AbbVie Reports Third-Quarter 2016 Financial Results

NORTH CHICAGO, Ill., Oct. 28, 2016 /PRNewswire/ -- AbbVie (NYSE:ABBV) announced financial results for the third quarter ended September 30, 2016.

"We delivered another strong quarter, with EPS growth ahead of our expectations. Year-to-date, we've driven strong commercial, operational and R&D execution, and we have advanced our pipeline and other strategic priorities," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "AbbVie represents a unique investment opportunity, offering both compelling growth, along with a strong return of capital to investors, including a rapidly growing dividend, which has grown 60 percent since we became an independent company nearly four years ago."

Third-Quarter Results

• Worldwide reported net revenues were $6.43 billion in the third quarter, up 8.2 percent. Worldwide adjusted net revenues increased 8.0 percent, excluding a 0.6 percent unfavorable impact from foreign exchange rate fluctuations.
• Global HUMIRA sales increased 11.3 percent on a reported basis. Operational HUMIRA sales increased 12.1 percent, excluding a 0.8 percent impact from foreign exchange. Strong global growth was driven by continued momentum across all three major market categories – rheumatology, dermatology and gastroenterology.
• Third-quarter global IMBRUVICA net revenue was $501 million, with U.S. sales of $437 million and international profit sharing of $64 million for the quarter. Total company sales growth was also driven by strong operational growth from Creon and Duodopa.
• On a GAAP basis, the gross margin ratio in the third quarter was 76.6 percent. The adjusted gross margin ratio was 80.7 percent.
• On a GAAP basis, selling, general and administrative expense was 21.5 percent of net revenues. The adjusted SG&A expense was 21.4 percent of net revenues.
• On a GAAP basis, research and development expense was 17.2 percent of net revenues. The adjusted R&D expense was 16.5 percent, reflecting funding actions supporting all stages of our pipeline.
• On a GAAP basis, the operating margin in the third quarter was 36.7 percent. The adjusted operating margin was 42.8 percent.
• Net interest expense was $250 million. On a GAAP basis, the tax rate in the quarter was 20.7 percent. The adjusted tax rate was 19.9 percent.
• Diluted earnings per share in the third quarter was $0.97 on a GAAP basis. Adjusted diluted EPS, excluding intangible asset amortization expense and other specified items, was $1.21, up 7.1 percent.

Key Events from the Third Quarter

• AbbVie announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) granted a positive opinion for VENCLYXTO™ (venetoclax) for patients with relapsed/refractory (R/R) chronic lymphocytic leukemia (CLL) with chromosome 17p deletion or TP53 mutation in adult patients who are unsuitable for or have failed a B-cell receptor pathway inhibitor, or in patients without the 17p deletion or TP53 mutations who have failed both chemotherapy and a B-cell pathway inhibitor. AbbVie also announced that it had received Canadian regulatory approval of Venclexta™ (venetoclax) for patients with R/R CLL with chromosome 17p deletion. Earlier this year, the U.S. Food and Drug Administration (FDA) granted accelerated approval of Venclexta for the treatment of patients with CLL with 17p deletion who have received at least one prior therapy. Venclexta is being developed by AbbVie and Genentech, a member of the Roche Group.
• AbbVie announced the submission of a supplemental New Drug Application (sNDA) to the U.S. FDA for IMBRUVICA to treat patients with marginal zone lymphoma (MZL). MZL is a slow-growing form of non-Hodgkin's lymphoma. If approved, MZL will be the fifth unique type of blood cancer indication for IMBRUVICA.
• AbbVie continued to advance studies of rovalpituzumab tesirine (Rova-T), a novel biomarker-specific therapy that targets cancer stem cells and combines a targeted antibody that delivers a cytotoxic agent directly to cancer cells expressing delta-like protein 3 (DLL3). The expression of DLL3 suggests Rova-T may be useful across a range of neuroendocrine tumors, including a subset of small cell lung cancer (SCLC), metastatic melanoma, glioblastoma multiforme, prostate, pancreatic and colorectal cancers. AbbVie recently began enrollment of a Phase 1 eight-arm "basket study" in neuroendocrine tumors and a Phase 1/2 regimen selection study as a first-line treatment for SCLC.
• AbbVie, in partnership with Boehringer Ingelheim (BI), completed patient enrollment for the Phase 3 pivotal program evaluating risankizumab in patients with moderate-to-severe plaque psoriasis. Data from three of the registrational studies are expected by the end of 2017. AbbVie and BI are also evaluating the potential of risankizumab in Crohn's disease, psoriatic arthritis and asthma, with the initiation of the Phase 3 program in Crohn's disease expected in the first half of 2017.
• AbbVie received U.S. FDA Breakthrough Therapy Designation (BTD) for the investigational, pan-genotypic regimen of glecaprevir (ABT-493)/pibrentasvir (ABT-530) (G/P) for the treatment of patients with chronic hepatitis C virus (HCV) who failed previous therapy with direct-acting antivirals (DAAs) in genotype 1, including therapy with an NS5A inhibitor and/or protease inhibitor. BTD is intended to expedite the development and review of therapies for serious or life threatening conditions.
• AbbVie is nearing completion of the registrational program for its next-generation HCV combination regimen of ABT-493 and ABT-530. Results from several of the Phase 3 studies, including 8-week data in treatment-naive, non-cirrhotic patients, as well as in patients who failed previous therapy with DAAs, will be presented at the annual meeting of the American Association for the Study of Liver Diseases (AASLD) in November. The company anticipates commercialization of the next-generation combination in 2017.
• AbbVie and Biogen announced the European Commission (EC) approval for ZINBRYTA (daclizumab), a once-monthly, self-administered, subcutaneous treatment for relapsing forms of multiple sclerosis (RMS). Approval from the U.S. FDA was received in May. These approvals were based on results from the Phase 3 DECIDE and SELECT trials which demonstrated that treatment with ZINBRYTA 150 mg, administered subcutaneously every four weeks, reduced the annualized relapse rate, as well as the risk of 24-week confirmed disability progression. ZINBRYTA improved results on key measures of MS disease activity in patients with RMS compared to AVONEX 30 mcg intramuscular injection administered weekly and placebo. The companies launched ZINBRYTA in the U.S. in August.
• AbbVie and Biogen presented data at the 32^nd Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) in London. The new post-hoc analysis from the pivotal DECIDE study shows that a significantly greater number of people treated with ZINBRYTA^TM achieved no evidence of disease activity (NEDA) compared to those taking AVONEX^® (interferon beta-1a) intramuscular injection. Additional new interim data from the long-term extension study, EXTEND, further affirm ZINBRYTA's efficacy on clinically meaningful measures of multiple sclerosis disease activity and provide additional information supporting ZINBRYTA's safety profile.
• AbbVie and Neurocrine Biosciences, Inc. presented data from two replicate pivotal Phase 3 studies evaluating the efficacy and safety of Elagolix, an investigational, orally administered gonadotropin-releasing hormone antagonist, in premenopausal women with endometriosis at the 72nd American Society for Reproductive Medicine Scientific Congress (ASRM).  The data demonstrated that, compared to placebo at month three and month six, patients treated with Elagolix reported statistically significant reductions in scores for menstrual pain (dysmenorrhea) and non-menstrual pelvic pain associated with endometriosis as measured by the Daily Assessment of Endometriosis Pain scale. Phase 3 trials of Elagolix for the management of uterine fibroids are ongoing.

AbbVie Raises Full-Year 2016 Outlook

AbbVie is raising GAAP diluted EPS guidance for the full-year 2016 to $3.74 to $3.76. AbbVie is raising its adjusted diluted EPS guidance for the full-year 2016 to $4.80 to $4.82. The company's 2016 adjusted diluted EPS guidance excludes $1.06 per share of intangible asset amortization expense, acquisition related costs and accounting impacts, the impact of the Venezuelan currency devaluation, and other specified items.

Company Declares Dividend Increase of 12 Percent

AbbVie is also announcing today that its board of directors declared an increase in the company's quarterly cash dividend from $0.57 per share to $0.64 per share beginning with the dividend payable on February 15, 2017 to shareholders of record as of January 13, 2017. This reflects an increase of approximately 12 percent, continuing AbbVie's strong commitment to returning cash to shareholders through a growing dividend. Since the company's inception in 2013, AbbVie has increased its dividend by 60 percent. AbbVie is a member of the S&P Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.

About AbbVie

AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company's mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world's most complex and serious diseases. Together with its wholly-owned subsidiary, Pharmacyclics, AbbVie employs more than 28,000 people worldwide and markets medicines in more than 170 countries. For further information on the company and its people, portfolio and commitments, please visit www.abbvie.com. Follow @abbvie on Twitter or view our Facebook and LinkedIn pages.

Conference Call

AbbVie will host an investor conference call today at 8:00 a.m. Central time to discuss our third-quarter performance. The call will be webcast through AbbVie's Investor Relations website at www.abbvieinvestor.com. An archived edition of the call will be available after 11:00 a.m. Central time.

Non-GAAP Financial Results

Financial results for 2015 and 2016 are presented on both a reported and a non-GAAP basis. Reported results were prepared in accordance with GAAP and include all revenue and expenses recognized during the period. Non-GAAP results adjust for certain non-cash items and for factors that are unusual or unpredictable, and exclude those costs, expenses, and other specified items presented in the reconciliation tables later in this release. AbbVie's management believes non-GAAP financial measures provide useful information to investors regarding AbbVie's results of operations and assist management, analysts, and investors in evaluating the performance of the business. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. The company's 2016 financial guidance is also being provided on both a reported and a non-GAAP basis.

Forward-Looking Statements

Some statements in this news release are, or may be considered, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "project" and similar expressions, among others, generally identify forward-looking statements. 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. Such risks and uncertainties include, but are not limited to, challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, and changes to laws and regulations applicable to our industry. Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie's operations is set forth in Item 1A, "Risk Factors," of AbbVie's 2015 Annual Report on Form 10-K, which has been filed with the Securities and Exchange Commission. 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.

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