Good morning and thank you for standing by. Welcome to the AbbVie Second Quarter 2018 Earnings Conference Call. All participants will be able to listen only until the question-and-answer portion of this call. [Operator Instructions] I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations.

Good morning and thanks for joining us. Also on the call with me today are Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Mike Severino, Executive Vice President, Research and Development and Chief Scientific Officer; and Bill Chase, Executive Vice President of Finance and Chief Financial Officer. Before we get started, I’d like to remind you that some statements we make today are or may be considered forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Additional information about the factors that may affect AbbVie’s operations is included in our 2017 Annual Report on Form 10-K and in our other SEC filings. AbbVie undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments except as required by law. On today’s conference call, as in the past, non-GAAP financial measures will be used to help investors understand AbbVie’s ongoing business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings release and regulatory filings from today, which can be found on our website. Following our prepared remarks, we’ll take your questions. So with that, I’ll now turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I’ll briefly discuss our second quarter performance and highlights as well as our full year guidance which we’re increasing again this quarter. Mike will then provide an update on recent advancements across our R&D pipeline, and Bill will discuss the quarter in more detail. As always, following our remarks, we’ll take your questions. AbbVie once again delivered an outstanding quarter with adjusted earnings per share of $2. Representing growth of more than 40% versus last year and exceeding expectations. We also delivered strong top line results in the quarter with global adjusted operational sales growth of 17.1%. This outstanding performance was driven by growth from several assets across our portfolio including significant contributions from HUMIRA, IMBRUVICA, and MAVYRET. We’re extremely pleased with our performance in the quarter and the progress year-to-date. We’ve driven outstanding commercial, operational and R&D execution resulting in strong top and bottom line results. Based on our performance in the first half of the year and the tremendous confidence we have in our business we’re raising our full year 2018 EPS guidance by $0.10 we’re now expecting adjusted earnings per share of $7.76 to $7.86 reflecting growth of 39.5% to midpoint. It’s important to recognize this is the third increase to our earning’s guidance for 2018. A testament to the momentum and confidence we have in our ongoing business fundamentals and underlying performance and we’re raising our guidance despite the anticipated introduction of direct biosimilar competition in certain markets outside the United States in the fourth quarter. So clearly, we expect our performance in the second half of the year to continue to be robust. As I mentioned a moment ago several products within our portfolio are driving strong growth. Starting with HUMIRA which…

Thank you Rick. When we launched AbbVie our strategy was to build an industry leading pipeline and a robust R&D engine capable of driving significant and sustainable growth. We’ve made tremendous progress over the past few years and we’re now entering a period where a large number of assets have either already transitioned to commercialization or are preparing to do so. Our R&D engine has been very productive over the past two years. Specifically we’ve received a number of major regulatory approvals including VENCLEXTA and Relapsed/Refractory CLL. IMBRUVICA in Marginal Zone Lymphoma and graft versus host disease. MAVYRET and HVC and ORILISSA and Endometriosis. We’ve reported positive data from nearly a dozen key registration enabling clinical programs including Upadacitinib in RA. Risankizumab in psoriasis. VENCLEXTA in Relapsed/Refractory CLL and AML. IMBRUVICA in frontline CLL and elagolix in Endometriosis and uterine fibroids to name a few. We’ve been very pleased with the data generated across these programs. As each asset has proven to be differentiated relative to the current standard of care. We’ve also seen promising proof of concept data from numerous mid stage programs which we’ve advanced into registrational studies. These includes Upadacitinib in Crohn’s Disease, psoriatic arthritis and atopic dermatitis. Risankizumab in Crohn’s Disease and VENCLEXTA in multiple myeloma and mantle cell lymphoma. The data we’ve produced and the regulatory success we’ve to-date, reinforce our view that the assets we’re developing will achieve strong competitive positions within their respective markets. And we’ve also continued the significant progress in the recent quarter, which I’ll now spend a few moments highlighting. In immunology, we’ve made significant progress with Upadacitinib and Risankizumab, our two late stage assets with best in class potential across a broad range of indications. In the quarter, we reported top line results from the select early study which…

Thanks Mike. As Rick mentioned we’re very pleased with our outstanding second quarter performance. Our year-to-date underlying business fundamentals remain strong and we’ve entered the second half of significant momentum. Total adjusted net revenues for the second quarter were $8.3 billion up 17.1% operationally excluding the impact of foreign exchange. We reported adjusted earnings per share of $2 up 40.8% compared to the second quarter of 2017 and exceeding our guidance range for the quarter. HUMIRA global sales were $5.2 billion up 8.2% operationally. In the US, HUMIRA sales increased 10% compared to the prior year with high single-digit prescription volume growth and roughly 3% favorable price. Wholesaler inventory levels remains below half month in the quarter. International HUMIRA sales were more than $1.6 billion up 4.4% on an operational basis. We continue to see very good growth through the first half of 2018 despite increasing competition. With its unique product profile years of physician experience and broad set of indications HUMIRA remains the leading global frontline therapy across all approved indications. Global IMBRUVICA net revenues were $850 million up 35.6% year-over-year with continued strong uptake in CLL as well as other approved indications. Global HCV sales were $973 million with MAVYRET sales of $932 million. The pace of MAVYRET’s uptake continues to exceed expectations driven by strong market share performance globally as well as higher treatment volumes from warehoused DAA failure patients in certain markets. Global sales of Duodopa, a therapy for advanced Parkinson’s disease, grew 25.1% on an operational basis in the quarter, and we also saw strong operational sales growth from Creon which was up 11.4%. Turning now to the P&L profile for the second quarter, adjusted gross margin was 80.5% of sales compared to 82.3% in the prior year. The decrease versus prior year reflects the…

Thanks Bill. We’ll now open the call for questions. Operator, we’ll take the first question please.

[Operator Instructions] our first question today is from Jami Rubin from Goldman Sachs.

I know there are whole bunch of questions on this call regarding rebates. Let me just ask you Rick, sort of bigger picture question. The gap between AbbVie’s industry leading performance would you continue to execute on time and time again and the stocks below evaluation and lower valuation this year and investor lack of confidence has never been wider. What do you do to close that gap? Is it deal activity? Do you feel that’s what needs to happen, is it share buyback, is it committing to 50% dividend yield or dividend payout ratio, are there other structures that you’re considering such as spin outs? In addition Rick, can you clarify your comments that you made during our conference last month about doing $20 billion to $30 billion deal. I think investors took that as a signal that something is going to happen sooner, rather than later. Maybe if you could just address those please, thanks very much. A – Rick Gonzalez: Thanks Jami. This is Rick. Appreciate the question. Maybe let me answer is first by framing, how I view AbbVie. There’s a lot of scepticisms, concern about rebates about biosimilars. Frankly some of that is reasonable, some of it is driven by people who want to illicit for their own personal gain, I don’t think that’s quite as reasonable but its reality. And so I think If you step back and look at AbbVie and what I would say [indiscernible] objective way. The way I would evaluate AbbVie is the following. Look I’d start with how we perform. We’ve been in existence now 5.25 years, 22 or 23 quarters we’ve had. We’re clearly a company and management team that lives up to the commitments that we make to investors. We take that extremely seriously, we never once…

Thanks Jami. Operator we’ll take the next question please.

Thank you. Our next question is from Steve Scala from Cowen. Q – Steve Scala: As we approach the launch of HUMIRA biosimilars in the EU, is anything shaping up differently then you would have expected either positively or negatively? In the past you’ve spoken to that the fact that you’re implementing defense strategies and I’m not aware that you’ve amplified on them, perhaps you could now. Secondly has the Risankizumab filing been accepted and is there a PDUFA date and then thirdly can you give us VENCLEXTA sales in the second quarter? Thank you. A – Rick Gonzalez: Steve, this is Rick. Let me take the first one, Mike take the second and Bill can take the third and maybe I can add some color onto the third. So as far as biosimilar assumptions in the EU. I’d say there is nothing different from what we had anticipated. I recently had a review I’m going to have another review in a month or so with the team. I’d say everything is tracking as we had assumed it would track, so and we certainly wouldn’t, if we had concerns we certainly wouldn’t be raising guidance at this point because we’re already delivering tremendous levels of performance if we had any level of uncertainty and based on what I said a few moments ago, we take extremely seriously that we’re never going to miss. We wouldn’t be raising guidance at this point, unless we had a lot of confidence in what that fourth quarter was going to look like. Now am I going to go through the defense strategies, I apologize on that because unfortunately it’s not my objective to telegraph to all of our competitors, what our defense strategies are? But what I can tell you is, thus far it is playing out exactly as we had planned it to play out and certainly as we go through the fourth quarter all of our are going to get a lot of clarity, on with that quarter looks like. I think buyer actions you can probably tell, we feel about it. But we’re all going to know here soon. And I have confidence in how we’re going to execute against that.

Okay, so this is Mike. With respect to the Risa file, the file was submitted in April. It was accepted on scheduled, so it would be June. We don’t typically give exact PDUFA dates, but you can do the math from there. It’s a standard 10 plus 2 review, so I call it – and although it’s very early what I would say is the file is going very smoothly and matching our very high expectations.

VENCLEXTA sales in the quarter were $65 million. A – Rick Gonzalez: Thanks for that, that’s accurate. I will say that since the MURANO approval, we have seen an inflection point in patient starts. We track patient starts on VENCLEXTA like we do on other drugs. And so we have seen a fairly significant uptick in patient starts and so we are I think we’re encouraged based on what we’re seeing here now. It’s obviously very early since but I think if you look at that data, you look at the position, you look at the feedback that we’re getting from KOLs [ph] about their excitement about this asset and most importantly if you look at the benefit they can provide patients in this Relapsed/Refractory setting particularly patients who have failed BTK inhibitor. I think it’s a tremendous opportunity going forward for us. And I think another big opportunity for VENCLEXTA is AML. This is a very serious disease has bad outcomes for patients, particularly patients that can’t tolerate intensive chemotherapy and this is an excellent new therapy for those patients and it provides significant benefit for those patients and so I think our ability to have a big impact in AML is a high probability.

Thanks Steve. Operator next question please.

Thank you. Our next question is from Jason Gerberry from Bank of America. Q – Jason Gerberry: I appreciate the guidance on elagolix launch for this. Could you talk a little bit more about how that launch progresses what I mean by that is, is the slow early launch is it more to do it educating the docs around the monitoring requirements are in the label or is it just difficult revenue recognition early on just because of presumably early access barriers? My second question, I’m not sure if you’re going to be able to answer this, but can you just talk a little bit about the differential gross margin profile for HUMIRA US versus ex-US? Just wondering because the price point is so different on those and just kind of curios, do you guys still kind of standby the 50% operating margin target by 2020? Thanks. A – Rick Gonzalez: First on ORILISSA there isn’t any monitoring requirements in the label, but maybe let me back up a little bit and talk about what are the key attributes of this product in order for it to be successful and then I’ll talk about the ramp. So if you think about this area, what you would want to get the maximum value out of an asset in this area is, one you want a drug that gives high levels of efficacy, has a relatively clean safety profile, fast on, fast off because many of these women are reproductive age and they want to, if they choose to become pregnant or try to become pregnant, you want a drug they can stop taking and therefore they can move forward from a pregnancy standpoint. You want a label that allows for clinical diagnosis not diagnosis by lab, which is what we have.…

So Jason its Bill Chase on your two questions regarding gross margin and operating margin. We’ve never been specific around gross margin of HUMIRA in certain geographies but you’ve obviously noted the fact that the price point outside of the US is lower and therefore there is less profit. That said, if you look at on a percentage basis whether it’s in the US or outside of the US HUMIRA is still a profile and profit generator and I don’t think you want to be necessarily of the opinion that it would be massively lower based on pricing. So but I can’t give you a whole more guidance from that. And then with operating margin, yes I mean our intent is still to aim for that 50%. If you look at the progress year-to-date, we’re going to be up about 1.5 points versus last year, but what people don’t actually realize is that is inclusive of a lot of dilution related to both partnership accounting and the stem and the idle. If you squared those away and did apples-to-apples, we’d probably about 350 basis points higher still yet. Now of course those investments are exactly the type of the investments you want to make, we’ve been happy taking that near term dilution on operating margin in order to have product like Risa or the ability to have the optionality of Stem. So we’re pleased with our progress. I think what you need to watch from here is two things. First of all the roll off of the rest of the HUMIRA royalties that really kicks in the back half of this year and then again in 2019. As well as the contribution of a more rapidly growing top line and as products like Risa launch for example and Upa and ORILISSA. You should definitely see some real positive [indiscernible] in P&L.

Thanks Jason. Operator next question please.

Thank you. Our next question is from Josh Schimmer from Evercore. Q – Josh Schimmer: For ORILISSA do you expect hormone add-back will ultimately lift the limited duration of use recommendation on the late month, if so when do you expect that would happen? And then is the week stage pipeline program maturing to commercial assets. What do you see is the key early and mid stage programs you’d emphasize is best positioned to take replaces? Thanks.

This is Mike, I’ll take that. We’re pursuing Phase 3B program for ORILISSA looking at the ability of low dose hormonal add-back to mitigate some of the anti-estrogenic effects are intrinsic to this mechanism of action. We would expect that would allow for longer duration of therapy and we already feel pretty good about the tiers we have, but then maybe some women who knew even more than that and add-back maybe a route, to allow that to happen. We’ve not given specific timing on that study or on subsequent label changes because we’re still in the execution phase, but it’s something that we are progressing very nicely. With respect to the pipeline, as you point out we have a number of assets that are transitioning into commercialization. These are the assets for which we’ve been delivering positive Phase 3 data pretty consistently over the course of the last couple of years and we’ve paid a lot of attention to making sure that the pipeline is full behind that. What I would point to is a number of assets in our early oncology pipeline. We’ve invested a lot to make sure that pipeline is robust. We have on the order of about 18 programs in the clinic in early oncology and that number changes day-to-day as we advance programs, but that’s very robust across a number of areas. We have our stem [ph] [indiscernible] pipeline we have our early immune-oncology programs and some of those are producing very interesting early data, late preclinical and early clinical data and we have other programs aimed at our areas of expertise like apoptosis as one example. So we have a very robust pipeline there that will drive future growth we’re quite confident and outside of oncology we’ve also invested a lot in our…

Thanks Josh. Operator, next question please.

Thank you. Our next question is from Chris Schott from JPMorgan. Q – Chris Schott: First, can you just talk about the President’s blueprint for reducing drug cost and potential changes to rebate structures? I know there’s a lot of uncertainty here, but we want your perspective on A; how likely you think that we’ll see changes to the current industry pricing structure and B; how you think about that and prepare for any potential changes from an AbbVie perspective? My second question was on the outlook firm for HCV from here, you’ve always have a ton of success in this business this year. You’re talking about north of $3.5 billion of revenue, but we’re seeing step down 3Q versus 2Q. how [indiscernible] how do you think about the trajectory for HCV as we think about the second half of the year, then we start looking out in the future, is this the business that you can maintain at this level or do we start to think about this stepping down in the next few years? Thanks so much. A – Rick Gonzalez: Okay, Chris. This is Rick. I’ll take those two. So I think as we think about the blueprint that has come out from the administration. I’m saying in our view we believe it’s an important step to address probably one of the biggest challenges that we face both as a nation as well as an industry and that is the significant burden out of pocket cost for seniors in Medicare around co-pay and the donut hole. I mean that’s a significant challenge and I think it’s something that we have to be able to wrestle to the ground. I would say we’re very supportive of the idea, of changing a structure where the net price how the…

No, I mean market share is phenomenal, it’s really just the market call.

Thanks Chris. Operator next question please.

Thank you. Our next question is from John Boris from SunTrust. Q – John Boris: Rick, if we look at the word interchange ability FDA withdrew some guidelines there but there continues to be a lot of saber rattling around that such as having proprietary manufactures tightness specification on there, manufacturing biologics to make it easier for companies to get into the market. There’s also some saber rattling around settlements most notably having the FDA [ph] look at settlements on a prospective versus a retrospective basis. Just your thoughts on those two potential risks on HUMIRA. And then last question just has to do with, the phases that you laid out at a competitors conference. Obviously Phase 1 since the spin in early 2013 operational execution has been superb. Phase 2 pipeline delivery and really where investor has been focused is Phase 3 your build out in solid tumors and potentially other areas such as neurosciences. Just your thoughts over the long-term on Phase 3 and the build out in that phase. Thanks. A – Rick Gonzalez: All right, thank you John. So I’ll cover maybe the first two questions and will have Mike cover question number three. If you look at interchange ability. I would say FDA certainly the discussion around this has ramped over the last several months I would say, but if you actually go back year and half or so ago, the FDA had come out with some guidance around interchange ability, what we needed to do to be able to have an interchangeable biosimilar. And we’re switching studies, I’m sure most investors are familiar what the requirements were. And so at that point, when we were doing our LRP, we made the decision the conscious decision that we would dial in interchangeable biosimilar, [indiscernible] mean…

Okay, this is Mike. I’ll take the third part of your question around the phases of our strategy. And Phase 1 as you point out is operational execution, Phase 2 is the phase that we’re in right now, delivering on our late stage pipeline to create the next generation of marketed products that can drive our growth and then the third phase looks beyond that. It is sustainable growth out into the 2020’s and beyond and what I would say about that is a couple of things. One when you look at pipeline execution there is long-term growth out of our existing pipeline assets as Rick pointed out and with assets like Upadacitinib and Risankizumab we’re really just at the starting gates and there’s a lot of work to be done and there’s like Crohn’s Disease and atopic dermatitis, [indiscernible] inflammatory bowel diseases for Risankizumab that will drive growth. So there is more to that longer term growth story than just aren’t really pipeline. What we have as I mentioned a little while earlier, invested considerably in our early pipeline. We’ve invested in immunology because we’re fully determined to remain a long-term leader in immunology and we have a robust set of pipeline assets behind both Upadacitinib and Risankizumab and those are in the areas that I mentioned already and we’re investing in our pipeline and other areas as well. In oncology, we’ve built a very robust early pipeline. As I mentioned we have a large number of early clinical assets in oncology as well as we late preclinical assets, they’re poised to move into the clinical. These are across wide range of areas. There’s our Stemcentrx pipeline, our next generation immune-oncology efforts which are going very well and other efforts aimed at our core capabilities as a company, expanding…

Thanks John. Operator, we have time for one final question please.

And our final question today is from Gregg Gilbert from Deutsche Bank. Q – Gregg Gilbert: Two quick ones. First, Rick going back to Jami’s question. I’m not sure you addressed sort of whether you’re considering anything that’s different from all that you described to position AbbVie operationally and from a pipeline standpoint. So are you considering anything, doing anything differently than you have already done going forward? And then for Bill, I believe your model for HUMIRA erosion outside the US, due to biosimilar competition it’s based on some other examples that have come before. Do you think that’s sufficiently conservative in light of the growing sort of experience with biosimilars in Europe and the fact that HUMIRA is larger as the starting point then some of those other examples, thanks. Bye. A – Rick Gonzalez: Gregg, it’s Rick. When you say do anything different I mean clearly we’re still committed to be able to return significant capital to shareholders. So it’s clearly our intent and we have the ability to continue to grow the dividend and we’ve obviously just finished a fairly significant share repurchase. We have $2.5 billion left on the existing buyback program that we have and at the point, where that gets lower. We’ll obviously go back to our board and gain authorization for another share repurchase and so we continue to be committed in those areas from BDC endpoint as I said, we continue to look for various opportunities and if we were to find the right kind of opportunity, we obviously add to that. I think the other question that Jami mentioned was some kind of a spin and I wouldn’t say that we’re evaluating anything in that area.

And from O-US HUMIRA perspective, it’s the best forecast we have right now, we’re going to be dealing with live ammo obviously pretty quick, but when we look at the way we’re forecasting it relative to the analogs, there are a couple of differences, first and foremost you need to recognize that unlike the analog the people typically compare us to, HUMIRA is growing at a nice pace and so that will make the decrease relative to peak. Look a little less severe than one would think, that have been just a status quo market place where there was no growth. The other thing is, keep in mind that not all of the markets are going biosimilar at the same time that gives us a little bit maybe a little bit of different circumstance given certain geographies that will be going to biosimilars later. So when we back up, when we look at it and we forecast this every year and we forecast it from the bottom up, this is the best number we have at this point in time, but it’s all going to largely be around with them because we’re going to see the real data fairly soon in the fourth quarter and then, we will adjust as we see fit. Q – Gregg Gilbert: Thank you.

Thanks Gregg. That concludes today’s conference call. If you’d like to listen to a replay of the call, please visit our website at investors.abbvie.com. Thanks again for joining us

Thank you. And this does conclude today’s conference. You may disconnect at this time.