AbbVie's global sales reduce 1.8% to $5.111B in fourth quarter 2013

AbbVie (NYSE: ABBV) today announced financial results for the fourth quarter and full year ended Dec. 31, 2013.

"We are pleased with AbbVie's performance in our first full year as an independent biopharmaceutical company," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "We achieved all of the objectives we set forth for 2013, exceeded our original earnings guidance, and established a solid foundation for the future. We intend to build on this momentum in 2014 as we invest in our key products, advance our pipeline, and prepare for significant product launches that will drive growth in 2015 and beyond."

Fourth-Quarter Results

• Worldwide sales were $5.111 billion in the fourth quarter, down 1.8 percent. On an operational basis, sales decreased 1.1 percent, excluding a 0.7 percent unfavorable impact from foreign exchange rate fluctuations. Excluding sales from our lipid franchise due to the loss of exclusivity, sales increased 7.9 percent on an operational basis in the quarter.
• Fourth-quarter sales were led by the continued strength of HUMIRA. Global HUMIRA sales increased 13.4 percent. U.S. HUMIRA sales grew 18.1 percent.
• Fourth-quarter adjusted gross margin ratio was 77.1 percent, excluding intangible asset amortization and other specified items. The gross margin ratio under U.S. generally accepted accounting principles (GAAP) was 74.9 percent.
• Adjusted selling, general and administrative (SG&A) expense was 26.5 percent of sales in the fourth quarter, reflecting continued investment in our growth brands. On a GAAP basis, SG&A was 28.3 percent of sales.
• Research and development (R&D) was 15.6 percent of sales in the quarter, reflecting funding actions in support of our emerging mid- and late-stage pipeline assets and the continued pursuit of additional HUMIRA indications.
• Net interest expense was $68 million, and the adjusted tax rate was 22.2 percent in the quarter. On a GAAP basis, the fourth-quarter tax rate was 21.6 percent.
• Fourth-quarter diluted earnings per share were $0.70 on a GAAP basis. Adjusted diluted earnings per share, excluding intangible asset amortization expense and other specified items, were $0.82.

Key Events from the Fourth Quarter

• This morning, AbbVie announced completion of its Phase 3 hepatitis C virus (HCV) studies; including top-line results from four remaining registrational HCV trials: TURQUOISE-II, PEARL-II, PEARL-III, and PEARL-IV trials.

Results from the TURQUOISE-II study, which examined treatment of HCV in 380 patients with cirrhosis, a difficult-to-treat population, showed that patients treated for 12 weeks with the AbbVie combination achieved 92 percent sustained virologic response at 12 weeks post treatment (SVR₁₂). 96 percent of patients treated with the AbbVie regimen for 24 weeks achieved SVR₁₂. 

The PEARL-II and PEARL-III studies evaluated the potential for ribavirin-free therapy in genotype 1b (GT1b) experienced and naive patients, respectively. PEARL-IV evaluated the potential for ribavirin-free therapy in genotype 1a (GT1a) naive patients. Results from the PEARL-II study>12. Patients treated with the ribavirin-containing regimen, achieved 97 percent SVR₁₂. Results from the PEARL-III study>12. The PEARL-IV study>12 rate of 97 percent and the ribavirin-free regimen produced an SVR₁₂ rate of 90 percent.

• During the quarter, AbbVie announced top-line Phase 3 HCV results from the SAPPHIRE-I and SAPPHIRE-II studies, which examined AbbVie's HCV regimen in naive and treatment-experienced patients. Results from the SAPPHIRE trials showed that in both naive and treatment-experienced patients, treatment with AbbVie's 3-DAA therapy plus ribavirin produced high SVR rates of 96 percent. Additionally, the regimen was well-tolerated, with discontinuations due to adverse events reported in only one percent of patients receiving the combination.
• AbbVie recently announced the initiation of a Phase 3 clinical trial evaluating the safety and efficacy of its investigational compound, veliparib (ABT-888), when added to carboplatin, a chemotherapy, in women with early-stage, triple-negative breast cancer. The three-arm trial will compare the addition of veliparib plus carboplatin or placebo plus carboplatin to standard neoadjuvant chemotherapy. We expect Phase 3 starts for veliparib in additional cancer types in 2014.
• AbbVie and its partner recently initiated a Phase 3 comparative clinical trial designed to evaluate the efficacy and safety of ABT-199/GDC-0199, an investigational BCL-2 (B-cell lymphoma 2) selective inhibitor, in patients with relapsed refractory chronic lymphocytic leukemia (CLL). The study will compare the combination of ABT-199/GDC-0199 and rituximab to the combination of bendamustine and rituximab. Rituximab and bendamustine are commonly used to treat patients with CLL.

Issuing Full-Year 2014 Outlook

AbbVie expects 2014 revenue of approximately $19 billion, excluding any potential revenue from the expected 2014 U.S. launch of our HCV therapy. AbbVie is issuing diluted earnings-per-share guidance for the full-year 2014 of $3.00 to $3.10 on an adjusted basis, or $2.63 to $2.73 on a GAAP basis. The company's 2014 adjusted diluted earnings-per-share guidance excludes $0.37 per share of intangible asset amortization expense and other specified items primarily associated with certain separation-related costs and ongoing restructuring activities.