Thank you very much for joining us today. My name is Mohit Bansal. I am one of the biotech and pharma analysts here at Wells Fargo, and I am joined by AbbVie management team with us today. So from my left to right, we have Roopal Thakkar. He is the EVP and head of research, and Chief Scientific Officer at AbbVie. We have Jeff Stewart. He is the EVP and Chief Commercial Officer at AbbVie. And Scott Reents, he is the CFO of the company. Thank you very much, Team AbbVie, for joining us today.
Thanks for having us.
Thank you. So exciting times at AbbVie. I do not know. I have leaders from three different sections of AbbVie, so I will probably have 10,000 questions in 35 minutes. Maybe I will start with you, Jeff, right? I am sure there are a lot of questions around immunology. You have done a tremendous job with SKYRIZI and RINVOQ. We do not even talk about HUMIRA anymore. You have consistently outperformed the consensus expectations for SKYRIZI and RINVOQ. Where you sit today, how much underappreciation for the franchise still is, some of that pipeline as well, and then what cards will turn over in next three to five years that will make you. That will see us through that.
Yeah. Thank you very much. No, we're very, very pleased with the historical performance and the visibility we have going forward. 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. We have markets like IBD, or atopic dermatitis, or PsA. These markets grow anywhere from mid-single digits to high single digits. Atopic dermatitis, which is basically the most underdeveloped market, is growing well into the double digits. So the markets themselves are very, very nice areas to play in. 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.
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, SKYRIZI and RINVOQ now are in their eighth year of growth.
Right.
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. 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. Then we have several categories of our catalyst before we get to the pipeline. Some of them are, we're really, really close on an innovative approach for the sub-Q 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. 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. 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. There are many, many catalysts that will come here for immunology as we move forward.
Got it. 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? Are investors overestimating the competition versus the growth challenges there, number one? Number two, bring in the sub-Q Crohn's induction regimen in there, and how does it help?
Sure. We see that the competition across immunology, and we will see 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. That is actually what we have 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. 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 sub-Q for Crohn's in the fourth quarter.
That is 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 sub-Q data. It is very exceptional. In fact, I would say we have not seen anything like this just in terms of induction. Whether it was a sub-Q or an IV, it is exceptional data. This is the AFFIRM data, and there will be more data releases pending about that data. We are very, very excited about it. We have released the top line, so we see tremendous endoscopic healing. We have not seen anything match it. It is better than our own IV.
This catalyst that you have 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. In immunology, I want to touch upon your platform study here as well. As the first data set from these studies emerge, 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?
Yeah, thanks. I'll build on some of the comments that Jeff Stewart has already made. 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. 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. This is not cross-trial comparisons. This is within-trial comparisons where we had mono, combo side by side. 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'll be around 80% of the data.
Next year will be 100%. 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.
Got it.
What we are doing now in parallel is that data flows is generating an even larger platform, which will now enroll SKYRIZI plus our proprietary alpha-4 beta-7, in combination with our extended duration TL1A, that will be in Crohn's and ulcerative colitis.
Right.
We will 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. 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 does a little bit higher dose drive even higher efficacy, particularly on the endoscopic side. That is going to be the most critical things that we will be looking at.
Got it. AbbVie is one company where sales team and R&D team actually work well together. They all say it, but again, you both have input there. For you, Jeff, what would be the most important aspect for these 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?
Yeah, I think I will basically build on what Roopal has said. If you think of the transformation that AbbVie has 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. That is exactly what we help drive with the gastroenterology community, of course. If you think back on history which was not long ago we did a definitive trial which was SKYRIZI versus STELARA with the primary endpoint of endoscopic remission. This was the SEQUENCE Study.
Right.
It was a doubling of effect. The community understood that, look, if I can get that bowel, that healing under control, I am going to get differential outcomes.
Right.
The market value driver shifted very, very fast. 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.
Right.
The great news is we have seen it. If you think, SKYRIZI doubled the standard of care.
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. That's critical. 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.
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.
We've done remarkable things 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. We would like, and we work with Roopal on this to say, "Hey, it's not the alpha-4 beta-7 combo versus the TL1A. Of course, we always let the science drive it.
Right.
But we actually think we may be able to co-position them in different segments, m aybe one may be better in ulcerative colitis 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.
Great. That is a nice segue into a question for Scott, basically. We all have known AbbVie since 2013. That is when it became AbbVie, right?
Yes.
I think for many years you had your back against the wall, trying to replace HUMIRA, and that is why there was a lot 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 are exactly right. I think we have spent a lot of time leading into the HUMIRA loss of exclusivity event, thinking about what the future looked like immediately after, but also beyond that. When we look at what we have done over the last couple of years, we have done roughly 30 transactions, spent about $20 billion, and half of that was with respect to the Apogee transaction.
That means we have done almost 30 transactions with another $10 billion on smaller, earlier stage things. It is that combination of making sure we are bringing in external innovation that is well-matched. For instance, the combination studies we are doing with SKYRIZI, that is in combination with a TL1A that we brought in. 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. I would say we are looking at the assets, we are making sure we have everything that we need to build us and drive that growth going forward. At the same time, making sure we are funding it appropriately. From an R&D perspective, since 2022, we have increased our R&D spend by roughly $3.5 billion. We are almost at $10 billion this year from an R&D spend.
Making sure we are funding everything that we have internally, and we have brought a lot of great things internally. Things like lutikizumab, VENCLEXTA, RINVOQ of course. But also when we are bringing things in, we are also spending a lot of time with them. SKYRIZI is a great example of something that obviously 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. It is going to continue to be that combination. We have a strong backbone.
I think something that we are very proud of where we are today with the pipeline and certainly, that momentum will continue, but we will continue to augment that with the right areas and just looking at things in our core areas and adjacencies. Obviously, with Apogee, it is a little bit later. We go late stage, early stage. It is focusing on the right assets that we can make a meaningful difference with.
It is very clear that you are not buying revenues. It is not the Allergan-like deal, you are doing phase II-ish deals. Is that the strategy here? Like phase I, phase II, looking at 2035 and beyond? How are you thinking about that?
Well, I would say that we are fortunate to be in the position we are 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. We have a very strong runway, and 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. 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. 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? There have been some placebo responses which are really high lately. Talk a little bit about that and your comfort level around those phase III's.
Yeah, a couple things to mention. 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. We have lutikizumab as a alpha 1 beta going forward, saw 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. For RINVOQ, it is a patient population that has already failed the biologics. So similar positioning that we see with SKYRIZI and RINVOQ in IBD and in PsA. That is a very good, I would say, position if both are successful. In R&D, our goal is to do our best to make sure these trials are successful.
Placebo is a consideration, particularly in HS, in immunology, because the disease can relapse and remit, and placebo can go up and down. Because we have naive patients coming in the luti trial, we set the endpoint as a more stringent HiSCR 75.
Traditionally, a HiSCR 50 has been used. We set that precedent years ago with HUMIRA.
Right.
That is one aspect. With a tougher to treat patient population that is in the RINVOQ study, we could anticipate maybe less bouncing up of placebo. We see a HiSCR 50 there. But that one is because we have 100% treatment failure. Those are two approaches that we are using to do our best to de-risk and make sure placebo is tamed. But we agree with you, and that is 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. That has been implemented as well, and we will see data later this year.
Got it. Very helpful. I have so many immunology questions, but I want to go to oncology first. If we have time, we will go there. I do want to talk about Apogee, though. With the data for BCMA last week, can you talk a little bit about that? You are not the first to market there, but at the same time, you have a unique approach, and the data looked pretty interesting for monotherapy. Talk a little bit about where do you see it fitting.
Yeah. 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. 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 under-penetrated. 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.
Right.
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? 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.
Right.
We stopped it early after only 11 months of median follow-up, which is quite early. Despite that strong hazard ratio for PFS and even OS, both are under 0.5. That is important, but really what is most critical is that this is delivered with a single step-up dose and, in total, only 13 injections in a year, because you are giving it every month. If you look at competitors, it is double of that in the best case, and up to 50 or 54 injections in a year. It is very labor-intensive for the center. That is why the communities do not use it. Community practitioners do not use these very much, and it is very challenging for the patient to keep coming to the hospital.
That's a very important factor. This was the regimen that we used was every other month, full dose out of the gate after a single step up. CRS rates 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. 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. Jeff, you may want to comment on the market because I think there is a strong commercial opportunity here.
Yeah, I would say, to reiterate what Roopal's point is, this is an exceptional product. If one way you look askance and say, "AbbVie's late, maybe it's the fourth or fifth entrant.
Right.
That's not the way we look at it at all.
Right.
Of course, it is our internal view.
Right.
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. You get what you expect, which is tremendous efficacy, but then you get this triple play that's very different than the first generations. 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.
Okay.
When you look at the market structure, even though it looks like a category that's been there for a while, it's very under-penetrated. In the community, 75%-80% where the myeloma is, they don't really have access to these CAR Ts or these bispecifics. 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 trispecifics.
Right.
Mohit, to your point, we are going to play in myeloma, and we are going to play very big. In etentamig with this unblinding, we are looking at a very rapid filing and entry. We know hematology.
Yeah.
We may not be in myeloma but we have played very effectively as the leader with the hematologists around the world. 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.
Yeah.
Yeah.
I think it's an exciting and underappreciated catalyst for the company.
We hope it'll wake up quickly. To build on Jeff's point, we will be engaging with regulators about labeling. One big discussion topic for us is around the REMS and hospitalization. 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 hospital.
Okay.
That will build on the profile that Jeff is describing.
Now, hematology has so many examples where not the best drug wins. Your drug is very good, but at the same time, convenience and ease of use is also very important. I mean, REVLIMID versus Velcade for sure. Very helpful. Thank you for that. Let's just talk a little bit about neuroscience as well, right? Psychedelics, so you were among the big companies, you were the first mover in there, and now even 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 the next 6- 12 months that could be.
Yeah, this is bretisilocin, and similar to other assets, it started with the profile that we saw. We saw deep, durable basically remission in major depression in the early study. There'll be a couple more or another readout this year. 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 well, compared to other competitors that may be six hours or plus.
Also, the psychedelic 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.
We wanted something friendly for the patient and for the site. For 2 hours, deep responses, and potential for a longer duration beyond, let's say, weekly dosing.
Right.
Can you push out to every month or beyond? We see that potential as well. That's linked to the mechanism where it's a 5-HT2A, not 5-HT2B.
Many of the natural or other assets bind to that receptor, which is a potential safety issue from a cardiac valve and fibrosis standpoint. You 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. This asset differentiates in a multifaceted way that has us very excited. Hopefully, we can serve lots and lots of patients, but also a very excited market that we can enter. We know the VRAYLAR space, we know depression. We will see some more data this year. We are 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. This is where I do not think you get a lot of credit for, but when you look past the first asset, then you look at the second asset, the second generation ADCs are looking pretty interesting. SEZ6 , that is pretty interesting. Talk a little bit about where you are most excited about in your oncology franchise, and again, which one is the sleeper there?
Sure. Maybe they all are while we are talking about it.
Yeah.
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. 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 is a very strongly antagonistic antibody, so it blocks signaling, and it blocks growth. It is important when you pick the marker you go after that blocking it is helpful, and that it is not expressed at high levels on normal tissue. That is your c-Met story. That is also a SEZ6 story.
FR-alpha which we have a novel asset that has entered the clinic to follow ELAHERE which uses the same linker and warhead strategy as Temab-A , where we are seeing strong data in lung and colon cancer and ovarian cancer. We are repeating that with FR-alpha with a topo warhead, that is 901. Then we take our abilities to make bispecifics like we do with lutikizumab, and we have created 969, which is PSMA/STEAP, same linker, same topo warhead that is showing very strong data on prostate cancer.
which is now moving into phase III. If you have these ADCs that are behaving well, which is what we have observed based on how we have built them, and going after tumor targets that are specifically expressed on tumor, then that allows you to have a strong benefit-risk balance. 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. 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 are very excited about that, and that data will be shared, I think, this weekend at World Lung.
Right.
It 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. Scott, taking all of this, when you think about 2035 and beyond, the big. Now between SKYRIZI and RINVOQ, arguably it will be a, whatever, $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 where do you think the incremental BD dollar would go in terms of either therapeutic area or how you are thinking about all that?
Well, I think it starts with what is the assets that are out there. So I think, for anything we do from a financial analysis, a strategic fit, it is looking at our core areas, the adjacencies, areas that we see the opportunity, and making sure that we understand the assets. So sometimes it is just a matter of the assets emerging in the right place and getting that conviction. It is also making sure we have everything we need to complement, to replace, and to really even improve what we are 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 is where we think about it.
I think, looking at where the asset sits in its life cycle, as I said, if it is early stage, later stage, even on market, we will look at that as long as we can find the right profile. The last aspect is we have the capacity to do what we need to do and do it appropriately. We will do it in a measured, methodical way. We are not going to chase things that we should not be chasing. But we have, I would say, a very diligent, robust process where we have a lot of internal debate, even with something like our recent acquisition. That was an asset that we have been looking at for the last couple of years.
Right.
It is something we follow a lot of things. We are looking for the right fit, and that hit the market. So, we will continue to seek where we can find that opportunity. But you are exactly right. Looking at the window to the back half of the next decade, 2040, we have spent a lot of time, and we are getting ahead of that by thinking about it now. A number of the things that Roopal spoke about are going to be things that are going to be helping us 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 am sitting here, September 8th to 10th, 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 is the continued execution that Jeff talked about in immunology on market and the strength there. Then with more maturity of the pipeline.
Right.
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 f or lutikizumab and RINVOQ. I think that would be very exciting. Then favorable movement into, I would say, psychiatry with bretisilocin and even emraclidine. We didn't talk about that today.
Right.
We cleared the 100 mg dose, and now we're at 150 mg. Recall, that was studied originally at 30 mg.
Right.
So there's other spaces. Then I would say rapid execution of the atopic derm trials with zumi from Apogee.
Right.
Looking at combos with 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 .
That is perfect. So with that high note, on that high note, thank you very much for joining. All the best.
Thank you, Mohit.
Thank you.