On November 1, 2019 AbbVie (NYSE:ABBV) reported financial results for the third quarter ended September 30, 2019 (Press release, AbbVie, NOV 1, 2019, View Source [SID1234550173]).
"Strong performance from our Immunology and Hematologic Oncology portfolios led our growth this quarter. We are also making excellent progress with several key strategic priorities, including the recent launch of our two new immunology therapies – Rinvoq and Skyrizi – both of which are off to an impressive start, as well as continued progress toward the completion of our planned acquisition of Allergan," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "Based on the continued momentum of our portfolio, we are once again raising our full year 2019 EPS guidance range and increasing our dividend."
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Note: "Operational" comparisons are presented at constant currency rates and reflect comparative local currency net
revenues at the prior year’s foreign exchange rates.
Third-Quarter Results
Worldwide net revenues were $8.479 billion, an increase of 3.0 percent on a reported basis, or 3.5 percent operationally.
Global HUMIRA net revenues of $4.936 billion decreased 3.7 percent on a reported basis, or 3.2 percent operationally. U.S. HUMIRA net revenues were $3.887 billion, an increase of 9.6 percent. Internationally, HUMIRA net revenues were $1.049 billion, a decrease of 33.5 percent on a reported basis, or 31.8 percent operationally, due to biosimilar competition.
Global net revenues from the hematologic oncology portfolio were $1.478 billion, an increase of 38.3 percent on a reported basis, or 38.5 percent operationally. Global IMBRUVICA net revenues were $1.257 billion, an increase of 29.3 percent, with U.S. net revenues of $1.042 billion and international profit sharing of $215 million. Global VENCLEXTA net revenues were $221 million.
Global HCV net revenues were $698 million, a decrease of 19.0 percent on a reported basis, or 18.6 percent operationally. In the U.S., HCV net revenues of $368 million decreased 17.0 percent in the quarter. Internationally, HCV net revenues of $330 million decreased 21.2 percent on a reported basis, or 20.4 percent operationally.
On a GAAP basis, the gross margin ratio in the third quarter was 77.4 percent. The adjusted gross margin ratio was 82.0 percent.
On a GAAP basis, selling, general and administrative expense was 19.5 percent of net revenues. The adjusted SG&A expense was 19.1 percent of net revenues.
On a GAAP basis, research and development expense was 26.9 percent of net revenues. The adjusted R&D expense was 14.5 percent of net revenues, reflecting funding actions supporting all stages of our pipeline.
On a GAAP basis, the operating margin in the third quarter was 30.9 percent. The adjusted operating margin was 48.4 percent.
On a GAAP basis, net interest expense was $420 million. The adjusted net interest expense was $288 million. On a GAAP basis, the tax rate in the quarter was 5.9 percent. The adjusted tax rate was 8.8 percent.
Diluted EPS in the third quarter was $1.26 on a GAAP basis, inclusive of an impairment charge related to intangible assets acquired as part of the 2016 acquisition of Stemcentrx, Inc. Adjusted diluted EPS, excluding specified items, was $2.33.
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 announced the U.S. Food and Drug Administration (FDA) approval of RINVOQ (upadacitinib) for the treatment of moderate to severe rheumatoid arthritis (RA) in adult patients who have had an inadequate response or intolerance to methotrexate. The approval is 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. Additionally, the European Medicines Agency’s Committee for Medicinal Products for Human Use adopted a positive opinion for RINVOQ, for the treatment of adult patients with moderate to severe active rheumatoid arthritis who have responded inadequately to, or who are intolerant to one or more disease-modifying anti-rheumatic drugs. Discovered and developed by AbbVie, RINVOQ marks the second FDA approval of a targeted immunomodulator therapy for AbbVie this year.
AbbVie announced positive top-line results from its first Phase 3 clinical trial of RINVOQ in adult patients with active psoriatic arthritis. Results from the SELECT-PsA 2 study, which evaluated RINVOQ versus placebo in patients who did not adequately respond to treatment with one or more biologic DMARDs, showed that both doses of RINVOQ (15 mg and 30 mg) met the primary endpoint of ACR20 response at week 12. Key secondary endpoints were also achieved and included HAQ-DI, PASI75, minimal disease activity, ACR50 and ACR70. The safety profile was consistent with that of previous studies across indications, with no new safety signals detected. Detailed study results will be presented at an upcoming medical conference.
AbbVie presented new long-term data showing a significant number of patients with moderate to severe plaque psoriasis treated with SKYRIZI (risankizumab) experienced complete skin clearance. At the World Congress of Dermatology (WCD), AbbVie presented data from the Phase 3 IMMhance study which showed 73 percent of patients achieved a static Physician Global Assessment (sPGA) score of clear or almost clear skin and 72 percent of patients achieved a Psoriasis Area and Severity Index (PASI) 100 score at week 94, among patients who achieved sPGA 0/1 at week 28. At the European Academy of Dermatology and Venereology (EADV), AbbVie presented data from the Phase 3 LIMMitless trial which showed that at approximately 2.5 years of treatment SKYRIZI provides durable maintenance of efficacy with 87 percent of patients achieving PASI 90, 61 percent achieving PASI 100 and 86 percent achieving a sPGA score of clear or almost clear skin. SKYRIZI is part of a collaboration between Boehringer Ingelheim (BI) and AbbVie, with AbbVie leading development and commercialization globally.
AbbVie announced the FDA approval of MAVYRET (glecaprevir/pibrentasvir) to shorten the once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic hepatitis C (HCV) patients across all genotypes. Mavyret was previously approved by the FDA as an 8-week, pan-genotypic treatment for treatment-naïve HCV patients without cirrhosis. In addition, the European Commission (EC) approved MAVIRET (glecaprevir/pibrentasvir) for 8 weeks of treatment in treatment-naïve patients with chronic HCV and compensated cirrhosis with genotype 1, 2, 4, 5 and 6. The label expansions were based on data from the Phase 3b EXPEDITION-8 study in which an overall 98 percent of patients achieved a sustained virologic response 12 weeks after treatment.
AbbVie, in cooperation with Neurocrine Biosciences, Inc., announced the submission of a New Drug Application (NDA) to the FDA for elagolix, an investigational, orally administered gonadotropin-releasing hormone antagonist, for the management of heavy menstrual bleeding (HMB) associated with uterine fibroids in women. In two replicate Phase 3 clinical studies, elagolix demonstrated a statistically significant reduction in HMB, in combination with add-back therapy, compared to placebo. If approved by the FDA, elagolix will be an oral medical management treatment option for HMB associated with uterine fibroids.
Recent Events (continued)
Following the closure of the MERU Phase 3 study evaluating Rovalpituzumab Tesirine (Rova-T) as a first-line maintenance therapy for advanced small-cell lung cancer, the termination of the Rova-T research and development program and an evaluation of the Stemcentrx-related intangible assets, AbbVie recorded an impairment charge related to intangible assets acquired as part of its 2016 acquisition of Stemcentrx, Inc. The after-tax net impact of this impairment and the related adjustment to contingent consideration liabilities was $823 million. With this impairment there is no remaining balance on Stemcentrx-related intangible assets. AbbVie continues to focus research and development efforts on other therapies in its oncology portfolio of investigational and marketed medicines.
At the International Congress of Parkinson’s Disease and Movement Disorders, AbbVie presented data from 22 abstracts in Parkinson’s disease (PD) and other neurodegenerative disorders. Final data from the Phase 1b study evaluating the safety and tolerability of the investigational medicine ABBV-951 in patients with advanced PD demonstrated that ABBV-951 is safe and tolerable when delivered via 24-hour continuous subcutaneous infusion for 28 days and support future investigations of ABBV-951 as a potentially new treatment option for PD patients.
AbbVie and Allergan continue to cooperate fully with regulators regarding AbbVie’s proposed acquisition of Allergan and both companies received a Request for Additional Information (Second Request) from the Federal Trade Commission. Additionally, Allergan shareholders voted to approve the proposed acquisition with more than 99 percent of the votes cast at both a special court-ordered meeting of shareholders and at an extraordinary general meeting of shareholders in favor of the transaction. AbbVie and Allergan continue to expect to close the transaction in early 2020.
Full-Year 2019 Outlook
AbbVie is updating its GAAP diluted EPS guidance for the full-year 2019 from $5.69 to $5.79 to $5.08 to $5.10, representing growth of 39.1 percent at the midpoint, inclusive of a non-cash charge for SKYRIZI contingent consideration following regulatory approvals in the second quarter and a third-quarter impairment charge related to intangible assets acquired as part of the 2016 acquisition of Stemcentrx, Inc. AbbVie is raising its previously announced adjusted EPS guidance range for the full-year 2019 from $8.82 to $8.92 to $8.90 to $8.92, representing growth of 12.6 percent at the midpoint. The company’s 2019 adjusted diluted EPS guidance excludes $3.82 per share of intangible asset amortization expense, non-cash charges for contingent consideration adjustments and other specified items.
Company Declares Dividend Increase of 10.3 Percent
AbbVie is announcing today that its board of directors declared an increase in the company’s quarterly cash
dividend from $1.07 per share to $1.18 per share beginning with the dividend payable on February 14, 2020 to
shareholders of record as of January 15, 2020. This reflects an increase of approximately 10.3 percent,
continuing AbbVie’s strong commitment to returning cash to shareholders through a growing dividend. Since the
company’s inception in 2013, AbbVie has increased its quarterly dividend by 195 percent. AbbVie is a member of
the S&P Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least
25 consecutive years.
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.
About AbbVie
AbbVie is a global, research-driven biopharmaceutical company committed to developing innovative advanced therapies for some of the world’s most complex and critical conditions. The company’s mission is to use its expertise, dedicated people and unique approach to innovation to markedly improve treatments across four primary therapeutic areas: immunology, oncology, virology and neuroscience. In more than 75 countries, AbbVie employees are working every day to advance health solutions for people around the world. For more information about AbbVie, please visit us at www.abbvie.com. Follow @abbvie on Twitter, Facebook or LinkedIn.
Conference Call
AbbVie will host an investor conference call today at 8:00 a.m. Central time to discuss our third-quarter performance. The call will be webcast through AbbVie’s Investor Relations website at investors.abbvie.com. An archived edition of the call will be available after 11:00 a.m. Central time.
Non-GAAP Financial Results
Financial results for 2019 and 2018 are presented on both a reported and a non-GAAP basis. Reported results were prepared in accordance with GAAP and include all revenue and expenses recognized during the period. Non-GAAP results adjust for certain non-cash items and for factors that are unusual or unpredictable, and exclude those costs, expenses, and other specified items presented in the reconciliation tables later in this release. AbbVie’s management believes non-GAAP financial measures provide useful information to investors regarding AbbVie’s results of operations and assist management, analysts, and investors in evaluating the performance of the business. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. The company’s 2019 financial guidance is also being provided on both a reported and a non-GAAP basis.