41st Annual J.P. Morgan Healthcare Conference Call
January 10, 2023 6:00 P.M. ET
Rick Gonzalez - Chairman and Chief Executive Officer
Rob Michael - President
Jeff Stewart - Chief Commercial Officer
Conference Call Participants
Chris Schott - J.P. Morgan
Good afternoon, everybody. I'm Chris Schott at J.P. Morgan. And it's my pleasure to be introducing AbbVie today. From the company, we have a presentation from Rick Gonzalez, AbbVie's Chairman and CEO. And after the presentation, we're going to have a Q&A session with a broader swath of the management team, including Rob Michael, President of AbbVie; Chief Commercial Officer, Jeff Stewart; and Chief Medical Officer; Roopal Thakkar. So with that, I'm going to turn it over to Rick. Happy New Year, and thanks for joining us today.
Well, thank you, Chris, and good afternoon, everyone, and certainly a pleasure to be here with all of you. Before I begin, please take a moment to review the forward-looking statement. I know it's the most enjoyable thing that you have here for a couple of minutes before we move forward. This is certainly an exciting time when we think about our company. We're just finishing up our 10th year operating as an independent company.
AbbVie has grown over the past decade to become a leading pharmaceutical company with a market capitalization of $285 billion, and a track record of consistently delivering top tier financial performance and strong execution. We've also become a company that has evolved over time to have very strong operating characteristics. We have a diversified portfolio with significant leadership positions in several major therapeutic categories supported by industry leading commercial capabilities and execution.
We have an R&D engine that has discovered and developed five major blockbusters over the past decade. These assets are expected to generate approximately $16 billion in annual revenues in 2022. And we have a robust pipeline across all stages of development. We have also strategically acquired and successfully integrated several differentiated assets to further support AbbVie's long-term growth. These efforts have resulted in an outstanding total shareholder return of more than 600% since our inception.
We certainly created a very strong foundation as we enter 2023. The event that we have all been long planning for here to AbbVie, the U.S. Humira loss of exclusivity, which will begin later this month, will have an impact on AbbVie's total performance in the near-term. We've now secured Humira formulary access for more than 90% of the U.S. covered lives this year.
When we issued formal 2023 guidance, on the fourth quarter call, it's important to note that the lower end of our EPS outlook range will represent [floor earnings] [ph] for the company. Regardless of the shape of the erosion curve over the next two years, we do not anticipate that 2024 earnings will be lower than the initial 2023 EPS guidance given that the momentum and growth from another year of our broader portfolio is expected to more than offset any potential incremental Humira erosion that could occur in 2024.
Ultimately though, we remain well-positioned to absorb the impact from the Humira LOE and quickly return to strong growth starting in 2025. We continue to anticipate a clearer path to strong sales growth in 2025 with high-single-digit compounded annual growth rate to the end of this decade. With our robust long-term growth outlook, AbbVie clearly represents a unique investment opportunity, well-positioned for attractive shareholder returns.
Following the U.S. Humira event, we expect AbbVie's revenue growth to be among the highest in our industry. We will also have one of the lowest LOE exposures through the end of this decade and expect our strong business performance will generate substantial cash flow to support our capital allocation needs. This includes investing in innovative R&D across our therapeutic categories, as well as the capacity to continue to do business development to augment our pipeline in our portfolio. Growing our dividend, this remains a key priority and reflects an attractive yield for our shareholders.
Last October, we announced a 5% increase in our cash quarterly dividend, which we have now grown by 270% since our inception and this further underscores our level of confidence in AbbVie's long-term outlook. And finally paying down debt. We have made substantial progress and remain on-track to achieve roughly $34 billion of cumulative pay down through 2023.
Now moving to Slide 5. Our long-term growth will be driven by numerous differentiated assets across each of our core areas. Let's start with immunology. In immunology, our performance and execution has been outstanding and we're well-positioned for sustained leadership. Skyrizi and Rinvoq are now commercialized across all of Humira's major indications, plus a distinct new indication, atopic dermatitis.
These two new therapies are demonstrating impressive results with more than $7.5 billion of combined sales expected in 2022. We also have several promising R&D programs underway in our core disease areas within immunology, and in areas of immunology where there are few or no effective treatments. Areas like lupus, GCA, HS, Alopecia, Vitiligo and PMR.
Turning now to Slide 6. The rapid indication expansion of Skyrizi and Rinvoq took place in less than half of Humira's development timeline. With the addition of atopic dermatitis, these two assets together now span a greater portion of the global immunology market than Humira did. And we expect they will remain major growth drivers for the company through the end of this decade and beyond.
Based on the strong launch trajectory across the currently approved indications, as well as the progress that we're making with additional label expansion Skyrizi and Rinvoq are now on pace to deliver more than $17.5 billion in combined sales, risk adjusted sales in 2025, well above our previous expectations. We now expect global sales for Skyrizi to reach more than $10 billion in 2025, an increase of $2.5 billion versus our previous guidance, reflecting higher performance across basically all of the indications.
We continue to expect Rinvoq to achieved more than $7.5 billion of global sales in 2025. This outlook now contemplates higher sales, in IBD based on the strong approved label for UC and the robust data demonstrated in our clinical program for Crohn's disease. This increased momentum in IBD is expected to be offset by lower contributions in rheumatology, given the impact from the global update to JAK inhibitor labels.
As we look beyond 2025, we expect combined sales for Skyrizi and Rinvoq to exceed the peak revenues achieved by Humira, which was more than $21 billion. We expect that to happen in 2027 with continued significant growth anticipated in the following years.
Moving now to Slide 7. AbbVie has built a significant leadership position in hematological oncology with Imbruvica and Venclexta. While Imbruvica is expected to generate significant cash flow through the end of this decade, recent challenging market and share dynamics attributed to both the pace of COVID recovery, as well as new competitive entrants has significantly lowered our sales expectations for Imbruvica. This expected revenue impact will be partially offset by the continued strong growth from Venclexta, our first-in-class BCL-2 inhibitor for multiple hematological malignancies.
Venclexta’s [proven indications] [ph] in both CLL and AML are both seeing robust share of performance. Potential ongoing label expansion in other important areas such as multiple myeloma in the T1114 patient population, as well as high risk MDS also have the potential to drive meaningful long-term growth for this business. As a result, the near-term outlook for Imbruvica, we now expect global oncology revenues to decline to approximately $5.7 billion in 2023 and anticipate sales will remain relatively flat for 2024 and 2025.
As we look at Slide 8 now, we expect our oncology pipeline to return to sales growth in 2026 with the anticipated launch, and indication ramps of several new products for both blood cancer and some solid tumors. These promising late stage oncology opportunities include Epcoritamab, a potentially best-in-class CD3xCD20 bispecific for B-cell malignancies, including DLBCL and follicular lymphoma. The initial approval is anticipated later this year.
Navitoclax, a novel BCL-2/BCL-xL inhibitor with the potential to improve symptoms, reverse fibrosis, and modify the course of myelofibrosis. We anticipate approval of that asset in 2024. And Teliso-V, our c-MET ADC with the potential to become an important new treatment option for non- squamous non-small cell lung cancer, we anticipate approval for the initial indication in 2024....