Q3 2026 AbbVie Inc. Earnings Conference Call - LIFECELL CORP

Explicit Guidance:

• FY2026 Revenue: Raised to approximately $67.8 billion (increase of $200 million from prior guidance).
• FY2026 EPS (Non-GAAP): Raised to $13.95 – $13.99 per share (midpoint increased by $0.11).
• FY2026 Segment Sales Outlooks:
  • Immunology: $34.9 billion (Skyrizi: $21.8B; Rinvoq: $10.3B).
  • Neuroscience: $13.0 billion (Vraylar: $4.2B; Botox Therapeutic: $4.2B; Oral CGRP: $3.1B).
  • Oncology: $6.6 billion (Cyrama/Verkleta: $3.1B; Imbruvica: $2.1B).
  • Aesthetics: $5.0 billion (Botox Cosmetic: $2.8B).
• Q4 2026 Guidance: Revenue $18.4 billion; EPS $3.83 – $3.87.
• FY2026 Margins & Expenses: Adjusted gross margin >84%; Adjusted R&D $9.8B; Adjusted SG&A $14.5B; Adjusted operating margin 46.7% (includes ~1.8% IPR&D impact).
• FX Impact: Expected 0.5% favorable impact on FY2026 sales growth.
• Dividend: Increased by 5.2% to $1.82/share, payable February 2027; 5.2% growth rate applied starting FY2027.
• Cash Flow & Capital Allocation: Free cash flow of $14 billion YTD (first 9 months); Target net leverage of 2.0x over next 2–3 years.

Business-Segment Outlook:

• Immunology (IBD/Psoriasis):
  • Skyrizi: Expects accelerated patient share growth in Crohn's due to sub-Q induction launch; strong momentum in IBD and psoriasis with robust share gains despite competition.
  • Rinvoq: Global sales expected to exceed $2.7 billion in FY2026; new indications for vitiligo and alopecia areata expected to add ~$2 billion in peak sales; approvals in U.S. anticipated within next several months.
• Neuroscience:
  • Parkinson's (Juvemo): Launch ramping gradually; full commercial/Medicare coverage expected by 2028; collective Parkinson's franchise (Juvemo, Vylev, Duopa) to deliver > $5 billion peak sales.
  • Psychiatry/Migraine: Vrelar sales $4.2B; Botox Therapeutic $4.2B; Oral CGRP $3.1B.
  • Future Catalysts: Qlipo (menstrual migraine) and Ubrelvi (menstrural migraine prevention) data/registrations anticipated for early 2027.
• Oncology:
  • Enfortumab Vedotin (Padcev): Anticipated U.S. approval in 2027; strong sales growth offsetting Imbruvica decline.
  • Epkinley (Bispecific): Regulatory submission expected early 2027 for frontline DLBCL; strong data supports new standard of care.
  • Entitumab (Enfortumab): U.S. application submitted for multiple myeloma; approval anticipated 2027; anticipated to launch mid-2027.
• Aesthetics: Botox cosmetic revenue $669M (up 4.1%); Juvederm down 11.8%. BOE (Tranybot E) resubmission expected end of 2026 with decision mid-2027.

Market and Competitive Outlook:

• Payer Access: Expect consistent low-single-digit rebate concessions (typically low single-digit) for immunology portfolio; strong payer access anticipated for Rinvoq new indications.
• Competition: Skyrizi maintaining ~50% in-play share in IBD and ~50% in new/switching psoriasis patients; sub-Q induction provides differentiation against IV and competitors.
• Botox IRA: Botox Cosmetic deemed ineligible for IRA selection due to human serum albumin content; court ruling in favor of AbbVie pending appeal.
• 340B Program: AbbVie participating in 340B pilot for Imbruvica, Linzess, and Vraylar to curb program abuse; financial impact uncertain at this time.

Macro / Industry Outlook:

• Economy: Aesthetics category showing signs of stability after headwinds from economic uncertainty and lower consumer confidence.
• IRA Pricing: IRA price reductions for Vraylar expected to begin in 2027.
• Regulatory: Expecting FDA decisions for BOE (mid-2027) and Rinvoq vitiligo/alopecia approvals (U.S. next several months); multiple myeloma approvals anticipated in 2027.

Strategic Initiatives:

• M&A/BD: Focusing on bolt-on acquisitions in immunology, neuroscience, oncology, and obesity; potential for early-to-late-stage deals; no large transformational deals expected due to current breadth.
• Obesity Strategy: Expanding obesity portfolio via ABBV295 (amylin analog); exploring combinations with incretins; Phase 2 trials initiated; no specific GLP-1 acquisition mandated if amylin profile is sufficient.
• Pipeline Expansion:
  • IBD Combos: Phase IIb trials underway for Skyrizi + ABBV382 (Alpha-4-Beta-7) and Skyrizi + ABBV701 (TL1A); potential acceleration to Phase III by late 2027.
  • Neuroscience: Amiracilidine (150mg dose) Phase II enrollment in schizophrenia by end of 2026; psychedelic reticillin Phase III for MDD starting late 2026.
  • Dermatology: Phase 3 for Zumilokibar (Atopic Dermatitis) starting late 2026; Rinvoq Phase 3 for Hidradenitis Suppurativa (HS) top-line results expected year-end 2026.
  • Hematology: New Phase III trials for Entitumab in combination with pomalidomide and in light-chain amyloidosis; Phase III for Epkinley in frontline DLBCL.
  • Solid Tumors: Phase 3 initiation for ABBV-1480 (PD-1/VEGF bispecific) in NSCLC; Phase 2 for ABBV706 (ADC) in SCLC starting 2027.

Risks and Headwinds to Outlook:

• Regulatory: Appeal of Botox IRA ruling; potential FDA delays for BOE resubmission.
• Commercial: Access ramp time (approx. 60 days) for sub-Q induction; Medicare coverage timing for Juvemo.
• Macro/Economic: Continued pressure on aesthetics from consumer confidence and economic uncertainty.
• Competitive: Biosimilar competition impacting Humira sales (down 30.6%); IRA pricing impact on Vraylar starting 2027.
• Operational: IPR&D expense impacts on margins; potential for unfavorable FX movements.
• Pipeline: Unpredictability of Phase 3 readouts (e.g., Rinvoq HS); potential delays in co-formulation work.

Management Tone on the Future:

• Confidence: High confidence; describing business as "above expectations" with "outstanding results."
• Growth Outlook: Expects "top-tier" growth for FY2027; 2026 growth projected to be second-highest relative to peers.
• Strategic Shift: Transitioning from managing Humira decline to driving growth via new immunology, neuroscience, and oncology assets (targeting growth into the 2030s).
• Pipeline: Described as having "numerous opportunities" and "excellent progress," with several assets potentially "under-appreciated" by the street (e.g., Entitumab, TMAP-A).

Miscellaneous:

• Dividend History: Quarterly dividend has grown >350% since inception.
• Cash Balance: $10.8 billion as of end of September 2026.
• Free Cash Flow: $14 billion generated in first 9 months of 2026 (includes $2.7B Skyrizi royalty payments).
• Acquisition: Apogee Therapeutics acquisition completed, adding dermatology/respiratory assets; net leverage target of 2.0x.