Eli Lilly and Company, Q2 2024 Earnings Call, Aug 08, 2024 - NYSE:LLY

NYSE:LLY

Here is a detailed list of what Joe Fletcher, the Vice President of Investor Relations at Eli Lilly and Company, has said during the earnings call:

1. Introduction and Welcome:

   • Thanked attendees for joining the Q2 2024 Earnings Call.
   • Introduced himself and the executives present on the call.
   • Mentioned the anticipation of making projections and forward-looking statements based on current expectations, noting that actual results could differ materially due to various factors.
   • Highlighted that the information provided about products and pipeline is for the investment community and not intended for promotional purposes.

2. Transition to Prepared Remarks:

   • Handed over the call to David Ricks, the Chairman and CEO, to discuss the company's performance and outlook.

3. Q&A Session:

   • Moderated the Q&A session, providing instructions for callers to ask questions.
   • Responded to various analysts' questions by directing them to the appropriate executives for detailed answers.

4. Specific Questions Addressed:

   • When asked about average selling price (ASP) movements in the market, he directed the question to Gordon Brooks or Patrik Jonsson for insights.
   • For questions regarding manufacturing and supply, he facilitated the discussion by inviting David Ricks to provide clarity.
   • Addressed inquiries about the competitive landscape in the obesity market by directing the question to Dan Skovronsky and Patrik Jonsson for their insights on barriers to entry and market positioning.
   • Responded to questions about operating leverage and financial mechanics by handing over to Gordon Brooks for detailed commentary.
   • For questions about the international rollout of Mounjaro, he asked Ilya Yuffa to provide insights on the reimbursement landscape and market dynamics.
   • Concluded the Q&A session by thanking participants and encouraging them to follow up with the Investor Relations team for any unanswered questions.

5. Closing Remarks:

   • Thanked everyone for their participation in the earnings call.
   • Encouraged attendees to reach out to the Investor Relations team for any further inquiries.

This summary captures Joe Fletcher's contributions during the earnings call, focusing on his role in facilitating the discussion and providing context for the company's performance and strategic direction.

David A. Ricks, the Chairman, CEO, and President of Eli Lilly and Company, made several key statements during the Q2 2024 Earnings Call. Here’s a detailed summary of his remarks:

1. Growth Trajectory: Ricks highlighted that it is an exciting time for Lilly, noting that the company's growth trajectory accelerated in the second quarter of 2024. He emphasized the company's investments in innovative medicines and manufacturing expansion, which are helping to bring Lilly's medicines to more people globally.

2. Financial Performance: He reported that revenue grew by 36% in Q2, with new products contributing nearly $3.5 billion compared to the same period last year. He mentioned strong U.S. demand for Mounjaro and Zepbound, indicating confidence in the company's outlook despite previous volatility in weekly prescription volumes.

3. Pipeline Milestones: Ricks discussed several key pipeline milestones, including:

   • The approval of Kisunla (donanemab) in the U.S. for Alzheimer's disease.
   • The approval of Jaypirca in Japan for mantle cell lymphoma.
   • The submission of tirzepatide for obstructive sleep apnea and positive results from the SUMMIT Phase III trial for heart failure with preserved ejection fraction.

4. Obesity Strategy: He outlined Lilly's comprehensive strategy to address obesity, mentioning that the company is pursuing opportunities across various mechanisms, indications, and dosage forms. He noted that Lilly has 11 new molecules in the clinic for obesity and is investing in late-stage Phase III programs.

5. Manufacturing Expansion: Ricks emphasized the company's ambitious manufacturing expansion agenda, including a $5.3 billion investment in the Lebanon, Indiana site, which he described as the largest single investment in synthetic medicine active pharmaceutical ingredient manufacturing in U.S. history. He mentioned that Lilly has committed over $18 billion since 2020 to build, upgrade, or acquire facilities in the U.S. and Europe.

6. Leadership Changes: He acknowledged the resignation of Anat Ashkenazi as CFO and the appointment of Gordon Brooks as Interim CFO. He also mentioned the retirement of Alonzo Weems and welcomed Melissa Seymour as the new Executive Vice President of Global Quality.

7. Closing Remarks: In his closing remarks, Ricks summarized the exceptional revenue growth driven by Mounjaro, Zepbound, and Verzenio. He expressed confidence in the ramp-up of production and the significant advances in the pipeline, reiterating Lilly's commitment to investing in product launches and manufacturing expansion.

8. Future Outlook: Ricks concluded by expressing optimism about Lilly's future, stating that the company has a better opportunity than ever to impact human health on a global scale.

These points encapsulate Ricks' contributions during the earnings call, reflecting both the company's current performance and future strategies.

Gordon Brooks, the Interim CFO of Eli Lilly, provided several key insights during the earnings call. Here’s a detailed summary of his remarks:

1. Q2 Financial Performance:

   • He summarized the financial performance for Q2 2024, highlighting a 36% revenue growth, primarily driven by Mounjaro, Zepbound, and Verzenio. Excluding revenue from the sale of rights to Baqsimi in Q2 of the previous year, revenue growth was 46%.
   • Gross margin as a percentage of revenue increased from 79.8% in Q2 2023 to 82% in Q2 2024, benefiting from a favorable product mix and higher realized prices, although this was partially offset by higher production costs.

2. Operating Income and Expenses:

   • Operating income increased by 90% in Q2, driven by higher revenue from new products, despite operating expense growth.
   • R&D expenses rose by 15%, reflecting continued investment in the portfolio and personnel.
   • Marketing, selling, and administrative expenses increased by 10%, primarily due to promotional efforts for ongoing and future launches.

3. Tax Rate:

   • The effective tax rate on a non-GAAP basis was 16.5% in Q2 2024, compared to 16.1% in Q2 2023. The increase was attributed to a mix of earnings in higher tax jurisdictions.

4. Earnings Per Share (EPS):

   • He reported an EPS of $3.92 in Q2, an 86% increase compared to the prior year. This included a negative impact of $0.14 from acquired IPR&D charges.

5. Revenue Growth Dynamics:

   • He discussed the dynamics of revenue growth, noting that U.S. revenue increased by 42% in Q2, with volume growth of 27% driven by Zepbound, Mounjaro, and Verzenio. Realized prices increased by 15%, largely due to Mounjaro access and savings card dynamics.
   • He mentioned that wholesaler back orders for Mounjaro and Zepbound had been reduced significantly, and all doses of these products were now listed as available on the FDA shortage website.

6. Future Guidance:

   • Gordon provided an update on the company’s financial guidance, raising the full-year revenue outlook by $3 billion to a range of $45.4 billion to $46.6 billion. This increase was attributed to strong performance across non-incretin medicines as well as Mounjaro and Zepbound.
   • He indicated that the company expects production of sellable doses of incretin medicines in the second half of 2024 to be at least 1.5 times the sellable doses in the second half of 2023.

7. Operating Margin Expectations:

   • He discussed expectations for operating margins, indicating that the ratio of gross margin less operating expenses divided by revenue is expected to be in the range of 36% to 38% on a reported basis and 37% to 39% on a non-GAAP basis.

8. Other Income and Expense:

   • He provided guidance for other income and expense, expecting between $525 million and $425 million of expense on a reported basis, and between $400 million and $300 million on a non-GAAP basis.

9. Closing Remarks:

   • Gordon concluded his remarks by reiterating the strong financial performance and the company’s commitment to investing in product launches and the advancement of its pipeline.

Overall, Gordon Brooks provided a comprehensive overview of Eli Lilly's financial performance, operational dynamics, and future outlook during the earnings call.

Here is a detailed summary of the remarks made by Daniel M. Skovronsky, the EVP, Chief Scientific Officer and President of Lilly Research Laboratories & Lilly Immunology, during the Eli Lilly Q2 2024 Earnings Call:

1. Kisunla FDA Approval:

   • Expressed excitement about the FDA approval of Kisunla (donanemab) for the treatment of Alzheimer's disease.
   • Highlighted the positive discussion during the June Advisory Committee meeting regarding the safety and efficacy data.
   • Noted that nearly half of the study participants completed their treatment course within 12 months, suggesting that limited duration therapy could lower patient costs and reduce the number of required infusions.
   • Mentioned that Kisunla is broadly covered for Medicare patients through approved CED registries and that regulatory reviews are ongoing in several countries.

2. Tirzepatide Heart Failure Phase III Readout:

   • Discussed the positive results from the SUMMIT Phase III trial evaluating tirzepatide for heart failure with preserved ejection fraction (HFpEF) and obesity.
   • Reported that tirzepatide reduced the risk of worsening heart failure by 38% compared to placebo and significantly improved heart failure symptoms and physical limitations.
   • Noted that all key secondary endpoints were met, including a mean body weight reduction of 15.7% for tirzepatide compared to 2.2% for placebo.
   • Indicated that the safety profile of tirzepatide in this trial was consistent with previous studies.

3. Updates on Pipeline Opportunities:

   • Provided updates on various pipeline opportunities, particularly in cardiometabolic health, which is the new name for the internal business formerly known as Lilly diabetes and obesity.
   • Mentioned the publication of detailed results for tirzepatide in the treatment of moderate to severe obstructive sleep apnea and obesity, noting that all primary and key secondary endpoints were achieved.
   • Highlighted the submission of tirzepatide for regulatory approval in the U.S. and EU for obstructive sleep apnea and obesity, with the FDA granting breakthrough therapy designation.

4. MASH (Metabolic Dysfunction Associated Steatotic Liver Disease):

   • Discussed the Phase II trial results for tirzepatide in patients with MASH, indicating that over half of the patients showed improvement in fibrosis at 52 weeks.
   • Mentioned ongoing engagement with regulatory authorities regarding a potential Phase III registration strategy for MASH.

5. Efsitora Alfa Trials:

   • Announced top-line data from two Phase III trials for efsitora alfa, a once-weekly insulin for type 2 diabetes, both of which met their primary endpoints.

6. Diversity of Incretin Molecules:

   • Emphasized the importance of having multiple incretin molecules in clinical development, which offers potential options for patients across various mechanisms, indications, dosages, and treatment schedules.

7. Oncology Updates:

   • Mentioned the approval of Jaypirca in Japan for mantle cell lymphoma and the initiation of Phase I trials for new antibody-drug conjugates (ADCs).

8. Immunology and Neuroscience Updates:

   • Discussed the submission of mirikizumab for Crohn's disease in Japan and the termination of the GITR antagonist development due to insufficient efficacy.
   • Provided an update on the anti-tau small molecule OGA inhibitor, which failed to meet primary endpoints in a Phase II study for Alzheimer's disease.

9. Acquisition of Morphic:

   • Announced the acquisition of Morphic, a biopharma company developing oral integrin therapies for chronic diseases, and mentioned plans to reflect the oral alpha-4-beta-7 integrin inhibitor in Phase II for ulcerative colitis and Crohn's disease.

10. Closing Remarks:

    • Concluded by reiterating the progress made in the quarter and the commitment to advancing innovative therapies for patients.

This summary encapsulates the key points made by Daniel M. Skovronsky during the earnings call, focusing on product approvals, pipeline developments, and strategic initiatives within Eli Lilly.

Patrik Jonsson highlighted the following:

• Commercial Success of Mounjaro and Zepbound: Mounjaro and Zepbound are driving significant revenue growth, with Mounjaro sales reaching $3.1 billion globally in Q2, and Zepbound sales exceeding $1.2 billion in Q2.

• Formulary Coverage for Zepbound: As of July 1, Zepbound has approximately 86% access in the commercial segment in the U.S., and over 50% of employers have opted in to anti-obesity medicine coverage.

• Launch of KwikPen: The KwikPen presentation of Mounjaro has been launched in the U.K., Germany, and the UAE, with plans to launch in additional markets throughout 2024.

• Supply and Demand Balance: Despite supply constraints, the company is making progress in ramping up production, and the FDA shortage list now shows all doses of Mounjaro and Zepbound as available.

• Employer Opt-In Efforts: Lilly is focusing on educating employers about the health and productivity benefits of obesity drugs, including reduced absenteeism and increased productivity, to drive greater inclusion of these drugs in employee benefits.

• Patient Persistence: Early feedback indicates that patients are experiencing significant benefits from Zepbound, leading to high persistence rates. Lilly is also improving consumer platforms and digital channels to enhance patient experience and adherence.