Good morning and thank you for standing by. Welcome to the AbbVie Third Quarter 2020 Earnings Conference Call. All participants will be able to listen-only until the question-and-answer portion [Operator Instructions] And 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; Michael Severino, Vice Chairman and President; Rob Michael, Executive Vice President and Chief Financial Officer; and joining us for the Q&A portion of the call is Laura Schumacher, Vice Chairman, External Affairs, Chief Legal Officer and Corporate Secretary. Before we get started, I remind you that some statements we make today may be considered forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on AbbVie’s operations, results and financial results that may cause actual results to differ materially from those indicated in the forward-looking statements. Additional information about these risks and uncertainties is included in our 2019 annual report on Form 10-K and in our other SEC filings. AbbVie undertakes no obligation to update these forward-looking statements 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. Unless otherwise noted, our commentary on sales growth is on a comparable operational basis, which includes full current year and historical results for Allergan and excludes the impact of exchange. For this comparison of underlying performance, all historically reported Allergan revenues have been recast to conform to AbbVie’s revenue recognition accounting policies and excludes the divestitures of Zenpep and Viokace. Following our prepared remarks, we will take your questions. So, with that, I will now turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I will discuss our third quarter performance and highlights, as well as our full year guidance, which we are raising again this quarter. Mike will then provide an update on recent advancements across our R&D programs and Rob will discuss the quarter in more detail. Following our remarks, we will take your questions. AbbVie delivered another excellent quarter with adjusted earnings per share of $2.83, exceeding the midpoint of our guidance range by $0.08. When I look at our business and the actions we have taken to position AbbVie for sustainable performance, including the acquisition of Allergan, I feel very good about our long-term outlook. The fundamentals are strong and there is considerable momentum across our legacy and new portfolios, which are both demonstrating robust growth, despite the COVID pandemic and together have the potential for significant long-term value creation. I’d like to specifically highlight our recent progress across several aspects of our business, including the launches of RINVOQ and SKYRIZI, which are performing well ahead of all comparable launch analogs in their initial indications and continue to exceed our expectations. Our hem/onc franchise continues to deliver robust performance and is expected to generate more than $6.5 billion in revenue this year, representing strong double-digit growth. New indications and novel combinations, including our recently announced collaboration with Genmab and I-Mab provide opportunities for further revenue expansion. While it is still relatively early in the integration of Allergan, the strategic merits of the combination have never been more evident. We are already demonstrating that we have created a stronger, more diverse company, with robust cash flows and multiple new growth vehicles for the long-term. We now have the leading aesthetics franchise, which is demonstrating a strong V-shaped recovery,…

Thank you, Rick. We continue to make great progress across all stages of our pipeline and this morning I will highlight key events since our last earnings call. Starting with immunology, where we achieved several major milestones, including submission of our U.S. and European regulatory applications for RINVOQ in ankylosing spondylitis and atopic dermatitis. We expect regulatory decisions in the first half of 2021 for both indications, as well as for psoriatic arthritis which was submitted for regulatory review earlier this year. Within the rheumatology segment, both psoriatic arthritis and ankylosing spondylitis are large and important markets and represent a significant growth opportunity for RINVOQ. We will highlight the growing body of data from our rheumatology portfolio and the -- at the upcoming virtual ACR Congress, where we will present 35 abstracts from multiple assets across our portfolio, including six selected for oral presentation. Atopic dermatitis is a new disease area for AbbVie and also represents an important area of growth for our immunology franchise going forward. Based on the data generated in our registrational program, we remain very confident in the benefit/risk profile for RINVOQ in atopic dermatitis and believe it will offer meaningful advantages over products on the market today or in development. Beyond the Phase 3 studies that support our regulatory submission, we are also evaluating RINVOQ in a head-to-head Phase 3 trial against dupilumab, which if successful, will help further support RINVOQ as a highly differentiated therapeutic option for patients with atopic dermatitis. We look forward to seeing data from this head-to-head study later this quarter. In the area of inflammatory bowel diseases, we remain on track to see induction data later this quarter from our Phase 3 program for RINVOQ in ulcerative colitis. We will see data from a second induction study in ulcerative colitis,…

Thank you, Mike. Starting with third quarter results, we delivered strong top and bottomline performance. We reported adjusted earnings per share of $2.83, above our guidance midpoint by $0.08. Total adjusted net revenues were approximately $12.9 billion, up 4.1% on a comparable operational basis and ahead of our expectations. Immunology global sales were approximately $5.8 billion, up 15% on an operational basis, despite the impact of COVID on new patient starts across the immunology market. U.S. HUMIRA sales were approximately $4.2 billion, up 7.7% compared to prior year, reflecting continued demand growth plus price. Wholesaler inventory levels remain below half a month in the quarter. International HUMIRA sales were $951 million, down 8% operationally, reflecting biosimilar competition across Europe and other international markets. SKYRIZI sales were $435 million with leading in-play share in the U.S. psoriasis market and robust sequential growth internationally. RINVOQ sales were $215 million with continued strong in-play share in the U.S. RA market. Hematologic oncology delivered another strong quarter, with sales of $1.7 billion, up 16.4% on an operational basis. IMBRUVICA net revenues were approximately $1.4 billion, up 9% driven by our leading share in CLL. VENCLEXTA revenues were $352 million, with strong demand across all approved indications. MAVYRET sales were $414 million, down 41.1% on an operational basis, as treated patient volumes have remained below pre-COVID levels. Aesthetic sales were $967 million with BOTOX cosmetic and JUVÉDERM both experiencing a faster than expected recovery from the COVID pandemic. Neuroscience revenues were more than $1.2 billion led by VRAYLAR and our migraine portfolio. VRAYLAR once again delivered strong growth with revenues of $358 million. BOTOX Therapeutic continues to experience a rapid recovery from the COVID pandemic, with sales of $523 million in the quarter. The launch of UBRELVY is also going very well with recent direct-to-consumer…

Thanks, Rob. We will now open the call for questions. Operator, first question, please?

Thank you. [Operator Instructions] Our first question today is from Chris Schott from JPMorgan.

Great. Thanks so much for the questions and congrats on the results. I guess just two for me. First, 2021, I know you are not giving guidance yet, but can you just talk through some of the pushes and pulls we should keep in mind as we think about next year’s numbers and it seems like the core business obviously has a lot of traction here. I am just trying to get a sense of from your perspective what are the uncertainties as you think about that guidance number for next year? And my second question was on RINVOQ in atopic derm. Can you just elaborate a bit more on how you are thinking about the size of that opportunity? I know one of your peers has a single indication JAK in AD they think is a $3 billion peak sales opportunity. I know that’s well above your risk adjusted numbers you had a few years ago. It sounds like now you are talking about potential multi-billion dollar opportunity. But just help us flesh out a little bit about how big of an opportunity could this be for the product? Thank you.

Okay. So, Chris, this is Rick. I will talk a little bit about 2021 and then Mike maybe can talk a little bit about how we view RINVOQ in AD and Rob. So when we look at 2021, I think, you have to step back and say, how are we performing this year? And obviously we are performing very well. There’s still some COVID impact built in. It varies a bit by therapeutic areas, some areas are impacted more than others. So as an example, CLL has been impacted more than other areas, HCV has been impacted more than other areas. It’s usually places where the therapy can be delayed without significant consequence for the patient is where we are seeing most significant delays. So as we move through the fourth quarter, we will see whether or not that recovers more and that’s certainly one aspect of it. I would say, even without much recovery, the underlying performance of the business looks good. I think you can look at the dividend increase that we put through and that should give you some flavor for the level of confidence that we have, because obviously, we would want to tie that to what we assumed that we could deliver from an overall performance standpoint. I’d also say that, as we look to consensus, we are comfortable with what we see in consensus in 2021. So we want to see a few other things just play out primarily around COVID, how much improvement we get. We have launched a number of programs over the course of the last couple of months to try to activate patients more, to go to their physicians and seek treatment out. I think those programs, some of those programs will be successful and we will see some of those increase, particularly in immunology, because dermatology is another one of those areas that the new patient starts are still off a little bit. Now, obviously, SKYRIZI is performing extremely well and HUMIRA continues to perform well. So, I’d say that’s the single biggest issue. Rob, Mike, do you want to talk about RINVOQ?

Certainly. I will start and then pass it over to Rob, if he wants to add a little bit more detail. We view atopic dermatitis as a very attractive and a very substantial opportunity overall. It’s an indication that I think for many years was underappreciated by the industry. Now that’s changed recently and you have seen a lot of focus in drug development in atopic dermatitis. We feel very good about the profile that we have demonstrated, coming out of Phase 2, when we made those statements about the risk-adjusted potential in atopic dermatitis, we felt good about our data and those data were sufficient to get a breakthrough therapy designation. We are in the fortunate and not always that common situation where our Phase 3 results have actually outperformed our expectations based on Phase 2. And if you look at the Phase 3 results, they are really strong across the board. They are strong in total response. They are strong in repeated response and they are strong on components like itch, which is the most troublesome symptom to patients in the majority of cases. And so, when you couple that with the safety profile that we have demonstrated, which we think is very favorable. We see this as something that has very real potential and when we look across studies, we feel very good about our results. And of course, we have a head-to-head study with dupilumab, which is coming up later on this quarter and so that will be important additional information, and we are very optimistic about those results. Rob, I don’t know if you would like to add anything further?

Chris, this is Rob. So if you think about atopic dermatitis, it’s a $3 billion global market with very strong growth potential. In our 2025 risk adjusted guidance of greater than $10 billion for RINVOQ and SKYRIZI, we included $1 billion of revenue for RINVOQ AD, but we feel pretty good that we can achieve that expectation.

And the only other thing I’d add is, I think atopic derm is a market very similar to several others, in fact, psoriasis, I would say, is a similar type of market. But as you get more competitors in the market driving promotion, it has a very large population of patients. So the question is, activating those patients and getting them to go into the physician’s offices to seek treatment. And so, obviously, when you have one company doing that, they have the capacity to drive a certain amount. When you have more than one company, you are doubling or tripling the amount of promotion activity, particularly here in the U.S. and that tends to activate more patients to seek treatment. I think if you looked at the total available market of patients who would qualify, it’s a huge market, it’s north of $5 billion easily. So the question is, how fast can you activate them and how broadly can you activate those patients? From a profile standpoint of our drug, I think we will compete quite effectively, and I think, in particular, the performance around itch is going to give us an advantage. So it’s a very attractive market and it’s certainly one that we will focus a lot of attention on to drive.

And Chris, this is Rob again. Just to clarify, I said exceed or achieve, but we expect to exceed that $1 billion risk-adjusted number for RINVOQ AD in 2025.

Thanks, Chris. Operator, next question, please?

Thank you. And our next question is from Geoffrey Porges from SVB Leerink.

Thanks. Rick a question to you. With the dividend going up, it looks like you have got about a 6.5% dividend yield. The core business is performing well. And my question is, what are the -- and you are now a $50 billion to $55 billion topline company. What are the pipeline assets that can really move the needle, I know all the new indications for the existing NMEs, but what new NMEs can be really substantial to move the needle on a $55 billion topline, because I think, that’s part of why you have got an industry high dividend yield?

So, Geoff, this is Rick. I think if you look at the business, you have to look at it in phases, right? So I’d say the phase between now and call it 2025, 2026. That growth is going to be driven by expansion of RINVOQ and SKYRIZI, continued strong growth in the neuroscience pipeline, continued strong growth in the aesthetics pipeline and continued strong growth in the hem/onc. Starting in that 2025 timeframe and beyond, that’s where the earlier to mid-stage pipeline will drive a significant amount of growth. Now there will be assets like Navitoclax, like 951, atogepant, that will come in prior to that and help boost growth right around ‘23 and ‘24. But I can tell you, we are very confident that we have now built a portfolio that can sustain growth and drive growth on the other side of the LOE. In fact, I would tell you that, when I look at RINVOQ and SKYRIZI, and I look at the in-play market shares that we see with those assets today, when we gave guidance of 2025, we assumed that on average, we would achieve high single-digit market share across the indications. So as an example, if you look at SKYRIZI right now, SKYRIZI’s in-play share is 33%, the market leader by a wide margin. The next closest product is at 16% in-play share. And its TRX share is now at 11% and climbing rapidly. So it’s already above what we had assumed the peak would have been out in 2025 from a market share standpoint. And if we maintain that 33% by then, it will have an overall share of about 33%, so it will be three times what we had assumed for psoriasis. So when you look at the speed at which we are bringing the new indications, when you look at the breadth of those indications across the revenue base that HUMIRA has today, we have covered all of the major indications for HUMIRA plus one more that HUMIRA doesn’t have, which is atopic derm. And if we can achieve that kind of market share in each of these indications, then we will obviously double what we assumed that 2025 number was and that gets you pretty close to covering all of HUMIRA in the U.S. So I am very encouraged about that. And I think that, along with the other assets and the four major growth platforms, gives us a tremendous amount of confidence that we can drive growth on a sustainable basis at a very high level.

Thanks, Geoff. Operator, next question, please?

Thank you. And our next question is from Vamil Divan from Mizuho.

Hi. Thanks so much for taking my questions. So maybe just sort of following up on what has been asked. For 2021 on Chris’ question, can you just talk a little bit about how you are thinking about drug pricing pressure, either U.S. or globally just to think about our modeling for next year, I think, that would be helpful? And then maybe building on Geoff’s question, I think one of the other concerns that investors have is around potential tax reform that may come out of D.C. depending on how the election plays out. I know it’s tough to ask just a few days before the election. But I guess based on what you are seeing especially from the Biden side, I guess the Biden plan right now. Is there anything you can share with investors at this point in terms of how your tax rate may change going forward and I appreciate there’s probably not much that you can give, but any insights I think would be helpful, because I think it is investors seem very concerned about at this point? Thank you.

Yeah. Well, Vamil, obviously, it’s still unclear as to what the landscape will be on the other side of the election, so we obviously have to let that play out. Having said that, I think, we assume that there will be continued pressure on the industry as it relates to drug pricing. As far as what our expectations would be in 2021, I think our expectations in 2021 from a price standpoint will be similar to what they were in ‘19 and ‘20, and is we weren’t reliant on price. I mean, fortunately our business is primarily a volume-driven business. It’s typically in areas that are very serious diseases and have strong value propositions. And so that gives me confidence that we will be able to fare reasonably well even if there are changes. I’d say the second thing is, it’s unlikely that you will get changes that have a significant impact early on in ‘21, because there’s going to be a lot of debate here about what those changes are. What I would hope the debate ultimately transitions to is co-pays and out-of-pocket costs for patients, because that is the fundamental issue and it’s particularly the issue when you look at Part D patients. They have to pay far too much of the burden of the cost from an out-of-pocket cost standpoint. And they are really the only group of patients in the U.S. that have that kind of burden associated with them. If you look at the overall performance from a cost standpoint of Medicare Part D. It’s performed very well. In fact, if you go back to the original CBO estimates over the last 10 years, it’s come in 45% below the original estimates for what it would grow. And if you look at Part D, it’s…

Vamil, It’s Rob. So based on a very high level of information on the Biden proposal, we would see an increase in our tax rate like most U,S, companies, but it’s really difficult to provide a rate impact without the details. That said, AbbVie would still have a favorable profile versus our peers and we wouldn’t have raised our dividend if we were overly concerned about the implications.

And the only thing I’d add, Vamil, on that one is, we obviously did flex what we thought the tax rate could be and we just don’t know that much about it, we know what has been said. But we flexed it against this dividend increase and made sure we were absolutely comfortable with payout ratios based on that and we are or we wouldn’t have moved forward with the 10.2% increase.

Thanks, Vamil. Operator, next question, please?

Thank you. And our next question is from Steve Scala from Cowen.

Thank you so much, and congratulations on another impressive quarter. I have several questions, but three of them are short. Can you be more specific on where SKYRIZI patients are coming from? I think it’s notable that COSENTYX was a bit light this quarter and Novartis cited competition? Secondly, what was the non-GAAP interest expense number in the quarter? Third, you provided guidance for HUMIRA OUS, but I don’t think U.S. So can you tell us what you think the U.S. guidance would look like? And then, lastly, we have tracked clinical trial activity during the pandemic and it shows AbbVie recruiting trials were up 14% year-to-date. That is industry-leading two times greater than the next closest competitor and much better than the average, which is down, and I am just curious, what accounts for this? Is it a deliberate strategy to capture patients when other companies are taking a wait-and-see approach or is it something else? Thank you.

Yeah. So, Steve, I will handle your first question. Rob will handle two and three, and Mike can handle number four. So if you look at the in-play share, about 25% of that in-play share is coming -- on SKYRIZI is coming from HUMIRA. The other 75% is coming from competitors. I’d say it’s primarily the 17s but some coming from the other 12, 23s or 23s, but I’d say the bulk of it is coming from the 17s. So that might answer your question about COSENTYX. If you look at the capture of the type of patient that we are getting with SKYRIZI, it’s very balanced. It’s about 50/50 between first-line and then second-line. So that’s a nice balance between IE patients and patients who have failed other therapies. So I think the asset is performing the way you would expect a high-performing, high-efficacy asset to be able to perform, is -- it has quickly become the preferred product by prescribing physicians. It has a great profile. It’s quarterly dosing. It’s got great efficacy. The efficacy improves over time. There aren’t any assets that have that kind of a profile on the market. So I would expect that SKYRIZI will continue to increase its in-play share. It’s jumped about 3 points over the last maybe two months and I would expect it will continue to increase.

Hey. Steve, this is Rob. On your question on interest expense, for non-GAAP and GAAP, it’s the same number. It’s $620 million in the third quarter. We are no longer specifying any interest expense, because we have now closed the transaction, so that negative carry on the bond is no longer is applicable for the specified. So $620 million is the number for both non-GAAP and GAAP. On the U.S. HUMIRA question, so we did not change our guidance, it continues to be 8 -- for the U.S. HUMIRA 8% growth with a low single-digit price contribution.

This is Mike. I will take your last question on clinical trial activity. The first thing that, I would say is, the increase in clinical trial activity reflects what’s going on in our pipeline and there’s a lot of activity in our pipeline, and a large number of molecules that we are advancing, and so that’s a big part of it. Another part is that, we made the conscious decision to leave decisions around enrollment in the hands of investigators rather than making them centrally, because they understand the situation in their hospital in their community better than we do. And there was a small group of studies that we paused at the time of the initial COVID impact, but the majority we allowed to continue. That doesn’t mean that there weren’t disruptions from COVID. But it does mean that investigators decided when it was time to pause enrollment and when it was time to resume enrollment. And I think the evidence shows that they made those decisions better than they could have been made centrally. And that has allowed us to advance our portfolio, to advance our clinical trials with minimal disruption and with safe conduct for patients and the staff at the site, which are also critically important considerations. And so, I’d say, it’s a combination of those factors.

Thanks, Steve. Operator, next question, please?

Thank you. And our next question is from Navin Jacob from UBS.

Hi. How are you?

This is Jon Lim on for Navin Jacob.

Hi, Jon. Yeah. Sorry…

We just had a few questions.

You guys pass along [ph].

We just had a few questions. First, regarding the HUMIRA question in the U.S., within the markets in which a biosimilar is out there, what percent of the molecule is now brand versus biosimilars? With now almost two years of biosimilar experience, how does that affect things? And next for SKYRIZI and RINVOQ, can achieve the type of uptake that you have been seeing in the U.S. and in the international markets? We would appreciate any commentary around in-play market share achieved in markets you have been approved in. And lastly, if we could talk about VRAYLAR MDD timing? Thank you.

Okay. This is Rob. Just to clarify, the first question was on international HUMIRA, how much of that is now a biosimilar?

Right. Within the markets where there’s a biosimilar, how much is…

Yeah.

… brand versus biosimilar, help us visualize that question…

I think he wants what’s the molecule…

[Inaudible]

Yeah.

Yeah. We are at about 60% molecule share across the Board. So that’s of all of the international markets, on average, it’s about 60% molecule share.

And then on SKYRIZI and RINVOQ, I don’t have the numbers right in front of me on each of the markets. I would say typically in the international market, it is a slightly slower uptake than it is in the U.S., but still doing very well. So maybe the best thing would be to get back to you with some more specifics around that. But I think you can assume that the in-play share there probably averages between 20% and 30%. But it depends obviously on the country that you are talking about. And then on VRAYLAR MDD timing, Mike?

Yes. On VRAYLAR MDD, we would expect to have the study’s readout in the second half of next year and be prepared for regulatory submissions shortly thereafter. So it’s possible we would have an approval in ‘22.

And I think that’s an important point to make here. If we look at VRAYLAR, VRAYLAR is growing very rapidly. And as you know, the atypical anti-psychotic market is very, very large. I think VRAYLAR’s share is something like 3% and it’s tracking at $1.4 billion at 3%. So if we look at the current indications, as we indicated in the comments, of bipolar and schizophrenia, we think we can drive VRAYLAR alone in those indications to a multi-billion dollar product and that’s just driving that market share penetration up to like 5% or so. And I think that’s very doable based on the profile of VRAYLAR. VRAYLAR has a very unique profile in that market. So MDD, if we are successful, obviously, will open up a whole other channel and allow you to increase that market share even more significantly. And so typically, many of the drugs that achieved MDD were drugs that had $5 billion, $6 billion of annual revenues. So this is a nice opportunity. Without MDD, VRAYLAR is still going to be a very important product and a very significant product. With MDD, it becomes a major product. And so we will see how those next two studies play out. The first study was positive and I think we are hopeful that we will be able to get it.

Thanks, Sriker [ph]. I think that was you. Operator, next question, please?

Thank you. Our next question is from Randall Stanicky from RBC Capital Markets.

Great. Thanks. Rick, early in the pandemic, you were one of the few to identify or build an impact for potential headwinds from higher unemployment associated with loss of health coverage. What are you currently seeing right now and anything on the patient assistance program numbers that help you inform on that? And then secondly, I just wanted to ask on BOTOX migraine. This has been historically a roughly $600 million high margin product for Allergan. We have been watching CGRP inhibitors now been in the market a couple of years. Do you see this as a growth product or opportunity for you and what are you seeing overall with respect to BOTOX in migraine? Thanks.

So on the unemployment, we did identify back, I guess, it was in the first quarter call, that we were going to build in a level of risk associated with patients who would have to move to some type of an assistance program, because they lost their jobs. We have not seen that impact play out to any significant level. We have not seen it in our patient assistance program and right around the pandemic we made a decision to proactively go out and advertise our patient assistance program just to make sure that patients knew that if they couldn’t afford their AbbVie drugs that they could get them from us. So I think we proactively tried to drive it in an effort to make sure that patients were not exposed, but we haven’t seen very much at all. We still have some coverage left in the fourth quarter for it. But I’d say at this point, I think, we are questioning whether or not we are going to see it. Now, I can’t tell you exactly why. But I can tell you we are monitoring it carefully and it’s definitely not happening, at least in our business, because we would see it in the patient assistance program. On BOTOX migraine, if you actually look at what is happening with patients on BOTOX migraine, when the injectable CGRPs came into the market, you did see a tick down in patients, but then BOTOX recovered. And it has roughly the same number of patients that it had back then. It’s slightly lower than it had back then. So what the CGRPs ended up doing was expanding the market to some extent. And we are seeing a very similar phenomenon on the acute therapies as well. If you look at the scripts,…

Thank, Randall. Operator, next question, please?

Thank you. Our next question is from David Risinger from Morgan Stanley.

Thanks very much. Excuse me, so I want to start with a high-level question, Rick. Could you please discuss long-term immunology net pricing and formulary positioning prospects in the face of increasing competition in coming years? And then second, just had a high level question about cash flow, I was hoping that you could discuss prospects for operating cash flow, CapEx and free cash flow? Thank you very much.

Yeah. Thanks, David. I will take the first one. Rob will answer the second one for you. So if I look at long-term immunology, what’s critically important is that you have the kinds of assets that allow that managed care organization or PBM to be able to cover the greatest number of patients. This is a category where not every drug works on every patient. So you have to have multiple options that are available in the formulary and that’s just -- that is the appropriate thing to do to make sure that patients have the drugs that they need to be able to be treated. I would say, we typically do very well with formulary access. That’s driven primarily by the fact that our assets tend to be very attractive assets from a clinical profile. They establish significant market share positions and that’s important for the managed care organization or the PBM. So I don’t see anything significantly impacting that going forward. I would assume we will maintain very high levels of formulary access. Net pricing, there’s always some level of impact on pricing when you renegotiate the contracts. I don’t anticipate that you will see a significant change going forward. So I think it’s more of the normal kinds of competitive activities that we see in the marketplace.

And David, this is Rob. I will answer your question on cash flow, so if you look at AbbVie and Allergan in 2019 on a combined basis, generated about $19 billion almost $20 billion of operating cash flow. CapEx runs close to $1 billion, and so if you look at this year, again, we have a partial year of Allergan, we are probably trending towards the $16 billion operating cash flow number with a little bit less than $1 billion of CapEx. So you need to annualize that and also consider the fact that we are going to generate earnings growth going forward, but that should give you a good number to work with.

Thank you.

Thanks, David. Operator, next question, please?

Thank you. Our next question is from Terence Flynn from Goldman Sachs.

Hi. Thanks for taking the questions. I was just wondering first, maybe on the IBD front, I know you have a number of readouts coming up for RINVOQ and SKYRIZI here. Maybe you could just outline what current usage of targeted drugs in IBD is on a percentage basis and how that compares to rheumatology and dermatology? And what you see is a potential here to boost that uptake in IBD further? And then to your TNF steroid conjugate program, what were the criteria that were key that led to your choice of 154 as a go-forward asset? And then lastly, on the Allergan integration, I know you said everything is on track there. It’s going really well. You talked about some revenue synergy opportunity, Rick, and I know you have laid out your expense synergy target of $2 billion in 2022. Maybe you could just talk about some of the puts and takes for 2021 as we think about the Allergan synergies on both sides? Thank you.

Okay. Great. On IBD usage, if you look at the penetration, I’d say, IBD is an area where you have reasonable levels of biologic penetration, because the disease particularly Crohn’s is the disease is a pretty severe. I think the challenge in IBD is that, with the current therapies that are available, you still get sub-optimal clinical efficacy for these patients and durability of that efficacy. And so what physicians tend to do is they rotate patients through various treatments to try to maintain them in control for a longer period of time. So it is a market that is right for higher efficacy agents and a market that is right for more agents to be available to allow for better treatment of those patients and that’s the key driver in that segment of what gives significant uptake. So when we see the data around IBD that will be important for us, obviously the early data looks good. And ultimately I think these assets, along with HUMIRA, will be able to provide the market with a significant new alternative and I think that uptake will be good based on that.

This is Mike. I will take the question about 154. So, 3373 and 154 represent our TNF steroid conjugate molecules that are in the clinic. They are very similar, similar to the extent that we view the biology as being translatable between the two. But 154 includes some improvements in linker technology that relate to manufacturability and ability to formulate at high concentration, ease of formulation. And so those can be very important advantages for a successful molecule. We previously toplined the positive results from 3373. We wanted to see that 154 gave us the PK performance and the exposure to achieve the pharmacodynamic coverage we think we need in the next stage of development. And as I said, we viewed the biology as translatable between the two. So once we saw that PK performance and it matched our expectations and showed that 154 would give us the coverage that we were seeking at acceptable doses in the clinic, we made the decision to advance that molecule into larger scale trials.

Hey. Terence, this is Rob. I will take your question on synergies. So while we are not providing guidance for 2021 today. I think a good way to think about the expense synergies is to run rate the $600 million in partial year synergies, which gets to about $1 billion. And then, as you think about that ramp to greater than $2 billion by 2022, I think it’s reasonable to straight line that. So if you think about what’s going to drive the ramp? It’s things like systems integration, leveraging procurement spend, will result in more synergies over time, as well as network optimization. In the near-term, it’s really driven more from immediate redundancies like corporate infrastructure and R&D portfolio optimization. As it relates to the revenue synergies, look, as we have now had a few months with the combined company, we see opportunities as we think about investment in aesthetics, where we have really amped up our DTC investment for JUVÉDERM and BOTOX cosmetic, it give o the ability to invest more in aesthetics. Similarly, invest more in neuroscience, whether that’s VRAYLAR, BOTOX therapeutic. And then we look internationally given the infrastructure we have, the integrated brand team approach, we think there’s opportunity to really leverage our market access capability, our international affiliate structure to really drive that international growth for the company going forward for those Allergan brands as well.

Terence, the only thing I would add, maybe to give you some perspective on the investment side. Allergan tended to what I would describe as pulse invest in particularly DTC, but even in social media. So they didn’t -- and typically what we do with brands when we want to drive maximum speed of market penetration is we invest at a steady state and continue to do that for an extended period of time. So they might have invested heavily in one quarter and then gone dark in the next quarter and then invested again and gone dark again. We don’t use that kind of a strategy. We tend to invest for the full year. And in our experience, what that does is it gives you, the fact that you have constant coverage, gives you maximum speed of penetration. So we clearly think that’s going to be an advantage, particularly in areas like aesthetics and neuroscience.

Thanks, Terence. Operator, next question, please?

Thank you. Our next question is from Gregg Gilbert from Truist.

Thank you for getting me in. Good morning. Rick, it sounds like you think the neuroscience franchise might be one of the sleepers of the Allergan deal and you have already framed the potential for VRAYLAR particularly if depression hits. But I was curious if this development in neuroscience has taken on sort of a new sense of urgency given the heft that you have now in that franchise or whether you think you have enough going on there already? And for Mike, I was hoping you could let us know when we will see Phase 3 data for 951 in Parkinson’s and give us a sneak preview of what you are looking for there profile wise? And lastly, can you frame for BOTOX therapeutics, Mike, what you have decided to pursue in terms of indications versus ones that you have taken off the table now that you have had some time to work with that? Thanks.

I’d say on neuroscience, the way to think about it is or at least the way we are thinking about it is, there’s a significant opportunity to drive VRAYLAR to be a very large product, I mean, doubling or more depending upon the ability to get MDD. And I’d also say in migraine, when we get the full portfolio of migraine assets. The migraine market is a big market. If you look at the acute market today, it’s probably about $1.5 billion. We believe it can grow to $4 billion or $5 billion by 2025 with the right kinds of assets and the right kind of promotion. And then if you look at the preventative market, it’s about $3 billion, so we believe that one in real high-single to low-double digits with the right kinds of assets and the right kinds of promotion. So the first phase of neuroscience is nothing more than taking the assets we have now, getting atogepant to the marketplace and then we have a full portfolio of migraine products, and then maximizing the market share position of those assets in the market, that’s sort of Phase 1. But I would say now that we have infrastructure in place, Mike’s BD team has been now been starting to look at assets that would be complementary to that. And we didn’t in the past because for a single anti-psychotic, we wouldn’t have wanted to build-out the infrastructure, it just wouldn’t have made sense for us. But now we can basically add those kinds of assets to the infrastructure we have. So it does give us another opportunity from a BD standpoint to be able to build the business longer term.

I will take the second question and agree with everything Rick said, the only thing I’d add on BD in neuroscience is neuropsychiatry is now clearly an area of strength for us and can be an area of interest and that can go beyond the anti-psychotics as well. There’s tremendous potential and unmet need in areas like generalized anxiety disorder, still in depression despite there are many agents on the market, many, many patients remain inadequately treated, so we would look broadly across that space. With respect to 951 and data timing, we would expect to see results from our Phase 3 study in the second half of next year. And what we are looking for is really DUOPA like efficacy, because DUOPA is a transformational product but it’s also a product that is challenging to administer, and the nature of that product, the fact that it requires the placement of a gastric tube that’s then threaded into the small bowel and has to be maintained limits the size of what’s effectively an addressable market. Not the market by the labeled indication, but the proportion of patients within that population that would consider a therapy like that. And 951 has the potential to substantially expand that. It has an insulin pump-like device, subcutaneous delivery device. We think it will broaden the number of patients within that labeled population, who would consider such a therapy and this is really a very substantial market. So for example, if you look at DUOPA, despite all of its challenges, it does about $0.5 billion in sales. If you look across similar therapies for advanced Parkinson’s disease, the market is probably $1.5 billion or more and that probably represents only a small part of the potential because much of it remains untapped. So we think that 951 can address that and we think the profile that it will take to address that is DUOPA like efficacy with a more patient-friendly subcutaneous delivery device. With respect to BOTOX indications, there are a number of indications, both for BOTOX and for other toxins, for novel toxins that we are considering in the therapeutic space. I think there’s more work that we can do in the migraine space. Although, that has been an area of strength, episodic migraine has patients that may benefit from a therapy like BOTOX and there’s still much more to do on the neurology side with respect to specificity disorders that might be secondary to stroke or other conditions where there is still room to expand those indications. When we look more broadly, there are a number of potential interesting indications for neurotoxins. They might not be BOTOX. They may be novel toxins. Those could be things like prevention of afib, for example, and we are continuing to explore indications beyond that.

Thanks, Gregg. Operator, next question, please?

Thank you. And our next question is from Tim Anderson from Wolfe Research.

Thank you. A high level question for Rick, despite Allergan being a very reasonable solution to upcoming U.S. HUMIRA LOE in 2023, the multiple on AbbVie is lower than it’s ever been. The entire drug group is out of favor, but your multiple is about half of the peer group average. To me what that multiple says is that investors remain worried about what AbbVie looks like past 2023. So two questions related to this, the first is why not give updated granular extended guidance that goes beyond 2023? You have given long-term guidance in the past sometimes and that’s resonated well with the market. So can we expect you might do this at some point soon? And second question, why not go do more M&A in the near-term, we just saw Bristol do a $13 billion deal not far after closing Celgene and layering more product into your pipeline would help give investors assurances that there’s life beyond 2023. And by virtue of how you answered an earlier question, you yourself basically said there’s not much new NME flow until 2025 and beyond? Thank you.

Yeah. I think if you look -- Tim, this is Rick. If you look at the PE of the whole sector, obviously, the sector is under pressure from the political environment and concerns about the political environment. And you are correct, we are at the lower end of that PE and I think that is driven by uncertainty about what the growth rate will be on the other side of the LOE. What I would tell you is obviously, we have a 10-year LLP, so we know what we think that growth rate is on the other side of the LOE. And I can tell you that when I look at that growth rate, it’s robust. Now, the market has to come around to that point of view. I’d say, we haven’t always been right, but in total revenue, we have always been right. In fact, we have always beat for the most part what our expectations were. And so we obviously challenge it pretty hard and we have knowledge of what we believe the erosion curve will look like. We have knowledge of what we think our pipeline will deliver and what the additional indications will deliver. And look, I remember there was a tremendous amount of skepticism about when we gave it was either $10 billion or $11 billion of risk adjusted revenues for RINVOQ and SKYRIZI back a year or two ago, something like that. There was a tremendous amount of skepticism, that’s impossible. I don’t hear very much of that now that these two assets are $2 billion and growing like rockets. So I’d say our ability to assess what we can do with our assets is pretty high. Now, that doesn’t mean you shouldn’t go out and get more things and we constantly look and…

Thank you.

Thanks, Tim. Operator, next -- we have time for one final question.

Thank you. And our final question today is from Josh Schimmer from Evercore.

Last question. Thanks for squeezing me in. Just a couple of quick ones, can you provide any color on the SKYRIZI royalty and can you comment on what you see as the incremental markets for the lower face toxins, the new dermal filler and presbyopia, if you view any of those as material? Thank you.

Yeah. Josh, so on the SKYRIZI royalty, well, keep in mind that we account for this as a business combination, so it comes through consideration so you don’t see it on a non-GAAP P&L. We don’t disclose our royalty rates but a good way to think about it is reasonable royalty you would pay for a late-stage asset is probably a good way to think about what the royalty burn would be on -- the cash royalty burn will be on SKYRIZI.

And I’d say the lower face toxins and the lower face fillers that we are working on, probably the best way, rather than trying to characterize individual indications for toxins or fillers is, we are trying to build a portfolio and a market activation strategy that will allow us to grow the aesthetics business at a consistent double-digit rate. And it is both that internal pipeline and activating more patients, and some BD effort that will give us that. So, certainly those lower face toxins and fillers are designed to be able to support that growth going forward. The eye care product, I would call that product sort of a modest product. I don’t remember the specifics. Do you, Rob?

Yeah.

I’d call it sort of a modest size product.

Yeah.

Thank you.

Thanks, Josh. 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. This does conclude today’s conference. You may disconnect at this time.