Elizabeth Shea - AbbVie, Inc. Richard A. Gonzalez - AbbVie, Inc. Michael E. Severino, M.D. - AbbVie, Inc. William J. Chase - AbbVie, Inc..

Jeffrey Holford - Jefferies LLC Jami Rubin - Goldman Sachs & Co. LLC Joshua Schimmer - Evercore ISI Christopher Schott - JPMorgan Securities LLC Evan Seigerman - Barclays Capital, Inc. Steve Scala - Cowen and Co. LLC Geoffrey C. Porges - Leerink Partners LLC Vamil K. Divan - Credit Suisse Securities (USA) LLC Gregory D.

Fraser - Deutsche Bank Securities, Inc..

Good morning and thank you all for holding. Welcome to the AbbVie third quarter 2017 earnings conference call. All participants will be able to listen only until the question-and-answer portion of this call. I would like to remind all parties today's call is being recorded. If you have any objections, please disconnect at this time.

I would now like to introduce Ms. Liz Shea, Vice President of Investor Relations..

Rick Gonzalez, Chairman of the Board and Chief Executive Officer; Michael Severino, Executive Vice President of Research & Development and Chief Scientific Officer; and Bill Chase, Executive Vice President of Finance and Chief Financial Officer.

Before we get started, I remind you that some statements that we make today are or may be considered forward-looking statements for 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 2016 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.

In addition to the news release issued this morning, we have also posted slides on our website at investors.abbvie.com that supplement some of the content we'll be covering this morning. Following our prepared remarks, we'll take your questions. So now with that, I'll now turn the call over to Rick..

Thank you, Liz. Good morning, everyone, and thank you for joining us this morning. Today, we'll be covering two topics. I'll briefly discuss our third quarter performance and operational highlights, and Mike and Bill will walk you through the quarter in more detail.

Then, I'll provide an update on the company's long-term strategic and financial objectives. And as always, we'll provide ample time at the end of the call to answer your questions. We delivered another quarter of outstanding performance, with results ahead of our expectations. Adjusted earnings per share were $1.41, up 16.5% versus last year.

We also delivered strong top line results in the quarter with operational sales growth of 8.8%, driven by a number of products in our portfolio. This includes HUMIRA, with global operational sales growth of nearly 15%, and IMBRUVICA, which grew more than 37% versus the prior year.

Based on our strong year-to-date performance, we are raising our full-year 2017 EPS guidance to $5.53 to $5.55, reflecting growth of 14.9% at the midpoint. During the quarter, we announced the global resolution of all intellectual property-related litigation with Amgen over their biosimilar to HUMIRA.

We're pleased with this settlement, which we believe demonstrates the strength of our HUMIRA IP portfolio and further demonstrates our confidence that we will not see direct biosimilar competition in the U.S. until at least the 2022 timeframe.

Importantly, this will allow a number of key assets within our robust late-stage pipeline to enter the marketplace and establish a strong growth trajectory. Mike will provide additional color around recent advancements across numerous pipeline programs, but I'll briefly mention a few highlights.

We're very pleased with the significant progress we've made with several late-stage assets. In particular, the data readouts for upadacitinib and risankizumab illustrate that both of these therapies have the potential to be highly differentiated best-in-class agents across a range of immune-mediated conditions.

We've established strong leadership in immunology with HUMIRA. The 2019 commercialization of both of these therapies will allow us to further grow that already strong position.

We're also very encouraged by the results from the Phase III MURANO trial, which evaluated VENCLEXTA in combination with RITUXAN for the treatment of patients with relapsed/refractory CLL, an indication for which we received Breakthrough Therapy Designation.

An independent data monitoring committee reviewed the MURANO study and made the recommendation to unblind the trial based on the strong positive results. The full results of the study will be presented in an upcoming medical meeting, and we're moving forward with our regulatory applications.

Finally, this morning we announced we received Priority Review for elagolix in endometriosis. This status, which shortens the FDA review period, is granted to medicines the agency determines have potential to provide significant improvements in the safety and effectiveness of the treatment of a serious disease.

There have been no new treatments for endometriosis-associated pain in well over a decade. So if approved, elagolix will represent an important treatment option for this painful condition and underserved patient population. In summary, we continue to demonstrate outstanding performance, driven by our strong commercial, operational, and R&D execution.

We have delivered strong financial results, and we're making significant advancements in our pipeline. I'll discuss our outlook for 2018 and provide an update on our long-term strategic and financial objectives following Mike and Bill's comments. With that, I'll turn the call over to Mike..

Thank you, Rick. In order to allow time for our strategic update, I'll keep my prepared remarks brief, highlighting just a few of the noteworthy milestones from the quarter. As Rick mentioned, we've continued to make significant progress across our pipeline. In immunology, we reported results from several mid and late-stage trials.

Just yesterday, we announced positive top line results from three Phase III studies evaluating risankizumab in psoriasis. Data from these trials demonstrated superior skin clearance with risankizumab treatment versus two leading biologics, Stelara and HUMIRA.

In the ultIMMa-1 and ultIMMa-2 trials, 75% of patients receiving risankizumab in both studies achieved PASI 90 compared to 42% and 48% of patients receiving Stelara, respectively. We are particularly encouraged by the durable rates of skin clearance demonstrated in these two studies.

At one year, roughly twice as many patients treated with risankizumab achieved full skin clearance compared to Stelara, with 56% and 60% of the risankizumab patients achieving PASI 100 in ultIMMa-1 and ultIMMa-2 respectively.

We also saw very high rates of efficacy in the IMMvent study, with risankizumab demonstrating superior rates of skin clearance compared to HUMIRA. Within this trial, we designed a portion of the study to evaluate risankizumab's efficacy in patients who had an inadequate response to HUMIRA.

In this portion of the study, patients with an inadequate response to HUMIRA after 16 weeks were re-randomized to risankizumab or HUMIRA. And, of these patients, 66% treated with risankizumab achieved PASI 90, compared to 21% who continued with HUMIRA, demonstrating risankizumab's potential in the growing TNF inadequate responder population.

We look forward to seeing data next year from the remaining trial in the psoriasis pivotal program. Our regulatory submission is on track for 2018, with commercialization expected in 2019. Moving now to upadacitinib, our oral selective JAK1 inhibitor, in development for six indications.

Last month we announced top line results from the second of our Phase III studies, the SELECT-BEYOND study.

In this trial, which evaluated patients who did not respond adequately or were intolerant to biologic DMARDs, both doses of upadacitinib met all primary and ranked secondary endpoints at week 12 and patient-sustained clinical response through week 24. Upadacitinib drove very high levels of response at ACR20.

But more importantly, it drove strong levels of response on more stringent clinical endpoints, such as ACR50, ACR70, low disease activity, and DAS remission. We saw levels of efficacy in this difficult-to-treat refractory population, similar to efficacy more typically observed in bio-naive patients.

We are aware that there continues to be significant investor interest regarding the topic of DVT and PE event rates.

As we stated on our last earnings call, we have a comprehensive monitoring program in place for upadacitinib and have not observed anything in our Phase III program that we consider a signal, and the rate of DVT and PE across the program is consistent with the expected background rate in an RA population.

While we can appreciate the desire to characterize event rates for upadacitinib, it is important to keep in mind that estimates based on individual events or a subset of trials have the potential to be inaccurate and misleading.

The upadacitinib program is designed to provide a comprehensive safety database with more than 3,000 upadacitinib-treated patients. Evaluation of unblinded event rates and comparisons to rates in control groups and expected background rates must be done in the context of our overall program once the core studies have read out.

Given the fact that we have reported data from two of our six registrational trials and that the majority of our database remains blinded, we view any attempt to calculate event rates or compare rates across upadacitinib and control groups as premature at the present time.

Furthermore, providing unblinded data from ongoing studies could impact the integrity of these trials, which is something that we obviously cannot and will not do. In addition to our internal safety monitoring program, we have an independent data monitoring committee, or DMC, in place for upadacitinib in order to ensure patient safety.

The DMC has access to all data from the program, including unblinded data, and monitors it for safety on an ongoing basis. The DMC is also obviously aware of the heightened interest in DVTs and PEs in this setting and has consistently made the recommendation to proceed with the program without modification.

We remain very confident in upadacitinib and are investing in and advancing multiple indications in a manner that is consistent with our confidence. We also recently reported positive top line results from the upadacitinib Phase II study in atopic dermatitis, demonstrating very strong efficacy across all doses compared to placebo.

In the trial, we saw very rapid response times, with upadacitinib demonstrating reduction in pruritus within the first week and improvement in skin lesions within the first two weeks for all doses. Roughly half of patients achieved a 90% or greater improvement in skin lesions by week 16.

Based on these data, we plan to advance upadacitinib into Phase III studies in atopic dermatitis in the first half of 2018.

Moving now to oncology, in the third quarter, we reported that the DMC for the Phase III MURANO trial recommended we unblind the study for efficacy, indicating that VENCLEXTA in combination with RITUXAN met the primary endpoint of the study of demonstrating significantly prolonged progression-free survival in patients with relapsed/refractory CLL compared to a combination of bendamustine and RITUXAN, a standard regimen in this patient population.

We plan to present detailed findings from the trial at an upcoming medical meeting, and the data will support our regulatory application for broader use in the relapsed/refractory CLL population.

Also in the third quarter, we received regulatory approval for the use of IMBRUVICA in chronic graft-versus-host disease after failure of one or more lines of systemic therapy.

And before the end of the year we expect data from an interim analysis of the SHINE study in front-line mantle cell lymphoma, which if successful would support a label update for IMBRUVICA in this indication.

We continue to make good progress with our solid tumor efforts as well, where we currently have more than 20 solid tumor assets in the clinic, 17 of which are in Phase I studies. We have started seeing early data from several of these programs, and we look forward to many more readouts as data mature over the next 12 to 18 months.

At ESMO last month, we presented early data from the Rova-T BASKET study in neuroendocrine tumors. While the data are very early, we are encouraged by the findings, which showed reduction in tumor burden and confirmed responses in solid tumors beyond small cell lung cancer.

Our Phase III Rova-T studies in small-cell lung cancer continue to progress, with the TAHOE study in the second-line setting and the MERU study in the front-line setting both now well underway. TRINITY, our registrational study in third-line or greater small-cell lung cancer, also continues to progress well.

As we prepare for our forthcoming regulatory submissions, we've been actively engaged in discussions with regulators. We recently received feedback from the FDA that they would like to see six-month durability data as part of our regulatory submission data package.

This request is not unusual in development programs where single-arm studies are being used to support approval. We anticipate that six-month data will be available in the second quarter of 2018. Therefore, we have moved the final analysis for the TRINITY study to the second quarter of next year in order to meet the FDA's request.

We continue to expect our regulatory submission to follow shortly thereafter. In the area of virology, early in the third quarter, we received regulatory approvals in the U.S., Europe, and Japan for MAVYRET.

And in the area of women's health, we submitted our regulatory application for elagolix as a treatment for women suffering from endometriosis-associated pain. And this morning, we announced that we received a Priority Review designation from the FDA.

While 2017 to date has already been a very eventful and productive year, we anticipate seeing several additional clinical development milestones in the coming months, and 2018 will also be a milestone-filled year. With that, I'll turn the call over to Bill for additional comments on our third quarter performance.

Bill?.

Thanks, Mike. We are very pleased with our strong third quarter results. Total net revenues were nearly $7 billion, up 8.8% operationally excluding a 70 basis point favorable impact from foreign exchange. We reported adjusted earnings per share of $1.41, up 16.5% compared with the third quarter of 2016.

Adjusted EPS exceeded the midpoint of our prior guidance range by $0.04 due to favorable sales and operating margin profile dynamics. There was also a $0.02 benefit in the quarter related to the divestiture of an equity position. HUMIRA's global sales in the quarter were $4.7 billion, up 14.8% operationally, reflecting continued strong demand. U.S.

growth was 19.1%, driven by prescription growth approaching 12% and mid-single-digit price contribution. The growth rate versus 2016 also reflected some benefit from customer ordering patterns in the third quarter of 2016. Wholesaler inventory levels were below 0.5 month in all quarters.

International HUMIRA sales were $1.6 billion in the quarter, up 6.8% on an operational basis. With its unique product profile, years of physician experience, and broad set of indications, HUMIRA remains the undisputed market leader across all therapeutic categories despite competition.

Global IMBRUVICA net revenues in the third quarter were $688 million, up more than 37% versus the prior year. IMBRUVICA continues to drive strong uptake in front-line CLL and remains the market share leader in CLL across all lines of therapy, with total patient market share of 35% in first-line and over 70% in the second-line-plus setting.

Global HCV sales in the third quarter were $276 million. During the quarter we received regulatory approval for MAVYRET, our next-generation HCV offering in the U.S., Europe, and Japan.

While we are still in the early stages of our launch, we've been pleased with its initial uptake globally, and physician feedback on the product has been very favorable. Global sales of MAVYRET approached $100 million in the quarter. Global sales of Duodopa, our therapy for advanced Parkinson's disease, grew 22% on an operational basis in the quarter.

We also saw a strong growth contribution from Creon and Synagis. Reviewing the P&L profile for the quarter, adjusted gross margin was 80.8% of sales, slightly favorable versus the prior year. This was inclusive of 50 basis points of dilutive impact related to partnership accounting.

Adjusted R&D was 17% of sales, up 50 basis points over the prior year, reflecting increased funding of the pipeline. Adjusted SG&A was 20.7% of sales in the third quarter, down 70 basis points versus the prior year, driven by sales leverage and operational efficiencies.

The adjusted operating margin was 43.1% of sales in the third quarter compared to 42.8% in the prior year, an improvement of 30 basis points despite an increase in R&D spending as a percentage of sales. Net interest expense was $252 million, and the adjusted tax rate was 19% in the quarter.

Third quarter adjusted earnings per share excluding intangible amortization expense and other specified items was $1.41, up 16.5% year over year. Turning to full-year guidance, as Rick mentioned, we are raising our full-year adjusted EPS guidance range to $5.53 to $5.55 per share, representing growth of 14.9% at the midpoint.

This excludes $1.26 per share of non-cash amortization and other specified items. Our full-year GAAP guidance has been updated to reflect recent milestone payments and overall progress on the risankizumab program.

We continue to forecast full-year top line operational growth approaching 10%, with minimal impact from foreign currency on a full-year basis. This forecast contemplates global HUMIRA operational growth approaching the mid-teens. In the U.S., we continue to expect HUMIRA full-year sales growth in the mid to high teens.

For international HUMIRA, we expect full-year sales growth on both an operational and reported basis to be in the mid-single digits. And we remain on track to achieve the full-year sales guidance that we outlined in January for the other products across our portfolio.

We continue to forecast full-year gross margin as a percentage of sales to be 80.5% and operating margin to be approximately 42.5%. We also continue to expect full-year net interest expense of approximately $1 billion, and we expect the adjusted tax rate to be approximately 19%.

For the fourth quarter, we expect adjusted earnings per share between $1.42 and $1.44. This adjusted EPS guidance excludes roughly $0.41 of non-cash amortization and other specified items, which represents year-over-year growth of 19.2% at the midpoint. We expect fourth quarter operational sales growth of approximately 10%.

And at current exchange rates, we would expect foreign exchange to have a 2% favorable impact on reported sales growth in the fourth quarter. In closing, we are pleased with our strong performance in the quarter, delivering top-tier revenue and EPS growth while continuing to advance our pipeline and successfully executing on our long-term strategy.

And with that, I'll turn the call back over to Rick..

Crohn's disease, atopic dermatitis, psoriatic arthritis, ulcerative colitis, and ankylosing spondylitis. In atopic dermatitis, we recently reported positive top line Phase II results, demonstrating strong efficacy across all doses and a clean safety profile.

We saw rapid response time, with reduction in itch within the first week and improvements in skin within the first two weeks for all doses. We're pleased with these results and believe this further demonstrates that selective JAK1 inhibition may be a novel therapeutic approach across a broad range of immune-mediated diseases.

Based on the data, we plan to advance into Phase III studies in atopic dermatitis in the first half of 2018. In IBD, similar to risankizumab, ABT-494 has demonstrated impressive remission and endoscopic response scores in Crohn's disease, and we expect to begin Phase III studies soon.

This agent holds strong promise in IBD, where current products show a waning response and high discontinuation rates, and we're very excited about this drug's potential within this segment of the market.

All told, we believe upadacitinib will be a significant growth driver for AbbVie, with nominal sales across six indications of approximately $6.5 billion in 2025. Moving now to oncology, where one of our key strategic priorities is to expand our already strong position in hematological malignancies.

Despite the emergence of new treatments that have improved outcomes, unmet needs remain relatively high. We've built a strategic portfolio of assets, including multiple mechanisms of action that have vast potential alone and in combination.

With IMBRUVICA and VENCLEXTA, AbbVie has a set of assets that is capable of transforming treatment across a wide range of blood cancers. We're targeting CLL, AML, non-Hodgkin's lymphomas, and multiple myelomas as well as other conditions.

These two therapies alone and in combination with other medicines are demonstrating extremely strong activity in a broad range of cancers, giving us the ability to create a leadership position in the hematological oncology market, a $30 billion market today, expected to grow to $50 billion by 2020 and $65 billion by 2025.

Given our portfolio, we're well positioned to drive the continued evolution of the treatment landscape, establishing BTK and BcL-2 inhibition as foundational therapies in CLL and other hematological malignancies. Our goal is to transform the therapeutic approach, allowing patients to achieve more durable, deeper responses.

Through novel combinations of IMBRUVICA, VENCLEXTA, and other therapies, we'll drive better long-term control of blood cancers. The growing body of data for both therapies in CLL and in other hematological malignancies will support label expansion, thereby driving increasing penetration and growth in the coming years.

Our confidence in our ability to achieve and sustain a strong leadership position within this market stems from the truly impressive data we've seen from both of these assets.

IMBRUVICA has changed the treatment paradigm in second-line and greater CLL and in patients with the 17p deletion and is gaining strong momentum in first-line CLL by providing strong durable response and a superior survival benefit over standard of care.

We're expanding IMBRUVICA's use in multiple segments of non-Hodgkin's lymphoma beyond the already approved indications and exploring potential in additional diseases. We continue to expect sales of IMBRUVICA of greater than $7 billion to AbbVie.

We've also seen outstanding results from VENCLEXTA's clinical program, which has shown high response rates in difficult-to-treat patient populations, including relapsed/refractory CLL patients with a 17p deletion and CLL patients who have failed prior therapy with a B-cell receptor inhibitor.

We recently reported strong positive top line results from the Phase III MURANO study in relapsed/refractory CLL, where combination treatment with VENCLEXTA and RITUXAN prolonged progression-free survival versus BR. Based on the positive results, an independent data monitoring committee has made the recommendation to unblind the trial.

Analysis of the data showed that the combination treatment with VENCLEXTA and RITUXAN may offer another strong option for patients with relapsed/refractory CLL.

We plan to submit our regulatory application in the coming months, and we look forward to bringing this potential new treatment to the market in the broader relapsed/refractory CLL population.

We also had development programs for VENCLEXTA in AML, multiple myeloma, and other blood cancers, where we've seen promising results, including strong data supporting two Breakthrough Therapy designations in AML. These indications have the potential to start adding significant value in the three- to five-year time horizon.

We believe that VENCLEXTA's nominal sales potential in 2025 across multiple hematological malignancies is approximately $6 billion. Another strategic priority for AbbVie is establishing a strong foundation in solid tumors.

We've made significant investments, both internally and externally, in groundbreaking technology and platforms, and we've partnered with leaders across the field to identify and advance promising therapies to address the significant unmet need that continues to exist in this area. We've made tremendous progress over the past several years.

We currently have more than 20 solid tumor assets in clinical development, many demonstrating early signs of efficacy, and expect to advance at least 10 additional assets into human trials over the next year.

One of our strategic investments was the acquisition of Stemcentrx, which provided AbbVie a late-stage asset in Rova-T as well as a highly attractive discovery and early development platform. Rova-T represents a multibillion-dollar peak revenue opportunity as we advance into first-line small-cell lung cancer and other indications.

As Mike mentioned, in the second quarter next year, we'll see results from the TRINITY study in third-line small-cell lung cancer, and we plan to submit our regulatory application for this indication soon thereafter. Small-cell lung cancer is a devastating disease.

And in the setting where Rova-T will initially be approved, third-line-plus, patients have extremely poor prognosis. There are currently no approved treatments, and the five-year survival is approximately 6%. There has been progress in the field with promising data from both Rova-T and I-O therapy.

Recent data showed objective responses in I-O monotherapy in second- and third-line patients at 11% and I-O/I-O combinations at 22%. This level of response is a meaningful improvement over the mid-single-digit response rates experts estimate are typical in the real-world setting.

Ultimately, we believe a combination of Rova-T and I-O therapy could demonstrate higher levels of efficacy, and we have ongoing collaborations to evaluate this approach with initial data expected next year. Additionally, we have ongoing studies in the front-line and second-line settings.

And in parallel, we're advancing studies to validate Rova-T's activity in a number of other solid tumors. The expression of DLL3 in metastatic melanoma, glioblastoma, and some prostate, pancreatic, and colorectal tumors suggests that Rova-T may be useful in these tumor types.

Beyond Rova-T, the acquisition of Stemcentrx also brought with it a pipeline of additional clinical development programs, including seven additional novel compounds which are currently in human trials, covering solid tumors from small-cell lung cancer to ovarian cancer and colorectal cancer, among others.

Going forward, we're on track to advance roughly three novel assets from Stemcentrx to enter human trials each year. In our early-stage oncology pipeline, we're continuing to explore new technologies that will extend our reach in the solid tumor market.

For example, our next-generation immuno-oncology programs are designed to broaden and deepen responses beyond what we've seen with the first wave of I-O therapies. We're using novel approaches, including bi-specific technology to elicit T-cell activation in close proximity to tumor cells.

Over the past year, four next-generation immuno-oncology assets have entered the clinic, and we look forward to data from these studies over the next several years. As evidenced by our on-market presence, our late-stage pipeline, and our early discovery and development work, clearly we have a major strategic commitment to oncology.

Oncology will be a major growth driver for AbbVie over the next 10 years and beyond, further diversifying our business. In addition to AbbVie's efforts in immunology and oncology, our strategy includes investments and development activity in other attractive high-growth markets such as women's health, neuroscience, and virology.

In women's health, elagolix represents a potential new medicine and advancement for women suffering from endometriosis and uterine fibroids, both highly prevalent conditions with limited treatment options. There are millions of women unsatisfied with their treatment and cycling through oral contraceptives and pain medications.

These women are dealing with significant levels of chronic pain. We believe elagolix represents a significant advancement for this large underserved population and represents a multibillion-dollar opportunity for AbbVie.

Neuroscience is an emerging area of focus for AbbVie, and we are investing internally and externally to develop disease-modifying therapies to treat neurodegenerative conditions such as Alzheimer's, Parkinson's, and multiple sclerosis.

We're currently evaluating mechanisms like and anti-tau and RGMa, which have the potential to translate to disease modification in degenerative neurological conditions, including Alzheimer's, MS, and spinal cord injury.

In virology, we recently launched MAVYRET, our next-generation HCV treatment, a pan-genotypic, once-daily, ribavirin-free therapy that has SVR rates approaching 100% across genotypes with eight weeks of therapy for the majority of patients.

While it's still early, the global launch is progressing extremely well, with positive feedback from physicians, patients, and payers on its strong clinical profile and our go-to-market strategy, confirming our expectation that MAVYRET is a highly competitive product within this market.

Just nine weeks after the launch, MAVYRET has achieved a market share position in the U.S. of over 15%, predominantly driven by the public channel. Internationally, we've seen strong uptake in markets where we've launched, including Germany, which achieved a market leadership position with 40% market share 10 weeks after its launch.

We view MAVYRET as a significant revenue opportunity over the long-range plan, with meaningful sales contributions beginning in 2018.

Clearly, we have one of the most impressive R&D pipelines in our industry, and we look forward to the evolution of our pipeline assets, from promising late-stage development compounds to high-growth marketed products in these areas of high unmet need.

The combination of our own market products and our promising late-stage assets should produce robust growth for our business over the long term. AbbVie represents a unique and attractive investment, offering both industry-leading growth and strong shareholder returns.

There are two components of our company, our HUMIRA business and our growth platform, both of which provide a compelling growth story and high shareholder value. HUMIRA will remain the cornerstone of our industry-leading immunology franchise. We have a high degree of confidence in our ability to deliver continued strong HUMIRA performance.

And as I mentioned, we now expect HUMIRA sales to approach $21 billion in 2020. Following the entry of direct biosimilar competition in the U.S., we expect that HUMIRA will maintain a strong market position with a manageable erosion curve. HUMIRA will generate robust durable cash flow through 2025 and beyond.

These cash flows will fund our pipeline and fuel our ability to continue to provide an attractive return of capital to our shareholders through a strong and growing dividend and share repurchase.

Beyond HUMIRA, AbbVie has a stable base business and a highly attractive pipeline, which represents a significant underappreciated growth platform for AbbVie. Our non-HUMIRA business, which today has sales of approximately $9.6 billion, is expected to grow to more than $35 billion in 2025, reflecting a compound annual growth rate of almost 18%.

This growth trajectory reflects the strength of our derisked late-stage pipeline, including over 20 new product or indication launches by 2020, supporting our ability to sustain top-tier revenue growth despite the entry of direct biosimilar competition.

Based on consensus estimates, AbbVie's top and bottom line growth over the next five years is projected to be in the top quartile of our peer group, while our P/E multiple currently ranks in the lower third of our industry.

So despite our recent strong stock performance, our P/E multiple still has significant room for expansion to be valued consistent with our top-tier biotech peers, offering the potential for strong shareholder returns.

Our objective when we launched AbbVie was to build a high-performing biopharmaceutical company that was capable of delivering long-term top-tier performance. We are a company and a management team that has consistently achieved our objectives, and we have met or exceeded our commitments to our investors.

We're proud of our performance and our proven track record of execution, and we're certainly excited about AbbVie's prospects going forward. We look forward to engaging with the investment community in the coming weeks as we meet with investors and share our strategic vision for the company.

We have a high degree of confidence in our ability to continue to successfully execute on our long-term strategy and deliver outstanding shareholder value. With that, I'll turn the call back over to Liz..

Thanks, Rick. We'll now open the call for questions. Operator, first question please..

Our first question today is from Jeff Holford from Jefferies..

Hi, everyone. Thanks very much for taking my questions. I've got a few quick ones for you. Just first off, there seemed to be a lot of focus yesterday around one of your competitor's commentary around the sudden decline or deterioration in the growth of the psoriasis and psoriatic arthritis markets.

I'm not sure that we've seen it in some of the other companies reporting. I just wondered if you'd like to comment on what you see the market growth there. Second, I know you're not going to give the rate based on what you said.

But can you just confirm that upadacitinib you're seeing a rate below 0.8, which is I think is what one of your other competitors referred to as the upper end of the background rate that's out there? Then just on hep C, you say in your slide deck you're trending below the $3 billion for 2020, which obviously is right based on the current numbers, but MAVYRET looks to be having a very impressive early launch.

I know that we won't be through contracting until through 2018, and 2019 is probably the year that it really steps up. But are you not perhaps a little bit more confident than you indicated in the slide deck that you could be around $3 billion at least by 2020? And then just last on elagolix, I note the Priority Review.

That's really interesting, particularly in light of the opioid use that's there. I'm just wondering what kind of additional labeling support or just what you're looking for there to be able to make the case that this could be part of the solution to the opioid epidemic, particularly in those women with endometriosis. Thanks very much..

Okay.

Mike, maybe why don't you start by talking about the rate, and then I'll cover the other three?.

Certainly. So on upadacitinib, what we've said is that we monitor the program very carefully, and we look at the aggregate data. And so when we monitor the data at this stage, we're looking in a blinded manner across our entire database.

And it's important to understand that because I can't give you a rate that is a upadacitinib rate today without talking about unblinded data and ongoing studies, and I can't do that. So what I'll do is I'll talk about aggregate rates. And what we said and what remains true is that those aggregate rates are consistent with the background.

And we've said that the background, there's variability in that background, but those estimates are around 0.8. And so that hasn't changed. It also hasn't changed that we haven't seen anything that we consider a signal. And the aggregate of our monitoring program tells us that all the statements that we've made are still holding..

Okay, so let me talk a little bit about the psoriasis market first. I think what is being confused here is the slowdown in our product versus the slowdown in our market, and we had something similar happen roughly a year ago with a different product.

If you think about when OTEZLA entered the market, it really drove a number of patients, particularly the more mild patients into the market. And if you recall correctly, we saw the psoriasis market rate grow very rapidly over that period of time, the market rate.

And essentially, what we're seeing now is that that product is no longer gaining traction. And therefore, that group of patients and that growth is no longer in the market.

But if you strip that out, which is what we do all the time to look at our performance, because we really compete in more of the moderate patient population where the biologics tend to compete, moderate to severe, that rate has stayed the same or accelerated.

In fact, it's actually accelerated a bit because you'll have patients that don't get adequate response on OTEZLA that then move on to a biologic. And psoriasis is one of the fastest-growing segments we operate in, mid-teens growth rate. It's a very robust market. It's a highly attractive market. We perform extremely well within that market.

And so I'd say our point of view is very different, and I think our performance clearly demonstrates that it supports our point of view as being different. So I think it's not a question of the market, it's a question of the performance of that asset and what it drove into the marketplace.

On your third question, which was HCV greater than $3 billion, look, we're certainly tracking below $3 billion today. MAVYRET is off to a very good start, and I think MAVYRET does offer a significant opportunity for us going forward. I'd also say that we need to see this market sort itself out.

This is a more challenging market to have a high degree of predictability in what you're going to be able to achieve and sustain over the longer term. Patient volumes have changed pretty dramatically. The competitive response in this market has been robust in certain situations.

And so we're just too early in that launch to make those kinds of predictions. We've obviously dialed in a certain level of HCV performance for 2018 in what we're projecting. I'd say we're optimistic, in fact, I'd say very optimistic about the uptake that we're getting in the marketplace.

But we probably won't reach a real steady-state level until the second quarter of 2018, and then I think we'll be in a much better position to make longer-term projections. And based on the fact that I made one of these projections before, I'll probably wait till I have a little better idea of what that rate looks like.

Elagolix, I think, Jeff, you make an excellent point. This is an area where women are suffering from a significant level of chronic pain, and our clinical trial clearly demonstrated that we could reduce the level of pain medication use. And I think we would be hopeful that that will be something that's identified in the label.

I think the trial was designed in a way where that should be something that would be an objective for us, and we do think it will serve an important purpose in treating people with endometriosis. And so we need to go through the regulatory process, but that certainly will be an objective that we have for the asset.

I think it will be an important objective for the asset going forward. And I can tell you that we're extremely excited about the opportunity for elagolix..

Thanks, Jeff. Operator, we'll take the next question..

Thanks very much..

Thank you. Our next question is from Jami Rubin from Goldman Sachs..

Thank you. Rick, you provided a ton of information in your strategic update, and I'm sure you're tired of talking, but I have a really, really simple question for you.

Do you see a cliff at all? And if not, can you grow the company through whatever cliff you might see or some erosion from HUMIRA? And I ask the question because, obviously, the stock has had a big move.

But my sense is that if you look at the multiple, as you correctly pointed out, it is still at the bottom third, reflecting my sense is that investors still view that there is a cliff coming, albeit pushed out.

So is that the right way to look at it, or do you think this is a company without a cliff and a company that can actually even grow through that cliff? Thanks..

Jami, if you look at our objective when we launched the company, we knew from day one that there was a point of time when we would be dealing with biosimilar competition on HUMIRA. And our whole focus on building a pipeline, a robust pipeline, was designed to allow us to be able to grow through that period.

And we talked over and over again about the importance of the 2019 date in order to launch those products and ultimately be able to drive them up the growth curve to the point where they are profitable and they are contributing significantly.

And I think as we continue to advance, we are hitting all of those milestones that we set for ourselves to be able to do that. And so I would tell you that our whole intent was to be able to drive through that erosion curve that we expected.

I'd also say that as we watch biosimilars play out, mostly in the international markets is where we've seen most of the experience.

They are operating in a way and the counter-strategies that the innovators are using are operating in a way that is consistent with our model that we will use, and we'll actually start that model in 2018 in markets that are going to see at the end of 2018 biosimilar competition outside the U.S.

We're seeing erosion that is consistent with what we assume. And I think we will be able to deal with that in a way that is effective. And so I would say could you have some lumpiness at certain points? I think you could.

Do I think will we be able to grow through it on an extended basis? I don't think there's any question that we'll be able to grow through it..

Thank you..

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

Thank you. Our next question is from Josh Schimmer from Evercore ISI Group..

Great, thanks for taking the question, two of them quickly.

Can you provide an update for how the managed care contract negotiations have gone for HUMIRA and the rest of the portfolio as you approach 2018 and then have greater visibility into 2019? And then maybe a question for Mike, as you think about allocation of R&D spending to the Stemcentrx portfolio, can you discuss what percent of the R&D budget do you think those assets will eventually consume? And do you have any plans to assess other targeting technologies beyond the ADC approach that you're currently using? Thanks..

On the managed care contracting, so we're through all the contracting for managed care and PBMs for 2018. HUMIRA has over 95% preferred covered lives coverage, so we're very pleased with our overall coverage range. And so I don't know specifically how many of those bridge into 2019, so I don't have that data available.

But there was one change, and that was in Aetna, where Aetna did change our status for new patients. We've maintained existing patients, but Aetna is not a large number of covered lives, so that doesn't have any material impact on the brand or on the company, obviously.

But as I said, we have a little over 95% preferred access, which is clearly where we want to be..

Okay, and so this is Mike. I'll take the question about Stemcentrx and our overall portfolio. So as we mentioned on the call, we have a very robust portfolio overall in R&D. And certainly within oncology, we are building considerable momentum. As I mentioned, we have 20 programs in the clinic, 17 of those are in early development.

And that's a mix between Stemcentrx and other AbbVie programs. And so that makes it difficult to give you a percentage that Stemcentrx will represent going forward because, of course, that's going to be based on the total number of programs that advance into later-stage development.

What I would say is we're seeing encouraging signs across that portfolio, on stem programs and other programs of activity, so we'd expect to advance a number of those programs. And with respect to your question about targeting technologies, we certainly have a number of ADCs in our portfolio.

We feel that the talents we have as an organization fit that very well in terms of our skills in small molecule chemistry and protein engineering and antibody engineering, but we are in no way limited to ADCs. We have very robust capabilities in small molecules, in novel biologics beyond monoclonal antibodies.

We have a presence now in oncolytic viruses and other novel means to modulate targets. And so we're going to look at the targets that we have available, and we're going to pick the best modality that we can to address them, and that is in no way going to be limited to ADCs..

Great, thank you..

Thanks, Josh. Operator, we'll take the next question, please..

Thank you. Our next question is from Chris Schott from JPMorgan..

Great, thanks very much, and appreciate all the commentary earlier on the call. Maybe the first question is for Rick. It's just expanding on some of those earlier psoriasis comments you made and just thinking about that business going forward.

You obviously have a significant position here with HUMIRA, but there's a number of very effective agents, including your own IL-23, either launching or about to launch.

So can you just elaborate a little bit more on, A), how much more room do you see for biologic shares to increase here? Maybe B), how do you see TNF's positioning versus these newer agents? And then C), on the pricing dynamics side, does this lead to an area where there could be more price competition, given all the options patients have? And then my second question is on capital deployment priorities.

Just given all the traction you've had on the pipeline, can you just update us a little bit about how you're thinking about capital deployment on a go-forward basis? Thank you..

Okay. So I think if you look at the psoriasis business – and I'd say in general, if you look at all of the areas where HUMIRA competes, it has been and continues to be a relatively crowded market. That hasn't changed the performance of HUMIRA, and I don't expect it to change going forward either.

Certainly, there are room in this market for significant additional biologic penetration. In fact, if you look at the psoriasis market, it has the lowest biologic penetration rates of the three major segments – rheum, GI, and derm.

Derm is the lowest of the three, so it certainly has the greatest opportunity to be able to drive additional biologic penetration. And there clearly is an opportunity to have differentiated products within that segment where you have very, very high efficacy products, like our IL-23, that fit in a portfolio with products like HUMIRA.

And in fact, as we look at our positioning within that market, that is how we think about it. We think about HUMIRA will still be a workhorse product within that market, and risankizumab will fit in for where physicians have patients that ultimately want a higher level of efficacy, and it clearly has a very durable response.

I think the perception is in derm that over time you see a waning effect of these drugs. And in fact, if we look at the risankizumab data, what we see is just the opposite. As we go out in time, the response becomes more robust. And in fact, if you look at total clearance, it's 60% I think at 12 months, which is very impressive.

We haven't seen an agent that looks like that. Convenience of dosing is going to be another significant thing. There will be patients who prefer a less frequent dosing regimen. And so we see these attributes being able to fit together quite nicely and serve the broader patient population.

I think there's always pricing dynamics in every market that you operate in. I don't see anything in this market that has changed significantly, and I don't anticipate that we'll see something that changes, certainly over what is a reasonable time horizon, the next couple of years. So I don't see any dynamics there that overly concern me.

This is still going to boil down to having the right assets and having the right team to be able to execute those assets.

And we view the whole concept of both upadacitinib and risankizumab in combination with HUMIRA give us a powerful portfolio of medicines to be able to serve this market even more broadly than we serve it today, and that gives us tremendous opportunity to be able to grow this business going forward.

We've given you some projections of what we think the market will look like and what we think we'll be able to do. If you think about those projections, the market that we compete in, these assets, $5 billion to $6.5 billion is what we're projecting for each asset by 2025. That represents roughly 7% market share for each asset. This is a big market.

It's a market that is growing at a very rapid pace, and it's a market that the fundamentals still suggest that you can drive biologic penetration levels higher. And certainly, our execution level around that has demonstrated that. On capital deployment, we're in the nice position that we have a business that generates a tremendous amount of capital.

And as we continue to grow it at the rates we're growing it, that cash is only going to grow over time. And our first priority is always to deploy that cash against strategic opportunities to be able to continue to grow the business.

One of the things we did when we started the company is we committed that we would put in a long-term strategy that would allow us to be able to create a pipeline and fund that pipeline in a way that we could sustain growth over the long term.

So we're always looking out in that period of 10 years to say do we have sufficient assets in the pipeline to be able to grow it? So I would always tell you that we'll be looking for those kinds of opportunities. And when we find them, we're going to go after them, and we're in the position to be able to do that.

And I think we have the team that can go out and has demonstrated it can execute to get those assets when we want them. And then the second part is, obviously, we are committed to returning cash to shareholders.

We've certainly demonstrated that, both in the dividend – I mentioned in my comments, we've grown the dividend over 77% since we became a public company, and we've made significant share repurchases over that five-year time period. So we're in a position where we want to continue to grow that and look for opportunities to grow that.

If we get tax reform that gives us greater access to our offshore cash, that will allow us to invest more in the U.S., and it will also allow us to be able to return more cash to shareholders, and that would be desirable to us..

Thanks, Chris. Operator, we'll take the next question, please..

Thank you. Your next question is from Geoff Meacham from Barclays..

Hi all, this is Evan on for Geoff. Congrats on all the progress, and thank you for some of the longer-term guidance and insights, and one quick thank you to Liz and her team for the great strategic slides. They're very, very helpful. One on hep C.

Given the evolving commercial landscape for hep C, what are some of your lessons learned on pricing and reimbursement? And then I have a follow-up on Rova-T..

Well, I don't know that I would describe them as lessons learned. I think as we indicated when we launched MAVYRET, one of the things that we look carefully at is what segment of the U.S.

market would be available for this asset and what was the right go-to-market strategy to be able to access that, because we certainly viewed that as the early opportunity. And then obviously, we drove our decision to come out with a WAC that was in the price range that we came out with it.

So whether you call that a lesson learned or you just say that basically in our analysis of how to be successful in this segment of the market, that was the strategy we came up with. I think you can look at it either way.

Certainly, I think as we look back at that decision, that was a good decision that clearly has had the impact that we had hoped it would have. And I think in general, we like stability in this market. Certainly, this is a market that has had significant price erosion over the last several years.

Most of our contracting is positioned in a parity fashion, and we're totally comfortable with that. In fact, that's our preferred position because we believe this asset can compete effectively, quite effectively, on the attributes of the asset itself. And I think that is the positioning that we're using in the marketplace, and it's been effective..

That's great.

And then on Rova-T, how has the bar changed in small-cell lung cancer, given there being other novel treatment approaches and now that you've pushed the data out, what is it, a quarter or two?.

So small-cell lung cancer remains an area of very, very substantial unmet medical need. The standard of care hasn't changed in many years. And we view it in a positive way overall that there are now some therapies that look like they can make a real difference here, Rova-T included. I'm not sure that the bar has changed substantially though.

So for example, if you look at third-line or greater small-cell lung cancer, there are no approved therapies. Response rates based on expert opinion, because there really are no good clinical studies here, would probably be in the low single-digit range, if not zero. And survival is dismal.

And as Rick mentioned, with recent I-O releases, objective response rates of 10% or 20% are meaningfully different from that. And so there's a huge unmet medical need here, and there's an unmet medical need that relates not only to response rates but also to getting patients on a course that allows them to have good long-term outcomes.

And those longer-term outcomes have been a strength of Rova-T based on its stem cell-targeting approach, cancer stem cell-targeting approach. So while there are encouraging signs, there's still a huge unmet medical need, and I don't think the bar has changed substantially..

Great, thanks for the questions..

Thanks, Evan. Operator, we'll take the next question please..

Thank you. Our next question is from Steve Scala from Cowen..

Many thanks. I have two questions, first a question on the settlement with Amgen on the HUMIRA IP. Settlements of this nature almost always include language allowing the challenger, obviously in this case Amgen, to launch earlier under certain circumstances.

And one such circumstance might be another company's at-risk launch, and in this case, earlier than January of 2023, at least in the U.S. Such language was not in the AbbVie release, and I think it would be material information.

So I'm wondering why an earlier launch by Amgen appears to not even be possible under any circumstances? And secondly, can you be more specific on what RA studies will support the ABT-494 filing? Will it be all six or some subset of them? Many thanks..

Okay, I'll handle the Amgen settlement piece. We have an agreement with Amgen that we have not released all of the specifics around the contract between us and Amgen, and I'm certainly not going to do that now. What I would tell you is this.

What gives us confidence that we're not going to have earlier launches? Let's disconnect it from whether or not Amgen would be able to go to the market or not, is the fact that, one, we believe this clearly demonstrates the power of our IP. Number two, we've been very clear about our position and how we'll enforce our IP.

And if necessary, we will attempt to get a preliminary injunction to block anyone that launches if they violate our IP.

I think if you look at the rulings that have come out of the patent office around the formulation patents alone, I would say that would be an extremely compelling argument with the court in order to obtain a preliminary injunction against someone.

And I think the precedents would suggest that it would be unlikely that the court wouldn't follow what the patent office had described as they reviewed those patents and reaffirmed those patents against the challengers.

And so I think what gives us confidence is we fundamentally believe, one, that's an incredibly risky strategy for someone to take based on the size of this asset and the damage that would be done and the consequences of that damage if they lost.

Number two, I don't know that I can be any clearer about what our intent is, but I think they understand what our intent would be to defend it. And number three, I think our probability of success of getting a PI is high..

Okay, so this is Mike. With respect to the RA studies for upadacitinib and what will support an NDA next year, as you mentioned, we have six studies, and those cover a range of patients from methotrexate inadequate responders to biologic inadequate responders. They include active comparator studies and studies aimed to look at structural endpoints.

And so we will file with at least five studies of the six. We've always considered five studies our core. There was a sixth study, which is a structural study, which was originally anticipated to take longer than the others, but it is moving forward ahead of schedule.

So it's possible that that could actually come in at a time that it can be included, but we're going to continue to evaluate that, but it would either be five or six studies that we would include..

Thank you..

Thanks, Steve. Operator, we'll take the next question, please..

Thank you. Our next question is from Geoffrey Porges from Leerink..

Thank you very much and thanks for all the background color, first question for Mike. Mike, you've talked about upadacitinib in your observations. But could you just give us a sense of – we can't help this question of the BTE rate given what's happened with other programs.

So could you give us a sense of the total clinical experience in RA and the number of observed events so far in the RA studies? I know that the studies are still blinded or some of them are, but it will be helpful to know where you stand.

And then could you just comment on whether you're seeing any platelet increases or decreases? And then on a related note, I'm struck by the timing of the launches of upadacitinib and risankizumab in ulcerative colitis and Crohn's, which are out in 2022 and 2023.

Is there a bottleneck in study sites or in patient recruitment? Because it just seems a long time to have to wait for those programs in IBD to mature. If you could, help us understand that. Thanks..

Certainly. So with respect to rates across the program, I think the best answer that I can give you is the answer that I gave you in my prepared remarks, which is that we monitor the program in aggregate across all of the studies. And of course, we're still blinded on the majority of the studies and therefore the majority of our database.

And when we look at that and when we look at those rates, those rates are consistent with the background rate that we've stated on a number of occasions. We're going to continue to monitor carefully, but we do not see that situation change. I'll also refer to the remarks I made about our DMC.

We are firewalled from our DMC by design, but our DMC has access to all of the data, including the unblinded data, and they have consistently recommended that we continue the program without any modifications. And if they had concerns, you certainly wouldn't expect that to have been their course of action.

With respect to platelet changes, we've looked at it. We've not seen any changes with platelets. Platelets remain stable on therapy. And I think platelets don't seem to be playing any part of the picture for upadacitinib. In terms of launches in UC and Crohn's, it's early on in those programs.

So we're always going to try to move as quickly as we can and advance programs rapidly, but we're not seeing any bottlenecks in sites. We're not seeing any bottlenecks in patients. In fact, recruitment across the program has gone very well, I think indicative of strong investigator and patient interest in the upadacitinib program broadly..

Thanks..

Thanks, Geoff. Operator, we'll take the next question please..

Thank you. Our next question is from Vamil Divan from Credit Suisse..

Great, thanks so much for taking my questions and also for all the details today. So a couple thoughts around the long-term plan and just maybe some updates to your thoughts when you made the plan in 2015 and the update today. So specifically around HUMIRA, and if you can, just what your assumptions are on pricing growth in the U.S.

for that product between now and 2020, what's baked into that $21 billion number? Second, HUMIRA in terms of the EU biosimilar impact, obviously it still looks like it's end of next year.

Just what your thoughts are, we have a little more experience now with biosimilars, in fact, than when we did two years ago, so what you guys are assuming the impact will be on HUMIRA in Europe starting I guess in 2019? And then finally, just around once we do see U.S.

biosimilar direct competition, it sounds like in January 2023, is there any change to your outlook on the rate of erosion at that point, maybe just with some of the changing pricing dynamics or payer dynamics in this country, or do you feel pretty much the same about the erosion curve after 2023? Thanks so much..

Okay, Vamil, this is Rick. So HUMIRA pricing was your first question as it relates the long-term guidance. I think obviously, we do a long-range plan. What you're seeing is the result of what comes out of that long-range planning process. That's where these numbers obviously come from.

And we have communicated previously I think to the investment community that our typical strategy is that we are conservative particularly on the out years because it's much harder to predict from a pricing standpoint, so we tend to be relatively conservative on those out years.

We evaluate it as we get close to the coming year what we think the dynamics are. We have recently come out and said that in 2018, we'll have one price increase, similar to what we did in 2017. And that price increase, I can't remember the specific language. Bill probably can.

But it basically said that it would be below double-digit, and that is how we plan on operating in 2018. And so I think it's consistent with all of that. As far as biosimilars outside of the U.S., we've obviously spent a lot of time studying both the Remicade biosimilar, which has been out there for a longer period of time, the Enbrel biosimilar.

We're watching the Remicade biosimilar here in the U.S. as well. And we've modeled both our strategy and our expected erosion curves against the experience that we've seen there and the competitive response that we've seen and the effectiveness of that competitive response.

We've communicated as part of the previous long-range planning guidance that we gave, is that what we expect is for the brand internationally to peak at in 2018 and then start a modest erosion curve as we see biosimilars enter the marketplaces outside the U.S. in the fourth quarter of 2018 moving forward.

And if you model that going forward all the way through 2020, what you essentially would see is from peak to 2020, the erosion is about 15% or 20%. Now what you have to remember is, unlike some of these other drugs, we are growing volume.

In fact, we're growing volume outside the United States at a rate of high single digits, low double-digit volume increases. And if you looked at some of the other brands, when the biosimilar entered the marketplace, they weren't growing volume, and so therefore, they would have a greater impact on what their revenues eroded over that period of time.

So if you actually dial back in what we're assuming in the way of volume growth that will occur at the same time, then instead of being 15%, as an example, the number would be closer to about 25%, let's say.

And that's relatively consistent, probably a little bit on the lower end compared to Remicade or Enbrel, but I'd say it's within the range of what we've seen from them. Now obviously, we hope to execute even better than that, but I think for planning purposes, that's a reasonable way for investors to think about it.

Your third point was erosion starting in 2023 and the impact that price would have at that point. Again, we have an erosion model that we've built. I think that erosion model is reflective of what we think is likely. It has built into it what we think the pricing assumptions would be leading up to that. And 2023 is a long ways out though.

So we need to continue to monitor that, and we'll obviously adjust it along the way. But I'd say right now it factors in a relatively conservative level of price leading up to the biosimilars entering the marketplace..

Thanks, Vamil. We've got now almost 90 minutes, so we got only time for one more question. Obviously, after the call, we'll be available to answer and address any additional questions that we're unable to get to in the queue today. So, operator, we'll take the last question..

Thank you. Our final question today is from Gregg Gilbert from Deutsche Bank..

Thank you. It's Greg Fraser on for Gregg Gilbert.

On elagolix, how are you thinking about the size of opportunity for endometriosis versus uterine fibroids? And how do you see your current new product business being impacted as adoption of elagolix grows? And then a quick one on VENCLEXTA, how should we think about the market opportunity with a broader label based on the MURANO data? Thank you..

If you look at elagolix in endometriosis, that deck that we provided you will give you the specific numbers, but I'll do this from recall. There are approximately about 2.5 million women in the U.S. that are diagnosed. We think that undiagnosed is probably in the range of about 4 million women.

So obviously, it's a big opportunity, and it's the earlier opportunity. Now, there are more patients who have uterine fibroids, but uterine fibroids are behind endometriosis. And so clearly, we think this is so multibillion-dollar opportunity in endometriosis.

It is one that will require education because this is an area where there hasn't been any real new therapies in this market for 10 years or so. So it is going to require both patient education as well as physician education. And so it will have a ramp that is consistent with the kinds of assets that require that kind of market development.

And we're going to start that market development from a disease awareness standpoint prior to the approval of the drug. So we'll be starting that in 2018 to start to prepare the market for the launch of elagolix. But I think it's a very significant opportunity, and it's one we're obviously preparing for a high-level success.

As far LUPRON is concerned because of the side effect profile of LUPRON, LUPRON is incredibly effective at this. The problem is that it completely shuts down the access, and so it has all of the implications of essentially putting the patient into menopause.

And so it's not a very desirable drug to use for this particular indication, and therefore the sales for this area are relatively modest. So it won't have a material impact at all. My guess is it will have significant erosion of the little bit that it has, but that won't have any kind of material impact overall.

And on MURANO, obviously, today we have a label that's essentially for 17p deletion, which is a relatively – it's an important segment of the market for those patients because they have difficult outcomes, but it's a relatively small number of patients. The broader relapsed/refractory indication in CLL is a very significant opportunity.

So this will drive – once we have this in the marketplace, we would expect that this will drive significant revenue ramping of VENCLEXTA..

Thanks, everyone. That concludes today's conference call. You could access a replay of the call at our website. Thanks again for joining us..

Thank you. And this does conclude today's conference. You may disconnect at this time..