Eli Lilly and Company

Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q4 2022 Earnings Conference 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. And as a reminder, today's conference is being recorded. I would now like to turn the conference over to our host, Joe Fletcher, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Lois. Good morning, and thank you all for joining us for Eli Lilly and Company's Q4 2022 earnings call. I'm Joe Fletcher, 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 Ufa, President of Lilly International, Jake Van Narden, CEO of Loxo at Lilly, Mike Mason, President of Lilly Diabetes, and Patrick Johnson, President of Lilly Immunology and Lilly USA. We're also joined by Mike Springnether, Kent Ueha, and Lauren Zierke from 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 several factors, including those listed on slide three. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 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's 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. And now I'll turn the call over to Dave.

Okay, thanks, Joe. 2022 is a year of strong pipeline and commercial performance for Lilly. We delivered top and bottom line growth in 2022 despite the impact of the Olympia LOE in the U.S. and significant FX headwinds and delivered another remarkable year of pipeline progress. We began 2023 with multiple updates to our late-stage pipeline. In our Q2 2022 earnings call last August, we announced the filing of submissions for two assets with the FDA under an accelerated approval pathway. perturbitinib in mantle cell lymphoma, and donenumab in early symptomatic Alzheimer's disease. Last month, we received responses from the FDA on both these assets. On January 19th, we announced that the FDA issued a complete response letter for accelerated approval of donenumab due to the limited number of patients with at least 12 months of drug exposure. There were no other deficiencies cited. We will continue to work with the FDA to evaluate the best pathway to make this potential treatment option available to patients and look forward to results next quarter for the Trailblazer ALTS II Phase III confirmatory trial, which will form the basis of Denonimab's application for traditional approval. We have consistently stated that we would expect very limited uptake before CMS supports coverage. At the time we submitted for accelerated approval, we had hoped that there would be more movement from CMS to provide access to these medicines for people with Alzheimer's disease. Unfortunately, this has not yet materialized. We maintain conviction that given the impact of this devastating disease and significant unmet need, positive confirmatory data and FDA traditional approvals should be sufficient to support global reimbursement. and patient access necessary for broad use of Denonimab over time. Also in the month of January, we received FDA approval for J-PERCA, the first and only non-covalent BTK inhibitor for adults with relapsed or refractory mental cell lymphoma after at least two lines of systemic therapy, including a BTK inhibitor. J-PERCA is a highly selective kinase inhibitor whose novel reversible binding mechanism and pharmacology may allow for extended targeting of the BTK pathway following treatment with a covalent BTK inhibitor. We are pleased with the recent approval of J-PERCA and we remain confident in the long-term opportunity for Denonimab. We also look forward to the potential launch of two of our immunology assets later this year with Mirakizumab and Lebrekizumab and of Terzipatide for obesity. This current wave of new launches, along with the ongoing focus and progress in our next wave of R&D innovation, underpins our long-term outlook to drive top-tier revenue growth and expand our margins over time. On slide four, you can see the progress we've made on our strategic deliverables. Excluding revenue from COVID-19 antibodies, revenue on a constant currency basis grew 10% in Q4 and 5% for the full year. Volume in our core business, again excluding COVID-19 antibodies, grew 13% in Q4 and 12% for the year. This volume-driven performance was attributed to our key growth products, which grew 21% last quarter. For pipeline milestones, in addition to the recent FDA approval of JPIRCA, we have shared several important updates since our Q3 earnings call. positive Phase III readout and FDA and EMA acceptance of the regulatory submission for Jardians for adults with chronic kidney disease, the initiation of a rolling submission in the U.S. for terzipatide in obesity, and FDA granting a fast-track designation for terzipatide in obstructive sleep apnea. We also continue to put our cash flow to work to create long-term value. In late January, we announced plans to invest an additional $450 million for expansion of our Research Triangle Park manufacturing site in North Carolina to further augment our manufacturing capacity for the years ahead. On the business development front, we closed the acquisition of Accuos to expand our gene therapy capability, and we entered into strategic research collaborations with a focus on new modalities and technologies. Finally, we continue to return capital to investors. In Q4, we distributed nearly $900 million to shareholders via the dividend, and we announced a 15% increase to the dividend for the fifth consecutive year. Moving to slide five, you'll see a list of the key events since our Q3 earnings call, including several important regulatory, clinical, business development, and ESG updates we are discussing today or that were discussed during our guidance call on December 13th. One item I'd like to highlight is the collaboration we announced in December with EVA Pharma, to deliver a sustainable supply of affordable, high-quality insulin to at least 1 million people living with diabetes in low- to middle-income countries, most of which are in Africa. This is an important collaboration with a local company to produce low-cost, high-quality medicines. Strengthening capacity and building self-reliance for insulin manufacturing within the African region will provide a more sustainable supply in the long term. With this agreement, Lilly will sell insulin API to Ava Pharma at a significantly reduced price and provide pro bono technology transfer to enable Ava to formulate, fill, and finish insulin vials and cartridges. We're proud to be a part of this novel arrangement, which aligns with our 30 by 30 goal of improving access to quality health care for 30 million people living in limited resource settings annually by 2032. Now I'll turn the call over to Anat to review our Q4 and full year 2022 results.