Good morning and thank you for standing by. Welcome to the AbbVie third quarter 2016 earnings conference call. All participants will be able to listen only until the question and answer portion of this call. [Operation Instructions] I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations.

Good morning and thank you for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Michael Severino, Executive Vice President of Research & Development and Chief Scientific Officer; and Bill Chase, Executive Vice President of Finance and Chief Financial Officer. Before we get started, I want to remind you that some statements made today are or 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 2015 Annual Report on Form 10-K and in our other SEC filings. AbbVie undertakes no obligation to release publicly any revision to forward-looking statements as a result of subsequent events or developments, except as required by law. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand AbbVie's ongoing 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 now turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. This morning I'll discuss our third quarter performance, recent operational highlights, and I'll also share some high-level perspective regarding our growth profile for 2017. Mike will then provide updates on recent advancements across our R&D programs, and Bill will provide additional color on the quarter and our outlook for the remainder of this year. 2016 is shaping up to be another very strong year, with operational revenue growth year-to-date of nearly 16% and EPS growth through three quarters of 14.6%. This follows a very strong 2015, where we delivered operational revenue growth of 22% and EPS growth of 29%. Based on our confidence in the performance of the business going forward, today we'll provide a view of 2017 which will once again demonstrate strong underlying performance. Our third quarter results were ahead of our expectations, including adjusted earnings per share of $1.21, representing growth of 7.1% versus the third quarter of 2015. Our results included global operational sales growth of 8%, reflecting continued strong performance from our on-market business, led by HUMIRA and IMBRUVICA, as well as other products in our portfolio. HUMIRA continues to drive robust performance, delivering global operational growth of more than 12% in the quarter. Despite increasing competition from new classes of drugs and indirect biosimilar competition in international markets, HUMIRA continues to demonstrate exceptional performance and durability across the three major market segments. In rheumatology, HUMIRA continues to hold the number one market share position with year-over-year share gains. In dermatology, we're seeing mid-teens volume growth, and we're maintaining a very strong number one market share position with a 15-point lead over the number two competitor. And in GI, we continue to see strong double-digit volume growth. Internationally, HUMIRA continues to maintain…

Thank you, Rick. Once again, we had a very productive quarter in R&D, with significant progress across a number of programs. Today, I'll highlight key pipeline events that occurred during the quarter, as well as some of our upcoming milestones. I'll start with oncology, an area where we are advancing our pipeline in both hematologic malignancies and solid tumors. Turning our attention to solid tumors, we continue to make good progress with Rova-T. We recently began enrolling patients in two new studies, a Phase I, eight-arm basket study in a broad set of narrow endocrine tumors, and a Phase 1/2 regimen-selection study in front-line small-cell lung cancer. We expect to start seeing data from both studies in the second half of next year. The Rova-T program in relapsed/refractory small-cell lung cancer is progressing well. We continue to see good results from the ongoing Phase 1 study, with patients still alive more than two years after receiving just two doses of Rova-T. Enrollment in the TRINITY study, our confirmatory third-line registrational trial in small-cell lung cancer, is also going very well. And we expect the study to be fully enrolled within the next month. Data from TRINITY will be available next year, which will trigger the submission of our regulatory dossiers. We are also on the cusp of starting two additional Rova-T studies, MARU, the Phase 3 registrational trial evaluating standard chemotherapy followed by Rova-T in the front-line setting, and the Phase 1/2 combination study, evaluating Rova-T with Opdivo and with Opdivo and Yervoy in small-cell lung cancer. We expect both trials to be up and running by the end of the year. We're also making good progress with other assets from the Stemcentrx pipeline. In addition to Rova-T, we have four assets in the clinic and are on track to…

Thanks Mike. This morning I'll review our third quarter performance and provide an update on our outlook for 2016. In the quarter, we delivered strong operational sales growth of 8%, excluding a little more than 0.5% of unfavorable impact from foreign currency. We exceeded our adjusted earnings per share guidance, delivering growth of more than 7% compared to the third quarter of 2015. HUMIRA delivered another quarter of strong sales growth, with global sales of more than $4 billion, up 12.1% operationally. Globally we continue to see strong volume growth across all therapeutic segments. In the U.S., HUMIRA sales increased 16.7% compared to the prior year. The growth rate in the quarter was negatively impacted by 4 points due to higher customer ordering patterns in the prior year, a reversal of what we experienced with second quarter growth rates. Normalized for this, HUMIRA performance in the quarter exceeded 20%, comprised of low-teen prescription growth and single-digit price. Wholesaler inventory levels remained below half a month across all periods. On a year-to-date basis, HUMIRA U.S. sales growth exceeds 24%. For the fourth quarter, we forecast sales growth in excess of 20%, which will contribute to our full-year forecast of above 20%. International HUMIRA sales were more than $1.4 billion in the quarter, up 4.5% on an operational basis. Biosimilar Remicade has not had a material impact on performance, and the Enbrel biosimilar continues to perform in line with our previously communicated assumptions. We continue to forecast HUMIRA international operational sales growth in the mid-single digits for the full year. HUMIRA's unique product profile and AbbVie's strong commercial execution has made HUMIRA the number one prescribed biologic, and we continue to see strong momentum for HUMIRA as market leader around the world. Global IMBRUVICA net revenues in the third quarter were $501…

Thanks, Bill. We'll now open the call for questions. Operator, we'll take the first question.

[Operation Instructions] Our first question comes from the line of Ms. Jami Rubin from Goldman Sachs. Ma'am, your line is open.

Thank you. Rick, a couple questions. My first question is more sort of a broad industry question, and maybe you can talk about what you're seeing from your perspective. Obviously, there is tremendous concern in the marketplace about structural change to pricing. We saw McKesson highlight significant moderation in price increases next year, which caused them to lower their guidance. Novo significantly lowered their expectations. Amgen talked about TNF pricing basically going away. From your vantage point, what are you seeing, and maybe you can share with us changes that we should anticipate in our models with respect to net pricing for HUMIRA in the U.S. going forward? Secondly, we appreciate the early commentary and color on 2017 guidance, 13% to 15% earnings growth. However, that is a little bit below consensus. Maybe if you could just step back – you gave us 2020 guidance a couple years ago; maybe you could just step back and help us think about the cadence of earnings growth. AbbVie's a different company from the industry average just given the looming competition to HUMIRA. Maybe if you could just help us think about the growth of this company over the next five years, how you're thinking about it? What you see relative to the plan that you put out a couple years ago? Thanks very much.

Sure, Jami. So this is Rick. Thank you for the questions. I think as you look at price, certainly the rhetoric on price has been more intense than we've seen it in a number of years, and some of that is driven by the political environment, and some of its driven by more fundamentals. I think if you look at our business specifically, our business is primarily a volume-driven business. That's not to say we don't benefit at all from price. But clearly the vast majority of our growth comes from volume. And the key, I think, for our entire industry is to continue to drive innovation and innovative products in general. And innovative pharmaceuticals, I think in general, tend to save the healthcare system money over time. And I don't know that we've done everything we should do to be able to make sure that, one, we get that message out and, two, maybe support that message a little bit better than we than we have in the past. And so I think that's the key for the industry going forward. And that's the thing that we need to focus our attention on. And if you look at the products that we've been successful with, I think they have a good economic value proposition. HUMIRA's a good example of that as well. And so what I'd say as we look at our planning process, just as we have in previous years, we tend to plan conservatively when it comes to price and then evaluate the market environment at the time that we ultimately get close to that period of time and make a decision around what is the appropriate pricing strategy. And our guidance in 2017 and our long-range plan are both reflective of that philosophy. That philosophy hasn't…

Thank you.

Operator, we'll take the next question.

Our next question comes from the line of Jeffrey Holford from Jefferies. Sir, your line is open.

Oh, good morning. Thanks very much for taking my question. Just want to ask you, Rick, just to comment on a couple of things said by Amgen yesterday. So they have an expectation for flat net pricing for their TNF in 2017. Do you have a similar expectation built into your guidance for 2017 for HUMIRA? I wonder if you can give us a bit more color on that. And then beyond 2017, do you already anticipate that that flat net pricing in the U.S., if that's what you consider for 2017, actually becomes negative maybe in 2018, 2019? Just wondering what you've considered in your midterm plan. And then also, Amgen seemed to communicate yesterday evening that they won't launch at risk in 2017, and indeed whilst the legal process is going on. Is that your interpretation of what they were saying also? And how long you think do you think that that legal process going to go on for? I don't know if you have any court dates yet. Thanks very much.

Okay. Thanks, Jeff. So I'm not going to necessarily give you the absolute color on what our assumption is in 2017 as it relates to price. But I'd say we don't have a consistent view of the TNF market to the one that was described by Amgen. And I think every product obviously has a different perspective in the marketplace. Maybe it's worthwhile to walk through HUMIRA in a little bit of detail, because I know there's always a lot of interest in it, and that'll give you, I think, a perspective of where we stand overall. I mean, if you step back and you look at where HUMIRA is, take the international market first, HUMIRA continues to perform as we've described it, despite the fact that we've seen the launch of Enbrel biosimilars in that market now for about seven or eight months, I would guess, maybe nine months, something like that, that they've actually been in the marketplace. They've had a very modest impact. We're delivering mid-single digit growth, as we've described to you. In fact, this quarter was about 4.5%. Now, the interesting thing is, if you adjust for the impact of Venezuela, which will be a one-time impact in 2016, the underlying growth of our international business for HUMIRA is 7.6%. So good, strong growth. It's primarily volume growth because you typically have negative price in those international markets. So I'd say HUMIRA's performing exactly where we would have expected it to perform in the international markets. If you look at the U.S., the U.S. has had just truly outstanding growth. If you looked at the past six quarters, on average, HUMIRA has averaged about 25% growth. The last two quarters, second and third quarter, if you average the two of them together, the growth was…

Thanks very much.

Thanks, operator. We'll take the next question.

Our next question comes from the line of Chris Schott from JPMorgan. Your line is open.

Great. Thanks very much. Just two quick ones here. First, Rick, just to clarify that comment you made on HUMIRA net pricing for 2017. I know you don't talk a lot about price, but just to make sure I heard that right, did you say minimal to no change in net price? Is that basically implying you're not seeing net price up in 2017, or is that referring to the kind of realized price increase? I just wanted to make sure I heard that one right. The second one was just talking about formulary dynamics. I think some payers have talked about wanting to move to more indication-based pricing and have talked specifically about the TNF category. Just interested in your thoughts on that, and is that anything we should be seeing from you either in 2017 or 2018 as you're going through these formulary discussions? Thanks very much.

Well, as I described to you before, Chris – so we are through the 2017 and 2018 negotiations now. Now, that doesn't mean you can't open something up. But at the end of the day, we have completed all of our negotiations at this point for the 2017 and 2018 contract periods. My comment on net price was essentially, as you go in and you negotiate for your next contract, typically there is pressure to take your rebates up, right? So that's – if you put any price increase and the fall-through of price increase aside, it's what would you increase your rebates by over that period of time? That's what my comment was designed to address, that there was minimal to no change from that perspective. Any price will flow through based on the normal dynamics of how that would occur. And, as I said, it was consistent with what we had in place from any levels of price protection in 2016. So it's basically business as usual for us going forward in 2017 and 2018. As far as indication-based pricing, I mean, I think that's a phenomenon that originally started in the area of oncology, where you could have an oncolytic agent that had very different activity or efficacy in one type of cancer versus another, and is the value proposition the same? If you look at HUMIRA typically across the areas that we compete, HUMIRA is typically the gold standard in most of the areas that we compete in. I'd say generally speaking we have seen some interest in indication-based pricing and potentially doing that. That's not something that, as I said, I think fits well for HUMIRA because of its broad applicability and its level of performance across the range of indications that it has. But it's certainly something that has been of interest. I don't see that as a fundamental issue in the contracting that we've seen go forward for 2017 and 2018, at least for HUMIRA.

Thank you.

Operator, we'll take the next question.

Our next question comes from Andrew Baum from Citi. Your line is open.

Hi. A couple of questions, please. Could you help me just further categorize the slowing HUMIRA growth, given the biosimilar impact is obviously going to be pretty limited given the geography and limited time that the other TNF biosimilars have been the market. How much is competition from the IL-17s in the psoriasis class? How much is saturation of indications? And how much is mandatory price reductions outside the U.S.? And I know you've given earnings guidance for next year. I wonder whether you'd like to give revenue guidance for HUMIRA. Second, AbbVie's enjoyed a mutually positive relationship with the PBMs. In general, do you anticipate any change between the relationships between the PBMs and the pharma industry given the political focus on the PBMs on the lack of transparency, as well as the ongoing attorney general investigations? And then finally, for Mike, could you tell us what percentage of patients on IMBRUVICA run into problems with atrial fibrillation or coagulopathy? I'm obviously thinking about future competition from Astra's acalabrutinib. Many thanks.

So Andrew, in terms of HUMIRA, if you look at the overall growth rates outside the U.S., I can't give you a complete slice of what IL-17s are doing specifically, because it impacts market by market. But broadly, when you look at our assumptions that we had around biosimilars and the underlying growth of the markets, things have been progressing very, very well. So you look at major markets across Europe, we've got market growing in the low teens, no changes there. And if you look at HUMIRA share, very, very minimal change year over year. Biosimilar Remicade has not had a major impact on the brand in any way whatsoever. And Enbrel, as we had told you at the beginning of the year, we anticipated a 2 to 3 percentage growth impact, but that was more or less based on the pricing that we expected the biosimilar to come in at. So the biosimilars have been performing very much in line with our expectations. The new entrants to market – look, it's something we're watching very closely. But the reality is, those new entrants tend to get slotted as for patients that are ultimately anti-TNF failures. And so while they are ultimately gaining some traction in the market and they're picking up market share, I don't think you should read that through as a direct erosion to the market share of HUMIRA. Again, in fact, we've got a very, very strong market share position across those markets.

I think, Andrew – this is Rick. When you say the brand is slowing, I'm not sure whether you're referencing what Bill said in his comments about the prior-year inventory levels or you're just looking at, as in the U.S., as I said in my comments a moment ago, we've averaged over six quarters about 25%, and the last two quarters are more in the 21% range. There's obviously fluctuation from quarter to quarter. But if you look at the dollar contribution across those quarters of growth, it's fairly consistent. And there's always ins and outs, but at the end of the day, as the brand gets bigger, the percent growth is going to go down, and the brand has obviously grown significantly across that period of time. If you look at the IL-17s of some of the other brands, as I mentioned in the market share, our market share in derm is roughly flat. We clearly have the leadership position in that segment. And I think as we look at the dynamics within that market, just to reinforce what Bill said, it's typically the number two player that's getting the bulk of any erosion in their market share with the entrance of a new mechanism like a 17, as an example, because it is usually the second-line failure that they tend to get their market share from. And so HUMIRA has not had as much as of a negative impact based on that because we're typically the first TNF that is used in those indications. On the PBMs, obviously we try to have good relationships with all of our customers, whether they be managed care organizations or PBMs. They are professional relationships. I think PBMs serve a very important purpose. They obviously allow plans to be able to have formularies that they can help manage, and that's the role that they play, and we play an important role with them in being able to supply them with products that can go on those formularies, and so I think it's a typical business relationship. And on IMBRUVICA, I mean, I don't know that we commented specifically about the rates. They're obviously relatively low rates. Mike, do you want to add anything?

Well, I think we can comment on the clinical trial experience as probably the best ability to assess the rates. And there the AFib rates have been in large data sets, so big Phase 3 studies, on the order of about 6% to 7% on a number of – across the studies that make up our label. And there is a background rate, of course, for AFib in that population as well, which runs in the low single digits. And for bleeding events, we're seeing bleeding events in about that same range of patients. And, again, there's a background rate in the population. With bleeding, most of the episodes of major bleeding that we've seen in our clinical trial program have generally been associated with other precipitants, so trauma or other events that might be associated with bleeding. And, again, there's a background rate there as well.

Thank you.

Thanks, Andrew. Operator, we'll take the next question.

Our next question comes from the line of Vamil Divan from Credit Suisse. Your line is open.

Great. Great, thanks so much for taking my questions. So two questions I have. So one on HUMIRA. You've talked obviously kind of how you see things relative to the longer-term guidance you gave last year. I just had a question more on the longer term, because I think there's been a lot of expectation that once there is biosimilar HUMIRA available in the U.S., because of some of the relationships you have with the PBMs, that the erosion of HUMIRA may be relatively slow. I'm wondering if any of this sort of rhetoric and discussion around drug pricing and transparency around drug pricing, does that change your view on the tail for HUMIRA after we have biosimilar entry, whatever year that entry actually occurs in the U.S.? And then my second question, a couple of your key pipeline products are also in the autoimmune [indiscernible] oral JAK and your IL-23. I'm wondering if you could just talk a little bit about the dynamic there, because there's obviously competitors ahead of you in both of those spaces. You're going to be entering what appears to be pretty competitive and maybe price-sensitive markets as well. And you will not have the same sort of dominant position that you've enjoyed with HUMIRA. So how do you think about the opportunity to get into those markets coming behind competitors, with price again being a potential issue? Thanks.

Yeah, I mean, based on the long-term expectations, as we've communicated to the market before, we don't anticipate biosimilar competition in the U.S. market for quite some time. And so I think we have a strategy that we have developed that we will put in place at the point at which we see biosimilar competition in any market around the world. We'll obviously implement that strategy outside the U.S. potentially earlier, in an earlier timeframe. And that strategy is designed for us to be able to maintain our position going forward. I think it's far enough out in the U.S. that we will have to see how the dynamics play out. I don't anticipate anything significantly changing that strategy based on how we would employ the strategy, based on the debates that we see going on and the market dynamics going on. I'll have Mike maybe talk a little bit about the JAKs and the IL-23s from a performance standpoint, but what I would say from a market standpoint is we have always tried to position that our follow-on products would be significantly differentiated versus others in the marketplace. And we've designed our clinical trials to be able to produce that level of differentiation. And I would expect that if anything we would be in a better position based on our experience and our position in this market to be able to launch these products successfully into the market as companion products behind what will be a workhouse product like HUMIRA. We still anticipate that HUMIRA will be the workhorse product that will handle the vast majority of the volume, particularly in the beginning, and these products will fit into different segments going forward in a complementary way, and I think that gives us an advantage, not a disadvantage, in the marketplace. Mike?

Yes, this is Mike. What I would add is, as a leader in immunology, we have a very clear understanding of the profile that we believe will be competitive, not only today but in the future and in the timeframe that these products will launch. And when we look at, in the case of the two molecules you mentioned, the Phase 2b data to make a decision on either advancement or in-licensing, we kept that profile in mind. And I think each of those assets stands up very well to that understanding of what we'll need to be competitive. With the JAK, for example, that's why we focused on differentiated efficacies, strong efficacy in very difficult-to-treat patient populations, and very, very strong data at the higher-levels response, endpoints like remission, low disease activity, durable ACR70s, and the like. And for risankizumab, it was it was really the same thought process. We looked at those data and we believed, based on a very substantial set of clinical trial results, that the efficacy there was truly differentiated. And we can point, for example, to the approximately 50% posi 100 response for risankizumab in Phase 2b with very favorable pharmaceutical properties of that agent, very favorable dosing that we believe is attainable in Phase 3 and in registration. So we're keeping that profile in mind, and we're advancing assets that we believe will be competitive in the future.

Thanks, Vamil. Operator, we'll take the next question, please.

Our next question comes from the line of Geoff Meacham from Barclays. Your line is open.

I wanted to switch gears away from HUMIRA a little bit and talk a little bit about IMBRUVICA. And curious if you can give us any commentary post the first-line approval just with respect to durational therapy, dose interruptions. Clearly extended treatment is clearly one of the big value drivers here for IMBRUVICA. And then just for Elagolix, just wanted to get your perspective, updated perspective, just given a new competitor in the marketplace about the value of having add-back or not and what that means in terms of differentiation in the women's health market. Thanks.

This is Rick. I think on IMBRUVICA, if you look at our performance in first line, we're obviously pleased with the ramp that we've seen so far. I mean, we're ramping fairly rapidly to about 20% now of the overall market. The duration of therapy, I think we've communicated historically, has been in the area of about 75% of the clinical trial experience. I haven't seen the data in the last couple of months, but I think in first line it's consistent with that, and it has been increasing slightly in the relapsed/refractory area. But it's certainly at a very respectable level and certainly isn't anything that we're concerned about at all. I mean, it's certainly at a level that we would expect it to be going forward. And so I think the adoption of IMBRUVICA in that first line, I think the speed of adoption in that first line is an indication of the power of the data that we've seen in RESONATE-2 and physicians' receptivity to that data, both from a PFS and an overall survival standpoint. That's really what's driving a lot of the usage of this product. And I think as we expand and provide even more data, we should continue to see the ability to be able to penetrate that first-line market to an even greater extent. Elagolix?

With respect to Elagolix, we're obviously aware of the competition and keep a close eye on competition across all of our franchises. But we feel very good about the position we have with Elagolix. We have a substantial lead, having completed two Phase 3 studies, and competition is considerably behind that in terms of timing. And we're going to continue to drive that program forward. The efficacy and the safety results that we see, we view very favorably. We think they support the value proposition that we had in mind when we entered into Phase 3. And we're going to continue in subsequent studies, in post-registration studies, Phase 4 work, if you will, to continue to define that profile. Add-back could be an important part of that profile, and we are pursuing that. And there may be other strategies to continue to enhance the value proposition for Elagolix. Then we're going to be driving forward with that aggressively.

Thanks, Geoff. Operator, we'll take the next question.

Our next question comes from the line of Marc Goodman from UBS. Your line is open.

Hi. This is Ami Fadia; I'm on for Marc. Most of our questions have been answered, but I'll ask three quick follow-up questions. Firstly, on HUMIRA for the quarter, if you look at the sequential sales in 3Q versus 2Q, there was weakness sequentially, but if you could help us understand what might have driven that, that would be helpful. Secondly, just with respect to your long-range guidance for EPS growth, how should we think about the 15% growth over the longer term? Right now it's sort of ranging in the lower double-digit range. When do you expect to see the spike more closer to the mid double-digit range? And then thirdly, on Rova-T, could you elaborate a little bit on the basket study? What are you looking to see there? That would be helpful. Thanks.

Ami, it's Bill Chase. HUMIRA's kind of a difficult brand to look at on a sequential quarter basis. First of all, it's a very well-established brand – growing rapidly, but well-established. If you go back and look over the years, it is not unusual in the U.S. or abroad to see a general flattening out over the summer and then an acceleration back in the back half of the year. And that is the pattern that we're seeing this year. Now, could there be some degree of inventory between Q2 and Q3 that's impacting that sequential growth? Yeah. I mean, look, minor moves flow – impact that sequential. But really at the end of the day when we look at the brand, and we look at the dynamics around the brand, and we look at the prior year destock that we saw in the second quarter, and the subsequent restock in the third quarter, there is nothing that is alarming us about this third quarter. You have you to remember that our second quarter results had 26.7% growth. That was largely related – that difference from the 20% was largely related to a destocking event in the second quarter of 2015, and we're just seeing the impact of the restock in the third quarter of 2015. So we actually feel very, very good about it. We're guiding fourth quarter above 20%. We feel very, very good about our full-year forecast.

On the EPS, so 2015 we delivered EPS growth of 29%. And this year, the midpoint is about 12%, right?

Yeah.

Now, you got to remember, that 12% has the dilution associated with the Stemcentrx transaction and the dilution associated with the BI transaction. So that's certainly weighing on this year. We're guiding next year to be 13% to 15%, so that's certainly in the range of the 15% area. And then nothing has changed that gives me any concern that we won't achieve the number that we talked to you about on average across that period of 2015 to 2020, that we can average that kind of a compounded growth rate. But I'd say, thus far, if you look through 2017, you'd say we're at or above that range, across the average, including the dilution of those two transactions. And then Rova-T?

Yeah, this is Mike. With respect to the basket study for Rova-T, so this is a study that has eight arms, and each arm looks at a different type of the tumors that have neuroendocrine features and share the same underlying biology as small-cell lung cancer. Examples of these tumor types might be the large-cell component of non-small-cell lung cancer, a form of pancreatic cancer that has neuroendocrine features, subsets of colorectal cancer and metastatic melanoma, for example. So each of these eight arms is going to look for response rate in refractory patients with those tumors. And when we see a response rate that we view as indicative of good activity, we would then have the ability to expand out both those cohorts and start additional studies that could be registration-enabling, following the same conceptual strategy that we did with Rova-T and small-cell. Of course the nature of what each registrational program would look like would be tailored to the individual tumor type. But this is a study that could rapidly trigger additional registrational work in those other tumors as we see signs of activity.

Thank you.

Thanks, Ami. Operator, we'll take the next question.

Our next question comes from the line of John Scotti of Evercore LSI (sic) [ISI] (1:11:32). Your line is open.

Hi. Thanks for taking my questions. I have a couple, please. So I apologize for touching on this I think the third time, but I just want to make sure I'm absolutely clear. So when you say minimal to no change in net price from 2017 to – 2016, 2017, 2018, just to be clear, so what you mean is that the gross-to-net spread on HUMIRA you don't anticipate widening, but you will still continue to capture at least some net price growth? Or is it that you do not anticipate on capturing any net price growth because gross-to-net spreads are widening? And then also, I was also curious on the P&L management this quarter, particularly on the SG&A side, which came in a little bit better than expectations. So where are those cost savings coming from, and are they coming from HUMIRA? Are you reducing your global footprint on HUMIRA ahead of the biosimilar entry? If not, just curious where they're coming from. Thank you.

Okay, so, John, just to clarify on the price, the net price comment refers to what happened to net price before any future price actions. Okay? Now, what we're not saying is that there will be no net price increase next year. We still have within our contracts the ability to raise price and see a positive impact on the P&L from those actions. The net price actually has to do with, without any future price increases – which, by the way, that isn't how we're modeling the year, what we would expect – price would be an a constant basis without price increases. The contracts allow us to take net price. And any net price increases, any price increase that we took, would have a positive impact on our bottom line. That's the way you need to think about it. That said, in 2017, we are planning conservatively, as we always do. We're approaching the 2017 guidance with the exact same philosophy on how we plan for price increases that we have in the past. So hopefully that helps out. And then from a P&L management standpoint – look, the SG&A ratio, we're very pleased with. It's really a couple different things. There is a leverage impact from the rapidly growing top line that obviously we've been delivering over the last few quarters. That said, we look at our spend. We're looking at admin very, very closely. We're looking at the productivity of all of our SG&A investments, as you would expect us to. And we fund projects based on an ROI and a return. And if they have positive ROI, we find a way to get the money in the right places to deliver the return. In terms of HUMIRA, we are not backing off our spend on HUMIRA. The spend on HUMIRA has been the driver of the spectacular growth that the brand has put up. And all of those programs are very, very high ROI, which as you can see – as you can imagine based on the sales growth.

Thank you.

Thanks, John. Operator, we'll take the next question.

Our next question comes from the line of Alex Arfaei from BMO Capital Markets. Your line is open.

Good morning, folks. Thank you for taking the questions. Most of my HUMIRA and price questions have been asked and answered. Just looking out at pipeline and business development opportunities, what are your thoughts about either developing or pursuing CAR-T products to augment your hematology pipeline and maintain your leadership? That seems to be where we're going with a lot of hematologic malignancies. Thank you.

So this is Mike. With respect to CAR-Ts, obviously there's been a lot of activity. It's still early days for the use of those agents in later-stage trials and obviously not yet being registered agents. And there's also a lot of work that is going on to try to figure out what is the right functionality that one would want to build into a CAR-T to optimize its applicability across a range of both hematologic and other tumors. And so we're keeping a close eye on the space. As a leader in immunology with our very strong presence in oncology, obviously there are a lot of skills that we bring to the table that we think we could apply to CAR-Ts. And we'll continue to monitor that area closely, both with our internal work and keeping an eye on the external environment.

Thanks, Alex. Operator, we have time for one more question.

Our last question comes from the line of Steve Scala from Cowen.

Thank you very much. I believe HUMIRA's IP estate has increased by 30 or so patents from this point last year. Last year you gave us a very nice chart of the nature of the patents and the expiration dates. It was page 14 of your slide deck. In general terms, can you detail the nature of the additional 30 in terms of the type of patent they are and the expiration dates? And then, secondly, AstraZeneca has saying they could file acalabrutinib for an indication by the end of this year, but I'm not aware that they have identified that indication. Does AbbVie have any competitive intelligence on what AstraZeneca might be up to? Thank you.

Yeah, Steve. This is Rick. On the IP, off the top of my head, I can't give you all of the dates of the incremental 30 patents. We continue to work on our patent estate. So I think maybe off-line we'll try to get back to you with whatever we are able to provide you. And then, Mike, do you want to talk about AZ?

Sure. This is Mike. And we've certainly heard the comments that you're referring to by AZ, but we agree that they've not been very specific. I don't think we can really speculate on what they have in mind. What I can tell you is with ibrutinib, we're moving forward very aggressively, very rapidly across a number of fronts, moving to front line in CLL, advancing our programs in other areas like non-Hodgkin lymphoma. So we're really focused on raising the bar there and making sure that we're driving IMBRUVICA as rapidly and aggressively as we possibly can.

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

Participants, the call has concluded. You may now disconnect. Thank you.