The operator introduces the Lilly Q1 2024 earnings call and provides instructions for the question-and-answer session. Joe Fletcher, Senior Vice President of Investor Relations, welcomes the participants and introduces the speakers, including the company's CEO, CFO, and other executives. He also mentions that projections and forward-looking statements will be made and provides a disclaimer. The focus of the call will be on non-GAAP financial measures.

In this paragraph, the company expresses satisfaction with their Q1 results and their continued growth. They are focused on bringing innovative medicines to those in need and are investing in their people, launches, and pipeline. The company achieved several pipeline milestones and is prioritizing their manufacturing expansion agenda. They recently acquired a facility in Wisconsin and broke ground on a new site in Germany, while also working to increase output and productivity in existing facilities.

In the first quarter of 2024, the company saw a 26% increase in revenue, driven by new products such as Mounjaro and Zepbound. Gross margin also increased due to higher prices and improved production costs. Expenses for marketing, selling, and administrative activities increased by 12%, while research and development expenses increased by 27%. The company also recognized an acquired IPR&D charge of $111 million, resulting in a 63% increase in operating income.

In the first quarter of 2024, the effective tax rate for the company was 11.9%, a decrease from the previous year due to a larger net discrete tax benefit. Earnings per share increased by 59%, despite a negative impact from acquired IPR&D charges. In the US, revenue grew by 28%, driven by the success of Mounjaro, Zepbound, and Verzenio. Europe and the rest of the world also saw strong revenue growth, while Japan's revenue grew by 2%. Verzenio saw a 40% increase in sales, with Jaypirca experiencing an acceleration in growth following its approval for a new indication.

The company is anticipating future Phase 3 trials for a potential new medicine and has seen significant sales growth for their current medicine, Mounjaro. However, there have been some delays in prescription fulfillment due to high demand, but the company is working to increase supply. They expect sales growth to be primarily driven by production and shipment quantities. The company has also received approvals for their multi-dose delivery device in the EU and plans to launch in the coming weeks. In contrast, Trulicity revenue declined in the first quarter.

Trulicity revenue decreased by 30% due to supply constraints and competitive dynamics, as well as measures taken to minimize disruption to existing patients. However, the launch progress for Zepbound in the U.S. has been strong, with over $0.5 billion in sales in Q1. The company is rapidly building out access for Zepbound and is focusing on broadening access with PBMs and employer opt-ins. The company has also updated their 2024 financial guidance, increasing their revenue outlook by $2 billion due to the strong performance of Mounjaro and Zepbound. They now expect a year-over-year revenue growth of approximately 26% and a ratio of gross margin to revenue in the range of 32% to 34%.

The company has reaffirmed their guidance for other income and expenses and tax rate, taking into consideration Q1 results. They expect EPS to be in the range of $13.05 to $13.55 on a reported basis and $13.50 to $14 on a non-GAAP basis, including Q1 IPR&D charges. The call was then turned over to Dan, who discussed the positive Phase 3 results for tirzepatide in treating obesity and obstructive sleep apnea. The studies, known as SURMOUNT-OSA, included two separate trials with a total of 469 participants. Study 1 evaluated tirzepatide in participants not on PAP therapy, while Study 2 evaluated it in patients already using PAP therapy.

Two studies were conducted to assess the efficacy and safety of tirzepatide, comparing it to a placebo in patients with sleep apnea. In both studies, tirzepatide led to a significant reduction in the Apnea-Hypopnea Index (AHI) and impressive weight loss. The most common adverse events were gastrointestinal related and generally mild-to-moderate in severity. Prior to the study, there were questions about the expected level of weight loss due to the study's focus on sleep apnea and the population being mostly male.

The paragraph discusses updates on various studies and trials in the company's portfolio, including positive results from a Phase 3 study of their once-weekly basal insulin and enrollment completion for several other studies. The results from these trials will be presented at upcoming conferences and submitted to regulatory agencies. Additionally, results from the EMPACT-MI study showed a 10% reduction in risk for heart failure or all-cause mortality with Jardiance, but it did not reach statistical significance.

The company has initiated a Phase 3 program for retatrutide in Type 2 diabetes and a Phase 3 trial for lepodisiran in cardiovascular disease. They are also evaluating eloralintide for obesity and have terminated a Phase 3 trial for Verzenio in prostate cancer. They have initiated Phase 1 trials for two new assets in oncology and expect three more to enter the clinic this year. They will share more details at an investor event in June.

The company will provide an update on their oncology strategy and pipeline opportunities soon. They also announced that the FDA plans to convene a meeting to discuss donanemab for Alzheimer's disease in mid-2024. The company has decided to discontinue investigation of GBA1 for Gaucher disease type 2. They have submitted mirikizumab for approval for Crohn's disease and resubmitted lebrikizumab for atopic dermatitis. Phase 3 studies for lebrikizumab in two new indications will also be initiated.

The company is optimistic about the potential of lebrikizumab as a treatment option for multiple sclerosis and atopic dermatitis. They have also made progress in their pipeline, including top line data from tirzepatide and SURMOUNT-OSA, and approval of the KwikPen delivery device in the EU. The company is continuing to invest in recent and upcoming launches, pipeline development, and manufacturing expansion. They will be taking one question per caller during the Q&A session.

The speaker is responding to a question about the recent guidance raise and explains that the increase is due to the ramping up of capacity and supply in their supply chain. They have multiple sites and partnerships that are either under construction or ramping up, which will allow them to launch products in different regions. The recent approval of a product in Europe has also given them more confidence in their ability to meet their goals.

A caller named Mohit Bansal from Wells Fargo asks about the pricing trend for the company. He specifically mentions Mounjaro and Zepbound and asks about the cadence of price volume for the year. Dave Ricks hands the question over to Patrik Jonsson, who explains that there was a one-time adjustment for Mounjaro in the fourth quarter, but there may be some benefits in the first half of 2024 due to the termination of a saving card. However, there will likely be pricing headwinds in the second half of the year. The next caller, Umer Raffat from Evercore, asks about Part D reimbursement dynamics for tirzepatide and whether it will be considered differently as a weight loss drug or as a drug for specific indications like sleep apnea. Dave Ricks defers the question to Patrik Jonsson.

Patrik Jonsson of CMS is confident that their new data on obstructive sleep apnea and comorbidities will be reimbursed in Medicare Part D. They also expect other comorbidities to be covered, assuming positive results from the HFpEF study and the mobility-mortality outcome study. They believe that obesity treatment will eventually be covered at cost, although it is unlikely to pass in 2024. Seamus Fernandez asks about the potential for tirzepatide in NASH, and Dan Skovronsky confirms that the data will be presented at EASL in June. The data from the Phase 2 trial are expected to be positive and show that tirzepatide can have a significant impact on NASH.

The next steps for tirzepatide involve discussions with the FDA to determine the best path forward. However, retatrutide, which includes the addition of glucagon, could also have a significant impact on the disease based on biomarker data from previous studies. Lilly has a broad portfolio for obesity and metabolic diseases and will continue to push the science to develop the best possible medicines for patients. The strongest drug, Zepbound, currently has a NBRx market share of 57% and it will be interesting to see how upcoming competitors such as CagriSema and AMG 133 will compare in terms of weight loss and blood sugar metrics. Lilly has placed their bets on GIP agonism with tirzepatide, but CagriSema's addition of more agonism on top of GLP-1 also makes sense.

The speaker discusses the advancements made in the company's amylin agonist to Phase 2 and the potential for more progress in the future. They also mention the strong portfolio of assets in Phase 1 and Phase 2 for diabetes and obesity, with two more in Phase 3. They address a question about the accuracy of IQVIA prescription data and the impact of LillyDirect on this data.

The speaker is discussing the company's presentation at ADA last year and their plans to move amylin into Phase 2. They also mention the potential benefits of GIP agonism and the exploration of other mechanisms. The speaker was asked about the potential for Zepbound to be added to CMS coverage, and they mention Teva as the main goal and the potential for it to be added after the heart failure data in 3Q or the CVOT data.

Dave Ricks and Patrik Jonsson discuss the plans for Zepbound, which they expect to be covered by CMS and Medicare at the time of launch, followed by a positive readout and approval. They also mention the possibility of pursuing other indications, such as MMO, assuming everything goes according to plan. Geoff Meacham asks about the rationale for using KwikPen only in international markets, and Dave Ricks explains that they are open to using it in other jurisdictions as well. Kerry Holford asks about the Phase 3 plans for the new Lp(a) product.

The speaker is asked about the publication of Phase 2 data for their drug lepodisiran, as well as the dose and frequency of administration for the Phase 3 study. They are also asked about how their drug differentiates from competitors in Phase 3. The speaker confirms that Phase 2 data has not been published yet, but Phase 1 data was well received. They mention the long durability of action and deep reduction in Lp(a) levels with a single dose of lepodisiran. They also mention that they have not disclosed the dose or frequency yet and highlight potential areas of differentiation such as the depth of clearance, frequency of administration, and the population being studied.

The speaker discusses the company's Phase 3 study and their confidence in the results. They mention the potential for differentiation and testing the Lp(a) hypothesis. The next question is about the SURPASS-CVOT trial and the speaker declines to comment on interim analysis. The trial is designed for non-inferiority and the company hopes for superiority. The speaker expresses confidence in the results, citing additional data from the OSA study.

The speaker expresses confidence in the potential of donanemab and anticipates discussions around its safety and efficacy during the upcoming AdCom. They also mention two unique aspects of the trial, including limited duration dosing and assessing tau at baseline.

The speaker is discussing the potential for TRAILBLAZER 3 and the positive results seen in the early population. They believe the potential for intervention is even stronger in earlier patients. They also mention that they are using the time before potential approval to prepare the healthcare system and address any questions the AdCom may have. The next question is about orforglipron and concerns raised by Novo Nordisk about its manufacturing complexity and scalability. The speaker assures that Lilly is building out its manufacturing capacity and expects to meet global demand after launch in 2026, but there may be supply constraints to consider when modeling the drug's ramp after launch.

The speaker discusses the complexity of their drug orforglipron and the confidence they have in its production and potential success. They also mention the availability of resources for production and the potential launch date in 2025. A question is then asked about their next obesity drug.

In response to a question about the company's portfolio of earlier-stage obesity molecules, CEO Dave Ricks and Chief Scientific Officer Dan Skovronsky discuss the potential for improvement in terms of quality and tolerability of weight loss, frequency of injections, and efficacy in related diseases such as NASH. They express confidence in the strength of their pipeline and the potential for long-term investment in treating abnormal metabolism and related diseases.

Chris asks about the supply and demand dynamic for the company's products, specifically when they might come closer together. Dave and Anat both mention that the demand for their products is strong, and while their manufacturing facilities are working hard to increase supply, it may take some time for supply to catch up with demand. They expect this situation to continue through this year and potentially into next year, but they will continue to invest and ramp up production.

The speaker discusses the potential benefits of orforglipron, including its different presentation and utilization of existing manufacturing infrastructure. They plan to update investors on their progress throughout the year and in the future. Another topic discussed is bimagrumab, which has a different mechanism of weight loss compared to incretins. They hope to see increased muscle mass and a higher ratio of lean to fat mass when combined with incretins. The current study is evaluating bimagrumab as both monotherapy and in combination with semaglutide, and they are looking forward to the results. The next question is about the importance of showing significant dose response and not blunting overall weight loss in the upcoming Phase 2b data for bimagrumab.

Kripa Devarakonda asks about the advancement of PNT2002 in the company's radio pharma pipeline and where it will fit in the market. Dave Ricks calls on Jake Van Naarden to discuss their radioligand efforts, specifically PNT2001, which is a PSMA-directed therapy for prostate cancer. Van Naarden explains that they are excited about bringing radiopharmaceuticals into their portfolio through the acquisition of Point Biopharma and additional work in their Discovery Labs. PNT2001 is designed to have increased tumor uptake and lower salivary gland toxicity, making it potentially more effective than existing agents. The Phase 1 experience is just beginning, but the preclinical package looks promising and differentiated from other PSMA ligands.

The speaker is discussing the potential of a new drug and its upcoming Phase 1 trials. They believe it has the potential to improve outcomes for patients with prostate cancer and could potentially compete with existing treatments. They are also discussing the guidance and how the increase in guidance relates to the 1.5 times sellable doses that will be available for patients. The speaker clarifies that the 1.5 times sellable dose refers to the number of sellable doses, not devices, and that they are confident in their ability to increase capacity for the drug throughout the year.

The speaker states that some events, such as the construction of a site in North Carolina, will affect the company's progress. However, they are confident that they will meet their full year guidance. The conference call has concluded and a replay will be available until June 4.

This summary was generated with AI and may contain some inaccuracies.