AbbVie Inc. (NYSE:ABBV) Cowen Health Care Conference March 12, 2019 8:00 AM ET
Mike Severino - Vice Chairman & President
Conference Call Participants
Steve Scala - Cowen & Co.
Well, good morning and welcome to the AbbVie session at the Cowen Conference. We're very pleased to have the company back again with us this year. Representing the company, Mike Severino, who is Vice Chairman and President; and Rob Michael, who is Senior Vice President and CFO.
As many of you may know, we believe at Cowen that this stock represents a very compelling idea right now. And what are the reasons for that? Well, how many pharma stocks do you know that have four products in development and maybe five that have multibillion-dollar potential.
Second, yes HUMIRA represents a significant hurdle, but we believe the company has done as good a job as they possibly could have to protect themselves in the U.S. and to blunt the erosion in Europe. Thirdly, of course, the stock is very attractively valued. And you put it all together and we think that this represents a very good time to be kicking the tires on AbbVie. And this is a great opportunity with two members of senior management with us today.
So there are so many new products and exciting developments at AbbVie to talk about and I want to spend 29 minutes of our 30 minutes together just chatting about that.
Q - Steve Scala
But let's get the HUMIRA in Europe situation out of the way to start. So you've given very explicit guidance of what you expect to occur this year. How has that changed since you reported your fourth quarter if it has changed at all?
Yes. Well, so in January, when we reported our fourth quarter, we guided to sales in our international HUMIRA business being down about 30% to reflect direct biosimilar competition in the region. And when we gave that guidance, we based it not only on the pricing actions that we were seeing at the time, but also on assumptions of further erosion through the course of the year.
So when we look at where we are right now, we continue to feel good about those numbers. And just to clarify, the 30% is an operational basis, so that excludes exchange and it's off of our total international sales base just sort of $6.2 billion in 2018.
Okay. And let's flip to the U.S. Again, you've done an admirable job shoring up the franchise through 2022, 2023-ish. Of course, there is one company lurking out there who has an approval. How do you think investors should be thinking about that potential challenge from BI?
Yes. So, obviously, we can't opine on the decisions that the management of other companies might or might not make. But we can say is, that we remain very confident in our IP portfolio for HUMIRA and in our overall strategy.
We have IP around HUMIRA that is a result of significant investment in innovation. A number of these patents have been challenged through the IPR process and upheld. In addition to that, we've reached agreements with eight biosimilar manufacturers and these include some of the largest and most experienced companies in the industry.
In each of these settlements the biosimilar manufacturer has affirmed and attested to the validity of our IP. So we feel very good about the strategy. And we remain very confident that we won't see direct biosimilar competition in the U.S. before 2023.
Okay. We'd like to keep this interactive, so if the audience has any questions, please raise your hand and we will call on you. Any questions at this point? So let's move into some of your exciting new drugs. And as we look to 2019, I think, it's the Cowen belief that one of the most exciting potential readouts or readouts will be the VENCLEXTA, BELLINI data in refractory multiple myeloma. And clearly, it's a big potential opportunity for a product which already has big potential. So maybe you can create a framework for which we can head into this event to calibrate expectations.
So, first of all, I think, it's important to look at VENCLEXTA over all. And VENCLEXTA has delivered spectacular clinical trial results across a wide range of indications. Obviously, its most advanced indication is relapsed/refractory chronic lymphocytic leukemia, where we have very, very strong data that we believe establishes VENCLEXTA in combination with rituximab really a gold standard for efficacy in that population.
And that's very important, because at the same time that IMBRUVICA is moving aggressively into the frontline on the basis of its clinical trial data, we have VENCLEXTA establishing itself as a gold standard for efficacy behind that.
We've also reported top line from our front line -- first of our front-line CLL studies with VENCLEXTA. That study was positive. Detailed data will be presented at a medical meeting. So that aspect of the program is going very well.
We've made great progress in AML, acute myelogenous leukemia, which is an indication that a few years back I think we would not have judged based on the preclinical data to be as attractive as it turned out to be. But the clinical trial data had been very strong.
We were approved on the basis of Phase 2 data, accelerated approval in the U.S. We have the Phase 3 studies which are the confirmatory studies up and running. And so that's an attractive part of the program.
Myeloma represents another very interesting opportunity and there are two components to that strategy. One is a biomarker-driven component in patients who have a particular genetic mutation t(11;14). And those patients have a phenotype that looks like a mature B-cell and is BCL-2 high. And we've seen in early studies very, very strong results there. And there is a dedicated part of the Phase 3 program that will look at those patients as well.
The Bellini study in relapsed/refractory myeloma that you described is in the broader unselected population. Those patients have held between one and three priors. And that is temporarily the first that we'll read out. That will come in the first half of this year.
That would represent the fastest path to approval in myeloma, because that's further along. Once we have those data in hand, we'll be able to comment on that. But it's not necessarily even the most important opportunity, because we think that that biomarker opportunity is particularly important for a couple of reasons.
One, based on the early data, we expect to see very, very strong results there; and also because myeloma is becoming a crowded space and the ability to identify a patient population that's particularly responsive with the biomarker we think is very attractive. So, both of those opportunities are potentially very interesting. We'll see the data on the broader opportunity first, but the biomarker program continues to progress as well.
And would you expect the readout of that broader opportunity still to be in the first half of this year? I realize it's event-driven, but is that your best intelligence?
Yes, we still expect it to be in the first half of this year.
Okay. In a meeting with you not long ago, you were asked about what should be -- what would be a good outcome of BELLINI. And I think what you said at that point if I remember correctly is you said an 18-month PFS.
And I thought that was interesting but then after you said it an hour a few hours later I realized I had no ability to put that into context. So, what would the control arm be expected to do in that situation? And is this in the biomarker-driven cohort or in the all-comers cohort?
Well, we were speaking more broadly when we made that comment. I think that's not a comment that I made directly to you, but I think that is consistent with the way we benchmark that field.
If you look at relapsed/refractory myeloma and you look at the performance of standard regimens in patients that are similar to the patients that would be enrolled in BELLINI you might expect a PFS in the range of about 12 months.
So, something like the numbers that you're talking about would represent a substantial increase in that. Of course we're close enough to the data now but I think we should probably just wait until we get those data and then be able to comment on them further.
Okay. Questions from the audience? So, let's move to one of your four exciting drugs coming through the pipeline and that is risankizumab. For those of you who were at yesterday's dermatology panel, clearly there's a great excitement in the dermatology community for this drug given its dosing given the spectacular data and so forth.
So, we're expecting an approval this half. We are past the window by which -- and these are all questions they sound like to me. And we're past the window by which there would be an FDA AdCom announced if there was going to be one. And for everything that we know the regulatory discussions are going along extremely well. So, is there anything that you would change in those statements?
I think that that captures it. So, risankizumab it's important to consider. It's supported by a very broad and very robust Phase 3 package with very strong data that we've released in the past both on the efficacy and the benefit risk side. We had very high rates of skin clearance very durable skin clearance which is important because loss of efficacy in this field in psoriasis is a concern for patients and physicians because many agents are perceived to lose efficacy over time.
Our numbers are actually increasing over time and increasing on the more stringent endpoints like PASI 100, for example, or complete skin clearance which are effectively the same thing.
And our regulatory discussions are progressing very nicely. I think you saw that we received a positive opinion from the CHMP recently. Our U.S. discussions are going well. We don't expect an advisory committee at this time and based on where we are in that review we would know that by now if that was something that was likely. So, I would think that things are progressing very much in line with our expectations. We certainly had high expectations for that program.
And the data certainly supports that. What should we expect in terms of rollout? So, when we see -- and we're not asking you to tell us or predict quarterly revenues, but since we're going to have to judge whether they are solid, great, maybe a touch disappointing what -- how would you characterize what we should expect for the rollout?
Yes, well, I would point to a couple things. First when we have a U.S. label. We want to get a label -- and of course, a European label as well. We want to get a label that reflects the very strong data that we have generated in our Phase 3 program. We would certainly have every expectation that we would. So, that will be an important proof point as this program continues to move forward.
We would be in a position to launch rapidly after approval effectively immediately. The strength of the data will be important in terms of driving acceptance and uptake in the field. Obviously, we're not in a position today to talk about our go-to-market strategy or to give detailed guidance. But we think the strength of the data will really speak for itself. And then it will be important to gain access rapidly because access is something that is absolutely essential in the U.S. market.
Based on the data we've generated based on our knowledge and experience of the field and based on the portfolio of products that we have, we would expect to be able to get access rapidly. So, with any new mechanism it always takes time particularly in this area in immunology and inflammation for physicians to get comfortable gain experience with the new mechanism, understand how to work it into their treatment paradigms. But the points that I mentioned will be the early indicators of that uptake.
Okay. Questions? So, let's move to upadacitinib. So the approval of this agent should come in the second quarter. So, maybe you can…
Second half second half, all right, I meant to say that. Tell us how the regulatory discussions are going here. And I appreciate the fact that it's more likely an FDA AdCom would be required here. So, maybe you can tell us your expectations there as well.
Yes. Well, again, it starts with the data. And for upadacitinib, we have run a very broad and very comprehensive Phase 3 program that looks across a wide range of patient populations from very early patients who are naive to methotrexate to very advanced patients who've had multiple biologics.
We have two structural studies where we showed a clear structural benefit which is important in this disease. We had a head-to-head against HUMIRA as well where we showed superiority across a wide range of endpoints. So, we have a very strong data package. We have a very strong benefit risk package as well to our eye. And we submitted that at the end of last year with approval in the second half of this year.
Those discussions are obviously much earlier on than the risankizumab discussions. But I would characterize them as going entirely consistent with our expectations.
With respect to an AdCom, it's a bit early to predict on upadacitinib given where we are in the regulatory review process in the U.S. But what I would say is that, advisory committees for NMEs for novel molecular entities in rheumatoid arthritis, it's common for the rheum division in the U.S. to have advisory committees. So, it wouldn't necessarily be surprising, if they chose to, but it's too early for us to know whether they will or they won't.
I think some people in the investment community were rattled by the recent XELJANZ news about the CV findings at the above approved dose in RA, and because that to us was validation, or at least strong suggestion that it's now a class effect, it's not just baricitinib. Now that's just our conjecture. It doesn't mean its right. Tell us, how you view that?
Well, I would return to our data. And so when you say the CV effects, I think you're referring to the thromboembolic events and PEs in particular were commented on in the press release from Pfizer and I think in some of the FDA communications. Those occurred at a dose higher than the approved dose in RA for that molecule and we're off to see how that plays through for XELJANZ.
But I would return to our data set. We have generated a very robust data set across a wide range of patients, as I've said before. We studied two doses, a lower dose and a higher dose. The benefit risk of both doses was favorable certainly in our assessment. We didn't see any signal at either dose of risk for those sorts of events. And in fact, at the end of the Phase 3 program we put out rates, which across the board low dose high dose and comparators, showed no evidence of increased risk. And we've continued to monitor those patients to monitor our ongoing studies and our extensions. And nothing that, we've seen to-date changes our point of view around that.
So I would really return to our data and the fact that our program, which was quite large, I mean, enrolled over 4,500 patients and studied them for studies that go up to a year and of course extensions that go beyond, are the best way to characterize our benefit risk and we feel very good about the profile that we've seen.
I realize that this whole conversation is within the backdrop of a patient population, the RA patient population that has a background incidence of thromboembolic events to start. However, at least in our eyes, we looked at the 30 milligram dose as – versus the 15 and did think that there was what we would refer to as a signal. In fact, we put out a note on that. So I don't know, if you saw it or not. But just why does AbbVie think there is not a signal at 30?
So, a couple of reasons. One is, when we look at the risk-adjusted and it's very hard – rather the exposure adjusted rates and it's very hard for an external party to do that, because you have event rates from clinical trials. You can have estimations of the exposure time, but you don't have the full exposure time. And the exposure time continues to accumulate on an ongoing basis. And certainly, well beyond at this point what was available when we released the data.
When you look at those exposure-adjusted rates, they are not different from each other. So there's no evidence of the dose response. They're not different from comparators. In fact, they're numerically lower than some of the comparators. But given the uncertainty of the estimates, I would say they're not different from those comparators and they're not different from expectations of the baseline rates. And all of those features are important.
Very early on in the Lilly experience the focus was solely on background rates and one can't look solely at background rates that's an important part of the equation, but one can't look solely at that. But when you look at the full picture, when you look at the fact that there is no dose relationship within our molecule, when you look at the rates compared to the comparators and there are a wide range of comparators methotrexate, adalimumab for most of the time some true placebo in our early study, we see a very, very consistent pattern, which to our eye shows no evidence of increased risk.
I think strengthening AbbVie's position here is the fact that you will pursue the 30 milligram for other indications. So, what other indications indeed might the 30 milligrams be employed if you reveal that publicly?
Yeah. Well, so in our first quarter call, we mentioned that, we wrote our rheumatoid arthritis file around the 15-milligram dose. And we did that based on our assessment of dose response for efficacy. I was talking about dose response for safety a second ago. But if you look at dose response for efficacy, we see in RA the overwhelming majority, if not all of the benefit being delivered by the 15-milligram dose.
And in drug discovery and development, one always wants to select the lowest dose that delivers maximal efficacy. And when we reviewed the data in-house after completing the program in RA, we believe that that's a 15-milligram dose. And so that's the way we wrote that file.
Now that maybe different in other indications. So for example, from the Phase 2 data in atopic dermatitis, there seems to be a dose response for efficacy between 15 milligrams and 30 milligrams. And so we will study both of those doses in that part of the program.
In the inflammatory bowel disease program, so in Crohn's disease and ulcerative colitis particularly around induction, we will look at higher doses including the 30-milligram dose.
So there are other components of the program where the exposure response for efficacy may be different where we might make a different dosing decision, but that will be driven by the data in those parts of the program. But from a benefit risk profile perspective, we view both 15 and the 30 as having a favorable benefit risk.
Q –Steve Scala
Okay. Questions from the audience? So let's shift gears and talk about AbbVie's long-standing goal or wish to have a third vertical to supplement oncology and inflammation. So maybe you can update us on the company's current thinking along those lines. And what are the most compelling third verticals that you see complementing the skill set that AbbVie now has?
Okay. Well, if you look at our efforts, particularly our efforts in research and development, they're focused on immunology, on oncology and on neuroscience. Obviously in the clinical we have a number of other important areas, women's health virology with our hep C program. But if you look back into our pipeline those are the areas where the majority of our effort is.
And in the immunology, the focus is on driving next-generation programs like the ones we just talked about risankizumab and upadacitinib and a generation beyond that. So we have a number of programs both in late discovery and in early to mid-stage development that will continue to raise the bar across the disease states that we talked about things like rheumatoid arthritis, other forms of arthritis, psoriasis and inflammatory bowel diseases, but also have the potential to take us into new areas.
And there are some important adjacencies; things like fibrotic disease, which would have synergies in areas like scleroderma where there have been really no therapeutic advances in many, many decades and really very little works there at all; or in areas like pulmonary fibrosis, which we don't think of as an autoimmune disease but has a lot of mechanistic similarities to many of the diseases that we treat and actually there are pulmonary manifestations of many of the autoimmune disorders that we already treat. So those could be adjacencies that would be a logical extension of our immunology presence.
In oncology, obviously, we're most advanced in hematologic malignancies. But we have built considerable capabilities, a broad early pipeline and hence some real opportunities in solid tumors. And so I think you can expect to see us continue to drive towards a presence in solid tumors that would mirror our presence in hematologic malignancies. So that's an important potential area.
Neuroscience is an area that's much earlier for us. For the majority of our pipeline, we're focused on disease modifying therapies for Alzheimer's disease and Parkinson's disease and other neurodegenerative disorders. We have through our internal efforts and through partnerships built a robust early pipeline, the most advanced programs in Phase 2, but we have a robust pipeline behind that. That looks at a range of mechanisms.
So in Alzheimer's disease, for example, the overwhelming majority of the effort across the field has been directed at A-beta, but we believe there are a number of other very attractive targets, tactics -- targets like TREM2 and CD33 that modify the neuro-inflammatory response. And so you've seen us build that up over time.
And depending on what opportunities present themselves from our internal pipeline, externally you could see us continue to add to that and potentially even broaden our focus in neuroscience.
Beyond that we're constantly looking at and analyzing new opportunities in new areas. I think you could expect to see us do things that make sense for the company that we are that capitalize on our strengths, but we could look at other verticals beyond that over time based on emerging science, emerging data.
And you mentioned solid tumors. Its area you mentioned before. When might we see progress with respect to either having solid tumor agents in late-stage development or even on the market?
Well, our most advanced program is our ADC against EGFR amplified glioblastoma multiforme. That's ABT-414 or depatuxizumab. That's actually in a Phase 3 study now in frontline GBM in patients who bear that mutation and that's about half of the patients GBM. It's an event-driven trial but that could read out -- we'd expect that to read out this year.
And so that would be the first opportunity. The most advanced opportunity is perhaps a better way to say it. But we have a broad pipeline beyond that. We have a large number of programs in early development that are moving towards 1b to a proof-of-concept studies across a range of mechanisms novel immuno-oncology targets beyond checkpoint inhibitors that simply complement checkpoint inhibitors or work where those agents don't work.
We have a broad focus on apoptotic programs that capitalizes on the strength that we've developed from our work around VENETOCLAX for example, but programs that would have application to solid tumors and a broad range of other mechanisms based on core tumor-driver mutations that we're addressing. So I think over the course of the next 12 or 18 months you'll see a lot of forward movement in that pipeline.
Okay. So what data can we look forward to getting at the major cancer meetings this year whether it be ACR, ASCO or ASH?
Yes. I mean, I think in the ASCO time frame, we can expect to see more - the detailed data from CLL14. That's important. We'll see updates from other aspects of the VENETOCLAX and IMBRUVICA program. We'll see data from a wide range of those early- to mid-stage programs that we've talked about. So in that time frame, I think that's what you can look for. ASH of course is still a ways out, but you can expect our pipeline to mature and we would expect to have a number of those same sorts of programs with data in time for ASH.
Maybe I should have asked this earlier, but maybe you can give us an update of your view of the landscape -- competitive landscape for IMBRUVICA? So there's agent on the market. Some are in development. So what's your characterization of their profiles, their competitive threats and the market performance in the case where there is one?
Yes. Well, IMBRUVICA is a remarkable drug. And when you have a drug like that that success breeds imitation. What I would describe the follow-on agents that you described -- that you talked about is essentially follow-on or me-too BTK inhibitors. We don't see a difference in profile. If you look at BTK inhibitors, it's pretty clear what you're going to get. You get remarkable efficacy in disease indications that are pretty well described, described by our program. You also get a benefit risk that's favorable overall that has some very clear what we believe are on-mechanism signals that need to be managed and can be managed effectively things like bleeding and things like AFib that occur in a minority of patients.
We take patient safety very seriously. We think it's important to manage that effectively and we believe we can. And that can be managed very effectively in the clinic. But we don't see any difference when we look at the earlier agents. And as those data roll forward, I think that supports that view. If these are on-mechanism effects then a different agent or an agent with slightly different specificity for off-target kinases isn't really going to make a difference. And if you look at those agents and compare like-to-like data so their early data to our early data looks pretty similar.
As our programs roll forward you'll start to see the same sort of on-target effects, on-mechanism effects that I described in those programs as well. But there is an important difference which is they are substantially behind. So the most advanced of those follow-on programs is approved in relapsed/refractory MCL under accelerated approval and has with our eyes modest share there at the same time that we have multiple Phase 3 readouts in first-line CLL and data across a broad range of indications. And in oncology, it's hard to catch up, particularly if you don't have a very clear and specific area of differentiation.
We only have a few seconds left. What do you think is the one or two things that investors are missing about AbbVie that if they had a better understanding of might view the stock in a different way?
Well, I think there are a number of important things to consider. One is the strength of our business overall and the strength of our ex-HUMIRA business. We've just talked about five programs that are either already on the market and expanding into new indications or nearing commercialization that we think can drive considerable growth. Those are the ones we had to talk about in detail. We didn't get a chance to talk much about or list another very important program on market in endometriosis, approaching time for submission in the U.S. around uterine fibroids and other important indication.
So when you look at the breadth of that late-stage pipeline and new-to-market presence, there's a lot of strength a lot of growth. We've said that we think we can grow our ex-HUMIRA business to $35 billion by 2025 and it's on the strength of those programs. So as those progress, as people see some of the proof points that we've talked about, I think they'll have a chance to get more comfortable with that. And I think that's one thing that will be important to focus on. Then there is the strength of our earlier pipeline.
We've done a lot of work in immunology, a lot of work in oncology in solid tumors that I described. Those data will be coming forward over the course of the next 12 to 18 months. And that will be an additional important factor to consider. So I think that one needs to consider the strength of our overall business and look at those growth drivers that we think will make a very substantial positive difference favorable difference for this company over the course of the next couple of years.
Great. Well, with that we are out of time. I'd like to thank you for a great overview of the company. Very exciting times coming up particularly this year. So thanks very much.