Eli Lilly and Company

Good morning. Thank you for joining us for Eli Lilly and Company's Q2 2026 earnings call. I'm Mike Czapar, Senior Vice President of Advice to Relations. Joining me on today's call are Dave Ricks, Lilly's Chair and CEO, Lucas Montarce, Chief Financial Officer, Dr. Dan Skovronsky, Chief Scientific and Product Officer, Adrian Brown, President of Lilly Immunology, Dr. Carol Ho, President of Lilly Neuroscience, Ilya Yuffa, President of Lilly USA and Global Customer Capabilities, President of Lilly Oncology and Head of Business Development, Patrick Johnson, President of Lilly International, and Ken Kuster, President of Lilly Cardiometabolic Health. During this call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to various factors, including those listed on slide four. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 10-K and subsequent filing with the SEC. The information we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional or otherwise influence prescribing decisions. Our commentary today will focus on our non-GAAP financial measures. Now, I'll turn the call over to Dave.

Thanks, Mike. Q2 continued Lilly's strong momentum. We delivered robust revenue across all key products and major geographies. We raised our full year annual guidance We advanced our pipeline across each of our therapeutic areas and expanded our pipeline through business development. On slide five, we list key Q2 financial metrics and highlight progress related to our strategic deliverables. Revenue grew 48% compared to Q2 of 2025, and our key products increased by almost $6.8 billion. Within key products are oncology, Immunology and Neuroscience Medicines collectively grew 121% compared to the same quarter last year as we continue to expand our presence across the portfolio. The number of people taking Incutins grew and Lilly's portfolio of medicines extended its leadership position. The U.S. Foundeo launch continued to build momentum after educating physicians and securing commercial access across all three major PBMs in June We began broad, direct-to-consumer marketing to raise consumer awareness. We completed the U.S. submission of Foundeo for type 2 diabetes and expect regulatory action later this year. We launched Foundeo for obesity in the UAE and we recently received approval in Saudi Arabia for obesity and in Mexico for obesity and type 2 diabetes. Early uptake in the UAE has been encouraging. demonstrating the pent-up demand for Foundeo to treat obesity outside the U.S. Foundeo is under regulatory review in over 40 additional countries, and we look forward to additional approvals later this year. We also achieved several key pipeline and regulatory milestones since our last call, including the U.S. FDA approval of Eblis for maintenance dosing once every eight weeks in atopic dermatitis, The EU approval for J-PERCA in CLL across all lines of therapy. A positive CHMP opinion in EU for insulin F-sitora-alpha for type 2 diabetes under the trade name Onswik. And positive top line results in three phase three retritutide trials in obesity. We added to our strong internal pipeline through business development, announcing agreements to acquire multiple companies to expand our presence in emerging therapeutic areas, including Kirovo, Limitech Biologics, and the Vaccine Company, building a platform of potential new medicines to prevent infectious disease and their downstream complications. And we acquired Atai Berk-Beckley, a company developing novel treatments for treatment-resistant depression and other mental conditions. We continued our manufacturing build-out and opened our first dedicated genetic medicine manufacturing facility in Lebanon, Indiana. We also produced the first batch of commercial material at our new manufacturing site in Limerick, Ireland. We distributed $1.5 billion in dividends in the second quarter and executed $1.6 billion in share repurchases. Lastly, in partnership with the US government, we reached an important milestone to improve Medicare access to anti-obesity medicines. As shown on slide 6, the Medicare GLP-1 Bridge Program launched on July 1, granting 20 million eligible Americans insurance coverage for GLP-1s for obesity at the low, out-of-pocket price of $50 per month. With this expansion, 35% more people now have coverage for our obesity medicines in the United States. While still early, feedback from patients and physicians has been quite positive. will soon be publishing our annual sustainability report at sustainability.lilly.com, showing the progress we made in 2025 on our sustainability priorities. Notably, we reached approximately 40 million people in resource-limited settings, exceeding our original goal of reaching 30 million by 2030. We are now developing a new commitment to address the growing burden of diabetes and obesity in resource-limited settings worldwide. and we'll share more details about this plan later this year. Now I'll turn the call over to Lucas to review our Q2 results.

Lucas Montarce Thanks, Dave. As shown on slide seven, Q2 was another strong quarter of financial performance. Revenue grew 48 percent compared to Q2 2025, driven by Seppan and Moncharo, with strong momentum across all areas and geographies. Gross margin as a percentage of revenue was 86.3 percent in Q2, An increase of approximately 1.3 percentage points versus the same quarter last year. The change was driven primarily by favorable product mix and improved cost of production. Marketing, selling, and administrative expenses increased 25% as we invested in promotional activities to support current and planned product launches. R&D expenses increased 14% driven by continued investment in our pipeline, including more than 40 active phase three programs. Our non-GAAP performance margin was 54.8%, an increase of nine percentage points from Q2025, driven by revenue growth. Non-GAAP earnings per share were $8.38, including acquired IPR&D charges of $3.03. This compares to earnings per share of $6.31 in Q2 2025, inclusive of $0.14 of acquired IPR&D charges. On slide eight, we quantify the effect of price, rate, and volume on revenue growth. U.S. revenue increased 33% in Q2, primarily driven by volume growth at Banan Moncaro, as well as contributions from our immunology, oncology, and neuroscience portfolio. U.S. price declined by 3%, driven by Zeban and Monjarro. In Q2, U.S. price benefited from a change to estimates for rebates and discounts. Excluding these adjustments, U.S. price declined by 9%. Europe revenue grew 55% in constant currency, driven by sustained strong volume growth of Monjarro. Europe revenue also benefited from a $250 million Jardian milestone payment. In Japan, revenue grew 30% in constant currency, driven by Monjaro and Kizonda. In China, revenue grew by 93% in constant currency, driven by the uptake of Monjaro. And in the rest of the world, revenue grew 136% in constant currency, driven by Monjaro, primarily in Latin America and Asia. On slide nine, we provide an update on the performance of our key products.