AbbVie Inc. Q3 2025 earnings call

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's business continues to perform above our expectations. We delivered another excellent quarter, including strong financial results, pipeline advancement across all stages of development, and strategic investments to drive sustainable long-term growth. Given our positive momentum, we are raising our 2025 outlook for the third time this year. Starting with our third quarter performance, we delivered adjusted earnings per share of $1.86, which is $0.10 above our guidance midpoint. Total net revenues were nearly $15.8 billion, reflecting high single-digit sales growth and beating our expectations by approximately $300 million. I'm especially pleased with the execution of our growth platform, including combined sales growth of more than 40% from SKYRIZI and RINVOQ, our leading immunology medicines, as well as double-digit revenue growth from neuroscience, our second largest and fastest-growing therapeutic area.

With no significant LOE event in the near term, our growth platform provides a clear line of sight to growth into the next decade. This puts AbbVie in a strong position to fully invest for the 2030s and beyond. Since our inception in 2013, we have invested more than $84 billion to research, discover, and develop new medicines and solutions for patients. We anticipate $9 billion of adjusted R&D expense in 2025, a substantial increase from the prior year. This supports numerous pipeline opportunities across our core areas: immunology, oncology, neuroscience, and aesthetics, as well as new sources of growth like obesity. More broadly, I'm very pleased with the breadth and depth of our robust pipeline, with approximately 90 programs across all stages of development.

We are making excellent progress and expect several important milestones over the next two years, including new product approvals for tavapadon and PVEK, expanded indications for RINVOQ, EPKINLY, QULIPTA, and UBRELVY, and pivotal data for lutikizumab, Temab-A, and etentamig. These pipeline programs have the potential to drive growth for AbbVie later this decade. We also continue to invest in external innovation, adding novel mechanisms and platform technologies to further augment our pipeline to drive growth in the 2030s and beyond. Our recent deal activity includes announcing the acquisition of Gilgamesh' bretisilocin, expanding our psychiatry pipeline with a next-generation psychedelic currently in phase II development for major depressive disorder, and closing the acquisition of Capstan Therapeutics, further strengthening our immunology pipeline with an in vivo CAR-T platform.

Our consistently strong performance, as well as the progress we are making to build and advance a robust pipeline, fully supports our capital allocation priorities. This includes investing at least $10 billion of capital in the U.S. over the next 10 years. Construction is already underway for a new API manufacturing site in North Chicago, as well as expansion of biologics manufacturing and R&D capacity at our existing site in Worcester. We are also committed to delivering a healthy, sustainable dividend that grows every year. Today, we announced a 5.5% increase in our quarterly cash dividend, beginning with a dividend payable in February 2026. Since inception, we have grown our quarterly dividend by more than 330%. In summary, this is an exciting time for AbbVie. We are demonstrating outstanding execution across our portfolio, and our long-term outlook remains very strong.

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 approximately $7.9 billion, up 11.2% on an operational basis. SKYRIZI and RINVOQ continued to exceed our expectations, once again demonstrating robust growth across a broad set of indications. SKYRIZI global sales were $4.7 billion, reflecting operational growth of 46%. RINVOQ global revenues were nearly $2.2 billion, up 34.1% on an operational basis. I'm especially pleased with our portfolio performance in gastroenterology, where these two medicines are on pace to nearly double their combined sales in IBD this year. Our uptake in Crohn's disease remains impressive, with SKYRIZI and RINVOQ together achieving in-play share leadership in a dozen countries. This includes capturing roughly 50% of newer switching Crohn's patients across all lines of therapy in the U.S.

We see similar momentum in ulcerative colitis as well, with SKYRIZI and RINVOQ collectively holding in-play share leadership in more than 10 key markets and capturing nearly one out of every three newer switching UC patients across all mechanisms in the U.S. IBD continues to be an area of high unmet need, with substantial headroom for biologic penetration as well as expanding lines of therapy. Given the compelling efficacy, safety, and dosing profiles for both assets, SKYRIZI with less frequent dosing favored by patients and clinicians, especially for the maintenance treatment relative to the most effective dose for other IL-23s, and RINVOQ, often preferred for difficult-to-treat IBD cases, having demonstrated the strongest response rates in UC studies, as well as very strong efficacy in CD as well.

Along with RINVOQ's recently expanded label in IBD, which is a great outcome for patients who will now have access to RINVOQ earlier in the treatment paradigm when anti-TNF treatment is clinically inadvisable, we remain very competitively positioned for continued strong growth across gastroenterology. Moving to the rest of our core immunology indications, SKYRIZI continues to perform exceptionally well in psoriasis, gaining share across our key markets. This includes an impressive 50% in-play patient share for biologics in the U.S. RINVOQ is also delivering strong prescription growth in rheumatology. In RA, RINVOQ continues to achieve the leading in-play patient share across lines of therapy. We now have three head-to-head studies demonstrating RINVOQ's superiority to other biologics in RA, including recent positive data from our SELECT-SWITCH trial, which clearly supports the clinical benefits of switching to RINVOQ after a first TNF failure.

Lastly, we are seeing a very nice ramp in GCA, where RINVOQ now has full formulary coverage. I'm very pleased with the progress and look forward to the commercialization of additional sizable indications like alopecia areata and vitiligo. Turning now to HUMIRA, which delivered global sales of $993 million, down 55.7% on an operational basis, reflecting biosimilar competition. We continue to anticipate HUMIRA access in the U.S. will decrease throughout the remainder of this year and into 2026 as more plans select exclusionary contracts for existing patients. This step-up in volume erosion is expected to be partially offset by a price benefit also associated with these contract changes, which is included in our fourth quarter outlook. Moving to oncology, which delivered total revenues of nearly $1.7 billion, relatively flat versus prior year.

Momentum from VENCLEXTA, as well as newer products ELAHERE, EPKINLY, and EMRELIS, helped to offset the expected sales decline from IMBRUVICA, which continues to be impacted by competitive dynamics in CLL. Overall, I'm very pleased with the progress we are making to expand our commercial capabilities in both heme and solid tumors with our existing portfolio. These efforts will ultimately support our emerging oncology pipeline, which includes several promising programs to improve patient outcomes in many difficult-to-treat cancers. Turning now to aesthetics, which delivered global sales of approximately $1.2 billion, down 4.2% on an operational basis. BOTOX cosmetic global revenues were $637 million, and JUVÉDERM global sales were $253 million, with growth rates for both products down on an operational basis. While our portfolio is performing well from a competitive perspective, we continue to face challenging market conditions in several key markets, which are impacting our results.

With overall consumer sentiment remaining quite low, especially in the U.S., as concerns about the economy and inflation weigh on discretionary spending, we now see category growth tracking below our previous assumptions globally. However, this near-term macro pressure does not dampen our excitement for the long-term potential of our leading aesthetics portfolio. We are investing to support patient activation with robust promotion and product innovation. We recently launched new consumer campaigns for BOTOX as well as fillers to further stimulate category growth, which remains highly underpenetrated and where we stand to disproportionately benefit upon market recovery, given our leading product shares. Innovation from our pipeline, including novel toxins like TrenibotE, a fast-acting, short-duration toxin, as well as several next-generation fillers, will also provide growth in the coming years. Moving now to neuroscience, which is demonstrating exceptional performance.

Total revenues were more than $2.8 billion, up 19.6% on an operational basis. I'm very pleased with our leading migraine portfolio, with UBRELVY, QULIPTA, and BOTOX Therapeutic all delivering robust double-digit growth. QULIPTA is now the number one CGRP treatment for migraine prevention, with a total prescription share of approximately 7.5%. VRAYLAR is also performing well in both bipolar and aMDD, with total sales of $934 million, up 6.7%. Physicians continue to report positive feedback on VRAYLAR's strong benefit-risk profile, including dosing flexibility, low sedation, and the ability to address anhedonia and anxiety symptoms often associated with depression. Lastly, in Parkinson's disease, VYALEV's launch trajectory has been very impressive. Total sales were $138 million, up 40% on a sequential basis.

The uptake across international markets continues to exceed our expectations, with physicians and patient communities highlighting meaningful improvements in on-time and off-time from the 24-hour delivery and the control of symptoms throughout the morning, day, and night. VYALEV is the only Parkinson's treatment that often replaces the need for add-on oral therapies to manage motor fluctuations, reducing the daily pill burden for these patients. We anticipate expanded coverage of VYALEV in the U.S. soon, which we expect will provide further revenue inflection next year. I'm also excited about tavapadon, where we are pursuing approval for use as a monotherapy for early Parkinson's disease, as well as an adjunct to optimize oral therapy for more advanced patients. This will be a very complementary offering for both VYALEV and DUOPA.

Given the significant commercial opportunity with our emerging Parkinson's portfolio, we are now actively expanding our field sales team to support higher anticipated demand next year. Overall, again, we are demonstrating strong revenue growth, and our commercial execution has been outstanding. With that, I'll turn the call to Roopal for comments on our R&D highlights. Roopal.

Thank you, Jeff. Starting with immunology, we announced positive top-line results from the second phase III RINVOQ alopecia areata trial, reinforcing the potential for RINVOQ to significantly improve hair regrowth for patients suffering from severe forms of this condition. Data were consistent with the results from the first trial, with RINVOQ demonstrating meaningful improvement in hair regrowth across both doses compared to placebo. We remain on track to begin submitting regulatory applications later this year. We also recently announced positive top-line results from two phase III RINVOQ vitiligo trials. In both studies, RINVOQ met the co-primary and key secondary endpoints at week 48, demonstrating improvements in both total body and facial vitiligo scoring compared to placebo. We are very pleased with these results, which illustrate RINVOQ's potential to provide significant skin repigmentation to patients suffering from non-segmental vitiligo.

The daily challenges of living with this condition can often lead to depression and anxiety. With no approved systemic treatments, there is very high unmet need for these patients. Once approved, RINVOQ could potentially be the first systemic therapy available for vitiligo. Regulatory submissions are planned for early next year. Positive top-line results were also announced from the SELECT-SWITCH trial, which compared RINVOQ to HUMIRA in RA patients who had an inadequate response or intolerance to their first TNF inhibitor. This is the first head-to-head study comparing anti-TNF cycling versus switching to RINVOQ. In the study, RINVOQ demonstrated superiority in HUMIRA for efficacy measures, with nearly twice as many patients achieving low disease activity and remission. For RA patients who did not respond well to their first TNF inhibitor, these results clearly show the benefit of switching to RINVOQ rather than cycling to another anti-TNF.

In IBD, RINVOQ recently received a label update in Crohn's disease and ulcerative colitis, allowing its use prior to anti-TNFs in patients who have received at least one approved systemic therapy when TNF inhibitors are clinically inadvisable. The treatment paradigm has evolved in IBD, with increasing utilization of newer, higher efficacy agents like SKYRIZI. There are certain clinical scenarios when an anti-TNF may not be the most appropriate next treatment option for a patient. This label update provides physicians with the flexibility to use RINVOQ prior to anti-TNFs for certain patients after they have tried another approved systemic therapy. Moving to oncology, the regulatory application was submitted to the FDA for PVEK in blastic plasmacytoid dendritic cell neoplasm. This rare, aggressive blood cancer primarily affects an older population who is at high risk for complications with traditional chemotherapy or precluded from stem cell transplantation.

As a new treatment providing durable responses with a manageable safety profile, our novel ADC has the potential to become an important new therapeutic option for these patients. At the recent ESMO meeting, we presented three orals for Temab-A, highlighting this novel ADC's potential both as a monotherapy and in combination across advanced, difficult-to-treat solid tumors. In CRC patients who received two or more prior lines of therapy, and regardless of c-MET expression levels, Temab-A, in combination with bevacizumab, demonstrated manageable safety and better responses in disease control compared to current standard of care. Treatment with Temab-A at 2.4 mg per kg, plus bevacizumab, achieved an objective response rate of 30% and a confirmed disease control rate of 97% compared to rates of 0% and 70%, respectively, for LONSURF plus bevacizumab. Based on these results, we plan to begin a phase III study for this combination in late-line all-comers CRC.

In a proof of concept study in pancreatic cancer, monotherapy Temab-A demonstrated an objective response rate of 24% in the overall population and 40% in patients who received first-line gemcitabine plus ABRAXANE. A phase II study in pancreatic cancer is expected to begin next year. In an exploratory study in MET-amplified solid tumors after progression following standard of care, monotherapy with Temab-A resulted in an objective response rate of 47% and median duration of response of 12.5 months for the 2.4 mg per kg dose. Higher responses were observed in patients with non-small cell lung cancer, with a rate of 69%, and gastroesophageal cancer, with a rate of 71%. A phase II study in MET-amplified solid tumors is expected to begin later this year.

We are making significant progress with Temab-A across a broad range of tumors, and there is an increasing body of evidence demonstrating durable efficacy and a manageable safety profile in these difficult-to-treat cancers. We look forward to providing additional updates on Temab-A programs as data mature. In neuroscience, the regulatory application for tavapadon in Parkinson’s disease was recently submitted to the FDA. For many patients with Parkinson’s, existing oral therapies aren’t sufficient to manage symptoms. Our selective D1/D5 receptor partial agonist demonstrated robust efficacy as a monotherapy in early Parkinson’s disease and as an adjunct to levodopa/carbidopa oral therapy in patients still experiencing motor fluctuations. Once approved, we believe tavapadon will be an important new treatment option. Results from a phase II study evaluating BOTOX in upper limb essential tremor were recently presented at the MDS Congress.

In the study, BOTOX met the primary and all secondary endpoints, demonstrating significant improvements in all assessment measures compared to placebo. With a global patient population of about 25 million, essential tremor is the most common movement disorder. This progressive neurological condition can substantially hinder patients’ physical activities and diminish their quality of life. Current treatment options are limited in terms of both efficacy and tolerability, leaving considerable need for new therapies. Based on these results, we plan to advance a new toxin for upper limb essential tremor. Gemibot A is a novel toxin that has demonstrated different pharmacologic properties preclinically compared to BOTOX, such as less diffusion to neighboring muscles. Phase II studies for Gemibot A in essential tremor and ventral hernia repair will begin next year. To further expand our neuropsychiatry pipeline, we acquired bretisilocin from Gilgamesh.

bretisilocin is a novel 5-HT2A receptor agonist and 5-HT releaser, with a short duration of hallucination that has demonstrated robust efficacy in a phase II proof of concept study in major depressive disorder. Rapid efficacy was achieved after the initial dose, with response and remission maintained through day 74 without additional intervention. This novel psychedelic has the potential to provide significant benefit to patients by offering rapid, robust, and durable antidepressant effects following a short in-clinic treatment session. Additional phase II studies in depression are expected to begin next year. To summarize, we continue to make good progress across all stages in therapeutic areas of our pipeline and look forward to many important pipeline milestones in the remainder of this year and into 2026. With that, I'll turn the call over to Scott.

Thank you, Roopal. Starting with our third-quarter results, we reported adjusted earnings per share of $1.86, which is $0.10 above our guidance midpoint. These results include a $1.50 unfavorable impact from acquired IPR&D expense, primarily reflecting upfront charges for the acquisition of Capstan Therapeutics and our license agreement with IGI. Total net revenues were nearly $15.8 billion, reflecting growth of 8.4% on an operational basis, excluding a modestly favorable impact from foreign exchange. Importantly, our ex-HUMIRA growth platform delivered reported sales growth of more than 20%, once again exceeding our expectations. Adjusted gross margin was 83.9% of sales, adjusted R&D expense was 14.3% of sales, and adjusted SG&A expense was 21.6% of sales. The adjusted operating margin ratio was 30.9% of sales, which includes a 17% unfavorable impact from acquired IPR&D expense. Net interest expense was $667 million.

The adjusted tax rate was 24.5%, reflecting the low deductibility of acquired IPR&D expense this quarter. Turning to our financial outlook, we are raising our full-year adjusted earnings per share guidance to between $10.61 and $10.65. Please note that this guidance does not include an estimate for acquired IPR&D expense that may be incurred beyond the third quarter. We now expect total net revenues of approximately $60.9 billion, an increase of $400 million. This updated forecast primarily reflects SKYRIZI global sales of $17.3 billion, an increase of $200 million with continued share gains in psoriasis and IBD. Neuroscience global revenues of $10.7 billion, an increase of $200 million, reflecting continued strength across VRAYLAR, BOTOX Therapeutic, VYALEV, and the total oral CGRP portfolio.

Aesthetics total sales of $4.9 billion, a decrease of $200 million, reflecting greater than expected market softness globally, with the remaining $200 million increase reflecting the collective momentum from RINVOQ and several other products across our diverse portfolio. We also continue to assume a relatively neutral impact from foreign exchange on full-year sales growth. Moving to the P&L for full year 2025, we continue to expect adjusted gross margin of 84% of sales, adjusted R&D expense of $9 billion, and adjusted SG&A expense of $13.5 billion. We now anticipate an adjusted operating margin ratio of approximately 41% of sales. In line with our previous expectations after including the roughly 6% unfavorable impact of acquired IPR&D expense incurred through the third quarter, we now forecast our non-GAAP tax rate to be approximately 17.3%, also reflecting the impact of acquired IPR&D.

Turning to the fourth quarter, we anticipate net revenues of more than $16.3 billion. This reflects an estimated 1% favorable impact from foreign exchange on sales growth. We expect adjusted earnings per share between $3.32 and $3.36. This guidance does not include acquired IPR&D expense that may be incurred in the quarter. Finally, AbbVie's robust business performance continues to support our capital allocation priorities. Our cash balance at the end of September was more than $5.6 billion, and we generated approximately $13 billion of free cash flow in the first nine months of the year, which includes nearly $2.2 billion of SKYRIZI royalty payments. This free cash flow fully supports a strong and growing quarterly dividend, which we are increasing 5.5% to $1.73 per share, beginning with a dividend payable in February 2026, as well as capacity for continued business development.

We have executed approximately 30 deals since the beginning of 2024, and we continue to assess external innovation across all of our key growth areas. We also remain on track to achieve a net leverage ratio of 2x by the end of 2026. In closing, AbbVie once again delivered outstanding results, and our financial outlook remains very strong. With that, I'll turn the call back over to Liz.