conference Call. That concludes today's conference. Please disconnect at this time, and we hope you have a wonderful rest of your day.

So good morning, everyone. My name is Dave Risinger. I'm very pleased to host a couple of senior executives from AbbVie.

So immediately to my left is the CSO, Roopal Thakkar, and to his left is the CFO, Scott Reents.

And very much appreciate you joining the Leerink Global Healthcare Conference.

Maybe, Scott, you can kick us off with some high-level remarks on the company's growth prospects and how we should think about the margin profile in coming years?

Yes, of course, happy to do that. First, thank you very much for having us down and beautiful weather. So it's never hard to come down here from Chicago at this time of the year. So I appreciate you having us.

When we think about the business, I think we've been pretty -- we've talked a lot about the prospects. Obviously, we're excited the way 2025 performed, the momentum coming in. We're excited with our guidance of $67 billion in 2026. But really, when we look at the business, we have the portfolio of assets in place today on market derisked, and we've talked about this a lot, driving high single-digit growth through the decade. We're very confident and continue to be very confident in doing that as well as a clear line of sight to robust growth into the next decade as well. So we have what we need to continue to grow. When you think about that growth and what's going to drive that growth, certainly, SKYRIZI and RINVOQ now entering into their eighth year on market, continue to generate strong growth, over 20% combined growth in the year of a large base.

And just really have been happy with the performance of those. They're operating in strong products that are differentiated, amongst other assets within their various indications. But they're indications that are growing well. The markets are growing well. And when we look at the market share that we have on an actual basis, we still have a lot of room versus the in play. So we see a lot of headroom for continued share growth in addition to that market growth. And we're happy to see that.

Outside of the immunology, we also continue to have a strong growth in neuroscience, our second fastest growing area. When we had our earnings call at the fourth quarter call, and gave the guidance. We talked about a couple of things where we've seen particular momentum. The oral CGRPs for migraine, Ubrelvy and Qulipta, the uptake and the momentum from those 2 has been strong enough that we've indicated that we'll have in excess of $5 billion of growth -- or I'm sorry, total peak sales for those assets.

And then when we look into our emerging Parkinson's franchise. Certainly, we've been on the market with Duodopa for a number of years and had good results, but the launch of Vyalev is very promising, and we have an asset that will be coming to market within this growth period, I'm talking about tavapadon and that Parkinson's group of products will be also in excess of $5 billion. So a number of assets across the entire portfolio, and we can talk about those in addition to the pipeline, which I know we'll get into.

From an earnings perspective, we've done a nice job. You've seen us expand operating margin this year. In fact, we have a fast growth from EPS in excess of top line. The top line is growing just under 10% on a reported basis. EPS growing over 13%. So we're continuing to drive efficiencies within our SG&A line and leverage the SG&A line. But as we're expanding operating margin, we're making sure that we invest in the future.

R&D is something you'll see us continue to be in that 14% to 15% profile. We've continued to increase R&D on an absolute basis, a few billion dollars since 2022. And that's an important piece of our story when we look to what comes after the assets that we have in place today to drive that long, long-term growth. So we're very excited about the positioning of the company. I think we've been very thoughtful. We've been good executors and we'll continue to be -- and the pipeline is something that when we look at across the board, what we're seeing is encouraging and exciting as well.

Excellent. So you touched on SKYRIZI and RINVOQ, and you mentioned market share. And the investment community has been concerned about TREMFYA gaining share in IBD and also concerned about the icotrokinra...

Sure.

Forthcoming launch. So could you just contextualize that and just sort of level set in terms of how you see those competitive threats and the ability of SKYRIZI and RINVOQ to continue to grow in the face of them?

Yes, happy to do that. And I think it's -- I will certainly do that, David. And then I think it would be helpful if Roopal gave some thoughts as well because there's some important profile aspects of the products as well.

When we look at these markets, as I said, they're growing, SKYRIZI and RINVOQ have continued to perform well. The competition, in particular, in IBD, it's something that we're mindful we do not ever take competition lightly. We're focused on it. When I talk about the guidance and when I give the guidance, it always contemplates the competitive effects, and we've made some reasonable assumptions. But when we step back and look at IBD, SKYRIZI continues to get its -- more than its fair share, call it 60% of new patients within IBD starts. That continues to go well.

TREMFYA being an IL-23, you're not seeing it -- it's not a one-for-one takeaway either where you're seeing some real expansion of the IL-23 class. So if you use an example, what we saw in psoriasis, we've seen the IL-23s be north of 2/3 of that market over time and continuing to grow with that headroom that's run from an in-play.

And when you look at IBD, you see the in-play is very high, again, around that call it, 2/3 side. But you also see the actuals are still well below that. And so you've got a lot of room to grow, and that's not going to be a zero-sum game between the 2. Now that being said, as I mentioned, SKYRIZI getting more than its fair share and we're continuing to see that. And even I think more impressive in front line, first line, you're seeing 75% of in-play share for SKYRIZI. So when those naive patients, we're seeing even greater uptake because of the profiles that we have there.

And so when we put together guidance, we'll look at the competition, we'll take that into consideration, but we don't see that as a significant impact to our ability to continue to grow market share or achieve these numbers.

Yes. And we're able to bolster that positioning that Scott just referenced in the front line. And we are very enthusiastic about the subcutaneous data that just read out for SKYRIZI and that will be submitted this year and we'll be preparing for approval and launch next year. And why we're enthusiastic is, in particular, in that bio-naive patient population, this is that frontline patient population that Scott referenced, where we already have a strong position. We see that further bolstered by the data where we saw 60% endoscopic response, 70% clinical remission, both of those with 45-point deltas, which is higher than what we've observed with SKYRIZI given intravenously. So that will be new data that will enter into the field and again, help that positioning in the front line.

And the other notable change moving into this year is for RINVOQ, where the label has been updated to allow more flexibility for the physician to prescribe RINVOQ, in a second-line setting after the failure of, let's say, a biologic and not being forced to step through an anti-TNF. If the physician feels it's not advisable to use, they can turn right to RINVOQ. So one could imagine a patient getting SKYRIZI in the frontline and for the few patients that don't do well down the road, they can then switch to RINVOQ without having to worry about stepping through.

So that label update and this new data for CD induction for SKYRIZI will start entering into the market. And I would say, continue to enhance our position that way the teams can continue to be, I would say, very effective.

Excellent. So what was the timing of that RINVOQ label update?

It was -- what was it, the third quarter of last year.

Got it.

And that will again enter into sales materials and conversations over the course of this year where people understand now where the opportunity has updated with RINVOQ. So that's an exciting place to be where we can have the dual conversation and come to IBD with a portfolio not just a single asset and it really supports -- further support SKYRIZI in the front line and gives an opportunity for a potential expanded use of RINVOQ in the second line.

I think we can be competitive across the board in an expanding IBD marketplace.

Excellent. And so remind us about when you'll be able to file for the subcutaneous induction and then that clock?

Yes. We're here in March. We just got the data. Give us a couple of months to submit it. The supplements are reviewed in approximately 10 months. That's usually the time zone and FDA keeps with their time and we stay on time, then the earlier part of next year, we would anticipate an approval and then a fairly rapid launch.

And then obviously, in UC, it's a different volume that's required. Could you speak to that?

Yes. The dose is higher in ulcerative colitis. So we'll take a fulsome look at the data set, including our PK/PD data, which we haven't seen because we've just seen the top line data. And then make a decision if there is a rapid pathway in ulcerative colitis.

The Crohn's indication would cover about 2/3 of IBD. So the majority of IBD is covered. And then if you see -- if we see a path forward there after we speak with regulators, and that's something else that we would pursue.

Excellent. Why don't we pivot to the recent amylin press release. Congrats on that. Would love to hear your perspectives and the prospects for that drug candidate.

We're quite encouraged by the data, David. We are seeing almost a 10% efficacy delta only at 12 weeks. And what's really encouraging is that the population studied was not an obese population on average. Meaning the BMI that we studied was more in a healthy population under 30, and majority male, only 12% of that population was female. And majority percentage of weight loss usually occurs in higher BMI settings and when there's more women in the trial and usually beyond 12 weeks.

So we had the disadvantage of not having any of those 3 factors in the study and still saw an almost 10% delta in the higher treatment arms. And one of them was actually every other week. So that sets up a potential of a profile that could be every other week, potentially even monthly favorable safety profile and room to move on efficacy as we move into the relevant patient population and treat longer. So we're very enthusiastic about moving into Phase Ib, which will include patients that have, I would say, real obesity.

We also have the opportunity to study a dose higher than the 14-milligram studied. And in fact, the 14 milligrams was only given for 1 week before the weight was observed in this study. So longer duration, potentially higher dose and the right patient population for us, I think it was not anticipated to be this good. So we're very excited to move this forward.

And then kicking off a Phase II also later this year to further optimize the dose. We want the best tolerability we can get to drive durability. And then to optimize the weight loss, which is already fairly substantial only in week 12.

Excellent. And what was the average BMI of patients that were...

I think it was 29 and change. Just under 30.

Got it.

Typically, you would see 35, 36 above that.

Yes, very impressive. And how have you discussed the balance between amylin and calcitonin for this agent?

Well, you're right. It is a DACRA format, so it binds both. And we don't see any detriment to weight loss, where I think there were some arguments that you could be better off, specifically going after amylin. We haven't observed that. There could be a benefit potentially to bone if you also target calcitonin.

So we will learn more about this over time when we're able to do DEXA scans, also MRIs to understand the full metabolic impact whether that's bone. And then the distribution between fat and muscle. So we'll be collecting all of that over time. But so far, encouraged by the DACRA mechanism of this based on the weight loss that we've seen thus far in the wrong patient population in a way.

Excellent. Excellent. So we have a lot of ground to cover another 15 minutes or so. I would like to ask you just to sort of focus this on lot of pipeline readouts to look forward to. But maybe you could focus on some of the bigger CARs that are going to be turning over the next year or so, i.e., that have implications for drugs that can be multibillion in peak sales.

Yes. So we talked about RINVOQ briefly in IBD. We will also see in hidradenitis suppurativa Phase III readout for RINVOQ later this year. It will be the 16-week double-blinded data. And then also for our novel bispecific lutikizumab which targets anti-IL-1 -- sorry, targets IL-1 alpha and beta that will be reading out later this year in HS as well.

HS is an underpenetrated market, one of the least penetrated, under 5%, and the prevalence is similar to IBD. So we feel that there is a robust opportunity in HS and something we can replicate potentially if both are approved to the setting that we have in IBD where you have SKYRIZI on one hand and also RINVOQ in IBD something similar could happen with lutikizumab in RINVOQ. So both of those will have Phase III readouts this year.

The other important readout in immunology is our IBD combination studies. Currently, SKYRIZI is being partnered with lutikizumab and our own anti alpha-4 beta-7 agent. And that data will read out this year. And if one or both are positive, we'll be moving them forward towards the Phase III program and raising the bar on efficacy is the potential with these orthogonal mechanisms while maintaining a favorable safety profile.

And then the other readouts that we'll see, which will be early, but we've entered into patients with their B-cell depletion therapies. One was obtained through the Capstan deal which is an in vivo CD19 mRNA-based CAR-T, and we'll start seeing patients this year, and we have our own anti-CD19 antibody drug conjugate with actually a steroid warhead, and we'll start seeing patient-level data this year. So that's immunology.

And then maybe I'll turn to oncology because we probably don't spend as much time talking about oncology and maybe the investor community underappreciates this one. And we'll see Phase III readout for our T cell engaging BCMA antibody etentamig. And that will be in the third-line setting in multiple myeloma. And we don't feel the market has crowded out an agent like this because of the profile being developed. It's a single step-up dose and monthly dosing immediately.

So you don't have to wait 6 plus months to get to monthly dosing. And this may drive enhanced safety profile, lower rate of infections and the opportunity to continue to combine this with other therapies to move up in lines of therapy. So that readout will occur later this year as well.

We will also see more data from our ADC portfolio. We are already in the market with Elahere as an ADC and Emrelis as an ADC, one is in ovarian cancer, one is in lung cancer. Our next-generation molecule that's similar to Elahere will readout later this year to see if we can go after lower levels of FR alpha.

And then Temab-A, which is our next-gen asset that targets c-MET similar to Emrelis, will also have readouts in ovarian cancer and head and neck cancer. And then we've seen strong data in third-line colorectal cancer, which will be initiating a Phase III there but we'll see readouts in second line against FOLFIRI to see if we can replace irinotecan. So that will be important data.

And then we have bispecific in prostate cancer 969 that's against PSMA STEAP has our same Topo warhead platform that we have in Temab-A. And that will see data at ASCO in prostate cancer. So the team is very excited about that readout potential this year as well.

And then turning to neuroscience, we'll see a second set of data, Phase II data for the Gilgamesh asset called bretisilocin, that's our psychedelic, short-acting agent that showed very strong efficacy in depression. We'll see another set of data there. And if that's positive, we'll have a clear signal to move very quickly into Phase III in depression, and we're also contemplating an indication in PTSD if this continues to show the efficacy that we've seen thus far.

And we'll have readouts in the migraine franchise, in menstrual migraine later this year for atogepant and Ubrelvy, and that could allow further expansion of our CGRP portfolio, and that would be a global program. Excellent, I would say a variety of exciting readouts.

Excellent. And I guess, just touching on Temab-A, what are you hoping that, that will demonstrate in ovarian cancer?

Well, I would hope consistent data that we've seen with other assets that are targeting FR alpha and others, including even HER2 where we see c-MET today is nonoverlapping with FR alpha in HER2, and we see high unmet need. And if there's a biomarker population there that's driving efficacy above the 35%, I would say, threshold, then you have a potential co-positioning with an FR alpha agent like Elahere. And then we can have a biomarker approach similarly against c-MET. And we've already seen the behavior with Temab-A in combination with bevacizumab in colorectal cancer, and bev is commonly used in ovarian cancer, so you can anticipate a combination approach in maybe even earlier lines.

So that would be exciting because physicians want to optimize that benefit risk. And if we deliver a targeted therapy that is partnered with a biomarker then that will catch people's attention. So we'd be very excited if that data looks strong, and then we'll be moving that in parallel. While we're waiting for 151 is a name of the asset, which is a biparatopic similar to Elahere and similar warhead, so non-topo warhead. And that might have the potential to combine even with chemotherapy, where these maytansinoid warheads don't drive as much cytopenia as maybe the topoisomerase inhibitors do. So we'll be able to have a full spectrum coverage potentially of ovarian cancer over time.

Excellent. Excellent. So Scott, I wanted to hit it back to you just to talk about the financials a little bit more. So AbbVie has a phenomenal track record of delivering very consistent and strong financial performance. But in particular, it's notable that the company can provide the level of detailed guidance that it does, including quarterly guidance, which I think makes the company unique among peers.

Could you just talk a little bit about the -- I guess, the culture of execution at AbbVie at a high level and the financial discipline to be able to see things more clearly than your competitors can see for their own businesses.

Well, look, I think that there's been a couple of things that we've taken the approach. One, we are engaged in regular discussions continually not just with the commercial organization and how the top line is looking, but across the company to understand the P&L in total. And so we have some pretty robust meetings. We spend a lot of time walking through and thinking through the various aspects of what we'll be going on.

I would say that the granularity that we provide is just coming directly out of our materials. We're talking through it. I think it's important for us to ensure that we're giving that right level of a picture of what the company is. I think maybe it's a little bit of borne out of being still. It feels like a relatively new company when we spun out more than a decade ago. But it's been -- a lot of -- we've had a lot of activity over the years. The Humira LOE is something certainly that probably informed our psyche a bit and making sure that we were providing the level of information not only with respect to that franchise.

But also to the remainder of the business because we knew that, that had a finite life, and we need to make sure that the ex-HUMIRA, the growth platform was properly understood and accounted for when we provide that guidance. And there's enough dynamics we felt was important. But we're proud of the fact that we try to give investors a good picture.

I think we've been ahead of certain things like the Part D redesign. I think we're one of the first companies to really get out there and just talk conceptually about it at a level of granularity, but also provide even ultimately on a product by product line, where we thought that, that impact would be so people could fully understand it. And it's important. The volume is important, we try to understand that this is a volume-driven business, but pricing is a very dynamic environment. So we try to give the right color where appropriate.

Excellent. Excellent. And then clearly, the company is set for solid growth in coming years. But -- and that I guess, means the company doesn't need to execute M&A. But at the same time, the stock is trading at a relatively low P/E to growth ratio, which implies that there's still some lack of visibility on mega blockbuster pipeline candidates, which is logical, those -- there's a lot of readouts forthcoming.

But ultimately, people want to see bright shiny objects that can replace SKYRIZI someday. So how do you think about M&A and external business development from that vantage point? Meaning, you've got a long runway, but at the same time, investors are already looking out, right, to many, many years from now, just like they did for Merck with the turning of the clock in 2020, people started to ask about the KEYTRUDA cliff in 2028.

Yes. So maybe a couple of things. I think you're exactly right. I mean when we look at our earnings profile, if you look at the consensus numbers, we do trade at a discount to where we think we should trade from a P/E multiple perspective. I think especially when you look at our ability to execute over time, I'd say the quality and the durability of our growth over time, it's derisked. We don't have LOEs just one really to speak of in 2030 with Vraylar. But by and large, a very solid profile. And so I think it's a high quality, high durability of earnings. And so we think that should garner more respect from a multiple perspective.

And I think you couple that with your question on the BD, 2 things. One, when we look at what our needs are, our needs are farther out. Our needs are more in the back half of the next decade, say, in terms of what are those growth drivers going to be and making sure we get in the market. And at the same time, RINVOQ has an LOE date in 2037 at this point.

So we have a long runway, which gives us the flexibility and the time to ensure that what we're bringing in-house fits that time horizon appropriately. So that's why you've seen us do over 30 transactions, roughly $8 billion in the last 2 years to bring things externally into and put in Roopal's R&D engine to make sure we have the tools that we need when we're looking at combination studies or combination therapies, both in immunology with SKYRIZI, but also in the oncology space with the recently acquired PD-1 VEGF that we announced earlier this year. So that's really bringing for those future.

We do have the balance sheet that gives us the flexibility. We're right around 2x net debt to EBITDA. We've proven that we can lever up and then deliver upon a deleveraging plan. We've done that. So while it's not our top priority, we certainly will look out in the marketplace. If we see something that is quality, differentiated, something that we have a high conviction on that makes sense within our business, even it is a little more near term to your comment, I guess, that we may or may not necessarily need right now, but if it's the right asset in the right area, we have the ability to execute upon that.

And we would, if we saw something that was appropriate for us. So we'll continue to build out our external innovation. We'll continue to feed and invest in the internal R&D pipeline that we have and maintain that, that 14% to 15% profile growing significantly on an absolute basis year-over-year as we invest in R&D. But really, the primary is that future, but we have the ability and I think we've got the discipline if we see something appropriate, we can act on it.

Excellent. All right. Well, maybe we can just wrap up with Roopal, where you started on HS. So with respect to those readouts for RINVOQ and lutikizumab, could you just provide some perspective on what the efficacy bars are from your vantage point? Obviously, they're 2 very different agents. And also with respect to lutikizumab, maybe just provide some context on whether in the wake of its failure last year in ulcerative colitis, whether that might have impacted your expectations for its ability to perform in HS or not?

So ulcerative colitis was a little different than HS, where I wouldn't call it a failure. It just didn't differentiate from HUMIRA as much as we did. So we think there is activity there. We saw strong activity in Phase II for HS. So that's what motivated us to move as quickly as possible in the Phase III. In that setting, it was a 100% TNF failure population with a Hurley score of greater -- of 3, which around was 70% of the patient population. So it was a very resistant refractory patient population, and we saw very strong efficacy, high deltas from placebo. So that's why we moved into Phase III, where we think we could potentially differentiate on efficacy and the safety profile, which was very strong also in Phase II.

And in Phase III, we're including those that have failed biologic and those that are naive to a biologic. So you could even see a higher efficacy profile. We have a stringent endpoint there, which is a high score 75. And again, that will be reading out this year and the positioning could be in a naive population or in a post biologic.

RINVOQ is being positioned post biologic where we think it will be used in that patient population that was enrolled in Phase III is all bio failure. So you see a portfolio setup that is similar to what we have in IBD. And we think both of them can be highly efficacious in the patient populations that we're studying and both exit out later this year. And again, HS is still underpenetrated and has a prevalence that's similar to IBD.

Excellent. And just one final question. So how are the stats set up for the lutikizumab trial that includes both naive and experienced patients?

Yes. We'll -- it's a single study. So it's highly powered, I would say. So we'll be able to split and look at both groups. And I think it would be very similar to how we've seen splits in IBD where when you look at labeling, you'll see those that are advanced therapy naive and those that are post advanced failure patients, I would say. And then hopefully, we'll be able to communicate something like that in labeling ultimately for lutikizumab.

Excellent. Well, we'll look forward to the results. Thanks so much for being with here with us here. Really appreciate it.

Thank you for having us.

So good morning once again, and welcome to TD Cowen's 46th Annual Healthcare Conference. We're absolutely delighted to have AbbVie back with us again this year. And representing the company, we have 3 members of management Scott Reents, who is Executive Vice President and CFO; Jeff Stewart, who is the Executive Vice President and Chief Commercial Officer; and Roopal Thakkar, who is Executive Vice President, R&D and CSO.

So thank you for making the journey to be with us. Lots to talk about on the outlook for the company, the commercialized products today as well as what's going on in R&D. And we'd probably like to start there because it is quite likely the case that AbbVie simply doesn't get full credit for what has gone on in the labs and what's going on today and the growth potential that, that could drive. So we do want to spend some time on that. And why don't we start out there? But this kind of gets to clinical trial conduct.

So this is more of a curiosity than anything in mind, but we -- there's a number of big immunology companies in this industry, obviously. And a couple have said that they're struggling in immunology trials to deal with this high placebo rate and is leading many trials to not be successful. But then we look at a company like AbbVie and you just chugging along, delivering positive results and really not having that problem. So we're just wondering what is it that AbbVie is doing different than other companies that allows you to be successful when playing in the same markets?

Well, thank you for having us, Steve here today. I'll talk about this in a couple of different ways. One is we've been very fortunate, I would say, over the last [indiscernible] years in immunology to have assets that drive very high levels of efficacy. So one way to differentiate from placebo is to beat it by a lot. And when you have assets like HUMIRA years ago and now SKYRIZI [indiscernible] some emerging assets, that is one helpful thing. And our focus has always been to differentiate from existing standard of care eventually to restate standard of care. So that's one point.

The second point, when you have so many assets, you run a number of studies, global studies. And one thing that we do very carefully is train sites on the endpoints of interest and carefully monitor that data real time rather than waiting for long periods where some may wait till 50% enrollment or even further before they do thoughtful monitoring. So that's a component.

The other 2 things I'll mention are patient selection and endpoint selection and the stringency of those end points. So a couple of real-time examples, endpoint selection. We have a rheumatoid arthritis trial that just read out very important in RA as we see it because the field still today, around 50% will recycle anti-TNF therapy. So for example, if someone is taking [indiscernible], they're not doing well, they may go to HUMIRA. And we did a study to compare going on to HUMIRA or RINVOQ recently called the Select Switch study. And the endpoint we used was a DAS remission endpoint, so it's very difficult to achieve. But when we do an endpoint like this, we see a doubling of response with RINVOQ versus HUMIRA, which has been for many years of gold standard in rheumatoid arthritis. But now we've doubled that. So that will contribute to our promotional materials and our approach in rheumatoid arthritis. So that's one example.

Just yesterday, I believe we put out our data for a subcutaneous induction trial for SKYRIZI in Crohn's disease, we're currently approved with an IV induction, which shows very strong efficacy and we just observed efficacy with subcutaneous that was even higher than the IV, particularly when you look at the objective endpoint of endoscopic response, so that is goes along the lines of endpoint selection. So this one is independent of symptoms, independent of the clinician at the site, independent of the patient. These are assessed as -- with a third party that doesn't note patient or the timing of the endoscope.

And there, we demonstrated, I think, a 45-point -- almost a 45-point delta with 60% endoscopic response in a treatment-naive patient population. And both of those principles are being applied to hidradenitis supertiva. So I believe some of these companies may have a tough time dealing with placebo in HS. It's a very dynamic disease, and it can relapse and remit and if you catch someone in the wrong spot, they could have a high placebo response. So 2 things that we're doing there. I bring these up because they are going to be important readouts, Phase III readouts later this year for ludicizumab, our anti-IL-1 alpha beta molecule bispecific antibody and RINVOQ.

And two things that we're doing there is ludicizumab is being studied in a patient population that includes treatment-naive patients that could have a higher placebo response along with treatment failure, those that have already been treated with biologics. And there, what we have done has utilized a high score 75. This is a 75% reduction. And that's a very stringent endpoint. It's something that we originally created for HUMIRA many, many years ago, and that was a high score of 50. Now we will use that HiSCR 50 for RINVOQ, but RINVOQ is being studied in a population that's 100% bio failure.

So you see there's -- there can be a strategy there of using some of these methods and how we best control placebo and we've seen some recent data readouts that show when you do this and have great medicines, you can really have great data and help as many patients as possible.

Okay. Makes sense. By the way, should the audience have questions, just raise your hand, and I'll call on you. Since you mentioned lutukizumab, in HS. What is the goal? Do you need to have best in disease efficacy? Or what is the goal of these studies?

So the one thing that we observed with lutacizumab was very high efficacy in the Phase II program that was 100% TNF failure with approximately 70% that were Hurley Stage III. That gets to patient selection and maybe why we fully differentiated well from placebo. But we observed a very strong safety profile. We didn't see high rates of fungal infections, for example. We didn't see flares of inflammatory bowel disease, which can happen with certain agents in HS or other diseases that are prone to IBD.

So that being said, we took it forward in Phase III and are looking at a treatment-naive population and a failure population. And think of that in HS, how we would think about SKYRIZI in inflammatory bowel disease, being able to cover naive patients and maybe some more resistant patients. RINVOQ on the other hand, is targeting a full 100% TNF or biologic failure population, which is consistent with some of its positioning in the second line. So then that will provide us, our commercial organization, our medical organization with 2 assets considering multiple lines of therapy. So a portfolio approach similar to what we have executed very successfully in inflammatory bowel disease. So that's the ultimate approach and strategy.

And that's a very underpenetrated market, HS, even lower penetration than atopic dermatitis, which is maybe growing beyond the 5%. HS could be -- is lower than that and has a prevalence that's similar to IBD. So there's a great amount of potential there. if we can see positive data for both of these and then eventually having a launch.

The next question kind of bridges both finance and research. But what is AbbVie doing with this one trial policy are you in your future study designs, are you embracing one trial? Or are you sticking with the old way, just in case? Or how are you approaching this?

Yes. Steve, it's interesting you bring that up right in the same conversation that we're having with HS. So the ludicizumab Phase III and the RINVOQ Phase III are both single studies. So it was something that has been available for many, many years. And it's something that we leveraged for both of those assets in HS. And again, we'll see a readout in those Phase IIIs later this year. Now it takes a discussion with the health authority and the division to make sure that they're comfortable with the number of patients that you're studying, the amount of safety data that you'll have, how long they've been on therapy and the end points, but that being said, going forward, I think that does create some efficiencies and opportunities for many more assets that can be studied in a single trial.

So that's something that we've always looked at. And in fact, we're looking at several years ago, even before this new updated guidance came out. But I agree that could be a benefit and could lead to greater speed and simplicity, especially at the site level.

Okay. Maybe best poised to Jeff, what are AbbVie's plans? Well, first of all, maybe you can update us on [indiscernible] in GI disease overall, but specifically ulcerative colitis. And is there a need? Is there a plan to test a subcutaneous version in the induction phase?

Yes. I think as Roopal mentioned, Steve, that we're very, very happy with this readout that we saw earlier in the week because it fits right within overall how we're positioning SKYRIZI in IBD and especially Crohn's. So we're positioned in frontline bionaive that this is your first go-to medication. And as I highlighted recently, our capture rate, despite the launch of a competitor is still very, very high. It's about 75% in that in that segment and about 60-40 overall. So we do see that this new subcu data is going to allow us to not only close a gap but to frame the power of the data that has just been revealed, so that's also very exciting.

And we wanted to try to understand because the dosing is different between UC and Crohn's about how we would read out in this first trial with Crohn's, which was exceptionally positive and maybe Roopal, discuss the next steps for ulcerative colitis.

And as Jeff stated, ulcerative colitis has a higher dosing regimen during the induction period. So that's something that I would say we'll evaluate now. But the most encouraging news is the data that we saw looks better than the IV striking data for endoscopic response in naive, which is positioning for SKYRIZI. So I think there is a potential opportunity, but we'll take a look at that. And remember, Crohn's will cover 2/3 of the IBD market already and we'll get that submission together quickly and hand it over to the Jeff's team, hopefully, with a nice label in 2027.

Sticking with this topic in a few years, we may see the anti-TL1As arrive in IBD. What -- how do you view that, Jeff? Is that a major obstacle, minor obstacle, -- how would you view it?

I think when we look at the overall profile of SKYRIZI and RINVOQ, it's going to be difficult for those agents from what so far to really differentiate or have a significant needle mover. Now will they take some share? Will those segment grow? Yes, of course. But again, that's on the backdrop of a really, really dynamic IBD market. the penetration -- the bio penetration still has quite a ways to go. We also see the line of therapy expansion we've talked before, so that in many cases, second and third liner going to grow faster than frontline, which is still a significant market space.

And then we know that we have a very, very strong share position. I think one of the key aspects when we looked at the TL1A assets a few years ago, we like them. But what we really liked about them was the potential to be used in combination to truly reset the standard of care. And so that's why when we looked at the profile of SKYRIZI and [indiscernible] sort of on this, when we look at how durable it is, the length of the therapy that you get, that's why we did the licensing deal for a long-acting TL1A because we think the real breakthrough is when those 2 come together, both very, very safe, both potentially proven but to reset the standard and [indiscernible] program in terms of combination therapy is moving a pace now, and we should see that readout to see if our theory in fact, works out.

And our TLA TL1A asset will be probably the third 1 actually to enter into our platform IBD study assessing these combinations that Jeff was describing. And because of that strong safety profile and durability and high levels of efficacy with SKYRIZI, we see now the opportunity to combine biologic therapies with the same observation of TL1A relatively safe. As Jeff stated, we like those, we like the efficacy. But as a monotherapy does not differentiate with SKYRIZI or RINVOQ.

And in particular, if you look at the most recent induction data that I just described a few moments ago, they definitely can't differentiate, especially in the naive population. But before we initiate those TL1A combos with SKYRIZI, which are all in process, we also have our own internal alpha 4 beta 7 asset that's very potent that's being combined now with SKYRIZI and ludicizumab, which we were previously discussing and context of HS. That is also part of this platform study. These data will read out this year and will allow us to make some decisions on what to take forward both one of the combinations and in parallel with this work that we're doing clinically, we are working with our development sciences team to create co-formulation.

And that's going to be very important from a patient convenience standpoint. But we're hopeful that we can break the efficacy ceiling that we've observed thus far in the 23 class, even in the TL1A class. And then later in the year, we'd be able to initiate a TL1A combination with SKYRIZI. And then we also have a [ TIM-1 ] antibody, which is a master regulator in the inflam cascade. That one will also be assessed in IBD. First, we'll look at it as a monotherapy and see if there's potential for combinations. And one could even imagine some combinations that don't even include SKYRIZI based on the number of that we have.

Scott, maybe you can remind us what the company said about the long-term growth outlook for the business? And what do you need to see from [indiscernible] side of the organization to give you the confidence to push that out even further?

Sure. No, happy to answer the question, Steve. So we provided a high single-digit CAGR through the decade from '24 to '29 when we really gave that period of time. So the high single-digit growth for the [indiscernible] which puts us in the top tier. We also are fortunate to have cleared our big LOE event with HUMIRA. So the assets that we have in place today, the products that we have give us a clear line of sight to growth well into the next decade as well. So that's on the top line.

Certainly, we do see further EPS expansion beyond the revenue growth. over that period of time as we focus and leverage the SG&A line. We'll continue to invest heavily in R&D. You've seen us increase our R&D in terms of profile, but also in absolute dollars by a few billion dollars since 2022, for example. And we'll continue to do that as we drive out that pipeline. I'd say what we need to continue to see, certainly when we do things like extend outside [indiscernible] area, but extend the [indiscernible] a very positive aspect as well.

But as we look at across the portfolio, what that next generation of the growth drivers are. So it's the readouts, it's all the activity that Roopal just mentioned immunology. Certainly, we're very excited about our oncology pipeline as well, and there's a lot going on there that we're going to watch. And of course, neuroscience is one that we've spoken about a lot. It's our fastest-growing area. Currently. In that area, we have -- we've talked about having $3 billion, $5 billion areas with ILAV approaching $5 billion, our oral CGRPs in the migraine space, exceeding $5 billion peak and then the Parkinson's with Biolab and Tavapadon and Duopa, also being in a $5 billion.

So we see a strong momentum there, but we also have an exciting pipeline behind that as well, still looking [indiscernible] certainly, we're very excited about [indiscernible], which we brought in from the [indiscernible] transaction. So I think it's just the continued development of the pipeline we have in-house. And we're not done, obviously, from a business development standpoint. We've acquired over 30 assets and platforms over the past 2 years, investing $8 billion in external innovation. And we're going to continue to ensure that [indiscernible] everything he needs in his our materium to make sure he's developing and driving that pipeline and to provide us with those growth drivers for the future.

Great. So that's robust outlook, strong growth beyond the end of this decade. So maybe both Jeff and Roopal can kind of walk us through the building blocks that are going to be able to deliver that, especially as you get into the next decade. So how are you going to deliver that bar up growth?

Well, I think it's the breadth of the assets that we have will facilitate that long-term growth. Scott mentioned several of these. Immunology, we've talked about quite a bit already today. What I would add to immunology is our B-cell depletion strategy. One of the deals that we did as part of that $8 billion was Capstan and that provides us with [indiscernible] mRNA-based CAR-T, which could have a tremendous impact in patients in rheumatologic disease. And thus far, we've seen proof of mechanism and healthy patients where we do deplete B cells and then naive B cell, repopulate.

We are now moving into patients, rheumatoid arthritis, lupus, shogrens or some ideas, you could even see us testing multiple sclerosis potentially and even other disease states that aren't classically thought of as being B-cell driven. So that could be a tremendous opportunity because this would allow to deliver the car immediately without transforming anyone's blood cells, no requirement for [indiscernible] depletion, no genomic DNA integration because it's mRNA-based, transient expression, so you don't have a car living there the whole time, depleting B-cells and new patients requiring antibiotics or IV IG, for example, and the ability to potentially redose.

In parallel with that, we have our own monoclonal antibody against CD19 with a linker and a warhead, which steroid element. And that we've also observed B-cell depletion. So that is also in the clinic. And later this year, we'll start seeing that data to continue to raise the bar and where we see standard of care emerging beyond all the work that we're doing in IBD and HS. So that's immunology.

And then neuroscience, Scott walked through the Parkinson's opportunity, we anticipate [indiscernible] being approved later this year that will be exceptional complement for Violiv, which is Jeff's team is ramping this very nicely across the globe. And that gives a 24-hour oral option that could come in right before patients would move to a 24-hour subcutaneous option. And as part of this, we are looking still in schizophrenia with emracladine, recall that was dosed at 30 milligrams in the last 2 pivotals that didn't differentiate from the high placebo response that saw.

However, we are now moving into a 100-milligram dose testing. We've surpassed 75 milligrams, and we'll see if 100 milligrams as tolerated, which would give us better receptor occupancy. Once we clear that dose exploration, we'll move into Phase II for schizophrenia, including monotherapy recall this from Cerevel along with [indiscernible]. The other very exciting one that Scott mentioned is bretisilicin. This is the psychedelic. Why we like this one is it's short acting, resulting in a quick office time because that can be a burden to the patient and to the clinic, and it's a 5-HT2A agonist and the opportunity there is not just a single dose, but potentially multiple dosing.

The concern with these psychedelic is a 5-HT2AB agonism, which can result in cardiac valvular issues what we saw years ago with [indiscernible] seems to deliver the efficacy experience, but it's actually an antagonist at that particular receptor that we believe results in the valvular issues. So we'll see Phase II -- a second Phase II arms readout and we'll be moving into Phase III. And that could be very exciting and totally reshaping how your depression is treated. We're also studying PTSD is on the plan.

And then in oncology, we're very excited about our antibody drug conjugates were on market with [indiscernible] here now in ovarian cancer, which is largely driven by chemotherapy. This allows us to give us replacement to conventional chemo. We have a follow-on molecule to that one that will read out this year that may allow for greater depth in FR alpha expression, not just high but going lower. And then we have our own Topo warhead version of Eli here. And then this year, we'll also see a readout for [indiscernible] ovarian which is currently under development in lung cancer and CRC.

In fact, we saw very exciting data with T MABA and CRC, which as a disease state is similar to ovarian cancer which is dominated by chemotherapy and a victim, I would say, of minimal innovation over the last 2 or 3 decades in ovarian being so much larger, the data in combination with bevacizumab in third line plus against [indiscernible], the standard of care, we saw a 30% ORR against 0. So that will be a Phase III approach that we can right now in all comers. So we're very excited about that. We had strong data in pancreatic cancer. We have 2 Phase IIs moving forward there. We're also anticipating head and neck cancer results this year on the ADC front, and then small cell lung cancer 706, which [indiscernible] showed 80% or in second line lung cancer. So those Phase IIIs will also be kicked off.

And then one final ADC, I'll mention that's coming soon at ASCO, I think we anticipate showing this data -- it's taking technology from lutikizumab, in fact, and from TmabA and combining it together where we have a bispecific against PSMA steep with the same linker technology in topoisomers inhibitor warhead in prostate cancer. And the very early data was encouraging, we'll have more data to share at ASCO. So that creates a very exciting portfolio of ADCs that will drive growth in 2030 and beyond.

And then in multiple myeloma, I think Steve, you have asked us over the years about [indiscernible] in multiple myeloma and how we see that fitting in to a potentially one would consider a very crowded space in myeloma. But the difference being is this asset drives high level of efficacy as a -- I would say, lower affinity binding to CD3, so it has a much lower CRS profile and the molecule is designed to be giving -- to be delivered once a month. So that Phase II will read out this year, and we'll be able to potentially launch that and really move into that space with a high efficacy agent that's delivered once a month immediately single step up potentially out of the hospital.

That is very desirable from a patient burden standpoint, but in particular, from a clinical site standpoint because majority of myeloma or heme malignancies are treated in the community, 70% to 80%. So that's where you see less penetration for high efficacy or even CAR-T like compounds because of the burden. So this is where we can see that fit. And remember, in our pipeline, we have a BCMA GPRC5D and also a very unique molecule BCMA CD38 and these are all moving forward in patients, and we could see these also contributing to 2030 and beyond.

And we're also studying an amylin analog in obesity which leverages our development capabilities, our knowledge of immunology, where we see obese patients in psoriasis HS or knowledge in CNS. Migraine where we see a high prevalence of obesity overlapping and then Jeff's team and their presence in the aesthetics market. direct-to-patient approach. And we'll see some data this year, early data from the multi-ascending dose of the Amylin though it will not be in obese patients yet, mostly men, but we'll get a sense of what doses that we can take forward and what type of weight loss we can deliver.

The key there is being tolerability and why we like the Amylin class with lower rates of nausea, vomiting and diarrhea and hopefully, more sustainable use because majority of the patients tend to drop off of therapy after 1 year with classic and creating class. All of those combined, I think, gives us a very strong position for 2030 and beyond.

A couple of follow-ups. But for Scott and/or Jeff, what has the company said about the potential of Tavapadon? Have you given a peak potential? I simply don't remember. And secondly, one asset that should be growing well into the next decade is BOTOX. So maybe you can give us an update there? And what's your outlook, how confident are you in a positive outlook for that asset?

Yes. We haven't given peak potential for Tavapadon but we certainly think it's significant. We have this asset for oral selective dopamine agonist, D1, D5 that we got from our [ Cerevel ] acquisition. And we think it's kind of a very nice AbbVie play that we've talked about before. Roopal talked about lutakizumab and RINVOQ in HS. We talked about SKYRIZI and RINVOQ and IBD or PSA. In this case, we're really having significant momentum with Vialiv. We're creating a subcu space after the orals.

And now we're bringing oral tovapidon as monotherapy or in combination with the standard which is oral levodopa/carbidopa. And so we think that can be a very significant asset before you move to [indiscernible]. So this idea of playing in different market segments is significant. And when you look across those segments, so think Tavapadon [indiscernible] and even on the back end, we still have several hundred million dollars of Duodopa, which is a surgery -- that's where we've given that approach that we think that's at a minimum of $5 billion opportunity and Tavapadon is a part of that. Certainly not the whole thing. The largest will be [indiscernible].

So we're really excited about that. The data has surprised us at every turn. Why is it different? Well, first, it's different because it's once a day, works for 24 hours. The efficacy is very, very strong, but the tolerability profile because of the selectivity is excellent. I mean you don't get the somnolence, you don't get the edema that you see in the older generation. And you certainly don't get from what we've seen with a significant amount of data, the impulse control disorder. And that's what the physicians have really been worried about with this prior class of drugs. So it's a significant asset that we're going to launch later this year.

BOTOX continues to be an incredible asset across the board in both aesthetics, but even the therapeutics is even far. This is a multibillion-dollar asset. Now we did announce that it was selected for negotiation. But the Medicare segment of that is about 30%. So we'll probably -- if we do get negotiating because we're challenging that based on the fact that there's blood product within there, which is actually an exclusion, so we'll see how that legal challenge goes with the government. But nonetheless, this will continue to be a very, very significant brand well into the future. And we do have, basically, Steve, backup toxins behind it that continue to invest in. So great profile overall. And I would say the neuroscience momentum is very significant and meaningful for the company.

We are out of time, but I'd like to ask one final question, and I'll post it to Scott. What do you foresee or anticipate will be the biggest surprise or change at AbbVie over the next decade?

Well, look, I don't think it would be a surprise to us. I think as you've listened to over the past half hour, Roopal will go through the pipeline. There's a lot of exciting things. I think the breadth of what we have going on there -- we have some very exciting products. I think that Jeff and his organization will be able to capitalize on. And so I think we're very excited about that opportunity. And so I think that's going to be the -- maybe the surprise, not internally, but maybe there'll be some surprises out there because I think we will be able to not only bring those products to the market, but also execute very well as we've been known to do.

And I think that's where you're going to see us. And I suppose when I say it's a surprise to the market, when I look at story that Roopal just laid out, the assets we have in place to drive growth into the next decade. And then I look at where we're trading from a PE multiple, I suppose that's a surprise that it were as low as we are. I mean, we're around 16% right now and we see certainly have an opportunity for much more expansion beyond that as that information becomes kind of process, and we see this develop over time.

Great. Sounds exciting. We look forward to watching the progress.

Good morning, everyone, and well, happy Friday, the 13th. And on a serious note, thanks for joining us for day 2 of our Piper's Virtual Immunology Symposium.

So we're delighted to have AbbVie with us. We have Chief Scientific Officer, Roopal Thakkar. We also have Kori Wallace, who is Vice President, Immunology Development -- sorry, R&D, Immunology. So I want to make sure I didn't mangle that too badly. But thanks so much for doing this.

And I know there's a ton to talk about. And so I think a good place to start, quite honestly, would be on data readouts as we -- as the year progresses.

So the 2 drugs that come to mind, Roopal and Kori are lutekizumab and RINVOQ in HS. So with that in mind, with Ludy in HS, how do you see the potential for clinical differentiation given what is a mechanistically distinct approach here, IL-1 alpha, IL-1 beta, particularly relative to HUMIRA and COSENTYX. So particularly interested in how you're framing the potential for differentiation in what is a pretty significant unmet medical need in HS.

Well, thank you, David. Thanks for having us, and thank you to your audience for listening in here today.

I think you -- what you mentioned about differentiation is very important. And we've learned some things over the years with HUMIRA and HS. Remember, that was the first -- not just biologic, but first medicine ever approved for hidradenitis suppurativa, and that's something that we started working on almost 20 years ago. And what was important for us was restating standard of care.

And I think that's where our targeted development for lutikizumab and RINVOQ play along those themes. Also similar to the rest of our program in immunology, lutikizumab being a bispecific, which we have others in the pipeline that eventually we'll have time to talk about today, may be difficult. But over time, you'll hear about those.

We also have other assets that we combine and maybe we can get into some of that today. We're also working on co-formulations for these other potential medicines. And then along with that, remember, we did a deal for orals with Nimble. So you have the co-formulations, combos, bispecifics, orals, more potent, longer half-life. And then we have B cell approaches that we can also chat about that we're excited about.

And we've entered into the clinic in APA, which is immune and fibrosis together. So taking all of those aside, we could focus directly on Ludy. And maybe, Kori, as we talk about Ludy, the alpha 1 alpha beta bispecific, why we think that's important and what we've observed in skin and expression over the years we're looking at patients who received HUMIRA or those that didn't.

[indiscernible]. Go ahead, sorry.

No, I would say neutrophils play a really important role in HS and not really targeted right now. So I think lutikizumab targeting the bispecific approach targeting both alpha and beta is really important. IL-1 alpha acts as an alarmin. It's released from keratinocytes and IL-1 beta recruits neutrophils to that, the area of the lesional skin. And so they play really important nonredundant and synergistic roles, and that's why we think targeting both of them is very important in HS.

And when you look at the Phase II data that we have, it's really strong, like we have both data in bio-experienced patients, TNF experienced patients in that Phase II as well as we confirm that efficacy in a naive cohort, and it really looks strong and differentiated in that Phase II profile.

Yes. In both of these, and we saw the same for 100% anti-TNF experienced in the Phase II, like Kori said, and that's how we're developing RINVOQ. So we've opened up the Phase II to bioexperienced and naive for Ludy and 100% TNF for RINVOQ. And both of those will have double-blind week 16 data at the end of this year.

And hopefully, over time, they'll fit together similarly of how SKYRIZI and RINVOQ are positioned today very successfully in IBD, in Crohn's and UC, where the positioning for SKYRIZI is in treatment naive, where we have extremely strong data and RINVOQ comes in post and with the label enhancement that we've seen with RINVOQ in IBD most recently, we see something similar that could happen in HS.

Okay. So you actually answered a number of my follow-up questions, which is great. So -- but I did want to drill down a little bit more on biologic-naive versus biologic experience. I mean with Ludy, I mean, what's your -- I mean, obviously, you'll be guided by the data, but knowing what we know about the drugs about the agents mechanism, do you have any expectation that Ludy or even risk RINVOQ might fare better in one subgroup versus -- over another? What's generally your thinking there?

Well, the conventional wisdom in immunology has been typically the bio-naive or advanced therapy naive or more recently diagnosed patients tend to have higher levels of efficacy observed with virtually every asset. And HS, it's -- maybe it's a little bit more mixed when you look across the landscape. And some of that could be if you're looking at top line data or the treatment effect, placebo can really bounce around in HS, and I know that's been a challenge for development programs for others.

So depending on what you're looking for, if it's a treatment effect where you subtract out placebo versus top line, in general, the conventional wisdom is that your top line high levels of efficacy, naive tend to be a little bit higher, but your placebo could also be a little bit higher. That being said, I think we've seen clinically meaningful effects with Ludy in that 100% TNF failure population that was the original Phase II.

Also remember, 70% of those patients were early Stage II and quite a bit of draining fistulas and tunnels there. and showed very strong data. And the team also generated a separate cohort in pure naive and that top line, I think, was even higher than what we saw in the Phase II.

Okay. I wanted to just pick your brain briefly about the potential competitive landscape. So there's [ AVLOS 009. ] I think that's specific to IL-1 beta. That's in Phase II. You've got the OX40 TNF-directed bispecific, Ravagalimab, that Sanofi is developing. So there's obviously a varied development landscape here. But just general thoughts on those compounds and just what you're seeing in terms of other agents in development for HS.

Maybe I'll make a few comments, and Kori, we can go back and you can comment on the potential importance of the alpha. But one comment is -- maybe I'll start with OX40. I think quite a bit of press recently. One big player kind of jumped out of the OX40 in atopic dermatitis, another one read out. One notable finding, which some of our experts have been talking about is a Kaposi sarcoma, an event of that.

So sometimes you never know until you do longer-term data. And that -- if there's more cases of that, then you know that immunosuppression is pretty strong. And I would say in dermatology, atopic dermatitis and any dermatologic indications, that could be a strong consideration when one thinks about prescribing. We see Kaposi -- I mean, we used to see it in HIV AIDS many years ago.

And then those individuals that have more intensive immunosuppression post-transplant to avoid rejection, which is very important. But you could see that in those patients. I don't think we've seen cases in atopic dermatitis or even HS. And if you bring an anti-TNF into it, I think there'll just have to be some questions on dual fairly potent immunosuppression, especially over the long term.

Other development programs with anti-TNFs as bispecific has led to challenges with immunogenicity. We had our own challenges. Years ago, we had a TNF17 agent, and it actually had a high level of immunogenicity. So making bispecifics with anti-TNFs did become a little more difficult. And as you've seen in IBD, our combinations, even though we have HUMIRA, our combinations were moving away from anti-TNFs to more novel, knowing that many patients have already received anti-TNFs in IBD, in particular, where we're seeing that starting to step down.

But in HS, even with 17s, these physicians still like their HUMIRA, their anti-TNFs, they're still using quite a bit of that. So one has to think about what is the strategy that comes next and not the same if you can retreat. And I think on the alpha beta side, yes, I think we like IL-1 alpha...

Yes, right. So as you mentioned, the [ AVLOS 009, ] it blocks just the beta. But I think targeting both alpha and beta is important. So as I mentioned, IL-1 alpha can act sort of as that alarm in release in the epidermis from keratinocytes. And so it covers the damage signaling both from the epidermis and from the immune cells.

And IL-1 alpha can also be implicated in increased angiogenesis, so in inflammation. So getting that more blood flow to the lesion, more inflammation. And so blocking both, we think, is really important. And also, it likely blocks some compensatory mechanisms, right? They're nonoverlapping and likely synergistic.

Yes. Okay. All right. Super helpful. So I wanted to switch gears and talk about IBD. Obviously, a ton going on. So just at a high level, we're seeing a lot, and Roopal, you mentioned it earlier in our discussion, co-formulations, bispecifics, and it seems like that's where the next wave of development is focusing on in IBD.

So with that in mind, just give us a refresher of what you're looking at, particularly with SKYRIZI in IBD. So you've got combo studies with lutikizumab. You've got a TL1A directed treatment 701. You've got your alpha4beta7 directed treatment 382.

So obviously, a lot going on. But maybe the way I'll ask it is -- and I know it's a loaded question, but what are you most -- which combination are you most excited about scientifically?

Yes. Well, it's a great question. I would say I can take it in a couple of different ways. So one comment before the answer is what we also are looking for this year is our SKYRIZI subcutaneous data, which I think will be important also in the market right now where IV. There's competitors that have subcu.

Despite that, we still see a very large share in frontline with SKYRIZI, but having a subcu may further support that. So that data will be coming out this year. Now turning back to combos. In terms of what's precedented, how about that versus what we're most excited about. When you talk to the R&D team, we're excited about everything. But in terms of what's precedented, I would say the alpha4beta7 that we have, which is a more potent version, I would say, versus vedolizumab and the TL1A, those are precedented in IBD, where we've seen, I would say, better data in ulcerative colitis, maybe a slight step down in Crohn's, but that's okay when you combine with SKYRIZI, and we feel these are orthogonal approaches.

And the alpha4beta7 along with Ludy, we'll get a read this year and then look forward to phase transitions with those assets. Now Ludy looked a little bit better than HUMIRA numerically in ulcerative colitis, probably not as high as we would want, but we'll test it out now in Crohn's, along with the alpha4beta7.

The TL1A combinations will start later this year with SKYRIZI. And then our TREM1, which is a very unique mechanism, if you want to hear a little bit about that, Kori discussed that. That one, we'll see actually proof-of concept into later this year, early next year. Maybe TREM1 is an exciting one because I don't think there's much competition in this area.

No, exactly. So TREM1 -- go ahead. Go ahead.

No, no, no. Go ahead. That was...

I was going to dive into TREM1 a little bit. Yes. No, I think the combination is too, the unmet need in IBD really is improved efficacy, deep durable remission, really modifying the disease. And so when you look across that sort of landscape with competitors, really, right, it's a differentiation, which is why we're going with that combination approach.

And then I'll pivot to TREM1, so triggering receptor expressed on myeloid cells. So it kind of tells you at least where it's working, right? It's upstream. It's really involved with the sort of amplification of inflammation, a lot of preclinical data supporting the mechanism and even some reverse translation work that demonstrates is upregulated in patients who fail TNF. And so I think this is -- it could be a really nice new novel mechanism.

Is that potentially a monotherapy approach? Or could that be another novel combination with, say, SKYRIZI or another mechanism?

Yes. I think so right now, we're evaluating it as monotherapy because it hasn't been evaluated in the clinic before. And so what we want to do is -- I think there is a potential there for monotherapy.

And what's nice is we get -- we'll have some samples, we can do reverse translation, and we can figure out the appropriate combination partner based on orthogonal mechanisms. And we have a nice portfolio of assets that we could potentially combine with it if the monotherapy alone isn't sufficient.

So I wanted to switch gears a little bit and drill down on the TL1A. And I know you're focusing a lot on combination usage. I believe it's an ultra-long-acting profile. So I think that is a point of differentiation that you've called out previously. But I wanted to take a step back because we are getting Phase III data for Merck's Tulisokibart later this year in UC.

So I wanted to get your thoughts on just how to think about the data, what's your general view of where this class could fit within the broader IBD armamentarium, what you're kind of looking for from the Merck data and ultimately, where you see your TL1A...

So when we saw the Phase II data sets of not just 1 TL1A, but 2, I think that's a convincing mechanism and it showed efficacy, I would say, stronger in ulcerative colitis than in Crohn's to date. However, at that time, we didn't see differentiated efficacy versus SKYRIZI or RINVOQ. So in order to break that efficacy ceiling, our position and strategy was, look, we like the mechanism. It looks like it's driving some efficacy here. It could be orthogonal to IL-23.

And we thought the combination is the best approach as a next-generational therapy, given that they don't -- whether it's TL1A or an oral or anything else that we have seen to date in Phase II, none of them differentiated from Phase III RINVOQ and SKYRIZI data. And it's a rare circumstance that the Phase III data look better than Phase II. It can happen.

I think it happened with RINVOQ, and it has surprised us a few times. But other than RINVOQ, there's not many examples where efficacy tends to rise. What ends up happening, you bring in -- you have to enroll these studies, so you're bringing in patients that could be failed multiple lines of therapy, so then efficacy settles down. So that's why the combination approach, if we can give higher levels of efficacy, maintain safety and give a convenience of co-formulation, that would be the approach of the future.

I would say the present really SKYRIZI, RINVOQ really serve the needs today, especially in that frontline setting. And then physicians have the flexibility to use RINVOQ second line and don't have to step through an anti-TNF anymore.

What about the role of biomarkers in the future? I mean one thing we hear from KOLs is that, well, if we can have more biomarker enriched populations in IBD that perhaps we won't necessarily migrate on mask to these novel combinations, I mean, which is kind of an interesting thought. I've heard it mentioned by a few KOLs. What do you think about that?

I think we would agree. We would love to demonstrate convincing data with a biomarker. That was one approach that we had, in fact, with lutikizumab with IL-1 alpha beta. Kori and her team will be getting tissue from all of our studies. We work with our precision medicine team internally.

And if there is biomarkers that are robustly predictive, we would absolutely want to bring that individualized care to the community as quickly as we could. Immunology has been difficult, I would say. It's not as targeted as we have had success in oncology, but it hasn't dissuaded us from at least taking a deep dive into tissue and biomarkers to do our best to see if we can see segregation of populations that we can detect and then give a therapy that's more fitting for an individualized patient.

And TL1A, I think, showed glimpses of that. And we'll have to see if the companies that are bringing in the monotherapies if they have some thoughts on a biomarker approach, but we continue to investigate.

Okay. So there's a lot of chatter about TL1As in fibrotic diseases and the role TL1A plays in fibrotic processes, and that certainly can be highly relevant in IBD, but certainly other conditions. I know Roche is running a MASH study with theirs. But how are you thinking about the potential for wider development of 701 in -- particularly in fibrotic diseases?

We like the molecule. Kori, you can talk about maybe some of the indications we could be interested in and why we like the molecule mechanistically.

Sure. So yes, TL1A, as you mentioned, there's lots of preclinical data out there supporting its role as an antifibrotic agent. And so right now, we're focusing on IBD, but all autoimmune disease, unchecked inflammation leads to fibrosis scarring that you can't reverse.

And I think importantly, too, fibroblasts play a role early on in disease. And so TL1A targeting sort of that inflammatory profibrotic component is really attractive. So as we think about future development, diseases like RA, PSA, HS, systemic sclerosis, I think, are all on our radar.

And remember, we have an LPAR program internally that may be even more specific to fibrosis, and that has entered the clinic as well. So we'll have a biologic in that space and an oral looking at IPF and sclerosis.

Okay. And then we've got a couple of minutes. I want to -- I'm going to bounce around on a couple of topics. So you mentioned you have an oral IL-23. J&J obviously is pretty well along with theirs. But I wanted to get your thoughts on how you think just conceptually, an oral IL-23 directed treatment could be impactful in the indications where we see a lot of IL-23 usage, psoriatic diseases, inflammatory bowel disease.

And so just talk to how you think about the potential impact of a movement to an oral and how you're thinking about your molecule?

Similar to what I described in the TLA space, we think there's a next-generation opportunity, hence, the deal for Nimble. And what we're trying to accomplish there is higher potency and then probably even more importantly is a longer half-life. Even with RINVOQ in the oral space, it's very difficult for patients to be 100% adherent over time.

The greatest adherence we see is with something like a SKYRIZI, where you're taking it quarterly. And in between, you're not worrying about food or water intake, when can I eat, when can I not eat. So that can also impact adherence. So people could miss some doses. And what we've seen with blocking 23, you want to try to block that to the maximum level. That way, you can deliver results like SKYRIZI, whether it's in psoriasis, PSA, Crohn's or UC. And the existing oral that we've seen data from are, I would say, not like a SKYRIZI biologic.

It could be like older biologics, but the efficacy just doesn't match -- and part of that could be a half-life disadvantage and potency and how much drug you can actually deliver. So that's why we're working on a potential next-generational approach. But in the meantime, like I said previously, SKYRIZI and RINVOQ are very well serving needs today at levels of efficacy that still are not matched by either novel orals or novel biologics.

And then just real quick, I wanted to -- if you can, give us 30 seconds on 319, pretty unique here, ADC targeting CD19, steroid payload. You're looking at it potentially in SLE, maybe Sj�gren's. Just very quick thoughts on your excitement about that compound.

I think in general, on going after B cells is stepping back is very exciting, and that's what got us excited about borrowing this asset 319 that kori can talk a little bit about with the steroid warhead. We borrowed that from our heme colleagues in the oncology space.

And recall, we also did the deal for CASA, which gives us an in situ lipid nanoparticle CAR-T that doesn't require lymphodepletion, no DNA integration. It's tunable. You can redose it. It's transiently expressed. So you could imagine hopefully having long-term safety and from a CMC standpoint, scalable. So that's something maybe we can do a deeper dive over time. But 319, maybe, Kori, this one is exciting...

Yes. 319 with the GRM ADC payload. So it has really 3 mechanisms, right, delivering that steroid to the B cell. It's actually inhibiting CD19 activation. And also, you have like that antibody-dependent killing of the cell as well based on the antibody.

And so with that steroid payload, it's really unique in that when you look at B cell depletion and what has been shown in the literature so far, it's that rapid deep depletion and that prolonged deep durable drug-free remission. So when we're looking at how to dose 319, it's really sort of this upfront dosing and it's self- tapering then of that steroid.

And as we get more data from 319, we actually have an asset ABBV-519, same antibody without the payload. So if patients would need a boost or anything like that, we can come in with the steroid-free version in 519 and looking at that as a maintenance opportunity.

Okay. Well, that's...

And also we have data from -- we have data from our 319 in oncology. It's given every 3 weeks for a year, and we haven't seen any movement in any steroid-related markers. And those are at much higher doses than we would likely use in immunology.

Okay. Terrific. Well, thanks, Kori. And thanks, Roopal. I wish we had more time. But yes, this will be some food for thought for another discussion down the road. But yes, great stuff. And thanks again, and thanks to everyone listening in, and I'll wrap it up there.

Thank you, David.

Thanks.

All right. Bye-bye.