AbbVie Inc. Q1 2026 earnings call

Good morning. 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 and 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 our 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 is off to an excellent start to the year, with first quarter results exceeding our expectations across our diverse portfolio. We are delivering top-tier growth and continue to strengthen our long-term outlook with pipeline advancements and strategic transactions. Turning to our first quarter performance, we achieved adjusted earnings per share of $2.65, which is $0.07 above our guidance midpoint. Total net revenues were $15 billion, beating our expectations by $300 million and reflecting robust sales growth of 12.4%. I'm especially pleased with the momentum in immunology and neuroscience, which are both delivering share gains in growing markets.

Based on this strong performance, we are raising our full year adjusted earnings per share guidance by $0.12 and now expect adjusted EPS between $14.08 and $14.28. Turning now to R&D, we are making meaningful progress advancing programs across all stages of development. Recent highlights include the U.S. regulatory submissions of RINVOQ for alopecia areata, giving us a potential new source of growth in dermatology, and SKYRIZI sub-Q induction in Crohn's, with an approval decision expected later this year. We also saw promising interim data from our Crohn's platform study combining SKYRIZI and our own alpha-4 beta-7, which has potential to deliver transformational efficacy. In obesity, we announced early stage data for our amylin analog ABBV-295 with very encouraging weight loss results.

In oncology, we are now expecting the regulatory submission for Etentamig by the end of this year, which is earlier than our previous expectations. We also expanded our emerging oncology pipeline by closing the RemeGen agreement, giving us a novel PD-1/VEGF bispecific antibody. We will continue to augment our portfolio with business development to access external innovation. Given our strong growth outlook, we have significant financial capacity to pursue both early and late-stage opportunities. Lastly, as part of AbbVie's $100 billion commitment to U.S. R&D and capital investments over the next decade, we recently announced construction of several new manufacturing sites. This includes a $1.4 billion investment to build a pharmaceutical manufacturing campus in North Carolina and a $380 million investment for two new plants in North Chicago.

These strategic investments will strengthen AbbVie's ability to produce medical breakthroughs in immunology, neuroscience, oncology, and obesity. In summary, the fundamentals of our business are strong, and we are well-positioned to deliver top-tier growth for the long term. 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 $7.3 billion, reflecting impressive sales growth of $1 billion. SKYRIZI total sales were $4.5 billion, up 29.2% on an operational basis, exceeding our expectations. We continue to demonstrate exceptional performance across psoriatic disease, where we are gaining share and have clear leadership over all biologics and orals by a very wide margin. The psoriatic market is growing robustly, and we feel extremely confident in SKYRIZI's best-in-class profile, including high-end durable efficacy on both skin and joints, as well as simple quarterly dosing, which collectively gives us a distinct advantage relative to all the existing and emerging therapies in this area. We continue to generate compelling evidence to support SKYRIZI as the preferred treatment option for psoriatic disease.

At the recent AAD meeting, we presented new data highlighting SKYRIZI's strong efficacy in genital and scalp psoriasis, which are very difficult to treat areas, often leading to significant social and emotional burden to patients. The FDA has recently approved adding the new study results in these high impact area to the SKYRIZI label. We also now have long-term efficacy and radiographic data in psoriatic arthritis, demonstrating SKYRIZI's durable efficacy with nearly 90% of patients showing no radiographic progression through five years of treatment. This data will enhance our existing leadership in the important PSA segment, where SKYRIZI is the frontline in-play patient share leader in both the derm and rheum segments. Performance also remains very robust in IBD, where SKYRIZI is on track to deliver more than 30% global sales growth across Crohn's disease and ulcerative colitis this year.

Competitive dynamics within IBD are playing out in line with our expectations, with SKYRIZI continuing to capture a leading share of total new patient starts in the U.S. in the quarter, including very significant in-play leadership in the frontline setting, which is the strongest signal of overall physician preference for SKYRIZI. I'm also pleased with the compelling results from our recent subcutaneous induction study for Crohn's, with data, particularly in the bio naïve population that we believe compares very favorably versus the competition. We look forward to providing an additional dosing option for physicians and IBD patients later this year. Turning now to RINVOQ, which is also performing above our expectations. Global sales were $2.1 billion, up 20.2% on an operational basis. Demand remains strong across all of RINVOQ's indications.

We are now achieving high teens in-play patient share in RA and are seeing a nice inflection in prescriptions across gastro, especially in UC, following the recent expanded label supporting access to RINVOQ earlier in the treatment paradigm for IBD patients. We are also planning for the potential near-term commercialization of two additional indications, vitiligo and alopecia areata, which will meaningful expand RINVOQ's dermatology label and where we have also recently expanded our field force to support these emerging opportunities. Lastly, in immunology, HUMIRA global sales were $688 million, down 40.3% on an operational basis, reflecting biosimilar competition and in line with our expectations. Moving to neuroscience, where we continue to outperform our expectations as well. Total revenues were nearly $2.9 billion, up 24.3% on an operational basis.

In migraine, our leading portfolio continues to gain market share with UBRELVY, QULIPTA, and BOTOX therapeutic, each delivering robust double-digit sales growth. In psychiatry, VRAYLAR global sales were $905 million, up 18.4%, reflecting strong prescription growth in both bipolar disorder and adjunctive MDD. VRAYLAR has significant leadership with new prescription share roughly double the next closest branded competitor, and we expect continued momentum following the introduction of new lower doses, allowing prescribing flexibility as well as pediatric usage. Moving to Parkinson's disease, we continue to see encouraging uptake for VYALEV, which is on track to achieve blockbuster revenue this year. Total sales were $201 million, up approximately 10% on a sequential basis.

We are also preparing for the potential approval and launch of tavapadon in the U.S. later this year, an exciting new oral treatment for patients with Parkinson's and a very complementary addition to our growing Parkinson's portfolio with VYALEV and DUODOPA. Tavapadon has demonstrated strong efficacy as both a monotherapy as well as an add-on to the standard of care. We believe it will be a sizable commercial opportunity. Moving now to oncology, where total revenues were more than $1.6 billion, down 3% on an operational basis. VENCLEXTA continues to perform very well, especially in CLL, as combination use with BTK inhibitors are emerging as a preferred fixed treatment duration globally. We've recently received full approvals in the U.S. and the U.K., as well as positive CHMP opinion for VENCLEXTA's use with BTKs for that fixed treatment course.

Total VENCLEXTA sales were $770 million, up 9.7% on an operational basis. Continued sales growth from ELAHERE, EPKINLY, and EMRELIS also helped to partially offset the expected sales decline for IMBRUVICA, which was down 24.7% due to IRA pricing and competitive share pressure. Turning now to aesthetics, which delivered global sales of nearly $1.2 billion, up 5.1% on an operational basis. BOTOX Cosmetic total revenues were $668 million, up 17%, reflecting a favorable price comparison in the U.S. as well as modest market growth globally. JUVÉDERM global sales were $232 million, down 2.9%, reflecting continued headwinds in key dermal filler markets.

While economic headwinds have continued to impact market conditions globally, the long-term prospects for the category remain attractive given high consumer interest and low penetration rates. As the industry leader, we are investing in promotion and innovation to support patient activation. I'm particularly excited about the potential for TrenibotE, our fast-acting, short-duration toxin, which once approved, we expect will be market expanding and complements our toxin portfolio very nicely. While TrenibotE is delayed in the U.S., we continue to anticipate approval and launches this year in key international markets, including Europe, Canada, and Japan. Overall, I'm extremely 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. We continue to make good progress across our pipeline. I'll start with dermatology programs in immunology. As Jeff just mentioned, new data was presented at the recent AAD meeting highlighting SKYRIZI's strong efficacy in genital and scalp psoriasis and long-term efficacy, including radiographic data in psoriatic arthritis. These recent presentations add to the growing body of evidence supporting SKYRIZI's best-in-class profile in psoriatic diseases. Its strong, durable efficacy on both skin and joint measures, favorable safety and tolerability profile, and convenient quarterly maintenance dosing give us confidence that SKYRIZI will continue to be the preferred first-line treatment option for patients with psoriatic disease. Additionally, discussions are ongoing with the FDA regarding revised label language related to tuberculosis evaluation for SKYRIZI. While TB monitoring has become fairly routine prior to initiating treatment with biologics, updated language would allow healthcare providers to use their clinical judgment.

Moving to RINVOQ, the regulatory application for alopecia areata was recently submitted to the FDA. Approval decisions are anticipated later this year in Europe and Japan and in early 2027 in the U.S. In hidradenitis suppurativa, phase III studies for both RINVOQ and lutikizumab are progressing well and remain on track for 16-week top-line results in the second half of this year. Turning to gastroenterology, all co-primary and key secondary endpoints were met in the phase III AFFIRM study, with SKYRIZI subcutaneous induction in Crohn's disease demonstrating very high levels of endoscopic response and clinical remission. While not a direct head-to-head comparison, when matching these data against results from the SKYRIZI IV induction program, the subcu induction achieved numerically higher results across key endpoints. We are extremely pleased with the strong performance demonstrated by subcutaneous induction, especially considering that this study enrolled a very difficult-to-treat patient population.

Two-thirds of the patients received prior advanced therapy, with half failing two or more therapies and a third failing ustekinumab or a JAK inhibitor. Data in those who had not previously experienced advanced therapy were particularly noteworthy, where 61% of SKYRIZI patients achieved endoscopic response and 73% achieved clinical remission at week 12. This is 45 points higher than placebo on both measures. These are very impressive results, which will continue to support first-line use. These data reinforce SKYRIZI's best-in-class profile and provide an additional induction dosing option for patients with Crohn's disease. Our U.S. regulatory application was recently submitted with an approval decision anticipated later this year. Subcu induction for ulcerative colitis is also being assessed, we will be discussing options with health authorities. On to other gastro programs. An interim analysis was recently completed on our Crohn's disease platform study.

In the cohort evaluating SKYRIZI plus our novel anti-alpha-4 beta-7 antibody, ABBV-382, the combination resulted in a higher rate of endoscopic remission at week 12 and at week 24. The rate was double that of either monotherapy arm. Endoscopic remission was achieved by approximately 42% of patients receiving the combination at week 24. These results were observed in a broad population that had severe and refractory disease, which included 82% advanced treatment failures and 53% of patients failing two or more advanced treatments. Of the patients that previously received advanced therapies, 63% failed an agent with an overlapping mechanism with the combination, and 20% failed a JAK inhibitor. At baseline, patients had a mean Crohn's disease activity index of 325 and a simple endoscopic score of 14, which represents a very treatment-refractory patient population.

Achieving this level of endoscopic remission in this setting is a particularly meaningful achievement, as this endpoint is an objective measure of mucosal healing and is associated with long-term benefits, including reduced rates of hospitalization, surgery, and disease progression. Safety of the combination was consistent with the profiles of the monotherapies. No new signals were observed. These results demonstrate the potentially transformative level of efficacy that our novel combination can achieve. The study is expected to complete in the third quarter, with presentation at a medical meeting anticipated by early next year. A phase IIb study is planned to begin this summer in patients with Crohn's disease and ulcerative colitis to evaluate SKYRIZI in combination with both ABBV-382 and with our extended half-life TL1A antibody. In parallel, we will be evaluating phase III acceleration options for SKYRIZI plus ABBV-382 in Crohn's disease.

In the SKYRIZI plus lutikizumab cohort, the combination did not sufficiently differentiate from monotherapy SKYRIZI and will not be moving forward. In the early stage immunology pipeline, we are nearing completion of a phase I study for an IRAK4 inhibitor, ABBV-848, and plan to begin a phase II study in rheumatoid arthritis later this year. This potent inhibitor has the potential to provide biologic like efficacy, a favorable safety profile with no box warnings, and convenient once daily oral dosing. I will now discuss neuroscience. Top line analysis was recently completed on our phase II trial evaluating ABBV-932 in bipolar depression. In the study, the overall difference observed between the drug-treated and placebo groups was not statistically significant. However, in a pre-specified subgroup analysis of bipolar I patients, an efficacy signal was observed.

The safety profile of ABBV-932 was generally similar to placebo, including rates of extrapyramidal events, demonstrating the potential for a more favorable tolerability profile compared to VRAYLAR. We are evaluating next steps to continue ABBV-932 development in bipolar I patients. Dose escalation work continues for emraclidine in both schizophrenia and elderly patients. In schizophrenia, we have cleared the 100 mg dose and will begin evaluating 150 mg. phase II studies in monotherapy and adjunctive schizophrenia, as well as psychosis related to Alzheimer's, Parkinson's, and Lewy body dementia, are planned to begin in the fourth quarter. Moving to our psychedelic asset, Bretisilocin, additional data from an ongoing phase II study in major depressive disorder will be available this year.

Several studies are planned to begin in 2026, including a phase III trial for single course acute treatment in MDD, a phase IIb evaluating repeat dosing for chronic use in MDD, and a proof of concept phase II in post-traumatic stress disorder. In Parkinson's disease, we remain on track for an approval decision for tavapadon in the third quarter. Turning to our solid tumors program in oncology, Temab-A is progressing well across a broad range of tumor types. At the upcoming ASCO meeting, early stage safety and efficacy results for Temab-A in head and neck and ovarian cancers will be presented. Based on these results, we are engaging with regulators regarding ways to accelerate programs for Temab-A plus pembrolizumab in frontline head and neck cancer and Temab-A plus bevacizumab in frontline ovarian cancer.

In colorectal cancer, we have made a decision to update our strategy in the third line plus setting and will now focus the pivotal program on Temab-A in combination with bevacizumab in an all-comers population, as opposed to pursuing monotherapy in c-Met selected patients. Targeting all comers will allow Temab-A to reach a substantially broader population. Temab-A plus bevacizumab demonstrated improved response rates and disease control versus current standard of care, regardless of c-Met expression levels. Treatment with Temab-A at 2.4 mg/kg plus Bev 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 Bev. Given the expanded patient population for the all comers phase III trial, we anticipate faster enrollment compared to the study in c-Met selected patients.

Initial data readout is expected in the second half of next year. In lung cancer, Temab-A received its first breakthrough therapy designation as a monotherapy in second-line plus EGFR wild type non-squamous non-small cell lung cancer. We are in the process of planning a phase III trial in this setting. In small cell lung cancer, a phase III trial for monotherapy ABBV-706 recently began in relapsed refractory patients. Two phase II studies evaluating ABBV-706 triplet combinations in frontline patients are also planned to initiate this year. These trials will evaluate ABBV-706 in combination with atezolizumab plus DLL3 T-cell engagers. Moving to ABBV-969, dose escalation data in late-line metastatic castration resistant prostate cancer will be presented at ASCO.

Based on these results, we are in the process of discussing acceleration options with regulators in order to advance into phase III trials as quickly as possible. We also continue to augment our solid tumor pipeline through investments in external innovation, including one with Kestrel Therapeutics, who recently began a phase I study to evaluate a pan-KRAS inhibitor in advanced solid tumors harboring KRAS mutations. This next-generation inhibitor has the potential to provide an improved efficacy and safety profile based on increased potency and specificity against the most relevant KRAS mutations while sparing H- and N-RAS isoforms. Our strategy is to combine this pan-KRAS inhibitor with Temab-A in pancreatic, lung, and colorectal cancers. In hematologic oncology, our phase III trial evaluating monotherapy Etentamig in third-line plus multiple myeloma is tracking ahead of schedule.

We anticipate a response rate readout in the third quarter, with potential to also see an interim analysis on progression-free survival. If this interim analysis is positive, regulatory submissions would occur later this year. Progress continues in earlier lines of therapy as well. The increasing use of anti-CD38 antibodies in earlier treatment settings is driving a need for CD38-free BCMA combinations, particularly those that can provide the convenience of monthly BCMA dosing combined with an oral agent. Plans are underway for a phase III study evaluating Etentamig in combination with pomalidomide in second-line plus patients, including those that were exposed or refractory to a CD38 antibody or who lost response to a BCMA CAR-T or ADC. Moving to other areas of our pipeline. In aesthetics, the FDA issued a complete response letter for our TrenibotE application related to manufacturing questions.

Thank you, Roopal. Starting with our first quarter results, we reported adjusted earnings per share of $2.65, which is $0.07 above our guidance midpoint. These results include a $0.41 unfavorable impact from acquired IP R&D expense. Total net revenues were $15 billion. This reflects top-tier growth of 12.4%, including a 2.1% favorable impact from foreign exchange. Adjusted gross margin was 83.6% of sales. Adjusted R&D expense was 15.1% of sales, and adjusted SG&A expense was 22.7% of sales. The adjusted operating margin ratio was 40.8% of sales, which includes a 5% unfavorable impact from acquired IP R&D expense. Net interest expense was $645 million. The adjusted tax rate was 15.4%.

Turning to our financial outlook, we are raising our full-year adjusted earnings per share guidance to between $14.08 and $14.28. Please note that this guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the first quarter. We now expect total net revenues of approximately $67.3 billion, an increase of $300 million. The impact from foreign exchange on full-year sales growth remains roughly in line with our prior expectations. This upgraded revenue forecast includes the following approximate assumptions for several of our key products and therapeutic areas. We now expect SKYRIZI global revenues of $21.6 billion, an increase of $100 million, reflecting demand growth in psoriatic and IBD indications.

RINVOQ global sales of $10.2 billion, an increase of $100 million, reflecting strong performance in the rheum and gastro indications. Total neuroscience revenues of $12.6 billion, an increase of $100 million, reflecting momentum across the portfolio. Moving to the P&L for 2026, we continue to forecast full-year adjusted gross margin above 84% of sales, adjusted R&D expense of approximately $9.7 billion, and adjusted SG&A expense of approximately $14.2 billion. We now anticipate an adjusted operating margin ratio of approximately 47.5% of sales, in line with our previous expectations after including the roughly 1% unfavorable impact of acquired IP R&D expense incurred through the first quarter.

We also now expect adjusted net interest expense of approximately $2.7 billion, a reduction of $100 million, primarily related to favorable rates on our debt issuance. Turning to the second quarter, we anticipate net revenues of approximately $16.7 billion. This includes an estimated 0.6% favorable impact from foreign exchange. We are forecasting an adjusted operating margin ratio of approximately 50%. We expect adjusted earnings per share between $3.74 and $3.78. This guidance does not include acquired IP R&D expense that may be incurred in the quarter. In closing, AbbVie continues to deliver outstanding results, and our financial health remains very strong.

Our capital allocation priorities remain focused on the future as we are investing in the business at record levels, have financial flexibility to pursue compelling business development, and are returning capital to shareholders through our strong and growing dividend. With that, I'll turn the call back over to Liz.