LLY - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Eli Lilly Fourth Quarter 2018 Earnings Call. At this time, all the participant lines are in a listen-only mode. There will be an opportunity for your questions, and instructions will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded. I'll turn the conference now to Mr. of President Vice Hern, Investor Relations. Kevin ahead, go sir. Please

Kevin Hern

us Good call. and Lilly you I'm joining morning. for for Relations. Company's Investor Hern, President Eli Vice Thank Kevin of QX XXXX earnings

Lilly and our the Lilly Dave on me Chairman We're Josh and of Dr. USA. Research of today's President Skovronsky, are Laboratories; Diabetes President Oncology; Chief Joining Bio-Medicines; Ricks, Czapar Christi Anne Officer; Mike Financial by White, Investor Enrique Shaw, call joined and of team. Kim Lilly's CEO; President and Relations Conterno, Lilly President Dan Smiley, also of Lilly Lilly Macko of

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

for intended for will community. three due a Commission. the the of our decisions. investment differ I over benefit actual in now the promotional, our factors, XX-Q and latest could and in progress forms our Our sufficient XX-K summary prescribing slide not we with information Dave to be pipeline number products Exchange those to is call and results to the Securities is for and outlined of including materially not a turn about of is provide filed The QX. It on and those listed

Dave Ricks

Thanks, Kevin.

growth continued EPS X%, of quarter in XX%. non-GAAP We our XX%, XXXX of non-GAAP performance fourth revenue operating of growth strong with a and income growth

headwind be continue and Trulicity, was U.S. Cialis total include which achieved Newer driver by diabetes of exclusivity the pharma Jardiance. to quarter, This products, of represented growth. our pharmaceutical and from growth growth, loss the U.S. of the XX% worldwide pharma XX% volume-based Highlights strong human XX% Verzenio, the growth, our in of despite the of Basaglar, significant Taltz, in led volume revenue volume revenue

our year-over-year margins. see to operating in expansion continue We

submission We prophylaxis percent made in as XXX the effect launches. operating QX the with pipeline, new while The basis significant of results and Europe. approval points a investing on increased of results a of of cluster international dermatitis. of in and pain, FX of over prevention baricitinib the phase sold, in revenue Emgality studies U.S., osteoarthritis for product including study phase X of the the tanezumab headache moderate-to-severe X two the of income patients the from inventory non-GAAP for Excluding with in progress by of migraine, atopic treatment in Emgality

primary survival, an sarcoma. soft doxorubicin We or with metastatic in announced X and confirmatory of or did for also the update the This was Phase tissue study Lartruvo no between there overall in endpoint advanced of arms. meet the difference study provided not combination study survival

steps We regulators to Lartruvo, are the next data now present an upcoming with global the medical will conference. for determine announced working and in

value-creating a and enhance commercialization highly biopharmaceutical medicines precision oncology medicines. focused Lilly expand first-in-class for which with flow add agreement our presence to Loxo access In medicines the operating to multiple terms utilize we external our on cancers, strong our the continue genomically-defined of and cash patients of portfolio would prospects. to acquire into growth selective development announced Oncology, innovation We to that future will deployment, capital the definitive

agreement of several other announced diseases. Aduro other antagonist Immune also tau acquire and autoimmune currently novel Alzheimer's immunotherapies Biotech and agreement for chronic molecule transactions, program, for assets develop pain, TRPAX being diseases. related with to preclinical agreement including studied with and their to treatment announced develop all other to We an inflammatory the AC for small business We development inhibitors an to Hydra an neurodegenerative Biosciences with

In over for addition, via dividend, increase the million XX% we and $XXX returned a dividend announced XXXX.

on like Elanco. to separation our stock. provide an completing billion $X.X for of of the repurchased We plans also update also I'd full

providing shares. are for million affect to community during XXX dispose Elanco we December Today, to remaining stated the the our use our meeting, operationally ready we as are well the of timeline we full a we'll method separation as investment As separation.

to an Specifically, accomplished the decision The our Elanco's timing company. coming launch with exchange and for days. Elanco on together, a Jeff the future. tender market are offer Lilly Elanco traded the we to occur first-half and Lilly of their plan well year We're IPO, remaining next our pleased this exact future. market to their but early the and his share we excited to about shares step, Elanco launch of and will publically launch We're the performance of for exchange enthusiasm shares. of what shareholders this conditions, employees could offer to depend as exchange prepared with we've reception take Elanco's the team as in the as are of proud

Moving five six, more slides the our events on and key detail you'll November call. since to see earnings

results, I'll QX the call XXXX. Now, the to update turn to to on over for and review our an financial guidance Josh provide

Josh Smiley

presentation our a non-GAAP and measures, results. business, to the provides our GAAP trends to while of in our GAAP of changes eight slide Thanks, year-on-year today's comments our focus in the I'll my adjusted summary Dave. description press quarter fourth detailed release into seven measures results provide results. insights so refer please summarizes a on Slide earnings GAAP of our underlying for non-GAAP

basis a you'll that margin increased as on the So, Dave slide increase revenue to looking see X% revenue of measures mentioned percent at XX points earlier. XX.X%. non-GAAP Gross of nine,

by to while effect taken XXXX, a of cost R&D on the increased increased launch XXXX XXX exchange points. of our to previously newest as this of equity operating about launches quarter, by percent which increased large revenue inventory extent over million compared on and to newer And driven last year's to or of year's gains percent the late-phase the last last in public $X.X investments QX $XXX revenue, new Excluding income versus in mark-to-market our the partially basis launches, put FX quarter, margin excluding quarter, announced the XX% Other expense due compared basis QX to declined strategic primarily and expense administrative was declined over in rates investment quarter. Total expense sale and points, support structure, for biotech entries. sold XXX effect XX by X%. $XXX.X from declined margin with gain including to a less marketing, expense basis points X% of VC partnership company's margin of a in in This primarily of on our the approximately income was operating benefiting million compared lesser U.S. improvement investments. an Emgality, an international quarter. in the this for operating operating a revenue of XX.X% in was as pipeline year's million expense and reduce sold, of investments income offset reductions reduction at selling, international year's actions increasing XX.X% Total X%, inventories Operating quarter. expense on product by gross expenses foreign driven our companies to of

XXX rate same last Our tax points the tax of year, U.S. the with a driven XX.X%, quarter compared basis reform. was decrease by impact primarily of

we Earnings net quarter the with single-digit revenue reflect non-GAAP $X.XX impact this where our expansion revenue performance expenses, operating our while meaningful profitability XX%, full-year in increased in as at you the outstanding versus earnings non-GAAP income achieved share reduction included growth see non-controlling details expenses top per year. X% to year, mid leading in approximately last significant XX%, by growth repurchases. throughout grew share of growth by to a per at the of which operating same Elanco. due bottom XX% while while carefully increased can reduction earnings these So, shares declined also a led growth X%, EPS. a share full-year, per to the Consistent improvement margin to faster, from share delivering interest XX managing for Slide strong line our the measures line, and in

operating Excluding percent of as a inventory full-year was of the increase FX impact to XXX sold, compared points for the XXXX. on XX.X%, revenue basis an of income

find XX. between slides And and details XX on provides non-GAAP a these reported slide to reconciliation on EPS. and Moving XX adjustments you'll additional

a at XX, the of revenue slide and let's take volume rate, to Moving effect on look growth. price,

delivered This XX% driven worldwide grew point. price. straight quarter, partially by second offset by was XX%, growth our revenue On a which double-digit volume foreign pharma an U.S. the volume price. Taltz, led X% percentage business volume growth. quarter in exchange one increased human pharma quarter, represented and reduced by by growth, increase strong revenue QX Verzenio Trulicity, Basaglar, offset X%. last performance by Like partially basis, was

XX% the diabetes nearly U.S. over highlighted XX% in U.S. volume Cialis, growth. by grew volume products Excluding delivering

Trulicity. was QX. driven evolve, strategy. and corresponding disproportionate Roughly Approximately price access While rebates the government for of growth the of changes U.S. in is volume-based in which and didn't to to new was U.S. decline the quarter. U.S. sustained three of last similar certain declined for X%, price one pricing points estimates of point our continues driven was have decline to volume D, and growth our discounts, by Part year's driven segments the Medicare which execution by we success Basaglar volume by environment

points increases increased which in for also Taltz Humalog, approximately had We affordability drove and decline patient of also two associated volumes. and programs with access

with volumes. XXXX, to in our more offset increased mid than U.S. remain single-digit price forward comfortable projection we Looking of declines by

Cialis. growth despite Moving exchange. to the the of grew by achieved foreign volume, exclusivity negative and offset effect loss driven by largely for revenue X% price Europe, pharma volume of This was

Volume volume This by robust volume coming driven Olumiant, Japan, by significant the biannual over drag X%, contribution QX. XX%. led led a from Cymbalta. impact from Jardiance, was X% Olumiant, by offset with grew of cuts the volume a was Trulicity, X% which Cialis, up pharma and was affect also newer Excluding largely growth revenue Trulicity, In with too Taltz. growth in products of growth pricing and by

diabetes Humalog, Ingelheim. performance and collaboration of in in XX% volume growth quarter, namely revenue pharma on Jardiance a the the led from with this Boehringer rest portfolio, basis increased our world by Our Trulicity,

to lower quarter, for same and extent Health, and being future animal by results. companion and products Turning X% therapeutics. on offset this declines sales revenue sales worldwide a and ruminants swine, to grew prevention products disease exited of performance outlines driven in was of basis higher by are volume, information products animal full-year partially protein the higher health companion and Slide lesser Animal that for XX a our

of Once engine take this again, identical that on with XX.X a newer contribution their XX. growth entirely points loss XX% our by to our products grew points, drag let's look have growth, experienced Brands these almost Cialis. the products in Now volume our of of percentage QX. worldwide growth volume driven nearly of exclusivity slide basis the volume provided of drivers a worldwide quarter, at XXX

growth the market as rapid rest of versions last seen September of Cialis the end volume the quarter, of QX and XX uptake. our XX%. erosion posted generic You LOEs, Slide may a revenue human pharmaceutical When XX% of recall revenue. brands of year total, sales. a our over $X.X of view product billion we've at generated newer In provides products this of over the these our entered in representing excluding U.S. expected,

excited Our particularly demonstrates in of of treatment our newer growth the about execution migraine. the U.S. We're the commercial for preventative launch product of strategy. successful the Emgality

While we still access, payer the will for to-date early Combined meaningful gains U.S. a have experienced we've franchise. been future share driver pain demonstrating the be NBRx anticipate going impressive. promising forward, Emgality growth with our best-in-class

had small negative with operating a on our our non-GAAP EPS. revenue XX a the quarter relatively small positive on and explanations, effective slide minimal to impact and with income impact FX on and statement continuing impact this income Moving a

XXXX slide the non-GAAP assume acquisition, an XX, guidance which to we've we see closes to financial $X.XX our on Loxo approximate that updated reflect of our will anticipated quarter. Oncology impact you this Turning guidance

addition Lartruvo million improved a in $XXX of X Vitrakvi, in offset updated was results non-GAAP by R&D impact of expense the sales by driven study line, other million and and the Loxo income increase driven other expense top on higher to Phase outlook an impact is tax for to due and decrease and to momentum, the the $XXX million expense, between on item by core negative inclusion rate of by what of and Lartruvo, of includes based pipeline, acquisition. expense due the guidance This interest line a products the $X.XX offset of decrease a Loxo approximately net $XXX December. Oncology Oncology we of an partially QX trends improved across of our $XXX an for million million by range $XXX of versus announced performance positive Additionally, which business projected

reflect this development in incremental and XXXX the financing non-GAAP during The decrease is needs for contemplated for guidance to acquisition, of XX% effective per $X.XX acquisition the earnings earnings guidance of guidance, expenses Elanco tax and from to we As announcement is briefly stated reduction the December $X.XX deductible the December share who estimates full-year. model a the to in cents only basis share. estimates Investor reform, as purposes. by resulted continues those our our I to a for our $X.XX, U.S. $X.XX. half Lartruvo reflects per integration the updated adjustments of have share for tax non-controlling due our analysts, that who per note GAAP Call for tax of in the the portion the would financing, rate profits interest meeting, XX already to non-GAAP the their share the average of and XXXX for a in tax approximately XX% is increase Loxo transaction. range per $X.XX and being since those decrease certain average driven per share our for for our since in rate updated had to Oncology point updated business size Loxo portion Oncology revised Touching not expense A the interest on effective haven't roughly include

in In expected that the are Renminbi is Yen to FX addition, total, and $X.XX is per stronger $X.XX share. note share slightly to we slightly currently weaker our impacts Euro modest. of what now earnings I'd the in GAAP be share but in for XXXX assumed are per to the per range and December, guidance in

FX and in incorporate quarterly monitor appropriate as will our updates. We movements changes

should Moving on be think our here as to numbers post XX, business helpful slide about go-forward the separation basis the Elanco. you a of

Phase at with reflects Investment Community revenue Our acquisition December inventories accommodate and of flat sold. digit and excluding expenses, administrative Oncology Loxo effect selling as and pharma-only growth, operating or to XX% revenue expectations at you Meeting FX the investments, growth first international the a approximately shared X R&D other for marketing, XXXX on our of XX.X%, income relatively percent mid-single

once executed exchange we've We the offer shares will range number an the EPS Lilly know Elanco provide of retired. and

incremental are still by guidance full lower our products. acquisition, also remain to XXXX with Although company products. than committed and substantial our forward gains that is guidance and EPS associated pipeline and we bring the expect margin Lartruvo note Loxo to our we're generation Loxo to in XXXX of strategy Oncology led and next in making committed our full-year impact, sales unexpected updated We the Oncology new And due our newer I'd goals. volume the confident despite strong costs to investments our achieving operating December performance and innovation-based

will addition new prioritize existing to and we our products, As to replenishing marketed we in launches, move forward, for funding lifecycle opportunities pipeline. continue

development cash to dividend future also and buybacks. pipeline to and will increases finally, return business the to We and continue excess upgrade we'll leverage shareholders growth via share our prospects, to

future events. pipeline I'll key and Now to the back to Dave call the over review turn

Dave Ricks

Slide three Community our of assets final since XXXX. Meeting, insulin, the insulin of addition initiation which U.S. X, and eight the expected of we On Emgality calls for provide for that X events and basal Thanks, addition highlighted tally areas, the movement for we the the in is as in Phase efforts slide start Phase pending XX indication key start prostate cancer, XX, last headache, teriparatide molecules. Verzenio Dan diabetes, therapeutic once-weekly of system, biologic and of Type Josh. our opportunities care cluster new the episodic Loxo Investment our a early-stage of X entities a include X at part for testing December February Phase earnings delivery X of shows automated across to and the our for select for submission on connected pipeline a attrition of

initiation experience on Meeting, with As XX momentum. enter in at our Slide year Community our while XXXX a great we detail reviewed And and strong we the Phase and study key dermatitis, pain, baricitinib January, tanezumab the previously-announced execution in Phase discussed and Investment study from and These shows a pipeline, we XXXX. our a XXXX osteoarthritis study. disease, in for a monitoring of we're results of X innovation-based we've X progress the results on setback kidney chronic include two made X atopic Phase from of for for was Lartruvo events, in progress strategy. studies empagliflozin early in Lartruvo December the of in

the calendar XX% me In new products, we past priorities XX and entirely our briefly for let Now, forward. which year made by moving in the progress revenue. of the X% we've of growth strong delivered volume-based accounted XXXX, our in some of revenue driven pharma months

Through our and XXX with submissions, on Phase impact over innovation several of additions strategic became We expansion IPO. for our as margin IPO the points, our debt continued and pipeline investments through public the raised a for internal in billion and was our completed businesses excluding $X our Health international transferred publicly-traded majority which X of initial over Lilly yielding well-received We to basis inventories first-in-class We've pipeline. sold. progress with provided the Elanco consideration operating connection Elanco review to a late-stage Elanco. of seen Animal to strong positive of The the Elanco approvals, along offering. in performance, readouts, external significant alternatives exchange offering, excellent Lilly company. foreign the with multiple vast and a

approximately the development and early deals. business pending acquisition our to with share returned Loxo and pipeline numerous $X.X dividend the bolstered via and announced shareholders also of We phase billion Oncology, repurchase, platforms preclinical

remain continuing our launching focused pipeline. excellence replenish to Moving and we XXXX, with into on

latest System the The Safe the for on Medicare regarding moment will rule Managed that take Medicaid segments protections news Q&A, Healthcare moving represent the to to within Harbor proposed meaningful and comment U.S. change eliminate Before rebates system. the Reform. I'd to like would a to potential

While still as following. proposal, the this a we it's accomplishing see potentially

pharmacy out-of-pocket the could be greatest more highly First, for costs the their lowering with benefit a win counter rebated realized such at this taking products, patients insulin. as patients, by

products benefit will and our medicines focus and in reductions Patients quality, and you outcomes, lowering should price occurs and innovative today. directly costs. the overall partnering medical improve rarely rule to federal Unfortunately, demonstrating and of shift as to concessions for and health the Second, value the plans. this companies insurers commercial with from know, systems

innovation to for barrier remove Finally, artificial patients. that space creating this change could for needs addresses an unmet competition,

affordable the sick support to system. We the subsidizing current and often to are medicines in appears issue. patients. to this continue positive making be this Too And tool accessible address more well our a to

We are principles, this market-based like which the balance healthcare for improvements and affordability, appropriately to reward innovation. U.S. patient system

While about our continue more the turn questions Kevin remarks. about this talk this, the I'd emerge call we'll likely prepared moderate Q&A session. you over know the I on have details to This many to sure rule. like And I'm concludes to now, back the as

Kevin Hern

ask two session, single instructions parts. from Dave. for many question to limit to and the the like first with a the or please questions take Q&A John, your you Thanks, possible, as then questions as callers ready two provide We'd that to so for we caller. we're

Operator

Certainly. line of the to we'll ahead. [Operator with go Fernandez Guggenheim. First, Please go Instructions] Seamus

Seamus Fernandez

for question. Thanks very much the

us baricitinib, market that just a the sense is, those just its dermatitis how can in two general what a of you the got you the with so pipeline Thanks -- announcement product. might then we much. least the might So, the launch in see on both competing Dupixent? atopic for implemented, existing to be terms of that at versus recently, really look of a relative data and question data just products, of headline give like program impact the how or And REMS quickly tanezumab, quick you give expectations can for sense second the product that guys on us

Kevin Hern

expectations Okay, Christi tanezumab commercial dermatitis. on atopic thanks, the weigh to Seamus. bari program. We'll you go potential then for impact. to with for the want Christi, -- REMS Dan for the And if in

Dan Skovronsky

with course, don't OA. for trial. Phase the data on to, on along Pfizer, the thanks partner full we're our still have Yes, on data on On the the this We course question X excited announce molecule of package, tanezumab. latest

before, As efficacy. we the said very though, confident in we're

you osteoarthritis, We that continue very the the to picture. encouraging is risk data we've RPOA. benefit. including we with for think, is see existing medical progressive the get, that need if the encouraging, I looking chronic opioids And think really compelling at This And that's the are a molecule, continue pain deficiencies I unmet replicate. to take I rapidly available, obviously been of therapies and offers this that context think the and vast NSAIDs, a

long-term I just to have we've and can we what great next encouraged. the read and study. think particularly your So, would if with about seen respect discuss But trials we we that. that it's premature I safety of reason the continue be see to like the so have pattern wait results With post-approval question to to far, say REMS specific things out, that;

then full the data package with move get Let's forward and the FDA.

Christi Shaw

so And opportunity, about, just talking the to of the of medications been the look in million the are times, similar classes enrolled at change the is that has we that in similar, analgesics. high. to what unmet And least those XX multiple patients osteoarthritis been XX six three been are extremely market you even is if million. -- most study, if it's patients are patients of need different have which look at number commercial the they years, suffering They what Dan's at from over on very severe you

unmet and the safety is So, REMS, et look patients. huge and most the high in need as still we severe that cetera, opportunity at

combination two dermatitis, studies Turning of package. support global to reported is this in primary terms so this Recall, of five three studies, we meeting endpoints. we our year. results our then dermatitis more That have positive a atopic of will yes, readouts atopic out

to market was moderate see come not goal, suffer XX the it's they able you XX million bit atopic dermatitis or from our ago, very to those about patients market years know, market, patients dermatitis, to million Just be psoriasis one-on-one as this may with you leaders, oral like atopic to you may talk the is market thought and if to a the of new little give as and from severe. to whether these XX need suffer the first therapies. or podium, And

Kevin Hern

Christi. next caller? John, Thanks,

Operator

that Please Cowen. the of line will go And be with Steve from ahead. Scala

Steve Scala

have for not readouts, small. or significance the second the But guidance. four milligram baricitinib Verzenio the I I XXXX their achieved LOXO-XXX statistical to two were arm is appreciate And the MONARCH you. can atopic contribution as only I specifically of was what Thank about then on one Were there this. trials the and reasons as the trial, we LIBRETTO dermatitis P&L Thank you safety am in look failure you. XXXX trial. on thinking question plus to was Lartruvo two critical in AWARD-XX, us questions. about trial, milligram cohorts well? the positive the tanezumab impact Trulicity tell and

Kevin Hern

you the to answer guidance then on Christi, Steve. question. baricitinib, we'll question have go and Josh the Thanks, for

Christi Shaw

but two milligram milligram, Yes, and One meet milligram not one four milligram, at endpoints. did the doses, included primary milligram. trial, as meet endpoints, four primary look and it you three did the two the so milligram

assessment As of at and three. all two you scores, the milligrams endpoints, the milligrams four global primary those. the of met did two look meet three And the pain

at we as something milligrams at we'll and dermatitis So, an those that be be total for know as look we is FDA to in the we package effective submitting atopic the look dose four the approval. will

Josh Smiley

Steve, Hi, Josh. it's

R&D Obviously, driver R&D addition, of those the item Loxo success million $XXX all in mentioned, contemplates categories. as the expansion the funds of with the you that is our On for our guidance. XXX say range the R&D and pipeline, primary line first in guidance, I'd

impacts so contemplated In terms opportunities of the the line, and our we sales those, range. in probabilize at top they're potential look and all

most will have the really say they're to of positive. of Although I extent you that things XXXX would in mentioned more impact an the that

number To be we're even growth on the not individual I confident of would confident our a upfront the can in the product Lartruvo As for for still are XXXX. sales or based the for this minimum of guidance in with XXXX accruing, any XXXX midst comments, we're achieving X%. mentioned out, dependant that we're the the X% coming that's growth goal business rate about at clinical of readout confident annual assumes data And we're XXXX, R&D pharma XXXX. launch and launches that in the impact the compound between point. with achieve we hit that We're that and in that now on number giving that which of

Kevin Hern

next John, you. Thank caller?

Operator

with Please We'll ahead. Chris Schott to JPMorgan. go go

Chris Schott

is more greater contracting the a price of decline, mix XXXX this Great. about XQ question like the Thanks to about one you think very you did out the your about saw thinking trying margin drivers pharma. mid in is, similar for primary dynamic, rebates for the and in we like that guess much some was I'm I can we that was was first decline just questions. targets My to single-digit give I we about really the where initiatives granularity here more wondering that are My price. or as should us erosion? pressures expectation U.S. operating XQ it's just the on second channel and driving of patient drivers the affordability be on assumption. in get

guidance XXX looking at pharma impact I about think on you're a versus basis for 'XX. point prior

the can as So, for elaborate think dynamics pharma thinking and business should you just to about some of what you. we Thank there? we out the be XXXX,

Kevin Hern

go to those Chris. for questions. you, We'll Josh Great. both Thank

Josh Smiley

Yes, I -- price for Chris, decline first mean for on XXXX XXXX. the

decline XX%, that's mid expansion, got that about impact hole single-digit from will is the donut So, to to or have a have. and that in XX% close Medicare move of the new is one million thing XXXX the $XXX we two points

our seeing new a item are same that's thing. XXXX. the they're Otherwise, We're seeing Humalog; generally new in around So These launches are affordability increase patient efforts. we an in around they very volume that like the of seeing that kinds right positive to gains; Taltz long-run in impacts we're lead certainly time Emgality. confident now. Trulicity and are over those We're in

all a as that expect looking competition, sort think nothing and declines We So, diabetes segment, mix either big then small that is of one we're or pricing headwinds a be there. lot but from mostly think the faces new do are any improving I to related And we into a a always few at maintaining to XXXX, the of big obviously have don't access. you'll with going but they're we that and access or going points unit perspective. I of happy very -- rest drag see

our targets think -- out now I Remember margin about have As a XXXX it guidance Elanco, XXXX, gives yes, to, when where it at relates sort the about you or about is Elanco, so to the us if the you is I to is think we take we operating point or midpoint at look XXXX, XX%. when get -- for benefit. for out, XX% guidance for of to ranges. take probably

well that's XXX yes, improvement XXXX. range looking about year We midpoint basis we're think our this to very points So, versus at achievable.

If margin operating improved single we growth XXX points. digits We got high basis expenses. you to by there relatively look at flat in about line mid through XXXX, top and

minimum in we about X% mentioned, we I XXXX, growth our need achieve feel we'd good to growth, would, which As revenue about.

mathematically line gets a I us good top with on control just very mid us So, good -- there. think growth single-digit gives the expenses

minimum. the So ability that we're to comfortable with achieve

Kevin Hern

John, you. next Thank caller.

Operator

of with And Gerberry Please that'll go America ahead. Bank be Merrill Lynch. Jason

Unidentified Analyst

for Good one Jason. have morning Emgality. one [ph] our I pricing taking on This on everyone. is for Chi Hi. Thanks and questions. on

of specifically gross-to-net on bit how one, you on products just with exclusive can little the contracting, about give think you [indiscernible]. color [indiscernible] First a impact high

for lagging the can Emgality Just about broadly [indiscernible] end exclusive XXXX, contract? contracting to the does that curious curious, on on exclusive prescription would how be see you take be so progression the to early or Second, away given [indiscernible] you. in think might Emgality [indiscernible] company know you an now, Thank that primary Emgality, them the this [indiscernible] competitors of on are over does [indiscernible] adopters? quickly focused right if win And [indiscernible] comment care, space paid Lilly great. is the

Kevin Hern

D Okay, and for you. to We'll go rebates, on Emgality. the thank then question Enrique for Part Christi

Enrique Conterno

it comes understood to see that we this but look trend not contracting. continued I'm at Yes, sure quo, we as basically think I full in exclusive when point time the the at question, I status the

know, where to I now the how have concessions basically way. right As trying utilization, to is insulin uncertainty payers going products comes need most we And is rebates play clearly, all we this trends extract restrict fewer it contracted mealtime see and out. are maybe already to that we some rule. proposed be to And at won't there's that new time. speculate able to when on really

Christi Shaw

so Emgality, the and that Yes, with patients the are excited being CGRP by number we're helped agents. on of

patients six expect eligible. probably to We million be

from months of But Emgality at obviously our marketplace come have and about right at The now prescriptions third a the XX%. that paid a we're are so in that look primary care, a prescriptions similar, of neurologists, splits couple we up, come you October, launched questions, in we come midlevel. is data. of from about If specifically seeing third what just a from your third

much So this the beyond very as care will neurologists well. an primary be into expansion

we're at currently XX% a So at we January. looking NBRx. specifically launched XX% And in even already late we though at looking Emgality's performance, year, the ended

strong So, we XXX% direct-to-consumer these have just And as XX% competitors have that in launched ad relative but XX% we that as know very well device like. week. activation a competitors. have, and improvement, has that unique million and a TV to at launches, really not that as platform we that this quality uses our of don't Trulicity a consumer over know that monthly patients you demonstrated we headaches campaign drug Lilly our has We We just know look our reduction life. the

both very ability compete. the we're on market bullish on to Emgality's So, and

Kevin Hern

next John, Christi. Thanks, caller please?

Operator

Louise go will with Chen Please Cantor. ahead. That be

Louise Chen

after that? Thanks at type it the and Hi. do your now Rewind in being sales long injectable is CGRPs just on potential you. for approved CGRPs And the then of the ADA, here secondly, come of market uptick opportunity it think about you the think curious Trulicity light for see we how Thank take for benefit presentation to to question how to my market? oral and from will questions. you lasmiditan, you think what My taking should first for

Kevin Hern

Thank you.

lasmiditan. take Enrique handle the and question So, on Christi will Trulicity, then will

Enrique Conterno

seeing Clearly very the share we've growing from and a basis. at market share, and And Ozempic. anything, we right in gain accelerate on are already outstanding of importantly, run launch GLP-X a continued Trulicity been to high able five on XX% of now market. present is levels, well, the huge perform since from nearly the those points markets Trulicity a If to GLP-X year-on-year over fact benefiting has growth in

I start look already at future as of we as solidifies, think to that when a impact going critical And promotion the Now, had. this Rewind, benefit big I The data. is clearly see dataset basically we this important it bright that think, we trial and patients. basically Trulicity that's

the expect that new we once action time of impact, the FDA some We on the get label. in XXXX course,

Christi Shaw

have on play action then will Yes, and year. some the regulatory marketplace, this how it lasmiditan in where and we will

So, we're looking that. to forward

kind those And of and with with who we acute look million are marketplace, prevention look suffer the that is about how from are that at is that you diagnosed, suffer at migraine and overlapping X the migraines taking million there's of XX therapy. from somewhat million patients market. If the XX only

use, at look And also of patients versus don't acute XXX% prevention distinctly. CGRPs CGRPs a you need of as obviously a there's So, obviously both their migraine. for clear all huge

CGRPs. So overlap we And really versus there. the great positioning oral think obviously use a the [ph] we may has see lasmi

will CGRP of taking a the because that. you're you we to at market patients they to many different then look And the cant of out so look tolerate lasmiditan a if of fallen marketplace, If have acute be want safety, or to the so may preventative efficacy if mechanism option the add you for lack great them. have at

Kevin Hern

Thank you. please. next caller, John,

Operator

Markets. Please go with Alex That Arfaei ahead. Capital will from BMO be

Alex Arfaei

you. below expectations. and Verzenio notably Great. our Good morning was thank

impact this And You given and inventory slowdown just this. you patterns market? mentioned the quantify product for in long-term buying your the picture impacted follow-up, the CDKX/X latest in Could the bigger please expectations apparent a U.S. a trying and was higher on peers. XXXX question Historically your more lower you've relatively your margin look external internal I'm operating here. to innovation to your invested as to past that with R&D margin. innovation, on operating opposed just

XXs Now grows mid can approach increased with Thank you. digits line that your to is expect you acquisitions, reasonable in as seem mid operating to have top the to single that from a margin? it balanced contribution get Lilly more

Kevin Hern

you. We'll post then and operating Dave go Verzenio, take thank for will margin question the on Okay, on Anne the to XXXX. question

Anne White

Thanks, Alex, for the question.

rates million as XX% mentioned, the $X -- encouraged to seeing we're U.S. physicians really And On we our drive execution, high So, Verzenio focus market and of we're flattening over in of With is you to new we prescriptions. Verzenio market. on the positive about a impact to outside who trial are increasing in a as CDKX/X inventory seeing Verzenio looking in conversion saw that of forward launches on trial clearly Verzenio our additional new share also XXXX. penetration with note, write moving We're occurred. the has

So has well, we're we've and in launched the countries in particular seeing poor good a is patients several strong and what in Europe, in in Japan, uptake uptake as prognosis. been with

will that patients driving or visceral also are so in who disease And liver be there. with metastases execution

So the growth a we focus have across strong on execution we really for globe. a hope for of as Verzenio continued year

Dave Ricks

new We're that so for of in R&D statement-based sort company on we we see number. of prolonged to know revenue with year, us industry relates the partnerships, that line not on have expand to it be go. drivers today, good balancing R&D speculate choice would good an making opportunities fixed that balance for patients grow those grow. margins create going see would target it's say, toward for R&D hard promising question. we because nail I percent as and which our well appetite function direction there's long-term value this is long-term as grow more We of adding should helpful but R&D, would of this. We on to about of to strategy, to the We're value sales, opportunity period ahead and as products see do and shareholders I and actually better additional us spending expect both I internal lot able some We Yes, down the and to would of a to future. a it, as this it's of gross hope top "What sheet, I ourselves income think and be will not to line, have will launches. based because more visibility but see would be on to a next on which item, M&A the that see core and it's for better therapies top opportunities to do even to and we don't science patients. question, continue because continue just in And growth is the spend long-term XXXX, of to see me growth that what we be think a opportunities," at you we the is for a we improve expansion, innovation. tell because that mean to continue our SG&A a as to the a a line-up front company, continue really are and with to of that, how relatively of let to long-term margins the a full the

Kevin Hern

caller, please? next John, Dave. Thanks,

Operator

Please We'll go ahead. Barclays. with go Meacham to Geoff

Geoff Meacham

you Thanks it Jardiance happening a picture question maybe a that more XQ the or to from broadened broaden bit and your then, question. I investors good bigger as what guys a XQ, on initially capacity in, more you category just deal, I attribute some now. into demand most continue you few, even so Enrique, presence, guys. signs know feel but is of backdrop back more you oncology do you. saw so see have a Josh of for had maybe happened I priority that a the them? in little should an XXXX? you expecting for standpoint, the obviously from received Loxo sequential Good morning, yet, of Thank as for that inflection hasn't [indiscernible], well help do just there trends like need And is where therapeutic the the fitting you -- BD were after

Kevin Hern

Enrique?

Enrique Conterno

good. Very

strong the when at it As number Jardiance, I'm comes of particularly XXXX, to product. are we we think for points I inflection bullish tailwinds success have the of a playing look that because us

Jardiance that think in guidelines and within updated in we place on for I have the preference pretty and class. new and emphasis Jardiance that's the re-inclusion SGLTXs, have EASD formularies, Clearly, know, particular, we CVS you ADA but that. of As that significant

actually and around effect we're look basically is that -- formulary the it mid-XXs, we comes data, data, even of showing has are beyond the of basically are growth and to it's XX-plus the that we in now, Now, that look market basically of Jardiance NBRx we in we across the some likely likely itself. as the is share, running spillover double-digits. accelerator it when at commercial, at seeing of low part it class some access to some now re-inclusion Jardiance SGLTX seeing seeing when

that basically given think the competitors, of the very I to think is the product. see also our all we encouraging. finally, have that And profile terms I that as investment of increased we in beneficial

terms in share So more very class leader. overall these basically how and of importantly, the accelerating, see as bullish capitalizing I Jardiance

Josh Smiley

Hi, Geoff. Thanks for question. the

and Dave's to that think income cash translates and generation. to strong about operating development business future, I interest, growth and see of capacity earlier us, good we think about how relates good sales in go period of first, flow the to as front it growth comments a I'd back we growth

think we've forward. got in good we of very like capacity, terms going feel I capacity So

we see. We're portfolio the So the we'll we're invested pursue constrained where really one not the development therapeutic towards area. we for can It's science in a really see by therapeutic aggressively. pursue the those We'll good assets with today and from perspective to that areas we we're particularly business going be opportunities mostly them and like tilted that the enhance acquisition. value when create can shareholders

are balance just and will looking be in and areas given continue opportunities just two to and of cash flow of capacity the all where to when immunology but the to opportunity, really, progression you'd there's where us that oncology and and think we of are the investment I our expect best for therapeutic have find we've open can sciences, got sheet areas lot a act. we assets,

Kevin Hern

you. next please? Thank caller, John,

Operator

David Stanley. ahead. Morgan go That be will Please, Risinger with

David Risinger

very much. thanks Yes,

patients you to be the type. it what percentage readouts of be tumor please helpful if candidates discuss could you watch would XXX if Loxo possible First, could could each forthcoming and characterize in

just be as priced oral, semaglutide, Second including the nit question, with thank I discuss market that for think, August, six to when GLPX implications the Novo's I versus you Trulicity? the should lower is And Tradjenta, you? little completed sulfonylurea study in ago expectation months CAROLINA line, oral the respect one an which have expect it we then top is potential for could will

Kevin Hern

thank will go Anne Okay, and We'll Loxo for to two you. then final questions. Enrique the take

Anne White

at readout over The can well. to Loxo looking very you forward Yes, see It scientific study, now. we'll that. additional of XXX expect XXXX, a XXX, so patients be for has in half an meeting the so the to in LIBRETTO second is enrolling it

And of end be robust the will there reported this so data at year.

on on we as depending or Importantly, on as between response meetings -- some at tumor staying higher, XX% we seeing therapy stay XX% [ph], rates and the patients saw reported as Long of and that of some the various XX% type last World was therapy. that then year such the data saw

or So data. We by it's very transformative and patients excited we RET remain for XXX the mutation. with fusions think encouraged

continue you to so that. more And will hear from

the opportunities and Vivian that that's so know so is cancer you leaders fusions population, largest in lung of X% RET RET incidence thought could tumor those XX% the that smaller far they On it that see of XX% what to RET literature in actually as has response with also and very over we a which that know thyroid RET patients. medullary conversations in that's as as be lung fusions such happens point that in again In strong about activating a it's papillary XX%, X,XXX to then a mutations, of And about as but rate mutation. the patients patients U.S. those in a to actual with and cancers market rates, happens one X% growth about substantial

again to the that in the additional so U.S. then And start alone. global could XXX numbers. And you include patients be an

strong about to rates excited penetration, the believe are we see of and the while so again, response response, high, a long do and readouts. also those not so very are incidence we'll rates remarkable durability that really So looking forward

Enrique Conterno

question I'm speculate and a really thank question to unable Unfortunately some the for is the oral how for going There product David, the price good. implications. on on they're Nordisk. sema. Very of you Novo to

CAROLINA, As the far to as and line we quarter, expect results. results top Tradjenta release the top this

Kevin Hern

Thank you, Enrique.

please? caller, Next

Operator

go to Credit Vamil go We'll ahead. Suisse. of Please Divan

Vamil Divan

taking questions. Hi, great, thanks for my

net first up how least longer-term say at you potential, uptake So milligram four just there. questions, how sales of think on the for at discount, dynamics two milligram in we that market Olumiant I for pricing be the maybe players have curious U.S., coming, with in just I guess, the early made fourth the Looks of comments the dose view access And like this in on based dynamic, there you helpful, around following the guys but now on trying any you know should seeing next the this Emgality, evolve about get gaining on in the least terms quarter just year, to the but year, be limited three for for other some know, the appreciate the insights done pretty pretty a may space. well you're but would announcement, thanks. dose the

Christi Shaw

for question. Vamil Sure. Thanks, the

take those… So I'll I both of guess,

Kevin Hern

Sure.

Christi Shaw

versus standpoint. less four milligram four versus the AACR is about with XX, similar pain about you, uptake, our Kevin, that the fast -- on fitted with AACR XX, and on the an across relief two are so patients and the sorry, we of Olumiant very having see what there efficacy clinical front is what we kind see in globe I'm X% the especially just less. I it's strong The the experience from it's in X% two of really

in who has a places and be will market leader, four product continued we U.S., et and positive. the playing indications issue continue us smaller it post confident ongoing Obviously, as We're atopic the access benefit still U.S. lupus. obviously to milligram in been growth earlier market multiple look feedback discussion across profile in that in that. about indication with so. discount an risk that in right Arthritis now. is the of Rheumatoid I At think physicians tried patients' So We our dose our that been extremely those in hasn't very cetera have we're to at the this the and dermatitis, the Obviously, talked TNS. XX% a the

forgot to February move CGRPs. have best-in-class mention to for versus we asking other to thanks know Emgality Xst, I I the are on the As the net very about XXXX in excited because and we that starting discounting will pricing, then access

There us We not are small that only three has all put regional PBMs. has player, been has on -- one regional disadvantaged player CGRP. that get to major us a

piece. So can I and we We what in comment we're really away retail. is tell, sampling, the plays have office. market the right our know, better out seeing the office sampling and I the wide-open physician's the happens to in on as access in relative can't access. competitors, started you discounting physician

on with is the continues think the you as actually see questions little no flat. in up competitors piece of co-pay think well, into dynamics to we market huge We So million And A made our of market specialty in dynamics bit market our play, a samples order is what rates -- retail actually demand to there versus a you the grow, with the only of NBRx that pure it. what getting kind from lot market of flat opportunity, see the changing is. chart look six what patients. has underlying market mail the

Kevin Hern

Christi. Thanks,

please? caller Next

Operator

Citi. with Please ahead. Baum Andrew to go go We'll

Vineeth Agrawal

Hi, Citi. Baum for is Two Andrew Vineeth questions, at Agrawal this please.

for implications is fraud for into of do think the HHS how are affordability, Secondly, you a viable pricing profitable pharmacies? Thank pressure increase net while brand price you risk materially will it is ultimately pricing one NDC drug more and formularies with that negative near-term might reduce the political Medicare strategy material at plans you? you. concerned much or does it independent First commercially spill proposal second commercial

Kevin Hern

and in the back then So and the question. to need on government come seeing care. second we'll go the might then Dave the pricing initial we for spillover pressure on to clarification managed question for potential what the we're And the to

Dave Ricks

do. saying relates proposed your speculate question. see just Yes, not seems I'll Hill guess, nearly regulatory details right been difficult whatever excited examples underlying new U.S. of our think week, long-term answer the there. innovative-based which are strategy this I is an and way of industry, about the of you pricing. overcome of But course, speaking pressures on what caveat I I products we that. outlook, the introduction company, some as all now, very are it we've we're give to like innovation-based I'll rule it idea every this sure can some drug out is to about it in it's The by the today the science as of And or course I'm got pricing good an

So we like that probably spillover their where growth well come out say out-of-pocket two formularies to administration as side-by-side commercial our It's government and and period run at doubt, forward. the to we pharmacy rules is actually strong priority, We'll they top gives as for is in recently both going base difficult focused priority into top of got I a well We're get launched fine. it's it's the systems adapt We now on counter. which how fair patients as think No is say flowing we've costs would lowering innovation markets. as and to us sit. whatever finalized. strong

very in We'll evolve, know, has change great emerge to [indiscernible] rule, and And as consistent innovation a serve participants, with I based policy this with and like think we'll as year So the ability plan, before. that's fair we've in will how through early see That you that's period markets idea. this the but a well into on got in successful. things pass us have the working of savings confident navigate D Part managed taken strong customers. even as dynamics new capacity highly we I'm capability Lilly and positions this to rebate

Kevin Hern

the for repeat didn't try pick Could room. we so you up answer that second to question you? and We can please it the -- in

Vineeth Agrawal

in independent Medicare So, or NDC viable that the bill fraud the sense does the pharmacies higher-priced strategy increase brand you pharmacies of it the drug, formularies the dispense risk think the drugs? do is at second materially for but commercially lower-priced for the

Enrique Conterno

where answer the provide a potentially it a do product. situation an the viable be This reasons There a question. Maybe second are to We on really number including depends to us Enrique. could options that specific of I'll having review to brand is available all brand. second and for try

that time. carefully. something we always that's So that very this comment study I'm But prepared not at to on

Kevin Hern

you. Thank

caller, please? Next

Operator

Please with to ahead. Evercore go Umer go We'll Raffat ISI.

Umer Raffat

for much question. my so Thanks taking sorry. Hi,

on the on out how say a just some end more was maybe give is in of noticed see happening, XXXX? can little changing year that and Loxo extent what comment sub specific the the you and you by very deal, on of already for us deal much. Loxo there metrics I First, sale $XX that from that of came management XXXX, documents estimate let's you Thank million testing

Kevin Hern

questions. those take Anne have We'll thanks. Okay,

Anne White

track I a forecast, the things info, believe, won't launch would details the performance. are say to if forward, we'll soon on comment sales we comment to comment we can specifically don't too off Going it's year -- for good obviously performance on have I and those is so Bayer to but that that again comment. the the I think -- we on see full-year sales. future before the of forecasted start, This

good as lung far in we belief the we're have our pretty of seeing is follow tends testing, As rapidly. to then that cancer in rapidly. seeing so medicines when is go and importantly, -- both track And we're it's what obviously, in uptake RET testing testing

is it's widespread. accelerate testing many so to then and getting bringing in you're important Key noting success these for us forward to testing be driving is that though quickly. spaces these And lessons

sure making diagnostic drugs, not these and but available. pathologists this partnering launching is routine is focus our So on with laboratories just in and also that testing

we delta the academic of adoption so thyroid. the central seeing more even and early increase getting at it testing particularly be We scale in we're cancer again, are the NGS centers, expect routine. to seeing And

And while the the will down. I that go lung, are again, it's in do also advances out testing seeing So that fairly opportunities routine there knowledge thyroid, believe we're with forward. that testing costs in bring there in

also key. So see what as we that's

launch it's well. with pathologists laboratories, that at the know the as and the I strategy, make about very much partnership to Bayer testing Loxo the our this value sure in understand and they So, agree of that

drive change that believe medicines practice. good in we So will

And high in which is these with change response so a face medicine, rates, the healthcare we definitely significant; helping are of high of very bringing forward the rate. good precision value particularly response medicines. the small is We efficiency patients, forward system look medicine, numbers the that with driver to fact very strong of

So very efficient use believe dynamic care we dollars, pretty of can change that so health rapidly. we

Kevin Hern

Anne. you, Thank

Next caller, please?

Operator

with Scala And Cowen. go we'll go to ahead. Please Steve

Steve Scala

only Thank XXXX event, And as listed clarify? expected, in lastly split but occasions. can Investigator several endpoint your QX primary on that MONARCH one plus dermatitis hairs, baricitinib were key clarify there you on are on is the for one Her Enrique, you. is Christi, then changing MONARCH that's atopic hate missed? that not the milligram to I in REWIND the two both Secondly, to referred may the comment but trial, data, I and the assessment, paradigm global the you call

Thank you. You three did in has changed what not that last months? today, the say

Kevin Hern

on finally Thanks, the for to and Christi on Steve. then Anne REWIND. go out Christi. first for the We'll close bari, MONARCH Enrique then readout, to one

Christi Shaw

Yes.

data the scientific primary were then global that with knowledge the as to secondary multiple we and data endpoints, had gain on we studies we that the endpoints -- There and of be had we're meeting, going multiple next primary sharing assessment readout to especially had then three -- we more endpoint, So secondary we'll future multiple year. at that, endpoint, is this them. actually a eight

we two-milligram as endpoints. on know of so, the missed of some And endpoints all met secondary the I the primary as said, the four-milligram

me appreciate I So you that answer. allowing clarify to

Kevin Hern

Anne?

Anne White

in the a the so stages wouldn't verboseness so, readout we study, the It forward that those on look but we year. Phase look to be this study, do Her expect X forward of MONARCH forward first-half to Yes, do to we next on that, readouts that's listings, and of is study X data. the whether move we [indiscernible] necessarily depending to Phase on of the a know the

that So year. first-half the in this see readout of you'll

Kevin Hern

Thank you. Enrique?

Enrique Conterno

all, have months we even enthusiasm maybe REWIND are bullish than were if Trulicity not anything, we for and of a at today My couple changed more back.

Steve Scala

Thank you.

Kevin Hern

Next caller please?

Operator

And Mr. questions further in no queue. Hern, there are

Kevin Hern

Thank great. Okay, you.

go for close. will to Dave We the

Dave Ricks

goals your your again call interest profitability Great. demonstrated Thank company participation in for XXXX. in company. progress well. our we appreciate and toward clear in you, earnings executing is and revenue and XXXX the We The Kevin, today's

Investor medicines volume-driven to our highlighted our recently-announced and through continue of investment advance Oncology. be augmented progressing follow-up address a With any for have continues as Please have internally dialing Loxo We into with to Lilly great you strategy by development you. a pipeline again Relations team the Thank innovation-based and revenue our in discovered call, a if transactions, hope on business compelling robust XXXX. didn't day. additional questions we growth, acquisition with Thanks you move today. we

Operator

Ladies your for participation. that your conclude and Thank conference. you gentlemen, does

now may You disconnect.

Eli Lilly and (LLY) 6 Feb 192018 Q4 Earnings call transcript