On February 7, 2020 AbbVie (NYSE:ABBV) reported financial results for the fourth quarter and full year ended December 31, 2019 (Press release, AbbVie, FEB 7, 2020, View Source [SID1234554026]).
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"Our strong performance this quarter completes another excellent year for AbbVie," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "The launches of Skyrizi and Rinvoq are going extremely well, and we are entering 2020 with substantial momentum. We also look forward to completing the planned Allergan acquisition in the first quarter."
Fourth-Quarter Results
Worldwide net revenues were $8.704 billion, an increase of 4.8 percent on a reported basis, or 5.3 percent operationally. Excluding the unfavorable impact of international HUMIRA net revenues due to biosimilar competition, fourth-quarter net revenues grew 11.0 percent operationally.
U.S. HUMIRA net revenues were $3.969 billion, an increase of 9.8 percent. Internationally, HUMIRA net revenues were $948 million, a decrease of 27.3 percent on a reported basis, or 25.4 percent operationally, due to biosimilar competition. Global HUMIRA net revenues of $4.917 billion were flat on a reported basis and increased 0.5 percent operationally.
Global IMBRUVICA net revenues were $1.296 billion, an increase of 28.9 percent, with U.S. net revenues of $1.073 billion and international profit sharing of $223 million. Global VENCLEXTA net revenues were $251 million. Global net revenues from the hematologic oncology portfolio were $1.547 billion, an increase of 37.0 percent on a reported basis, or 37.2 percent operationally.
Global SKYRIZI net revenues were $216 million and global RINVOQ net revenues were $33 million.
On a GAAP basis, the gross margin ratio in the fourth quarter was 77.0 percent. The adjusted gross margin ratio was 81.6 percent.
On a GAAP basis, selling, general and administrative expense was 22.4 percent of net revenues. The adjusted SG&A expense was 21.6 percent of net revenues.
On a GAAP basis, research and development expense was 17.7 percent of net revenues. The adjusted R&D expense was 15.3 percent of net revenues, reflecting funding actions supporting all stages of our pipeline.
On a GAAP basis, the operating margin in the fourth quarter was 45.5 percent. The adjusted operating margin was 44.6 percent.
On a GAAP basis, net interest expense was $455 million. The adjusted net interest expense was $282 million.
On a GAAP basis, the tax rate in the quarter was 8.9 percent. The adjusted tax rate was 8.8 percent.
Diluted EPS in the fourth quarter was $1.88 on a GAAP basis. Adjusted diluted EPS, excluding specified items, was $2.21.
Note: "Operational" comparisons are presented at constant currency rates and reflect comparative local currency net revenues at the prior year’s foreign exchange rates.
Recent Events
AbbVie and Allergan announced that Allergan has entered into definitive agreements to divest brazikumab and Zenpep in conjunction with the ongoing regulatory approval process for AbbVie’s acquisition of Allergan. AstraZeneca will acquire brazikumab, an investigational IL-23 inhibitor in Phase 2b/3 development for Crohn’s Disease and in Phase 2 development for ulcerative colitis, including global development and commercial rights. Nestle will acquire and take full operational ownership of Zenpep, a treatment for exocrine pancreatic insufficiency, as well as Viokace, another pancreatic enzyme preparation, as part of the transaction. The closings of the divestitures of brazikumab and Zenpep are contingent upon receipt of U.S. Federal Trade Commission and European Commission (EC) approval, closing of AbbVie’s pending acquisition of Allergan and the satisfaction of other customary closing conditions. AbbVie and Allergan continue to expect to close the pending transaction in the first quarter of 2020.
AbbVie announced regulatory approvals for RINVOQ (upadacitinib) for the treatment of adult patients with moderate to severe rheumatoid arthritis (RA). The approvals from the EC and the Japanese Ministry of Health, Labour and Welfare are based on results from the SELECT Phase 3 program, one of the largest registrational Phase 3 programs in RA, with approximately 4,400 patients evaluated across five studies.
AbbVie announced positive top-line data from the Phase 3 SELECT-PsA 1 study, the second of two registration-enabling trials evaluating RINVOQ in psoriatic arthritis (PsA). In this study, both doses of RINVOQ (15 mg and 30 mg, once daily) met the primary endpoint of ACR20 at week 12 versus placebo in adult patients with active PsA who have responded inadequately or are intolerant to one or more non-biologic disease modifying anti-rheumatic drugs (DMARDs). RINVOQ also demonstrated significant improvements in signs and symptoms of the disease across a variety of endpoints compared to placebo. Both doses of RINVOQ also significantly inhibited radiographic progression at week 24 compared to placebo. The 30 mg dose of RINVOQ achieved superiority to adalimumab in terms of ACR20 response at week 12, whereas both doses achieved non-inferiority vs. adalimumab. The safety profile of RINVOQ was consistent with previously reported results across indications, with no new safety risks detected. Detailed data from both pivotal studies will be presented at an upcoming medical meeting and AbbVie expects to submit our regulatory applications for RINVOQ in PsA in the second quarter of this year.
AbbVie announced positive data from a head-to-head Phase 3 study evaluating SKYRIZI (risankizumab) compared to Cosentyx in adult patients with moderate to severe plaque psoriasis. In the study, SKYRIZI met both primary endpoints and all ranked secondary endpoints, demonstrating higher rates of skin clearance compared to Cosentyx. SKYRIZI met the primary endpoint of superiority with at least a 90 percent improvement from baseline in the Psoriasis Area and Severity Index (PASI 90) at week 52. Of patients treated with SKYRIZI, 87 percent achieved PASI 90 compared to 57 percent of Cosentyx-treated patients at 52 weeks. At week 16, SKYRIZI met the other primary endpoint of non-inferiority to Cosentyx, with 74 percent of SKYRIZI patients achieving PASI 90 compared to 66 percent of Cosentyx patients. SKYRIZI also showed superiority compared to Cosentyx for all ranked secondary endpoints, including PASI 100, and PASI 75, as well as a static Physician Global Assessment score of clear or almost clear at week 52. The safety profile of SKYRIZI was consistent with that observed in previously reported studies, with no new safety signals observed through week 52. SKYRIZI is part of a collaboration between Boehringer Ingelheim and AbbVie, with AbbVie leading development and commercialization globally.
At the American College of Rheumatology (ACR)/Association for Rheumatology Health Professionals (ARHP) Annual Meeting, AbbVie presented data for RINVOQ, HUMIRA (adalimumab) and SKYRIZI, with 38 abstracts presented across multiple rheumatic conditions, including RA, ankylosing spondylitis (AS) and PsA. Included in the presentations were new data from the Phase 2/3 SELECT-AXIS 1 trial in which twice as many adult patients with active AS treated with RINVOQ achieved the primary endpoint of Assessment of SpondyloArthritis International Society (ASAS) 40 response at week 14 versus placebo. The safety profile of RINVOQ was consistent with that of previous studies in rheumatoid arthritis, with no new safety risks detected. AbbVie also presented long-term data from the SELECT Phase 3 program further evaluating efficacy and safety across measures with RINVOQ, even without methotrexate, in patients with moderate to severe RA.
AbbVie announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has granted a positive opinion for VENCLYXTO (venetoclax) in combination with obinutuzumab for the treatment of patients with chronic lymphocytic leukemia (CLL) who were previously untreated. The CHMP positive opinion is based on results from the Phase 3 CLL14 clinical trial, which showed that patients who completed one year of treatment with VENCLYXTO plus obinutuzumab had prolonged progression-free survival (PFS) and higher rates of minimal residual disease (MRD) negativity compared to patients receiving a standard of care chemoimmunotherapy regimen of obinutuzumab and chlorambucil. This represents the third positive CHMP opinion for VENCLYXTO and if approved by the EC, VENCLYXTO plus obinutuzumab would be the first chemotherapy-free, oral combination regimen given with a fixed duration for patients with previously-untreated CLL. Venetoclax is being developed by AbbVie and Roche and is jointly commercialized by AbbVie and Genentech, a member of the Roche Group, in the U.S. and by AbbVie outside of the U.S.
AbbVie announced the submission of a supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration (FDA) for IMBRUVICA (ibrutinib) in combination with rituximab for the first-line treatment of younger patients (70 years old or younger) with CLL or small lymphocytic lymphoma (SLL). The application is being reviewed under the FDA’s Real-Time Oncology Review pilot program and is based on results from the Phase 3 E1912 study, which showed significantly improved PFS and overall survival (OS) in patients treated with IMBRUVICA plus rituximab compared to those treated with fludarabine, cyclophosphamide and rituximab (FCR). Safety data were consistent with the known safety profile of IMBRUVICA and if approved, the milestone will mark the 11th FDA approval for IMBRUVICA across six distinct disease areas. IMBRUVICA is jointly developed and commercialized with Janssen Biotech, Inc.
At the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting & Exposition (ASH) (Free ASH Whitepaper), AbbVie presented data from more than 40 abstracts, including 18 oral presentations, featuring the latest scientific progress from its Hematologic Oncology programs. Key data presentations included new data from the Phase 2 CAPTIVATE study evaluating IMBRUVICA plus VENCLEXTA (venetoclax) in previously untreated patients with CLL; new data from the Phase 3 E1912 study evaluating IMBRUVICA plus rituximab versus FCR in front-line CLL, results of a 7.5-year pooled analysis for IMBRUVICA monotherapy showing earlier treatment extended PFS and increased the likelihood of a complete response in patients with relapsed/refractory mantle cell lymphoma; updated data from the Phase 3 MURANO trial four-year analysis demonstrating PFS and OS benefits with VENCLEXTA plus rituximab in patients with relapsed/refractory CLL; and results from a Phase 2 study of navitoclax in combination with ruxolitinib showing clinically meaningful spleen responses, reductions in allelic burden and improvements in total symptom score, as well as improvements in bone marrow fibrosis.
AbbVie announced that the CHMP of the EMA has recommended a change to the marketing authorization for MAVIRET (glecaprevir/pibrentasvir) to shorten once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic hepatitis C (HCV) patients with genotype (GT) 3 infection. If approved by the EC, MAVIRET will be the only pan-genotypic 8-week treatment option for treatment-naïve, chronic HCV patients, without cirrhosis or with compensated cirrhosis. The positive recommendation is supported by data from the Phase 3b EXPEDITION-8 study, which showed that with 8 weeks of MAVIRET, an overall 98 percent patients achieved a sustained virologic response 12 weeks after treatment (SVR12), and for patients with GT3, the SVR12 rate was over 95%. A final EC decision is expected in 2020.
AbbVie and Harpoon Therapeutics, Inc., a clinical-stage immunotherapy company developing a novel class of T cell engagers targeting both solid tumors and hematologic malignancies, announced an exclusive worldwide option and license transaction for HPN217, Harpoon’s B cell maturation antigen (BCMA)-targeting Tri-specific T cell Activating Construct (TriTAC), and an expansion of their existing discovery collaboration for up to six additional targets. These agreements build upon the discovery collaboration established by the two companies in October 2017 and are expected to advance and broaden the use of Harpoon’s proprietary TriTAC platform. The collaboration broadens AbbVie’s oncology research platform to expand the development of potentially life-changing treatments for patients.
AbbVie announced a collaboration with Scripps Research to develop new therapies for a range of diseases, including in the therapeutic areas of oncology, immunology, neurology and fibrosis. Under the terms of the license agreement, Scripps Research will continue to conduct pre-clinical research and development activities and, in some cases, Phase 1 clinical trials with AbbVie having an exclusive option to further develop and commercialize. The collaboration broadens AbbVie’s research platform to expand the development of potentially life-changing treatments for patients.
The Chinese health authorities have requested supply of Aluvia (lopinavir/ritonavir) as part of the government’s broader efforts to address the coronavirus crisis in China. In response to this request, AbbVie has confirmed a donation of Aluvia as an experimental option to support this growing public health crisis.
Full-Year 2020 Outlook
AbbVie is issuing its standalone GAAP diluted EPS guidance for the full-year 2020 of $7.66 to $7.76, representing growth of 46.0 percent at the midpoint. AbbVie expects to deliver standalone adjusted diluted EPS for the full-year 2020 of $9.61 to $9.71, representing growth of 8.1 percent at the midpoint. The company’s standalone 2020 adjusted diluted EPS guidance excludes $1.95 per share of intangible asset amortization expense, non-cash charges for contingent consideration adjustments and other specified items.
AbbVie expects standalone revenue growth approaching 8.0 percent on an operational basis.
Statements Required by the Irish Takeover Rules
The directors of AbbVie accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors of AbbVie (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.
Any holder of 1% or more of any class of relevant securities of AbbVie Inc. may have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2013.