Abbvie Inc (ABBV) — Q2 2018 Earnings Call Transcript

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

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I’ll briefly discuss our second quarter performance and highlights as well as our full year guidance which we’re increasing again this quarter. Mike will then provide an update on recent advancements across our R&D pipeline, and Bill will discuss the quarter in more detail. As always, following our remarks, we’ll take your questions. AbbVie once again delivered an outstanding quarter with adjusted earnings per share of $2, representing growth of more than 40% versus last year and exceeding expectations. We also delivered strong top-line results in the quarter with global adjusted operational sales growth of 17.1%. This outstanding performance was driven by growth from several assets across our portfolio including significant contributions from HUMIRA, IMBRUVICA, and MAVYRET. We’re extremely pleased with our performance in the quarter and the progress year-to-date. We’ve driven outstanding commercial, operational, and R&D execution resulting in strong top- and bottom-line results. Based on our performance in the first half of the year and the tremendous confidence we have in our business, we’re raising our full-year 2018 EPS guidance by $0.10; we’re now expecting adjusted earnings per share of $7.76 to $7.86 reflecting growth of 39.5% to midpoint. It’s important to recognize this is the third increase to our earnings guidance for 2018, a testament to the momentum and confidence we have in our ongoing business fundamentals and underlying performance and we’re raising our guidance despite the anticipated introduction of direct biosimilar competition in certain markets outside the United States in the fourth quarter. So clearly, we expect our performance in the second half of the year to continue to be robust. As I mentioned a moment ago, several products within our portfolio are driving strong growth. Starting with HUMIRA which delivered global operational sales growth of 8.2% in the quarter. In the US, HUMIRA sales grew 10% driven by strong prescription volume growth across all three categories. Internationally, HUMIRA sales grew 4.4% operationally. We continue to be pleased with the underlying market trends across geographies and therapeutic segments. Global sales of IMBRUVICA were $850 million in the quarter, an increase of more than 35% over the prior year... ...We expect this momentum to continue based on the growing evidence illustrating IMBRUVICA’s strong efficacy across a wide range of indications. Global HCV sales were $973 million in the second quarter, again exceeding expectations with continued momentum from the MAVYRET launch. Based on its compelling clinical profile and our commercial execution, MAVYRET has achieved the market-leading position in the US as well as strong leadership positions in a number of other major markets including Japan, Germany, Spain, Italy among others. As evident in our results, the overall business continues to deliver robust revenue and EPS growth driven by our highly differentiated assets and our outstanding execution. Our business performance is underpinned by strong volume-driven growth. Of the more than 17% global operational revenue growth in the quarter, roughly 16% was volume-driven growth with the remainder approximately 1% driven by price. In addition to the strong financial results, we continue to make excellent progress with our late-stage R&D programs. Mike will cover the pipeline in more detail here in just a few moments. So I’ll mention just a few of the highlights. Earlier this week, we received FDA approval for elagolix now known as ORILISSA for the management of moderate-to-severe pain associated with endometriosis, a chronic disease which affects approximately three million women in the US. With very few treatments approved over the last 20 years, ORILISSA will be an important new therapeutic option for the many women who suffer with this painful condition. We’re extremely pleased with the approved label, which provides physicians flexibility of dosing and duration of therapy. Given the compelling product profile, the disease prevalence, and the patient need, ORILISSA represents a significant long-term opportunity for AbbVie with multi-billion dollar peak sales potential. We’ve also made two major advancements with VENCLEXTA further strengthening our leadership position in Hematological Oncology. We received US Regulatory Approval for VENCLEXTA in the broader Relapsed/Refractory CLL patient population representing a significant expansion beyond the narrow indication where VENCLEXTA was previously approved. We also submitted our US Regulatory application for VENCLEXTA in AML representing a significant acceleration of the timeline for the sizable follow-on indication. We’ve also made significant progress with our two next-generation immunology assets, Upadacitinib and Risankizumab. We recently reported results from the fifth and final pivotal trial evaluating Upadacitinib as a treatment for RA. We’ve been very encouraged by the level of efficacy and the benefit-risk profile observed across the entire clinical program...

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

Thanks Mike. As Rick mentioned, we’re very pleased with our outstanding second quarter performance. Our year-to-date underlying business fundamentals remain strong and we’ve entered the second half with significant momentum. Total adjusted net revenues for the second quarter were $8.3 billion, up 17.1% operationally excluding the impact of foreign exchange. We reported adjusted earnings per share of $2, up 40.8% compared to the second quarter of 2017 and exceeding our guidance range for the quarter. HUMIRA global sales were $5.2 billion, up 8.2% operationally. In the US, HUMIRA sales increased 10% compared to the prior year with high single-digit prescription volume growth and roughly 3% favorable price. Wholesaler inventory levels remain below half a month in the quarter. Global IMBRUVICA net revenues were $850 million, up 35.6% year-over-year with continued strong uptake in CLL as well as other approved indications. Global HCV sales were $973 million with MAVYRET sales of $932 million. The pace of MAVYRET’s uptake continues to exceed expectations driven by strong market share performance globally as well as higher treatment volumes from warehoused DAA failure patients in certain markets. Global sales of Duodopa, a therapy for advanced Parkinson’s disease, grew 25.1% on an operational basis in the quarter, and we also saw strong operational sales growth from Creon which was up 11.4%. Turning now to the P&L profile for the second quarter, adjusted gross margin was 80.5% of sales compared to 82.3% in the prior year. The decrease versus prior year reflects the year-over-year dilutive impact of partnership accounting as well as exchange impacts of hedged currencies. Adjusted R&D was 15.3% of sales in the quarter, supporting pipeline programs in oncology, immunology as well as other areas. Adjusted SG&A was 19.9% of sales in the quarter, a decrease of 40 basis points versus the prior year, reflecting sales leverage and operational efficiencies. The adjusted operating margin was 45.3% in the second quarter, an improvement of 90 basis points versus the prior year. Net interest expense was $272 million in the quarter and the adjusted tax rate was 9%.

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

I know there are a whole bunch of questions on this call regarding rebates. Let me just ask you Rick, sort of bigger picture question. The gap between AbbVie’s industry-leading performance would you continue to execute on time and time again and the stock's below evaluation and lower valuation this year and investor lack of confidence has never been wider. What do you do to close that gap? Is it deal activity? Do you feel that’s what needs to happen, is it share buyback, is it committing to a 50% dividend yield or dividend payout ratio, are there other structures that you’re considering such as spin outs? In addition Rick, can you clarify your comments that you made during our conference last month about doing a $20 billion to $30 billion deal? I think investors took that as a signal that something is going to happen sooner, rather than later. Maybe if you could just address those please, thanks very much.

Thanks Jami. This is Rick. I appreciate the question. Maybe let me answer first by framing how I view AbbVie. There’s a lot of skepticism and concern about rebates, about biosimilars. Frankly, some of that is reasonable, some of it is driven by people who want to elicit for their own personal gain, I don’t think that’s quite as reasonable but it’s reality. And so I think if you step back and look at AbbVie and what I would say objectively, the way I would evaluate AbbVie is the following. Look, I’d start with how we perform. We’ve been in existence now for 5.25 years, 22 or 23 quarters we’ve had. We’re clearly a company and management team that lives up to the commitments that we make to investors. We take that extremely seriously; we never once disappointed investors and back in most of those quarters, much like this year we have exceeded the expectations that we have set for investors. Every year since I can remember there has been concern about HUMIRA. Biosimilars coming in 2018, new mechanisms of action, etc. You’re never going to make $18 billion, etc. We have beat every single one of those expectations along the way. We have built two assets in addition to HUMIRA now that are both approaching $4 billion, IMBRUVICA and MAVYRET. Two major mega assets that are part of our portfolio and our business going forward. If you look at VENCLEXTA, it’s on the verge of becoming a major asset for us with the MURANO approval and the approval of AML next year. We have tremendous confidence in what we think VENCLEXTA can do. If you look at ORILISSA, it was approved just recently. It has an excellent label, and that is clearly a multi-billion asset for us. If you look at the clinical trial from Risa and Upa, it clearly supports that these two are best in class assets and are going to play a very important role when biosimilars enter the marketplace in the US and we have a lot of confidence in what that portfolio is going to be able to do and how it’s going to be able to perform. If you look at 2019 and 2020, so out in sort of the near future here, and you look at AbbVie, we’re going to have seven assets. HUMIRA, IMBRUVICA, MAVYRET, VENCLEXTA, Upa and Risa, which will all either be multi-billion assets or on their way to being multi-billion assets. For a company that started five and a half years ago with one asset HUMIRA, the HUMIRA company, it will tell you we have made impressive progress and I think the future is even brighter than what the past has been going forward. So I have tremendous confidence in the growth trajectory of the company going forward and frankly the strategy we put in place back in 2013 is playing out pretty much exactly as we had planned. It doesn’t mean there aren’t changes and things that you have to do along the way to adjust to different environmental factors. Over the long haul, investors will reward long-term performance and there is not a company that I’m aware of that’s performing better than us and there’s not a company that has performed better over the past five years. If you talk about it, we’re delivering 40% EPS growth this year and people will say, but you’ve gotten the benefit of tax. Okay, so back the benefit of the tax out. We’re delivering 25% EPS growth this year on an operating basis. There aren’t many companies that are delivering 25% EPS growth. In fact, I can't think of another one our size, that’s delivering that level of growth. I’d also say that we have delivered a tremendous amount of cash back to shareholders through our dividend increases and our buyback programs. And certainly, we have shown that we are not shy about doing M&A when we think we need it and find the appropriate kinds of assets.

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

As we approach the launch of HUMIRA biosimilars in the EU, is anything shaping up differently than you would have expected either positively or negatively? In the past you’ve spoken to the fact that you’re implementing defense strategies and I’m not aware that you’ve amplified on them, perhaps you could now. Secondly, has the Risankizumab filing been accepted and is there a PDUFA date? And then thirdly, can you give us VENCLEXTA sales in the second quarter? Thank you.

Steve, this is Rick. Let me take the first one, Mike take the second, and Bill can take the third and maybe I can add some color onto the third. So as far as biosimilar assumptions in the EU. I’d say there is nothing different from what we had anticipated. I recently had a review, and I’m going to have another review in a month or so with the team. I’d say everything is tracking as we had assumed it would track, so we wouldn’t, if we had concerns we certainly wouldn’t be raising guidance at this point because we’re already delivering tremendous levels of performance. If we had any level of uncertainty, and based on what I said a few moments ago, we take extremely seriously that we’re never going to miss.

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

VENCLEXTA sales in the quarter were $65 million.

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

Thanks Steve. Operator, next question please.

I appreciate the guidance on elagolix launch for this. Could you talk a little bit more about how that launch progresses? What I mean by that is, is the slow early launch is it more to do with educating the docs around the monitoring requirements in the label or is it just difficult revenue recognition early on just because of presumably early access barriers? My second question, I’m not sure if you’re going to be able to answer this, but can you just talk a little bit about the differential gross margin profile for HUMIRA US versus ex-US? Just wondering because the price point is so different on those and just kind of curious, do you guys still kind of stand by the 50% operating margin target by 2020? Thanks.

First on ORILISSA, there aren’t any monitoring requirements in the label, but maybe let me back up a little bit and talk about what are the key attributes of this product in order for it to be successful and then I’ll talk about the ramp. So if you think about this area, what you would want to get the maximum value out of an asset in this area is, one you want a drug that gives high levels of efficacy, has a relatively clean safety profile, fast on, fast off because many of these women are reproductive age and they want to, if they choose to become pregnant or try to become pregnant, you want a drug they can stop taking and therefore they can move forward from a pregnancy standpoint. You want a label that allows for clinical diagnosis, not diagnosis by lab, which is what we have. We wanted two doses because you have different levels of pain among these women and so you want to be able to titrate the dose depending upon their level of pain and your ability to control that pain over time. We’ve obviously gotten that in the label. We priced it in a way that it’s designed to get relatively rapid uptake; it’s priced at roughly 30% lower than Lupron which is one of the competitive alternatives that are available, and so I think we have priced it in a way that should enhance the launch. Now having said that, there hasn’t been a therapy, a new therapy in this area now, 15 or 20 years and because of that physicians aren’t used to prescribing medical therapy for it. So, there is an education element that has to occur. Now we started a disease awareness campaign already, we started it a couple of months ago and we’re going to continue to run that disease awareness campaign.

So Jason, it's Bill Chase on your two questions regarding gross margin and operating margin. We’ve never been specific around gross margin of HUMIRA in certain geographies but you’ve obviously noted the fact that the price point outside of the US is lower and therefore there is less profit. That said, if you look at on a percentage basis, whether it’s in the US or outside of the US, HUMIRA is still a profile and profit generator and I don’t think you want to be necessarily of the opinion that it would be massively lower based on pricing. So, but I can’t give you a whole lot more guidance from that. And then with operating margin, yes, I mean our intent is still to aim for that 50%. If you look at the progress year-to-date, we’re going to be up about 1.5 points versus last year, but what people don’t actually realize is that is inclusive of a lot of dilution related to both partnership accounting and the stem and the idle. If you squared those away and did apples to apples, we’d probably about 350 basis points higher still yet. Now, of course, those investments are exactly the type of the investments you want to make; we’ve been happy taking that near-term dilution on operating margin in order to have products like Risa or the ability to have the optionality of Stem. So we’re pleased with our progress.

Thanks Jason. Operator, next question please.

For ORILISSA do you expect hormone add-back will ultimately lift the limited duration of use recommendation on the label, if so when do you expect that would happen? And then is the week stage pipeline program maturing to commercial assets. What do you see as the key early and mid-stage programs you’d emphasize as best positioned to take over? Thanks.

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

Only thing I’d add, Josh, this is Rick, is if you think about the strategy we had with HUMIRA, it was a strategy where we tried to maximize the value of the asset by identifying other disease states where that mechanism could be successful and provide a good clinical benefit. As you look at things like Risa and especially Upadacitinib, the breadth of that mechanism, I think we’re equally as excited as we were with HUMIRA that it will allow us to be able to expand the indications fairly significantly overtime and remember those are going to come out more in a 2021, 2022, 2023 timeframe. So going in areas like Crohn’s Disease like atopic dermatitis, which we’ve seen impressive data, those are big opportunities; they’re big markets that too is going to add to our ability to be able to continue to grow and add on significant opportunities in the pipeline over time, in addition to our earlier stage or mid-stage pipeline as Mike mentioned in oncology and immunology.

Thanks Josh. Operator, next question please.

First, can you just talk about the President’s blueprint for reducing drug costs and potential changes to rebate structures? I know there’s a lot of uncertainty here, but we want your perspective on A; how likely you think that we’ll see changes to the current industry pricing structure and B; how you think about that and prepare for any potential changes from an AbbVie perspective? My second question was on the outlook firm for HCV from here; you’ve always had a ton of success in this business this year. You’re talking about north of $3.5 billion of revenue, but we’re seeing a step down 3Q versus 2Q. How do you think about the trajectory for HCV as we think about the second half of the year? Do we start looking out in the future; is this a business that you can maintain at this level or do we start to think about this stepping down in the next few years? Thanks so much.

Okay, Chris. This is Rick. I’ll take those two. So I think as we think about the blueprint that has come out from the administration, I’d say in our view we believe it’s an important step to address probably one of the biggest challenges that we face both as a nation as well as an industry and that is the significant burden out of pocket costs for seniors in Medicare around co-pay and the donut hole. I mean that’s a significant challenge and I think it’s something that we have to be able to wrestle to the ground. I would say we’re very supportive of the idea of changing a structure where the net price how the co-pay is paid against; I think that’s a fair and very reasonable thing to ultimately implement. I’d also say that if you look at the blueprint, it’s probably the most comprehensive look that we’ve seen in a very, very long time at the system and looking at ways to ultimately improve the system overall. So we’re encouraged, and we’ll continue to work with the industry to provide feedback and to provide feedback directly around the blueprint; we’d be interested in making sure that we come forward with solutions that will work. Now it’s a little early in the process, so there’s not a lot of specificity yet on what some of those changes are, so it’s a little difficult to look at it yet and determine impacts on the business or any of those kind of things, but I’d say generally speaking when we look at the framework, at least for AbbVie’s business, there were probably more positives than there were negatives based on the kinds of products that we have. As it relates to rebates, I know there is a lot of debate on rebates, and I think it is important for people to understand I think some of the facts around rebates. When we do rebates the same as you view a discount. Okay, so from our perspective they are one and the same. Essentially we provide a rebate to a managed care group or a PBM as part of a position to be able to get a formula in position.

Thanks Rick.

Thanks Chris. Operator next question please.

Rick, if we look at the word interchangeability, the FDA withdrew some guidelines there but there continues to be a lot of saber rattling around that such as having proprietary manufacturers tighten specifications on their manufacturing biologics to make it easier for companies to get into the market. There’s also some saber rattling around settlements, most notably having the FDA look at settlements on a prospective versus a retrospective basis. Just your thoughts on those two potential risks on HUMIRA. And then last question just has to do with the phases that you laid out at a competitors conference. Obviously Phase 1 since the spin in early 2013 operational execution has been superb. Phase 2 pipeline delivery and really where investors have been focused is Phase 3 your build-out in solid tumors and potentially other areas such as neuroscience. Just your thoughts over the long-term on Phase 3 and the build-out in that phase. Thanks.

Thank you, John. I will address the first two questions, and then Mike will take the third. Regarding interchangeability, I have noticed that the discussions around this have increased significantly over the past few months. However, if we look back about a year and a half, the FDA had issued guidance on interchangeability and the requirements for creating an interchangeable biosimilar, which I believe most investors are already aware of. During our long-range planning, we decided to incorporate interchangeable biosimilars, recognizing their importance. Our planning assumes that there will be at least one interchangeable biosimilar available in the US in the first year, with multiple options in the second year and beyond. So I would say we’d dial that into our assumptions because we believe that was the intent of the FDA was to move in that direction. And I’d say that I think that became a prudent assumption because that clearly is, I think the direction that they’re ultimately going in. I mean it certainly changes some of the dynamics around how we think about it, but I don’t think it fundamentally changes the most significant dynamic and that is we have always said when biosimilars enter the market, when they’re available to be able to enter the market that we will compete on price in that competitive environment to maintain the vast majority of the line. And that’s certainly good for the healthcare system and I think if you look at the free market system that exists today and you look at examples where that competition has played out like HCV and example, the system gets a huge benefit from it.

Okay, this is Mike. I’ll take the third part of your question around the phases of our strategy. And Phase 1, as you point out, is operational execution, Phase 2 is the phase that we’re in right now, delivering on our late-stage pipeline to create the next generation of marketed products that can drive our growth and then the third phase looks beyond that. It is sustainable growth out into the 2020s and beyond and what I would say about that is a couple of things. One, when you look at pipeline execution, there is long-term growth out of our existing pipeline assets as Rick pointed out. As Rick mentioned, with assets like Upadacitinib and Risankizumab, we're truly just beginning, and there's a significant amount of work ahead. Conditions such as Crohn’s Disease and atopic dermatitis, along with inflammatory bowel diseases for Risankizumab, will contribute to growth. Thus, the longer-term growth narrative goes beyond just our pipeline. As I noted earlier, we have made substantial investments in our early pipeline and in immunology because we are committed to being a long-term leader in this area. We have a strong set of pipeline assets supporting both Upadacitinib and Risankizumab in the mentioned fields, and we are also investing in our pipeline across other areas.

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

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

Two quick ones. First, Rick going back to Jami’s question. I’m not sure you addressed sort of whether you’re considering anything that’s different from all that you described to position AbbVie operationally and from a pipeline standpoint. So are you considering anything, doing anything differently than you have already done going forward? And then for Bill, I believe your model for HUMIRA erosion outside the US, due to biosimilar competition is based on some other examples that have come before. Do you think that’s sufficiently conservative in light of the growing sort of experience with biosimilars in Europe and the fact that HUMIRA is larger as the starting point than some of those other examples, thanks. Bye.

Gregg, it’s Rick. When you say doing anything different, I mean clearly we’re still committed to be able to return significant capital to shareholders. So it’s clearly our intent and we have the ability to continue to grow the dividend and we’ve obviously just finished a fairly significant share repurchase. We have $2.5 billion left on the existing buyback program that we have and at the point, where that gets lower, we’ll obviously go back to our board and gain authorization for another share repurchase and so we continue to be committed in those areas from BDC endpoint as I said, we continue to look for various opportunities and if we were to find the right kind of opportunity, we obviously add to that.

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

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