Abbvie Inc

NYSE:ABBV

Earnings Call Analysis

AbbVie's Growth Accelerates with Robust Performance and Positive Guidance

In the third quarter, AbbVie reported nearly $14.5 billion in revenue, a 4.9% operational increase, with adjusted EPS of $3, beating guidance. Their ex-HUMIRA portfolio thrived, driven by SKYRIZI and RINVOQ, expected to exceed $17 billion in sales this year. They raised full-year adjusted EPS guidance to $10.90-$10.94 and total revenue to approximately $56 billion. HUMIRA faced a 36.5% decline, but its erosion positively impacted new drug sales. The recent acquisition of Cerevel Therapeutics enhances their neuroscience pipeline. Overall, AbbVie maintains strong growth prospects with solid cash flow supporting a 5.8% dividend increase starting in 2025.

Strong Financial Performance in Q3

In the third quarter of 2024, AbbVie reported adjusted earnings per share (EPS) of $3, surpassing expectations by $0.10. Total net revenues came in at nearly $14.5 billion, representing a robust 4.9% growth on an operational basis, although there was a 1.1% unfavorable impact from foreign exchange. The company's ex-HUMIRA growth platform drove remarkable growth, achieving nearly 18%, reflecting the strong performance of its newer products.

Guidance Upgraded Amid Solid Growth

AbbVie raised its guidance for the full year, now expecting adjusted EPS to be between $10.90 and $10.94, an increase of $0.15. Total net revenue expectations were also elevated by $500 million to approximately $56 billion. Notably, the SKYRIZI brand forecasts have been adjusted significantly upward, now expecting global sales of around $11.5 billion, highlighting its successful performance across all indications.

HUMIRA Erosion and Transition to Newer Therapies

The traditional blockbuster HUMIRA saw its U.S. sales drop by approximately $400 million to $7.4 billion, primarily due to increasing competition from biosimilars and a shifting prescriptive appetite towards newer products like SKYRIZI and RINVOQ. Despite this decline, the overall dynamics of AbbVie’s immunology portfolio have benefitted positively as the decline in HUMIRA is offset by robust performance in its new dual-drug offerings.

Product Highlights: Rising Stars and Challenges

SKYRIZI exhibited impressive growth with global sales of $3.2 billion, up 51.5%. Similarly, RINVOQ saw sales rise by 47.4% to $1.6 billion. However, challenges persist in AbbVie's aesthetic segment, where overall revenue from aesthetic products saw a decrease largely due to the slowdown of JUVEDERM in a tough economic environment, resulting in a revenue drop of roughly $200 million.

Investment in Innovation and Future Growth

AbbVie completed the acquisition of Cerevel Therapeutics, bolstering its neuroscience pipeline, which is critical for effective treatments in conditions such as Parkinson's and schizophrenia. The company anticipates significant future contributions from this vertical, supported by new phase III studies and ongoing developments in its broad laboratory pipeline aimed for sustainable growth through the 2030s.

Cash Flow and Shareholder Returns

The strong operational performance has led to over $11 billion in free cash flow, allowing AbbVie to increase its dividend by 5.8% to $1.64 per share, effective from 2025. This marks a significant cumulative increase of over 300% since the dividend program's inception. Furthermore, the firm is set to efficiently utilize its cash reserves to continue reducing its debt while exploring new growth opportunities.

Confident Outlook for 2025

Looking forward, AbbVie is poised for strong mid-single-digit revenue growth in 2025, buoyed by positive sales momentum from SKYRIZI and RINVOQ. Despite HUMIRA's decline, the anticipated product transitions suggest an optimistic future where the company expects to maintain robust sales growth even after navigating for significant shifts in its portfolio dynamics.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, and thank you for standing by. Welcome to the AbbVie Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Today's call is being recorded.

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

[Elizabeth Shea, executive]

Good morning, and thanks for joining us. Also on the call with me today are Rob Michael, Chief Executive Officer; Jeff Stewart, Executive Vice President, Chief Commercial Officer; Roopal Thakkar, Executive Vice President, Research and Development, Chief Scientific Officer; Scott Reents, Executive Vice President, Chief Financial Officer; and Carrie Strom, Senior Vice President, AbbVie and President Global Allergan Aesthetics.

Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in our forward-looking statements. Additional information about these risks and uncertainties included in our SEC filings, AbbVie undertakes no obligation to update these forward-looking statements, except as required by law.

On today's conference call, non-GAAP financial measures will be used to help investors understand AbbVie's business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website.

Following our prepared remarks, we'll take your questions. So with that, I'll turn the call over to Rob.

[Robert Michael, executive]

Thank you, Liz. Good morning, everyone, and thank you for joining us. AbbVie is performing exceptionally well, and I'm extremely pleased with the execution against our strategic priorities, including continued double-digit sales growth from our ex-HUMIRA platform, the closing and integration of Cerevel Therapeutics and the progress we are making to build and advance a compelling pipeline of innovative medicines.

Turning to our results. AbbVie's diversified portfolio delivered sales that were $260 million above our expectations and reflect robust mid-single-digit operational sales growth. Our ex-HUMIRA platform drove this overachievement, including growth of nearly 18%.

The momentum of SKYRIZI and RINVOQ is especially impressive, with combined sales expected to exceed $17 billion this year, which is $1.3 billion above our initial expectations, and we see substantial opportunity for continued strong growth well into the next decade.

Several other key products also delivered double-digit sales growth, including Venclexta, VRAYLAR, Ubrelvy and QULIPTA. This broad-based performance further demonstrates the strength of our commercial portfolio. For the third time this year, we are raising our full year revenue and adjusted EPS guidance.

We are increasing our full year revenue guidance by $500 million, and have now raised total revenue by $1.8 billion since our initial guidance in February. We are also raising our full year adjusted earnings per share guidance by $0.15 and now expect adjusted EPS between $10.90 and $10.94. In addition to achieving strong quarterly results, we have been very focused on investing in the business to generate sustainable long-term performance in the 2030s and beyond.

During the quarter, we successfully completed the acquisition of Cereval Therapeutics, strengthening our neuroscience pipeline. Cerevel enhances our ability to help patients suffering from devastating conditions such as Parkinson's and schizophrenia. The integration has been seamless, and we are excited to have the talented Cerevel team join our organization.

Within the Cerevel pipeline, we are very pleased with the positive Phase III results and emerging profile of Tavapadon in Parkinson's. And we remain on track to read out both pivotal studies for emraclidine and schizophrenia in the fourth quarter.

More broadly on the pipeline, we have been advancing key R&D programs across all stages of development. Some notable highlights include the U.S. approvals of Biolab for advanced Parkinson's and BOTOX for pletizumabans, the U.S. regulatory submission of Telio V for non-squamous non-small cell lung cancer, and the start of our Phase II Crohn's platform study which is evaluating SKYRIZI in combination with several novel biologics.

In summary, AbbVie continues to demonstrate strong commercial, operational and R&D execution. The robust performance of our growth platform once again exceeded our expectations, and we see numerous opportunities to drive long-term growth, further underscoring our confidence in that growth.

Today, we announced a 5.8% increase in our quarterly cash dividend, beginning with the dividend payable in February 2025. Since inception, we have increased our quarterly dividend by more than 300%.

With that, I'll turn the call over to Jeff for additional comments on our commercial highlights. Jeff?

[Jeffrey Stewart, executive]

Thank you, Rob. I'm extremely pleased with the continued strong momentum across the therapeutic portfolio. I'll start with the quarterly results for immunology, which delivered total revenues of more than $7 billion, up 4.8% on an operational basis. SKYRIZI global sales were $3.2 billion, up 51.5% on an operational basis, exceeding our expectations.

We are seeing robust prescription growth across psoriatic disease, with SKYRIZI achieving in-play biologic share leadership in approximately now 30 key countries. In the U.S., we continue to capture nearly 1 out of every 2 in-play psoriatic disease patients on biologic therapy and we see substantial room for further total share growth.

We believe that SKYRIZI's best-in-class profile with nearly complete skin clearance, high durability of response, easy onboarding and quarterly dosing for maintenance therapy -- that's a very high bar relative to other therapies on market or in development.

SKYRIZI has also demonstrated a compelling clinical profile in IBD, including strong endoscopic data paired with convenient dosing. This differentiated profile as well as our compelling head-to-head sequence data versus STELARA is supporting very rapid uptake in Crohn's disease, where SKYRIZI continues to gain market share globally achieving in-play patient leadership across all lines of therapy in the U.S., Japan and Canada.

SKYRIZI's U.S. in-play patient share is now approximately 32%, more than double the share of the second biologic treatment. And with SKYRIZI's total prescription share of approximately 8%, we see significant opportunity for revenue inflection in Crohn's going forward. While we are still very early in our launch in the U.S. and Europe, we also anticipate robust uptake for SKYRIZI in ulcerative colitis, the new indication.

Initial prescription trends as well as feedback from gastroneurologists have been overwhelmingly positive. Physicians are particularly impressed with the data that has been demonstrated for naive UC patients who have not been exposed yet to biologics, where SKYRIZI achieved very high results for clinical remission and endoscopic response.

We have now secured broad formulary access for SKYRIZI in UC with sales in this indication expected to ramp meaningfully over the next several quarters. So given the momentum we are seeing across all of these indications, we will be raising our full year sales guidance once again for SKYRIZI.

Turning now to RINVOQ, which is also demonstrating robust growth Global sales were $1.6 billion, up 47.4% on an operational basis. We continue to see strong prescription growth across all 7 of RINVOQ's approved indications. I'm especially pleased with our performance in IBD, where RINVOQ's uptake is exceeding our expectations.

RINVOQ is now capturing double-digit in-play patient share in the U.S. for ulcerative colitis as well as Crohn's disease. Both indications are now available in more than 75 countries with reimbursement and share continuing to increase.

I also wanted to highlight our recent performance in atopic dermatitis, where RINVOQ is seeing an acceleration of in-place share following recent positive data from our second head-to-head study versus Dupixent. As an oral option that provides rapid skin clearance and itch relief, we believe RINVOQ's strong differentiated profile will continue to compete well in this highly underpenetrated AD market. As a result of this continued strong performance, we will also be increasing the full year sales guidance once again for RINVOQ.

Looking forward, we see substantial momentum for both SKYRIZI and RINVOQ, including continued share gains across existing indications on top of the typical underlying market growth across room, derm and gastro. Additionally, we are making excellent progress with several new indications for RINVOQ across sizable markets that will have the potential to provide another significant revenue inflection in the second half of this decade and into the 2030s.

From a competitive perspective, a key element of SKYRIZI and RINVOQ success has been their strong differentiation with compelling head-to-head data against several novel therapies. This includes SKYRIZI's superiority versus HUMIRA COSENTYX, Otezla and STELARA in psoriasis as well as STELARA in Crohn's disease and RINVOQ superiority versus HUMIRA and ORENCIA in rheumatoid arthritis as well as DUPIXENT in atopic dermatitis.

To further support our differentiation, we have another head-to-head study ongoing for SKYRIZI versus [indiscernible] in psoriasis with plans also underway now for a study comparing SKYRIZI versus ENTYVIO in ulcerative colitis. So given all of these factors, we feel very confident about the long-term growth prospects for both SKYRIZI and RINVOQ.

Turning now to HUMIRA, which delivered global sales of $2.2 billion, down 36.5% on an operational basis due to biosimilar competition. While HUMIRA's share erosion to biosimilars in the U.S. is largely in line with our expectations, we are now seeing more HUMIRA molecule volume moving to other novel mechanisms than previously anticipated.

So while this has an unfavorable impact to HUMIRA sales, we are seeing a benefit to SKYRIZI and RINVOQ, which is a very favorable dynamic for immunology portfolio now and certainly over the long term.

Moving now to oncology, where total revenues were approximately $1.7 billion. IMBRUVICA global revenues were $828 million, down 8.8%, reflecting continued competitive dynamics in CLL, partially offset by higher persistency rates for existing patients.

VENCLEXTA is performing extremely well. Global sales were $677 million, up 18.2% on an operational basis. This reflects strong momentum in CLL, especially in Europe, where recent guideline changes recommend combination use of Venclexta plus BTK inhibitors as a preferred fixed duration treatment versus continuous BTK treatment alone.

Growth is also supported by our very strong share position in frontline AML, where VENCLEXTA is the leading treatment for patients who are ineligible for intensive induction chemotherapy. We are also seeing nice sequential revenue growth from ELAHERE here and at Kinley, which are both demonstrating strong launch trajectories.

Turning now to neuroscience, where total revenues were more than $2.3 billion, up 16% on an operational basis. VRAYLAR is demonstrating robust performance. Sales were $875 million, up 16.6% on an operational basis, reflecting continued new prescription growth in both bipolar disorder and adjunctive MDD.

Within migraine, our leading oral CGRP therapies contribute $445 million in combined revenue this quarter, reflecting growth of approximately 22% as we continue to see increasing prescription demand for both Ubrelvy and QULIPTA. Global BOTOX Therapeutic sales were $848 million, reflecting strong performance in chronic migraine as well as the other approved indications.

Finally, we are very excited for the recent U.S. approval of Violav, a transformative therapy for patients with advanced Parkinson's disease who are uncontrolled on oral therapy alone. As a less invasive, nonsurgical delivery system that can provide meaningful improvements in on-time and off time, we believe Violav has the potential to significantly expand use beyond current device aided therapies. Sales in the U.S. for Violav are expected to ramp gradually over the next several quarters as we work to establish the appropriate Medicare coverage and benefit determination.

At the same time, we are very encouraged by the interest and uptake internationally, where we have approval now in 35 countries with several thousand patients already on treatment. Longer term, we anticipate peak sales of Violav to exceed $1 billion.

So overall, I'm very pleased with the continued commercial execution and performance across the therapeutic portfolio. And with that, I'll turn the call over to Carrie for additional comments on aesthetics. Carrie?

[Carrie Strom, executive]

Thank you, Jeff. Third quarter Global Aesthetic sales were more than $1.2 billion, representing growth of 1.8% on an operational basis. In the U.S., aesthetic sales of $791 million increased by 3.9%, driven by growth from BOTOX Cosmetic as well as other brands across our broad portfolio.

U.S. BOTOX Cosmetics sales were $414 million, an increase of 6.5% versus the prior year. Favorable pricing dynamics and facial toxin market growth more than offset modest share erosion. BOTOX Cosmetic remains the clear market leader.

U.S. Juvederm were $105 million. Juvederm's market-leading share was consistent with last year and the overall seller market was roughly flat to the prior year.

While the U.S. facial injectable market remains largely stable, growth is below historical rates. As a result, there is a reluctance from customers to maintain traditional toxin and filler inventory levels. based upon the relatively higher price point of filler procedures in a still challenging U.S. economic environment, Juvederm is more impacted by this dynamic, which can be seen in third quarter results.

Internationally, aesthetic sales were $448 million, reflecting a decline of 1.6% on an operational basis. Within China, the economic dynamics that weighed on our results during the first half of the year have continued to impact consumer spending. This has created challenging aesthetic market conditions that has been particularly impactful to Juvederm's performance. Primarily due to this circumstance, we are moderating our Juvederm sales outlook for the year.

We are encouraged by the recently announced government stimulus in China. We will continue to monitor for any further development and how it could positively impact consumer discretionary spending and aesthetic market growth. Although the current dynamics in China are challenging, its potential remains attractive, and we are committed to bring innovation to this market that will drive longterm growth.

Along those lines, in China, we recently received approval for the BOTOX Cosmetic indication and master muscle prominence, marking the first toxin in the world to have this indication. This approval enables us to market and train to this important treatment option that addresses a top aesthetic concern among many Asian patients.

In the U.S., we are pleased that we received FDA approval for the use of BOTOX Cosmetic to treat platizmaban. This approval positions BOTOX as the only cosmetitoxin with 4 distinct indications, and enables us to market and train beyond the face for the improvement of neck and jaw line appearance. We also remain excited about the opportunity for BoNT/E. Based upon its rapid onset and short-acting profile, BoNT/E has the potential to activate new patients that are hesitant to try facial toxins, driving long-term market expansion.

Looking to the future, we continue to see significant growth potential for our aesthetics portfolio based upon low market penetration rates, our commitment to introduce novel treatments, our strong customer relationships, and our position as the global aesthetic leader.

With that, I'll turn the call over to Roopal.

[Roopal Thakkar, executive]

Thank you, Carrie. Starting with immunology where we recently began our Phase II Crohn's disease platform study, which will evaluate SKYRIZI in combination with several other novel biologics. This study will initially look at combinations of SKYRIZI with our anti-IL-1 alpha beta bispecific luticizumab and our novel anti-alpha4beta7 antibody ABBV-382. We are planning to include additional novel biologics in the future.

Our approach in immunology has been to pursue therapies that are well differentiated and have the potential to elevate standard of care. We have clearly achieved this with RINVOQ and SKYRIZI across multiple indications, including Crohn's disease and ulcerative colitis.

As we think about how the IBD market will evolve, we view dual mechanism approaches as having the greatest potential to achieve levels of efficacy that are above current standard of care. We are very excited about the potential for these combination therapies in IBD, and we look forward to sharing updates as the data mature.

In oncology, we continue to make very good progress across all stages of our hem and solid tumor pipeline. In the area of solid tumors, we recently submitted our application to the FDA for accelerated approval of Teliso-V as a monotherapy in patients with previously treated C-MET overexpressing EGFR wild type, non-squamous, non-small cell lung cancer.

Once approved, Teliso-V will become the first c-Met targeted ADC to enter non-small cell lung cancer. A segment with limited options and where patients tend to have a very poor prognosis, especially if their tumors express c-Met. We anticipate an approval decision in the first half of 2025.

In the quarter, we also received a positive CHMP opinion recommending ELAHERE for the treatment of platinum-resistant ovarian cancer in patients with high expression of FR alpha and treated with up to 3 prior therapies. This decision was based on the positive Phase III MIRASOL trial where ELAHERE here demonstrated an overall survival benefit and significantly reduce the risk of cancer progression. We anticipate an approval decision in Europe in the fourth quarter.

At the recent ESMO Congress, we presented new Phase I data for ABBV-400 in advanced non-small cell lung cancer and gastroesophageal cancer. Early efficacy data from the lung cohort are promising, with an objective response rate of 48% across all patients in the study and response rates ranging from 60% to 78% in patients with overexpressed c-Met.

We are very pleased with the level of activity we're seeing from our next-generation c-Met ADC, which compares favorably to Teliso-V, where we've seen objective response rates ranging from 23% in medium c-Met expressors to 35% in patients with high c-Met expression. 400 has the potential to expand our c-Met portfolio into earlier lines of therapy and lower levels of c-Met expression in lung cancer.

Similarly, in patients with advanced gastroesophageal cancer, 400 demonstrated promising activity with an objective response rate of 29% across all patients. This compares well against combination and single-agent chemotherapy, which are the standards of care for patients in second line and third line of therapy, respectively.

Based on these encouraging preliminary data, we plan to begin Phase II studies for 400 in both non-small cell lung cancer and gastroesophageal cancer. Recall, we've also advanced 400 in late-line colorectal cancer and we remain on track to begin a Phase III study later this year.

In the area of hematologic oncology, we received approval in Europe for [indiscernible] as a monotherapy treatment for patients with relapsed/refractory follicular lymphoma after 2 or more lines of therapy. Epcoritamab is now the only T cell engaging bispecific approved in the U.S. and Europe to treat both follicular lymphoma and diffuse large B-cell lymphoma.

Moving to neuroscience. We recently received FDA approval for [ VilEv ] as the first subcutaneous 24-hour infusion of levodopa-based therapy for the treatment of motor fluctuations in adults with advanced Parkinson's disease. Our novel subcutaneous [ levodopa carbidopa ] delivery system offers meaningful benefits over current treatment options and others that are in development.

[ VilEv ] delivers significant improvements in on-time and off time with a nonsurgical 24-hour delivery system. It can deliver high levodopa doses similar to the amount provided by DUOPA, and it doesn't require a combination with oral drugs to achieve efficacy. We're extremely excited to bring this transformative therapeutic option to patients in the U.S.

We also recently announced positive top line results from the Phase III TEMPO-1 trial, which evaluated fixed doses of monotherapy Tavapadon in early Parkinson's disease. In the study, both doses of Tavapadon met the primary endpoint, demonstrating a significant reduction in the severity of Parkinson's disease symptoms compared with placebo at week 26, as measured by decreases in the combined scores for Parts 2 and 3 of the unified Parkinson's disease rating scale. Key secondary endpoints were also met in this study.

We are very pleased with the emerging profile for Tavapadon which shows it is generally safe and well tolerated, and it can drive strong efficacy as a monotherapy in early Parkinson's and as an adjunctive treatment in patients with more advanced disease.

Results from the 2 Phase III studies thus far look favorable compared to other dopamine agonists on the market. and we believe Tavapadon has the potential to become an important new treatment option and a monotherapy for Parkinson's patients as well as an adjunct to oral legal carbidopa.

We expect to see results from TEMPO-2 later this year, which is our Phase III monotherapy study evaluating a flexible dose of tampon. Results from our long-term safety study, TEMPO 4, are expected next year.

As Rob mentioned, we remain on track to share data from the 2 emaraclidine pivotal studies in the fourth quarter. We also continue to invest in external innovation to strengthen our neuroscience pipeline. We recently announced 2 deals in this area, including an expanded collaboration with Gideon Richter to develop novel targets for neuropsychiatric conditions.

And the acquisition of Aliata brings an anti-pyraglutamate A-beta antibody which uses a unique blood-brain barrier crossing an amyloid aggregate clearing technology. Aliata's lead antibody has been able to achieve encouraging levels in cerebrospinal fluid with an extended half-life and the potential to be delivered subcutaneously. This molecule could become a best-in-class treatment for Alzheimer's disease.

Aliata's novel technologies for enabling therapeutics to access the central nervous system also have the potential to be used with other programs across our neuroscience pipeline.

In aesthetics, we recently received approval for BOTOX in the U.S. for moderate to severe platysma bands marking the first global approval in this indication for any neurotoxin. There is currently a lack of nonsurgical treatments available to improve the appearance of prominent platysma bands. And we believe BOTOX will represent an important new treatment option for patients who are looking to reduce the appearance of vertical neckbands and improve jawline definition.

In our novel toxin portfolio, we remain on track to submit our regulatory application for BoNT/E around the end of this year. Our rapid onset, short-acting toxin has a highly differentiated clinical profile and once approved, will offer patients a novel option compared to currently available neurotoxins. So in summary, this has been a very productive year thus far for our R&D organization, and we are pleased with the progress we've made advancing our broad pipeline.

With that, I'll turn the call over to Scott.

[Scott Reents, executive]

Thank you, Roopal. Starting with our third quarter results. We reported adjusted earnings per share of $3, which is $0.10 above our guidance midpoint. These results include a $0.04 unfavorable impact from acquired IP R&D expense.

Total net revenues were nearly $14.5 billion, reflecting robust growth of 4.9% on an operational basis, excluding a 1.1% unfavorable impact from foreign exchange. Our x-HUMIRA growth platform which covers more than 80% of AbbVie's total sales, delivered reported growth of nearly 18%, once again exceeding our expectations.

The adjusted operating margin ratio was 46.7% of sales. This includes adjusted gross margin of 84.4%, adjusted R&D expense of 14.2%, acquired IP R&D expense of 0.6% and adjusted SG&A expense of 23%. Net interest expense was $591 million, the adjusted tax rate was 16.2%.

Turning to our financial outlook. We are raising the midpoint of our full year adjusted earnings per share guidance by $0.15. And now expect adjusted earnings per share between $10.90 and $10.94. Please note that this guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the third quarter.

We now expect total net revenues of approximately $56 billion, an increase of $500 million. At current rates, we expect foreign exchange to have a 0.7% unfavorable impact on full year sales growth. This revenue forecast includes the following updates to select key products and therapeutic areas. We now approximate SKYRIZI global sales of $11.5 billion, an increase of $500 million due to continued strong performance across all approved indications.

RINVOQ total revenue of $5.8 billion, an increase of $100 million, reflecting robust uptake in IBD. U.S. total U.S. HUMIRA total sales of $7.4 billion, a decrease of $400 million, reflecting more HUMIRA molecule volume moving to other novel mechanisms, including SKYRIZI and RINVOQ.

IMBRUVICA total revenue of $3.3 billion, an increase of $200 million, reflecting higher persistency rates for existing patients. VINCLEXA total sales of $2.6 billion, an increase of $100 million, reflecting momentum in both U.S. and international markets.

Aesthetics global revenue of $5.3 billion, a decrease of $200 million, almost entirely due to lower JUVEDERM volume, which continues to be impacted by challenging economic conditions in key markets. VRAYLAR total sales of $3.3 billion, a decrease of $100 million, reflecting continued strong prescription demand partially offset by modestly unfavorable channel mix. And for BOTOX, we now expect global revenue in the therapeutic space of $3.3 billion, an increase of $100 million, reflecting robust demand across all indications.

Moving to the P&L for 2024. We continue to forecast a full year adjusted gross margin of approximately 84% of sales, adjusted R&D investment of 14%, adjusted SG&A expense of 23.5% as well as an adjusted operating margin ratio of roughly 44.5% of sales, which includes a 2.1% unfavorable impact from acquired IP R&D expense.

Turning to the fourth quarter. We anticipate net revenues approaching $14.8 billion. At current rates, we expect foreign exchange to have a neutral impact on sales growth. We expect adjusted earnings per share between $2.94 and $2.98. This guidance does not include acquired IPR&D expense that may be incurred in the quarter and excludes any potential impact from the recently announced acquisition of Aliado Therapeutics.

Finally, AbbVie's robust business performance continues to support our capital allocation priorities. Our cash balance at the end of September was nearly $7.3 billion, and we generated more than $11 billion of free cash flow which includes approximately $1.5 billion of SKYRIZI royalty payments in the first 9 months of the year.

This free cash flow fully supports a strong and growing quarterly dividend which we are increasing 5.8% to $1.64 per share, beginning with the dividend payable in 2025. We as well as debt repayment, where we remain on track to pay down the roughly $7 billion of maturities this year and anticipate achieving a net leverage ratio of 2x by the end of 2026.

Our strong cash flow also provides capacity for additional business development. We have executed more than a dozen early-stage deals so far this year, and we continue to assess external innovation across all of our key growth areas. In closing, AbbVie has once again delivered strong top and bottom line results. I'm very pleased with the momentum of our ex-HUMIRA growth platform, including continued robust performance from SKYRIZI and RINVOQ which further supports AbbVie's long-term outlook.

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

[Elizabeth Shea, executive]

Thanks, Scott. We will now open the call for questions. We are aware of a peer earnings call that begins at 9:00 a.m. Central, so we'll do our best to wrap up our Q&A right around the top of the hour. [Operator Instructions]

[Operator]

Our first question comes from Chris Schott with JPMorgan.

[Christopher Schott, analyst]

Congrats on the results. My question was really just centered around 2025 and just some preliminary outlook there. I guess a specific question. You mentioned HUMIRA volumes are maybe shifting over to newer drugs.

Can you comment at all about just in terms of where the Street sits currently with HUMIRA? I think the consensus number is up $6.8 billion. Is that a reasonable forecast? Or is that something you could see higher erosion given what's happening with HUMIRA?

And then bigger picture kind of tied to that, the mid-single-digit top line growth. It sounds like the trends you're seeing here may be a net positive where maybe HUMIRA volumes are declining, but that's largely moving over to SKYRIZI and RINVOQ [indiscernible] get some context of, is that mid-single-digit target still a reasonable one to think about for AbbVie next year?

[Robert Michael, executive]

Thanks for the question, Chris. This is Rob. I'll start and then I'll have Jeff supplement. So yes, we're very confident in that robust mid-single-digit growth, both top line, bottom line for 2025. I think you've interpreted it correctly that the trends we're seeing are net positive and that we're seeing overperformance from SKYRIZI and RINVOQ more than offsetting the dynamics with HUMIRA.

And so as we look at consensus, that's probably not reflected. So I think it's fair to say there's a shift that's required there, but we're very pleased with the strong uptake for SKYRIZI and RINVOQ. As I mentioned in my remarks, we have now delivered guidance increases of $1.3 billion for SKYRIZI and RINVOQ in total.

We're seeing tremendous momentum, particularly with the IBD indications across really all indications, but particularly in IBD, and we are starting to see this dynamic with the overall HUMIRA molecule, where there is the switching that we're seeing now to other mechanisms, including SKYRIZI and RINVOQ, which is a long-term very positive benefit.

So as we look at the business, we're very well positioned essentially 2 years after the U.S. HUMIRA LOE will be returning to robust top line and bottom line growth. And really performance across many parts of the business, not just SKYRIZI and RINVOQ, you've seen us perform very nicely in oncology.

We've obviously overperformed our expectations in oncology very pleased with the early returns on ELAHERE. VENCLEXTA is performing exceptionally well. The guidelines changes in Europe are positive as we think about the combination opportunities with BTK inhibitors. So VENCLEXTA is going to be strong. [indiscernible] is performing very nicely as well.

When I look across the neuroscience franchise, VRAYLAR is a strong grower. We're very pleased with the migraine portfolio. Obviously, very excited about Cerevel and doing a number of deals now on the early pipeline, both with Guinean Richter and Aliana that really fortifies the long-term view for neuroscience as well.

And then with Aesthetics, while it's below our expectations for this year, obviously, the economic conditions have dictated that. We still have tremendous confidence in the long-term outlook for that business. But as we look at 2025, we're very confident in our ability to return to that robust mid-single-digit growth.

[Jeffrey Stewart, executive]

Yes. Thanks, Rob. And I'll just add a little bit more flavor. It's Jeff. So we saw this trend start to emerge in terms of this compression of the, let's say, the auto molecule or the ADA market, the HUMIRA plus biosimilars just prior to the CVS event and then it accelerated over Q2. And again, we saw it throughout Q3. So that's why we've adapted our approach here.

Other than this dynamic, the biosimilar dynamics are playing out really exactly as we anticipated. And you can see this compression in the IQVIA data. So really, the shrinking of the HUMIRA or the ADA market is something that's quite clear. It's a little difficult to quantify over time with full precision, but we can see that the molecule continues to decline sequentially, and we continue to see strong share gains, as I highlighted for SKYRIZI and RINVOQ.

So this incremental flow from the molecule compression, is clearly a contributing factor to some of the overperformance that we saw in Q2 and Q3, but it's really only 1 of several. We've also had significant incremental investments in consumer space, the sales force approaches we've taken, Chris, the integration of the head-to-head data I talked about. And certainly, now we're starting to see the impact of the UC launch. So when we put all that together, we think that the dynamics are net-net quite positive overall. And as Rob said, we're still looking good for '25.

[Operator]

Our next question comes from Mohit Bansal.

[Mohit Bansal, analyst]

We just wanted to touch upon the trial you are running head-to-head against ENTYVIO. Could you help us understand based on preclinical or early data? What gives you confidence there? And are you looking at non-inferiority or potential superiority over ENTYVIO there?

[Roopal Thakkar, executive]

Mohit, it's Roopal. I'll take that one. So when we look at the data, in particular, I think Jeff highlighted this in ulcerative colitis with SKYRIZI in this naive patient population. This is a patient population that hasn't seen biologics or other advanced therapies like JAK inhibitors.

The endoscopic improvement, and this is in label, was 76% in the maintenance portion of this. So it was quite high. In fact, higher than what we've observed even with RINVOQ. So that gave us a good amount of confidence that we have the potential to differentiate with all other assets. You heard about the SKYRIZI versus ustekinumab, head-to-head in Crohn's disease. But this one gives us a unique opportunity there to go head-to-head with vedolizumab, especially looking at endoscopic improvement.

So for that particular end point, you asked about the type of endpoint, there we would think about superiority because of it being an objective endpoint sometimes with symptoms like clinical remission, these could bounce around. That may be 1 where we consider as noninferiority. But I would say endoscopic improvements in the field are now believed to be highly predictive of long-term outcomes. So that would be how we're looking at this, Mohit.

[Operator]

This question comes from Vamil Divan with Guggenheim Securities.

[Vamil Divan, analyst]

Great. I'll keep it just 1 on imraquidine. Just getting a lot of questions from investors kind of leading up that data release. So maybe you can just the level of that expectation and what you're hoping to see from the data, especially obviously now we have the approval from Bristol with [indiscernible] just kind of what are you thinking in terms of efficacy safety profile relative to that impeder and also on the liver testing requirements that they added initiation? Is that something you'd expect as well based on your data? And then just tying to that just in terms of the data releases, we do you expect to give 1 press release? Or do you think you're combining both studies? Or should we still expect the 2 separate releases?

[Roopal Thakkar, executive]

Vamil, it's Roopal, I'll take that one. So a couple of things. Maybe starting with what we've observed with the approval. So we were encouraged by the lack of a boxed warning, meaning there's a recognition that this is a unique mechanism of action looking specifically at the muscarinic class. So we were pleased to see that.

I think what was notable for us was the GI adverse events, including how that would play out in terms of longer-term tolerability, also anticholinergic affects bladder retention. That was something, I guess, we did not anticipate. You mentioned hepatic monitoring. That was something that we didn't anticipate. The other thing that was notable is along with the BID dosing, there is a food effect. So you have to wait a certain period amount of time when you eat and after you eat when you can take the pill.

So when we think about our profile, we continue to be encouraged with emracladine being a single agent once a day, no food effect. We don't see the extent of GI effects. We don't -- and we have not observed in the Phase Ib data, any bladder issues. And when we had looked at that Ib data, we didn't see any hepatic issues, but we don't anticipate any type of laboratory monitoring.

Also, we were also thinking about neurodegeneration associated psychosis. And these patients are typically older and likely more sensitive to anticholinergic effects. So we continue to see an opportunity in that patient population as well.

So we've stated that the data will read out here in the next couple of months in the quarter. The same team is working on wrapping up these 2 studies. So depending on how far apart the data are, will probably determine, as you stated, is it 1 or 2 press releases. It's a little early right now for us to tell you, is it going to be 1 or 2. But if they're going to be close together, it's potentially going to be one.

[Operator]

Our next question comes from Terence Flynn with Morgan Stanley.

[Terence Flynn, analyst]

Maybe a 2 part from me. Just wondering if you can I'm assuming contracting is now wrapped up. If you can comment at all on how to think about SKYRIZI and RINVOQ formulary positioning and pricing just high level for 2025.

[Jeffrey Stewart, executive]

Yes. It's Jeff. So yes, contracting is very, very close to wrapping up. We have a few more nuances. And so typically, that may take another month or so. Overall, we're making very good progress on contracting next year.

So in terms of what we've highlighted in the past is we -- we do not anticipate any material change for SKYRIZI and RINVOQ in terms of the access for next year across Medicare or the commercial plans. We have quite high, very broad access and we assume that, that will continue.

In terms of what we've highlighted to anticipate we've said that we do have over our near term and LRP sort of a negative pricing environment, but it's modest. It's nothing like we saw many quarters ago where we had 7 indications. So we said from a rebate perspective, low single-digit changes is a reasonable assumption that we feel confident. And despite we're not fully complete, I think that's a fair assessment at this point.

[Operator]

Our next question comes from Chris Shubitani with Goldman Sachs.

[Chris Shibutani, analyst]

Apologies, I was on mute. Thank you for the question. All the comments you've made about SyretInVok and the molecule switching are very helpful. Just curious as we think on the forward about other potential mechanisms and modalities in particular, I think we have competitor oral data that's coming up. interested to hear your thoughts in terms of that modality difference as well as how you might rank your optimism for some of the new mechanisms of action, I believe you have TL1A as well in your pipeline, the earlier stage.

[Roopal Thakkar, executive]

Chris, it's Roopal. I'll take that one. With respect to the oral, I'll take us back to the SKYRIZI head-to-head that occurred with [indiscernible], which is also an oral. The data were substantially higher from an efficacy standpoint for SKYRIZI as was the tolerability along with when we ask patients what did they prefer. They actually preferred quarterly subcutaneous dosing. So I would think about it that way as well.

Now the question would be, it's a similar mechanism, could the efficacy be better than what has been observed with apremilast in psoriasis. Well, what we saw in the Phase II data, my recollection still is that SKYRIZI is a full 50% higher when it comes to full skin clearance at a PASI 100. And that's where the bar is now PASI 90 and PASI 100. So we still see an efficacy advantage.

Also, the data I'm sharing our Phase III SKYRIZI data the data that we saw for the oral '23 was from Phase II. So there is a reasonable potential that the efficacy data tend to settle down when you go to a broader patient population, especially those that have had longer-standing disease or have seen other therapies like other biologics. So we continue to feel very good and optimistic about our profile versus any emerging competition.

Also, we think about our assets from a global standpoint. And when you think about majority of the countries, they are very driven by efficacy to gain access. And in the oral space, we don't really see it across the globe. Maybe there's a couple of countries. I think Jeff has mentioned the U.S., but that space may be referred to as a prebiologic space. So maybe more of an influence on the TYK2 or in apremilast is how we see it.

In terms of other mechanisms that we like, as I mentioned, we like anti-IL23 the way it's delivered with SKYRIZI, the depth of response, the high durability and the convenience with quarterly dosing, if we can couple that with other assets as part of our combination approach, we think that's going to be extremely competitive in the future.

Mechanisms like TL1A, we think are going to be important, especially from a combination approach, which we have won internally. We think the ulcerative colitis data are encouraging, but from a monotherapy standpoint, not differentiated, especially when you look at the SKYRIZI data that I mentioned earlier, and RINVOQ. And then in Crohn's, something like TL1A, we think it really does need a combo.

So that will be part of our platform along with our novel alpha 4 beta 7. We think that's also a good combo. And then we've also provided very strong data in hidradenitis super teva with our IL-1 alpha beta ludicizumab. And we've seen some preclinical signals that IL-1 beta could be a driver of disease and resistance to other biologics.

So luticizumab will also be part of the combo in our IBD platform. So that's just a some of the mechanisms that we're excited about. There are several others that are early in the pipeline, and we will give you more information about those as the data mature.

[Operator]

Our next question comes from Trung Huynh with UBS.

[Trung Huynh, analyst]

Just on the Aesthetics business. In the Q&A, you did mention that you still have a tremendous amount of confidence hitting that longer-term guide here. I'm curious on how dependent this is on the economic environment is getting better and getting better quickly. So you've moderated your Juvederm outlook this year because it's not been good. If next year is another challenging economic year, could we see that $9 billion in 2029 being moderated or even polled? Just what's giving you confidence?

[Robert Michael, executive]

Thanks for the question. This is Rob. I'll take that one. So as we think about the long-term guide, which is greater than $9 billion by 2029, you need to believe that you can have essentially a compound growth of around 11% to get there. If we look at the historical growth of this market, it's been, let's say, call it, low double digits, low teens as we look at it going forward, we think probably a more prudent assumption is when we see the recovery, something more in the high single digits, right? So you need something beyond just the market recovery to get there.

And when we look at the innovation that we're bringing, particularly with the short one, short-acting fast onset short-acting bond that we expect to launch in '26, that could really transform the market because if you think about the #1 barrier for patients is fear of an unnatural look. That could really unlock a part of the market that's dormant right now, plus it could also lead to share gains.

And so I think we need to see, one, how the market recovers. I would say, '25 and '26. And then ultimately see how the Bonte launch ramps in '26. At that point, we'll have a better sense of the $9 billion as we sit here today. If you believe that the market will recover to high single digits, and we have a lot of confidence in BoNT/E. We still believe we can get there, which is why we're not updating that guidance. But I would expect us to reflect more on that more likely in the '26 time frame than in '25.

[Operator]

Our next question comes from Geoff Meacham with Citi.

[Geoffrey Meacham, analyst]

Thanks for the question. I had a bigger picture one for Rob. So when I look at your therapeutic areas, Eye Care stands out as 1 that's pretty modest contributor today and also down the road. How would you rank that business strategically? And then related, when you look at BD going forward, are there other TAs that you're looking at that could be additive, just thinking specifically maybe metabolic or cardio?

[Robert Michael, executive]

Thanks for the question, Geoff. So this is Rob. So yes, I mean, our main focus is our 5 key growth areas, which includes eye care. It includes immunology, oncology, nerves and eye care. And we participate in large markets with high unmet need that have great growth potential.

And within those 5 verticals, we're building depth across 24 core areas. That does include eye care as well. When we think about diabetic retinopathy, wet AMD, prescription dry eye medications. And so eye care does an important role, albeit it's not as high of a growth driver as the other 4 verticals, but it is part of our 5.

And that ultimately guides both our internal R&D investments as well as our BD efforts, which, as you know, continue to be very active. So far this year, we've executed 15 deals along those lines really focus more on early-stage opportunities to drive growth in the next decade. So that's our primary focus.

Now if we see an opportunity for differentiation in a large market with high unmet need like metabolics, we would consider pursuing it, especially if you can help drive growth in the next decade. But again, it would be more opportunistic. We have to see differentiation. And right now, it's not our primary focus. But again, we're open to more sources of growth for the next decade if we see differentiation that we can create value. And we certainly have the financial wherewithal to pursue those opportunities.

[Operator]

Our next question comes from James Shin with Deutsche Bank.

[James Shin, analyst]

For erapiden's readout, I think there's a question on how much erosion could be anticipated. I know you mentioned that the team -- the same team that was really working on the Phase Ib is wrapping up studies and so forth. But there's been some other data that has of cerebral strategies such as high baseline pans and so forth, and placebo effect was still kind of surprisingly higher than it should be. Is there any insight on managing this placebo effect?

[Roopal Thakkar, executive]

Thanks, James. It's Roopal. When we did our thorough diligence, that was a major question that we and the broader team had. So you bring up a good point. Some things that we observed in those 2 studies that will be the pivotal readout we're -- what Cerevel was strategically doing.

One thing was limiting the number of countries, limiting the number of sites, central review for eligibility criteria, training of raters, certifying those raters, recertifying raters monitoring, blinded data with respect to site activity. So I think those are important factors that could drive placebo in either direction.

So what we observed was, we would say, a good control or at least the best 1 could do to manage placebo responses. So it's hard to know what -- if there's any erosion until we see the data. But the effect size that we did see in the Phase Ib was a little over 12 points, so we think that was a strong separation. And even if that were to go down a little bit, we still feel that based on the safety profile and tolerability profile this could still be very, very competitive even if we saw a droppage in some point on the efficacy side.

[Operator]

Our next question comes from Carter Gould with Barclays.

[Carter L. Gould, analyst]

Great. I was hoping to follow up a little bit on the Alliad acquisition, sort of what differentiation you saw versus some of the other enhanced brain delivery kind of approaches there that give you confidence? And maybe we've seen AbbVie take a number of shots on [indiscernible] across Alzheimer's here, just seems pretty central to your longer-term neuroscience portfolio. Can you maybe just again put that in some broader context as you think about the TA strategy longer term? .

[Roopal Thakkar, executive]

Sure. It's Roopal, I'll take that. Yes, we've been investing for a number of years in this space. And in addition to the recent deal, we'll have an option readout with elector and TREM2 coming up. We have an SV2A molecule that would look at cognition and other symptoms. Enracladine could participate in that space from an Alzheimer psychosis standpoint.

We have other pipeline assets that are looking at TAL intracellular and even an approach looking at extracellular TAL. We did have our own A beta monotherapeutic antibody, which we did read out, it did look good, but it wasn't fully differentiated.

And moving on to the Aliata deal, what we see there is the ability to access the CSF at what we would say at this stage at higher concentrations than maybe other competitors. So we think that's a good thing. The other aspect that we like is an extended half-life. So that could lead to a convenient dosing.

And if this approach plays out, then one could consider having subcutaneous dosing even getting out to monthly. And if the efficacy is high because of deeper brain penetration, that could result in lower levels faster and better able to see cognition benefit in a year or 18 months. So those are some of the benefits that we would see.

The other benefit would be getting to the parincomal tissue more broadly, and that could have a reduction in ARIA, which is probably what is disallowing this to really take off. It's very challenging to take an elderly family member to get multiple scans and worry about them having stroke-like symptoms.

So that would be something else we believe we can address with this asset of having a strong safety profile, tolerability ease of onboarding and high efficacy and ultimately, strong benefits on cognition.

[Robert Michael, executive]

And this is Rob. I'll just add on here as we think about strategically about the neuroscience franchise. I mean I think about it as having really 4 main segments. You have psychiatry, migraine, Parkinson's, then neurodegeneration.

And if you look at what we've done to build out the long-term growth outlook for this franchise, obviously, the psychiatry between [indiscernible] we also had the early stage opportunity with Gilgamesh, really investing in longer-term growth in psychiatry. We have actually a very strong franchise in migraine with oral CGRPs as well as BOTOX therapeutic.

In Parkinson's, now with the launch of Viale, which is faring very nicely outside the U.S., and we expect will also perform nicely in the U.S. The early Phase III data we've seen so far for Tavapadon the mytokinin disease-modifying approach is early and Parkinson's, another investment we've made. And then in Alzheimer's now with Aliata is another, I'd say, long-term investment we're making to grow the Neuroscience franchise.

There's also adjacencies like ALS, MS, that we're interested in that we have some partnerships that we'll continue to pursue. And so we see neuroscience is an important long-term growth driver for the company. We're obviously investing heavily across a number of areas, but we think about it really in those 4 categories. And so it's 1 that we're obviously very excited about the future prospects for.

[Operator]

This question comes from Steve Scala with Cowen.

[Steve Scala, analyst]

I'm a bit surprised at how Cerevel was such a focus in the prepared remarks, given the pending emracaladine data which very much will color our views of the Cerevel acquisition. Should we conclude you have increased confidence or insight into the pending data?

And related to that, seem to be looking for an effect size of 0.6. But based on what was just said, that doesn't even seem to be a possibility. So any thoughts would be appreciated.

[Robert Michael, executive]

This is Rob, and Roopal can take the second part. I'll take the first part of the question. So Steve, in the prepared remarks, we're talking about the quarter. We obviously closed several transactions in the quarter. That's a significant event.

We also did see the Phase III trial results for Tavapadon, so that was important to comment as well. As we've mentioned, we expect the 2 pivotals from Racladene to read out in the fourth quarter. So I wouldn't read too much into it other than it was an important event to highlight in the quarter.

[Roopal Thakkar, executive]

Yes. And it's Roopal. I agree. We have 2 positive Phase III studies with Tavapadon. And in the oral space, I don't know if we've seen a new mechanism that could have this type of approach in a very long time. So it is important to discuss that because the unmet need continues to be very, very high, and Parkinson's is a place where we believe we can meaningfully participate in.

On the effect size question, when we look at the Ib data, it was more than a 12-point differential. So we have observed sometimes the decrement and the question was around if placebo responses move up a little bit. So that being said, we still think we can maintain a very strong effect size coupled with the safety profile.

Remember, the issue here in therapy isn't just about efficacy, it's about maintaining these patients on a drug that they can tolerate, and the majority of these patients don't last very long and cycle through these assets and even stop these especially atypicals without even letting their physicians know and then go on to have a flare and end up in the hospital.

So we think about this as a benefit, risk and tolerability profile. And from a weight, metabolic motor symptoms, sedation. These are major problems with atypicals. And with something like imaraclidine, we feel that we can still fully differentiate. So I don't know if I'd read into any concerns other than maybe seeing an effect that's slightly different than what we saw in Phase Ib. But beyond that, we think this could still be very competitive.

[Operator]

Our final question comes from Luisa Hector with Berenberg.

[Luisa Hector, analyst]

Just on VRAYLAR, could you expand a little on the comments of the channel mix pressure in Q3, and how that will play out as we move forward? And perhaps just a quick comment on the extension of the collaboration with Gideon Richter and why you went down that route.

[Scott Reents, executive]

Lisa, this is Scott. I'll take the question regarding VRAYLAR. So it was -- essentially, it was a channel mix change. It was slight. I would tell you that really kind of had accumulated over the course of the year. And that's why we made -- we decided it made sense to make the adjustments. So as that channel mix change, we saw a little bit of negative price as a result of that. So we took down the regular guidance by $100 million.

Now I would note in neuroscience in totality that was offset by the raise in BOTOX Therapeutics. So neuroscience and our therapeutic or growth area guide is stable. So maybe the second question we'll go to Roopal.

[Roopal Thakkar, executive]

Yes. We -- it's Roopal. We expanded further. We've had a strong partnership. They're a terrific organization. We have a follow-on to VRAYLAR that's more D3 leaning that will start entering the clinic quite soon in Phase II, looking at bipolar depression and MDD as well as generalized anxiety disorder.

As Rob described as part of our neuroscience strategy, psychiatry is a big part of that. And having a deeper relationship with Gideon Richter will allow us to have potentially even more assets in depression, in bipolar disorder, in schizophrenia and anxiety and potentially, other adjacent indications that we continue to be interested in because the unmet need continues to be very high.

[Elizabeth Shea, executive]

Well, thank you. And thanks, Shirley. That concludes our conference call today. 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. And this concludes today's call. We thank you for your participation. And at this time, you may disconnect your lines.