Abbvie Inc

NYSE:ABBV

Earnings Call Transcript 2020-Q3

[Operator]

Good morning and thank you for standing by. Welcome to the AbbVie Third Quarter 2020 Earnings Conference Call. All participants will be able to listen-only until the question-and-answer portion [Operator Instructions]

And I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations.

[Liz Shea, Vice President, Investor Relations]

Good morning and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Michael Severino, Vice Chairman and President; Rob Michael, Executive Vice President and Chief Financial Officer; and joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman, External Affairs, Chief Legal Officer and Corporate Secretary.

Before we get started, I remind you that some statements we make today may be considered forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on AbbVie’s operations, results and financial results that may cause actual results to differ materially from those indicated in the forward-looking statements.

Additional information about these risks and uncertainties is included in our 2019 annual report on Form 10-K and in our other SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law.

On today’s conference call, as in the past, non-GAAP financial measures will be used to help investors understand AbbVie’s ongoing 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.

Unless otherwise noted, our commentary on sales growth is on a comparable operational basis, which includes full current year and historical results for Allergan and excludes the impact of exchange.

For this comparison of underlying performance, all historically reported Allergan revenues have been recast to conform to AbbVie’s revenue recognition accounting policies and excludes the divestitures of Zenpep and Viokace. Following our prepared remarks, we will take your questions.

So, with that, I will now turn the call over to Rick.

[Rick Gonzalez, Chairman and CEO]

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I will discuss our third quarter performance and highlights, as well as our full year guidance, which we are raising again this quarter. Mike will then provide an update on recent advancements across our R&D programs and Rob will discuss the quarter in more detail. Following our remarks, we will take your questions.

AbbVie delivered another excellent quarter with adjusted earnings per share of $2.83, exceeding the midpoint of our guidance range by $0.08. When I look at our business and the actions we have taken to position AbbVie for sustainable performance, including the acquisition of Allergan, I feel very good about our long-term outlook.

The fundamentals are strong and there is considerable momentum across our legacy and new portfolios, which are both demonstrating robust growth, despite the COVID pandemic and together have the potential for significant long-term value creation.

I’d like to specifically highlight our recent progress across several aspects of our business, including the launches of RINVOQ and SKYRIZI, which are performing well ahead of all comparable launch analogs in their initial indications and continue to exceed our expectations.

Our hem/onc franchise continues to deliver robust performance and is expected to generate more than $6.5 billion in revenue this year, representing strong double-digit growth. New indications and novel combinations, including our recently announced collaboration with Genmab and I-Mab provide opportunities for further revenue expansion.

While it is still relatively early in the integration of Allergan, the strategic merits of the combination have never been more evident. We are already demonstrating that we have created a stronger, more diverse company, with robust cash flows and multiple new growth vehicles for the long-term.

We now have the leading aesthetics franchise, which is demonstrating a strong V-shaped recovery, as well as a highly attractive neuroscience portfolio which delivered double-digit growth on a comparable operational basis this quarter and has significant momentum with VRAYLAR and our expanding migraine franchise.

And our pipeline is advancing nicely, with numerous attractive late-stage programs that we believe will allow us to maintain a growing and vibrant business. We are on track for the approval of more than a dozen new products for major indications over the next two years, which will collectively add meaningful revenue growth.

This includes a total of six additional indications for RINVOQ and SKYRIZI, expanded indications for VENCLEXTA and several other near-term product -- new product approvals, including atogepant, Navitoclax and 951.

Clearly, this is a very exciting time for AbbVie and I am pleased with the progress that we are making towards our long-term strategy for sustainable growth. I remain confident that we will continue to execute as we have in the past and deliver outstanding shareholder value going forward.

I’d like to look further at our business performance. I am pleased with the recent trends across our key growth areas. I will start with immunology, where we established strong trajectories for RINVOQ and SKYRIZI.

As I previously noted, both continue to perform well-above expectations. In their initial indications, these two brands have clearly demonstrated superior efficacy to HUMIRA, as well as other novel agents on the market or in development, resulting in significant in-play market shares, a leading indicator for long-term commercial performance.

The in-play share for RINVOQ in RA, which includes both new and switching patients remains strong at approximately 16% and has now reached parity with our market leading HUMIRA. In psoriasis, SKYRIZI has already achieved the leading in-play market share at 33%.

This level of share capture at this stage of the launch is unprecedented, and if sustained, will ultimately lead to total market share well in excess of what was contemplated when we communicated our expectations for 2025 sales.

This strong performance and trajectory, despite the impact of the COVID-19 pandemic is a testament to our differentiated product profile and our commercial execution. Our focus since the pandemic has been on driving accelerated patient activation and we remain encouraged by our current prescription trends.

Our recent performance continues to give us confidence in the near- and long-term potential for both RINVOQ and SKYRIZI, which we now expect will deliver $2.2 billion in combined revenue for full year 2020, well exceeding our original projections for this year.

In addition to outstanding commercial momentum, we are also making excellent progress with RINVOQ and SKYRIZI in new indications, which we expect will further strengthen our leadership position.

We have already started planning and preparing for the forthcoming approval of three additional RINVOQ indications next year, including psoriatic arthritis and ankylosing spondylitis, giving us complete coverage across the more than $40 billion rheumatology segment. We also expect approval in atopic dermatitis, another large and growing market that has the potential to be multi-billion dollar peak revenues for RINVOQ.

In the coming year, we also intend to submit regulatory applications for SKYRIZI in psoriatic arthritis and both agents in the area of inflammatory bowel disease, a more than $20 billion market today with high unmet need. Overall, I am extremely pleased with the progress we are making on both RINVOQ and SKYRIZI.

I’d also like to take this opportunity to announce that we will be hosting an immunology focused Investor Day in December, where we intend to further discuss our strategy, progress, and expectations for this important growth area. Additional details will be forthcoming.

Turning now to hem/onc, which delivered robust double-digit growth again this quarter and remains an important therapeutic area for AbbVie’s long-term performance. IMBRUVICA has a strong position across multiple indications including CLL, where it remains the clear market share leader across all lines of therapy.

IMBRUVICA sales increased 9% on an operational basis this quarter, despite lower new patient starts within CLL, where the market remains below pre-COVID levels. VENCLEXTA sales increased nearly 60% on an operational basis this quarter. The penetration across our approved indications remains strong, especially in AML, given the potential aggressive disease progression of that cancer.

In the quarter, we also announced a strategic collaboration with I-Mab, further expanding our oncology portfolio with anti-CD47 monoclonal antibody, which has potential across a wide range of blood cancers.

The I-Mab opportunity adds to our already-attractive oncology pipeline, which includes Navitoclax, Genmab CD3xCD20, expanded indications for VENCLEXTA and several promising early-stage programs.

We also now have another high performing franchise in neuroscience, which further diversifies AbbVie’s sources of long-term growth. VRAYLAR sales increased strong double-digits again this quarter on a comparable operational basis, with annualized revenues of more than $1.4 billion.

Given VRAYLAR’s benefit/risk profile relative to other atypical anti-psychotics, we remain confident in its long-term growth potential, which we believe is multi-billion dollars across the currently approved indications of bipolar disorder and schizophrenia.

BOTOX Therapeutics, which has nearly a dozen medical treatment indications, including chronic migraine, is also performing very well. Revenues were up nearly $100 million sequentially on a comparable operational basis, demonstrating a rapid COVID recovery.

The launch of UBRELVY, our leading oral CGRP for acute migraine, is exceeding our expectations. Commercial access is ramping strongly and increasing DTC investments have resulted in encouraging new patient starts and market expansion.

When you consider our overall scale with BOTOX Therapeutics, UBRELVY’s acute treatment profile and the promising development of atogepant for the prevention of episodic and chronic migraine, we see substantial room for long-term revenue growth with this best-in-class migraine portfolio.

Within aesthetics, our fourth major growth platform, we are seeing robust demand trends and a rapid V-shaped recovery. Total global aesthetics revenues of more than $950 million were up 70% sequentially on a comparable operational basis, illustrating the significant underlying demand for both BOTOX cosmetics and JUVÉDERM.

We remain focused on supporting clinics through the COVID pandemic and expect consistent investment in consumer promotion to expand the aesthetics market, which remains under penetrated globally.

Our dedicated R&D and business development are expected to sustain new innovation and rapidly expand our aesthetics portfolio for long-term growth, including the recently announced acquisition of Luminera, which provides us with a complementary dermal filler portfolio and pipeline. Overall, we are very pleased with the momentum that we are seeing with our aesthetics franchise.

AbbVie’s business continues to remain resilient and demonstrates strong underlying growth throughout the pandemic. Based on the performance this quarter and our progress year-to-date, we are raising our full year 2020 EPS guidance. We now expect adjusted earnings per share of $10.47 to $10.49, reflecting growth of more than 17% at the midpoint.

In addition to the excellent progress we are making across the portfolio, the integration of Allergan continues to go very well. Despite the size of this transaction and the timing of the COVID pandemic, the transition has been seamless.

We are performing very well against both our synergy and accretion targets, and it is becoming increasingly clear to us that there are also opportunities for revenue synergies across various aspects of the business.

We are now six months post-close and the strategic merits of the transaction are extremely evident. Allergan is providing additional growth platforms, robust financial benefits and greater diversity of our business.

We remain confident that the newly combined business will generate significant earnings and cash flow to support continued investment in our innovative R&D platform, as well as a strong and growing dividend, while also allowing us to rapidly pay down debt.

To that end, as noted in our news release, today we are announcing a 10.2% increase in our quarterly cash dividend from $1.18 per share to $1.30 per share beginning with the dividend payable in February 2021. Since inception, we have grown our quarterly dividend by 225%.

So, in summary, we continue to demonstrate strong execution across our portfolio and remain encouraged by the overall recovery trends. We have assembled an impressive set of diversified growth assets with significant growth potential giving us a high degree of confidence in the long-term outlook for our business.

With that, I will turn the call over to Mike.

[Michael Severino, Vice Chairman and President]

Thank you, Rick. We continue to make great progress across all stages of our pipeline and this morning I will highlight key events since our last earnings call. Starting with immunology, where we achieved several major milestones, including submission of our U.S. and European regulatory applications for RINVOQ in ankylosing spondylitis and atopic dermatitis.

We expect regulatory decisions in the first half of 2021 for both indications, as well as for psoriatic arthritis which was submitted for regulatory review earlier this year. Within the rheumatology segment, both psoriatic arthritis and ankylosing spondylitis are large and important markets and represent a significant growth opportunity for RINVOQ.

We will highlight the growing body of data from our rheumatology portfolio and the -- at the upcoming virtual ACR Congress, where we will present 35 abstracts from multiple assets across our portfolio, including six selected for oral presentation.

Atopic dermatitis is a new disease area for AbbVie and also represents an important area of growth for our immunology franchise going forward. Based on the data generated in our registrational program, we remain very confident in the benefit/risk profile for RINVOQ in atopic dermatitis and believe it will offer meaningful advantages over products on the market today or in development.

Beyond the Phase 3 studies that support our regulatory submission, we are also evaluating RINVOQ in a head-to-head Phase 3 trial against dupilumab, which if successful, will help further support RINVOQ as a highly differentiated therapeutic option for patients with atopic dermatitis. We look forward to seeing data from this head-to-head study later this quarter.

In the area of inflammatory bowel diseases, we remain on track to see induction data later this quarter from our Phase 3 program for RINVOQ in ulcerative colitis. We will see data from a second induction study in ulcerative colitis, as well as results from the maintenance portion of these studies next year. We expect to file our regulatory applications in 2021 as well.

We are also making great progress with the development programs for SKYRIZI and later this quarter we expect data from several new indications across rheumatology and gastroenterology. We will see data from two Phase 3 studies in psoriatic arthritis and results from the first Phase 3 induction study in Crohn’s disease, supporting regulatory applications for both indications in 2021.

Outside of immunology, SKYRIZI will also be evaluated as a potential treatment for COVID-19 as part of the NIH ACTIV program, which is a public private partnership aimed at accelerating potential therapies and vaccines for COVID-19.

SKYRIZI was selected through a prioritization process that evaluated immunomodulators with acceptable safety profiles as potential treatments for COVID-19 complications caused by the cytokine storm observed in some patients.

SKYRIZI will be included in the ACTIV-5 Big Effect trial, which is a Phase 2 study designed to evaluate a number of drugs that are either approved or in late-stage development as potential treatments for COVID-19.

In our early-stage immunology pipeline, earlier this year, we toplined positive results from a proof-of-concept study evaluating our novel TNF steroid conjugate, ABBV-3373 in RA. We recently completed the Phase 1 PK and safety study for our second TNF steroid conjugate, ABBV-154. Based on these data, we have selected 154 to move forward into larger scale trials. We expect to begin a Phase 2b definitive dose ranging study for 154 in RA for the first half of 2021.

As Rick mentioned, we will be hosting an Immunology Day for investors in December, where we will provide an update on our immunology strategy and long-term outlook for the franchise. We look forward to providing additional updates on our immunology pipeline at that time.

In oncology, we continue to advance our portfolio with several important Phase 3 studies beginning in the quarter, including VENCLEXTA in high-risk myelodysplastic syndrome and navitoclax in myelofibrosis.

We also recently received full FDA approval of VENCLEXTA in combination with azacitidine, decitabine or low-dose cytarabine in newly diagnosed AML patients, who are ineligible for intensive induction chemotherapy. This approval is supported by the Phase 3 VIALE-A and VIALE-C studies.

Updated efficacy and safety results from VIALE-A were recently published in the New England Journal of Medicine and showed that the combination of VENCLEXTA and azacitidine extended overall survival compared to azacitidine plus placebo.

Additionally, following the publication of the VIALE-A results, the NCCN guidelines were updated to recommend the VENCLEXTA and azacitidine combination as the Category 1 preferred treatment for AML patients who are ineligible for intensive chemotherapy. Importantly, the VENCLEXTA combination has the Category 1 designation irrespective of mutational status.

Also in the quarter, we announced a collaboration with I-Mab to develop and commercialize the anti-CD47 monoclonal antibody, lemzoparlimab. The emerging data for lemzoparlimab is very encouraging and provides AbbVie access to another potentially differentiated asset in the immuno-oncology space.

The data generated to date show that lemzoparlimab effectively blocks tumor-specific CD47 interactions, but with much lower binding to red blood cells, potentially leading to a better safety profile. Lemzoparlimab is being studied in multiple cancers with a focus on hematological malignancies.

In neuroscience, we recently presented new data from several clinical programs at the virtual Migraine Trust International Symposium, showcasing the breadth and strength of our migraine portfolio and demonstrating AbbVie’s commitment to providing multiple treatment options for the acute and preventive treatment of migraine. In total, 15 abstracts were presented for BOTOX, UBRELVY and atogepant.

Included in the MTIS presentation were the detailed results for atogepant in the Phase 3 advanced study, which demonstrated a clinically meaningful and statistically significant improvement over placebo, with all atogepant doses for the primary endpoint of reduction in mean monthly migraine days.

Significant improvements were also observed for all secondary endpoints in the 30-milligram and 60-milligram dose groups. Treatment with atogepant resulted in 56% to 61% of subjects achieving at least a 50% reduction in monthly migraine days, compared to 29% for the placebo group.

We are very encouraged by the strong benefit/risk profile that has been demonstrated for atogepant in migraine prevention and believe that once approved, this new oral treatment option will be competitively positioned in the prevention market.

Together with BOTOX for chronic migraine prevention and UBRELVY for acute migraine treatment, the addition of atogepant creates a market leading portfolio in migraine that represents significant long-term value for AbbVie.

In aesthetics, we continue to make good progress with our portfolio of facial toxins and dermal fillers. We have several ongoing programs for new indications for BOTOX and for the JUVÉDERM collection, as well as a pipeline of innovative toxins and dermal fillers, which we expect to reach the market over the course of the next five years.

BOTOX has been the leading neurotoxin for over two decades, with R&D efforts in aesthetics primarily focused on the upper face. To support expansion to the lower face region, we have several programs ongoing, including studies in masseter and platysma prominence.

We recently had a positive data readout for our Phase 2 study for the reduction of masseter prominence in the lower face. This study met all primary and secondary endpoints, demonstrating that the severity of prominence was reduced following a single treatment of BOTOX. Based on these results, we plan to begin Phase 3 development next year, which will support registration in the U.S. and Europe.

We also recently announced the acquisition of Luminera’s dermal filler portfolio led by HArmonyCa, which is an innovative dermal filler developed for facial soft tissue augmentation. Luminera’s assets are highly complementary to our JUVÉDERM filler franchise and we look forward to expanding their development to markets around the world.

And in eye care, we recently announced positive topline results from the Phase 3 GEMINI 1 and GEMINI 2 studies, which evaluated our topical eye drop, AGN-190584 for the treatment of symptoms associated with presbyopia.

In both studies, 584 met the primary endpoint and the majority of secondary endpoints, with data from both studies demonstrating that treatment with 584 resulted in significant near-vision gains in low lighting conditions without a loss of distance vision. Based on these results, we plan to submit our regulatory application to the FDA in the first half of next year.

So, in summary, we have continued to make significant progress advancing and accelerating our programs this quarter, and we look forward to many more important pipeline milestones in the coming months and through 2021.

With that, I will turn the call over to Rob for additional comments on our third quarter performance and financial outlook. Rob?

[Rob Michael, Executive Vice President and CFO]

Thank you, Mike. Starting with third quarter results, we delivered strong top and bottomline performance. We reported adjusted earnings per share of $2.83, above our guidance midpoint by $0.08. Total adjusted net revenues were approximately $12.9 billion, up 4.1% on a comparable operational basis and ahead of our expectations.

Immunology global sales were approximately $5.8 billion, up 15% on an operational basis, despite the impact of COVID on new patient starts across the immunology market.

U.S. HUMIRA sales were approximately $4.2 billion, up 7.7% compared to prior year, reflecting continued demand growth plus price. Wholesaler inventory levels remain below half a month in the quarter. International HUMIRA sales were $951 million, down 8% operationally, reflecting biosimilar competition across Europe and other international markets.

SKYRIZI sales were $435 million with leading in-play share in the U.S. psoriasis market and robust sequential growth internationally. RINVOQ sales were $215 million with continued strong in-play share in the U.S. RA market.

Hematologic oncology delivered another strong quarter, with sales of $1.7 billion, up 16.4% on an operational basis. IMBRUVICA net revenues were approximately $1.4 billion, up 9% driven by our leading share in CLL.

VENCLEXTA revenues were $352 million, with strong demand across all approved indications. MAVYRET sales were $414 million, down 41.1% on an operational basis, as treated patient volumes have remained below pre-COVID levels. Aesthetic sales were $967 million with BOTOX cosmetic and JUVÉDERM both experiencing a faster than expected recovery from the COVID pandemic.

Neuroscience revenues were more than $1.2 billion led by VRAYLAR and our migraine portfolio. VRAYLAR once again delivered strong growth with revenues of $358 million. BOTOX Therapeutic continues to experience a rapid recovery from the COVID pandemic, with sales of $523 million in the quarter.

The launch of UBRELVY is also going very well with recent direct-to-consumer promotion driving new prescription growth. Sales of UBRELVY were $38 million. We also saw a significant contribution from eye care, which had sales of $840 million.

Turning now to the P&L profile for the third quarter. Adjusted gross margin was 81.7% of sales, adjusted R&D investment was 11.7% of sales and adjusted SG&A expense was 21.1% of sales. The adjusted operating margin ratio was 48.8% of sales, an improvement of 40 basis points versus the prior year. Net interest expense was $620 million and the adjusted tax rate was 11.7%.

As Rick previously mentioned, we are raising our full year adjusted earnings per share guidance to between $10.47 and $10.49, including accretion from the Allergan transaction of 12% on an annualized basis. Excluded from this guidance is $6.58 of known intangible amortization and specified items.

This guidance now contemplates 2020 adjusted net revenue of approximately $45.7 billion, representing an increase of $200 million from our previous estimate. At current rates, we now expect foreign exchange to have a modest unfavorable impact on fully reported sales growth.

Included in this guidance are the following updated 2020 assumptions. We now expect international HUMIRA sales approaching $3.7 billion. For SKYRIZI, we now expect revenues of approximately $1.5 billion. For RINVOQ, we now expect sales of approximately $700 million. For IMBRIVICA, we now expect revenue of approximately $5.3 billion, as new patient starts in the CLL market remain below pre-COVID levels.

For Aesthetics, we now expect post-close sales of approximately $2.5 billion with BOTOX cosmetic and JUVÉDERM both demonstrating a fast recovery. For MAVYRET, we now expect sales of approximately $1.9 billion, as treatments remain below pre-COVID levels. We now expect LUPRON revenues of approximately $750 million, as we work to resolve a near-term supply issue, which has impacted availability of certain formulations.

Moving to the P&L, we continue to forecast full year adjusted gross margin just above 82% of sales and adjusted operating margin of approximately 48% of sales. This guidance includes approximately $600 million in expense synergies for the partial year in 2020. We remain on track to deliver greater than $2 billion in expense synergies by 2022.

As we look ahead to the fourth quarter, we anticipate adjusted net revenue approaching $13.8 billion. At current rates, we expect foreign exchange to have a modest favorable impact on reported sales growth.

We are forecasting an adjusted operating margin ratio of approximately 46.5% of sales. We model a non-GAAP tax rate of 11.6% and we expect the average share count to be similar to Q3. We expect adjusted earnings per share between $2.83 and $2.85, excluding approximately $1.73 of known intangible amortization and specified items.

Finally, AbbVie’s strong business performance continues to support our capital allocation priorities. We generated $12.7 billion of operating cash flow in the first nine months of the year, and our cash and investments balance at the end of September was $8 billion. Underscoring our confidence in AbbVie’s long-term outlook, today we announced a 10.2% increase in our quarterly cash dividend, beginning with the dividend payable in February 2021.

We also remain on track to pay down $15 billion to $18 billion of combined company debt by the end of 2021 and expect to achieve a net debt-to-EBITDA ratio of 2.5 times by the end of next year, with further deleveraging through 2023.

With that, I will turn the call back over to Liz.

[Liz Shea, Vice President, Investor Relations]

Thanks, Rob. We will now open the call for questions. Operator, first question, please?

[Operator]

Thank you. [Operator Instructions] Our first question today is from Chris Schott from JPMorgan.

[Chris Schott, JPMorgan]

Great. Thanks so much for the questions and congrats on the results. I guess just two for me. First, 2021, I know you are not giving guidance yet, but can you just talk through some of the pushes and pulls we should keep in mind as we think about next year’s numbers and it seems like the core business obviously has a lot of traction here. I am just trying to get a sense of from your perspective what are the uncertainties as you think about that guidance number for next year? And my second question was on RINVOQ in atopic derm. Can you just elaborate a bit more on how you are thinking about the size of that opportunity? I know one of your peers has a single indication JAK in AD they think is a $3 billion peak sales opportunity. I know that’s well above your risk adjusted numbers you had a few years ago. It sounds like now you are talking about potential multi-billion dollar opportunity. But just help us flesh out a little bit about how big of an opportunity could this be for the product? Thank you.

[Rick Gonzalez, Chairman and CEO]

Okay. So, Chris, this is Rick. I will talk a little bit about 2021 and then Mike maybe can talk a little bit about how we view RINVOQ in AD and Rob. So when we look at 2021, I think, you have to step back and say, how are we performing this year?

And obviously we are performing very well. There’s still some COVID impact built in. It varies a bit by therapeutic areas, some areas are impacted more than others. So as an example, CLL has been impacted more than other areas, HCV has been impacted more than other areas. It’s usually places where the therapy can be delayed without significant consequence for the patient is where we are seeing most significant delays.

So as we move through the fourth quarter, we will see whether or not that recovers more and that’s certainly one aspect of it. I would say, even without much recovery, the underlying performance of the business looks good.

I think you can look at the dividend increase that we put through and that should give you some flavor for the level of confidence that we have, because obviously, we would want to tie that to what we assumed that we could deliver from an overall performance standpoint. I’d also say that, as we look to consensus, we are comfortable with what we see in consensus in 2021.

So we want to see a few other things just play out primarily around COVID, how much improvement we get. We have launched a number of programs over the course of the last couple of months to try to activate patients more, to go to their physicians and seek treatment out.

I think those programs, some of those programs will be successful and we will see some of those increase, particularly in immunology, because dermatology is another one of those areas that the new patient starts are still off a little bit. Now, obviously, SKYRIZI is performing extremely well and HUMIRA continues to perform well. So, I’d say that’s the single biggest issue. Rob, Mike, do you want to talk about RINVOQ?

[Michael Severino, Vice Chairman and President]

Certainly. I will start and then pass it over to Rob, if he wants to add a little bit more detail. We view atopic dermatitis as a very attractive and a very substantial opportunity overall. It’s an indication that I think for many years was underappreciated by the industry. Now that’s changed recently and you have seen a lot of focus in drug development in atopic dermatitis.

We feel very good about the profile that we have demonstrated, coming out of Phase 2, when we made those statements about the risk-adjusted potential in atopic dermatitis, we felt good about our data and those data were sufficient to get a breakthrough therapy designation.

We are in the fortunate and not always that common situation where our Phase 3 results have actually outperformed our expectations based on Phase 2. And if you look at the Phase 3 results, they are really strong across the board. They are strong in total response. They are strong in repeated response and they are strong on components like itch, which is the most troublesome symptom to patients in the majority of cases.

And so, when you couple that with the safety profile that we have demonstrated, which we think is very favorable. We see this as something that has very real potential and when we look across studies, we feel very good about our results. And of course, we have a head-to-head study with dupilumab, which is coming up later on this quarter and so that will be important additional information, and we are very optimistic about those results. Rob, I don’t know if you would like to add anything further?

[Rob Michael, Executive Vice President and CFO]

Chris, this is Rob. So if you think about atopic dermatitis, it’s a $3 billion global market with very strong growth potential. In our 2025 risk adjusted guidance of greater than $10 billion for RINVOQ and SKYRIZI, we included $1 billion of revenue for RINVOQ AD, but we feel pretty good that we can achieve that expectation.

[Rick Gonzalez, Chairman and CEO]

And the only other thing I’d add is, I think atopic derm is a market very similar to several others, in fact, psoriasis, I would say, is a similar type of market. But as you get more competitors in the market driving promotion, it has a very large population of patients.

So the question is, activating those patients and getting them to go into the physician’s offices to seek treatment. And so, obviously, when you have one company doing that, they have the capacity to drive a certain amount. When you have more than one company, you are doubling or tripling the amount of promotion activity, particularly here in the U.S. and that tends to activate more patients to seek treatment.

I think if you looked at the total available market of patients who would qualify, it’s a huge market, it’s north of $5 billion easily. So the question is, how fast can you activate them and how broadly can you activate those patients?

From a profile standpoint of our drug, I think we will compete quite effectively, and I think, in particular, the performance around itch is going to give us an advantage. So it’s a very attractive market and it’s certainly one that we will focus a lot of attention on to drive.

[Rob Michael, Executive Vice President and CFO]

And Chris, this is Rob again. Just to clarify, I said exceed or achieve, but we expect to exceed that $1 billion risk-adjusted number for RINVOQ AD in 2025.

[Liz Shea, Vice President, Investor Relations]

Thanks, Chris. Operator, next question, please?

[Operator]

Thank you. And our next question is from Geoffrey Porges from SVB Leerink.

[Geoffrey Porges, SVB Leerink]

Thanks. Rick a question to you. With the dividend going up, it looks like you have got about a 6.5% dividend yield. The core business is performing well. And my question is, what are the -- and you are now a $50 billion to $55 billion topline company. What are the pipeline assets that can really move the needle, I know all the new indications for the existing NMEs, but what new NMEs can be really substantial to move the needle on a $55 billion topline, because I think, that’s part of why you have got an industry high dividend yield?

[Rick Gonzalez, Chairman and CEO]

So, Geoff, this is Rick. I think if you look at the business, you have to look at it in phases, right? So I’d say the phase between now and call it 2025, 2026. That growth is going to be driven by expansion of RINVOQ and SKYRIZI, continued strong growth in the neuroscience pipeline, continued strong growth in the aesthetics pipeline and continued strong growth in the hem/onc. Starting in that 2025 timeframe and beyond, that’s where the earlier to mid-stage pipeline will drive a significant amount of growth.

Now there will be assets like Navitoclax, like 951, atogepant, that will come in prior to that and help boost growth right around ‘23 and ‘24. But I can tell you, we are very confident that we have now built a portfolio that can sustain growth and drive growth on the other side of the LOE.

In fact, I would tell you that, when I look at RINVOQ and SKYRIZI, and I look at the in-play market shares that we see with those assets today, when we gave guidance of 2025, we assumed that on average, we would achieve high single-digit market share across the indications.

So as an example, if you look at SKYRIZI right now, SKYRIZI’s in-play share is 33%, the market leader by a wide margin. The next closest product is at 16% in-play share. And its TRX share is now at 11% and climbing rapidly.

So it’s already above what we had assumed the peak would have been out in 2025 from a market share standpoint. And if we maintain that 33% by then, it will have an overall share of about 33%, so it will be three times what we had assumed for psoriasis.

So when you look at the speed at which we are bringing the new indications, when you look at the breadth of those indications across the revenue base that HUMIRA has today, we have covered all of the major indications for HUMIRA plus one more that HUMIRA doesn’t have, which is atopic derm.

And if we can achieve that kind of market share in each of these indications, then we will obviously double what we assumed that 2025 number was and that gets you pretty close to covering all of HUMIRA in the U.S.

So I am very encouraged about that. And I think that, along with the other assets and the four major growth platforms, gives us a tremendous amount of confidence that we can drive growth on a sustainable basis at a very high level.

[Liz Shea, Vice President, Investor Relations]

Thanks, Geoff. Operator, next question, please?

[Operator]

Thank you. And our next question is from Vamil Divan from Mizuho.

[Vamil Divan, Mizuho]

Hi. Thanks so much for taking my questions. So maybe just sort of following up on what has been asked. For 2021 on Chris’ question, can you just talk a little bit about how you are thinking about drug pricing pressure, either U.S. or globally just to think about our modeling for next year, I think, that would be helpful? And then maybe building on Geoff’s question, I think one of the other concerns that investors have is around potential tax reform that may come out of D.C. depending on how the election plays out. I know it’s tough to ask just a few days before the election. But I guess based on what you are seeing especially from the Biden side, I guess the Biden plan right now. Is there anything you can share with investors at this point in terms of how your tax rate may change going forward and I appreciate there’s probably not much that you can give, but any insights I think would be helpful, because I think it is investors seem very concerned about at this point? Thank you.

[Rick Gonzalez, Chairman and CEO]

Yeah. Well, Vamil, obviously, it’s still unclear as to what the landscape will be on the other side of the election, so we obviously have to let that play out. Having said that, I think, we assume that there will be continued pressure on the industry as it relates to drug pricing.

As far as what our expectations would be in 2021, I think our expectations in 2021 from a price standpoint will be similar to what they were in ‘19 and ‘20, and is we weren’t reliant on price. I mean, fortunately our business is primarily a volume-driven business. It’s typically in areas that are very serious diseases and have strong value propositions. And so that gives me confidence that we will be able to fare reasonably well even if there are changes.

I’d say the second thing is, it’s unlikely that you will get changes that have a significant impact early on in ‘21, because there’s going to be a lot of debate here about what those changes are. What I would hope the debate ultimately transitions to is co-pays and out-of-pocket costs for patients, because that is the fundamental issue and it’s particularly the issue when you look at Part D patients.

They have to pay far too much of the burden of the cost from an out-of-pocket cost standpoint. And they are really the only group of patients in the U.S. that have that kind of burden associated with them.

If you look at the overall performance from a cost standpoint of Medicare Part D. It’s performed very well. In fact, if you go back to the original CBO estimates over the last 10 years, it’s come in 45% below the original estimates for what it would grow.

And if you look at Part D, it’s grown at about the rate of other healthcare services inflation, not significantly higher. And so the affordability problem is really around those co-pays. We have to drive those co-pays.

And then I think the other thing that has to be played in here is, I would hope as this debate goes on, they are going to look very carefully at our industry and the value of our industry both from a societal standpoint, as well as an economic standpoint and this is tremendously value industry. Just look at what we have done as an industry as it relates to this pandemic, whether you are talking about vaccines or you are talking about therapeutics, look at what we have done in advancements with cancer.

And then from an economic standpoint, this industry supports directly or indirectly 4 million jobs in the United States, typically high paying jobs. It produces a tremendous amount of economic output for the U.S. And so it’s an industry that you don’t want to damage in the process and I think that has to be part of the debate.

But the short answer to your question is, I think, you should -- we should -- we are not assuming we will get a lot of benefit from price in ‘21. We are also not assuming that across that year we would see a significant change that would have a dramatic impact on that calendar year. Tax reform was your next question.

[Rob Michael, Executive Vice President and CFO]

Vamil, It’s Rob. So based on a very high level of information on the Biden proposal, we would see an increase in our tax rate like most U,S, companies, but it’s really difficult to provide a rate impact without the details. That said, AbbVie would still have a favorable profile versus our peers and we wouldn’t have raised our dividend if we were overly concerned about the implications.

[Rick Gonzalez, Chairman and CEO]

And the only thing I’d add, Vamil, on that one is, we obviously did flex what we thought the tax rate could be and we just don’t know that much about it, we know what has been said. But we flexed it against this dividend increase and made sure we were absolutely comfortable with payout ratios based on that and we are or we wouldn’t have moved forward with the 10.2% increase.

[Liz Shea, Vice President, Investor Relations]

Thanks, Vamil. Operator, next question, please?

[Operator]

Thank you. And our next question is from Steve Scala from Cowen.

[Steve Scala, Cowen]

Thank you so much, and congratulations on another impressive quarter. I have several questions, but three of them are short. Can you be more specific on where SKYRIZI patients are coming from? I think it’s notable that COSENTYX was a bit light this quarter and Novartis cited competition? Secondly, what was the non-GAAP interest expense number in the quarter? Third, you provided guidance for HUMIRA OUS, but I don’t think U.S. So can you tell us what you think the U.S. guidance would look like? And then, lastly, we have tracked clinical trial activity during the pandemic and it shows AbbVie recruiting trials were up 14% year-to-date. That is industry-leading two times greater than the next closest competitor and much better than the average, which is down, and I am just curious, what accounts for this? Is it a deliberate strategy to capture patients when other companies are taking a wait-and-see approach or is it something else? Thank you.

[Rick Gonzalez, Chairman and CEO]

Yeah. So, Steve, I will handle your first question. Rob will handle two and three, and Mike can handle number four. So if you look at the in-play share, about 25% of that in-play share is coming -- on SKYRIZI is coming from HUMIRA. The other 75% is coming from competitors. I’d say it’s primarily the 17s but some coming from the other 12, 23s or 23s, but I’d say the bulk of it is coming from the 17s. So that might answer your question about COSENTYX.

If you look at the capture of the type of patient that we are getting with SKYRIZI, it’s very balanced. It’s about 50/50 between first-line and then second-line. So that’s a nice balance between IE patients and patients who have failed other therapies.

So I think the asset is performing the way you would expect a high-performing, high-efficacy asset to be able to perform, is -- it has quickly become the preferred product by prescribing physicians. It has a great profile. It’s quarterly dosing. It’s got great efficacy. The efficacy improves over time.

There aren’t any assets that have that kind of a profile on the market. So I would expect that SKYRIZI will continue to increase its in-play share. It’s jumped about 3 points over the last maybe two months and I would expect it will continue to increase.

[Rob Michael, Executive Vice President and CFO]

Hey. Steve, this is Rob. On your question on interest expense, for non-GAAP and GAAP, it’s the same number. It’s $620 million in the third quarter. We are no longer specifying any interest expense, because we have now closed the transaction, so that negative carry on the bond is no longer is applicable for the specified. So $620 million is the number for both non-GAAP and GAAP. On the U.S. HUMIRA question, so we did not change our guidance, it continues to be 8 -- for the U.S. HUMIRA 8% growth with a low single-digit price contribution.

[Michael Severino, Vice Chairman and President]

This is Mike. I will take your last question on clinical trial activity. The first thing that, I would say is, the increase in clinical trial activity reflects what’s going on in our pipeline and there’s a lot of activity in our pipeline, and a large number of molecules that we are advancing, and so that’s a big part of it.

Another part is that, we made the conscious decision to leave decisions around enrollment in the hands of investigators rather than making them centrally, because they understand the situation in their hospital in their community better than we do.

And there was a small group of studies that we paused at the time of the initial COVID impact, but the majority we allowed to continue. That doesn’t mean that there weren’t disruptions from COVID. But it does mean that investigators decided when it was time to pause enrollment and when it was time to resume enrollment.

And I think the evidence shows that they made those decisions better than they could have been made centrally. And that has allowed us to advance our portfolio, to advance our clinical trials with minimal disruption and with safe conduct for patients and the staff at the site, which are also critically important considerations. And so, I’d say, it’s a combination of those factors.

[Liz Shea, Vice President, Investor Relations]

Thanks, Steve. Operator, next question, please?

[Operator]

Thank you. And our next question is from Navin Jacob from UBS.

[Rick Gonzalez, Chairman and CEO]

Hi. How are you?

[Jon Lim, UBS]

This is Jon Lim on for Navin Jacob.

[Rick Gonzalez, Chairman and CEO]

Hi, Jon. Yeah. Sorry…

[Jon Lim, UBS]

We just had a few questions.

[Rick Gonzalez, Chairman and CEO]

You guys pass along [ph].

[Jon Lim, UBS]

We just had a few questions. First, regarding the HUMIRA question in the U.S., within the markets in which a biosimilar is out there, what percent of the molecule is now brand versus biosimilars? With now almost two years of biosimilar experience, how does that affect things? And next for SKYRIZI and RINVOQ, can achieve the type of uptake that you have been seeing in the U.S. and in the international markets? We would appreciate any commentary around in-play market share achieved in markets you have been approved in. And lastly, if we could talk about VRAYLAR MDD timing? Thank you.

[Rob Michael, Executive Vice President and CFO]

Okay. This is Rob. Just to clarify, the first question was on international HUMIRA, how much of that is now a biosimilar?

[Jon Lim, UBS]

Right. Within the markets where there’s a biosimilar, how much is…

[Rob Michael, Executive Vice President and CFO]

Yeah.

[Jon Lim, UBS]

… brand versus biosimilar, help us visualize that question…

[Rick Gonzalez, Chairman and CEO]

I think he wants what’s the molecule…

[Rob Michael, Executive Vice President and CFO]

[Inaudible]

[Rick Gonzalez, Chairman and CEO]

Yeah.

[Rob Michael, Executive Vice President and CFO]

Yeah. We are at about 60% molecule share across the Board. So that’s of all of the international markets, on average, it’s about 60% molecule share.

[Rick Gonzalez, Chairman and CEO]

And then on SKYRIZI and RINVOQ, I don’t have the numbers right in front of me on each of the markets. I would say typically in the international market, it is a slightly slower uptake than it is in the U.S., but still doing very well.

So maybe the best thing would be to get back to you with some more specifics around that. But I think you can assume that the in-play share there probably averages between 20% and 30%. But it depends obviously on the country that you are talking about. And then on VRAYLAR MDD timing, Mike?

[Michael Severino, Vice Chairman and President]

Yes. On VRAYLAR MDD, we would expect to have the study’s readout in the second half of next year and be prepared for regulatory submissions shortly thereafter. So it’s possible we would have an approval in ‘22.

[Rick Gonzalez, Chairman and CEO]

And I think that’s an important point to make here. If we look at VRAYLAR, VRAYLAR is growing very rapidly. And as you know, the atypical anti-psychotic market is very, very large. I think VRAYLAR’s share is something like 3% and it’s tracking at $1.4 billion at 3%.

So if we look at the current indications, as we indicated in the comments, of bipolar and schizophrenia, we think we can drive VRAYLAR alone in those indications to a multi-billion dollar product and that’s just driving that market share penetration up to like 5% or so. And I think that’s very doable based on the profile of VRAYLAR. VRAYLAR has a very unique profile in that market.

So MDD, if we are successful, obviously, will open up a whole other channel and allow you to increase that market share even more significantly. And so typically, many of the drugs that achieved MDD were drugs that had $5 billion, $6 billion of annual revenues.

So this is a nice opportunity. Without MDD, VRAYLAR is still going to be a very important product and a very significant product. With MDD, it becomes a major product. And so we will see how those next two studies play out. The first study was positive and I think we are hopeful that we will be able to get it.

[Liz Shea, Vice President, Investor Relations]

Thanks, Sriker [ph]. I think that was you. Operator, next question, please?

[Operator]

Thank you. Our next question is from Randall Stanicky from RBC Capital Markets.

[Randall Stanicky, RBC Capital Markets]

Great. Thanks. Rick, early in the pandemic, you were one of the few to identify or build an impact for potential headwinds from higher unemployment associated with loss of health coverage. What are you currently seeing right now and anything on the patient assistance program numbers that help you inform on that? And then secondly, I just wanted to ask on BOTOX migraine. This has been historically a roughly $600 million high margin product for Allergan. We have been watching CGRP inhibitors now been in the market a couple of years. Do you see this as a growth product or opportunity for you and what are you seeing overall with respect to BOTOX in migraine? Thanks.

[Rick Gonzalez, Chairman and CEO]

So on the unemployment, we did identify back, I guess, it was in the first quarter call, that we were going to build in a level of risk associated with patients who would have to move to some type of an assistance program, because they lost their jobs.

We have not seen that impact play out to any significant level. We have not seen it in our patient assistance program and right around the pandemic we made a decision to proactively go out and advertise our patient assistance program just to make sure that patients knew that if they couldn’t afford their AbbVie drugs that they could get them from us.

So I think we proactively tried to drive it in an effort to make sure that patients were not exposed, but we haven’t seen very much at all. We still have some coverage left in the fourth quarter for it. But I’d say at this point, I think, we are questioning whether or not we are going to see it.

Now, I can’t tell you exactly why. But I can tell you we are monitoring it carefully and it’s definitely not happening, at least in our business, because we would see it in the patient assistance program.

On BOTOX migraine, if you actually look at what is happening with patients on BOTOX migraine, when the injectable CGRPs came into the market, you did see a tick down in patients, but then BOTOX recovered. And it has roughly the same number of patients that it had back then. It’s slightly lower than it had back then. So what the CGRPs ended up doing was expanding the market to some extent.

And we are seeing a very similar phenomenon on the acute therapies as well. If you look at the scripts, the NBRxs for the acute CGRPs, you can see that it’s actually almost doubling every quarter the number of patients. In the last quarter, it was about 90,000 to 100,000 NBRxs.

So I think these assets can significantly expand the market. I think two-thirds of our patients are patients that have switched on the acute, have switched from triptans to our agent and one-third of them are naive patients that we are bringing into the category.

And again, that’s all about making it visible to patients who have this condition so that they go to their physician and ask for the therapy. It’s all about building markets essentially. And so I think one of the things these assets will do is they will expand the market.

Now, I think as you expand the market, obviously BOTOX therapeutics, some of those patients will ultimately if they don’t get the kind of relief that they are looking for on an injectable CGRP or the acute therapy, they would eventually probably try injectable BOTOX.

So we could see a little bit of growth there, but the biggest part of the growth that we are going to see in this market is from UBRELVY and ultimately atogepant. It’s a big market and I think these agents will allow us to be able to significantly expand the market and I think this is clearly a multi-billion dollar market.

[Liz Shea, Vice President, Investor Relations]

Thank, Randall. Operator, next question, please?

[Operator]

Thank you. Our next question is from David Risinger from Morgan Stanley.

[David Risinger, Morgan Stanley]

Thanks very much. Excuse me, so I want to start with a high-level question, Rick. Could you please discuss long-term immunology net pricing and formulary positioning prospects in the face of increasing competition in coming years? And then second, just had a high level question about cash flow, I was hoping that you could discuss prospects for operating cash flow, CapEx and free cash flow? Thank you very much.

[Rick Gonzalez, Chairman and CEO]

Yeah. Thanks, David. I will take the first one. Rob will answer the second one for you. So if I look at long-term immunology, what’s critically important is that you have the kinds of assets that allow that managed care organization or PBM to be able to cover the greatest number of patients.

This is a category where not every drug works on every patient. So you have to have multiple options that are available in the formulary and that’s just -- that is the appropriate thing to do to make sure that patients have the drugs that they need to be able to be treated.

I would say, we typically do very well with formulary access. That’s driven primarily by the fact that our assets tend to be very attractive assets from a clinical profile. They establish significant market share positions and that’s important for the managed care organization or the PBM. So I don’t see anything significantly impacting that going forward. I would assume we will maintain very high levels of formulary access.

Net pricing, there’s always some level of impact on pricing when you renegotiate the contracts. I don’t anticipate that you will see a significant change going forward. So I think it’s more of the normal kinds of competitive activities that we see in the marketplace.

[Rob Michael, Executive Vice President and CFO]

And David, this is Rob. I will answer your question on cash flow, so if you look at AbbVie and Allergan in 2019 on a combined basis, generated about $19 billion almost $20 billion of operating cash flow.

CapEx runs close to $1 billion, and so if you look at this year, again, we have a partial year of Allergan, we are probably trending towards the $16 billion operating cash flow number with a little bit less than $1 billion of CapEx. So you need to annualize that and also consider the fact that we are going to generate earnings growth going forward, but that should give you a good number to work with.

[David Risinger, Morgan Stanley]

Thank you.

[Liz Shea, Vice President, Investor Relations]

Thanks, David. Operator, next question, please?

[Operator]

Thank you. Our next question is from Terence Flynn from Goldman Sachs.

[Terence Flynn, Goldman Sachs]

Hi. Thanks for taking the questions. I was just wondering first, maybe on the IBD front, I know you have a number of readouts coming up for RINVOQ and SKYRIZI here. Maybe you could just outline what current usage of targeted drugs in IBD is on a percentage basis and how that compares to rheumatology and dermatology? And what you see is a potential here to boost that uptake in IBD further? And then to your TNF steroid conjugate program, what were the criteria that were key that led to your choice of 154 as a go-forward asset? And then lastly, on the Allergan integration, I know you said everything is on track there. It’s going really well. You talked about some revenue synergy opportunity, Rick, and I know you have laid out your expense synergy target of $2 billion in 2022. Maybe you could just talk about some of the puts and takes for 2021 as we think about the Allergan synergies on both sides? Thank you.

[Rick Gonzalez, Chairman and CEO]

Okay. Great. On IBD usage, if you look at the penetration, I’d say, IBD is an area where you have reasonable levels of biologic penetration, because the disease particularly Crohn’s is the disease is a pretty severe. I think the challenge in IBD is that, with the current therapies that are available, you still get sub-optimal clinical efficacy for these patients and durability of that efficacy.

And so what physicians tend to do is they rotate patients through various treatments to try to maintain them in control for a longer period of time. So it is a market that is right for higher efficacy agents and a market that is right for more agents to be available to allow for better treatment of those patients and that’s the key driver in that segment of what gives significant uptake.

So when we see the data around IBD that will be important for us, obviously the early data looks good. And ultimately I think these assets, along with HUMIRA, will be able to provide the market with a significant new alternative and I think that uptake will be good based on that.

[Michael Severino, Vice Chairman and President]

This is Mike. I will take the question about 154. So, 3373 and 154 represent our TNF steroid conjugate molecules that are in the clinic. They are very similar, similar to the extent that we view the biology as being translatable between the two.

But 154 includes some improvements in linker technology that relate to manufacturability and ability to formulate at high concentration, ease of formulation. And so those can be very important advantages for a successful molecule.

We previously toplined the positive results from 3373. We wanted to see that 154 gave us the PK performance and the exposure to achieve the pharmacodynamic coverage we think we need in the next stage of development. And as I said, we viewed the biology as translatable between the two.

So once we saw that PK performance and it matched our expectations and showed that 154 would give us the coverage that we were seeking at acceptable doses in the clinic, we made the decision to advance that molecule into larger scale trials.

[Rob Michael, Executive Vice President and CFO]

Hey. Terence, this is Rob. I will take your question on synergies. So while we are not providing guidance for 2021 today. I think a good way to think about the expense synergies is to run rate the $600 million in partial year synergies, which gets to about $1 billion. And then, as you think about that ramp to greater than $2 billion by 2022, I think it’s reasonable to straight line that.

So if you think about what’s going to drive the ramp? It’s things like systems integration, leveraging procurement spend, will result in more synergies over time, as well as network optimization. In the near-term, it’s really driven more from immediate redundancies like corporate infrastructure and R&D portfolio optimization.

As it relates to the revenue synergies, look, as we have now had a few months with the combined company, we see opportunities as we think about investment in aesthetics, where we have really amped up our DTC investment for JUVÉDERM and BOTOX cosmetic, it give o the ability to invest more in aesthetics. Similarly, invest more in neuroscience, whether that’s VRAYLAR, BOTOX therapeutic.

And then we look internationally given the infrastructure we have, the integrated brand team approach, we think there’s opportunity to really leverage our market access capability, our international affiliate structure to really drive that international growth for the company going forward for those Allergan brands as well.

[Rick Gonzalez, Chairman and CEO]

Terence, the only thing I would add, maybe to give you some perspective on the investment side. Allergan tended to what I would describe as pulse invest in particularly DTC, but even in social media.

So they didn’t -- and typically what we do with brands when we want to drive maximum speed of market penetration is we invest at a steady state and continue to do that for an extended period of time.

So they might have invested heavily in one quarter and then gone dark in the next quarter and then invested again and gone dark again. We don’t use that kind of a strategy. We tend to invest for the full year.

And in our experience, what that does is it gives you, the fact that you have constant coverage, gives you maximum speed of penetration. So we clearly think that’s going to be an advantage, particularly in areas like aesthetics and neuroscience.

[Liz Shea, Vice President, Investor Relations]

Thanks, Terence. Operator, next question, please?

[Operator]

Thank you. Our next question is from Gregg Gilbert from Truist.

[Gregg Gilbert, Truist]

Thank you for getting me in. Good morning. Rick, it sounds like you think the neuroscience franchise might be one of the sleepers of the Allergan deal and you have already framed the potential for VRAYLAR particularly if depression hits. But I was curious if this development in neuroscience has taken on sort of a new sense of urgency given the heft that you have now in that franchise or whether you think you have enough going on there already? And for Mike, I was hoping you could let us know when we will see Phase 3 data for 951 in Parkinson’s and give us a sneak preview of what you are looking for there profile wise? And lastly, can you frame for BOTOX therapeutics, Mike, what you have decided to pursue in terms of indications versus ones that you have taken off the table now that you have had some time to work with that? Thanks.

[Rick Gonzalez, Chairman and CEO]

I’d say on neuroscience, the way to think about it is or at least the way we are thinking about it is, there’s a significant opportunity to drive VRAYLAR to be a very large product, I mean, doubling or more depending upon the ability to get MDD.

And I’d also say in migraine, when we get the full portfolio of migraine assets. The migraine market is a big market. If you look at the acute market today, it’s probably about $1.5 billion. We believe it can grow to $4 billion or $5 billion by 2025 with the right kinds of assets and the right kind of promotion.

And then if you look at the preventative market, it’s about $3 billion, so we believe that one in real high-single to low-double digits with the right kinds of assets and the right kinds of promotion.

So the first phase of neuroscience is nothing more than taking the assets we have now, getting atogepant to the marketplace and then we have a full portfolio of migraine products, and then maximizing the market share position of those assets in the market, that’s sort of Phase 1.

But I would say now that we have infrastructure in place, Mike’s BD team has been now been starting to look at assets that would be complementary to that. And we didn’t in the past because for a single anti-psychotic, we wouldn’t have wanted to build-out the infrastructure, it just wouldn’t have made sense for us. But now we can basically add those kinds of assets to the infrastructure we have. So it does give us another opportunity from a BD standpoint to be able to build the business longer term.

[Michael Severino, Vice Chairman and President]

I will take the second question and agree with everything Rick said, the only thing I’d add on BD in neuroscience is neuropsychiatry is now clearly an area of strength for us and can be an area of interest and that can go beyond the anti-psychotics as well.

There’s tremendous potential and unmet need in areas like generalized anxiety disorder, still in depression despite there are many agents on the market, many, many patients remain inadequately treated, so we would look broadly across that space. With respect to 951 and data timing, we would expect to see results from our Phase 3 study in the second half of next year.

And what we are looking for is really DUOPA like efficacy, because DUOPA is a transformational product but it’s also a product that is challenging to administer, and the nature of that product, the fact that it requires the placement of a gastric tube that’s then threaded into the small bowel and has to be maintained limits the size of what’s effectively an addressable market. Not the market by the labeled indication, but the proportion of patients within that population that would consider a therapy like that.

And 951 has the potential to substantially expand that. It has an insulin pump-like device, subcutaneous delivery device. We think it will broaden the number of patients within that labeled population, who would consider such a therapy and this is really a very substantial market.

So for example, if you look at DUOPA, despite all of its challenges, it does about $0.5 billion in sales. If you look across similar therapies for advanced Parkinson’s disease, the market is probably $1.5 billion or more and that probably represents only a small part of the potential because much of it remains untapped. So we think that 951 can address that and we think the profile that it will take to address that is DUOPA like efficacy with a more patient-friendly subcutaneous delivery device.

With respect to BOTOX indications, there are a number of indications, both for BOTOX and for other toxins, for novel toxins that we are considering in the therapeutic space. I think there’s more work that we can do in the migraine space. Although, that has been an area of strength, episodic migraine has patients that may benefit from a therapy like BOTOX and there’s still much more to do on the neurology side with respect to specificity disorders that might be secondary to stroke or other conditions where there is still room to expand those indications.

When we look more broadly, there are a number of potential interesting indications for neurotoxins. They might not be BOTOX. They may be novel toxins. Those could be things like prevention of afib, for example, and we are continuing to explore indications beyond that.

[Liz Shea, Vice President, Investor Relations]

Thanks, Gregg. Operator, next question, please?

[Operator]

Thank you. And our next question is from Tim Anderson from Wolfe Research.

[Tim Anderson, Wolfe Research]

Thank you. A high level question for Rick, despite Allergan being a very reasonable solution to upcoming U.S. HUMIRA LOE in 2023, the multiple on AbbVie is lower than it’s ever been. The entire drug group is out of favor, but your multiple is about half of the peer group average. To me what that multiple says is that investors remain worried about what AbbVie looks like past 2023. So two questions related to this, the first is why not give updated granular extended guidance that goes beyond 2023? You have given long-term guidance in the past sometimes and that’s resonated well with the market. So can we expect you might do this at some point soon? And second question, why not go do more M&A in the near-term, we just saw Bristol do a $13 billion deal not far after closing Celgene and layering more product into your pipeline would help give investors assurances that there’s life beyond 2023. And by virtue of how you answered an earlier question, you yourself basically said there’s not much new NME flow until 2025 and beyond? Thank you.

[Rick Gonzalez, Chairman and CEO]

Yeah. I think if you look -- Tim, this is Rick. If you look at the PE of the whole sector, obviously, the sector is under pressure from the political environment and concerns about the political environment. And you are correct, we are at the lower end of that PE and I think that is driven by uncertainty about what the growth rate will be on the other side of the LOE.

What I would tell you is obviously, we have a 10-year LLP, so we know what we think that growth rate is on the other side of the LOE. And I can tell you that when I look at that growth rate, it’s robust.

Now, the market has to come around to that point of view. I’d say, we haven’t always been right, but in total revenue, we have always been right. In fact, we have always beat for the most part what our expectations were.

And so we obviously challenge it pretty hard and we have knowledge of what we believe the erosion curve will look like. We have knowledge of what we think our pipeline will deliver and what the additional indications will deliver.

And look, I remember there was a tremendous amount of skepticism about when we gave it was either $10 billion or $11 billion of risk adjusted revenues for RINVOQ and SKYRIZI back a year or two ago, something like that.

There was a tremendous amount of skepticism, that’s impossible. I don’t hear very much of that now that these two assets are $2 billion and growing like rockets. So I’d say our ability to assess what we can do with our assets is pretty high.

Now, that doesn’t mean you shouldn’t go out and get more things and we constantly look and where we find opportunity, we will clearly go pursue those. They have to be opportunities that make sense and fit into our portfolio.

You have seen us do transactions to continue to build the long-term future of our hem/onc business with Genmab and I-Mab. And those two assets combined with what VENCLEXTA and IMBRUVICA can continue to do, I think it is going to give us a very robust long-term performance in that franchise.

I think in immunology, we are in pretty good shape between our internal pipeline both the additional indications on SKYRIZI and RINVOQ and then what we have earlier on that we think will play out in a positive way.

When we look at neuroscience, we just talked about that we have the ability to be able to grow that. Certainly, we are going to invest heavily in aesthetics. We have a tremendous amount of assets, new toxins that we are working on and we are going to accelerate many of those, new fillers and other kinds of opportunities that will build that aesthetics business to be able to grow rapidly.

And so I feel pretty good about where we are. In fact, I’d tell you I feel very good about where we are six months into the Allergan transaction. Certainly Allergan has given us more growth as we mentioned a moment ago. When we look at neuroscience, neuroscience has clearly been I think a nice positive upside for us and one that I think we can execute very well.

As far as guidance is concerned, I am not saying, we will never give guidance, but we want to give guidance when we are able to do it with a high degree of certainty. Because the last thing we want to do is provide a level of guidance that you don’t have a high degree of certainty and you know it’s going to, it has some variability to it.

You probably remember, we did that on the international biosimilars and we were off by not that much, but we were off by some and the market didn’t like the fact that we were off. So you need to be awfully careful about how you provide that guidance in a way to make sure that you meet or exceed the guidance, and at the point which we have that level of confidence, we may go out with longer term guidance.

[Tim Anderson, Wolfe Research]

Thank you.

[Liz Shea, Vice President, Investor Relations]

Thanks, Tim. Operator, next -- we have time for one final question.

[Operator]

Thank you. And our final question today is from Josh Schimmer from Evercore.

[Josh Schimmer, Evercore]

Last question. Thanks for squeezing me in. Just a couple of quick ones, can you provide any color on the SKYRIZI royalty and can you comment on what you see as the incremental markets for the lower face toxins, the new dermal filler and presbyopia, if you view any of those as material? Thank you.

[Rob Michael, Executive Vice President and CFO]

Yeah. Josh, so on the SKYRIZI royalty, well, keep in mind that we account for this as a business combination, so it comes through consideration so you don’t see it on a non-GAAP P&L. We don’t disclose our royalty rates but a good way to think about it is reasonable royalty you would pay for a late-stage asset is probably a good way to think about what the royalty burn would be on -- the cash royalty burn will be on SKYRIZI.

[Rick Gonzalez, Chairman and CEO]

And I’d say the lower face toxins and the lower face fillers that we are working on, probably the best way, rather than trying to characterize individual indications for toxins or fillers is, we are trying to build a portfolio and a market activation strategy that will allow us to grow the aesthetics business at a consistent double-digit rate.

And it is both that internal pipeline and activating more patients, and some BD effort that will give us that. So, certainly those lower face toxins and fillers are designed to be able to support that growth going forward. The eye care product, I would call that product sort of a modest product. I don’t remember the specifics. Do you, Rob?

[Rob Michael, Executive Vice President and CFO]

Yeah.

[Rick Gonzalez, Chairman and CEO]

I’d call it sort of a modest size product.

[Rob Michael, Executive Vice President and CFO]

Yeah.

[Josh Schimmer, Evercore]

Thank you.

[Liz Shea, Vice President, Investor Relations]

Thanks, Josh. That concludes today’s conference call. If you’d like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us.

[Operator]

Thank you. This does conclude today’s conference. You may disconnect at this time.