Eli Lilly and Company

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Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q1 2024 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... Operator 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.

Thank you, Paul, and good morning, everyone. Thank you for joining us for Eli Lalini Company's Q1 2024 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, Anad Ashkenazi, chief financial officer, Dr. Dan Skobronski, chief scientific officer and president of Lilly Immunology, Anne White, president of Lilly Neuroscience, Ilya Yufa, president of Lilly International, Jake Van Narden, president of Loxo at Lilly, and Patrick Johnson, president of Lilly Diabetes and Obesity and Lilly USA. We're also joined by Michaela Irons, Mike Spragneather, and Lauren Zerke of the IR team. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. Actual results could differ materially due to several factors, including those listed on slide two. 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 SEC. 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 our commentary will focus on our non-GAAP financial measures. Now I'll turn the call over to Dave. Okay, thanks, Joe. We're pleased with our Q1 results and the continued momentum in our business, which positions us well for accelerated growth as this year progresses. Our focus is to bring innovative medicines to people in need. And in 2024, we're investing in our people, our launches, expanding our pipeline of new medicines, including through business development, and of course, accelerating the needed capacity in our manufacturing network. Results this quarter represent a continuation of the strong growth we delivered in 2023. On slide four, you can see details of the financial performance and progress related to our strategic deliverables. Revenue grew 26% in Q1, with our new products growing nearly $1.8 billion compared with the same period last year. We achieved several key pipeline milestones, including the positive phase two results for terzapatide in moderate to severe obstructive sleep apnea, the approval of our multi-dose quick pen delivery device for Monjaro in Europe, submission of mirakizumab in the U.S. and in the EU for moderately to severely active Crohn's disease, the resubmission of leperkizumab in the U.S. for moderate to severe atopic dermatitis, and the initiation of our phase three study for lepidicerone, evaluating efficacy and reducing cardiovascular risk. Lilly's top priority is to ensure we execute on our ambitious manufacturing expansion agenda. We recently signed an agreement to acquire an injectable medicine facility from Nexus Pharmaceuticals in Pleasant Prairie, Wisconsin. This state-of-the-art facility has been FDA approved and we are targeting to initiate production at the end of 2025. We broke ground earlier this month on our previously announced parenteral manufacturing site in Germany. And in existing facilities, we are working to maximize output and productivity to meet demand. The recent EMA approval and upcoming launch of our multi-dose quick pen delivery device for Manjaro will unlock new supply capacity for Europe and other international markets. while we are also seeing meaningful progress in the ramp of new lines in existing Lilly and CDMO sites for the United States. We continue to make progress against our plans to increase manufacturing capacity, the most ambitious expansion plan in our company's history. Lastly, we distributed over $1 billion in dividends during the first quarter. On slide five, you'll see a list of the key events since our Q4 earnings call, including the milestones I mentioned earlier, and several other important updates. So now let me turn the call over to Anat to review our Q1 financial results.

Thanks, Dave. Slide six summarizes financial performance in the first quarter of 2024. First quarter revenue growth of 26 percent was driven by new products, primarily Montero and Zepdal. Gross margin as a percent of revenue increased from 78.4 percent in Q1 2023 to 82.5 percent in Q1 2024. Gross margin in the quarter benefited from higher realized prices, variable product mix, and to a lesser extent, improved production costs. Marketing, selling, and administrative expenses increased 12%, primarily driven by promotional efforts supporting current and future launches, as well as increased compensation and benefits costs. R&D expenses increased 27%, driven by higher development expenses for late-stage assets and additional investments in early-stage research. as well as a one-time charge of approximately $75 million associated with the termination of the Fresenio Prostate Program. In Q1, we recognized the acquired IPR&D charge of $111 million, which negatively impacted EPS by 10 cents. Operating income increased 63% in Q1, driven by higher revenue from new products, partially offset by operating expense growth. Our Q1 effective tax rate was 11.9% compared to 12.8% in Q1 2023, driven by a larger net discrete tax benefit reflected in Q1 2024 compared with the same period in 2023. We delivered earnings per share of $2.58 in Q1, a 59% increase compared to Q1 2023, inclusive of the negative impact of 10 cents from acquired IPRD charges in both periods. On slide 7, we quantify the effect of price, rate, and volume on revenue growth. U.S. revenue increased 28% in Q1, driven by growth of Monjaro, Zedbound, and Versenio. Unprecedented demand for incretin medicines led to wholesaler backorders of Trulicity, Monjaro, and Zedbound at quarter end. Realized prices in the U.S. increased 16%, largely driven by Monjaro excess and savings card dynamics. Moving to Europe, revenue growth was once again strong, increasing 29% in constant currency, driven primarily by volume from Rosanio and Monjaro, as well as payments associated with the distribution and divestiture agreements. Japan revenue grew 2% in constant currency. Volume growth of 7% was driven by Monjaro and Rosanio, partially offset by a decreased volume for Trulicity, and a partnership milestone in the base period. Price declined 5% in the quarter. Moving to China, Q1 revenue increased 4% in constant currency. Volume growth was driven by Tybit, partially offset by Illumiant and Cialis. Revenue in the rest of the world increased 31% in constant currency, primarily driven by volume growth from Manjaro, and to a lesser extent for Xenio and Jarnians. Slide 8 provides additional perspectives across our product categories. First, I would like to highlight Versennial, which saw a worldwide sale increase 40% in Q1, driven by continued volume growth in the early breast cancer indication. Jaypurka revenue increased to $50 million worldwide, representing an acceleration in sequential quarterly growth following the December 2023 approval for the CLO indication. We're looking forward to potentially making this medicine available to even more patients as future Phase III trials read out. Next, in Q1, Monjara cells were $1.8 billion globally and $1.5 billion in the U.S., up from $568 million and $536 million in Q1 2023, respectively. Sequential quarter over quarter revenue for Monjaro in the U.S. was impacted by a one-time benefit from changes in estimates for relief and discounts in Q4 2023, as well as lower inventory in the channel in Q4 2024, and a strong demand. Access level across commercial and R&D were consistent with high levels we communicated on our last earnings call, and near parity with established injectable incutin medicines. The demand for Terzapatide is very strong. In each week, hundreds of thousands of people fill strips from Monjaro and Zepound. Yet we understand the frustration from those facing prescription delays or uncertainties yet in their medicine. While we are working tirelessly to ramp supply and expect meaningful increases in shipment volumes in the second half of the year, demand continues to outstrip even increased supply. We remain on track to meet expectations we set earlier this year. the production of saleable doses of incretin medicine in the second half of 2024 will be at least one and a half times the saleable doses in the second half of 2023. In the short to mid-term, we expect sales growth to primarily be a function of the quantities we can produce and ship. Outside the U.S., we're delighted that the multi-dose crude plant delivery device from Majuro was recently approved in the EU, adding to the U.K. approval earlier this year. This approval applies to both the type 2 diabetes and chronic weight management indication, as they are under a single brand in Europe. While timing for launch will vary by country, we expect to start launching in the EU in coming weeks. In Q1, worldwide trulicity revenue declined 26%. U.S. trulicity revenue decreased 30%, driven by lower volume, primarily due to supply constraints and competitive dynamics. In addition, sales in international markets were impacted by measures we have taken to minimize disruption to existing patients, including communicating to healthcare professionals to not start new patient central listening. Turning to slide 9, we have seen exceptionally strong U.S. launch progress for ZetBound, with over half a billion in sales in Q1. We're rapidly building that access for ZetBound in the U.S. And as of April 1st, we have approximately 67% access in the commercial segment. As a reminder, patients' access in this market is a two-step process, typically requiring individual employers to opt in to an anti-obesity medicine rider on PBM coverage. We are continuing to focus on broadening access both with PBMs and through employer opt-ins, and early progress is encouraging. On slide 10, we provide an update on capital allocation. Slide 11 shows updated 2024 financial guidance. Given the strength we're seeing in our business and projections for continued acceleration expected in the second half of the year, we're increasing our full-year revenue outlook by $2 billion on the top and bottom ends of the range to be between $42.4 billion to $43.6 billion. This increase is primarily due to strong performance of Monjaro and Seth Fountain and greater visibility and confidence into our production expansion for the remainder of 2024. With this update, year-over-year revenue growth for the company is now expected to be approximately 26% at the midpoint, or approximately 35% for the core business, which excludes the impact from global divestitures. Given the update to revenue guidance, we now expect the ratio of gross margin less OPEX divided by revenue be in the range of 32% to 34% on a reported basis and 33% to 35% on a non-GAAP basis, representing further margin expansion. We're reaffirming guidance for other income and expense and tax rates, which now takes into consideration Q1 results. Based on these updates and inclusive of Q1 IPR&D charges of $0.10 per share, we now expect EPS to be in the range of $13.05 to $13.55 on a reported basis, and $13.50 to $14 on a non-GAAP basis. Now, I'll turn the call over to Dan to highlight progress in R&D.

Thanks, Anant. Let me start with our exciting announcement from earlier this month. That was the positive phase three results from the Surmount OSA studies, which evaluated terzapatide for treatment of adults with obesity and moderate to severe obstructive sleep apnea, known as OSA. OSA is a sleep-related breathing disorder characterized by complete or partial collapse of the upper airway during sleep. OSA can have serious cardiometabolic complications, contributing to hypertension, coronary heart disease, stroke, heart failure, atrial fibrillation, and even type 2 diabetes. The need is significant. OSA impacts 80 million people in the U.S., with more than 20 million people suffering from moderate to severe OSA. We also know that a substantial majority, approximately 70%, of people with OSA also live with obesity. While there are pharmaceutical treatments for the excessive daytime sleepiness associated with OSA, Terzepatide could potentially be the first pharmacological treatment for the underlying disease. As shown on slide 12, Surmount OSA was comprised of two separate trials run under one master protocol. Study 1 evaluated drosepatide in participants not currently on positive airway pressure or PAP therapy, while Study 2 evaluated drosepatide in patients who had used PAP for at least three months prior to the study and planned to continue PAP therapy during the entire course of the trial. The total of 469 participants were enrolled across these studies. Each study randomized participants to either maximum tolerated dose approved for drosepatide, which could be 10 milligrams or 15 milligrams, or to placebo, and patients were followed on therapy for 52 weeks. On slide 13, we show the results of study one. For the efficacy estimate on mean apnea hypopnea index, or AHI, terzapatide led to a mean reduction of 27.4 events per hour compared to a mean AHI reduction of 4.8 events per hour for placebo. This difference was highly statistically significant. AHI baseline values were 52.9, and AHI was reduced by 55% in the terzapatide arm. We also saw a mean body weight reduction of 18.1% with terzapatide treatment, consistent with our expectations for this study. This was, of course, also statistically significant versus placebo. On slide 14, we show the results of study 2. In this population, for the efficacy estimand, terzapatide led to a mean AHI reduction of 30.4 events per hour. compared to a mean AHI reduction of 6.0 events per hour for placebo. The baseline AHI was 46.1 in the trisepatite arm, and mean AHI reduction was 62.8%. Again, we saw impressive weight loss with a mean body weight reduction of 20.1% from baseline. These results were also all highly statistically significant. In both studies, the overall safety profile was similar to previously reported surmount and surpass trials. The most commonly reported adverse events were gastrointestinal-related and generally mild to moderate in severity, with the most commonly reported gastrointestinal adverse events for patients treated with trisepatide being diarrhea, nausea, vomiting, and constipation. Prior to the study readout, we noted investor questions about what level of weight loss we would see, given several factors that were uniquely combined in this study of trisepatide. First, the primary aim of the study was not treatment of obesity. Second, that the population was approximately 70% males, in whom weight loss can be harder to achieve with incretin medicines. Third, there was a particularly high baseline BMI in this population. And finally, the use of the 10 or 15 milligram maximum tolerated dose approach. We were therefore highly reassured to see weight loss observed across the two studies at 52 weeks was nearly 20%, despite this difficult to treat population. Consistent with other phase III studies such as EPITIDE at the 52-week time point, we did not see weight loss plateau. We'll present detailed results of Sermont OSA during a symposium at ADA on June 21st. Additionally, we plan to submit to the FDA and other global regulatory agencies beginning mid-year. Moving to the other updates across our portfolio, slide 15 shows select pipeline opportunities as of April 26th, and slide 16 shows potential key events for the year. We're pleased to share that results were positive in QUINT4, the first phase 3 study of insulin F-Citora-alpha, our once-weekly basal insulin. This study evaluated F-Citora compared to insulin glargine in adult participants with type 2 diabetes who are on multiple daily insulin injections. In the coming weeks, we expect to report top-line results from QUINT4 as well as QUINT2, which is evaluating F-Citora compared to Degludec in adults with type 2 diabetes who are naive to basal insulin. Together, these are the first two of five studies in the APSITORA Phase 3 program. Additional updates in our late-stage diabetes and obesity pipeline include results of the MPACT-MI study showing Jardians had a 10% relative risk reduction in the primary composite endpoint of time-to-first hospitalization due to heart failure or all-cause mortality versus placebo, which did not reach statistical significance. We've completed enrollment for surmount MMO with over 15,000 participants, and for both or for glipron studies in chronic weight management, ATTAIN-1 and ATTAIN-2, which together enrolled 4,500 participants. Finally, we've now initiated the Transcend Phase 3 program, studying retatrutide in type 2 diabetes. In the cardiovascular disease area, we're excited to have initiated the Phase 3 trial for lepidyserin, a subcutaneous injectable siRNA. This study will evaluate the efficacy in improving cardiovascular outcomes for participants with high lipoprotein A who have cardiovascular disease or are at risk of heart attack or stroke. We are evaluating the efficacy of lepidyserin in both secondary and high-risk primary prevention, and we hope this will one day offer healthcare providers a treatment option for a broad group of patients at increased cardiovascular risk due to high LPA levels. Earlier in our diabetes and obesity pipeline, we've now initiated a phase two monotherapy study evaluating alora lintide, our selective amylin receptor agonist in obesity. Turning to oncology, we made the decision to terminate for futility the phase three cyclone three trial evaluating versenio and metastatic hormone-sensitive prostate cancer following an interim analysis. This concludes development of versenio and prostate cancer following last quarter's announcement that the cyclone two study did not meet its primary end point. In early oncology development, we've initiated phase one trials for two new assets. The first is our Nectin-4 ADC, which came from our acquisition of Emergence Therapeutics. The second is PNT-2001, which came from our acquisition of Point Biopharma. We're encouraged by what we're seeing in our oncology portfolio and expect 2024 to be particularly productive. Along with the Nectin-4 ADC and PNT-2001 start, We expect at least three other new molecules to enter the clinic this year. We look forward to sharing more details with the investment community at an oncology-focused investor event hosted by the Lilly Oncology team. This event will take place on the evening of Sunday, June 2nd in Chicago in conjunction with the ASCO annual meeting. It will also be available via webcast. We plan to provide an update on our oncology strategy and pipeline opportunities. Additional details will be available soon regarding this event. Turning to neuroscience, Last month, we announced that the FDA plans to convene a meeting of the Peripheral and CNS Drugs Advisory Committee to discuss Denenumab in early symptomatic Alzheimer's disease. We expect the advisory committee meeting will take place in mid-2024, but the exact date will be confirmed when it appears in the Federal Register. We expect the focus to be around the safety and efficacy profile of Denenumab, along with unique aspects of the clinical program. Remain confident in Denenumab's potential. to offer very meaningful benefits to patients and look forward to addressing the FDA's questions in this forum. Additionally, we made the decision to discontinue investigation of GBA1, our gene therapy asset, in Gaucher disease type 2. Phase 2 studies in Parkinson's disease and Gaucher disease type 1 are still underway and have not been impacted by this decision. Finally, in immunology, we've submitted Mirakizumab to the FDA and EMA for approval for use in adults with moderately to severely active Crohn's disease. In the U.S., we've resubmitted Leberkizumab's application to the FDA for moderate to severe atopic dermatitis. This is following a complete response letter based on inspection findings at a third-party manufacturer. As a reminder, the letter stated no concerns with the clinical data package safety or label. We expect regulatory action in the second half of this year. We're also announcing that in the coming months, we'll be initiating phase three studies evaluating Leberkizumab in two new indications, chronic rhinocitis with nasal polyposis and allergic rhinitis due to perennial allergens. Leberkizumab will be the first biologic to be evaluated in phase three for allergic rhinitis. We're optimistic about the potential of Leberkizumab to be an important treatment option in these patient populations, as well as in atopic dermatitis. In earlier stage immunology development, We've advanced our CD19 antibody into Phase II for multiple sclerosis. I now turn the call back to Dave for closing remarks.

Okay. Thanks, Dan. Before we go to Q&A, let me briefly sum up the progress in our first quarter. Strong revenue growth in Q1 was driven by our recent product launches, primarily Monjaro and Cephap. We expect acceleration in revenue growth through the second half of the year as supply of Advances in our pipeline include top-line data from Terzepatide and Surmount and OSA, approval of the QuickPen delivery device from Monjaro and the EU, submission of Merikizumab and Leberkizumab, as well as an initiation of Leprodicerin, sorry, a phase-three study, as Dan just mentioned. We are continuing to invest in recent and upcoming launches, internal and external pipeline development, and our manufacturing expansion agenda. This is to sustain our long-term growth outlook. So now let me turn the call over to Joe to moderate the Q&A session. Thanks, Dave. We'd like to take questions from as many callers as possible and conclude our call in a timely manner. So consistent with prior quarters, we'll respond to one question per caller, so ask that you limit to one question per caller as we'll end the call at 11 a.m. If you have more than one question, you can reenter the queue and we'll get to your question if time allows. So, Paul, please provide instructions for the Q&A session, and then we're ready for our first caller.

Thank you. At this time, we will be conducting a question and answer session. If you have any questions, please press star 1 on your phone at this time. We ask that participants limit themselves to one question on today's call. If you do have a follow-up question, please rejoin the queue by pressing star 1 at any time. We also ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. And the first question today is coming from Chris Schott from J.P. Morgan. Chris, your line is live.

Great. Thanks so much, and congrats on all the progress here. I just had a question, just was hoping you could elaborate a bit more on the capacity dynamics that are leading to the guidance raised today. I specifically was looking for a little more color. Is this more U.S. or international? And should we read this as more capacity in the system than you expected, or just a faster ramp of the new plant and maybe the same overall capacity as you exit the year? Thanks so much.

Thanks, Chris. I'll hand over to Nath to talk about the guidance areas.

Thanks for the question, Chris. And as we've mentioned earlier in the year when we issued guidance, we said that we expect capacity and supply to ramp towards the second half of the year, and that's what we're seeing. Now, as a reminder, we do have quite a large number of nodes across our supply chain that have to come online or ramp capacity. You know, we are, if you look at everything we have under construction or ramping up, we have six sites right now between the two sites in North Carolina, a site in Ireland, two sites in Indiana, a site in Germany, and then a seventh one that we just purchased. They're all either ramping up or under construction. And there are multiple nodes across that supply chain that have to become operational, which requires approval, et cetera, for three products, depending on which product runs on which line. that are planned throughout the year. Now that we're four months into the year, we have greater visibility into these nodes of capacity and feel more confident. Just as one example, the approval of the QuickPen in Europe that just came in, slightly ahead of our expectation, gives us additional confidence in our ability to launch QuickPen for patients in Europe. So it is across our sites globally, as well as ramping up capacity with partners or CDMOs as well as in existing sites where we're making investments to expand where we can or ramp up capacity. So it's across our supply chain.

Thanks. Next caller, Paul.

Thank you. The next question is coming from Mohit Bansal from Wells Fargo. Mohit, your line is live. Great. Thank you very much for taking my question.

Congrats on the progress. I have a question regarding the pricing. So if you look at the script trend, it seems like there was a little bit of adverse relationship in the pricing versus fourth quarter. Can you comment on that? And how should we think about the cadence of price volume over the quarters for the year? Thank you.

Thanks, Mohit. You didn't say it, but I assume you're talking about Manjaro and ZepBounce. I'll hand over to Patrick to make some commentary on that price.

Thank you very much, Mohit. When you look at the pricing of Monjaro, I think it's important to take into account that in the Q4 earnings, we announced a one-time adjustment for Monjaro in Q4 that was quite significant. So it was a one-time adjustment in the base of Q4. When we look forward for the first half of 2024, it's important to have in mind that we also terminated the $25 saving card 6-30-2023, but patients that were on are grandfathered until 6-30-2024. So there will probably be some benefits during the first half of 2024 for Monjaro, but from the second half of this year, we should expect to see typical pricing headwinds for Monjaro as well.

Thank you.

Next question, Paul.

Thanks. The next question is coming from Umar Rafat. from Evercore. Umar, your line is live.

Hi, guys. Thanks for taking my question. I wanted to focus a quick second on Part D reimbursement dynamics, if I may. And my question is, will terzepatide be considered differently than a, quote-unquote, weight loss drug to secure Part D reimbursement? And the new indications like sleep apnea, will they be considered an applicable drug and not get lumped up as a broad weight loss drug, quote-unquote? Thank you.

Thanks, Umar. I'll go to Patrick for that question.

Thank you very much, Umar. I think with the announcement made by the CMS early April to reimburse co-morbidities for obesity based upon the select trial, we're also confident that with the new data that we presented just weeks ago in terms of obstructive sleep apnea, that that's going to be reimbursed in Medicare Part E. And we expect similarly for other co-morbidities and the readout of HF-PET, assuming that's positive and approved, and later on with the mobility mortality outcome study. Still, our true north is really to get the true of a Treat and Reduce Obesity Act passed. And we strongly believe that's not a matter of if, but when. We don't see it likely to pass in 2024, but there is still a small likelihood that that's going to happen.

Thanks, Patrick. Next question, Paul.

Thank you. The next question is coming from Seamus Fernandez from Guggenheim. Seamus, your line is live.

Great. Thanks for the question. Really just wanted to ask, Dan, as you have assessed the phase two surmount data in NASH, just interested to know how you are thinking about those data and the opportunity for truzepatide in that setting, or perhaps if retatrutide remains the right target molecule to move forward there. We've had a lot of speculation around some of the comments from the last quarter and just trying to firm that up and also when we're likely to see those data. I believe they're expected at EASL, but if that is possible to confirm, thanks so much.

Thanks, Seamus. I'll start with the last part there. Yeah, the app check was accepted and will be presented at EASL in early June. So that'll be the opportunity to see the full NASH package from that phase two trial. Like we said in the last call, really exciting data. We shared some of the top line. I think trisepatide can have a profound effect on this disease. It's a phase two trial. Next steps here are to discuss with the FDA what the best path forward could be for trisepatide. You're pointing out, though, that we have another choice in ratatrutide. which based on biomarker data from earlier studies could also have a profound effect on this disease, that molecule has the addition of glucagon, which is likely to have additional benefits in the liver. So important opportunities ahead and good to have options as we go into these discussions with regulators. I think for MASH, like other obesity-related or metabolic-related diseases, Lilly has a pretty broad portfolio, and we'll just continue to push the science to make the best possible medicines for patients.

Thanks, Dan. Paul, next question.

The next question will be from Tim Anderson from Wolf Research. Tim, your line is live.

Thank you. You showed a slide. ZetBound has NBRX share market of 57% at end of Q1. That makes it pretty clear that the strongest drug wins. So on that topic, just your latest thinking on upcoming competitor readouts and how they'll stack up to ZetBound on metrics of weight loss and blood sugar, so specifically Cagrosema from Novo and Amgen's 133. I know it's just the best guess, but it's what we get asked to do. Thank you.

Thanks, Tim. Okay, I'll maybe hand it to Dan for some comments.

Yeah, sure, Tim. It's probably more your job than ours to speculate on competitor readouts, but I'll take a stab at it since you asked. I think on AMG 133, we've just seen really a small amount of data, so probably anything is possible, and like you, we'll be interested to see their results today. Of course, there's arguments that can be heard about GIP agonism versus antagonism. We've placed our bets, and we like the data we got with the GIP agonism. On Kagrisema, of course, adding more agonism on different pathways on top of GLP-1 is a good idea. That's what we have with Terzapatide as a dual agonist. So Kagrisema makes sense, and you'll note that we've advanced our amylin agonist into phase two. Turzepatide already is a dual agonist. Ratatoutite's already a triple agonist. There's probably more we could do here at Lilly. I think across our portfolio in phase one and phase two, we have nine assets that are marked for diabetes or obesity. Many of them could lead to additive weight loss on top of established mechanisms, plus two more in phase three, of course. So We have a strong portfolio here. I think Terzapatide still has unsurpassed efficacy at weight loss, but we're preparing for our next generation assets as well.

Thanks again, Dan.

All next question.

The next question will be from Terrence Flynn from Morgan Stanley. Terrence, your line is live.

Great. Congrats on all the progress. Just was wondering if you can tell us if the IQVIA Prescription data is an accurate representation of teresapetide volumes, or if it's been underrepresented at all, given Lilly Direct and what you know about how much is flowing through that channel. And if it is underrepresented, can you help quantify any delta for us? Thank you.

Thanks for the question, Terrence. I'll hand it to Patrick for commentary on IQV and Lilly Direct.

Thank you very much, Terence. You know, when it comes to Lilly Direct, I think we're very pleased with the start. And when we look at the utilization by consumers, it's gaining traction by weeks here. If we look at the TRX data for Q1, particularly for Z bound, it's relatively low volume that goes through Lilly Direct, slightly higher in terms of MBRX. It's our understanding that what goes through Lilly Direct is not by default captured by IQVIA, but IQVIA has a methodology in place to estimate what goes through Lilly Direct as well.

Thank you, Patrick. All next questions?

The next question will be from Akash Tiwari from Jefferies. Akash, your line is live.

Hey, thanks so much. So your team presented data on a monotherapy GIF agonist at ADA last year, but it looks like you are moving the amylin into phase two. Can you talk about why amylin might be preferred versus GIF as a maintenance regimen for obesity and how your product could defer versus others when it comes to half-life and preferential agonism versus calcitonin and amylin? Thanks.

Thank you, Akash. I'll hand to Dan for a commentary on our amylin and

Yeah, there are a lot of good questions in there. Thanks for following the science so closely. So on the GIP, the long-acting molecule, I think primarily in that experiment, we were excited to show the benefits of isolated GIP agonism, just to answer some mechanism action questions around terzapatide. But as you point out, there's potential for that molecule for other indications or as a monotherapy or combination with other molecules. mechanisms. But of course, since terzepatide already includes GIP agonism, we're also excited to explore other mechanisms. So that's where the LARA, which is one of nine different mechanisms, as I said a moment ago, that we're exploring the long-acting amyloid move forward to phase two, That has potential perhaps as a combination therapy, perhaps as a maintenance therapy, perhaps as a monotherapy. There's a lot to explore. It's still very early as it is for all of our mechanisms. So we'll keep investing, and as we have data to share, we'll do that. Thanks, Dan.

Paul, next question?

The next question will be from Trung Huynh from UBS. Trung, your line is live.

Yeah, hi, thanks for my question. Just back on CMS recently broadening its coverage for Wegovy for certain heart conditions, I appreciate you mentioned that Troa is the main goal, but do you expect ZetBound to get added to CMS in a similar way as Wegovy? And yeah, when could this happen? Could this be after the heart failure data in 3Q, or do we have to wait for the CVOT data? Thanks very much.

Thanks, Tram.

I'll let Patrick respond. Thanks, Ram. Now, based upon what CMS stated early April, we actually expect to get obstructive sleep apnea for a second covered by CMS and Medicare at the time of launch. And the next one then would be HFPEF assuming a positive readout and approval. And the third one would be the MMO indication. That's the sequence of our plans, assuming everything goes according to plan, and we get the approval for both.

Thanks, Patrick.

Paul, next question. The next question will be from Jeff Meacham from Bank of America. Jeff, your line is live.

Morning, guys. Thanks for the question. You guys have been asked on this before, I'm sure, but can you just review the rationale in utilizing the quick pen just for outside the U.S. markets like Europe? I wasn't sure why this couldn't apply to the U.S. market and if this also could be a means to relieve capacity looking forward. Thank you.

Thanks, Jeff, for the question. Paul, Dave, Want to weigh in? Yeah, sure. And Ilya, I can add to this. As we've said on several calls now, our goal is to pursue all of the above, basically as it relates to supply options, recognizing the tremendous demand and unmet need and the constraints that exist in scaling the supply chain. So QuickVen uses existing assets so there was less time lag. We pursued this first in the UK and now in Europe. as a way to meet the needs of those patients. But we haven't ruled it out in other jurisdictions, and so we'll continue to look at every option we can to meet the needs of patients with obesity and overweight, as well as with diabetes.

Thanks, Dave. Paul, next question?

The next question is from Carrie Hallford from Barenburg. Carrie, your line is live.

Oh, hi. I'm going to take a different topic here. Looking at LC little a, your new product you've now said that you're taking into phase three. Can you confirm whether you've published any phase two data? I haven't found any, so if I'm correct there, when might we see that published? And can you confirm what dose and frequency of administration you're looking at for that phase three study? And I guess as you appear to be positioned third in that race, we'll be interested to hear how you expect your drug to be differentiated versus a competitor as it's already in phase three. Thank you.

Thanks, Carrie. It's a good multi-part question, but on LP little a, happy to talk about lepidoceran. So Dan, you want to comment on this?

Yeah, thanks, Carrie, for the good questions here. You're right, we haven't yet published the phase two data. I think we just recently were able to publish a phase one data that was really exciting and well-received. I think one of the things that people noted in our phase one data was a very long durability of action and the very deep reduction in LPLA levels following a single dose of lepidyserine. We now have, of course, a phase two data in hand and use that to design and begin the phase three trial. I think we haven't quite disclosed dose or frequency yet, but I'm sure that will happen in time. You asked about differentiation. I think there's probably a couple different potentials for differentiation here versus a shorter-acting ASO and a siRNA that are both in phase three studies. Maybe first is The depth of clearance of LP-LLA, we don't know how much you have to reduce LP-LLA to lead to benefits in cardiovascular outcomes and whether there's a threshold effect or a floor to this. So the depth of clearance is one. The second, as you asked about, could be frequency of administration or durability of action, those two being closely linked. And the third, of course, is the population that's being studied. And I noted we're studying secondary as well as primary prevention here. So I think we have a good package with multiple opportunities for differentiation and eager to test the LPA hypothesis here, this phase three study.

Thanks for the question, Kerry. Paul, next question.

Next question will be from Steve Scala from TD County. Steve, your line is live.

Oh, thank you very much. Given that, based on all available metrics, the surpassed CVOT interim likely already has passed, can you confirm that the only way the trial would have stopped is if there were either a survival benefit or futility and not simply non-inferiority? And anything you can say regarding your confidence in eventually hitting superiority based on what you know so far? Thank you.

Thanks, Steve. Dan, you want to take the question on Surpass CBOT?

Sure. Thanks, Steve. As you know, we do our best not to comment on interim analyses, although many of our different trials can incorporate interim analyses. But when we do talk about them, it risks unintentional unblinding of results. And for that reason, we prefer not to do that. You're right that the primary analysis of the study and the design is around non-inferiority versus what we are ready to know to be a very good drug that reduces cardiovascular risk, and that's trulicity. So it's designed as a non-inferiority trial. Of course, when the final data come, we would be delighted to see even superiority. You asked about our confidence. Confidence continues to increase for this readout. In fact, as disclosed in the prepared remarks today, we got additional data here even from the OSA study that should make us feel more confident, not just the benefit of sleep apnea, which itself could lead to cardiovascular benefits, but actually the weight loss and the I think there are some concerns about weight loss in different populations and different trials and males, females, et cetera. So some of that was discharged here. So remain excited and look forward to getting that data when the study is complete.

Thanks, Dan.

Paul, next question.

The next question will be from Evan Seegerman from BMO Capital Markets. Evan, your line is live.

Hi, all. Thank you so much for taking my question. I wanted to touch on the Nanomab, you know, with the adcom approaching. Can you discuss if your confidence has changed in the asset and maybe any specific points that you will hope will be addressed during this discussion with these outside experts? Thank you so much.

Thanks, Evan. Anne, want to discuss with Donna at home?

Yeah, thanks so much for the question. And we are incredibly confident in NMS potential and the fact that it offers very meaningful benefits to people with early symptoms of Alzheimer's disease. And just the overall approvability of the package We do look forward to seeing those questions. We haven't received those yet. I think that what we'll anticipate really is discussions around the safety and efficacy of Denanamab. And the safety and efficacy profile remain very consistent with what we published and presented. So nothing new there. We do expect there's a couple of unique aspects to our trial that we anticipate they'll want to discuss. One is around limited duration dosing. We think this is an incredibly important feature of Denanumab, the chance to stop dosing when you've cleared the plaques. And Denanumab clears them robustly and rapidly. So we think that allows for this limited duration dosing approach. So we really do look forward to getting into that data and having the advisors see that and respond to it. Another unique aspect is assessing tau at baseline. This is important for the field so that we understand the prognostic factor of tau, and that was able to be earned. But what we saw in the trial was all patients benefited, regardless of tau level, with those earlier in the disease doing even better. It's one of the reasons that we remain so enthusiastic about Trablazer 3. And while Dan didn't mention that in his remarks, I think we're remain and get even more enthusiastic about the opportunity to intervene earlier based on what we saw in that early population, the people with low tau and those that had no tau with such strong biomarker results. I think you probably remember the data that patients in that earliest part of our study had a 60% slowing, and we believe that could be even stronger as you get into the earlier patients that are preclinical. But maybe just one more mark. In the meantime, though, this is not time lost. We'll continue to make sure the health care system is ready. We're going to make sure that we launch into an even stronger market with potential approval. So we're making the most of this time and look forward to the outcome, as Dan said, in mid-24 and answering any questions that they have.

Thank you, Anne. Paul, next question. The next question will be from David Reisinger from Lyric Partners. David, your line is live.

Thanks very much. And let me add my congrats on the progress and the guidance raised. So my question is on Orpher Glipron. Novo Nordisk has raised some concerns about the scalability of Orpher Glipron manufacturing given its complexity. I haven't spoken to Novo directly, but someone told me that they mentioned there are 35 steps in the process. I don't know if that's true, but could you please discuss how Lilly is building out its manufacturing capacity and whether the company expects to be able to meet global demand in the Western world after launch in 2026, or whether we, the investment community, should expect supply constraints and should be guarded about how we try to model or for glipron's ramp after launch. Thank you. Thanks, Dave. I'll hand over to our Dave Ricks here.

Okay.

Great, Dave. Great to hear from you. I mean, first of all, it is true that our for glipron is a complicated, large, small molecule, a large, small molecule, if you were, and there are many steps in the process. You can read about them in our patent filings, I think. But, you know, Lilly, maybe unlike other companies, we've made small molecules for a long time. We're capable at doing it. We understand how to put them together, and we've got a defined process to do it for the bond. So the API production, while a long process and maybe complicated relative to other small molecules, is something we're super confident in and have our arms around. The finished process is really the big advance over using injectables because here we're just tablet stamping or capsule making. which are dry processes we understand extremely well. I think the big gain here will be the fact that both for synthetic chemistry and capsule making and tablet making, there is already capacity on planet Earth that is significant. And so unlike the parenteral side, where we've been talking about injectables, and new capacity needs to be built, and which we're doing aggressively, as I not commented on earlier, Here, there's a lot of partners we can access, as well as our own substantial network for dry product co-finish and API production. So, pretty confident here. Now, will we stick the landing on exact doses and quantities in every instance? We're not guaranteeing that, but I think the picture will be quite a bit different should Orgapon prove to be safe and effective in the phased studies. Again, that's in 25, so we can expect launch maybe a year after that. That's an important event in the course of the Pinkerton class. Thanks, Dave. And thanks, Dave Reisinger, for the question. Next question, Paul.

Next question is coming from Louise Chen from Cantor. Louise, your line is live.

Hi. Thanks for taking my question. I just wanted to ask you about your next wave of obesity drugs. Looks like you've got half a dozen of these in development. And where do you think you can most differentiate yourself? Thank you.

Thanks. Dan, you want to comment on earlier phase obesity?

Yeah, thanks, Luis. We're excited about the portfolio of earlier stage obesity molecules. I think there's a number of opportunities for improvement over even an excellent drug like terzapatide. We think about the quality of weight loss as one aspect. So, for example, even on terzapatide, we see the ratio of leading to fat mass improve as patients lose weight on these drugs. Could we make it improve even faster with a muscle-stimulating agent like Bimagromab? Maybe. That's under investigation. Terzapatide is very well tolerated, but some people stop taking it because of GI side effects. Could we have drugs that have fewer side effects? Maybe that could be possible. Terzapatide is given as a once-a-weekly injection. Most patients... find that to be acceptable, but probably with less frequent injections that could lower the burden on manufacturing and make it easier to use for patients. So that's another avenue of exploration. There are some patients who don't achieve their desired levels of weight loss, even on a powerful drug like terzapatide. And so that's another avenue. Finally, across different indications, and I spoke earlier of MASH, that are related to metabolic disease, there could be different activities that prove more or less beneficial for these other related diseases. So that's another avenue of differentiation. I think we're just at the beginning of probably what will be seen as a multi-decade investment in treating abnormal metabolism and all diseases that come with that. And I'm really proud and pleased that really has what must be the strongest pipeline in this area in the industry.

Thank you, Dan.

All next question.

The next question is from Chris Shibutani from Goldman Sachs.

Chris, your line is live. Hey, thanks, Chris. All next question. Oops, can you hear me?

Oh, yeah, there you are. Go ahead, Chris. Great, thank you. wanted to ask about the supply and dynamic and the demand and when those two might come closer together. Previously, Anat, you've been quite specific in your vocabulary in saying that that was something that could possibly happen in 2025. Dave, you were in front of a group that we hosted, and I think you gave a little bit of a broader range. What's the latest that you would like to communicate based upon all the progress that you're making, the acquisition of the Wisconsin facility, et cetera, about a potential timing for that supply-demand dynamic to come closer together.

Let me start on this. So I would say that, as I said in my prepared remarks, we expect that the supply-demand situation will remain quite tight in the near term as well as the midterm. And just to clarify, it's not that we have a production issue or manufacturing facilities are progressing incredibly well. And I'm incredibly proud of the work done by our M&Q colleagues around the world. Literally, we have sites working 24-7. We're doing construction overnight. We're making the right investments to ensure we're progressing rapidly, as you've seen evidenced by the results as well as the raise we did for the year. But the demand is strong, which shouldn't be a surprise given the health benefits that these products provide to patients, highly efficacious medicines. And I expect that this will continue through the year, even with the significant ramp that we have, and we'll add more supply across different presentations, both with the auto-injector as well as the quick pen. But even with that, I expect that the demand will outpace supply through this year. Potentially next year, obviously we'll see. We're continuing to invest in ramp as we go into next year, but it could be quite some time. We talked earlier about morphoglipron. Should we have positive phase three readout that provides another relief valve in terms of just offering a different presentation, as Dave mentioned, which utilizes a different set of infrastructure within our manufacturing organization available capacity globally. So it will be in a stepwise fashion. We'll continue to update investors as we progress through the year and coming years.

Thanks, Anand. All next questions?

Next question will be from Carter Gould from Barclays. Carter, your line of life.

Great. Thanks. Good morning. Congrats on all the progress. I wanted to dive into Bemagromab ahead of the Phase IIb data forthcoming. Can you talk for a bit around the importance of showing STAT-SIG or clear dose response across the composition of the weight loss drivers and maybe as well as the importance of not blunting the overall weight loss as you contemplate a move to phase three potentially. Thank you.

Thanks, Carter, for the question. Dan, you want to comment on the MagraMap?

Yeah, thanks, Carter. It's a good question. The MagraMap is a very different mechanism of weight loss versus incretins, but one that we think could be important in combination with incretins. So the MagraMap is you know, we think will likely have important effects on adipose tissue as well as muscle mass. And so our hope is to see increased muscle mass and increased ratio, I should say, of lean to fat mass by combining bemagromab with incretins. In this present study, it's being evaluated both as monotherapy and combination with semaglutide at different doses. So, we'll see if weight loss effects on fat tissue stack, and we'll see if effects on lean body mass that were seen in previous bimagramab monotherapy studies work in combination with incretin. Looking forward to seeing that data.

Thanks, Dan. All next questions?

The next question is coming from Kripa Devarakonda from Truist Securities. Kripa, your line is live.

Hey, guys. Thank you so much for taking my question, and congrats on all the progress. I have a question about your radiopharma pipeline. You mentioned PNT2002 in your oncology pipeline. Can you talk about how you see that advancing, and given what you've seen so far, where you see this being placed in the landscape in terms of market share? Thank you.

Thanks for the question. Jake, I'm calling you to maybe apply a little bit on our radio ligand efforts, PNT 2001 in particular.

Yeah, happy to. Thanks for the question. We're really excited about bringing radiopharmaceuticals into the portfolio by way of the acquisition of Point Biopharma, and we are supplementing that acquisition with additional work through our discovery labs and the ability to make these medicines ourselves. So I expect we'll have more to talk about in terms of additional medicines over the course of the next couple years, in addition to TNT 2001. But specific to that question, 2001 is a PSMA-directed therapy for prostate cancer conjugated to actinium, the alpha emitter. And I think, you know, while actinium holds a lot of promise over lutetium, particularly in the context of creating double-stranded DNA breaks versus single-stranded and the ability to perhaps drive more efficacy, for patients with prostate cancer, I think one of the limitations of the existing agents is that they probably cause too much salivary gland toxicity to be real durable products. And so the point team designed a novel PSMA-directed ligand with increased tumor uptake relative to the salivary gland in order to drive more therapeutic index using actinium as the payload. So we're just getting started with the phase one experience right now, so I don't have a lot to say about what we're seeing just yet. But the preclinical package looked really interesting and differentiated from the other PSMA ligands that exist out there. So we're looking forward to putting it through its phase one paces, and we'll see what we have. Depending on the clinical profile, I think there's the potential to improve outcomes in patients that have already seen a lutetium-based agent maybe go ahead of that and compete with the lutetium-based agents or perhaps even go even earlier in therapy as PSMA expression really exists in the continuum of prostate cancer care. So more to come on that as we define the clinical profile in the phase one.

Thanks, Jake. Paul, I think we've got time for maybe one more question. We're right at 11, so maybe final question in the queue. Thank you.

Okay, the final question today is coming from James Shin from Deutsche Bank. James, your line is live.

Hey, good morning, guys. Thanks for the question. I just wanted to try and reconcile the guidance list with the one and a half times salable doses being maintained. Thank you.

Okay, James, maybe I'll give time now to talk about the guidance and how the guidance is raised. It relates to the one-and-a-half-sellable-dose comment.

Let's start with the one-and-a-half-sellable-dose comment that I made on the guidance call in February. So that references not a number of devices but a number of sellable doses. And as we ramp up capacity for QuickPen, recall that unlike the single-use vial or the auto-injector, that QuickPen is a multi-dose device that has multiple doses available for patients. That comment referred to the second half of this year versus the second half of last year. So we're expecting that total saleable doses this year in the second half will be at least one and a half times where we were second half of last year. That remains unchanged. But the level of confidence we have in our ability to progress on each note of our capacity that's coming online or will get approved, et cetera, has just increased. There are multiple of these. throughout the year. Multiple of these have occurred. Some will occur, and I gave the quick pen as one example. Think about a construction of a site, for example, Concord in North Carolina, which we said will become operation by end of the year and we'll start seeing products next year. That construction has concluded, lines are installed, and we need to run qualifications, get approval, et cetera. There are multiple nodes of these across our own manufacturing sites as well as external. and that they all need to come online to get to where we need in terms of the full year guidance. But our confidence as the year progresses, and as the year has progressed, our confidence in that has increased, but it remains at least one and a half.

Thanks, Anand. Great. Well, thanks for your time today, everyone, and we appreciate you participating in today's earnings call and your interest in our company. Please follow up with the IR team if you have any additional questions that we didn't address today, and have a great day. Thanks.

Thank you, and ladies and gentlemen, this does conclude our conference for today. This conference will be made available for replay beginning at 1 p.m. today, running through June 4th at midnight. You may access the replay system at any time by dialing 800-332-6854 and entering the access code 317750. International dialers can call 9735280005. Again, those numbers are 800-332-6854 and 973-528-0005 with the access code 317750. Thank you for your participation. You may now disconnect your lines.