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AbbVie Inc Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- Immunology delivered total revenues of approximately $7.3 billion in Q4, exceeding expectations.
- Skyrizi and Rinvoq are capturing substantial portfolio share in IBD, given their respective efficacy, safety, and dosing profiles.
- The company is seeing strong performance across all approved indications, especially in IBD, and sees several tailwinds that will support growth into the next decade, including healthy immunology market growth; strong share capture, given best-in-class profiles; continued robust market access; and momentum from new indications, such as the recent launch of Skyrizi in UC.
- The company is very pleased with its execution in 2024 and expects its diverse portfolio to drive strong growth in 2025 and beyond.
- The company anticipates a substantial portion of its growth to be driven by robust performance from Skyrizi and Rinvoq.
- Facial injectable share declined by a few points in Q4.
- Aesthetics sales were $459 million, representing an operational decline of 3.2% due to lower Juvederm sales.
- The company expects to see price declines YoY, but modest.
- Net revenues are expected to be approximately $12.8 billion.
- Adjusted EPS is expected to be between $2.47 and $2.51.
- The company is forecasting a full-year adjusted gross margin of approximately 84% of sales, adjusted R&D investment of approximately 14.5%, adjusted SG&A expense of approximately $13.2 billion, and an adjusted operating margin ratio of roughly 47% of sales.
- The company expects its non-GAAP tax rate to be approximately 15.6%.
- The company is well positioned with its ex-Humira platform and expects to deliver robust mid-single digit revenue growth in 2025 and exceed its previous peak revenue in just the second year following the US Humira LOE.
Q&A Highlights from AbbVie Inc Earnings Call Q4 2024
- Analyst asked about the pricing dynamics of Skyrizi and Rinvoq and how the company factored in pricing for both this year and the next several years.
- The company's pricing strategy is focused on volume-based business, and they have consistently seen low-single digit price declines from the rebating side. The company expects these price declines to continue, but with a one-time Part D redesign in 2025.
- The company's pricing strategy is focused on volume-based business, and they have consistently seen low-single digit price declines from the rebating side. The company expects these price declines to continue, but with a one-time Part D redesign in 2025.
- Analyst asked about the base drivers of the upside to the targets for the drugs, and if it's fair to think most of this is coming from IBD or if it's across the board.
- The primary driver of the change is share capture, and the company sees it across the board. The ramps in IBD have been very significant, but the growth is also coming from other indications.
- The primary driver of the change is share capture, and the company sees it across the board. The ramps in IBD have been very significant, but the growth is also coming from other indications.
- Analyst asked about the conviction level for ABBV-113, an oral NLRX1 agonist, and whether it could move into Phase 3.
- Scott Reents, President of U.S. Commercial, explained that the company has not quantified the volume offset in their guidance, but it is a fairly modest offset overall. He also stated that the volume offset will come from the standard eligible patient segment, which is a third of the business.
- Scott Reents, President of U.S. Commercial, explained that the company has not quantified the volume offset in their guidance, but it is a fairly modest offset overall. He also stated that the volume offset will come from the standard eligible patient segment, which is a third of the business.
- Analyst asked about the volume for I&I space, which is growing rapidly.
- Jeffrey Ryan Stewart, Executive Vice President and Chief Financial Officer, explained that the volume for I&I space is growing due to the promotion and profile of the medication, but it is becoming harder to measure due to the dynamics around new head-to-head trials, new indications, and other approaches. He also mentioned that the markets are still very buoyant and significant, and that the lines of therapy are expanding, particularly in atopic dermatitis and IBD.
- Jeffrey Ryan Stewart, Executive Vice President and Chief Financial Officer, explained that the volume for I&I space is growing due to the promotion and profile of the medication, but it is becoming harder to measure due to the dynamics around new head-to-head trials, new indications, and other approaches. He also mentioned that the markets are still very buoyant and significant, and that the lines of therapy are expanding, particularly in atopic dermatitis and IBD.
- Analyst asked about the underlying dynamics of the market and why it continues to grow.
- Robert A. Michael, Executive Vice President and Chief Commercial Officer, explained that the market is growing due to high-single digit market growth in psoriasis and IBD, mid-teens market growth in atopic dermatitis, and low- to mid-single digit market growth in rheumatoid arthritis. He also mentioned that there is still fairly low penetration rates for atopic dermatitis, which leaves room for growth.
- Robert A. Michael, Executive Vice President and Chief Commercial Officer, explained that the market is growing due to high-single digit market growth in psoriasis and IBD, mid-teens market growth in atopic dermatitis, and low- to mid-single digit market growth in rheumatoid arthritis. He also mentioned that there is still fairly low penetration rates for atopic dermatitis, which leaves room for growth.
- Analyst asked about the volume offset for Part D redesign, and how it will impact the business.
- Scott Reents, President of U.S. Commercial, explained that the volume offset for Part D redesign will impact the standard eligible patient segment, which is a third of the business. He also stated that the company is working very hard to ensure that people are electing cap and smooth, and that the volume offset will come from that one-third of the patient segment.
- Scott Reents, President of U.S. Commercial, explained that the volume offset for Part D redesign will impact the standard eligible patient segment, which is a third of the business. He also stated that the company is working very hard to ensure that people are electing cap and smooth, and that the volume offset will come from that one-third of the patient segment.
- Analyst asked about the pipeline slide, and whether the company could have some Phase 2 UC data for ABBV-113.
- Roopal Thakkar, Senior Vice President and Chief Medical Officer, explained that ABBV-11
- Roopal Thakkar, Senior Vice President and Chief Medical Officer, explained that ABBV-11
- Analyst asked about AbbVie's long-term commercial vision for ABBV-400 or Temab-A and its potential adoption in the early 2030s.
- Jeffrey Ryan Stewart, Chief Commercial Officer of AbbVie, stated that ABBV-400 or Temab-A is an underappreciated asset and has the potential to be a very attractive product in the colorectal cancer market. He noted that it has shown very promising results in later lines of therapy and that the company is focusing on proper dose optimization to optimize benefit/risk and tolerability.
- Jeffrey Ryan Stewart, Chief Commercial Officer of AbbVie, stated that ABBV-400 or Temab-A is an underappreciated asset and has the potential to be a very attractive product in the colorectal cancer market. He noted that it has shown very promising results in later lines of therapy and that the company is focusing on proper dose optimization to optimize benefit/risk and tolerability.
- Analyst asked about AbbVie's external transactions, specifically regarding emraclidine, and how it has impacted the company's overall M&A track record.
- Robert A. Michael, Chief Financial Officer of AbbVie, stated that the company has had a strong track record of successful M&A transactions, including the acquisition of BI, Pharmacyclics, and Allergan, which have helped to drive growth in the company's blood cancer, neuroscience, aesthetics, and eye care verticals. He noted that the company continues to pursue assets that can add depth to its pipeline and drive growth in the next decade, and that it has signed more than 20 early-stage deals across immunology, oncology, and neuroscience in recent months.
- Robert A. Michael, Chief Financial Officer of AbbVie, stated that the company has had a strong track record of successful M&A transactions, including the acquisition of BI, Pharmacyclics, and Allergan, which have helped to drive growth in the company's blood cancer, neuroscience, aesthetics, and eye care verticals. He noted that the company continues to pursue assets that can add depth to its pipeline and drive growth in the next decade, and that it has signed more than 20 early-stage deals across immunology, oncology, and neuroscience in recent months.
- Analyst asked about the impact of the IRA Medicare pricing on the commercial market and whether there is any evidence of spillover or slippage.
- Scott T. Reents, Executive Vice President of AbbVie, stated that the company has seen a change in its business mix due to the impact of the Part D redesign, leading to a 4% headwind to growth. He noted that the company has distilled its guidance number and made a precise number of 4% today, and that the change is more of a function of mix rather than any spillover or slippage from the IRA Medicare pricing.
- Scott T. Reents, Executive Vice President of AbbVie, stated that the company has seen a change in its business mix due to the impact of the Part D redesign, leading to a 4% headwind to growth. He noted that the company has distilled its guidance number and made a precise number of 4% today, and that the change is more of a function of mix rather than any spillover or slippage from the IRA Medicare pricing.
- Analyst asked about the aesthetics guidance and whether it has changed due to the impact of the IRA Medicare pricing.
- Jeffrey Ryan Stewart, Chief Commercial Officer of AbbVie, stated that the company has not seen any spillover or slippage in its negotiations across the
- Jeffrey Ryan Stewart, Chief Commercial Officer of AbbVie, stated that the company has not seen any spillover or slippage in its negotiations across the
- Analyst asked about the current growth dynamic in the atopic dermatitis market and whether there is an inflection point anticipated.
- Jeffrey Ryan Stewart, Chief Commercial Officer, explained that the company has seen a significant inflection in new patient capture despite the launch of other interleukin products over the past year. He noted that the company has ramped up to the highest in-play shares it has had, which is above 20%. He attributed this to Rinvoq's ability to distinguish itself on stringent endpoints, such as minimal disease activity and complete skin clearance. He also mentioned that the company is seeing a build-up in in-play share over time, as their TRx share is below 20%.
- Jeffrey Ryan Stewart, Chief Commercial Officer, explained that the company has seen a significant inflection in new patient capture despite the launch of other interleukin products over the past year. He noted that the company has ramped up to the highest in-play shares it has had, which is above 20%. He attributed this to Rinvoq's ability to distinguish itself on stringent endpoints, such as minimal disease activity and complete skin clearance. He also mentioned that the company is seeing a build-up in in-play share over time, as their TRx share is below 20%.
- Analyst asked about the current growth dynamic in the aesthetics market, specifically regarding the split between ex-US, China, and the US.
- Scott T. Reents, Senior Vice President and Chief Financial Officer, stated that the company did not see a significant impact from stocking in the fourth quarter, and that it will not impact the first quarter.
- Scott T. Reents, Senior Vice President and Chief Financial Officer, stated that the company did not see a significant impact from stocking in the fourth quarter, and that it will not impact the first quarter.
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