LLY - Earnings call transcript Q2 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the quarter two 2019 earnings call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Kevin Hern, Vice President of Investor Relations. Please go ahead.

Kevin Hern

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

Dan Macko Chief Joining me and Officer; Research our Chairman President White, Enrique President Lilly Ricks, Dave of of Dr. Laboratories; President joining Financial and Lilly Anne joined on today's first time the CEO; Diabetes U.S.A call and for also Josh are: the of and Lilly Czapar Skovronsky, Lilly We're our Mike President Conterno, Oncology; Lilly's Patrik of Incoming Investor us by Bio-Medicines. Jonsson, Kim of who is Smiley, team. Lilly as Relations

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

Slide materially to in factors, could outlined number and results our latest differ actual forms Our Commission. filed and due Exchange and Securities X with XX-K the those listed a on XX-Q of including those

to the not benefit we It is information for is The the intended promotional about pipeline provide investment decisions. community. and for prescribing products be and of our not sufficient is

earnings the As prepared the on during focus exclude share offer remarks, will that commentary measures, our financial X, and non-GAAP January though via was on financial our transition XXXX, present and XXXX. contribution as from the to XXXX full a Elanco disposition reminder we complete per exchange which

QX. progress I'll Now a for turn the call in Dave of our over summary to

Dave Ricks

an important women Well, morning cancer. at for exciting for Lilly an day Thanks and it's the here with Kevin. world us around breast living Eli

X on in but me on that with performance few cancer of make women the minutes, just have breast more first the Verzenio results announced that MONARCH extends the a we quarter. the life few in let comments showing As positive overall a in the trial,

and execute to our productivity and pipeline improving excellence, We focusing our strategic launch on capabilities. objectives, progressing on continue our

withdrawal. revenue of the last late of product X% the Lartruvo’s exclusivity year impact and X% despite in currency, loss quarter constant for impending Second and grew U.S. Cialis

consecutive quarter XXth our marked revenue growth. of QX worldwide

was impact performance which driven XX% company's of revenue. by the key XX% X% and Cialis accounted growth Lartruvo the excluding grew of our volume nearly the exclusivity products of by Our volume growth for loss of led

decline QX representing patients the in approval achieved This pipeline hypoglycemia Baqsimi, Second-Line margin for treatment points margin High-AFP non-GAAP on this launches our treatment in Operating decrease diabetes. versus both year. and milestones of basis basis a reflects and and progress point operating several including margin margin FDA last and agent for gross for in last goals The nasal our severe approval in FDA of the increased a XXX versus our toward of XXXX. Carcinoma XXX Hepatocellular adults. improved XX.X%, investment of a call, was QX We episodic Emgality year, reflecting cluster our CYRAMZA by XXXX of assets with earning headaches for patients approval since our as single glucagon of FDA with pipeline.

a their three pleased note opportunity respective all We're that indications. of first-in-class the for approvals, Lilly represents product within these to

Trulicity of differentiating the X mentioned I Type CDK study to X X an the Phase others patients X in & data X milestone earlier, the for from positive for exciting data doses medicine the milestones X which survival for highlight include And Phase higher diabetes. Verzenio Additional in from Verzenio MONARCH positive with overall this class.

pain. in we this not Pfizer, osteoarthritis submissions and with time, in severe moderate low of submission Tanezumab with regulatory severe submissions pain a followed partnership At we're patients Also potential Japan. the for are by by XXXX, QX to in chronic planning EU moderate U.S. prioritizing to back

through flow our return external to our augment leverage cash and to continue shareholders. innovation We capital pipeline strong operating to

for being $XXX agreement in via worldwide a studied returned program pain dividend. chronic that nearly We currently And Centrexion conditions. repurchase to from QX. the accelerated $X.X share non-opioid is announced small treatment billion molecule licensing Therapeutics million the we shareholders completed potential novel for announced as We a

Moving earnings call continuing launched XX% make for price. April. on to our the efforts insulin list to Humalog Slide Lily price current at in X last affordable since key this our more medicines more In detail than you'll a quarter, patients, see on we lower Lispro of events list

has While an patients so been for access solution important far limited.

to We make to to with work accessible payers patients. will solution this important continue

like our to leadership highlight would also changes. I

service key for his defending First, advisor job sincere our a to gratitude our serving you've as team of company leadership board. our a and a to to Mike, and company. tremendous note Harrington, great the Mike leadership done and

Jonsson Second, long I focused a ranked some track in welcome Patrik for largest results Patrik's markets. delivering record Under business Japan XXth is the our Pharma unit. Biomedicines like our of to patient Lilly has leadership with leadership, of leader the Patrik period would Patrik in climbed as assumes that during her the Company great from rate Japan year. which key highest senior the in It's delivered six at Japan joined XXXX the number of of this team. in to We ranking end have successful to included launches leadership growth of products. our the growth a time,

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

Josh Smiley

results presentation provides GAAP non-GAAP Thanks, a of And Dave. our X results. to measures. Slide our summary X of summarizes Slide GAAP

X%. efficiency for revenue non-GAAP FX gross of long-term sold, margin Slide a XX.X%, track increased the international on keeping see XX.X%, was profitability. revenue us Gross percent the you'll to revenue X achieve increased measures impact margin as manufacturing at and our percent inventory Looking goals on a excluding of as on to of

administrative support the XXXX increased higher gross by to of efficiencies. recent of by by as increasing Total product and selling a QX investments well XX basis operating other key products. growth basis mix to approximately margin the expense with price negative our U.S. launch driven expense unfavorable declined driven Emgality X%, X%, and marketing marketing the partially compared revenue, primarily impact in as of offset impact points On on same manufacturing

development QX all by reflecting increased stage put late XX.X% as our the higher X% operating I operating investments revenue including XX% percent expenses that and driven which for RET-Inhibitor Total tirzepatide, at mirikizumab. the for XXXX our assets, compared just income a quarter. expense mentioned, income decreased R&D of to

revenue we As track to our achieve as our XXXX XX% growth improvements drive while expect income to on operating target recent year in of launches leverage, guidance our and of remain and continued as well operating margins, we XX%. full

million to was in acquisition. to driven Other primarily this expense expense expense of the income net XXXX. higher Loxo million of $XX related This compared QX interest income and $XX quarter was by

with year, the driven primarily quarter XXX benefit tax foreign U.S. net was last compared by audits the same basis impact rate with a associated tax of with Our associated XX%, the tax as resolution decrease a timing as of and of reform. tax well U.S. points discrete the

from X% priorities exclusivity At approvals, share products. and reduction progress as continued growth outstanding the significant income bottom to readouts brands key in based X volume the Phase of growth in behind earnings pipeline Jardiance Emgality, while growth despite impact two Trulicity line Lartruvo. driving Taltz, shares increased due two as strong for of three repurchases. progress, Investing QX and headwinds net the of loss regulatory such including key a the and and our Verzenio, good we submissions per declined evidenced U.S. made In positive by revenue share X%, strategic with aligned from Cialis

Slide these year-to-date, same reconciliation EPS the non-GAAP find non-GAAP on and additional outlines, X reported measures and Slide provide on Slides and these while XX XX you'll between details adjustments XX.

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

in volume, This quarter, worldwide basis, grew revenue a offset X% partially by price. on a performance X% driven increase by

reduced to grew of growth the Lartruvo, Cialis X% growth. volume each Trulicity, the the Jardiance U.S., with Exchange second and was quarter and in delivering tenth by XXXX, Alimta, revenue growth delivered major we of diabetes compared Foreign in U.S. led excluding over quarter XX% geography. X%, flat revenue growth nearly our products was volume for XX% by volume straight Taltz, volume

hole. Consistent year increased Part manufacturing that XX% the with nearly resulting by of declined rebates XX% from moved gap from driven coverage U.S. funding the doughnut price X% X% financial with our this change the in XXXX Medicare D to guidance, increases rebates modest is mix The rebates by Approximately to for offset estimates unfavorable due a remaining X% affordability. X% price partially and adjustments of mix. patient contracted higher favorable to segments discounts was list and and price favorability

to declines Going in funding coverage forward, in continue QX we the impact with U.S. year. in QX gap mid-single-digit less impact to for anticipate full the expect changes we still price and

partially Olumiant FX and impact FX excluding Revenue on basis. growth. volume by on volume, Moving led Taltz. contributors led by X% rest grew in with the of negative Volume of growth the Olumiant growth key growth Trulicity, In of FX, XX% X% offset by Japan, the excluding revenue driven increased as the and revenue by world XX% was Cymbalta excluding in the by Europe, same is driven to China Verzenio, to price.

of At information the is results. same the bottom our for June the Slide year-to-date

shown the As key drove our confidence These our percentage XX.X points growth this worldwide products of quarter, were XX, volume again in Slide of products engine once XXXX reinforcing our on volume growth. our achieving revenue growth goals.

points of Branded by XXX Cialis. of driven that provided loss primarily a experienced have basis drag exclusivity

seen year. at generics of we've the following As end last in rapid Cialis expected, of a market of entry September the erosion and U.S. the sales,

in QX. QX to this continue normalize to expect We in drag and begin

revenue total, generated Slide growing quarter this over to of growth XX these billion In provides revenue. a key view $X.X of in our products. brands XX%

market to In XX% share the as U.S. of year. U.S. indication CYRAMZA, We sustained addition in strong like Jardiance, launch first the expect line as EGFR which quarter to forward mutated submit I'd later we highlight performance growth in the Taltz to the second-line cell the of the of Trulicity, HCC cancer and lung and non-small lung. grew our look in to second continued doubled this metastatic High-AFP in performance

where at We're increase gain in U.S. market new-to-brand approximately X points see of excited which an QX. XX% is prescription to continue the exiting share QX we to of exited share share, for Emgality

our its second to forward of meaningfully with half to As we continues contributing scripts. access script of one-third XXXX. strong in continuing uptake look total quarter in U.S. We the exited U.S of grow, approximately the sales paid best-in-class Emgality

XX EPS. results, expenses, positive on had focusing little impact our Slide on modest and gross income and operating year-over-year on of select shows statement, margin impact income non-GAAP lines exchange operating foreign the our rates

that see reflects on that Turning you'll we've guidance in for results updated XX, Slide to XXXX line year. increase guidance non-GAAP our our the our bottom financial

recent expense $X.X billion Specifically, $X.X reflecting for and narrowing we're range raising in of billion, continued the SG&A investments launches. to

reflecting We and zero gains income million are an to lowering in for of $XXX half portfolio. first our the equity range expense other deductions to

earnings the non-GAAP to associated future. benefits with net tax share unchanged. in QX decreasing to per discrete to to the XX% to of share we $X.XX the range rates of are tax to share, remains reported range share. XXXX in to the raising be discrete benefit rate XX% And tax now for XX%, our audits to to per which the to be $X.XX per is XX% XX% On as a a our expectations resolution per reflects the XX% earnings and of per from is in $X.XX performance We're of our share tax range share range our per $X.XX expected reflect expected tax basis,

the XX we've progress and goals. XXXX shows made revenue towards operating our Slide margin

the X% the in XXXX, left at Lartruvo. growth would exclusivity of headwinds rate grow minimum and XXXX performance our the compounded represents Cialis that for XXXX-XXXX in from that we midpoint annual we've despite X% in of of of constant the XXXX X% outlined. currency, On With over XXXX need impact achieve the growth slide, the sales to guidance revenue of to loss

and and scale, in from we're that headwind abates XXXX revenue LOE we'll Lartruvo to our new the continue goal. As achieve products that confident minimum Cialis

expansion the increasing of you the diminishes On over XX% can Cialis and as the last significant under margin we've right, year. since XX% Lartruvo LOE delivered from just this see year. Again, that to XXXX, impact

goal our our confident products new at we're operating achieve As to XX% we'll continue scale, XXXX margin.

drive future we investment allocation. spend business billion half with over of internal the strategic year priorities, On Aligned Slide in we growth our and R&D. $XX expenditures between provide in an our capital on activities, capital to development the update XX, first

In addition, $X to we've returned nearly billion shareholders.

of to ahead to – the and our our half invest pipeline, launches, look the products key seek prospects continue we return external As growth year, second shareholders. of new innovation the in and fund augment future to we'll our our growth capital to recent

R&D. turn Dan we'll over the highlight on Now, to to call progress our

Dan Skovronsky

its and exciting breast summarize big quarter. for R&D results an highlights But interim been important results, efficacy really A HERX-negative on first color It's news a R&D capped some with X more trial Josh. the improving cancer. morning Thanks quarter women with the this Verzenio’s that analysis, HR-positive, bit for demonstrated in Verzenio survival of for a I'll MONARCH other minute. at off overall positive the

pipeline Slide earnings earlier, regulatory type of X call GLP-X five Dave since regulatory last lung empagliflozin select that X and of collaboration CYRAMZA non-small X initiation Phase XX and cell diabetes assets for submission shows including Movements Receptor as our Agonist first-line regulatory of alopecia Ingelheim The our mentioned areata. the Phase July for submission Boehringer molecules. and attrition two the of cancer. XXth. in per opportunities the of includes approvals EGFR-positive baricitinib X for Oral testing of the Phase Iinitiation with

already line that have that made a we're XX, earnings for call, Moving progress mentioned. approvals, key and disclosures events the top since monitoring the last including and we've Dave of Slide to I XXXX, on number submissions

we've readout this in out FOLFOX X cancer. And trial with with year. pancreatic later pegilodecakin quarter, second-line this added line read driven for trial to the we expect top combination Phase SEQUOIA this New to the trial event

We'll had into ARMO need pancreatic recall based in limited on driven unmet moved Phase that X, was high data second-line this this the medical Phase by for X cancer. program

well this we biomarker shared in as diabetes, cancer lung Later driven year's cell cancer. lung as Lispro renal still we've several we datasets. including and year, outcome at type CV as presentations in In previous meeting, of key for cancer, this studies a the study Diabetes in the medical well Rapid a Trulicity study, type tirzepatide As diabetes, a indications as renal Association we'll as X updates, initiate had and see molecule. number REWIND this X for Ultra American

I'll share ADA a meeting. the few key takeaways from

and consistent shared in evidenced shown in study reduction first study Moving was that is X Phase than slower rates relative These severe because less This discontinuation did here. X I'll the tested demonstrated results dose were side improved the The effects to escalation significant occur design the in the were mostly to particularly GI encouraging, mild and in EASD the escalation tolerability highlight we with at are Slide that dose study. to Xb XX, study. tirzepatide in Phase dose moderate Xb efficacy the the escalation Phase a The was by study. XXXX. treatment Phase step-wise study

We Five in loss the look already XXXX. in to underway the believe relative data HbAXc treatment for and surpass weight reset tirzepatide to to current expectations therapies. are we has forward opportunity patients beginning trials for program readouts and

Turning for outcome XX, see to summary Slide data the regarding you'll REWIND cardiovascular study Trulicity.

was a As physicians’ lower that's high and CV more observed other a patients for as reminder, the patient data the population efficacy of placebo included from in to events different risk the notably updated on established rate representative a Studying population population MACE REWIND CV the arm by GLP-Xs, in generated of studies left. seen demonstrate patient bar offices. and a diabetes lower in

the Equally prespecified without clinically demonstrated XX% MACE notably efficacy, impressive with Despite measures, a bar patients studies. with consistent is subgroups prior results, which in variety of showed CV for benefit the most safety a demonstrating of consistency the across of Trulicity prior and while disease. high meaningful reduction MACE

and the We we regulators hearing expect on population from our broad reflect the submissions. we forward look label to studied, to

Moving XX. we've last four we quarter, to XX the highlighted Slide over Last bets big the late-phase made months.

consecutive inhibitors. generating Obviously, opportunities. start X/X highlight with like me differentiation previewed data X Phase and HERX-positive important in quarter, December versus we've patients additional medicine, over data X XXXX. for X, with we some X three XXXX data important CDK we that X XXXX, comments MONARCH X this Verzenio. in Phase three in Verzenio's X highlight expected survival meeting, and to readouts said I'd This overall But When for progress in Phase we exciting We on XXXX years. upcoming data Phase first, other let select in data made we which Phase expected our investor at readouts adjuvant now highlighted Phase

occurred of readouts and We're these first pleased two the that show have are positive. both to today

interim our women HERX-negative the first was earlier stringent analysis readout a analysis Verzenio and cancer. HR-positive press overall X survival extended occurred p-value. per with for MONARCH of than and morning, required showed expected this metastatic the breast This robust As life release

in this originally endpoint we strong interim analysis, were X/X to to results While the to overall analysis enough the Verzenio statistically only improvement in at the go in XXXX, had CDK expected significant the to inhibitor trial its first meet final making combination fulvestrant with and achieve survival.

with to regulators to data. We presenting look forward working important this and this new later results year submit these

Phase X/X our in HERX-positive work show trial that positive today this controlled randomized population. announcing we're was CDK with efficacy making first trial HERX-positive addition, to in positive, the in breast Verzenio X inhibitor In We'll the Also, support MONARCH a to pleased China, approval hear Phase our our we're steps. data to submission in upcoming will This early regulators stopped was China. due today in appropriate efficacy. plus, study determine to for next that X cancer

I forward looking to adjuvant in this Phase our out is population, in much XXXX. X expected very in and Finally, read population should say we're still data to the trial still receiving

turn of this X and Phase to Now Phase on the are X later data in trials, ongoing we pancreatic addition year, XXXX, complete cancer come the on and track let me the back trials. briefly to Touching X results expect Cypress we to to lung X, disclosures now pegilodecakin, Cypress in XXXX. Phase topic in X cancer expect

patients a XXX beyond is Zagotenemab our state. anti-tau Alzheimer's early a antibody neuroscience. to agent treatable imaging potentially to patients. placebo-controlled whose in the This study not identify Moving has disease progressed currently study uses of tau nearly symptomatic

forward help XXXX. beneficial will look strategy antibody uniquely our treatment a And aggregated tau seeing is a While tau, elements incorporates disease. Alzheimer's hallmark to with trial a We data in forms that a disease. the for the Alzheimer's is a higher-risk of us of our believe best area, learn key targets pathologic we unique molecule design

we is DXPAM targets addition, on in well some Parkinson's data, into in symptomatic disease. Phase move improving Lewy modulator dopamine positive dementia we're bodies our the receptor. focusing signal treatment and studying Based as of body and molecule We Phase this in DX previously disease X quickly early Lewy dementia, body which If enrollment, expect prepared on Phase treatment with shared In to both we're patients XXXX. the dementia dementia, data, Alzheimer's X cognition. that X a and with see as in symptomatic the includes Lewy encouraging attention allosteric we now of data

X In moderate-to-severe anticipate immunology, an medical our moved seeing immunology year. the first We're antibody with anti-IL-XX of this high atopic in dermatitis, portfolio, we asset area and of recently development target into the patients This we about unmet our and excited molecule. in half emerging of on builds data need. this Phase next potential

I'd programs. to two Finally, diabetes highlight like

asset our is First next-generation data enabling be same once-weekly diabetes. dosing. time a which line has technology This basal the with reporting to Basal Basal used basal and important insulin insulin. create the anticipating year. Insulin-FC weekly uses We're new people is for potential that option Trulicity, top be treatment extension next could Insulin-FC, we the first to convenient an

Phase the of data delivery closed and have updates system AXC potential the efforts on on X a achieving move insulin system the today on next know our assets and over we launch X to loop look focused to patients coming half goals. process in of Phase in of Second, ongoing pipeline will in additional the efforts their tracking will these number of insulin believe we that that outcomes. earnings Phase more achieving call. goals. We progress years improving a step forward into XXXX of Pending not increase ongoing delivery improving with The insulin people the iterative share towards has AXC significantly first automated potential patient treatment are the X XXXX. an positive are our We their than

over Now, to back some I turn for closing remarks. the call Dave

Dave Ricks

Dan. Thanks,

of the QX of continued competition volume Before of in XX%, we growth quarter. products investments our the X%, volume go XXX now Lartruvo, growth goals to to the which patients the of reach continued to progress of Cialis and operating of the generic and due more commercial Q&A, key in the We erosion sum made growth improve progress XX% towards margin future. despite Liberty our pipeline products to improved impressive let late-stage made margin me up briefly represents second withdrawal delivered basis as we've to and revenue. strategic XXXX. care points in versus Meanwhile We today, standard we

with We along pipeline for approvals, including X quarter, survival exciting made this the regulatory with overall progress MONARCH three readout the Verzenio.

into into asset also advancing Phase In assets while addition, we moved clinic. development, multiple the one X

Looking ahead, later a this the disclosure subsequent year. for about submission at and inhibitor data medical meeting we're RET major our excited

million share We accelerated also shareholders the and repurchase via returned our to over billion completed $XXX dividend, program. $X.X

points of from the a so on future. cost hopes patients. Senate package, the our lot week, to allowing Finally, to details may patient in the hear its for a results pricing a Committee plan strong just QX focus the of delivered is Senate released for and of it and latest be about of subject. of in on prospects discussion and the last we drug course there be I few Finance continuing won't the This let we'll this administration, in improve make me address out Congress know solid the and Lilly's the fund this questions word Q&A here last particular

healthcare, investors be, lowering by at this continue core our focus innovation, to want the and principles encouraging patients assure to the transparency costs that pharma to who medicines. First, use industry and and I on the and industry counter will and for of pharmacy all fairness has protecting in our guided shaping

better to the on be and legislative advance it Senate coming our principles. others. many to falls package Committee some these try working over core Finance of months We'll stakeholders weeks align proposals short While to with the all ideas,

the care. of and many to continue size proposals patient to industry the on and on of these work you have will know I impact

and I'll XXX% three resetting there's more more comments let and relate a innovation on from focus parts impact detailed in concerns increases Part strategy me Pharma Part already and time likelihood and highlight are in practical package just statement redesign, has when capping reserving help. here the later I'll We're policy few this Medicaid Lilly. to clarity make a more price cap put a the follows. numeric The implications answer D uncertainty. to list the of This B a assess here so just the public So the and perspective, D. for out on a the patient

Part Based have which our current portfolio, Medicaid legislated the benefit. out-of-pocket our savings cap. of to impact portfolio, seems, we to our neutral important which maximums it redesign, and our and negative a the A medicines D would on exposure most the should proposal, currently Part this But and diabetes immunology out-of-pocket needed oncology with on some be higher positive on includes deliver an would is primary which cost addition impact most is a to business. a in beneficiaries form, patients for use D have in the

our general XX% and increase the patients. to primarily in impact would would well. – moderate a a for rebate government, benefit revenue. our represent also current of so insulin near-term, raising Medicaid Removing more most was new on XXXX, insulin in it up view, proposal legislation Humalog shown has late The business. U.S. as our the in little finance represents money in industry, for a version us than it the in at negative XXX% the rebate the draft likely delivering as the to XX% In cap headwind XXX% cap a but Humulin larger volume, in this next Medicaid no due is house the basis a represent

coming We're it be in increases price these well, Medicare Part budget, mechanisms contracting D the increases in system prices, was millions And the of while which already Part expanding structure, the in to in B. reporting worked that list represents. Part will D of Part seniors. this limit Medicare and is exist segments ASP innovation price inflation we've to for less D quite under CPI capping and enacted proposal access about concerned market-based seen. at Finally, has controls rate a the and perhaps B likely price be to in

modest to enacted through already price for policy While as savings. Patient moderated medicines, be accumulate we'd our Lilly encourage significantly kind moderation. quite has if proposal, government this a list will although continue this the time do of this impact increases from

of spreads, and I this patients these the savings for XXXX to deliver remake innovative issue have that none coming and no Unfortunately, XXXX remain substantial proposals to medicines. over actors currently take of constructed, centerpiece use our and – will out-of-pocket presently note the begin structure gross fundamental our and the on as would guidance. presented advocacy incentives the proposals would to would XXXX, of these address all net a in who impact months to effect

pipeline in term, Longer our any the different bring need Across to volume for innovative Company, patients innovation. motivated diseases. will to to growth remain who more driven and on through case, we more progress continue focus employees medicines to Lilly solutions energized millions – million

our execute to the also to and only to growth us. opportunity long-term deliver not strategic of goals, our excited XXXX XXXX We priorities realize front but are in

prepared This concludes our remarks.

I'll Q&A Now Kevin session. the to moderate to the turn call over

Kevin Hern

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

Operator

Certainly. [Operator with from Instructions] will And the first Umer Raffat our question of line come Evercore.

open. is line Your

Umer Raffat

Hi. much so questions. for my Thanks taking

about of Max that what's is those capital? if is I to is here. a curious given and exposure what's And the read that lot post raised question if is questions the think no very impact dollar impact rebate is there Medicaid cap blog XXX% with dollar one on the of this I interest my investors caps. First, every

that's So first.

is been has very which Cyprus into much. trial readout would you ARMO for that Secondly curious it's set IO-IO open-label understand X going disappointing? trial, very I knowing how Thank R&D, on I expectations investor late, was the on of this due that fall. you an

Kevin Hern

Thanks, We'll second. first have Umer. and take question then the Dave Anne, your

Dave Ricks

I Okay. appreciate the question.

Although I most off remarks, my head of was Umer. in to prepared hoping these

by a companies policy think M us I our Company. state think aside, a Medicaid, of I any giving forcing version regressive actually exposure As a price. – of the catalyst, the with Medicaid in excess punishes issues we It list the asking rebate But of is underwrite said to you're policy.

impacts for said that of across in portfolio our total the I And low exclusively we almost As this percent Medicaid – businesses. those a the of insulin are teens Lilly in medicines. volume as terms

So of Company. insulin cap is and the number related to theoretical the that the those on XX% total the insulin impact of to be smaller businesses. a related would that of

nature in of concerning a policy XXX%. it. absolute a in advocate is XX% Medicaid is for Medicaid any volume the we bad the in of leading a it's a Company capped version because at the way by MCAP and to of So policy for phase-in case, certainly The the the better with impact financial

Anne White

it's Pegilodecakin, the sharing we mentioned, data the of that and Dan completing QX. forward at beginning studies look – so to

results We are in X. the Cyprus particularly forward looking

So this is a the we've those so the XX%. high-expressers, Keytruda added are PD-LX patient in over population where

in trigger also for trials greatest lung lines with positive line that trials. or long from in in would setting So additional and registration those data do cancer trials, combination to later then the opportunity following agents. potentially other is IO first continue the pegilodecakin believe We whether

and of area renal X other data Both the the renal study. had in cancer. great cell lung Phase then encouraging interest And is

rapidly evolving that Dan setting. mentioned, we plans as this in do to a and then working our as peg So see optimize on landscape

lung of driven cancer well as at And and other the so as in end year, tumor studies the forward to types. starting those look biomarker studies

So and and pegilodecakin. more come to Cyprus

Kevin Hern

Umer. Thanks

Cynthia? please, caller, Next

Operator

from That Goldman Flynn come line with Sachs. of the Terence will

is open. Your line

Terence Flynn

frame us, just question dynamics first the Thanks then Trulicity the on you can of my taking And for first in the Trulicity context there. for Hi. questions. you then the help given in love second the the data on in half growth high And some tirzepatide? dose for saw half, the LOXO-XXX. is would Maybe perspective second

you're You mentioned going this data to year. later have presentation

would Just level and seeing the durability tolerability, kind date. love thoughts you're high of on safety, Thanks. to

Kevin Hern

Thanks.

the XXX. go we'll and to then question, Anne for on So first that Enrique

Enrique Conterno

second quarter relative got XXXX United strong XXXX. the pleased with performance of quarter we the of We growth XX% a the prescription Very the second volume in when are good. saw Well, States look we We Trulicity. of sustained to at growth.

at then price And of were offset was that. modest As pieces price our The increases. high at erosion. we XX%. when we Clearly sales good to were from at about to by funding look list see there some we that this sequential the was that, rebates continued bigger erosion was growth growth the price relative going points below seven somewhat donut look look QX, hole, incremental XX% did Clearly, volume. we the of when

share X.X performance. of at as do I we as and mentioned, and and I strong, significant higher fundamentals of very course X.X class you have, business REWIND, milligrams growth look think XX%, at look think with catalyst the about for Trulicity. We importantly, doses it of we milligrams when comes are their both the the to when

and of we being excited wait, tirzepatide, at about are utilize We we think look to of resetting efficacy. we X in opportunities about very both When worse about That's diabetes. continue the completely think with that be code sort AXC When to in with the it so excited asset. we treatment we of of people particular type different zip expectations both. for tirzepatide why a when comes

Anne White

thank for with that question. And LOXO-XXX, then you

a the We mutations. year. registrational first the do will of inhibitor. now is and update said, look profile by on And class half or an continue about more sharing to one data be rolled set. the tumor a RET excited end fusions present forward or It's And enrolled second track with best the the types which that and to at over XXX across in in both U.S. the robust as it's we patients for RET filing, that's as an and very regulatory really advance we on of XXXX the medical you meeting, data the

highly exciting we've can is of and response and durability seen potent require profile carry doesn't cytopenia that well. burden supportive that And LOXO-XXX care a robust So emerging costly rates the as safety interventions. also

to is program. continue a strong. enrolments again be job LOXO The fantastic to team do So in continuing this

upcoming at we're forward much data sharing that meetings. so very And looking to

Kevin Hern

Thank And next you, caller, Terence. Thanks, please? Anne.

Operator

will Andrew That with of the be from Baum Citi. line

line open. Your is

Andrew Baum

Thank you.

initial X/X commercial that cure us this the for entire you MONARCH to can Medicare of First CDK versus us subsequent plan some XXXX? market, formally X down for and status therapy use data idea you and question, could the break for on the lines whether give

it cap something about proposal? inflation to relate reform the then Thank if that second, with rising part is the Is could to research insurance that take happen of concerns we And possible Part the D. allow will premiums Medicare rebate as you.

Kevin Hern

Thanks. We'll go and to Dave Anne initial question then for question. the for inflation the cap

Anne White

you question Andrew. and thought thank And good you, really carefully. Well, about a asked this

across advantage differentiates this, we results. of crossing confirms the of is do demonstrate on And a able the so it's based growth product. at interim show strength over. a survival therapy So in Verzenio, and these pre-planned believe lines the increased difficult to do were reason patients expect because We fact all that a we of to significance like our trial

And data treatment those share will with this we decisions. making access importantly, and certainly

who Verzenio from important that survival both heard are physicians families for we've with for as verifies really disease to are so and is patients As devastating treating importance this be incredibly to the And well, women one patients outcome and disease survivals, do them. And as to their who heard with can an overall we've the possible. this and objective living outcome most outcome the achieve best most long everything as of overall they repeatedly the this patients. most meaningful that want is

to with really glad we're So this for delivered result women have cancer. breast metastatic

Dave Ricks

I your Thank it didn't up. And quite I you. think Thanks make question, – for Andrew. you

D issue Part generates pretty most rebate finance really. of of the package that the with surplus primary the impact the to much a amount huge of which patients. to proposal back not we've is it about – D within the action, table, a the Part score. government, seen the Look it. CPI talking bit is generates savings little you're think does for our AF cap Even which Senate the leading sort integrated the maybe reform This reform relates on itself, go I as to the on of I package, is pays

but policymakers this been than how are have package already counter importantly, do years, and we're leave is various relieved the at that? low premiums stable extremely the delivers reinvest we Part in to for posing directly question the with So For more proposals. more D pharmacy yes, premium stability,

is go seniors list. all the to back through some you deductible to pricing and to indexing indicate those their with co-payments, or is of as not idea discounts of One of their net passing negotiated

I think has everyone much you as out good is issue score. point idea, is been pretty closely the as this you think the a

Now, time. rest I a also package, find stepping the even and up is pass achieve goals. it Finance Committee make if in through there potential D connection huge through those in could phases, with at think to of we all it into look or can rebate the Part One phasing partial

about is who that like you're with probably shape policies like try fundamental some use better out-of-pocket all the So pushing there'll we've for to thing issue, to far – actively addresses are best the something these of discussion, had really we're the which ideas that on. of and this lot do a package, from maybe got medicines. and a is, workable we'll suggesting. we this this our although we're we like line ink, don't as main the here pharma be one And into finish innovative And ideas all lot people costs

Kevin Hern

next Thank you. question. for the Andrew, caller, please? thanks Cynthia,

Operator

with the That will Scala from Cowen. be Steve of line

line open. is Your

Steve Scala

I Thank you. have a couple.

that's tanezumab, that can and on lower confidence no in pain approved chronic of your OA, longer would why a level filing where X.X you describe be question. they First then IL-XX share secondly, milligram be you the IL-XX. in SKYRIZI the how were are AbbVie back taking specifically start, off does and AbbVie's said a cancer to from pain first to And stand? great seems So

you're you. seeing. just So what curious Thank

Kevin Hern

the Dan have take will if you Josh, SKYRIZI. handle tanezumab Steve. and Thanks, question, you can

Dan Skovronsky

right, that them and the sort on of you're those the populations. we that is tanezumab indications. we prioritize benefit put order question based for Yes. the Thanks various you of which data overall in Steve on in, the risk that In in the have a each sense,

So the need medical that prioritized regulators. well forward as the unmet based with on that moving in as we've osteoarthritis,

proceeding had on also in we're population. disclosed. of based with together that partners. that based announcing It's Overall, and That's we we that evidence wouldn't proceeding the decision benefit in that the trials overall risk to be our the confidence provides and recently a this that totality regulatory we've unless have with medicine that's submissions the on come we

given chronic benefit the for pain unmet to given this pain the population. need Pfizer, of to yet. a lower hard at in At the we've data that and to same pursue so the that reasons, not medical have risk in time it's population have we the and taking don't out be benefits that the almost comment exactly what decided back Cancer don't we that is on It's that and trial. line in there here third bit could time read

Josh Smiley

if the in it's in a time with The the look at bit prescription right really Okay. and and in Josh. XX%, we Steve in place we from trends. some – it at ILXX/XX it first, of in to we maybe from relative is IL-XX see of It's launch expected see see now like look as share TRx U.S. Taltz's terms – we with Cosentyx. On of it good performance SKYRIZI, the primarily terms is Really SKYRIZI, – saw But we're to line share QX looks growth what in really normalize really pleased little market what a we the Taltz launch, be. In volume you store, Taltz growth. we better class, saw we coming

But continues our growth feel the and that we're performance good about we share seeing.

looking later be for important this on course forward our and for Of year, against trial positioning think to competitive data that an head-to-head Tremfya releasing I we're us. will

in thing growth overall, that need the So biggest class. continued to we the see is we –

still I prescriptions happening the majority class. in think of TNF are

to and for is more modern for IL-XX on both patients us. IL-XX anything shift able good it be better the think of the – to classes I treatments and So good will are

Steve Scala

Thank you.

Kevin Hern

Steve. Thanks, Thanks, Josh.

caller, Next please?

Operator

with David Risinger line of the to Go Stanley. Morgan

Your line is open.

David Risinger

Yes. much. Thanks very

please. two questions, have So I

the majority you the of with such had government only problem population challenge. a But costs likely struggle And Part the doing people who that a outside applied a if medicines Part are could because will you to the Dave, outside that major of what out-of-pocket that public drugs. with about relations anything industry the D with respect mentioned First, talk is for government's is B that's Medicare can costs. D, costs of out-of-pocket Part industry actions use affect the has innovative where

of with the industry is of major cost or the the the with try groups Commerce Chamber challenge? to out-of-pocket employer So anything doing to change i.e. dynamic

that for a I'll has thing not it just pay visits, et too final overcome much drug seem make one costs the the that out-of-pocket utilization other physician that the hospital the relative people out-of-pocket as to treatment cetera. coverage, visits, industry statement able fact to healthcare does of which unfair i.e. And is such been

for sorry want government diatribe of industry's the I anyway, did outside So agenda to understand the reimbursement. but long

oral then talk as Thank you a potential opportunity? Lilly's you. of product GLP-Xs about just could evaluation pipeline And second,

Kevin Hern

oral will Thanks. Dave will have about your a – take and Dave question, talk glutathione first pipeline. Dan will then

Dave Ricks

we hard Dave for we counter. in – do Thanks, to there. But patients to – around to I think experience general working lot that. pharmacy the the improve rhetoric the I But the need mean, industry, Yes. improve mostly we're agree a question, we of in the in at that the need

half that You for in U.S. four commercially are an we there our I correctly I things to discussions doing we're ramping about business would in increasing is but for in whatever is And government of doing is lot business area Lilly's That reimbursed that both programs, us. that more point there. point focus probably of a the than up. think out

and is healthcare how coverage. we implement our first own The design

as healthcare shape to policies we we employees it I progressive the own company, we begin our here, as insulin experience, practice. as that – peer cover, think the these to think a dollar one of et I first And best years position to relates As providers through deductible purchasing having in funded it the going And it, a our well our can have to we're are market by all most the like coverage with on gets doing and are own for drug physicians to insurance including of behavior. cetera. way companies recommend as drug products

medicines the important ruling probably around is plans. the And there can was they time subtle of whether that and an clarity for the – the be know, ARS designs allows deductible quite recently answer treatment maybe preventative HRA yes, that – a classified high you IRS question under can. As HSA first that from is thing as

use commercial products a us, also can the millions design I point so plans for in insurance other market will categories zero-out-of for help in medicines, are those they purchasing people. think, coverage pocket a essential diabetes dollar we but new affect that to that of important as So well that particular first in as that

leading a value-based is pricing Lilly on. taking position a Thirdly, is something

Although having it's share as dramatically been translate shift strides of begin it discussion And that's cost stubborn and does in medicines around I government success doesn't with value counter, we're and well, and segments in as making important. I a this it demonstrate the the the medicines at of – risk directly self-insured pharmacy this benefit We're it pretty and the both allow medicines our lot think think employers. a to enormous solution markets. the us issue to commercial to does out-of-pocket medicines with a of versus those costs

regulate seeking state-based there are the marketplace. commercial to efforts Finally, are that

policies with that will action maybe innovative to let's there. and be that's I for see a federal out those in states a shifts field them in the And Colorado and there. engage debate honest – debates, think for an and the center very playing where increasingly XXXX, you'll happen, little probably of patients being as from one Lilly pharma the be active year medicines during ready election advocate we'll help

we which a lot answer, including for of well. in but those to is out, a lot matters here companies a you as inefficiencies thing I Lilly, and good pointed commercial address market So need my think

Kevin Hern

Dave. Thanks, Dan?

Dan Skovronsky

one able Great. want for our two incretins. strategy speak meets of an that area which Thanks oral therapy to oral for And It's obviously we of interest is maybe us. your question be here, generally criteria. incretin sort that on of about to offer

experience dosing under improved patients, more for translate First, that convenient important a have it currently more bioavailability will what's because development. with versus more efficacy. significantly reliable that's to And could convenient

greater in The GLP-Xs. is available currently to efficacy weekly the once offer than other option an oral product

pursuing So different tactics two we're those approaches. with

very that's to something to bioavailability need move to highly So small molecules. get you

we which by characterized and call or moved this that. here invented the them molecule that program, is And partnered on product agonist, X into Chugai, a was NPA quarter, so GLP-X Phase with non-peptide is by we have we just which the

X we're and what excited we data see that So quickly bioavailability that how will from project. that. to We'll kind get, of Phase determine learn we pursue

incretins. avenue next generation other really injectables to currently get on available than The efficacy better relies

orally of seeking into the So And these look by tirzepatide like clinic get to forward our to number and are those purchase a molecules to accomplish we GIP/GLP become the where that have are to bio-available. soon. specific peptide programs moving we

Kevin Hern

Dave. Thanks, Dan. And thank you,

Next caller, please?

Operator

the line with Seamus We will go Fernandez Guggenheim. to of

is line open. Your

Seamus Fernandez

Thanks very much.

separately, a quick a net, maybe very Thanks negotiation need meaningful Company's just size further to size? cycle? on questions, can us anticipate or product definition on Can you for And to growth the we Verzenio the in then just of of net data quick market path market sense HERX-positive to just to two reposition us first give disease. lot. next if a give thinking the the then just So Taltz, Lilly's And formulary the registrational? us gross should currently? an and gross the And in RA, you clinically concessions estimated price give about given

Kevin Hern

Josh Thanks, question Seamus. Verzenio question. Anne will take Taltz will then review and for the the

Anne White

we're extremely the result Dan remarks, to thanks that positive his And opening as study. on in for in pleased question that a HERX-positive Seamus, Yes, data. have mentioned

have positive the difficult-to-treat And results HERX-positive controlled you breast in population. first mentioned, cancer. so a study has been as this this very randomized And is to

has the study. And for chemotherapy to been opportunities certainly them goal so this avoid finding of

positive endpoint want data show while are the believe patients, that the specifics do primary at a to we the presenting it's for those that year, And particularly can't the meeting setting. meaningful. chemotherapy and the so scientific do be I And in that later of that PFS we result relevant avoid believe meeting of clinically we'll and this of clinically this

scientific next is share to data We meetings. step do really as And plan, this the we that's discuss discuss – our regulators this data. to at the with

time further this regulatory can't I strategy. any comment So on at

probably XX% about breast is to this you as so size, market the cancer. XX% On of know,

market. not So insubstantative this is an

significant go So opportunity as this patients is have type that we a particularly believe these do forward who we for cancer. breast hard-to-treat of

all just indication, and again, with a X/X those result that diagnosis. that overall think the the one it's with survival dosing, that continuous Verzenio and the the only particularly help the in data again, we China study, So robust with continued together strength reinforce patients, three the only a poor to And brings. I CDK had registration monotherapy has

So I Verzenio think we're to very share pleased these on updates today.

Josh Smiley

were the Taltz major factors on Seamus, neither and to in And price and of really U.S. terms net, second of growth. gross in those quarter,

price have steady. rates pretty and Our remained gross-to-net

in of are and the that change Taltz in about QX. the mentioned QX, we psoriasis. performance two-thirds now in with really prescriptions We're reimbursed, right share didn't As U.S. in pleased

up and there. space, as indications forward we're you mentioned opportunity growth make room looking think think I the in we more to will which AxSpA, in us competitive open significant

really, But year. price improve. see not first in terms focused today, that we're of and would availability And the on in half we significant like and access, this to of changes

Dave Ricks

to And the indication, maybe comment RA. that, add to PsA is just to not

leverage see I in – not indications our these we erode additional think see we it. will is payer access actually discussions, the enhance this way

more was the gain. it works PsA, unique and indications opposite So more we actually, the the on your can leverage I like get, from way build the product more way The question think the the is more phrased. we AxSpa we volume

pricing market. So product the we're of also but optimistic power the growth this I think about the in both

Kevin Hern

next Seamus, please. thanks questions your for caller and

Operator

Chris We with will go to of the JPMorgan. Schott line

is open. line Your

Chris Schott

Thanks great. Alright, very questions. much for the

be in question. to is, Can first be concerns sema. terms investor that's entrants as in look new there So to and Trulicity about Trulicity And get just a of thoughts we of oral launch to you the going seems one First reacting GLP-X market? how out pricing we we lingering pricing your for should with maybe the beyond XXXX environment see anticipating latest payers challenging the more forward? and

Second question was tax. on

items mentioned year. some lower rate you this think tax and a discrete I

rate for beyond Just about we normalized we about think Lilly tax XXXX? as much. any very Thanks look how thoughts should

Kevin Hern

Enrique question. so for Josh you, and tax the Thank

Enrique Conterno

question. provide value but I Trulicity price. to is of today I get and we know that, the can delivering that the will it's question can the incremental that additional on unable the is the providing. Trulicity I'm outlook we because doses important all about we think about And often Appreciate to product think value this we Trulicity think REWIND, that as of about think deliver basically launching be will that value as be higher the that and

not price from strong we the of on Novo think the the and a payers, the how responses to I'm We with product going would product. maybe. performance have speculate potential what foundation

Josh Smiley

think on rate, our between guidance I saw was that a this prior benefits basis the point, a that year by XX% for we tax we discrete XX% on in reduced tax the as quarter. non-GAAP second and given

a long-term reasonable. perspective, XX% I to think is XX% from that range

that little low-to-mid is today rate in the the teens on calculation have But given structure that sustainable of flows around and tax the of sort the a income that again factor – a depending things how One in can the U.S. we're here the our swing and move bit. where as guilty we comfortable

– year that see sales could as at we can basis think depending where point or given XXX So one that's how we're on in somewhere as launching, on we long another. maintain with moving, swing any range maintained, we a way again are

Kevin Hern

Chris, for Josh. questions. your Thanks thanks

please? caller, Next

Operator

of to will line Research. Tim Wolfe We the Anderson go from

open. is line Your

Tim Anderson

such at to team lead in all? growth enough oral is that think business that that the of by budge the Novo's you do a And product Trulicity Lilly will classes? Thank palpable is that investors, come when terms you. class that or may expect Diabetes for On really Trulicity, Trulicity high scripts source will the slowdown drug will from launches, in of be not semaglutide where

get who or question that that their is with back industry table in well-informed because funding. killing a they brought from is, to reform, off stakeholder alignment reform the of And on AARP surprised something proposed then you the whether to the half on sorry, rebate key I second question area this learn reform think rebate like in be their is where to Dave. permanently of My was someone table? again drug supposed still the was

Kevin Hern

thanks. Okay,

Trulicity for the then Enrique question. for policy and Dave So

Enrique Conterno

need very the – of will It's placement, to see need when and message speculate it's to basically so will we price and is Yes. to what think given Novo the of our honestly product, type source what we how that so forth we on. difficult business, see

oral to right I do to though, first, think that, what an think as we think orals. about diabetes go we when we think about tend just is generally see, patients I

that So big going right the sense commercializing on is and a incredible now that to is positions, My I an for depending that's be product, Jardiance, them product they product to we think have, barrier price has overcome. are benefit. how and basically which incredible how this pretty we evidence

that I behind investing well have and great partner successful. extremely on we a to it think positioned We're extremely Boehringer with product. we're well make the Ingelheim

Kevin Hern

Dave?

Dave Ricks

Yes.

Okay. Thanks the question, for Tim.

their a our I endpoint. experiment royalties that guess but in Anyway, reform. the was why, comes strong than primary it's in D can heading can program. missed of think I rebate majority AARP We revenue, we the it’s questions half declare advance that of of I the think true, off speculate prepared more all true also opponent think from from Part remarks we I

spent So Washington. get in cynical easy time to when you

we That other good a think still idea. said, possible form. come it's in probably it Is to some Well, back?

make Dave the that it I D Risinger mentioned around the inside Statute by redesign, way because gets think out-of-pocket Part But market the of other the earlier patients for politics insurance Andrew, linking it list we Anti-Kickback perhaps could have segments. the or it and was go scoring don't That a commercial other all a scoring price harder in a change there is of scale, broad-based affordable something happen idea model And costs than is create it. and design good as and sliding of pulling to the a and benefit of the to more the the way. idea.

portfolio, up on from far money sale, restructure and of today. most average work the single kind net Lilly's, over we're And way on given across giving spreads, big gross know, like you up to So is this as efficacious quickest our a idea. retail it's on and XX% a portfolio this directly the is of incentives work on payers non-patients, patients' behalf to all of at how including point the behalf of save set beneficiaries, to patients versus which with of

to a idea is have we got this and go. an might So go we long way this debate in

Kevin Hern

Thanks Tim, , Dave. questions. for thanks your

please. caller, Next

Operator

We will Cantor go to the Fitzgerald. line of Louise with Chen

Your line is open.

Louise Chen

Hi. Thanks for taking my questions.

by So your my then you think your of that is tirzepatide. on I first in question And do are to product, acceptable effects or considered failed? plan obesity you ask what and side GI wanted physicians? you NASH how level those others differentiate are from is product to development, on what

the on is what prophylactic potential CGRPs, think if you. would then these question is second the CGRPs entry oral the my CGRPs. growth the any do then the the injectable And overlap there Thank there of products? and with you interfere about ones of acute with CGRPs your And

Kevin Hern

Thanks. for to Enrique tirzepatide want talk the We'll on to if the go question you CGRPs. about and Dan, then

Enrique Conterno

excellent already have level so know We and will get success we experiment the that class. going believe GLP-X of of of class, effects to are we've have that side in-market an effect trading seen will the that with have side of the we we In GLP-X, can do the we be success. we profile significant here because GLP-X think, believe the I a off. comparable additional not the tirzepatide, case we we efficacy to

to comes first-in-class product. we with bidding are what's thinking be bidding that or best-in-class and NASH are expectations the we We're honestly going tirzepatide. obesity are NASH it to be When of obesity, we to both possible reset not in and to

Kevin Hern

Enrique. Thanks, Dan?

Dan Skovronsky

the oral the for Thanks on coming and impact your question potential CGRPs of Great. market. to CGRP market

prophylaxis indication you be treatment or Emgality out the like prevention migraine, oral pointed our for the and whereas approved injectable for and CGRPs in as the the to for are migraine. know initial broader CGRPs is of course, acute Of use marketed of likely a

and of couple go safety. about I still is outstanding, I the a to are think would there that questions oral first probably CGRPs

is key choosing in like are ends Emgality generate otherwise I One great see safety a regulators. that somewhat drugs the of population got to oral medication have the disease about with factor about this chronic a to the with here. young we'll things been in healthy has questions that to population. safety up think so Remember, the class safety able relatively a just and the be There of is how we've data and this and great

here there I just mechanistic question a of is data think not which there's bit to yet. also address a

much because work if So though chronic and oral already, pretty whether part curve here. people and the question are agent adding as patients blockade any it you've dose know chronic even on have of if additional we preventive on treatment. is response maxed got the will is, antibody on The will question an already of we effect CGRP a out and

for reason, likely So for be won't we've and of CGRP that rather other for to mechanisms antibodies, that looked with part are complementary. but migraine clash

So we're potential lasmiditan soon. broader that's space and coming treatment can the that FDA be I excited we important with offer currently about the review. And an think will new in under

Kevin Hern

Louise, Thanks, thanks for Dan. questions. your

please. caller, Next

Operator

Gerberry We with Jason will of Bank go of to the line America.

Your line is open.

Jason Gerberry

questions. Good for Thanks taking morning. my

me. from questions two Just

absent First GIP-driven then X we do dermatitis, how side so of scores positioned think a market? next second in lower, based just XX the bit dupilumab question dermatitis just learn of a the whether side on diarrhea Olumiant to BREEZE IGA anything you data, data the thinking have to it you curious, on the it's effect, X do and we'll atopic months detailed my XX just tirzepatide, in Olumiant hand, relative about, Phase pertains sort the were Phase reporting data think on as in could effect? the And far so to Thanks. atopic be in the

Kevin Hern

the for tirzepatide, to Enrique we'll go Thanks. Okay. for question. Dan then Olumiant and

Enrique Conterno

have is sure us we see to basically so done we've are tolerability. we that tolerable the delivers has when trial Yes. for and to Phase actually AXc mentioned, that be product the titration comes we on to going and what the are And trials I'm loss, it understand My given to waiting for we to given sense that Phase a this weight is GLP-Xs. that efficacy dose that X the modeling, of very comparable same some as comfortable X unsurpassed the for and product at resetting expectations studies we a feel time going

Kevin Hern

Dan? Enrique. Thanks,

Dan Skovronsky

for Thanks atopic question derm. Olumiant on for the Yes.

oral biologic obviously to Just in to this injectable I’d it's an specifically dupilumab, out, it just compare comparing case, point derm. that tough medication with for atopic

think the of some for and yet. here Olumiant comparison like that. may I patients But repetidy there and orals important none I other the in is versus really are think atopic derm has action advantages

for the got we'll more have data out. to think come comes We've oral that's to derm and here be potential that the see we I and atopic first So, encouraging. how

Kevin Hern

Thanks, Dan. for Jason, your thanks questions.

Next caller, please.

Operator

We'll Jacob the with line UBS. Navin go of to

Your is line open.

Navin Jacob

question. my taking for Thanks Hi,

and if wondering give could to line, am seeing you're the are year. underlying raised of higher arthritis in came with volume your color of your the a underlying us missing, in that level for I any market just little double-digit if that overall to wondering on regards And then some expectations guidance growth. market? dynamic of you growth terms market SG&A Taltz, psoriasis the than bit is growth psoriatic you perhaps of on Just planning AbbVie

know Over the it? how thinking you're of be of we next about you're years launching couple line, about should thinking wondering I how that products, a bunch

not regards on is for there a business we any deals just we've finally Thank be you very do about you're spin-off, this large seen your allocation, and/or interest in M&A companies thinking in several capital how color space and about with deals? to whether continued much. yesterday, potential thinking your large bolt-on then And restructuring necessarily may that any

Kevin Hern

thanks. Okay,

Josh the about for to capital and go questions the Dave we'll Taltz and SG&A structuring. So talking allocation

Josh Smiley

Okay, great.

course IL-XXs than the think we'd from to IL-XXs probably and class, growing of SKYRIZI, IL-XXs grow. is think IL-XXs. as on I overall I derm we're see important moving the I faster what's continue most that's earlier, in first modern mentioned launch across double-digit moving, are So to to TNFs market, patients growth seeing of that with low the again the And the and expect the total

psoriasis we're being to on is fast we we're that And looking the versus durable. and and head-to-head forward on clearance acting year our data on focused Taltz generate in XXX% So later will on Tremfya. this again

looking forward to we're market. in continued So that growth

level that. comfortable to move the really we SG&A a We're for with As of half the with second first of of implies absolute SG&A, pretty flat, half year the year. guidance our this

U.S., launches, with you as our the do expense. in lot got of product digital. direct-to-consumer well a We new variable As both SG&A television lot we've a of as look advertising

scaling, on clearly got we're that of how investment pulse we're as year, the good a putting new half So of second handle them. we've we've a we lot behind our and in last launches money

a margin first next invested confident We've course and absolute half good we XX% of at and but so in continued And we're of are sort well think over that see year, as remarks, where XXXX. to to moderate products in we We do mix growth behind in operating of growth as into SG&A we'll I new again mostly XXXX. absolute headed are years. for good reinforces target for leverage out XXXX the of pretty we our we'd this margin launch the envelope now. but tactics, the expect the operating look flat comfortable sales operating see talked that prepared a that the feel look our an expect there basis, few with with we very We of kind with

Kevin Hern

Dave? Thank you, Josh.

Dave Ricks

capital on Yes. I us. mean allocation changes for nothing

merger in that. shareholders. for generates don't believe don't I think activity value We large we've some believe quite said still for scale time, we

of in out. entity shareholders we think to such stakeholders, then guess execute. have terms if lot what do in thinking value human don't we In had we can being society and spin innovative news, and pharmaceuticals of We one we a we be. generate is I well to yesterday's for that it's the where we business spin-outs similar an that the And health executed animal all and transaction. patients, of

really that focus, in funding add our shareholders therapeutic where type can is and our value the So within fits mostly outside exercise would allocation within for we bolt-on’s then R&D, on for where value capital building looking focus and it terms where fall see pipeline, we of patients. organic opportunities, and

Loxo the those on quarter, So QX, interested where deal types and lies. that’s had time. things We our in of for in focused Centrexion focus announced this we've are what what some we're been

And I don't the see change even past there's from a years. XX

So we'll that continue path. on

Kevin Hern

Dave it Dave. ends the Navin, Thanks thanks the close. for your Q&A turn to over portion. for questions. I'll This

Dave Ricks

your participation our Thank you. your in Great. Eli Lilly Company. interest appreciate in today and We call and

meaningful begin the on of the XXXX. opportunity of we made that lies progress on in the ahead second the reflect we quarters the first year, we As the two half and balance

diversified XXXX Lilly investment. innovation-based and our compelling With to in of in our operating a exciting volume XXXX, committed and continue opportunities growth pipeline in to and invest are We we market, continues a goals while be to full margin driven strategy. a revenue the

team Thanks have everyone call. for if dialing-in. didn't Please follow-up follow-up with our IR questions have you that Hope on we great address today's a day.

Operator

you. And gentlemen, available XX.XX Thank conference call July replay be XXXX. XX, for after ladies will and AM today midnight today's until

may once numbers, XXXXXX. You XXX-XXX-XXXX, code code dialing XXXX-XXX-XXXX, enter or access may entering access by AT&T access again, the XXX-XXX-XXXX, participants of teleconference of the dial and XXXX-XXX-XXXX and replay system XXXXXX. International the both

today. That the participation for your Thank Service. AT&T TeleConference does Executive for concludes your conference using call for and you

now You disconnect. may

Eli Lilly and (LLY) 30 Jul 192019 Q2 Earnings call transcript