AbbVie Inc. Q2 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, 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, thank you for joining us. AbbVie delivered another excellent quarter, with results once again exceeding our expectations. I'm especially pleased with the execution across our business, including double-digit sales growth from our diverse portfolio, the advancement of our compelling pipeline of innovative medicines, and our planned acquisition of Apogee Therapeutics, which represents an exciting opportunity to bolster AbbVie's leading immunology portfolio. Turning to our second quarter performance, we achieved adjusted earnings per share of $3.65, which is $0.06 above our guidance midpoint. Total net revenues were nearly $17 billion, beating our expectations by $300 million, and reflecting robust sales growth of 10.2%. The performance of SKYRIZI, RINVOQ, and our neuroscience portfolio continues to be very strong, with each delivering growth above 20%.

Based on this momentum, we are raising our full-year revenue guidance by $300 million and have now raised total revenue by $600 million since the start of the year. Turning now to R&D, we continue to make excellent progress advancing our pipeline. Recent highlights from our late-stage programs include the U.S. approval of DECNUPAZ, a treatment for a rare form of blood cancer. This represents AbbVie's first marketed ADC in hematology. We also received European approvals for QULIPTA to treat acute migraine, TEPKINLY for second-line follicular lymphoma, as well as Boey, a first-in-class short-acting toxin in aesthetics. In addition, we received European approvals for RINVOQ in both vitiligo and alopecia areata, with U.S. regulatory decisions forthcoming. Based on the compelling data generated for each of these programs, we now anticipate the combined peak sales for these two indications alone to approach $2 billion, which is meaningfully above our prior expectations.

During the quarter, we also announced the acquisition of Apogee Therapeutics, which will add multiple differentiated assets in dermatology, respiratory, and other related inflammatory diseases with significant sales potential. The acquisition will add even more depth to our robust pipeline in immunology, which we expect will be a major growth driver for AbbVie over the long term. This transaction is an excellent fit with our strategy to build and advance a compelling pipeline with new sources of growth to support AbbVie's performance in the 2030s and beyond. We have ample financial capacity for more business development and remain focused on adding both early and late-stage opportunities across our core disease areas. In summary, we are delivering outstanding execution across our business, 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 nearly $8.8 billion, reflecting very strong operational sales growth of 14.6%. SKYRIZI total sales were $5.5 billion, up 24% on an operational basis, once again exceeding our expectations. I'm very pleased with our performance in psoriasis, where we continue to capture robust in-play share of new and switching patients at a rate which is impressively four times higher than any other biologic or oral treatment in the U.S. We have achieved market share leadership now in more than 30 countries and see substantial room for continued growth globally. We do not expect a material impact to our robust outlook in psoriasis from existing or new therapies given SKYRIZI's very distinct profile.

This includes high and very durable skin clearance from head to toe, widely demonstrated superior efficacy in head-to-head trials versus five different mechanisms, including both biologics and oral agents, simple and convenient quarterly dosing, and extremely strong long-term data in psoriatic arthritis extending now to five years, which is very important to prescribers as roughly 30% of psoriasis patients ultimately develop PsA. As well as now our recent approval for pediatric use with the new weight-based dosing option. In IBD, SKYRIZI's fastest-growing indication, we continue to capture a leading share of total new patient starts in the U.S. in the quarter, including substantial leadership in the front-line setting, the clearest signal of physician preference. Competitive dynamics remain in line with our expectations with the IL-23 category seeing very robust growth in both Crohn's disease and ulcerative colitis.

Importantly, we are also preparing for the potential approval of our subcutaneous induction dosing option for Crohn's later this fall, which is supported by very strong data, particularly in the front line, where we observe the highest levels of endoscopic response seen in the category. Turning now to RINVOQ, which is also performing above our expectations. Global sales were more than $2.5 billion, up 23.7% on an operational basis. I am especially pleased with the momentum we see in gastroenterology, where RINVOQ is on pace to deliver 30% global sales growth this year. RINVOQ has set a very high bar for efficacy in both ulcerative colitis and Crohn's disease, demonstrating strong rates of remission and endoscopic improvement. We continue to see a nice inflection of in-play patient share following the recently expanded label supporting access to RINVOQ earlier in the treatment paradigm for IBD patients.

More broadly, we continue to see strong demand across all of RINVOQ indications. We are very excited about the growth potential in dermatology with vitiligo and alopecia areata now approved in Europe, with U.S. approval decisions anticipated over the next few quarters. RINVOQ's profile is competitively positioned for both of these chronic diseases, where our recently expanded U.S. derm field force will support both launches. Lastly, in immunology, HUMIRA global sales were $756 million, down 36.1% on an operational basis, reflecting biosimilar competition and in line with our expectations. Moving to neuroscience, where we once again outperformed our expectations. Total revenues were more than $3.2 billion, up approximately 20% on an operational basis. All three of our leading neuro pillars continue to demonstrate robust sales growth. In psychiatry, VRAYLAR global sales were nearly $1.1 billion, up approximately 19%, reflecting share gains in both bipolar disorder and adjunctive MDD.

In migraine, our leading portfolio continues to deliver outstanding results, with BOTOX therapeutic, UBRELVY, and QULIPTA each delivering double-digit sales growth again this quarter. QULIPTA is now approved in Europe for adults as both an acute treatment option for migraine attacks and as a once-daily preventative treatment option for chronic or episodic migraine. The acute indication expansion in international markets for QULIPTA further supports our long-term outlook for our oral CGRPs to collectively achieve more than $5 billion of peak sales. Moving to Parkinson's disease, another substantial long-term growth driver for AbbVie. Total sales for VYALEV were $256 million, up more than 27% on a sequential basis. VYALEV is well on track to achieve blockbuster sales this year. We expect continued robust momentum in Parkinson's with the anticipated U.S. approval and launch of tavapadone in the third quarter.

Feedback from key opinion leaders has been very positive, with tavapadone demonstrating strong efficacy as both a monotherapy as well as an add-on to standard of care. Overall, we believe our Parkinson's portfolio with VYALEV, tavapadone, and DUOPA will be a substantial commercial opportunity. We continue to expect collective Parkinson's peak sales of more than $5 billion. Turning now to oncology, where total revenues were more than $1.6 billion, down 2.4% on an operational basis. Total VENCLEXTA sales were $771 million, up 9.6% on an operational basis. Performance in CLL continues to be strong as VENCLEXTA use in combination with BTK inhibitors is expanding as a preferred fixed-duration treatment globally. Double-digit sales growth from ELAHERE, TEPKINLY, and EMRELIS also helped to partially offset the sales decline for IMBRUVICA, which was down 29.4% as expected due to IRA pricing and competitive share pressure.

We also launched DECNUPAZ, a new therapeutic option for patients living with BPDCN, an ultra-rare form of blood cancer, further expanding AbbVie's emerging ADC portfolio. Moving now to aesthetics, which delivered global sales of nearly $1.3 billion, down 0.9% on an operational basis. BOTOX Cosmetic total revenues were $728 million, up 3.4% operationally, reflecting modest market growth globally. JUVÉDERM global sales were $245 million, down 6.6% operationally, reflecting continued headwinds in key dermal filler markets. As the industry leader, we continue to invest in this highly under-penetrated market to support long-term growth. I'm especially pleased with the recent Europe and Canada approvals of Boey, our fast-acting, short-duration toxin. Boey complements our toxin portfolio very nicely and represents a new way for patients to initiate an aesthetic treatment. We expect Boey will meaningfully expand the toxin market and look forward to potentially bringing this exciting innovation to the U.S.

Overall, we continue to demonstrate outstanding commercial execution. With that, I'll turn the call over to Roopal for comments on our R&D highlights. Roopal ?

Thank you, Jeff. I'll begin with dermatology programs in immunology. RINVOQ was approved in Europe for the treatment of severe alopecia and non-segmental vitiligo. Applications are also under review in the U.S., with approval decisions anticipated later this year for vitiligo and early next year for alopecia areata. In hidradenitis suppurativa, we remain on track for 16-week data later this year from both RINVOQ and lutikizumab phase III trials. In our early-stage dermatology pipeline, three programs were recently advanced into the clinic, including an IL-13/IL-31 receptor bispecific antibody for atopic dermatitis, an oral IL-23 receptor inhibitor for psoriasis, and a long-acting IL-1 alpha/beta bispecific antibody for hidradenitis suppurativa. Turning to gastroenterology, the U.S. application for SKYRIZI subcutaneous induction in Crohn's disease is under review, with an approval decision expected later this fall.

The subcutaneous regimen demonstrated very high levels of endoscopic response and clinical remission, with rates on both measures 25 points higher than placebo in the overall population and 45 points higher in patients who had not previously experienced advanced therapy. To our knowledge, these results in patients naive to advanced therapies are the highest reported for induction therapies in Crohn's disease, comparing very favorably to SKYRIZI IV and other approved agents. Full results from the study will be presented this fall, which will include additional important endpoints such as endoscopic remission. Startup activities are underway for our phase II-B combination trial in IBD. This multi-arm study will evaluate SKYRIZI plus a higher dose of our novel anti-alpha-4 beta-7 antibody and extended half-life TL1A antibody in both Crohn's disease and ulcerative colitis.

Interim results for SKYRIZI plus anti-alpha-4 beta-7 in Crohn's disease demonstrated a doubling of endoscopic remission at week 24 compared to either monotherapy. This study is expected to complete this fall, final results will be submitted for presentation at a future medical meeting. Lastly, in immunology, we announced the planned acquisition of Apogee Therapeutics, which adds a portfolio of long-acting biologics targeting atopic dermatitis, respiratory conditions, and other immune-mediated diseases. These novel assets are highly complementary to our immunology strategy and further strengthen an already robust pipeline. Moving to neuroscience. QULIPTA was approved in Europe for the acute treatment of migraine, expanding options for patients. In Parkinson's disease, an FDA approval decision is expected in the third quarter for tavapadon.

Results from three phase III trials demonstrated that this novel selective D1/D5 dopamine agonist has the potential to be a highly effective treatment for motor symptoms with low rates of dyskinesia, edema, sedation, and impulse control disorder. We look forward to bringing this innovation to patients later this year. In our early-stage neuroscience pipeline, multiple new trials were recently initiated, including a phase II study for a novel toxin, [Gemibotulinum], in essential tremor and a phase I-B study for ABBV-1758, a blood-brain barrier-crossing anti-pyroglutamate A-beta antibody in Alzheimer's disease. In schizophrenia, the multi-ascending dose study for emraclidine is nearing completion. The 100 mg dose retained a safe and tolerable profile, 150 mg is being evaluated. Dose selection for both schizophrenia and psychosis programs is expected in the coming months, we remain on track to begin phase II studies in the fourth quarter.

Moving to solid tumor programs. Progress with Temab-A continues across a broad range of tumor types. In colorectal cancer, breakthrough therapy designation was granted for Temab-A in combination with bevacizumab in refractory metastatic CRC. This designation supports our phase III strategy in an all-comer third-line-plus setting, the trial is now actively recruiting. In second-line CRC, data are expected later this year from a phase II study evaluating Temab-A combinations versus chemotherapy. These results will help inform the development strategy for Temab-A in first and second-line CRC, as in irinotecan replacement. Early-stage results in ovarian and head and neck cancers were presented at the recent ASCO meeting, demonstrating Temab-A's potential in both tumor types. In platinum-resistant ovarian cancer, Temab-A showed strong anti-tumor activity, particularly in c-MET-selected patients, where response rates reached as high as 80%.

Temab-A also demonstrated a 50% response rate in clear cell carcinoma, a segment with high unmet need that typically does not respond well to cytotoxic therapy. Plans to advance Temab-A in ovarian cancer will be discussed with regulators over the coming months. In c-MET-selected patients with advanced head and neck cancer, Temab-A demonstrated a 31% response rate and a median overall survival of 15.3 months, which compares favorably to standard of care. A phase II study evaluating Temab-A plus pembrolizumab in frontline will start soon. In pancreatic cancer, a phase II study evaluating Temab-A with FOLFOX as a frontline combination therapy was recently initiated. Turning to hematologic oncology, progress continues with etentamig across lines of therapy in multiple myeloma. An interim analysis is planned in the third quarter for progression-free survival from the monotherapy third-line-plus trial. If this interim analysis is positive, regulatory submission would occur later this year.

A phase III study evaluating etentamig in combination with pomalidomide in second-line-plus patients, including those that were exposed or refractory to an anti-CD38 antibody or who lost response to an anti-BCMA CAR T or ADC will begin by year-end. Additionally, encouraging early-stage results for etentamig in relapse refractory light chain amyloidosis were presented at the recent EHA Congress. At the 40 mg dose, 100% of patients achieved hematologic complete response with a promising safety profile that included no CRS or ICANS. Based on these results, a phase III trial in newly diagnosed patients is being planned. Also in hematology, DECNUPAZ received FDA approval for blastic plasmacytoid dendritic cell neoplasm, an ultra-rare and aggressive blood cancer. As a new treatment alternative providing durable responses with a manageable safety profile and outpatient administration, DECNUPAZ offers a meaningful benefit to patients with this rare cancer.

Moving to aesthetics, our rapid onset and short duration toxin, Boey, was approved in Europe and Canada for the temporary improvement in appearance of glabellar lines. This marks an important milestone in aesthetic medicine. Boey was developed to allow patients to temporarily preview the benefits of cosmetic toxins without worrying about long-lasting results. Clinicians and patients now have another option to tailor treatment to individual needs and goals. In summary, we are making meaningful progress with our pipeline and look forward to additional important data readouts, regulatory submissions, and approvals throughout the remainder of 2026. 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 $3.65, which is $0.06 above our guidance midpoint. These results include a $0.17 unfavorable impact from acquired IPR&D expense. Quarterly net revenues were nearly $17 billion, reflecting robust growth of 10.2%, including a 0.7% favorable impact from foreign exchange. Adjusted gross margin was 84.7% of sales. Adjusted R&D expense was 13.6% of sales, and adjusted SG&A expense was 21% of sales. The adjusted operating margin was 48.3% of sales, which includes a 1.7% unfavorable impact from acquired IPR&D expense. Net interest expense was $679 million. The adjusted tax rate was 14.7%. Turning to our financial outlook, we are updating our full-year adjusted earnings per share guidance to between $13.87 and $14.07. This update reflects a $0.10 improvement in the outlook of our existing business based on strong second quarter results and continued momentum.

It also now includes $0.14 of anticipated dilution related to the planned Apogee acquisition that is more than offsetting our underlying over-performance. We continue to expect that the Apogee transaction will close in the third quarter. 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 $67.6 billion, an increase of $300 million. This assumes a roughly 0.5% favorable impact from foreign exchange on full-year sales growth, reflecting less benefit than our previous expectation. Our increased revenue forecast includes the following approximate assumptions for several of our key products and therapeutic areas. We now expect SKYRIZI global revenues of $21.7 billion, an increase of $100 million based on momentum across psoriatic and IBD indications.

Total neuroscience revenues of $12.7 billion, an increase of $100 million, now reflecting VRAYLAR sales approaching $4.1 billion and BOTOX therapeutic sales approaching $4.2 billion. The remaining $100 million increase reflects momentum from RINVOQ and VENCLEXTA. Moving to the P&L for 2026, we continue to forecast full year adjusted gross margin above 84% of sales. We now expect adjusted R&D expense of approximately $9.8 billion, an increase of $100 million reflecting Apogee-related pipeline investments. We expect adjusted SG&A expense of approximately $14.5 billion as we continue to support our significant commercial momentum. We anticipate an adjusted operating margin ratio approaching 47% of sales. We also expect adjusted net interest expense of approximately $2.9 billion, an increase of $200 million, which reflects the partial year financing cost of the planned Apogee transaction.

We now forecast our non-GAAP tax rate to be approximately 14.5%, which reflects the impact of acquired IPR&D. Turning to the third quarter, we anticipate net revenues of approximately $17.2 billion, which includes an estimated 0.4% unfavorable impact from foreign exchange. We also forecast adjusted earnings per share between $3.84 and $3.88. This guidance contemplates a partial quarter of dilution related to the planned Apogee transaction, does not include acquired IPR&D expense that may be incurred in the quarter. AbbVie is financially well-positioned to complete the planned Apogee acquisition. We have secured interim financing and expect to issue long-term debt in the coming months. We remain committed to achieving a net leverage ratio of two times within two to three years following the deal close.

Based on our strong cash flows, balance sheet and business outlook, we continue to have substantial financial flexibility to pursue additional innovative business development. AbbVie continues to deliver outstanding performance, we are carrying significant momentum into the second half of 2026. I'll turn the call back over to Liz.