Eli Lilly and Company

Ladies and gentlemen, thank you for standing by and welcome to the Lilly G4 2021 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. Should you require assistance during the call, please press star then zero and an operator will assist you offline. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Vice President of Investor Relations, Kevin Hearn. Please go ahead.

Good morning. Thank you for joining us for Eli Lilly and Company's Q4 2021 Earnings Call. I'm Kevin Hearn, Vice President of Investor Relations. And joining me on today's call are Dave Ricks, Lilly's Chair and CEO, Anat Ashkenazi, Chief Financial Officer, Dr. Dan Skowronski, Chief Scientific and Medical Officer, Anne White, President of Lilly Neuroscience, Ilya Yufa, President of Lilly International, Jake Van Narden, CEO of Loxo Oncology at Lilly and President of Lilly Oncology, Mike Mason, President of Lilly Diabetes, and Patrick Janssen, President of Lilly Immunology and Lilly USA. We're also joined by Lauren Zierke, Kenta Ueha, and Sarah Smith of the Investor Relations Team. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on slide three. Additional information concerning factors that could cause actual results to differ materially is contained in our latest forms 10-K and subsequent forms 10-Q and 8-K filed with the Securities and Exchange Commission. The information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions. As we transition to our prepared remarks, please note that our commentary will focus on non-GAAP financial measures.

Now I'll turn the call over to Dave. Thanks, Kevin. 2021 was another outstanding year for Lilly as we delivered strong top and bottom line growth and positive pivotal readouts for five important assets with the potential to launch in the next two years. As we move into 2022, we continue to build on this foundation and are determined to deliver on our long-term outlook to drive top-tier revenue growth, expand operating margins, and innovate to develop and launch new medicines for patients that address significant unmet needs. Unpacking our 2021 performance, on slide four, you can see the progress we've made on our strategic deliverables. Q4 revenue is 8% and was driven by volume growth of 11%. Well, when excluding revenue from COVID-19 antibodies, revenue grew 6% for the quarter and 10% for the full year. This volume-driven performance is attributable to our key growth products, which grew by 28% and now account for 61% of our core business in Q4. On our non-GAAP gross margin was 76.1% in Q4, a decrease of approximately 250 basis points driven by increased sales of COVID-19 antibodies, which have a lower gross margin profile. Our non-GAAP operating margin was 31.7%, representing a decrease of approximately 130 basis points as a result of the lower gross margin percent just mentioned. For pipeline milestones, we have shared several important updates since our Q3 earnings call, including additional positive Phase III readouts for mirakizumab in ulcerative colitis and lebrekizumab in atopic dermatitis. The initiation of a rolling submission in the U.S. for pertabrutinib in mantle cell lymphoma. And our submission of beptilovumab to the FDA for emergency use authorization for the treatment of mild to moderate COVID-19. We also continue to put our cash flow to work to create long-term value and recently announced our plans to make significant investments in new manufacturing sites in both North Carolina and Ireland. These investments will bolster the resilience and capacity of our supply chain as we launch new products to drive meaningful long-term growth. In addition, this quarter, we announced a strategic research collaborations with a focus on new modalities as we continue to augment internal discovery capabilities. Finally, on financials, we announced a 15% increase to the dividend for the fourth consecutive year. And in Q4, we distributed nearly $800 million to shareholders via the dividend, and completed another $750 million in share repurchases. Moving to slides five and six, you'll see a list of key events since our Q3 earnings call, including several important regulatory, clinical, business development, and COVID-19 therapy updates we are discussing today, or that were part of the discussion during our December 15th investment community meeting. So now I'll turn the call over to Anat to review our Q4 and full year 2021 results.