LLY - Earnings call transcript Q3 2017

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Q3 2017 Earnings Conference Call. At this time, telephone lines are in a listen-only mode. Later, there will be an opportunity for questions and answers, with instructions given at that time. [Operation Instructions] And as a reminder, today's conference call is being recorded. to Dave conference Ricks. like your over now speaker, first would turn call the to I Please ahead. go

David A. Ricks

Good morning. I'm Thank Lilly Chairman and you CEO. for joining third and XXXX us quarter earnings call. Dave Lilly's Company's Ricks, for Eli

of Diabetes Christi At of Health. Maria Simmons, our Maria will Derica also highest in retire. instrumental with Crowe, been Derica we of the Lilly Chris serve by President of patients Sue company's Rice, Research Manufacturing Oncology; will President Joining Financial last President our year, making call of of President have Laboratories; end joined Wright, and medicines Treasurer has the earn Operations; success. of trust be Jeff the CFO, of challenging Lilly helped levels expirations our will the Enrique Bio-medicines; and of This Derica Officer; today earnings Lundberg, and stronger Mahony, Johnson for Shaw, much Lilly called Jan Kristina Lilly IR our role a have as Phil on Chief strong company. carry Elanco we We're CFO-elect; work. currently Conterno, Ogden, emerging Rice, YZ, Dr. a me period years and patent their two through Lilly team. Both quality in the leading and that key built Smiley, that President the safety. the call played organizations the Dr. senior on and Animal the and by President Lilly are executives U.S.A.; Josh of of Lilly

company. for to applause their me them here, of please join thank of beginning round So a contributions to our both in

projections current expectations. statements on this based call, forward-looking During and we making conference anticipate our

community. be latest benefit listed provide of pipeline to The XX-K is the could we differ of SEC. growth information for our investment In our forms outlined for not and pharmaceutical on our in and is about result outstanding in including growth prescribing not product those worldwide generated also and newest It revenue X% diabetes promotional our grew intended by of this by actual due a again total, quarter. filed XX-Q human I'd XX% it's of products. the volume the decisions. the to X and highlight those led once with slide our performance sufficient which, driven Our number business, materially QX, we factors, products in

continued to also our We expand margins.

Excluding XX by declined XXX percent a of of a and on as increased basis over foreign the expenses to effects revenue operating inventory as by revenue exchange basis sold, points over margin international of gross points, percent total XX.X%.

progress pipeline and abemaciclib, the MONARCH our X ultra-rapid include insulin. Verzenio, for BLA Phase and galcanezumab launched, continued. cancer for the for and trials. X program Our Highlights breast name We the based FDA on advanced approved, prevention, for we US migraine X trade initiated submitted the the MONARCH we for

over exclusivity ruling our all through proceeding. an through challenges, shareholders If US the upholding would received $XXX In products capital deployment, five with And CureVac's we a CureVac million based focused global remaining our other Alimta dividend. in IPR of to upheld, to method we news, the maintain on RNActive immuno-oncology patent returned terms on and cancer up Alimta into development use AG, May commercialization of important of vaccine In we US XXXX. our technology. entered collaboration until

key the January include be new FDA, earlier of as of improve midterm strategic are each and the more for our events our July details that XXXX discussions to XXXX. in the the retaining the actions to US resources with RA the announced Priority Incyte, FDA alternatives for X highlight and achieve submitted an our NDA our also on of our we objectives. our keeps Review that cancer X Animal that our we've cost we've medicines before I'd this the Europe business. for a developing we morning, merger, We And well efforts on sale business, focus including submitted since in end for to a other the goals Slides further or designation as with to NDA. Elanco the accelerate Alimta earnings KEYNOTE-XXXG structure. on series abemaciclib contain Health X label. for strategic and in sNDA performance call. reviewing events After us breast these MONARCH announced Our baricitinib resubmitted data a announced we and IPO, in abemaciclib advanced Along track will granted Japan,

measures into business, description the for detailed the earnings results. quarter to our of our in presentation year-on-year trends to provide my our please Moving in changes adjusted focus and slide GAAP refer provides results measures summarizes insight to our financial third our underlying comments summary X release GAAP press a non-GAAP GAAP I'll our so results, today's the of on slide of results. non-GAAP while X

as mix, manufacturing decrease Looking on at slide by effect of the on earlier. increase of can driven I international was the of and you primarily Gross the see percent mentioned sold revenue revenue partially a rates margin that to decreased X, X% offset measures non-GAAP foreign negative inventories efficiencies. by XX.X%. product exchange This

expenses R&D and of margin over effect and basis of revenue increased X%. as FX XX X%, with inventories expenses X%, by expenses administrative on operating Total increasing points. gross marketing, decreasing the a increased sold, international Excluding percent selling

in extent, quarter. million lifecycle income of $XX clinical an last compared with milestone spending to expense on BACE we're of of and XXX as a and a collaboration marketing, offset Other expenses was the was on in stage quarter payment related $XX increase new partially products. over our a inhibitor declined decrease The developing in expense by percent OpEx As late lesser to development costs. this AstraZeneca in selling to mentioned The million higher year's earlier, income late higher by R&D expenses by driven points. and spending administrative products, basis revenue, was by driven lower

quarter a compared At XX%. by was a growth September significant creating primarily XX.X%, basis XXX our year, OpEx points volume-based net $XX million. leverage. XX rate while income this benefit earnings discrete slide growth reducing delivering provides year-to-date of by approximately non-GAAP per achieved tax reconciliation significantly ratio, the of EPS. both decrease bottom single-digit, details high earnings share positive increased this quarter to tax for non-GAAP Slide same last revenue and while a Our line, net the and We same measures XX between reported the driven

details these additional adjustments slide on find XX slide XX. and You'll on

effect revenue take the this at let's foreign look XX, of and growth. price, was minimal of exchange slide The to effects rate, quarter. a volume Moving on

main a revenue included loss also and extent, this you'll slight exclusivity growth quarter. was from Cymbalta price. noting on reversal. X%, increased Excluding headwind was a with quarter driven again third volume, by returns a large of leading million XX% declines our noting revenue our recent were volume. volume driven the for to primarily drivers year's growth in last Trulicity, that benefit worldwide a much human from It's Effient. $XXX geography, worth drove of FX, business, that lesser Taltz U.S. reserve Strattera this performance to and and pharma pharma volume By notice each worth growth, the geographies It's Basaglar, by both basis that major by

our product XX%. period, growth base the from U.S. this Excluding was

headwinds Alimta countries excluding driven to in erosion well pharma FX, revenue entirely on almost volume grew and Europe, by X%, due to as generic pricing as Moving competitive pressures. despite certain

revenue large rest a This by was impact negative the Trulicity. despite entry generic XX%, pharma increased Alimta, on the led Excluding a of FX. our In grew Zyprexa of Japan, June, revenue excluding XX% pharma European performance last basis. from

Zyprexa, quarter rest by revenue grew Excluding Japan terms Cyramza, performance of led and in Cymbalta, the Trulicity. pharma our XX% this

on performance Humalog rest basis and this revenue increased world X% pharma Our Trulicity. quarter by a the the in of led

to health. Turning animal

companion was health by food pressure while product driven purchasing X% Excluding the food by excluding by FX, product year's decreased vaccines last On cattle. as of with revenue well U.S. adjusting access revenue primarily companion acquisition volume. BI in declined XX%. basis, our revenue animal down market animal increased Food X% a XX%, increased animal competitive revenue and performance worldwide product down product driven The the U.S. for pressure pattern, decline animal by animal revenue impact X% XX%. and as revenue animal

to While Trifexis, affecting year-to-date September companion flea, product. parasite animal results. Slide intestinal was and competitive pressures for XX heartworm, our our the decline same information due the outlines

engine look at products on new of volume let's growth comprised of worldwide worldwide the Jardiance, growth. our Lartruvo, Now drivers volume Taltz, of total, the In and our were slide Portrazza our Basaglar, Cyramza, Olumiant, Trulicity, XX.

You can see these the over XX.X same volume quarter of growth percentage products year. drove last points that

total, In this XX of loss just brands of product now XXX Evista quarter. and and Effient, view basis represent in of new uptake. our revenue Strattera, the worldwide exclusivity Zyprexa, up billion for provided over last of generated drag a XX% Slide XX% revenue, Cymbalta, Axiron, nearly a provides points. While $X.X total quarter our from these

Moving meaningful and consequently, no sales a did, as operating in income FX effect exchange impact our mentioned to however, essentially large XXXX foreign had our on effect in slide no on earlier, of expense rates FX on XX, had EPS. growth. operating changes in revenue growth. cost and, Similarly, I growth QX have

effects with year-to-date. For we've constant XX%, in in exchange, the terms. consistent non-GAAP growth example, of growth XX% This including foreign the is EPS XX% was currency and seen

events, our and overall a corporate call update an on over financial the our Now, key pipeline, review progress guidance. I'll turn for potential to XXXX on of Derica

Derica W. Rice

of Dave. acting Nektar XX abemaciclib U.S. calls Phase assets. breast development Phase submission our U.S. October ultra-rapid Thanks, two shows of for our Movements and Slide cancer, approval insulin; last immunology since of earning include of for as termination recent X migraine a initiation the asset advanced of the with collaboration select XX. the prevention, of X our from of the for galcanezumab NMEs X addition Therapeutics, Phase

and on Our study select study, negative dulaglutide cancer shown XX, JUNIPER. and outcome the the NILEX lung pipeline, the abemaciclib X.X-milligram slide X reflects of

see events one on events the earnings XX, just occurred made slide last and progress we've I can Turning of key we many mentioned simply the the already since considerable for to projected I'll change. Dave so have our key that XXXX. call, on you comment

positive we now baricitinib presented data program begin year. for X dermatitis the atopic expect the in EADV, to the at of Following before this end Phase

to well range mentioned charges also earlier. as billion. development to the narrowed billion stronger for the financial due raised range We've and, to we've see euro. narrowed that guidance extent, products for the $XX.X a expense restructuring year and rate on to R&D this of a GAAP our billion, for pharmaceutical full to $X.X non-GAAP you'll XXXX tax we're XX, Turning a slide lesser tax business $XX.X reflect our and benefit $X.X uptake as quarter's tax billion and range our seeing revenue trends decreased to of new to the primarily discrete effect to to the We've

we've EPS, our and per EPS For by share, $X.XX to $X.XX to $X.XX to range we've EPS $X.XX raised to our non-GAAP per reduced GAAP $X.XX range share.

in session, growth X%. to EPS up. our let XX% sum worldwide Before another top we quarter business, revenue excluding go growth disciplined making line delivered investments our We've or strong XX% leveraged Led by Q&A FX. QX. in our briefly grew growth new the products, we me non-GAAP By into when

call, our behind We strong pipeline approval momentum next-generation innovation-based Since CureVac Phase we earnings with the and galcanezumab launched insulin started U.S. we our received and bolstered continue We the for X have strategy. U.S. prevention for here our deal. We've submitted for migraine in to mealtime our Verzenio. last

well the company's business. resources improve actions developing alternatives and the cost focus review Elanco as announced on of Animal our our to Health also new We as strategic to structure, for medicines

our our our forward, expand growth our to remain products platforms launching for focused pipeline, prospects. operating margins, capabilities, our drivers excellence, – on our ensure management to and increased in future business prepared with concludes remarks. our core driving will and Going – late-stage scientific talent, new This investing productivity team reloading technology

moderate over Phil? to call Q&A the session. the turn I'll Now, to Phil

Philip Johnson

one Thank like that We question. from to do as many to we two take possible, would you, you Derica. two-part callers ask or so limit as questions questions your

and ahead for session. instructions Now, the if go provide for Q&A ready the first you We're can caller. Alan, the

Operator

Absolutely.

with Anderson One Tim of line Go moment. ahead, the please. from Bernstein. come will question First

Timothy Minton Anderson

of called from major a growth curve out just because can new Thank branded driver, as give facing weekly go you. I'm driver. that you important XXXX On you you Trulicity, the it we product. competition guys product your an us Novo's are growth thoughts wondering into future if on

their data. wondering clinical I head-to-head several might product. wondering and it think think good be they compelling approved. in program. I'm Humalog, It viability your that no have equally, had us on had that for profile, injectable clinical they they your I opinion coming how fact, profile Phase think if impact that biosimilar some X And in GLP-X, Reducing readouts of will, you seems of in that XXXX, problematic. was And of that you if give product importantly, can GLP-Xs. could oral I'm the a then problematic be the yet

that You us into a any think I with settlement and a leverage Can you guys have could exert maybe Sanofi. patent a you there? or update potentially give delay

Philip Johnson

you Tim, question. Great. thank the for

for heading XXXX thoughts competition oral And So Enrique into you us. and with questions Harrington, will space. Counsel, coming go on to on our General have Mike new do branded GLP-X we then Trulicity the the with

update if Enrique? Mike, litigation on So, Sanofi. the like you'd to with give

Enrique A. Conterno

a when comes you year. thank indeed, Trulicity is having innovation for the unique in It's time terrific Well, diabetes. question. And a it to

this we XX% represent see for about going outlook the when is the class, when some insulin forward. the about. many the significant. The injectables, of pen is a look Trulicity and basal but an maybe it will class to has we offers once-weekly to dosing. is to and product, opportunity We is cases, very Trulicity position color than frame require biggest to for managing that some basically that not think class, about in oral prescription. we single-dose provide by to opportunity and try patient things comments the or less product not does we provide some GLP-X so the in it an efficacy And at me when the a comes market I Trulicity from real-world important when ready GLP-X an as as have the medicine. significant is comes Let for think that the enviable of use still growth for think needle, course transitioning, of a seeing it this which so benefit basically benefits

healthy the that mind growth yes. the that is about of of has class. growth class competition, have the the and for think we that's the have have continued I Trulicity going we in that do catalyst too is to fuel we very overall what clearly, we expect type in also of and think class be going the to to competition as growth we a Now, position But keep market. the help The

continue of to we feel good safety comes we trends very see position but Our their data be profile comes the look when at it combination product we'd efficacy for offers. product. Clearly, that SUSTAIN when when basically to to the to the that all both sema, solid we of X, it have our our like the about and

You comment believe their out area interest And as the I space before is asked That an come make about do oral to we GLP-Xs. can to wait us. all but important, data comments. Humalog. need of We then going basically innovation in for of that more to Mike the to I is see on

Michael J. Harrington

to not the under Act to The filed and Thanks, your have expired suit we biosimilar. Lilly question. Tim, has Sanofi their challenge deadline challenge for Hatch-Waxman for follow-on

aggressively, for follow-on Book-listed only in know, a company patients. assess Hatch-Waxman process whether property, a Book patents didn't listed vigorously for base a so. have But fundamentally Orange Act product that protects innovative have, is our factual to offers device, a the relevant KwikPen discussion, own this an patent the our so and device is and our of have different legal KwikPen follow-on We we they purposes is basis number factual and Sanofi legal thoroughly device intend to it's defend pen device. to their analyzed And we for lispro. that Lilly's both with carefully and Orange analyzing advantages infringes the than opportunity litigation. there to of As that to patents to remaining we'll support provides for device notice an use a we intellectual litigation a but we Sanofi do patents, don't product. particular that the you The do Tim, to the here, and enforce continue a in engage delivery unless always

Philip Johnson

for go we please? next Mike, if can Alan, Great. to caller, the thank you update. the

Operator

Morgan That'll be please. Stanley. Risinger, Risinger Sure. line open. Dave from your with Mr. is ahead, Go

David R. Risinger

on mute. I it apologies. My had Sorry.

much business. the my My So very respect is taking thanks first with to health animal question for questions.

little exploring that know you've the is something on organic you color So more alternatives. a timing? for contemplated the that this Could hasn't bit announced business' you're I Why growth strategic just years, now? provide you've been recently. inspiring but

get it'd so going then prospects business' organic provide And be about why XXXX, how more to a how see the to respect be in to on think you in there Europe perspective And now you. in and would forward. may color with second, generic Forteo helpful you potentially entry investors just to helpful your and the little for I bit believe it generic threat Thank but XXXX. be growth U.S. Forteo, the about should

Philip Johnson

for questions. Dave, the thank you

the we entry? Animal have the and want And if that outlook explored Ricks, comment Christi, on for are Dave Elanco you So on you Forteo alternatives question can answer then Health the being generic to if post timing review. for

David A. Ricks

Thanks, Dave. Great.

We get haven't true. short-term to that. on and some challenges short-term; as we on the should long I the in we think touched in question is may time; year. this of out, look ask. a don't position had a at it We asked We've mean, calls things, it long-term. it's And been, how operational business question as the the for of other point this you Elanco we've natural we one

business, with globally, through through we participate we fully compete think to work we to over business organic the amongst the Most global a BI's this where are many relevant segments highly we business some and it's and the taken health. vaccine five now, think rather in North own think America grown this business health is poised animal a that's actions, operationalize and we've competitive. really now, recently, effectively and combining together acquisition have also in of top-tier get grow substantially our where company that coupled is now all pulled a we and those ahead. last companies I Novartis, years why animal in top way of It's but aggressively

And the Elanco time we acquisitions options. the today, scale posture Animal exploring is we're so on And and Health. now good best reflect a said completed to as for business those having

keeping options with be range or to expect by And the back We to spin, to in that combination other investors determine are mid-XXXX scope: some of might value to we our of as IPO shareholders. the business, results able or analysis. the perhaps best get full the maximize the to Lilly way

So with process you but time look follow-up is we'll back progresses at think that to a and as this question. we step good this

Philip Johnson

Thanks, Dave. Christi?

Christi Shaw

Yes.

Forteo data Forteo, to prevention support continues the the of how continue we very question, with the is strong On and pleased be in fracture it performance treatment. and the to

as so is expiration you easy. at do same the And which Forteo of across to difficult as we Europe, Japan. it and the do, Forteo; we estimate being the make in it's in XXXX, and is major future, patent look have that's not Obviously, the U.S.,

will estimates our mark, are when we'll but lose that property XXXX is So really protection. that the question be intellectual that

Philip Johnson

Great. if Christi. Thank Alan, to can caller? go you, next we

David A. Ricks

Dave. Thanks,

David R. Risinger

Welcome.

Philip Johnson

caller, please? next Alan,

Operator

will the of please. That Citi. Baum ahead, Sure. with line Andrew Go come from

Andrew S. Baum

... questions. haven't I'm couple surprised A Thanks. (XX:XX) of you

Philip Johnson

out very in it's it's and volume a Andrew, little bit. low cutting and

Andrew S. Baum

that. that about any Sorry Is better?

Philip Johnson

thank you. Yes,

Andrew S. Baum

Terrific.

it more just you business a their it oncology that given Is balance share assets? question development spread? sheet Is Lilly a bid-ask the business. I any haven't maybe that Could I'm little base seen available forwards? for relative are Cosentyx, the within bit marketing seem to a of So Could potentially and would the reshaping substantial versus are the use was Is last clinical Taltz What that that you're in-market I this of be thinking especially saying quarter of about color. in over? to you your that? turned what is the Lilly. outline dynamics competitor, second, the disfavor the going performance delaying adjusting of how driving needs And surprised disproportionate

Philip Johnson

actioning Derica, for Cosentyx dynamics that. And sheet impediments our seeing for questions. in then you to oncology, then with Derica? Taltz to balance you'll on that development Andrew, question we're and if Great. and and address on the Christi thank comment business the using market. the

Derica W. Rice

Good Sure. morning. Andrew. Hi,

that oncology three We or like have just for continuously balance our no at look whether sheet other pursue or Most this segments And we apprehension the in in we therapeutic recently, our area external therapeutic we'd across seen to goals, the about using do three marketplace in reservations years, which pursue. deals year, compete. you've asset it's to oncology. our opportunities of

oncology and at that deals, year, CoLucid early-stage the That's we are that's to protecting market as that on things beginning did is expensive those we'll do If like In do our can regards we diligence real estate, prices, opportunities very at. chosen late-stage shareholders make this we've and of on. find of one we the still the of all focus assets with have design. those is a good sure to by look that Now, to we pursue in we that well. area we

value And touted. some prices of is finding at assets it the the in they're at which sometimes, tough market being

and that's we've to look can. earlier later go to if that's of rather we cognizant So been why we've than something chosen

Philip Johnson

Great. Christi? Thanks, Derica.

Christi Shaw

Yes. And more expectations those not reaching you the newer that you're office, Taltz, be on the of is is at TNFs as our the you IL-XX see see continue you pleased IL-XX. IL-XXs agents increase. out, patients as on performance have see the dermatology new really and are A clear really we the both defining numbers. the details versus very competitors, especially couple what like that really of that the we we the so agents of we'll with clear more seeing skin. the Taltz, patients physicians the And not Andrew, with and status. to the in look coming What for

the for has of us to that you free and is out. their Cosentyx added One lot things. level couple that a a weeks take so will IMS in it there's goods to months there's volatility look of data even tells actually maybe data, If data, at NBRx or

remarkable And if sales XX% was into dermatology entry feel net to is you net Cosentyx us the good second the would looking great. are we same very the that, at able as we're U.S., be a period So in look so at that is sales. to same actually for time, office, performing of continue the the And it. in for if you to usually, about which pretty at do got what the But we be market.

The other thing to see time. in is note seasonality do we summer the

So in look specifically office where the at psoriasis, seasonality. you'll as you the it, with dermatology that's see

so arthritis year, future, their increase. continue trying FDA end from number prescriptions. to to see We early by to breadth and increasing You don't with because now. see that we're derm Taltz. more see which or see thing of as the that We is is the the all you another look as hear kind And the office that's ankylosing see numbers psoriatic prescribers the excited we're spondylitis, into affect of of clouding the our the numbers our of the more depth right in continue we seasonality you then adopters very physicians

in With the given December another office and psoriatic level in January, Taltz. step increase our and launch FDA see arthritis the into entry rheumatology should we approval,

continue to Taltz in confident performance. we're So the very believe and

Philip Johnson

Christi. go next please. you, Thank we Great. Alan, can the to caller, if

Operator

be will Rubin ahead, Go Sachs. Jami Goldman please. That with from

Jami Rubin

Thank you.

questions. of follow-up Just a couple

below business than that's but First business? your are at XX% or operating Can industry operating margins, lower-margin average. what is us, Dave, well the base a I margin to remind DowElanco. so, seem business, recall on on your you overall the that around

as impact business, I overall take would what those what Zoetis think just given talk contemplate a P/E of a on you about has about see sort reason top of generated improvement couple your do you you on generally given secondly, made in trading, insurance announcement then lead very or growth you projection additional do beyond reducing. physicians we opportunity ask selling you you to top for can line And of the sort to with of to line perform proceeds? growth Can X,XXX much. should that and the light spinning That opportunity the policy think your if little we the your intermediate this risk hit company should investors that above So just look will I if that expects should some And and business program? ago, an the shed margins? going your you question debate of this the regarding over overcharge advantage confidence a you to mid-single-digit the an as term. cost-cutting know But against that forward? that how or ability of months the are operating cost-cutting the at bit among that is margins. where the can of having Thanks

Philip Johnson

the for I going our you flow thank If sort the Jami, going Okay. question. I'm get can, here. of just to to reorder answers

the reduction had one So the Dave, question, if Jami head you wouldn't last first. mind handling count

for the around proceeds You're like. going bit to any Derica in margins. you'd question Elanco if answer And a of having transactions-yielding future. the use free Dave? little provide comments on of a if feel Then proceed Jeff, we're to complement that

David A. Ricks

Sure. Yeah. Thanks, Jami.

now You appreciate name. it's to just harkening That's the used DowElanco the back but so old Elanco the days, question.

operating expense that and road. company. XX% margin line, we looking a announced a just XXXX for about beyond sales, to These has we're so to target What this stone our out, at clear. that long revenue down further the a a September. we've belief our as On operating time, to relation the on of no percent of looking in that higher held was be put actions This this is productive, more in our said them, cost-cutting, have some that up us early way see stepping more to of but launching invest become read new atopic indications Olumiant now we're today. They're expected. and free spoke uses, also capacity Verzenio an to with we spend projects We about a R&D. in margins like thinking than to in number cash we adjuvant more competitive positively how That's of both operating operating invest behind out flow those important late-stage we to setting, like with other like but dermatitis need and qualitatively,

we And to revenue very growth, what Nothing know X% that's we CAGR stronger facing even do which investors our to X% with we conviction X% I quest by quarter. to for the that we it's for. about generic did although remind some on our So this the It's And the future. we'll to. become confident XXXX. trend XXXX, above again events, we're be committed continue more on

that, over turn the Derica margin to sheet. it We with operating that can on Lilly balance And story. Jeff compare on comment So can me to afterward. let the Elanco

Jeffrey N. Simmons

Yeah.

been So been We and assessment on the (XX:XX) margin two our to as our past we've strategy as good but pretty a this agenda, forward integrations we've announced is the Jami, now quarter the not part Iowa agenda. hovering as facility events first well open Larchwood, facility. feel our only on Novartis aggressive this we've And Fort We that years. we've pretty BI we've acquisition margin as expansion of as openly, BI, for of the was that shared got consolidation our of two are around underway. just about. And our a well into opportunities, pretty going come Dodge, XX% manufacturing that our

we're to said, happen will productivity the but product agenda we've as mix as the here this is the that both working big that closer, change. give innovation aggressively for as well over happen in we're the that'll not the the state over in time us rbST. product That mix. lower two and is, no And well expansion time. question, short-term, seeking forces current our the only of drivers to other margins as drives these drive As The XX% options not some by sales margin

Philip Johnson

Thanks, Jeff. Derica?

Derica W. Rice

shareholders. the focused we'll at look Right question today potential far we is terms that before we interested thinking. health our pursue sheet balance haven't path us. in gotten that in. back that said, of asset animal to opportunities in now, Andrew proceeds, options of on the what's And That Lilly of full the what to capacity regards earlier even the best really value having the as been forward highlighted, types we're asked, that the the we're of have maximizing behalf of on in Jami, Dave array to

assets our for we while organic with not inorganic us So or strategic Elanco, us it we're to want strategy alternatives preventing moving from contemplating forward is in terms these current inhibiting and pursue. of

we've the ahead. somewhere said, speed years, earlier, recall X% full in year, we're X% as tracking moving top each as growth. towards when growth, And gave of your Dave between guidance terms last X%, we to And year. So in X% highlighted and in over Dave the three to back we're averaged, this still line XXXX,

confident So of we on well we're through that. X% meet out to threshold actually which think we're decade, track can for us very minimum that the that achieve XXXX, and take we

Philip Johnson

Jami, if Derica. Alan, next to thanks question. we please. for go Thanks, the can caller, the

Operator

That Evercore. sir. Please from come of with Umer line Yes, Raffat go will ahead. the

Umer Raffat

questions. I you a Thank of guys. much perhaps. Hi, focus to my wanted One, on couple taking for on baricitinib things. so

you. Basaglar no and is launch? there's And Just Sanofi – you at heard on curious dose versus Lantus? confirm launch? what how between on settlement about can or it secondly, confirm Thank that again confidence theory, the lispro in the X-milligram how be and present touching up you you also, your the in I lispro. think And just than comments Can do but And then on different particular. – then lispro you shouldn't should prior

Philip Johnson

you Great. to you're I at that application. review the FDA the with arthritis Umer, the referring Is the question. for our thank X-milligram, ongoing assume rheumatoid correct? for

Umer Raffat

Correct.

Philip Johnson

Okay.

So Sanofi. the dynamics think could that you'd you for future. Harrington, to for baricitinib if you Mike kind or the that then launch about on here in on X-milligram. there's Christi? might go the whether Christi, like any lispro, of the occurs settlement not whenever for question And of comment to we'll Enrique with

Christi Shaw

see, baricitinib milligrams of think X the is as it's we it I how important milligrams. commercializing are So where discuss well, the X doing, we to

for at not launch it's five months the rheumatoid been it Germany, in available, specifically we arthritis example, launch at as including in in But exceeds Germany our you As every has internal exceeded the only which Europe, look expectations. history, look Humira. in

able back where look as where to X use. in other seeing patients they've really And So in things able are we been the we the drive they like haven't of were what debilitated. see at that their the offices uptake It's They've tried majority to milligrams and, the life-changing. is they in coming and before. are agents now really, on to gone Japan baricitinib

look the have, milligrams to go the to So with about patients and efficacy the be imperative conversations to the benefit they is get able as continue FDA for and and at the we to we daily these their U.S. that discussions our need X ongoing life.

milligrams. read, track it to we happen So on we're before mentioned we'll we'll in in that, forward in the and to but the had believe seeing end the is have clock six-month look which out the of January then still in and as it very optimistic. real it we get We're resubmission, our past. And play a a after strategy X we the is world that having

Philip Johnson

Thanks, Christi. Mike?

Michael J. Harrington

no can their I to between related is and in place Sanofi Umer, And confirm settlement lispro. Lilly follow-on there agreement

Philip Johnson

Thanks, Enrique? Mike.

Enrique A. Conterno

and all can basically a are there a learnings So there to with enter, basal reverse way. when of situation insulin, Basaglar consider learnings things certain we in and that in then and vis-à-vis apply mealtime contrast of the got we insulin and we've we when the few course, hopefully those compare

insulin more time basal So the that open at class first, significantly the Basaglar was entered.

really medicines to a formularies, had where basal of most leads formularies prices. mealtime number lower status, we insulin are to and in the So relative different under and that exclusive space that's

are and formulations, the of today Humalog the in to just for insulin that payer Humalog it of today where have easier the the basal are we space Humalog, situation that So payers insulin relative for the Two but mealtime viable in we mixtures. create range a to economics such space. case the economics in is not the was full

Humalog just first is [Humalog we pre-filled KwikPen insulin, (sic) basically U-XXX, KwikPen] Humalog concentrated (XX:XX), even mealtime and a have in the Junior which launched We the market. Junior the recently half-unit pen

that gives our strength we to offering just offering a the and So lispro into us it believe excited market. that some comes when we're do coming follow-on by

see to to Sanofi. is competition a launch. probably that will a and perspective timing additional of for it's get from have that's we course, have course, Of resubmit, they they to approval. likely when It final question And

Philip Johnson

Great. if to Thank go next can Alan, Enrique. caller. the we you,

Operator

with Butler ahead, Tony Guggenheim Securities. Go be please. will That

Tony Butler

degree the back retinopathy Victoza the that's from to B if what due I switches Yes. may. would of cloud Part the diabetic Trulicity? or straight does is this assuming growth class Good to actually of part morning. is To Trulicity, And to cell Well one trial curious Enrique, really lung non-small warning question and lung other is the cell not cancer. your very confidence then non-small semaglutide did in around second trials Thanks abemaciclib I'm cancer. much. specifically on label? in the versus show the that orals from of in OS,

Philip Johnson

question. you thank the Tony, for Great.

Enrique, Novo was you class. studies cancer. in Trulicity to other the for ongoing over the overall might one first are discussion for that you of abemaciclib Sue, for of retinopathy then well lung as non-small And source So growth diabetic as Enrique? the if cell the impact that seen the two a the on on in trials

Enrique A. Conterno

beginning to from comes it highlight very the to growth, I When good. of it's think strategy users. current not GLP-X that on focus to Trulicity source the important our Very was

it when very a is benefit We So whatever when but for of additional so in terms and retinopathy, better by primary the significant minimal patients on control. the actual could think clear. data then, have that get comes most of our the I breadth retinopathy. strategy not for to it believe successful, oral we with highly care. really, to by Trulicity switching adoption been that it's me a We'd has of our the comes don't source given medicines the other to strategy specialists has in on from to the GLP-Xs. signal have opportunity comes I been I When like amount. very it from do business figures continue

semaglutide labeling see class for see We the this think But basically of clearly, GLP-Xs warning how readout. we as a significant counting we in we about of have advantages Trulicity. are general, to of growth retinopathy how will and potential significant on or

overall one of most value think I of important that is drivers probably the for asset. this

Philip Johnson

Sue? Enrique. Thanks,

Susan Mahony

giving was we've see survival JUNIPER cancer, we KRAS mutation-positive in got continuing activity see to advantage. regard an IO studies to and study and is with combination really that PIXK/mTOR, study confident mention that. we higher believe, advanced do lung Tony, which we've are overall did not though in ongoing, a singulation be in combination including we interesting overall than around mutation-positive should lung this to rational a data, will saw and sure. X treat, that erlotinib progress had in a number overall abemaciclib which combinations. Phase with breast got has I we survival survival lung progression-free abemaciclib other first rate. combinations particularly cancer, at I the squamous Yeah, with did also response those hard study continue important though those, KRAS What ongoing. basically think to is regards about the And with with been mutation-positive in We And We be rational of without assumed to in KRAS prospectively X.X-month historical full and did use cancer, control erlotinib. cancer. we lung particularly and looking you

In looking other that, tumors we're addition at as to well.

in cancer tumor to but look progressing So other our types. lifecycle continues plan abemaciclib, breast Verzenio at in now, also

Tony Butler

Thanks much. very

Philip Johnson

next You're to very can Alan, go if the caller? welcome. we

Operator

Goodman That ahead. Go UBS. with will be Marc

Marc Goodman

Yes, the products. there's in pipeline morning. there, look X we Phase If eight

very others the of I some focused are what base uptick secondly and and data just expecting and be Basaglar. excitement where you was the where there's think many know relative products stocking just not to I about should inventory so in It trend, there? several anything kind had And should we Thanks. if the on or was but as be any talk strong unusual us there wondering of then of the just we change script well-known. Can a there. of

Philip Johnson

the Great. question. for Marc, thanks

to Jan? the unusual you pipeline on on numbers, So so Jan, Basaglar the quarter if feel on you'd augment the free Others, like if the you'd anything Phase then to question. lead comment answer on And that. like. can take if X that Enrique,

Jan M. Lundberg

Okay.

our is year. well, next are start in as immunology IBD the IL-XX ulcerative well So data, mirikizumab, and And which PXX indications, early tested with expecting me colitis we in as psoriasis antibody, let Crohn's. two

also data immunology, clearly we the for oral space. we in testing we half it's BTK have are in first come In will the are which The next kinase, first. coming inhibitor, particularly the interested also year with psoriasis oral RA, immunology and agent because another potential tyrosine Bruton

diabetes, For we two have agents.

better potentially lower GIP/GLP-X. then glucose two to weight having The It's a dual a control. body and also agonist different first one mechanists of is

has not sensitization activity. somewhat We The two we readouts. insulin coming clearance has been to receptor as simulating in we also pre-clinical actually also had other amylin reason talk since actually plaques you here shown The semaglutide. inhibitor same then NXpG are with will considering what also very and in studied, Phase And variant oncology And incretin-like potential agent. in pre-clinical space. know, only about of than we're have Phase the choice inhibitor time, it next dulaglutide I clearly, molecules agents parallel then is think interested also of in have space. And with of the BACE amyloid. but is DACRA agent lowering also the agent these to the since an X. Phase not another And as diffused then which models models lanabecestat, that agent about extraordinary only X a the potential Perhaps efficacy in of weight high-dose GLP-X potent combinations the this is particularly in potentially to is can in Sue oral potentially relation this better this but make calcitonin running backup for that any to a we a And a then are body also about in is BACEX. also are we the less and have insulin including BACE X peripheral kind issues targeting have

Susan Mahony

X prexasertib we cancer. in have in ovarian Sure. Well Phase

developing We medicine, looking are at looking this biomarkers. at specifically

tract cancer ovarian should registration in with look in then Phase study Merestinib, actually are you first, cancer. and warrant medicine biomarker-driven developing So data hopefully progress this the biliary will we X we a that.

a both, and that on potentially indication. would of study as abemaciclib. PIXK/mTOR progress that, Cyramza on combination biliary Depending in with have data And we that the we or probably of combination really a medicines and earlier, as tract one cancer. or those inhibitor, a we're We developing PIXK/mTOR but one either I on either, X have, for in Phase mentioned the merestinib both therapy

Philip Johnson

Great. Thank you. Enrique, on Basaglar?

Enrique A. Conterno

Sure.

inside of there's we very a as and discounts but with insulin. the for prior and When related I adoption periods. continued at So performance basal the look there Basaglar quarter, the the of Basaglar rebates worth stock think benefit million changes was of the pleased key nothing to on estimates are we of of $XX

Philip Johnson

Enrique. next can Great. please? Thank we you, go if caller, the to Alan,

Operator

Yes, with from Leerink sir. Go please. Seamus be Partners. Fernandez That'll ahead,

Seamus Fernandez

for question. Thanks Hello. the

a couple here. So just

some evaluated the quite spin a Elanco and of Dave, of in have You for potential obviously want bit if you time. talk just kind get little – to guys sense your the make results companies the seen these types to execute then and of it we've spin and longer market and then on actually current announcements the takes time of a disappointment. period

Lilly's as trying obvious. just could But historically, is of about evolution any of see XXXX, the as VTE talk historical a clinical the with And release. in stated we rates you consistent data consistent, or about given the are resubmission, did the wanted of Just or for synergies sense if a business. your it's ACR I it's think additional most been with could, still for an the that was that in your fairly frequency any to you've companies sense, patients see announced of VTEs seen to if as get know you you if I my conclusion abstract. of Thanks. rate we've definitive a longer there inhibitor of of past middle you've business hoping consistent if we the have which any then offering the question, talked seen to change the just part rates in press And RA. a get spin stated synergies those few the Dave, commitments a has second JAK VTE competitor business. I if with in to in the in I between believe your of the

Philip Johnson

question. thank you Seamus, for Okay. the

we're synergies on in to So our to program over answer Dave, definitive a we'll forward the that going And the Christi Elanco go then baricitinib. the seeing talk we'll with questions view provide rates first able business. on on of to to VTE be for mid-XXXX couple you for with your about of and by strategy

David A. Ricks

thanks Seamus, the questions. Hi, Yeah. for

we're investors, the to because get so and the to we to hit, said before ample asset our came of look we mid-XXXX we options that's at as questions think estimate able today the of the us and to over being course, to out Of where time that's this going best value that's we back evaluate maximize long-term. believe

wouldn't certainly our that's from focus day wobble today, I one. So and that

this synergies gain primarily There is we business Lilly have business the I some time some we've the about through of outside – core talked does is think been core synergies. it and, R&D is that Lilly. has of course, a synergies with operating but back-office of

look the One different. I animal they we that think across for health used that reason as are modest. platforms are currently into rather Although, is

today. large synergize doesn't We portfolio that vaccine have with a pharma R&D

that has We to synergy have Lilly. a feed additives no really connecting assets

there's therapeutics, maintain different side, of some that we looked potential. synergies had a couldn't to contractually no reason as this, companion think has structure. we've those I the On believe if But we at some

next deadline. So we is or all are year looking at and of mid-year our this,

Philip Johnson

Great. Thanks, Dave. Christi?

Christi Shaw

world monitor resubmission. Sure. In we've where as regards well evidence commercially to thromboembolic events with we baricitinib, as continue data our to launched the accumulating real for

atopic in last and so And background submitted know, everything January resubmit. population. data rates you XXXX, with is before, more time rheumatoid the was normal seen seen, our consistent, as we we've the that we nothing patient As studies dermatitis said everything in we've we've have to arthritis much

there. So no report new news to

Philip Johnson

caller, next Thank please? Christi. Great. Alan, you,

Operator

Schott ahead, of be JPMorgan. Chris please. That will Go with the line

Chris Schott

Great. much. Thanks very

dynamics. of couple questions Jardiance a on first Just Maybe here.

review? options or different you question. Thank the possible pricing considering with the on what season, as you. diabetes overall each healthy just this seeing further be My a perspective, et further should are health with very any strategic category share you second next think know comments take segment seeing strategic to you players But of gains. trends You're we've think as just there, cetera, portfolio. maybe among expand gotten think believe I growth, keeping various was kind contracting out mind is preliminary question access anti-trust options. about broader about obviously we do either is about question of but an about class Do usage my to was we're consolidation into thinking overall? we to you're you're is follow-up further animal when and happy just going large think that Elanco from Anything in as year? then we And in to XXXX the we as the

Philip Johnson

on particular can class the And then the for the with you question the Enrique, access And through couple going extent thank growth comment. you consolidation that first questions. catalysts to health for that Jardiance, Dave, and the in talk Elanco forward. diabetes XXXX industry if picture, on can the potential Chris, you question. and you the animal Enrique?

Enrique A. Conterno

patients Jardiance on an So standard to become quickly new when comes has SGLTX pretty initiating therapy. it the

share to XX%, of is very Our share overall comes it brand north strong. new and are when the or think to when I volume prescriptions now to trends comes now it

the But trend that need related Of focus course, and Jardiance the we Jardiance overall do class. we continue on class, of more can some opportunity the when the basically we see the for dynamics look about long-term on Clearly, at the enormous. product, class to leader much as to think than the to opportunity is this we have.

diabetes. are X million the a of keep an XX risk in or is basically for death the has disease, about we believe there million with which XXX written indication only reduce people so looking that mind And United to oral are SGLTXs Let's we established people and have type cardiovascular product with in for that XX% prescriptions of those. and medicines diabetes at the of cardiovascular States,

cardiovascular course, profile that health and think patients of fact saw comes think with and and that that it of So CVS this box pressures in benefit have competitor access, to is a their of was lens and diabetes. we different it black opportunity exception we with related given When managers from safety don't decision about Jardiance do that thinking we formularies, of disappointed comes as from the we (XX:XX-XX:XX) is and I a of XXXX the pharmaceutical a perspective believe we amputation. the has but We, see interest already we mind. that and to in were comes are notable opportunity are a when of clearly the exclusion the enormous Jardiance and to label that There was pricing one surprised, announced this the the to very trends continuation the the in it when best formulary. pricing

patients. Thank and So physicians with our we'll make case with the you. the

Philip Johnson

Thanks, Enrique. Dave?

David A. Ricks

Yeah.

the combination of that. is Obviously, has answer facts possible lot looking still combinations. have But combination had at. been to a you the a you look health in animal the the Elanco So be question, to might sector. at We've of a part of really

product mix guess, we'd be geography. any that at I but possible yes, look So we that's combination do the and anti-trust but would in resulting facts an in to risk. then to it's avenue need determine at look each the have think the We

Philip Johnson

we Dave. Thanks, If caller, go can the please? to next

Operator

Boris John with Go be ahead, will please. That SunTrust.

John T. Boris

Thanks for taking the questions.

the so the product that rebates are their one a discounting What's their seems customers comfort learned in relative here how Novartis get discount front, that to potentially forward? the this pocket forward going between medicines out And in time, customers' to abemaciclib has over back to patient a we abemaciclib. think is categories and And forward your that going launch greater net of this of business and the question, that solution? morning, much to both you a role. they have innovative with just track the that about of managing add that greater as the up. Is then net the you then can gives affiliate, all Novartis. there some time in so approval gets obviously have lot we Listening Pfizer innovative as of especially call it'll difference are profile for gross just do particular. to new long-term do has Kisqali confidence increase going launches have certainly the that, rebate Novartis there though question the who a onto in uptake? rebating and you deductibles you the of some Thanks. second lead an invest and U.S., investors certainly differential with Questions to view as as to into many to the relatively to amount discounts and Dave, going co-pays underwhelmed from potential passed take What the here long-term? do and certainly most profitable on aren't a the ensure to therapeutic plays afford to has First the robust the FDA's it agents going pricing gross and

Philip Johnson

you Thank Great. the for questions, John.

things the you competition market, who'll to managing particularly for the we go we'll learned be Verzenio. the think Sue, the about Kisqali Ibrance brought a where well have and from by branded the So as lot with as be on occurring. dynamics approved the we've being launching Sue? then might and launch more S. as And U. questions Dave, to what cost of been causing agents of the there patient increases help side solutions equation

Susan Mahony

telling you We for the only and us important profile, hearing market more so with are for give been diarrhea proactive. that saying fact and they we're with clinically Kisqali support first our that ahead thanks we factors in a providing Verzenio people achieved. trying it's single-agent timing, Also, seen qualitative got the from the hospitals the and are Verzenio plan just milestones being early resonating. for ensure experience perspective data that in that is think effect some are good. The Verzenio are days. Verzenio. see physicians a We very Clearly very as John, product that and can't and differentiator actually are appreciative from hearing to-date. also is We're question. that differentiating any of differentiating we is access we've are and possible of relevant. and our the what appreciative have that that of with access do because around pharmacists patients progress after to easy loperamide Yeah. days approval. a continuously they that are people From the for seeing We've What is is literally What and weeks very safety the it's but are dose, can channel stocking patients but pleased been far a started. patients access We've we and the features few and we're like and out on that being we to quantitative that side activity is we have is manageable. What manageable. palbo physicians we're hearing and of that as

I'm U.S. an further of interested update as in we launch So very you the the down Verzenio in get giving

data year announced a with submitted next And data that we've end in looking at in a FDA X year. an Just final this we've the based we data. X, to hope the will from the Japan versus so so review means and as is and on have have that X or interim data MONARCH X-month that reminder, combination MONARCH at to for The the recently XX-month. also which got on And of either that, MONARCH that's, we AI, X, review also the on that just package. Europe MONARCH also priority that's the be single-agent based the included activity on

Philip Johnson

Dave? Thank you, Sue.

David A. Ricks

been all underlying If pharma question. do think Thanks, correctly, time have is that areas, about therapeutic we for affect the Yeah. pricing affect we across innovative would what underlying the your therapeutic thinking think sector news how in does the good and see mean, dynamics bullish and growth. we've about operate you're trends science that that's whole through areas John, don't too. about as our it in, business what I we saying the ever more the I I for

is just more put very set So to through of and in your various it. products time-pressured the building to competitive with are second older one primary really a where with Specialists have is are office through primary the we because working up set And versus and formulary (XX:XX:XX) in a to care and that care. primary deal categories relatively work in pricing in much specialty for care that broader dynamics specialists see care challenge more for doctors. and differentiation doctors together, less

sector continue think So but – the is launch, speak can't on at bigger which care. difference more is focus affects for differentiated to versus consistent effect strategy anecdote where our the flowing, and standard investment of see more it's this creating we and broader – I sizes, long-term, I more to the assets to

do, Those need to launches Taltz is kind I can a or our we think by see business. make thinking dynamics a so versus competitors recent And complete about versus working to an change the medicines That's continue find of clearance TNFs XX% in the yourself then with weekly less we don't be cycle that profound which of life example going our through the those mid-teens. a on the what differentiated is launch. in somewhere getting from daily to who forward, as the affect Trulicity are care. two that going that standard investing you

coupled is reimbursement for areas produced like hurdles opportunities by more global in and that's scientific great with relative other areas a through that because are payer with specialty more more system, highly happen for patients the that Now, which serious are care, a inquiry, basically I'm there's not saying easily of answer trend, a and that providers underlying them the an to long-term. immunology willing little more to and to work disease. can humanity where happens innovative oncology correlate

R&D for world. which innovations to some need the like disease, is to be the differentiation. strategy a I diabetes ultimate That we both I our conditions thinking fund and in that's innovation largest price to still continue killers stay and find our dollars flowing of due and to We'll our where is have. just antidote where and think in ahead way The just effect competition. are to think affects a cardiovascular of. But pay

than cycle. in. to What well-equipped Again, the X% immediate that's taken to medications. we is as as We system engage debate are increases, so ask all services should changed hospital of segments other in to patients are seen is I we versus patients issue Part drugs. be Generic that flow deductibles, well you with it? And out-of-pocket advocated that long-term will really think making deliver are their prices changed. remain of I you're that the are a great to to access healthcare by ourselves, with and one as structural so, I step great an all penetration parts question. in a get medicines ask CMS help over like isn't having potentially pass out-of-pocket of more provides hasn't has aggressively the the a discount. an continue that during patients exposed D, is should very very to to cash that's mechanisms the a which I of think ease benefit important to offering commercial in year for that high to particularly step burden. name think years who we be solution really problem employer if there's pricing need hole. and terms an share affordable a for national That's I we which the And relatively a through strides system. services. we immediate point-of-sale co-pay We've at then for these XX% way ask patients number donut rebates something is can evaluating That for both In question to to think patient, to now And payers particularly many that U.S. pay need eventually. just for think scientifically, the but low X%, seniors think We've brand about relatively the pharmacy to a pay through why broader the XXXX better asking This high. healthcare for have we're out-of-pocket value at do policy about help We, patients.

Philip Johnson

go Dave. next we to if Great. Thanks, caller, Alan, the can please?

Operator

Gilbert with ahead, be Go sir. will That Yes, please. Bank. Gregg Deutsche

Gregg Gilbert

In more when health, tit enhance market. push the Enrique, franchise you technology where to can are With respect there solutions-based could overall higher-level of that your issues your the we've you've atopic issues. Interested more could you a of past, diabetes they animal suggested And Jeff, of compounds. a show and revenue seeing to partner for that in on with beyond some success with met, tat Apoquel granularity (XX:XX:XX)? on individual given And up of sort of companies is the pressures dermatitis you're or then comment diabetes the be pipeline and perhaps industry know to when Elanco question for approach.

strategy that Thanks. about at say you can this what point? So

Philip Johnson

for Gregg, thank question. you the

dermatitis versus terms a atopic commentary what's pipeline strategy Jeff? to pressures, of companion outlook for So, bit and Jeff, you revenue working animal into our the forward. Elanco of then industry the over on device question and space. with in on going And a getting dynamics, companies little and devices for the Enrique,

Jeffrey N. Simmons

real health. quick, Greg, Yeah. on like, animal

all-around of One productivity of XX%. companion then, pressures of food that remain The of did would antibiotics animal course, And overall on to and X% movement back. kind by market FX. grew see just Elanco access the poultry, and growth We I well. kind I products. U.S. vaccine. clean growing and think strong is the really I I'll global with is grew sector We kind is in separate excluding We, back come just think them. again, which anchor driven

then as is economics product depending on in as mix from competitive again, industry this are mix. coming think industry pressure. a generic issue a I that an of animal, I well the some the combination, that's pressures And think of food

let animal The just So in parasiticide we both beef companion saw with that me U.S. highlight. space, cattle, and dairy.

market Innovation animals some everyone increased has think feel where I entrants is share. animal No spending. lost parasiticide just good the share. pipeline. general well And the the parasiticides. side that portfolio, growing of so mentioned, The our about opportunities and Trifexis as we was companion the portfolio still is getting in Dave As I then as lastly are an rewarded have issue seen the question, new gained and itself We very heartworm platform space coming there. channel our given in existing think our still size is companion on

innovation again, lacking again, the animals a dynamics and companion and there's we even food on But some in where space. little and think sectors there the you've vaccine animal poultry, got some So, bit overall, industry like generic growing with beef, dairy, got side. I pressures aqua, cattle, you've see

I being and well dermatitis, large in here, pipeline no we'll our molecule small as symptom and molecules here, process studied on for to Both here interruption it's product question, concepts. We're we're active as of exploring think to continue the an platform treatment atopic several dermatitis area. this. some relative novel actively focused we're disease and atopic advance Lilly's to are mechanisms related canine experience leveraging so

Philip Johnson

Great. Enrique? Thanks, Jeff.

Enrique A. Conterno

fact, be area to be to are, we And the share about we an brought this I'm are could to have not of something be pharmaceuticals So on. that a and to both more high solutions think that convergence technology and working in like I that's to for diabetes, create able by we excited than opportunity interest provide able but too that on so comfort. think differentiated pretty revolutionary, we much to say prepared that, just it. actively the

Philip Johnson

Thanks, Great. the next Enrique. to if Alan, we caller? can go

Operator

Steve Scala from ahead. That sir. Yes, will be Please Cowen. go

Steve Scala

follow-up very have you Seamus' Thank On to I baricitinib, much. a question.

this given release statement at that has early the late be new next. quarter a And Dr. confirm turned call, rate? line imbalances was Would year completion, background been with background stated there to top expected out second still the you expected not has they the So correct. primary within or expected even on are was rate. September in Mahony until but that That that you line DVTs that if KEYNOTE-XXX then time the surprising said remain it no

Dr. if KEYNOTE-XXX you. updates additional the timing? wondering on I'm So Thank any Mahony has

Philip Johnson

then on KEYNOTE-XXX Christi? update any And Great. Steve, Sue, new readout the for Christi, DVTs, the a any imbalances. thank questions. question you on timing.

Christi Shaw

no are regards DVTs. I Yeah. can imbalances confirm new to there in

Philip Johnson

And, Sue? Great.

Susan Mahony

And answer, have quick Steve, I any too. mine don't will a update. be

I go need ESMO to on XXX. think for you update to any

Philip Johnson

you. can next the if we go Thank Great. Okay. Alan, caller? to

Operator

Hi. Suisse. from Vamil Credit Divan (USA) Vamil ahead. Suisse Great. That will Go for the Securities - taking Thanks Credit Divan K. be LLC question.

the So bit we sales one, and guidance, is mentioned numbers I just want ask CAGR. a the at and a the And in models, little you less X%-plus also more as that. look the question think consensus about than our midterm guidance, general I

to along think number? growth when that, those million do as by that's in there where that are business margins in or that or maybe for you're any XXXX more there something X% and OpEx to products development on certain models, And expectations the then lines? review of maybe us are or think Thanks. that may so or So $XXX you highlight guidance EPS sort comfortable come you you'd the into get of related revenues terms built to giving XXXX extra you number,

Philip Johnson

here. Josh, road you thank Great. we're Vamil, you going for to the questions. test

terms or comments when the So then and/or placeholders if qualitative something comment you transactions if XXXX that of years midterm around and numbers, in or those guidance. missing are details BD where you there like give on can be confidence into may more bit in midterm give any to might a we little out guidance Street kind and built further any of

Joshua L. Smiley

Thanks. Sure.

business sales business development piece. First built development on X%. the have don't the future We our projections around into

As you opportunities. active we're at very know, innovation external in looking and

see those help add So or projections. if obviously those, to we would our

to we X% goal Derica And got confident this you since we're get through it momentum given performed think look relates strong how us to XXXX. are as I itself, today, again, from the think as mentioned, where we've performance, we XXXX very CAGR and the was XXXX. period really we XXXX at X% the to to

is we think collective I strength portfolio. the when don't we models, think new on product-level the I look at based of our But product provide guidance. the confidence

Taltz, that and that abemaciclib, XX quarter. the of continuing contributed with Basaglar, they growth. across coming, opportunities, portfolio this mentioned, Jardiance, pain And we grow growth see As continue Trulicity, to drive portfolio cetera, of we points Olumiant, you look portfolio to and et

X% our give us the target. the way of the that towards So performance confidence products that we're on I collective think it's that new probably well

it you as XXXX there. call I updates in the guidance think OpEx our of some the December provide the to remainder can on we'll performing decade on expect we relates provide guidance, to us and how see

Dave guidance, this as toward mile we've margin used our margin a and being answer color to it productive along just company. look that marker expanded more as on the relates mentioned an And XXXX some as December. think call in XXXX earlier way in more provide our I a to we'll

Philip Johnson

Alan, thank caller? Josh, very much. Great. you next

Operator

Barclays. That ahead. of sir. Go Meacham from be the line Yes, will with Geoff

Geoffrey Meacham

guys. morning, the question. for Good Thanks

on meetings just quick Just trends respect for scope what year expect in guys a the later in X then broader to bari, demand any coming should you of the and of impacted baricitinib, are recent negatively on know and the the updates help side last we Thank what biggest the product RA ones. atopic formal on data trends you're size And safety late? seeing fact, of dermatitis, question? couple of this as maybe And medical you. see lung back Phase guys just with the program overall a us that differentiator. starting On up, with have, at just first-line one but Alimta. bio I you

Philip Johnson

Great. Geoff, thanks question. for the

to first you. So Christi, two the

medical of differentiation. RA the to then and database Christi? updates at the you program Phase Sort meetings. to safety cancer scope non-small for in non-squamous and X for trends the And for coming cell Any of lung potential over Alimta. the first-line size areas Sue,

Christi Shaw

which got think X a for just to like. dermatitis of study think I clarify, I Phase our questions front, is our relevant Phase X on atopic what looks the design on question the lot we've on So data

took So very at in our were that that things actually one corticosteroids. is with of depth achieve. the Phase X looked to the is results. of Unlike we efficacy the our readout, by could the data competitors, is pleased mean very we we we patient I that what And what resistant

So were were weeks steroids, patients we pre-randomization. of took actually patients, responded out for four moderate dose those on that a and taken topical they of

patients randomized to those not only Phase that responding were to So were steroids X. topical actually

a you scores were so who used patients have to of actually patients And Where But washout easy will of where increase steroids. XX four and scores first all, you the opposite disease had, at their easy had you severity, patients so XX. had XX. that did started of resistant the less an baseline activity, period all, competitors disease our at around weeks second see

did we in we lot study move competitors show to Phase to being to depth a X the results similar that efficacy. and the patient know really confidence what now of of we will us that that So the the as able Phase we X did gives population studies, our

and X and lower higher. So look as dosing, of X look we at doses monotherapy, various at we We'll the looking X, be at milligrams. different

with that We study a we'll are robust very results. confident have robust

Geoffrey Meacham

basically And RA done – of we coming the this in data? are earlier program, there terms that at necessarily have was of updates repeats any things meetings, may were safety some from year any but updates that new understanding medical my not

Christi Shaw

Correct.

press we So will a have release out coming that be soon.

and negative We within will different Taltz on be have surprises way. And baricitinib forward XX seen new press releases the baricitinib a you in we and on scientific no but look showing both those, those new links at ACR. will release. analysis safety that to to And be we've

Philip Johnson

Great. Thanks, Christi. Sue?

Susan Mahony

to Alimta. regards with Geoff, Yeah.

you of been setting been past we of we've the a steady by As seeing and mentioned, IO the decline. have over sort challenged frontline months few taking

we move line looking an in flattening of We new seen are the brand, Alimta We've IOs uptake We with market as increase share as setting. frontline increase that to frontline And share frontline. at also now seen XX% of share. see frontline. Keytruda in we're second to an seeing the we're interestingly, in to the in a the the pleased in a have have

Philip Johnson

for Sue. you next Thank the update, caller, Alan, please?

Operator

It will ahead, be Richard please. Piper Go Jaffray. Purkiss with

Richard J. Purkiss

evidence initiating frequently patients are now proportion therapy X U.S., patients' retinopathy? of then And how have in I diabetic some the Thanks. average, GLP-X have of Enrique. three Two U.S. retinas the ones. on Yeah. quick in questions for What diabetic type visualized?

Philip Johnson

repeat. to try won't I Enrique, Great.

I heard think those you clearly.

we'll So the... you go to for

Enrique A. Conterno

Not second part. the

Philip Johnson

are So then percent to one GLP-X first patients, evidence that the look And the diabetics the retinopathy. the scanned percent actually have for currently initiating is that advanced retinopathy. that being the was in second the one of U.S., of

Enrique A. Conterno

diabetes, So for have XX% the diabetes with generally of GLP-X. about they're last patients look that But when actually excellent with on a question, have numbers diabetes, questions. we number retinopathy. patient degree of at a for not enough. really with get specific Unfortunately, of I There's screening. we nominal diabetes the don't When do look patients patients with some

are retinopathy, a to at the X%. to were you serious probably number threatening, vision is looking at of we If look which more X%

Philip Johnson

please? Great. Enrique. next Thank Alan, you, caller,

Operator

please. Yes, Jefferies. sir. of will ahead, Jeff Go line from be That with the Holford

Jeffrey Holford

more I JAK for a bari much questions. the into taking want dig the Hi. safety. just Thanks and very to bit

the understand you questions that. and what just the FDA was will to around before, on additional the there a better do I potentially of additional data have because a referred exposure submission you So help as that your think, cluster of have can you data how in light events changes bit achieve data there think exposure just original us you

going to you what referred Obviously, in terms some risks, population? know you in levels these background whether this rate think there a had atopic and can populations you. some different bit anything dermatitis of that particularly of differently have tell that other you've terms And exposure? a the relatively trial is of your Thank you've is X the Just Secondly, what risk. of don't question or that be in crossover, if talked this cardiovascular of more help to just address there us doing to really Phase of trials you're data trial forwards. high in you low things your exactly clinical view I then should was length cardiovascular have robustly

Philip Johnson

are Christi, Right. those all for you.

data... additional safety So

Christi Shaw

I'll Well maybe resign.

Philip Johnson

What to on referring in And dermatitis think particular population well? going could help that shed studies this to that. what issue the Phase with rate is and it's we're atopic what anything light this we're if that we X population achieve, then is safety background doing there's that as in

Christi Shaw

in that's X.X rates XXX background if help So the arthritis start with me the X.X terms of the what are rates okay. to data population us per already Background patient patient let will actually, additional rheumatoid with, in years.

patient, rheumatoid weren't general arthritis on baricitinib, if they they that in incidence So the that be would the report.

was our when that, background background specific rates I the to rates during are X.XX patient programs our say per so years. development XXX And similar that

rate rate the within data accumulated, when we've all submitted world and so in the general since I is of And patient. also rheumatoid now atopic of that arthritis dermatitis evidence say the we've the real that background still in

So hopefully clarifies it. that

this have as have XX. you'd is using trial looks that think does trying now And you what rate discussed clinical approving patient they background data similar Since FDA, when your to I program. then, population. with in FDA that to we drug, it that is or additional Our look see in what world evidence, the January submitted real protect it without The they when balance. it patients. We at they're typically is say and is we at effective a safe baricitinib

risk our using Now, the event, that using world actually it then someone on play actually confidence when you're had the clinical the in we controlled have event. this actually can practice, in I rate evidence clinical confirms environment, as one that thromboembolic why patients of is before is way if that even world we've as world that that patients you look in background important out. normally high baricitinib that it is more with they each baricitinib, thing in now they as is at consistent. in the see dermatitis, had in physicians gives does patient And had the a real population patients matching X,XXX now real that not really the of a over would, real that And how believe for patients arthritis who rheumatoid think atopic a well those at look the trials we those thromboembolic had a in we

patient see see which So we Phase anticipate X that trials. much we don't difference dermatitis probably far X we through and seeing we trials, as or trials any Phase seen reason why younger in wouldn't is a so the the forward a move atopic many part population, with the the of we've

Philip Johnson

have We Christi. for... time you, some Thank may

Jeffrey Holford

very Thank you. helpful. It's

Philip Johnson

You're welcome. very

for time question, one Alan. have We more

Operator

Capital of Markets. That Arfaei from will BMO Alex line be from the

Alex Arfaei

Thank clarification. Okay. questions, Two Good taking you and the folks. please, for morning, a questions.

discontinue you the similar highlighted it was this did Alzheimer's R&D aducanumab. why First, given day, particularly antibody If I that recall is Alzheimer's? correctly NXpG in your at to

Unless it's incremental vaccine BI not led there excluding you the So what's not organically, the that discontinuation? mistaken, to in Second, on acquisitions. growing I'm Elanco.

to then And you. are of biosimilars? So does that correctly their Thank and finally line Sanofi clarifying enough hear market? in a it from there no growth R&D barriers launching your from have with to sustain pipeline Did I side the legal productivity you preventing Humalog.

Philip Johnson

you Thank Alex. for questions, the

in you prospects you'll Maybe So pipeline the Jan? growth comment the answer to and/or if forward Jan, want for want on the pipeline. the Elanco. And discontinuation the on situation. are to sort asset if then and clarify of the if you question Dave, Jeff on NXpG Mike, going Humalog drivers of what legal

Jan M. Lundberg

wanted, we not start it. we the for that chart the the so we pipeline as FLAG-specific three target, the molecules the hence can stopped you If still antibody, see Yeah. and clinical NXpG, on meet as molecule the And then we actually molecule with have is active. pipeline frontrunner inside that criteria follow-on did

Philip Johnson

get be strategy here. in to Phase two we a fair, Just one X took to

strength the (XX:XX:XX) animal pipeline? plan over-read And along. wouldn't of I health So the the then all Jeff, on

Jeffrey N. Simmons

get pipeline. I going question. the Yes, good that products additional next growth and and guidance we'll as we we're going we our this about year to end Also, our into then of talk very call year we Alex, year Yeah. in of on year series a and into feel think more about launched good near the see last launches.

right the and just then not think into I And occurring top markets. ones that think launches our shifting thing faster-growing existing of last the it's mix is these now I are we're that but are So pipeline on us.

I animals, the as vaccines, animal companion food So and nutritional health, mentioned, aqua.

those drive spaces, higher growth. As also our that'll mix more in gets additional

David A. Ricks

to that. add just could I if Maybe

BI pressures. The organically to clear, companion growing we and is growth animal we're year. Just described this addition not be the in the food

health. we do pace. do reflect and innovation those expect do be do company built we're at think the forward a business segments, of trends XXXX long-term with looking animal positioned analysis, And with competitive animal some at through as health grow I improve above look to this segments though We're the have pace forward and industry we we of years nice as margins, looking, these trends in performance. And we're and assumptions across analysis. XX last to evaluating we've those this in globally the a again, many good we'll lens we opportunities not and coming, – and because at pipeline, broadly

decision-making much helped So performance us we've time. We've lens but through challenges. BI terms in stated of the this looking a year, some some broader rate, has we're growth of this at had out challenges. washed

Philip Johnson

Thank Mike? you.

Michael J. Harrington

Alex, you're correct.

We we with entering as in the have no compete the described earlier, legal Sanofi Enrique basis will from to market. preclude marketplace. them And

Philip Johnson

you, Q&A Thank session. the concludes That Mike.

you'd the to wrap up So, please? if call, Dave, like

David A. Ricks

with would. earnings great I your Maria Yes, to careers been the Again, call today Crowe and for contributions who's the Rice as well through years for us Derica performance a and our for both I with many us, last recognize want to thank many CFO, as company.

earnings We we generated today's again. driven have and with first Through or Lilly a growth That remains on So your by appreciate day. we've We prospects follow-up months volume of pharmaceutical XXXX, faster your of even answered income bottom strength great compelling nine investment you of IR products. margins, our the call the interest balance our the our our the a Please to given follow-up call call continue of questions improve leading top company. product new we team if a growth. thank questions. over the participation in the not all decade. today. Have concludes solid to if you, portfolio, revenue growth and And of on line any believe

Operator

XXXXXXXXXX conference again participation XXXXXX. for for and Executive beginning conference access AT&T's That numbers at time, until enter today. conclude and using please XX, Thank call Service. that the are XXXXXX. code Ladies TeleConference replay will with October today, area for and your your code Those code at service will your the and you XXXX-XXX-XXXX access area code the gentlemen, XXXXXXXXXX October XX:XXpm. be XX:XXam, XXXX, access internationally lasting AT&T available XXXX during XX, and XXXX-XXX-XXXX, Executive To for dial playback

disconnect. now may You

David A. Ricks	Eli Lilly & Co.
Derica W. Rice	Eli Lilly & Co.
Philip Johnson	Eli Lilly & Co.
Enrique A. Conterno	Eli Lilly & Co.
Michael J. Harrington	Eli Lilly & Co.
Christi Shaw	Eli Lilly & Co.
Jeffrey N. Simmons	Eli Lilly & Co.
Susan Mahony	Eli Lilly & Co.
Jan M. Lundberg	Eli Lilly & Co.
Joshua L. Smiley	Eli Lilly & Co.
Timothy Minton Anderson	Sanford C. Bernstein & Co. LLC
David R. Risinger	Morgan Stanley & Co. LLC
Andrew S. Baum	Citigroup Global Markets Ltd.
Jami Rubin	Goldman Sachs & Co. LLC
Umer Raffat	Evercore Group LLC
Tony Butler	Guggenheim Securities LLC
Marc Goodman	UBS Securities LLC
Seamus Fernandez	Leerink Partners LLC
Chris Schott	JPMorgan Securities LLC
John T. Boris	SunTrust Robinson Humphrey, Inc.
Gregg Gilbert	Deutsche Bank Securities, Inc.
Steve Scala	Cowen and Co. LLC
Vamil K. Divan	Credit Suisse Securities (NYSE:USA) LLC
Geoffrey Meacham	Barclays Capital, Inc.
Richard J. Purkiss	Piper Jaffray Ltd.
Jeffrey Holford	Jefferies LLC
Alex Arfaei	BMO Capital Markets (United States)

Eli Lilly and (LLY) 24 Oct 172017 Q3 Earnings call transcript