Good morning and thank you for standing by. Welcome to the AbbVie First Quarter 2024 Earnings Conference Call. All participants will be able to listen-only until the question-and-answer portion of this call. If you have any objections, you may disconnect at this time. I would now like to introduce Ms. Liz Shea, Senior Vice President of Investor Relations. Ma'am, you may begin.

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; Rob Michael, President and Chief Operating Officer; Jeff Stewart, Executive Vice President, Chief Commercial Officer; Scott Reents, Executive Vice President, Chief Financial Officer; Carrie Strom, Senior Vice President, AbbVie and President, Global Allergan Aesthetics; and Roopal Thakkar, Senior Vice President, Chief Medical Officer, Global Therapeutics. Joining us for the Q&A portion of the call is Tom Hudson, Senior Vice President, Chief Scientific Officer, Global Research. Before we get started, I'll note that some statements we make today may be considered forward-looking statements based on our current expectations. 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 our forward-looking statements. Additional information about these risks and uncertainties is included in our SEC filings. AbbVie undertakes no obligation to update these forward-looking statements except as required by law. On today's conference call, non-GAAP financial measures will be used to help investors understand AbbVie's 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 turn the call over to Rick.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I'm extremely pleased with our start to 2024, with first quarter results exceeding our expectations. Before we discuss our performance in more detail, I'd like to share my perspective on the planned CEO transition that was announced earlier this year. After serving more than 11 years as AbbVie's first CEO, I have decided to retire from the role effective July 1 of this year and will continue to serve AbbVie as Executive Chairman of the Board. As you heard me say before, it is important that we choose the right time to make this critical leadership transition. The Board and I have been long planning for my eventual succession and now is the opportune time to move forward with the transition, as our business is performing very well and is in a strong position for the long term. We are successfully navigating the Humira U.S. loss of exclusivity. We have built an outstanding company culture, an important priority and competitive advantage. Our productive R&D engine, which has yielded numerous innovative new medicines for patients, will continue to fuel our robust pipeline for years to come. After a multi-year process, our Board has unanimously selected Rob Michael, our current President and Chief Operating Officer, as AbbVie's next CEO. I have known and worked with Rob for many years, and he is an excellent choice as my successor. He brings the experience, leadership, and strategic vision to build on AbbVie's past successes, advance our strategy, and enhance shareholder value. Since our inception, Rob has held several important leadership positions that have collectively had a tremendous impact on AbbVie from establishing our financial planning organization to navigating the end of exclusivity for Humira in the U.S. to driving key business development opportunities that have been critical to diversify our business and support long-term growth, including the acquisitions of Allergan and ImmunoGen and the pending Cerevel transaction. Looking back, AbbVie has evolved tremendously as an independent company, and our performance has truly been exceptional. Since our inception, we've grown our revenue from $18 billion to $55 billion. Our market capitalization has increased substantially from $54 billion to roughly $300 billion today. We have achieved a total shareholder return of more than 675%, which is top tier relative to our peers. Importantly, we’ve substantially increased our investments in R&D to discover and develop new medicines that have the potential to improve patients' lives. As I look ahead, our company has never been stronger, and our future has never been brighter. We are executing well across all aspects of our business, and our long-term growth prospects remain very strong. In summary, it has been a privilege and immensely gratifying to serve with all of my AbbVie colleagues for the past 11 years, growing AbbVie into what it is today. I look forward to continuing to work with Rob and the leadership team to create meaningful value for our shareholders and all of our stakeholders. And I'd also like to take this opportunity to thank all of our shareholders for the trust and confidence you put in me as AbbVie's CEO. With that, I will turn the call over to Rob for comments on our recent business performance.

Thank you, Rick. Before I comment on our first quarter performance, I want to congratulate Rick on his exceptional leadership of AbbVie over the past 11 years. During his tenure, Rick made several strategic moves that have positioned AbbVie to have a bright future beyond Humira, consistently drove the organization to deliver very strong performance, and demonstrated genuine care for our employees, patients, shareholders and communities that has defined who we are as a company today. It has been my privilege to work closely with Rick over many years, and I look forward to working with him in his role as Executive Chairman. AbbVie's outlook is very strong, and I am excited about the remarkable impact that we will continue to have on patients' lives. Turning to first quarter performance, we're off to an excellent start to the year with strong top and bottom-line results. We reported adjusted earnings per share of $2.31, which is $0.11 above our guidance midpoint. Total net revenues were $12.3 billion, approximately $400 million ahead of our expectations. This overachievement was driven by our ex-Humira growth platform, which delivered revenue growth of more than 15% this quarter and includes continued robust sales from Skyrizi and Rinvoq, with combined growth above 50% in their fifth full year on the market, as well as double-digit revenue growth from several other key products including Venclexta, Vraylar, Ubrelvy, and Qulipta. This broad-based sales momentum clearly demonstrates the strength of our diversified portfolio with multiple growth drivers to support our long-term outlook. We are also making excellent progress with several of our near-term priorities. We recently completed the acquisition of ImmunoGen, which accelerates our entry into the solid tumor market and strengthens our oncology pipeline. The integration has been seamless, and we are impressed by the caliber of talent we have welcomed into AbbVie. We also remain on track with the pending acquisition of Cerevel, which we anticipate will close in the middle of the year. Cerevel's pipeline of differentiated assets will further augment our neuroscience portfolio. In addition, we continue to advance our R&D pipeline and invest for long-term growth. This progress includes the FDA's full approval of Elahere for FR alpha positive platinum resistant ovarian cancer, a meaningful first-in-class treatment for patients and a significant long-term growth opportunity for AbbVie in solid tumors. We also gained U.S. approval of Juvederm Voluma XC for temple hollows, further strengthening our leadership in aesthetic fillers, and we executed several business development opportunities adding novel early stage programs and partnerships in oncology and immunology. Given the strong results this quarter, we are raising our full-year adjusted earnings per share guidance by $0.16 and now expect adjusted EPS between $11.13 and $11.33. In summary, this is an exciting time for AbbVie, and I am extremely pleased with the momentum of our diverse portfolio. We're off to an excellent start to the year, and we are well positioned to deliver a high-single-digit revenue CAGR through the end of the decade. With that, I'll turn the call over to Jeff for additional comments on our commercial highlights.

Thank you, Rob. I'll start with the quarterly results for immunology, which delivered total revenues of approximately $5.4 billion, exceeding our expectations. Skyrizi global sales were $2 billion reflecting operational growth of 48%. We continue to see exceptional momentum across all of the approved indications. In psoriasis, Skyrizi is the clear market leader in the U.S. biologic psoriasis market with a total prescription share now above 35%. That's more than double the share of the next closest biologic therapy. Share is also ramping nicely in PsA, especially in the dermatology segment, where we are now capturing one out of every four new or switching in-play biologic patients. Globally, Skyrizi has achieved psoriatic in-play share leadership in nearly 30 key countries. In IBD, Skyrizi is on track to add more than $1 billion of incremental sales growth this year. We are seeing tremendous performance in Crohn's disease, where our compelling head-to-head data versus Stelara is driving a meaningful inflection of patient share. As a result, we have now achieved in-play share leadership in Crohn's across all lines of therapy in both the U.S. and Japan, as well as other key markets around the world. And finally, we are preparing for the launch of Skyrizi in ulcerative colitis, which represents another substantial long-term growth driver. We expect approval decisions in the middle of this year and anticipate rapid access in the U.S. following our launch. Given the robust frontline capture for Skyrizi in Crohn's and the exceptional bio-naive data we have generated in UC, we anticipate a strong launch. Turning now to Rinvoq with global sales of approximately $1.1 billion, reflecting operational growth of 61.9%. In rheum, we continue to see strong prescription growth across each of the four approved indications, and I'm especially pleased with our performance in rheumatoid arthritis, where Rinvoq has achieved in-play share leadership in nearly 20 key international markets. Atopic dermatitis is tracking in line with our expectations with continued market share momentum globally. Importantly, we recently announced positive results from LEVEL UP, our second head-to-head study in AD. LEVEL UP demonstrated Rinvoq superiority for patients starting therapy on the 15 milligram dose versus Dupixent across key efficacy parameters, including high levels of skin clearance and itch reduction. We anticipate that these strong head-to-head results will support additional share capture, especially given Rinvoq label use in the U.S., which requires that initiation with a 15 milligram dose. And in IBD, Rinvoq's uptake continues to be very strong. Rinvoq is capturing high teens in play patient share in ulcerative colitis as well as mid-teens in play patient share in Crohn's disease. This performance is especially encouraging recognizing that we're still relatively early in the launch phase for both the UC and CD indications, and the lines of therapy are also expanding, with second line plus growing even faster as patients cycle to newer, higher efficacy agents like Rinvoq in IBD. Turning now to Humira, which delivered global sales of approximately $2.3 billion, down 35.2% on an operational basis due to biosimilar competition. Erosion in the U.S. played out slightly better than our expectations in the quarter with the vast majority of the impact this quarter driven by price. As previously communicated, the recent changes to the CVS template formularies were anticipated in our full-year outlook for U.S. Humira, and the volume impact is tracking in line with our expectations. Our guidance has also contemplated the impact of additional formulary changes that are expected to go into effect over the course of the year. We continue to anticipate that Humira will maintain parity access to biosimilars for a significant majority of patient lives this year. Moving now to oncology, where total revenues were more than $1.5 billion exceeding our expectations. Imbruvica global revenues were $838 million, down 4.5%, reflecting continued competitive pressure in CLL. Venclexta global sales were $614 million, up 16.3% on an operational basis and we are seeing robust momentum internationally with strong performance for both CLL and AML. Elahere generated $64 million of sales to AbbVie, reflecting a partial quarter of revenue following the February close of the ImmunoGen acquisition. The Elahere sales and marketing team is executing very well, and I'm pleased with the smooth integration into our commercial organization. We anticipate that the recent positive updates in the NCCN guidelines for both platinum-sensitive and platinum-resistant ovarian cancer patients, as well as the full label approval, which of course, includes the compelling overall survival data that has never been achieved before in these platinum-resistant patients will continue to drive strong Elahere uptake. Lastly, the global launch of Epkinly in third-line plus DLBCL is also performing well, and we remain on track for the potential label expansion for follicular lymphoma later this year. Neuroscience total revenues were nearly $2 billion, up 16% on an operational basis, again ahead of our expectations. This robust performance is driven by continued double-digit growth of Vraylar with global sales of $694 million, Ubrelvy with total revenue of $203 million and Qulipta with global sales of $131 million. Each of these leading assets continue to gain share and remain competitively well positioned. Botox Therapeutic is also performing well, especially in chronic migraine. Total global sales were $748 million, up 4.5% on an operational basis. And finally, we are very excited about 951, which will be commercialized as Vyalev in the U.S. and represents a potentially transformative next-generation therapy for advanced Parkinson's disease. Feedback from the launches in Japan and Europe have been very encouraging, and we remain on track for commercial approval in the U.S. later this year. So overall, I'm extremely pleased with the strong and balanced growth across our therapeutic portfolio this quarter, a testament to our differentiated product profiles and commercial execution. And with that, I'll turn the call over to Carrie for additional comments on aesthetics.

Thank you, Jeff. First quarter global aesthetic sales were over $1.2 billion, reflecting a modest decline on an operational basis. In the U.S., aesthetic sales of $776 million were roughly flat versus the prior year. We continue to see sustained momentum in the facial injectable market recovery that emerged in the back half of last year. Consistent with the past few quarters, the toxin market grew by a mid-single-digit percentage. We saw similar year-over-year increases in the number of facial filler procedures, representing a return to quarterly market growth for the first time since early 2022. From a competitive perspective, our U.S. aesthetics portfolio continues to perform well. Market share for both Botox Cosmetic and Juvederm was stable in the first quarter as these assets remain the clear market leaders. While we're pleased that the market and share trends across U.S. facial injectables are aligned with our previous expectations, our first-quarter results were impacted by customers holding lower-than-normal inventory levels at quarter-end. This dynamic relates to a decision made during the quarter to shift the timing of certain promotional activities into the second quarter. We therefore expect inventory levels to normalize in the second quarter and remain on track to deliver full-year aesthetics sales growth in the U.S. Internationally, first-quarter aesthetic sales were $473 million, reflecting an operational decline of 5.5%. Consistent with our expectations, growth in China was impacted by persistent economic headwinds as well as a challenging comparison versus the first quarter of last year, which benefited from a robust recovery post-COVID. We are monitoring the economic developments across China and continue to anticipate a recovery in the second half of this year. Our pipeline continues to generate important new assets. Uptake of our recently launched Volux and SkinVive products remain strong, underscoring the importance of innovation within aesthetics. Given this context, we are excited for the upcoming launch of Juvederm Voluma XC for the treatment of temple hollows. As the only dermal filler approved for use in the upper face, we anticipate the Voluma XC introduction will activate more consumers and support the long-term growth of our filler portfolio. And within our toxin pipeline, we continue to expect FDA approval of the platysma prominence indication for Botox near the end of this year, enhancing Botox growth potential as a noninvasive treatment to reduce the appearance of vertical neck bands and improve jawline definition. We also remain on track to submit a new drug application for our short-acting toxin, BoNT/E, before the end of this year. This novel toxin has demonstrated a rapid onset of action as well as a short duration of effect, meaningfully lowering the barrier for toxin adoption across consumers who have been considering but are hesitant to try Botox. Given this profile, BoNT/E has significant market expansion potential as satisfied patients would naturally convert to Botox. Overall, the underlying trends across our aesthetics portfolio align well with our previous expectations, and we remain on track to deliver high-single-digit global aesthetics growth this year. With that, I'll turn the call over to Roopal.

Thank you, Carrie. I'll start with immunology. We recently announced positive top-line results from two Phase III studies for Rinvoq in dermatology and rheumatology. In the LEVEL UP study, which evaluated Rinvoq against dupilumab in atopic dermatitis, Rinvoq demonstrated superiority on the primary endpoint at week 16, which was a composite endpoint measuring skin clearance and itch reduction. Twice as many Rinvoq patients achieved this very stringent endpoint compared to dupilumab. Rinvoq also demonstrated superiority on all rank secondary endpoints in this trial. LEVEL UP was a study in which patients started on Rinvoq 15 milligrams and could escalate to 30 milligrams if they did not achieve treatment goals, which is how Rinvoq is prescribed for atopic dermatitis in the U.S. We also saw very rapid responses with Rinvoq demonstrating superiority on itch as early as week two and on skin lesions as early as week four. Rinvoq's safety profile in the LEVEL UP trial was consistent with what has been observed in previous studies. There were no serious infections in patients treated with Rinvoq and one in the dupilumab group. The rate of serious adverse events was similar across treatment arms. There were no malignancies, MACE events, or VTEs reported in either treatment group. Based on these data as well as results from previous Phase III studies, we remain very confident in Rinvoq's profile in atopic dermatitis, and we believe it offers meaningful advantages over other products on the market today. We also announced positive top-line results from our Phase III select giant cell arthritis trial, which evaluated Rinvoq in combination with a 26-week steroid taper regimen compared to patients receiving placebo in combination with a 52-week steroid taper. In the study, Rinvoq 15 milligrams met the primary and key secondary endpoints, demonstrating superiority on sustained remission from week 12 through week 52, as well as on disease flare and reduction in cumulative steroid exposure at week 52. Importantly, Rinvoq's safety profile was consistent with what has been observed in more than 15,000 patients previously studied across controlled trials. The mean age in this population was 71, which is the oldest population studied to date with Rinvoq. And the average prednisone equivalent dose at baseline was almost 35 milligrams. Rates of serious adverse events and VTEs were similar across treatment groups. There were no MACE events in the Rinvoq arm, while there were two in the placebo group. Based on the results from the select GCA trial, we believe Rinvoq has the potential to be a safe and tolerable oral treatment option. We plan to submit our regulatory applications for this indication later this year. We continue to make very good progress with our inflammatory bowel disease programs. We anticipate several advancements this year, including the initiation of a Phase II study for lutikizumab in ulcerative colitis. The start of our Phase II Crohn's disease platform study, which will evaluate combinations of Skyrizi with lutikizumab and other novel biologics. And we remain on track for approval decisions for Skyrizi in ulcerative colitis, with the U.S. expected in the second quarter and Europe in the second half of the year. We also continue to invest in external innovation to expand our immunology pipeline, as evidenced by four deals that we announced in the first quarter. These include the acquisition of Landos Biopharma, which brings an oral NLRX1 agonist currently in Phase II for ulcerative colitis, a partnership with OSE immunotherapeutics to develop a novel ChemR23 agonist antibody for inflammatory conditions, such as IBD and RA. A collaboration with Parvus Therapeutics to utilize their immune tolerization platform to develop novel therapies for IBD, and a collaboration with Tentarix Biotherapeutics to develop conditionally active, multi-specific biologics in immunology and oncology. We are excited to partner with these companies who are all pursuing very innovative approaches to developing transformative therapies. Moving to oncology, where in the quarter, we closed the ImmunoGen transaction, which brings exciting programs in both solid and blood cancers. Last month, Elahere received full approval from the FDA for FR alpha positive platinum resistant ovarian cancer in patients treated with up to three prior therapies. This conversion to full approval was based on data from the confirmatory Phase III MIRASOL trial, where Elahere demonstrated an overall survival benefit and significantly reduced the risk of cancer progression. We expect to see results from additional ImmunoGen programs this year, including data from the Phase II PICCOLO study evaluating Elahere as a monotherapy in FR alpha positive third line plus platinum-sensitive ovarian cancer patients who are not eligible for retreatment with platinum-based therapies. And we expect to see data in the second half of the year from a potentially registration-enabling Phase II trial for our CD123 targeting ADC, Pivek in a rare blood cancer called blastic plasmacytoid dendritic cell neoplasm. Now moving to program updates in hematologic oncology. Based on the totality of the data from our TRANSFORM-1 trial and following recent feedback from regulators, we will not be submitting navitoclax for approval in myelofibrosis, and we will wind down the TRANSFORM-2 study in the relapsed refractory setting. In other areas of hematological oncology, we remain on track for several regulatory and clinical milestones this year, including regulatory approvals in the U.S. and Europe for Epkinly in relapsed/refractory follicular lymphoma. The Phase III readout from the Venclexta VERONA trial in treatment-naive, higher-risk MDS and initiation of a Phase III monotherapy study for ABBV-383 in third-line multiple myeloma. We remain very excited about this asset's potential to become a best-in-class BCMA CD3 bispecific by providing deep, durable responses and low incidence and severity of CRS and with the potential for outpatient administration, limited or no step-up dosing and monthly administration from the beginning of treatment. Moving to other areas of our pipeline. In aesthetics, we remain on track to submit our regulatory application for BoNT/E in the second half of the year. Our rapid onset short-acting toxin has a highly differentiated clinical profile compared to currently available neurotoxins. BoNT/E is designed for patients who are considering using facial toxins for the first time or for a special event and will allow them to experience results over a very short period of time. This novel toxin will complement our existing business as patients would naturally transition to Botox following experience with this trial toxin. In neuroscience, we continue to make good progress with 951, where we have received regulatory approvals in 33 countries thus far and anticipate an approval decision in the U.S. in the second quarter. As Rob mentioned, we remain on track to close the Cerevel transaction in the middle of this year. Cerevel recently announced positive top line results from their Phase III TEMPO-3 trial evaluating Tavapadon as adjunctive therapy to levodopa in patients with Parkinson's disease. In the study, Tavapadon met the primary endpoint, demonstrating a 1.1-hour increase in total on time without troublesome dyskinesia compared to patients treated with levodopa and placebo. Tavapadon also met the key secondary endpoint in the trial, providing a significant reduction in off time compared to levodopa and placebo. Two additional Phase III studies for Tavapadon in Parkinson's disease are expected to read out later this year. The emracladine pivotal studies in schizophrenia remain on track to begin reading out later this year as well. We look forward to providing updates on these programs once the transaction has closed. With that, I'll turn the call over to Scott.

Thank you, Roopal. Starting with our first quarter results, we reported adjusted earnings per share of $2.31, which is $0.11 above our guidance midpoint. These results include an $0.08 unfavorable impact from acquired IP R&D expense. Total net revenues were $12.3 billion, $400 million ahead of our guidance and reflecting a return to growth of 1.6% on an operational basis, excluding a 0.9% unfavorable impact from foreign exchange. Importantly, these results reflect more than 15% sales growth from our ex-Humira growth platform. The adjusted operating margin ratio was 42.2% of sales. This includes adjusted gross margin of 82.9%, adjusted R&D expense of 14.7%, acquired IP R&D expense of 1.3%, and adjusted SG&A expense of 24.6%. Adjusted net interest expense was $429 million. The adjusted tax rate was 14.8%. Turning to our financial outlook. We are raising our full year adjusted earnings per share guidance to between $11.13 and $11.33. This increase of $0.16 at the midpoint includes $0.26 of operating overperformance partially offset by $0.10 of higher dilution due to the earlier close of ImmunoGen. As previously communicated, this earnings per share guidance includes $0.42 of dilution related to the recently closed acquisition of ImmunoGen and the pending acquisition of Cerevel. Please also note that this guidance does not include an estimate for acquired IP R&D expense that may be incurred beyond the first quarter. We now expect total net revenues of approximately $55 billion, an increase of $800 million. At current rates, we expect foreign exchange to have a 0.9% unfavorable impact on full year sales growth. This revenue forecast includes the following updated assumptions, with the entire sales increase driven by our ex-Humira growth platform. We now expect Skyrizi global revenue of $10.7 billion, an increase of $200 million due to strong momentum across all approved indications. Rinvoq total sales of $5.6 billion, an increase of $100 million, reflecting robust uptake in IBD. Imbruvica total revenue of $3.1 billion, an increase of $200 million, reflecting lower erosion, and Elahere total sales to AbbVie of $450 million, an increase of roughly $200 million, reflecting a partial year of revenue following the February close of the ImmunoGen acquisition. Moving to the P&L for 2024, we continue to forecast adjusted gross margin of approximately 84% of sales, adjusted R&D investment of 14%, adjusted SG&A expense of 23.5%, and an adjusted operating margin ratio of roughly 46.5%. We now expect adjusted net interest expense of $2.2 billion, which includes the partial year cost in 2024 to finance the ImmunoGen and Cerevel transactions. Turning to the second quarter, we anticipate net revenues of approximately $14 billion, which includes U.S. Humira erosion of approximately 32%, reflecting a step-up in volume erosion and with the recent CVS formulary change, partially offset by a one-time price benefit also associated with that change. At current rates, we expect foreign exchange to have a 1.3% unfavorable impact on sales growth. We are forecasting adjusted operating margin ratio of approximately 49.5% of sales, and we are also modeling a non-GAAP tax rate of 16.4%. We expect adjusted earnings per share between $3.05 and $3.09. This guidance does not include acquired IP R&D expense that may be incurred in the quarter. In closing, I'm very pleased with the excellent start to the year. We are demonstrating strong momentum across the portfolio, and our financial outlook remains very strong. With that, I'll turn the call back over to Liz.

Thanks, Scott. We will now open the call for questions. In the interest of hearing from as many analysts as possible over the remainder of the call, we ask that you please limit your questions to one or two. Operator, first question, please.

First question comes from Mohit Bansal with Wells Fargo.

Congrats on the progress and congrats Rob as well. So maybe let's just start with 2024. I mean so thanks for this guidance. But when we look from 2024 to '25, there are a couple of headwinds that you have highlighted in the past. So obviously, IRA Part D redesign will be there and Humira may have another leg down. And given the volume erosion here, people are a little bit concerned there. Can you help us understand what is your current thinking on the trough, '24 versus '25? And could you give us some confidence that you can continue to grow in '25 despite these headwinds from IRA and Humira?

This is Rob. I'll address that question. Looking ahead to 2024 and 2025, the ex-Humira growth platform is showing significant momentum. Specifically, Skyrizi and Rinvoq are increasing by over $4 billion annually. We expect Aesthetics to bounce back to high-single-digit growth. Our neuroscience division is set to grow by more than $1 billion this year, driven by strong performance from Vraylar and our migraine portfolio, with additional contributions from Vyalev and Elahere in 2025. These factors will help to mitigate the erosion from Humira and the impact of the Part D benefit redesign, enabling us to achieve strong revenue growth. The redesign will affect our business overall, primarily in immunology and oncology, and we estimate this could result in a revenue impact of several growth points. Though we anticipate strong revenue growth, we will face that headwind in 2025. It’s important to note that the IRA impact will primarily affect us in 2025 and should not significantly impact subsequent years, as products subject to negotiation won't carry the Part D cost share impact. Despite the 2025 headwind, we expect to maintain strong growth, with an acceleration in the following years. From a margin standpoint, we will continue to improve operating margins, which will act as a tailwind. You should account for the annualization of interest expense from these transactions, recalling that we effectively see about half a year for Cerevel and 10.5 months this year for ImmunoGen. Therefore, we expect robust revenue growth and earnings growth, albeit not at the same rate due to the annualization effect. By 2026 and onward, we will achieve even faster revenue growth alongside very strong earnings growth. This is the best way to understand our company's profile. There is significant momentum in the ex-Humira growth platform, positioning us well for considerable growth.

Thanks, Mohit. Operator, next question, please.

The next question is from Vamil Divan with Guggenheim.

So maybe I could just ask a couple on the aesthetics side. It sounds like your commentary is pretty generally in line with Liz said before, but obviously, the number was a little lighter this quarter than even to your guidance. Can you maybe just talk a little bit more about that you mentioned some shift in promotional efforts to the second quarter and maybe inventory levels then as a result being lower and maybe I don't know if you can quantify that a little bit? And was this sort of planned when you gave your guidance back in February or is this something that's sort of evolved over the quarter? Maybe just kind of why the decision maybe would be helpful to give us some comfort on the outlook there?

This is Carrie. So first, I'll give a little bit of context to the fundamentals in terms of market growth and market share, which were in line with our expectations. So our market share continues to be strong and stable. For Botox Cosmetic, despite a new competitor, strong stable share at high levels. And then for our Juvederm line, continued share strength, even some share pickup in the past few quarters, as we launched our new products. So like you said, those fundamentals are in line with our expectations. As we were going through the quarter, we really realized that the aesthetics market is quite sensitive to seasonality with Q2 and Q4 typically having the highest volume. And after a few years of COVID and economic disruption, we're now anticipating a return to that typical seasonality. So we shifted investment in some of our sales and marketing efforts into Q2, which impacted customer and sales promotional timing and activities, which then resulted in lower inventory held by our customers in Q1. We do expect that to come back in Q2 and the rest year. And I'll let Scott address the rest of that question.

Sure. Thanks, Carrie. So Vamil, to quantify the inventory impact in the first quarter, it was a little bit more than $50 million between Juvederm and Botox, and you can think of that as being split roughly 2/3 to Botox and 1/3 to Juvederm. As Carrie mentioned in her remarks, we expect that impact of that inventory to turn in the second quarter.

Thanks, Vamil. Operator, next question, please.

Next question comes from Chris Shibutani with Goldman Sachs.

When we think about the 2024 upcoming contracting season, which obviously has been quite dynamic for Humira over the past year plus. Can you provide us with any insights in terms of structural aspects within your contracts that you build in that may help provide offsets? We often have limited visibility. We're looking at the prescription volume trends. It feels as if our calculus is sometimes incomplete. But what can you reassure us in terms of the dynamics as we're seeing this year two play out and how you're approaching contracting for the forward?

Chris, it's Jeff. So the contracting season typically starts in April or May and, frankly, as we've highlighted before, can run in the immunology category really through the end of the year. So we have a few philosophies that we look towards. We want to continue to basically make sure that patients, if possible, based on our pricing concessions, aren't disrupted because when you start to disrupt patients, they do struggle with the change. It's a change in their treatment course. And so as we look to that, we've historically highlighted that we are negotiating for parity contracts with Humira. We do put some controls in place in some cases, but not all; we seek multi-year contracts with our payers to try to establish the relationship, the pricing, etc., and we will think of ways to make sure that those contracts can hold. So they have some teeth in them. They can't just be willy-nilly discarded. And so it is a long-term, in some cases, partnership over a couple of years with these payers. I can't go into the details over exactly how those controls work. But suffice it to say that there are terms and timing and limits in terms of when contracts can be changed, even maybe some clawbacks in some cases. We want these more sustained relationships because of our position in the category with these great brands. We typically use those sorts of techniques and that's how we go for it. So again, it's hard to look forward too much because it is dynamic as we look to '25. But we've been quite successful in maintaining good access for our brands, and certainly, Humira is tracking in line with our expectations.

Thanks, Chris. Operator, next question, please.

Our next question comes from Chris Schott with JPMorgan.

Just a couple more on the Humira front. I think Humira you had mentioned that in 2024, you expected most of the impact would be price versus volume. I think the street has been concerned that we're seeing more volume erosion, particularly with the CVS book of business. I'm just interested in your latest thinking as we think about price versus volume for the remainder of this year, as we consider CVS, etc. How should we think about that balance just so there's kind of surprises, I guess we watch these volume trends playing out? And then maybe just on a related topic, can you talk at all about the tail for Humira sales in the U.S.? I guess the part of the question, do you expect that you'll see most players or payers eventually switch out Humira like we're seeing at CVS? And if so, is it still reasonable to think about there being a decent tail of revenue, I guess, for this product in the U.S. over time?

There's a lot in there. Let me go through it in a systematic fashion. So I think, first, to directly answer your question. We still, as we look forward, believe that the significant majority of our lives will be at parity. So that means our guidance around the majority being price is still holding in our go-forward look. Let me give you some perspective. I had some in my opening remarks over what's happening with CVS. So the first is that, as I mentioned, the step down in volume was really anticipated, and based on our analysis of the data, which I'll highlight, it's really right in line with our expectations. One of the things in my remarks, I often talk about new-to-brand or our in-play share capture, and that's a really good way to look at performance, particularly early in launch cycles when you're looking at capture rate or competitive dynamics. I think it's important that investors and analysts need to be very mindful when you have a dislocation or disruption or switching, you can get very, very full at looking at NRx or NBRx because it sort of overinflates what you might be looking at. So I think that's important. The other fact base that we look at is in terms of the step down. As we look at other analogs, we look at the Cosentyx Taltz analog or Taltz was advantaged in ESI for Cosentyx back in 2019. We see that typically in this category, almost 90% of the erosion tracks within the first two to three weeks. That's actually what we're starting to see, we believe with the CVS template following that similar pattern. So if you can't really look at NRx or NBRx, you really have to look at TRx in this case, Chris. This is very interesting. We would make sure to guide folks to look at what's happening with the TRx data in the market. We see that not all of the Humira prescriptions are moving to a biosimilar. If you look at the first two weeks, it's pretty meaningful; over 20% of the Humira prescriptions are moving to other mechanisms of actions, including Skyrizi and Rinvoq. In fact, while we haven't studied this week as much, it actually seems to have accelerated a bit from there. That actually makes sense because if you think it from the physician's perspective, when patients are being switched, they often take a break and pause to say, are these patients really under control, should I consider an alternative? That's actually what we see playing out in the market. The pure degradation or step-down from Humira is in line with what we assumed, and we are seeing this other market behavior that's taking place. So overall, we still believe we have robust access, and this will continue to play out in the market. And remember, only about 14% or 15% of the patients are new patients that cycle into Humira. As we mentioned earlier, large existing base is manageable.

And Chris, this is Rob. On your question regarding the guidance for this year. I think it's important to note yes, we've said that the vast majority of the erosion is price. We've talked about that dynamic. If you think about first half, second half, we have the annualization impact, given the mid-year step-up in rebates last year. So the annualization impact comes through in the first half, you'd expect price erosion to be greater in the first half or the second half. But at the same time, we did contemplate volume erosion because we were very well aware of the CVS contract. We gave you that guidance. So we did put in volume erosion in our guidance, but the vast majority of it is price, but I don't want investors to think that we didn't put any volume into our guidance. We were very well aware of the CVS contract. And I think we made some prudent assumptions on potentially other impacts. But overall, we're still tracking in line with that guidance.

Thanks, Chris. Operator, next question, please.

Our next question comes from Terence Flynn with Morgan Stanley.

Congrats to Rick and best of luck to Rob in a new role. Just wondering if you could maybe frame a little bit for us the opportunity for Skyrizi in UC versus Crohn's disease. I think last time we heard from J&J, Crohn's represented about $7 billion of Stelara sales. Obviously, you guys have made decent inroads there based on your comments. But just wondering to think about the dollar opportunity in ulcerative colitis. And then when you were talking through some of the latest Rinvoq data, I was just wondering if there's an opportunity down the road as you generate more clinical data, but also commercial data to potentially revisit the restrictions on line of therapy on the label at some point, or if we shouldn't think about that as a possibility.

It's Jeff. I'll take the first question. So Crohn's is larger than UC. I mean, if you look at the overall market or revenue, I think it's 65%, 70%. So Crohn's is very, very significant. Having said that, ulcerative colitis is a multibillion-dollar opportunity for us. It's still a very, very underpenetrated and substantial indication. So it's weighted about 70-30, but still, I wouldn't underestimate what ulcerative colitis means. And I think I would add in concert with my prepared remarks, we've seen very, very significant acceleration into frontline Crohn's disease with Skyrizi. And what's remarkable, we studied a very difficult population in ulcerative colitis, but we still had substantial developed naive patients. The performance in that naive population is exceptional, at the very top of the league table in terms of overall ability to achieve endoscopic clearance and symptom control. We like that setup because we know that we can bring UC very fast afterwards when we get the approval this year. So it's a substantial global opportunity which still presents one of our largest opportunities that we have in the category. And I'll ask Roopal to comment on the second question.

Yes, thank you. So the data we keep generating continues to drive confidence, for sure, that the original Phase III that came out with their safety profile, and what we continue to learn even with longer-term data, even in more high-risk patients confirms what we've always seen. That will continue to drive confidence, I think with our clinicians. Now from a health authority standpoint, I think the position there is that you have this oral surveillance study with upadacitinib, and they’re going to apply those findings to the other assets in a similar class until there's another outcome study to argue against that. I think that’s kind of how we see it, now that's in the U.S. I would say globally, there's still an opportunity for many jurisdictions where JAK inhibitors can be at parity. So you might start seeing some more movement there in earlier lines. But as Jeff stated in his prepared remarks, the second line and even third lines of many of these indications continue to grow as people now have options, whereas in the past, if all you had was a TNF, maybe you were cycling. But now that you know that there's other therapies, you're starting to see people break sooner. So I think that second and third line is still a huge opportunity, and we'll continue to grow with this emerging data.

And Terence, it's Jeff again. One more comment. I mentioned how we're excited about the naive position for both Skyrizi in CD and UC coming. But what's also nice is those same representatives are in the office and are able to highlight basically a one-two punch, where you use Skyrizi first in earlier lines based on this exquisite data. And then for later lines, you can use Rinvoq. So we actually see in the marketplace that that combination and that positioning is allowing us right now in real time, capturing almost 40% of all in-play share with Skyrizi first and Rinvoq second. So it's an encouraging position as we fill out that portfolio.

Thanks, Terence. Operator, next question, please.

The next question comes from Carter Gould with Barclays.

I wanted to circle back on the prior commentary around some of the TRx data. And I guess the overarching question is that, I guess, appropriately kind of capturing all the volume you're really seeing? And there's clearly with your part of your agreement with CVS and the Cordavis, there is the potential for some Humira volume to potentially be shifting there. Is that being captured by TRx? So I guess, any commentary there on the sort of the accuracy of that data that we're all seeing. And then maybe if you just go back and I wanted to circle back on the EPS commentary on '25 sort of the way you framed that growth. Is that sort of x-IPR&D? Any color there would be appreciated.

Yes, it's a great question. It's still early, but we believe the data is accurate. In the first two weeks, which includes the Cordavis Humira, there was a decrease of about 13,000 prescriptions for Humira from the baseline. The biosimilars captured around 10, primarily from Cordavis Humira. This means there are about 3,000 prescriptions, or over 20%, that we observe shifting to other mechanisms of action, including our Skyrizi and Rinvoq. This makes sense because the switch is not a direct one-to-one; physicians are discussing care options with patients. We believe that some are indeed moving to other mechanisms, which we've observed in other cases as well. We're confident in the data and will continue to monitor it. We'll have to wait and see where it ultimately settles. I want to emphasize that the decrease in Humira aligns with our expectations, and we are witnessing a notable shift to other mechanisms, which is somewhat anticipated but perhaps more pronounced than we anticipated. We still believe that a significant majority of Humira will maintain parity in lives in '24.

And Carter, this is Rob. Just to clarify my earlier comments. Yes, it is ex-IP R&D. We always guide to ex-IP R&D. What I was trying to highlight is you should expect robust revenue growth in '25 and that growth accelerating in 2026 and beyond given that Part D benefit redesign impact in '25. Given that operating margin will expand, you typically would expect our earnings to grow faster than our revenue. That is generally true with one exception in '25 being that we will have an annualization impact from net interest expense. We'll still deliver a very solid earnings growth. As you model it, just keep in mind that while you expect typically earnings to outpace revenue growth given expanding operating margin, you do have that dynamic in '25, that's important for your modeling.

Thanks, Carter. Operator, next question, please.

Our next question comes from Simon Baker with Redburn Atlantic.

I have two quick questions. First, regarding Humira in a broader context, there's been some political discussion about the role of PBMs in hindering rather than helping the uptake of biosimilars. Do you anticipate any structural changes in the market as a result? Secondly, on Rinvoq and the Level Up data, how do you see the competitive landscape changing in that area? Is it primarily about switches or expansion of market expectations? I ask this because Sanofi mentioned this morning that they embrace competition as a means to increase the number of patients treated in a field that is still relatively under-served. I'm curious about your view on the commercial opportunities here.

It's Jeff again. I would say that we're not anticipating a wholesale restructure of the PBM industry, for example. I mean, we certainly think that there's a very reasonable chance of sort of transparency reform, exactly how some of the economics are working, maybe transparencies to the government or downstream to the clients, that's very possible. But a major wholesale change, we don't see that happening in the near-term. Obviously, we are continuing to monitor that and would make adjustments as we might need to. Regarding your atopic dermatitis question, I think the answer is really a bit of both. I think as we've highlighted before, the market here is exceptional in terms of the low bio penetration or oral and bio penetration. It's really only about 4% or 5%. This marketplace is going to grow significantly as this innovation is able to be delivered to the global population with this very serious disease. We think this Level Up study is good for our market share penetration. I'll give you some perspective: our U.S. market share is lower; it's around 9%. Typically, where our countries have been able to highlight more direct comparisons, we couldn't do that because of the starting dose I highlighted. We see that most of our international affiliates have market shares in the mid-teens or sometimes in the low 20s. The ability to bring a comparative study that's directly linked to the U.S. label will show the physicians how to achieve higher levels of control. Patients want no disease on their skin and lack of itch if they can get there, and that's what we studied in Level Up. We think it's certainly going to help with both market expansion and around the world with our ability to capture some more share. I hope that helps.

Thanks, Simon. Operator, next question, please.

Next question comes from Tim Anderson with Wolfe Research.

I have questions on contracting for Skyrizi in '25. How many lives do you already have locked up through your general multi-year contracting? And then do you continue to think that the availability of cheap versions of Humira, either brand or biosimilar, won't lead to any increase in step edits on Skyrizi under the idea that while Skyrizi is better, something like Humira or biosimilar Stelara might be just fine. That same arrangement can be made in the statin category, for example, Crestor is the best, Zocor might do just fine.

Yes. I think we'll probably pass on the number of lives locked up. I'm confident, given the market position TAM of Skyrizi and Rinvoq, I think, in particular around the momentum that we have across the Skyrizi indication, that we're going to have very favorable access in 2025 and beyond. The other thing that we've highlighted is I'm very pleased with how the adoption of Skyrizi is going in IBD. It's clear that we're taking significant share from Stelara, and the doctors are voting with their pens or their electronic prescribing because the ability to get these very sensitive patients under control is great, and it's unprecedented what we see with Skyrizi. So as time goes by, we think that differentiation is going to aid us significantly as we think about the formulary positions related to not only Humira but also to Stelara.

Thanks, Tim. Operator, next question, please.

The next question comes from Luisa Hector with Berenberg.

It's on Elahere. I wonder whether you might be able to tell us the full quarter of sales. And then any commentary around penetration rate of Elahere and how much off-label use you think may be happening with the guideline inclusion?

Sure. Regarding the full quarter sales of Elahere, we closed mid-year in February. Before that, based on our observations, there were approximately $110 million in sales for the full quarter.

And what we also see in the marketplace, a big catalyst that we saw in the first quarter was the movement from the accelerated approval to the full approval that Roopal highlighted with the MIRASOL data. We were rapidly able to basically integrate that into all the material of the medical liaisons and certainly account managers and sales folks. Having that definitive table in the label and the ability to go deeper into our call plan is going to be very positive to continue the growth rates through the rest of the year. In terms of off-label, that's difficult to say. We think that the majority of the sales thus far are in that platinum-resistant population. However, the guidelines do allow for reimbursement with different levels of FRA alpha. Some of the updates that I mentioned in my prepared remarks. We'll continue to monitor it, but there's certainly a significant headroom in terms of the populations that are coming in terms of the ovarian cancer marketplace.

Thanks, Luisa. Operator, next question, please.

The next question comes from Gary Nachman with Raymond James.

When looking at the strong performance of the neuro franchise of Vraylar and migraine in particular, talk about the competitive dynamics there in those markets. And how did the gross connects impact you in 1Q versus what you expected? And how should that trend for the rest of the year? And then with respect to Cerevel, just your confidence that it will still close by mid-year, and how FTC is viewing the schizophrenia market and how much overlap there might be between emraclidine and Vraylar? Just the latest thinking on that based on your conversations with the FTC.

It's Jeff. I'll address the competitiveness aspect regarding our current focus. We're very pleased with our ability to gain market share in these segments. Starting with migraine, we remain the leader in new-to-brand share for Botox in chronic migraine, and we observe significant acceleration with Qulipta, which has now become the leading preventative agent. Notably, there is minimal interaction with Botox; injectors use Botox, while non-injectors benefit from the excellent option that Qulipta provides. Qulipta is clearly establishing its market leadership among injectable and oral CGRPs. Ubrelvy maintains a substantial lead over its main competitor, Nurtec, and we're observing increased penetration into the larger triptan segment, crucial for our long-term growth. Vraylar continues to perform well with ongoing market growth. Regarding our perceptions, Gary, you rank at the top concerning the efficacy of adjunctive treatment for major depression, which is our latest indication, and we likely have the broadest range of indications for bipolar 1. Both factors enable us to keep gaining share. We also feel confident about managing the gross to net situation, including our vouchers and co-pay, which can sometimes be tricky in the first quarter. We have strong controls in place, and we're seeing a lot of stability. Overall, these businesses are performing very well.

Gary, I'll take your question. This is Rob. I'll take your question on the FTC. We are working closely with the agency on their additional requests. Keep in mind that we do not have any overlapping MOAs with Cerevel, and Vraylar's share in schizophrenia is very low. The vast majority of Vraylar sales come from the bipolar and AMBD indications. In the case of emracladine, it will serve the early Parkinson's segment, which Duodopa and Vyalev do not participate in. We don't have any concerns with the merits of the transaction and continue to expect closing it in the middle of the year.

Thanks, Gary. Operator, next question, please.

The next question comes from Steve Scala with TD Cowen.

I apologize for asking for clarification on Humira. You mentioned that things are going as planned, but in your prepared remarks, you indicated that U.S. erosion was slightly better than your expectations in Q1. Should we conclude that this improvement is temporary? You also spoke about volume pressure, but noted that it is offset by price benefits. Can you provide more details on that? Overall, it seems like you anticipate volumes will not meet the expectations set three months ago. Is this possibly related to the Accredo news from yesterday? That's a lengthy question, but it's just one. My second question is whether the FDA has reached out about potential safety issues with Emlacridine following the competitor's incidents with convulsions in rabbits. Have you experienced similar issues with your agent?

Yes, it's Jeff. I'll address that. The first quarter performed slightly better overall because we didn't experience any volume disruptions until then. After three weeks into Q1, our model for Humira retention with the CVS template is largely aligning with our expectations, although we were surprised to find that some of the Humira is not shifting to the biosimilar and is instead going to other treatments like Skyrizi and Rinvoq. Looking ahead to the remainder of the first quarter and into the second quarter, our outlook for the full year remains consistent with what we guided at the beginning of the year. Therefore, there is no significant change in our observations in the marketplace.

Yes, this is Rob. I'll confirm that what Jeff is saying. I mean it's tracking in line with our expectations. We're not saying that volume is worse than we originally guided. We're saying this is tracking in line with our expectations. We try to characterize for you the price versus volume dynamics. Obviously, saying it's price erosion is the vast majority, but there is volume, and it's tracking exactly as we anticipated. So there isn't an additional downside here. As Jeff mentioned, we did have slightly better performance in the first quarter, but again, it was to the tune of $30 million to $40 million on this book of business, not overly material, but ahead of the initial expectation.

Steve, it's Roopal. I can take the next question. We did a thorough diligence. When we look at data sets that offer clinical data, obviously, we do a deep dive there, also look at blinded data, but we also do a deep dive looking at toxicology, animal tox in particular. We didn't observe anything that was consistent with what has been described thus far. As I mentioned, when we look at blinded safety data either from the 1B or the current pivotals that are running, we don't see an adverse event like this that would be related. As far as we know, no health authority has reached out to ask any further questions about this.

Steve, this is Rob. I'm going to come back to your previous question and maybe I understand where the confusion could be. That one-time price benefit is a year-over-year dynamic. It was contemplated in our guidance. When you have a formulary change you essentially have those rebates go away, and you recognize that. That was part of our guidance. That was not a benefit versus our guidance; that's a benefit in the year-over-year. So if you look at Scott guided to I think it was 32% erosion in the second quarter, which is lower than it was around 40% in the first quarter. So naturally, you'd wonder why would you have less erosion? Well, there's that year-over-year dynamic, but that was how we planned the year. We anticipated it because we knew about the change that was coming on April 1. So I don't want to interpret that as a benefit versus our guidance; that's a benefit in the year-over-year calculation.

Thanks, Steve. Operator, next question, please.

Our next question comes from Trung Huynh with UBS.

Congratulations, Rick, on the next chapter of your life and Rob for moving AbbVie forward. Again, on biosimilar Humira. In your remarks, you mentioned post the expected CVS contract, there was a step-up in price for Humira. Is that simply because you're giving away more price to CVS at the contract at the time? And you mentioned additional contracts moving to biosimilar, like CVS, this year. Are there any meaningful contracts here that you can flag so we're not surprised? And is it possible we could see a pricing increase by year end because of this?

Trung, this is Scott. I'll start with your question regarding the price benefit. So in my remarks, I indicated that with the formulary change in CVS and the volume step-down we saw there, there’s a one-time price benefit associated with that. You can think of this as we have the volume declines that had been associated with price that we would have been paying in terms of rebate that those rebates will no longer be paid. Therefore, there's a one-time price benefit associated with that initial step-down in the quarter. So that's what that relates to.

Yes, and in terms of what we see going forward, as I highlighted, we don't see a significant exclusionary action where Humira would be removed from a formulary going forward. We did plan for, obviously, that smaller plans may make some adjustments to their formularies. That's all within the volume degradation and the pricing dynamics that we put into our guidance. As I mentioned in one of the comments, some payers may consider this idea of starting new patients on the biosimilars versus maintaining all the existing patients on Humira. If you were to see that, you shouldn't be surprised about that, and that would be within the contemplated approaches that we're taking as we look across '24 with our knowledge of what's happening in the marketplace.

Thanks, Trung. Operator, we have time for one final question.

And our final question comes from Evan Seigerman with BMO Capital Markets.

On the aesthetics business, maybe talk to me about some of the dynamics you're seeing in China. I know that there's a lot of macro headwinds and this is a pretty big part of your business. And then a bit of housekeeping on Skyrizi, where the last quarter you disclosed the $1.9 billion cash payment for royalties. Can you provide us any color on what this quarter's royalty was? And I believe that was for the full year last year, but maybe just for the quarter.

This is Carrie. I'll address your question on aesthetics in China. We do expect economic headwinds that we're seeing in China to persist over the near term with the China aesthetics market flat overall for 2024. So the way to think about it is to expect negative market conditions until the recovery starts to begin in the second half of 2024. China does remain a very important market for our aesthetics business. As the market there starts to recover, we will continue to invest in consumer activation, injector training, and continue to launch new products in support of the market.

It's Scott. So you're right. With respect to the schedule relative payments. You have to remember that these are on a bit of a lag, so they don't track each quarter sales. But the $400 million was the amount in the first quarter that we paid in cash payment.

Well, thanks, Evan. 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. That concludes today's conference. You may all disconnect at this time.