AbbVie Inc.
Q2 2020 Earnings Call Transcript

Published: 31 Jul 2020

[Operator:]

Good morning. And thank you for standing by. Welcome to the AbbVie Second Quarter 2020 Earnings Conference Call. All participants will be able to listen-only until the question-and-answer portion. I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations.

[Liz Shea:]

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; and Rob Michael, Executive Vice President and Chief Financial Officer. Joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman External Affairs, Chief Legal Officer and Corporate Secretary.

[Rick Gonzalez:]

Thank you, Liz. Good morning, everyone, and thank you for joining us. Today, I'll discuss our second quarter performance and highlights. And for the first time, I'll provide our 2020 outlook for the newly combined company. Mike will then discuss recent advancements across R&D programs. And Rob, will review the quarter and our updated guidance in more detail. Following our remarks, we'll take your questions.

[Michael Severino:]

Thank you Rick. We had a very productive quarter with continued progress across all stages of our pipeline. Additionally with the recent closing of the Allergan acquisition, we added promising pipeline assets in the areas of aesthetics and neuroscience. We look forward to sharing updates as those programs progress through development.

[Rob Michael:]

Thank you, Mike. Starting with second quarter results, we delivered top and bottom line performance ahead of expectations. We reported adjusted earnings per share of $2.34 above our guidance midpoint by $0.21. This includes $0.10 of stronger performance from legacy AbbVie and $0.11 of accretion from Allergan. Total net revenues were $10.4 billion, including $2 billion in sales contribution from the Allergan portfolio. Legacy AbbVie was approximately $300 million ahead of our stand-alone sales guidance driven by RINVOQ, SKYRIZI and HUMIRA. COVID-related inventory stocking for the first quarter largely reversed as expected. U.S. HUMIRA sales were approximately $4 billion ahead of expectations due to the lower impact from COVID on continuing patient prescriptions. Wholesaler inventory levels remained below 0.5 month in the quarter. International HUMIRA sales were $863 million, down 17.4% operationally reflecting biosimilar competition across Europe and other international markets and ahead of our expectations. SKYRIZI global sales were $330 million with continued strong U.S. in-play market share. We also continue to see robust demand for RINVOQ with sales of $149 million in the quarter and a rapid increase in U.S. in-play market share. Hematologic oncology global sales were nearly $1.6 billion, up 25.8% on an operational basis with continued strong performance of both IMBRUVICA and VENCLEXTA. IMBRUVICA global net revenues were approximately $1.3 billion, up 17.2% driven by continued strong performance in CLL. VENCLEXTA revenues were $303 million with strong demand across all approved indications. Global MAVYRET sales were $376 million down 51.4% on an operational basis as treated patient volumes have declined during the COVID pandemic. Allergan Aesthetics contributed sales of $481 million in the quarter. BOTOX Cosmetic with sales of $226 million and JUVÉDERM with sales of $113 million are both seeing a faster-than-expected recovery from the COVID pandemic. Neuroscience global revenues were $734 million. These results were led by BOTOX Therapeutic VRAYLAR and UBRELVY with combined sales of more than $500 million. We also saw a significant contribution from our eye care business which had global sales of $417 million. Turning now to the P&L profile for the second quarter. Adjusted gross margin was 82.8% of sales adjusted, R&D investment was 12.8% of sales and adjusted SG&A expense was 22.9% of sales. The adjusted operating margin ratio was 47% of sales including a negative impact of 70 basis points due to the reversal of COVID-related inventory stocking from the first quarter. Adjusted net interest expense was $484 million and the adjusted tax rate was 11.4%. Today we are issuing combined company guidance for the first time. As Rick previously discussed, we are closely monitoring the impact of the COVID pandemic and have factored the latest trends into our updated forecast. We now expect full year adjusted earnings per share between $10.35 and $10.45 including $0.70 of accretion from the Allergan transaction. which represents an annualized contribution of 11%. Excluded from this guidance is $6.23 of known intangible amortization and specified items. This guidance now contemplates full year revenue of approximately $45.5 billion. At current rates, we now expect foreign exchange to have a 30 basis point unfavorable impact on full year reported sales growth. Included in this revenue guidance are the following updated full year assumptions. We now expect U.S. HUMIRA sales growth of approximately 8%. We now expect international HUMIRA sales of approximately $3.5 billion. For RINVOQ we now expect global revenues of approximately $600 million. For global HCV, we now expect sales of approximately $2.1 billion as treatments remain below pre-COVID levels. For aesthetics, we expect global sales of approximately $2.4 billion, including approximately $1 billion from BOTOX Cosmetic and approximately $650 million from JUVÉDERM. For neuroscience, we expect global sales of approximately $3.5 billion, including approximately $1.4 billion from BOTOX Therapeutic and approximately $950 million from VRAYLAR. For eye care, we expect global revenues of approximately $2.1 billion, including approximately $700 million from RESTASIS, which assumes no generic competition in 2020. And for women's health, we expect global revenues of approximately $700 million. All other full year product guidance assumptions remain unchanged. Moving to the P&L. We now forecast adjusted gross margin just above 82% of sales, adjusted R&D investment to be approximately $5.8 billion, adjusted SG&A expense to be approximately $9.9 billion, and adjusted operating margin of approximately 48% of sales. This P&L guidance includes approximately $600 million in expense synergies for the partial year in 2020. We remain on track to deliver greater than $2 billion in expense synergies by 2022. We now expect adjusted net interest expense of approximately $2 billion, which includes the cost of financing the Allergan transaction. We now model a non-GAAP tax rate of just above 11% for the newly combined company. Finally, we now expect our full year average share count to approach 1.7 billion shares, including the equity issue to finance the Allergan acquisition. As we look ahead to the third quarter, we anticipate adjusted revenue of approximately $12.8 billion. At current rates, we expect foreign exchange to have a modest unfavorable impact on reported sales growth. We are forecasting an adjusted operating margin ratio of just above 48% of sales. We model a non-GAAP tax rate of 11.6%, and we expect the average share count to approach 1.8 billion shares. We expect adjusted earnings per share between $2.73 and $2.77, excluding approximately $1.59 of known intangible amortization and specified items. AbbVie remains well positioned to execute on our capital allocation priorities, including rapidly paying down debt, supporting a strong and growing dividend, and pursuing additional innovative mid to late-stage pipeline assets. We generated $6.9 billion of operating cash flow in the first half of the year. And our cash balance at the end of June was $6 billion. We are on track to pay down $15 billion to $18 billion of combined company debt by the end of 2021, of which nearly $7 billion has already been repaid. We expect to achieve a net debt-to-EBITDA ratio of 2.5 times by the end of 2021 with further deleveraging through 2023. In closing, AbbVie's performance and financial condition remain strong. We are very pleased with the momentum of the business heading into the second half of 2020. With that, I'll turn the call back over to Liz.

[Liz Shea:]

Thanks Rob. We will now open the call for questions. Operator, first question please.

[Operator:]

Thank you. Our first question today is from Randall Stanicky from RBC Capital Markets.

[Randall Stanicky:]

Great. Thanks guys. I just have two one for Rick and one for Rob. Rick, a bigger-picture question a huge part of the AbbVie story is…

[Liz Shea:]

Randall, sorry to interrupt. We can't hear you very well. Is there any way you can turn up your mic or speak up?

[Randall Stanicky:]

Great. Is that better?

[Liz Shea:]

Quiet clear. Yes.

[Rick Gonzalez:]

It's okay.

[Randall Stanicky:]

Great. Rick I wanted to ask a big part of the AbbVie story is growth on the other side of HUMIRA in 2023. There's still some trepidation with -- from investors in getting comfortable with the step-down. What would you say to those investors to get people comfortable that there's a growth story on the other side of HUMIRA? And what do you need to do specifically between now and then strategically to position the business for that?

[Rick Gonzalez:]

Okay. Randall, did you have a second question? Or is that…

[Randall Stanicky:]

Yes. The second question I'll ask it upfront for Rob. Just if you could help us understand the steady state the run rate for R&D. I think you said $5.8 billion for this year that will go higher on an annualized basis. But you're also pulling $1 billion of R&D synergies out of that as well.

[Rick Gonzalez:]

Okay. I'll cover your first question, Randall, and then Rob can jump in and talk through the R&D funding question that you had. So, look, I think it's a great question. It is one that obviously the vast majority of investors are interested in. We have described I think to investors the rationale of why we were excited about doing the Allergan transaction. It obviously gives us a tremendous amount of ability to be able to manage our way through the loss of exclusivity in the U.S. of HUMIRA. It provides us with two more major growth franchises for the company to help drive growth. And it allows us to continue to invest aggressively both in internal R&D as well as external. And so I think it provides the framework to allow us to continue to perform, as we have performed over the last number of years. I mean, clearly, we have -- we certainly have a track record of showing that we can grow this business and we can build on this business. We've demonstrated that since 2013 when we spun out. So what makes me excited and what makes me comfortable that I can ultimately grow the business through the LOE? I think it starts with, look, we have six, yes, six major growth assets in our business today, if you step back and you look at them, six medicines that have tremendous opportunity to be able to grow

[Rob Michael:]

So, Randall this is Rob. On your question on R&D, so if you think through the partial year synergies the $600 million, about $400 million of that comes from R&D. And by 2022, about 50% of the greater than $2 billion in synergies will come from R&D. So, while I would expect the expenses to annualize obviously with the partial year close we'll also see those synergies ramp up. So, the best way to think about it is a steady-state R&D level in the $6 billion range.

[Randall Stanicky:]

Great. Thanks.

[Liz Shea:]

Thanks Randall. Operator, next question please.

[Operator:]

Thank you. Our next question is from Navin Jacob from UBS.

[Navin Jacob:]

Hi, thanks for taking the question. Just wanted to expand on some of the opportunities that Rick had just mentioned.

[Liz Shea:]

Again Navin, can you speak up a little bit?

[Rick Gonzalez:]

Well, let's see if we can turn our end up.

[Navin Jacob:]

Sure. So, is this okay? Can you hear me okay?

[Rick Gonzalez:]

That's better.

[Liz Shea:]

Better. Thank you.

[Navin Jacob:]

Okay. I will yell. So, with regard to--

[Rick Gonzalez:]

We turned our end up. So, you don't need to yell.

[Navin Jacob:]

All right. Fair enough. With regards to the VENCLEXTA opportunity in multiple myeloma the CANOVA trial wondering if you could give us an update there and how large could that potential opportunity be. Obviously, relapsed/refractory multiple myeloma is pretty competitive. So, just wondering what sort of -- how we should be thinking about that where that excitement is coming from. And then if you could remind us also about your subcutaneous version -- pump version of DUOPA that's supposed to read out in the first half of 2021. How should we be thinking about that opportunity? Could that be a blockbuster opportunity?

[Michael Severino:]

This is Mike. I'll take those. With respect to VENCLEXTA we see very real potential in the t(11;14) multiple myeloma population. If we look across our trials early phase trials and then some set analyses of later phase trials where we have data from t(11;14), we see very consistent responses. We see high response rates and we see long progression-free survival in the t(11;14) population. And that makes sense because that t(11;14) population has a transformed cell that has a B-cell-like phenotype and it's BCL-2 high. So, it would be expected to be uniquely sensitive to VENCLEXTA and to BCL-2 inhibition. So, we have the Phase III study well underway now. It's an event-driven trial. But we would hope to have data in the near future in 2021. And that study is designed to confirm those earlier observations. In terms of how large an opportunity it can be, the t(11;14) population is about 20% of multiple myeloma. And multiple myeloma is a big indication. So, 20% of that is a lot. Now, as you mentioned it's becoming a competitive space. But one of the advantages of having a biomarker-driven therapy is that we can identify and physicians can identify in practice what patients are likely to respond to VENCLEXTA. So, we'll know what a VENCLEXTA patient looks like. And we think that will be a real opportunity and a real advantage. So, we're very optimistic about that aspect of the program and we think it represents an important additional role for VENCLEXTA. With respect to 951, that is a program that's designed to deliver DUOPA-like efficacy through a subcutaneous insulin pump-like device. And so to do that we had to develop two novel prodrugs. These are NMEs that are rapidly converted to the active agents in circulation. And they allow delivery of levodopa and carbidopa ultimately through this insulin pump-like device that you just can't do with the parent compounds because of their physical properties and chemical limitations and local tolerability limitations. So, it really does represent a real breakthrough. What we know about the efficacy of DUOPA is that it is very, very strong. It really is transformational. But it takes a lot to get that efficacy. Patients have to have a gastric tube placed to then thread it down into the small bowel. They have to maintain that. So, this is a much more patient-accessible patient-friendly if you will way to deliver the same sort of efficacy. And so we think that has a potential to really expand the number of patients who would be willing to consider a therapy such as 951 and it's a big market. If you look at DUOPA despite all the limitations, it's doing about $0.5 billion in sales. If you look at deep brain stimulation, there's also considerable use. In aggregate, this market today is well over $1 billion, probably $1.5 billion. And not all patients who would qualify by their patient profile are willing to undergo these therapies. So, we think that 951 can be a very real opportunity and can be quite substantial.

[Liz Shea:]

Thanks Navin. Operator, next question please.

[Operator:]

Thank you. And our next question is from Chris Schott from JPMorgan.

[Chris Schott:]

Great. Thanks so much for the questions. So, just two for me. The first can you just elaborate a little bit more about how you're thinking about the size of the opportunity for RINVOQ in atopic derm now that we have the Phase III? I guess just a little bit more just how you see this fitting into the treatment paradigm. And then my second question was on the 2020 guidance. If I back out the $0.70 of Allergan accretion, it seems like the base AbbVie numbers are unchanged despite what looked like very, very strong results in the first half of the year. So, just help me understand a little bit the dynamics that are happening with that kind of underlying AbbVie set of assumptions. Thanks so much.

[Michael Severino:]

This is Mike. I'll take the first one and then I'll hand it over to Rick for the second one. With respect to atopic dermatitis, we're very pleased with the results that we demonstrated across the Phase 3 trials. They actually exceeded our expectations based on the Phase 2b results. And those 2b results were very strong and had earned us a breakthrough therapy designation. And we're pleased not only with the efficacy, but also with the safety profile. We've said for quite some time that one needs to look at the safety of a drug in the intended population. Because things like background therapies, risk factors in the population can have a substantial influence on what that profile looks like not only for the active agent, but for the comparator or for placebo. And if you look at the profile in the AD studies, it looks very favorable to our eye. And these were substantial studies and a substantial program overall. This wasn't a quick study to get an indication expansion. We ran a Phase 3 program for atopic dermatitis that could standalone for an additional submission. So we think that very strong data package will be a real advantage when we bring this indication to market. If you look at the size of the market overall, I think, it's been underappreciated for years. Now that's changing now. There are a large number of patients who would be eligible for systemic therapy. Obviously, dupilumab is off to a good start over the past several years in that indication. But if you look at their efficacy only about half of patients achieve an adequate response if you consider that adequate response in EASI 75. And so in our study we drove very good numbers there higher than that roughly 50% albeit there through cross-trial comparisons. So we think that there is a real opportunity for a high-efficacy agent in this space. And so it really can play on both ends of the spectrum. Patients who don't achieve an adequate response with earlier therapies this is an obvious choice. But with the efficacy and the safety profile that we've observed, we see no reason why it wouldn't be used upfront as well. And of course, we'll have head-to-head data against dupilumab later on this year as we said in our prepared remarks.

[Rob Michael:]

So Chris, this is Rob. I'll take your question on guidance. So if you take that $0.70 of accretion and you back-off the midpoint of $10.40 it gives you a standalone of $9.70 EPS, which is $0.04 higher than our previous guidance. And it's really driven by the sales changes that we've made today. So for U.S. HUMIRA we took that up 1%, which equals about $150 million because we're seeing less impact of COVID on continuing patients. HUMIRA OUS we've taken up $100 million. We're seeing less erosion than we initially had planned. On RINVOQ that's up $100 million as well really driven by the rapid in-play share that we're seeing. And that's partially offset by MAVYRET as we've seen the market really decline during COVID. But net-net revenue is up about $150 million EPS up $0.04 versus our previous guidance for stand-alone AbbVie.

[Rick Gonzalez:]

And the only thing I'd add on that is obviously we were more favorable on base AbbVie in the quarter than the $0.04. But there's still uncertainty as it relates to COVID. And so we're keeping some coverage there to see how things play out in the third quarter.

[Liz Shea:]

Thanks, Chris. Operator, next question please.

[Operator:]

Thank you. And our next question is from Steve Scala from Cowen.

[Steve Scala:]

Thank you. First congratulations on delivering ahead of expectations in the midst of a major integration, new launches and a global pandemic. It's really impressive. Rick you stated that the impact of the pandemic was less than expected. That certainly hasn't been the case at other companies. You also said that you're seeing recovery in the aesthetics portfolio, which sounds as though it snapped back faster than the legacy AbbVie. So I'm just curious to what do you attribute these dynamics? And do you expect the second half of the year to look more like the first half or more like May and June relative to patient volumes, clinic traffic and so forth? And then secondly, you stated that you expect margin improvement over the next few years. Could you provide some parameters around that expectation? Thank you.

[Rick Gonzalez:]

Okay. So this is Rick. I'll take the first one. Your observation is correct. So I think the way to think about it is that both in the second quarter many of the assets didn't drop as far as we expected. That was part of the favorability. I'd say that was particularly, the case in a number of areas in the legacy AbbVie portfolio associated with the business. On the aesthetics it is pretty much the way you're describing it. What we saw happening in the aesthetics business and to a very similar extent to BOTOX Therapeutic is that we saw a rapid drop in the case of aesthetics as those practices virtually closed. I'd say almost all if not all of the practices had closed. So aesthetic revenues dropped significantly for a period of time in that mid-April time frame. As we started to see geographies remove the shelter-in-place orders around the U.S., we saw the aesthetics practices quickly put in place safety measures to be able to allow patients to come back into their offices. And I'd say the vast majority of those practices ramped back up and went back into doing procedures fairly quickly. As we approached that mid-May time frame we actually saw -- let's take BOTOX as an example. And BOTOX would be the leading indicator because it's the procedure -- BOTOX Cosmetic it is the procedure that people would go to first. It ramped back up went well over 100% of pre-COVID levels to around 120% 125%. And then it and that was obviously pent-up demand that was coming back into the channel so patients returned quickly. And then as that pent-up demand started to burn off as we got through June, you started to see it drop back down. And now it's settled in sort of in the mid-90s right now. We think it will reach -- it will stabilize back up over the course of third quarter back close to pre-COVID levels and then start growing again. And so I can tell you I'm extremely pleased with how both aesthetics and BOTOX Therapeutics had returned. I think it's a testament of those brands and those patients. As far as the assumptions we made in the second half obviously, we're assuming the second half performs a lot better than the first half. We're not assuming any kind of a broad-based shelter in-place activity. And we'll continue to see more and more patients come back into physicians offices. On the AbbVie side of the business, we are monitoring those patients by individual practice. It's appropriate for our particular businesses. And I'd say for the most part they are returning close to pre-COVID levels. They do vary a little bit by specialty. As an example, rheum and GI have come back faster than medical derm has. But medical derm has returned as well to some extent and we're continuing to see it return. Oncology practices in certain conditions we've seen -- we saw some tailing off of CLL treatment in the second quarter. That's now returning back to normalized levels. So I think the second half will, obviously, be much better than the first half. And I think we should return to normalized levels as we proceed through the second half of the year. Rob anything you want to add on that?

[Rob Michael:]

I can answer the question on margin. Steve this is Rob. On operating margin, I think when you think about we have a partial year of synergies and a top-line that's been pressured by COVID we have a 48% operating margin profile. As you think about 2021 and 2022, we're going to obviously run -- we're going to ramp those synergies as well as we'll see top-line growth and where you'd see the P&L leverage that we've demonstrated in past year. So, I would expect to see our operating margin expand in 2021 and 2022. With 2023 with the U.S. HUMIRA event, obviously, we would see operating margin pulled back. But I would expect it to be in the 45% range, which still puts us top tier in the industry.

[Steve Scala:]

Thank you.

[Liz Shea:]

Thanks, Steve. Operator, next question please.

[Operator:]

Thank you. Our next question is from Geoffrey Porges from Leerink.

[Geoffrey Porges:]

Thank you very much. Hi, Rick congratulations. Very helpful to get the guidance. Could you talk a little bit about atogepant? Particularly what's the size of the addressable opportunity for the full portfolio of oral migraine medicines? And perhaps how much of an issue is the constipation data that you've seen? And then Rick look there's a massive economic disruption going on. And I'd be interested in your commentary about how consumers and payers are reacting to that disruption and how that's factored into your guidance. Are we seeing switches from IV to oral from generic to brand? How is that playing out in your experience and observation? Thanks.

[Rick Gonzalez:]

All right. Great. So maybe we'll have Mike talk a little bit about the profile of the drug. And what I'd say is I think we probably want to come back at a later date once we've had a little better opportunity to analyze the chronic migraine market. And it's going to depend to a great extent on the profile of the drug obviously. But it's a very large market a very significant market. And -- but Mike maybe if you want to talk a little bit about constipation and then I'll come back and talk about the payer dynamics.

[Michael Severino:]

Sure. I'll talk about atogepant. We're very pleased with the data we've seen. And of course this fits into an important part of our migraine portfolio with UBRELVY for acute migraine now with atogepant with two data readouts in episodic migraine and an ongoing program in chronic migraine. And, of course, there's BOTOX Therapeutic in chronic migraine, so it really rounds out our portfolio. The efficacy that we saw was very strong. As we said in our prepared remarks, we hit the primary and all secondary’s across the two upper doses and the primary and four out of six secondary’s for the lowest dose studied. So that is an efficacy profile that I think exceeded our expectations going into the study. With respect to the safety, our view of the safety profile looks very favorable. The constipation that was observed in the overwhelming majority of cases was mild or moderate. It didn't limit treatment. So patients stayed on treatment. They could be managed easily with interventions like stool softeners or fiber supplementation. So we don't see it as something that is limiting particularly in light of the very strong efficacy that we have demonstrated. And the only other point I'd add is that we have a good understanding of it and it's on target. So it comes with the efficacy you get a very strong efficacy and you have this manageable tolerability profile that I described.

[Rick Gonzalez:]

Geoff on the -- on your second question, you probably recall back on our first quarter guidance when we outlined that we had built in to our forecast for the remainder of the year some impact for some channels shifting that we thought could occur due to the high unemployment. And essentially we haven't seen much of that at all. In fact I would tell you, we haven't seen any of it to any material effect right now. And one of the things that we do to watch that carefully is our PAP program. We've been advertising extensively to consumers to make sure that they know if they lost their insurance or they lost their jobs and they don't have insurance coverage and they can't afford their AbbVie medicines to come to us. We have a very extensive patient assistance program. And we're not seeing any significant increase in those requests. It could be because of the furloughs. We're not 100% sure yet. And potentially we could see some increase as we go further here depending upon what happens with stimulus programs going forward. We have still maintained some level of coverage in our forecast that we're providing now. So we believe we have sufficient coverage to deal with it and we'll just have to see how it sorts itself out.

[Liz Shea:]

Thanks, Geoffrey. Operator, next question please.

[Operator:]

Thank you. Our next question is from Vamil Divan from Mizuho.

[Vamil Divan:]

Hi, great. Thank you so much for taking my question. Maybe just to continue on the migraine question. You mentioned UBRELVY and the potential there. Can you maybe just talk a little bit about the net pricing that you're thinking about in that space? I guess, maybe relative to the injectable antibodies that are helpful for prevention already there's only the two players it sounds like here between you and Biohaven -- or on the injectable side. So just trying to get a sense how you see this pricing dynamic play out? We're getting a lot of questions on that front. And then maybe for Rick I'm just curious around some of the executive orders we've seen on the drug pricing side for the administration. I don't know if I may have missed your comments earlier but just curious if you have any additional thoughts about what you heard from some of your peers on this issue this week on their calls. But every company, obviously, has a different product mix and maybe some different perspectives. So curious what your views are especially as it relates to the rebate rule order? Thanks so much.

[Rick Gonzalez:]

Right. Okay. I'll cover both of those questions. So on migraine, I mean obviously we don't publicly talk about our net price. We have fairly significant managed care coverage on the asset already. I think it's about 70%. And obviously it had to be priced in a way that was appropriate to be able to get that level of coverage. This is a market where market expansion is important. As I said, I think if you look at the penetration right now of acute migraine products against the -- or at least the oral CGRPs against the total migraine acute market, it's about 12% penetrated right now. So there's a significant opportunity to be able to grow that market. And it gives you some idea of the magnitude of this market. So you certainly want it to be in a position where it can have access to be able to allow patients, to be able to use the products. These products certainly have demonstrated that they have strong demand from patients to be able to provide them appropriate levels of relief. And so I would just tell you that that's an important aspect of the overall strategy here is to be able to grow this market over the long term. On the executive orders as you have probably seen they're pretty high level at this point and they provide some high-level direction. So I think, until we see them, sort of, start to sort out I think it's a little difficult to give you a lot of specificity around what they look like. Now I will say, if I look at them in the backdrop of AbbVie's business, I would say, I don't think they will have a significant impact on our business. If you look at Part B as an example, we have a very small Part B business. I think it's around 2% to 3%. 3%, I guess, is the right number now. So it's a very insignificant part. If you look at the importation bill or executive order, it's very similar to what's already been given out to the states. And it excludes biologics, which obviously is an important part of our business. If you look at the third one, it's insulin and EpiPen. We're not in that business. And then the rebate rule. Certainly, as we look at rebates, we're absolutely supportive of patients being able to get the benefit of the discount associated with the rebate or discount. As we've said many times before for us whether it's a rebate or a discount is not very material to us. What I would say is when I look at that executive order it does say that you have to be able to implement it without increasing premiums. And everything I know about how rebates are redistributed, I would say that I think that that will be difficult to do. So I don't know how that will ultimately play out. So -- I mean at a high-level look at what we think about them right now. But I think right now, I wouldn't anticipate that they have a significant risk associated with AbbVie.

[Liz Shea:]

Thanks, Vamil. Operator, next question please.

[Operator:]

Thank you. And our next question is from David Risinger from Morgan Stanley.

[David Risinger:]

Great. Thanks so much. And congrats on all of the encouraging updates. So first Rick, could you please discuss maybe in a little bit more detail the most significant revenue synergy opportunities you see as a result of the combination with Allergan? I know that the combined company can do more with certain franchise, but if you could put some finer points on that that would be very helpful. Then second with respect to next year's readouts, AbbVie has a very large pipeline of Phase 2 candidates with proof-of-concept readouts in 2021. But could you point us to the ones that have the biggest commercial potential? So if there is validation in 2021 what are the biggest product opportunities that we should be paying attention to? And then one little tidbit. The UBRELVY number was $22 million in the quarter. That was strong. How much stocking was in there? Thank you.

[Rick Gonzalez:]

Okay. So I'll cover the first one and then I'll have Mike cover the second and Rob can cover the third. So if I look at the business overall I said that the integration has gone very seamlessly. And I think that's a tribute to all the planning that we did. We had some extra time to be able to do it and I think that benefited us. And so I think the two organizations have come together in a way that's been quite good. Now I would say, I think, the places where we have an opportunity to be able to provide some synergy and benefit certainly when you look at our therapeutic businesses, when you look at our -- many of the tactical kinds of execution techniques that we use in the marketplace I think many of those are applicable to the Allergan therapeutic portfolio. Certainly when you look at managed care that's an area that we have demonstrated that we're quite skilled at being able to effectively manage our way through that. And then the third area, I'd say is if I look at aesthetics, aesthetics is a very attractive market. It has a significant opportunity to be able to grow that market, which I mean by bringing in more people into the market more quickly. You can do that several different ways. Obviously, some of it is driven by promotional activity. I'd say Allergan is very skilled from a social media standpoint. And I think that's an area that's probably been underfunded. Historically, it's an area that we have a high level of interest in funding to a greater extent. And we obviously have the financial wherewithal to be able to do that. The second thing is being able to bring more new innovation more rapidly into that market. And I think that's an area that we'll also be able to provide a benefit both in the way we operate R&D and the ability to be able to rapidly innovate. I think that will be a benefit to the overall business. And I think we have an opportunity to be able to accelerate the growth of that business in a meaningful way over time. And it's a market I like a lot. I think both based on demographics the cash pay aspects of it and how it responds to appropriate innovation in that market. So that's an area that I think over time you can expect us to continue to make sure that we're doing what we know how to do to be able to ultimately grow that market over the long term. Those would be some of the things I'd tell you at a high level. Mike?

[Michael Severino:]

I'll take the second question. So we do as you point out have a number of data readouts from Phase 2 studies or other proof-of-concept studies in 2021 and also in the following years in 2022 and beyond. And a number of these are very large opportunities. I'd point to our oncology programs. We have a number of immuno-oncology programs that would be large opportunities, if they hit. Our GARP program I think is a very good example of that. Our bispecifics I think are a very good example of that. We just brought in through the Genmab collaboration epcoritamab, which is a large opportunity. Obviously, that's post proof of concept. But there are two additional molecules there that are just a little bit earlier in development that could be large opportunities. We have bispecifics in BCMA more than one program that could be very large opportunities, if they were in fact best-in-class. And we think they have the potential to be best-in-class. The last thing, I would point to in oncology is our novel so targeted ADC technology with ABBV-155 being in the lead in non-small cell lung cancer. That is a BCL-XL warhead targeted by a B7-H3 antibody. If that were to hit and we'd see those data next year that would be a large opportunity. Obviously in immunology we're advancing our TNF steroid program. But I think those are data that we've already reported out. And then the last thing that, I would mention is in our neuroscience portfolio. Obviously, Alzheimer's disease if those programs were to hit they would be a very large opportunity given the enormous unmet medical need. Now obviously, in Alzheimer's disease it's higher risk higher reward. But if we got favorable data it would be a very, very meaningful opportunity.

[Rob Michael:]

And David, this is Rob. On UBRELVY, if you look at just the full quarter revenue of $27 million it really follows the prescription growth on a sequential basis. So there's really a negligible stocking impact. And we'd expect to see continued sequential growth for that product.

[Liz Shea:]

Operator, next question, please.

[Operator:]

Our next question is from Chris Raymond from Piper Sandler.

[Chris Raymond:]

Thanks. Just back to atogepant in sort of a competitive setup. So Rick I heard your comments on how this is underappreciated. We've done some checks to see, if it indicated that that's the case. And I know this – it's not approved yet. So pardon if you don't mind the commercial question here. But there's been some chatter out there especially from some Biohaven bulls that placebo-adjusted migraine days maybe don't matter as much as absolute days. And so just maybe you're in the field with UBRELVY from a rep-to-doc dialogue perspective, what do you guys see as the most important attribute especially as you'll be positioning this in the prevention setting versus subcus and the other oral therapies – or the other oral therapy that happens to be a dissolving tablet?

[Michael Severino:]

Well, this is Mike. I'll take the first part of that and then Rick may want to add. With respect to efficacy, the most important attribute is the placebo-adjusted migraine days. If one were solely to look at the total days one could conclude that placebo is in fact a good therapy for these patients, because we see reductions. And so you have to account for that. And there are differences from study-to-study based on design, population enrolled and what that placebo difference is. So it absolutely has to be taken into account. And when you look at our placebo-adjusted results, they're very strong. They range between 1.2 and 1.7 days, which in this disease area is a very meaningful response rate. And it's higher than what has been reported with other oral agents obviously with the caveat of a cross-trial comparison. So we think that on the most important efficacy parameter we performed very, very well. And of course we've hit all the secondaries across two of those three doses as I've described. And as we get the data out into the public domain you'll get more color on that.

[Rick Gonzalez:]

Yeah. I would just reiterate what Mike says. I mean, physicians are well skilled in understanding what placebo rates are. And I just don't even think, it's appropriate not to represent a product's efficacy without looking at the placebo rate. So, I mean, I think that will be the way doctors look at it. And I think that is the way the products will be marketed. And certainly, if I had a lower rate, I may have an interest in that. But at the end of the day I think that is the appropriate way to look at it.

[Chris Raymond:]

Thank you.

[Liz Shea:]

Thanks, Chris. Operator, next question please.

[Operator:]

Thank you. Our next question is from Tim Anderson from Wolfe Research.

[Tim Anderson:]

Hi. Thank you. A few pipeline questions please. On the TNF steroid conjugate some KOLs have a mixed view of that approach. For those that are skeptical what's the most common reason that you hear? Second question on VRAYLAR, what are your odds of regulatory success in depression? Even just qualitatively is this a high-risk, medium-risk or low-risk endeavor? And then can you clarify why your Genmab CD3xCD20 would be best-in-class?

[Michael Severino:]

Okay. I'll take those questions. With respect to the TNF steroid conjugate what I would say is, it's important to keep in mind that this is an early phase trial and this was intended to be a proof-of-concept trial. One can't do a fully powered head-to-head against an active competitor like HUMIRA in Phase I or Phase II because that typically requires or always requires essentially a large Phase III study. Head-to-head studies are often amongst the largest studies in a Phase III program. So what we were looking for was evidence to support the profile that I described which is that we had a high probability of success in those trials downstream. If folks have a mixed view then what we hear is they'd like to see those later data. And what I would say is, we're well on the path to generating them. We're pleased with the results that we've seen and we think it's a very promising platform and we're going to be advancing into larger-scale trials and people will get the data that they're looking for. With respect to VRAYLAR in the adjunctive treatment of major depressive disorder, I think the question was how would I characterize the risk there? There already is one positive study in hand. And so of the two studies that are underway, we would need one additional study to read out positive to support the indication. I think that historically this has been a challenging indication. But I think the -- both the rationale and the data from earlier studies in the VRAYLAR program are strong. So I would probably put it in the moderate probability range. We didn't build it into our model. Our success with VRAYLAR was not dependent on it. But we think it represents a very attractive upside opportunity if in fact it hits. And with respect to why Genmab CD3xCD20 has the potential to be best-in-class? I would point to two things. One is the efficacy data reported from the early phase trials, particularly in DLBCL, which is a very difficult-to-treat tumor type, puts it at the higher end of efficacy. And the safety profile has been very favorable in terms of what's been observed to date both with respect to cytokine release syndrome and the lack of occurrence in the early phase trials of higher-grade CRS and also with respect to the neurological symptoms that can accompany this class of therapy. So it seems to have threaded that sweet spot between achieving very strong efficacy with a good safety profile. It also has subcu administration with its existing formulation. Others are working towards that. But Genmab already has the data in hand. And the dosing schedule fits very well into the regimens that will be used in the diseases that we'd study particularly DLBCL and follicular lymphoma. So we see aggregate of that that we think gives it a very, very strong profile.

[Tim Anderson:]

Thank you.

[Liz Shea:]

Thanks, Tim. Operator, we have time for one final question please.

[Operator:]

Thank you. Our final question today is from Terence Flynn from Goldman Sachs.

[Terence Flynn:]

Great. Thanks for taking the question and congrats on the Allergan integration. You mentioned in your comments that RINVOQ uptakes accelerating here was just wondering if you could provide a little bit more color on that. Is that being driven by COVID and maybe teleprescribing having an advantage over some of the injectables? And if so, do you see that as being a durable change here as we come out of the pandemic? And then the second one I had was just on VENCLEXTA. I noticed you're running some trials for solid tumors. Maybe just remind us of the rationale here behind that approach. And how optimistic are you there as you move into later stages? Thank you.

[Rick Gonzalez:]

Okay. Thanks. I'll take the first question. Mike can cover the second one. So RINVOQ clearly has started to ramp in a fairly significant way. I think it's associated with two things. One is any time you see a pro -- it's about eight months into its launch, you typically start to see that inflection point on successful products. As you go out and you present the data to physicians and start to educate physicians and they start to get some use, you tend to see that inflection point start to happen around six months. So I think it's the natural inflection point that we would have expected if the product was being successfully accepted into the marketplace the way we hoped as a high-efficacy agent. I think there is some benefit that we're seeing during the COVID crisis that it is an oral, so it's a little easier to prescribe than an injectable might be. So we're probably getting some collateral benefit associated with that. But I don't think that's the fundamental benefit that we're seeing. Mike?

[Michael Severino:]

Right. So I'll take the question with respect to VENCLEXTA in solid tumors. I think there's two different lines of evidence. In breast cancer, there are -- there is an investigator-sponsored study that showed promise in breast cancer. And so there's a follow-up study there to confirm that. And if that were confirmed, it would be obviously a substantial opportunity given the unmet need there. And then there are other solid tumors such as both small cell lung cancer and non-small cell lung cancer where there's preclinical rationale that warrants exploration. And so I would characterize the solid tumor program as higher risk but high reward worthy of exploration. The solid tumor program in VENCLEXTA has not been baked into our thinking and isn't necessary for any of the success that we have talked about with the molecule. But if something were to hit there represents very nice upside. And I think there's enough rationale to warrant the exploration.

[Liz Shea:]

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

[Operator:]

Thank you. This does conclude today's conference. You may disconnect at this time.