Abbvie Inc

NYSE:ABBV

Earnings Call Transcript 2021-Q4

[Liz Shea, VP, Head, IR]

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, Vice Chairman, Finance and Commercial Operations and Chief Financial Officer; and Jeff Stewart, Executive Vice President, Chief Commercial Officer. 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, 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 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 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.

Unless otherwise noted, our commentary on sales growth is on a comparable basis, which includes full current year and historical results for Allergan. For this comparison of underlying performance, all historically reported Allergan revenues have been recast to conform to AbbVie’s revenue recognition accounting policies, and exclude the divestitures of Zenpep and Viokace. References to operational growth further exclude the impact of exchange. Following our prepared remarks, we’ll take your questions.

So with that, I’ll 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’ll provide perspective on our overall performance and outlook, and then Jeff, Mike and Rob will review our quarterly business highlights, pipeline progress, financial results and guidance for 2022 in more detail.

Our performances this quarter tops off another excellent year for AbbVie with results well above our initial expectations. We delivered full year 2021 adjusted earnings per share of $12.70, representing growth of more than 20% versus the prior year. Full-year adjusted net revenues were more than $56 billion, up 10.5% on a comparable operational basis. These results demonstrate balanced performance across each of our major growth franchises, including double-digit comparable operational revenue growth from immunology, aesthetics, and neuroscience. I’m extremely pleased with our momentum, and we’ve entered this year in a strong position, which is reflected in our guidance. We anticipate 2022 adjusted earnings per share of $14 to $14.20, representing growth of 11% at the midpoint.

Longer-term, we remain well positioned with an impressive set of diversified growth assets. In immunology, Skyrizi and Rinvoq are already contributing meaningful revenue, including $4.6 billion in combined sales last year with substantial growth anticipated in 2022 and beyond. Over the next few months, we expect to add several new indications to the list of approved uses for these two assets, at which point, Skyrizi and Rinvoq will be commercialized across all of Humira’s major indications, plus atopic dermatitis.

With the strong performance that we’re seeing in their initial indications and the robust data we’ve demonstrated across our broad development programs, we expect combined peak sales for Skyrizi and Rinvoq to exceed the peak revenues achieved by Humira.

In hematological oncology, we’ve established a leading position with Imbruvica and Venclexta, which were both expected to remain important revenue contributors through the decade. To support our next wave of growth, we also have an exciting and diverse pipeline of promising new therapies to address critical unmet needs in both blood cancers and solid tumors. Notable opportunities from our mid to late stage oncology pipeline include Navitoclax for myelofibrosis, which has the potential to provide disease modification in a market where current treatments only address symptoms.

At Epcoritamab, a potentially best-in-class CD3XCD20 for B-cell malignancies, including DLBCL and follicular lymphoma; ABBV-383, our BCMA CD3 bispecific, which has the potential to become a best-in-class treatment in multiple myeloma; and Teliso-V, our promising c-Met ADC being studied for nonsquamous non-small cell lung cancer, which was recently granted breakthrough therapy designation.

In neuroscience, we have a portfolio of compelling and differentiated therapies to support robust long-term growth in migraine, Parkinson’s disease and psychiatric conditions. Ubrelvy and Qulipta are both demonstrating strong launch trajectories in migraine, with each treatment expected to contribute more than $1 billion in peak sales. Vraylar continues to have a significant opportunity with currently approved indications with peak sales expected to approach $4 billion. An approval in major depressive disorder represents upside to our current projections. And 951, a potentially transformative improvement to our current treatment options for patients with advanced Parkinson’s disease with peak sales also anticipated to be more than $1 billion.

Our leading aesthetics portfolio represents another extremely attractive growth opportunity. This business is performing well above expectations, delivering full year 2021 sales of more than $5.2 billion, $700 million higher than our initial guidance. AbbVie’s increased promotional investments are driving accelerated category growth, especially in toxins and fillers, where there is substantial room for additional market penetration globally.

Dedicated resources are also of focused on delivering new product innovation within aesthetics, with several exciting R&D programs internally, including both short-acting and long-acting toxins, as well as novel fillers with biostimulatory or regenerative features. And we remain active with business development to pursue promising external technologies and complementary opportunities, including the recently closed Soliton acquisition, which further expands our body contouring portfolio. Given this focus and investment, we expect our aesthetics franchise to deliver high single digit revenue growth, through the end of the decade, including sales of more than $9 billion in 2029.

Lastly, we’ve developed a robust pipeline, including numerous attractive late-stage programs, novel early stage therapies in a growing range of potential platform technologies, which we expect will collectively contribute to our growth through the decade.

With the actions that we’ve taken to diversify our sources of growth, we remain very confident in the long-term outlook for our business. Following the U.S. Humira LOE event in 2023, we expect to quickly return to growth in 2024 and deliver high-single-digit growth from 2025 to the end of the decade. This is a testament to the strength of AbbVie’s broad and balanced portfolio.

In summary, this is an exciting time for our Company. We’re demonstrating excellent execution across our portfolio, and our long-term growth prospects remain very strong.

With that, I’ll turn the call over to Jeff. Jeff?

[Jeff Stewart, EVP and Chief Commercial Officer]

Thank you, Rick.

Looking at our quarterly results, we continue to demonstrate excellent commercial execution across our therapeutic portfolio. I’ll start with immunology, which delivered global revenues of more than $6.7 billion, reflecting growth of 13.3% on an operational basis. Global Humira sales were $5.3 billion, up 3.5%, with 6% revenue growth in the U.S. offset by biosimilar competition across the international markets, where revenues were down 8.8% on an operational basis.

Skyrizi is performing extremely well. Global sales of nearly $900 million were up 12.4% on a sequential basis, reflecting continued market share gains. Skyrizi has now surpassed Humira as the leader for total prescriptions in the U.S. psoriasis biological market, with share of approximately 20%. We are also now leading the market in several international geographies, including Japan. Total in-place share, which includes both new and switching patients, remains very and now, reflects roughly 37% patient share in the U.S. as well as leadership in nearly 20 key countries around the world.

Skyrizi is also now approved for its second major indication, to treat adults with active psoriatic arthritis, further enhancing its compelling profile in dermatology. Field promotion is now active globally and early feedback from physicians has been very positive. Given Skyrizi’s demonstrated skin clearance and joint efficacy in our PSA clinical program, with nearly 30% of patients visiting dermatologists, having both, skin and joint involvement, this new approval will sustain Skyrizi’s strong momentum.

In addition, we are preparing for the launch of Skyrizi’s in Crohn’s disease, an indication with very meaningful long-term revenue potential, with regulatory approvals in both, the U.S. and Europe anticipated this year.

Rinvoq also continues to demonstrate robust growth. Global sales of more than $500 million were up 14% on a sequential basis. Prescriptions in RA remain strong with a total market share of more than 5.5% in the U.S. and nearly 5% across key international markets. We’re very pleased with the competitive labels for both PSA and atopic dermatitis, where we are making excellent progress with their launches globally.

In atopic dermatitis, dermatologists appreciate key elements of Rinvoq’s new label, including the incorporation of stringent skin and itch endpoints, reflective of the performance in our registrational trials, as well as an adolescent indication and dosing flexibility. Managed care access is expected to ramp fairly quickly for both atopic dermatitis and PSA in the U.S. We are also preparing for the launches of Rinvoq in ulcerative colitis and axial SpA with regulatory approvals for both indications anticipated this year as well.

Overall, we continue to feel very good about the performance and progress we’re making with both, Rinvoq and Skyrizi, which are expected to contribute more than $15 billion in combined risk adjusted global sales in 2025.

In hematologic oncology, global revenues were nearly $1.9 billion, up 4.7% on an operational basis. Venclexta once again, delivered robust growth. Sales were up 34% on an operational basis with strong share performance across all approved indications. Imbruvica global revenues were down 2.7%, reflecting a slower than anticipated market recovery in CLL and increased share pressure from newer therapies.

In neuroscience, revenues were more than $1.6 billion, up 19% on an operational basis, including robust double-digit growth for both, Vraylar and Botox Therapeutic.

I’m also very pleased with our performance in migraine, where we have a portfolio of multiple distinct therapies to address the full spectrum of this disease. This includes our two leading oral CGRP therapies. Ubrelvy for acute migraine, which delivered total sales of $183 million, up 13% on a sequential basis, we anticipate robust sales growth again this year based on Ubrelvy’s competitive profile, continued strong new patient starts and a rapidly expanding CGRP segment.

And we also have Qulipta, the only oral CGRP treatment specifically developed for the prevention of episodic migraine. The launch is going extremely well. When considering both paid and bridge volume Qulipta is already capturing nearly 20% of the new-to-brand share in the preventative CGRP class. Roughly three months post-launch, this is an incredible accomplishment and it’s a testament to Qulipta’s demonstrated efficacy, including rapid and meaningful reduction in migraine days. We expect commercial access for Qulipta to ramp quickly in the first half of this year.

In eye care, revenues of $960 million were up 3.9% on an operational basis, including $364 million in sales from Restasis.

Lastly, Mavyret were $427 million, down 10.1% on an operational basis, as treated patient volumes remained suppressed compared to pre-COVID levels.

Overall, I’m very pleased with the performance and the momentum across the therapeutic portfolio.

And with that, I’ll turn the call over to Mike for additional comments on our R&D programs. Mike?

[Michael Severino, Vice Chairman and President]

Thank you, Jeff.

We made significant advancement across all stages of our pipeline in 2021, and we expect continued progress again this year.

In immunology, we had several recent important regulatory updates. We implemented safety and indication updates to our RA label for Rinvoq, and also received FDA approval in psoriatic arthritis and atopic dermatitis to curing strong labels that highlight Rinvoq’s favorable benefit risk profile in both new indications.

In atopic dermatitis, we received approval for both the 15 milligram and 30 milligram doses, and based on the impressive levels of skin clearance and itch reduction demonstrated in our development program, we believe Rinvoq will be an important new treatment option for adult and adolescent patients with moderate to severe atopic dermatitis, who have not responded well to other systemic agents, such as cyclosporine, methotrexate, azathioprine, or biologics.

We also have regulatory applications under review for Rinvoq in ulcerative colitis, ankylosing spondylitis, and non-radiographic axial SpA. We expect an FDA approval decision next month for ulcerative colitis, in the second quarter for ankylosing spondylitis, and in the fourth quarter for non-radiographic axial SpA. In Europe, we anticipate approval decisions for ulcerative colitis and non-radiographic axial SpA in the second half of the year.

We’re nearing completion of Rinvoq’s registrational program in Crohn’s disease, which is the last major indication expansion program for Rinvoq. We recently announced positive top-line results from the first Phase 3 Crohn’s induction study, where Rinvoq demonstrated a very impact on clinical remission and endoscopic response in a difficult-to-treat refractory patient population. We expect to see results from the second Phase 3 Crohn’s induction study and from the maintenance study in the first half of this year with regulatory submissions anticipated in the second half of 2022.

Also in immunology, we recently received FDA approval for Skyrizi in psoriatic arthritis, an important indication expansion for this asset. Based on the strong joint efficacy and the high level of skin clearance that Skyrizi provided in our registrational trials, we believe Skyrizi will be very competitively positioned as an effective new treatment option for psoriatic arthritis patients.

We also have regulatory applications under review for Skyrizi in Crohn’s disease with approval decisions expected in the U.S. next month and in Europe, later this year. We’ve seen impressive results in our Crohn’s disease program, and we believe Skyrizi has the potential to become an important new therapy in this market, where there continues to be considerable unmet need.

We’re making very good progress with our early-stage immunology pipeline as well, where we are developing novel agents with the goal of significantly advancing the standard-of-care across our core areas, by providing deeper and more durable responses.

Our anti-TNF steroid ADC ABBV-154 is a novel approach for delivering a potent steroid that has the potential to provide durable remission in diseases such as RA, PMR and Crohn’s disease. We expect to see preliminary data from our Phase 2 dose ranging study in RA in the fourth quarter of this year. We also expect to see Phase 2 proof-of-concept data in PMR and Crohn’s disease in 2023.

In dermatology, our early-stage efforts are focused on developing oral agents that can provide clear skin with durable responses. Our RoRγT inverse agonist, ABBV-157 is designed to more effectively inhibit IL-17 production compared to pure antagonists, which has the potential to result in a greater impact on skin inflammation. We’ve recently been again a Phase 2 dose ranging study for 157 in psoriasis.

Moving to oncology, where we continue to make good progress across all stages of our pipeline. We recently received an FDA breakthrough therapy designation for Teliso-V in second line plus advanced or metastatic nonsquamous, non-small cell lung cancer, based on the encouraging results we’ve seen to-date in our clinical program.

Treatment options for patients who have exhausted platinum-based chemotherapy, immunotherapy and targeted therapy are limited to single agent chemo, which typically provides response rates of only 15% to 20%, with a median overall survival of less than one year. Prognosis for these patients is very poor.

While targeted therapies have been approved by the FDA for the 3% to 4% of non-small cell lung cancer patients, harboring MET exon 14 skipping mutations, there are currently no therapies approved, specifically for the much larger group of patients, who exhibit c-Met protein overexpression. Patients with overexpressed c-Met represents about 25% to 30% of the advanced or metastatic nonsquamous, non-small cell lung cancer population with wild-type EGFR, which corresponds to an incidence of approximately 35,000 patients each year in the U.S.

In stage 1 of our Phase 2 study, we saw promising efficacy in heavily pretreated patients who received Teliso-V, including a 54% objective response rate in those with highly expressed c-Met. The second stage of the Phase 2 study is ongoing and has the potential to support an accelerated approval in second-line plus advanced metastatic nonsquamous non-small cell lung cancer. We expect to see additional data from this study next year.

We also recently began the clinical program for our next-generation c-Met ADC, ABBV-400, which utilizes a more potent topoisomerase inhibitor payload to potentially drive deeper tumor responses in patients with both, intermediate and high levels of c-Met expression.

We also expect to see data this year from several important indication expansion programs for Venclexta, including results from the Phase 3 CANOVA trial in relapsed/refractory multiple myeloma patients with a t(11;14) mutation as well as results from our program for Venclexta in previously untreated higher-risk MDS patients, where we received a breakthrough therapy designation.

We plan to submit our regulatory applications to the FDA in the first half of this year for an accelerated approval in MDS, and late in ‘22 or early ‘23 for multiple myeloma. Both indications represent important expansion opportunities for Venclexta and will help drive long-term growth for our oncology portfolio.

We are also making very good progress with epcoritamab, where we continue to generate strong data in early-stage studies to support our view that epcoritamab has the potential to become a differentiated and best-in-class CD3xCD20 bispecific across several B-cell malignancies including diffuse B cell and follicular lymphomas.

We’ll see monotherapy data in the third quarter from the Phase 2 expansion cohort in DLBCL, which has the potential to support a submission for accelerated approval in the second half of this year.

We also have a Phase 3 study ongoing in third-line relapsed/refractory DLBCL and we plan to initiate several additional Phase 3 trials this year, including studies in earlier lines of therapy for diffuse B-cell lymphoma in multiple combinations, as well as in follicular lymphoma in combination with rituximab and Revlimid.

This year, we’ll also see additional data maturing from our cohort expansion studies for ABBV-383, both as a monotherapy and in combination with standard-of-care and novel agents in multiple myeloma. We believe our BCMA-CD3 bispecific has the potential to be differentiated on efficacy, safety and dosing interval and can be best-in-class across multiple lines of therapy. We plan to initiate Phase 3 studies later this year in relapsed/refractory multiple myeloma.

We also continue to make good progress with Navitoclax in myelofibrosis, where we’ve seen strong mid-stage data supporting our view that Navitoclax has the potential to provide disease modification, which we believe will lead to improved and durable clinical outcomes for patients. We expect a Phase 3 data readout and regulatory submissions in the first half of next year, with approval anticipated near the end of 2023.

Moving to neuroscience, where we expect several important pipeline events in 2022 as well. We recently completed discussions with the FDA and are preparing to submit our application for Vraylar as an adjunctive treatment for major depressive disorder. Based on the totality of the data and the strong benefit-risk profile demonstrated in our clinical program, we believe Vraylar has the potential to be competitively positioned as an adjunctive treatment for major depressive disorder. We expect a submission in the first quarter and an approval decision by the end of the year.

We’ve also completed our registration-enabling program for ABBV-951, our novel subcutaneous levodopa/carbidopa delivery system for treatment of advanced Parkinson’s disease. In our Phase 3 studies, 951 proved superior to oral levodopa/carbidopa in reducing motor fluctuations in this advanced population, and we believe our innovative new delivery system represents a potentially transformative improvement to current treatment options. We remain on track to submit our regulatory applications in the first half of this year in the U.S. and Europe, with both approval decisions anticipated in early 2023.

And we expect to see Phase 3 data for Qulipta in chronic migraine prevention later in the first quarter and plan to submit our regulatory applications in both, the U.S. and Europe this summer, with approval decisions expected in the first half of 2023.

So, in summary, we remain focused on continuing to execute on our pipeline programs and anticipate numerous important regulatory and clinical milestones across all stages of our pipeline in 2022. This includes important indication expansion for on-market drugs and data readouts and regulatory actions for key late-stage assets as well as proof-of-concept data from several early-stage NME programs.

With that, I’ll turn the call over to Rob for additional comments on our fourth quarter performance and our 2022 financial outlook. Rob?

[Rob Michael]

Thank you, Mike.

AbbVie once again delivered outstanding performance while also advancing our strategic priorities. The strong results across our portfolio continue to support AbbVie’s long-term growth outlook.

Starting with fourth quarter results. We reported adjusted earnings per share of $3.31, up 13.4% compared to prior year and $0.05 above our guidance midpoint. Total adjusted net revenues were $14.9 billion, up 7.5% on an operational basis, excluding a 0.1% unfavorable impact from foreign exchange.

The adjusted operating margin ratio was 49.3% of sales, an improvement of 240 basis points versus the prior year. This includes adjusted gross margin of 83.6% of sales, adjusted R&D investment of 12.1% of sales, and adjusted SG&A expense of 22.2% of sales. Net interest expense was $571 million, and the adjusted tax rate was 12.5%.

Shifting to 2022, our full year adjusted earnings per share guidance is between $14 and $14.20, reflecting growth of 11% at the midpoint. Excluded from this guidance is $4.74 of known intangible amortization and specified items. We expect adjusted net revenue of approximately $60 billion. At current rates, we expect foreign exchange to have a 0.8% unfavorable impact on full year sales growth.

This revenue forecast comprehends the following approximate assumptions for our key products and therapeutic areas. We expect Immunology Global sales to grow double digits, including U.S. Humira growth of 8%, International Humira revenue of $2.6 billion at current exchange rates, Skyrizi Global sales of $4.4 billion and Rinvoq Global sales of $2.7 billion.

In hematologic oncology, we expect Venclexta global sales of $2.3 billion and Imbruvica global revenue of $5.4 billion. The Imbruvica forecast assumes market recovery in CLL, offset by share erosion from increased competition. For aesthetics, we expect global sales of $5.9 billion, including $2.6 billion for Botox Cosmetic and $1.7 billion from Juvederm.

For neuroscience, we expect global revenue of $6.9 billion, including Botox Therapeutic sales of $2.7 billion, Vraylar sales of $2.2 billion, Ubrelvy sales of $800 million and Qulipta sales of $200 million with commercial access increasing rapidly in the first half of the year.

For eye care, we expect global sales of $2.9 billion, including $700 million from Restasis, which assumes no generic competition in the first half of 2022. Lastly, we expect Mavyret global revenue of $1.7 billion.

Looking at the P&L for 2022, we are forecasting full year adjusted gross margin of approximately 84% of sales, adjusted R&D investment of approximately $6.8 billion and adjusted SG&A expense of approximately $12.7 billion. This guidance includes approximately $2.5 billion in expense synergies from the Allergan acquisition. We are forecasting the adjusted operating margin ratio to expand by 120 basis points to approximately 51.5% of sales. We expect adjusted net interest expense approaching $2.2 billion, our non-GAAP tax rate to be approximately 12.7% and our share count to be roughly flat to 2021.

Turning to the first quarter, we anticipate net revenue approaching $13.5 billion. At current rates, we expect foreign exchange to have a 1.3% unfavorable impact on sales growth. This revenue forecast comprehends the following approximate assumptions for our key therapeutic areas: Immunology sales of $6.2 billion, HemOnc revenue of $1.7 billion, aesthetic sales of $1.3 billion, neuroscience revenue of $1.5 billion and eye care sales of $900 million.

We are forecasting an adjusted operating margin ratio of approximately 51% of sales, and we model a non-GAAP tax rate of 12.4%. We expect adjusted earnings per share between $3.10 and $3.14, excluding approximately $1.22 of known intangible amortization and specified items.

Finally, AbbVie’s strong business performance and outlook continue to support our capital allocation priorities. We expect to generate adjusted free cash flow of approximately $24 billion in 2022, which is net of roughly $1 billion in Skyrizi royalty payments. This cash flow will fully support a strong and growing dividend, which we have increased by more than 250% since inception; continued debt repayment, where we expect to pay down just above $12 billion of debt in 2022 and estimate a net leverage ratio of 1.8 times by the end of the year. Our strong cash flow also allows for continued business development, with approximately $2 billion allocated annually to augment our pipeline with the most promising external technologies and innovative therapies.

In closing, we are very pleased to AbbVie’s strong results in 2021. And we expect to deliver robust performance in 2022 and over the long term.

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

[Liz Shea, VP, Head, IR]

Thanks, Rob. We will now open the call for questions. In the interest of hearing from as many analysts as possible over the remainder of the call, we ask that you please limit your questions to one or two. Operator, we’ll take the first question.

[Operator]

Thank you. Our first question comes from Chris Schott with JP Morgan.

[Chris Schott, JP Morgan]

Great. Thanks so much for the questions. I just have a couple here digging into Rinvoq in a little bit more detail. I guess, first in rheumatoid arthritis, can you just -- it looks like volumes have plateaued a little bit. It’s probably not hugely surprising given label revision, but just elaborate a little bit more on the feedback you’re getting from physicians there. And when you anticipate you’ll start to see sequential growth again in that indication?

The second question I had on Rinvoq was then on atopic derm. Just elaborate again a little bit more on the ramp you’re expecting here. Is this something that’s going to take some time, or do you view that there’s some low-hanging fruit maybe with some of the DP failures? I’m really just trying to get to with all of these is, I guess, the $2.7 billion guidance, how much of that’s RA? How much of it is new indication? Just a little bit more color on that front. Thanks so much.

[Jeff Stewart, EVP and Chief Commercial Officer]

Yes. Thanks. Hi. It’s Jeff. I’ll give you some sense on what’s happening with RA. So, the RA market after the drug safety and label is progressing as we anticipated. So, I’ll give you some sense, and I’ll refer to sort of in-play share because you have to be a little bit careful in the December, January time frame with overall volumes in the market.

But right before the Drug Safety Communication, we had about a 16% in-place share in RA, which was just right behind Humira. So very, very strong. If we look at where that’s trended over the fourth quarter, it’s dropped about 20%. Okay? So, it’s about 14 reported in October, just over 13 in November, very consistent with what we thought would happen. So, about a 20% shift in new-to-brand starts over that time period.

And what we see from the market is it’s exactly as we would expect, very, very stable, no change really in second-line plus and doctors start to suppress their starts in first-line consistent with the label. So, what we’re going to see is that as basically the promotion kicks back in here after December in the first quarter, we’re going to see that type of stability, which we can see is very, very clear from our overall share in our weeklies and start to progress as we shift and pivot towards that second-line plus. So, the market is responding very similar to our expectations that we’ve been talking about in terms of overall RA.

Obviously, PsA is going to help build upon that RA dynamic and then ultimately, later in the year, the big axial approvals as well. So, everything is progressing as we thought it would progress from a market perspective.

In terms of atopic dermatitis, listen, I said in my prepared remarks, we’re very pleased with the label. We have those stringent endpoints of the EASI 90, the high skin clearance, very powerful itch reduction are reflected in our label. We obviously have both doses approved. The market, I can tell you, has been very pleasantly surprised about the adolescent indication, which is -- it’s very important.

So, that’s basically -- we’re going to start to see that ramp. It won’t -- we don’t think it’s going to be slow. And to your point, in terms of our ability to start to capture patients, it’s happening already. We obviously haven’t reported any of the TRxs yet, but we can see it in the market. And typically, it’s falling into a couple of areas. First, dupi failures, not a surprise, and there’s a reasonably significant number of people after 4 or 5 years that just have failed and exited the market. They’re going to come back in. We have reports from our research and our teams over partial responders to dupi that just aren’t doing well, in particular with the itch. We see some early starts there.

And then, of course, challenging patients in general, we are seeing starts there as well with those higher levels of skin involvement. So the market seems to be progressing as we expected. It’s not surprising that as we look at the development of the second-line market, we’re going to see initially most of the starts in the dupi partial responders or the nonresponders, which is a fairly significant population.

Also, as I mentioned, that we will start to see our access ramp fairly quickly here over the first part of the year. So, we’re encouraged. Maybe I can turn it over to Rob to give a sense over the relative magnitude of the sales.

[Rob Michael]

Thanks, Jeff. Chris, this is Rob. So of the Rinvoq guidance of $2.7 billion, the AD and spine indications will each contribute a couple of hundred million dollars, while UC will contribute around $100 million. And to keep in mind in terms of sequential growth, keep in mind, in the U.S., you tend to see from Q4 to Q1, it’s a sequential decline. So that’s just a seasonal dynamic that we see across the business. So you would see sequential growth resume in Q2 and beyond.

[Operator]

Our next question comes from Ronny Gal from Bernstein.

[Ronny Gal, Bernstein]

First question is around Humira. I was wondering if you guys will be in a position to give us some sort of a floor number in 2023 based on payer contracts. Sometimes this year, obviously, the market is looking for that. And then, when I talk to payers, it seems a lot of the decisions about what product they would use longer term will not happen in 2023. That will happen in 2024. You kind of talked about kind of like a decline and then a quick ramp-up. Do you see the floor here in 2023, or do you see it in 2024?

And then, if I could sneak one more. You have one of the largest differences between GAAP and non-GAAP earnings in the industry because of that Allergan acquisition. As you look at the amortization period and so forth, when do you think this thing will begin to narrow in a significant way just because that’s a concern for some investors?

[Rick Gonzalez, Chairman and CEO]

Okay. Ronny, this is Rick Gonzalez. I’ll take the Humira questions. I think if you look at the guidance we provided thus far, I mean, I think that’s consistent with how we see the market playing out overall. We’ve said basically you should be thinking about 45% erosion, plus or minus 10%, that’s probably a reasonable range. Nothing has really given us any indication that it should be different than that at this point.

I think we will be in a position as we move later on this year to potentially be able to provide some more specificity around that. We should be through all of the contracting at that point, in a better position to be able to understand the ramp and the change that will occur over that period of time, and we certainly want to provide guidance when we have confidence that we can give you a high degree of specificity of what that guidance looks like.

As it relates to your question about floor for Humira, I think your question is, will the floor for Humira be in ‘23 or ‘24. And I believe you’ll see further erosion from ‘23 to ‘24 on the Humira business alone. But what we have described is we returned to growth on the overall business. So, you have to think about it from the perspective of this underlying growth engine that gets suppressed in ‘23 by the significant erosion that you see around Humira, both price and some volume. And then, as that continues, it continues at a slower pace when we get into ‘24. So, the overall business has the ability to be able to drive growth for the total Company. But yes, Humira would continue to decline in ‘24. And then Rob, why don’t you cover the third one?

[Rob Michael]

Sure, Ronny, this is Rob. So when you look at our adjustments to specified intangible amortization, I’d say intangible amortization is like 70% of it and this is on the $4.74 guidance that we’ve given this year. And that will continue. Obviously, those things fall off over a number of years. But I would say that’s probably a level that I would assume would be present for the next several years.

Another big component is kind of the contingent consideration given that we’re -- that’s purchase accounting, and we record that accretion as such, that will certainly fluctuate over time. But I’d say those are the two biggest components of the guide this year. And certainly, integration costs are starting to wind down, so you would expect to see those come down. But it is going down from last year. And so you would expect it potentially trend down. But overall, I think you can model this level going forward.

[Operator]

Our next question comes from Andrew Baum with Citi.

[Andrew Baum, Citi]

A couple of questions. Firstly, on Imbruvica. As we move into 2022 and the COVID dynamic shakes out, we’ll be able to see the impact of competition versus COVID. Assuming that a significant chunk of the U.S. slowing growth rate or decline is due to competition, what can be done to recoup the momentum against the narrative, particularly of Calquence?

And then second, in terms of your aesthetics business, you terminated your contract with Medytox liquid formulation. There are competitive products coming to market as well as increasing price competition. How much of that is concerned or as your franchise and the breadth of the portfolio enough to minimize any impact of novel formulations? Thank you.

[Jeff Stewart, EVP and Chief Commercial Officer]

Yes. Hi, Andrew, it’s Jeff. So, thanks. And you’re right that we still have the continuing lingering effect with COVID, and Rob addressed that in his comments. So, we still see the market versus ‘19 levels down about 10% and even marginally down from 2020 in Q4. So we anticipate that that will moderate go forward. And then we’re left to manage the competitive impact. So, we are seeing competitive BTKs have some impact on Imbruvica, but we’re also seeing the competitive impact from our own Venclexta. So we have to start to think about looking at the combination of the AbbVie position, which is still very, very strong.

To give you some sense in second-line, we have 45% share of the market, and it’s even higher in third-line, and it’s in the 30s for frontline. So, we have to continue, which is our strategy to highlight where we have a lot of distinction, which is the strength of our data across every comparator in CLL, the overall survival benefit, and then also bring the strength of our overall portfolio. So, that’s how we plan to mitigate it. As Rob mentioned, we see market recovery offset by some share pressure on Imbruvica, mitigated by positive Ven impact.

So, that’s how we see the market develop as we go into 2022. We also are seeing some pricing pressure in some select segments that are also contributing to the share loss for Imbruvica. And obviously, we -- as much as we can, we keep the pricing discipline in the market moving forward. So, I hope that context helps.

[Rick Gonzalez, Chairman and CEO]

Andrew, this is Rick. I’ll cover the Aesthetics questions for you. And certainly, as you look at Botox, both here in the U.S. and internationally, it competes today against a significant number of competitive alternatives that are available. I think it’s a pretty impressive position that Botox has in the market. When you look at the brand equity that it has, when you look at the confidence that injectors have in using the product, they tend to describe it as the most forgiving of all the toxins that they have experience with.

And then there’s obviously a fairly significant customer loyalty aspect to Botox with the loyalty programs and Allergan has a very significant loyalty program that offers patients incentives to be able to use the product and to go back and get repeat procedures. Having said all of that, we feel confident in the position that we have competitively against the competitive alternatives that we see out there and those that we see coming.

We have a very active R&D effort in the aesthetics R&D group now that’s looking at next-generation toxins. Two in particular that we highlighted in the comments earlier are we had a short-acting toxin that’s in development that’s progressing very nicely, and we have a true long-acting toxin that’s in development as well. And we believe that those will help grow the market.

But, if I look at the market now, obviously, we’ve seen significant acceleration in the market since we’ve activated many of the strategies that we put in place after acquiring Allergan. But if I look at our overall share, overall share has stayed very steady, in fact, might have ticked up one point in the latest set of data. So, that tells you that we’re not only growing the market very rapidly but we’re continuing to compete quite effectively against the alternatives that are out there. So, I’m not overly concerned about what I see on the horizon. I think, we have the opportunity to build the market even larger with some of the next generation toxins that we’re working on when we bring those to the marketplace. So, I feel good about our position in toxins and in fillers as we move forward.

[Operator]

Our next question comes from Vamil Divan from Mizuho Securities.

[Vamil Divan, Mizuho Securities]

So, a couple. I always appreciate all the guidance. You guys gave both near term and longer term. Just a couple of questions I have related to more of the longer-term guidance you’ve given. In the past, you had talked about your HemOnc franchise sort of in peak sales or sales I guess in 2025 of around $13 billion. When you updated some of your numbers earlier last month, I don’t think you updated that one. So, I’m just curious if you still think that that’s a reasonable sort of 2025 expectation?

And then, the other one is around Ubrelvy, where you’ve sort of stayed with this guidance of sort of more than $1 billion in peak sales. But you’re already guiding to $800 million of sales just in this current year, pretty early in the launch. So, I’m just wondering if you can maybe give a little better sense of how you’re viewing sort of the longer-term opportunity for Ubrelvy and maybe if you want to mention Qulipta, I know that’s early, but at least for Ubrelvy, do you think there’s significant upside to that $1 billion number you’ve mentioned before? Thank you.

[Rick Gonzalez, Chairman and CEO]

Vamil, this is Rick. So, I’ll cover the first one, and then I’m going to have Jeff cover the Ubrelvy question that you’ve asked. So, it’s a good question. Obviously, the HemOnc market in the areas that we participate in, in particular, I would say CLL has changed over the last several years. I think one of the -- certainly, one of the things that was not ever anticipated in that guidance was the impact that COVID would have on the market and the reduction that we saw in the number of new patients, which was quite sizable. And that obviously wasn’t contemplated in it.

And the second thing is we are seeing certainly more competitive pressure, both from price and some volume than we anticipated in that time frame. Having said all of that and -- well, I’d say a third item is, certainly, Venclexta is performing well as well. And I’d say, it’s tended to exceed some of our expectations, at least at this point within the launch trajectory of the brand.

So, all of those have factors in what we’re describing here. I’d also say we have done a nice job of building out our HemOnc portfolio from an R&D standpoint. When I look at some of those assets that I described in my opening comments, I think they’re going to have a very significant opportunity. As an example, one that I didn’t mention there would be Venclexta and the t(11;14) multiple myeloma population. That could be a very significant opportunity, we feel good about that. We should get a readout on that. And we think that could be a significant contributor to both improvement in in-patient therapy, but also a significant improvement in the overall revenue in the franchise.

And then, you have things like Navitoclax and epcoritamab and 383, those are all significant opportunities to be able to drive growth. So, I still feel confident in the overall ability for us to grow our HemOnc franchise. Having said that, I would say, Imbruvica is under more pressure than we anticipated. When we put that guidance out, at that point, we didn’t even contemplate a follow-on BTKs in any meaningful way. But we do see more competitive pressure there. But overall, I’d say, I still feel very confident in our ability to be able to grow that, that will be a growth franchise for the Company over the long term.

[Jeff Stewart, EVP and Chief Commercial Officer]

Yes. Hi Vamil, it’s Jeff. So, just to answer your question on Ubrelvy in the overall market. Certainly, we’re very pleased, as I mentioned in my remarks, over the momentum on Ubrelvy. We continue to lead in that acute space. And the early results for Qulipta are also very strong. Now, a lot of it is going to depend on how that CGRP market develops. So, if you think about it in this way, and this is how we think about it is, is it’s about in terms of new patient capture for the total Ubrelvy market, where we also compete with another player from Biohaven.

It’s about 18% to 19% of the market. And the market is also with the expanded triptan market, of course. So, if you look at that, the payers certainly like you to step through one or more triptans. When you look at the population that may not be eligible for a triptan or fails a triptan, the estimates are typically up to 30% to 35%. And so, the market has potential room to sort of double into that epidemiology. So, you can kind of run the numbers there.

I mean, we often get the question, is it over $1 billion? Is it closer to $1 billion or is it closer to a higher number. But nonetheless, we’re pleased. Certainly, it’s exceeded our expectations so far, and Qulipta has as well. So, I think there’s more room for the market to run, but we’ll have to see. I mean, there are payer pressures in the market, as I mentioned, in terms of the step-through therapy.

[Operator]

Our next question comes from Steve Scala from Cowen.

[Steve Scala, Cowen]

I have a couple of questions. At a high level, I struggle to understand why 2022 won’t be a stronger year than the guide on the earnings line. Skyrizi and Botox are doing phenomenally. Rinvoq is holding its own. Humira will still be exclusive in the U.S. for the whole year and should be at peak profitability and the pandemic less an obstacle. So, why won’t 2022 look more like or even better than 2021 in terms of earnings power? And secondly, there was no mention of the CF program even in the upcoming milestones. Any thoughts on the timing of the triplet data? In the past, I would describe AbbVie confidence as being no more than moderate. Has it changed one way or the other?

[Rick Gonzalez, Chairman and CEO]

Steve, this is Rick. Maybe Rob and I will tag team your first question, and then Michael will cover your second question. I think if I look at 2022 and I look at our overall performance coming off of a strong year in 2021, it’s pretty impressive performance. When I look at the EPS growth, certainly, do we have an opportunity to drive it harder? I can tell you, every year, we endeavor to drive it as hard as we can drive it. And when I look at all of the businesses individually, and I look at their ability to be able to perform, I’m extremely confident in the trajectory that we have going forward.

Specifically, we’re assuming as an example, in HCV that there’s still a COVID impact in HCV. So, I wouldn’t say the pandemic is completely gone in 2022. But, I’d say, overall, the brands are performing well. We’re investing in the business to ensure that we continue to be able to drive long-term performance. And so certainly, that obviously drives some expectations around what the EPS growth will be year-over-year. I don’t know, Rob, anything you’d like to add?

[Rob Michael]

I mean, I think it’s a good point and that we are fully investing to support the long-term growth. If you think about we’re launching AD, that’s a new area for us. Qulipta and Vuity, we’re also going to fully invest there. Aesthetics, we’ve seen that the strength of the investment in aesthetics in the way we’ve been able to grow the market. So that’s really important. At the same time, we’re expanding operating margin. We’re exceeding our expectations for synergies. And so, you’re seeing us deliver another year of operating margin expansion.

So, I’d say, we’re top tier in operating margin, very healthy P&L profile. And then, the other thing that you probably have to factor in here is that we’ve assumed half year Restasis as well. We don’t really have visibility to the generic until we make an assumption every time we update guidance six months out. So that’s something that if you look at year-over-year that you should figure into your comparisons. But overall, we’re very pleased with delivering double-digit growth in earnings and seeing another year of very strong operating margin expansion while fully investing to support the growth of the business.

[Michael Severino, Vice Chairman and President]

And this is Mike. I’ll take the question on CF. I think, it’s important to keep in mind that this is a pre proof-of-concept program that doesn’t contribute in any meaningful way to our long-term outlook and doesn’t factor into our thinking about the long-term potential in the pipeline. And the way we have discussed it is consistent with that view. We’ve always said that it represents significant upside if it were to hit, but it’s an early program.

With respect to the timing of the data, we continue to track towards the timing that we’ve described previously. We would expect to have data from the triple, sufficient to enable a go/no-go decision later on this quarter.

[Operator]

Our next question comes from Tim Anderson with Wolfe Research.

[Tim Anderson, Wolfe Research]

A couple of questions. I’m guessing that as we move through 2022, investors are going to start to have some concerns about 2023 earnings, what the impact from Humira could be, and you talked about having more visibility on Humira contracting later this year. My question is, is it possible you’ll actually give us 2023 earnings guidance sometime this year, like at Q3 results as an example?

And then, my second question, just going back to CF data. You said in mid-November that you would actually have that data in-house by the end of the year. So, here we are four weeks later, we haven’t really seen anything. My question is, do you actually have that data in-house? Did you hit that timeline of end of year, if not, what’s going on? And what changed in that short window?

[Rick Gonzalez, Chairman and CEO]

Okay. Tim, this is Rick. I’ll cover your first question. Mike can address the second one. We certainly are in a position now to be able to commit that we would give earnings guidance in the third quarter. I think clearly, we’ll be able to give a better feel for what that erosion curve looks like. And could that ultimately end up being at least a pretty good perspective for us to be able to build off of what earnings guidance would look like. It might. I think if we’re in a position where we can confidently provide that guidance, we would provide it.

But I certainly think we’ll be in a position where we have very good visibility as to what that erosion curve will look like. And at that point, we can tighten it a bit and be able to provide a higher level of specificity. We understand it’s an important issue for investors. As far as EPS is concerned, in 2023, we have said that we expect EPS to decline in 2023. So, I don’t think any investor is -- that would be a surprise to any investor. But obviously, it’s important for us to be able to frame it as accurately as we can for the investment community and be able to provide direction around that. And at the point at which we think we can do that in a reliable way, we’re committed to be able to do that. So, let’s see how it plays out. And certainly, as we get to the third quarter call, that would be the position at -- the point at which I think we’d be in a position to be able to provide more clarity. Mike?

[Michael Severino, Vice Chairman and President]

So, on CF, what we said towards the end of last year is that data would begin to come in-house around the end of the year, and we would have sufficient data to make a go/no-go in the first quarter. And we’re still tracking to that overall timeline. There were some challenges towards the end of the year, where a number of patients were expected from Australia, for example, and Australia shut down because of COVID and we had to shift that enrollment. So, we perhaps have slightly less data than we would have hoped to have had at this point in the year. But again, we’re still tracking to be able to make that go/no-go decision by the end of the year, because it’s important to keep in mind that these are short studies. And so once you get those patients in, you can turn the data around and make a decision pretty quickly. But the overall timing hasn’t changed substantially from what we described at the end of last year.

[Operator]

Our next question comes from Mohit Bansal from Wells Fargo.

[Mohit Bansal, Wells Fargo]

Congrats on the quarter. Maybe a question on Rinvoq and other oral competition and competitors in IBD, where do you see Rinvoq fitting versus other orals such as SNP [ph] inhibitor? I mean, now they are more than -- there could be more than one. And KOL, I mean they kind of suggested some kind of induction with one drug in maintenance with other drugs, a kind of treatment paradigm in IBD. Do you think it is even a possibility in any of these diseases? Thank you.

[Michael Severino, Vice Chairman and President]

I think -- this is Mike. I’ll take that question. If you look at the performance of Rinvoq and inflammatory bowel diseases, both in UC where we have the full data set and in Crohn’s disease, where we have an important component of the induction data set, the performance across the board is very, very strong. Not only in terms of just overall response rates that are measured, but particularly when one looks at deeper measures of response, clinical remission, mucosal healing, major clinical response, which is the combination of remission and endoscopic improvement. And across the board, we’re driving very high levels of disease control.

And we think that feature of the drug, combined with the overall benefit risk position us to compete very effectively against not only oral competitors but many competitors, all competitors in the field. When we look at those data to our eye, given the limitations of cross-study comparisons, we see response rates that just aren’t paralleled in the field. And so we think that there is a very real opportunity for Rinvoq and our view of its role in IBD reflects that.

With respect to mixed induction and maintenance regimens, it’s important to keep in mind that there are no data to support those sorts of regimens. All of the programs look at induction, followed by maintenance, which is usually a step-down in dose from the induction dose. And that’s the data set that physicians will have.

Now, it’s important to keep in mind that in the long term, patients often lose control and then they need to be reinduced with a new agent. And one of the very strong features of Rinvoq and quite frankly, Skyrizi also shares this characteristic, is it has very durable response. So, it does maintain response for a very long period of time in the studies that we have continued to follow, including our long-term extensions from Phase 2 and our Phase 3 program. So, we think those are also very strong attributes to the products.

[Operator]

Our next question comes from Gary Nachman from BMO Capital Markets.

[Gary Nachman, BMO Capital Markets]

Aesthetics has been a big source of upside in 2021. So, I’m curious, did you see any real impact from Omicron in the fourth quarter? Do you see a tailwind maybe from that further recovery this year? Is that baked into the aesthetics guidance of $5.9 billion that you have for 2022? And you’ve talked about high-single-digit long-term aesthetics guidance, but this year should be double digits. So, should we be thinking more along the lines of double-digit growth maybe for the next few years if you’re still investing a lot in that space?

And then, just one other quick one on Qulipta for the chronic migraine prevention indication. That data is coming soon sometime this quarter. So, just talk about how meaningful you think that indication will be and how that’s factored into the peak targets that you talked about. Thank you.

[Rick Gonzalez, Chairman and CEO]

Gary, it’s a good question on Omicron in new studies because it is something we track very carefully in every major geography around the world as well as by state here in the United States. And I will tell you that at least as far as the U.S. is concerned, there has not been much of an impact on aesthetic volume, unlike what we saw when there was an actual shutdown. And obviously, you would think shutdown, you’re going to see the volume go down. But I’d say here, we’re seeing very little impact on the volume.

So, we have factored in that we don’t expect a major disruption going forward. And I think the data would clearly support that that’s a reasonable position to take. And as far as the business overall, I mean, I can tell you, we’re very pleased with how the business is performing. I think that group is executing at a very high level. And certainly, the resourcing and the dedicated structure that we put in place, I think, are helping a lot in major geographies like the U.S. and China.

We’re obviously comfortable with the guide that we provided. It is an area that we’re going to continue to invest in and continue to drive. And I think it’s a market that I think is extremely attractive. And it’s going to require both us to continue to execute and invest in it appropriately to grow the market, but also to build out more assets that meet patients’ needs to be able to expand the market. And so, we’ve almost doubled the R&D investment that we have in aesthetics since we took it over.

And we have a number of programs that I think are very exciting programs. Some of the biostimulatory and regenerative fillers that we’re working on now, I think, could be exciting opportunities like tropoelastin to be able to stimulate tropoelastin in patients using fillers is an exciting program that continues to advance. And so, it’s going to require both. It’s something that we’re absolutely committed to continue to drive. And I think this can be, as we indicated in our comments, I think this can be a strong business for AbbVie over the long term.

Jeff, do you want to cover Qulipta?

[Jeff Stewart, EVP and Chief Commercial Officer]

Yes. Thanks Gary for you question on Qulipta. It’s an important new indication if we see -- when we see the data and it were to be approved. And I’ll give you some perspective. Obviously, we’ve talked about how much we really like our portfolio of migraine. You got Botox on chronic with the injectors. Obviously, you have Qulipta right now in episodic and of course, Ubrelvy in acute. So, the Qulipta chronic gives us quite a bit of flexibility, and it’s a nice catalyst. Even though episodic is a bigger market in terms of patients, obviously, chronic patients do consume a lot of medication.

Largely, if you think about the market structure, you’ve got injectors, meaning they inject Botox or you have non-injectors. So, to bring in the first oral that -- for people that don’t choose to have a Botox-injectable practice, that’s quite attractive. And we think it builds in our story over the strength of Qulipta first-in-class designed specifically for these indications. So, it’s a very nice catalyst if it were to be approved. And so, we’re anxiously looking forward to that.

The other thing I would note, which is further off and it’s obviously something that would have to play out through the studies in Mike’s organization, was chronic migraine is so difficult that the potential for patients to have combination treatment. So, in other words, a Botox Therapeutic plus a simple oral drug like Qulipta could bring this concept to that segment of the market called migraine freedom where you’re really trying to get the headaches down to as low as possible. And so, again, it’s further off, but it shows you the flexibility that we have as we continue to build out Qulipta across our migraine portfolio. So, we’re pretty excited about the potential for CM.

[Operator]

Our next question is from Geoff Meacham from Bank of America.

[Geoff Meacham, Bank of America]

I just had a couple of quick ones for Rick -- or for Rob. The first one is when you look at your our modified 2025 guidance for Skyrizi and Rinvoq, were there any changes to your assumptions on duration of therapy or the pricing environment? I’m just thinking about the payer landscape with many more biosimilars coming up and what impact that could have on switching or price increases.

And then, the second question is on the BD front. We’ve obviously seen valuations come down quite a bit in SMID cap biotech in the past six months. And I know you’ve usually talked about $2 billion earmarked for BD, but does the current environment make things like bringing new TAs or newer technologies in-house more attractive? Thanks so much.

[Rick Gonzalez, Chairman and CEO]

Rob?

[Rob Michael]

Yes, Geoff. So obviously, when we go through our long-range plan, we consider the various dynamics of the pricing environment. So, we factor that into our 2025 guidance. I would not say that there’s really been an assumption change for duration of therapy. But we did -- we certainly took into account the impact of label on RA, AD and SpA, but then that was offset by the stronger performance at OUS as well as the stronger IBD data that we saw for Rinvoq and just the overall performance of Skyrizi in psoriasis. It was all factored into that updated guidance, but we did not make an assumption change for duration of therapy, and we certainly factor in various pricing assumptions as we go through our long-range plan.

[Rick Gonzalez, Chairman and CEO]

Yes. And maybe Mike and I will tag team number two. I mean, certainly, as we -- you’ve seen us pay down debt at a very significant pace. We’re continuing to commit to pay down significant debt this year. And we’ll certainly be in a position where we could do larger opportunities if that was something that we desired and we thought it was the right kind of opportunity as we move forward in ‘23 and ‘24. Certainly, the $2 billion that we’ve allocated has been sufficient to be able to cover the things that we’re looking for. Mike has responsibility for business development. So, I think it’s probably a little closer to the valuation question. Mike?

[Michael Severino, Vice Chairman and President]

Well, what I would say is that valuations have certainly come down, and that brings opportunities into the focus that might previously been outside of that range of $2 billion a year that we had contemplated. And as Rick said, as we pay down debt, we have some more flexibility. But we’re going to continue to look at BD in the same way that we always have, which is that it is an important component of adding innovation to our pipeline and needs to be coupled with our internal innovation.

So, we’re going to match what’s out there. The innovation we see, the therapeutic areas that are most promising with what’s going on in our early pipeline and use that to make sure that, overall, we have a very strong and very innovative pipeline. And you can see that, for example, in the way that we have built our HemOnc franchise, where we have a nice blend of internally discovered and partnered programs from Venclexta and Imbruvica, obviously, our lead programs to the significant programs behind that, things like Navitoclax, epcoritamab, 383 and now Teliso-V demonstrating extremely strong data in non-small cell lung cancer. So, that’s a blend of internal and external innovation.

And we’re going to continue to look at areas in that same way. And it’s principally going to be the fit for our overall situation, the strength of the innovation and that balance between internal and external innovation that we look at.

[Operator]

Our next question comes from Josh Schimmer from Evercore.

[Josh Schimmer, Evercore]

First, I’m a little surprised the contingent consideration adjustment is not higher considering your recently revised Skyrizi forecast. Am I not understanding that line correctly, or should we be expecting a more meaningful revision in the first quarter? And then, you mentioned a couple of times the novel biostimulatory dermal fillers you have in the aesthetics pipeline. Can you elaborate on how you expect those to differentiate versus the current offering and whether you expect those to expand the market for fillers?

[Rob Michael]

Josh, this is Rob. I’ll take your first question. So, we did actually record in Q2 of last year, additional accretion for higher sales forecast for Skyrizi, and that was really tied to both our long-range plan as well as because it’s a fair value measure. You have to take external forecast into account. And obviously, Street numbers had moved up as well. We came out with publicly with the updated guidance in December, but we already contemplated that in our contingent consideration accretion in Q2 of last year. So, that’s already accounted for.

[Rick Gonzalez, Chairman and CEO]

So, on the biostimulatory fillers, I think the way to think about it, there are multiple programs, but I’ll talk about two areas specifically. Certainly, one of the areas that you want to be able to look at is your ability to be able to stimulate collagen so that your own body can produce collagen to be able to provide support and filling in a specific area that you desire. And there are some products on the market today that provide that. One of the negatives of those products is you don’t get the immediate filling effect that you normally get with a filler, where you get physical filling immediately upon the procedure. You get a little bit of swelling that occurs. So, for a very short period of time, you will get what looks to be filling, but then that swelling goes down. And then for a period of time, the patient has to wait in order for them to get the collagen impact, and that takes a significant period of time.

So we have a technology in-house that we acquired, and we’re further developing that combines both physical filling and collagen stimulation in one product. So, you get the immediate filling effect of a normal filler. And then, as that starts to resolve over time, you get the collagen impact that’s building over that same period of time to provide long-term filling. So, I would say that most of these technologies that we’re working on are market expansion opportunities, so that’s one example.

The second example would be one of the areas that is important for patients is what we describe as skin quality, the smoothness of your skin essentially. And one of the things that provides smoothness of your skin is the elasticity of the skin. So, tropoelastin is an example of a product that we have in development that will allow the body to be able to produce more elastin. So, you can inject this product and it will provide, we believe, we have to prove this in the clinical studies, that would provide not only some level, not a dramatic level of filling but an ability to be able to provide elastin information along those areas and be able to smooth the skin out. That would clearly be a market expansion opportunity, today there really aren’t fillers that do that. They can stretch the skin with the physical filling, but they don’t really provide smoothing of the skin. And so, those are two examples of what we’re working on.

[Operator]

Our next question comes from Chris Raymond with Piper Sandler.

[Chris Raymond, Piper Sandler]

Just two questions. First on the migraine franchise. I noticed that you have a Phase 3 trial looking at Qulipta in Botox in a combo therapy for migraine -- for chronic migraine prevention. Our doc checks indicate actually growing interest, docs sort of highlight that as proactively is something they’re interested in. I guess, was this trial in response to that feedback or maybe just talk about the rationale and how you’re looking at combo in the space?

And then, just a question on a drug that doesn’t come up that you just launched, Vuity. Presbyopia represents a huge TAM. Maybe just talk about initial uptake trends and what is it about this market, I guess, that you’re seeing that you’re not making a bigger deal out of this launch? Thanks.

[Michael Severino, Vice Chairman and President]

So, this is Mike. I’ll start with the question on Qulipta and Botox combo use and then Jeff may want to add and take the second question. With respect to that combination, it really goes back to what Jeff said before, this concept of migraine freedom. If you think about chronic migraine, these are patients who have 15 or more migraine days a month. That’s a migraine every other day, and these are debilitating attacks. So a substantial reduction in that is great.

But, what patients and physicians are really seeking is an elimination of the migraine so that they can be free to go across their daily lives, to go about their daily lives. And given the options that are out there today to really get to that level in those most severely affected patients. Combination therapy is an obvious place to go, particularly when it’s complementary approaches that work through different mechanisms. And so you would expect their effects to be independent and additive.

And where you have a treatment like Botox, it has a long track record, is infrequently administered and has a long duration. So, it’s that thinking that led to that combination trial. And I do think we would also agree that there is significant interest in treating physicians around these approaches.

[Jeff Stewart, EVP and Chief Commercial Officer]

Yes. Just to add to that, that’s exactly right, is the -- it’s so logical and there’s so much unmet need, to Mike’s point, in chronic migraine with half a month, sometimes these migraines last for days. And so there’s a lot of desperation. And when the thought leaders and the headache specialists see the impact of Botox and how simple Qulipta is and how strong that is, they go right there. So I think we are encouraged, as Mike mentioned, to sort of see the outcome of those studies for migraine freedom. It would -- if it works, it would be a real advance for patients.

[Rick Gonzalez, Chairman and CEO]

And so on Vuity, you’re right, we didn’t comment on this meeting. You typically wouldn’t comment on a product that’s -- of this size. And I mean, it’s a very interesting product. I think it clearly has a unique fit in the market. I’ll have -- I’ll let Jeff talk a little bit about the total available market, what we see as far as the size of that market going forward. But the reason we didn’t highlight it is, like I said, if we look at what we think peak sales will be here, it’s not a product of the magnitude that we would typically highlight.

[Jeff Stewart, EVP and Chief Commercial Officer]

Yes. And what we see is that there is excitement about Vuity. I mean it’s different than the -- obviously, the market is basically over-the-counter or prescription high glasses or readers, right? So, this is the first ever product that basically is a drop or a reading drop, right? So, when we start to break down the data and you take a really, really big market, tens and tens of millions of patients with presbyopia. But we also largely see from the clinical study, it really works the best for moderate to severe younger people, not older people.

So, as we basically make the cuts, it’s still a substantial market size, but it’s not as large as you might think if you just look at all the presbyopes that are better in the United States. But nonetheless, it’s early days where we have a sales force that’s calling on our optometrist, also ophthalmologists. What we see from the early results is significant interest. We haven’t started our big consumer push, which will come later, later in this quarter.

It is an older glaucoma product that’s been reformulated. So, there’s a little bit of learning from the ophthalmologists who really understand glaucoma products. But overall, the early results are it works, it works as anticipated. It works quickly within 15 minutes. It lasts for 6 to 8 hours. And so, again, when we look at the price point, it’s not a reimbursed product. It’s a cash pay product. We have, to Rick’s point, fairly modest expectations. And we’ll continue to watch the trajectory here over the next quarter or so.

[Rick Gonzalez, Chairman and CEO]

I think the big assumption that you have to look at here is, what is the utilization per month the patient would actually use it for. I mean, as an example, I keep bugging the guys that I have to go get a prescription for it. Now, what do I want it for? When I go to a restaurant, I have trouble reading in low light. So, I’ll use it for that purpose. And so, it’s very difficult to come up with what the frequency at which it will be used. If it’s used in a high frequency, it will obviously be a bigger product. If it’s used at a relatively low frequency, it will be smaller product. So, we’ll have to see how it plays out.

[Liz Shea, VP, Head, IR]

Operator, we have time for one final question.

[Operator]

Thank you. Our final question comes from Matthew Harrison from Morgan Stanley.

[Matthew Harrison, Morgan Stanley]

Thanks for fitting me in. I guess, two for me, if I may. So first, on epco, could you just comment around your confidence around accelerated approval here in DLBCL and how you’re thinking about that opportunity in the near term? And then, on Vraylar, maybe just comment on what FDA conversations are ongoing there and how you’re thinking about the potential for an AdCom or not.

[Michael Severino, Vice Chairman and President]

So, on epco, we have a high degree of confidence in epco overall. It continues to deliver very strong results, high overall response rates, very deep responses, good complete response rates across a number of indications, DLBCL and follicular lymphoma both. With respect to the confidence in accelerated approval for diffuse large B-cell lymphoma, when we look at the data, we think it clearly exceeds the benchmarks of available therapies in highly pre-treated refractory patients.

So, we would think that accelerated approval should be supported by those data, will allow the data to continue to mature from the expansion cohorts and have our final regulatory discussions later on this year to set up that accelerated approval submission. So, it certainly is in our planning, and we think it’s very supportable based on the data.

With respect to confidence in Vraylar and MDD, we’re confident in that -- we’ve been confident. We were confident when we saw the data and looked at the strength of those data and looked at the relevant precedents for molecules that have achieved indications, not only in depression, broadly speaking, but in adjunctive treatment of major depressive disorder.

We’ve completed all of the regulatory discussions that we need to have for the submission, and we’re planning the submission shortly as we described in my prepared remarks. In terms of potential for an AdCom, it’s really too early to comment on that. We typically start to have those conversations with the agency a few months into the review process. But, based on the data and based on the precedence, it’s not something that we would anticipate. However, if the agency were to have one, it wouldn’t concern us either. We think the data package is very strong and would hold its own.

[Liz Shea, VP, Head, IR]

Thanks, Matthew. 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. That concludes today’s conference call. Thank you for your participation. You may disconnect at this time.