M&A Announcement

Mar 5, 2015

day and thank you for standing by. Welcome to the AbbVie Investor and Analyst Conference Call. All participants will be able to listen only until the question and answer portion of this call. This call is being recorded by AbbVie. And I would now like to introduce Mr. Larry Pippo, Vice President of Investor Relations. Good morning and thanks for joining us for this special conference call to discuss AbbVie's acquisition of Pharmacyclics, which we announced last night. Joining me on the call today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer and Bill Chase, Executive Vice President of Finance and Chief Financial Officer. Joining us for the Q and A portion of the call are Laura Schumacher, Executive Vice President, Business Development, External Affairs and General Counsel and Mike Severino, Executive Vice President of R and D and Chief Scientific Officer. Rick will provide an overview of Pharmacyclics and the strategic rationale for the addition of this strong growth business to our portfolio. Bill will discuss the key financial aspects of the transaction, and following our prepared remarks, we'll take any questions that you may have. We have posted a set of slides as additional background for your reference. They can be found on our website. Before we get started, I remind you that some statements we make today may be considered forward looking statements for purposes of the Private Securities Litigation Reform Act of 1995. AbbVie cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward looking statements. Additional information about the factors that may affect AbbVie's operations is included in our 2014 Annual Report on Form 10 ks and in our other SEC filings. AbbVie undertakes no obligation to release publicly any revisions to forward looking statements as a result of subsequent events or developments, So with that, I'll now turn the call over to Rick. Thank you, Larry. Good morning, everyone, and thank you for joining us. Let me begin by saying how pleased I am to announce our acquisition of Pharmacyclics. This is an exciting day for AbbVie. It's an exciting day for both organizations. We could not be more pleased to have the talented Pharmacyclics team join our organization. The addition of Pharmacyclics builds upon the already strong growth of our business driven by HUMIRA, Vatera and a robust late stage pipeline with several assets with multibillion dollar potential. This acquisition enables us to build a strong leadership position in the hematological oncology space, an attractive And rapidly growing market now approaching $24,000,000,000 globally. Within this category, Our 2 organizations bring together complementary strengths and assets in this important therapeutic category. I had the opportunity over the last month or so to spend Significant time with the executive management team, broader leadership team and many of the Pharmacyclic employees. I'm tremendously impressed With the accomplishments of that team and organization and I'm confident that their expertise and innovation will greatly advantage AbbVie going forward. While strategically important, this acquisition is also very financially attractive. It will add to our long term growth prospects Ongoing earnings per share starting in 2017, the 2nd full year after closing and accelerating to more than $0.60 per share in 2019 and ramping significantly thereafter. And the acquisition exceeds our cost of capital hurdle in the 4th full year. Through this acquisition AbbVie obtains a rapidly growing on market asset, IBRUVICA, A novel and first in class BTK inhibitor with multibillion dollar revenue potential. IMBRUVICA is a strategically important asset, which we believe AbbVie and Pharmacyclics are uniquely positioned to maximize. Additionally, Pharmacyclics has several other promising assets in earlier stage development. IMBRUVICA represents a pipeline in a molecule much like HUMIRA did With significant growth potential through its existing and expanding list of indications and lines of therapy And AbbVie has an established track record of success in creating leadership in high value markets. IMBRUVICA has already secured approval for the treatment of 4 indications and there are more than 50 clinical studies to evaluate the therapy In its 1st year on the market, Pharmacyclics has driven market leading performance and therapeutic uptake of IMBRUVICA, Clearly demonstrating the strength of the Pharmacyclics organization and the product's attributes. IMBRUVICA is currently approved in more than 40 countries And more than 15,000 patients have been treated. IMBRUVICA is also an early assessment for solid tumors and has a potential treatment for graft versus Host Disease. The product has vast potential for label expansion and future indications. We expect IMBRUVICA to drive U. S. Sales of approximately $1,000,000,000 in 2015 with peak sales for AbbVie Estimated to exceed $7,000,000,000 The acquisition of Pharmacyclics is highly complementary With our existing oncology pipeline, which is comprised of 5 late stage assets poised to launch over the next few years. This includes our BCL-two inhibitor ABT199 and our dual PI3 kinase inhibitor divaloseb, Both being investigated for treatment of a wide range of blood cancers. So the addition of Pharmacyclics Gives us access to 3 novel and promising mechanisms for the treatment of hematological malignancies: BTK inhibition, PI3K inhibition and BCL2 inhibition. The addition of IMBRUVICA to our portfolio puts us in a strong position To offer combinations that have the potential to elevate the standard of care, with the goal being to increase efficacy through the use of an all oral well tolerated therapy. There's also the potential for combination with immunotherapy Such as checkpoint inhibitors and other mechanisms. The acquisition of Pharmacyclics also gives AbbVie immediate strong commercial infrastructure, Expertise and capabilities, which we intend to leverage in order to launch the assets coming out of our emerging pipeline. In addition to ABT199 and develoceb in our hematological malignancy portfolio, our portfolio includes voliparib, Our PARP inhibitor being investigated for a large range of solid tumors and ABT-four fourteen, our antibody drug conjugate for glioblastoma multiforma. These assets have demonstrated promising signals of efficacy. We have the potential to launch each of these late stage oncology therapies over the next 3 years. All told, we expect Our newly combined oncology franchise to generate peak year sales well in excess of $15,000,000,000 The acquisition represents a rare and unique opportunity for AbbVie to further enhance its already strong growth prospects. In addition to our oncology franchise, part of which I just described, we have a number of other sources of future growth. These include our immunology franchise, including HUMIRA, which we expect will drive continued strong growth And significant cash flow generation for years to come. Our HCV franchise where we have established a significant foothold in the market of specialty focused medicines, including more than 40 active clinical development programs underway spanning large and Growing Specialty Categories. Clearly, we have a strong leadership position in the immunology market with HUMIRA, The world's leading anti TNF and we have a multifaceted strategy in place, which we believe will allow us to protect and grow our position. HUMIRA has averaged well over $1,000,000,000 of growth per year over the past 8 years and it has many unique That will help us continue to grow in the years to come. This includes 2 new HUMIRA indications in late stage development, HS and uveitis, Both of which will be unique to the Emera label and collectively represent a peak year sales opportunity of more than $1,000,000,000 We are also actively developing formulation and device enhancements, which will provide further product differentiation. We recently completed the U. S. And EMA regulatory submission for a new HUMIRA formulation, which we believe will enhance the patient experience. The U. S. Submission was completed in late 2014, while the EMA application was submitted in early 2015. We expect regulatory decisions later this year. We also continue to build upon our robust IP portfolio, which consists of both granted patents And pending applications covering our product, approved indications, dosing, formulations and methods of manufacturing. As the first fully human monoclonal antibody, the extensive clinical trial work and investment we undertook led us to many innovations with HUMIRA and our intellectual property protects all of that innovation. As we've said before, We intend to defend any intellectual property that is implicated by a biosimilar applicant. And behind HUMIRA, we have a rich pipeline of mid and late stage immunology assets in development. All of our R and D efforts are focused on advancing standard of care in each of our areas of immunology leadership. In summary, this is an exciting day for AbbVie, an exciting day for Pharmacyclics and our combined shareholders. Together, we have the ability to create a strong leadership position in this important therapeutic area, which will significantly benefit patients. The addition of this business is a strategically compelling opportunity that will significantly strengthen our long term revenue and EPS Growth Prospects. With that, I'll turn the call over to Bill. Bill? Thank you, Rick. Let me begin by Addressing how pleased we are to announce this strategic acquisition. Pharmacyclics adds an attractive new growth platform to AbbVie's already strong portfolio and accelerates our entry into the hematological oncology market. We're also very pleased with the financial profile of this acquisition It's clear that prior to this acquisition AbbVie was already extremely well positioned to deliver industry leading revenue and EPS growth. The addition of Pharmacyclics provides significant incremental revenue and earnings potential, thereby further strengthening our prospects for growth over the mid to long And as you know AbbVie generates robust cash flow, which will be further enhanced by this acquisition. We intend to continue our commitment to returning cash to our shareholders through a strong growing dividend, which we have increased 28% since becoming an independent company just 2 years ago. The addition of IMBRUVICA provides another growth Our combined oncology franchise Has the potential to deliver more than $15,000,000,000 in incremental peak year sales representing a significant addition relative to our current sales base. I'd like to now cover the details regarding the transaction. We are acquiring Pharmaceuticals for $261.25 per share. The purchase price will be funded with cash of $152.25 per share representing approximately 58% of the consideration And $109 per share in AbbVie stock representing approximately 42% of the consideration. The purchase price is fixed. Given that there is an equity component of the financing, the final number of shares issued will be dependent on AbbVie's In order to optimize our deal structure, we intend to execute An accelerated share repurchase program promptly following the close of the transaction whereby we plan to repurchase at least half of the equity issued for this transaction. In support of this accelerated share repurchase, our Board of Directors has authorized A $5,000,000,000 increase to our existing share repurchase program. We have committed bridge financing in place to fund the cash purchase price and the post closing accelerated share repurchase program. As Rick noted, this is a financially attractive acquisition, which we anticipate will be accretive beginning in 2017 and significantly accretive in the years that follow. We expect accretion in excess of $0.60 per share in 2019 and accelerating thereafter. For 2015, we expect the partial year impact of the transaction to be approximately $0.20 dilutive to our ongoing earnings per share. As a result, we are updating our 2015 adjusted diluted earnings per share guidance to $4.05 to $4.25 per share. This updated guidance range reflects industry leading EPS growth of 22% to 28% and we will provide more detailed guidance as we approach the close of the transaction, which we are currently estimating will occur in the 2nd quarter. We anticipate specified charges for deal costs, upfront financing costs and integration, which will be provided at a future date. In summary, the acquisition of Pharmacyclics will drive compelling financial returns long term accretion while enabling AbbVie to accelerate revenue growth. We are very excited to join forces with Pharmacyclics to create And with that, I'll turn the call back over to Larry. Thanks, Bill. And we'll now open the call for questions. Ilan, we'll take our first question please. Thank you. Our first question today is from Jamie Rubin from Goldman Sachs. Thank you. This is for you Rick or anybody else who wants to take a stab at Just trying to understand the $7,000,000,000 IMBRUVICA number to AbbVie. Does that imply $14,000,000,000 in world sales or is it less because you will be recognizing the top line at 100% in the U. S. And ex U. S. Is a royalty. So if you can kind of clarify that. And does that $7,000,000,000 number incorporate value for Solid tumors, the data which obviously nobody has seen. And secondly, what does this mean for ABT199? I think that the Previous sort of bear case on Pharmacyclics was that ABT199 looks to be a better compound could put some pressure on IMBRUVICA. So how does Owning the 2, how does 1 +1equal3 with respect to owning both assets? And just thirdly, kind of high level, Rick, What do you think I mean, clearly, this is a big price to pay, making a big bet longer term on oncology. But what does this mean to the bear case on HUMIRA? How much more like I mean, I'm just curious to know if you can kind of put that price in perspective and your thinking in terms of the potential bear case on HUMIRA due to biosimilars. Thanks very much. Thanks, Jamie. Hi, Jamie. It's Rick. So maybe I'll Start with the 3rd and we'll pass it around potentially after that if I haven't covered it. Well, first, I guess what I'd say This was not done because we believe we're concerned about HUMIRA. I mean, as we told you many, many We have a high level of confidence in our ability to be able to drive HUMIRA and protect HUMIRA and grow the franchise over time. And certainly, you're starting to see elements of that Play out. As we're moving into this year, which is the timeframe that we would have expected some of those elements to play out, the formulation is obviously one of those. Our IP continues to progress in the direction that we would have expected and other aspects of the strategy continue to progress. So it has nothing to do with that. We value This transaction based on what we thought this transaction could deliver for us as we do with all transactions And I'll just say, I'm thrilled that we've had the opportunity to be able to be the company that won this highly competitive process. You don't get the opportunity in our business very often to end up with a derisked on market multibillion dollar asset In an extremely attractive market segment that has the breadth of potential that this asset has And that's really what attracted us to us. And when we went through the diligence process, I'd say we became more encouraged than we I've been going into it as well. And so, as we looked at it and we looked at the value that it would deliver for us, I mean, there were multiple levels of value that it delivered. First, It added strategic capabilities and you've heard me say this before, both commercially, clinically and regulatory capabilities oncology. We have invested for a long time. We have a robust oncology pipeline, not just late stage assets, but mid and earlier stage assets. And this is an area that we were committed to, but we always said we'd have to build it from the ground up and this gave us an opportunity to be able to have Establish assets in those areas and build out additional expertise to allow us to advance our own pipeline more rapidly than we And more effectively than we probably would have been by ourselves. Then you look at IMBRUVICA. And as I said, this is an asset that has The opportunity to exceed $7,000,000,000 To answer your first question, essentially, that is the US Plus what we would capture out of the international sales, so it's not the total molecule, doesn't Necessarily translate exactly the way you described it, but it is our portion of the internationals being booked as well. If you look at where that growth comes from, it comes from 4 or 5 areas and this is this concept of sort of a pipeline in a drug. I'd say about 25 if you think of the product today being roughly $1,000,000,000 and it's going to grow to something north of $7,000,000,000 say $7,500,000,000 something in that range, About a quarter of that growth, maybe a little less than a quarter of that growth comes from continued penetration in the indications that they're in today. The second part would be about a third of that growth, about 30% of that growth comes from moving up in lines of therapy. So, a good example of that would be Moving up to first line in CLL. And as you assess each one of these, I think one of the things that's impressive about this particular asset Yes. There's a very high probability of success of being able to do that. And I'm going to move down the chain here and there are areas that are much more speculative that I'll get to here in a moment. But I'd say if you look at the strong value drivers, certainly moving up in lines of therapy in several of the areas that they're working on now, Our assessment is, has a very high probability of success based on the data that we've seen. Then the third component is And there too, reasonably high probability of success based on some of their data. We do believe that additionally this molecule could have a role in the treatment of multiple myeloma. And although that is risk adjusted in a more significant way, and then we did see their data on solid tumors And we were impressed with what we saw. Now having said that, I will tell you solid tumors are very heavily risk adjusted because there's still lots and lots of I would say that would be a significant upside to the model that we've seen so far. And so it is truly this pipeline in a drug and obviously we've had experience With HUMIRA, with that same type of a concept, maybe played out a slightly different way and that's one of the things that impressed us Was the probability of this mechanism being able to move across these different lines of therapy and across these different Conditions, right, of these different types of cancers. I'd say the next component was really the synergistic benefit We saw from our own assets of being able to leverage the commercial infrastructure To be able to drive our ramp and penetration more rapidly for ABT199, duvelaceb, we have some earlier stage assets that We haven't talked a lot about that are in the hematological malignancy space that we're also encouraged that we'll be advancing through if they're successful. The next area that we obviously evaluated as part of the valuation was what could it do for our overall business. And as we mentioned before, this Starting in 2017, ramping rapidly to $0.60 per share by 2019 and over $1 by 2021. It diversifies our base of growth products that we have beyond HUMIRA, VICARA, DUADOPA and others. And it strengthens our U. S. Cash position. So as we looked at all of the strategic criteria we were trying to fill, this met most of that Strategic criteria. So, it was a tremendous asset from that standpoint. And lastly, what I'd say is, we value this asset just like we value every other We built a model. We refined the model as we went through the process. We extrapolated that model to come up with a value. And We obviously set a maximum value that we're willing to pay for the asset. And I can tell you we're disciplined enough that we don't go past that maximum value. And we didn't in this circumstance as well. I'd say that Pharmacyclics ran a very well disciplined, But highly competitive process. I've been through a lot of these and I'd say this was probably one of the most competitive ones I've And there were multiple companies that were competing. There were multiple rounds for this asset. 3 companies stayed in till the very end and bid against each other in this process. And we won. And look, you're going to get an opportunity to be able to see what the bids were because there'll be a disclosure around this. And I'd say, I'm happy with the value. And why don't you just wait and see what comes out in the disclosures and we're going to see how the others bid. Can I just follow-up? Sure. Okay. Just can you what are your assumptions in your And then can you answer the question on ABT199? Thanks. Yes. Let me go back to the question on ABT199. I'm going to probably have Mike give you a little more color. But what I would tell you is, one of the reasons that we A significant reason that we wanted to do this transaction is that we believe these two products are synergistic. I mean, there's a commercial aspect that's synergistic, but I think the more exciting Aspect is potentially using these assets in some form of combination with 199. And And we have Mike maybe talk about that in some level of detail. Sure. So this is Mike. As Rick said, we remain very confident in 199. In fact, I'd say as we see more data, we become increasingly confident. That mechanism has shown broad and deep responses across a wide range of tumor types and we're continuing to pursue it aggressively. Similarly, as we've had a chance to take a very close look at IMBRUVICA, we have a very high degree of confidence based on its demonstrated safety and efficacy profile across a wide range of tumor types and primarily hematological malignancies and the other indications that These 2 very promising novel agents work through mechanisms that we view as being very complementary. So BTK inhibition removes growth activation and proliferation signals that ultimately lead to cancer cell death. And venetoclax or 199 blocks the activity of BCL-two, which is a protein that allows cancer cells to Those programs' cell death mechanisms. And so we believe there's very strong mechanistic reason to believe that they'll work together very well. And by By bringing these 2 very promising novel agents together, we believe we'll be able to explore novel combinations and sequences of therapy that will allow us to address a wide range of hematologic malignancies and elevate the standard of care. And then Jamie on your IP question, I think what you're asking is what's their IP projection? So in the U. S, It's 2027 and in the EU it's 2029. Thank you. Thanks, Jamie. Thank you. Our next question is from Jeff Holford from Please. Thanks very much for taking my questions. I've got quite a few, but try and focus them down. Just on the 2019, can you give us a bit more specific color on what the revenue Assumption is around the guidance there. Secondly, I just wonder if you could just tell A bit more on the HUMIRA new formulation that you referred to exactly what you mean by the patient experience. Could you be more specific Around that there and then just what the financing rate is on the deal that you think? So Jeff, it's Bill Chase. In terms of 2019, when we look at the model, what I can tell you is the sales incremental to AbbVie AbbVie is well over $4,000,000,000 So we think this is a brand that certainly has shown stellar growth since launch and we would expect to see That trend continue. In terms of financing rates, I don't want to get into specifics on what we've got on interest in the model, but Obviously, this is a very favorable rate environment. You're seeing a lot of companies out there doing some pretty impressive deals at some pretty impressive rates. I think we build in a realistic expectation of rates when we finally come to market in the model and Yes. We'll just see how that pans out, but it is a very, very favorable environment as you know. And then, Jeff, on the HUMIRA formulation, I mean, obviously, we're going to be careful about what we say about the formulation both from a competitive standpoint and frankly we have to work with the regulatory authorities in Authorities in order to gain approval of the product, so we want to work through that process. But what I would say to you is that we have been working on This formulation for quite some time, it is designed to enhance both the patient experience, but also I'd say Give some benefits that the current formulation does not have. And obviously, we're doing that in a way to differentiate the current formulation to this Differentiating the new formulation to the prior formulation and it's advancing as we would have expected. And we'll have, I think, more color on that As we get towards the end of the year. Just one quick follow-up on it. I mean, can we expect that to be a value driven Switch in terms of you're thinking about using price there and just any thoughts within your long range plan on how much of this you how much The current HUMIRA you might expect to switch over before you anticipate the launch of biosimilars. Yes. I mean the first part of your question is we don't plan on using price As a tool here, so it's not like this is like a low cost HUMIRA strategy. So I don't want you to think that. And as far as the conversion would be concerned, I think it's too early to give you estimates on that. Great. Thank you very much. Thanks, Jeff. Thank you. Our next question is from Chris Schott from JPMorgan. Great. Thanks very much for the questions. The first one is, when I look you have 2 potentially large assets in HemOnc here. You talked about how they can be complementary in some But it does seem like you could have some environment where these assets 199 and IMBRUVICA could be competitive. Does it become challenging to These two partnerships with J&J and Roche as you think about competitive decisions pricing etcetera as you look across your broader portfolio? And the second question is, when you look at the type of returns that Shire would have offered your investors post the treasury changes And you compare that to the situation with Pharmacyclics, can you just elaborate a little bit more of why PCYC was a better deal for investors relative to going forward Shire transaction. Thanks very much. Chris, this is Rick. The second one is pretty easy. With the changes in the treasury notice, The NPV for the Shire transaction was negative, significantly negative. And this obviously is not that. So, they're very different. And I'd say strategically, they're also very different. I mean, they had different benefits In many ways, but ultimately, I think the profile of this asset and what it can do in an area that we're very, very interested in like Oncology and the synergistic opportunity that it has across our own portfolio is a very good fit and you have a Single asset that has tremendous growth potential. The vast majority of that growth comes from indications Or lines of therapy that have a very high probability of success. That's a very unique Set of characteristics around a molecule in our industry. You can go out and buy a biotech company that has a very exciting asset And it's in Phase 3 as an example. And I mean, you think you know what's going to happen, but you never really Until you're done and you can go through the regulatory process and never be 100% sure, this is an asset that's on the market today. We have lots of experience or they have lots of experience With it from the standpoint of having it in 15,000 patients, it's safe, it's efficacious, we know we can expand it. It's a very different Risk profile and value proposition, but the bottom line is the returns are very, very different. Your first question was about the partnerships. At the end of the day, I think in all these partnerships, You manage them to be able to maximize the value and maximize the benefit for patients because there's a strong linkage between those 2 in our business. When we can deliver a therapy that does significantly improve standard of care for patients, typically the commercial performance Is in line with that value proposition. And so and I think most partnerships will always work in a way where They won't certainly won't stand in the way of that happening and frankly they'll encourage that to happen to try to be able to create treatment approaches Maximize the patient experience and the patient result. And so we're not concerned about our ability to be able to manage through that. These are 2 Fine organizations that I think have alignment around those objectives just like we do. Thank you. Thanks, Chris. Thank you. Our next question is from Steve Scala from Cowen. Thank you and congratulations on a bold deal. Certainly, it adds Much needed visibility later this decade. A few questions, Rick, and this is just the net, but I think you said peak oncology sales The slides say well in excess of $20,000,000,000 So can you clarify? And presumably, you would need to hit that prior Patent expiration. So we're talking about hitting that in 2026 or so, I would assume, maybe you can tell Secondly, does the deal between J and J and Pharmacyclics expire at any point or is there any change in economics under any imaginable And similarly with Roche and ABT199, does this deal change anything Economically, now that you'll have a competitive product maybe? And then thirdly, it doesn't sound like this Deal includes any cost reduction within the Pharmacyclics organization, but just confirm. Thank you very much. Okay. So maybe the last one first. So no, we're not doing this to create Any kind of synergies and in fact, I'd say the opposite. We will set up Pharmacyclics as a center of excellence And build upon it, certainly, they have expertise in BTK and other kinase mechanisms that They're unique and we value that and we're going to continue to explore that. And I think certainly when you look at their track record from their ability to be able to gain approvals And the speed at which they've been able to do that, they've demonstrated that they're very, very qualified at doing that. And so we're going to build upon that experience. The peak oncology sales, they do occur. I can't recall the exact dates, Ology sales, they do occur I can't recall the exact dates, but they do occur in that time range that you're talking about Kind of the mid-twenty kind of time range. And I guess I hedged a little bit more than the slide did. I should have probably looked at the slide more carefully. Larry will talk later. But certainly, it's the expectation that we could get to that kind of a range. On the terms of each of the agreements, obviously those terms are confidential, so I can't talk about them Any detail, but I guess what I could say to you is we're not assuming any fundamental change in either terms in either agreement. Thank you. Thanks, Steve. Thank you. Our next question is from Vamil Divan from Credit Suisse. Hello? Vamil? Hi. This This is Ari Jaja on behalf of Vamil Divan. Hi, Ari. So our question is pertaining to antitrust. Is there anything that Can I merge there given the partnerships with Infinity and Roche? Thank you. Hi, this is Laura. We don't anticipate there to be any antitrust issues with respect to the assets as we've outlined before. We see these assets as Very complementary. And so as we look at this transaction and these assets, we really don't anticipate Any issues with respect to Antitrust? Great. Thank you. Thank you. Our next question is from Mark Schoenbaum from Evercore ISI. Hi, this is John in for Mark. Just a couple of quick questions. One on the deal, is there a break fee associated This deal, many material adverse clauses. And then also the $7,000,000,000 peak to AbbVie seems to imply about 11 point The $12,000,000,000 end user sales, I was wondering if you could just give a little bit more color on that number. And then finally on the sales force For IMBRUVICA, does that sales force primarily is that with J and J or is that with Pharmacyclics? Thanks. So, the sales force, both J&J and Pharmacyclics have direct sales forces. Some physicians they both call on, so there's some overlap from a physician standpoint and then some they've separated The 2 organizations. And if I recall correctly, although don't hold me to it, I'd say the sales force size is roughly the same size between the 2. And then on the peak, okay, yes, I would say directionally the numbers that you're looking at are probably reasonable, but what I would say is we've obviously built a model with a set of assumptions that we used in our model, we've carefully analyzed those. But what I don't want to do is commit J and J to something. They obviously have international responsibility for this asset and I'm not going to put them in a position where we give you a number that is really their responsibility But I'd say the concept that you've laid out is a reasonable concept, all right? And the last question was the breakup fee. This is Laura again. There is a breakup fee under certain circumstances in the transaction and it's approximately 3% of the deal. Thank you. Our next question please. Thank you. Our next question is from Robin Karnauskas from Deutsche Bank. Robin, your line is open. Please check your mute feature. Hi. Actually this is Mohit filling in for Robin. Thanks for taking the call. Hi, Yes, sorry about that. So right, two key questions. Congrats on getting such a good asset. Number 1, what about RA? How much Insight as you get into their RA study and if that product will be viable. I know there is a multi dose trial ongoing and it's a fully owned asset. And then my second question is very value creating would be sort of an induction regimen of 199 followed by IMBRUVICA maintenance. But I know that trial would be hard to run. Did you get any insight into maybe how the FDA is thinking about running trials like that with different endpoints? So that would be very value Creating for AbbVie. Thanks. Yes. So this is Mike. With respect to RA, there's obviously Strong rationale for BTK inhibition in autoimmune diseases. It's early on in the development of those mechanisms. And as you said, Pharmacyclics has a Phase 1 program that we have looked at. We feel very good about the steps that they've taken and the Potential there, but again recognizing that it is very early. There is also potential in other autoimmune diseases that are driven by B cells, So that's an area that we obviously know very, very well, an area where we have a lot of capabilities and we're going We continue to work with the pharmaceutical team on that aspect of the program. With respect to induction and maintenance regimens With an agent like 199 and IMBRUVICA, I mean, obviously, as we said before, we view these mechanisms as very complementary. They both have very attractive features and there are a number of either combinations or The examples that you gave very well could be one of them. I think it's a little bit early to speculate on what registrational endpoints might be for those. But when you demonstrate the sorts of responses and the depth of That both of these agents have shown in the clinic so far, I'm confident that we can work out an overall path. That's helpful. And then as a follow-up, so for uvelasib, like how do you see that position? It seems so clear like 199 and IMBRUVICA very well together. How are you thinking about the CICR kinase combinations and where that fits in? And again, I guess, it goes to how you how are your partners Yes. So this is Mike again. With respect to develosib, So hematologic malignancies and particularly B cell malignancies are a broad and complicated space in terms of tumor types, subtypes, different activation patterns, different patterns, different drivers of the malignant cells. We view the 3 assets that we have as Being very promising novel and giving us a wide range of abilities to So again, it's a little bit early to speculate exactly which will play and exactly what And we believe make meaningful differences in the standard of care. So we look forward to Exploring the right way to use these agents very aggressively in the near future. Great. Thanks so much. Thanks, Robin. Thank you. Our next question is from Colin Bristow from Bank of America. Hey, thanks for taking the questions. I briefly lost connection, so sorry if this has been repeated. But can you just confirm, was this Deal in any way driven by a change in your expectations around the commercial viability for 199? And then just give us an update on The Phase 2 17p deletion data timing. And then number 2, just going forward, how should we think about future business development, both in terms of your therapeutic areas interest in deal size. And then just 3 on tax rate, any material changes there to the going forward assumptions? Thanks. So, this is Rick. I'd say there are no changes at all in our assumptions Our excitement continues to grow. Everything we see about it confirms what we had hoped. As far as future business development, I mean, we're going to continue to focus in the areas we looked at before. We have certain areas that we focused Our primary attention around immunology, obviously, is one of those. Oncology was another one of those. And we've talked about those areas before. I think this is obviously a sizable asset that we're acquiring. And I wouldn't anticipate that over the short to medium term, there will be another acquisition of this size, but we continue to have a tremendous amount of financial Capacity to be able to do BD and it's always our first priority to invest back in the business to be able to ultimately grow the business. And so that is our area of focus and we have plenty of capacity to keep doing that, but probably more in the nature of the kinds of transactions that we've done Bill, you want to talk about tax rate? Yes. Colin, on the tax rate, obviously, one of the things one of the many things about this transaction, which Attractive is, this has the potential over the medium and long term to generate significant U. S. Cash. And obviously, we factored that into our As we looked at this asset. In the near term though, I think it's a safe assumption that you're not going to see a whole lot of variability on the tax rate. And that's really a function of where this asset is in its overall life cycle. But certainly, as the sales increase and that U. S. Cash flow Increases along with it that will allow us to appropriately adjust the tax rate as needed. And then you had a question on 17p deletion timing, Mike? Yes. So this is Mike. We continue to make Very good progress with 199 and we expect to see data from the 17PDell study in the first half of this And we would continue to expect that would lead to a filing later on this year. Great. Thank you. Thanks, Colin. Thank you. Our next Question is from Alex Herffier from BMO Capital Markets. Good morning and thank you for taking the questions. Could you comment on the Pipeline excuse me, on the timeline for the key data readouts for IMBRUVICA for some of the major new indications you mentioned And as well as solid tumors. And I'm also a little bit curious about your use of so much stock given that it has underperformed This year and your decision to buy back half of the new shares after closing, forgive me if this is a naive question, but why structure So let me start with the stock. We considered a number of factors when we looked at deal structure. One thing that we have to acknowledge was that there was a desire of Pharmacyclics to participate in the upside of the pro form a combination. So certainly, Our deal structure enabled that by having an equity component. But likewise, we also had our own capital structure objectives That we wanted to achieve. One of them is to preserve flexibility for future investments in L and A. So at the end of the day, there was a lot of enthusiasm on the targets part for AbbVie Equity That ultimately drove the $58.42 and then obviously there were some needs within our capital structure we wanted to be sensitive What is important to stress though is that we are planning on going back and buying a significant portion of that newly issued equity at least 50%. And we have the ability within our share repurchase program to take out more via normal means If need be. And Mike? Yes. So with The one thing we probably should be careful with is these are their Dates, right, which is under the CDA. Are we in a position to be able to talk about their dates? We should probably just make some general comments. With respect to data readouts, as Rick pointed out, of course, these are still pharmaceclic studies. They have a very broad and We have a comprehensive clinical trials program with over 50 studies as we said in the materials that we released in Flow data over the next few years. Indications like solid tumors that you talked about are still In early phases, and so those data will mature over time. Thanks, Alex. And, Ilan, we have time for one more question, please. Thank you. Our final question this morning is from Tony Butler from Guggenheim Partners. Yes. Thanks very much. Rick, when the deal was constructed, the relationship you have with J and J at least contractually, You have a sales force which now will sell IMBRUVICA, it's fine. But when ABT199 comes to market, Does that same sales force get armed with 199? Because that obviously affects how you think about the profitability Of the contractual arrangement, are you actually add new people and to help sell 199 in addition to those selling IMBRUVICA? Thanks very much. Yes. We would anticipate that we would add more people in order to fill that capacity that need for capacity. Great. Thank you. All right. Thanks, Tony. And that concludes our call today. If you'd like to listen to a replay of the call, please visit our website or you can call 866-479 2,459, passcode 13,015 and the audio replay will be available until midnight Friday, February 13. Thanks again for joining us today.