AbbVie Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Performance: Delivered adjusted earnings per share of $1.86, $0.10 above guidance midpoint. Total net revenues were nearly $15.8 billion, with high single-digit sales growth and $300M above expectations. Raised 2025 outlook for the third time.
• Pipeline Advancements: Pipeline has ~90 programs. Key milestones include new product approvals for tavapadon and PVEK, expanded indications for Rinvoq, Epkinly, etc., and pivotal data for lutikizumab, Temab-A, etentamig.
• Growth Platform: Skyrizi and Rinvoq combined sales growth >40%. Neuroscience showed double-digit revenue growth. Growth platform provides line of sight to growth into next decade.
• R&D Investments: Anticipate $9 billion of adjusted R&D expense in 2025. Invested >$84B since 2013 in research, discovery, and development.
• Capital Allocation: Investing at least $10B in US over 10 years. Construction underway for new API manufacturing site in North Chicago and expansion in Worcester. Increased quarterly cash dividend by 5.5%.

Segment Performance

• Immunology: Delivered total revenues of approximately $7.9 billion, up 11.2% on an operational basis. Skyrizi global sales were $4.7 billion (46% operational growth), Rinvoq global revenues were nearly $2.2 billion (34.1% operational growth).
• Humira: Global sales of $993 million, down 55.7% on an operational basis due to biosimilar competition.
• Oncology: Total revenues were nearly $1.7 billion, relatively flat versus prior year. Momentum from Venclexta, Elahere, Epkinly, and EMRELIS offset Imbruvica sales decline.
• Aesthetics: Global sales were approximately $1.2 billion, down 4.2% on an operational basis. Botox Cosmetic global revenues were $637 million, Juvederm global sales were $253 million, both with lower growth rates.
• Neuroscience: Total revenues were more than $2.8 billion, up 19.6% on an operational basis. Ubrelvy, Qulipta, Botox Therapeutic, Vraylar, and VYALEV showed robust growth.

Guidance

• Raised 2025 adjusted earnings per share guidance to between $10.61 and $10.65. Total net revenues expected to be approximately $16.9 billion, an increase of $400M.
• Skyrizi global sales expected at $17.3B, Neuroscience at $10.7B, Aesthetics at $4.9B.
• Fourth quarter 2025 net revenues expected >$16.3 billion, adjusted EPS between $3.32 and $3.36. Aim to achieve net leverage ratio of 2x by end of 2026.

Risks

• Biosimilar Competition: Humira sales impacted by biosimilar competition, with access in US expected to decrease through 2026.
• Market Softness: Aesthetics segment facing challenging market conditions due to macroeconomic factors, with category growth below previous assumptions globally.
• Competitive Dynamics: Oncology facing competitive pressures affecting Imbruvica sales in CLL.
• Macroeconomic Pressures: Discretionary spending affected by economy and inflation, impacting aesthetics sales.

Question and Answer

Q: Potential implications of new PBM model and IRA price negotiations for Vraylar and Linzess?

A: Rob Michael stated AbbVie's performance driven by differentiated medicines and execution. IRA prices not public yet, but outcomes for Vraylar and Linzess won't impact long-term guidance.

Q: IL-23 market competition and 2026 outlook?

A: Jeff Stewart noted Skyrizi's strong growth, IL-23 class expanding rapidly. 2026 growth expected despite Humira erosion and Imbruvica IRA pricing, with momentum from neuroscience and other segments.

Q: 2027 outlook for Skyrizi and Rinvoq, and aesthetics market share?

A: Rob Michael said AbbVie on track to exceed 2027 guidance, with depth in pipeline. Jeffrey Stewart provided aesthetics market share details: BOTOX ~60% share, Juvederm ~45% share, with investments in campaigns and training centers.

Q: Gilgamesh acquisition and MDD treatment paradigm?

A: Roopal Thakkar discussed Gilgamesh acquisition's potential, with short-duration hallucination and long-term benefit in depression treatment, planning Phase II/III studies.

Q: Parkinson's franchise and tavapadon?

A: Jeff Stewart and Roopal Thakkar discussed VYALEV's strong uptake and competitive position, and tavapadon's submission to FDA as monotherapy and adjunct to levodopa-carbidopa.