abbvie (abbv) earnings report: q4 2015 conference call ... · global viekira performance, although...

CompanyName:AbbVieIncCompanyTicker:ABBVSector:HealthCareIndustry:Drugs

EventDescription:Q42015EarningsCallMarketCapasofEventDate:93.36BPriceasofEventDate:54.03

©2014TheStreet,Inc.Al l R ightsReserved Page1of22

AbbVie(ABBV)EarningsReport:Q42015ConferenceCallTranscriptThefollowingAbbVieconferencecalltookplaceonJanuary29,2016,09:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

LarryPeepo;AbbVie,Inc.;InvestorRelationsRickGonzalez;AbbVie,Inc.;Chairman&CEOMichaelSeverino;AbbVie,Inc.;ChiefScientificOfficerBillChase;AbbVie,Inc.;CFO

OtherPart icipants

ChrisSchott;JPMorganChase;AnalystJamiRubin;GoldmanSachs;AnalystMarcGoodman;UBS;AnalystMarkSchoenebaum;ISIGroup;AnalystDavidRisinger;MorganStanley;AnalystVamilDivan;CreditSuisse;AnalystAlexArfaei;BMO;AnalystSteveScala;Cowen;AnalystJohnBoris;SunTrustRobinsonHumphrey;AnalystColinBristow;BofAMerrillLynch;AnalystAndrewBaum;Citi;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

WelcometotheAbbViefourth-quarter2015earningsconferencecall.

(OperatorInstructions)

Thiscallisbeingrecorded.Ifyouhaveanyobjectionsyoumaydisconnectatthispoint.

IwouldnowliketointroduceMr.LarryPeepo,VicePresidentofInvestorRelations.

LarryPeepo (InvestorRelations):

Goodmorning.Thanksforjoiningustoday.

AlsoonthecallwithmeareRickGonzalez,ChairmanoftheBoardandChiefExecutiveOfficer;MichaelSeverino,ExecutiveVicePresidentofResearch&DevelopmentandChiefScientificOfficer;andBillChase,ExecutiveVicePresidentofFinanceandChiefFinancialOfficer.

BeforewegetstartedIremindyouthatsomestatementswemaketodaymaybeconsideredforward-lookingstatementsforthepurposesofthePrivateSecuritiesLitigationReformActof1995.AbbViecautionsthattheseforward-lookingstatementsaresubjecttorisksanduncertaintiesthatmaycauseactualresultstodiffermateriallyfromthoseindicatedintheforward-lookingstatements.




AdditionalinformationaboutthefactorsthatmayaffectAbbVie'soperationsisincludedinour2014annualreportonForm10-KandinourotherSECfilings.AbbVieundertakesnoobligationtoreleasepubliclyanyrevisionstoforward-lookingstatementsasaresultofsubsequenteventsordevelopmentsexceptasrequiredbylaw.

Ontoday'sconferencecallasinthepastnon-GAAPfinancialmeasureswillbeusedtohelpinvestorsunderstandAbbVie'songoingbusinessperformance.Thesenon-GAAPfinancialmeasuresarereconciledwithcomparableGAAPfinancialmeasuresinourearningsreleaseandregulatoryfilingsfromtodaywhichcanbefoundonourwebsite.

Followingourpreparedremarkswewilltakeyourquestions.SowiththatIwillnowturnthecallovertoRick.

RickGonzalez (Chairman&CEO):

Thankyou,Larry.Goodmorningeveryoneandthankyouforjoiningustoday.

ThismorningIwillbrieflydiscussourfourth-quarterperformanceandour2015operationalhighlights.MikewillthenprovideupdatesonrecentadvancementsacrossourR&DprogramsandBillwilldiscussthequarterandour2016guidanceinmoredetail.Asalways,followingourremarkswewilltakeyourquestions.

Wedeliveredanotherstrongperformanceinthefourthquarterwithresultsaheadofexpectationsincludingadjustedearningspershareof$1.13,representinggrowthof27%versusthefourthquarterof2014.Ourfourth-quarterperformancecapsoffaverystrongyearforAbbViewithsalesandearningswellaboveouroriginalprojectionsfortheyear.Wedelivered22%globaloperationalsalesgrowthin2015andweincreasedongoingearningspersharebymorethan29%.

We'vedrivenstrongcommercial,operationalandR&Dexecution,resultinginindustry-leadingperformancewithbothstrongrevenuegrowthandimprovementinouroperatingmarginprofile.AbbVie'sEPSgrowthfor2015ranksusamongthetopgrowthcompaniesinourindustry.

Clearly,2015wasayearofexcellentperformance.WedeliveredoutstandingresultsfromourcurrentportfoliowithstronggrowthfromHUMIRAwhichdrove19%globaloperationalgrowthin2015includingUSgrowthofnearly29%andinternationaloperationalgrowthof8.6%.WesawcontinuedstrongmomentumfromIMBRUVICAwithfull-year2015salesinexcessof$1billion.

GlobalVIEKIRAperformance,althoughbelowouroriginalexpectations,generatedmorethan$1.6billioninitsfirstyearonthemarket.AndwehadstrongperformancefromotherproductsinourportfolioincludingCreon,LupronandDuodopa.

Overthepastyearwe'veseensignificantpipelineadvancementandachievedanumberofimportantdevelopmentandregulatorymilestones.WesecuredapprovalsforseveralassetsincludingHUMIRAasatreatmentforHS,ouroncedailyHCVcombinationinJapanandourpartnerreceivedapprovalforelotuzumabforrelapsedrefractorymultiplemyeloma.

Wesuccessfullycompletedregistrationalstudiesandsubmittedregulatoryapplicationsforanumberofprogramsincludingvenetoclaxforrelapsed/refractoryCLL,IMBRUVICAforfirst-lineCLL,Z inbrytaformultiplesclerosisandHUMIRAforuveitis.Wesuccessfullycompletedmid-stageclinicaltrialsandtransitionedintotheregistrationenablingphaseofdevelopmentforseveralkeyprogramsincludingourselectiveJAK1inhibitorAVG-494inRA,ourpan-genotypicnext-generationHCBcombinationelagolixforuterinefibroidsandABT-414,ourantibodydrugconjugateforglioblastomamultiforme.

Wealsoreportedcompellingdatafromseveraldevelopmentprogramsincludingelagolixpivotaldatain




endometriosis,theHELIOSandRESONATE-2IMBRUVICAdatawhichweanticipatewillbereflectedintheproductlabelthisyearandvenetoclaxdatainseveralcancertypesincludingrobustresultsinCLLandAML.Infact,thedatawepresentedonvenetoclaxthisyearhasresultedinthreebreakthroughtherapydesignations,astatusgrantedbytheFDAwhenclinicalevidenceindicatesthatamedicinemaydemonstrateasubstantialimprovementoverexistingtherapies.

Webelievevenetoclaxhassignificantpotentialacrossawiderangeofbloodcancerswiththefirstofpotentiallynumerousindicationscominginthefirsthalfofthisyear.Theprogresswe'vemadewithourpipelineincludingtheimpressivedatawe'vesharedoverthepastyearhasfurtherincreasedourlevelofconfidenceandderiskedmanyofourkeyR&Dprograms.Numerousassetsinourlatestagepipelinehavetheopportunitytogeneratemultibillion-dollarpeakyearsalesandrepresentanopportunityformeaningfulrevenuegrowthintheyearstocome.

2016promisestobeanothermilestonefilledyearwithsignificantactivityacrossourpipelinewhichMikewilldiscussinmoredetailhereinjustafewmoments.In2015wealsoaugmentedourportfolioandourpipelinethroughstrategiclicensingandacquisitionactivity.TheacquisitionofPharmacyclicsprovidedamajornewgrowthplatforminakeystrategicarea:hematologicaloncology.

IMBRUVICA,whichisnowablockbustertherapy,offerssignificantgrowthpotentialthroughitsexistingandexpandinglistofindicationsandlinesoftherapy.WeremainexcitedaboutthepotentialforIMBRUVICAandwearepleasedthatourthesisisplayingoutasweexpected.

Withinthehematologicaloncologysegment,wehaveinvestedstrategicallytobuildaportfolioofmedicineswiththepotentialtotransformthecareofalargerangeofmalignancies.Ourportfolioincludesthreenovelmechanismsofaction:BTKinhibition,BCL-2inhibition,PI3kinasedualinhibition.Thesemechanismsareeitheron-market,underregulatoryrevieworinregistrationenablingtrials.

We'rewell-positionedtobuilduponourleadershipinthiscategorywithuniquecombinationsoftheseandotheragents.Overthepastyearwe'vedeliveredastrongreturnofcapitaltoourinvestors,includingarapidlygrowingdividendwhichhasgrown42%sinceourinceptionaswellassharerepurchase.Weremaincommittedtoabalancedcapitalallocationstrategy,returningcashtoshareholderswhilecontinuingtoaddstrategicallytoourpipeline.

FollowingouracquisitionofPharmacyclicslastyearourfocusinthenear-termisoncontinuingtoaugmentourtherapeuticareasoffocus,especiallyoncologyandimmunology.Weevaluateopportunitiesthatfitourstrategiccriteriaandcandeliverstrongreturns.

In2015wealsodroveimprovedefficiencyacrossouroperations,deliveringsignificantoperatingmarginexpansionwhilecontinuingtoinvestinR&DandSG&Atodrivefuturegrowth.Wehavedeliveredasignificantlevelofmarginexpansiontodateandweremaincommittedtodoingmoretoimproveouroperatingmarginprofilegoingforward.

Ourfocusonoperatingefficiencieswilldriveouradjustedoperatingmarginprofiletogreaterthan50%by2020.We'veentered2016withstrongmomentumwhichweintendtobuildupontodriveahighlevelofperformanceacrossouroperationsandstronggrowth.Ourfull-year2016EPSguidanceof$4.90to$5.10representsgrowthof16.5%atthemidpoint,positioningAbbVietobeamongtheindustryleadersforEPSgrowthonceagainthisyear.

Onourthird-quarterconferencecallweoutlinedourlong-termguidanceforanumberofkeymetricsincludingourexpectationsfortop-andbottom-linegrowthandmarginexpansionoverourfive-yearplan.Weremaincommittedtodeliveringontheselong-termobjectiveswhichwillgeneratedouble-digitEPSgrowthonaveragethrough2020.




Soinsummary,we'repleasedwithourstrongexecutionandthesignificantadvancementswemadein2015.Overthepastyearwe'vedemonstratedastrongtrackrecordofsuccesswithpositiveclinicaldataandregulatoryoutcomesandwelookforwardtonumerousimportantpipelinemilestonesintheyearahead.

We'veconsistentlydeliveredonourcommitmentsandarepositionedforanotheryearofstronggrowth.We'vebuiltastrongfoundationandwe'refocusedongeneratingtop-tierfinancialperformanceintheyearstocome.

WiththatIwillturnthecallovertoMikeforadditionalcommentsonourR&Dprogram.Mike?

MichaelSeverino (ChiefScientificOfficer):

Thankyou,Rick.In2015wesignificantlyadvancedandderiskedourpipelineandachievedanumberofimportantregulatorymilestones.Andweexpect2016tobeaveryproductiveyearaswellwithpotentialforseveralregulatorysubmissionsandapprovals,keydatareadoutsandphasetransitions.

Wehaveabroadpipelinethatincludesmorethan50activeclinicaldevelopmentprogramsincludingmorethan20newproductsorindicationsinlatestagedevelopmentaroundaregulatoryreview.

TodayI'llhighlightrecentupdatesanddiscusssomeofthemilestonesweanticipateintheyeartocome.I'llstartwithhematologiconcology,anareawherewehaveinvestedheavilyandareuniquelypositioned.

AsRickmentioned,wehavebuiltastrategicportfolioofassetsincludingmultiplemechanismsofactionthathavesignificantpotentialaloneandincombination.ThedevelopmentprogramsforourflagshiponcologyproductIMBRUVICAcontinuestoprogressnicely.Ournextopportunityforlabelexpansionisinthefirst-lineCLLsetting.

DatafromtheRESONATE-2trialintreatment-naiveCLLpatientsrecentlypublishedinTheNewEnglandJournalofMedicineshowedtreatmentwithIMBRUVICAresultedinan84%reductionintheriskofdiseaseprogressionversuschlorambucilwith87%ofpatientsremainingonsingleagentIMBRUVICAtreatmentat18months.Additionally,treatmentwithIMBRUVICAshowedan84%reductioninoverallmortality.WebelieveRESONATE-2representsapracticechangingstudythatwillsetanewtreatmentstandardformanytreatment-naivepatients.

WesubmittedasupplementalnewdrugapplicationtotheFDAwhichiscurrentlyunderpriorityreviewandweanticipateapprovalinthefirsthalfof2016.IMBRUVICAisalsobeingevaluatedinmidtolatestagetrialsinfollicularlymphoma,marginalzonelymphoma,diffuselargeB-celllymphoma,multiplemyeloma,graftversushostdiseaseandpancreaticcancer.

AttherecentASHmeeting,65IMBRUVICA-relatedabstractswerepresentedincludingdatafromseveralstudiesandpotentialnewindications.Andthereispotentialfordataflowandpossibleregulatorysubmissionsthisyearforseveralindicationsincludingtreatment-naivemantle-celllymphoma,relapsed/refractoryfollicularlymphomaandtreatment-naivediffuselargeB-celllymphomawithtimingdependentonevent-drivenanalysesofongoingstudies.

Intheareaofimmuno-oncologyongoingtrialsevaluatingIMBRUVICAincombinationwithcheckpointinhibitorsareprogressingwellwiththepotentialtoseeproof-of-conceptdatainsolidtumorsoverthecourseoftheyear.

Anotherimportantstrategicassetinouroncologyportfolioisvenetoclax,ournovelBcL-2inhibitor,whichhasdemonstratedstrongefficacy,achievingdeeplevelsofresponseanddurablediseasecontrolbothasmonotherapyandincombinationwithrituxaninpatientswithrelapsedrefractoryCLL.Venetoclaxis




currentlyunderpriorityreviewforrelapsed/refractoryCLLincludingpatientswhosetumorsharborthe17pdeletionmutationandweexpectFDAactioninthefirsthalfof2016.

AtASHwepresenteddataintherelapsed/refractoryCLLpatientsincombinationwithRituxan,showinganoverallresponserateof86%andacompleteresponserateof47%.Additionally,minimalresidualdiseasenegativityinthebonemarrowwasobservedin55%ofallpatientstreatedwiththecombination.We'reveryencouragedbythedepthoftheresponsesdrivenbycombinationtherapyinthispatientpopulation.

Basedonthesedata,earlierthismonththeFDAgrantedbreakthroughtherapydesignationforvenetoclaxwhenusedincombinationwithRituxan.WealsobelieveBcL-2willbeeffectiveinotherhematologicmalignancies.Werecentlypresentedencouragingvenetoclaxdataintreatment-naiveAMLpatientsover65yearsofagewhoareineligibleforintensiveinductionchemotherapy.

Theearlydatashowedcombinationtreatmentwithvenetoclaxandhypomethylatingagentsresultedincompleteresponseratesofapproximately71%whichisroughlydoubletheresponseratethatwouldbeexpectedwiththecurrentstandardofcare.AndbasedonthesepromisingresultsearlierthisweektheFDAgrantedthethirdvenetoclaxbreakthroughtherapydesignation.Wearemovingexpeditiouslyintheregistrationaltrialsforthisindication.

InadditiontoIMBRUVICAandvenetoclaxwearedevelopingadualPI3kinaseinhibitorduvelisibcurrentlyinlatestagedevelopment.IncollaborationwithourpartnerInfinitywe'llseedataonduvelisibinrelapsed/refractoryNHLandCLLinthesecondhalfoftheyearwithpotentialregulatorysubmissionstofollow.Wearewell-positionedtocontinuetoevolvethetreatmentlandscapeinCLLandotherbloodcancersbyexploringnovelcombinationsincludingtheprogramsinourpipelineandothermechanismsWithagoaltoachievedeepdurablediseasecontroland/orremissionswhilereducingoreliminatingtheuseoftoxicchemotherapy.

Tothatendwehavenumerouscombinationtrialsunderwayorstartingin2016.ThisincludesourPhase3studyofachemotherapy-freecombinationofvenetoclaxandGazyvainfirst-lineunfitCLLpatients.Thisstudyisunderwayandenrollingwell.

AlargePhase3studyisbeinginitiatedincollaborationwiththeGermanCLLworkinggrouptoevaluatetreatmentwithvenetoclaxincombinationwithavarietyoftherapiesincludingGazyvaandIMBRUVICAinpreviouslyuntreatedfitCLLpatients.Thisstudy,whichweexpecttoinitiatemidyear,willassesstheabilityofvenetoclax-basedcombinationstodriveachievementofminimalresidualdisease,whichhasbeenassociatedwithimprovedsurvivalinCLLpatients.

Toaugmentongoinginvestigatorsponsoredandcollaborativegroupstudiesevaluatingvenetoclaxandibrutinibcombinationswearedesigningcompany-sponsoredstudiestoevaluatethecombinationinfirst-lineCLLpatients.Inaddition,AbbVieandGenentecharefinalizingplanstopursueregistrationwillstudiesevaluatingcombinationsofvenetoclaxwithproteasomeinhibitorsinmultiplemyelomaandasImentionedpreviouslyincombinationwithhypomethylatingagentsinAML.Finally,wearepreparingtoinitiateadosefindingstudyevaluatingvenetoclaxandduvelisibinpatientswithavarietyofhematologicmalignancies.

Inadditiontoourworkinhematologiconcology,wehavealsobeeninvestinginanumberofprogramsforthetreatmentofsolidtumorsincludingourPARPinhibitorveliparibwithfivePhase3studiesunderwayinlung,breastandovariancancerandABT-414whichisindevelopmentforglioblastomamultiformeorGBM.GBMisthemostcommonandmostaggressivetypeofmalignantprimarybraintumor.PreviouslyreportedinterimresultsfromaPhase1clinicaltrialofABT-414showedthatroughly25%ofpatientswithEGFRamplificationortheB3varianttreatedwithABT-414inadditiontostandardofcareachievedan




objectiveresponse.

Theseresultsillustratealevelofefficacynottypicallyseeninthisdifficult-to-treatcancerwherehistoricdataofresponseratesinourrefractorypopulationhavebeenlessthan10%.Laterthisyearwe'llseeadditionaldataforABT-414insecond-lineGBM.Ifthedataareconsistentwithearlierstudies,thesetrialscouldrepresentapathtoaregulatorysubmissioninthesecondhalfof2016.

Inparallel,largerrandomizedcomparativeregistrationaltrialsareongoinginfirst-andsecond-lineGBM.Wealsohaveanactiveprogramfocusedondrivingthenextwaveofimmuno-oncologydevelopmentbeyondcheckpointinhibitors.WerecentlyenteredintoacollaborationwithM.D.AndersonCancerCenterfocusedonthediscoveryanddevelopmentofnewimmuno-oncologytherapies.

Throughthisagreementwe'repairingM.D.Anderson'scuttingedgepreclinical,translationalandclinicalcapabilitieswithourstrengthinbiology,proteinengineeringandchemistrywithagoaltoacceleratethedevelopmentofnewmedicines.Weanticipateanumberofimmuno-oncologyassetsmovingintotheclinicthisyearandwelookforwardtosharingmoredetailsonourstrategyinthisareaatourR&DdayinJune.

Movingontoimmunology,ourstrategyiscentereduponidentifyingtreatmentsthatofferdifferentiatedprofilesrelativetocurrentlyavailabletherapieswithagoalofcontinuingtoraisethestandardofcare.Wehavemultiplemidandlatestagepipelineassetswithbest-in-classpotential.

Inlate2015weinitiatedaPhase3programinrheumatoidarthritisforourselectiveJAK1inhibitorABT-494followingpositiveresultsfromourmid-stageclinicaltrials.WeareparticularlyexcitedabouttheresultsofABT-494inadifficult-to-treatpopulation:anti-TNFinadequateresponders,agrowingsegmentoftheREmarket.ResultsfromtheBALANCE-ItrialinthispatientpopulationrecentlypresentedatACRillustratetheagent'spotentialtobeabest-in-classtherapywithACR20responsesupto73%andACR50responsesupto44%.

AdditionaldatafromourPhase2programwillbepresentedoverthecourseof2016andweexpecttocommercializeABT-494in2019.Wealsohaveadditionalimmunologycandidatesindevelopmentandwillseemid-stagedatafrommultipleprogramsin2016.

Finally,inimmunologywecontinuetoinnovatewithHUMIRA.LastyearwereceivedEUandUSapprovalforanewformulationofHUMIRA.Additionally,wehavesubmittedregulatoryapplicationsforanimprovedHUMIRApendeviceandourUSandEuropeanregulatoryapplicationsforuveitisarecurrentlyunderreviewwithdecisionsexpectedinthesecondhalfofthisyear.

Movingnowtovirologywhereourgoalistodevelopanext-generationassetthatoffershighcureratesinaribavirinandritonavir-freeregimen.Mid-stagedataindicatethatournewpan-genotypiccombinationcandelivercureratesapproaching100%andwebelievethemajorityofpatientswillbewellservedwithaneight-weektreatmentoption.

LatelastyearweinitiatedacomprehensiveregistrationalprogramincludingsixglobalPhase3studies.Wewillstarttoseedatafromourregistrationaltrialslaterthisyearandthiscombinationispoisedforcommercialentrynextyear.

Inneurologywe'refocusedontherapiesforthetreatmentofconditionslikeAlzheimer'sdisease,Parkinson's,MSandotherneurodegenerativeconditions.Z inbrytaisourfirst-in-classinvestigationalbiologicforrelapseremittingmultiplesclerosiswhichiscurrentlyunderregulatoryreviewintheUSandEuropewithregulatorydecisionsexpectedinthefirsthalfof2016.ThefilingsarebaseduponstrongpivotaltrialresultswhichdemonstratedpatientstreatedwithZ inbrytahadastatisticallysignificant45%reductioninannualizedrelapseratesversusAvonex,anestablishedstandardofcare.




Giventheproductprofile,novelmechanismofactionanditsonce-monthlysubcutaneousadministrationwebelieveZ inbrytahasthepotentialtobeanimportanttherapeuticoption.LastyearweenteredintoacollaborationwithC2NDiagnosticstodevelopandcommercializeaportfolioofanti-tauantibodiesforthetreatmentofseriousneurodegenerativedisorders.

LastyearweinitiatedaPhase1programinpatientswithprogressivesupernuclearpalsyandweremainontracktostartclinicaldevelopmentwithC2NinAlzheimer'sdiseasein2016.Finally,elagolixisourcompoundinPhase3developmentforendometriosisanduterinefibroids.Ourgoalwithelagolixandendometriosisistobringtomarketanoraltherapythatprovidesahighlevelofefficacywithminimalmenopausalsideeffectssuchashotflashwhilepreservingbonehealth.

Wereportedpositiveresultsfromourfirstpivotaltrialinendometriosislastyearandplantoreporttop-lineresultsfromthesecondpivotalstudyinthefirstquarterof2016.WealsoplantopresentmoredetailedfindingsfrombothregistrationaltrialsattheASRNmeetinginOctober.WealsorecentlyinitiatedaPhase3programinvestigatingtheeffectofelagolixonbleedingrelatedtouterinefibroids.

Soinsummary,wecontinuetomakesignificantprogresswithourpipelineandareontracktoadvanceseveralprogramsin2016.We'vebuiltapromisinglate-stagepipelinecomprisedofpotentiallytransformationalmedicineswhichwillfuelourfuturegrowth.

WelookforwardtocoveringourfullpipelineinmoredetailatanR&DpipelinereviewtobeheldinChicagoduringthe2016ASCOmeetinginJune.Wehopeyouwilljoinus.

WiththatIwillturnthecallovertoBillforadditionalcommentsonthequarterandour2016guidance.

BillChase (CFO):

Thankyou,Mike.ThismorningI'llsharewithyouthehighlightsofourfull-year2015performance,provideanoverviewofourfourth-quarterresultsandthenwalkthroughouroutlookfor2016.

Wehadastrongperformancein2015,allowingustoraiseourfull-yearEPSguidancerangetwiceduringtheyearandultimatelydeliversales,marginexpansionandearningsprojectionsthatexceededouroriginalexpectations.Forthefull-year2015,adjustednetrevenueswere$22.8billion,up22%onanoperationalbasis.Weexpandedouradjustedoperatingmarginprofileto42.3%in2015,up610basispointsfortheyear.AndasRickmentionedwereportedadjustedearningspershareresultsof$4.29,upmorethan29%fortheyear.

Turningtothefourthquarter,totaladjustedsaleswere$6.4billion,upmorethan24%onanoperationalbasis.Unfavorableimpactsfromforeignexchangeratefluctuationsreducedsalesgrowthinthequarterby6%.HUMIRAdeliveredglobalsalesof$3.8billioninthequarter,up16%operationallyexcludingtheimpactofforeignexchange.

IntheUS,HUMIRAsalesweremorethan$2.3billion,increasingnearly21%reflectingexceptionalgrowthacrossallthreemajorcategories:rheumatology,gastroanddermatology.Internationally,HUMIRAsaleswerenearly$1.4billioninthequarter,upastrong9.7%onanoperationalbasisexcludinganunfavorableimpactfromexchange.GlobalHUMIRAsalesforthefull-year2015were$14billion,up19.1%operationallyversustheprioryear.

InternationalHUMIRAsalesin2015increased8.6%onanoperationalbasis.

GlobalIMBRUVICAnetrevenueswere$343millioninthequarter.USsaleswere$295millionandourinternationalprofit-sharingwas$48million.

SincetheclosingofthePharmacyclicsacquisitiononMay26,IMBRUVICAhasdriven$754millionofnew




revenueforAbbVieandwearepleasedwithitsprogress.AsignificantportionofourvaluationforPharmacyclicsisattributedtoadvancingintofirst-linetherapyintreatment-naiveCLLpatientsandthesubmissionofthestrongRESONATE-2datatotheFDAthisquarterbodeswellforthisassumption.

GlobalVIEKIRAsalesinthefourthquarterwere$554million.Theinternationallaunchhasexceededourplanningexpectations,resultinginahighermixofinternationalsalesagainthisquarter.Asexpected,VIEKIRAX,ourtwo-drugonce-dailyribavirin-freecombinationforthetreatmentofgenotype1BinJapanlaunchedlateinthefourthquarter.

GlobalsalesofDuodopa,ourtherapyforadvancedParkinson'sdisease,grew24.4%onanoperationalbasisinthequarter.Wesawcontinueddouble-digitgrowthinternationallyforDuodopawithamodestlevelofUSsalesasexpected.GlobalDuodopasalesforthefull-year2015were$231million,up23.5%operationallyversustheprioryear.

GlobalCreonsaleswere$185million,up22.8%.Full-yearsalesofCreonwere$632million,up22.5%versus2014.Creonmaintainsitsleadershippositioninthepancreaticenzymemarketwithroughly70%share.

GlobalLupronsaleswere$235millioninthefourthquarter,up15.6%onanoperationalbasis.Forthefullyear,globalLupronsaleswere$826million,up9.3%exceedingourexpectations.Luproncontinuestoholdaleadershippositionandmaintainssignificantshareofthemarket.

TurningtotheP&Lprofileforthefourthquarter,theadjustedgrossmarginratiowas80.5%excludingamortizationandotherspecifieditems.ExcludingtheimpactofPharmacyclics,wesawanearly100basisimprovementyearoveryear.InthefourthquarteradjustedR&Dwas15.9%ofsalesandadjustedSG&Awas23.9%ofsales,contributingtocontinuedimprovementinouroperatingmarginprofile.

Operatingmargininthequarterwas40.1%ofsalescomparedto35.8%inthefourthquarterof2014.AdjustingforthenegativeimpactsofforeignexchangeandtheacquisitionofPharmacyclicsoperatingmarginincreasedby540basispoints.

Asareminder,thefourth-quartermarginprofileisgenerallythelowestofanyquarterduringtheyear.ThisreflectsseasonalproductmiximpactsfromhighersalesofproductslikeSynagis,alowermarginpartneredproduct.

Netinterestexpensewas$199millionandtheadjustedtaxratewas21.6%inthefourthquarter.Fourth-quarteradjustedEPSwas$1.13excludingnon-cashamortizationexpenseandspecifieditems.OnaGAAPbasiswepostedEPSof$0.92.

Aswelookaheadto2016,weareconfirmingourpreviouslyissuedfull-yearadjustedEPSguidancerangeof$4.90to$5.10.Thisguidanceexcludes$0.42pershareofnon-cashamortizationandnon-cashPharmacyclicsacquisitionimpactsaswellas$0.03pershareofotherspecifieds.

Onthetopline,weexpectmid-teensrevenuegrowthonanoperationalbasisexcludingroughly2%negativeimpactfromexchange.Includedinourtop-lineguidanceareassumptionsforourkeyproductsasfollows.

HUMIRAhasaveragedwellover$1billionofannualgrowthforanumberofyears.In2016weexpectHUMIRAtoonceagainbeanimportantcontributortoourperformancewithhighteensgrowthexpectedintheUS.Internationally,weareforecastingmid-single-digitoperationalgrowth,reflectingthelatestmarketdynamicsincludingthelaunchofabiosimilarforEnbrel.

ForIMBRUVICAweexpectrevenuestoAbbVieofatleast$1.8million.WeanticipateglobalVIEKIRAsales




ofapproximately$2billionfortheyear.ThislevelofsalesincludesignificantinternationalgrowthwithafullyearofsalesinJapan.

Weexpectcontinueddouble-digitgrowthforDuodopa,includinganincreasedUSsalescontribution.AsmentionedonpreviouscallsweanticipateagradualrampforproductsalesintheUSasphysicianscontinuetogetmorefamiliarwiththeproduct.

ForSynagis,weexpectmid-single-digitoperationalgrowthin2016.RegardingAndroGelwe'reforecasting2016salesofroughly$500million.ForCreonweexpecthighsingle-digitsalesgrowth.ForLupronandSynthroid,weexpectsalestoberoughlyflatyearoveryearandweexpectdeclinesinseveralproductswithcontinuedlipidfranchiseerosionaswellasnegativemarkettrendsinHIVandothermatureproducts.

TurningbacktotheP&Lfor2016,weareforecastinganadjustedgrossmarginratioapproaching82%.WeareforecastingR&Dexpenseabove15%ofsalesandweexpecttoseesalesleveragewithSG&Alevelsatapproximately23%ofsales,wellbelowthe24.6%bookedin2015.Asaresult,in2016weareforecastinganincreaseinouroperatingmarginprofileof100basispoints,reflectingongoinginitiativesandsalesleverage.

Excludingyear-over-yearimpactsofforeignexchangeinPharmacyclicsthisoperatingmarginimprovementwouldexceed300basispoints.Weareforecastingnetinterestexpenseofabout$800millionforthefullyearandweexpectanadjustedtaxrateofapproximately21%to22%in2016.

Regardingourfirst-quarteroutlook,weexpectadjustedearningspershareinthequarterof$1.13to$1.15.Thisguidancereflectsgrowthofapproximately21%atthemidpoint.

Ourfirst-quarteradjustedEPSguidanceexcludesroughly$0.11ofnon-cashamortizationandspecifieditems.Weareforecastingrevenuegrowthinthefirstquarterjustabove20%excludingroughly4%negativeexchange.

Whileourfull-yearoutlookforinternationalHUMIRAgrowthismidsingledigitsinthefirstquarterweanticipateanoperationalinternationalgrowthrateof3%.Thisisthedirectresultofadifficultcomparisontotheprior-yearquarterwhereweposteda15%increaseforthebrandduetoshipmenttiming.

Soaswelookbackwe'reverypleasedwithAbbVie'sperformanceinourfirstthreeyearsasanindependentCompany.In2015wedeliveredsales,marginexpansionandearningswellaboveouroriginaloutlookandweexpecttobuildonthatmomentumin2016withindustry-leadinggrowthandanexcitingpipeline.

WiththatIwillturnitbackovertoLarry.


Thanks,Bill.Wewillnowopenthecallforquestions.

QUESTIONS&ANSWERS

Operator,we'lltakeourfirstquestionplease.

Operator :

(OperatorInstructions)

ChrisSchott,JPMorgan.




ChrisSchott (Analyst-JPMorganChase):

Great.Thanksverymuchandthanksforthequestions.

Firstoneshere--justanyperspectiveontherecentAmgenIPRDdecisiononyourformulationpatentandwhatthatmeansforHUMIRA?Andmaybewhilewe'retalkingaboutIP,maybeanythoughtsaswellontheCoherusandBIfilingsonyourdosingpatents?

Thatwouldbemyfirstquestion.

Thesecondone,themid-single-digitgrowthforinternationalHUMIRA,couldyouelaboratealittlebitmoreonthedriversandassumptionsthere?IguessspecificallywhatareyouanticipatingintermsofpricingorvolumecompetitionwhenwethinkaboutbiosimilarREMICADEandEnbrel?

Thankssomuch.


Hi,Chris,it'sRick.SoI'llcoverthosetwo.LetmedotheHUMIRAonefirst.

Soaswementionedinourpreviouscall,weareanticipatingthatwewillseeindirectbiosimilarcompetitionoutsidetheUS,meaningEnbrelbiosimilarsoutsidetheUSthisyear.Soifyouthinkaboutourgrowthratewefinishedthisyearinternationallyatabout8.6%andwe'reguidingfornextyearataboutmidsingledigits.Youcanbreakitupintosortoftwocomponents.

Onewouldbeobviouslyasthebrandgetsalittlebitbiggerthegrowthrateasapercentageisslowingdownabit.AndthenwehavebuiltinwhatareasetofassumptionsofwhatkindofpriceimpactwemightseefromEnbrelincertainmarkets,particularlyinEuropeIwouldsayandthatrepresentsabout2%ofourgrowth.Soyoucanofitcomingdownabout2%basedonthat.Sothat'stheHUMIRApiece.

OntheAmgenIPRandtheotherIPRs,andIthinkingeneralacrossallofthelitigationaspectsofHUMIRA,Ithinkit'simportanttorecognizethatwehavenowenteredanewphaseofourbiosimilarstrategy.Inourthird-quartercallwelaidoutadetailedexplanationofourpatentestateinanefforttoreallyprovidetheinvestmentcommunitywithacomprehensivesetofinformationaroundtheIPandwhatwethoughtthelitigationtimelineswouldlooklikegoingforward.WhatIcantellyouisnothinghaschangedfromthatassessment.

Westillbelieveineverythingthatwe'vedescribedtoyouaspartofthat.Butnowwe'reintheactivelitigationprocesswithotherplayers,whetherthatbeIPRlitigationorotherkindoflitigationthatwillstarttoplayout.

It'sjustnotprudentforustolayoutfortheworldaplay-by-playanalysisofourpositionsaroundthis.That'sjustnotthesmartthingtodofromalitigationstandpoint.

SowhatI'dtellyouisI'dreiteratethepointsthatwemadebefore.WehavealargerobustportfolioofIP.WehavedonesignificantworkfromaninnovationstandpointinthisareaandwehaveprosecutedallthisIPbasedontheworkthatwe'vedone,theinvestmentthatwe'vemadeandwefeelgoodabouttheIPinourportfolioandaswe'vesaidbeforeweintendtovigorouslydefendourIP.

Thisisgoingtoneedtoplayoutovertime.Wearecertainlypleasedwiththedecisionofthepatentoffice.Butwe'renotgoingbasicallydoaplay-by-playonthisbecausethatpotentiallycouldjeopardizeourposition.

ChrisSchott (Analyst-JPMorganChase):




Allright.Thanksverymuch.

Operator :

JamiRubin,GoldmanSachs.

JamiRubin (Analyst-GoldmanSachs):

Thankyou.IjustwanttotalkaboutUSHUMIRAsalesthispastquarterIguess20%,or21%wasabitbelowconsensusexpectations.Ifyoulookatvolumegrowthandpricecontributionthatshouldhaveledtoslightlyhighergrowth.

I'mwonderingifyoucantalkaboutwhatishappeningtonetpriceincreases,aretheysticking?AndwithrespecttoyourhighteensguidanceforUSHUMIRAsalesin2016,whatagainareyourassumptionsforprice?Thanksverymuch.

BillChase (CFO):

Hi,Jami,it'sBill.Look,Ithinkwe'veseenspectaculargrowthnumbersoutofHUMIRAintheUSallyearlongandcertainlyQ421%isn'tabadnumber.IfyoulookatthemarketTRxgrowthrightnowonthequarteritwasabout13%.

Fromaninventorystandpoint,sequentiallyquarterversusquarteritstayedroughlyflatatalittlelessthanhalfamonth.ButonethingthatisimpactingthisnumberiswehadslightlyhigherinventorynumbersinthechannelinQ42014andifyouadjustthatoutitprettymuchgetsyoubacktowhereguidancehadus.Sowehaven'tseenanythingonthisbrandthatwouldleadustopauseandrestateourexpectations.

AsIsaidonthecallandinmycommentswe'reexpectinghighteensgrowth.Soit'sgoingverywell.

Fromapriceperspectiveit'snormalforthesesortsofproductstotakepriceincreasestowardstheendoftheyearorthebeginningoftheyear.Wecertainlyhavedonethatatthebeginningoftheyear.SothereisgoingtobeapricedynamiconHUMIRAin2016andwe'llhavetoseehowthingspanoutastheyearprogressesaboveandbeyondthat.


AndJami,thisisRick.TheonlythingIwouldaddismuchlikethediscussionwehadlastquarteraboutinternationalthirdquarterifyoulookatourorderingorifyoulookatourgrowthratepatternsoverthelastseveralyears,whatyou'llseeistypicallyfourthquarterisalittlebitlowerfromagrowthstandpoint.

ButIthinkwhatyou'reaskingisareweseeinganykindofaslowdownintheUS?We'renot.TheUSisperformingveryrobustly.

WeguidedIthinkatthebeginningofthisyeartoaboutthesamenumber,highteensandobviouslyoverachievedthat.AndsowefeelverygoodabouttheperformancegoingforwardwithHUMIRA.

Operator :

MarcGoodman,UBS.

MarcGoodman (Analyst-UBS):

Yes,goodmorning.YoumentionedtheHUMIRApriceincreasewhichwaslike10%-ish.Howmuchofthatisactuallyflowingthroughtothebottomlinethisyearthatyouprojectandhowhasthatchangedasfarasthegrosstonetoverthepastcoupleofyears?




Andthensecond,ifyoucouldtalkabouthepatitisCalittlebit.ObviouslytheUSthere'sonedynamicandobviouslywithMerckcomingintheygotapproved,theysettheirpricinglastnight,ifyoucouldcommentonthat.

ThensecondlyifyoucouldtalkaboutJapan,whereweareandhowit'sdoing.Iknowyoudidn'thavealotofJapaninthequarterbutnowit'sbeenagoodmonthandahalflatersomaybeyoucanjustgiveusasenseforhowJapanisdoingandtherampandhowmuchJapanisgoingtobeapieceofthatO-USthisyear?


Okay.SoletmetaketheHUMIRApricepiece.Iunderstandallofthefocusonprice.Ithinkallofusinthisindustryrecognizealloftheheadlineswe'dseenaroundpriceandIthinkanimportantperspectivetostepbackandthinkaboutforourbusiness,thisisnotabusinessthatishighlydependentuponprice,ourbusinessI'mtalkingabout.

Soasyoulookatouroperationalgrowthin2015at22%,only2%ofthatwaspriceacrossthebusiness.IfyoulookatHUMIRAroughlyaround25%oftheoverallgrowthisdrivenbyprice.

Now,youdohavecertainmanaged-carecontractsthathavesomelevelofpriceprotectionsoallthepricedoesn'tfallthroughat100%.Anddependinguponwherethepriceincreasesareandthemagnitudeofthosepriceincreaseslessofitwillfallthroughinalaterpriceincreaseasanexample.

ButoverallthevastmajorityofourgrowthwhetheritbeHUMIRAorotherassetsinourpipelineisdrivenbyvolumegrowth.AndIthinkthat'sanimportantperspectivefortheinvestorcommunitytounderstand.

AsfarasHCVisconcerned,asweplannedoutfor2016,I'dsaytheMercklabelcameinprettymuchspotonwhatwehadexpected.SoIthinkit'swithinourexpectations.WehavebuiltintoourassumptionsforHCValevelofcompetitionandsomelevelofpricecompetition.

We'regoingtohavetoseehowthatplaysout.It'snot--wedon'tbelievewehaveanyexposurethereatall,sowe'renotconcernedaboutthat.Butwehavebuiltinwhatwebelieveisanappropriatelevelofbothpriceandvolumecompetitionthatwecanseeinthemarketplacein2016.

Japantoyourpoint,welaunchedverylateinthefourthquarter.Andsofar,andIhadanupdatejustaweekorsoagofromtheteam,Japanisgoingwell.It'strackingonourexpectations.

Operator :

MarkSchoenebaum,EvercoreISI.

MarkSchoenebaum(Analyst-ISIGroup):

Heyguys,thanks.WonderingifIcouldtakealeftturnhereawayfromhepCanddrugpricingandtalkalittlebitaboutyourpipelinewhichisarguablynotdiscussedalotonthestreet.Sonumberone,I'dloveto--andalsocompetition.

Sofirstofall,I'dlovetogetyourthoughtson,there'sbeenalotofnewsintheJAKspace,I'dlovetogetyourthoughtscomparingbaricitinibto494.I'dalsolovetogetanupdateonhowyou'rethinkingaboutABT-122andALX-0061,what'sthenextstepwhenwemakeanextstep?

AndifpossiblethrowinacommentaboutACP-196versusIMBRUVICA.ThismoleculehasobviouslycomeintotheheadlinesafterAZNpaidIthink$7billionforit.Thankyouverymuch.





SureMark,thisisMike.Iwilltakethosequestions.

YourfirstquestionwasaboutourJAKfranchiseandcompetition.IthinkthatifwelookatJAKinhibitorstherehadbeenafairamountofenthusiasmseveralyearsagothatactualresultsdidn'tliveuptoexpectationsforthefirstgenerationofthosemoleculessuchastofacitinib.

ButthecurrentgenerationIthinkhaveveryniceprofiles.AndIthinkbaricitinibhasgeneratedaniceprofilebasedonthedatathatweseentoday.We'llseemoreastheyproceedthroughtheregulatoryreview.

AndIthinktheclassisgoingtogetuseovertime.Whatweseewiththisclassisittendstostartslowandbuildovertimeandworkfrommoreresistantpatientsuptoearlyotherlinesoftherapy.AndweseethatwiththerapiesinRAandimmunologyingeneral.

SowhenIcomparethetwoIfeelveryencouragedbytheresultsthatwe'veseenwithABT-494.We'veseenverystrongefficacy,notjustattheACR20levelbutatmuchhigherlevelsofresponse:ACR50,ACR70DASremission,etc.

Andwe'veseenthatacrosstwolargePhase2bstudiesincludingaTNFinadequateresponder.ThosearetheresultsthatImentionedinouropeningcomments.AndthereweseealevelofresponseinTNFinadequaterespondersthatwebelievehasthepotentialtobebest-in-class.

SoifyoulinkthatupwithwhatIsaidabouthowRAdynamicsplayoutthosedataaregoingtobeveryimportantandwebelievethatthatisabigopportunityforthismolecule.Wedobelieveovertimethat494willcertainlyhaveuseinearlierlinesoftherapybutwhenwelookatthebalancedprofileof494wefeelverygoodaboutit.

SomovingontoABT-122inAblynx,thoseareinmid-stagetrialsandwewillseedatafromABT-122midyearandfromAblynxtowardsthebackendoftheyear.Andoncewehavethosedata,thenthatwillbethetimetomakedecisionsaboutnextstepsandwe'llbesharingthosedataassoonasit'sreasonabletodosoafterwegetthem.

MarkSchoenebaum(Analyst-ISIGroup):

Whatarethehurdlesforsuccessinthosetrials?


Wellourgeneralapproachhasbeenthatwebelieveweneedtoraisethestandardofcare.Sowhatwe'regoingtowanttoseeissomethingthatisoverandabovethelevelofefficacythatcanbeachievedwithcomparableagentsifyouwill.SoABT-122combines17inTNFssoyou'regoingtowanttoseesomethinginthediseasepopulationswe'vestudiedinRAandinpsoriaticarthritisthat'sbetterthanonecangetwiththosemechanismsalone.

AndAblynxisanotherapproachatIL-6youwanttoseesomethingthat'sbetterthantheexistingtherapiesthatareoutthere.Nowobviouslythesearen'tcomparativestudiesbutwe'llhavethedatawebelievetomakethoseassessmentsandtodeterminewhetherwewilladvancethoseprogramsthisyearasIsaid.

SowiththerecertainlyhasbeenalotoftalkaboutAcertagivenitsrelativelyearlystageofdevelopment.WhatIwouldsayfirstandforemostiswe'vesetaveryhighbarwithIMBRUVICA.We'vesetaveryhighbarwithefficacyandalsowithsafety.




IquotedsomeofthenumbersfromRESONATE-2.Wedon'tbelievewe'veleftanyroomonthetablefortheretobeastoryofimprovedefficacyandwefeelverygoodaboutthesafetyprofileofIMBRUVICA.

WithAcertawe'relookingatmuchearlierdata.We'relookingatPhase1b/2astudies.Ithinkthestudythathasgarneredthemostattentionisabouta61patientdoserisingstudywithanexpansion.

Andit'sreallyjustnotpossibletocomparethoseveryearlytrialstoamoleculelikeIMBRUVICAwhichhasmultiplePhase3readoutsandhasbeenonthemarketnowforaconsiderableperiodoftime.Sowe'llseeastheirprogramcontinuestoprogresswhatthey'reabletodemonstrate.

Theyhavecomparativestudiesthatwillreadoutinacoupleofyearstime.AndIthinkthat'sreallythefirsttimewewillbeabletomakeanysortofcomparativeassessment.Thoseareopenlabelstudiessothat'salimitationofthem.

AndIwillalsoaddthatAcerta'scomparativestudiesareinrelapsedrefractorypatientsandIMBRUVICAismovingtothefrontlineovertimeandthatmomentumisgoingtokeepup.SowefeelveryconfidentinourpositionwithIMBRUVICA.


TheonlyotherthingI'dadd--thisisRick.WhenwedidtheacquisitionofPharmacyclics,wediditwiththeknowledgeofAcerta.Sowethoroughlyreviewedbasedontheinformationthatwehadatthattimethecompoundandevaluatingwhetherornotwethoughtitwasarisk.

AndIthinkoneofthethingstokeepinmindisafollowerstrategyinoncologyatleasthistoricallyhasnotworkedverywell.Andthereasonitdoesn'tworkverywellisiftheinnovatorkeepsadvancingthebartheregulatoryenvironmentchangesonthefollowerandwhattheyneedtodotobeabletogettheirapprovals.Andit'smoredifficult,ittakesmoretime,it'smoreexpensivebecausetheycan'tdosinglearmstudiestogetapproval.

ThesecondthingI'dsayisthereseemstobetwothesesoutthere.Onewouldbeimprovedefficacy,onewouldbeimprovedsafetyprofileparticularlyaroundbleedinganda-fib.

Iwouldn'tsaythatthoseareissuesthatareinhibitingourabilitytobeabletoadvancethebrandandthestandardofcaretoday.ButwhatIwouldalsosayaswehaveevaluateditwebelievethatthevastmajorityofthedatawouldsupportthatthoseareon-mechanismsideeffects.

Andsowe'llhavetoseewhattheirdataprovesoutandwe'llhavetoseewhattheirinclusionandexclusioncriteriaisonthetrialsthattheyruntomakesureit'sabalancedviewtobeabletodemonstratewhatthebleedinga-fibratewouldbe.Andrememberwedidn'tseea-fibinIMBRUVICAuntilwegottosomethinglike1,500patientsorso.AndIthinkwesawbleedingatabout500,600,somethinglikethat,right?

Sowehavetoseealotmoredatatoseearealsignalandithastobeinapopulationthat'sconsistentwiththepopulationthat'sbeingtreatedandwe'llseewhatthedatalookslike.ButIthinktheevidencetodaywouldsuggestthatthoseareon-mechanism.Andsowe'llhavetoseehowitplaysoutbutIwouldtellyouthatwe'reconfidentinourpositionwithIMBRUVICA.

Operator :

DavidRisinger,MorganStanley.

DavidRisinger (Analyst-MorganStanley):

Thanksverymuch.SoIwantedtogobacktothepositiveIPRdecisions.Couldyoupleasecharacterize




thebreadthofthosetwopatents,the157and158patentswhichweresurprisinglyupheld?SpecificallyyoumusthaveanopiniononthelikelihoodthatotherbiosimilarmanufacturersbeyondAmgenwillinfringethesepatentsbecauseit'schallengingtomakeastablemonoclonalantibodywithoutinfringing.

AndthensecondI'minterestedinyourperspectiveondurationoftherapyforIMBRUVICAcurrentlyandhowyouexpectthattoevolvewithnewindications.Andthenalsoifyoucouldshareanythoughtsonvenetoclaxonthatfrontwithrespecttoexpecteddurationoftherapyaswell,thatwouldbeveryhelpful.Thankyou.


David,thisisRick.OntheIPRpart,youknowIguesswhatI'dsayisitwasn'tsurprisingtous.WeobviouslyhaveaprettyhighlevelofconfidenceintheIP.

Youknowasfarasothersthatwouldinfringe,we'recertainlynotinapositiontobeabletoanswerthatquestionbecausewedon'tknowwhattheirformulationsare.Iguessthebestplacetogetthatanswerwouldbetoaskthem.

ButasIsaidwe'renotgoingtotalkalotabouthowwe'repositioningthingsandhowweplanonrunningtheIPRprocessgoingforward.Themostimportantthinghereisthatweprevail.AndIrealizethatprobablydoesn'tgiveyougreatcomfortbutyouhavetorecognizeourresponsibilityistomakesurethatweputthebestpositionforwardandthatwedon'ttipoff--wedon'ttipoffouropponentsinthisprocessastowhatourstrategyis.

SoIapologizeforthatpartofitbutthat'sthetrade-offwehavetomakehere.Andyou'regoingtoseemoreofthisplayoutovertimeandIthinkyou'llgetafeelforit.AndyoucangetotherpeopletoevaluatewhatyouthinkthatwilllooklikefromanIPstandpoint,althoughI'dsaymuchlikethisparticularpatentsomepeopleopinethattheydidn'tthinkitwasverystrongandyousawhowthepatentofficemadetheirdecision.SoIthinkthat'saboutallwecantalkaboutasitrelatestothelitigation.

ThesecondwouldbeondurationoftherapyonIMBRUVICA.IfyoulookatthedurationoftherapytodayI'dsayit'strackingonwhatweexpectedaspartoftheoriginaldealmodelthatweputtogether.TogiveyousomeflavorforthatI'dsayit'sabout75%oftheclinicaltrialduration.

Ithasbeenincreasingovertime.Thereareanumberofelementsthatbasicallywehaveanalyzedandhaveprogramsinplace.Someofthosearepayerrelatedandsomeareotherkindsofthingsthatwehavetocontinuetoworkthrough.

IthinkoneofthethingsthatwillbeextremelyhelpfulistheRESONATE-2datahere.Becausenowyouhaveabsolutedatathatsupportsthatifyoukeepthesepatientsontherapyforalongerperiodoftimethenyougetverygoodoutcomes.SoIthinknotonlyfromthestandpointofallowingustobeabletomoveintofrontlinebutasanotherpieceofstrong,credibleevidencethatmaintainingtherapyoveralongerperiodoftimegivespatientsthebenefitthatwe'relookingfor.

Oneofthethingsthatwedidseeisincertainphysicianpopulationsfromadurationstandpointwhenbloodcountsimprovedsomephysicianswouldtakepatientsoffoftherapyandobviouslythat'snotsomethingthatwewouldwant.SoIthinkRESONATE-2isastrongsupportingsetofdatathatwillhelpgivephysicianstheknowledgeandinformationtheyneedtobeconvincedthattheyshouldkeepthemontherapyeventhoughthebloodcountshaveimproved.

Andthenonvenetoclax,Idon'tknow,Mike,canyoutalkatallaboutthat?It'salittlehardtotellatthispoint.





ThisisMike.WithrespecttodurationoftherapywithvenetoclaxIthinkit'searlytomakeastatementbecausewe'retreatingmanydifferentpopulationsnowinclinicaltrials.Wehavealargenumberofpatientscontinuingontherapy,sothosemeandurationsoftherapyareincreasingasthedatasetmatures.

SoIthinkwecan'tgiveaspecificnumber.Ithinkwhatwecansayisthattheresponseswe'reseeingareverygood.

We'rekeepingpatientsontherapy.Thereisgooddurabilityofthoseresponses.AndasthedatasetmaturesandaswemovetoalabelIthinkwecanupdateyouonthat.

Operator :

VamilDivan,CreditSuisse.

VamilDivan (Analyst-CreditSuisse):

Thankssomuch.Acoupleofquestions.

One,justintermsofhepCIappreciatethecommentsyoumadefornextyearandhowyou'relookingintothat.Canyougiveusasenseifyou'veseenanyimpactonprescriptiontrendsfromthelabelchangethatyouhadtomakebacknearthestartofthefourthquarterandifthat'simpactedthingsatall?

Andthenmaybeonthepipeline,againIappreciateallthecommentsthatweremadeearlierandalsoinresponsetoMark'squestions,maybeifyoujuststreamlinethingsalittlebitandjustflagifyoucouldthetwoorthreemostimportantdatareleasesthatyouthinkinvestorsshouldbefocusedonforAbbViebetweennowandyourJuneR&Dday.Thankssomuch.


ThisisRick.IwilltaketheHCVone.Wehaveseenanimpact.

Maybethebestwaytodescribeitwouldbethis.Yousawwhatourrevenueswereinthefourthquarter.Wehadflaggedthatthe$3billionrunningrateinthefourthquarterthatwethought,Iflagged,thatwemightmissitbutwewouldberelativelycloseandthatiswhatwehadbeentrackingagainstforthefourthquarter.

I'dsayinthefourthquarterthereweretwoimpactsandoneofthemisgoingtobethelabelchange.That'swhyI'mgoingthroughthisexplanationforyou.

SoonewastheVAvolumesstayedverylowthroughthefourthquarterbecauseofthefundingissueintheVA.Sothatwasoneoftheimpacts.

ButthenthesecondwaswhatwesawfromcollateralimpactonthelabelandI'dsaywelostaboutonesharepoint.SotherewassomebleedoverimpacttoothersegmentsbecausetheChild-PughBisn'tworthonesharepoint.

Ithasstabilizednowatthatlevel.AndsoIthinktheimpacthasflowedthroughandwewouldassumethatinwhatwe'vebuiltfor2016.Butthat'sbeentheoverallimpact.


Andintermsofdatareleasestokeepaneyeon,aswesaidinourremarkswe'regoingtoseeresultsfromtheelagolixendometriosissecondpivotalstudyinthefirstquarter.We'lltoplinethat,sothatwillobviouslybesomethingtokeepanIoutfor.




AtEASLwe'llpresentalargeamountofdataonournext-generationhepCprogramincludingeight-weekand12weekcomponentsofourPhase2program.Sothatwillbesomethingtokeepaneyeon.

AndatASCOIwouldlooktoourdatainCLLinvenetoclaxandalsoAMLinvenetoclaxasupdatesthatwecankeepaneyeoutfor.

Operator :

AlexArfaei,BMOCapitalMarkets.

AlexArf aei(Analyst-BMO):

Goodmorningfolksandthanksfortakingthequestions.Obviouslythereisquiteabitofskepticismaboutyour2020HUMIRAguidance.AndgivenwhatyousaidtodayaboutEuropeandthefactthatbiosimilarcompetitionwillonlyincreasethere,canyouhelpusunderstandhowyougetthere,basicallyhelpusbridgethedifferencebetweenwhereconsensusisrightnowtoyourexpectationforgreaterthan$18billionby2020forHUMIRA?

AndthenI'mcuriousaboutwhataresomeofthethingsthatyouwillbelookingforduringtheupcomingREMICADEbiosimilarSBApanel?Thankyou.


SoAlex,thisisRick.Youknowifyouthinkaboutwhatwedescribedforyouonthe2020HUMIRAguidanceex-USwebasicallysaidthatwewouldseedirectbiosimilarcompetitioninthefourthquarterof2018.Wehavesomeimpactfromindirectbiosimilarstartingin2016.

Idescribedearlierinthecallwhatthatimpactassumptionisfor2016.Itwillobviouslyhaveaflow-throughimpactinto2017asthatexpandsandbasicallyflowsthrough.

ButthenifyouthinkabouttheerosioncurvethatIdescribedonthethird-quartercall,sowhatwesaidwasinternationallythebrandwillpeakat2018andthenitwillgentlystarttodeclineandifyougettotheendof2020it'sdownabout15%orso.That'sacombinationofvolumeandprice.

NowI'dalsotellyoubecauseofthecategoryisstillgrowingobviouslythenthegrowthwouldhavebeenthereandsomeofthatgrowthwenttoabiosimilarplayer.Soitbasicallysaysthatabout30%ofthetotalopportunitywouldhavegoneoverthatperiodoftime.Andthat'sapointatwhichweseesomelevelofstabilizationgoingforward.

SoIthinkthat'sthewayyouwouldcharacterizeit.Andalthoughwedon'thavedirectknowledgeofhoweachanalystbuildsconsensusaroundtheirinternationalandUSsetsofassumptions,whatIwouldsayisthebiggestdifferencebetweenconsensusandourforecastisthatsomepeoplearestillforecastingthatHUMIRAseesbiosimilarcompetitionintheUnitedStates.

Thenumberistoobigtobeanythingotherthanthat,thechange.SoafterourguidancewhatwedidseeiswesawHUMIRAmoveupprettysignificantlybutnotallthewayouttoour2020forecast.Sotherearestillsomeindividualswhowe'reassumingthattheyseebiosimilarcompetitionprobablynowinthat2019timeframeit'sprettymuchslidoutto.

Soitisthedifferencebetweenthatandultimatelyourassumptionthatwewillgetthrough2020to2022andIthinkthat'sthebiggestsingleimpact.Asfarasthe[RemC]panelIthinkaswetalkedaboutinternationallywe'vebeenwatchingthisplayoutintheinternationalmarketsandstudyingitcarefully.Andaswe'veindicatedtothemarketplacemany,manytimesbeforewe'renotseeingadirectimpactonHUMIRA.




Andobviouslyifyoulookatourgrowthratesin2015andyoulookatourgrowthrateinfourthquarter,Ithinkthat'sindicativeofthefactthatwe'renotseeinganysubstantialimpactaswell.Andsowewouldn'tassumethattherewouldbeanimpactintheUnitedStateseither,thatreallyfitsinadifferentcategory.Ithinktheonethingthatwillbeinterestingtolookatinthepaneliswehaveassumedinourplanningassumptionsthatbiosimilarplayersgetextrapolation.

Wedon'tagreewiththat.Wethinkit'simportantforanydrugtobetestedintheindicationthatit'sgoingtobeusedinandgeneratesomeclinicaldata.ButI'dsayweplanfromaconservativestandpointthatwewillseeextrapolationinallthemajormarketsaroundtheworld.

IthinkaswegoforwardhereifsomehowwegotanindicationthatthatwerenotgoingtobethecaseintheUnitedStatesthatwouldbeapositivetous.Sothat'soneofthethingsthatwe'llbelookingat.

Operator :

SteveScala,Cowen.

SteveScala(Analyst-Cowen):

Thankyou.Youmentionedthe$2billioninVIEKIRAsalesin2016.ThatislessthanannualizingQ42015saleswhichwerealreadyabitheldbackasyoudescribedacoupleofminutesago.

Soitseemsastheseexpectationsoryou'reexpectingaslowdownquarteroverquarterin2016despitethelaunchinJapan.Sowhereareyouexpectingtoseethepressure?

Secondly,wherespecificallyinMerck'shepClabeledasAbbVieseecompetitiveadvantagesforVIEKIRAifany?Andthenlastly,whathasbeentheuptakeofthenewformulationofHUMIRAintheEU?Thankyouverymuch.


Steve,thisisRick.Iwilltakethefirstone.Soyouarecorrectthatifyoulookatwhatwe'reguidinggoingforwarditislessthanourfourth-quarterannualizedandthatisourintent.

There'stwofactorsthere.Let'sbehonest,we'vehadtroublepredictingthisnumber,sowewantedtogointo2016withanumberthatwehadaveryhighlevelofconfidencethatwecouldhit.

Sothatiscertainlyacomponentofit.ThesecondcomponentisweareassumingsomelevelofcompetitionfromMerck.

Sowe'llhavetoseehowitplaysoutbutIwouldsaywe'regoingtosetthisoneatanumberthatwehaveahighlevelofconfidencethatwethinkwecandeliver.AndI'dmuchrathersurpriseyouonthepositivethansithereandapologizeonthemiss.AndMike,whydon'tyoucoverthelabel.


Well,sorecognizingthattheMercklabelhasjustcomeoutwhatIwouldsayiswewouldlookparticularlyattheimpactofRAVsonresponse.Andthisissomethingwe'vebeensayingsincethePhase3datawerepresented.TheUSlabelrecommendsRAVtestingforMerckandguidesbothregimenandtreatmentdurationbasedonthat.

AndwithVIEKIRA,that'snotthecase.Andalsowhenwelookatournext-generationregimentandwelookatactivityinanumberofpreclinicalsystems,invirusesthatcarrythoseresistancemutations,weseeveryhighlevelsofactivityforouragent.Sowethinkthatthat'sgoingtobeastrengthforourprogramsgoingforward.





Andthenonyourlastquestion,wehavenotlaunchedthenewHUMIRAformulationinternationallyorintheUS.Weneedanewpendeviceforthisformulationandsowehavesubmittedthepeninbothjurisdictions.We'llhavetowaitforthattogetapprovedandoncethat'sapprovedthenwe'llmakeourdecisionsonlaunchingthose.

Operator :

JohnBoris,SunTrust.

JohnBoris (Analyst-SunTrustRobinsonHumphrey):

Thanksfortakingthequestionsandcongratulationsontheresults.FirstquestionhastodowiththeJapanesemarkets.AreyouanticipatinganyimpacttoyourfranchisesfrompricedecreasesinJapaninApril?

Secondquestion,whatpercentofHUMIRArevenuesinUSandex-UScomefromrheumatoidarthritis?Andcanyougivesomecolorontimingaroundwhenthepenmightseeorsecureapproval?

AndthenlastquestionjusthastodowithABT-494,itseemsthatcompetitivelybaricitinibandthedeveloperstherehavelatchedontoanimportantareaofdiabeticnephropathythatappearstohaveaneffectthatwouldbeaverylargeuntappedmarket.I'msureyou'lltalkaboutthisinJunebutanythoughtsaroundfurtherbroadeningthedevelopmentoutsideofRAforABT-494?Thanks.


SoJohn,thisisRick.I'lltakethefirstone.SotheJapanesemarketpriceadjustments,weareawareofit.

Ithasbeencommunicatedtous.Soit'sbuiltintoour2016guidance.

Idon'tthinkit'ssomethingwecantellyoubecausereallytheJapaneseauthoritiesneedtoreleasethat,notus.ButI'dsayitwasintherangeslightlylowerthanwewouldhaveexpected.

SoIthinkit'sfineandasIsaidit'sintheguidancealready.Butweareawareofwhatthenumberis.TheHUMIRAindicationmix,itwasRAyousaid?

BillChase (CFO):

Yes,RA,John,rightnowisjustabitunder35%ofglobalsales.


Andthenthependevicestheyweresubmittedrecently,sowe'rethinkingsecondhalfof2016.AndthenABT-494,Mike?


Sure.ThisisMike.

SowithrespecttobroadeningoutABT-494development,weobviouslybelievethatABT-494hasbroadpotentialinRA.Inotherimmunologically-mediatedconditionswehaveprogramsunderwayininflammatoryboweldiseaseandIthinkthedatasupportthatwe'relikelytoseeagoodeffectthere.

Withrespecttodiabeticnephropathy,it'sanintriguingidea.It'scertainlysomethingwe'dconsiderandperhapsthatisagoodtopicforourR&DdayinJune.




Operator :

ColinBristow,BankofAmerica.

ColinBristow(Analyst-BofAMerrillLynch):

Goodmorningandthanksfortakingthequestionandalltheusefulcolor.SofirstonHUMIRA,justinthe4Qcanyoucommentspecificallyoratleastqualitativelyonthelevelofrebatinginthequarterandhowitcomparesyearoveryearandsequentially?

SecondonhepC,canyougiveussomeideaofthenumberofcontractsperhapsasaproportionof2015whichyousecuredwithexclusivityfor2016?Andthenthirdly,andsorryifImissedthisbutontheHUMIRAex-USfront,canyougiveusanupdateontheimpactyou'rethinkfrombiosimilarREMICADE?

Ithinkpreviouslyyousaidaround3%share.Andthenjustfollowingonfromthattheme,howdoyouanticipatethethreatfromthebiosimilarEnbrelgivenit'saninjectableversusaninfusion?Thanks.

BillChase (CFO):

Socallon,it'sBillChase.OntherebatingaroundHUMIRAobviouslywedon'tgotoanygreatlengthsexplainingthelevelsofrebating.

WhatyouneedtothinkaboutwithourpricingdynamiconHUMIRAispriceincreasesinthelaterhalfoftheyeartendtohavelessofafallthroughthat'srelatedtobasicallypricingcapsincertainprograms.Sototheextentthatwetakepricelaterintheyear,ourrebategoesupforthoseparticularprograms.ButIdon'twanttogetintoanyspecificnumbersaroundthatatthispointintime.


OntheHCVcontractingwhenweoriginallylaunched,andtheexclusivecontractsthatwehadweremultiyearcontractswiththeexceptionoftheMedicaidcontractswhichmanyofthoseareannualcontracts.TheygetbidoutonayearlybasissoI'dsaycertainlythemajorityofourbusinessisunderamultiyearcontractingstrategy.

OnHUMIRARemC,Imaynothaveheardthequestioncorrectlybutwehaven'tcommunicatedthatit'shada3%impactbuthadvirtuallynoimpactonourbusiness.Overallifyoulookattheiroverallbiologicshareissomewherearound3%butthevastmajorityofthathascomefromREMICADE.

AndthenEnbreliswhatIdescribedearlierthatweareanticipatingabouta2%impactfromagrowthratestandpoint.Themajorityofthat,thevastmajorityofthatisprice.Therearecertainmarketswheretherewillbeapriceimpact.


Operator,wehavetimeforonemorequestion,please.

Operator :

AndrewBaum,Citi.

AndrewBaum(Analyst-Citi):

Thankyou,threequestionsplease.Firstly,you'veexpressedpreviouslyyourconfidenceintherobustnessofthe135patentwithintheUSandIknowit'shadaverylengthyprosecutionhistorytoattaininclusionintheUSPTO.




CouldyoucontrastthatwiththewithdrawalofthesimilarpatentsfromEurope?WhatunderpinstheconfidenceintheUSbuildingonthelengthypatentprosecutionifyou'dliketocomment?

Second,perhapsyoucouldgointoalittlebitmoredetailintermsofthereferencepricingforanti-TNFagentswithinEurope.ObviouslythinkingoftheimpactofEnbrelanddraggingdownthepricesofthecategory.

Andfinally,justonAcerta'sBTKinhibitordoyoubelievethattheyinfringedAbbVie'sintellectual-property?Thankyou.


Thanks,Andrew.Onthe135patent,asIsaidbeforewe'renotgoingtogothroughalotofdetailbackandforth.ButtheonethingIdowanttoclarifyisrememberIPinEuropeisdifferentthanIPintheUnitedStatesinhowitisultimatelyprosecuted.

Thesecondthingisit'simportanttorememberthatalthoughwewithdrewtheparentpatentwediditbecausetherewasoneparticularassaythatwehadasecondpatentthatdidn'thavethatquestion.Andthereforewepulledthatpatentinordertobasicallyjustfocusonthisotherpatent.Soit'snotlikewewithdrewitbecausewewereconcernedaboutit.

Andsoultimately--butthatisnotanissuefromaUSstandpoint.Ithinkthat'sprobablyasmuchaswe'regoingtotalkaboutit.

Referencepricing,obviouslypartofwhatIindicatedearlierisreferencepricebutI'dsayalsotherearesomemarketswheretherecouldbesomehospitalnegotiationsalsothatcouldhaveanimpacthere.Andsowefactoredinwhatwethinkiscertainlyaconservativenumber,butIthinkit'sanappropriatenumbertobeabletoultimatelyplanfor2016.

AndthenonAcertaBTK,theIP,againwehavesignificantIPinthisarea.AndifwebelieveAcertainfringesthatIPwe'llenforcetheIP.


Thanks,Andrew.Andthatconcludestoday'sconferencecall.

Ifyou'dliketolistentoareplayofthecallpleasevisitourwebsiteatAbbvieinvestor.com.Thanksagainforjoiningus.

Operator :

Thatconcludestoday'sconference.

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