Good morning. Thank you for standing by, and welcome to the AbbVie's Second Quarter 2021 Earnings Conference Call. All participants will be able to listen only until the question-and-answer portion of this call. [Operator Instructions] I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations. Ma’am, you may proceed.

Good morning, and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Michael Severino, Vice Chairman and President; Rob Michael, Executive Vice President and Chief Financial Officer and Jeff Stewart, Executive Vice President, Commercial Operations. Joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman, External Affairs Chief Legal Officer and Corporate Secretary. 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 these risks and uncertainties is included in our SEC filings. AbbVie undertakes no obligation to update these forward-looking statements, except as required by law. On today's conference call non-GAAP financial measures will be used to help investors understand AbbVie’s business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Unless otherwise noted, our commentary on sales growth is on a comparable basis, which includes full current year and historical results for Allergan. For this comparison of underlying performance all historically reported Allergan revenues has been recast to conform to AbbVie’s revenue recognition accounting policies, and exclude the divestitures Zenpep and Viokace. References to operational growth further exclude the impact of exchange. 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. I'll discuss our second quarter performance and outlook. And then Jeff, Mike and Rob will do our business highlights, pipeline progress and financial results in more detail. AbbVie delivered another excellent quarter with adjusted earnings per share of $3.11, exceeding the midpoint of our guidance by $0.04. Total adjusted net revenues of nearly $14 billion were up 19.3% on a comparable operational basis, approximately $375 million ahead of our expectations. These results demonstrate our strong and balanced performance across each of our major growth franchises, including double-digit comparable operational revenue growth from immunology, hem/onc, neuroscience and aesthetics. Looking at the most recent trends, the vast majority of our portfolio is well into the recovery phase from the pandemic. In immunology, we continue to see strong recovery across the room, derm and gastro segments with positive trends across all key indicators, including new patient starts. SKYRIZI and RINVOQ continue to ramp nicely in their initial indications, with both products demonstrating robust double-digit sequential revenue growth. In neuroscience, Vraylar is demonstrating strong new prescription volume in the atypical antipsychotic market and the launch of Ubrelvy, the leading oral CGRP for acute migraine continues to exceed our expectations. Aesthetics continues to perform well above pre-COVID levels exceeding our internal expectations. We're pleased with the rapid market growth in both toxins and fillers, driven by our increased promotional resources globally, brand strength and COVID-related pent-up demand. Rapid global market demand is expected to remain well above historical levels in the near to medium-term and we are raising our full year guidance once again for aesthetics. While the recovery across the AbbVie portfolio is going very well in aggregate, in certain disease areas like CLL and HCV, we continue to see a…

Thank you, Rick. I'll start with immunology, which delivered global revenues of more than $6.1 billion, reflecting growth of 13.8% on an operational basis. SKYRIZI and RINVOQ continue to have significant impact on AbbVie’s growth and performance, contributing more than $1 billion in combined sales this quarter. SKYRIZI global revenues were up 17.4% on a sequential basis, reflecting increasing market share globally. In the U.S., SKYRIZI continues to perform well and has maintained its leading in-play psoriasis patient share, which includes both new and switching patients at approximately 34%. SKYRIZI’s total prescription share capture is now approaching 20%, second only to Humira. Internationally, SKYRIZI has achieved in-play patient share leadership in 13 markets, including Canada, France and Japan. RINVOQ is also demonstrating robust growth with global sales up nearly 25% on a sequential basis. We continue to see in-play patient share of approximately 15% in the U.S. RA market, where physician and patient feedback remain very positive on RINVOQ’s strong benefit risk profile. Internationally, RINVOQ access and share continue to ramp nicely in RA, with in-play market leadership now in half a dozen key countries. We are also making excellent progress with the regulatory approval and commercial launch of PSA and AS across several OUS countries. And we look forward to the approval and commercialization of RINVOQ in atopic dermatitis later this year following the recent CHMP positive opinion for both the 15-milligram and 30-milligram doses. Humira global sales were approximately $5.1 billion, up 3.6% on an operational basis, with continued high single-digit revenue growth in the U.S., offset by biosimilar competition across the international markets, where revenues were down 12.6% on an operational basis. In hematologic oncology, sales were approximately $1.8 billion, up 13.2% on an operational basis. AbbVie maintains a strong leadership position in CLL with a combined…

Thank you, Jeff. I'll start with immunology where we had several notable pipeline events in the quarter. In the area of inflammatory bowel disease, we reported positive top line results from the Phase 3 maintenance studies for RINVOQ in ulcerative colitis, and SKYRIZI in Crohn's disease. In the RINVOQ UC maintenance study, both the 15 and 30 milligram doses met the primary and all secondary endpoints at week 52. In the induction portion of the program, RINVOQ demonstrated a very strong impact on the disease. And the results from this maintenance study demonstrate that patients continuing treatment with RINVOQ maintain high levels of clinical remission, clinical response and endoscopic improvement at the one-year mark. In fact, maintenance treatment with either dose of RINVOQ resulted in some of the highest rates of remission and endoscopic improvements seen in UC clinical studies. With the 30 milligram RINVOQ dose 52% of patients achieved clinical remission, 62% achieved endoscopic improvement, 49% achieved histologic endoscopic mucosal improvement, and 68% achieved steroid free remission. We are very pleased with how RINVOQ performed from a safety perspective as well. In this maintenance study, the exposure adjusted event rates for overall adverse events including serious and severe events were higher in the placebo group than in either RINVOQ dose group. Additionally, the exposure adjusted rates for MACE, VTE and malignancies, excluding non-melanoma skin cancer were comparable between RINVOQ groups and placebo. These results provide further evidence that RINVOQ has the potential to become a highly effective therapy for patients with moderate to severe ulcerative colitis. We're also nearing completion of the Crohn's disease program for RINVOQ and expect to see data from the first Phase 3 induction study later this year. Results from the second induction study and the maintenance study are expected in the first half of…

Thank you, Mike. Starting with second quarter results, we reported adjusted earnings per share of $3.11 up 32.9% compared to prior year and above our guidance midpoint. Total adjusted net revenues were nearly $14 billion 19.3% on a comparable operational basis, excluding a 1.6% favorable impact from foreign exchange. The adjusted operating margin ratio was 49.7% of sales, an improvement of 260 basis points versus the prior year. This includes adjusted gross margin of 82.2% of sales, adjusted R&D investment of 11.3% of sales and adjusted SG&A expense of 21.2% of sales. Net interest expense was $606 million, and the adjusted tax rate was 12.6%. As Rick previously mentioned, we are raising our full year adjusted earnings per share guidance to between $12.52 and $12.62, reflecting growth of 19% at the midpoint. Excluded from this guidance is $6.48 of known intangible amortization and specified items. This guidance now contemplates full year revenue growth of 10.7% on a comparable operational basis. At current rates, we now expect foreign exchange have 0.9% favorable impact on full year comparable sales growth. This implies a full year revenue forecast of approximately $56.3 billion. Included in this guidance are the following updated full year assumptions. We now expect aesthetics global revenue of approximately $4.9 billion, including approximately $2 billion from Botox Cosmetic, and approximately $1.4 billion from Juvederm. We now expect Restasis sales of approximately $1.1 billion and assume no generic competition in 2021. For Ubrelvy, we now expect sales of approximately $500 million. For women's health, we now expect global revenue of approximately $900 million. And for Mavyret, we now expect global sales of approximately $1.9 billion. Looking at the P&L for 2021, we are now forecasting adjusted R&D investment of approximately $6.7 billion and adjusted SGA expense of approximately $11.9 billion. All other…

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

Thank you, Ms. Shea. Our first question is from Vamil Divan with Mizuho Securities. Your line is open, sir.

Great. Thanks very much for taking my questions. So maybe two if I could. So one, Rick, you mentioned some of the Allergan products, maybe doing better than your expectation. Can you maybe, I mean, I know you don’t want to share your secret sauce. But in terms of what is it that you've noticed that has helped to drive those products? Because it seems like it's pretty much across the Board, from an aesthetic to Vraylar, Ubrelvy. So, is it around promotion efforts? Is it around some payor dynamics? Or anything you could share would be helpful there? And then the second one on Imbruvica. I just want to confirm, I think you guys said that the new patient share across all indications now is 42%. So, I just want to see you guys are in line with what you expect at this point. Obviously, there's been questions around some like competitors that have entered the market. And maybe you can just talk about the patients who are not studying on Imbruvica. So, what are you seeing as the reasons why they might be choosing a competitor? Thank you.

Yeah, Vamil, this is Rick. I'll cover certain part of the first question, and maybe I'll ask Jeff to jump in and cover any additional thoughts that he might have. I think as you look at this business, one of the things that I think AbbVie is sort of known for is that, we tend to operate in a very focused and disciplined way, especially across what we consider to be growth franchises. We expect every one of our major businesses to develop plans, to be able to maximize the value of their assets, both from a strategic long-term basis, but also from a short-term tactical basis. And I'll use aesthetics as the example. Early on, we made the decision that we were going to fully integrate the aesthetics business to make sure that it had the focus and attention there it needed because we believe this business had a significant opportunity to be able to grow. We did that globally. So, if you look at Allergan in the past internationally, those people representing those products also had to represent eyecare and other therapeutic products. So, we moved those out into the therapeutic areas of AbbVie internationally and solely dedicated the aesthetics group internationally to just their products. And then in the U.S., we operate with a similar structure and a fully integrated R&D organization is totally committed to just developing aesthetics products and reports directly to Mike and then the Head of the Business for aesthetics reports directly to me. And we had them develop a plan that they are now executing against to be able to deliver against that. So, I think it's really three aspects of it from my perspective. It's one the structure we put in place. And that was a thoughtful, planned out structure. Two, it's the discipline processes that we use to be able to execute across all of our businesses. And then third, I'd say we have consistently invested and we do invest in businesses that we think have the opportunity to be able to drive long-term growth and performance in a way that we can drive that at maximum speed. And certainly, as you look at aesthetics, we've increased the investment in SG&A and we've increased the investment in R&D. Jeff, anything you'd add?

I think, Rick, the – I would agree, I think, big piece Vamil, was the - is the level of the investment. So, as we looked at the - particularly the neuroscience compounds, Vraylar and Ubrelvy, we were able to structure the sales forces a little differently, which was important from commercial execution and also really upgrade and drive some of the investment around patient activation. So, I think that all of these brands are spectacular brands leadership position. And when we got that investment profile right, we've seen the response, so nothing that beyond that. Going back to your question on the hematology share, the 42% that I referred to was the combined AbbVie shares. So that's Imbruvica plus Venclexta across all lines of CLL. So, if you take a look - if I give you a little bit more color on the latest data that we have, for example, in frontline, we have 35% total AbbVie share, which is made up around 24% for Imbruvica and 11% for Venclexta. For second line share, for example, we have a 48% total AbbVie position, which is approximately 33% for Imbruvica and 15% for Venclexta. So, both of these brands are now operating at a very significant share level across CLL. I'll give you some more thoughts as you ask for in terms of color in the market. Beyond that leadership level that we have across the CLL indication, we do see that the CLL market is still suppressed. So, for example, patient starts year-to-date are down in the high single digits. And even within the quarter, they were down in the low single digits. We see that improving. And so that outlook looks to improve over the second part of the year. In terms of overall share dynamics, over the last several quarters, we have lost a few share points to Calquence, within the range of our expectations as they've ramped with their CLL ramp. But also interesting, we've seen that there's been some share increases in monotherapy CD20, which we think is also a COVID type of effect that will ultimately revert back to normality as we go along through the pandemic. So overall, the franchise is performing very, very well. And as you heard from Mike, we're tremendously excited about the future of the hem/onc franchises as we move forward.

And Vamil, this is Rob. I'm going to come back to your first question. Just one more thing we should mention is, we've been able to really leverage our international infrastructure. And so, we set up this business. We have the aesthetics franchise, focus fully internationally on that business whereas Allergan had combined with therapeutics. So, we've been able to bring that focus and the level of investment. I think we've also been able to leverage our market access prowess. So, we’re very strong across the globe. And so, when you think about the opportunities for us going forward, I think, international certainly plays a big role as we leverage the Allergan business.

Thanks, Vamil. Operator, next question please.

Thank you for your question. Our next question is from Chris Schott with JPMorgan. You may ask your question.

Great. Thanks so much. Just another one on aesthetics. Obviously, some incredibly strong numbers here. Can you just elaborate a little bit more on sustainability of this growth? So, I guess I’m just trying to get a better sense of how much of what we're seeing right now is catch up as we exit lockdowns versus a more sustained step up in sales going forward? Just any color on that would be appreciated. My second question was RINVOQ in UC. Can you just put some of this data into context as you think about the competitive landscape, and particularly relative to what you had anticipated in your long-term guidance for this indication? I think you’re about $1 billion in IBD sales by 2025. And is that we've seen more of this data set, just how comfortable are you feeling with that target and ultimately the role RINVOQ’s going to play in this space? Thanks so much.

Hey, Chris, this is Rick. I'll take the aesthetics question and then Mike can maybe cover the second question that you had. So, it's a great question. And it's one that we have been looking at very carefully. I mean, if you just step back and you look at the performance of the business, we've done a number of things to drive the business. We believe this business is significantly underpenetrated when you look at the available patient population here and your ability to drive long-term penetration is tremendous. And so, that's why we've done the things that we've done to try to drive that demand. Globally, the aesthetic sales were up 31%. If we look at the U.S. toxin and filler business, the markets up about 40% versus 2019. So, but it's hard to evaluate, I can tell you the vast majority of it is driven by fundamental demand. And we can see that through the funnel that we see patients coming in and how many of them are activated to go get procedures. But we just conducted a fairly robust market research study to try to understand how much of it was COVID related. And we looked at things like how many of those patients got stimulus checks, how many of them were affected from an employment standpoint, and are now back at work? I'd say that study, if you looked at the data in that study, the conclusion that you withdraw from that is very little of it is COVID related. Now, I think the flaw is this, most patients are not going to say they use stimulus money for these kinds of procedures or other kinds of things. So, I think to the best of our ability, what I would tell you is about two thirds of the performance, I think, is fundamental demand, and maybe one-third of it is pent up demand. We're going to need a couple more quarters, I think to see how that plays out. But I'd say that's our best assessment right now. So, very robust growth either way, and it could sustain a little bit better than that. But I think, you can pretty well count on two thirds of it being fundamental demand at sustainable longer term. Mike?

I'll take the question on RINVOQ UC. What I would say is the data that we've seen from RINVOQ UC has exceeded our expectations from an episode perspective, and the results they are very strong. UC has been very difficult to treat pharmacologically and getting high rates of permission. And this response has been challenging and both has delivered those now account just across number of studies. And I think from a safety perspective, it's also performed very well. I commented in my remarks, fact that overall rates of these serious AEs are actually lower with RINVOQ [ph]. Now the reason for that is that many of these AEs are driven by self and with the improvement in the ease to use UC then improve as well. And with respect to events of interest, the safety profile has worked very, very well with their segment A, segment B and other events rates have been comparable to controls. And so overall, we feel very confident in the long term guidance that we put out. But one thing that's important to keep in mind is that long term guidance is 2025 guidance. And our IBD assets will be in relatively early stage of launch by that time. But the profiles that I've talked about not only for RINVOQ, but also for SKYRIZI bode well, not only 2025 guidance, but for the long term growth of that aesthetic as opportunity there as well.

Thanks Chris. Operator, next question, please.

Thank you. Our next question will be from Ronny Gal with Bernstein. You may ask your question sir.

Good morning, and thank you for taking the questions. First one is on ABBV-951. You've mentioned the efficacy rates. I was wondering if you can talk a little bit about the skin safety profile as compared to the neogen product or the apomorphine IV from Europe, especially when it comes to the some more severe effects like Abscess and Okta? The second question is staying with a pipeline is a little bit of budget a-Beta. Didn't take long for you guys to walk into that. I was kind of wondering if you can talk a little bit about the science that you're discovering, is the right approach to get to the best effect with minimal side effects to try to remove as much flak as possible in a very targeted manner? Or should the approach be to go after soluble [indiscernible] and approach to removal of plaque indirectly?

Okay, so this is Mike, I'll take both of those questions. With respect to 951 we’ll publish full data from the Phase 3 study that I described at a medical meeting and then ultimately, in peer reviewed journals as well. But what I can say is the skin safety has looked good to our eye and is within our expectations well within our expectations. As one would expect with a cutaneous device, there are some local reactions, but those have generally been mild and resolved with continuing treatment. We've not seen significant issues with more severe types of skin about the safety profile, and we think the patient friendly aspects of subcutaneous delivery that has some parallels to an insulin pump like device will be a real advantage here because it allows patients to get that to open like efficacy that's transformative without the need for placement of a gastric tube that's unthreaded in the small bowel and very, very difficult to manage. And so, we feel very good about the potential for 951. With respect to a-Beta, I think if one looks at all of the data, it's quite clear that if you can remove plaque rapidly, then there will be a benefit, and the key parameter that we would need to see is deep reductions in level of plaque and rapid reductions in the level of plaque, because you won't start to see a cognitive benefit, we believe until you get to that amyloid negativity level bypass, which is 20 centroids, until you reduce patients to that level. So, the goal would be to get them there as rapidly as possible. And to do that, while minimizing the impact of area. And we think that that can be done through epitopes selection. There are slight differences in the amyloid forms that are present in vessel wall compared to plaque. And with appropriate epitopes selection, we believe that our preclinical data would support that you can do that with reduced risk of area. And of course, we now need to see whether the clinical data supports that as well. But those are the basic principles that we're following. We've obviously had these candidates before the aducanumab approval, because as I said, we've been monitoring this area quite closely. But we think this is a good time to advance those candidates and to determine whether the science I described plays out in the clinic. But our approaches with respect to a-Beta are based on plaque, not soluble forms of [Indiscernible].

Thank you.

Thanks, Ronnie. Operator, next question, please.

Thank you. Our next question is from Andrew Baum with Citi. You may ask your question.

Many thanks. A few question, Jeff. Firstly, on the outlook for rebaiting and oncology, this is somewhat of a novelty, at least historically. I know that yes, excluded Calquence from their formulary, there's obviously increased therapeutic competition in the space. How should we be thinking about the rebaiting outlook and oncology going forward more broadly? Second, on the U.S. paybacks through COVID and now in the recovery stage, could you outline the magnitude of which you've had to increase and then decrease the Medicaid components in the patient assistance programs? Or whether you're seeing that improvements, some sense of scale and direction there? Many thanks.

Yeah, thank you, Andrew. And to start with oncology. I mean, largely, as you know the rebaiting has been done through the sort of the GPO channel. And particularly with the physician in office dynamics that are in that sector, we don't see significant rebaiting happening at the PDM level. And if it is, it's quite modest. I think the certainly from the ESI standpoint that you highlighted, that was an ESI decision. That was not certainly something that AbbVie approach that particular payer with any sort of deal. Our philosophy is that these drugs are very important for oncologists to have basically open access for all of these agents. So, I think it is something that we've seen some of these lights that have started to turn on. But they've been quite modest. And I don't think that they're going to be a super accelerant that we should be overly worried about. That's my position on that. I think this the second approach in terms of sorry, that was the question on the magnitude of the Medicaid. Yeah, this has been quite interesting. We've seen, certainly on all of the data, the fact that the enrollment in Medicaid has gone up. When we look across our businesses at let's say, acute channel shifts in terms of the utilization, they're relatively modest. They're there, so we don't see massive movements around our channels shifting that link to the magnitude of what you might see in terms of the enrollments. So it's relatively modest, certainly manageable. And I think, certainly, as we see the jobs positioned come back and that could be quite strong, I think we'll see any modest movement will be corrected over the next several quarters.

And this is Rick. Going ahead I'd add to the second question is so we have a very extensive and I would say generous PAP program in place that's really designed to ensure that patients who can't afford our medicines, have the ability to be able to access those medicines free of charge in many cases. As an example, 99% of the applications we get for uninsured patients we approve we actually just increased the program to 600% of the federal poverty level across all of our brands. And so, it's a program that I think is designed to fulfill the mission that I just described. And that is that patients who need our medicines can get them from us if they can't afford to pay for them, or whatever system that they operate in. And but we have not seen and much to our surprise, we have not seen that program increased dramatically, even through COVID. And we advertise directly to patients that if they lost their job during COVID, that we would provide our medicines to them. But I wouldn't say, as I said, much to our surprise we didn't see the volume go up dramatically.

Thank you, Andrew. Next question, please.

Thank you. Our next question is from Geoffrey Porges with Leerink. Your line is open, sir.

Thank you very much. Lots of questions. But I'll focus first on RINVOQ. Rick, you've given the long term guidance of recall $7 billion in revenue by 2025. I think and by means correct me if I don't recall correctly. But if you only get the 15 milligram dose approved, if that's the outcome of the deliberations of the FDA, but you get the approvals in Europe, can you achieve that revenue guidance? You’re confident enough in the 15 milligram program? And then secondly, for Mike. You'll see us development program seems to have been sort of reactivated. And could you talk a little bit about your conviction, a little bit more detail on a 119? We don't know much about that. Are you confident that it can be active see through correct that matches up to your competition? Because clearly that's a big revenue opportunity that we have reflected in. Thanks.

So, Jeffrey, this is Rick, on your first question. Yes, the guidance for RINVOQ is $8 billion. And I would say we're confident that even with a 15 milligram, we will sustain that guidance. If you look at the performance of the 15 milligram is quite remarkable. And so, we feel good about the performance of RINVOQ, we continue to see strong uptake of RINVOQ, and physician interest and is consistent with what we would expect. So, I think we're fine now.

This is my context, a question on the CF program. When we restructured the collaboration with Galapagos. A few years ago, to take direct operational control of that program, we had a couple of goals. One is we wanted to make sure that we're optimizing the potentiator in C1 components of the regimen. We felt we had a best in class, C1 in Q2. But we believed we needed to make a switch in the potentiator to one that we already had in hand. And we've done that. We also believe that we needed a C2 corrector. That’s in that time period a few years ago did not exist. So, we needed a C2 corrector that had the potential to be best in class. And so, what we did is we put a significant internal chemistry effort to come up with a number of compounds. 119 is the most advanced and a very promising one that we believe fit that bill. And based on all the preclinical profiling, we think 119 can be a best in class C2 corrector. And with the other components of or triple, we think we can deliver best in class efficacy with appropriate pharmacological properties, dosing, low DDIs, et cetera. And so, we are now in a proof-of-concept Phase 2 study in the clinic to determine whether those preclinical data will in fact spare out. What I would say here is the preclinical assays are good. They're much more predictive than they are in other areas because we fundamentally know what the defect is in CF, and we can study it in appropriate tissues in human tissues in vitro. But ultimately, we're going to need to see the clinical data. By right around the end of the year, we'll see internally proof of concept results for that triple. We'd probably be in a position to announce them externally early next year, and those will be data that will include impact on FET1 with a triple. And so that will tell us whether we can be best in class. And I agree if we are best in class, I think it's a very significant opportunity and we will progress it rapidly. Now, it's a proof-of-concept study. So, if it's successful, we'd have some additional dose ranging to do. We're studying the highest dose of 119, to determine whether it can have that effect we'd have to do some additional dose ranging to determine the optimal dose of 119, but that can be done rapidly. And then we would, if successful move into Phase 3 development.

All right. Thanks Mike.

Thanks, Geoff. Operator next question, please.

Thank you. Our next question is from 6 Geoff Meacham with Bank of America. Your line is open, sir.

Morning, everyone. Thanks for the question. Just had a few quick ones. Another one on JAK safety. And Mike you mentioned you expect regulatory action in the next few months? Can you just give us some perspective on that? Is there any data that you're still waiting on to submit? And is there still the potential for an advisory panel? And then the second one is on Ubrelvy. Maybe just give us some color on the on the new start dynamic? What are the patients recapturing? What share are you getting from and maybe just help us with kind of the -- what other wins do you have to make with respect to formulary access and share? Thank you.

I'll take the first question and then Jeff will take the second question on Ubrelvy. So, with respect to JAK safety, we have indicated that we believe that an action is possible in the next few months. That's based on our discussions with the agency and what timing we think is reasonable. It's not a specific action date, like the PDUFA dates that had been set in the past. So, we will continue to monitor it as the process continues to move along. But the rate limiting factor, as we understand it is the agency's review of the tofacitinib oral surveillance data. And I think once that is completed, we will be able to move forward with Goodspeed with arm review. But there are no additional data from a safety perspective or no other substantial analysis that the agency is waiting on for us. We provided our updated benefit risk quite some time ago, as we announced publicly. And the agency has not requested any additional data. So, it's really that review of the tofacitinib oral surveillance is gaining as we understand it. With respect to an advisory panel, the agency always has the authority to call one if they desire to have one. But what I would say is, if they were planning on having an advisory committee. I would expect them to already be preparing for that and already have that process in motion. And we would know that, and there's no indication that that is underway at this time.

Right, and I'll take the Ubrelvy question. As I mentioned, we're very, very pleased with Ubrelvy and really our overall migraine portfolio that we're rapidly developing here. To give you some sense, it's quite remarkable. I mean, if you look at the total acute oral CGRP category, so that's us and the competitor. It's about 18% of all new prescriptions, and it continues to grow very, very quickly. So again, it shows you how hard patients and physicians are. Are looking for the adoption of these particular agents, even though you have to step through a Triptan, some cases two Triptan. So, the market demand is very, very substantial. When we look to the overall performance, we can see that roughly the two agents are sort of splitting the acute indication. Some of the more weeklies are now being a little confounded by the new preventative episodic approval from Neurotech. But nonetheless, I think that's a small piece of the story. When we sort of peel out some of their new preventative scripts, we still have the leadership position for the acute market. But I really think the bigger picture is how fast that segment will expand over time? And we anticipate that will continue to lead that based on Ubrelvy’s overall profile. Our overall access dynamics are quite good. So, we really have roughly a 90% access. Again, some of that access demands a step through a Triptan. But overall, when you look at how fast that category is going, we don't really anticipate that there's major new plans that we need to achieve any sort of incremental access position. And so, basically our commercial strategy continues to be how hard can we drive this acute segment and lead that acute segment. And as I mentioned in my prepared remark, anticipating the arrival in the late third quarter for Atogepant, which has just a spectacular profile for episodic migraine. So, thank you.

Thanks Geoff. Operator next question, please.

Our next question is from Tim Anderson with Wolfe Research. You may ask your question.

Thank you. It's well known that AbbVie rebates heavily on Humira in the U.S. So, when biosimilars launch, won’t you potentially have room to pull back on those rebates, which could mean, basically the meaningful offset to last Humira volumes. It seems like it could end up being in the billions of dollars that you could pull back in house. And I realized there's RINVOQ and SKYRIZI dynamic to consider. And related to that line of questioning how does the prospect of interchangeability biosimilars impact your thinking on this front? If interchangeable, generics are allowed or not allowed? How does that impact what you might do with those rebate dollars? And then second question, quick one, just the range of outcomes for when Imbruvica might face generics in the U.S. Is it in the realm of possibilities that AbbVie enters into settlement agreements with legal challengers that could push out generic timing?

Hi Jim, it’s Rick. So, I'll cover the first two questions that you have there. I would say let me start with interchangeability. We've outlined now over the last year or two, I think pretty specifically what we view the biosimilar impact in the U.S. to be and we are assuming that there will be two interchangeable biosimilars. And that's in the thought process of the erosion models that we have described many, many times now. So, we are assuming there will be interchangeability. We're certainly not in a position where we're going to talk about what we're going to do from the standpoint of rebates. We've always competed very effectively in these markets. Certainly, the focus for us going forward is the next generation assets, SKYRIZI and RINVOQ. And you can see now, those two assets this year will do $4.6 billion. So, call it $5 billion. They're rapidly growing. And they're doing exactly what we had hoped they would do. They have higher levels of efficacy, and they're ramping dramatically. And they will buffer the impact of biosimilar impact in the U.S. And so, what I'd say is the strategy is going exactly the way we had hoped it would go. We'll fill out the range of indications on SKYRIZI and RINVOQ. And continue to drive those assets into the marketplace effectively. On Imbruvica?

Yeah, hi. This is Laura Schumacher. Our Imbruvica composition of matter patent expires in May of 2028 assuming that we get the pediatric extension. We do have later expiring IP covering methods of use formulations, crystal forms, and the like. Our long-range plan currently assumes the loss of exclusivity in the U.S. in May of 2028 when the composition of matter of patent expires. There is litigation ongoing with one remaining and a filer. And we're awaiting a decision on that.

Thank you.

Great, thank you Tim. Operator next question, please.

Thank you. Our next question is from Matthew Harrison with Morgan Stanley. You may ask your question.

Great. Good morning. Thanks for taking the question. Just a follow up question on CFP, I guess first two parts here. First, are you confident that you have a potentiator that's active and improve versus the Galapagos compound? Because I think we've seen a lot of issues with people trying to develop potentiators. They're as good as Kaleidoco. And then, second, I know you talked about FPV 1, have you looked at sweat chloride at all? Obviously, you need a larger patient sample size to get a good directional view on FPV 1. I'm wondering if we looked at smaller patient numbers on sweat chloride. Thanks.

So, this is Mike. I’ll take that. With respect to the potentiator, we are convinced that we have a potentiator that has activity and we've changed the potentiator from some of those prior combinations that were pursued earlier on in the Galapagos collaboration. We think that, that potentiator it has clear signs of activity, we think the C1 character is very good and probably best in class based on the data that we have seen that were generated earlier in the collaboration. We put this up, the principal piece that was missing was that CTO and we think we have a good one. With respect to the endpoints while it does take a larger sample size, to look at FPV 1 we feel like FPV 1 is what really matters here. That's what's going to translate into clinical benefit for patients. And so, our proof-of-concept study will show us FPV 1 and that's the primary measure that we are going to use to determine whether to advance the triple or not.

Thank you, Matthew. Operator, next question, please.

Thank you. Our next question is from Steve Scala with Cowen. Your line is open, sir.

Thank you, a couple questions. Many of the questions so far suggests concerns around RINVOQ. But I'm wondering if this could all turn into be a positive. So, to what extent do you believe RINVOQ prescribing might be being held back by competitor product concerns? So, once those concerns are resolved and or RINVOQ emerges unscathed, if it does. RINVOQ could even do better. And we could be looking at a sharp acceleration in share gains and prescription trends in Q4. So that's the first question. And secondly, on Humira contract renewals that will be signed in coming months for 2022. What is the typical duration of those contracts? Are they typically 12 months? 24 months, 36 months? If you can give us an idea of that that would be helpful. Thank you.

Yeah, it's a very good question. And this question we fought a lot about, let me give you some perspective on RINVOQ. So, if you look at our, let's say, our demand performance, and I think I mentioned my prepared remarks, we've been very consistent about 15% in place share in the large RA market, which is just under Humira, which has grown a little bit over the COVID times and since January to about 18%. So, we're very, very stable. And I do believe that there is some overhang on certain segments of prescribers that have, let's say, going back a little bit to the TNF, really our own product, Humira. So, it's not outside of the realm of possibility as this resolves and really largely, as you probably heard, or seen Xeljanz has lost in play share over that period. So, I do believe there's a little overhang in certain, probably significant segments of Rheumatology. So, we are anxiously awaiting the resolution here of oral surveillance, which obviously has delayed our regulatory submissions. But it's not outside of the realm of possibility, given the very significant and differentiated data that we have in our packages, that we can see an acceleration as things resolve. But we're going to anxiously be monitoring. And certainly, be prepared to anticipate any outcome there.

And see, this is Rick. On the contracting question, I'll handle that one. It varies quite a bit based on product and by managed care organization, but I'd say typically, so it can be some of them can be as short as 12 months, it's probably more common to be in a 24 month range from a contracting standpoint.

Thank you.

Thanks, Steve. Operator next question, please.

Thanks. Just on the a-Beta program and you answered a few questions. But I think I heard you describe the product that you're targeting the plaques and not the cybil forms of a-Beta. Just kind of maybe if you, wonder if you can give a little bit more color on the driver of that have gone forward with that. Did you guys -- does your science sort of tell you that amyloid beta oligomers, for example, are not a driver of the disease or this is more of a decision that's driven by the regulatory precedents of approving targeting the a-Beta plaques. And then maybe also, if you can get a little more detail on this molecule is likely an IV, or possibly subcue delivered antibody? Thanks.

So, this is Mike, I'll take that. With respect to the focus on plaque, I think when one looks at all of the data, you can conclude that if you can reduce plaque rapidly, from that point forward, you can see a benefit. So, in other words, getting the majority of patients to a level where they are amyloid negative by PET, so below 20 [ph] centoloids. And doing that rapidly is what's required to see a benefit emerge over time. And part of the importance of speed is that you're not going to see that benefit until you get to that level. So, if you spend the entire period of a trial, getting to that level, you don't then have an opportunity within that trial to see an improvement in cognition. And of course, for patients, if you don't get to that level fast enough, they're not going to drive benefit for a period of sometimes too many years. And they need really faster than that. So, that's our focus on plaque. With respect to different components and the role of oligomers. I think it's hard to tease that apart right now, what we know from the data is what I said that getting patients to amyloid negativity, but reducing plaque is what seems to drive a clinical benefit, whether there are upstream steps that one could try to impact to achieve the same result. I think it's an open question. And we're going where the science tells us to go today. With respect to IV or subcue, I think it's early to answer that question. It's going to relate to ultimately the delivered dose. And then dose forms that can be delivered. So, for example, there are on body injectors and other things that can deliver more than the traditional one or two and those of a solution containing a monoclonal antibody. So, there are approaches that could be IV or subcue, but I think it's a little bit early to make predictions on how that will all play out.

Thank you.

Thanks, Chris. Operator, next question please.

Thank you. It comes from Luisa Hector with Berenberg. Your line is open.

Hello, thank you for taking my question. Sorry, going back to RINVOQ again, but I just wanted to check that the approval of the pending indications isn't a particular gating item for your filing in UC. And then I see that you haven't changed your guidance for RINVOQ for this year. And I know previously, you've stated that maybe would only ever be a small contribution this year. But rather than self, I just wonder whether there's any particular savings on your launch costs this year due to the delay? And then maybe on TMB-383. Again, I think I've understood this is now 100% belonging to you. So just to check, no impact from the Amgen acquisition? And then when might we see a Phase 2 start looks like you have a dose data very compelling. So how soon could we be looking out for that trial starting data? Thank you.

Okay, this is Mike. I'll start with the RINVOQ question and pass it to Rob. And then I'll come back or the 383 question. With respect to the UC filing, the UC filing is not dependent on the approvals in the other indications. And obviously, the timing of release of review of the UC filing would carry it out to a point where those matters where I think, based on any reasonable expectation be resolved.

Yeah, and your question regarding the guidance for RINVOQ. So you're right, we did give guidance to $1.7 billion early this year, assuming we would have a new indications approved. We said that would be a minor contribution, think of it in that couple of hundred-million-dollar range. But given the strong performance out of the RA indication, we've maintained that guidance, despite the fact that those approvals are delayed. There is some level of savings in terms of SG&A related to approvals being delayed. But at the same time, we're investing the business you'd look at, we're doing the aesthetics. Obviously, other parts of Allergan business, there's opportunity to invest more broadly. So overall, SG&A is up because we are investing for long term growth, but there is some level of savings associated with the RINVOQ delays.

With respect to 383, the BCMA, CD3 bispecific, you're correct, there is no impact of the Amgen acquisition of Teneobio on that. The asset would be ours and it would be unencumbered by anything related to the Amgen acquisition. In terms of Phase 2 timing, we plan to move forward very rapidly, not only with Phase 2, but with Phase 3 studies. With this asset, we think the data that have been generated are very strong, very high levels of response, good levels at the DGPR were better thresholds with a very good safety profile as well and a profile that would fit well with combination therapy and move to earlier lines of therapy. So, we'll advance the program aggressively and we'll update on the specifics a little bit later on in the year.

Thanks, Luisa. Operator next question, please.

Our next question will come from Daniel Busby with RBC Capital Markets. You may proceed with your question.

Good morning. I've got two questions. First, a bigger picture question on SKYRIZI and RINVOQ. You've got to do peak sales for both products in the early 2030s. There's been a lot of focus on near term regulatory hurdles, particularly for RINVOQ. But there's also a lot that could happen competitively between now and then. So, with that said, what do you view is the biggest potential longer term competitive threats for both of those drugs, and particularly given the ongoing emergence and maturation of new drug modalities? And second, can you talk a little bit about the assumptions you've built into overall guidance relating to the Delta variant, and whether that's changed at all the way you think about the second half recovery? Thank you.

We go through a fairly rigorous and by that I'd say a very rigorous long range planning process where we evaluate what we think the comparative alternatives might be and the profile of our assets versus other assets. And I would say as we look at RINVOQ and SKYRIZI, and the clinical data that has been generated is certainly achieving or exceeding the expectations that we had for those assets. I don't see anything on the horizon, that would make it in a timeframe that would have a material impact on those assets based on the guidance that we provided, or even longer-term guidance out to typically do a 10-year long range planning process. So yes, there are certainly many, many modalities that are available today across many of these therapeutic areas. It's having the right kind of asset, and the right kind of clinical performance. And then everything else that wraps around that market access and all the other things you have to be effective at in order to achieve the level of performance that these assets are achieving. And so, bottom line is, I think we feel very confident in our assumptions here. As it relates to the Delta variant. I think as we look at the guidance that we are providing in the second half, it certainly is reflective of what we assume -- we don't assume dramatic changes in the U.S. or other major markets around the world and where we are today. We're assuming major levels of recovery in certain markets, either that are currently in lockdown, like Australia as an example, or in many of the Asian markets outside of outside of China and Singapore. So, I think we've properly represented it. I think the healthcare system in the U.S. in particular has experienced that we have last year tells us that the healthcare system can much better treat these patients. And we're not assuming that we see anything that would be significant in this shift in the U.S. from a lockdown standpoint.

Thanks, Daniel. Operator, we have time for one final question.

It will come from Gary Nachman with BMO Capital Markets. Your line is open, sir.

Hi. Good morning. And thanks for squeezing me in. Sorry, but one more RINVOQ first. Curious why you think Europe doesn't seem as concerned with JAK class the way the FDA has been since you got the positive opinion on atopic derm for both doses there? And how you see uptake in Europe versus the U.S. overall? Is there a difference in perception, you think in those regions with the class? And then regarding Vraylar for MDD? How are the Phase 3 studies gone overall? Did you change anything with respect to enrollment numbers or sites during the course of the pandemic since these Phase 3 data are coming soon? And have you done any more work sizing up the potential market opportunity, where you think it would be used most for MDD? What types of patients? Thank you.

So, this is Mike, I'll start and then I'll pass it over to Jeff for some initial additional comments. With respect to RINVOQ and the regulatory environment in the prescriber perception prescriber environment, between Europe and the U.S., we do see differences. And the European authorities, and the European prescribing base seems to place less emphasis on these signals and view them more specifically to the molecules that generated the data then the EU have. Why that is? I can't give you a single reason other than these are both very large, competent jurisdictions that have come to their own impressions of the data. And those impressions have different somewhat. As you've said, for atopic derm we got the positive opinion from the CHMP for both the 15 and 30 milligram doses. We think the data are very supportive of that decision. And we look forward to launching that indication in Europe. And we think it's going to be an important additional indication, as it will be in the U.S. when we do get to approval. With respect to uptake in Europe, Jeff, I don't know if you want to comment?

Yeah, as I mentioned in my remarks, the uptake on RINVOQ in many major markets is very, very strong. Now, as you know, waiting for reimbursement takes a little bit more time than the U.S. but as I highlighted, we have in play leadership and this is including the TNF to biosimilars in Germany, France, Canada, for example. So, it's quite strong. I think another point that I'd like to make, and we certainly see it in some of the early launch countries with PSA and AS. There appears to be a synergistic effect which makes some sense from a commercial standpoint. As countries like Germany start to introduce PSA and AS, the entire RINVOQ molecule starts to accelerate and move faster. And so again, given the last question I answered, we're actually anxiously awaiting the approval of those extra room indications there. So it's quite strong. And as I highlighted again and Mike mentioned, our label here in atopic derm is going to look quite strong in the European markets. Mike, maybe you can hit on MDD and then I'll address the market structure there.

With respect to Vraylar and MDD, we did a deep dive on the Phase 3 studies shortly after closing the acquisition of Allergan. And what I would say is, we found that the studies were very well designed. We were comfortable with important considerations like patient selection, selection of sites that we believe would give quality data. We looked at the blinded aggregate characteristics of the population roles. You look at the baseline characteristics, and you don't know who's on active or placebo, but you can just see if you're enrolling the right patient population, and we believe we were. All of the measures are designed and seem to be behaving appropriately. And so, we feel good about the design characteristics of that study. And we did not feel that it was necessary to make any changes. But we did do that deep dive to be sure of that as I said, what we found was in fact reassuring. With respect to the market opportunity, I'll just make a couple of comments. And I'll hand it off to Jeff, for some more detail. But what I would say is, depression obviously is a substantial indication. And it's one that is very difficult to treat with existing agents. About 50% of patients don't achieve adequate control with monotherapy with frontline agents like SSRIs, or SNRIs. And so, there is an important opportunity for adjunctive therapy. And obviously, this is an adjunctive MDD indication. So, that would be the population that we would be looking at. Jeff, do you want to comment in more detail on that?

Yeah, I mean, if we look at the market structure, obviously, you have schizophrenia, which is a relatively modest market, and we have a good growing position there with our existing indication. And then you have the prescriptions and really the different bipolar segments. And what I would say about not the big depression market, but the adjunctive MDD market that Mike spoke about. It's about the same size in terms of a prescription value to the bipolar segment. So, adjunctive MDD, if the studies were to progress as we see is really gives us a chance to access a market that's equally sized for the one that we're competing in today. So, it's quite attractive as we continue to look for the final readout of those trials.

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

That does conclude today's conference call. We thank you all for participating. You may now disconnect and have a great rest of your day.