Q1 2022 Eli Lilly and Co Earnings Call

Okay.

Ladies and gentlemen, thank you for standing by and welcome to the Lilly Q1.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Lilly Q1. This concludes our 2022 earnings call. At this time, all participants are in a listen-only mode.

Operator: Later, we will conduct a question-and-answer session. 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.

2022 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 to do require assistance. During the call. Please press Star then zero and an operator will assist you offline and as a reminder, your conference is being rich.

I would now like to turn the conference over to your host Kevin Hern. Please go ahead.

Operator: And as a reminder, your conference is being recorded. I would now like to turn the conference over to your host, Kevin Hearn. Please go ahead. Good morning.

Kevin Hearn: Thank you for joining us for Eli Lilly and Company's Q1 2022 earnings call. I'm Kevin Hearn, Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chair and CEO, Anat Ashkenazi, Chief Financial Officer, Dr. Dan Skovronsky, Chief Scientific and Medical Officer, Anne White, President of Lilly Neuroscience, Ilya Yuffa, president of Lilly International Jake Van Naarden, CEO of Loxo Oncology at Lilly and President of Lilly Oncology Mike Mason, President of Lilly Diabetes and Patrik Jonsson, President of Lilly Immunology and Lilly USA, We're also joined by Sarah Smith, Kent Ueha, and Lauren Zierke of the Investor Relations, During this conference call, we anticipate making projections and forward-looking statements based on our current expectations.

Good morning, Thank you for joining us for Eli Lilly and company's Q1, 2022 earnings call I'm, Kevin Hern, Vice President of Investor Relations. Joining me on today's call are Dave Ricks, Lilly's Chairman and CEO .

Eskenazi Chief Financial Officer Dr.

Dr Danskin, Wronski, chief scientific and medical Officer.

And white President of Lilly Neuroscience, Ilya youthful president of Lilly International.

Jake Van Norden, CEO of <unk> oncology at Lilly and President of Lilly oncology.

Mike Mason President of Lilly diabetes, and Patrik Jonsson, President of Lilly Immunology and Lilly USA.

We're also joined by Sarah Smith cancer away Huh, and Lauren <unk> of the Investor Relations team.

Kevin Hearn: Our actual results could differ materially due to several factors, including those listed on slide 3. Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 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. As we transition to our prepared remarks, please note that our commentary will focus on non-GAAP financial measures. Now, I'll turn the call over to Dave. Thanks, Kevin. 2022 is off to a strong start.

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 several factors, including those listed on slide three.

Additional information concerning factors that could cause actual results to differ materially is contained in our latest Form 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.

As we transition to our prepared remarks. Please note that our commentary will focus on non-GAAP financial measures now I'll turn the call over to Dave.

Thanks, Kevin.

'twenty two is off to a strong start with solid volume driven revenue growth led by our key products and the new <unk> obesity data, we announced this morning.

Dave Ricks: This is solid, volume-driven revenue growth led by our key products and the new terzipatide obesity data we announced this morning. We are focused on driving adoption of our newer medicines, preparing for a key product launch, delivering several global submissions for potential new medicines, all the while advancing our pipeline to power the next wave of growth. We are pleased with the progress we saw in the first quarter. Before I get to our results, I'd like to take a moment to address the tragic loss of life and the hardships we are seeing in Ukraine. Our Ukraine office is currently closed, and operations are suspended.

We are focused on driving adoption of our newer medicines preparing for key product launches delivering several global submissions for potential new medicines.

All the while advancing our pipeline to power the next wave of growth.

We are pleased with the progress we saw in the first quarter.

Before I get to our results I would like to take a moment to address the tragic loss of life and the hardships we're seeing in Ukraine.

Our Ukraine office is currently closed and operations are suspended.

Dave Ricks: The safety of our employees and their families continues to be our top priority. We are working through logistical challenges in order to ensure the supply of our medicines to those in need in Ukraine. Earlier this month, an initial shipment of medicine donated by Lilly, including insulin, arrived in Ukraine thanks to the tremendous efforts of our partners Project HOPE and Direct Relief. Few of our clinical trial participants are in Ukraine, so while we're doing everything we can to ensure continuity of their medical care, there is minimal impact on our global trials.

Safety of our employees and their families continues to be our top priority.

We are working through logistical challenges in order to ensure supply of our medicines to those in need in Ukraine.

Earlier this month, an initial shipment of medicine donated by Lilly, including insulin arrived in Ukraine. Thanks to the tremendous efforts of our partners project hope and direct relief.

Few of our clinical trial participants are in Ukraine. So while we're doing everything we can to ensure continuity of their medical care. There is minimal impact to our global trials.

With regard to Russia, we have suspended investments or promotional.

Dave Ricks: With regard to Russia, we have suspended investment, promotional activities, and new clinical trials there. Our Russian operations are now only focused on ensuring people suffering from diseases like cancer and diabetes continue to get the Lilly medicines they need. Should we generate any profits from our sales in Russia, we will donate them to organizations dedicated to humanitarian relief.

Activities and new clinical trials there.

Our Russian operations are now only focused on ensuring people suffering from diseases like cancer and diabetes continue to get the Lilly medicines they need.

Should we generate any profits from our sales in Russia, we will donate them to organizations dedicated to humanitarian relief.

Our revenue in Russia, and Ukraine account for less than 1% of our total company sales in 2021.

Dave Ricks: Our revenue in Russia and Ukraine will account for less than 1% of our total company sales in 2021. Moving to our results, you can see on slide four the progress we've made on our strategic deliverables so far this year. Q1 revenue grew 15% or 17% on a constant currency basis and was driven by volume growth of 20%.

Moving to our results you can see on slide four the progress we've made on our strategic deliverables. So far this year Q.

Q1 revenue grew 15% or 17% on a constant currency basis and was driven by volume growth of 20%.

Dave Ricks: When excluding revenue from COVID-19 antibodies in Olympta due to loss of exclusivity, revenue grew 10% for the quarter. This volume-driven performance in Q1 is attributable to our key growth products, which grew 24% and now account for 61% of our core business, with long IP runways for many of these products, meaning less than 10% of our 2022 revenue is exposed to patent expiry in the next five years, along with the potential to launch five new medicines over the next 18 months. The durability of our growth outlook is quite strong. Our non-GAAP gross margin was 76.1% in Q1, an increase of approximately 70 basis points. Excluding revenue from COVID antibodies, gross margin was approximately 80% for the quarter.

When excluding revenue from COVID-19, antibodies and Alimta due to loss of exclusivity revenue grew 10% for the quarter.

This volume driven performance in Q1 is attributable to our key growth products, which grew 24% and now account for 61% of our core business.

With long IP runways for many of these products and less than 10% of our 2022 revenue exposed to patent expiry in the next five years, along with the potential launch five new medicines over the next 18 months.

The durability of our growth outlook is quite strong.

Our non-GAAP gross margin was 76, 1% in Q1 an.

An increase of approximately 70 basis points.

Dave Ricks: Our non-GAAP operating margin was 33.4%, an increase of roughly 1,000 basis points, primarily driven by both higher gross margin and lower R&D expenses for COVID antibodies. In our pipeline, we have several important updates since our Q4 earnings call, including the U.S. and E.U. approval for Jardians in heart failure with preserved ejection fraction, as well as a recommendation from the Independent Data Monitoring Committee for an early stop to the Phase 3 trial studying Jardians for chronic kidney disease due to clear, positive effort. The U.S.

Excluding revenue from Covid antibodies gross margin was approximately 80% for the quarter. Our non-GAAP operating margin was 33, 4% an increase of roughly 1000 basis points, primarily driven by both higher gross margin and lower R&D expenses for Covid antibodies.

And our pipeline we have several important updates since our Q4 earnings call, including the U S and EU approval for <unk> in heart failure with preserved ejection fraction.

As well as a recommendation from the independent data monitoring committee for an early stop to the phase III trial studying <unk> for chronic kidney disease.

Due to clear positive efficacy.

The U S emergency use authorization for <unk> for the treatment of mild to moderate COVID-19.

Dave Ricks: Emergency Use Authorization for Bebtolovumab for the treatment of mild to moderate COVID-19. The recent U.S. submission of Mirakizumab for the treatment of adults with moderately to severely active ulcerative colitis, and a positive phase three top-line readout for SOMAT-1, the first of four global studies to evaluate trizepatide for adults living with obesity or overweight. Dan will talk in more detail later, but we are very excited with the results of the Phase 3 Surmount 1 top line readout.

The recent U S submission of <unk> for the treatment of adults with moderately to severely active ulcerative colitis.

And a positive phase III topline readout for <unk> one the first of four global studies to evaluate <unk> for adults living with obesity are overweight.

Dan will talk in more detail later, but we are very excited with the results of the phase III surmount, one topline readout.

Dave Ricks: We believe there is significant potential for terzipatide to build off the impressive results we saw from our clinical program in type 2 diabetes and help people with obesity, a disease impacting over 110 million people in the United States and approximately 650 million people worldwide.

We believe there is significant potential for <unk> to build off the impressive results. We saw from our clinical program in type two diabetes and help people with obesity Dizzy.

A disease impacting over 110 million people in the United States and approximately 650 million people worldwide.

Dave Ricks: Obesity is a chronic and progressive disease that causes over 2.8 million deaths globally each year. The economic impact associated with obesity is more than $1 trillion in the U.S. alone. We believe addressing obesity could make a difference in millions of people's lives, have a significant impact on public health, and reduce healthcare costs. We're hopeful that we are entering a new era of obesity care, where people have medicines that can help treat their obesity, and this is our first proof point on that journey.

<unk> is a chronic and progressive disease that causes over $2 8 million deaths globally each year.

The economic impact associated with obesity has more than one trillion in the U S alone.

We believe addressing obesity could make a difference in millions of People's lives have.

Have a significant impact on public health.

And reduce health care costs.

We're hopeful that we're entering a new era of obesity care, where people have medicines that can help treat their obesity and this is our first proof points on that journey.

We continue to rapidly advance nucleic acid innovation at Lilly building on our growing portfolio with the launch of the Lilly Institute for genetic medicines, a $700 million facility in Boston.

Dave Ricks: We continue to rapidly advance nucleic acid innovation at Lilly, building on our growing portfolio with the launch of the Lilly Institute for Genetic Medicine, a $700 million facility in Boston. We will develop novel RNA and DNA-based medicines, as well as push the boundaries of delivery technology to unlock difficult-to-treat targets, key strategic areas for us like neurodegeneration, diabetes, and obesity. Finally, we distributed nearly $900 million in dividends in the quarter and completed $1.5 billion in share repurchases.

We'll develop novel RNA and DNA based medicines as well as push the boundaries of delivery technology to unlock difficult to treat targets in key strategic areas for us like neuro degeneration diabetes and obesity.

Finally, we distributed nearly $900 million in dividends in the quarter and completed $1 5 billion.

And share repurchases.

Dave Ricks: On slides 5 and 6, you'll see a list of key events since our Q4 earnings call, including several important regulatory, clinical, and COVID-19 antibody updates we were discussing today. Now I'll turn the call over to Anat to review the Q1 results. Thanks Dave.

On slides five and six you'll see a list of key events since our Q4 earnings call, including several important regulatory clinical and COVID-19 antibody updates we are discussing today.

Now I will turn the call over to or not to review the Q1 results.

Anat Ashkenazi: Before I review the financial results for Q1, it is important to note that beginning this quarter, following direction from the SEC, presentation of non-GAAP measures will not include upfront charges and development milestones related to acquired in-process R&D and development. While this has no bearing on how we conduct our business, it will have an impact on how we present our non-GAAP measures. This change in presentation of financial results will have the effect of pulling into non-GAAP measures certain charges that were previously reported only in our GAAP financial results.

Thanks, David before I review the financial results for Q1. It is important to note that beginning this quarter following direction from the SEC presentation of non-GAAP measures will not include upfront charges and development milestones related to acquired in process R&D and development.

While this has no bearing on how we conduct our business. It will have an impact on how we represent how we present our non-GAAP measures.

This change in presentation of financial results will have the effect of pulling into non-GAAP measures certain charges that were previously reported only in our GAAP financial results.

Anat Ashkenazi: We expect this change will increase non-GAF operating expenses and decrease non-GAF operating margins and earnings per share. To help with the year-on-year comparison of our non-GAF measures, you can find a revised workbook on our investor website, reflecting the updated presentation of our 2020 and 2021 results. Slide 7 summarizes financial performance in the first quarter of 2022. I'll focus my comments on non-GAAP performance. In Q1, revenue grew by 15%.

We expect this change will increase non-GAAP operating expenses and decreased non-GAAP operating margins and earnings per share.

To help with year on year comparison of our non-GAAP measures you can find our revised workbook and our investor website, reflecting the updated presentation of our 2020 and 2021 results.

Slide seven summarizes <unk> financial performance in the first quarter of 2022.

Focus my comments on non-GAAP performance.

In Q1 revenue grew 15%.

Anat Ashkenazi: Excluding revenue from COVID-19 antibodies and Elimta, revenue increased 10%, highlighting solid momentum for our core business. Gross margin as a percent of revenue increased 70 basis points to 76.1% in Q1 2022. The increase in gross margin percent was primarily driven by the unfavorable effects of foreign exchange rates on international inventory sold in Q1 2021, partially offset by increased sales of COVID antibodies, which have a lower gross margin profile than the rest of our portfolio, and to a lesser extent, lower realized prices, increased manufacturing costs, and logistics due to Total operating expenses decreased 6% this quarter, which, as a reminder, is now inclusive of acquired IPR&D and development milestone charges.

Excluding COVID-19 , excluding revenue from Covid, 19, antibodies and Alimta revenue increased 10% highlighting solid momentum for our core business.

Gross margin as a percent of revenue increased 70 basis points to 76, 1% in Q1 2022.

The increase in gross margin percent was primarily driven by the unfavorable effects of foreign exchange rates on international inventory sold in Q1 2021 parse.

Partially offset by increased sales of Covid antibodies, which have lowered gross margin profile than the rest of our portfolio.

And to a lesser extent lower realized prices.

Increase in manufacturing costs and logistics due to inflation had a modest impact on gross margin in Q1.

Total operating expenses decreased 6% this quarter, which as a reminder is now inclusive of the acquired IP R&D and development milestone charges.

Marketing selling and administrative expenses decreased 1%, while R&D expenses decreased 4% driven by lower development expenses for COVID-19 antibodies, partially offset by higher development expenses for late stage assets.

Anat Ashkenazi: Marketing, selling, and administrative expenses decreased 1%, while R&D expenses decreased 4%, driven by lower development expenses for COVID-19 antibodies, partially offset by higher development expenses for late-stage assets. This quarter, we recognize acquired IPR&D and development milestone charges of $166 million, or 15 cents of EPS, primarily related to a purchase of a priority review voucher. In Q1 2021, acquired IPR&D and development milestone charges were $312 million, or 27 cents of EPS.

This quarter, we recognized the acquired IP R&D and development milestone charges of $166 million or <unk> 15 of EPS, primarily related to a purchase of a priority review voucher.

In Q1, 2021 acquired IP, R&D and developing milestone charges were $312 million or 27 of EPS.

Operating income increased 66% in Q1, driven by higher revenue, primarily due to higher sales of Covid antibody lower R&D expenses for Covid antibodies and to a lesser extent lower acquired IP R&D and developing milestone charges.

Anat Ashkenazi: Operating income increased 66% in Q1, driven by higher revenue, primarily due to higher sales of COVID antibodies, lower R&D expenses for COVID antibodies, and to a lesser extent, lower acquired IP R&D and development milestone charges. Operating income as a percent of revenue was 33.4% for the quarter and reflects the benefit from COVID-19 antibody revenue, as well as the negative impact of approximately 210 basis points attributed to acquired IPR&E and development milestone charges. Other income and expense was revenue of approximately $38 million this quarter compared with revenue of $35 million in Q1 2021.

Operating income as a percent of revenue was 33, 4% for the quarter and reflects the benefit from COVID-19 antibody revenue as well as the negative impact of approximately 210 basis points attributed to acquired IP R&D and development milestone charges.

Other income and expense was income of approximately $38 million this quarter compared with income of $35 million in Q1 2021.

Our Q1 effective tax rate was 10, 3% an increase of 140 basis points compared to the same period in 2021.

Anat Ashkenazi: Our Q1 effective tax rate was 10.3%, an increase of 140 basis points compared to the same period in 2021. This increase was driven by a lower net discrete tax benefit this quarter, partially offset by decreased tax expenses related to the implementation of the provision in the 2017 Tax Act requiring companies to capitalize research and development expenses. At the bottom line, we delivered strong earnings per share growth of 63% in Q1, inclusive of approximately 1500 basis points related to low required IPRMD and development milestone charges.

This increase was driven by a lower net discrete tax benefit this quarter, partially offset by decreased tax expenses related to the implementation of the provision in the 2017 tax act requiring to capitalized research and development expenses.

At the bottom line, we delivered strong earnings per share growth of 63% in Q1 inclusive of approximately 500 basis points related to lower acquired IP R&D and development milestone charges.

On slide eight we quantify the effect of price rate and volume on revenue growth.

Anat Ashkenazi: On slide 8, we quantify the effect of price, rate, and volume on revenue growth. This quarter, U.S. revenue grew 31 percent, and when excluding revenue from COVID-19 antibodies and Elimta, revenue grew 14 percent in the U.S. This growth was driven by volume, led by Trlicity, Fresenio, Jardians, Ellumians, and Tulsa.

This quarter U S revenue grew 31% and when excluding revenue from COVID-19 antibodies in Atlanta.

<unk> grew 14% in the U S.

This growth was driven by volume led by <unk>, presenting a majority in alumina and pulp.

We experienced a net price decline of 1% for the quarter and continue to expect mid single digit price decline in the U S for the full year.

As a reminder, our single competitor to Alimta launch in the U S. In February and we expect broad generic entry in may resulting in significant erosion of U S. Alimta revenue.

Moving to Europe revenue in Q1 declined 13% in constant currency and when excluding revenue from COVID-19 antibodies and Atlanta revenue grew 14% in constant currency, driven primarily by volume growth for <unk> called <unk> and ILUVIEN we.

Anat Ashkenazi: We experienced a net price decline of 1% for the quarter and continue to expect a mid-single-digit price decline in the U.S. for the full year. As a reminder, a single competitor to Olympta launched in the U.S. in February, and we expect broad generic entry in May, resulting in significant erosion of U.S. Olympta revenue. Moving to Europe, revenue in Q1 declined 13% in constant currency, and when excluding revenue from COVID-19 antibodies and Elimta, revenue grew 14% in constant currency, driven primarily by volume growth for Trlicity, Toltz, Jardians, Fresenio, and Illumion.

Anat Ashkenazi: We expect continued growth in Europe, excluding Limta. For Japan, Q1 revenue decreased 21% in constant currency as their business there continues to be negatively affected by significant declines in off-patched products, primarily Simbalta and Olympta. The key growth products now represent 65% of total revenue in Japan, and we expect a return to growth in Japan beginning in 2023. In China, revenue grew 10% in constant currency.

We expect continued growth in Europe , excluding alimta.

For Japan, Q1 revenue decreased 21% in constant currency as our business. There continues to be negatively affected by significant declines in off patent products, primarily cymbalta and alimta.

Key growth products now represent 65% of total revenue in Japan, and we expect a return to growth in Japan, beginning in 2023.

In China revenue grew 10% in constant currency. The NRG all access has driven significant volume growth for newer products like private felicity versus any untold.

Anat Ashkenazi: The NRDL axis has driven significant volume growth for newer products like Tyvek, Trulicity, Versenio, and Tulsa, and has been partially offset by related price decreases. We expect this improved access to continue to drive future volume growth more than offset the price declines. The recent COVID-19 outbreak in China and the subsequent protective measures that are currently being put in place to control the spread of the virus highlight the potential for commercial impacts in China in the near term, particularly for infused products like typhus.

And has been partially offset by related price decreases.

We expect this improved access to continue to drive future volume growth more than offsetting the price decline.

The recent COVID-19 outbreak in China and a subsequent protective measures that are currently being put in place to control the spread of the virus highlight the potential for commercial impact in China in the near term, particularly if our infused product like Thailand.

Revenue in the rest of the world increased 29% in constant currency this quarter, driven primarily by $95 million in revenue from the sales of rights to CLS in Taiwan in Saudi Arabia, as well as by increased sales of key growth products.

Anat Ashkenazi: Revenue in the rest of the world increased 29% in constant currency this quarter, driven primarily by $95 million in revenue from the sales of rights to Cialis in Taiwan and Saudi Arabia, as well as by increased sales of key growth products. We continue to expect a mid-single-digit net price decline in 2022 for the U.S., Europe, and Japan, with a worldwide net price decline in the high single digits driven by the expanded As shown on slide 9, our key growth products continue to drive robust worldwide volume growth.

We continue to expect a mid single digit net price decline in 2022 for the U S Europe , and Japan with a worldwide net price decline in the high single digit driven by the expanded <unk> access for our products in China.

As shown on slide nine our key growth products continued to drive robust worldwide volume growth.

These products drove nearly 15% points of volume growth this quarter and continued to bolster our overall performance and outlook.

Anat Ashkenazi: These products drove nearly 15% points of volume growth this quarter and continue to bolster overall performance and outlook. Slide 10 further highlights the contributions of our key growth products. This quarter, these brands generated $3.9 billion in revenue and made up 61% of our core business revenue, growing 24%.

Slide 10 further highlights the contributions of our key growth products.

<unk> core this quarter. These brands generated $3 9 billion revenue and made up 61% of our core business revenue growing 24%.

Anat Ashkenazi: We're pleased with the continued market growth of both the GLP-1 and SGLP-2 classes, where Trulicity and Jardians are market leaders, as well as the strong Pulse prescription growth. We were also encouraged by the significant uptick of Resenium Q1, driven by the approval and launch of the adjuvant indication, which has led to an inflection in both new and total prescriptions. On slide 11, we provide an update on cap allocation In Q1 2022, we invested $2.4 billion to drive our future growth through a combination of R&D expenditures, business development outlays, and capital investment. In addition, we returned approximately $900 million to shareholders in dividends and repurchased $1.5 billion in stock.

We're pleased with the continued market growth of both the G. L. P. One <unk> two classes.

<unk> enjoyed in our market leaders as well as with the strong <unk> prescription growth.

We're also encouraged by the significant uptake of <unk> in Q1, driven by the approval and launch of the adjuvant indication, which has led to an inflection in both new and total prescriptions.

On slide 11, we provide an update on capital allocation in Q1, 2022, we invested $2 $4 billion to drive our future growth through a combination of R&D expenditures business development, our place and capital investment.

In addition, we returned approximately $900 million to shareholders in dividend and repurchased 1 billion and a half in stock.

Our capital allocation priorities remain unchanged as we continue to fund our key marketed products and expect the new launches invest in our pipeline pursue opportunities for external innovation to augment our future growth prospects and return excess capital to shareholders.

Anat Ashkenazi: Our capital allocation priorities remain unchanged as we continue to fund our key market of products and expect new launches, invest in our pipeline, pursue opportunities for external innovation to augment our future growth prospects, and return access capital to shareholders. Slide 12 is your updated 2022 financial guidance. As I previously noted, our presentation of non-GAAP financial measures will now include IPR&D and development milestone charges. For guidance, we will include charges that have been incurred or realized as of the date of the earnings release and will not include any impact from potential or pending business development.

Slide 12 is our updated 2022 financial guidance as.

As I previously noted our presentation of non-GAAP financial measures will now include IP, R&D and development milestone charges.

For guidance. We will include charge charges that have been incurred all realized as of the date of the earnings release and will not include any impact from potential or pending business development.

Anat Ashkenazi: We're providing information that should make this change as easy as possible to understand, as well as to incorporate into modeling. As always, please let us know if there's anything else we can do to be of assistance as you navigate through this transition. I want to reiterate that margin expansion continues to be a priority for our team. Consistent with prior communication, excluding IPR&D and development milestone charges, we expect to drive further non-GAAP operating margin expansion over time.

We're providing information that should make this change as easy as possible to understand as well as incorporate into modeling.

As always please let us know if there's anything else we can do to be of assistance as you navigate through this transition.

I do want to reiterate that margin expansion continues to be priority for our teams consistent with prior communication, excluding IP R&D and development milestone charges, we expect to drive further non-GAAP operating margin expansion over time.

Getting into the numbers underlying our updated guidance. There are several items that benefited first quarter results, which are not expected to recur.

Anat Ashkenazi: Getting into the numbers underlying our updated guidance, there are several items that benefited first quarter results that are not expected to recur. These include approximately a billion dollars four or five of COVID antibody sales. U.S. Solymta revenue of approximately $250 million that will be impacted by multi-source generic entrants in Q2 and beyond, a favorable effective tax rate, and a one-time benefit related to the resolution of sephachloric patent litigation in Canada.

These include approximately $1 billion $4 five of Covid antibodies sales U S. Alimta revenue of approximately $250 million that will be impacted by multi source generic entrants in Q2 and beyond.

Favorable effective tax rate and a one time benefit related to the resolution of Cefaclor patent litigation in Canada.

I would also remind you that as we look ahead to the second quarter. The Q2 2021 revenue benefited from the sale of CLS rights in China, which will provide roughly two five percentage points of headwind to our top line growth in Q2.

Anat Ashkenazi: I would also remind you that as we look ahead to the second quarter, the Q2 2021 revenue benefited from the sale of Cialis rights in China, which will provide roughly two and a half percentage points of headwind to our top line growth in Q2. Starting with revenue, we are increasing the guidance range by $1 billion to now be in the range of $28.8 to $29.3 billion, reflecting the additional revenue from BEMTA-Livimed sales in Q1. While we project an unfavorable impact from the foreign exchange rate, we are expecting to offset it with stronger core business performance.

Starting with revenue, we are increasing the guidance range by $1 billion to now be in the range of 28, 8% to $29 3 billion, reflecting the additional revenues from them to live in that sales in Q1.

While we project an unfavorable impact from foreign exchange rate, we are expecting to offset it with stronger core business performance.

Anat Ashkenazi: We anticipate that any additional revenue from sales of COVID-19 antibodies will be limited beginning in Q2 2022. While the U.S. government has an option to purchase an additional 500,000 doses of Beptolivumab no later than July 31st of this year, it is uncertain whether this option will be exercised, and therefore it is not included in our guidance. Moving down the income statement, GAAP gross margin percent is now expected to be approximately 76%, while non-GAAP gross margin is now expected to be approximately 78%.

We anticipate that any additional revenue from sales of COVID-19 antibodies to be limited beginning Q2 2022.

While the U S government has an option to purchase additional 500000 doses of <unk>. No later than July 31 of this year. It is uncertain, whether this option will be exercised and therefore it does not include in our guidance.

Moving down to income statement GAAP gross margin percent is now expected to be approximately 76%, while non-GAAP margin gross margin is now expected to be approximately 78%.

Anat Ashkenazi: The majority of this 200 basis point reduction is due to the impact of Q1 BEP on LIBIMEP sales, which has a lower gross margin, and to a lesser extent, an increase of approximately $100 million in logistics and manufacturing costs due to inflation.

The majority of this 200 basis point reduction is due to the impact of Q1 bet to live in Mems sales, which has lower gross margin and to a lesser extent, an increase of approximately $100 million in logistics and manufacturing costs due to inflation.

The range for R&D expenses has been increased by 100 million to be seven 1% to seven $3 billion driven by investment our late stage pipeline, primarily altzheimer's clinical development and investment to advance to diagnostics ecosystem.

Anat Ashkenazi: The range for R&D expenses has been increased by $100 million to be $7.1 to $7.3 billion, driven by investment in our late-stage pipeline, primarily Alzheimer's clinical development, and investment to advance the diagnostics ecosystem. Our guidance includes acquired IPR&D and development milestone charges of approximately $521 million, reflecting Q1 charges of $166 million, with the remainder primarily related to a charge associated with the buyout of future obligations that were contingent upon the development, regulatory, and commercial success of our mutant-selective PI3K inhibitor. This guidance does not include any impact from potential or pending business development transactions. Gap and non-gap operating margin decreased 200 basis points to approximately 28% and 30%, respectively, primarily due to the negative impact associated with the acquired IPR&D and development milestone charges to date.

Our guidance includes acquired IP, R&D and development milestone charges of approximately $521 million, reflecting Q1 charges of $166 million.

With the remainder primarily related to a charge associated with the buyout of future obligations that were contingent upon development regulatory and commercial success of our mutant selective <unk> inhibitor.

This guidance does not include any impact from potential or pending business development transactions.

GAAP and non-GAAP operating margin decreased 200 basis points to approximately 28% and 30% respectively, primarily due to the negative impact associated with the acquired IP R&D and development milestone charges to date.

Given the accounting change for acquired IP, R&D and development milestone charges and the inherent variability associated with strike charges, our non-GAAP operating margin figure.

Anat Ashkenazi: Given the accounting change for acquired IPR&D and development milestone charges and the inherent variability associated with such charges, our non-GAAP operating margin figure will not measure efficiency in the same way it has done historically. However, you can track our operating margin in the way you deem most appropriate, knowing that we aim to expand operating margin over time, excluding acquired IPR&D and development milestone charges. Our Q1 2022 tax rate and EPS include a favorable impact from the provision in the 2017 Tax Act that requires capitalization of research and development expenses for tax purposes.

<unk> measure efficiency in the same way it has done historically.

However, you can track our operating margin in the way you deem most appropriate knowing that we aimed to expand operating margin over time, excluding acquired IP R&D and development milestone charges.

Our Q1 2022 tax rate and EPS include a favorable impact from the provision in the 2017 tax act that requires capitalization of research and development expenses for tax purposes.

Our financial guidance for the full year is unchanged and assumed that this provision will be deferred over fueled by Congress.

Anat Ashkenazi: Special guidance for the full year is unchanged and assumes that this provision will be deferred or repealed by Congress effective for 2022. If this provision is not deferred or repealed effective this year, then we would expect our reported and non-GAAP tax rates to be approximately 10 to 11 percent. It is notable that while this provision favorably impacts certain tax items which decrease our effective tax rates, we expect it will increase our 2022 cash payments of income taxes by approximately $1.5 billion.

<unk> for 2022.

This provision is not deferred over until effective this year than we would expect our reported and non-GAAP tax rate to be approximately 10% to 11%.

It is notable that while this provision favorably impacts certain tax items, which decreased our effective tax rate. We expect it will increase our 2022 cash payments of income taxes by approximately $1 $5 billion.

Based on these changes we have lowered our reported EPS guidance by 70.

Dan Skovronsky: Based on these changes, we have lowered our reported EPS guidance by 70 cents to now be in the range of $7.3 to $7.45 per share and lower non-GAAP EPS guidance to be in the range of $8.50 to $8.30. The $0.35 reduction in our non-GEP EPS range includes a $0.55 decrease due to the year-to-date acquired IPR&D and development milestone charges. Partially offset by improved business performance of $0.20, attributable to the net benefit of Q1 BEP DeliverMEP sales and increased investments in R&D.

To now be in the range of seven 3% to $7 45 per share and lower non-GAAP EPS guidance to be in the range of $8 52.

$8 30.

That 35 cents reduction are noncore.

non-GAAP EPS range includes a 50 <unk> decreased due to the year to date acquired IP R&D and development milestone charges, partially offset by improved business performance of 'twenty.

Attributable to the net benefit of Q1, they have to live in that sales and increased investments in R&D.

Dan Skovronsky: Now I will turn the call over to Dan to highlight our progress in R&D. Thanks, Anat. Let me start with today's exciting announcement, the positive top-line results from the Terzapitide Surmount I Phase III study. Participants without type 2 diabetes who have obesity or are overweight with at least one comorbidity achieved up to 22.5% weight loss at 72 weeks, which translates to a mean weight loss of 52 pounds. Terzapatide is the first investigational medicine to deliver more than 20% weight loss on average in a Phase III study. Indeed, most people on 10 or 15 mg of terzapatide in this trial achieved 20% or greater weight loss, and up to 63% of patients on 15 mg achieved this level of weight reduction.

Now I will turn the call over to Dan to highlight our progress in R&D.

Let me start with today's exciting announcement of positive topline results from the trees appetite surmount, one phase III study.

Participants without type two diabetes, who have obesity or overweight with at least one comorbidity.

<unk> up to 22, 5% weight loss at 72 weeks, which translates to a mean weight loss of 52 pounds.

<unk> appetite is the first investigational medicine to deliver more than 20% weight loss on average in a phase three study.

Indeed, most people on 10 or 15 milligrams of <unk> appetite in this trial achieved 20% or greater weight loss and up to 63% of patients on 15 milligrams achieved this level of weight reduction.

Obesity is a chronic disease that needs more effective treatment options for patients. We are working hard at Lilly to create new potentially innovative medicines with the aim to modernize how this disease has approached.

Dan Skovronsky: Obesity is a chronic disease that needs more effective treatment options for patients. We're working hard at Lilly to create new, potentially innovative medicines with the aim of modernizing how this disease is approached. We hope that Terzapotite can be Lilly's first such medicine, and the Shemout program has been designed to test just that. I'll cover the Surmount I results in more detail, but first, let me quickly provide an overview of the Surmount Phase III program.

Dan Skovronsky: The Surmount Program has enrolled more than 5,000 people with obesity or overweight across six studies, four of which are global registration studies. On slide 13, you can see key trial design elements for those four global registration studies. All four studies compared the efficacy and safety of terzapatide to placebo as an adjunct to a reduced calorie diet and increased physical activity. Surmount One was designed to evaluate treatment with terzepatide compared to placebo to provide weight reduction and safety data for people without type 2 diabetes, with obesity, or overweight with at least one comorbidity.

We hope that there's appetite can be released first such medicine and the surmount program has been designed to test just that.

Dan Skovronsky: Surmount 2 will provide weight reduction and safety data for people with obesity or overweight with type 2 diabetes. Surmount III will provide data on maximizing weight loss following an intensive lifestyle program, and Surmount IV will evaluate maintaining weight loss. We expect the remaining three global studies to read out in the middle of 2023. Note that dose escalation in the SHMOUT program is consistent with that of the SURPASS program for the treatment of type 2 diabetes with terzapatide. Patients start with 2.5 mg of terzapatide and move up every 4 weeks in 2.5 mg increments to reach their target dose.

I'll cover the surmount one results in more detail, but first let me quickly provide an overview of the surmount phase III program.

This amount program has enrolled more than 5000 people with obesity or overweight across six studies four of which are global registration studies on slide 13, you can see key trial design elements for those four global registration studies, all four studies compare the efficacy and safety of <unk> appetite to placebo as an adjunct to reduced calorie diet and increased.

Dan Skovronsky: In Surmount 3 and 4, study participants will escalate to the maximum tolerated dose of either 10 milligrams or 15 milligrams. Patients escalating to the maximum tolerated dose provide the opportunity to evaluate the full potential for weight reduction. Studies vary in duration from 72 to 82, 72 to 88 weeks, and Surmount One will continue through 176 weeks to evaluate whether terzapatide can actually slow the time to onset of type 2 diabetes in participants who had pre-diabetes at the time of entering the clinical trial.

Physical activity.

Surmount, one was designed to evaluate treatment with serious appetite compared to placebo to provide weight reduction and safety data for people without type two diabetes with obesity or overweight with at least one comorbidity.

Surmount, two will provide weight reduction and safety data for people with obesity are overweight with type two diabetes.

<unk> three will provide data on maximizing weight loss following an intensive lifestyle program.

About four evaluates maintaining weight loss.

We expect the remaining three global studies to read out in the middle of 2023.

Note that dose escalation in this surmount program is consistent with that of the surpass program for the treatment of type two diabetes with Sears appetite patients.

Patients start with two five milligrams, which is appetite and move up every four weeks and two five milligram increments to reach their target dose.

<unk> three and four study participants will escalate to the maximum tolerate dose of either 10 milligrams or 15 milligrams patients escalating the maximum tolerated dose provides the opportunity to evaluate the full potential for weight reduction.

Studies varying duration from 72% to 80, 270% to 88 weeks and surmount. One will continue through 176 weeks to evaluate whether <unk> appetite can actually slow the time to onset of type two diabetes and participants who had pre diabetes at the time of entering the clinical trial.

Dan Skovronsky: We believe this will be important additional information for patients and physicians. Surmount One, a large trial that enrolled over 2,500 participants, met its co-primary study endpoints and also hit on all pre-specified key secondary endpoints. On slide 14, you can see the first co-primary end point in the Surmount One study, which is appetite delivered up to 22.5% mean body weight reduction in adults with obesity or overweight. With a mean baseline weight across the study of 231 pounds, this translates into a mean body weight reduction of 52 pounds on the 15 milligram treatment arm of the study.

We believe this will be important additional information for patients and physicians.

Surmount won a large trial, which enrolled over 2500 participants met its co primary study endpoints and also hit on all Prespecified key secondary endpoints.

On Slide 14, you can see the first co primary endpoint in this surmount one study, which is appetite delivered up to 22, 5% mean body weight reduction in adults with obesity or overweight.

With the mean baseline weight across the study of 231 pounds. This translates into a mean body weight reduction of 52 pounds on the 15 milligram treatment arm of the study.

Along with the impressive results from the 10 milligram dose, which showed 21, 4% mean body weight reduction. We were also very pleased to see how well the five milligram arm performed with a 16% mean body weight reduction also at 72 weeks for the efficacy estimate.

Dan Skovronsky: Along with the impressive results from the 10 mg dose, which showed a 21.4% mean body weight reduction, we were also very pleased to see how well the 5 mg arm performed with a 16% mean body weight reduction, also at 72 weeks for the efficacy estimate. Moving to slide 15, Terzapatide obviously achieved the second co-primary endpoint of driving at least 5% weight reduction. Clearly, the vast majority of subjects, including greater than 96% of participants in the 10 and 15 milligram arms, achieved this level of weight reduction.

Moving to slide 15 tours appetite, obviously achieved the second co primary endpoint of driving at least 5% weight reduction clearly the vast majority of subjects, including greater than 96% of participants in the 10 and 15 milligram arms achieved this level of weight reduction.

Dan Skovronsky: We're really excited that a key secondary endpoint in SIRMOUT1 showed up to 63% of patients achieved at least 20% body weight reduction at 72 weeks, again using the efficacy estimate. This is compared to only 1% of participants who achieved greater than 20% weight loss on placebo as an adjunct to diet and exercise.

We're really excited that a key secondary endpoint is surmount one showed up to 63% of patients achieved at least 20% body weight reduction at 72 weeks again using the efficacy estimate this is compared to only 1% of participants who achieved greater than 20% weight loss on placebo as an adjunct to diet and exercise.

Moving to slide 16, you can see the safety profile from the <unk>. One study <unk> was well tolerated in study participants with the overall safety and Tolerability profile similar to <unk> based therapies approved for the treatment of obesity.

Dan Skovronsky: Moving to slide 16, you can see the safety profile from the ChAMAT1 study. Terzapatide was well tolerated in study participants, with an overall safety and tolerability profile similar to incretin-based therapies approved for the treatment of obesity. As in the SURPASS program, the most common reported adverse events were GI-related, generally mild to moderate in severity, and usually occurred during dose escalation.

As in the surpass program. The most commonly reported adverse events were Gi related generally mild to moderate in severity and usually occurred during dose escalation.

Treatment discontinuation rates due to adverse events were between four 3% and seven 1% for separate type treatment arms compared to two 6% for placebo.

Dan Skovronsky: Treatment discontinuation rates due to adverse events were between 4.3% and 7.1% for tracepatide treatment arms compared to 2.6% for placebo. Overall, treatment discontinuation rates ranged from roughly 14-16% in the tritazepatide arms compared to over 26% for placebo. The minimal weight loss seen in the placebo treatment group combined with the observed placebo discontinuation rate of 26% demonstrates the limited efficacy of diet and exercise alone and highlights the significant unmet medical need for people with this disease.

Overall treatment discontinuation rates range from roughly 14% to 16% and the truth is appetite arms compared to over 26% for placebo.

The minimal weight loss seen in the placebo treatment group combined with the observed placebo discontinuation rate of 26%.

Demonstrating the limited efficacy of diet and exercise alone and highlights the significant unmet medical need for people with this disease.

We'll continue to evaluate the surmount one study data and are planning to present findings at a medical meeting in the second half of this year and of course, we plan to submit our manuscript to a top tier peer reviewed journal.

Dan Skovronsky: We'll continue to evaluate the SHMOUT1 study data and are planning to present findings at a medical meeting in the second half of this year, and, of course, we plan to submit our manuscript to a top-tier peer-reviewed journal. As Dave mentioned earlier, obesity is a chronic disease impacting over 110 million Americans, and there is a great need for more effective treatment options. While our current alignment with the FDA is to complete the force or mount global registrational studies prior to submission, we believe the impressive results from Surmount One warrant further discussion. Based on our existing robust data set, we're looking forward to reviewing the data with the FDA and discussing the potential for an expedited path forward for this indication. Moving on to the rest of the portfolio.

As Dave mentioned earlier obesity is a chronic disease impacting over 110 million Americans and there is great need for more effective treatment options.

While our current alignment with the FDA is to complete the four surmount global Registrational studies prior to submission.

We believe the impressive results from surmount one warrant further discussion.

Based on our existing robust dataset, we're looking forward to reviewing the data with the FDA and discussing the potential for an expedited path forward for this indication.

Moving to the rest of the portfolio Slide 17 shows select pipeline opportunities as of April 27th and Slide 18 shows potential key events for the year.

Dan Skovronsky: Slide 17 shows select pipeline opportunities as of April 27th, and slide 18 shows potential key events for the year. There have been several other important developments since our last earnings call, and I'll cover these by therapeutic area. In diabetes, along with our partner Berenger Ingelheim, we're proud of the expanded indication for Jardians as a treatment for heart failure with preserved ejection fraction, which has been classified as the single largest unmet need in cardiovascular medicine.

There have been several other important developments since our last earnings call and I'll cover these by therapeutic area.

And diabetes, along with our partner Beringer Ingelheim, we're proud of the expanded indication for <unk> as a treatment for heart failure with preserved ejection fraction, which has been classified as the single largest unmet need in cardiovascular medicine.

Dan Skovronsky: Jardance is now the first and only heart failure therapy to demonstrate a statistically significant risk reduction in cardiovascular death or hospitalization for heart failure, regardless of ejection fracture. We also announced that phase 3 trials studying Jardines for Chronic Kidney Disease will stop early due to clear positive efficacy. The recommendation was made by an independent data monitoring committee.

Short answer is now the first and only heart failure therapy to demonstrate statistically significant risk reduction in cardiovascular death or hospitalization for heart failure, regardless of ejection fraction.

We also announced the phase III trial studying <unk> for chronic kidney disease will stop early due to clear positive efficacy. The recommendation was made by an independent data monitoring committee and while we've not yet seen results from this interim analysis. We are excited about the potential for this new indication and expect to share detailed results from the upcoming primary analysis at a medical meeting in.

Dan Skovronsky: And while we've not yet seen results from this interim analysis, we're excited about the potential for this new indication and expect to share detailed results from the upcoming primary analysis at a medical meeting in the second half of this year. Last month, we began dosing patients in the first of five phase three trials for our investigational weekly insulin, basal insulin FC, or BIF. The QINT3 trial compares weekly BIF to insulin deglidec, where patients are currently treated with basal insulin.

Second half of this year.

Last month, we began dosing patients in the first of five phase III trials for an investigational weekly insulin basal insulin FC or bit.

<unk> three trial compares weekly Beth to insulin degler deck, where patients are currently treated with basal insulin.

Dan Skovronsky: We intend to start the other four phase three trials later this year. You'll also see we've advanced our long-acting amylin receptor agonists to phase one development in obesity. Shifting to immunology, we presented mirakizumab induction data from LUCENT1 at the European Crohn's and Colitis Virtual Congress.

We intend to start the other four phase III trials later this year.

You'll also see we've advanced our long acting amylin receptor agonist to phase one development in obesity.

Shifting to immunology, we presented mirror kismet of induction data from Lucent wanted the Europeans Crohns and colitis virtual Congress.

Dan Skovronsky: Demonstrating superiority over placebo for the primary and all key secondary endpoints, these data show patients with moderately to severely active ulcerative colitis achieved statistically superior rates of clinical remission compared to patients taking placebo, with nearly two-thirds of patients responding to Mirakizumab. The results indicated improved symptom relief, including decreased bowel urgency and resolution or near resolution of inflammation. Building upon the positive outcomes from LUCENT 1, we look forward to sharing maintenance data from LUCENT 2 later in Q2. We're also excited to announce that we've submitted to the FDA and expect submissions in Europe and Japan in Q2. Mirakizumab has the potential to be the first-in-class IL-23p19 inhibitor treatment for people with ulcerative colitis.

Demonstrating superiority over placebo for the primary and all key secondary endpoints. These data show patients with moderately to severely active ulcerative colitis achieved statistically superior rates of clinical remission compared to patients taking placebo with nearly two thirds of patients responding to <unk>.

The results indicated improved symptom relief, including decreased bowel urgency and resolution or near resolution of inflammation.

Building upon the positive outcomes from loosen one we look forward to sharing maintenance data from Lucerne two later in Q2.

We're also excited to announce that we've submitted to the FDA and expect submissions in Europe and Japan in Q2.

<unk> has the potential to be the first in class IL 23, <unk> inhibitor treatment for people with ulcerative colitis.

Last month at the American Academy of Dermatology annual meeting, we shared <unk> Mab monotherapy data showing more than 50% of patients with moderate to severe atopic dermatitis experienced at least 75% reduction in disease severity at 16 weeks.

Dan Skovronsky: Last month at the American Academy of Dermatology Annual Meeting, we shared Leberkizumab monotherapy data showing more than 50% of patients with moderate to severe atopic dermatitis experienced at least 75% reduction in disease severity at 16 weeks. Additionally, at the revolutionizing atopic dermatitis conference, we shared data showing 70% of patients receiving leberizumab combined with topical corticosteroids achieved at least 75% improvement in overall We believe these data could help establish a competitive profile for Lebrokizumab, and we're looking forward to further data from our maintenance studies in the first half of this year to provide insight into the durability of Lebrokizumab. Global submissions are expected by year-end.

Additionally, at the revolutionizing atopic dermatitis conference, we shared data showing 70% of patients receiving <unk> mab combined with topical corticosteroids achieved at least 75% improvement in overall disease severity.

We believe these data could help establish a competitive profile for <unk> and we're looking forward to further data from our maintenance studies in the first half of this year to provide insight into the durability of efficacy.

Global submissions are expected by year end.

Moving to <unk>. The FDA review for Alopecia Areata is underway and we're pleased to note that the FDA has granted priority review designation.

Dan Skovronsky: Moving to Barristinib, the FDA review for alopecia areata is underway, and we're pleased to note that the FDA has granted priority review designation. As expected, we also received a complete response letter from the FDA for baricitinib for the atopic dermatitis indication, as we were not in alignment with the agency on the indicated population. Finally, in immunology, we have discontinued the Phase 2 study for IL-2 and ulcerative colitis due to a lack of efficacy based on interim analysis.

As expected. We also received a complete response letter from the FDA for <unk> atopic dermatitis indication as we were not in alignment with the agency on the indicated population.

Finally in immunology, we've discontinued the phase II study for IL two in ulcerative colitis to do a lack of efficacy based on interim analysis.

Dan Skovronsky: The safety was consistent with that observed in previous studies, and this decision does not impact the ongoing or planned studies for IL-2 and SLE or atopic dermatitis, as each disease state evaluates a different clinical hypothesis. Moving on to neuroscience and the national coverage determination issued earlier this month for monoclonal antibodies directed against amyloid. We share the disappointment of patients and their caregivers with this NCD, and we note more generally that innovation in new medical areas nearly always starts with data that is less proven and more debated and may proceed initially through regulatory mechanisms such as accelerated approval.

The safety was consistent with that observed in previous studies and this decision does not impact the ongoing or planned studies for IL, two and SLE or atopic dermatitis as each disease state evaluates a different clinical hypothesis.

Moving on to neuroscience and the national coverage determination issued earlier this month for monoclonal antibodies directed against amyloid.

We share the disappointment of patients and their caregivers with this mcd and we know more generally the innovation of new medical areas. Nearly always starts with data that are less proven and more debated and May proceed initially through regulatory mechanisms such as accelerated approval.

We believe that medicare's decision to use <unk> in such circumstances is in conflict with Fda's and Congress's intent of expedited regulatory pathways and is likely to have a stifling effect on innovation for new medical areas.

Dan Skovronsky: We believe that Medicare's decision to use CED in such circumstances is in conflict with FDA's and Congress' intent of expedited regulatory pathways and is likely to have a stifling effect on innovation for new medical areas, causing harm to patients that are waiting and in need of new medicine. That said, we're continuing with our rolling submission to the FDA under the Accelerated Approval Pathway. We intend to complete our initial submission yet in Q2, enabling a potential regulatory decision in early 2023.

Harm to patients that are waiting and in need of new medicines.

That said, we're continuing with our rolling submission to the FDA under the accelerated approval pathway, we intend to complete our initial submission yet in Q2, enabling a potential regulatory decision in early 2023.

We believe it would be beneficial for genetic map to obtain accelerated approval proximal to the trailblazer ALS two phase III readout in mid 2023, which would enable parallel discussions with CMS regarding outright coverage and expedited review time for full FDA approval.

Dan Skovronsky: We believe it would be beneficial for Genetimab to obtain accelerated approval proximal to the Trailblazer ALS-2 Phase 3 readout in mid-2023, which would enable parallel discussions with CMS regarding outright coverage and expedited review time for full FDA approval. We believe that given the thoughtful and robust design of Trailblazer L2, if the study is positive, it should meet the high level of evidence criteria set forth by CMS in the NCD decision. At that time, we will advocate for CMS to reconsider outright coverage of synonymous drugs.

We believe that given the thoughtful and robust design of trailblazer else too. If the study is positive it should meet the high level of evidence criteria set forth by CMS in the NCD decision.

At that time, we will advocate for CMS to reconsider outright coverage, it's an intermittent.

As we've stated previously it's inconceivable to us that one substantial evidence of clinical benefit has been established for any Alzheimer's medicine people with the disease won't have access to it our view of the mid and long term opportunity to help patients with genetic map remains unchanged.

Dan Skovronsky: As we stated previously, it's inconceivable to us that once substantial evidence of clinical benefit has been established for any Alzheimer's medicine, people with the disease won't have access to it. Hence, our view of the mid- and long-term opportunity to help patients with Denetimab remains unchanged. Moving now to oncology with pertubrutinib, we're also working on a rolling submission here under the accelerated approval pathway, in this case for mantle cell lymphoma. Here, we also expect to complete our initial submission in Q2.

Shifting now to oncology with <unk>. We're also working on a rolling submission here under the accelerated approval pathway in this case for mantle cell lymphoma.

We also expect to complete our initial submission in Q2.

We received a complete response letter from the FDA regarding the submission for <unk>, which was in line with our expectation after the oncology Oncologic drugs Advisory Committee meeting earlier this year.

Dan Skovronsky: We received a complete response letter from the FDA regarding the submission for centilumab, which was in line with our expectation after the Oncologic Drugs Advisory Committee meeting earlier this year. Along with Inovent, we're assessing next steps for some Telenab in the U.S. Further, in the oncology pipeline, we've started two additional phase three studies. The first is an additional study evaluating Verzenio, an HR-positive, HER2-negative, advanced or metastatic breast cancer drug, in combination with fulvestrant following progression on a CDK4-6 inhibitor and endocrine therapy.

Along with an event, we're assessing next steps for <unk> in the U S.

Further in the oncology pipeline, we started two additional phase III studies. The first is an additional study evaluating <unk> in HR positive <unk> negative advanced or metastatic breast cancer in combination with full vestron's following progression on a CDK <unk> inhibitor and endocrine therapy.

The second is cycling three evaluating <unk> in earlier lines of prostate cancer.

Dan Skovronsky: The second is Cyclone Three, evaluating Virginia when earlier lines of process failed. We've also advanced our next generation RET inhibitor to phase one development, and we've discontinued our Aura A kinase inhibitor as we did not see sufficient monotherapy activity to warrant further development. Similarly, in our pain therapeutic area, we decided to discontinue development of epiregulin TGF-alpha because it did not meet criteria for proceeding. Finally, as Dave mentioned earlier, the FDA authorized bebtolevimab for emergency use for certain non-hospitalized patients with mild to moderate COVID-19. Bebtelevumab neutralizes Omicron, including the BA2 sublimate lineage, as demonstrated by pseudovirus and authentic virus neutralization.

We have also advanced our next generation Ret inhibitor to phase one development and we have discontinued our Aurora a kinase inhibitor as we did not see sufficient monotherapy activity to warrant further development.

Similarly in our pain therapeutic area, we've decided to discontinue development of upper regulate TGF alpha because it did not meet criteria for proceeding.

Finally, as Dave mentioned earlier, the FDA authorized <unk> map for emergency use for certain non hospitalized patients with mild to moderate COVID-19.

That deliver neutralizes omicron, including the two sub limited lineage as demonstrated by pseudo virus and authentic virus neutralization assays.

As you can see Q1 was another busy but successful quarter for pipeline advancement at Lilly now I'll turn the call back to Dave for some closing remarks.

Dave Ricks: As you can see, Q1 was another busy but successful quarter for pipeline advancement at Lilly. Now, I'll turn the call back to Dave for some closing remarks. Thanks, Dan. Before we go to Q&A, let me briefly sum up the progress we've made this year. We delivered solid sales growth, driven largely by volume from our key growth products, which represent 61% of our core business.

Thanks, Sam before we go to Q&A, let me briefly sum up the progress we've made this year.

Dave Ricks: We continue to see opportunity for meaningful operating margin expansion over time, excluding the impact of acquired IPR&D and development milestone charges. We made significant progress developing new medicines with exciting advances, including for Jardians in Hef-Pef, the EUA authorization for Bebtulovumab, the submission of Mirakizumab and ulcerative colitis, as well as positive phase 3 results for terzipatidin obesity and Jardians in chronic Finally, we returned $2.4 billion to shareholders via the dividend and share repurchase.

We delivered solid sales growth driven largely by volume from our key growth products, which represent 61% of our core business. We continue to see opportunity for meaningful operating margin expansion over time.

Excluding the impact of acquired IP, R&D and development milestone charges.

We made significant progress developing new medicines with exciting advances, including for Guardians and half path. The EUA authorization for Bedfellow for map the submission of <unk> in ulcerative colitis as well as positive phase III results for <unk> in obesity and <unk> in chronic kidney disease.

Finally, we returned $2 $4 billion to shareholders via the dividend and share repurchase.

We are committed to invest for the long term.

Kevin Hearn: We are committed to investing for the long term, to advance promising R&D opportunities and support launches to bring groundbreaking therapies to patients diagnosed with some of the most challenging diseases facing humankind, like diabetes, obesity, Alzheimer's, cancer, and autoimmune disorders. With the progress we've seen to date, we remain extremely confident in our long-term growth prospects. Now I'll turn the call over to Kevin to moderate our Q&A session. Thanks, Kate.

To advance promising R&D opportunities and support launches to bring groundbreaking therapies to patients diagnosed with some of the most challenging diseases facing humankind.

Diabetes obesity Alzheimer's.

Cancer and autoimmune disorders.

With the progress we've seen to date, we remain extremely confident in our long term growth prospects.

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

Thanks, Steve we'd like to take questions from as many callers as possible. So we ask that you limit your questions to two per caller.

Operator: 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 a queue, and you may remove yourself from the queue at any time by repeating the 1-0 command.

<unk>. 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. One then zero on your Touchtone phone you will hear an acknowledgment Tom that you've been placed into queue and you may remove yourself from queue at any time by repeating the one zero command.

Operator: If you're on a speakerphone, please pick up your handset before pressing the number. Once again, if you have a question, please press one then zero. And our first question is from the Lion of Louise Chin. Please go. She's from Kansas.

On a speakerphone please pick up your handset before pressing the number once again if you have a question. Please press 190.

First question is from the line of Louise Chen. Please go ahead.

And he is from Cantor.

Hi, congratulations on this amount Dana and thanks for taking my questions here. So I did want to ask you more on his appetite for Matt How do you see the market landscape for obesity changing in light of your positive surmount data today.

Louise Chen: Hi, congratulations on the surmount data and thanks for taking my questions here. So I do want to ask you more in terms of appetite and surmount. How do you see the market landscape for obesity changing in light of your positive surmount data today? Is there an opportunity to file for that indication with the data? And what's a larger opportunity for you here? Is it type 2 diabetes or obesity?

Is there an opportunity to file for that indication with the data and what is a large opportunity for you here the type two diabetes our obesity. Thank you.

Dave Ricks: Thank you. Thanks, Louise. We'll go to Mike Mason for those.

Thanks, Luis will go to Mike Mason for those.

Mike Mason: All right, we thanks for the compliments up front. We appreciate that. I think the market opportunity, is it kind of remains what we thought before we see it as a sizable opportunity and when we look at the just the massive numbers of people who live with obesity over 100 million people in the U.S. 650 million people globally contributes a burden of over 1 trillion dollars globally. We do think it's a huge opportunity it should be perceived as a and and treated as a chronic illness it not only has health implications but it if you live with obesity it's a it's a very visible disease unlike others that really brings with it some unfortunate stigma in society that that really hurts individuals both physically and emotionally and so there's a need to treat this disease if the market's not going to develop overnight we have to increase awareness that this is a chronic disease that needs to be treated we do need to you know establish and grow the access for it so we're looking long term to this I think it's important for us to be able to build the foundation build the knowledge that this is a chronic disease get that appreciated by healthcare professionals and and and payers and then grow the market so we're going to look long term we're investing obviously not only intercepted but early at many early assets because we do think this is a a need in the marketplace that we need to focus on and obviously we're quite delighted by surmount one not not only the the high dose I mean obviously when we saw the 52 pounds of weight loss at the high dose on average we were wowed by that but you know I'm also as excited about the 16 percent weight loss at the five milligram because everyone we look at the averages but there is no averages out there every individual is different and we need to have a medication that at different doses offer different weight loss and so I'm very pleased about the the dose profile and the weight loss profile across all the doses as Dan said um you know we've originally on the on your filing question we you know we have aligned with the FDA on on four trials the surmount one two three and four program but you know given the the huge market need and given this data we do think it warrants a discussion with the FDA about whether we can find a path to accelerate it to the marketplace to meet this need the amount one data is great we also have you know over 4 000 patients in the surpass five global restoration studies that provides a lot of good information on the safety and efficacy of trisepatide in the diabetes population to go along with surmount one so we look forward to that that um conversation I think when we when you look at I think your last question was are we more excited about diabetes and obesity um I think we're equally excited about both of them obviously we'll focus our our attention on diabetes first still a huge massive on that need with unfortunately only half of people who live with type 2 diabetes in good control so we'll focus on that and then we'll focus long term on obesity as I said earlier so thanks for the question thanks for the compliments appreciate it, Thanks, Mike. Louise, thanks for your questions. Next caller, please. The next caller is Terrence Flynn from Morgan Stanley. Please go ahead.

Alright, thanks for the compliment upfront, we appreciate that I think the market opportunity.

As you kind of remains what we thought before.

We see it as a sizable opportunity and when we look at the just the massive numbers of people, who live with obesity over 100 million people in the U S 650 million people globally.

Contributes.

A burden of over $1 billion globally, we do think it's a huge opportunity to be perceived as a and treated as a chronic illness.

<unk> has help implications but.

If you live with obesity.

Very visible disease, unlike others that really brings with it some unfortunate stigma and to society that that really hurts individuals', both physically and emotionally and so there is a need to treat this disease.

The market is not going to develop overnight we have to increase awareness that this is a chronic disease that needs to be treated we do need.

Establish and grow the access for it. So we're looking long term to this I think it's important for us to be.

We will build the foundation build the knowledge that this is a chronic disease get that appreciated by health care professionals and and.

And payers and then grow the market. So we're going to look long term, we're investing obviously not only in <unk>, but early at many early assets because we do think this is a need in the marketplace that we need to focus on and obviously, we're quite delighted buys from out one.

Not only the high dose I mean, obviously when we saw the 52 pounds of weight loss at the high dose on average we were wowed by that but I'm also as excited about the 16% weight loss at the five milligram because everyone. We look at the averages but there is no averages out there every individual is differ.

And we need to have a medication that at different doses offer a different weight loss and so I'm very pleased about the dose profile in the weight loss profile across all the doses as Dan said.

We've originally on the on your filing question.

We have aligned with the FDA on on four trials the storm.

So about 123 and four program.

But given the huge market need and given this data we do think it warrants discussion with the FDA about whether we can find a path to accelerate it to the marketplace to meet this need.

This amount one data is great. We also have over 4000 patients in the surpass five global reservation studies that provides a lot of good information on the safety and efficacy of <unk> appetite.

These population to go along with it for Mt won so we look forward to that.

Conversation I think when we when you look at I think your last question was are we more excited about diabetes and obesity.

I think we are equally excited about both of them. Obviously, we will focus our attention on diabetes first still a huge massive unmet need with unfortunately, only half of people who live with type two diabetes and good control. So we will focus on that.

And then we will focus long term on the BC as I've said earlier. So thanks for the question and thanks for the compliment I appreciate it.

Michael Louise Thanks for your questions next caller. Please the next caller is Sharon Flynn from Morgan Stanley . Please go ahead.

Great. Let me offer my congratulations as well as some route one data.

Terence Flynn: Great. Let me offer my congratulations as well, Mr. Murat, on one data point. I had two questions. The first is just based on the timing of the acceptance of the terzapatide BLA for diabetes; it seems like we're past the window for the FDA to convene an advisory committee. So just wondering if you agree or if the door is still open there. And then I was just wondering, probably a question for Mike, if you could share your latest perspectives on the commercial positioning of terzapatide. Is this going to be a single brand or two separate brands?

Two questions. The first is just based on the timing of the acceptance of the <unk> appetite for diabetes. It seems like we're past the window for the FDA to convene an AD com panel. So just wondering if you agree or if the door is still open there.

And then I was just wondering probably a question for Mike If you could share your latest perspective on commercial positioning of turns appetite is this going to be a single brand or two separate brands and then how are you thinking early on just high level thoughts about pricing here or is this going to be based on dose level are fixed.

Dave Ricks: And then how are you thinking early on just high-level thoughts about pricing here? Is this going to be based on dose level or fixed as it is with Trulicity? Thank you. Thanks, Terrence.

<unk>. Thank you thanks.

Mike Mason: We'll go to the mic for both those questions. Okay, thanks for the question. I'll answer your second question first, on kind of our commercial position. Obviously, for competitive reasons, we'll keep that, you know, to ourselves at this time. But know that we will focus on maximizing the opportunity long term in diabetes and obesity, and we'll make the right moves, whether that's one or two brands. We'll have discussions with the FDA on the one versus two brands, and it's too early to talk about that at this point.

Thanks, Terrence will go to Mike for both those questions.

Okay. Thank.

Thanks for the question I'll answer your second question personal and kind of our commercial positioning and obviously for competitive reasons, we'll keep that to ourselves at this time.

Know that we will focus on maximizing the opportunity long term.

In diabetes, and obesity, and we will make the right moves whether that's one or two brands, we'll have dialogues with the FDA.

The FDA on the one versus two brands and it's too early to talk about that at this point.

With regards to the to the AD Comm, we don't anticipate an AD com fortress appetite.

Thanks, Mike Terence Thanks for your questions next caller please.

Mike Mason: With regard to the adcom, we don't anticipate an adcom for trizepatide. Thanks Mike. Terrence, thanks for your questions. Next caller, please. Next caller is Geoff Meacham from Bank of America. Please go ahead.

Next caller is Geoff Meacham from Bank of America. Please go ahead.

Hey, guys. Thanks, so much for the question also on offer my congrats on the data, but just on a few on the on the obesity opportunity.

Geoff Meacham: Hey guys, thanks so much for the question. Also want to offer my congratulations on the data. I just had a few on the obesity opportunity. Dan, I have a question for you.

Dan a question for you the market gaining factors still looks to be reimbursement and access and I think the prevailing wisdom is that an outcome study will be needed. So first do you agree with that and second is if you do.

How are you guys thinking about the size and scope.

The outcome study.

Sure if there's a benefit.

Point estimate of a benefit that you think can help drive reimbursement Oreo for example, bariatric surgery was a was a reasonable reference point. Thank you.

Thanks, We'll go to Dan and then Mike also invite you to weigh in on our MMO study.

Dan Skovronsky: The market gaining factor still looks to be reimbursement and access, and I think the prevailing wisdom is that an outcome study will be needed. So, first, do you agree with that? And second, if you do, how are you guys thinking about the size and scope of an obesity outcome study? I wasn't sure if there was a benefit, like a point estimate of a benefit that you think could help drive reimbursement or if, for example, bariatric surgery was a reasonable reference point.

Yes. Thanks.

Of course, we believe and there is.

Really quite a bit of evidence that weight loss will lead to two really strong benefits and outcomes across a variety of diseases.

Obviously cardiovascular disease is near the top of the list.

But there are many others as well.

We know a lot from Barry <unk> surgery, which is shown that it can reverse type two diabetes or prevent the onset of diabetes. It can reduce cardiovascular risk it can decrease.

Even mortality when you get weight loss, that's really in the range of what we saw in this trial. So we're excited about the potential to change those outcomes of course as you point out we have to demonstrate that we will do that over time.

But given where we are and our understanding of this disease process and given the depth of unmet medical need in obesity I don't see that data as a gating factor for for use or reimbursement of a drug.

Maybe Mike can offer more details on that.

Mike Mason: Thank you. Thank you. We'll go to Dan, and then Mike will also invite you to weigh in on our MMO study. Yeah, thanks. Of course, we believe, and there's really quite a bit of evidence that weight loss will lead to really strong benefits and outcomes across a variety of diseases. Obviously, cardiovascular disease is near the top of the list, but many others as well.

Thanks, Dan, Yes, yes, thanks, and thanks for the compliments on the data.

Yes.

I wouldn't look backward Lee at the fact that with that obesity agents up to this point really haven't been able to secure good access.

Dan Skovronsky: We know a lot from bariatric surgery, which has shown that it can reverse type 2 diabetes or prevent the onset of diabetes. It can also reduce cardiovascular risk. It can decrease even mortality when you get weight loss that's really in the range of what we saw in this trial. So we're excited about the potential to change those outcomes. Of course, as you point out, we have to demonstrate that we will do that over time.

Dan Skovronsky: But given where we are in our understanding of this disease process and given the depth of medical need and obesity, I don't see that data as a gating factor for the use or reimbursement of the drug. Maybe Mike can offer more details on that. Yeah, thanks, man.

The weight loss levels that you were seeing 5%, 7% weight loss.

Mike Mason: Yeah, yeah, thanks. And thanks for the compliments on the data. Yeah, I wouldn't look backward at the fact that obesity agents up to this point really haven't been able to secure good access. You know, at the weight loss levels that you were seeing, 5, 6, 7 percent weight loss, no one was able to produce, or no one has produced, health outcome benefits at that level of weight loss. So it makes sense for payers not to open access for those, probably, more cosmetic than true health benefits.

No one was able to produce our no one has produced.

Health outcome benefits at that level of weight loss. So it makes sense for payers not not opening access for those probably more cosmetic than true health benefits, but as you're looking at a.

Mike Mason: But if you're looking at a product like Trezepatai that can deliver up to twenty-two and a half percent weight loss, we do believe, and there's good data out there to suggest that's going to really improve and lead to good health outcomes. We have to produce that over time, and we will do that. But I don't think that will limit us from gaining access. In the meantime, I think when you look at Noble's access for Govee, they're at twenty, twenty-five million.

Product like towards appetite that can deliver up to 22, 5%.

<unk> loss, we do believe there is good data out there to suggest that's going to really improve and lead to good health outcomes. We have to produce that over time, and we will do that but I don't think that will limit us from gaining access.

In the meantime, I think when you look at <unk> of around 2000 $25 million.

Mike Mason: People who live with obesity in the U.S. have access, so I think we can continue to build on that. I think there was a real big win for access to obesity care recently with the federal health employees gaining access to obesity agents. So I think that's an important trend.

People, who live with obesity in the U S. Having access so I think we can.

To build on that I think there was a.

A real big win for abuse of the access recently with the federal health employees.

<unk> access for obesity agents, so I think thats a important trend also understand that we're we have we're dedicated to produce a series of trials that we hope will demonstrate and we expect to demonstrate good outcomes with <unk> appetite for sleep apnea.

Mike Mason: Also understand that, you know, we're we have we're dedicated to producing a series of trials that we hope will demonstrate and we expect to demonstrate good outcomes with Trezepatai for sleep apnea, HEPA, as well as our outcome study that will include cardiovascular. Now, those are indications right now that do have access. So both part B, you take sleep apnea, for example, that has good coverage in both commercials and part B.

Half path as well as our our outcome study that will include cardiovascular now those are indications right now that do have access. So both part D. You can sleep apnea. For example that has good coverage in both commercial and part D. So we do expect that we show.

Mike Mason: So we do expect that if we show good outcomes there, that for those people who have obesity and sleep apnea, we should be able to gain access to it. So we think we believe that access will start off at where it is today and grow over time. But we are committed long term to building access and helping people who live with obesity for the duration. Great, thank you.

Good outcomes, there that for those people, who have obesity and sleep apnea that we should be able to gain access for it. So we think we do believe that excess.

We'll start off at where it is today and growing over time.

But we are committed long term.

To build access and help people who live with obesity.

For the duration.

Alright, thank you.

Dan Skovronsky: Thanks Mike and Dan, thanks Geoff for your questions. Next caller please. Next caller is Chris Schapp from JP Morgan. Please go ahead. Great, thanks for the questions and congratulations on the data as well. Do you have, I guess, a couple of questions on trizepatide. First, do you see weight loss plateauing in the study? And if so, when did it plateau?

Thanks, Thanks, Mike and Dan Thanks, Jeff for your questions next caller. Please next caller is Chris Schott from J P. Morgan. Please go ahead.

Chris Schott: And then do you expect patients will stay on the drug once they've lost weight? I'm just getting a sense of just how you're thinking about the duration of trizepatide treatment in obesity. The second question was on an accelerated filing in obesity. Just any clarity on when we could get more details on that? And then finally, on the pre-diabetic progression to diabetes endpoint from SMART1, could diabetes prevention become a labeled indication, or is this just more data that could come on the label? Thank you so much. Thanks Chris, we'll go to the mic for all those questions. Okay, I think that may have been more than two, but I'll go through these pretty quickly.

Great. Thanks, Thanks for the questions in the <unk>.

Some of the data as well.

Do you I guess a couple of questions on <unk> appetite is first do you see weight loss plateauing in the study and if so.

When does it plateau.

And then do you expect patients will stay on the drug once they've lost weight I'm trying to sense of just how youre thinking about duration of tourist hepatitis b.

<unk>.

The second question was on an accelerated filing in obesity, just any clarity of when we could get more details on that.

And then finally on the pre diabetic progression to diabetes endpoint from some about one I guess could diabetes prevention become labeled indication or is this just more data that could come on label.

Thanks, so much.

Thanks, Chris we'll go to Mike for all those questions.

Okay, I think that may have been more than two but I'll go through these pretty quickly so first of all.

Mike Mason: So first of all, weight loss and plateauing. I think we have to leave some of the data for our medical meetings coming up, so I'll reserve that for that. We do believe that this is a chronic illness that requires chronic treatment, so we do believe people will need to stay on the drug long term in order to get the benefit. And then pre-diabetes; I look at that as an important population that Trajepatide could provide health outcomes for. So probably more about showing data where a segment could benefit from it versus having a labeled indication for it. Thanks Mike. Sorry.

Weight loss Plateauing, I think we have to leave some of the data for our medical meetings coming up so I will reserve that for that.

We do believe that this is a chronic illness that requires chronic treatment. So we do believe people will need to stay on the drug long term in order to get the benefit and then pre diabetes I look at that is as a an important population that that trajectory tied could provide health outcomes for so probably more of a.

Showing data, where a segment could benefit from it versus having a labeled indication for it.

Thanks Helane.

Okay.

Sorry.

Go ahead.

Next caller please.

Thank you. The next caller is Andrew Baum from Citi. Please go ahead.

Mike Mason: Okay. Go ahead. Next caller, please. Thank you. The next caller is Andrew Baum from Citi. Please go ahead. Yeah, thank you. A couple of questions, please.

Yes. Thank you a couple of questions. Please.

Andrew Baum: The long-term commercial potential of diabetes, you know, helped by the co-morbidities, I mean, clearly is there, and I'm sure it will be realized by you and your competitors. Could you comment, rather, on the trajectory in the nearer term? You referenced the covered lives that Novo has attained, but obviously, they had a very expensive bridge program during that period, which makes it difficult to extrapolate, you know, what the real reimbursed demand is. Secondly, we're hearing that PDMs are pushing back as patients are converted from the bridge to reimbursement, so any commentary you have on that would be helpful. And second, we've had two eight-stage failures with CERDs.

The long term commercial potential diabetes helped by the capabilities I mean, Katie is that and I'm sure it'll be realized by you and your competitors could you comment Rob enrollment trajectory near term.

You referenced the covered lives novo hesitate, but obviously they had a very expensive reach program during that period, which makes it difficult to extrapolate.

We'll reinvest imagines separately, we're hearing about TV Amazon pushing back as patients are conversions from the bridge to reimburse. So any comments you have on that.

Would be helpful. And then second would had to spring.

Great.

With.

Given you have.

Now underneath in phase III.

Obviously, you're having some groundwater how you're thinking about how this impacts you will development program.

Thanks, Andrew we'll go to Mike for the first one on the trajectory in obesity and then Jake for the question around <unk>.

Mike Mason: Given you have CERDs now, I believe, in phase three, as well as obviously having Zemio, how are you thinking about how this impacts your development of your CERD program? Thanks, Andrew. We'll go to Mike for the first one on trajectory and obesity and then Jake for the question around CERD. Yeah, as I said earlier, I do think it's going to be one that you're not going to probably spur out of the gate on that, you know, you'll have, you know, a sizable segment, but one that will grow over time.

Yes, as I said earlier I do think it's going to be one that youre not going to probably spring out of the gate on that.

Have.

Sizable segment, but one that will grow over time.

Mike Mason: We will provide supportive care, bridging programs, as you say, at launch to make sure and support people so they can have a good experience and see the benefits of the weight loss. But we do think it's something that this is one that I would look at in the obesity market, one that will establish, you know, it'll be a decent size, but it will grow for the next decade or two. Thanks, Mike. Jake?

We will provide supportive care bridging programs as you say at launch to make sure and support people. So they can have a good experience and see the benefits of the weight loss, but we do think its something thats. This is one that I would look at at the obesity market and one that will establish there'll be decent size, but it will grow.

For the next decade or two.

Thanks, Mike Jake.

Yes. Thanks for the question about about about <unk> our.

Jake Naarden: Yeah, thanks for the question about CERN. You know, our view of our program and the landscape hasn't really changed all that much in light of the recent announcements. You know, obviously, with respect to the two most recent trial readouts, we've yet to see the actual data, though, at least in one case, there were some directional clues given by company management. I think, largely speaking, we saw those studies as sort of underpowered phase two trials.

Our view of our program in the landscape hasn't really changed all that much in light of the recent announcements obviously.

It relates to the two most recent trial readouts, we've yet to see the actual data at least in one case there were some directional clues given by by company management I think largely speaking we saw those studies as sort of underpowered phase III trials and I think in many cases, what we're hearing qualitatively from those.

Company suggests it's exactly that in other words trends in the right direction.

But underpowered studies, our initial second line randomized trial that we're recruiting right now as a fully powered phase III study. So if anything we're actually more confident in that study winning than we were previously.

But that's not really the that may be the first path to market for the agent and impactful for those patients in the late line setting, but that's not really the ultimate.

I think most impactful place for the medicine, which is really in the adjuvant setting and we're working on the trial design there that we'll talk more about later this year.

Thanks, Jake Andrew Thanks for your questions next caller. Please your next caller is Seamus Fernandez from Guggenheim. Please go ahead.

Oh, great. Thanks for the questions and congrats on the data.

Quick question Dan.

The very large phase III.

Program that you are conducting cecity and more broadly, but the statement that you will be pursuing.

A potential faster path to market with regulatory authorities on the basis of this amount one data.

<unk> success is the real separation there.

The 20% threshold do you really think that's the.

The potential game changer or is it something else and the data that we have yet to see.

That you'd think uniquely compelling.

And then.

Currently.

Wanted to follow up on your comments on the Alzheimer's side of things.

I think you've said in the past.

There are some issues as it relates to.

How we think about the impact or thoughts around other clinical trials.

I'm wondering how you are feeling along those line.

Really just wanted to get your your general.

Compare and contrast of the Lilly program versus some of those come from.

The other two programs that are coming later this year.

Thanks, Seamus, we'll go to Dan for both of those okay.

Jake Naarden: And I think in many cases, what we're hearing qualitatively from those companies suggests exactly that, in other words, trends in the right direction. But underpowered studies, our initial second line, randomized trial that we're recruiting right now, is a fully powered phase three study. So if anything, we're actually more confident in that study winning than we were previously. But But, you know, that's not really the path that may be the first path to market for the agent and impactful for those patients in the late line setting. But that's not really the ultimate goal.

Jake Naarden: I think the most impactful place for the medicine is really in the adjuvant setting. And we're working on a trial design there that we'll talk more about later. Thanks Jake.

Seamus, let me start with tours appetite and sort of.

The comments that I made on the regulatory path.

Dan Skovronsky: Andrew, thanks for your questions. Next caller, please. The next caller is Demis Fernandes from Guggenheim. Please go ahead.

<unk> is a clear guidance on what's required to get an indication for anti obesity drug.

And those guidance documents form the basis of our previous discussions and alignment with the agency our base case based on those has been.

Really continues to be the submission will require the full package of phase III data from this trial from from this program.

On the other hand.

As I said I think we were impressed and delighted with the data that we got from surmount. One it's a very large phase III trial is as you pointed out and there are a number of elements here that encourage us to open the door for additional discussion with the FDA.

You asked what is it specifically, maybe I'll highlight two or three things first the efficacy as you pointed out the more than 20% weight loss is really unprecedented.

Level of weight loss in the field.

I think thats exciting for patients and addressing a very significant unmet medical need.

<unk> is the safety and Tolerability data that we got.

I think there is a pleasant surprise there if you look at how well tolerated. The drug was how few discontinuation, we had and as I pointed out more disk.

Discontinuation from treatment and placebo many more than that on the active arms of the drug just indicating that people tolerate this will want to stay on the drug and I appreciate the weight loss.

Benefits, they're getting so.

The very good safety and Tolerability profile that we're seeing combined with the extraordinary efficacy profile I think is a major step.

In that argument that.

The last piece of course is that we don't see this data in isolation. This builds on a very significant type two diabetes program, which of course involve many patients with type two diabetes and obesity and <unk>.

Demonstrated safety and efficacy in that setting as well so we'll see how that goes and I think to circle back to Chris's question. When do we learn more as we have discussions with regulators if we learn more and we see that there is an opportunity for expedited path here.

It will be as forthcoming with investors as possible.

Your second question here was around Alzheimer's and where are we thinking about.

Our profile versus competitors and when those competitor Readouts what are we going to be looking at.

I think we have a number of design elements and trailblazer two that we spoke about previously that we think could be very important.

Starting with our use of Biomarkers to select patients not just amyloid positivity, but also windowing in on patients with <unk>.

What we call intermediate Tau levels. So these aren't patients who have too much tau in the brain because we think they are beyond the point, where anti amyloid drugs will help them.

Nor are they patients with no tau in the brain, because we think those patients won't progress even on placebo and therefore.

Get benefit from a from a drug so we think selecting those patients will give us the opportunity to see better efficacy and a more homogenous background second we think we have a drug that lowers amyloid faster and steeper degree and that should translate to improved benefits and then third is some of the statistical differences in our analysis plan focusing on a complete.

To measure a dress.

Which we're excited about and things should be more highly powered to see a larger effect size. So all of those things combined lead us to a point, where even if competitors trials are negative and I think there's a reasonable chance one or both could be.

We won't be discouraged what I expect to see though is when we look at the totality of data from competitor Readouts prior to ours, and we will see evidence that lowering amyloid in general is having a positive effect on selling cognition and function, even if some trials on some endpoints at some time points hit or don't hit statistical significance.

I think it's set to tell they data that will encourage us and then as I said our trials designed to hit so that's what we're hoping for and that's what we expect middle of next year.

Thanks, Dan Seamus. Thanks for your questions next caller. Please the next caller is Tim Anderson from Wolfe Research. Please go ahead.

Hi, Thanks for taking our questions and congrats on the data. This is Alex on for Tim Anderson.

Seamus Fernandez: Oh, great. Thanks for the questions and congrats on the data. I have just one quick question.

Hey, just wanted to advertise.

Oil products.

No. Thanks for the <unk> the weight loss is impressive.

Based products, that's still about 40.

40% of patients on placebo.

At least 5% weight reduction, which is quite a high percentage and it will now seems to suggest a resistance mechanism of some thoughts here.

Is there any mechanistic rationale of predictability.

David respond thank you.

Thanks, We'll go to Dan for that question, yes. Thanks for that question I think youre right in past studies of different medications for weight loss there've been a lot of patients who didn't respond that's not the case with theres appetite. So we're really delighted that at the 10 to 15 milligram dose more than 96% of patients had at least 5% weight loss. So.

Dan Skovronsky: Dan, you know, this is a very large phase three program that you're conducting at GCD and more broadly, but the statement that you will be pursuing a potential faster path to market with regulatory authorities on the basis of this amount one data is certainly intriguing. You know, how do you see the likelihood of success and is the real separation there, the 20% threshold, do you really think that's the potential game changer?

Dan Skovronsky: Or is there something else in the data that we have yet to see that you think is uniquely compelling? And then separately, just wanted to follow up on your comments on the Alzheimer's side of things. Uh, you know...

Dan Skovronsky: I think you've said in the past that there are some issues, to you know how we think about the impact or thoughts around other clinical trials. I was wondering how you feel along those lines and really just wanted to get your general compare and contrast of the Lilly program versus some of the other two programs that are coming later this year. Thanks, Seamus. We'll go to Dan for both of those. Okay. Sure, Seamus.

Dan Skovronsky: Let me start with terzepatide and some of the comments that I made on the regulatory path. The FDA has clear guidance on what's required to get an indication for an anti-obesity drug, and those guidance documents form the basis of our previous discussions and alignment with the agency. Our base case based on those has been and really continues to be that submission will require the full package of phase three data from this trial and this program.

Dan Skovronsky: On the other hand, as I said, I think we were impressed and delighted with the data that we got from CERMAT-1. It's a very large phase three trial, as you pointed out, and there are a number of elements here that encourage us to open the door for additional discussion with the FDA. You asked what they were specifically; maybe I'll highlight two or three things.

This drug is working to some extent in the vast majority of patients in this trial and nearly two thirds of the patients at the highest dose are getting 20% weight loss, which is really a life changing level. So I think youre right patients are have variable degrees of resistance to anti obesity mechanisms, but I also think that this comb.

Nation of CIP and <unk> that we haven't <unk> appetite is such a powerful mechanism that it overcomes those are resistant patients for the most part. Thank you. Thanks, Dan Alex. Thanks for your question next caller. Please.

Dan Skovronsky: First, the efficacy, as you pointed out, the more than 20% weight loss is really unprecedented, a level of weight loss in the field, and I think that's exciting for patients and addresses a very significant unmet medical need. Second, the safety and tolerability data that we got. I think there's a pleasant surprise here if you look at how well tolerated this drug was, how few discontinuations we had, and, as I pointed out, more discontinuations from treatment on placebo, many more than on the active arms of the drug, just indicating that people tolerate this well, want to stay on the drug, and appreciate the weight loss benefits they're getting.

The next caller is Omar <unk> from Evercore. Please go ahead.

Hi, guys. Thanks for taking my question and by the way Congrats on the congrats on the data.

Dan Skovronsky: You know, the very good safety and tolerability profile that we're seeing combined with the extraordinary efficacy profile, I think is a major step in that argument. The last piece, of course, is that we don't see this data in isolation. This builds on a very significant type 2 diabetes program, which, of course, involved many patients with type 2 diabetes and obesity and demonstrated safety and efficacy in that setting as well. We'll see how that goes.

It's how I maintain my visit I'm joking.

I have I have two questions one.

Have you have you been able to finalize the stateline with FDA and also given your confidence in banana ma'am I'm curious why it would not make sense to have.

I have a CD or some of the boxes endpoint in their and trailblazer for the head to head versus <unk>.

And then separately just a quick one I noticed in your slides you mentioned the IL two conjugate and.

Ulcerative colitis is being removed and I couldnt tell if it's being discontinued in that because the child barely started less than six months ago. So just thought I should clarify thank you.

Thanks, We'll go to Dan for all those questions, Yes, sure. So let me start with the Alzheimer's questions.

Dan Skovronsky: And I think to circle back to Chris's question, when will we learn more? As we have discussions with regulators, if we learn more and we see that there is an opportunity for an expedited path here, we'll be as forthcoming with investors as possible. Your second question here was around Alzheimer's, and where are we thinking about our profile versus competitors, and when those competitor readouts, what are we going to be looking at? You know, I think we have a number of design elements in Trailblazer 2 that we've spoken about previously that we think could be very important.

Dan Skovronsky: Probably, you know, starting with our use of biomarkers to select patients, not just amyloid positivity, but also windowing in on patients with what we call intermediate tau levels. These aren't patients who have too much tau in the brain, because we think they're beyond the point where anti-amyloid drugs will help them. Nor are they patients with no tau in the brain because we think those patients won't progress, even on placebo, and therefore won't get benefit from a drug.

Dan Skovronsky: So we think selecting those patients will give us an opportunity to see better efficacy on a more homogeneous background. Second, we think we have a drug that lowers amyloid faster and to a deeper degree, and that should translate to improved benefits. Third, some of the statistical differences in our analysis plan, focusing on a composite measure, ADRAS, which we're excited about and think should be more highly powered to see a larger effect size.

I think we've been public about our stats plan I think the focus on on a dress is well warranted by all of the data that we've collected by.

Dan Skovronsky: So all those things combined lead us to a point where even if competitors' trials are negative, and I think there's a reasonable chance one or both could be, we won't be discouraged. What I expect to see, though, is that when we look at the totality of data from competitor readouts prior to ours, we'll see evidence that lowering amyloid in general is having a positive effect on slowing down cognition and function, even if some trials on some endpoints at some time points hit or don't hit statistical significance.

Dan Skovronsky: I think it's that totality of data that will encourage us, and then, as I said, our trials are designed to hit. So that's what we're hoping for, and that's what we expect in the middle of next year. Thanks, Dan. Seamus, thanks for your questions. Next caller, please. The next caller is Tim Anderson from Wolf Research. Please go ahead. Hi, thanks for taking our questions and congrats on the data. This is Alice Nettleton, and I'm on behalf of Tim Anderson.

Alice Nettleton: So just on to Zeppetide; for both your product and Novo's Regovi, the weight loss is impressive. But with both products, there are still about 30 to 40% of patients who take the placebo who don't achieve at least 5% weight reduction, which is quite a high percentage. And it almost seems to suggest a resistance mechanism of some sort to the glyph and GIF.

Pretty detailed statistical analyses many of which have been published on past trials, which just show. This is an outcome that performs better from a statistical perspective than things like CVR sum of boxes, while still capturing both.

Function and cognition so.

<unk> is noisy and also appears unreliable. If you look across sister studies for example, the <unk> studies or the the two <unk> studies CVR sum of boxes can move in opposite directions in different studies, whereas.

<unk> and Adas cog, the two components of <unk>.

Dress.

A much more reliable moved together show consistent effects.

So that's where we are I think it's a evolution of endpoints and we will do our best to justify that with regulators once we have our data.

Why wouldn't we have CVR sum of boxes was the second part of your question well of course, we do it.

It will be mitigated secondary.

For sure and I think from our perspective, the worst case scenario is that were held to achieving a draft to LCD or some of auctions. That's okay. If that happens I.

I hope and expect that we'll have a good chance to hit SEDAR sum of boxes, but of course, we're going to put what we see is the least noisy most reliable most formative endpoints first and our statistical analysis.

Which is address with respect to IL two you're right. This was a pretty fast in and out in ulcerative colitis. We were pleased to enroll this phase II study pretty quickly we triggered an interim analysis based on a certain number of patients with a certain amount of follow up.

And based on that analysis and pre specified criteria, we did not see enough efficacy to proceed. So it failed that futility analysis, we dropped that indication wind down that particular study in ulcerative colitis, but two other indications persist.

Thanks, Dan and thanks for your questions next caller. Please next caller, Steve Scala from Cowen. Please go ahead.

Dan Skovronsky: So is there any mechanistic rationale or predictability for those who don't respond? Thank you. Thanks. We'll go to Dan for that question. Yeah, thanks for that question. I think you're right. In past studies of different medications for weight loss, there have been a lot of patients who didn't respond. That's not the case with terzapatide.

Dan Skovronsky: So we're really delighted that at the 10 and 15 milligram doses, more than 96% of patients had at least 5% weight loss. So this drug is working to some extent in the vast majority of patients in this trial, and nearly two-thirds of the patients with the highest dose are getting 20% weight loss, which is really a life-changing level. So I think you're right. Patients have variable degrees of resistance to anti-obesity mechanisms, but I also think that this combination of GIP and GLP that we have in terzapatide is such a powerful mechanism that it overcomes those resistant patients for the most part.

Dan Skovronsky: Thank you. Thanks, Dan. Alex, thanks for your question. Next caller, please. The next caller is Umar Rafat from Evercore.

Thank you a couple of questions. The surmount one data was very impressive but not a huge surprise it must have been considered as a likely scenario by Lilly Lilly.

Selling strategy has shifted so just to be clear has FDA or other regulatory body encouraged literally too.

File early based on the surmount one results. So that's the first question second question is were there any inventory movement or other unusual movements in the quarter. It seems that a number of your key drivers just the missed at least our thinking so I'm wondering if it with inventory movements that accounted for that thank you.

Thanks, Steve we'll go to Dan for the regulatory question and not for the other question on inventory.

Umar Rafat: Please go ahead. Hi guys, thanks for taking my question. And, by the way, congrats on the data. It's how I maintain my physique, by the way.

Steve I think you said, it's not a surprise I think there are some things here that are quite a bit more positive than maybe most people would have expected.

Certainly the level of efficacy here that was achieved.

I think higher than most expectations as well as the tolerability so the adverse events from nausea.

Diarrhea vomiting.

Lower probably than what most people would have expected treatment discontinuation is particularly lower so I think on the whole we have a data package that does exceed expectations. So it's really at the top end of the range of what we thought might be possible for drug vectors appetite. So we're excited about that specific.

Youre asking about regulatory interactions, usually don't want to get into like back and forth on on things like that but just to be clear as I said before our alignment with the FDA was around submitting when the full package is complete and have not had discussions yet.

What other options might exist in light of this data.

Thanks, Dan.

So for the <unk>.

Dynamics in Q1, we typically see a dynamic associated with inventory build at the end of each calendar year in December and then following by inventory burn typically in the first quarter of each year. We saw the same dynamic here. This year, we saw an impact controller city and number of other products.

Which you may be seeing in as you're looking at the year on year comparison, the other element if youre looking at <unk> from a year on year perspective.

Did see in Q1 in comparison to Q1 of 2021 reduction in script size as you recall last year. We had we started our contract with ESI and the loading dose.

With associate with multiple devices.

Each patient started on so this quarter, we're just seeing a reduction associated with that year on year comparison.

Thanks for that Steve. Thanks for your questions next caller. Please.

Dan Skovronsky: I'm joking. So, Nanomab, I have two questions. One, have you been able to finalize the stat plan with FDA? And also, given your confidence in Nanomab, I'm curious why it would not make sense to have a CDR, some of the boxes' endpoints in there, and Trailblazer IV, the HeadTED versus Educanumab. And then separately, just a quick one.

Next caller is the amount of <unk> from Mizuho. Please go ahead.

Great. Thanks, so much for taking the questions maybe a couple more on the NBC side, if I could so one you mentioned the amlin agonist that you've moved into phase. One here can you just maybe talk about that and maybe more of an insurance policy against <unk>.

Competitors are working on or do you sort of expect the Hamlin maybe company funding mechanism.

Additional efficacy on top of what we're seeing now with.

We think lots and lots of them, which is appetite and then second you talked about this a little bit before around the discontinuation.

And the <unk>. So can you just remind us what the current duration of our average duration of therapy with <unk> and then maybe if you have anything currently assumption how you won't I want you to be patient.

And just staying in a product like yourself and given that I think are.

A superior profile, we're seeing for that either for diabetes and obesity. Thank you so much.

Thanks, Ron will go to Dan for the question on kind of early phase obesity, and then we'll go to Mike for the question around <unk> duration and implications in obesity.

Dan Skovronsky: I noticed your slides mentioned the IL-2 conjugate and ulcerative colitis are being removed. And I couldn't tell if it's being discontinued in that because this trial was barely started less than six months ago. So, I just thought I should clarify. Thank you. Thanks, we'll go to Dan for all those questions. Yeah, sure, so let me start with the Alzheimer's questions. You know, I think we've been public about our stats plan. I think the focus on ADRESS is well warranted by all of the data that we've collected through pretty detailed statistical analyses, many of which have been published in past trials, which just show this is an outcome that performs better from a statistical perspective than things like CDR-SOMA boxes, while still capturing both. Function and Cognition. So CDR is noisy and also appears unreliable.

Dan Skovronsky: If you look across sister studies, for example, the two solanesimab studies or the two acianumab studies, CDR somatoboxes can move in opposite directions in different studies, whereas ADLs and ADAS-CoG, the two components of ADRAS, are much more reliable, move together, and show consistent effects. So that's where we are. I think it's an evolution of endpoints, and we'll do our best to justify that with regulators once we have our data. Why wouldn't we have CDR-SOMMA boxes, was the second-party question.

Dan Skovronsky: Well, of course we do. It will be a gated secondary, for sure, and I think, from our perspective, the worst-case scenario is that we're held to achieving ADRAS and CDR-SOMMA boxes. That's okay if that happens.

Thanks for all you are asking about our long acting amylin.

<unk> here.

<unk> been interested in biology of other <unk> and Christian like pathways for for many years, maybe a decade now or more.

Amazon is one of those pathways, we have worked on dual amylin calcitonin receptor agonists.

As a pure <unk> agonist.

Flooring these and other similar mechanisms as complements likely to tours appetite I don't expect any of these packages are saw for this kind of a weight loss of 22, 5%.

We lost but I think it may be for some patients who desire even additional weight loss that you could stack one of these mechanisms on top of it there's appetite, but clearly we've raised the bar and we will look through our phase one and phase II portfolio now with even higher criteria for progressing I think to a new weight loss.

Mechanism now is going to have to be in the very high <unk> I think to be an exciting advanced beyond tours appetite, maybe adding something to just appetite.

Could accomplish that.

After the majority of patients efficacy similar even better too.

Bariatric surgery.

The next frontier.

Dan Skovronsky: I hope and expect that we'll have a good chance to hit CDR-SOMMA boxes. But, of course, we're going to put what we see as the least noisy, most reliable, most formative endpoint first in our clinical analysis, which is ADRAS. With respect to IL-2, you're right. This was a pretty fast in-and-out in ulcerative colitis.

Thanks, Dan Mike.

Yes. Thanks for the question is a very good question.

When you look at diabetes versus obesity.

It's hard to compare I think to suggest that because of the nature of the diseases that youll have like similar discontinuation rates or length of therapy.

When you look at when someone starts to elicit.

In type two diabetes, they only have a fraction of the beta cell health, so someone who is normal before.

Onset in the run up of pre diabetes and diabetes has has lowered the functioning of the beta cell and so.

What you Havent diabetes is that beta cell health continues to decline and then at some point you may have to go on insulin we don't believe that.

We will have that same dynamic in obesity that.

Effect of Av.

Weight loss with someone who lives at the BDC is not going to have that same effect.

Kind of wearing off with the beta cell health that youll see portfolios are.

Our <unk> and diabetes. So we do believe that the weight loss will will be more durable and that.

Patients will be well well motivated to stay on therapy that said it will be an area of focus for us to make sure that we learn why people.

Taking obesity agents.

And we will do whatever we cannot support.

So support patients during the entire length of therapy.

Thanks, Mike. Thanks for your questions next caller. Please the next caller is Carter Gould from Barclays. Please go ahead.

Hi, This is Justin on for Carter, Thanks for taking my questions and congrats on all the exciting update today.

First one sort of looking at read throughs to heart failure, just wanted to get your thoughts on the implications of this amount of data on the ongoing summit study given the weight losses predictive of outcomes there.

Magnus due to weight loss.

Today sort of increase your confidence in the outcomes of that study and then are there any interim analyses, we should be looking for out of it.

Okay.

Okay. Thank you and we'll go to Mike for those questions on.

Dan Skovronsky: We were pleased to enroll this Phase II study pretty quickly. We conducted an interim analysis based on a certain number of patients with a certain amount of follow-up, and based on that analysis and pre-specified criteria, we did not see enough efficacy to proceed. So it failed that futility analysis.

On summit.

Yes, I mean, good question I mean, I think the strength of the <unk> one data.

It makes us confidence in the entire tours appetite phase III.

Program for <unk> for all indications and so obviously arent potthast is one of the hypothesis was weight loss wood wood would help individuals with would have passed and obviously from out one supported that so we're confident.

R R.

Our half path program for tours appetite.

I don't believe we have and maybe Dan can answer that question off the top of my head, but I do believe we have any interim readouts on our heart failure study.

Yes.

Yes, Mike.

We usually try not to disclose potential interims.

To preserve.

Integrity of the study so sometimes we build those options and sometimes we are not but I totally agree that this weight loss sort of at the high end of expectations. I said earlier, it's just got to increase our confidence in <unk> and of course as we dig deeper we'll look at a number of biomarkers in the study, which could further inform cardiovascular benefits.

Thanks, Dan and Mike just and thanks for your questions next caller. Please the next caller is Kerry holford from bearing Baird. Please go ahead.

Dan Skovronsky: We dropped that indication, winding down that particular study in ulcerative colitis. But two other indications persist. Thanks, Dan and Umar. Thanks for your questions. Next caller, please. Next caller is Steve Scala from Cohen. Please go ahead.

Oh, hi, Thanks, two questions, please and other ones just appetite.

Steve Scala: Thank you. A couple of questions. The Surmount One data was very impressive, but not a huge surprise. It must have been considered a likely scenario by Lilly.

<unk>.

Hey.

The compelling data today.

Enable has 90 of finding an IP.

You all say now to secure a quick maybe interesting to that thank you.

Just a couple.

You mentioned filing.

Ts.

P that you purchased.

Okay.

And thank you all today is coming from the diabetes filing.

And then my second question for you and act on IP R&D guidance.

And clearly this cost which.

It can be for you.

Make sure the acquisitions collaborations.

Can we expect U.

And to provide visibility of this intelligent each year.

What extent what level of milestones.

Anthony.

EMEA ahead. Thank you.

Thanks, Carrie will go to Dan for the questions around regulatory filing.

Round tours appetite and then again to a not an IP R&D in guidance yes.

Dan Skovronsky: Yet Lilly's filing strategy has shifted. So just to be clear, has FDA or any regulatory body encouraged Lilly to file early based on these Surmount One results? So that's the first question. The second question is, were there any inventory movements or other unusual movements in the quarter? It seems that a number of your key drivers just missed at least our thinking, so I'm wondering if it was inventory movements that accounted for that.

Thanks, Cary just just to clarify we didn't announced plans for an early filing or we just said were moving to the next step and discussing.

Options with regulators.

Anat Ashkenazi: Thank you. Thanks, Steve. We'll go to Dan for the regulatory question and to Anat for the question inventory. All right, Steve.

You are right, we do have a <unk> voucher that repurchased.

We are excited to have a portfolio with rich with opportunities, both new molecular entities as well as new indications.

Such as the obesity indication.

We'll choose based on regulatory paths that are available to us and unmet medical needs and competition of course, what's the best opportunity to use that voucher on thanks.

Thanks, Dan and I'm curious.

Curious so on the IP R&D charges.

We're now building them into our non-GAAP .

Actuals and we will provide information not just on the quarterly results, but anything any business development transactions that had been signed between the end of the quarter in our earnings call but.

If you look even at our numbers from last year. These numbers are highly variable and highly unpredictable. So you can move from $40 million in one quarter to $400 million in another quarter or even zero.

And when we issue guidance it is practically impossible for us to provide any detailed view on what those charges will be not knowing what business development transaction will be signing so what we will do is as we have those we will provide that information to the investment community every quarter typically if it's associated with.

The large business development transaction there'll be a press release associated with it within the quarter, so youll be able to see and track that but providing it is.

Part of guidance is is challenging practically impossible to predict.

Thanks for that.

Here you had a question on.

Type two diabetes Paducah, we don't give <unk>.

We announced in the quarter when we.

Submitted it but as we've said we expect that by midyear. Thanks for your questions next caller. Please.

The next caller is Evan Siegel from BMO. Please go ahead.

Hi, guys. Thank you so much for taking my question and would love any additional color as to why we saw a higher discontinuation rate in the mid dose of the tourists appetite data and then more broadly speaking when you think about the market between solicit in potentially for his appetite.

The switch patient self or how do you expect it to add assuming approval. There's appetite. Thank you. So much. Thanks, Evan will go to Dan for the first question around Tolerability, just continuations and then Mike for the second one on <unk> interest appetite.

Dan Skovronsky: I think you said it's not a surprise. I think there are some things here that are quite a bit more positive than maybe most people would have expected. Certainly, the level of efficacy here that was achieved was, I think, higher than most expectations, as well as the tolerability. So the adverse events from nausea, diarrhea, vomiting were lower probably than what most people would have expected. Treatment discontinuations, particularly lower.

Thanks, and then study the Tolerability of the 10 and 15 milligram Gram doses were pretty similar.

So it's not surprising the treatment discontinuation rates could have been pretty similar of course, there's a little bit more efficacy on the 15 milligram dose, which is important driver to stay on therapy, So you'll probably see the balance of.

Of Tolerability and efficacy playing out a little bit better perhaps in the 15 and the 10.

But these are these are all pretty small rates of discontinuation. If you look at the sort of mid single digit rates of discontinuation for Aes.

That's really great I think.

Better than expected.

Thanks, Dan and Mike on <unk> appetite.

<unk>.

Dan Skovronsky: So I think on the whole, we have a data package that does exceed expectations. So it's really at the top end of the range of what we thought might be possible for drug vectors' appetite. So we're excited about that. Specifically, you're asking about regulatory interactions.

Yes. Thanks for the question our focus is going to be growing the class.

As well as growing our share of market in the class will try to maximize the opportunity for our entire acreage portfolio.

What's most important is not necessarily switches for molecules existing products, but more.

The new patients that are coming on into the interesting class and winning those new patients and so I think over time will give the mix between new patient starts and switches from from other <unk>, but I think primarily our focus is going to be on really driving.

Tours appetite wins of new patients coming into the class and so that will be our approach going forward.

Thanks, Mike and Dan. Thanks for your questions next caller. Please the next caller is Chris Giovanni from Goldman Sachs. Please go ahead.

Dan Skovronsky: We usually don't want to get into back and forth on things like that. But just to be clear, as I said before, our alignment with the FDA was around submitting when the full package is complete, and we have not had discussions yet about what other options might exist in light of this data. Thanks, Dan. Anat. So for the dynamics in Q1, we typically see dynamics associated with inventory built at the end of each calendar year in December and then followed by inventory burned typically in the first quarter of each year. We saw the same dynamic here this year.

Anat Ashkenazi: We saw an impact on Trulicity and a number of other products, which you may be seeing as you're looking at the year-on-year comparison. The other element, if you're looking at TALT from a year-on-year perspective, we did see in Q1 and in comparison to Q1 of 2021, a reduction in script size. As you recall, last year we started our contract with ESI, and the loading dose was associated with multiple devices that each patient started on. So this quarter, we're just seeing a reduction associated with that year on year comparison.

Thank you two questions if I may on tours appetite and the potential for a read across for Novo's outcome study that is the next data point I think in terms of thinking about the progress of this ultimate opportunity can you frame for us what you think would be your expectation.

Maybe level set.

Do you think would be a bar there although that you mentioned that you don't believe it's necessarily a gating factor that would be helpful. Second question on the post final NCD or donate a mab and the language that CMS used do you have clarity from perhaps post the final NCD.

At your current program will adequately address what they believe to be sort of accrual.

Requirements for the kinds of studies that need to be conducted in order for CMS to contemplate.

Full reimbursement of Alzheimer's Ben Thank.

Thank you.

Thanks, Chris we'll go to Mike <unk>, just thoughts on outcome studies and the competitive landscape there in obesity and then to Anne for the question on the entity and de Minimis.

Yes. Good question, we touched on this a little bit early but I think the district.

We expect the step CV study to be successful given the expected weight loss and what he has expressed we think that'll be important continue to grow the class and for some payers winning access on it. So we hope that the step program is successful we expect it will be and.

Obviously, we have a very comprehensive.

Phase III program to demonstrate outcomes, where obesity. We also are confident in.

Thanks, Mike and thanks for the question on Banana Mab, So as Dan mentioned, our priority will be to advocate for reconsideration with the <unk> phase III data. So we do remain confident in <unk> and believe that <unk> and our overall trailblazer program have extensive data and so as we review the requirements in.

The NCD, we believe our data should be sufficient to meet the high level of evidence criteria set forth by CMS. If TV <unk> is positive obviously will need to review that data with CMS and gain their agreement. So we'll do that very quickly. Our intention is as soon as we have that data too.

Request reconsideration for national coverage, and we believe that having two positive pivotal trials should meet that high level of evidence as far as CMS, we've engaged with them throughout the process and so we'll continue to do so moving forward and there is a number of statements and the NCD that we all see clarity on to gain additional clarity as we move forward.

Yes, we do believe that we should meet that high level of evidence, but pending those discussions with CMS.

Anat Ashkenazi: Steve, thanks for your questions. Next caller, please. The next caller is Mayor Devane from Mizzou.

Thanks, Ann Chris Thanks for your questions next caller please.

Operator: Please go ahead. Great. Thanks so much for taking the questions. Maybe a couple more on the OVC side if I could. So one, you mentioned the AMLIN agonist that you've moved into phase one here. Can you maybe talk about that? Is that maybe more of an insurance policy?

Next caller is robin connected.

With Securities. Please go ahead.

Operator: So what are the competitors working on? Or do you expect that the M1 could maybe, in combination with other mechanisms, have additional efficacy on top of what we're seeing now with Glypsin and also with Truzepatide? And then second, you talked about this a little bit before in the discussion of the new technology and the duration, so can you just remind us what the current duration or average duration of therapy is with Trulicy?

Hi, Thanks for taking my question I guess I'll keep going on in terms of appetite.

Route.

So.

A lot of your last question Andre <unk> of therapy have you talked to payers.

Once you reach a point, where maybe you're comorbidities or guidelines are on drug if theyre going to be willing you still reimbursed therapy.

And then second question for you is like when you think about this data now that you have it in housing is very robust.

What new trials might you think about or new indications, whether it be obesity without comorbidities or other indications might you might be starting out that you sort of have it in house and that's clear. Thanks.

Thanks, Rob and good for both of those questions.

Operator: And then maybe if you have any sort of current assumptions of how long you think patients may end up staying on a product like Truceptin given the superior profile we're seeing for that, either for diabetes or obesity. Thank you. Thanks, Bob. We'll go to Dan for the question on kind of early phase obesity, and then we'll go to Mike for the question around truthfulness, duration, and implications in obesity. Thanks very much.

Yes, good questions.

Dan Skovronsky: You're asking about our long-acting amylin agonist here. You know, we've been interested in the biology of other incretins and ancretin-like pathways for many years, maybe a decade now or more. Amylin is one of those pathways.

Dan Skovronsky: We've worked on dual amylin-calcitonin receptor agonists, but this is a pure amylin agonist. We're exploring these and other similar mechanisms as complements likely to terzapotide. I don't expect any of these mechanisms to offer this kind of weight loss, 22.5% weight loss, but I think it may be for some patients who desire additional weight loss that you could stack one of these mechanisms on top of terzapotide.

Dan Skovronsky: But clearly, we've raised the bar, you know, and we'll look through our phase one and phase two portfolio now with even higher criteria for progressing. I think a new weight loss mechanism is going to have to be in the very high 20s, I think, to be an exciting advance beyond terzapotide. Maybe adding something to terzapotide could accomplish that and offer the majority of patients efficacy similar or even better to terzapotide of Bariatric Surgery.

We are having discussions with payers.

Dan Skovronsky: That's the next frontier. Thanks, Dan. Mike?

They do.

We're excited about the obesity class.

If we can demonstrate an outcomes and if.

They have a patient who has seen benefits from a from a anti obesity medication.

They actually want to work with us to make sure that those individuals stay on therapy in order to get and maintain the weight loss. They have seen and so I think there'll be opportunities for us the partner with payers to ensure that we can maintain.

Individuals on chronic medications I think our expectation is that people do need to stay on an appetite long term in order to get and maintain the weight benefits.

We will be working with payers to make sure that we can maintain that weight loss. So people can get the outcomes that they need.

Second question remind me Kevin with the second question was.

Any new trials or indications as you see this data beyond what we've announced.

I mean, nothing that we're going to talk about in today's discussion obviously, we will internalize this data.

We will this is.

As we said earlier this is an important therapeutic area for us massive unmet needs and one that we are looking to play a long term game on so when you put those together.

Honestly are will be very thoughtful and aggressive and if we do feel that there is additional need for trials on <unk> appetite that can provide insights payers and health care professionals will do those trials.

Thanks for the questions.

Thanks, Mike Thanks, Robin for your questions. The queue is exhausted, we'll go to Dave for the close okay great.

Mike Mason: Yeah, thanks for the questions. A very good question indeed. You know, when you look at diabetes versus obesity, it's hard to compare, I think, to suggest that because of the nature of the diseases that you'll have like similar discontinuation rates or length of therapy. When you look at when someone starts trclicy with type 2 diabetes, they only have a fraction of the beta cell health of someone who's normal before. The onset and the run-up of pre-diabetes and diabetes have lowered the functioning of the beta cell.

Well, thanks for joining today's earnings and tours, if its I would call I guess.

And your interest of course in the company. It is an exciting moment for all of us.

Mike Mason: And so what you have in diabetes is that the beta cell health continues to decline, and then at some point, you may have to go on insulin. We don't believe that we'll have that same dynamic in obesity that, you know, the effect of weight loss on someone who lives with obesity is not going to have that same effect of kind of wearing off with the beta cell health that you see for trlicity and our GLPs in diabetes.

2022 started in a similar fashion to how we ended 2021 with strong momentum across the business.

Mike Mason: So we do believe that the weight loss will be more durable and that patients will be, you know, well motivated to stay on therapy. That said, it will be an area of focus for us to make sure that we learn why people stop taking obesity agents, and we'll do whatever we can to support patients during the entire length of therapy. Thanks, Mike. Mahmoud, thanks for your questions.

Operator: Next caller, please. The next caller is Carter Gould from Barclays. Please go ahead. Hi, this is Justin on behalf of Carter.

Operator: Thanks for taking the questions and congrats on all the exciting updates today. The first one, sort of looking at read-throughs to heart failure, just wanted to get your thoughts on the implications of, there's some data on the ongoing summit study, given that weight loss is a predictor of outcomes there. Does the magnitude of the weight loss that you announced today sort of increase your confidence in the outcomes of that study? And then, are there any interim analyses we should be looking for at the summit?

Operator: Okay, thank you. We'll go to Mike for those questions on Summit. Yeah, I mean, good question.

We remain focused on executing our innovation based strategy, which of course is to bring new medicines to patients and create value for all our stakeholders.

Mike Mason: I mean, I think the strength of the TRMT-1 data makes us confident in the entire TRS-EPITIDE Phase 3 program for all indications. And so, obviously, our hypothesis was that weight loss would help individuals with HEF-PATH, and obviously, TRMT-1 supported that. So, you know, we're confident in our HEF-PATH program for TRS-EPITIDE. I don't believe we have, and maybe Dan can answer that question off the top of my head, but I don't believe we have any interim readouts in our heart failure study. Yeah, Mike. We usually try not to disclose potential interims to preserve the integrity of the study. So sometimes we build those options in, and sometimes we're not.

Dan Skovronsky: But I totally agree that this, you know, weight loss, sort of at the high end of expectations, as I said earlier; we've just got to increase our confidence in HFPAF. And, of course, as we dig deeper, we'll look at a number of biomarkers in the study, which could further inform cardiovascular benefit. Thanks Dan and Mike. Justin, thanks for your questions. Next caller, please. The next caller is Kerry Holford from Beringberg. Please go ahead. Oh, hi.

With strong commercial execution complemented by a pipeline of industry leading opportunities.

We believe Lilly continues to be a compelling investment so thanks for dialing in today and please follow up with the IR team. If you have questions. We have not addressed on the call and have a great day. Thanks.

Operator: Thank you. Your questions, please. Another one to separate diet first. So if the compelling data today enables an earlier filing in obesity, are you also now hoping to secure a quick review? Do you think that you would get that as a supplementary filing? Or perhaps you would look to use the PRV that you purchased?

Thank you and ladies and gentlemen, this conference is available for replay beginning after 11 Oclock at 11 15 eastern time today and running through April 28th at Midnight, you May access the AT&T replay system at anytime by dialing eight.

Operator: Thank you for watching. Please subscribe. If you liked the video, please give me a thumbs up.

Operator: It really helps out the channel. Until next time, take care. And can you also just confirm the exact due date for the diabetes filing? And then my second question for you, Anat, on IPR&D and guidance. Clearly, this cost could evolve as you move through the year if you make further acquisitions, collaborations, and so on.

Operator: But can we expect you to provide visibility at the start of each year on what extent and what level of milestones you believe are likely to be met in the year ahead? Thanks. Thanks, Kerry.

Dan Skovronsky: We'll go to Dan for the questions around regulatory filing, around the TURS epitide, and then again to Anat on IPRMD and guidance. Yeah, thanks. Thanks, Kerry.

Dan Skovronsky: Just to clarify, we didn't announce plans for an early filing here. We just said we're moving to the next step and discussing options with regulators. You're right. We do have a PRV voucher that we purchased.

Dan Skovronsky: We're excited to have a portfolio rich with opportunities, both new molecular entities as well as new indications, such as the obesity indication. We'll choose, based on regulatory paths that are available to us and unmet medical needs and competition, of course, what's the best opportunity to use that voucher on. The End of the Night The End of the Night, Kerry, so on the IPR&D charges, while we're now building them into our non-GAAP actuals, and we'll provide information not just on the quarterly results but anything, any business development transactions that have been signed between the end of the quarter and our earnings call.

Dan Skovronsky: But you know, if you look even at our numbers from last year, these numbers are highly variable and highly unpredictable, so you can move from $40 million in one quarter to $400 million in another quarter, or even zero. And when we issue guidance, it is practically impossible for us to provide any detailed view on what those charges will be, not knowing what business development transaction we'll be signing.

Anat Ashkenazi: So what we will do is, as we have those, we'll provide that information to the investment community every quarter. Typically, if it's associated with a large business development transaction, there'll be a press release associated with it within the quarter, so you'll be able to see and track that. But providing it as part of guidance is challenging. It's practically impossible, actually, to predict these.

Anat Ashkenazi: Thanks a lot. And Kerry, you had a question about... The type 2 diabetes PDUFA dates. We don't give PDUFA dates. We announce in the quarter when we submit it. But we, as we said, we expect that by mid year. Thanks for your questions. Next caller, please. The next caller is Evan Seigerman from BMO. Please go ahead. Hi, guys.

Operator: Thank you so much for taking my question. I would love to know if you have any additional color on why we saw higher discontinuation rates in the mid-dose of the Truseptide data. And then, more broadly speaking, when you think about the market between Truicity and potentially Truseptide, do you expect to switch patients over? How do you expect these two assets to coexist, assuming approval of Truseptide? Thank you so much.

Operator: Thank you. Two questions, if I may, on Terzepatide and the potential for read across from Novo's outcome study. That is the next data point, I think, in terms of thinking about the progress of this ultimate opportunity. Can you frame for us what you think would be your expectations and maybe level set what you think would be a bar there? I know that you mentioned that you don't believe it's necessarily a gating factor.

Operator: Thanks, Seth. We'll go to Dan for the first question around tolerability discontinuations and then Mike for the second one on Truelicity and Truseptide. Yeah, thanks. In this study, the tolerability of the 10 and 15 milligram doses was pretty similar.

Operator: That would be helpful. Second question on the post-final NCD for Donatumab and the language that CMS used. Do you have clarity, perhaps post-the final NCD, that your current program will adequately address what they believe to be sort of structural requirements for the kinds of studies that need to be conducted in order for CMS to contemplate full reimbursement of Alzheimer's therapies? Thank you. Thanks, Chris. We'll go to Mike for just thoughts on outcome studies and the competitive landscape there in obesity, and then to Anne for the question on NCDs and beta-metabolism. Yeah, a good question.

Dan Skovronsky: So it's not surprising that treatment discontinuation rates could have been pretty similar. Of course, there's a little bit more efficacy at the 15 milligram dose, which is an important driver to stay on therapy. So you probably see the balance of tolerability and efficacy playing out a little bit better, perhaps, in the 15 and the 10. But these are all pretty small rates of discontinuation.

Mike Mason: We touched on this a little bit earlier, but we expect the STEP CV study to be successful, given the expected weight loss and what he has expressed. We think that'll be important to continue to grow the class and, for some payers, win access to it. So we hope that the STEP program is successful; we expect it to be. And, obviously, we have a very comprehensive phase three program to demonstrate outcomes for obesity that we also are confident in. Thanks, Mike. Anne?

Dan Skovronsky: If you look at the mid-single-digit rates of discontinuation for AEs, that's really great, I think, better than expected. Stan and Mike on Trulicity Enter's Appetite marketing thought, Yeah, thanks for the question. Our focus is going to be growing the class, as well as growing our share of the market in the class. We'll try to maximize the opportunity for our entire Incotrin portfolio. I mean, what's most important is not necessarily switches for molecules, you know, existing products, but more new patients that are coming into the Intricate class and winning those new patients.

Anne White: Yeah, thanks for the question on Dynanomab. As Dan mentioned, our priority will be to advocate for reconsideration with the TB2 Phase III data. Therefore, we do remain confident in Dynanomab and believe that TB2 and our overall Trailblazer program have extensive data. As we review the requirements for the NCD, we believe our data should be sufficient to meet the high level of evidence criteria set forth by CMS if TB2 is positive.

Mike Mason: And so I think over time, we'll get a mix between new patient starts and switches from other GLPs. But I think primarily our focus is going to be on really driving Traceptide wins for new patients coming into the class. And so that will be our approach going forward. Thanks Mike and Dan. Evan, thanks for your questions. Next caller, please. The next caller is Chris Shibutani from Goldman Sachs. Please go ahead.

Anne White: Obviously, we'll need to review this data with CMS and gain their agreement. So, we'll do that very quickly. Our intention is, as soon as we have that data, to request reconsideration for national coverage. And we believe that having two positive pivotal trials should meet that high level of evidence.

Operator: As far as CMS is concerned, we've engaged with them throughout the process, and so we'll continue to do so moving forward. And there's a number of statements in the NCD that we'll seek clarification on to gain additional clarity as we move forward. But yes, we do believe that we should meet that high level of evidence pending those discussions with CMS. Thanks, Dan.

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Operator: Chris, thanks for your question. Next caller, please. The next caller is Robyn Karnauskas from Truist Securities. Please go ahead.

Robyn Karnauskas: Hi, thanks for taking my question. And I guess I'll keep going on the tricepacide route. A lot of people ask questions about the duration of therapy. Have you talked to payers about once you reach a point where maybe some of your comorbidities are gone and you're on drugs, if they're going to be willing to still reimburse therapy?

Operator: And the second question for you is, like, when you think about this data, now that you have it in-house and it's very robust, what new trials might you think about or new indications, whether it be obesity without comorbidities or other indications, might you want to start now that you sort of have this in house and it's clear? Thanks Robyn, we'll go to the mic for both of those questions. Yeah, good questions, and when we were having discussions with payers, they, they do, they're excited about the obesity class if it can demonstrate and, you know, outcomes. And if, Do they have a patient who has seen benefits? from an anti-BC medication.

Mike Mason: They actually want to work with us to make sure that those individuals stay on therapy in order to get and maintain the weight loss they've seen. And so I think there'll be opportunities for us to partner with payers to ensure that we can maintain individuals on chronic medications. I think our expectation is that people do need to stay on trazepatide long-term in order to get and maintain the weight benefits.

Mike Mason: And we will be working with payers to make sure that we can maintain that weight loss so people can get the outcomes that they need. Second question: remember, Kevin, what that second question was. Any new trials or indications as you see this data beyond what we've announced? Yeah, I mean, nothing that we're going to talk about in today's discussion, obviously. We'll internalize this data.

Mike Mason: We will, you know, this is, as we said earlier, this is an important therapeutic area for us, massive unmet needs, and one that we are looking to play the long game on. So when you put those together, we obviously will be very thoughtful and aggressive. And if we do feel that there are additional needs for trials on trazepatide, that can provide insights to payers, and healthcare professionals will conduct those trials.

847, and entering the access code 4726957.

Operator: Thanks for the questions. Yep. Thanks, Mike. Thanks, Robyn, for your questions. The queue is exhausted.

Dave Ricks: We'll go to Dave for the close. Okay, great. Well, thanks for joining today's earnings and terzapatide call. And your interest, of course, in the company. It is an exciting moment for all of us. 2022 started in a similar fashion to how we ended 2021 with strong momentum across the business. We remain focused on executing our innovation-based strategy to bring new medicines to patients and create value for all our stakeholders. With strong commercial execution complemented by a pipeline of industry-leading opportunities, we believe Lilly continues to be a compelling investment.

Operator: So thanks for dialing in today, and please follow up with the IR team if you have questions we have not addressed on the call. And have a great day, thanks. And ladies and gentlemen, this conference is available for replay beginning after 11 o'clock, 11:15 Eastern Time today and running through April 28th at midnight. You may access the AT&T replay system at any time by dialing 866-207-1041 or, if you're international, 402-970-0847. And entering the access code 4726957. Again, those numbers are 1-866-207-1041, and the international number is 402-970-0847 with the access code 4723. 6957

Again, those numbers are 1866, <unk> 71041, and international is boring zero to 90 700847 with the access code four seven.

Operator: And that does conclude our conference for today. Thank you for your participation and for using AT&T teleconferencing. You may now disconnect. Lewis is the one clear, One moment at your beckoning.

6957, and that does conclude our conference for today. Thank you for your participation and for using AT&T teleconference Service you may now disconnect.

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