Eli Lilly and Company

Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q2 2023 Earnings 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. Thank you for joining us for Eli Lilly and Company's Q2 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, President 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 Michaela Irons, Mike Sprengnether, and Lauren Zierke 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 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.

Now I'll turn over the call to Dave. Thanks, Joe. In the second quarter, Lilly's momentum continued. We advanced our R&D pipeline, progressed our ambitious manufacturing agenda, and delivered strong financial results. Our business saw an acceleration of revenue growth driven by Manjaro, Fresenio, and Jardiance. As base period headwinds from COVID-19 antibody revenue and Olympia's loss of exclusivity recede, we do expect strong growth to continue in the quarters ahead. Philly has made substantial progress in advancing our pipeline of innovative medicines in recent years, but the past few months have been particularly noteworthy. In early May, we shared the top-line results of the Phase III Trailblazer ALS II trial, which showed donatumab treatment slowed clinical decline in Alzheimer's by 35%. While differences in enrollment criteria and study design make cross-trial comparisons difficult, This represents the greatest percentage cognitive slowing in a primary endpoint of any disease-modifying Alzheimer's disease treatment reported to date, and the only phase two to phase three replication to date. Three weeks ago at the Alzheimer's Association International Conference in Amsterdam, and simultaneously published in JAMA, we shared the detailed results, including new analysis, which demonstrate the potential of even greater cognitive slowing in patients in the earlier stages of Alzheimer's disease. At the ADA scientific sessions in June, we shared positive phase two data on two next generation diabetes and obesity product candidates, orforglupron and ritatricide. And less than two weeks ago, we shared top line results from the SIRMOUT3 and SIRMOUT4 phase three trials, which showed participants on trisipatide following intensive lifestyle intervention, or with continued trizepatide treatment, achieved up to 26.6% mean weight loss. Dan will share more perspectives in his R&D update on these and other exciting areas of pipeline progress. Moving to our results, you can see on slide four the continued progress made on our strategic deliverables so far this year. Excluding revenue from Baximi, and from the sales of COVID-19 antibodies in 2022, Q2 revenue grew 22% on 23% volume growth. Volume growth in Q2 is driven by Manjaro, which leads our new products category. That category also includes J-PERCA and now OMVO, which saw its first sales in Japan in Q2 and launched in Germany in July. In the second quarter of this year, new products and growth products categories combined combined contributed approximately 26 percentage points of volume growth. These products, coupled with potential upcoming launches, solidify Lilly's strong growth profile through this decade. We've had several important pipeline updates since our Q1 earnings call. For Mirakizumab, approval in the EU and resubmission of our U.S. application with regulatory action expected by the end of this year. Regulatory submissions in the U.S. for terzipatide for chronic weight management. Regulatory submission of donatumab for traditional approval to the FDA and EMA following the positive Phase III results from the Trailblazer ALS II trial. And positive Phase III top-line readouts for Sumount 3 and 4 in the third and fourth global studies evaluating terzipatide in chronic weight management. The second quarter also was productive for business development. We've commented in the past on our active exploration and pursuit of external innovation and are pleased to have announced agreements to acquire two clinical stage companies in the second quarter, Dice Therapeutics and Versanus Bio. These companies operate in different therapeutic areas, and each is a fit with Lilly's strategy. We also closed the sale of global rights to Baximi, and the financial impact of this transaction is reflected in our Q2 results. After quarter end, we close the sale of rights to our olanzapine portfolio, which will be reflected in our Q3 financial results. Both these transactions are now incorporated into our updated 2023 financial guidance. We continue to progress the most ambitious manufacturing expansion agenda in the 147 history of our company. We're happy to share that commercial production to support our incretin portfolio has begun at our Research Triangle Park site in North Carolina. Beyond the capacity expansion that will come as we ramp production at this site, we're also pursuing other near-term paths to expand access to our incretins to patients around the world. Anat will provide more detail on these efforts. And finally, we distributed over a billion dollars in dividends this quarter. On slide five, you'll see a list of key events since our Q1 earnings call, including several important regulatory, clinical, and other updates we're sharing today. So without further ado, I'll turn this over to Anat to share our Q2 results.