AbbVie Inc. - Quarter Report: 2024 September (Form 10-Q)


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Note 8

billion at September 30, 2024 and $ billion at December 31, 2023, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than months. Accumulated gains and losses as of September 30, 2024 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding from the date of settlement.

In 2019, the company entered into treasury rate lock agreements with notional amounts totaling $ billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value. The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was recognized in AOCI. This gain is reclassified to interest expense, net over the term of the related debt.

In June 2023, the company entered into a cross-currency swap contract that matured in November 2023 with a notional amount totaling € million to hedge the company’s exposure to changes in future cash flows of foreign currency denominated debt related to changes in foreign exchange rates. The cross-currency swap contract was designated as a cash flow hedge and effectively converted the interest and principal payments of the related foreign currency denominated debt to U.S. dollars. The unrealized gains and losses on the contract were included in AOCI and reclassified to net foreign exchange loss over the term of the related debt.

The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans. These contracts are not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net foreign exchange gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed. These contracts had notional amounts totaling $ billion at September 30, 2024 and $ billion at December 31, 2023.

The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € billion at September 30, 2024 and € billion at December 31, 2023. In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € billion, SEK billion, CAD million and CHF million at September 30, 2024 and € billion, SEK billion, CAD million and CHF million at December 31, 2023. The company uses the spot method of assessing hedge effectiveness for derivative instruments designated as net investment hedges. Realized and unrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ billion at September 30, 2024 and $ billion at December 31, 2023. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.

amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.


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$ Accounts payable and accrued liabilities$ $ Designated as net investment hedgesPrepaid expenses and other Accounts payable and accrued liabilities Designated as net investment hedgesOther assets Other long-term liabilities Not designated as hedgesPrepaid expenses and other Accounts payable and accrued liabilities Interest rate swap contractsDesignated as fair value hedgesOther assets Other long-term liabilities Total derivatives$ $ $ $

While certain derivatives are subject to netting arrangements with the company’s counterparties, the company does not offset derivative assets and liabilities within the condensed consolidated balance sheets.

)$ $ $ Designated as net investment hedges() () Cross-currency swap contracts designated as cash flow hedges () ()

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive income (loss) pre-tax losses of $ million for the three months and pre-tax gains of $ million for the nine months ended September 30, 2024 and pre-tax gains of $ million for the three months and pre-tax gains of $ million for the nine months ended September 30, 2023.


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$ $ $ Designated as net investment hedgesInterest expense, net Not designated as hedgesNet foreign exchange loss (gain)()()()()Treasury rate lock agreements designated as cash flow hedgesInterest expense, net Cross-currency swap contracts designated as cash flow hedgesNet foreign exchange loss (gain) () ()Interest rate swap contractsDesignated as fair value hedgesInterest expense, net () ()Debt designated as hedged item in fair value hedgesInterest expense, net() ()

Fair Value Measures

The fair value hierarchy consists of the following three levels:

•Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;

•Level 2 – Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and

•Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability.

$ $ $ Money market funds and time deposits Debt securities Equity securities Foreign currency contracts Total assets$ $ $ $ LiabilitiesInterest rate swap contracts$ $ $ $ Foreign currency contracts Financing liability Contingent consideration Total liabilities$ $ $ $


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Money market funds and time deposits are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves. Equity securities primarily consist of investments for which the fair values were determined by using the published market prices per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using observable market inputs including published interest rate curves and both forward and spot prices for foreign currencies.

The financing liability is related to funding agreements entered into by Cerevel Therapeutics prior to the acquisition and assumed by AbbVie. The funding agreements represent financial instruments that are accounted for as financing arrangements and the company elected to account for the financing liability in accordance with the fair value option, as permitted under ASC 825 Financial Instruments. The fair value measurement of the financing liability was determined based on significant unobservable inputs. Potential payments are estimated by applying a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for sales milestones and royalty payments, which are then discounted to present value. Changes to the fair value of the financing liability can result from changes to one or a number of inputs, including discount rates, estimated probabilities and timing of achieving milestones and estimated amounts of future sales. The change in fair value recognized in net earnings is recorded in other expense (income), net in the condensed consolidated statements of earnings and the change in fair value attributable to instrument-specific credit risk is recognized in other comprehensive loss. Changes in fair value recognized in other expense (income), net and other comprehensive loss for the three months ended September 30, 2024 were not significant.

The fair value measurements of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products. The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is employed in determining the appropriateness of certain of these inputs. Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period.


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% - %

Probability of payment for royalties by indication(b)

% - %

Projected year of payments

% at December 31, 2023.

There have been transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy. $ Change in fair value recognized in net earnings Payments()()Ending balance$ $

The change in fair value recognized in net earnings is recorded in other expense (income), net in the condensed consolidated statements of earnings. Contingent consideration payments of amounts up to the initial acquisition date fair value are classified as cash outflows from financing activities and payments of amounts in excess of the initial acquisition date fair value are classified as cash outflows from operating activities in the condensed consolidated statements of cash flows.

Certain financial instruments are carried at historical cost or some basis other than fair value.

$ $ $ $ Long-term debt and finance lease obligations, excluding fair value hedges Total liabilities$ $ $ $ $


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$ $ $ $ Long-term debt and finance lease obligations, excluding fair value hedges Total liabilities$ $ $ $ $

AbbVie also holds investments in equity securities that do not have readily determinable fair values. The company records these investments at cost and remeasures them to fair value based on certain observable price changes or impairment events as they occur. The carrying amount of these investments was $ million as of September 30, 2024 and $ million as of December 31, 2023. No significant cumulative upward or downward adjustments have been recorded for these investments as of September 30, 2024.

Concentrations of Risk

Of total net accounts receivable, U.S. wholesalers accounted for % as of September 30, 2024 and % as of December 31, 2023, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these wholesalers.

Debt and Credit Facilities

Financing Related to ImmunoGen and Cerevel Therapeutics Acquisitions

In connection with the acquisitions of ImmunoGen and Cerevel Therapeutics, in February, 2024, the company issued $ billion aggregate principal amount of unsecured senior notes. The notes are unsecured, unsubordinated obligations of AbbVie and will rank equally in right of payment with all of AbbVie’s existing and future unsecured, unsubordinated indebtedness, liabilities and other obligations. AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus a make-whole premium. AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity. In connection with the offering, debt issuance costs incurred totaled $ million and debt discounts totaled $ million, which are being amortized over the respective terms of the notes to interest expense, net in the condensed consolidated statements of earnings.

AbbVie used the net proceeds received from the issuance of the notes to finance the acquisition of ImmunoGen, repay its term-loan, repay commercial paper borrowings, pay fees and expenses in respect of the foregoing, finance general corporate purposes and, together with cash on hand, fund AbbVie’s acquisition of Cerevel Therapeutics. See Note 4 for additional information.


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4.80% Senior Notes due 2029 4.95% Senior Notes due 2031 5.05% Senior Notes due 2034 5.35% Senior Notes due 2044 5.40% Senior Notes due 2054 5.50% Senior Notes due 2064 Total debt issued$

In December 2023, AbbVie entered into a $ billion 364-day bridge credit agreement and $ billion 364-day term loan credit agreement. In February 2024, AbbVie borrowed and repaid $ billion under the term loan credit agreement. Interest charged on this borrowing was based on Secured Overnight Financing Rate Reference Rate (SOFR) +% with an effective interest rate of %. Subsequent to the $ billion issuance of senior notes, AbbVie terminated both the bridge and term loan credit agreements in the first quarter of 2024. In February 2024, concurrent with the ImmunoGen acquisition, the company assumed and repaid an ImmunoGen senior secured term loan at a fair value of $ million.

In connection with the acquisition of Cerevel Therapeutics, the company assumed $ million aggregate principal of % convertible senior notes due 2027. Upon acquisition, the convertible senior notes became callable and note holders could redeem the convertible senior notes for cash at a premium. As of the acquisition date, the convertible senior notes were recognized as current portion of long-term debt on the condensed consolidated balance sheets at an aggregate fair value of $ million. Following the acquisition date, the company repaid the convertible senior notes and there were no amounts outstanding as of September 30, 2024.

The company also assumed funding agreements entered into by Cerevel Therapeutics prior to the acquisition. Under the agreements, Cerevel Therapeutics received funding to support development of tavapadon and agreed to repay regulatory milestones, sales milestones and royalties contingent upon approval of tavapadon by the U.S. Food and Drug Administration (FDA). In addition, upon acquisition the company has the option to satisfy payment obligations early by making a payment equal to the amount of funding provided to Cerevel Therapeutics plus a variable premium. In all circumstances, total repayments under the funding agreements will not exceed $ million in aggregate. The funding agreements were accounted for as financing arrangements and the fair value of the related financing liability was $ million as of the acquisition date. In conjunction with the funding agreements, AbbVie also assumed security agreements entered into by Cerevel Therapeutics prior to the acquisition pursuant to which Cerevel Therapeutics granted the funding investors a security interest in the assets material to the development and commercialization of tavapadon in the United States.

Other Long-Term Debt

In May 2024, the company repaid a € billion aggregate principal amount of % senior euro notes at maturity.

In June 2024, the company repaid a € million aggregate principal amount of % senior euro notes and $ billion aggregate principal amount of % senior notes at maturity.

Subsequent to September 30, 2024, the company refinanced its $ billion floating rate three-year term loan. As part of the refinancing, the company repaid the existing $ billion term loan due May 2025 and borrowed $ billion under a new term loan due April 2027.

In January 2023, the company repaid a $ billion floating rate three-year term loan that was scheduled to mature in May 2023. In March 2023, the company repaid a $ million aggregate principal amount of % senior notes at maturity.

In May 2023, the company repaid $ billion aggregate principal amount of % senior notes at maturity.

Short-Term Borrowings

During the nine months ended September 30, 2024, the company issued and redeemed $ billion of commercial paper. There were commercial paper borrowings outstanding as of September 30, 2024 and December 31, 2023. The weighted average interest rate on commercial paper borrowings was % for the nine months ended September 30, 2024.


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revolving credit facility. The amendment increased the unsecured revolving credit facility commitments from $ billion to $ billion and extended the maturity date of the facility from August 2023 to March 2028. This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At September 30, 2024, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant. amounts were outstanding under the company's credit facilities as of September 30, 2024 and December 31, 2023.

Note 9 $ $ $ $ $ $ $ Interest cost Expected return on plan assets()()()() Amortization of prior service cost (credit) ()()()()Amortization of actuarial loss Net periodic benefit cost (credit)$ $()$ $()$ $ $ $


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Note 10

$ $ $ Research and development Selling, general and administrative Pre-tax compensation expense Tax benefit()()()()After-tax compensation expense$ $ $ $ $

Research and development

Selling, general and administrative )) )) $()

Other comprehensive loss for the nine months ended September 30, 2023 included foreign currency translation adjustments totaling a loss of $ million principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling a gain of $ million.


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)$()$()$()Tax expense Total reclassifications, net of tax$()$()$()$()Pension and post-employment benefits

Amortization of actuarial losses (gains) and other(b)

$ $()$ $()Tax benefit() () Total reclassifications, net of tax$ $()$ $()Cash flow hedging activities

Gains on foreign currency forward exchange contracts(c)

$()$()$()$()

Gains on treasury rate lock agreements(a)

()()()()

Gains on cross-currency swap contracts(d)

Tax expense

Total reclassifications, net of tax$()$()$()$()

(d) Amounts are included in net foreign exchange loss (gain) (see Note 8).

Note 11

% for the three months and % for the nine months ended September 30, 2024 compared to % for the three months and % for the nine months ended September 30, 2023. The effective tax rate in each period differed from the U.S. statutory tax rate of % principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, changes in fair value of contingent consideration and business development activities, including ImmunoGen and Cerevel Therapeutics acquisition-related costs. The increase in the effective tax rate for the three months ended September 30, 2024 over the prior year was primarily due to changes in fair value of contingent consideration, impact of foreign operations and business development activities. The increase in the effective tax rate for the nine months ended September 30, 2024 over the prior year was primarily due to the impact of foreign operations and business development activities.

million in connection with statute of limitation expirations. The company has various federal, state and foreign examinations ongoing. Finalizing examinations with the relevant taxing authorities can include formal administrative and legal proceedings, and as a result, we cannot reasonably estimate the timing of resolution for certain unrecognized tax benefits.

Subsequent to September 30, 2024, the company was notified that the administrative proceeding related to its U.S. federal income tax examination for certain tax years was substantially completed. Final resolution of examination of such years may occur in the fourth quarter of 2024. The company anticipates that final resolution will result in a decrease in the gross amount of unrecognized tax benefits on the condensed consolidated balance sheets and recognition of an income tax benefit in the condensed consolidated statement of earnings, which could be material. The Company does not anticipate that such resolution will have a significant impact on its cash flows.


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Note 12

billion as of September 30, 2024 and $ billion as of December 31, 2023. For litigation matters discussed below for which a loss is probable or reasonably possible, the company is unable to estimate the possible loss or range of loss, if any, beyond the amounts accrued. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued by AbbVie. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial position, results of operations or cash flows.

individual plaintiff lawsuits and a certified class action by Niaspan direct purchasers. The cases are pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the federal multi-district litigation (MDL) Rules as In re: Niaspan Antitrust Litigation, MDL No. 2460. In October 2016, the Orange County, California District Attorney’s Office filed a lawsuit on behalf of the State of California regarding the Niaspan patent litigation settlement in Orange County Superior Court, asserting a claim under the unfair competition provision of the California Business and Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees.

In August 2019, direct purchasers of AndroGel filed a lawsuit, King Drug Co. of Florence, Inc., et al. v. AbbVie Inc., et al., against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, alleging that 2006 patent litigation settlements and related agreements by Solvay Pharmaceuticals, Inc. (a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) with generic companies violated federal antitrust law, and also alleging that 2011 patent litigation by Abbott with two generic companies regarding AndroGel was sham litigation and the settlements of those litigations violated federal antitrust law. In September 2024, AbbVie and plaintiffs reached an agreement to resolve this lawsuit. In November 2022, the State of Oregon filed a lawsuit in the Multnomah County, Oregon Circuit Court making similar allegations regarding the 2011 patent litigation with one of the generic companies.

Government Proceedings

Lawsuits are pending against Allergan and several other manufacturers generally alleging that they improperly promoted and sold prescription opioid products. Approximately lawsuits are pending against Allergan in federal and state courts. Most of the federal court lawsuits are consolidated for pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re: National Prescription Opiate Litigation, MDL No. 2804. Approximately of the lawsuits are pending in various state courts. The plaintiffs in these lawsuits, which include states, counties, cities, other municipal entities, Native American tribes, union trust funds and other third-party payors, private hospitals and personal injury claimants, generally seek compensatory and punitive damages. Of these approximately lawsuits, approximately of them are brought by states, counties, cities, and other municipal entities, approximately of which are in the process of being dismissed pursuant to the previously announced settlement. Another approximately of the approximately lawsuits are covered by a proposed class settlement between Allergan and a class of acute care hospitals, which is subject to court approval and other contingencies.

In March 2023, AbbVie Inc. filed a petition in the United States Tax Court, AbbVie Inc. and Subsidiaries v. Commissioner of Internal Revenue. The petition disputes the Internal Revenue Service determination concerning a $ million income tax benefit recorded in 2014 related to a payment made to a third party for the termination of a proposed business combination.


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ALCL lawsuits and other lawsuits are coordinated for pre-trial purposes in the United States District Court for the District of New Jersey under the MDL rules as In re: Allergan Biocell Textured Breast Implant Product Liability Litigation, MDL No. 2921. Approximately ALCL lawsuits and other lawsuits are pending in various state courts. Approximately ALCL and other lawsuits are pending in other countries. Plaintiffs generally seek monetary damages, medical monitoring, and attorneys’ fees.

Intellectual Property Litigation

AbbVie Inc. is seeking to enforce patent rights relating to venetoclax (a drug sold under the trademark Venclexta). Litigation was filed in the United States District Court for the District of Delaware in July 2020 against Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc. AbbVie alleges defendants’ proposed generic venetoclax products infringe certain patents and seeks declaratory and injunctive relief. Genentech, Inc., which is in a global collaboration with AbbVie concerning the development and marketing of Venclexta, is the co-plaintiff in this suit.

AbbVie Inc. is seeking to enforce patent rights relating to upadacitinib (a drug sold under the trademark Rinvoq). Litigation was filed in the United States District Court for the District of Delaware in November 2023 against Hetero USA, Inc., Hetero Labs Limited, Hetero Labs Limited Unit-V, Aurobindo Pharma USA, Inc., Aurobindo Pharma Ltd., Sandoz, Inc. Sandoz Private Limited, Sandoz GMBH, and Sun Pharmaceutical Industries, Ltd. AbbVie alleges defendants’ proposed generic upadacitinib products infringe certain patents and seeks declaratory and injunctive relief.

AbbVie Inc. is seeking to enforce patent rights related to ubrogepant (a drug sold under the trademark Ubrelvy). Litigation was filed in the United States District Court for the District of New Jersey in March 2024 against Aurobindo Pharma U.S.A., Inc., Aurobindo Pharma Limited, and Apitoria Pharma Private Limited; Zydus Pharmaceuticals (USA) Inc. and Zydus Lifesciences Limited; MSN Pharmaceuticals Inc., MSN Laboratories Private Limited, and MSN Life Sciences Private Limited; and Hetero USA Inc., Hetero Labs Limited Unit-III, and Hetero Labs Limited. AbbVie alleges defendants’ proposed generic ubrogepant products infringe certain patents and seeks declaratory and injunctive relief. Merck Sharp & Dohme LLC, which exclusively licenses certain patents to AbbVie, is a co-plaintiff in the litigation.


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Note 13

$ $ $ International Total$ $ $ $ SkyriziUnited States$ $ $ $ International Total$ $ $ $ RinvoqUnited States$ $ $ $ International Total$ $ $ $ OncologyImbruvicaUnited States$ $ $ $ Collaboration revenues Total$ $ $ $ VenclextaUnited States$ $ $ $ International Total$ $ $ $

Elahere(a)

United States

$ $ $ $ EpkinlyCollaboration Revenues$ $ $ $ International Total$ $ $ $ AestheticsBotox CosmeticUnited States$ $ $ $ International Total$ $ $ $ Juvederm CollectionUnited States$ $ $ $ International Total$ $ $ $ Other AestheticsUnited States$ $ $ $ International Total$ $ $ $ NeuroscienceBotox TherapeuticUnited States$ $ $ $ International Total$ $ $ $ VraylarUnited States$ $ $ $ International Total$ $ $ $


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$ $ $ International Total$ $ $ $ UbrelvyUnited States$ $ $ $ International Total$ $ $ $ QuliptaUnited States$ $ $ $ International Total$ $ $ $ Other NeuroscienceUnited States$ $ $ $ International Total$ $ $ $ Eye CareOzurdexUnited States$ $ $ $ International Total$ $ $ $ Lumigan/GanfortUnited States$ $ $ $ International Total$ $ $ $ Alphagan/CombiganUnited States$ $ $ $ International Total$ $ $ $ RestasisUnited States$ $ $ $ International Total$ $ $ $ Other Eye CareUnited States$ $ $ $ International Total$ $ $ $ Other Key ProductsMavyretUnited States$ $ $ $ International Total$ $ $ $ CreonUnited States$ $ $ $ Linzess/ConstellaUnited States$ $ $ $ International Total$ $ $ $ All other$ $ $ $ Total net revenues$ $ $ $

(a)Net revenues include ImmunoGen product revenues after the acquisition closing date of February 12, 2024.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of September 30, 2024 and December 31, 2023 and the results of operations for the three and nine months ended September 30, 2024 and 2023. This commentary should be read in conjunction with the Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, “Financial Statements and Supplementary Data.”

EXECUTIVE OVERVIEW

Company Overview

AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. AbbVie uses 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.

On August 1, 2024, AbbVie completed the acquisition of Cerevel Therapeutics Holdings, Inc. (Cerevel Therapeutics). The acquisition complements AbbVie’s neuroscience portfolio, adding a wide range of potentially best-in-class assets that may transform standards of care across psychiatric and neurological disorders where significant unmet needs remain for patients. See Note 4 to the Condensed Consolidated Financial Statements for additional information on the acquisition. Subsequent to the acquisition date, AbbVie's consolidated financial statements include the assets, liabilities, operating results and cash flows of Cerevel Therapeutics.

On July 1, 2024, AbbVie announced Robert A. Michael, AbbVie's former president and chief operating officer, succeeded Richard A. Gonzalez as the company's chief executive officer (CEO). Mr. Gonzalez, who has served as CEO since the company's formation in 2013, retired from the role of CEO and became executive chairman of the board of directors, effective July 1, 2024. Additionally, the board has appointed Mr. Michael as a member of the board of directors effective July 1, 2024.

On February 12, 2024, AbbVie completed the acquisition of ImmunoGen, Inc. (ImmunoGen). The acquisition of ImmunoGen further builds on AbbVie's existing solid tumor pipeline of novel targeted therapies and next-generation immuno-oncology assets, which have the potential to create new treatment possibilities across multiple solid tumors and hematologic malignancies. AbbVie and ImmunoGen's combined capabilities represent an opportunity to deliver potentially transformative antibody-drug conjugate (ADC) therapies to patients. See Note 4 to the Condensed Consolidated Financial Statements for additional information on the acquisition. Subsequent to the acquisition date, AbbVie's consolidated financial statements include the assets, liabilities, operating results and cash flows of ImmunoGen.

AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers. Outside the United States, AbbVie sells products primarily to wholesalers or through distributors, and depending on the market works through largely centralized national payers system to agree on reimbursement terms. Certain products are co-marketed or co-promoted with other companies. AbbVie operates as a single global business segment and has approximately 50,000 employees.

2024 Strategic Objectives

AbbVie's mission is to discover and develop innovative medicines and products that solve serious health issues today and address the medical challenges of tomorrow while achieving top-tier financial performance through outstanding execution. AbbVie intends to execute its strategy and advance its mission in a number of ways, including: (i) maximizing the benefits of a diversified revenue base with multiple long-term growth drivers; (ii) leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas and ensuring strong commercial execution of new product launches; (iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, oncology, aesthetics, neuroscience and eye care as well as continued investment in key on-market products; (iv) generating substantial operating cash flows to support investment in innovative research and development, and return cash to shareholders via a strong and growing dividend while also continuing to repay debt. In addition, AbbVie anticipates several regulatory submissions and data readouts from key clinical trials in the next 12 months.


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Financial Results

The company's financial performance for the nine months ended September 30, 2024 included delivering worldwide net revenues of $41.2 billion, operating earnings of $10.6 billion, diluted earnings per share of $2.41 and cash flows from operations of $11.8 billion. Worldwide net revenues increased 3% on a reported basis and 4% on a constant currency basis.

Diluted earnings per share was $2.41 for the nine months ended September 30, 2024 and included the following after-tax costs: (i) $4.9 billion related to the amortization of intangible assets; (ii) $3.4 billion for the change in fair value of contingent consideration liabilities; (iii) $894 million of acquisition and integration expenses; and (iv) $585 million for charges related to litigation matters. Additionally, financial results reflected continued funding to support all stages of AbbVie’s pipeline assets and continued investment in AbbVie’s on-market brands.

Research and Development

Research and innovation are the cornerstones of AbbVie’s business as a global biopharmaceutical company. AbbVie’s long-term success depends to a great extent on its ability to continue to discover and develop innovative products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.

AbbVie’s pipeline currently includes approximately 90 compounds, devices or indications in development individually or under collaboration or license agreements and is focused on such important specialties as immunology, oncology, aesthetics, neuroscience and eye care. Of these programs, approximately 50 are in mid- and late-stage development.

The following sections summarize transitions of significant programs from mid-stage development to late-stage development as well as developments in significant late-stage and registration programs. AbbVie expects multiple mid-stage programs to transition into late-stage programs in the next 12 months.

Significant Programs and Developments

Immunology

Rinvoq

•In January 2024, AbbVie initiated a Phase 3 clinical trial to evaluate Rinvoq in adults and adolescents with non-segmental vitiligo who are eligible for systemic therapy.

•In April 2024, AbbVie announced positive top-line results from its Phase 3 SELECT-GCA trial for Rinvoq in combination with a 26-week steroid taper regimen in patients with giant cell arteritis (GCA) achieved its primary endpoint.

•In April 2024, AbbVie announced positive top-line results from the head-to-head Phase 3b/4 Level-Up trial evaluating Rinvoq compared to dupilumab in adolescent and adult patients with moderate to severe atopic dermatitis. In the study, Rinvoq demonstrated superiority to dupilumab on the primary endpoint and all ranked secondary endpoints.

•In June 2024, AbbVie announced that the U.S. Food and Drug Administration (FDA) has approved Rinvoq for the treatment of pediatric patients two years of age and older with active polyarticular juvenile idiopathic arthritis (pJIA) as well as psoriatic arthritis (PsA), provided they have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.

•In July 2024, AbbVie announced that it has submitted applications for a new indication to the FDA and European Medicines Agency (EMA) for Rinvoq for the treatment of adult patients with GCA.

Skyrizi

•In June 2024, AbbVie announced that the FDA has approved Skyrizi for adults with moderately to severely active ulcerative colitis (UC).

•In July 2024, AbbVie announced that the European Commission (EC) has approved Skyrizi for the treatment of adult patients with moderately to severely active UC who have had an inadequate response to, lost response to, or were intolerant to conventional therapy or a biologic therapy.

Lutikizumab

•In January 2024, AbbVie announced Phase 2 results showing adults with moderate to severe hidradenitis suppurativa (HS) who had previously failed anti-TNF therapy who received lutikizumab achieved higher response rates than placebo in the primary endpoint of achieving HS Clinical Response at week 16.


2024 Form 10-Q \|			32

•In July 2024, AbbVie initiated a Phase 3 clinical trial to evaluate lutikizumab in adult and adolescent patients with moderate to severe HS.

Oncology

Epkinly

•In March 2024, AbbVie initiated a Phase 3 clinical trial to evaluate Epkinly in combination with rituximab and lenalidomide in patients with previously untreated follicular lymphoma (FL).

•In June 2024, AbbVie announced that the FDA has approved Epkinly for the treatment of adults with relapsed or refractory (R/R) FL after two or more lines of prior therapy. This indication is approved under the FDA's Accelerated Approval program based on overall response rate (ORR) and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.

•In June 2024, AbbVie announced that the EMA Committee for Medicinal Products for Human Use has adopted a positive opinion recommending the conditional marketing authorization of Tepkinly as a monotherapy for the treatment of adult patients with R/R FL after two or more prior therapies.

•In August 2024, AbbVie announced that the EC has granted conditional marketing authorization for Tepkinly as a monotherapy for the treatment of adult patients with R/R FL after two or more lines of prior therapy.

Elahere

•In March 2024, AbbVie announced that the FDA granted full approval for Elahere for the treatment of folate receptor alpha (FRα)-positive, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal adult cancer patients treated with up to three prior therapies.

•In June 2024, AbbVie announced positive topline results from the Phase 2 PICCOLO trial evaluating Elahere monotherapy in heavily pre-treated patients with FRα-positive, platinum-sensitive ovarian cancer. The study met its primary endpoint and no new safety concerns were identified.

•In September 2024, AbbVie announced that the EMA Committee for Medicinal Products for Human Use has adopted a positive opinion recommending the marketing authorization of Elahere for the treatment of adult patients with FRα-positive, platinum-resistant and high-grade serous epithelial ovarian, fallopian tube or primary peritoneal cancer who have received one to three prior treatment regimens.

Navitoclax

•In April 2024, AbbVie announced its decision to discontinue the Phase 3 TRANSFORM-2 study evaluating navitoclax, a BCL-XL/BCL-2 inhibitor, plus ruxolitinib in patients with R/R myelofibrosis following evaluation of the totality of data from the Phase 3 TRANSFORM-1 trial and feedback from regulators.

ABBV-383

•In June 2024, AbbVie initiated the CERVINO Phase 3 clinical trial to evaluate ABBV-383 monotherapy compared with standard available therapies in adult patients with R/R multiple myeloma who have received at least two lines of prior therapy.

Teliso-V

•In September 2024, AbbVie announced submission of a Biologics License Application to the FDA for accelerated approval of Teliso-V in adult patients with previously treated, locally advanced or metastatic epidermal growth factor receptor (EGFR) wild type, nonsquamous non-small cell lung cancer (NSCLC) with c-Met protein overexpression.

Aesthetics

Juvederm Collection

•In March 2024, AbbVie announced the FDA approval of Juvederm Voluma XC for injection in the temple region to improve moderate to severe temple hollowing in adults over the age of 21.


2024 Form 10-Q \|			33

Botox Cosmetic

•In September 2024, AbbVie announced that Botox Cosmetic is now available for the treatment of masseter muscle prominence (MMP) in China.

•In October 2024, AbbVie announced that the FDA has approved Botox Cosmetic for temporary improvement in the appearance of moderate to severe vertical bands connecting the jaw and neck (platysma bands) in adults.

Neuroscience

Vyalev

•In January 2024, AbbVie announced the launch of Produodopa (ABBV-951) in the European Union for the treatment of advanced Parkinson's disease with severe motor fluctuations and hyperkinesia (excessive movement) or dyskinesia (involuntary movement), and when available combinations of Parkinson's medicinal products have not given satisfactory results.

•In June 2024, AbbVie announced it received a Complete Response Letter (CRL) from the FDA for the New Drug Application (NDA) for ABBV-951 for the treatment of motor fluctuations in adults with advanced Parkinson's disease. In its letter, the FDA cited observations that were identified during inspection of a third-party manufacturer listed in the NDA. The CRL did not identify any issues related to the safety, efficacy or labeling of ABBV-951, including the device, and does not request that AbbVie conduct additional efficacy or safety trials related to the drug or device-related testing.

•In October 2024, AbbVie announced that the FDA has approved Vyalev (ABBV-951) as the first and only subcutaneous 24-hour infusion of levodopa-based therapy for the treatment of motor fluctuations in adults with advanced Parkinson's disease.

Tavapadon

•In September 2024, AbbVie announced positive topline results from its Phase 3 TEMPO-1 trial for Tavapadon as a monotherapy in early Parkinson's disease.

For a more comprehensive discussion of AbbVie’s products and pipeline, see the company’s Annual Report on Form 10-K for the year ended December 31, 2023.


2024 Form 10-Q \|			34

RESULTS OF OPERATIONS

Net Revenues

The comparisons presented at constant currency rates reflect comparative local currency net revenues at the prior year’s foreign exchange rates. This measure provides information on the change in net revenues assuming that foreign currency exchange rates had not changed between the prior and current periods. AbbVie believes that the non-GAAP measure of change in net revenues at constant currency rates, when used in conjunction with the GAAP measure of change in net revenues at actual currency rates, may provide a more complete understanding of the company’s operations and can facilitate analysis of the company’s results of operations, particularly in evaluating performance from one period to another.


	Three months ended September 30,				Percent change				Nine months ended September 30,				Percent change
					At actual currency rates		At constant currency rates						At actual currency rates		At constant currency rates
(dollars in millions)	2024		2023						2024		2023
United States	$	11,148	$	10,852	2.7	%	2.7	%	$	31,295	$	30,773	1.7	%	1.7	%
International	3,312		3,075		7.7	%	12.4	%	9,937		9,244		7.5	%	12.2	%
Net revenues	$	14,460	$	13,927	3.8	%	4.9	%	$	41,232	$	40,017	3.0	%	4.1	%


2024 Form 10-Q \|			35

The following table details AbbVie’s worldwide net revenues:


		Three months ended September 30,				Percent change				Nine months ended September 30,				Percent change
						At actual currency rates		At constant currency rates						At actual currency rates		At constant currency rates
(dollars in millions)		2024		2023						2024		2023
Immunology
Humira	United States	$	1,765	$	3,020	(41.6)	%	(41.6)	%	$	5,896	$	9,420	(37.4)	%	(37.4)	%
	International	462		527		(12.4)	%	(7.8)	%	1,415		1,680		(15.8)	%	(10.8)	%
	Total	$	2,227	$	3,547	(37.2)	%	(36.5)	%	$	7,311	$	11,100	(34.1)	%	(33.3)	%
Skyrizi	United States	$	2,778	$	1,875	48.3	%	48.3	%	$	6,774	$	4,648	45.8	%	45.8	%
	International	427		251		70.0	%	75.7	%	1,166		721		61.8	%	66.6	%
	Total	$	3,205	$	2,126	50.8	%	51.5	%	$	7,940	$	5,369	47.9	%	48.5	%
Rinvoq	United States	$	1,170	$	801	45.9	%	45.9	%	$	2,912	$	1,895	53.6	%	53.6	%
	International	444		309		44.0	%	51.6	%	1,225		819		49.6	%	58.5	%
	Total	$	1,614	$	1,110	45.3	%	47.4	%	$	4,137	$	2,714	52.4	%	55.1	%
Oncology
Imbruvica	United States	$	618	$	678	(8.9)	%	(8.9)	%	$	1,823	$	1,982	(8.0)	%	(8.0)	%
	Collaboration revenues	210		230		(8.4)	%	(8.4)	%	676		711		(4.9)	%	(4.9)	%
	Total	$	828	$	908	(8.8)	%	(8.8)	%	$	2,499	$	2,693	(7.2)	%	(7.2)	%
Venclexta	United States	$	340	$	281	21.5	%	21.5	%	$	921	$	811	13.6	%	13.6	%
	International	337		309		8.9	%	15.4	%	1,007		888		13.4	%	19.7	%
	Total	$	677	$	590	14.8	%	18.2	%	$	1,928	$	1,699	13.5	%	16.8	%
Elahere(a)	United States	$	139	$	—	n/m		n/m		$	331	$	—	n/m		n/m


Epkinly	Collaboration revenues	$	31	$	14	>100.0 %		>100.0 %		$	82	$	14	>100.0 %		>100.0 %
	International	12		—		>100.0 %		>100.0 %		24		—		>100.0 %		>100.0 %
	Total	$	43	$	14	>100.0 %		>100.0 %		$	106	$	14	>100.0 %		>100.0 %
Aesthetics
Botox Cosmetic	United States	$	414	$	388	6.5	%	6.5	%	$	1,253	$	1,217	2.9	%	2.9	%
	International	257		232		10.9	%	15.5	%	780		747		4.5	%	9.1	%
	Total	$	671	$	620	8.2	%	9.9	%	$	2,033	$	1,964	3.5	%	5.3	%
Juvederm Collection	United States	$	105	$	116	(10.2)	%	(10.2)	%	$	349	$	363	(4.1)	%	(4.1)	%
	International	153		205		(25.1)	%	(20.8)	%	549		681		(19.3)	%	(14.6)	%
	Total	$	258	$	321	(19.7)	%	(16.9)	%	$	898	$	1,044	(14.0)	%	(10.9)	%
Other Aesthetics	United States	$	272	$	255	6.4	%	6.4	%	$	828	$	785	5.6	%	5.6	%
	International	38		43		(10.0)	%	(2.0)	%	119		130		(8.7)	%	(1.8)	%
	Total	$	310	$	298	4.0	%	5.1	%	$	947	$	915	3.5	%	4.5	%
Neuroscience
Botox Therapeutic	United States	$	708	$	626	13.1	%	13.1	%	$	1,988	$	1,827	8.8	%	8.8	%
	International	140		122		14.6	%	20.7	%	422		388		8.6	%	13.1	%
	Total	$	848	$	748	13.4	%	14.4	%	$	2,410	$	2,215	8.8	%	9.6	%
Vraylar	United States	$	873	$	750	16.5	%	16.5	%	$	2,338	$	1,967	18.9	%	18.9	%
	International	2		1		49.3	%	51.9	%	5		3		76.0	%	76.9	%
	Total	$	875	$	751	16.6	%	16.6	%	$	2,343	$	1,970	18.9	%	18.9	%
Duodopa	United States	$	24	$	25	(4.7)	%	(4.7)	%	$	72	$	74	(3.3)	%	(3.3)	%
	International	87		93		(7.1)	%	(6.4)	%	267		279		(4.4)	%	(4.0)	%
	Total	$	111	$	118	(6.6)	%	(6.0)	%	$	339	$	353	(4.1)	%	(3.8)	%
Ubrelvy	United States	$	261	$	230	13.6	%	13.6	%	$	685	$	574	19.3	%	19.3	%
	International	8		3		>100.0 %		>100.0 %		18		7		>100.0 %		>100.0 %
	Total	$	269	$	233	15.3	%	15.3	%	$	703	$	581	20.9	%	20.9	%
Qulipta	United States	$	168	$	131	28.3	%	28.3	%	$	442	$	292	51.3	%	51.3	%
	International	8		1		>100.0 %		>100.0 %		15		2		>100.0 %		>100.0 %
	Total	$	176	$	132	33.6	%	33.6	%	$	457	$	294	55.5	%	55.5	%


2024 Form 10-Q \|			36


		Three months ended September 30,				Percent change				Nine months ended September 30,				Percent change
						At actual currency rates		At constant currency rates						At actual currency rates		At constant currency rates
(dollars in millions)		2024		2023						2024		2023
Other Neuroscience	United States	$	54	$	55	(4.1)	%	(4.1)	%	$	172	$	195	(11.6)	%	(11.6)	%
	International	30		6		>100.0 %		>100.0 %		66		15		>100.0 %		>100.0 %
	Total	$	84	$	61	36.4	%	37.1	%	$	238	$	210	13.5	%	14.1	%
Eye Care
Ozurdex	United States	$	33	$	34	(2.3)	%	(2.3)	%	$	102	$	107	(4.4)	%	(4.4)	%
	International	86		86		(0.3)	%	2.5	%	272		247		10.0	%	13.1	%
	Total	$	119	$	120	(0.9)	%	1.1	%	$	374	$	354	5.7	%	7.8	%
Lumigan/Ganfort	United States	$	58	$	28	>100.0 %		>100.0 %		$	129	$	142	(9.5)	%	(9.5)	%
	International	58		63		(7.0)	%	(2.7)	%	181		198		(8.7)	%	(5.9)	%
	Total	$	116	$	91	27.2	%	30.2	%	$	310	$	340	(9.0)	%	(7.4)	%
Alphagan/Combigan	United States	$	26	$	30	(15.3)	%	(15.3)	%	$	54	$	90	(40.3)	%	(40.3)	%
	International	36		40		(10.0)	%	(4.5)	%	116		116		(0.1)	%	6.9	%
	Total	$	62	$	70	(12.3)	%	(9.2)	%	$	170	$	206	(17.7)	%	(13.8)	%
Restasis	United States	$	8	$	104	(92.5)	%	(92.5)	%	$	70	$	265	(73.4)	%	(73.4)	%
	International	13		13		2.1	%	8.1	%	40		43		(7.4)	%	(2.2)	%
	Total	$	21	$	117	(82.2)	%	(81.5)	%	$	110	$	308	(64.2)	%	(63.5)	%
Other Eye Care	United States	$	115	$	114	1.7	%	1.7	%	$	351	$	334	5.3	%	5.3	%
	International	92		93		(2.0)	%	4.2	%	281		288		(2.4)	%	2.1	%
	Total	$	207	$	207	—	%	2.8	%	$	632	$	622	1.7	%	3.8	%
Other Key Products
Mavyret	United States	$	147	$	167	(12.7)	%	(12.7)	%	$	458	$	531	(13.9)	%	(13.9)	%
	International	155		203		(23.1)	%	(20.5)	%	562		590		(4.6)	%	(1.2)	%
	Total	$	302	$	370	(18.4)	%	(17.0)	%	$	1,020	$	1,121	(9.0)	%	(7.2)	%
Creon	United States	$	338	$	305	10.6	%	10.6	%	$	995	$	892	11.5	%	11.5	%
Linzess/Constella	United States	$	225	$	279	(19.2)	%	(19.2)	%	$	693	$	799	(13.2)	%	(13.2)	%
	International	9		9		0.4	%	2.0	%	28		26		6.2	%	6.0	%
	Total	$	234	$	288	(18.6)	%	(18.6)	%	$	721	$	825	(12.6)	%	(12.6)	%
All other		$	726	$	782	(6.8)	%	(5.5)	%	$	2,280	$	2,214	3.0	%	4.6	%
Total net revenues		$	14,460	$	13,927	3.8	%	4.9	%	$	41,232	$	40,017	3.0	%	4.1	%

n/m – Not meaningful

(a)Net revenues include ImmunoGen product revenues after the acquisition closing date of February 12, 2024.

The following discussion and analysis of AbbVie’s net revenues by product is presented on a constant currency basis.

Global Humira sales decreased 37% for the three months and 33% for the nine months ended September 30, 2024. In the United States, Humira sales decreased by 42% for the three months and 37% for the nine months ended September 30, 2024 primarily driven by direct biosimilar competition following the loss of exclusivity on January 31, 2023. Internationally, Humira revenues decreased 8% for the three months and 11% for the nine months ended September 30, 2024 primarily driven by the continued impact of direct biosimilar competition. AbbVie continues to pursue strategies to maintain broad formulary access of Humira and manage the impact of biosimilar erosion.

Net revenues for Skyrizi increased 51% for the three months and 49% for the nine months ended September 30, 2024 primarily driven by continued strong market share uptake as well as market growth across all indications.

Net revenues for Rinvoq increased 47% for the three months and 55% for the nine months ended September 30, 2024 primarily driven by continued strong market share uptake as well as market growth across all indications.

Net revenues for Imbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie’s 50% share of Imbruvica profit. AbbVie's global Imbruvica revenues decreased 9% for the three months and 7% for the nine months ended September 30, 2024 primarily driven by decreased demand and lower market share in the United States as well as decreased collaboration revenues.

Net revenues for Venclexta increased 18% for the three months and 17% for the nine months ended September 30, 2024 primarily driven by continued market share uptake and market growth across all indications.


2024 Form 10-Q \|			37

Net revenues for Elahere were $139 million for the three months and $331 million for the nine months ended September 30, 2024 for the period subsequent to the completion of the ImmunoGen acquisition.

Net revenues for Botox Cosmetic increased 10% for the three months and 5% for the nine months ended September 30, 2024 primarily driven by favorable pricing. Net revenues for the nine months ended September 30, 2024 were also partially offset by the unfavorable impact of customer inventory destocking in the United States.

Net revenues for Juvederm Collection decreased 17% for the three months and 11% for the nine months ended September 30, 2024 primarily driven by decreased consumer demand across international markets. Net revenues for the nine months ended September 30, 2024 were also unfavorably impacted by customer inventory destocking in the United States.

Net revenues for Botox Therapeutic increased 14% for the three months and 10% for the nine months ended September 30, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Vraylar increased 17% for the three months and 19% for the nine months ended September 30, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Ubrelvy increased 15% for the three months and 21% for the nine months ended September 30, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Qulipta increased 34% for the three months and 56% for the nine months ended September 30, 2024 primarily driven by continued strong market share uptake as well as market growth.

Gross Margin


	Three months ended September 30,								Nine months ended September 30,
(dollars in millions)	2024			2023			% change		2024			2023			% change
Gross margin	$	10,248		$	7,442		38	%	$	28,724		$	25,306		14	%
as a % of net revenues	71		%	53		%			70		%	63		%

Gross margin as a percentage of net revenues increased for the three and nine months ended September 30, 2024 compared to the prior year. Gross margin percentage for the three and nine months ended September 30, 2024 was favorably impacted by lower amortization of intangibles and lower intangible asset impairment charges. The three months ended September 30, 2023 included intangible asset impairment charges of $2.1 billion.

Selling, General and Administrative


	Three months ended September 30,								Nine months ended September 30,
(dollars in millions)	2024			2023			% change		2024			2023			% change
Selling, general and administrative	$	4,205		$	3,372		25	%	$	10,897		$	9,679		13	%
as a % of net revenues	29		%	24		%			26		%	24		%

Selling, general and administrative (SG&A) expenses as a percentage of net revenues increased for the three and nine months ended September 30, 2024 compared to the prior year. SG&A expense was unfavorably impacted by higher litigation reserve charges and acquisition and integration costs incurred in connection with the ImmunoGen and Cerevel Therapeutics acquisitions including cash-settled, post-closing expense for both ImmunoGen and Cerevel Therapeutics employee incentive awards, partially offset by the favorable impact of leverage from revenue growth. See Note 4 to the Condensed Consolidated Financial Statements for additional information.


2024 Form 10-Q \|			38

Research and Development


	Three months ended September 30,								Nine months ended September 30,
(dollars in millions)	2024			2023			% change		2024			2023			% change
Research and development	$	2,130		$	1,723		24	%	$	6,017		$	5,748		5	%
as a % of net revenues	15		%	12		%			15		%	14		%

Research and development (R&D) expenses as a percentage of net revenues increased for the three and nine months ended September 30, 2024 compared to the prior year. R&D expense percentage for the three and nine months ended September 30, 2024 was unfavorably impacted by increased funding to support all stages of the company’s pipeline assets as well as acquisition and integration costs incurred in connection with the ImmunoGen and Cerevel Therapeutics acquisitions including cash-settled, post-closing expense for employee incentive awards. See Note 4 to the Condensed Consolidated Financial Statements for additional information. R&D expense percentage increase for the nine months ended September 30, 2024 was partially offset by lower intangible asset impairment charges. The nine months ended September 30, 2023 included an intangible asset impairment charge of $630 million.

Acquired IPR&D and Milestones


	Three months ended September 30,				Nine months ended September 30,
(dollars in millions)	2024		2023		2024		2023
Upfront charges	$	82	$	44	$	1,088	$	396
Development milestones	—		22		95		100
Acquired IPR&D and milestones	$	82	$	66	$	1,183	$	496

Acquired IPR&D and milestones expense for the nine months ended September 30, 2024 included a charge related to the upfront payment of $250 million to acquire Celsius Therapeutics. See Note 4 to the Condensed Consolidated Financial Statements for additional information.

Other Non-Operating Expenses (Income)


	Three months ended September 30,				Nine months ended September 30,
(in millions)	2024		2023		2024		2023
Interest expense	$	720	$	555	$	2,106	$	1,660
Interest income	(129)		(157)		(556)		(354)
Interest expense, net	$	591	$	398	$	1,550	$	1,306

Net foreign exchange loss (gain)	$	(3)	$	25	$	2	$	97
Other expense (income), net	1,159		(95)		3,090		3,121

Interest expense increased for the three and nine months ended September 30, 2024 compared to the prior year primarily due to the incremental interest associated with financing the ImmunoGen and Cerevel Therapeutics acquisitions. See Note 8 to the Condensed Consolidated Financial Statements for additional information related to debt issued to finance the ImmunoGen and Cerevel Therapeutics acquisitions.

Interest income decreased for the three months ended September 30, 2024 compared to the prior year primarily due to a lower average cash and cash equivalents balance. Interest income increased for the nine months ended September 30, 2024 compared to the prior year primarily due to a higher average cash and cash equivalents balance and the impact of higher interest rates.

Other expense (income), net included charges related to changes in fair value of contingent consideration liabilities of $1.4 billion for the three months and $3.5 billion for the nine months ended September 30, 2024 and $8 million for the three months and $3.4 billion for the nine months ended September 30, 2023. The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including the probability of success of achieving regulatory milestones, discount rates, the estimated amount of future sales of the acquired products and other market-based factors. For the three and nine months ended September 30, 2024, the change in fair value reflected higher estimated Skyrizi sales and the passage of time. For the three months ended September 30, 2024, the change in fair value also reflected the impact of lower discount rates. For the three months ended September 30, 2023, the change in fair value reflected the passage of time offset by higher discount rates. For the nine months


2024 Form 10-Q \|			39

ended September 30, 2023, the change in fair value reflected higher Skyrizi sales driven by stronger market share uptake and the passage of time, partially offset by higher discount rates.

Income Tax Expense

The effective tax rate was 25% for the three months and 28% for the nine months ended September 30, 2024 compared to 9% for the three months and 20% for the nine months ended September 30, 2023. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, changes in fair value of contingent consideration and business development activities, including ImmunoGen and Cerevel Therapeutics acquisition-related costs. The increase in the effective tax rate for the three months ended September 30, 2024 over the prior year was primarily due to changes in fair value of contingent consideration, impact of foreign operations and business development activities. The increase in the effective tax rate for the nine months ended September 30, 2024 over the prior year was primarily due to the impact of foreign operations and business development activities.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES


	Nine months ended September 30,
(in millions)	2024		2023
Cash flows provided by (used in):
Operating activities	$	11,758	$	18,086
Investing activities	(18,946)		(1,209)
Financing activities	1,650		(12,773)

Operating cash flows for the nine months ended September 30, 2024 decreased compared to the prior year primarily due to the timing of working capital, higher contingent consideration payments classified as operating cash flows and decreased results from operations driven by ImmunoGen and Cerevel Therapeutics acquisition-related cash expenses.

Investing cash flows for the nine months ended September 30, 2024 included $18.5 billion cash consideration paid to acquire ImmunoGen and Cerevel Therapeutics offset by cash acquired of $952 million, net sales and maturities of investment securities of $470 million, payments made for other acquisitions and investments of $1.2 billion and capital expenditures of $683 million. Investing cash flows for the nine months ended September 30, 2023 included payments made for other acquisitions and investments of $670 million and capital expenditures of $572 million.

Financing cash flows for the nine months ended September 30, 2024 included the issuance of unsecured senior notes totaling $15.0 billion aggregate principal which were used to finance the acquisitions of ImmunoGen and Cerevel Therapeutics. Additionally, financing cash flows included the issuance and repayment of $5.0 billion under the term loan credit agreement and repayments of €1.5 billion aggregate principal amount of 1.38% senior euro notes, €700 million aggregate principal amount of 1.25% senior euro notes, $1.0 billion aggregate principal amount of 3.85% senior notes, $99 million of secured term notes assumed from ImmunoGen in conjunction with the acquisition and the settlement of $400 million aggregate amount of 2.5% convertible senior notes assumed from Cerevel Therapeutics. Financing cash flows for the nine months ended September 30, 2023 included repayments of $1.0 billion floating rate term loan, $1.0 billion aggregate principal amount of 2.85% senior notes and $350 million aggregate principal amount of the company’s 2.80% senior notes.

Subsequent to September 30, 2024, the company refinanced its $2.0 billion floating rate three-year term loan. As part of the refinancing, the company repaid the existing $2.0 billion term loan due May 2025 and borrowed $2.0 billion under a new term loan due April 2027.

Financing cash flows also included cash dividend payments of $8.3 billion for the nine months ended September 30, 2024 and $7.9 billion for the nine months ended September 30, 2023. The increase in cash dividend payments was primarily driven by the increase in the quarterly dividend rate.


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On September 6, 2024, the company announced that its board of directors declared a quarterly cash dividend of $1.55 per share for stockholders of record at the close of business on October 15, 2024, payable on November 15, 2024. On October 30, 2024, the board of directors declared an increase in the company’s quarterly dividend from $1.55 per share to $1.64 per share beginning with the dividend payable on February 14, 2025 to stockholders of record as of January 15, 2025. This reflects an increase of approximately 5.8% over the previous quarterly rate. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.

The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's discretion. The program has no time limit and can be discontinued at any time. On February 16, 2023, AbbVie’s board of directors authorized a $5.0 billion increase to the existing stock repurchase authorization. AbbVie repurchased 5 million shares for $959 million during the nine months ended September 30, 2024 and 10 million shares for $1.6 billion during the nine months ended September 30, 2023.

Financing cash flows also included contingent consideration payments of $735 million for the nine months ended September 30, 2023. There were no contingent consideration payments classified as financing cash flows for the nine months ended September 30, 2024.

During the nine months ended September 30, 2024, the company issued and redeemed $1.7 billion of commercial paper. There were no commercial paper borrowings outstanding as of September 30, 2024 and December 31, 2023. AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.

Credit Risk

AbbVie monitors economic conditions, the creditworthiness of customers and government regulations and funding, both domestically and abroad. AbbVie regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables. AbbVie establishes an allowance for credit losses equal to the estimate of future losses over the contractual life of outstanding accounts receivable. AbbVie may also utilize factoring arrangements to mitigate credit risk, although the receivables included in such arrangements have historically not been a significant amount of total outstanding receivables.

Credit Facility, Access to Capital and Credit Ratings

Credit Facility

In December 2023, in connection with the acquisitions of ImmunoGen and Cerevel Therapeutics, AbbVie entered into a $9.0 billion 364-day bridge credit agreement and $5.0 billion 364-day term loan credit agreement. In February, 2024, AbbVie borrowed and repaid $5.0 billion under the term loan credit agreement. Subsequent to the $15.0 billion issuance of senior notes, AbbVie terminated both the bridge and term loan credit agreements in the first quarter of 2024.

In March 2023, AbbVie entered into an amended and restated five-year revolving credit facility. The amendment increased the unsecured revolving credit facility commitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028. This credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At September 30, 2024, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant. No amounts were outstanding under the company's credit facility as of September 30, 2024 and December 31, 2023.

Access to Capital

The company intends to fund short-term and long-term financial obligations as they mature through cash on hand, future cash flows from operations or has the ability to issue additional debt. The company’s ability to generate cash flows from operations, issue debt or enter into financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for the company’s products or in the solvency of its customers or suppliers, deterioration in the company’s key financial ratios or credit ratings or other material unfavorable changes in business conditions. At the current time, the company believes it has sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support the company’s growth objectives.


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Credit Ratings

In August 2024, Moody’s Investors Service (Moody’s) affirmed its A3 senior unsecured long-term rating. At the same time, Moody’s revised its outlook to positive from stable. There were no other changes in the company’s credit ratings during the nine months ended September 30, 2024. Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company’s ability to draw on its credit facility and would not result in an acceleration of scheduled maturities of any of the company’s outstanding debt.

CRITICAL ACCOUNTING POLICIES

A summary of the company’s significant accounting policies is included in Note 2, “Summary of Significant Accounting Policies” in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in the company’s application of its critical accounting policies during the nine months ended September 30, 2024.

FORWARD-LOOKING STATEMENTS

Some statements in this quarterly report on Form 10-Q 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 and uses of future or conditional verbs, 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 expressed or implied 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,” in AbbVie’s Annual Report on Form 10-K for the year ended December 31, 2023, which has been filed with the Securities and Exchange Commission. AbbVie notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. AbbVie undertakes no obligation, and specifically declines, to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the company's market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. The Chief Executive Officer, Robert A. Michael, and the Chief Financial Officer, Scott T. Reents, evaluated the effectiveness of AbbVie's disclosure controls and procedures as of the end of the period covered by this report, and concluded that AbbVie's disclosure controls and procedures were effective to ensure that information AbbVie is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and to ensure that information required to be disclosed by AbbVie in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to AbbVie's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Changes in internal control over financial reporting. There were no changes in AbbVie's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, AbbVie's internal control over financial reporting during the quarter ended September 30, 2024.

Inherent Limitations on Effectiveness of Controls. AbbVie’s management, including its Chief Executive Officer and its Chief Financial Officer, do not expect that AbbVie’s disclosure controls or internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or


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that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.


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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings is provided in Note 12 to the Condensed Consolidated Financial Statements and is incorporated by reference herein.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1, 2024 - July 31, 2024	974	(1)	$166.09	(1)	—	$3,849,610,303
August 1, 2024 - August 30, 2024	856	(1)	$186.04	(1)	—	$3,849,610,303
September 1, 2024 - September 30, 2024	902	(1)	$193.39	(1)	—	$3,849,610,303
Total	2,732	(1)	$181.36	(1)	—	$3,849,610,303

1.In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan – 974 in July; 856 in August; and 902 in September.

These shares do not include the shares surrendered to AbbVie to satisfy minimum tax withholding obligations in connection with the vesting or exercise of stock-based awards.

ITEM 5. OTHER ITEMS

During the three months ended September 30, 2024, no director or officer of the company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.


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ITEM 6. EXHIBITS

Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934.


Exhibit No.						Exhibit Description
31.1						Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

31.2						Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

32.1						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following financial statements and notes from the AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed on November 4, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.

104						Cover Page Interactive Data File (the cover page from the AbbVie Inc. Quarterly Report on Form 10-Q formatted as Inline XBRL and contained in Exhibit 101).

_______________________________________________________________________________


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						ABBVIE INC.


			By:			/s/ Scott T. Reents
						Scott T. Reents
						Executive Vice President,
						Chief Financial Officer (Principal Financial Officer)

Date: November 4, 2024


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AbbVie Inc. - Quarter Report: 2024 September (Form 10-Q)

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