AbbVie, Inc. (ABBV) Presents at Barclays Global Healthcare Broker Conference Call - (Transcript)

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About: AbbVie Inc. (ABBV)
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AbbVie, Inc. (NYSE:ABBV) Barclays Global Healthcare Conference March 13, 2019 10:15 AM ET

Company Participants

Robert Michael - SVP & CFO

Michael Severino - Vice Chairman & President

Conference Call Participants

Geoffrey Meacham - Barclays Bank

Geoffrey Meacham

Okay. Welcome to the second day of the morning sessions of the Barclays Global Healthcare Conference. My name is Geoff Meacham. I'm the senior biopharma analyst here. So we're really excited to have AbbVie up on stage for a fireside chat. So we have Mike Severino, Vice Chairman and President; and Rob Michael, CFO. So welcome, guys.

Robert Michael

Thanks.

Michael Severino

Thanks.

Question-and-Answer Session

Q - Geoffrey Meacham

We'll kick it off with probably the more topical questions that we're getting from investors, mostly on just HUMIRA, biosimilars OUS. So maybe just give us a sense -- I know, over the course of last year, we got an update about the erosion curve. And kind of just help us, maybe at a higher level, talk about where we are now and kind of -- versus original expectations.

Michael Severino

Sure. Well, we, in January, guided to OUS HUMIRA sales being down about 3% on an operational basis to reflect biosimilar competition in Europe. And that was based not only the pricing actions that we saw at that time, in January, but also, based on assumptions of additional erosion through the course of the year. And we continue to feel good about those assumptions and feel good about guidance.

Geoffrey Meacham

Yes. Okay. And then are there lessons to be learned when you think about the -- obviously, it's 2023. It's far in the U.S. But a lesson to be learned that you can implement in the U.S.? Or is there a different process just from a formulation or from a formulary status? Or...

Michael Severino

Well, I mean, I think there are a couple of important things to consider. One, 2023 still a ways off and we're not going to get be in a position to give 2023 guidance, certainly. And the U.S., of course, is very different from Europe. Europe is, of course, not 1 system, right? They're a range of health care systems. And so we're going to get look at how things spread out in Europe across the various health care systems, which, of course, range from the Nordics, which are very different than the larger companies, Germany and France. But we're going to look at those lessons, and of course, we're going to consider them very carefully as we approach the U.S. LoE, but that's still a number of years in the future. And there's no perfect analog to the U.S. system. The U.S. system is obviously very different than Europe and has its own dynamics.

Geoffrey Meacham

Yes. I know the strategy, Mike, has been -- or at least the one that you guys have talked about, has been to push upadacitinib and risankizumab maybe more upstream the next several years; and HUMIRA, downstream of that. What are the subtleties in that? Is it really about kind of rebates and pricing? Or is it something a little bit more teeth to it?

Michael Severino

Well, it starts with the profile of the products, so upadacitinib and risankizumab. There are details on each of those, but if we stay at a high level and look at the performance that we demonstrated in Phase III, they've each demonstrated very, very strong performance. And if we go back to a couple of years, what we had visibility into is the fact that both of those drove very high levels of response in heavily pretreated patients and were high-efficacy agents in their respective indications. But as the Phase III programs had played out, we've seen a very similar story for both assets, which is they performed very, very well across the board. We treated a wide range of patients, including very early patients, patients who were new to therapy, patients who hadn't been previously treated with a biologic or an immunomodulator, as well as those very heavily pretreated biologic failures. And both assets performed very well across that spectrum. So we don't see any reason based on the data that we have today, and it's the full Phase III package for the lead indications for both molecules, if they wouldn't be used in upfront patients as well. And we know that there are segments of physicians and patients who are going to want to go to high-efficacy agents early on in the course of their therapy, and we think that both of those agents provide very good options for those sorts of patients. They also have very strong efficacy in those heavily pretreated patients. So we'll play across the spectrum. But that's really based on the data package and based on the clinical need rather than other features.

Geoffrey Meacham

When you think about the JAK space, the lessons that we've seen -- or the trends that we've seen over the past several years have been, you have oral convenience. You have maybe a little bit better price point. You have just docs having a little bit more comfort with the class. Moving ahead of biologics in general, ahead of TNFs, is that a trend that you think should play out over the next several years, should continue over the next several years?

Michael Severino

Well, it's a trend that's largely based on the data. So if you look at upadacitinib program, we, as I said before, ran a wide range of studies, and those span very early patients who are naive to methotrexate as well as those heavily pretreated patients. And the results are very strong. We drove not only strong levels of response, but high levels of remission, low disease activity and some of those more stringent endpoints. We demonstrated a very convincing structural benefit in 2 studies. And that's very important to docs and the patients because it's structural progression that leads to disability and some long-term complications or rheumatoid arthritis in many patients. And so based on the strength of that data, we see a role for these higher-efficacy agents early on in the course of the therapy. And so I think that's a trend that will continue, but again, it's a trend that will continue based on the medical need and based on the performance of the individual products.

Geoffrey Meacham

Right. And the indications that we're seeing a lot of INI agents go after now is atopic dermatitis. With the success of the DUPIXENT in the indication, now you have obviously baricitinib which had some initial data. Maybe just give us kind of your higher-level view of -- should that -- should AD be any different for upadacitinib when you look at the long-term potential?

Michael Severino

Well, we think atopic dermatitis is a very interesting opportunity. I think for many years, it has been underappreciated by the industry, and to some extent, by treating physicians in terms of what the medical need was and how a systemic agent could meet that need. But if you look at a patient population and you look at those patients who are more severely affected, the sort of patients for whom a systemic therapy might be warranted, it's actually a sizable number. And it's probably, rough numbers, about as large as the psoriasis patient population. So I think there is a very real opportunity. I think there is a very real, unmet medical need. And upadacitinib has demonstrated very strong Phase II data there. So we had Phase II data that demonstrated very high levels of response overall: high levels of response on the histologic endpoints, on the wound healing, if you will; strong response on individual components, like pruritus, which is what's most bothersome to many of the patients; and a very rapid onset of response. And based on those data, we got a breakthrough therapy designation in the U.S., and I think that is important external validation for the strength of the data that we've generated. And we're moving aggressively into Phase III. So we have a Phase II program that's now underway that we think can be a very important contributor for that molecule.

Geoffrey Meacham

And you said earlier, Mike, the data for upadacitinib and risankizumab for that matter, looked quite strong and looked differentiated. From a -- I guess, from a commercial perspective, what would you say are the bigger leverage points to help accomplish moving it upstream, ahead of biologics?

Michael Severino

Yes. Well, it starts with the data package. That needs to translate through the label. And both of those agents are under regulatory review now. Obviously, risankizumab was filed earlier so it's a little bit further ahead. We've announced recently that we had a positive CHMP opinion recently and we're nearing the time frame for an approval decision in the U.S. Those discussions are ongoing very well. So we need that. Then we need access, and that's an important feature of the uptake in the U.S. in particular. And this is an area that we understand very well. This is an area that we've operated in very successfully for a number of years. Obviously, we bring to bear a wide range of assets, so really a portfolio of solutions. And we think -- when you look at the performance of the product, the strength of our portfolio and our understanding of the marketplace and ability to drive access, we think that will give us a real advantage there, and we would expect to have good success gaining that access. And it's that plus time for physicians to gain experience with the product profiles and gain comfort with them that we think will drive the uptake over time.

Geoffrey Meacham

Right, right. Let's shift gears to the rest of the portfolio. So in hepatitis C, you guys have had some really good success with MAVYRET and previously with VIEKIRA. But let's stay on MAVYRET. The profile looks -- it's obviously very competitive. Maybe -- but the -- I think the questions for investors for the overall class though is just how sustainable are we at right now in terms of new patients coming in, in that mix. So maybe give us a sense for what you guys are seeing or what you expect from a durability perspective of the overall market.

Robert Michael

Yes. I mean, so we do think that MAVYRET will be a strong cash flow generator for the long term. If you look at the number of patients worldwide, in 2018, it was just over 425,000. We're forecasting that at around 300,000 in 2027. So we do think it's a market that will continue to generate revenue for the company. That said, we would expect to see, over time, some erosion in terms of overall market. I mean, it's essentially a two player market today. Fairly comparable share. Pricing is fairly stable. So that's at least the way we're viewing MAVYRET over the long term.

Geoffrey Meacham

And you guys don't view anything coming out that's disruptive to the category?

Michael Severino

No. I think if you'll look at pipelines across the industry, we have settled into a point where we have the generation of products that are going to meet the unmet medical need. It's not a situation that's uncommon in medicine, really, to achieve what the regimens have achieved. But when you're curing, on Europe, 98% of patients with the short course of oral therapy across genotypes, that really addresses the overwhelming proportion of the unmet need.

Geoffrey Meacham

Across the virology space, in HIV, there's a new wave of long-acting injectables which, in theory, a lot of work to be done but could ultimately replace a lot of the share for the orals. I don't know if that technology exists today to have sort of a short, like, 1 or 2 injective sort of regimen in hep C. And I don't -- but I don't get the sense that AbbVie is really investing in the category though either.

Michael Severino

Well, it's a very different market because, obviously, HIV is chronic therapy market. And so the benefits of a long-duration injectable regimen over many, many years of therapy may be different than looking at the same situation compared to a defined course, 8 weeks for most patients, of oral therapy. So I think the dynamics are a bit different. And the technology for hep C really aren't there today. But I'm not sure if the drive is the same for hep C as it is for HIV.

Geoffrey Meacham

Right. So moving down the portfolio. So for ORILISSA or elagolix in the women's health space, you just launched. Maybe give us a sense for what year are the initial kind of uptake, reception. I know there has been some use of sampling in the space just to kind of help grow awareness. But maybe just talk about kind of your early experience with the -- in the marketplace.

Michael Severino

Well, so we had a very strong data package -- or we still have a very strong data package in hand there. That translated directly through the label that I think really exceeded our initial expectations, the expectations we've set before we had that full data package. So that's very favorable. We're in the early phases of our launch now and I would characterize it as going very well. I mean, we know that this is an area where there hasn't been innovation in more than a decade, probably two decades. And so we knew it was a market that was going to take some market development, some patient activation. Formulary access in that space, broadly speaking, is not as mature as it is in other areas. So we knew that it would take some time to build the access that we needed to get physicians comfortable with prescribing therapies that are managed through formularies because that's not typical for the other agents that they have been using. So we knew that, that would take some time and it would be a longer, steadier ramp. But I would say it's going quite well.

We've made good progress in access. The interest has been very high. Patient interest, physician interest has been very high. And we think that this drug provides a very good option for women who haven't had any options in a long time and really fills in a blank space in the treatment paradigm. Oral contraceptives are used early in endometriosis, but many women or like the large majority of women don't get the relief that they're seeking from those agents. And then there really isn't anything other than chronic pain medication until you're talking about very significant interventions like chemical menopause or Lupron or surgical intervention. And so there was a big gap in the treatment of endometriosis, and ORILISSA, I think, fits in very, very well there.

Geoffrey Meacham

What are your thoughts on the competitive landscape? We have done, for example, surveys and had many doc discussions. Some value co-formulated sort of -- and some value add-back, and some physicians prefer to titrate on a different way. But maybe just to get your higher-level view on how valuable that is and then how you guys are working on for formulation as well?

Michael Severino

Well, I think that it's all going to go back to the Phase III data package. And our data package is strong. Our performance is very good. We have 2 dose levels that allow physicians to titrate to the effect that is needed. We don't require add-back at the current label. In endometriosis, we are studying add-back because there may be a segment of the patient population for whom that is a good option, and that is something that we are addressing. But we feel good about the performance overall. And I think both that dosing flexibility, the flexibility, over time, about using add-back or not will -- are important features to look at. We also have our uterine fibroids program moving forward, which we'll file midyear this year. That's a different dose. That dose was studied with add-back because we're in a different part of the curve in terms of dose response. But that part of the program was very attractive as well.

Geoffrey Meacham

Yes. Let's switch gears to IMBRUVICA, which has been a huge success when you look at the profile in first, and to some degree, second-line CLL. Very long duration of therapy and nice, persistent, very good data package. When you think about kind of the next legs of growth for that franchise, is it really about expanding the beachhead of indications? Or is it just executing on the core CLL part?

Michael Severino

Well, IMBRUVICA is performing very, very well in our overall hem/onc franchise. It will deliver $5.1 billion in revenue this year. That's a combination of IMBRUVICA and venetoclax, those two agents combined. But if we look at IMBRUVICA, what I'd say the most important element of growth is the continued move to frontline therapy in CLL. So the data in CLL are very strong. We've had a frontline CLL indication for some time now. But last year, we had a number of important data readouts from additional Phase III randomized studies in frontline CLL, looking at comparators, including things like FCR which had previously been the gold standard for efficacy. And we've showed benefit over those comparators. And that sort of strength of data is reflected now in things like our NCC/NCCN Guidelines, where IMBRUVICA has a very strong Category 1 recommendation in frontline CLL. So that continued move to frontline is going to be an important source of growth. And then continued penetration into the other areas where IMBRUVICA has a very strong profile, forms of NHL, specific forms like MZL, marginal zone lymphoma. We're -- in Waldenström's, we're doing very well. So it's scoped across that. But probably the biggest segment is the continued movement to -- on the frontline CLL.

Geoffrey Meacham

Yes. And I know a lot of -- there's been a lot of deals in the space, in the biopharma space to gene therapy, cell therapy. A lot of companies that we've talked to have looked to CAR-T, for example, as liquid tumors being more broadly applicable. Does that keep you up at night when it comes to IMBRUVICA? And that -- what is the risk, I guess, of second-line or later CLL being -- showing a dramatic effect? Do you feel like AbbVie has the right assets to be able to test that? Or is that area a broader gene therapy, cell therapy platform kind of strategic importance to you guys?

Michael Severino

Well, I sleep very well at night because of the strength of the data of IMBRUVICA and for many reasons. When I look at cell-based therapy, I think a couple of things are clear: One is, cell-based therapies can clearly drive very deep and durable response within a subset of patients because of a number of features and because of the challenges around per-patient manufacturing of the existing technologies, because of benefit risk profile and how that is managed in administration in terms of in-hospital administration and for other reasons. I think those therapies are likely, in the near term, to be reserved for very particular groups of patients. And if you look at IMBRUVICA, IMBRUVICA is moving very aggressively into a very broad frontline position. So I think they live in very, very different spaces. So I don't see CAR-Ts as something that drives concern in my mind over the future of the IMBRUVICA. I think the future of IMBRUVICA is very bright, and it's based on the data that IMBRUVICA has generated. If we speak more broadly about options in this space, we follow developments in a number of areas. We have some very early cell-based approaches in our own pipeline. We also have some early approaches at T-cell redirecting bispecifics and we have a lot of capabilities in that area. So I think those sorts of therapies could play a role. I think the question is, "What is the right entry point? And when will those technologies advance to the point that they can start to treat broader numbers of patients?"

Geoffrey Meacham

Right. We're not there yet. A lot of work to do.

Michael Severino

Yes. Based on the data, I would agree with that.

Geoffrey Meacham

Yes. When you look at the neuroscience portfolio, tau is a very exciting mechanism and development. And we've seen from Roche and from others some -- a lot of, I mean, consistent failures for decades, I would say, at the sort of the beta-amyloid. Maybe just help us with kind of how much of a strategic priority is Alzheimer's or neuroscience to AbbVie? What else do you feel like would be necessary to round out the portfolio beyond the tau program?

Michael Severino

Okay. Well, I think -- obviously, there's a huge unmet medical need in Alzheimer's disease, and that is only going to increase over time as the population ages. To date, we haven't seen the sort of success people that have hoped for. The overwhelming majority of the approaches had been directed at amyloid. And while I think the data are very clear that amyloid plays a very important role in the disease process, I think it's less clear whether one can intervene in an effective way at or near the time that symptoms develop. And so that would push us to explore other sorts of approaches. The one in our pipeline that is most advanced is our anti-tau antibody. Tau is a protein that causes the tangles that are also one of the hallmark pathologies of Alzheimer's disease, and the accumulation of tau is much more closely linked to the development of the symptoms, both temporarily, in terms of when the symptoms develop; and in the actual regions of the brain where you see this function. So in other words, there are these variants of Alzheimer's disease that are regional variants, where a particular portion of the brain is affected. And if you look at those branch in pathology, amyloid pathology is everywhere. Tau pathology follows the dysfunction.

So I think those data make it a very interesting target. Our most advanced program is an antibody directed at blocking the spread of tau, but we have other approaches in our preclinical development, approaches that would go after intercellular tau and other approaches to modify tau biology. So that's one set of programs. The next major area that we're interested in, in Alzheimer's disease is neuroinflammation. And we have programs both in our own internal pipelines and through partnership aimed at some very interesting targets there, targets like TREM2 and CD33. If you look at sporadic Alzheimer's disease, so not familial but sporadic Alzheimer's disease, and you look at GWAS studies, the single strongest hit is TREM2. And we know that TREM2 and a protein called CD33 both modify the neuroinflammatory response to flat. And so we have programs aimed at modifying biology around those two targets. Those are either in late preclinical development or just entering the clinic. Those are very interesting. And then the third area that we are focused on is proteostasis, so the ability of the body to remove either defective or synaptic proteins. Those are the earliest of those approaches, but there's also a lot of promise there in that scenario that we are very active in from a research perspective.

Geoffrey Meacham

Right. Would you say that, that is probably a priority with respect to BD -- smaller-scale BD, is rounding out an area like neuroscience? Or are there other ones that you -- sort of like a new therapeutic category that would be dictated by unmet need?

Michael Severino

Well, look, what I would say is when you look at our internal efforts, we're focused on immunology, oncology and neuroscience primarily from a discovery perspective. Drugs like hep C are very important in the marketplace. ORILISSA is very important in the marketplace. But from a discovery perspective, that's where we're the most active. And I think you can expect that our BD activities will look across those areas. But we've certainly used smaller-scale early BD to build up neuroscience pipeline and to accelerate it more rapidly than we could solely through organic growth. And so where there are good opportunities, we'll look at them. It will all be based on the data, where we think there is strong data, where we think that points to real opportunities, something that can deliver value. We've shown the ability to pursue that kind of opportunity.

Geoffrey Meacham

Good. Mike, Rob, thanks a lot.

Michael Severino

Thanks, Geoff.

Robert Michael

Thanks very much.