Eli Lilly and Company Q1 2024 Earnings Call Transcript

Thanks, Chris. I'll hand over to Anat to talk about the guidance raise.

Thanks for the question, Chris. And as we've mentioned earlier in the year when we issued guidance, we said that we expect capacity and supply to ramp towards the second-half of the year, and that's what we're seeing. Now, as a reminder, we do have quite a large number of nodes across our supply chain that have to come online or ramp capacity. We are -- if you look at everything work -- we have under-construction or ramping-up, we have six sites right now between the two sites in North Carolina, a site in Ireland, two sites in Indiana, a site in Germany and then a seventh one that we just purchased. They're all either ramping-up or under-construction.

And there are multiple nodes across that supply chain that have to become operational, which requires approval, etc. for three products, depend on which product runs on which line, that are planned throughout the year. Now that we're four months into the year, we have greater visibility into that -- into these nodes of capacity and feel more confident. Just as one example, the approval of the Kwikpen in Europe that just came in slightly ahead of our expectation, gives us additional confidence in our ability to launch Kwikpen for patients in Europe.

So, it is across our sites globally as well as ramping-up capacity with partners, our CDMOs as well as in existing sites where we're making investments to expand where we can or ramp-up capacity. So, it's across our supply chain.

Thanks. Next caller, Paul?

Thanks, Mohit. You didn't say it, but I assume you're talking about Mounjaro and Zepbound. So, I'll hand over to Patrik to make some commentary on the price.

Well, thank you very much, Mohit. When you look at the pricing of Mounjaro, I think it's important to take into account that in the Q4 earnings, we announced a one-time adjustment for Mounjaro in Q4 that was quite significant. So, it was a one-time adjustment in the base of Q4. When we look forward for the first-half of 2024, it's important to have in mind that we also terminated the $25 saving card 6/30/2023, but patients that were on are grandfathered until 6/30/2024. So, that would probably be some benefits during the first-half of 2024 for Mounjaro.

But from the second-half of this year, we should expect to see typical pricing headwinds for Mounjaro as well.

Thank you. Next question, Paul?

Thanks, Umer. I'll go to Patrik for that question.

Thank you very much, Umer. I think with the announcement made by the CMS early-April to reimburse comorbidities for obesity based upon the SELECT trial, we're also confident that with the new data that we presented just weeks ago in terms of obstructive sleep apnea that, that's going to be reimbursed in Medicare Part D. And we expect similarly for other comorbidities and the read-out of HFpEF, assuming that's positive and approved, and later on with the MOBILITY mortality outcome study.

Still, our true north is really to get the TROA, the Treat and Reduce Obesity Act, passed. And we strongly believe that's not a matter of if, but when. We don't see it likely to pass in 2024, but that is still a small likelihood that, that's going to happen.

Thanks, Patrik. Next question, Paul?

Dan?

Yeah. Thanks, Seamus. I'll start with the last part there. Yeah, the abstract was accepted and will be presented at EASL in early June. So, that will be an opportunity to see the full NASH package from that Phase 2 trial. Like we said on the last call, really exciting data. We shared some of the top-line. I think tirzepatide can have a profound effect on this disease. It's a Phase 2 trial. Next steps here are to discuss with the FDA what the best path forward could be for tirzepatide.

You're pointing out, though, that we have another choice in retatrutide, which, based on biomarker data from earlier studies, could also have a profound effect on this disease, that molecule has the addition of glucagon, which is likely to have additional benefits in the liver. So, important opportunities ahead and good to have options as we go into these discussions with regulators.

I think for MASH, like other obesity related or metabolic related diseases, Lilly has a pretty broad portfolio and we'll just continue to push the science to make the best possible medicines for patients.

Thanks, Dan. Paul, next question?

Thanks, Tim. Okay. I'll maybe hand to Dan for some comments.

Yeah. Sure, Tim. It's probably more your job than ours to speculate our competitor read-outs, but I'll take a stab at it since you asked. I think, on AMG 133, we've just seen really a small amount of data. So, probably anything is possible, and -- but like you will be interested to see their results. Of course, there's arguments that can be heard about GIP agonism versus antagonism. We've placed our bets and we like the data we got with the GIP agonism.

On CagriSema, of course, adding more agonism on different pathways on top of GLP-1 is a good idea. That's what we have with tirzepatide as a dual agonist. So, CagriSema makes sense, and you'll note that we've advanced our amylin agonist into Phase 2. Tirzepatide already is a dual agonist. Retatrutide is already a triple agonist. There's probably more we could do here at Lilly. I think across our portfolio, in Phase 1 and Phase 2, we have nine assets that are marked for diabetes or obesity, many of them could lead to additive weight loss on top of established mechanisms, plus two more in Phase 3, of course. So, we have a strong portfolio here. I think tirzepatide still has unsurpassed efficacy at weight loss, but we're preparing for our next-generation assets as well.

Thanks, again, Dan. Paul, next question?

Thanks for the question, Terence. I'll hand to Patrik for commentary on IQVIA and LillyDirect.

Well, thanks very much, Terence. When it comes to LillyDirect, I think we're very pleased with the start. And when we look at the utilization by consumers, it's gaining traction by weeks here. If we look at the TRx data of Q1, particularly for Zepbound, it's relatively low volume that goes through LillyDirect, slightly higher in terms of NBRx. It's our understanding that what goes through LillyDirect is not by default captured by IQVIA. But IQVIA has a methodology in-place to estimate what goes through LillyDirect as well.

Thank you, Patrik. Paul, next question?

Thank you, Akash. I'll hand to Dan for commentary on our amylin.

Yeah. There are a lot of good questions in there. Thanks for following science so closely. So, on the GIP, the long-acting molecule, I think primarily in that experiment, we were excited to show the benefits of isolated GIP agonism just to answer some mechanism of action questions around tirzepatide.

But as you point out, there's potential for that molecule for the other indications or as a monotherapy or combination with other mechanisms. But of course, since tirzepatide already includes GIP agonism, we're also excited to explore other mechanisms. So, that's where elora, which is one of nine different mechanisms, as I said a moment ago, that we're exploring the long-acting amylin move forward to Phase 2. That has potential perhaps as a combination therapy, perhaps as a maintenance therapy, perhaps as a monotherapy, there's a lot to explore. It's still very early as it is for all of our mechanisms. So, we'll keep investing. And as we have data to share, we'll do that.

Thanks, Dan. Paul, next question?

Thanks, Trung. I'll let Patrik respond.

Thanks, Trung. No, based up on what CMS stated early-April, we actually expect to get obstructive sleep apnea for Zepbound covered by CMS and Medicare at the time of launch. And the next one then would be HFpEF assuming a positive readout and approval. And the third one would be the MMO indication. That's the sequence of our plans, assuming everything goes according to plan and we get the approval for both.

Thanks, Patrik. Paul, next question?

Thanks, Geoff, for the question. Paul -- Dave, you want to weigh in?

Yeah. Sure. And Ilya can add to this. As we think -- we've said on several calls now, our goal is to pursue all of the above, basically, as it relates to supply options, recognizing the tremendous demand and unmet need and the constraints that exist in scaling the supply chain. So, Kwikpen uses existing assets. So, there was less time lag. We pursued this first in the U.K. and now in Europe as a way to meet the needs of those patients. But we haven't ruled it out in other jurisdictions. And so, we'll continue to look at every option we can to meet the needs of patients with obesity and overweight as well as with diabetes.

Thanks, Dave. Paul, next question?

Thanks, Kerry. It's a good multi-part question, but on LP(a), happy to talk about lepodisiran. So, Dan, do you want to comment on this?

Yeah. Thanks, Kerry, for the good questions here. You're right, we haven't yet published the Phase 2 data. And I think we just recently were able to publish a Phase 1 data, and that was really exciting and well-received. I think one of the things that people noted in our Phase 1 data was a very long durability of action and the very deep reduction in LP(a) levels, following a single-dose of lepodisiran.

We now have, of course, a Phase 2 data in-hand and use that to design and begin the Phase 3 trial. I think we haven't quite disclosed dose or frequency yet, but I'm sure that will happen in time.

You asked about differentiation. I think there's probably a couple of different potentials for differentiation here versus a shorter-acting ASO and a siRNA that are both in Phase 3 studies. Maybe first is the depth of clearance of LP(a), we don't know-how much you have to reduce LP(a) to lead to benefits in cardiovascular outcomes and whether there's a threshold effect or a floor to this. So, the depth of clearance is one. The second, as you asked about, could be frequency of administration or durability of action, those two being closely linked.

And the third, of course, is the population that's being studied, and I noted we're studying secondary as well as primary prevention here. So, I think we have a good package with multiple opportunities for differentiation and eager to test the LP(a) hypothesis here in this Phase 3 study.

Thanks for the question, Kerry. Paul, next question?

Thanks, Steve. Dan, do you want to take the question on SURPASS-CVOT?

Sure. Thanks, Steve. As you know, we do our best not to comment on interim analyses, although many of our different trials can incorporate interim analyses. But when we do talk about the risks, unintentional, unblinding of results, and for that reason, we prefer not to do that.

You're right that the primary analysis of the study and the design is around non-inferiority versus what we are ready to know to be a very good drug that reduces cardiovascular risk and that's Trulicity. So, it's designed as a non-inferiority trial. Of course, when the final data come, we would be delighted to see even superiority.

You asked about our confidence. Confidence continues to increase for this readout. In fact, as disclosed in the prepared remarks today, we got additional data here even from the OSA study that should make us feel more confident, not just the benefit of sleep apnea, which itself could lead to cardiovascular benefits, but actually the weight loss. And I think there are some concerns about weight loss in different populations in different trials, and males, females, etc. So, some of that was discharged here. So, remain excited and look forward to getting that data when studies complete.

Thanks, Dan. Paul, next question?

Thanks, Evan. Anne, do you want to discuss the dona AdCom?

Yeah. Thanks so much for the question, and we are incredibly confident in donanemab's potential and the fact that offers very meaningful benefits to people with early symptomatic Alzheimer's disease, and just the overall approvability of the package. We do look forward to seeing those questions. We haven't received those yet. I think that what we'll anticipate really is discussions around the safety and efficacy of donanemab.

And those -- the safety and efficacy profile remain very consistent with what we published and presented. So, nothing new there. We do expect there's a couple of unique aspects to our trial that we anticipate they'll want to discuss. One is around limited duration dosing. We think this is an incredibly important feature of donanemab, the chance to stop dosing when you've cleared the plaques, and donanemab clears them robustly and rapidly. So, we think that allows for this limited duration dosing approach. So, we really do look forward to getting into that data and having the advisors see that and respond to it.

Another unique aspect is assessing tau at baseline. This is important for the field, so that we understand the prognostic factor of tau, and that was able to be firmed. But what we saw in the trial was all patients benefited regardless of tau level, with those early in the disease doing even better. It's one of the reasons that we remain so enthusiastic about TRAILBLAZER-3. And while Dan did mention it in his remarks, I think, we remain and get even more enthusiastic about the opportunity to intervene earlier based on what we saw in that early population, the people with low tau and those that had no tau with such strong biomarker results.

I think you probably remember the data that patients in the earliest part of our study had a 60% slowing and we believe that could be even stronger as you get into the earlier patients that are pre-clinical.

And maybe just one remark. In the meantime, though, this is not time lost, we'll continue to make sure the healthcare system is ready. We're going to make sure that we launch into an even stronger market with potential approval. So, we're making the most of this time and look forward to the outcome, as Dan said, in mid-'24, and answering any questions that they have.

Thank you, Anne. Paul, next question?

Thanks, Dave. I'll hand over to our Dave Ricks here.

Okay. Great, Dave. Great to hear from you. I mean, first of all, it is true that our orforglipron is a complicated large -- small molecule, a large small molecule, if you were, and there are many steps in the process. You can read about them in our patent filings, I think. But Lilly, maybe unlike other companies, we made small molecules for a long time. We're capable of doing it. We understand how to put them together, and we've got a defined process to do it for orforglipron.

So, the API production, well, a long process and maybe complicated relative to other small molecules is something we're super confident in and have our arms around. The finish process is really the big advance over using injectables, because, here, we're just tablet stamping or tablet -- capsule making, which are dry processes, we understand extremely well.

I think the big gain here will be the fact that both for synthetic chemistry and capsule making and tablet making, there is already capacity on planet Earth that is significant. And so, unlike the parenteral side where we've been talking about injectables and new capacity needs to be built, in which, we're doing aggressively, as Anat commented on earlier, here, there's a lot of partners we can access as well as our own substantial network or dry product, fill finish and API production. So, pretty confident here.

Now, will we stick the landing on exact doses and quantities in every instance? We're not guaranteeing that, but I think the picture will be quite a bit different should orforglipron prove to be safe and effective in the Phase 3 studies. Again, that's in 2025. So, we can expect launch maybe a year after that, and that's an important event in the time course of the incretin class.

Thanks, Dave. And thanks Dave Risinger for the question. Next question, Paul?

Thanks. Dan, do you want to comment on the earlier phase obesity?

Yeah. Thanks, Louise. We're excited about the portfolio of earlier-stage obesity molecules. I think there's a number of opportunities for improvement over even an excellent drug like tirzepatide. We think about the quality of weight loss as one aspect. So, for example, even on tirzepatide, we see the ratio of lean to fat mass improve as patients lose weight on these drugs. Could we make it improve even faster with the muscle stimulating agents like bimagrumab? Maybe, that's under investigation.

Tirzepatide is very well tolerated, but some people stop taking it because of GI side effects. Could we have drugs that have fewer side effects? But maybe that could be possible. Tirzepatide is given as a once a weekly injection, and most patients find that to be acceptable, but probably with less frequent injections that could lower the burden on manufacturing and make it easier to use for patients. So, that's another avenue of exploration. There are some patients who don't achieve their desired levels of weight loss even on a powerful drug like tirzepatide, and so that's another avenue.

Finally, across different indications, and I spoke earlier of NASH, that are related to metabolic disease. There could be different activities that proved more or less beneficial for these other related diseases. So, that's another avenue of differentiation. I think we're just at the beginning of probably what will be seen as a multi-decade investments in treating abnormal metabolism and all diseases that come with that. And I'm really proud and pleased that Lilly has what must be the strongest pipeline in this area in the industry.

Thank you, Dan. Paul, next question?

Hey, thanks, Chris. Paul, the next question?

Yeah, there you are. Go ahead, Chris.

Thanks, Chris. Anat?

Yeah. Let me start on this. So, I would say that, as I said in my prepared remarks, we expect that the supply-demand situation will remain quite tight in the near-term as well as the mid-term. And just to clarify, it's not that we have a production issue or manufacturing facilities are progressing incredibly well, and I'm incredibly proud of the work done by our M&Q colleagues around the world. Clearly, we have sites working 24/7. We're doing construction overnight. We're making the right investments to ensure we're progressing rapidly, as you've seen evidence by the results as well as the raise we did for the year.

But the demand is strong, which shouldn't be a surprise given the health benefits that these products provide to patients, highly efficacious and safe medicines. And I expect that this will continue through the year, even with the significant ramp that we have and we'll add more supply across different presentations, both with the auto-injector as well as the Kwikpen. But even with that, I expect that the demand will be -- will outpace supply through this year, potentially next year, obviously, we'll see. We'll continue to invest and ramp as we go into next year, but it could be quite some time.

We talked earlier about orforglipron, should we have positive Phase 3 readout that provides another relief valve in terms of just offering a different presentation, as Dave mentioned, which utilizes a different set of infrastructure within our manufacturing organization, available capacity globally. So, it will be in a step-wise fashion. We'll continue to update investors as we progress through the year and coming years.

Thanks, Anat. Paul, next question?

Thanks, Carter, for the question. Dan, do you want to comment on the bimagrumab?

Yeah. Thanks, Carter. It's a good question. Bimagrumab is a very different mechanism of weight loss versus incretins, but one that we think could be important in combination with incretins. So, bimagrumab, we think, will likely have important effects on adipose tissue as well as muscle mass. And so, our hope is to see increased muscle mass and increased ratio, I should say, of lean to fat mass by combining bimagrumab with incretins.

In this present study, it's being evaluated both as monotherapy and combination with semaglutide at different doses. So, we'll see if weight loss effects on fat tissue stack, and we'll see if effects on lean body mass that we're seeing in previous bimagrumab monotherapy studies work in combination with incretin. Looking forward to seeing that data.

Thanks Dan. Paul, next question?

Thanks, Kripa, for the question. Jake, calling you to maybe opine a little bit on our radioligand efforts, PNT2001 in particular?

Yeah, happy to. Thanks for the question. We're really excited about bringing radiopharmaceuticals into the portfolio by way of the acquisition of POINT Biopharma, and we are supplementing that acquisition with additional work through our discovery labs and the ability to make these medicines ourselves. So, I expect we'll have more to talk about in terms of additional medicines over the course of the next couple of years in addition to PNT2001.

But specific to that question, 2001 is a PSMA-directed therapy for prostate cancer conjugated to actinium, the alpha emitter. And I think while the actinium holds a lot of promise over lutetium, particularly in the context of creating double-stranded DNA breaks versus single stranded and the ability to perhaps drive more efficacy for patients with prostate cancer.

I think one of the limitations of the existing agents is that they probably cause too much salivary gland toxicity to be real durable products. And so, the POINT team designed a novel PSMA-directed ligand with increased tumor uptake relative to the salivary gland in order to drive more therapeutic index using actinium as the payload.

So, we're just getting started with the Phase 1 experience right now. So, I don't have a lot to say about what we're seeing just yet. But the preclinical package looked really interesting and differentiated from the other PSMA ligands that exist out there. So, we're looking forward to putting it through its Phase 1 paces, and we'll see what we have. Depending on the clinical profile, I think there's the potential to improve outcomes in patients that have already seen a lutetium based agent, maybe go ahead of that and compete with the lutetium based agents or perhaps even go even earlier in therapy as PSMA expression really exists in the continuum of prostate cancer care. So, more to come on that as we define the clinical profile in the Phase 1.

Thanks, Jake. Paul, I think we've got time for maybe one more question. We're right at 11:00. So, maybe a final question in the queue.

Okay. James, maybe I'll give to Anat to talk about the guidance and how the guidance raised relates to the 1.5, [Speech Overlap] dose comment.

Yeah. So, let's start with the 1.5 dose -- saleable dose comment that I've made on the guidance call in February. So, that reference is not a number of devices, but number of saleable doses. And as we ramp up capacity for Kwikpen, recall that unlike the single-use vial or the auto-injector, that Kwikpen is a multi-dose device that has multiple dose available for patients. That comment referred to the second half of this year versus the second half of last year. So, we're expecting that total saleable doses this year in the second half will be at least 1.5 times where we were second half of last year. That remains unchanged.

But the level of confidence we have in our ability to progress on each node of our capacity that's coming online or will get approved, etc., has just increased. There are multiple of these throughout the year. Multiple of these have occurred. Some will occur, as I gave the Kwikpen as one example. Think about a construction of a site, for example, Concord in North Carolina, which we said will become operational by end of the year, and we'll start seeing products next year. That construction has concluded. Lines are installed, and we need to run qualifications, get approval, etc. There are multiple nodes of these across our own manufacturing sites as well as external and that they all need to come online to get to where we need in terms of the full year guidance.

But our confidence, as the year progresses, and as the year has progressed, our confidence in that has increased, but it remains the -- at least 1.5.

Thanks, Anat. Great. Well, thanks for your time today, everyone, and we appreciate you participating in today's earnings call and your interest in our Company. Please follow-up with the IR team if you have any additional questions that we didn't address today, and have a great day. Thanks.