AbbVie Inc. Q2 2025 earnings call

Thank you. Good morning and thanks for joining us. Also on the call with me today are Rob Michael, Chairman and Chief Executive Officer; Jeff Stewart, Executive Vice President, Chief Commercial Officer; Roopal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer; and Scott Reents, Executive Vice President, Chief Financial Officer. Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in our forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law. On today's conference call, non-GAAP financial measures will be used to help investors understand AbbVie's business performance.

These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Following our prepared remarks, we'll take your questions. With that, I'll turn the call over to Rob.

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie delivered another outstanding quarter with results exceeding our expectations. We are making excellent progress advancing our pipeline and adding more depth through strategic transactions that support our long-term growth. Turning to our second quarter performance, we delivered adjusted earnings per share of $2.97, which is $0.11 above our guidance midpoint. Total net revenues were $15.4 billion, more than $400 million ahead of our expectations. This overachievement includes sales growth of 22% from our ex-HUMIRA platform, with continued robust performance from SKYRIZI and RINVOQ, which are now on pace to deliver more than $25 billion in combined sales this year, well above our initial expectations. We also delivered strong double-digit growth from neuroscience, driven by VRAYLAR, VYALEV, and our leading migraine portfolio.

Based on our momentum through the first half of the year, we are raising guidance for the second time. We now expect full-year revenue of $60.5 billion and an increase of $800 million. We have now raised our revenue guidance by $1.5 billion since the start of the year. We are also raising our full-year adjusted earnings per share guidance by $0.21 and now expect adjusted EPS between $11.88-$12.08. In addition to our strong financial results, we are making great progress with our R&D pipeline across all stages of development. Notable highlights from our late-stage programs include the recent approvals of EMRELIS for non-squamous non-small cell lung cancer and RINVOQ for GCA, the regulatory submission of TrenibotE, a first-in-class short-acting toxin in aesthetics, as well as highly differentiated phase III results in alopecia areata, a potential tenth indication for RINVOQ in the U.S.

We are also focused on augmenting our pipeline with therapies and platform technologies that have the potential to elevate the standard of care for patients. These include promising early-stage programs that have the potential to drive growth for AbbVie in the next decade. We have executed more than 30 business development transactions since the beginning of last year. Our recent activity includes closing the agreement with Gubra for a long-acting amylin analog in the treatment of obesity, as well as announcing our planned acquisition of Capstan Therapeutics, giving us an in vivo CAR-T platform that can further strengthen our immunology pipeline. We also in-licensed ISB 2001, a novel trispecific antibody for multiple myeloma, and we announced the collaboration with ADARx to develop next-generation siRNA therapies across multiple disease areas, including immunology, neuroscience, and oncology.

In summary, I'm very pleased with the performance of our business and the progress we are making against our long-term strategy. AbbVie's outlook is strong, and we are well-positioned to deliver on our commitments in 2025 and beyond. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff.

Thank you, Rob. I'll start with the quarterly results for immunology, which delivered total revenues of more than $7.6 billion. SKYRIZI continues to demonstrate impressive growth. Global sales were $4.4 billion, up 61.8% on an operational basis. We continue to capture robust in-play patient share in psoriatic disease. In the U.S., this includes clear leadership in psoriasis across all lines of therapy versus both biologics and oral agents, as well as continued strong performance in the PsA derm set, with frontline in-play shared leadership more than double the next closest biologic or oral therapy. Globally, SKYRIZI continues to grow and achieve total psoriatic disease market leadership in numerous major markets around the world. I'm also very pleased with SKYRIZI's performance in IBD, where we are on track to double our sales this year.

In the U.S., we continue to capture more than a third of new or switching patients in Crohn's disease and nearly 20% of new or switching patients in ulcerative colitis. As we look ahead, we feel very confident in SKYRIZI's profile, including compelling efficacy, safety, and dosing, and our very robust head-to-head program, where we have demonstrated superiority and clear differentiation against multiple novel therapies, sets a high bar for comparison. As we do compare our current dynamic share to total prescription share, it is clear there is still a substantial opportunity for continued total share gain across all of SKYRIZI's indications over time, especially in ulcerative colitis and Crohn's disease, which are still earlier in their launch trajectory. Turning now to RINVOQ, which is also demonstrating outstanding growth.

Global sales were $2 billion, up 41.2% on an operational basis, as we continue to see nice momentum across all of RINVOQ's indications. Uptake in IBD continues to be very strong. In the U.S., RINVOQ's in-play patient share across all lines of therapy for both ulcerative colitis and Crohn's disease is second only to SKYRIZI among branded medicines. As a portfolio, RINVOQ and SKYRIZI together are capturing one out of every two in-play Crohn's disease patients and one out of every three in-play UC patients in the U.S., a very strong combined leadership position in gastroenterology for AbbVie. I'd also highlight that we are making excellent progress with RINVOQ's global launch in giant cell arteritis, our sixth indication in rheumatology. Initial prescription trends, as well as feedback from rheumatologists, have been positive, with access in the U.S. expected to ramp quickly over the rest of the year.

Finally, we announced impressive phase III results in alopecia areata, a chronic autoimmune disease leading to unpredictable hair loss with nearly 2 million diagnosed patients globally. Alopecia areata, as well as the next wave of diseases, including Vitiligo, HS, and lupus, would expand RINVOQ's treatment in both dermatology and rheumatology, areas where we already have very strong call points with RINVOQ's core indications. Turning now to HUMIRA, which delivered global sales of more than $1.1 billion, down 58.2% on an operational basis, reflecting biosimilar competition. We anticipate HUMIRA access in the U.S. will continue to decrease throughout the second half of this year as more plans select exclusionary formularies for existing patients. Moving to oncology, which delivered total revenues of nearly $1.7 billion. IMBRUVICA global sales were $754 million, down 9.5%, reflecting continued competitive dynamics in CLL, partially offset by higher persistency rates for existing patients.

VENCLEXTA global revenues were $691 million, up 8.3% on an operational basis. This reflects strong demand in CLL with combination use of VENCLEXTA plus BTK inhibitors emerging as a preferred fixed-duration treatment. We are also seeing nice momentum from ELAHERE and EPKINLY, with both delivering double-digit revenue growth. We are early in the U.S. launch of EMRELIS, our newest ADC for previously treated non-squamous non-small cell lung cancer patients. This commercialization will help to establish c-MeT expression as a valid biomarker in non-small cell lung cancer and also build AbbVie's presence more broadly in solid tumors, where we have several promising next-generation ADCs in development, including Temab-A, which shares the same c-MeT target. Turning now to aesthetics, which delivered global sales of nearly $1.3 billion, down 8% on an operational basis.

BOTOX Cosmetic global revenues were $692 million, and JUVÉDERM global sales were $260 million, with growth rates for both products down on an operational basis. Consistent with the past few quarters, economic challenges and lower overall consumer sentiment have impacted the aesthetics market, which continues to perform below historical levels. As noted on the first quarter call, we moderated our assumptions for near-term category growth globally, which is tracking largely in line with our expectations. From a competitive perspective, our facial injectable portfolio remains the clear leader with strong market shares globally. Our progress with the Allē Loyalty program is going well, and we have robust plans underway to support patient activation. This includes a new BOTOX consumer campaign in the U.S. with ramping second-half investment, continued injector training globally, and bringing new products to market like TrenibotE, our fast-acting short-duration toxin, with commercialization expected next year.

As economic conditions improve from current levels, we remained very well-positioned for growth over the long term in the aesthetics category. Moving now to neuroscience, our second largest therapeutic area, where we continue to demonstrate robust growth. Total revenues were approximately $2.7 billion, up 24% on an operational basis. This exceptional performance is driven by continued double-digit operational growth of VRAYLAR, with global sales of $900 million, up 16.3%, BOTOX Therapeutic with global revenues of $928 million, up 14.2%, UBRELVY with global sales of $338 million, up 47.2%, and QULIPTA with global revenues of $267 million, up 76.9%. Importantly, we recently announced positive results from the head-to-head Temple study comparing QULIPTA to Topiramate for migraine prevention. Temple demonstrated that QULIPTA had fewer treatment discontinuations attributed to adverse events, as well as a significant reduction in migraine days versus Topiramate.

Given the high use of Topiramate as a frontline treatment for migraine prevention, we anticipate these strong results will support earlier adoption of QULIPTA. Moving to Parkinson's disease, I'm very pleased with the performance of VYALEV, where the global launch is off to an excellent start. Total sales were $98 million, up 56% on a sequential basis. Feedback from movement disorder specialists has been overwhelmingly positive, with uptake across the international markets exceeding our expectations. Looking forward, we believe our emerging Parkinson's disease portfolio with VYALEV, DUODOPA, and tavapadon forthcoming has the collective potential to be a multi-billion dollar opportunity over the long term. Overall, I'm very pleased with the execution and continued strong performance across our commercial portfolio. With that, I'll turn the call over to Roopal for comments on our R&D highlights. Roopal.

Thank you, Jeff. Starting with immunology, where we continue to make meaningful progress advancing our pipeline with several regulatory and clinical milestones since the last earnings call. FDA approval was granted for RINVOQ in GCA, representing our sixth rheumatology indication. Additionally, top-line data from the first phase III RINVOQ alopecia areata trial were just announced. In the study, RINVOQ met the primary and key secondary endpoints, demonstrating a statistically significant improvement in hair regrowth across both RINVOQ doses compared to placebo. Baseline scalp coverage prior to treatment was approximately 16%. In the RINVOQ 30 mg group, 54% of patients reached 80% or more scalp hair coverage, and 47% reached 90% or more coverage at 24 weeks. A robust effect was also demonstrated with RINVOQ 15 mg. These are truly transformative results and compare very favorably to the efficacy shown in pivotal trials for other JAK inhibitors.

The placebo-adjusted S 20 and 10 scores for RINVOQ 30 mg were approximately 20 percentage points above the rates for the highest approved doses of other JAK inhibitors. For the RINVOQ 15 mg group, rates were approximately 10 percentage points above. We are very pleased with these results, which certainly surpassed our expectations. Results from a second phase III alopecia areata study are anticipated in the third quarter, followed by regulatory submissions starting later this year. The Vitiligo program for RINVOQ is also nearing completion, with top-line results from phase III studies expected later this year. External innovation has supported expansion of our growing immunology pipeline. We recently announced plans to acquire Capstan. Their novel platform allows for in vivo programming of cells through mRNA delivery using targeted lipid nanoparticles. Capstan's lead asset, currently in phase I, generates CD19-specific CD8-positive in vivo CAR-T cells.

The CAR-T cells are designed to achieve rapid and deep B-cell depletion without the need for lymphoblating chemotherapy, while also avoiding other challenges associated with conventional ex vivo CAR-Ts. This innovative approach has the potential to become a transformative new treatment modality to reset the immune system and provide deep, durable drug-free remission for patients with autoimmune disease. Capstan's technology is a strong strategic fit for our early immunology efforts, where we have a number of internal assets designed to reset the immune system via depletion of pathogenic cells with the goal of delivering functional cures. We plan to advance several assets that deplete B-cells into the clinic, each with a different target or modality.

These include two anti-CD19 monoclonal antibodies that activate cell-mediated cytotoxicity, one with and the other without a payload, Etentamig, our BCMA CD3 bispecific T-cell engager, and ISB 2001, a BCMA CD38 CD3 trispecific T-cell engager that is part of our recently announced agreement with IGI Therapeutics. An interim analysis was recently completed on our monotherapy trial evaluating lutikizumab in ulcerative colitis. Lutikizumab showed numerically higher efficacy for the primary endpoint of endoscopic improvement compared to HUMIRA, which was the control arm. However, the results were not sufficiently differentiated for us to pursue it as a monotherapy in this population. We believe there's still opportunity to drive incremental efficacy as a combination therapy in Crohn's disease, where lutikizumab is being evaluated Irizi. Lutikizumab is one of several assets being studied, and results from our Crohn's combination platform study will begin to read out next year.

Lutikizumab has the potential to drive efficacy across other autoimmune diseases. It has demonstrated strong efficacy in hidradenitis suppurativa, where phase III is ongoing with data expected in 2027. Additional studies are underway evaluating monotherapy or combination approaches in psoriatic arthritis, atopic dermatitis, and rheumatoid arthritis. Moving to oncology, EMRELIS received accelerated approval from the FDA as a monotherapy in previously treated non-squamous non-small cell lung cancer with high c-MeT expression. This is an important new treatment option for patients with this challenging disease. At the recent ASCO meeting, we presented encouraging data for several novel ADCs in our oncology pipeline, including preliminary data from a phase I dose expansion study evaluating Temab-A, our next-generation c-MeT ADC in patients with eGFR-mutated non-squamous non-small cell lung cancer.

Temab-A demonstrated high and durable responses across c-MeT expression levels, with an objective response rate of 63% and median duration of response of 9.8 months. Based on these results, we plan to initiate additional studies in both first and second line. Other highlights from the ASCO meeting included encouraging early-stage results for ABBV-706 in high-grade neuroendocrine tumors and results from a registration-enabling phase II study evaluating PVEK in BPDCN, which will support a regulatory submission later this year. At the ESMO meeting this fall, we have several planned presentations for Temab-A, including results from a phase II study in combination with bevacizumab in CRC, as well as data from a proof-of-concept study in pancreatic cancer. We will also present updated data at the upcoming World Conference of Lung Cancer from our ABBV-706 dose-ranging proof-of-concept study in small cell lung cancer.

In the area of hematologic oncology, we recently announced a license agreement with IGI Therapeutics to develop a novel trispecific T-cell engager for multiple myeloma and autoimmune diseases. This first-in-class T-cell engaging antibody targets BCMA and CD38 on myeloma cells and has the potential to deliver deep and durable responses, ultimately improving outcomes for patients. Despite advancements, the five-year survival rate in multiple myeloma is still only about 60%, so unmet needs remain high. Quality of life is also important. Patients currently receive triplet and quad therapy, which can be challenging from a safety and convenience standpoint. HCPs and patients will continue to seek next-generation therapies that can provide high efficacy, better safety, and less complicated dosing regimens. We are extremely well-positioned to address the unmet needs across all patient segments in multiple myeloma with three next-generation multispecific T-cell engagers: Etentamig, ISB 2001, and SIM0500.

These off-the-shelf therapies may be particularly important for community-based sites, where approximately 80% of patients receive care. In the area of neuroscience, we announced positive top-line results from the head-to-head phase III Temple trial comparing QULIPTA and Topiramate for migraine prevention. The primary and all secondary endpoints were met in the study, demonstrating that patients treated with QULIPTA had fewer discontinuations due to adverse events and a greater reduction in migraine days compared to patients receiving Topiramate. Over the 24-week treatment period, 12% of patients discontinued QULIPTA due to adverse events, compared to 30% for Topiramate. 64% of patients on QULIPTA achieved at least a 50% reduction in mean monthly migraine days, compared to 39% of patients on Topiramate. These results add to the body of evidence supporting QULIPTA as a first-line treatment option for episodic and chronic migraine prevention.

In the quarter, MAVYRET was approved for the treatment of acute HCV. With this label expansion, caregivers can now treat HCV patients immediately following diagnosis, rather than waiting until progression to chronic disease. Earlier treatment, coupled with increased testing, brings us closer to achieving the World Health Organization's goal of global HCV elimination by 2030. To summarize, we've made significant progress across all of our therapeutic areas in the first half of the year and continue to expand our pipeline through internal and external innovation. We look forward to additional data readouts and regulatory milestones throughout the remainder of 2025. With that, I'll turn the call over to Scott.

Thank you, Roopal. Starting with our second quarter results, we reported adjusted earnings per share of $2.97, which is $0.11 above our guidance midpoint. These results include a $0.42 unfavorable impact from acquired IPR&D expense. Total net revenues were $15.4 billion, reflecting growth of 6.5% on an operational basis, excluding a modestly favorable impact from foreign exchange. Adjusted gross margin was 84.4% of sales. Adjusted R&D expense was 13.7% of sales, and adjusted SG&A expense was 21% of sales. The adjusted operating margin ratio was 44.3% of sales, which includes a 5.3% unfavorable impact from acquired IPR&D expense. Net interest expense was $678 million. The adjusted tax rate was 16.2%. Turning to our financial outlook, we are raising our full-year adjusted earnings per share guidance to between $11.88 and $12.08.

Please note that this guidance does not include an estimate for acquired IPR&D expense that may be incurred beyond the second quarter. We now expect total net revenues of approximately $60.5 billion and an increase of $800 million. This reflects a relatively neutral impact from foreign exchange on full-year sales growth. Our updated revenue forecast includes the following approximate assumptions for several of our key products and therapeutic areas. In immunology, we now expect SKYRIZI global revenues of $17.1 billion, an increase of $600 million, reflecting continued share gains in psoriasis and IBD, and U.S. HUMIRA revenues of $3 billion, a decrease of $500 million, reflecting biosimilar competition. In neuroscience, we now expect global sales of $10.5 billion, an increase of $300 million.

This includes a $100 million increase for VYALEV, reflecting strong international uptake, with the remaining $200 million increase split relatively evenly across VRAYLAR, BOTOX Therapeutic, and the total oral CGRP portfolio. In oncology, we now expect IMBRUVICA global revenues of $2.9 billion, an increase of $100 million, reflecting higher persistency rates for existing patients, and VENCLEXTA global sales of $2.8 billion, an increase of $100 million, reflecting continued strong demand in CLL. Moving to the P&L for 2025, we continue to forecast full-year adjusted gross margin of approximately 84% of sales. We now expect adjusted R&D expense of approximately $9 billion and adjusted SG&A expense of approximately $13.5 billion. We also now anticipate an adjusted operating margin ratio of roughly 45% of sales, in line with our previous expectations after including the 1.8% unfavorable impact of acquired IPR&D expense incurred through the second quarter.

Turning to the third quarter, we anticipate net revenues of approximately $15.5 billion. This reflects an estimated 1% favorable impact from foreign exchange on sales growth. We expect adjusted earnings per share between $3.24 and $3.28. This guidance does not include acquired IPR&D expense that may be incurred in the quarter. In closing, AbbVie once again delivered outstanding top and bottom-line performance, with results well ahead of our expectations. I'm pleased with the momentum from our HUMIRA platform, including SKYRIZI, RINVOQ, and neuroscience, which further supports AbbVie's long-term outlook. With that, I'll turn the call back over to Liz.