Q3 2021 Eli Lilly and Co Earnings Call
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Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Quarter 3 2021 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. Should you require assistance during the call, please press star then zero, and an operator will assist you offline.
Ladies and gentlemen, thank you for standing by and welcome to the Lilly quarter. Three 2021 earnings call. At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will be given at that time should you require assistance during the call. Please press Star then zero and an operator will assist you offline as a reminder, today's conference is being recorded I would now like to turn the conference over to your host Vice President of Investor Relations Kevin.
Operator: As a reminder, today's conference is being recorded. I would now like to turn the conference over to your host, Vice President of Investor Relations, Kevin Hearns. Please go ahead. Good morning.
Please go ahead.
Good morning, Thank you for joining us for Eli Lilly and company's Q3, 2021 earnings call, Kevin Hern VP of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's, Chairman and CEO and not asking Aussie Chief Financial Officer, Dr. Danskin, Wronski, Chief scientific and medical Officer, Anne White President.
Geoff Meacham: Thank you for joining us for Eli Lilly and Company's Q3 2021 earnings call. I'm Kevin Hearn, VP of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chairman and CEO, Anat Ashkenazi, Chief Financial Officer, Dr. Dan Skovronsky, Chief Scientific and Medical Officer, Anne White, President of Lilly Neuroscience, Jake Van Naarden, CEO of Loxo Oncology at Lilly and President of Lilly Oncology, Patrik Jonsson, President of Lilly Immunology and Lilly USA and Mike Mason, President of Lilly Diabetes.
Lilly neuroscience.
Jake Van Norden, CEO of <unk> oncology at Lilly and President of Lilly oncology Patrik.
Patrik Jonsson, President of Lilly Immunology, and Lilly USA, and Mike Mason President of Lilly diabetes.
Geoff Meacham: We're also joined by Lauren Zierke, Kent Ueha, and Sarah Smith of the Investor Relations Team. During this conference call, we anticipate making projections and forward-looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on slide three. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Forms 10-K and subsequent Forms 10-Q and 8-K filed with the Securities and Exchange Commission. The information we provide about our products and pipeline is for the benefit of the investment community.
We're also joined by Lauren's Erkki tend to weigh Huh and Sarah Smith of the Investor Relations team.
During this conference call, we anticipate making projections and forward looking statements based on our current expectations. Our actual results could differ materially due to a number of factors, including those listed on slide three.
Additional information concerning factors that could cause actual results to differ materially is contained in our latest forms 10-K, and subsequent forms 10-Q, and 8-K filed with the Securities and Exchange Commission.
The information, we provide about our products and pipeline is for the benefit of the investment community. It is not intended to be promotional and is not sufficient for prescribing decisions.
Geoff Meacham: This presentation is not intended to be promotional and is not sufficient for persuasion.
Geoff Meacham: are not sufficient for prescribing decisions. As we transition to our prepared remarks, a reminder that our commentary will focus on non-GAAP financial measures. Now, I'll turn the call over to Dave for a summary of our third quarter results. Thanks, Kevin.
As we transition to our prepared remarks, a reminder, that our commentary will focus on non-GAAP financial measures now I'll turn the call over to Dave for a summary of our third quarter results. Thanks, Kevin Once again Lilly had a very strong quarter growing our newest medicines around the world and continuing to advance significant potential new medicines in the law.
Dave Ricks: Once again, Lilly had a very strong quarter, growing our newest medicines around the world and continuing to advance significant potential new medicines in late stage development, while also building long-term opportunities through early stage investments in technology and progress in early stage programs. Q3 2021 was also a period where the resilience of our company, our people, and collaborators was tested by the pandemic, and again, they rose to the challenge.
Stage development, while also building long term opportunities through early stage investments in technology and progress in early stage programs.
Q3, 2021 was also a period, where the resilience of our company our people and collaborators were tested by the pandemic.
And again, they rose to the challenge on a personally recognize and thank my teammates for delivering such a strong overall performance innovating to maintain pipeline velocity velocity running our plants to meet the rapidly growing demand of medicines and continuing to serve our customers whether it be in person or online.
Dave Ricks: I want to personally recognize and thank my Lilly teammates for delivering such a strong overall performance, innovating to maintain pipeline velocity, running our plants to meet the rapidly growing demand for medicines, and continuing to serve our customers, whether it be in person or online. Turning to our strategic deliverables on slide 4, Q3 revenue grew 18% compared to Q3 2020, or 17% in constant currency. This performance was driven entirely by volume. Volume growth was 17%.
Turning to our strategic deliverables on slide four Q3 revenue grew 18% compared to Q3, 2021 'twenty 'twenty or 17% in constant currency. This performance.
This was driven entirely by volume.
Volume growth was 17 percentage points when excluding COVID-19 therapies, which includes revenue from COVID-19 antibodies and sales of ILUVIEN for the treatment of COVID-19 revenue grew an estimated 11% for the quarter and year to date.
Dave Ricks: When excluding COVID-19 therapies, which includes revenue from COVID-19 antibodies and sales of Illumia for the treatment of COVID-19, revenue grew an estimated 11% for the quarter and year to date. However, revenue attributable to our newer medicines grew over 35% and now represents nearly 60% of our core business this quarter, an important indicator for our long-term growth potential. Our non-GAAP gross margin was 79% in Q3, or 79.3%, excluding the impact of foreign exchange on international inventory sold. Excluding this FX impact, our gross margin decreased by approximately 60 basis points compared to last year.
Revenue attributable to our newer medicines grew over 35% and now represents nearly 60% of our core business this quarter.
An important indicator for our long term growth potential.
Our non-GAAP gross margin was 79% in Q3 were 79, 3% excluding for the impact of foreign exchange on international inventory sold.
Excluding this FX impact our gross margin decreased by approximately 60 basis points compared to last year.
Dave Ricks: Our non-GAAP operating margin was 30.5 percent, representing an improvement of over 400 basis points compared to Q3 of last year and over 100 basis points of sequential improvement from Q2. We had a number of significant pipeline milestones since our last earnings call in August, including FDA approvals for Rosenio in certain people with high-risk early breast cancer and for Jardians in collaboration with Beringer-Engelheim for heart failure with reduced ejection fraction, regulatory submissions for terzibatide for type 2 diabetes in the U.S., to which we applied a priority review voucher, as well as the EU, and Jardians We initiated a rolling submission in the U.S. for Denonimab in early Alzheimer's, and we have positive phase 3 readouts for lebrokismab and atopic dermatitis.
Our non-GAAP operating margin was 35%.
Representing an improvement of over 400 basis points compared to Q3 of last year and over 100 basis points of sequential improvement from Q2 of this year.
We had a number of significant pipeline milestones since our last earnings call in August, including the FDA approvals for <unk> in certain people with high risk early breast cancer.
And for Guardians in collaboration with Boehringer Ingelheim in heart failure with reduced ejection fraction.
Regulatory submissions for <unk> Zip tied for type two diabetes in the U S to which we apply the priority review voucher as well as the E U.
And Jordan and heart failure with preserved ejection fraction.
We initiated a rolling submission in the U S for Danone a map in early Alzheimer's disease.
And had positive phase III readouts for Lebron Kisan Mab in atopic dermatitis.
Dave Ricks: We also continue to augment our pipeline with business development, as we continue to leverage external innovation to build our discovery capabilities with a focus on new modalities. In Q3, we announced a research collaboration and licensing agreement with Lycea Therapeutics to utilize their proprietary protein degradation technology. Finally, on financials, we distributed nearly $800 million to shareholders via the dividend this quarter.
We also continued to augment our pipeline with business development opportunities as we continue to leverage external innovation to build our discovery capabilities with a focus on new modalities at Lilly.
In Q3, we announced a research collaboration and license agreement with <unk> therapeutics to utilize their proprietary protein degradation technology.
Finally on financials, we distributed nearly $800 million to shareholders via the dividend this quarter.
Dave Ricks: Moving to slides 5 and 6, you'll see a list of key events since our Q2 earnings call, including issuing the company's first sustainability bond with proceeds allocated toward environmental projects, including pollution prevention, energy efficiency, and renewable energy, as well as social projects to increase access to essential services and socioeconomic advancement and empowerment. We announced a series of leadership and organizational changes this quarter. Recent positive data readouts this year led us to the natural decision to increase our focus on immunology and neuroscience and to unify... the Loxone Oncology and Lilly Oncology organizations
Moving to slides five and six you'll see a list of key events since our Q2 earnings call, including issuing the company's first sustainability bonds with proceeds allocated toward environmental projects, including pollution prevention energy efficiency and renewable energy.
As well as social projects to increase access to essential services and socio economic advancement and empowerment.
We announced a series of leadership and organizational changes this quarter.
Positive data Readouts. This year led us to the natural decision to increase our focus on immunology and neuroscience and to unify.
The locks in oncology and Lilly oncology organizations. We believe these changes enhance our ability to execute on a broad range of exciting commercial and pipeline opportunities.
Dave Ricks: We believe these changes enhance our ability to execute on a broad range of exciting commercial and pipeline opportunities. I'd like to welcome Jake Van Arden to Lilly's Executive Committee and look forward to Anne, Patrik, and Jake continuing their leadership in their new roles.
I would like to welcome Jake Van Arden to Lilly's Executive Committee and look forward to an Patrick and Jay continuing their leadership in their new roles.
Dave Ricks: They'll be focused on increasing our competitiveness in their therapeutic areas, growing our existing medicines, while also launching our late-stage pipeline of new medicines, which could benefit patients across a diverse set of medical conditions. Similarly, I'm grateful for Ilya's continued leadership and look forward to him leading our growing international business. Finally, I'd like to thank Chido Zuleta for his impact on our company across more than three decades of his commitment to the patient to the development of our industry-leading commercial capability, in his relentless focus on execution and mentorship of countless Lilly leaders. Quito, thank you for your service to our company. We have a deep leadership bench here, Lilly. They're smart, they're energetic, and they're experienced.
There'll be focused on increasing our competitiveness in their therapeutic areas.
And growing our existing medicines, while also launching our late stage pipeline of new medicines, which could benefit patients across a diverse set of medical conditions.
Similarly, I'm grateful for his continued leadership and look forward to him leading our growing international business.
Finally, I'd like to thank cheetos letter for its impact on our company across more than three decades of his commitment to patients to development of our industry, leading commercial capabilities and his relentless focus on execution and mentorship of countless really leaders.
Thank you for your service to our company.
We have a deep leadership bench here at Lilly, they're smart, they're energetic and experienced and I know, they're as excited as I am to take Lilly to another level in the decade ahead.
Dave Ricks: And I know they're as excited as I am to take Lilly to another level in the decade ahead. Now, I'll turn the call over to Anat to review our Q3 results and provide an update on our financial guidance for 2021. Thank you all for joining us today.
Now I'll turn the call over to it not to review our Q3 results and provide an update on our financial guidance for 2020 one.
Thanks, Dave Slide seven and eight summarize financial performance in the third quarter and year to date I'll focus my comments on non-GAAP performance.
Anat Ashkenazi: Slides 7 and 8 summarize financial performance in the third quarter and year to date. I'll focus my comments on non-GAAP performance. Revenue increased 18% this quarter compared to Q3 2020, or 11% excluding the items Dave mentioned earlier, representing strong momentum for our core business, despite the impact of Olympta's OUS pet neck spree. We continue to be pleased with the strong volume growth across key brands like Trulicity, Pulse, Fresenio, and Jardians, as our key growth products made up nearly 60% of our core business during the quarter
Revenue increased 18% this quarter compared to Q3, 2020 or 11%, excluding the items, Dave mentioned earlier, representing strong momentum for our core business. Despite the impact of Alimta O U S patent expiry.
We continue to be pleased with the strong volume growth across key brands like solicited towards presenting are enjoying as our key growth products made up nearly 60% of our core business during the quarter.
Anat Ashkenazi: Gross margin as a percent of revenue declined 10 basis points to 79% in Q3. Favorable product mix excluding COVID-19 therapies and a favorable impact from the foreign exchange rate on international inventory sold were more than offset by lower gross margin on COVID-19 therapies. Total operating expenses grew 8% this quarter, compared to the same quarter last year.
Gross margin as a percent of revenue declined 10 basis points to 79% in Q3.
Favorable product mix, excluding COVID-19 therapies and a favorable impact from foreign exchange rates on international inventories sold were more than offset by lower gross margin and COVID-19 therapies.
Total operating expenses grew 8% this quarter compared to the same quarter last year marketing selling and administrative expenses increased 1%, while R&D expenses increased 17% driven by significant investments in exciting late stage pipeline opportunities, including the anonymous printed birth NIM entries F.
Anat Ashkenazi: Marketing, selling, and administrative expenses increased 1%, while R&D expenses increased 17%, driven by significant investments in exciting late-stage pipeline opportunities, including Denonimab, Fertibrutinib, and Trezepatite. We also invested approximately $50 million in research and development for COVID-19 therapies in Q3, bringing our total COVID-19 R&D investments to approximately $350 million year-to-date. Operating income increased 37% compared to Q3 2020, and operating income as a percent of revenue was 30.5% for the quarter, an increase of 420 basis points compared to the prior year, with sequential growth for the second straight quarter.
Hittite.
We also invested approximately $50 million in research and development for COVID-19 therapies in Q3, bringing our total COVID-19, R&D investment to approximately $315 million year to date.
Operating income increased 37% compared to Q3, 'twenty 'twenty and operating income as a percent of revenue was 35% for the quarter.
An increase of 420 basis points compared to the prior year with sequential growth for a second straight quarter.
Anat Ashkenazi: This increase was driven by revenue growth, outpace and expense growth, and we expect continued margin expansion in the fourth quarter. Other income and expense was an expense of $7 million for this quarter compared to income of $10 million in Q3 2020. Our effective tax rate was 14.3%, a decrease of 70 basis points compared with the same quarter last year.
This increase was driven by revenue growth outpacing expense growth and we expect continued margin expansion in the fourth quarter.
Other income and expense was expense of $7 million for this quarter compared to income of $10 million in Q3 2020.
Okay.
Our effective tax rate was 14, 3% a decrease of 70 basis points compared with the same quarter last year.
Anat Ashkenazi: The lower effective tax rate in the third quarter of 2021 was driven by a mix of earnings and lower tax jurisdiction, partially offset by a decrease in net discrete tax benefits compared to the same period in 2020. At the bottom line, we delivered strong growth as earnings per share increased 38% in Q3. On slide nine, we quantify the effect of price, rate, and volume on revenue growth, and we're encouraged by the growth seen across the world.
The lower effective tax rate in the third quarter of 2021 was driven by a mix of earnings in lower tax jurisdictions, partially offset by a decrease in net discrete tax benefit compared to the same period in 2020.
At the bottom line, we delivered strong growth as earnings per share increased 38% in Q3 2021.
On slide nine we quantify the effect of price rate and volume on revenue growth and we're encouraged by the growth seen across the world.
Anat Ashkenazi: This quarter, U.S. revenue grew 26% compared to the third quarter of 2020. Adjusting for revenue from COVID-19 therapies, revenue grew 14% in the U.S. This increase, driven largely by volume, was led by Trulicity, Tolt, Jardians, and Verzenio.
This quarter U S revenue grew 26% compared to the third quarter of 2020.
Adjusting for revenue from COVID-19 therapies revenue grew 14% in the U S.
This increase driven largely by volume was led by <unk> told you already it's in Brasilia.
Anat Ashkenazi: The higher net realized price in the U.S. this quarter was driven by lower utilization in the 340B segment, unfavorable changes to estimates for rebates and discounts for solicity in the third quarter of 2020, and modest list price increases partially offset by increased rebates to maintain broad patient access for our medicine. Our year-to-date U.S. net price decrease of 1% is in line with the low- to mid-single-digit guidance we gave last December, and our full-year outlook is consistent with those expectations.
The higher net realized price in the U S. This quarter was driven by lorry utilization into three or four you'd be segment unfavorable changes to estimates for rebates and discounts for its felicity in the third quarter of 2020 and modest list price increases partially offset by increased rebates to maintain broad patient access.
For our medicine.
Our year to date U S. Net price decrease of 1% is in line with the low to mid single digit guidance. We gave last December and our full year outlook is consistent with those expectations.
Anat Ashkenazi: Our 340B Limited Distribution Program begins September 2020, and so the fourth quarter of 2021 will be the first full quarter where its impact will also be included in the base period when calculating year-over-year price changes in the U.S. Given the increase in variability in payer mix, we continue to expect quarterly variability and reported U.S. net price changes across our business.
Our 340 be limited distribution program begins September 2020.
And so the fourth quarter of 2021 will be the first full quarter, where its impact will also be included in the base period, when calculating year over year price changes in the U S.
Given the increase in variability in payer mix, we continue to expect quarterly variability in reported U S net price changes across our business.
Anat Ashkenazi: Moving to Europe, revenue grew 3% in constant currency, excluding the impact of the first full quarter of loss of exclusivity for Olympta, revenue grew 16% in constant currency, driven primarily by volume growth for Tricity, Tulsa, and Virginia. We are pleased with the momentum of our business in Europe and expect continued growth, excluding Olympics. In Japan, revenue decreased 6% in constant currency, driven primarily by the decline of post patent products.
Moving to Europe revenue grew 3% in constant currency.
Excluding the impact of the first full quarter of loss of exclusivity for Alimta revenue grew 16% in constant currency, driven primarily by volume growth fridge, felicitate tall and presenting them.
We are pleased with the momentum of our business in Europe, and expect continued growth excluding alimta.
In Japan revenue decreased 6% in constant currency, driven primarily by the decline of post patent product revs.
Anat Ashkenazi: Revenue in Japan continues to be negatively impacted by decreased demand for several products that have lost market exclusivity, now including Olympta, as well as by the COVID-19 pandemic. However, Importantly, our key growth products grew 12% in Q3 in Japan. We expect improved revenue growth in Japan moving forward based on the uptake of these new products. In China, revenue grew 30% in constant currency, primarily driven by the continued uptake of TIVET and Trulicity.
Revenue in Japan continues to be negatively impacted by decreased demand for several products that have lost market exclusivity now include and Alimta as well as the bank by the COVID-19 pandemic.
Importantly, our key growth products grew 12% in Q3 in Japan.
We expect improved revenue growth in Japan, moving forward based on the uptake of these newer products.
In China revenue grew 30% in constant currency, primarily driven by continued uptake of ties it intra city.
Anat Ashkenazi: We're excited by the significant growth we're seeing in China, with sales of new medicine continuing to drive growth there. Revenue in the rest of the world increased 16% in constant currency, driven primarily by our key growth products. The bottom of the slide is the price, rate, and volume effect on revenue for our September year-to-date results, which shows double-digit growth across all major geographies except Japan. As shown on slide 10, our key growth products continue to drive strong worldwide volume growth.
We're excited by the significant growth, we're seeing in China with sales of new medicine, continuing to drive growth there.
Revenue in the rest of the world increased 16% in constant currency, driven primarily by our key growth products.
At the bottom of the slide is the price rate and volume effect on revenue for September year to date results.
Which shows double digit growth across all major geographies, except Japan.
As shown on slide 10, our key growth products continue to drive strong worldwide volume growth.
Anat Ashkenazi: These products drove a 15% point of growth this quarter and continue to drive our overall performance and outlook. Slide 11 highlights the contributions of our key growth products. In total, these brands generated nearly $30.9 billion in revenue this quarter and made up 58% of our core business revenue.
These products drove 15 percentage point of growth this quarter and continue to drive our overall performance and outlook.
Slide 11 highlights the contributions of our key growth products in total these brands generated nearly $3 $9 billion in revenue this quarter.
Made up 58% of our core business revenue.
Anat Ashkenazi: We are encouraged by the strength of our key growth products in Q3, collectively up over 35% compared to the same period in previous years. Trelissi, Verzenio, and Jordians all continue to outgrow their respective classes, and we're pleased with TALT's growth driven by increased access. On slide 12, we provide an update on capital allocation. In the first nine months of 2021, we invested $7 billion to drive our future growth through a combination of R&D expenditures, business development outlays, and capital investments. In addition, we returned over $2.3 billion to shareholders in dividends and have repurchased $500 million in shares.
We are encouraged by the strength of our key growth products in Q3 collectively up over 35% compared to the same period in prior year.
Sure, let's see if there's any O and Guardians all continued to outgrow their respective classes and we're pleased with towards growth driven by increased taxes.
On slide 12, we provide an update on capital allocation.
In the first nine months of 2021 we invested $7 billion shouldn't drive our future growth through a combination of R&D expenditures.
Development outlays and capital investments.
In addition, we returned over $2 3 billion to shareholders in dividends and have repurchased $500 million in stock.
Anat Ashkenazi: We will continue to fund the growth of our key products and recent launches, invest in our pipeline, seek external innovation to augment our future growth prospects, and return capital to shareholders. Turning to our 2021 financial guidance on slide 13, we're updating our GAAP and non-GAAP guidance. We're increasing the full-year revenue outlook by $200 million at the top end of the range and $400 million at the lower end of the range to reflect additional COVID-19 antibody revenue and the outlook for our core business. COVID-19 antibody revenue expectations are roughly $1.3 billion based on the existing U.S. government purchase agreement for additional doses of edesimib in Q3 and Q4. The net impact of these changes is an updated revenue range of $2 Our outlook for GAAP and non-GAAP gross margin percent remains unchanged.
We will continue to fund the growth of our key products and recent launches invest in our pipeline seek external innovation to augment our future growth prospects and return capital to shareholders.
Turning to our 2021 financial guidance on slide 13.
We're updating our GAAP and non-GAAP guidance.
We're increasing our full year revenue outlook by $200 million at the top end of the range and $400 million at the lower end of the range to reflect additional COVID-19 antibody revenue and the outlook for our core business.
COVID-19 antibody revenue expectations of roughly $1 3 billion based on the existing U S government purchasing agreements for additional doses of Edison that in Q3 and Q4.
The net impact of these changes as an updated revenue range of $27 $2 billion to $27 6 billion.
From the previous range of $26 eight to $27 $4 billion.
Our outlook for GAAP and non-GAAP gross margin percent remains unchanged.
Anat Ashkenazi: For research and development in FG&A, our guidance ranges remain unchanged. As we noted last quarter, investments in promising R&D opportunities and exciting potential launches are expected to push us to the top end of our guidance range for operating expenses. A reported and non-gap operating margin guidance is unchanged. Excluding the impact of COVID-19 antibodies, non-gap operating margin remains approximately 31%. Our non-GAAP ranges for other income and expense, and our expected tax rate, remain unchanged as well.
For research and development and SG&A, our guidance ranges remain unchanged as we noted last quarter investments in promising R&D opportunities and exciting potential launches are expected to push us to the top end of our guidance range for operating expenses.
Our reported and non-GAAP operating margin guidance is unchanged exclude.
Excluding the impact of COVID-19 antibodies non-GAAP operating margin remains approximately 31%.
Our non-GAAP ranges for other income and expense and our expected tax rate remains unchanged as well.
Anat Ashkenazi: On a reported basis, other income and expense is now expected to be expensed in the range of $250 million to $150 million, reflecting the impact of the charges associated with the repurchase of debt and net mark-to-market losses on investments in equity securities in the third quarter of 2021. The 2021 effective tax rate is now expected to be approximately 11% on a reported basis, reflecting the tax impact of the charges associated with the repurchase of debt and acquired IPR&D, as well as unfavorable mark-to-market adjustments on investments in equity securities in the third quarter of 2021.
On a reported basis other income and expense is now expected to be expense in the range of $250 million $250 million, reflecting the impact of the charges associated with the repurchase of debt and net mark to market losses on investments in equity securities in the third quarter of 2021.
The 2021 effective tax rate is now expected to be approximately 11% on a reported basis, reflecting the tax impact of the charges associated with the repurchase of debt and acquired IP R&D.
As well as unfavorable mark to market adjustments on investments in equity securities in the third quarter of 2021.
Anat Ashkenazi: Finally, the non-GAAP range for earnings per share has been raised to $7.95 to $8.05, while the GAAP EPS is expected to be in the range of $6.38 to $6.48. At our Investors Day in December, we will share initial 2022 guidance. Today, before I turn the call over to Dan for the R&D update, I'd like to provide a few reminders on the pushes and pulls across the P&L as you begin thinking about next year.
Finally, the non-GAAP range for earnings per share has been raised to 795 to eight O five well the GAAP EPS is expected to be in the range of $6 38 to 648.
At our investors day in December we will share our initial 2022 guidance.
Today before I turn the call over to Dan for the R&D update I'd like to provide a few reminders on the pushes and pulls across the P&L as you begin thinking about next year.
Anat Ashkenazi: In Q3, we saw the initial impact of Olympta's OUS patent expiry in Europe and Japan. Next year we will see its full year impact, as well as the U.S. Patent X-Free, with limited launches from a single generic company in Q1 before the full launch of generic entrants starting in Q2. As for revenue from COVID-19 therapies, we intend to reflect and guide our expectations related to signed purchase agreements for COVID-19 antibodies. Currently, we expect minimal revenue from COVID-19 therapies in 2022, leading to more difficult year-over-year comparisons. As we did this year, we will provide commentary on our financial results, excluding the impact of revenue and certain expenses from COVID-19 therapies to enable a more helpful year-over-year comparison of the performance of our core business.
In Q3, we saw the initial impact of Alimta as O U S patent expiry in Europe and Japan.
Next year, we will see full year impact as well as the U S patent expiry with.
With limited launches from its single generic company in Q1 before the full launch of generic entrance starting in Q2.
As for revenue from COVID-19 therapies, we intend to reflect and guidance our expectations related to signed purchase agreements for COVID-19 antibodies.
Currently we expect minimal revenue from COVID-19 therapies in 2022.
Leading to more difficult year over year comparisons.
As we did this year, we will provide commentary on our financial is excluding the impact of revenue and certain expenses from COVID-19 therapies to enable a more helpful year over year comparison of the performance of our core business.
Anat Ashkenazi: Absent major U.S. drug pricing reform, our 2022 and midterm outlook continues to be mid-single-digit net price erosion in the U.S. and globally, as the impact of lower utilization of 340B segments moves into the base-based period as we enter Q4 2021. We continue to invest in our bright future as we advance promising R&D opportunities and scale up to support exciting potential launches from our late stage pipeline. While these investments may pressure operating margins in the near term, they are critical to maximizing pipeline opportunities to help sustain top-tier revenue growth and operating margin expansion over the mid- to long-term.
Absent a major U S drug pricing reform, our 2022 and mid term outlook continues to be mid single digit net price erosion in the U S and globally is the impact of lower utilization of 340 B segment moved into the base base period, as we enter Q4 2021.
We continue to invest in our bright future as we advance promising R&D opportunities and scale up to support exciting potential launches from our late stage pipeline.
While these investments may pressure, our operating margin in the near term they are critical to maximizing pipeline opportunities to help sustain top tier revenue growth and operating margin expansion over the mid to long term.
Dan Skovronsky: Now I'll turn over the call to Dan to provide an update on our pipeline. Like 2020 before it, 2021 continues to be a very productive year for R&D at Lilly. Before I get into the broader portfolio update, I'll highlight several updates from our late stage pipeline, starting with Terzapotai. We shared detailed results from Terzapotai's SURPASS-IV study at EASD this quarter. Surpass 4 is the largest and longest surpass trial completed to date.
Now I'll turn over the call to Dan to provide an update on our pipeline.
Uh huh.
'twenty 'twenty before 2021 continues to be a very productive year for R&D at Lilly.
Before I get into the broader portfolio update I'll highlight several updates from our late stage pipeline.
Starting with tours appetite.
We shared detailed results from tours appetite surpass four study at U S. D. This quarter.
Surpass four is the largest and longest surpass trial completed to date and we were encouraged by the continued hemoglobin, a one C and weight control, which participants experienced even past the initial 52 week treatment period, and continuing up to two years.
Dan Skovronsky: And we were encouraged by the continued hemoglobin A1c and weight control, which participants experienced even past the initial 52-week treatment period and continuing up to two years. Looking at slide 14, this shows the change from baseline in hemoglobin A1c over time during the study. A1C reduction plateaued by roughly 24 weeks and was maintained at 52 weeks and thereafter to 104 weeks across all three trizepatide doses while in the insulin-glargine comparator arm.
Looking at Slide 14. This shows the change from baseline and hemoglobin a one C over time during the study.
You won't see reduction plateaued by roughly 24 weeks and was maintained at 52 weeks and thereafter to 104 weeks across all three tiers appetite doses.
While in the insulin guar gene comparator arm.
Dan Skovronsky: A1C began to increase after 52 weeks. Durability of A1C control is a challenge for type 2 diabetes treatment. While the 104-week data isn't a definitive answer as to whether trizepatide could potentially offer even longer-term, durable blood glucose control, these data certainly are encouraged. Moving the slide, please.
He once he began to increase after 52 weeks.
Durability of a one C control is a challenge for type two diabetes treatments, while the 104 week data isn't a definitive answer as to whether trues appetite could potentially offer even longer term durable blood glucose control. These days certainly are encouraging.
Moving to slide 15, as you can see wave loss plateaued at approximately 52 weeks and was maintained thereafter, such that at two years weight difference at the highest dose was approximately 15% compared to insulin <unk>.
Dan Skovronsky: As you can see, weight loss plateaued at approximately 52 weeks and was maintained thereafter, such that at two years, the weight difference at the highest dose was approximately 15% compared to insulin clarification. We've seen in previous incretin therapy trials conducted with GLP-1s a further increased impact on weight reduction in participants with obesity without type 2 diabetes compared to studies in participants who do have type 2 diabetes, such as this one. It will be interesting to see if this trend also extends to the dual agonism of terzapatide, which has demonstrated weight reductions in type 2 diabetes trials beyond what has been shown by GLP-1s to date.
We've seen in previous Incretin therapy trials conducted with G. L. P ones are further increased impact on weight reduction in participants with obesity without type two diabetes compared to studies and participants who do have type two diabetes such as this one.
It will be interesting to see if this trend also extends to the dual agonism of tours appetite, which has demonstrated weight reductions in type two diabetes trials beyond what has been shown by G. L P ones to date.
Dan Skovronsky: We clearly are excited about the weight loss potential here, and we believe the data to date bode well for upcoming readouts in obesity, starting with Surmount One, which reads out next year. Tuesday Appetite represents a new class of medicine.
We clearly are excited about the weight loss potential here and we believe the data to date bode well for upcoming Readouts in obesity, starting with surmount, one which reads out next year.
Two separate tied represents a new class of medicines and we're focused on continuing our significant investment for patients with type two diabetes obesity and related metabolic disorders, who may benefit from tours appetite.
Dan Skovronsky: And we're focused on continuing our significant investment in patients with type 2 diabetes, obesity, and related metabolic disorders who may benefit from terseptin. Moving to slide 16, today we announced the U.S. submission for gizepatide in type 2 diabetes and that we used a priority review voucher with the intention of bringing this investigational treatment to patients as quickly as possible. We are delighted at the continued progress of this novel, Dual Agonist, Ingrid, and hope to obtain approval in the U.S. by the middle of next year. Moving on to Denetimab. We have several important updates for this program.
Moving to slide 16 today, we announced the U S submission for <unk> appetite in type two diabetes and that we used a priority review voucher with the intention of bringing this investigational treatment to patients as quickly as possible.
We are delighted that the continued progress for this novel dual agonist encrypted and hope to obtain approval in the U S by the middle of next year.
Moving to Donato map, we have several important updates for this program first in the U S. We initiated a rolling BLA submission to the FDA for accelerated approval in early Alzheimer's disease. We.
Dan Skovronsky: First, in the U.S., we initiated a rolling BLA submission to the FDA for accelerated approval in early Alzheimer's. We intend to complete the submission in the next few months and expect regulatory action in the second half of 2022. We've also completed the original planned enrollment of 1,500 participants for Trailblazer Owls 2 and, based on the pre-specified 18-month primary endpoint, expect to have top-line results by the middle of 2023. We have added a separate single-arm addendum for safety exposures to Trailblazer ALS-2, which has already enrolled more than 300 patients and is continuing to enroll rapidly.
We intend to complete the submission in the next few months and expect regulatory action in the second half of 2022.
We've also completed the original planned enrollment of 1500 participants for Trailblazer ALS, two and based on the Prespecified 18 month primary endpoint, we expect to have top line results by the middle of 2023.
We've added a separate single arm addendum for safety exposures to Trailblazer House, two which has already enrolled more than 300 patients and is continuing to enroll rapidly.
Dan Skovronsky: This addendum will provide us with additional safety data to support the rolling submission. Moving to Trailblazer ALS-3, this is a prevention study for cognitively unimpaired individuals who already have Alzheimer's brain pathology but don't yet have clinical symptoms. We're excited to report that we have already initiated screening. This pioneering trial has multiple novel elements to reduce research subject burden, including the use of our phosphatidyl 217 blood assay currently in development to help detect Alzheimer's disease pathology in the patient screening process, video call technology for assessing cognitive function in the subject's home, and a large network of infusion centers that allow subjects to select the site most convenient to them during a decentralized clinical trial period.
This agenda and will provide us with additional safety data to support the rolling submission.
Moving to Trailblazer ALS three this is a prevention study for cognitively unimpaired individuals who already have Alzheimer's brain pathology, but don't yet have clinical symptoms.
We're excited to report that we have already initiated screening.
This pioneering trial has multiple novel elements to reduce research subject burden, including the use of our Phosphatide 217 blood assay currently in development to help detect Alzheimer's disease pathology and the patient screening process Vinny.
Video call technology for assessing cognitive function in the subject's home.
And a large network of infusion centers that allow subjects to select the site most convenient to them in a decentralized clinical trial paradigm.
Dan Skovronsky: We also announce today our plans to conduct a head-to-head phase 3 study comparing Denetimab to Aducanumab to assess superiority of brain amyloid plaque clearance in early symptomatic Alzheimer's. The co-primary endpoints will evaluate complete amyloid plaque clearance as measured by Florbetapir F18 PET scan and will assess the purity of brain amyloid plaque clearance in the total population and also the intermediate This study, Trailblazer ALS-4, is expected to begin enrollment this year, and we expect to share primary endpoint data in the second half of 2022.
We also announced today, our plans to conduct a head to head phase III study comparing day net a mab to add who can't imagine two such superiority of your brain amyloid plaque clearance in early symptomatic Alzheimer's disease.
The co primary endpoints will evaluate complete amyloid plaque clearance as measured by floor Beta Pier F 18, pet scan and will assess superiority on brain amyloid plaque clearance in the total population and also the intermediate Tau sub population.
This study Trailblazer <unk> four is expected to begin enrollment this year and we expect to share primary endpoint data in the second half of 2022.
Dan Skovronsky: We're encouraged by the progress we've made with Denenimap and its potential to positively impact patients with high unmet medical needs. We have, of course, followed progress in the Alzheimer's disease landscape since our last call and are watching closely as CMS's national coverage determination process plays out.
We're encouraged with the progress we've made with the nomad and with its potential to positively impact patients with high unmet medical need.
We have of course, followed progress in the Alzheimer's disease landscape since our last call and are watching closely as CMS national coverage determination process plays out.
Dan Skovronsky: We're committed to facing the challenges of effectively communicating DNATOMAP's clinical data and value proposition and to ensuring that the diagnostic and patient management ecosystems are adequately prepared. Given the current environment, we think it's reasonable to have modest expectations for the scale of patient impact for anti-amyloid therapies available under accelerated approval prior to the readout of their definitive phase 3 data, assuming potential accelerated approval for DNANIMAP in the second half of 2022.
We're committed to facing the challenges of effectively communicating genetic maps clinical data and value proposition and to ensuring that the diagnostic and patient management ecosystems are adequately well prepared.
Given the current environment, we think it's reasonable to have modest expectations for the scale of patient impact for anti amyloid therapies available under accelerated approval prior to the readout of their definitive phase III data.
Assuming potential accelerated approval for <unk> in the second half of 2022.
Dan Skovronsky: Our expected Trailblazer ALPS 2 Phase 3 readout by mid-2023 would follow quickly, meaning the window of accelerated approval without definitive Phase 3 data is likely to be brief. Assuming positive Phase 3 results, we should be confident in the mid- and long-term opportunity for genetimap if approved. Moving on to Virginia.
Our expected Trailblazer ALS two phase three read out by mid 2023 would follow quickly.
The window of accelerated approval without definitive phase III data is likely to be brief.
Assuming positive phase III results, we should be confident in the mid and long term opportunity for generative map if approved.
Moving onto Virginia.
Dan Skovronsky: In line with the expectations I outlined last quarter, we were pleased with Resenio's recent FDA approval as the first and only CDK4-6 inhibitor in combination with endocrine therapy for adult patients with HR-positive, HER2-negative, node-positive early breast cancer who are at high risk of recurrence with a KI-67 index of greater than or equal to 20% as detected by an FDA-approved test. This approval in the adjuvant setting represents the first new addition to endocrine therapy and adjuvant treatment of HR positive HER2 negative breast cancer in nearly two decades.
In line with the expectations I outlined last quarter. We were pleased with the present. He was recent FDA approval as the first and only CDK four six inhibitor in combination with endocrine therapy for adult patients with HR positive her two negative node positive early breast cancer, who are at high risk of recurrence. So the cash 67 index of greater than equal to 20%.
As detected by an FDA approved test.
This approval in the adjuvant setting represents the first New addition to endocrine therapy and adjuvant treatment of HR positive her two negative breast cancer in nearly two decades.
Dan Skovronsky: We're delighted to bring this important new treatment option to patients. Also, we recently shared updated data from the entire monarchy study at the ESMO virtual plenary meeting and co-published these data in Annals of Oncology. These data, which reflect additional follow-ups since our last public presentation, highlight the robustness of the effect size we're seeing for Visenio in the adjuvant setting. Notably, with a median follow-up of 27 months, we were pleased to see both IDFS and DRFS benefits extend beyond the two-year study treatment.
We were delighted to bring this important new treatment option to patients.
Also we recently shared updated data from the entire monarch E study at the ESMO virtual plenary meeting and co published these data in animals or oncology.
These data, which reflect additional follow ups since our last public presentation highlights the robustness of the effect size, we are seeing for presenting early in the adjuvant setting.
Notably with a median follow up of 27 months, we were pleased to see both idea S. N D. R. F. S benefit extend beyond the two year study treatment period. These data are not only important for patients, but also to help dispel concerns that the curves would come back together over time.
Dan Skovronsky: These data are not only important for patients but also to help dispel concerns that the curves would come back together over time. We're clearly observing, we've clearly observed continued separation of the curves, if not an expanding separation.
Clearly observing we've clearly observed continued separation of the curves if not expanding separation.
Dan Skovronsky: Since the adjuvant approval two weeks ago, there have been questions regarding why the FDA approval applied only to a subset of the study population. As previously communicated, overall survival was a secondary outcome measure for the Monarchy study and an important component of the FDA's review. While we do not typically publish immature overall survival data, we feel it's valuable to address these important questions about the difference between the enrolled study population and the approved indication.
Since the adjuvant approval two weeks ago there've been questions regarding why the FDA approval applied only to a subset of the study population.
As previously communicated overall survival was the secondary outcome measure for the monarch study and an important component of the Fda's review.
While we do not typically published immature overall survival data, we feel it's valuable to address these important questions about the difference between the enrolled study population and the approved indication.
As a result, while the overall survival data remains immature we do plan to publish the OS data from the additional follow up analysis with cut off of April one 2021 in a medical journal in the coming days.
Dan Skovronsky: As a result, while the overall survival data remain immature, we do plan to publish the OS data from the additional follow-up analysis with a cutoff of April 1, 2021, in a medical journal in the coming days. These data will show what we have observed thus far for overall survival trends in the ITT population compared to the approved population. We'll continue to follow patients in the ITT population for more mature overall survival data.
These data will show what we have observed thus far for overall survival trends in the ITT population compared to the approved population.
We will continue to follow patients in the ITT population for more mature overall survival data if positive always trend emerges in the ITT population, we plan to work with regulators to expand our adjuvant indication.
Importantly, the collective results from Virginias clinical development program have demonstrated a differentiated CDK four six inhibitor profile.
Dan Skovronsky: If a positive OS trend emerges in the ITT population, we plan to work with regulators to expand our adjuvant indications. Importantly, the collective results from Virginia's clinical development program have demonstrated a differentiated CDK4-6 inhibitor profile, and we look forward to continued investment in Brasenio for breast and prostate cancer and are excited about the opportunity to serve more patients. Slide 17 shows select pipeline opportunities as of October 22nd, and slide 18 shows potential key events for the year.
And we look forward to continued investment in Brasilia for breast and prostate cancer and are excited about the opportunity to serve more patients.
Slide 17 shows select pipeline opportunities as of October 22nd and Slide 18 shows potential key events for the year.
There've been several important developments since our last earnings call and I'll cover these by therapeutic area.
In oncology in addition to the exciting news for Virginia, We continue our investment in Porto Bruton Nibs Phase III program with an additional study start in chronic lymphocytic leukemia, including fixed duration per brute nib, plus vanilla oclock and rituximab in relapsed or refractory patients.
Dan Skovronsky: There have been several important developments since our last earnings call, and I'll cover these by therapeutic area. In Oncology, in addition to the exciting news for Versenio, we continue our investment in protobrutinib's Phase 3 program with an additional study starting chronic lymphocytic leukemia, including fixed-duration protobrutinib plus venetoclax and rituximab in relapsed or We plan to start a study in first-line treatment compared to bendamustine plus rituximab before year-end. We prioritized this first-line study rather than the head-to-head study evaluating superiority compared to Brutinib, as we think this first-line study could provide a faster pathway to bring protobrutinib to patients in the first-line setting.
We plan to start a study in first line treatment compared to Bendamustine plus rituximab before year end.
We prioritize this first line study rather than the head to head study evaluating superiority compared to Bruton. It as we think this first line study could provide a faster pathway to bring pretty brutal to patients in the first line setting.
We expect the head to head a bruton Nib C. L. L study to start in the first half of 2022.
We look forward to sharing updated dataset from the phase one two brewing study at a medical meeting later this year, we plan to provide a regulatory update for partner burden it at our Investor day in December.
<unk>, our oral <unk> also moved into phase three with the start of its monotherapy study compared to exemestane or full vestments.
Yeah.
Finally, we also publicly identified and presented preclinical characterization for chew two new agents at the molecular targets meeting this month.
Dan Skovronsky: We expect the head-to-head of the Brutinib CLL study to start in the first half of 2022. We look forward to sharing an updated data set from the Phase 1-2 Bruin study at a medical meeting later this year. We plan to provide a regulatory update for Pert- or Brutinib at our Investor Day in December. Thalum Nestrin, our oral CERN, also moved into Phase 3 with the start of its monotherapy study compared to examestane or fulvestrin.
783, which is a highly mutant selective allosteric <unk> alpha inhibitor.
And lots of $4 35, which is a highly isoform selective F. G F. R. Three inhibitor.
We look forward to filing <unk> for both programs in 2022, and subsequently moving them into the clinic.
And diabetes. In addition to the tours appetite update we obtained U S approval for Guardians and half for F presented detailed results from the Emperor preserved study at the European Society of Cardiology and submitted for half path in the U S and Europe. We're excited about the opportunity <unk> has to improve outcomes for patients are cross typed.
Dan Skovronsky: Finally, we also publicly identified and presented preclinical characterization for two new agents at the molecular targets meeting this month. Flaxo 783 is a highly mutant selective allosteric PI3K alpha inhibitor, and LOXO435, which is a highly isoform-selective FGFR3 inhibitor. We look forward to filing INDs for both programs in 2022 and subsequently moving them into the clinic. In diabetes, in addition to the terzepatide update, we obtained U.S. approval for Jardians and HFRAF, presented detailed results from the Emperor Preserved Study at the European Society of Cardiology, and submitted for HEF-PEF in the U.S. and Europe.
Two diabetes heart failure and chronic kidney disease.
We also started phase two studies for our G. L. P. One non peptide agonist in collaboration with Chugai in type two diabetes and obesity and look forward to sharing some phase one data from this molecule in December.
In immunology, we were delighted to have multiple positive phase III readouts for <unk> in atopic dermatitis and look forward to the readout of the maintenance data from the advocate one and two studies in the first half of next year ahead of global submissions expected by the end of 2022.
We're pleased with our progress in immunology this year with positive phase III Readouts from your kids a mab in Lubbock is a map and look forward to sharing more about our next generation of early phase immunology assets in December.
Dan Skovronsky: We're excited about the opportunity Jardians has to improve outcomes for patients across type 2 diabetes, heart failure, and chronic kidney disease. We have also started Phase 2 studies for our GLP-1 nonpeptide agonist in collaboration with Chugai in type 2 diabetes and obesity, and look forward to sharing some Phase 1 data from this molecule in December. In immunology, we were delighted to have multiple positive phase three readouts for leberkizumab and atopic dermatitis and look forward to the readout of the maintenance data from the Advocate 1 and 2 studies in the first half of next year, ahead of global submissions expected by the end of 2022.
Neuro degeneration, our anti Tau antibody <unk> 10, a mab recently concluded its phase II study in early symptomatic Alzheimer's.
So I can turn a mab failed to meet the primary endpoint and was unable to modulate tau spread in the brain.
The placebo population progressed as expected.
While this negative outcome was disappointing and we are discontinuing development for us that could turn them up we remain committed to tau as a high conviction target in Alzheimer's disease and plan to continue studying Tau biology, including inhibition of Tau aggregation with a small molecule <unk> inhibitor currently in the clinic.
In the pain therapeutic area in collaboration with Pfizer, we discontinued the global clinical development program for <unk> as a map following receipt of a complete response letter from the F. D. A fortunate as mab in osteoarthritis pain, and a negative opinion adopted by the C. H M P.
Dan Skovronsky: We're pleased with our progress in immunology this year, with positive phase 3 readouts for Mirkizumab and Lebrokizumab, and look forward to sharing more about our next generation of early phase immunology assets in December. In neurodegeneration, our anti-tau antibody Zagotenimab recently concluded its phase two study in early symptomatic Alzheimer's. Zagatinameb failed to meet the primary endpoint and was unable to modulate tau spread in the brain.
And finally, the FDA expanded the emergency use authorization for gambling never mapping at just seven map administered together to include post exposure prophylaxis and certain individuals for the prevention of Sars Cov two infection.
To recap Q3 was another positive quarter for R&D at Lilly continuing the positive momentum we've seen with a steady stream of significant pipeline advancements over the last couple of years as you know.
Move closer towards our goal of delivering more first or best in class treatment options to patients in areas of unmet need.
Dan Skovronsky: The placebo population progressed as expected. While this negative outcome was disappointing, and we're discontinuing development for Zagatanamab, we remain committed to tau as a high conviction target in Alzheimer's and plan to continue studying tau biology, including inhibition of tau aggregation with a small molecule OGA inhibitor currently in the clinic. In the pain therapeutic area, in collaboration with Pfizer, we discontinued the Global Clinical Development Program for Tinezumab following receipt of a complete response letter from the FDA for Tinezumab in osteoarthritis pain and a negative opinion adopted by the CHMP. And finally, the FDA expanded the Emergency Use Authorization for Bamlanivimab and Etesevimab administered together to include post-exposure prophylaxis in certain individuals for the prevention of SARS-CoV-2 infection.
Now I will turn the call back to Dave for some closing remarks, okay. Thanks, Dan before we go to Q&A, Let me sum up the progress we've made during the quarter.
We have seen continued strength in our core business through the first nine months of the year with double digit volume driven revenue growth net of COVID-19 therapies and strong performance across key brands.
We're pleased to see sequential and year over year operating margin expansion as well as strong non-GAAP earnings growth.
We've made significant progress developing new medicines in Q3 was another important quarter for our pipeline as we announced the submission of <unk> in type two diabetes.
Initiation of a rolling submission for Danone I Mab in the U S for early Alzheimer's disease key lifecycle approvals and submissions for <unk> and Guardians and positive.
Phase III readouts for liver Kisan Mab.
We returned nearly $800 million to shareholders through dividends in Q3, reflecting confidence in the ongoing strength of our business.
Dan Skovronsky: To recap, Q3 was another positive quarter for R&D at Lilly, continuing the positive momentum we've seen with a steady stream of significant pipeline advancements over the last couple years as we move closer towards our goal of delivering more first or best in class treatment options to patients in areas of need. Now, I'll turn the call back to Dave for some closing remarks. Okay, Dan. Before we go to Q&A, let me sum up the progress we've made during the quarter.
As you move toward the close of 2021, we are confident in our long term growth prospects, while the past year has seen tremendous advances in our late stage pipeline at our Investor Day in December we look forward to sharing information with you regarding the next generation of assets that we believe will enable us to sustain the flow of innovative.
Medicines to patients and augment our future growth prospects now.
Now I'll turn the call over to Kevin to moderate the Q&A session.
Thanks, Dave we'd like to take questions from as many callers as possible. So we ask that you limit your questions to two per caller.
Dan Skovronsky: We have seen continued strength in our core business through the first nine months of the year, with double-digit volume-driven revenue growth, net of COVID-19 therapies, and strong performance across key brands. We're pleased to see sequential and year-over-year operating margin expansion, as well as strong non-gap earnings growth. We have made significant progress developing new medicines, and Q3 was another important quarter for our pipeline as we announced the submission of terzipatide for type 2 diabetes, the initiation of a rolling submission for Denonimab in the U.S. for early Alzheimer's disease, key lifecycle approvals and submissions for Resenio and Jardians, and positive, Phase 3 readouts for leperchizumab.
Lois please provide the instructions for the Q&A session and then we're ready for the first caller.
Thank you and ladies and gentlemen, if you wish to ask a question. Please press <unk>, one and then zero on your Touchtone phone you will hear an acknowledged midtown that you'd been placed in the queue. You may remove yourself from queue at any time by repeating the ones you're welcome man if you're on a speakerphone. Please pick up your handset before pressing the number.
Once again, if you have a question. Please press the one then zero.
And our first question is from the line of Chris Schott. Please go ahead.
Oh, great. Thanks, so much for the questions I guess the first one for me is just on some of the 2022 comments I know, you're not giving formal guidance, yet, but should we be thinking about margin expansion next year from the I guess, roughly 30% or so margins that are implied in this year's guidance I'm just trying get my hands around how meaningful of a step up.
Dan Skovronsky: We returned nearly $800 million to shareholders through dividends in Q3, reflecting confidence in the ongoing strength of our business. As we move toward the close of 2021, we are confident in our long-term growth prospects. While the past year has seen tremendous advances in our late-stage pipeline, at our Investor Day in December, we look forward to sharing information with you regarding the next generation of assets that we believe will enable us to sustain the flow of innovative medicines to patients and augment our Future Growth Prospects
But in Opex, we should be thinking about supporting these major new launches coming next year and the second one was just one related to bibs rollout of agile home, it's obviously been a challenging launch.
Are there learnings here or just changes about how you're thinking about your go to market strategy for danone them up and I know Dan you made some comments in the in the remarks, but should we be thinking about much in the way of revenue at all Ford to non a mab in I guess in that window between once approved in prior to trouble is or two I'm sure on credit sensitive again, just as you look at what's.
Dave Ricks: Now I'll turn the call over to Kevin to moderate the Q&A session. Thanks, Dave. We'd like to take questions from as many callers as possible, so we ask that you limit your questions to two per caller. Lois, please provide the instructions for the Q&A session, and then we're ready for the first caller. Thank you, and ladies and gentlemen, if you wish to ask a question, please press 1, then 0 on your touchtone phone. You will hear an acknowledgment tone that you've been placed into queue. You may remove yourself from queue at any time by repeating the 1-0 command.
Bears there'd been surprises or changes in your in your thinking on the market. Thanks, so much.
Thanks, Chris we'll go to a not for the first question on the 2020 to margin expansion and then the end on the thoughts about the uptake in outlook towards an antibody.
Great. Thanks, So for 2022 we will provide further details and guidance and in a cut in December so not too far from now and will provide additional Terry on how we view the year and what investments and pushes and pulls we haven't gone into into next year. As you think about our margin expansion in the goals, we've set out and with <unk>.
Operator: If you are on a speakerphone, please pick up your handset before pressing the number. Once again, if you have a question, please press 1, then 0. And our first question is from the line of Chris Schott. Please go ahead.
Chris Schott: All right, great. Thanks so much for the questions.
Muni Kid in terms of getting to mid to high thirties in terms of margin expansion, we still have a clear line of sight to getting there and that's still our goal they'll be it but it's not a linear growth. So there'll be years theyre going to be a stronger years, there, we're gonna be making a specific targeted investments and as you've seen.
Chris Schott: This one for me is just on some of the 2022 comments. I know you're not giving formal guidance yet, but should we be thinking about margin expansion next year from the roughly 30% or so margins that are implied in this year's guidance? I'm just trying to get my head around how meaningful of a step up in OPEX we should be thinking about supporting these major new launches coming next year. And the second one was just one related to, "Are there learnings here or just changes about how you're
US do this year with the non imagine when we have strong conviction in our pipeline assets or one we're preparing to launch I'm very.
Pharmacy and opportunities and products, we will invest behind them. So think about this is still a growing.
Chris Schott: Thanks so much for talking about your go-to-market strategy for Denonimab, and I know Dan you made some of those comments in the remarks, but should we be thinking about much in the way of revenue at all for Denonimab, I guess in that window between when it's approved and prior to Trailblazer 2? I'm sure I've got a sense of, again, just as you look at what's happened there, have there been surprises or changes in your thinking about the market? Thanks so much.
Growing to mid to high thirty's, but not necessarily in a linear fashion, but in line with investments we would need to make.
Thanks, a lot yeah.
Well as Dan stated in our with our competitor has shared they've experienced there clearly is work to do to ensure that the diagnostic and the patient ecosystems are prepared for these medicines.
And until there is definitive phase III data, we do believe that we should really expect modest use of these medicines now Fortunately as Dan said for dynamic Mab. This confirmatory data comes quickly in mid 'twenty three for Trailblazer, all too and so this will be the opportunity to really help patients on a more significant scale.
Anat Ashkenazi: Chris, we'll go to Anat for the first question on 2022 margin expansion and then to Anne on thoughts about the uptake and outlook for nanomass. Great, thanks. So for 2022, we will provide further details and guidance in a couple of weeks in December. So not too far from now. And we'll provide additional commentary on how we view the year and what investments and pushes and pulls we have going into next year.
Now some of the opportunities here certainly pursuing accelerated approval is really important not to provide early access but also to let us begin addressing some of these infrastructure challenges ahead of the phase III data, we need to build out the diagnostic ecosystem, particularly pet scans and blood tests, we need to make sure that there's adequate infusion kept.
Anat Ashkenazi: As you think about our margin expansion and the goals we've set out, and we've communicated in terms of getting to the mid to high 30s in terms of margin expansion, we still have a clear line of sight to get there. And that's still our goal. Very promising opportunities and products; we will invest behind them. So think about this is still growing to the mid to high 30s, but not necessarily in a linear fashion but in line with the investments we would need to make.
Pasty and then very importantly, we need to ensure that there's reimbursement so that the appropriate patients can have access to do that I mab. So these are going to be our areas of focus now through our phase III window out we're confident in our ability to address these infrastructure challenges over time.
Anne E. White: Thanks for that. Well, as Dan stated, and as our competitor has shared, they've experienced that there clearly is work to do to ensure that the diagnostic and patient ecosystems are prepared for these medicines. And until there is definitive phase three data, we do believe that we should really expect modest use of these medicines. Now, fortunately, as Dan said for Denanimab, this confirmatory data comes quickly in mid-23 for Treblizer, and ALS-2, and so this will be the opportunity to really help patients on a more significant scale.
And I would say by clearing plaque faster and deeper we believe that as well as identifying the right patients we've optimized the chances for showing compelling benefits in the phase III, which as we said is what was going to show significant uptake in the class. We continue to see the same opportunity for Janina Mab in the mid to long term. Once these challenges aren't dressed in the confirmatory data is available.
Yes.
Thanks, Dan Chris Thanks for your questions next caller please.
The next caller is Geoff Meacham from Bank of America. Please go ahead.
Good morning, and thanks for the question.
I had two on Alzheimer's probably for Dan.
Anne E. White: Now, some of the opportunities here, certainly pursuing accelerated approval is really important, both to provide early access but also to let us begin addressing some of these infrastructure challenges ahead of phase three data. We need to build out the diagnostic ecosystem, particularly PET scans and blood tests. We need to make sure that there's adequate infusion capacity, and then, very importantly, we need to ensure that there is reimbursement so that the appropriate patients can have access to Danatomab. So, these are going to be our areas of focus now through our phase three window. We're confident in our ability to address these infrastructure challenges over time.
Would you expect the completion of the rolling submission by the end of this year and is there a regulatory threshold you need to hit in.
In terms of the safety exposure I'm, just trying to think of the number of patients that you that you have to get exposed to it and then for Zach I send them up.
The next steps here is it is it moving to another anti Tau asset altogether or do you want to optimize monotherapy I got sent a mab or maybe even moved forward in combination with donated enough. Thank you.
Thanks, Jeff Yeah, Alright, Thanks, Jeff for two good questions. The first is just on the timing of the completion of the rolling.
Anne E. White: And I would say by clearing plaque faster and deeper, we believe that as well as identifying the right patients, we've optimized the chances of showing compelling benefits in phase three, which, as we said, is what was going to show significant uptake in the class. We continue to see the same opportunity for Danatomab in the mid to long term once these challenges are addressed and the confirmatory data is available. Thanks, Anne. Chris, thanks for your questions. Next caller, please. The next caller is Geoff Meacham from Bank of America. Please go ahead, guys. Good morning.
Rolling submission.
You can assume we chose our words carefully here in the in the call our prepared remarks on the timing you're sort of driving out like once the regulatory hurdle the district to safety exposures, you're right. That's the key gating factor on timing.
You've heard we've enrolled a lot of patients in our clinical trials.
Including our patients and our safety of denim, so where we're extremely confident we will reach that Oh it's.
Safety exposure hurdle.
I guess you know looking forward Theres, probably two risks are question marks.
Geoff Meacham: I had two on Alzheimer's, probably. For Donanimab, would you expect completion of the Rolex submission by the end of this year? And is there a regulatory threshold you need to hit in terms of the safety exposure? and then for Zagatina. One of the next steps here, is it moving to another anti-Taoist set all together, or do you want to optimize?
One is just around the timing of exactly when do databases get locked in and data get cleaned and submitted to the F. D. A.
So that's why we're a little vague on timing here I think that the second one.
Of course that we don't know and won't know until all that data is in is is what what are the safety that actually show and so the assumption here of course is that they continue to be consistent with what we've seen in phase II.
Geoff Meacham: Thanks, Geoff. Dan? Great. Thanks, Geoff, for two good questions. The first is just on the timing of the completion of the Nanomap rolling submission. I think you can assume we chose our words carefully here in the call prepared remarks on the timing. You're sort of driving at, like, what's the regulatory hurdle with respect to safety exposures. You're right; that's the key gating factor on timing. You've heard we've enrolled a lot of patients in the clinical trials, including patients in a safety addendum. So we're extremely confident we'll reach that safety exposure hurdle.
So if those things work out then and I think that'll be the opportunity to talk a little more specifically.
It's about the data.
With respect to <unk> 10, a mab look I think what we have here a very potent anti.
Anti Tau antibody designed against what we believe is an important species of aggregated Tau delivered at a relatively high doses for any monoclonal antibody and we were unable to slow the spread of Tau progression in the brain. So at present I don't see a path forward for this antibody and I would be reluctant to.
Dan Skovronsky: I guess, you know, looking forward, there's probably two risks or question marks. One is just around the timing of exactly when do databases get locked and data get cleaned and submitted to the FDA. So that's why we're a little vague on timing here. I think that the second one, of course, that we don't know and won't know until all that data is in, is what the safety data actually show.
Invest in really any anti Tau antibody.
Given what we've seen here tayo, it's still a great target, it's just hard to hit it with a monoclonal antibody I think given that most of the tile that we care about is inside of cells.
Dan Skovronsky: And so the assumption here, of course, is that they continue to be consistent with what we've seen in phase two. So if those things work out, then I think that'll be an opportunity to talk a little more specifically about the data.
Thank you.
Thanks, and Jeff Thanks for your questions next caller please.
And the next Halloween as Louise Chen from Cantor. Please go ahead.
Hi, Thanks for taking my questions here. So my first question is how are you preparing to the launch of a mab entrance appetite next year and how should we think about the cost associated with that launch and then the second question I had for you is do you think it's a national coverage determination or the pricing.
Dan Skovronsky: With respect to Zagotenumab, look, I think we have here a very potent anti-tau antibody designed against what we believe is an important species of aggregated tau delivered at relatively high doses for any monoclonal antibody, and we were unable to slow the spread of tau progression in the brain. So, at present, I don't see a path forward for this antibody, and I would be reluctant to invest in really any anti-tau antibody, given what we've seen here. Tau is still a great target. It's just hard to hit it with a monoclonal antibody, I think, given that most of the tau that we care about is in cytosols.
And that is keeping doctors on the sidelines.
Thanks, we'll go to enough for the question on just launch prep and the the overall costs for both years appetite and demand about how we think about that going into next year and then we'll go to Anne for the question around.
The N C D and as your home.
Sure. So as we're preparing to launch both of these are medicines. Obviously, one is in an area, where we have significant commercial footprint manufacturing scale up capabilities and the other one is an area where currently our building. So we're investing in and advancing both of these efforts for preparing for a potential launch of <unk>.
Dan Skovronsky: Thanks, Dan. Geoff, thanks for your questions. Next caller, please, in the next
Operator: And the next caller is Louise Chen from Kantor. Please go ahead.
Louise Chen: Hi, thanks for taking my questions here. So my first question is, how are you preparing for the launch of Zaneta Mab and Trezepatide next year? And how should we think about the costs associated with that launch? And then the second question I had for you is, do you think it's the national coverage determination or the price of Aduhal that is keeping doctors on the sidelines? Thanks.
Aside mid next year and then regulatory.
Decision on Danone in that but the second half of next year those will be factored into the guidance that we will provide them on December 15th as we go into as we go into next year.
But rest assured we're building the commercial footprint that we needed to launch these effectively and leveraging the existing footprint, we have as well.
Anat Ashkenazi: We'll go to Anat for the question on just launch prep and the overall cost for both Terzapatide and Denanamab, and how we think about that going into the next year. And then we'll go to Anne for the question around NCDs and Agihelm. Sure, so as we're preparing to launch both these medicines, obviously, one is in an area where we have a significant commercial footprint and manufacturing scale-up capabilities, and the other one is in an area we're currently building.
So not an.
Well that's a good question that you've asked and I do think there's a number of things that are a challenge here I think as you look at banana map with incredibly important is that we had a positive phase two study that cleanly met its primary endpoint showing cognitive benefits hard to Nana Mab as well are we able to share that we had limited duration dosing two o'clock clearance and so we believe that this is going to be important for the disc.
Anat Ashkenazi: So we're investing in advancing both of these efforts forward, preparing for a potential launch of trisepatide mid-next year and then a regulatory decision on Denonamib in the second half of next year. Those will be factored into the guidance that we will provide on December 15th as we go into next year, but rest assured that we're building the commercial footprint that we need to launch these effectively and leveraging the existing footprint we have as well. Well, it's a good question that you've asked, and I do think there are a number of things that are a challenge here.
Isn't that physicians and payers make so I believe that then the nano map data is incredibly strong and then as I said following quickly to phase three confirmatory data, which I think is important and all of this you know published in the New England Journal of Medicine. So as we're talking to thought leaders and physicians I do believe that they see the strength of the data that we brought forward.
And and I think that's been a challenge that they've had with some of the competitive space. So I do think that data is one thing on their minds I think as well. The NCD is playing a role obviously that will be resolved before we launch and we'll be ready for for any of the potential outcomes, there and have been working closely with them along the way to make sure that they understand that.
Anne E. White: I think as you look at Denanamab, what's incredibly important is that we had a positive phase 2 study that cleanly met its primary endpoint, showing cognitive benefits for Denanamab. As well, we were able to share that we had limited duration dosing for plaque clearance, and so we believe that this is going to be important for the decisions that physicians and payers make. So, I believe the Denanamab data is incredibly strong, and then, as I said, the phase 3 confirmatory data, which I think is important. And all of this was published in the New England Journal of Medicine.
And that in a map data, particularly the rapid clearing plaque plaques as well as the limited duration dosing that offers we think benefit to them as well. So so it's been a good conversation with them. So far we really look forward to seeing what they have to say CMS has to say in January and then launching with this strong datasets are stands out in the second half of next year.
Anne E. White: So, as we're talking to thought leaders and physicians, I do believe that they see the strength of the data that we brought forward into Denanamab, and I think that's been a challenge that they've had with some of the competitive space. So, I do think that data is one thing on their minds. I think, as well, the NCD is playing a role. Obviously, that will be resolved before we launch, and we'll be ready for any of the potential outcomes there.
Thanks, Anne Louise Thanks for your questions next caller. Please the next caller is Tim Anderson from Wolfe Research. Please go ahead.
Hi, Thank you I have a couple of questions on the pending and C D by CMS.
So two questions first is commonly said that this upcoming decision will pertain to the whole class.
I struggle to see how that can realistically would be the case because that decision will be made on only one company is mixed for these three data.
And there are still other really important informative piece for datasets that are on the come so wouldnt be N C D or whatever it is initially potentially be revised.
Anne E. White: And we have been working closely with them along the way to make sure that they understand the Denanamab data, particularly the rapid clearing of plaques, as well as the limited duration dosing that offers, we think, a benefit to them, as well. So, it's been a good conversation with them so far. We really look forward to seeing what they have to say, what CMS has to say in January, and then launching with this strong data set, as Dan said, in the second half of next year.
Later as CMS has more information on these additional trials.
And then second if this is indeed, a decision that pertains to the whole class and presumably a movie has a view on what will happen in January. So do you expect the en masse will say that at home in the classroom broadly it should be covered in a way that will be commercially meaningful one can envision that there could be lots of restrictions.
That might impact the commercial market opportunity.
Thanks, Tim will go to Anne for those questions on the NCD process.
Well thanks, good questions on the process with the N C. D. So CMS has been clear that the N C D. As they're running the process is to cover the class now as I said, we are actively participating in the process, including we provided oral comments in July and additional written comments in August and we and I'm sure others as well have been.
Operator: Thanks, Sam. Louise, thanks for your questions. Next caller, please.
Tim Anderson: The next caller is Tim Anderson from Wolf Research. Please go ahead.
Tim Anderson: Hi, thank you.
Tim Anderson: I have a couple of questions on the pending NCD by CMS.
Meeting with CMS throughout the process to share our specific data and ensure that the differences in these medicines are understood and so we've asked them really to evaluate each drug based on their own data and this is I think as I said, particularly important considering that there are some differences between these we shared the data later in the year subsequent to the original.
Tim Anderson: So, two questions. First, it's commonly said that this upcoming decision will pertain to the whole A-Beta class. However, I struggle to see how that can realistically be the case.
Tim Anderson: because that decision will be made on only one company's mixed phase three data.
Tim Anderson: And there's still other really important, informative phase 3 datasets that are coming out, so wouldn't the NCD, whatever it is initially, potentially be revised later as CMS has more information from these additional trials?
Original readout that the degree of 10 nanometer plot clearance relates to clinical benefit, which I know is very important to CMS in this decision as well as the limited duration dosing. So we really look forward to seeing what they have to say in in January.
Tim Anderson: And then second, if this is indeed a decision that concerns the whole class, then presumably,
Tim Anderson: Do you expect CMS will say... The ad home and the class more broadly should be covered in a way that will be commercially viable. Tim, we'll go to Anne for those questions on the NCD process. Well, thanks.
That readout will look like.
We do acknowledge there's a lot of skepticism in the national discussion and so we do really hope and merit will continue to implement that we think eats drugs should be evaluated by CMS by payers and prescribers on their own data.
Anne E. White: Good questions on the process of the NCD. So CMS has been clear that the NCD, as they're running the process, is to cover the class. Now, as I said, we are actively participating in the process, including providing oral comments in July and additional written comments in August. And we, and I'm sure others as well, have been meeting with CMS throughout the process to share our specific data and ensure that the differences in these medicines are understood. And so we've asked them to really evaluate each drug based on their own data. And this is, I think, as I said, particularly important considering that there are some differences between these.
It is possible that N C D C and C. D will narrow for the patients most likely to benefit that's a possibility out of this but that's really aligned with the goals that we've had in our clinical trial designs, which has long been to use the diagnostic tools to make sure that the right patients are getting treatment. So we will look forward to the readout in January we will continue to stay.
Very engaged in that and yes, I believe as additional data comes out of our data and and others in the class that time that this will continue to influence the process.
Thanks, Dan Tim Thanks for your questions next caller please.
Anne E. White: We shared the data later in the year, subsequent to the original readout, that the degree of denatomab plaque clearance relates to clinical benefit, which I know is very important to CMS in this decision, as well as the limited duration dosing. So we really look forward to seeing what they have to say in January and what that readout will look like. We do acknowledge there's a lot of skepticism in the national discussion.
The next question comes from Andrew Baum from Citi. Please go ahead.
Hum.
Noise coming out of Washington that suggests that the pizzas battle some of the components that are gaining traction on some of the more wiring components of price negotiations seem to be more and more limited I just wonder if you could share any thoughts on what you think just take the pieces proposal on out of pocket caps could mean to.
Anne E. White: And so we do really hope, and we'll continue to influence, that we think each drug should be evaluated by CMS, by payers, and prescribers on their own data. It is possible that NCDs will narrow for the patients most likely to benefit. That's a possibility out of this.
And the farmer in terms of.
Increased volume without catastrophic coverage changes and then secondly could you comment on whether youre seeing neutralization of the amount of my by the antibody drug antibodies that you see with prolonged usage and is this one of the factors, which is contributing to the finite treatment duration with utilization.
Anne E. White: But that's really aligned with the goals that we've had in our clinical trial designs, which have long been to use diagnostic tools to make sure that the right patients are getting treatment. So we'll look forward to the readout in January. We'll continue to stay very engaged in this. And yes, I believe as additional data comes out, our data and others in the class, that this will continue to influence the process. Thanks, Anne. Tim, thanks for your question. Next caller, please. The next question comes from Andrew Baum from Citi. Please go ahead.
Not a concern.
Thanks, Andrew we'll go to Dave for the first question and Dan for the second.
Yeah. Thanks, Andrew for the question, obviously, there's a lot of talking and discussing going on in Washington about.
How to make medicines more affordable.
I think we've been pretty consistent in our view that.
Both as Lilly and I can I think I can speak for the industry here we are four.
The progress we are not for the status quo and the centerpiece of almost every.
Part of legislation being discussed which is good news for seniors as some reform to the part D benefit.
Andrew Baum: Noise coming out of Washington suggests that the Peters bill, some of the components, are gaining traction, and some of the more worrying components of price negotiations seem to be more and more limited. I just wonder if you could share any thoughts on what you think, just take the Peters proposal on how the pocket caps could mean to Lilly and the farmer in terms of increased volume without catastrophic coverage changes. And then, second, could you comment on whether you're seeing neutralization of Denanamab by the antibody drugs that you see with prolonged usage, and is this one of the factors which is contributing to the finite treatment duration, or is neutralization simply not a concern?
That is certainly a highlight it and represented Peter's Bill it's in HR 19. It was in the Grassley Wyden effort. It's I'm sure in the Senate finance effort now.
And I think that's good news the contours of that are all kind of different.
But the general idea is that our industry would pay additional cost into the system that that would reduce monthly out of pocket costs, both below and above the catastrophic phase cap catastrophic costs as well as eliminate the donut hole I think we're basically for all of those things and we think that's a good set of initiatives where the.
Debate sort of kicks in is around how to pay for that or whether paid for it from the industry should go to other health care priorities and of course, we have you know clear positions on that one piece of Peter's, though we don't like is the retroactive CPI cap I think that's punitive and unfair. It also is.
Dave Ricks: Thanks Andrew. We'll go to Dave for the first question and Dan for the second. Yeah, thanks, Andrew, for the question. Obviously, there's a lot of talking and discussing going on in Washington about how to make medicines more affordable. I think we've been pretty consistent in our view that, both as Lilly and, I think I can speak for the industry here, we are for progress. We are not for the status quo.
Disproportionate on some types of medicines versus others. So I think the industry is aligned we don't care for that.
So in general the idea of CPI regulator on forward price increases is something people have.
Dave Ricks: And the centerpiece of almost every piece of legislation being discussed, which is, I think, good news for seniors, is some reform to the Part D benefit. That is certainly highlighted in Representative Peter's bill. It's in H.R. 19.
Gotten used to talking about and then you know the thing we do put our foot down and firmly opposed and why we're so against each of our three and other efforts is taking money out of the pharmaceutical industry for other priorities isn't drug pricing a big enough problem why don't we take the money out of the pharmaceutical industry and give it to patients who want to buy our medicines.
Dave Ricks: It was in the Grassley-Wyden effort. It's, I'm sure, in the Senate finance effort now. And I think that's good news. The contours of that are all kind of different, but the general idea is that industry would pay additional costs into the system, and that would reduce monthly out-of-pocket costs both below and above the catastrophic phase, cap catastrophic costs, as well as eliminate the donut hole.
And that's a position we've had for a long time.
I think it's been a busy week and into next week, probably negotiating offers package but.
We're hopeful that some of these messages are resonating and we could land with a part D reform and modest impact on the industry. So we can keep innovating for the future.
Dave Ricks: I think we're basically for all those things, and we think that's a good set of initiatives. Where the debate sort of kicks in is around how to pay for that or whether pay-for-performance from the industry should go to other health care priorities. And, of course, we have, you know, clear positions on that. One piece of Peter's bill we don't like is the retroactive CPI cap. I think that's punitive and unfair.
Thanks, Dave and Dan.
Thanks, Andrew for the question on anti drug antibodies or 80 days.
We do see it as with genetic mab they arise pretty early in treatment.
There's no connection, though with with Adas and in our decision on on fixed duration dosing.
The reason for that is because the doses that we're using are so much higher than the level of antidrug antibodies that we don't see an effect in our clinical trials at these doses.
Dave Ricks: It also is disproportionate on some types of medicines versus others. So I think the industry is aligned that we don't care about that, although, in general, the idea of a CPI regulator on forward price increases is something people have, you know, gotten used to talking about. And then, you know, the thing we do put our foot down on and firmly oppose and why we're so against H.R.3 and other efforts is taking money out of the pharmaceutical industry for other priorities.
Of the eight days on PK or importantly on P D, which is the plot clearance effect.
None of them up so so no connection there.
Thanks, Dan Andrew Thanks for your questions next caller. Please the next caller Seamus Fernandez from Guggenheim Securities. Please go ahead.
Oh, thanks for the question so.
Maybe first on <unk>.
Dave Ricks: Isn't drug pricing a big enough problem? Why don't we take the money out of the pharmaceutical industry and give it to patients who want to buy our medicines? And that's a position we've had for a long time.
The performance of <unk> in the quarter and then your conviction.
This market can accelerate moving.
Moving forward now with the <unk> 67.
Approval, we're hearing good things from physicians, but it just doesn't seem to be reflected in the the opportunity that I think we all see ahead for <unk>.
Dave Ricks: I think it's going to be a busy week and into next week probably negotiating out this package. We're hopeful that some of these messages are resonating and we could land with a Part D reform and a modest impact on the industry so we can keep innovating. Thanks Dave. Dan?
And then a separate question I'm sure.
Mike Mason as tracking the opportunity and obesity very closely just.
Dan Skovronsky: Yeah, thanks Andrew for the question on anti-drug antibodies or ADAs. We do see ADAs with Denetimab. They arise pretty early in treatment. There's no connection, though, with ADAs and our decision on fixed duration dosing. The reason for that is because the doses that we're using are so much higher than the level of anti-drug antibodies that we don't see an effect in our clinical trials at these doses of the ADAs on PK or, importantly, on PD, which is the plaque clearance effect of Denetimab.
Wondering what feedback is on the types of patients that are going on till we go via at this point and how Lilly is thinking about the opportunity in obesity given the Oh the attempted acceleration of the launch of tours appetite with the ERP.
And obviously that's in diabetes, but just.
Just wondering when we might see a full launch in obesity given all the trials.
Dan Skovronsky: So no connection there. Thanks, Ben. Andrew, thanks for your questions. Next caller, please. The next caller is Seamus Fernandez from Guggenheim Securities. Please go ahead.
Thanks, Seamus, we'll go to Jay for the question on <unk> and then Mike for the question on tours appetite.
Thanks, Seamus so just starting with presenting those performance in the quarter.
Seamus Fernandez: Thanks for the question. So maybe first on the performance of Verzenio in the quarter, and then your conviction that this market can accelerate moving forward now with the KEY67 approval. We're hearing good things from physicians, but it just doesn't seem to be reflected in the opportunity that I think we all see ahead for Verzenio. And then, as a separate question, I'm sure Mike Mason is tracking the
As you probably remember we had some stocking that happened in the channel in the second quarter and so part of what happened this quarter.
A modest work down of that inventory I think the fundamentals of where where we stand in the metastatic setting continue to look really strong I like where we are in terms of N b Rx share hovering around 30% and hopefully we can continue to grow that I think that we still haven't seen.
Seamus Fernandez: I'm going to ask you to think about the opportunity in obesity very closely. Just wondering what feedback there is on the types of patients that are going on to WeGoVe at this point and how Lilly is thinking about the opportunity in obesity given the attempted acceleration of the launch of Terzetta.
The the entire class of CDK four six inhibitors returned to pre COVID-19 levels of prescriptions and so that's obviously an important lever for growth going forward.
Probably levered to things like mammogram volumes and other types of preventative care and bedrooms they'd get patients diagnosed and enter into doctors' offices, but we continue to grow our share of of N V. Rx.
Seamus Fernandez: with the PRB. And obviously, that's in diabetes, but
Seamus Fernandez: Just wondering when we might see a full launch in obesity, given all the trials.
Seamus Fernandez: given all the trials. Thanks.
Within the market turning.
Jacob S. Van Naarden: Thanks, Seamus. We'll go to Jake for the question on Verzenio and then to Mike for the question on Terzapitaj. Thanks, Seamus. So just starting with Presenio's performance in the quarter, as you probably remember, we had some stocking that happened in the channel in the second quarter. And so part of what happened this quarter was just a modest work-down of that inventory. I think the fundamentals of where
Turning to adjuvant.
We're very excited about about launching this medicine for men and women with early breast cancer.
Specifically key 67 high patients.
It's a real opportunity.
You've probably heard us say before it's about eight to 10000 patients. So it's obviously a smaller opportunity than the entire study population that we enrolled in monarchy.
Jacob S. Van Naarden: Where we stand in the metastatic setting continues to look really strong.
And as you know we will be looking.
Jacob S. Van Naarden: I think we continue to look really strong. I like where we are in terms of NBRX share, hovering around 30%, and hopefully, we can continue to grow that. I think that, you know, we still haven't seen the entire class of CDK4-6 inhibitors return to pre-COVID levels of prescriptions. And so that's obviously an important lever for growth going forward. We've probably leaned on things like mammogram volumes and other types of preventative care measures to get patients diagnosed and into doctor's offices.
Again next year will be the next analysis of survival to potentially expand to that broader population.
Should OS trend in the direction that that we and FDA want to see to do that but we have a great opportunity ahead of us I think certainly its growth from where we stand today, it's a brand new indication of.
A real size in terms of both patient numbers.
And and duration you know in many ways that realizing that it's also linked to the prior comments I made about patients returning to the art to the Doctor for preventative care to get diagnosed at levels hopefully that returned to pre COVID-19.
Jacob S. Van Naarden: But, you know, we continue to grow our share of NBRX within the market. Obviously, we're very excited about launching this medicine for men and women with early breast cancer, specifically key 67 high patients. It's a real opportunity. As I think you've probably heard us say before, it's about eight to 10,000 patients. It's obviously a smaller opportunity than the entire study population that we enrolled in Monarchy.
We don't need that obviously to make headway going into next year, but I think for the long term it's important for patients.
To make sure they get into the physician's office to get diagnosed.
Thanks, Jake Mike.
Jacob S. Van Naarden: And as you know, we'll be looking again next year for the next analysis of survival to potentially expand to that broader population should OS trend in the direction that we in FDA want to see it do so. But we have a great opportunity ahead of us. I think certainly it's growth from where we stand today. It's a brand new indication of real size in terms of both patient numbers and duration. In many ways, realizing that is also linked to the prior comments I made about, you know, patients returning to the doctor for preventative care, to get diagnosed at levels hopefully that return to pre-COVID.
Thanks Seamus.
First of all your 9% right. We're looking very closely at the abuse of the opportunity for <unk> appetite.
We're very excited about this.
The weight loss that we saw in type two diabetes patients above the 14% weight loss and the potential of that being even higher and the obesity population. Obviously, just a massive unmet need 110 million Americans live with obesity only about 3% of them are treated with some type of anti obesity medication. So we think.
The opportunity is huge to really help.
People, who live with chronic weight management issues.
Now with our program, we have for our trials and our surmount obesity registration program are first obesity.
Jacob S. Van Naarden: We don't need that, obviously, to make headway going into next year. But I think for the long term, it's important for patients to make sure that they get into the physician's office to get, Hi, Seamus. First of all, you're 100% right. We're looking very closely at the obesity opportunity for trizepatide. We're very excited about just the weight loss that we saw in type 2 diabetes patients, up to 14% weight loss, and the potential of that being even higher in the obese population, obviously just a massive unmet need. 110 million Americans live with obesity, and only about 3% of them are treated with some type of anti-obesity medication. So we think the opportunity is huge to really help people who live with chronic conditions
Trial will read out next year or so about one we're very excited to see that that should happen.
In mid next year, and then surmount two three and four we will get the data those trials are on track to wrap up in 'twenty three and then so when you look at our obesity submission and approval. It looks like you know approval in 2024 is the most likely outcome if everything goes well as we expect and our smile.
Graham So very excited about we gobies launch I think they've done a nice job I think not a surprise to us we thought that what was holding them back. The current market was just you know the current products in the marketplace just didn't have.
Cynically meaningful enough weight loss, we thought if we had products on the marketplace that had clinical clinically meaningful weight loss and those products were able to show.
Michael B. Mason: on Weight Management Issues. Now, with our program, we have four trials in our SOMOUT obesity registration program. Our first obesity trial will read out next year, our SOMOUT one. We're very excited to see that. That should happen in mid next year. And then SOMOUT two, three, and four, we'll get the data. Those trials are on track to wrap up.
Good clinical outcomes overall medical outcome for those living with obesity.
Acquisitions would write it and payers would provide access for it so it's not going to develop overnight, but we're very encouraged by the early launch it we go big.
And just very excited about to jeopardize opportunity.
Thanks, Mike Seamus. Thanks for your questions next caller. Please the next call. It is a matter of fact from Evercore. Please go ahead.
Michael B. Mason: in 23. And then, so when you look at our obesity submission and approval, it looks like, you know, our approval.
Thanks, So much for taking my question Dan.
Dan I was very intrigued by the banana member. So that you can imagine head to head trial and my question really was I understand the primary endpoints on amyloid plaque but will the trial will be able to gauge clinical efficacy on endpoints like C D or some of the boxes I ask because my understanding is an open label trial and then secondly, I feel like there's been a fair amount of.
Michael B. Mason: in 2024 is the most likely outcome if everything goes well as we expect in our SMALT program. So, very excited about WeGovie's launch. I think they've done a nice job. It was not a surprise to us. We thought that what was holding back the crowd
Michael B. Mason: [inaudible]
Michael B. Mason: Good clinical outcomes, and overall medical outcomes for those living with obesity.
Investor debate and perhaps confusion on what exactly it really messaging on the inadvertent PD one launch in the U S and and the sort of debate rages anywhere from little to be a dominant player or not so much. So just so we're all on the same page I guess, what are you guys expecting and do you expect it to be a meaningful PD one in the U S market and if you could speak.
Michael B. Mason: Thank you very much, and I'm just very excited about Trish Appetite's opportunity. Thanks, Mike.
Operator: Seamus, thanks for your questions. Next caller, please. The next caller is Umar Rafat from Evercore. Please go ahead. Hi.
Umar Rafat: Thanks so much for taking my question. Dan, I was very intrigued by the Denanamab versus Educanamab head-to-head trial. And my question really was, I understand the primary endpoints for amyloid plaque, but will the trial be able to gauge clinical efficacy on endpoints like CDR, some of the boxes? I ask because my understanding is it's an open-label trial. And then secondly, I feel like there's been a fair amount of investor debate and perhaps confusion on what exactly Lilly is messaging on the in-event PD-1 launch in the U.S., and the sort of debate ranges anywhere from whether Lilly will be a dominant player or not so much. So just so we're all on the same page, I guess, what are you guys expecting?
Your thoughts on whether data generated in Chinese patients would be irrelevant commercial consideration for U S oncologists or not.
Thank you we will go to Dan for the first question and Jay for the second.
I mean your question is whether the amount of members that are kind of metro head to head trial will be powered to measure clinical efficacy outcomes. They will not be it is a small and a.
A shorter trial, so we won't be able to draw conclusions about that but I, but I point out that if if we believe that plaque lowering as the appropriate surrogate and that question will certainly be answered in the next.
Year to 18 months as we get data from a number of the phase III plaque lowering drugs. So if it turns out that plaque lowering is an appropriate surrogate for predicting clinical efficacy then I think that the degree and speed of plaque lowering could be the basis of comparison across different Alzheimer's drugs in the same way that circuits in oncology.
Umar Rafat: And do you expect it to be a meaningful PD-1 in the U.S. market? And could you speak to your thoughts on whether data generated in Chinese patients would be a relevant commercial consideration for U.S. Thanks, Umar. We'll go to Dan for the first question and Jake for the second.
Dan Skovronsky: Thanks, Umar. Your question is whether the Denetimab-Versatikenimab trial, a head-to-head trial, will be powered to measure clinical efficacy outcomes. It will not be. It is a small and shorter trial, so we won't be able to draw conclusions about that. But I point out that if we believe that plaque lowering is the appropriate surrogate, and that question will certainly be answered in the next year to 18 months as we get data from a number of Phase III plaque lowering drugs.
<unk> are used to compare different drugs and are in a class.
Knowing that the long term outcome trials would have to be extremely large and long duration ARD for for clinical outcomes.
Also sort of pointed out that we're expecting here to to have a in a scenario where we're really excited about this we are expecting to have a positive phase III trial for genetic map, which in itself is.
<unk> I think from current competitors so.
The head to head on on efficacy against that may not actually be relevant.
Dan Skovronsky: So, if it turns out that plaque lowering is an appropriate surrogate for predicting clinical efficacy, then I think that the degree and speed of plaque lowering could be the basis of comparison across different Alzheimer's drugs, in the same way that surrogates in oncology are used to compare different drugs in a class.
Thanks, Dan Jason.
Hey, Omar Thanks for the question. So you know it's until I'm out of the PD, one inhibitor from inadvertent or we brought in to the company in terms of ex China rights explicitly with the intent to to use pricing as a lever to disrupt.
Dan Skovronsky: Knowing that the long-term outcome trials would have to be extremely large and long-duration powered for clinical outcomes, I also sort of point out that, you know, we're expecting here to have, in this scenario where we're, you know, really excited about this, we're expecting to have a positive phase three trial for Denanimab, which in itself is a differentiator, I think, from current competitors. So head-to-head on efficacy against ADU may not actually be relevant. Jake.
The U S market, starting with the United States and potentially moving to Europe, as well and as we've said publicly over.
Over the past couple of months the intent there is really through price.
Predominantly versus other mechanisms such as rebates et cetera.
There are certain customers out there are certain practices in prep and care models for which this is going to be an attractive.
Jacob S. Van Naarden: Hey, Umar, thanks for the question. So, you know, CentellaMav, the PD-1 inhibitor from Inovent, we brought in to the company in terms of ex-China rights explicitly with the intent to use pricing as a lever to disrupt the US market, starting with the United States and potentially moving to Europe as well. And as we've said publicly, over the past couple of months, the intent there has really been through price predominantly versus other mechanisms such as, you know, rebates, et cetera.
This is gonna be an attractive tool for lowering cost to their system and unfortunately the way. The system is designed today theyre going to be many channels for which a lower priced option actually isn't appealing.
So as you your question was about whether or not we intend to be a dominant player.
Hard for me to say that with any degree of assertion today, we will be focusing initially on the segments for which this is an attractive option given the way that their payer dynamics work and today, that's not a majority by any stretch, but that will be our focus out of the gate shouldn't shouldn't until I'm that'd be approved.
Jacob S. Van Naarden: There are certain customers out there, certain practices, and care models for which this is going to be an attractive tool for lowering costs in their system. And unfortunately, for the way the system is designed today, there are going to be many channels for which a lower-priced option actually isn't appealing. And so as your question is about whether or not we intend to be a dominant player, it's hard for me to say that with any degree of certainty today. We will be focusing initially on the segments for which this is an attractive option, given the way that their payer dynamics work. And today, that's not a majority by any stretch.
Onto your second question about whether or not the data package that's been generated for the for the Adrian will.
We'll have issues with prescribers in the United States.
Our market research to date suggest this won't be an issue, but obviously, we haven't launched the product yet we haven't gotten it approved yet so I can't say that with certainty, but our market research suggests that won't be an issue.
Jacob S. Van Naarden: But that will be our focus out of the gate, should Centelimab be approved. Now, on to your second question about whether or not the data package that's been generated for the agent will have issues with prescribers in the United States. Our market research to date suggests this won't be an issue, but obviously, we haven't launched the product yet, and we haven't gotten it approved yet, so I can't say that with certainty, but our market research suggests it won't be an issue.
But you know really in front of US initially is just getting the drug approved and I think as you know that's something we hope for in the early part of next year.
But the drug will be subject to an advisory committee and we await the details of what that'll cover.
Super helpful. Thank you so much.
Thanks, Jay Kumar Thanks for your questions next caller please.
Next caller is Ronny Gal from Bernstein. Please go ahead.
Hi, Good morning, and thank you for taking my question two of those who are staying with newmark points around until Nab in the U S.
Jacob S. Van Naarden: But, you know, really in front of us initially is just getting the drug approved, and I think, as you know, that's something we hope for in the early part of next year, but the drug will be subject to an advisory committee, and we await the details of what that will cover. Super helpful, thank you so much.
Uh huh.
92 part on this one first any comments about FDA Cancun policy in use in China only.
Patient population.
Jacob S. Van Naarden: Thanks Jake. Umar, thanks for your questions. Next caller, please. The next caller is Ronnie Gale from Bernstein. Please go ahead. Hi, good morning, and thank you for taking my question. Two of those. First, staying with Umar's points around Centelimab in the U.S., essentially two parts on this one. First, any comments about the FDA changing its policy and using China-only patients?
The submission of the United States, we've heard some things in conferences that that suggests there might be some change there and second on the same point.
You kind of talked about price as the dominant note here I guess the question is more around your thinking process.
Pharma has struggled for a long time and commercializing LOE cost product.
Innovative products at the same company if PD, one should have a low cost option why not why not.
Ronnie Gale: We've heard some things at conferences that suggest there might be some change there. And second, on the same point, you kind of talked about price as the dominant note here. I guess the question is more about your thinking process.
Loved by Kids and my wife, she does not follow a deep discounting strategy, giving.
The clinical profile versus other product in the same class and second question Keith.
The recent impact of interchangeable lantus could.
Ronnie Gale: You know, pharma has struggled for a long time with commercializing low-cost...
Can you discuss a little bit how the insulin. The fact I think when market a different assuming we will see the tangible product. There. How are the features of the market differ and would that also be a market, which is more amenable to adopting.
Ronnie Gale: and Innovative Products are the same company. If PD-1 should have a low-cost option, you know, why not Tiles?
Ronnie Gale: [inaudible]
Dave Ricks: Thanks, Ronnie. We'll go to Dave for those first couple questions around low-cost insurance and FDA policy, and then we'll go to Mike for the question on the interchangeability of Atlantis and how that can potentially read through to fast-acting insulin. Sure, happy to.
Need to tangible insulin.
Thanks, Ronnie we'll go to Dave for this first couple of questions around.
Low cost entrants and FDA policy.
And then we'll go to Mike for the question on the interchange ability of Lantus and how that can essentially read through the fast acting insulin.
Jacob S. Van Naarden: Maybe before we go to me on the FDA, Jake, do you have any comments on the FDA comments on China data? Yeah, I think it's a good observation. I think we've observed the same thing that the tone from DC does seem to have changed a bit over the past 18 months on this topic. So I think we're hearing and reading in some ways, probably the same things that you guys are.
Sure happy to maybe before we go to a me.
J J do you have any comments on the FDA comments on China data.
Yeah.
Yeah, I think it's a good observation and I think we've observed the same thing in the tone.
From D. C does seem to have changed a bit over the past 18 months on this topic. So I think.
We're hearing and reading in some ways, probably the same things that you guys are.
Jacob S. Van Naarden: We don't have a lot more information than that. And so you know, we await again the regulatory decision from FDA as to the acceptability of the PAC. As it relates, Ronnie, to the broader question about why not more sort of like everyday low-price kind of strategies in the main in pharmaceuticals, I mean, I think a couple things come to mind here. First, I think in oncology, in particular, it is infeasible quite often to run comparative studies. And so once an incumbent is established, you know, it's very difficult to displace that incumbent.
We don't have a lot more information than that.
So we await again the regulatory decision from FDA is to after the acceptability of the package.
As it relates to the broader question about why not more sort of like everyday low price kind of strategies and in the main in pharmaceuticals.
I think a couple of things come to mind here first I think in oncology in particular.
It is in feasible quite often to run a comparative studies and so once you didn't come in as is established you know.
It's very difficult to displace an incumbent maybe the one narrow exception might be what Jake highlighted but until a mab where you could have a more price sensitive segment and here, we have an analogous data from.
Dave Ricks: Maybe the one narrow exception might be what Jake highlighted with Centilumab, where you could have a more price-sensitive segment. And here we have analogous data from a different country that was conducted in a time gap that was prior to other PD-1s being approved in that setting. And so that presents, you know, an opportunistic play. We have, of course, also pursued this in insulin, and Mike can comment on that in a second. But, you know, Basaglar launched at a 30% discount to the other insulin, Glargine. We've pursued our own low-cost authorized generic of Humalog, now reducing the price to effectively 70% off the original brand.
From a different country that was conducted.
Time gap that debt.
Was prior to two other PD ones being approved in that setting and so that presents an opportunistic way.
We are of course also pursued this in insulin and Mike can comment on that in a second but basically are launched at a 30% discount to two the other insulin glory Jean.
Pursued our own LOE costs authorized generic of human log now reducing the price to effectively 70% off the original brand, but here again it illustrates the point Jake was making is that even in the retail side, it's not universally adopted today you know the half price.
Dave Ricks: But here again, it illustrates the point Jake was making, is that even on the retail side, it's not universally adopted. Today, you know, the half-priced form of Humalog and the third-off price of insulin Clargein that we provide have minority market shares. And that's a little bit counterintuitive.
Form of human logging and the third off price of insulin glare gene that we provide have minority market shares in and that's a little bit counterintuitive, but of course, we all know the incentives of the supply chain, which do tend to favor higher list price products, and that's I think where that shows up.
Dave Ricks: But, of course, we all know the incentives of the supply chain, which do tend to favor higher-list price products. And that's, I think, where that shows up. Finally, you asked why we don't pursue this for our whole portfolio. Well, I think the overriding thought for our portfolio is often to create differentiated datasets. And one thing different from Centilabab, different from Basiglar, and authorized generic hemolog is that those aren't differentiated datasets.
Finally, you asked why don't we pursued this for our whole portfolio well I think the overriding thought for our portfolio is often to create differentiated datasets and one thing different from <unk> until about different from basic Lar and authorized generic oh, because those arent differentiator datasets, so they're more of.
Dave Ricks: So they're more or less interchangeable. So, you know, when we create a new medicine, we're seeking to create something better. And in the main, that's how the system's set up. And that favors, typically, an introductory price that's similar to other innovative competitors, and then rebates and discounts to the channel to get formulary access and use. And that remains our main strategy. Of course, if there were some big policy shift that flattened gross to net or somehow reduced the incentives of the intermediaries, we'd take a look at that. I think our goal would be to deliver, you know, lower cost points to consumers if we could. Right now, the system mostly rewards something else.
Less interchangeable so.
You know when we create a new medicine, we're seeking to create something better and in the main that's how the system set up and that favors our typically our introductory price with similar to other innovative competitors, and then rebating or discounting to the channel too.
Get formulary access and use and that remains our main strategy of course, if there were some big policy shift that flattened gross to net or reduced somehow the incentives of the intermediaries.
Take a look at that I think our goal would be to deliver lower cost points to consumers. If we could right now mostly the system rewards something else and that's how we how we our forward planning for the portfolio that Dan was talking about maybe Mike as any final comments on insulin and interchangeability.
Michael B. Mason: And that's how we are forward planning for the portfolio that Dan was talking about. Maybe Mike has any final comments on insulin and interchangeability. Yeah, thanks, Dave. First of all, when we look at SimGli, it's only interchangeable with the reference product, which is Lantus, not BasalGlar. So we do think it's going to have more of an impact on Lantus versus BasalGlar.
Yes, Thanks, Dave.
First of all when we look at simply it's only interchangeable with the reference product, which is lantus not basic Laura. So we do think it's going to have a more of an impact on lantus versus basic Lora and when you look at the mealtime segments that first reference product.
Michael B. Mason: versus Basiglar. And when you look at the mealtime segments, that first reference product will be Insulin Aspart, not Lyspro.
We'll be insulin as part not life's probe now I think they also have to take a look at kind of the assemblies interchangeable Biosimilar I think many stakeholders in Washington, and believe that similarly interchangeable insulin would launch at a significant discounted price now that hasn't been the case the net impact.
Michael B. Mason: Now, I think you also have to take a look at kind of the Semgly's interchangeable biosimilar. I think many stakeholders in Washington believe that Semgly's interchangeable insulin would launch at a significantly discounted price.
Michael B. Mason: The net impact of SimGli's interchangeable launch is actually the introduction of a higher price presentation, not a lower price presentation. The new presentation is priced at $269 a vial versus $99 a vial of the original SimGli, which is priced at $299.
Assemblies interchangeable launch is actually the introduction of a higher price presentation, not a lower priced presentation. The new president presentation is priced at $269, a vial versus $99 a mile of the original assembly, which is at 273% increase so I think.
Michael B. Mason: I think what you're not going to see, at least what we haven't seen in the insulin biosimilar space, is that, you know, the simply interchangeable will really disrupt the basal insulin market, rather than what
What you're not going to see at least what we haven't seen in the insulin biosimilar space.
Is that the assembly interchangeable, we're really disrupt the basal insulin market rather what it'll do is allow us to compete in kind of the traditional health care system that we know have gaps, which we talked about earlier and which we've been trying to fill with our insulin value program and the senior savings model.
Michael B. Mason: Rather, what we'll do is allow it to compete in kind of the traditional health care system that, you know, we know has gaps, which we talked about earlier and which we've been trying to fill with our insulin value program and the senior
Michael B. Mason: When you look at and kind of pivot to the mealtime insulin market, mealtime insulins are a bit more complicated. They require more presentations than what you see with a basal insulin. So premixes or human insulins are also included in contracting. So I think that the mealtime insulin is a little bit different than what you see.
When you look at any kind of pivot to the mill time insulin market mealtime insulins are a bit more complicated they require more presentations than what you see with a basal insulin premixes.
Premixes are human <unk> are also included on contracting so I think the the mealtime insulin is a little bit different than what you see on the basal insulin, but what we've seen to date is that.
Michael B. Mason: [inaudible]
Given no assemblies life.
Michael B. Mason: At the end of the day, I think, you know, to reiterate Dave's point, I think, you know, it's better when we're focused on
Our price point on interchange ability, we don't think that's going to be really disruptive to the system, but more work within the current system, which we feel that we can strongly.
And now at the end of the day I think to reiterate Dave's point I think it's better when we're focused on on improvements and with our connected care launch with Beth with our weekly basal insulin I think we're focused on really driving innovation and better patient outcomes.
Michael B. Mason: It's better when we're focused on improvements. And with our Connected Care launch with BIF, with our weekly basal insulin, I think we're focused on really driving innovation and better patient outcomes.
Operator: Ronnie, thanks for your questions. Next caller, please. The next caller is Kerry Holford from Beringberg. Please go ahead. Hi, thank you.
Thanks, Mike Brian.
Brian Thanks for your questions next caller please.
The next caller is Kerry holford from bearing Baird. Please go ahead.
Okay.
Kerry Holford: Two questions for me on Bidenio, please, firstly on price. The increase in demand is called
Two questions.
I'm sorry.
Twice.
The increase in demand that's cool.
Kerry Holford: with envy, but I feel sad about a lower realized price. And now I'm going to go on to the comments in Q2, where you detailed the hiring last Friday. So we need to talk a bit more about the dynamics, and whether that's influenced in any way, but yeah, I've got something adjuvant at all, and secondly on the argument situation, and the volunteers commented on their call earlier today. The FDA has stated to them... Submissions based on ideas alone will be sufficient as long as there's no detrimental effect or no.
Yeah.
Right.
Not really.
Okay.
Hum.
Hi.
Cool.
Sure.
Anyway.
Yeah.
Yeah.
Secondly, R&D.
Okay.
I didn't know if he is going to need them accordingly.
And the FDA.
Dan.
So it will be.
In addition.
Kerry Holford: And now I think a bear's been conked off. I hope you enjoyed your experience, and...
Perfect.
Okay.
And not being a bad thing.
T O experience.
Kerry Holford: Well, perhaps there'd be a more relaxed approach than the FDA has been set out for Visenio, so I'm just curious as to why you think that might be. Anything that you can give them,
David.
And the FDA.
And is there anything I guess.
You answer as to why you think that might be.
It seems like you have that.
Jacob S. Van Naarden: Great, Kerry, you were kind of breaking it down and out, but I think these are for Jake, and the first question, Jake, if you didn't catch it, was about quarter-on-quarter revenue and whether it was affected by pricing in the CDK46 market or, you know, rather the stocking point you made earlier. And then I think the second point was about IDFS versus OS and the FDA's policy, if you call it that
Great carryover youre kind of breaking it out but I think these are for Jake and the first question Jacob you didn't catch it was about quarter on quarter.
Revenue.
Whether that was affected by pricing in the CDK four six market or.
Rather the stocking point you made earlier and then I think the second point was about.
Neither of us versus Oh S and in the FDA sort of policy.
So all of that.
Yeah. Thanks.
The first point, yeah, I mean, the the sequential quarters is really mostly related to the inventory stocking and Destocking point that I made earlier.
We haven't seen a ton of fluctuation in price.
On the on your comment about adjuvant or I can't comment on the back and forth that Novartis had with FDA. It just I'm, obviously, not privy to that though from what you've the framing of your question that actually doesn't sound, particularly different than the conversation that we've had with the agency as Dan mentioned in his prepared remarks.
Jacob S. Van Naarden: Yeah, thanks. On the first point, yeah, I mean, the sequential quarters are really mostly related to the inventory stocking and destocking point that I made earlier. We haven't seen a ton of fluctuation in price. On your comment about the adjuvant, I can't comment on the back and forth that Novartis had with FDA. I'm obviously not privy to that, though, from the framing of your question, that actually doesn't sound particularly different from the conversation that we had with the agency.
We've of course as you can imagine gotten a fair number of questions from folks around the nature of the approval in the in the subgroup versus the enrolled population of monarchy and and we'll be publishing in the coming days, the actual OS or overall survival data that were part of the regulatory.
Mission.
You know, you'll see you'll see what those trends look like in both the intent to treat population as well as the approved subset.
Jacob S. Van Naarden: And again, you know, trends in one direction or another, you know, that. You'll be able to interpret for yourself, but I don't, from what I can hear, I don't think the Novartis feedback from the agency is all that different from what we've received.
And again that you know trends in one direction or another.
You know that.
You'll you'll be able to interpret for yourself, but I don't from what I can here I don't think the Novartis feedback from the agency is all that different from what we received.
Jacob S. Van Naarden: Jake, Kerry, thanks for your questions. Next caller, please. The next question is from Vimil Devon from Mizzou Health Securities. Please go ahead.
Thanks, Jason Kary. Thanks for your questions next caller please.
The next question is from the mill demand from Mizuho Securities. Please go ahead.
Vimil Devon: Thanks for taking my question. Maybe just a couple
Thanks for taking my question, maybe just a couple of other topics that hasn't been discussed as much as the one on in reality. It seems like the C. G. R. P. Certain markets have been impacted by Covid more than some others. Maybe you could just sort of give us a sense of the dynamics youre seeing there and have you seen any impact from the oracles or else the Japanese that are entered.
Vimil Devon: other topics that haven't been discussed as much. So one on ingality, it feels like the CGR piece or market has been impacted by COVID more
Vimil Devon: .. .. .. .. ....
Vimil Devon: are on the class in the last few months. And then the second one is just on Jack.
Vimil Devon: The second one just on the JAX side, obviously, there's a lot of focus on the FDA sort of updates in that space. I'm curious if you have any sort of update timing around when you expect to use the final update label for Illumiant NRA and or a decision on atopic dermatitis. We'll go to Anne for the question on Galilee and Patrik for the question on Illumia
Well intervention that at any roll on in reality or are on the class.
In the last few months and then the second one just on the Jack side, obviously, a lot of focus on.
Sort of updates on that space I'm curious if you have any timing around when you expect them to you.
Finding a band.
<unk>.
And alright and or decision.
A decision on the atopic dermatitis application.
Yes.
Hey, So I won't go to Anne for the question on Gallery and Patrick for the question on ILUVIEN.
Anne E. White: Great. Well, thanks for the question on GALDI. So at present, what we've seen is the total migraine prescription market has seen growth, but it's driven primarily by the total acute new patient starts and additional concomitant use. With the injectable class, I do think that we're still experiencing headwinds from the pandemic and increased competition in the prevention space overall. We do see some variability of this across the markets. For example, some OUS markets are really returning to pre-COVID growth levels.
Great well thanks for that question I'm Goudy. So at present, what we've seen is the the total migraine prescription market has seen growth, but it's driven primarily by the total acute new patient starts and additional concomitant use.
With the injectable class I do think that we're still experiencing headwinds from the pandemic and increased competition in the in the prevention space overall, we do see some variability of this across the markets. Some O U S markets are returning really to pre COVID-19 growth levels and while we've seen improvement in the volume of new patient starts the future C. J.
Anne E. White: And while we've seen improvement in the volume of new patient starts, the CGRP MAB class in the U.S. is still about 13 percent below where we were at the start of the pandemic. So with the new competition and then appropriate treatment for acute prevention, we're seeing that the market should continue to grow as patients reengage in the system. Now on your question on oral impact, I think it's still a bit early to, in the early days of the launches, to see how this has impacted space in this way, so we'll watch that carefully.
B Mab class in the U S. It's still about 13% below where we were with the start of the pandemic.
And with the new competition, and then appropriate treatment for acute and prevention, we're seeing that the market should continue to grow as patient three engage in the system and on your question on oral impact I think it's still a bit early too early days and the launches to see how this has impacted the space in this way so we'll watch that carefully.
Anne E. White: I think our belief is that with so many patients and so much unmet need, the opportunity for these medicines, particularly MABs, remains significant, and obviously, in the end, it comes down to what's best for that patient and how we get them to their migraine-free days, and that's one place where we think, we believe Ingality has an advantage. So we'll continue to watch this space. We continue to believe in the efficacy that Ingality brings to the market, and so you'll see us continue to push forward in supporting the product. Thank you, Sam.
I think our belief is that with so many patients and so much unmet need the opportunity for these medicines.
Medicines, particularly the mammoth remains significant and.
Obviously in the end it comes down to what's best for that patient and how we get them to their migraine free days.
Days and Thats one place that we think we believe him gallery has an advantage. So we'll continue to watch this space. We continue to believe in the efficacy of that debt and Gal. He brings to the to the market and so you'll see us continue to push forward in supporting the product.
Thanks, Dan Patrick.
Patrik Jonsson: Well thank you very much. In terms of the question related to rheumatoid arthritis, the FDA has requested changes to the boxed warning for all JAK inhibitors to include serious heart-related events, cancer, blood clots, and death, and we believe in light of that, it's most likely that the JAKs will be placed after the biologic source of the treatment of rheumatoid arthritis, and that's pretty much where Illumion is currently placed in the U.S., so we don't see any major impact on Illumion driven by this change.
When I think about a margin Tom Sullivan the question related to rheumatoid arthritis, and the FDA has requested changes to the bulks wanting for oral JAK inhibitor <unk> to Sirius harp related events cancer blood clots and death, and we believe in the life of that it's most likely that the Jax would be placed after the biologics also.
The treatment of rheumatoid arthritis, and that's accretive Matsumoto Nuomi is currently placed in the U S. So we don't see any major impact on our new me on three of them by this change.
Patrik Jonsson: When we move to atopic dermatitis, we know that the FDA missed the PDUFA due to the ongoing assessment of the JAK inhibitors, and we believe that here it's also most likely that the JAK inhibitors will end up being placed after the biologics. Despite that, we also recognize that atopic dermatitis is a very heterogeneous disease, and our clinicians have a use for more tools in that toolbox, but that's what we believe is most likely moving forward. And we would expect some regulatory actions by the end of this year.
When we moved to atopic dermatitis, we know that the FDA missed the Purdue pharma due to the ongoing assessment of the JAK inhibitors and we believe also had its most likely that the JAK inhibitors. We lab will end up being placed off of the biologics and despite that what was the rate.
Ignite that atopic.
Dermatitis is a very heterogeneous disease and our clinicians have a use for more tools aimed at toolbox, but thats. What we believe is most likely moving forward and we would expect some regulatory actions prior to the end of this year.
Patrik Jonsson: Thanks, Patrik. Vamal, thanks for your questions. Next caller, please. The next caller is Carter Gould from Barclays. Please go ahead. Good morning.
Thanks, Patrick volatile thanks for your questions next caller please.
The next caller is Carter Gould from Barclays. Please go ahead.
Carter Gould: Thanks for taking the questions. Maybe first for Dan, just coming back to the head-to-head study. I don't think I've heard you say yet kind of the time period in which you're going to be measuring these reductions in amyloid. I believe you gave up the sort of second half, 22 kind of timeline for reading out that result. But should we be thinking about that at like a three-month or six-month time point, or just sort of the number of patients that get to
Hey, guys. Thanks for taking the questions maybe first for Dan just coming back to the head to head study I don't think I've heard you say you had kind of the time period in which youre going to be measuring these these reductions in amyloid.
I believe you did give up the sort of second half 'twenty to kind of timeline for reading out that result, but should we be thinking about that as like a three month or six month time point or just sort of the number of patients that get to below the lower limit of detection over over some period and then maybe for Jake on on a third class I know you guys have expressed some cautiousness on kind of the <unk>.
Carter Gould: Below the lower limits of detection, over some period. And then maybe for Jake on the third class, I know you guys have expressed some cautiousness about the role of the third treatment paradigm in the past. We started to see some of the later stage data sort of roll out from some of your competitors.
<unk> and.
In the treatment paradigm in the past we started to see some of the later stage data sort of rollout from some of your competitors wanted to get your latest thoughts there and if we might start to see some of the your third combination data from the original <unk> study before year end. Thank you.
Dan Skovronsky: Wanted to get your latest thoughts there and see if we might start to see some of your CERD combination data from the original EMBER study before your end. Thanks Carter. We'll go to Dan for the first question on the Nanomav head-to-head, and then Jake for surveys. Yeah, thanks for your question, Carter. I think you're appropriately pointing out that actually both things matter in terms of plaque clearance, how fast you clear the plaques and also how deep you clear the plaques.
Thanks Carter.
Go to Dan for the first question on the net amount of the head and then Jacob Yeah. Thanks for your question Carter I think you're appropriately pointing out that actually both things matter in terms of plot clearance how fast you clear the plaques and also how deep you've cleared the plaques.
Dan Skovronsky: You know, I think in the fullness of time, when we have phase three readouts for multiple drugs that look at efficacy, I predict those will be two important predictive factors in how well a drug helps patients, how quickly and how deeply it clears plaques. I think we have significant advances there in both aspects of the Nanomaps, so you can be sure we'll be looking at both of those things and reporting them out, as I said, in the back half of next year. Sam, Jake. Yeah, thanks for the questions about the oral S.W.O.R.D. program You know, we're looking forward to seeing the Radius Menorini data.
Yeah.
I think in the in the fullness of time, when we have phase III readouts.
For multiple drugs look at efficacy.
I predict those would be two important predictive factors in and how well our drug helps patience is how quickly and how do you play it clears plaque.
I think we have significant debentures there in both aspects with jnana map. So you can be sure we'll be looking at both of those things in and reporting that out as I said in the back half of next year.
Thanks, Dan Jason.
Yeah. Thanks for the questions about about they're all sort of program.
We're looking forward to seeing the radius marini data at San Antonio as I'm sure you are that studies, a little interesting in that it was very heavily enriched for ESR one mutated.
Jacob S. Van Naarden: and Matt Graney, data at San Antonio, as I'm sure you are. That study is a little interesting in that it's very heavily enriched for ESR1 mutated tumors. And so we're interested in seeing the degree to which the effect size observed in the study was really driven by that enriched subgroup where you would expect an outsized effect size versus a drug-white full vestibule versus non-ESR1 mutant patients. I think that question has meaningful read through as to the overall value of the class. If it's really just limited or driven by the ESR-1 mutants, I think that's a very different proposition than a true all-comer effect size.
Tumors.
And so we're interested in seeing the degree to which the effect size observed when the study was really driven by that enriched subgroup, where where you would expect an outsized effect size versus a drug like Volvo strength.
Versus in the non ESR, one mutant patients I think that that question has meaningful read through as to the overall value of the class.
If it's really just limited or more driven by the ESR. One mutants I think that's a very different proposition than a true all comer effect size.
Jacob S. Van Naarden: Um, as it relates to the combination data of ours, um, that's data we'll probably... Thanks, Jake. Carter, thanks for your questions. Next caller, please. The next question is from Steve Scala from Cohen. Please go ahead. Thank you.
As it relates to the combination data of ours.
Those are data will probably present next year.
Thanks, Jason Carter. Thanks for your questions next caller please.
The next question is from Steve Scala from Cowen. Please go ahead.
Thank you I have a couple of questions first is it not possible for Lilly to file tears appetite for obesity in 2022, and just the surmount one trial with supporting weight loss data from the diabetes trials other follow on indications for other drugs have been approved on one study.
Steve Scala: First, is it not possible for Lilly to file terzapatide for obesity in 2022 on just the SIRMOUT1 trial with supporting weight loss data from the diabetes trials? Other follow-on indications for other drugs have been approved on just one study, and SIRMOUT1 is a trial of 2,400 patients? So it's a big trial. Second question, are you planning to use blood-based biomarkers such as PTOW217 as companion diagnostics with the or within the non-IMAP filing? I think you used the Quanterix diagnostic in the Trailblazer trial, so I was wondering if that's part of the filing.
<unk> and surmount one is a trial in 2004 hundred patients. So it's a big trial.
Second question are you planning to use blood based biomarker, such as pizza out $2 17, as companion diagnostics with the or within the benign in that filing.
Thank you have used the <unk> diagnostic and the Trailblazer trials. So wondering if that's part of the filing thank you.
Steve Scala: Thank you. Steve, we'll go to Mike for the question on tersepitide and then Dan for the question on the fetal assay and, and the submission of the NANABAT. Mike. Yeah, Steve, good question. We, in our discussions with the FDA, we agreed upon four trials for the
Thanks, Steve we'll go to Mike for the question on tours appetite and then Dan for the question on <unk>.
The pizza LSA in the.
And the submission of the native App like.
Mike.
Yeah, Steve Good question.
We are we in our discussions with the FDA. We have agreed upon four trials from the Mount program that make up our submission for the BC indication pictures appetite as I said earlier those will read out from out want to read out next year surmount in two three and four readout in 'twenty, three and we will submit and expect approval.
Michael B. Mason: Thank you for your submission regarding the obesity indication for trizepatide.
Michael B. Mason: As I said earlier, those will read out, supernumerary one, read out next year, supernumerary two, three, and four, read out in 23, and we'll submit and expect approval.
Michael B. Mason: Based on conversations with the FDA when we set our development program, that's the current status.
24.
Based on conversations with the FDA when we set our development program.
Michael B. Mason: development program. That's the current plan.
The current plan.
Thanks, Mike Dan.
Dan Skovronsky: Dan. Thanks, Steve.
Thanks, Steve Good question on sort of companion diagnostics and in their role and FDA approval of Alzheimer's drugs I think based on what we've seen with with Attie Roux, our sort of base case expectation here is that the FDA is operating under.
Dan Skovronsky: Good question on sort of companion diagnostics and their role in FDA approval of Alzheimer's drugs. I think based on what we've seen with ADU, our sort of base case expectation here is that the FDA is operating under the assumption that standard of care now for Alzheimer's disease, if you are diagnosing a patient for Alzheimer's, should include biomarker confirmation of the disease. So for that reason, you know, my guess is that they won't be biomarkers that won't be included in prescribing information as companion diagnostics.
And the assumption that standard of care now for Alzheimer's disease. If you are diagnosing a patient for Alzheimer's should include biomarker confirmation of disease.
So for that reason my guess is that they won't be biomarkers won't be included in prescribing information as companion diagnostics.
Dan Skovronsky: Alright, I would take the opposite position probably with payers, where I think they are likely to be required for reimbursement for these medicines, but that has to be worked out. So those assumptions I just laid out sort of underlie our thinking about how P-Tau or Amivit or any other biomarkers, CSF-A-Beta, will be incorporated into labels? Probably not. And in practice, probably yes. And so we're proceeding accordingly to make sure that P-Tau-217, as well as other biomarkers, can be widely available around the same time as we launch Inanimab so that it can be incorporated into the standards of clinical practice as a biomarker for detecting Alzheimer's pathology and triaging patients to therapy.
Alright, I would take the opposite position, probably with payers, where I think they are likely to be required before reimbursement for these medicines, but that has to has to be worked out.
So those assumptions I, just laid out sort of underlie our thinking about how P tau or Amazon or any other biomarkers CSF a beta.
It will be incorporated into the label is probably not an into practice probably yes.
And so we're proceeding accordingly to make sure that piece out to 17, this as well as other biomarkers can be widely available around the same time as we launched it on a map so that it can be incorporated into the standards of clinical practice as a biomarker for detecting Alzheimer's pathology in triaging patients to therapy.
Dan Skovronsky: Thanks, Dan. Steve, thanks for your questions. Next caller, please. The next caller is from
Thank you. Thanks, Steve Thanks for your questions next caller please.
The next caller is from Matthew Harrison from Morgan Stanley. Please go ahead.
Operator: The next caller is Matthew Harrison from Morgan Stanley. Please go ahead. Mr. Harrison, can you please press 1-0? Can you hear me?
Mr. Harrison can you please press one zero.
And his line is open yes, okay.
Matthew Harrison: Yes. Okay, great, thanks. I was just wondering if you could comment on Lever Kizumab and your sort of views on the AD market, and, in particular, now that you've seen the OX40 data from Amgen KK, if that has any impact on how you think about the longer-term potential of that market. Thanks. Thanks. Matthew, we'll go to Patrick for the question on Leber Kismet.
Okay. Great. Thanks, I was just wondering if you could comment on on lebrecht. His mab in your sort of views on the a D market and in particular.
Now that you've seen the ox 40 data from Amgen KK, if that has any impact on how you think about the longer term potential of that market. Thanks.
Thanks, Matthew we'll go to Patrik for the question on liver Kismet.
Patrik Jonsson: Well, thank you very much for the question. We are very encouraged by the induction data for Lebrick-ASIMAB, where we saw more than 50% of patients treated with Lebrick-ASIMAB achieve an EASI 75. And we also met all the key secondary endpoints. And we actually believe that we have an opportunity here to launch a best-in-class IL-13. And currently, we are looking forward to the 52-week data during the first half of 2022 and a potential submission in the second half of next year. When it comes to the Amgen data, it doesn't change our outlook for Lebrick.
Well. Thank you very much for the question, we're very encouraged by the induction and then it became a model where we saw more than 50% of patients treated with <unk>, achieving an ESI 75, and it will also met all the key secondary endpoints and we actually believe that we have an opportunity here to launch a best in class I had thought.
<unk> and currently we are looking forward to the 52 weeks.
During the first half of 2022 and the potential submission in the second half of next year and when the counts of Amgen data. It doesn't change our outlook for Liberty as I said, we believe we're the best in class Hackathon Teen and we also believe that we have a very competitive asset we're the market leader and in a market that way.
Patrik Jonsson: As I said, we believe we have a best-in-class IL-13, and we also believe that we have a very competitive asset with the market leader. And this in a market where we know there is a big unmet need, and the biologic penetration is still very low. And we know that there is a need for many more medications, and particularly with the heterogeneous need in the marketplace.
We know that it's a big unmet need and the biologic penetration is very low and we know that they need for that product.
Many mom and occasions, and particularly with the hit from heterogeneous need in the marketplace.
Patrik Jonsson: Patrick and Matthew, thanks for your questions. We'll wrap up our Q&A and go to Dave for a close. Okay.
Thanks, Patrick Matthew Thanks for your question, we'll wrap up our Q&A today for clothes, great. Thanks, Kevin.
Dave Ricks: Thanks, Kevin. We appreciate your participation in today's earnings call and your interest in our company. We continue to grow our broad commercial portfolio with strong momentum in our core business, supported by many key brands and accelerating costs. This is complemented by a compelling pipeline with industry-leading opportunities, and we remain focused on bringing new medicines to patients and creating value for all of our stakeholders.
We appreciate your participation in todays earnings call and your interest in our company.
We continue to grow our broad commercial portfolio with strong momentum in our core business supported by many key brands and accelerating classes.
This is complemented by a compelling pipeline with industry, leading opportunities and we remain focused on bringing new medicines to patients and creating value for all of our stakeholders. Thanks.
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Okay.