Eli Lilly and Company

Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q1 2023 earnings conference call. At this time, all participants are on a listen-only mode. Later, we will be conducting a question and answer session and instructions will be given at that time. Should you request assistance during the call, please press star then zero and an operator will assist you offline. I would now like to turn the conference over to your host, Joe Fletcher, Senior Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for Eli Lilly and Company's Q1 2023 earnings call. I'm Joe Fletcher, Senior 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 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, Kenta Ueha, and Lauren Zerke 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 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 filings 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. It's 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, Joe. We're off to a strong start in 2023 with volume-driven revenue growth led by our Anchorage In Portfolio, Resenio, and Jardiance. At our Q1 earnings last year, we shared the exciting data from Surmount 1, the first of our Terzipatide Obesity Phase 3 trials. Today, we're excited to share the positive top-line results for the Surmount 2 Phase 3 trial for Terzipatide, which examined the safety and efficacy of Terzipatide in chronic weight management in a type 2 diabetes population. Sermount 1 set a new bar for weight loss possible from a pharmacologic agent in non-type 2 diabetes population with obesity or overweight in a phase 3 trial. And Sermount 2 does the same in the type 2 diabetes population. Before discussing our financial results and pipeline updates, I'd like to also note the actions Lilly announced on March 1st to improve insulin affordability in the United States. We are proud to have led these efforts to make it easier for people to access Lilly insulin, including through the broad implementation of our $35 out of pocket cap and a significant reduction in list price for most of our most commonly used insulins. That said, there remains substantial opportunity and need to reduce existing systemic barriers to insulin access and affordability. Bringing affordable insulin to those who need it will require action and engagement by all stakeholders in our health system. But together, we can create real change to improve access and affordability for people who use insulin. Moving to our results, you can see this on slide four that the progress we've made on our strategic deliverables so far this year. Q1 revenue, which includes sales of COVID-19 antibodies sorry, excluding sales from COVID-19 antibodies grew 10% or 12% on a constant currency basis, driven by volume growth of 18%. Volume growth in Q1 was underpinned by Manjaro, which is leading the new product category, which also includes JPRCA. And we expect we'll include additional products in the months and years to come. The new product and growth product classifications represent an evolution from our prior designation of key growth products. We believe that these classifications will help investors see the performance of both our newest products in addition to those with ongoing growth potential. In the first quarter of this year, the new product category contributed $574 million of revenue. and the new product and growth product categories combined to contribute 20 percentage points of volume growth in Q1. These products, as well as expected upcoming product launches, reinforce our belief in the strength of Lilly's growth outlook throughout this decade. Last Monday, we broke ground at the site of our two new manufacturing facilities in Boone County, Indiana. We also announced a further $1.6 billion investment in addition to the previously announced $2.1 billion investment in this project to expand Lilly's manufacturing network for active ingredients and new therapeutic modalities. And our progress continues as planned towards production starting later this year at our Research Triangle Park site in North Carolina. On the business development front, this past week we entered into agreements to sell the rights of our Olanzapine portfolio, including Zyprexa, and the rights to Baximi. These two transactions will enable us to further focus our time and effort on our next-generation medicines. In our pipeline, we've had several important updates since our Q4 earnings call, including label expansion for Versenio in advanced breast cancer in the U.S., for Mirakizumab approval in Japan, and a positive CHMP opinion in the EU, as well as the FDA's issuance of a complete response letter in the United States. regulatory submissions in the EU for terzipatide for chronic weight management, and in Japan for leverkizumab for atopic dermatitis, and a positive phase 3 top-line readout for SUMMOUT2, the second global study evaluating terzipatide for adults living with obesity or overweight, which will enable completion of our rolling submission with the FDA under FAST-TRACK designation. Dan will discuss this further, but we are excited with the top line results of the phase three SIRM-MT2 trial. As shared late last year, we received fast track designation from the FDA and initiated a rolling submission for terzipatide in chronic weight management based on the results of the SIRM-MT1 trial. And we aligned with the FDA that completion of the submission would come following the SIRM-MT2 readout. We anticipate completing our submission to the FDA in the coming weeks. We believe addressing obesity could make an enormous difference in millions of people's lives, significantly impact public health, and reduce health care costs. We are encouraged by this important next step in the journey to redefine obesity care. Finally, this quarter, we distributed $1 billion in dividends and completed $750 million in share repurchases. On slide five, you'll see a list of key events since our Q4 earnings call. including several important regulatory, clinical, and other updates we are discussing today. Now I'll turn the call over to Anat to review our Q1 results.