Bulletin
Investor Alert

Aug. 4, 2020, 9:58 a.m. EDT

10-Q: ABBVIE INC.

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of June 30, 2020 and December 31, 2019 and the results of operations for the three and six months ended June 30, 2020 and 2019. This commentary should be read in conjunction with the Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, "Financial Statements and Supplementary Data."







        EXECUTIVE OVERVIEW
        Company Overview
        AbbVie is a global, research-based biopharmaceutical company. AbbVie uses its
        expertise, dedicated people and unique approach to innovation to develop and
        market advanced therapies that address some of the world's most complex and
        serious diseases.
        On May 8, 2020, AbbVie completed the acquisition of Allergan plc (Allergan). The
        acquisition of Allergan creates a diversified biopharmaceutical company
        positioned for success with a comprehensive product portfolio that has
        leadership positions in key therapeutic areas of immunology, hematologic
        oncology, aesthetics, neuroscience, eye care and women's health. AbbVie's
        existing product portfolio and pipeline is enhanced with numerous Allergan
        assets and Allergan's product portfolio benefits from AbbVie's commercial
        strength, expertise and international infrastructure. See Note 4 to the
        Condensed Consolidated Financial Statements for additional information on the
        acquisition. Subsequent to the acquisition date, AbbVie's consolidated financial
        statements include the assets, liabilities, operating results and cash flows of
        Allergan.
        AbbVie's products are generally sold worldwide directly to wholesalers,
        distributors, government agencies, health care facilities, specialty pharmacies
        and independent retailers from AbbVie-owned distribution centers and public
        warehouses. Certain aesthetic products and devices are also sold directly to
        physicians and other licensed healthcare providers. In the United States, AbbVie
        distributes pharmaceutical products principally through independent wholesale
        distributors, with some sales directly to pharmacies and patients. Outside the
        United States, AbbVie sells products primarily to customers or through
        distributors, depending on the market served. Certain products are co-marketed
        or co-promoted with other companies. AbbVie has approximately 47,000 employees.
        AbbVie operates as a single global business segment.
        2020 Strategic Objectives
        AbbVie's mission is to discover and develop innovative medicines and products
        that solve serious health issues today and address the medical challenges of
        tomorrow while achieving top-tier financial performance through outstanding
        execution. AbbVie intends to continue to advance its mission in a number of
        ways, including: (i) maximizing the benefits of the Allergan acquisition to
        create a more diversified revenue base with multiple long-term growth drivers;
        (ii) growing revenues by leveraging AbbVie's commercial strength and
        international infrastructure across Allergan's therapeutic areas and ensuring
        strong commercial execution of new product launches; (iii) continuing to invest
        in and expand its pipeline in support of opportunities in immunology, oncology,
        aesthetics, neuroscience, eye care and women's health as well as continued
        investment in key on-market products; (iv) expanding operating margins; and
        (iv) returning cash to shareholders via a strong and growing dividend while also
        reducing incremental debt. In addition, AbbVie anticipates several regulatory
        submissions and key data readouts from key clinical trials in the next 12
        months.
        Financial Results
        The company's financial performance for the six months ended June 30, 2020
        included delivering worldwide net revenues of $19.0 billion, operating earnings
        of $4.4 billion, diluted earnings per share of $1.43 and cash flows from
        operations of $6.9 billion. Worldwide net revenues grew by 18% on a reported
        basis and 19% on a constant currency basis, which included $2.0 billion of
        contributed revenues from the Allergan acquisition, growth in the immunology
        portfolio from Skyrizi, Rinvoq and the continued strength of Humira in the U.S.
        as well as revenue growth from Imbruvica and Venclexta.
        


2020 Form 10-Q | [[Image Removed: abbvieimage2a19.gif]] 31

Diluted earnings per share was $1.43 for the six months ended June 30, 2020 and included the following after-tax costs: (i) $1.9 billion of expenses related to the Allergan acquisition; (ii) $1.6 billion related to the amortization of intangible assets; (iii) $881 million for the change in fair value of contingent consideration liabilities; (iv) $853 million for acquired in-process research and development (IPR&D); and (v) $164 million for milestones and other research and development (R&D) expenses. Additionally, financial results reflected continued funding to support all stages of AbbVie's pipeline assets and continued investment in AbbVie's on-market brands. Impact of the Coronavirus Disease 2019 (COVID-19) In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States and around the world. In response to the growing public health crisis, AbbVie has partnered with global authorities to support the experimental use of multiple AbbVie assets to determine their efficacy in the treatment of COVID-19. In June 2020, AbbVie announced that it has entered into a collaboration with Harbour BioMed, Utrecht University and Erasmus Medical Center to develop a novel antibody therapeutic to prevent and treat COVID-19. Additionally, AbbVie donated $35 million to increase healthcare capacity, supply critical equipment and deliver food and essential supplies during the crisis. AbbVie continues to closely manage manufacturing and supply chain resources around the world to help ensure that patients continue to receive an uninterrupted supply of their medicines. Clinical trial sites are being monitored locally to protect the safety of study participants, staff and employees. While the impact of COVID-19 on AbbVie's operations to date has not been material, AbbVie expects this matter could continue to negatively impact its results of operations throughout the duration of the outbreak. The extent to which COVID-19 may impact AbbVie's financial condition and results of operations remains uncertain.







                  In February 2020, AbbVie announced top-line results from its second
                  Phase 3 clinical trial of Rinvoq in adult patients with active
                  psoriatic arthritis (PsA). Results from the SELECT-PsA 1 study, which
                  evaluated Rinvoq versus placebo in patients who did not adequately
                  respond to treatment with one or more non-biologic disease-modifying
                  anti-rheumatic drugs (DMARDs), showed that both doses of Rinvoq met the
                  primary and key secondary endpoints. The safety profile was consistent
                  with that of previous studies across indications, with no new safety
                  risks detected.
                  In May 2020, AbbVie submitted a New Drug Application (NDA) to the U.S.
                  Food and Drug Administration (FDA) and, in June 2020, submitted a
                  marketing authorization application (MAA) to the European Medicines
                  Agency (EMA) for Rinvoq for the treatment of adult patients with active
                  psoriatic arthritis.
                  In June 2020, AbbVie announced top-line results from its Phase 3
                  Measure Up 1 study and, in July 2020, announced top-line results from
                  its Phase 3 Measure Up 2 and AD Up studies of Rinvoq for the treatment
                  of moderate to severe atopic dermatitis met all primary and secondary
                  endpoints versus placebo.
        


2020 Form 10-Q | [[Image Removed: abbvieimage2a19.gif]] 32







        Oncology
        Imbruvica
                  In April 2020, AbbVie received FDA approval for the use of Imbruvica in
                  combination with rituximab for the treatment of previously untreated
                  patients with chronic lymphocytic leukemia (CLL) or small lymphocytic
                  lymphoma (SLL).
        Venclexta
                  In February 2020, AbbVie announced that the Phase 3 VIALE-C trial of
                  Venclexta in combination with low-dose cytarabine in newly-diagnosed
                  patients with acute myeloid leukemia (AML) did not meet its primary
                  endpoint.
                  In March 2020, AbbVie announced that top-line results from its Phase 3
                  VIALE-A trial of Venclexta in combination with azacitidine in patients
                  with AML met its primary endpoints.
                  In March 2020, AbbVie received European Commission (EC) approval of
                  Venclyxto in combination with obinutuzumab for patients with previously
                  untreated CLL.
                  In May 2020, AbbVie submitted a supplemental NDA (sNDA) to the FDA for
                  the conversion of the conditional approval of Venclexta to full
                  approval for patients with AML. In June 2020, AbbVie submitted an MAA
                  to the EMA for Venclyxto for the treatment of patients with AML.
        








        Aesthetics
        Juvederm Collection
                  In June 2020, AbbVie received FDA approval of Juvederm Voluma XC for
                  the augmentation of the chin region to improve the chin profile in
                  adults over the age of 21.
        








        Neuroscience
        Botox Therapeutic
                  In June 2020, the FDA accepted the company's supplemental Biologics
                  License Application (sBLA) to expand the Botox prescribing information
                  for the treatment of detrusor (bladder muscle) overactivity associated
                  with an underlying neurologic condition in certain pediatric patients.
                  In July 2020, AbbVie received FDA approval of Botox for the treatment
                  of lower limb spasticity caused by cerebral palsy in pediatric patients
                  over the age of 2.
        Atogepant
                  In July 2020, AbbVie announced that the Phase 3 ADVANCE trial
                  evaluating atogepant, an orally administered calcitonin gene-related
                  peptide receptor antagonist, for migraine prevention met its primary
                  endpoint for all doses (10mg, 30mg, and 60mg) compared to placebo, all
                  secondary endpoints with 30mg and 60mg doses, and four out of six
                  secondary endpoints with the 10mg dose.
        


Virology/Liver Disease







        Mavyret
                  In March 2020, AbbVie announced that the EC granted marketing
                  authorization for Maviret to shorten once-daily treatment duration from
                  12 to 8 weeks in treatment-na�ve, compensated cirrhotic, chronic
                  hepatitis C virus (HCV) patients with genotype 3 infection.
        


Eye Care







                  In June 2020, AbbVie announced that the FDA issued a Complete Response
                  Letter (CRL) to the Biologics License Application (BLA) for abicipar
                  pegol, a novel, investigational DARPin therapy for patients with
                  neovascular (wet) age-related macular degeneration (nAMD). The CRL
                  indicated that the rate of intraocular inflammation observed following
                  administration of abicipar pegol results in an unfavorable benefit-risk
                  ratio in the treatment of nAMD. In July 2020, AbbVie withdrew the
                  regulatory application with the EMA for abicipar pegol for the
                  treatment of nAMD. AbbVie plans to meet with the FDA and EMA to discuss
                  their comments and determine next steps.
        


2020 Form 10-Q | [[Image Removed: abbvieimage2a19.gif]] 33







        Women's Health
        Oriahnn
                  In May 2020, the FDA approved Oriahnn (elagolix, estradiol, and
                  norethindrone acetate capsules; elagolix capsules) for the management
                  of heavy menstrual bleeding due to uterine fibroids in pre-menopausal
                  women.
        


For a more comprehensive discussion of AbbVie's products and pipeline, see the company's Annual Report on Form 10-K for the year ended December 31, 2019.







        RESULTS OF OPERATIONS
        Net Revenues
        The comparisons presented at constant currency rates reflect comparative local
        currency net revenues at the prior year's foreign exchange rates. This measure
        provides information on the change in net revenues assuming that foreign
        currency exchange rates had not changed between the prior and current periods.
        AbbVie believes that the non-GAAP measure of change in net revenues at constant
        currency rates, when used in conjunction with the GAAP measure of change in net
        revenues at actual currency rates, may provide a more complete understanding of
        the company's operations and can facilitate analysis of the company's results of
        operations, particularly in evaluating performance from one period to another.
                                     Three months ended                   Percent change                  Six months ended                 Percent change
                                          June 30,                 At actual         At constant              June 30,              At actual         At constant
        (dollars in millions)         2020            2019       currency rates     currency rates       2020          2019       currency rates     currency rates
        United States           $     8,147        $  5,964          36.6  %               36.6 %     $  14,305     $ 11,234          27.3  %               27.3 %
        International                 2,278           2,291          (0.5 )%                2.5 %         4,739        4,849          (2.2 )%                0.2 %
        Net revenues            $    10,425        $  8,255          26.3  %               27.1 %     $  19,044     $ 16,083          18.4  %               19.1 %
        


2020 Form 10-Q | [[Image Removed: abbvieimage2a19.gif]] 34

The following table details AbbVie's worldwide net revenues:







                                                 Three months ended                 Percent change                 Six months ended                Percent change
                                                      June 30,                At actual        At constant             June 30,              At actual        At constant
        (dollars in millions)                     2020           2019      currency rates    currency rates        2020         2019      currency rates    currency rates
        Immunology
        Humira            United States     $    3,974         $ 3,793            4.8  %            4.8  %     $    7,630     $ 7,008            8.9  %            8.9  %
                          International            863           1,077          (19.9 )%          (17.4 )%          1,910       2,308          (17.2 )%          (14.9 )%
                          Total             $    4,837         $ 4,870           (0.7 )%           (0.2 )%     $    9,540     $ 9,316            2.4  %            3.0  %
        Skyrizi           United States     $      289         $    42          >100%             >100%        $      555     $    42          >100%             >100%
                          International             41               6          >100%             >100%                75           6          >100%             >100%
                          Total             $      330         $    48          >100%             >100%        $      630     $    48          >100%             >100%
        Rinvoq            United States     $      136         $     -            n/m               n/m        $      218     $     -            n/m               n/m
                          International             13               -            n/m               n/m                17           -            n/m               n/m
                          Total             $      149         $     -            n/m               n/m        $      235     $     -            n/m               n/m
        Hematologic Oncology
        Imbruvica         United States     $    1,055         $   886           19.0  %           19.0  %     $    2,021     $ 1,715           17.9  %           17.9  %
                          Collaboration
                          revenues                 233             213            9.4  %            9.4  %            499         406           22.9  %           22.9  %
                          Total             $    1,288         $ 1,099           17.2  %           17.2  %     $    2,520     $ 2,121           18.8  %           18.8  %
        Venclexta         United States     $      191         $   117           63.5  %           63.5  %     $      392     $   222           76.7  %           76.7  %
                          International            112              52          >100%             >100%               228          98          >100%             >100%
                          Total             $      303         $   169           79.2  %           81.5  %     $      620     $   320           93.7  %           95.8  %
        Aesthetics
        Botox Cosmetic
        (a)               United States     $      147         $     -            n/m               n/m        $      147     $     -            n/m               n/m
                          International             79               -            n/m               n/m                79           -            n/m               n/m
                          Total             $      226         $     -            n/m               n/m        $      226     $     -            n/m               n/m
        Juvederm
        Collection (a)    United States     $       56         $     -            n/m               n/m        $       56     $     -            n/m               n/m
                          International             57               -            n/m               n/m                57           -            n/m               n/m
                          Total             $      113         $     -            n/m               n/m        $      113     $     -            n/m               n/m
        Other
        Aesthetics (a)    United States     $      127         $     -            n/m               n/m        $      127     $     -            n/m               n/m
                          International             15               -            n/m               n/m                15           -            n/m               n/m
                          Total             $      142         $     -            n/m               n/m        $      142     $     -            n/m               n/m
        Neuroscience
        Botox Therapeutic
        (a)               United States     $      254         $     -            n/m               n/m        $      254     $     -            n/m               n/m
                          International             43               -            n/m               n/m                43           -            n/m               n/m
                          Total             $      297         $     -            n/m               n/m        $      297     $     -            n/m               n/m
        Vraylar (a)       United States     $      192         $     -            n/m               n/m        $      192     $     -            n/m               n/m
        Duodopa           United States     $       25         $    24            8.3  %            8.3  %     $       50     $    46            9.3  %            9.3  %
                          International             93              91            1.6  %            3.7  %            192         180            6.7  %            9.2  %
                          Total             $      118         $   115            2.9  %            4.6  %     $      242     $   226            7.2  %            9.2  %
        Ubrelvy (a)       United States     $       22         $     -            n/m               n/m        $       22     $     -            n/m               n/m
        Other
        Neuroscience (a)  United States     $      103         $     -            n/m               n/m        $      103     $     -            n/m               n/m
                          International              2               -            n/m               n/m                 2           -            n/m               n/m
                          Total             $      105         $     -            n/m               n/m        $      105     $     -            n/m               n/m
        


2020 Form 10-Q | [[Image Removed: abbvieimage2a19.gif]] 35







                                                         Three months ended                 Percent change                 Six months ended                Percent change
                                                              June 30,                At actual        At constant             June 30,              At actual        At constant
        (dollars in millions)                             2020           2019      currency rates    currency rates       2020          2019      currency rates    currency rates
        Eye Care
        Lumigan/Ganfort (a)      United States      $        35        $     -            n/m               n/m        $      35     $      -            n/m               n/m
                                 International               41              -            n/m               n/m               41            -            n/m               n/m
                                 Total              $        76        $     -            n/m               n/m        $      76     $      -            n/m               n/m
        Alphagan/Combigan(a)     United States      $        47        $     -            n/m               n/m        $      47     $      -            n/m               n/m
                                 International               22              -            n/m               n/m               22            -            n/m               n/m
                                 Total              $        69        $     -            n/m               n/m        $      69     $      -            n/m               n/m
        Restasis (a)             United States      $       138        $     -            n/m               n/m        $     138     $      -            n/m               n/m
                                 International                6              -            n/m               n/m                6            -            n/m               n/m
                                 Total              $       144        $     -            n/m               n/m        $     144     $      -            n/m               n/m
        Other Eye Care (a)       United States      $        54        $     -            n/m               n/m        $      54     $      -            n/m               n/m
                                 International               74              -            n/m               n/m               74            -            n/m               n/m
                                 Total              $       128        $     -            n/m               n/m        $     128     $      -            n/m               n/m
        Women's Health
        Lo Loestrin (a)          United States      $        78        $     -            n/m               n/m        $      78     $      -            n/m               n/m
                                 International                2              -            n/m               n/m                2            -            n/m               n/m
                                 Total              $        80        $     -            n/m               n/m        $      80     $      -            n/m               n/m
        Orilissa/Oriahnn         United States      $        30        $    18           57.3  %           57.3  %     $      60     $     31           88.6  %           88.6  %
                                 International                1              1           90.2  %           95.4  %             2            1          >100%             >100%
                                 Total              $        31        $    19           58.0  %           58.1  %     $      62     $     32           90.3  %           90.4  %
        Other Women's Health (a) United States      $        34        $     -            n/m               n/m        $      34     $      -            n/m               n/m
                                 International                2              -            n/m               n/m                2            -            n/m               n/m
                                 Total              $        36        $     -            n/m               n/m        $      36     $      -            n/m               n/m
        Other Key Products
        Mavyret                  United States      $       146        $   396          (62.9 )%          (62.9 )%     $     380     $    799          (52.4 )%          (52.4 )%
                                 International              230            384          (40.2 )%          (39.6 )%           555          771          (28.1 )%          (27.2 )%
                                 Total              $       376        $   780          (51.7 )%          (51.4 )%     $     935     $  1,570          (40.4 )%          (39.9 )%
        Creon                    United States      $       252        $   257           (1.9 )%           (1.9 )%     $     528     $    484            9.3  %            9.3  %
        Lupron                   United States      $       167        $   168           (0.1 )%           (0.1 )%     $     362     $    359            1.1  %            1.1  %
                                 International               38             41           (8.9 )%           (3.2 )%            76           79           (4.7 )%           (0.6 )%
                                 Total              $       205        $   209           (1.8 )%           (0.7 )%     $     438     $    438              -  %            0.7  %
        Linzess/Constella (a)    United States      $       130        $     -            n/m               n/m        $     130     $      -            n/m               n/m
                                 International                3              -            n/m               n/m                3            -            n/m               n/m
                                 Total              $       133        $     -            n/m               n/m        $     133     $      -            n/m               n/m
        Synthroid                United States      $       183        $   203           (9.7 )%           (9.7 )%     $     388     $    385            0.7  %            0.7  %
        All other                                   $       590        $   486           21.5  %           24.6  %     $   1,143     $  1,143           (0.1 )%            2.0  %
        Total net revenues                          $    10,425        $ 8,255           26.3  %           27.1  %     $  19,044     $ 16,083           18.4  %           19.1  %
        


n/m - Not meaningful

Aug 04, 2020

COMTEX_368857967/2041/2020-08-04T09:58:21

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2020 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.