AbbVie Inc. (ABBV) Earnings Call Transcript
June 2, 2021
Earnings Call Speaker Segments
Hi, everybody, and thank you for joining us today. A fair presentation today. We are going to -- we are very lucky to have AbbVie with us, Dr. Michael Severino, the Vice Chairman and President of the organization; and Rob Michael, the SVP and CFO. So thank you, gentlemen, both for being with us today. We really appreciate it.
Let's start a little bit bigger -- with a couple of bigger questions. So just in general, my impression is that AbbVie is considered to be a very good commercial organization. And I was wondering kind of like what tools do you guys have that other companies not have. What have you honed in, in terms of capabilities that other companies are still struggling with?
Well, thanks, Ronny. It's a pleasure to be here, and I'm happy to take that question. We do believe we have a very strong commercial organization and a track record of very strong commercial execution. I would say there's no one thing, it is a number of factors that lead to that performance. It starts with the portfolio of products. You have to have strong products if you want to deliver strong commercial results. And if you look at the products that we've delivered, RINVOQ, SKYRIZI, each showing superiority, to Humira in their lead indications and actually to multiple biologics or immunomodulators and their lead indications, differentiated profiles. Across the board, we're after medicines that make a real difference rather than me-too type products. And so that's where it all starts. We have a very strong, very talented and very experienced professional sales force, a specialty sales force. They have a long track record with the prescriber base, the customers in their particular segments, and deep expertise in those segments. They score very high from a reputation standpoint and they bring real value to those conversations. And that facilitates our ability to go to market effectively. So for example, we're preparing for RINVOQ atopic dermatitis launch. There's a high degree of overlap between the prescribing base for atopic dermatitis with biologics or immunomodulators and the psoriasis prescribing base, so the SKYRIZI prescribing base that we know very well. And that experience, that expertise allows us to go to market very effectively. And those same conditions apply across all of the segments that we operate. We have a very consistent and very focused approach to investment and customer activation, both physician and patient activation. And we can see the benefits of that in our delivery against the legacy Allergan portfolio, where Allergan had previously posted our investment, but we've had more consistent investment, and that has shown benefits. We have a very strong managed care group that drives both rapid access and appropriate formulary positioning, and that allows us to launch very effectively in each of these new indications and to maintain the right access at appropriate pricing. And then we also have very strong patient support programs, really industry-leading patient support programs that provide real benefit to patients. And the combination of all of those factors is what leads to the commercial performance that we've demonstrated.
Okay. So I wonder if you can put like a number or two on this, like if you look at the tenure of your salespeople, any feel for how much -- how long have the tenure of your average salesperson is in immunology versus your peers? Anything that -- of that you can quote?
Well, we have a very experienced sales force. I can't quote the average tenure for you, but we have, in many cases, more than 10 years' experience in the field working with the same prescriber base, so we do have a long track record.
And if you look at just our portfolio and just the leadership position we've had, for example, in immunology, obviously, with Humira now, with RINVOQ and SKYRIZI, that certainly has been an area of strength for us as we develop those relationships over the number of years. I'd say if you look at the overall company, we tend to have a pretty high average tenure. We can't necessarily quote by function, but I would say, I look at the overall company, we have a fairly high level, I'd say, of average tenure. But it's really that the participation as a leader in these key markets, like I point to immunology as being the primary example, that really gives us that strength that drives that growth going forward.
That makes sense. I do want to talk a little bit about the D.C. outlook because it didn't actually come up in previous discussion, but obviously, you guys are very involved. In your mind, where are those discussions now? I mean the Biden team has been talking about having some sort of a bill in the market this year -- a bill, on the Senate floor this year. Is this still going to happen in your minds? Is this still a likely possibility? Or is this, at this point, just a lot less likely?
Well, I think the drug pricing environment in D.C. is still very fluid. And there are a number of proposals on the table or a number of proposals that are being discussed. And there's a fairly wide range there. So I think we're going to have to see specifically what advances and what form it will take. What we've said very consistently is that the primary problem and the primary challenge to be addressed is affordability of co-pays or out-of-pocket expenses for seniors on Medicare Part D, and we think they're just too high. We would support proposals that would lower those, make them more manageable and spread them out through the year, because in addition to being high, patients can get hit with a large bill at one time that can be very difficult for them to manage. And so a proposal that improves that, we would support. And we also think it's very important that those proposals balance the need to maintain a healthy, innovative biotech environment. But right now, the specifics on which proposals might advance or what form they might take is still very difficult to predict.
Is this going to all-on-hold while the infrastructure builds are going on? Or is there an active effort to move those things forward?
Well, I think when you look at the priorities of the administration, I think it's reasonable to assume that the pandemic response has been the top priority. Infrastructure is obviously very high on the list and really coming into focus now as a top priority. And so I think it may be a bit longer before we see what will advance on the drug pricing side and what form it might take.
So kind more of a when the infrastructure build is done, we'll see where that lies in the order of the next thing to get done. Understood. Let's talk about the immunology market. And I want to start at a higher point which is you have been, as I said, 20 years or so with the EMEA market and we're still seeing very strong growth in both rheumatology and psoriasis. And certainly, IBD has a lot more to go. But in psoriasis and rheumatology, it seems that at some point, we should begin to see a slowdown in demand, simply as that experienced patient population is exhausted, but we're not seeing it yet. In your minds, how far are we from the point where the demand is being met by the therapies that we're currently seeing?
Well, there's still room for market growth in all of these areas because biologics penetration is still relatively low across a wide range of areas. The highest biologic penetration is probably in the IBD market. There, you're at roughly 40%. [ Room ] is just a little bit behind that in the mid-30s. But when you think about the benefit that biologics deliver compared to traditional non-biologic DMARDs, there's still plenty of room for growth there. And in the other indications that make up the immunology space, penetration is even lower. In psoriasis, it's in the teens and has significant room for growth because patients with moderate-to-severe psoriasis really suffer a significant burden of disease. And with newer agents, high efficacy agents, agents like SKYRIZI, we see that market continuing to grow. And perhaps the most immature market is the atopic dermatitis market. There, biologic penetration is in the low single-digit range. And despite that, it's still a $3.5 billion market with significant potential to grow. It looks like the psoriasis market did maybe 15 years ago. And so as newer agents come onboard, as high efficacy agents like RINVOQ come on board, we think there's a real unmet need there and real potential to increase that biologic penetration and, therefore, grow the market.
That is kind of the point I'm going to start it with, which is how can psoriasis penetration -- into the moderate to severe population, the population that needs those biological markets, how can penetration be so low after 15 years? I mean, you had pretty good access for a really long time, you've been marketing this for a really long time fairly effectively. How come there is so little penetration?
Well, I think that the dermatologists and the derm community were newer to biologics than other physician groups. Rheumatologists have their whole practice set up around administering biologics, and it's been that way since the launch of the TNFs more than 2 decades ago. And similarly, in inflammatory bowel diseases, administering biologics is a mainstay of therapy. The dermatology community was newer to that space. The practices weren't set up to deliver biologics. There was a natural conservatism in that population and it has taken time for them to gain increasing comfort with the current generation of biologics, but we are seeing very significant market growth. And so we are making progress, broadly speaking, and patients who need these therapies are gaining access to them. I think that one thing that's important to consider is there's a high degree of overlap between high prescribers for biologics in psoriasis and in atopic dermatitis. In fact, there's about a 90% overlap in the high-prescribing atopic derm physician base to the biologics prescribing psoriasis physician base. And so that's a journey that took many years for psoriasis, but we would expect the market to grow much more rapidly in atopic dermatitis because those lessons have already been learned. They're already comfortable with administering systemic therapies. And of course, RINVOQ has the advantage that it is an oral and that's particularly advantageous for this patient and physician group. So I think many of the lessons that we've learned and the progress that we've made with psoriasis will speed adoption and speed penetration in atopic dermatitis.
And I think it also explains, if you just look at the trends in psoriasis, market growth has obviously been -- if you take the pandemic out, ending on the high teens, it's been growing faster than we've seen in rheumatology. We think about atopic dermatitis, we think that market can triple over the next several years. So we do would expect because of that lower penetration rate, you're going to -- you are seeing and will continue to see higher levels of growth for those indications.
So let's -- since you kind of came to an involvement with atopic, let's talk about this a little bit. Can you, a, remind us sort of the timeline for you guys to be able to comment? And two, there has been a discussion about potential AdCom for all the JAK1s before a decision is -- will take place. You and some of the other companies were saying, no, our time line is driven by our -- by the delays of the dates that FDA comes on PDUFA. But can we be confident that, that is not going to all be delayed by the need for some sort of an AdCom on the overall safety of the class?
So the PDUFA date for the atopic derm indication, which is I assume the indication that you're referring to, had been April and it moved 3 months so it's now in July. So early in the third quarter. And we feel like we are making appropriate progress with the -- our ability to provide answers to the FDA, provide them the data that they have requested, and we feel good about the overall progress we're making there. And we feel very confident in that overall profile and our ability to gain an approval in that indication. With respect to an AdCom, I don't think an AdCom is likely at all. And the reason for that is that if the FDA were planning an AdCom, they would already be setting that in motion. We would absolutely expect them to have reached out to us. We'd expect them to be deep in preparation for an AdCom and they're not. So while they still have the authority to do that, it seems very unlikely that they will for that simple reason. And if you look at their track record here, they have made these decisions on their own, based on their own review of the data in this class, pretty consistently. If you look at the RINVOQ RA application, that was in review at the time that the baricitinib, DVT, PE issue came to light. And there was speculation at that time that there would be an AdCom before they could act on the RA application. And there was not. The FDA made their decision based on the data that we provided them and based on their own review of those data. And the outcome there was a good one and the label that we achieved was a good one. And it supported the very robust launch in RA that quite frankly exceeded our expectations and I think exceeded expectations broadly speaking.
Okay. So the obvious question is, are we at the -- is there still a go, a back-and-forth in things like the label language? Is the overall review still progressing with the exception of that question of the safety profile of the class? Or is this kind of done and that's the last gating factor? Or is everything delayed and will we start somewhere in June? Can I -- can you give us a little bit more color on this?
I would say that the review of the file is progressing in a way that's very consistent with our expectations. We -- we're asked in April to supply some additional data. We supplied those data. We viewed the data as supportive of our overall application and very consistent with everything that we've said about product safety and efficacy. And I would say that the file is progressing as we would have expected.
A kind of like label discussion at this point or close enough to closing the last gaps in what needs to get done before approval. Is that kind of like the overall picture?
Yes. I mean we usually don't comment on the specifics of exact label discussions until they're finalized. But I would say we're making the progress that we would expect and we believe we're on track for an approval on the new PDUFA date.
Okay. So launch meeting, team is ready to go to the market, launch quantities or samples delivered to the sales force, all of this is essentially being run with expectation you will be launching this in July, August time frame. Is that the way to think about this?
In July, we're fully prepared for the launch.
Day 1?
Yes. We're fully prepared for the launch day 1. Our sales force is ready. Our manufacturing group, which is an outstanding manufacturing group, is ready. We will be ready to go.
And in terms of the kind of like day 1 or call it day 90 insurance coverage, do you expect that those updates to coverage to take place immediately, given that you already have contracts around both?
Well, we've shown the ability to drive access very rapidly and very efficiently. We wouldn't expect it to be any different here. We do have the advantage that we're already on market in other indications. And so we would expect that to enable rapid access.
Okay. In terms of the kind of the message and counter message you guys are expecting around this, obviously, the argument will come in from the Sanofi side, that they have less of a safety question, that they have activity in overlapping indications and there is a large segment of the patients with overlapping indications. And the last point will be, look, this is a new drug, you've got a drug that you're using and it's quite effective, why not? So kind of 3 arguments, right? The safety, experience and overlap with other indications. I mean how do you counter those 3?
Well, what I would say is the most important piece is the profile that we've demonstrated. So we've demonstrated a very strong efficacy profile. We've demonstrated very high rates of skin clearance not only at the 75% level but at the 90% and 100% level, which are levels of skin clearance that previously people didn't talk about because agents didn't achieve high numbers there. We've achieved very rapid skin clearance and very rapid and very prominent impact on itch, which is the most bothersome symptom for many of these patients. So we've demonstrated a very strong efficacy profile. We have a very well characterized safety profile and a favorable benefit risk. We've characterized our rates on DVT and PE, on MACE, on other safety events and shown no increase over either background rates or comparators across a wide range of studies not only in our atopic derm program but across the RINVOQ program. And so we've developed a very strong safety database. And we think that strong benefit risk addresses a real need for a high-efficacy agent in this space. The other thing that I would say is that, unfortunately, not all patients get an adequate response to their first therapy in this space. And many patients on dupilumab have not achieved an adequate response, either because they've come off of therapy, presumably because of efficacy or perhaps because of some tolerability issue, or are requiring substantial amounts of additional therapy, such as significant addition of topical steroids. And so there's a population that's really primed for a high-efficacy agent, either a warehouse population or a switch population. And that's what we...
And how big is this as a -- obviously, that's the first step, how big is that population versus the population that gives us Dupixent today? If you're a match to that.
It's very substantial. I mean there's about 1/3 of patients who we would view as warehouse patients, patients who've tried DP and -- there's probably about another 1/3, roughly speaking, who are getting an inadequate response as evidenced by the need for significant additional topical steroids. And so that's a ready-made population. And what we typically see in immunology space is docs will first prescribe in those patients, in those second-line patients, in this case, they'll gain experience. They'll gain experience with the efficacy. They'll gain experience managing the safety profile. And then over time, that helps move to earlier lines of therapy for patients who, for example, are more severely affected because we have head-to-head superiority data against dupilumab on a wide range of efficacy endpoints. So we think all of those features will benefit RINVOQ in the marketplace. The last thing that I would add is this isn't a zero-sum game because this market is very underdeveloped and underpenetrated and there's significant room for market growth. As Rob said, we would expect this market to triple over the next several years and there's potential for growth beyond that.
Okay. So are you preparing to launch both doses at this point?
Yes. We wrote our file around both the 15- and the 30-milligram dose.
Okay. So the kind of expectation is for near-term approval, you got both doses, you know the physician, there is 1/3 of the patients who don't -- that are recognized, treated and not benefit enough from dupilumab. So it sounds like you're guiding us to a really strong launch.
Well, we feel confident in the profile. As I mentioned, we wrote our file around both doses. We think both doses have a favorable benefit risk. So having said that, we also think that both doses performed very well. So the 15-milligram dose has many of the attributes of the 30-milligram dose with respect to high levels of skin clearance and rapid response. And so we feel that we could be successful with either dose. And while we expect both doses to be approved, if just, for example, only the 15-milligram dose were approved, we believe we could be successful. That would not lead us to change the guidance that we've given around the atopic derm launch and we feel that we're confident in our profile and ready to go.
Sure. I mean it feels basically what you told us, that guidance might even be conservative, right? dupilumab is probably about $4 billion in the market today, and you said the market is tripling. With you coming in with that kind of a profile, it feels like you've given us a guidance you're very confident in. Let's put it that way.
We are very confident in it.
Okay. So the other question is the impact of all this debate on physician behavior. Within RA, are we seeing patients -- are you seeing physician gradually moving away from XELJANZ? Is there a moving towards RINVOQ away from XELJANZ as a result of the heightened safety concern around XELJANZ?
Well, in the RA market, what we see is RINVOQ continues to perform very strongly. And its trajectory continues along a path that we would expect. So the XELJANZ issue seems to be viewed by the prescribing community as specific to XELJANZ. So you see a change in the XELJANZ performance, but RINVOQ's performance has continued. And since...
Yes. Have you gained from the XELJANZ' problems?
Well, we've continued to grow and so we're picking up patients from a variety of sources. We're picking up patients from many other therapies. It's hard to say what a doc would have prescribed 6 months ago versus what they're prescribing today, but we're continuing to gain and our in-play share is very strong.
And specifically in psoriatic arthritis when there is a potential to go to IL-17 and I guess coming in IL-23, is -- are you seeing some hesitancy to use RINVOQ? Is there a need to explain better the profile now versus 3 months ago? Or is the impact there not noticeable on the penetration of RINVOQ?
Well, the psoriatic arthritis file is still under review. The PDUFA there is in June. But when we talk to the community, we think they understand the data very well and we think we have a strong profile. The majority of psoriatic arthritis is managed by rheumatologists. They have considerable experience with RINVOQ through RA and so they have a familiarity with the product, both its efficacy and its safety profile and how to manage it. So we don't see that as different today as compared to 6 months ago.
So let's move away and just touch a little bit on RINVOQ in IBD. So one of the concern for IBD, you're using the 45-milligram dose to higher dose transduction. And the concern has been around the JAK1 class around gastric perforation, the notion that there is some uncommon but still some risk for gastric perforation with this class. And obviously, for gastroenterologists, that's a real concern. Any comments there about the profile of the product? And is there a risk there that you'll need to manage?
Well, the profile of the product is very strong in inflammatory bowel diseases. We have the UC induction data. Those data exceeded our expectations for efficacy and for safety. The rate of serious AEs was actually numerically lower for RINVOQ than it was for the comparator for placebo. And the reason for that is many of these AEs are driven by the underlying disease. And when you treat the disease effectively, rates are reduced. GI perforations have been uncommon across the program. We did not see any in the induction studies. And except I think there was one in the placebo group, showing that the population itself is at risk, but none in the RINVOQ-treated groups in the induction studies. And the other thing that I would point out is the 45-milligram dose is used for induction only and that's an 8-week period. So it is a limited exposure to that higher dose. We don't have the maintenance data yet to know what dose will be selected for the maintenance dose, but we would expect that to be lower.
Makes sense. And this is still expected in the second half of the year, I take it?
I'm sorry, the data for...
The maintenance data.
Yes, start coming on later on this year. So we have the 2 induction studies and the maintenance data for RINVOQ in UC would be available later on this year.
Okay. Let's switch off and talk a little bit about SKYRIZI. So obviously, great drug, just became the leader in the IL-23 category, just became the leader in psoriasis -- in the use in psoriasis, period. We have seen some of the other products in the category taking significant price discounts. And we have seen one of your competitors choosing not to launch their IL-23 in psoriasis. And I guess the broader concern is around this issue of post 2023 when you don't have the Humira umbrella, should we see SKYRIZI price point begin to decline?
Well, we believe SKYRIZI will be able to stand on its own. It already stands on its own. It's the leader in in-play share. And the second agent in in-play share is Humira, with SKYRIZI roughly doubling the in-play share of Humira in psoriasis. So SKYRIZI is in the low 30% range and Humira is roughly half of that. So this early in its launch, it's already performing extremely well. And I think the reason for that is the profile that it's demonstrated, very high degrees of efficacy, very high rates of skin clearance, very durable skin clearance out to a year, and we actually have long-term data out 2 years and 3 years that show that skin clearance, even at the PASI 100 level, continues to rise over time, which is unusual. Most agents, the concern is that efficacy wanes over time, and ours is still increasing. When you couple that with a very favorable safety profile and very convenient dosing, so once-a-quarter dosing, once every 3-month dosing interval, that's a very strong package and we think it stands on its own. So we would not see a change in the pricing dynamic after the Humira biosimilar event. We believe SKYRIZI will stand on its own and already does stand on its own as a leader in the space.
How does it really differentiate from TREMFYA? Kind of when we look at the data, it looks very, very similar, but obviously, you're looking a little bit more careful than we do. How do you argue this drug is better than TREMFYA or sufficiently enough not to get into the competition that you're seeing in the IL-17 category?
Well, I would point to the PASI 100 numbers, to the long-term numbers, to the dosing interval, the once-a-quarter dosing interval fits very well into physician practice. And so all of those features -- of course, safety is important, but safety I think is generally a strength of the 23s. But when you look at that efficacy, long-term efficacy, dosing interval and then you couple it with all of the additional features that we talked about at the beginning of this conversation, the patient support, the ability to drive access rapidly and efficiently, all of those things lead to the winning profile that we've observed with SKYRIZI.
Okay. So let's talk a little bit about Humira. So it seems that when we look externally at Humira, not only is it growing in volume like you pointed to, it is also -- it seems to be growing in price point. And the way we do it is by looking at the revenue that you report and defining it by scripts that we get from one of the consolidators. And I guess the question is, are we really seeing an oral commercial net price going higher? Or is this essentially a mix issue as you're seeing kind of like a higher price point for the new formulation for Medicaid and then offset some of the decline in price that -- or further concessions you're giving to commercial plans in the -- I guess, in the immunology space?
Yes. So while we don't necessarily -- we don't typically talk about channel dynamics, what I can tell you though is the last several years the Humira net price fall-through has been fairly consistent in that low single-digit range. So it's still positive but low single-digit. And that's what we guided to this year. If you recall, we guided to 8% growth for U.S. Humira in 2021 with low single-digit price growth. I think that's the best way to think about it. But we don't necessarily talk about necessarily the dynamics between the channels.
Okay. I accept that. So the other question I was asked is some of the expectations for Humira biosimilar causing erosion to Humira has -- have been I guess all over the place. The more I look at that data, it looks like you've got some very, very strong cards there to play. I mean how would -- I'll give you 3 -- I guess I'll divide it to 3 questions like, how would a biosimilar in Humira be adopted in Medicare given that the Medicare plans get such a great deal on Humira innovator by having the list price reimbursed to them by the government? It seems very hard to see penetration there. And then similarly, there has to be significant concern among payers that if they switch to -- from Humira to biosimilar midyear, they would lose money for the entire year given that they'll be paying more for the first half of 2023. So it seems that you only have one significant competitor in 2023 and that will be Amgen. So you kind of mentioned to us -- I guess the question would be that way -- you kind of mentioned to us you expect 2023 to be the trough and 2024 to be the beginning of the recovery. But you just kind of look at the profile of the market and it seems that the decline in 2023 will be relatively moderate and more of the decline should happen in 2024.
Yes. I think the thing to keep in mind, you mentioned 1 competitor, there'll be 7 to 9 competitors in 2023. Now some -- with Amgen coming in at the end of January and then the others coming in, say, in the middle of the year. The difference also is that given that they have an approval, they can negotiate with the payers. So I think you have to think about the competitive intensity. And that's something we learned from the Europe experience where we saw 4 biosimilars come in at the same time where they were willing and ready to go to their floor pricing very quickly. And so that's really informed the way we think about the guidance we've given, the direction we've given for that year 1 in the U.S. I think given that competitive intensity, given that we have 7 to 9 competitors, we'll be very motivated. And we would expect to compete on price as we did in the past to secure as much volume at a profitable level as we can. That's the dynamic that we're trying to describe. I think you really have to like focus on the competitive intensity that will exist with 7 to 9 competitors coming in '23.
Okay. You got 1 competitor in Feb, 3 in the middle of the year and the rest come in the fourth quarter. My understanding is, that's just what I'm getting you wrong here, pure contracts are basically annual. So if somebody will tell you Jan 1, 2023, they're going to go midyear with someone else, they'll be losing money for the first 6 months of the year before they'd be able to get their hands on the biosimilar to begin to switch. And the switch will not be 100%, it will be, let's call it, 70% or 80% within the first 3 months, and the remaining volume is paid for at list price for your own products. I mean it seems that you have a few cards to play that some of your competitors -- some of the competitors will not have.
Yes. Well, I think there are a number of things to consider. One, as we talked about, there will be significant competitive intensity. Two is our guidance assumes that there will be at least 1 or potentially 2 interchangeable biosimilars at the time of the loss of exclusivity in 2023. And we made that assumption because the guidance exists on how to do it. There are companies that are pursuing the path. We could get the work done in that time frame and so we feel that, that is an appropriate assumption. So that plays to the dynamic of the percent that can be switched and the timing that can be switched.
Yes. And look, our intent with -- we're trying to give investors a way to think about what that '23 erosion could look like. We've said use Europe, and again, there's no market outside the U.S. that's directly analogous to the U.S. It's difficult to run an analog, but if you just look at the overall average, we saw a range but on average, it's 45%. We've said plus -- sort of that plus or minus 5% to give you a range to work with. We'll certainly try to do the best we can in '23, but I think it's fair to assume -- and I think some of the dates you had in there weren't necessarily I'd pursue. Our understanding, I think you could assume that in '23 we'll have a fair -- more competition than you might be considering in that calendar year.
Okay. Why don't we leave it there. I guess, one question about biosimilar, I mean there has been a request to allow interchangeability between an old -- a product developed against the older formulation with a higher volume versus your lower volume product. I haven't seen a response to me. My assumption is that you will contest that argument. Is that fair?
So I want to make sure I understand your question. Would we make an argument that interchangeability with the old formulation doesn't mean interchangeability with the new formulation?
Correct.
Yes. We don't view the new formulation as something that would affect the availability of biosimilars. We developed a new formulation because it had patient benefits, because it reduced volume of injection and pain on injection. But we don't see it playing into the availability of biosimilar in Humira.
Interchangeable biosimilar?
That's correct. Interchangeable or otherwise.
Okay. The other question I had about Humira is some of your peers have taken a sharp view at specialty pharmacy on the 340B beginning to go far away from the mother -- from the original hospital in distributing their product. You have not participated in that effort. And I was kind of wondering why that is the case. Obviously, there's the impact of 340 and specialty -- contract specialty pharmacies is growing quite quickly. Any thoughts there?
Well, I think when we look at our overall business in the U.S., 340B is a more modest aspect. If we look at overall channel mix, you just take our U.S. sales, about 55% is in commercial, 25% in Medicare, about 5% Medicaid and 5% cash. That leaves you with 10% for all other, which 340B is part of that. So on a relative basis, it's not as big of an impact. And then to the extent that we do look at discounts, so we've had a program in place for a number of years to try to eliminate that. And that would be the impact of potential exposure to duplicate discounts, and we have scrapped those historically. And so I think probably the reason you're not hearing us talk about as much is, one, it's not as significant a proportion; and two, I think we've had mechanisms in place to deal with the duplicate discounts.
Okay. Aesthetics. So it seems, at least from just talking to the market, there seems to be an early recovery of that market. Is this something you guys are seeing? And what is driving this?
Yes. Yes. So we actually saw -- if you can go back to the last summer, we saw a very rapid recovery in Aesthetics back then. And so we did see -- I would say, at that point, we're talking about pent-up demand in Q2 of 2020. Obviously, the first quarter was another quarter we had very, very strong growth. If you look at just the U.S. toxins market versus 2019, it grew approximately 37%. Obviously, while we do expect strong growth, given the low penetration in that market, I don't think underlying growth of 37% is something we should be expecting. So there's clearly some level of pent-up demand in that number. It is difficult for us to really pinpoint it because we've put more investment behind this business. And so the question is, how much of it is just with more investment behind the business, how much is -- are we growing the market faster versus we have seen, as we've come out of the pandemic with vaccinations, a quicker return to normalcy. So I would say there is certainly a level, I'd say, of pent-up demand that's come through in the first quarter. It's difficult for me to tell you exactly how much. We're very pleased with the rate of growth and the responsiveness of -- to our promotional investment. We're very pleased with the expansion plans we've had even outside the U.S. I'd point to China with growth of the sales force in mid-tier cities. And so there's tremendous potential for that business to grow. And that's one of the reasons we gave that updated guidance in January at JPMorgan, going from mid-single-digit growth over the long term to high single-digit growth, because we've seen just a better responsiveness to incremental investment. And keep in mind, Allergan didn't necessarily have the capital available to deploy to both Juvederm and BOTOX Cosmetic DTC concurrently. We're doing that today and obviously investing in geographic expansion as well. We put more behind in R&D for long-term growth. We've increased the investment in R&D for the Aesthetics business and we're putting more behind BD. We just announced a deal with Soliton. We did a Luminera deal previous to that. So I think with more investment, we're seeing that business grow even faster, but it's difficult for me to say exactly how much of it is underlying versus pent-up.
One question I had is you discussed a little bit of the effort to develop better fillers. Now what is the direction you're taking there? And if you can just give us some sort of a feel for a time line before we're able to see something.
Well, we've done a number of things to continue to grow and expand our filler franchise. One was bringing in the filler portfolio from Luminera, which we did several months ago, which brings in a composite calcium hydroxyapatite and hyaluronic acid fillers, so CAHA filler, that has the best properties of both. So the hyaluronic acid gives immediate volume. So a benefit is seen shortly after the time of injection, essentially right at the time of injection, and you get a longer duration of action with the hydroxyapatite and the potential for biostimulatory effects as well. That's already commercialized in Brazil. We have CE marking in Europe and are running studies that would be necessary for approval in the U.S. which would come in the middle of the decade. So 2 to 3 years out, probably more like 3 years out. With respect to other innovative fillers, we are continuing to explore additional biostimulatory fillers, tropoelastin-based fillers, collagen-based fillers, that would both have a longer-lasting effect and a more natural effect in terms of the impact that they have on skin quality. And those are on a similar time frame. Those are in the middle of the 2020s that are currently in clinical development.
Okay. And the next question is if -- let's take the possibility that the biosimilar BOTOX is approved, which is not certain yet by a long shot, but let's assume one comes to the market around the middle of the decade. What markets are available for that biosimilar to compete in? Obviously, it can't do much in aesthetic given the nature of that market. But as you think about the portfolio that BOTOX fills today, where could they compete effective?
Well, as you've said, it's far from certain that a biosimilar will be successful and we think there are a number of challenges, but if one were to come to market, then we would expect them to compete principally in the therapeutic side of the market. So migraine, spasticity would be the major indications, so neurological applications, diseases treated by neurologists. And those are a meaningful part of the overall revenue, but we believe that we have both a strong track record, a good familiarity with the prescribing physicians, they have confidence and familiarity with BOTOX. So we feel comfortable with our ability to compete in that marketplace based on the products that are there today and based on potential future developments. But as we said in the beginning, we don't see a biosimilar as likely. We think it's very unlikely, specifically because BOTOX doesn't fit well into the biosimilar pathway.
All right. Let's talk about 2 or 3 of the younger drugs outside of the study. So one of the questions we have is about the potential of atogepant, the long-acting migraine drug. This market have taken a pretty big pricing step-down and now seems to be growing significantly on the volume. As you kind of put your sights into this, given your experience with UBRELVY, what is a reasonable market share for you guys to try to achieve in the prophylaxis market?
Well, we think there's a very substantial opportunity in the prophylaxis market and I would point to a couple of features. Atogepant has delivered a strong profile in Phase III for efficacy. It is at the upper end of the CGRP-directed agents in terms of placebo-adjusted reduction in migraine days. We have a high proportion of patients getting 50% improvement, meaning a 50% reduction in their migraine days. We have this with a very favorable safety profile. So we think that there's a real opportunity particularly for an oral because this space is one in which we think has substantial number of patients and therefore, physicians have a preference for an oral. So we think it's a meaningful opportunity. We've said that it could achieve $1 billion in peak sales. We've not been specific in terms of market share, and I think it's a bit early to predict specific market share particularly in a market that is still developing. It's taken some time to develop this market for the monoclonal antibodies. And we would expect the entry of orals to further develop the market. So we still think of it in terms of peak potential rather than a specific market share.
Makes sense. But $1 billion is a lot. Okay. Navitoclax, can you just contrast the profile of that market versus the rest of the myelofibrosis market? Where do you guys add value versus what exists there today? And what do you expect that product to potentially do?
Well, the potential of navitoclax, which is a BCL-XL inhibitor, is to not only provide symptomatic relief in terms of shrinking spleen volume, which is significant because that's responsible for much of the morbidity and even mortality with spleen rupture in these patients, but ultimately to affect disease progression, so to be disease-modifying. And we know from preclinical data, so these are our patient samples in vitro, that BCL-XL inhibition does a couple of things. One is it drives sensitization to JAK2 inhibition even in patients who have become resistant and it also directly inhibits the transformed clone that's responsible for the disease. And we're seeing evidence of that in our early clinical program. We're seeing good spleen volume reduction in heavily pretreated patients. We're seeing reversal of fibrosis, not only 1-grade but 2-grade reversal of fibrosis in some patients. And that's something that's just not seen in this disease. We have early evidence that we're reducing the allelic burden of the transformed clone that drives the disease. So all of these things point to a direction of disease modification, which we think is an important long-term story. In the short term, it will deliver good responses to pretreated patients who don't have other options, because really JAK2 inhibition is the only class that's currently available to treat these patients. We can do that in combination. We do it in later lines of therapy and we can do it in combination upfront where the hope is to drive deeper response and prolonged survival and therefore prolonged time on therapy, which has the effect of expanding the market. So we think there is very real potential for an agent like this. We think it will be used in heavily pretreated patients and in combinations upfront. It has the potential for disease modification. And we think that can lengthen time on therapy, ultimately improve survival, which is the ultimate goal and thereby grow the market. So it's a very attractive opportunity.
And beyond myelofibrosis, where else did this drug fit?
Well, the principal indication is myelofibrosis. There are other related conditions like essential thrombocythemia and polycythemia vera, which could be considered. But the principal indication is myelofibrosis.
Okay. And why is that? By the way, if you compare that to the BCL-2, I mean, how do the features of this drug differ in a way that will make it more specific to myelofibrosis as opposed to go have the broad spectrum BCL-2?
Well, navitoclax operates in myelofibrosis through its inhibition of BCL-XL. And what we know about myelofibrosis and related conditions is that they are very sensitive to BCL-XL inhibition. And because of that, navitoclax fits very well in myelofibrosis. XL operates in many tumor types. But to get to the degree of inhibition that you need to see an impact on cancers other than myelofibrosis or conditions other than myelofibrosis, you need to get to a level of systemic XL inhibition that's just not tolerated. So if you dose up on XL inhibition, you see a dose-limiting toxicity, which is reduction in platelets, thrombocytopenia. And so myelofibrosis is in that sweet spot where it's exquisitely sensitive to XL inhibition, where you can achieve the benefit before you get dose-limiting platelet reductions. Other conditions, it's harder to hit that mix. And in other conditions, we're pursuing XL inhibition but we're doing it through targeted delivery. So we have an XL warhead that we could use in an ADC-like construct in cases where you can't dose systemically to the levels that you need. Fibrosis is that unique fit for navitoclax.
Got it. And last, you have not gotten a ton of credit for the efforts you've put into Alzheimer's. So the question is kind of what is the horizon for this franchise? And second, given the data that's seen recently by the amyloid beta agents, are you kind of reconsidering participation in that segment of the market? You previously seemed to be more focused around the tau side.
Well, I think Alzheimer's disease obviously is a huge unmet medical need. And really, that need will persist whether aducanumab is approved this month or not. There'll still be more room to go even if it is improved. What I would say is it's an important area. It's a high-risk, high-reward opportunity and we are pursuing a range of approaches. We have pursued a number of tau approaches or are pursuing a number of tau approaches. Our lead candidate is an antibody, but we have other programs that are poised to enter the clinic that, for example, can clear intracellular aggregates of tau. So we're not trying to block an extracellular event in the CNS with the monoclonal antibody, which is inherently a challenging thing to do. And so we have a number of tau-based approaches. We have approaches directed at the neuro-inflammatory response. And some of the strongest genetic hits in GWAS studies in Alzheimer's disease are molecules involved in the inflammatory cascade. TREM2 is one of the strongest hits, CD33 is in a related pathway. We have programs aimed at both. And with respect to Abeta, there could be an opportunity for Abeta. As we understand the field more and more, I think it's clear that reducing Abeta, if one can do it fast enough and to a great enough extent, can provide benefit to patients. The question is finding the right window and navigating that in such a way that you don't have untoward rates of area. The amyloid-associated imaging abnormality, which reflects cerebral edema or microhemorrhages. And so if one can navigate that, there could be additional opportunities in Abeta as well. And I think if you look across the field, the data would support that view. So we'll remain active. We view it as high-risk, high-reward. It's not something that we count on because it's a relatively low probability of success. But the beauty of our neuroscience franchise after the integration with Allergan is it's a stand-alone pillar that's growing robustly and can achieve very significant sales without any of these disease-modifying efforts coming to fruition. And if they do come to fruition, then obviously, they address a huge unmet medical need and represent a very large potential upside.
And with that, I hope for a better treatment for Alzheimer's. We'll have to stop here. I would like to thank you both for being with us today and enjoy the rest of the afternoon. Thanks.
All right. Thank you, Ronny.
Thank you, Ronny.
Read the full transcript via the API
You're viewing the first half of this call. Get the complete AbbVie Inc. transcript - plus 252,000+ transcripts from 12,000+ companies, speaker segments and full-text search - through the EarningsAPI REST API or hosted MCP server.
Get an API key View API docs →For developers and AI pipelines
Programmatic access to AbbVie Inc. earnings transcripts and 252,000+ others is available through the
EarningsAPI REST API and the hosted MCP server.
Quarterly plans from $105 - full transcripts, speaker segments, full-text search,
and the /api/v1/transcripts/recent polling endpoint for ETL pipelines.