The FINANCIAL -- AbbVie announced financial results for the first quarter ended March 31, 2018.
"AbbVie is off to an excellent start in 2018, delivering first quarter revenue and EPS growth well ahead of expectations," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "Since our inception, we have strived to create a business that has multiple strong growth drivers. This quarter clearly demonstrates that level of diversity, with HUMIRA, IMBRUVICA and MAVYRET all delivering significant contributions to our growth. Based on the robust performance of the business, we are increasing our full-year EPS guidance, with the new midpoint reflecting industry-leading year-over-year growth of 38 percent."
Worldwide net revenues were $7.934 billion in the first quarter, up 21.4 percent year-over-year on a GAAP basis. On an operational basis, net revenues increased 17.6 percent, excluding a 3.8 percent favorable impact from foreign exchange.
Global HUMIRA sales increased 14.4 percent on a reported basis, or 10.7 percent operationally, excluding a 3.7 percent favorable impact from foreign exchange. In the U.S., HUMIRA sales grew 11.4 percent in the quarter. Internationally, HUMIRA sales grew 9.3 percent, excluding a 10.7 percent favorable impact from foreign exchange.
First-quarter global IMBRUVICA net revenues were $762 million, with U.S. sales of $624 million and international profit sharing of $138 million for the quarter, reflecting growth of 38.5 percent.
First-quarter global HCV net revenues were $919 million.
On a GAAP basis, the gross margin ratio in the first quarter was 75.7 percent. The adjusted gross margin ratio was 80.2 percent.
On a GAAP basis, selling, general and administrative expense was 22.6 percent of net revenues. The adjusted SG&A expense was 21.0 percent of net revenues.
On a GAAP basis, research and development expense was 15.7 percent of net revenues. The adjusted R&D expense was 15.0 percent, reflecting funding actions supporting all stages of our pipeline.
On a GAAP basis, the operating margin in the first quarter was 36.6 percent. The adjusted operating margin was 44.1 percent.
On a GAAP basis, net interest expense was $251 million. On a GAAP basis, the tax rate in the quarter was 0.5 percent. The adjusted tax rate was 7.6 percent.
Diluted EPS in the first quarter was $1.74 on a GAAP basis. Adjusted diluted EPS, excluding specified items, was $1.87, up 46.1 percent.
AbbVie submitted a Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) for risankizumab for treatment of patients with moderate to severe plaque psoriasis. The company expects to submit its regulatory filing with the European Medicines Agency (EMA) imminently. The BLA is supported by data from the global risankizumab Phase 3 psoriasis program evaluating more than 2,000 patients with moderate to severe chronic plaque psoriasis across four Phase 3 studies: ultIMMa-1, ultIMMa-2, IMMhance and IMMvent. Risankizumab is being developed in collaboration with Boehringer Ingelheim.
At the Annual Meeting of the American Academy of Dermatology (AAD), AbbVie presented new positive results from the pivotal Phase 3 ultIMMa-1 and ultIMMa-2 replicate clinical trials that evaluated the safety and efficacy of risankizumab compared to placebo or ustekinumab for the treatment of patients with moderate to severe plaque psoriasis. In the ultIMMa-1 and ultIMMa-2 trials, risankizumab met all co-primary and ranked secondary endpoints, demonstrating significantly higher rates of skin clearance at week 16 and at one year of treatment, compared to ustekinumab. In addition, through one year of treatment, significantly more patients receiving risankizumab self-reported a Dermatology Life Quality Index (DLQI) score of 0 or 1 compared with ustekinumab. The safety profile was consistent with all previously reported studies, and there were no new safety signals detected across the studies.
AbbVie announced positive top-line results from the Phase 3 SELECT-COMPARE trial, which evaluated the company's oral JAK-1 selective inhibitor, upadacitinib, in patients with moderate to severe rheumatoid arthritis who were on a stable background of methotrexate and had an inadequate response. The results showed that after 12 weeks, upadacitinib (15 mg, once-daily) met the study's primary endpoints of ACR20 and clinical remission, and all ranked secondary endpoints versus either placebo or adalimumab. Additionally, following 26 weeks of treatment, upadacitinib significantly inhibited radiographic progression (mTSS) from baseline, compared to placebo. The safety profile of upadacitinib was consistent with previously reported Phase 3 SELECT trials and the Phase 2 studies, with no new safety signals detected. The company expects to report data from an additional pivotal study (SELECT-EARLY) and submit regulatory applications later this year, with commercialization anticipated in 2019.
At the 13th Congress of the European Crohn's and Colitis Organisation (ECCO), AbbVie presented new 52 week data from the Phase 2 CELEST study, which evaluated upadacitinib in adult patients with moderately to severely active Crohn's disease, the majority of whom had failed two or more biologics. Results from the 16-week induction phase were previously presented at Digestive Disease Week in May 2017. Patients who responded to treatment in the 16-week induction phase entered the 36-week double-blinded extension phase of the study, which evaluated multiple dosing regimens of upadacitinib through one year. Results of the CELEST extension phase showed that many patients treated with upadacitinib who achieved clinical response after the 16-week induction phase maintained their response to treatment after the 36-week extension phase. The overall safety profile of upadacitinib in the CELEST study was consistent with that observed in other upadacitinib studies, with no new safety signals detected. Phase 3 trials evaluating upadacitinib in Crohn's disease are ongoing.
AbbVie presented at AAD new positive results from a Phase 2b study evaluating upadacitinib in patients with moderate to severe atopic dermatitis. AbbVie previously announced positive top-line data demonstrating that all upadacitinib dose groups (30/15/7.5 mg once-daily) met the primary endpoint (mean percentage change in the Eczema Area and Severity Index (EASI) score versus placebo) and all skin and itch-specific secondary endpoints at 16 weeks. AbbVie also presented data showing significant reduction of select symptoms, including reduction in itch (pruritus) at Week 1 and improvement in the extent and severity of skin lesions at Week 2, across all doses. Based on the Phase 2b results, the FDA granted Breakthrough Therapy Designation for upadacitinib in atopic dermatitis. The Phase 3 program for upadacitinib in atopic dermatitis is expected to begin later this year.
AbbVie announced top-line results from the Phase 2 TRINITY study evaluating rovalpituzumab tesirine (Rova-T) for third-line treatment of patients with DLL3-expressing relapsed/refractory (R/R) small cell lung cancer (SCLC). Although Rova-T demonstrated single agent responses in advanced SCLC patients, after consulting with the FDA, based on the magnitude of effect across multiple parameters in this single-arm study, the company will not seek accelerated approval for Rova-T in third-line R/R SCLC. Safety data in the TRINITY study were consistent with previously reported studies of Rova-T. The full TRINITY data have been submitted for presentation at the 2018 American Society of Clinical Oncology (ASCO) Annual Meeting in June. Ongoing Phase 3 studies, MERU and TAHOE, will continue to investigate Rova-T in first- and second-line SCLC, with readouts expected in the 2020 timeframe.
AbbVie, in cooperation with Neurocrine Biosciences, announced notification by the FDA that extended time is required to review additional information regarding the results of liver function tests provided by AbbVie in connection with its New Drug Application (NDA) for elagolix in endometriosis-associated pain. The Prescription Drug User Fee Act (PDUFA) date has been extended three months to the third quarter of 2018. The NDA for elagolix is supported by data from the largest prospective randomized clinical trials conducted to date for endometriosis. The safety and efficacy of elagolix were evaluated in nearly 1,700 women with moderate-to-severe endometriosis-associated pain. Based on AbbVie's review of the data, the company remains confident in its NDA and anticipates approval in the third quarter.
AbbVie, also in cooperation with Neurocrine Biosciences, announced positive top-line results from the Phase 3 ELARIS UF-I and ELARIS UF-II studies evaluating elagolix (300 mg twice daily) alone and in combination with low-dose hormone (add-back) therapy in women with uterine fibroids. At month six, elagolix, in combination with add-back therapy, met the primary efficacy endpoint in both studies, demonstrating reduced heavy menstrual bleeding compared to placebo. All ranked secondary endpoints in both studies were also met. The observed safety profile of elagolix in both Phase 3 studies was similar to observations in prior Phase 2 studies in uterine fibroids, which included hypoestrogenic effects, such as hot flush and reduction in bone mineral density. Data from both pivotal studies will support regulatory submissions for elagolix in uterine fibroids and will be presented at a medical conference later this year.
Following reports of inflammatory encephalitis and meningoencephalitis and the initiation of an Article 20 referral procedure by the EMA, AbbVie, together with Biogen, announced the voluntary worldwide withdrawal of ZINBRYTA for relapsing multiple sclerosis. Given the nature and complexity of reported adverse events, characterizing the evolving benefit/risk profile of ZINBRYTA would not be possible going forward given the limited number of patients being treated
AbbVie and Voyager Therapeutics announced an exclusive strategic collaboration and option agreement to develop and commercialize vectorized antibodies directed against tau for the treatment of Alzheimer's disease and other neurodegenerative diseases. This collaboration combines AbbVie's monoclonal antibody expertise, global clinical development and commercial capabilities with Voyager's gene therapy platform and expertise that enables generating adeno-associated viral vectors for the treatment of neurodegenerative diseases.
AbbVie announced a global resolution of all intellectual property-related litigation with Samsung Bioepis over its proposed biosimilar adalimumab product. Under the terms of the settlement agreements, AbbVie will grant to Samsung Bioepis a non-exclusive license to AbbVie's intellectual property relating to HUMIRA beginning on certain dates in certain countries in which AbbVie has intellectual property, including on June 30, 2023 in the U.S. and on October 16, 2018 in most countries in the European Union. Under the terms of the agreement, Samsung Bioepis will pay royalties to AbbVie for licensing its HUMIRA patents once its adalimumab biosimilar product is launched.
AbbVie announced that its board of directors increased the company's quarterly cash dividend by 35 percent from $0.71 per share to $0.96 per share and authorized a new $10 billion stock repurchase program. The cash dividend is payable May 15, 2018 to stockholders of record at the close of business on April 13, 2018. Since the company's inception in 2013, AbbVie has increased its dividend by 140 percent.
Full-Year 2018 Outlook
AbbVie is updating its GAAP diluted EPS for the full-year 2018 to $6.82 to $6.92. AbbVie is raising its previously announced adjusted EPS guidance range for the full-year 2018 from $7.33 to $7.43 to $7.66 to $7.76. The midpoint of this guidance reflects year-over-year growth of 38 percent. The company's 2018 adjusted diluted EPS guidance excludes $0.84 per share of intangible asset amortization expense, changes in the fair value of contingent consideration, a one-time net tax benefit related to the timing of the phase in of provisions of the U.S. tax reform legislation on certain subsidiaries, and other specified items.
AbbVie's adjusted EPS guidance range reflects an effective tax rate approaching 9 percent in 2018. In 2018, AbbVie will experience a one-time net tax benefit related to the timing of the phase in of provisions of the new legislation on certain subsidiaries. This benefit has been excluded from the adjusted EPS guidance, and included in the GAAP guidance range.
AbbVie continues to anticipate the company's adjusted effective tax rate to increase to 13 percent over the next five years as a result of increased domestic income and investment.